10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2008

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 Number: 1-6300

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

(Exact name of Registrant as specified in its charter)

Pennsylvania	23-6216339
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
200 South Broad Street Philadelphia, PA	19102
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (215) 875-0700

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 for such shorter period that the registrant 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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  x	Accelerated filer  ¨	Non-accelerated filer  ¨	Smaller reporting company  ¨
		(Do not check if a smaller reporting company)

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common shares of beneficial interest, $1.00 par value per share, outstanding at November 4, 2008: 39,412,145

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

CONTENTS

		Page
	PART I – FINANCIAL INFORMATION
Item 1	Financial Statements (Unaudited):
	Consolidated Balance Sheets – September 30, 2008 and December 31, 2007	1
	Consolidated Statements of Income – Three and Nine Months Ended September 30, 2008 and 2007	2
	Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2008 and 2007	4
	Notes to Unaudited Consolidated Financial Statements	5
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4	Controls and Procedures	34
	PART II – OTHER INFORMATION
Item 1	Legal Proceedings	35
Item 1A	Risk Factors	35
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3	Not Applicable	__
Item 4	Not Applicable	__
Item 5	Not Applicable	__
Item 6	Exhibits	37
SIGNATURES		38

Except as the context otherwise requires, references in this Quarterly Report on Form 10-Q to “we,” “our,” “us,” the “Company” and “PREIT” refer to Pennsylvania Real Estate Investment Trust and its subsidiaries, including our operating partnership, PREIT Associates, L.P. References in this Quarterly Report on Form 10-Q to “PREIT Associates” or the “Operating Partnership” refer to PREIT Associates, L.P. References in this Quarterly Report on Form 10-Q to “PRI” refer to PREIT-RUBIN, Inc.

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands of dollars, except share and per share amounts)	September 30, 2008			December 31, 2007
ASSETS:
INVESTMENTS IN REAL ESTATE, at cost:
Operating properties	$	3,215,570		$	3,074,562
Construction in progress		419,533			287,116
Land held for development		5,616			5,616
Total investments in real estate		3,640,719			3,367,294
Accumulated depreciation		(486,076	)		(401,502	)
Net investments in real estate		3,154,643			2,965,792
INVESTMENTS IN PARTNERSHIPS, at equity		36,130			36,424
OTHER ASSETS:
Cash and cash equivalents		19,452			27,925
Tenant and other receivables (net of allowance for doubtful accounts of $13,963 and $11,424 at September 30, 2008 and December 31, 2007, respectively)		44,393			49,094
Intangible assets (net of accumulated amortization of $161,863 and $137,809 at September 30, 2008 and December 31, 2007, respectively)		80,748			104,136
Deferred costs and other assets		87,945			80,703
Total assets	$	3,423,311		$	3,264,074
LIABILITIES:
Mortgage notes payable	$	1,680,101		$	1,643,122
Debt premium on mortgage notes payable		4,623			13,820
Exchangeable senior notes		287,500			287,500
Credit Facility		380,000			330,000
Senior unsecured Term Loan		170,000			—
Tenants’ deposits and deferred rent		17,532			16,213
Distributions in excess of partnership investments		45,982			49,166
Accrued expenses and other liabilities		105,058			111,378
Total liabilities		2,690,796			2,451,199
MINORITY INTEREST (redemption value $42,193 and $66,560 at September 30, 2008 and December 31, 2007, respectively)		54,366			55,256
COMMITMENTS AND CONTINGENCIES (Note 9)
SHAREHOLDERS’ EQUITY:
Shares of beneficial interest, $1.00 par value per share; 100,000,000 shares authorized; issued and outstanding 39,397,186 shares at September 30, 2008 and 39,134,109 shares at December 31, 2007		39,397			39,134
Capital contributed in excess of par		827,037			818,966
Accumulated other comprehensive loss		(14,833	)		(6,968	)
Distributions in excess of net income		(173,452	)		(93,513	)
Total shareholders’ equity		678,149			757,619
Total liabilities, minority interest and shareholders’ equity	$	3,423,311		$	3,264,074

See accompanying notes to the unaudited consolidated financial statements.

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands of dollars)	2008			2007			2008			2007
REVENUE:
Real estate revenue:
Base rent	$	73,110		$	71,547		$	219,951		$	213,300
Expense reimbursements		35,477			33,369			103,417			101,028
Percentage rent		1,060			1,289			3,526			4,922
Lease termination revenue		320			690			2,618			1,408
Other real estate revenue		3,718			3,902			10,951			11,330
Total real estate revenue		113,685			110,797			340,463			331,988
Management company revenue		1,181			854			2,992			1,827
Interest and other income		240			535			622			2,323
Total revenue		115,106			112,186			344,077			336,138
EXPENSES:
Property operating expenses:
CAM and real estate tax		(33,577	)		(31,620	)		(98,846	)		(95,116	)
Utilities		(7,019	)		(6,886	)		(19,308	)		(19,055	)
Other operating expenses		(7,148	)		(5,885	)		(19,002	)		(16,955	)
Total property operating expenses		(47,744	)		(44,391	)		(137,156	)		(131,126	)
Depreciation and amortization		(38,435	)		(32,743	)		(111,455	)		(96,970	)
Other expenses:
General and administrative expenses		(10,364	)		(9,801	)		(31,777	)		(30,969	)
Abandoned project costs, income taxes and other expenses		(311	)		(196	)		(1,815	)		(865	)
Total other expenses		(10,675	)		(9,997	)		(33,592	)		(31,834	)
Interest expense, net		(28,450	)		(24,866	)		(80,817	)		(72,338	)
Total expenses		(125,304	)		(111,997	)		(363,020	)		(332,268	)
(Loss) income before equity in income of partnerships, minority interest and discontinued operations		(10,198	)		189			(18,943	)		3,870
Equity in income of partnerships		2,169			1,148			5,738			3,272
Gains on sales of interests in real estate		—			—			—			579
Gains on sales of non-operating real estate		49			247			49			1,731
(Loss) income before minority interest and discontinued operations		(7,980	)		1,584			(13,156	)		9,452
Minority interest		349			(103	)		499			(884	)
(Loss) income from continuing operations		(7,631	)		1,481			(12,657	)		8,568
Income from discontinued operations:
Operating results from discontinued operations		—			19			—			(118	)
Gain on sale of discontinued operations		—			—			—			6,699
Minority interest		—			(1	)		—			(691	)
Income from discontinued operations		—			18			—			5,890
Net (loss) income		(7,631	)		1,499			(12,657	)		14,458
Redemption of preferred shares		—			13,347			—			13,347
Dividends on preferred shares		—			(1,134	)		—			(7,941	)
Net (loss allocable) income available to common shareholders	$	(7,631	)	$	13,712		$	(12,657	)	$	19,864

See accompanying notes to the unaudited consolidated financial statements.

2

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

CONSOLIDATED STATEMENTS OF INCOME (continued)

EARNINGS PER SHARE

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands of dollars, except per share amounts)	2008			2007			2008			2007
(Loss) income from continuing operations	$	(7,631	)	$	1,481		$	(12,657	)	$	8,568
Redemption of preferred shares		—			13,347			—			13,347
Dividends on preferred shares		—			(1,134	)		—			(7,941	)
Net (loss allocable) income available from continuing operations available to common shareholders		(7,631	)		13,694			(12,657	)		13,974
Dividends on unvested restricted shares		(304	)		(272	)		(918	)		(815	)
(Loss) income from continuing operations used to calculate earnings per share – basic and diluted	$	(7,935	)	$	13,422		$	(13,575	)	$	13,159
Income from discontinued operations used to calculate earnings per share – basic and diluted	$	—		$	18		$	—		$	5,890
Basic (loss) income per share:
(Loss) income from continuing operations	$	(0.20	)	$	0.35		$	(0.35	)	$	0.35
Income from discontinued operations		—			0.00			—			0.16
	$	(0.20	)	$	0.35		$	(0.35	)	$	0.51
Diluted (loss) income per share:
(Loss) income from continuing operations	$	(0.20	)	$	0.35		$	(0.35	)	$	0.35
Income from discontinued operations		—			0.00			—			0.16
	$	(0.20	)	$	0.35		$	(0.35	)	$	0.51
(in thousands of shares)
Weighted average shares outstanding – basic		38,840			38,181			38,782			37,219
Effect of dilutive common share equivalents (1)		—			295			—			363
Weighted average shares outstanding – diluted		38,840			38,476			38,782			37,582

(1) For the three and nine month periods ended September 30, 2008, respectively, there are net losses allocable to common shareholders from continuing operations, so the effect of common share equivalents of 12 for the three months ended September 30, 2008 and 18 for the nine months ended September 30, 2008 is excluded from the calculation of diluted loss per share for these periods because it would be antidilutive.

See accompanying notes to the unaudited financial statements.

3

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
(in thousands of dollars)	2008			2007
Cash flows from operating activities:
Net (loss) income	$	(12,657	)	$	14,458
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		86,336			73,433
Amortization		19,583			15,865
Straight-line rent adjustments		(2,265	)		(1,515	)
Provision for doubtful accounts		4,083			2,083
Amortization of deferred compensation		6,442			5,208
Amortization of Outperformance Program		614			614
Minority interest		(499	)		1,575
Net gain on forward starting swap activities		(2,002	)		—
Gains on sales of interests in real estate		(49	)		(9,009	)
Change in assets and liabilities:
Net change in other assets		(7,129	)		(1,238	)
Net change in other liabilities		2,310			(420	)
Net cash provided by operating activities		94,767			101,054
Cash flows from investing activities:
Investments in real estate acquisitions, net		(12,709	)		(11,280	)
Investments in real estate improvements		(23,743	)		(13,589	)
Additions to construction in progress		(225,878	)		(144,742	)
Investments in partnerships		(3,542	)		(9,497	)
Decrease in cash escrows		9,250			5,049
Capitalized leasing costs		(3,971	)		(3,502	)
Additions to leasehold improvements		(685	)		(811	)
Cash distributions from partnerships in excess of equity in income		653			2,998
Cash proceeds from sales of consolidated real estate investments		126			31,486
Net cash used in investing activities		(260,499	)		(143,888	)
Cash flows from financing activities:
Principal installments on mortgage notes payable		(17,669	)		(16,967	)
Proceeds from mortgage notes payable		460,265			150,000
Repayment of mortgage notes payable		(413,617	)		(56,663	)
Proceeds from sale of exchangeable senior notes		—			281,031
Net borrowing from (repayment of) Credit Facility		50,000			(87,000	)
Borrowing from senior unsecured Term Loan		170,000			—
Net (payment) proceeds from settlement of forward-starting interest swap agreements		(16,503	)		4,069
Purchase of capped call		—			(12,578	)
Payment of deferred financing costs		(6,570	)		(3,511	)
Shares of beneficial interest issued		2,987			13,845
Shares of beneficial interest repurchased		(623	)		(12,427	)
Operating partnership units purchased or redeemed		—			(78	)
Redemption of preferred shares		—			(129,955	)
Dividends paid to common shareholders		(67,282	)		(64,271	)
Distributions paid to operating partnership unit holders and minority partners		(3,729	)		(6,262	)
Dividends paid to preferred shareholders		—			(8,659	)
Net cash provided by financing activities		157,259			50,574
Net change in cash and cash equivalents		(8,473	)		7,740
Cash and cash equivalents, beginning of period		27,925			15,808
Cash and cash equivalents, end of period	$	19,452		$	23,548

See accompanying notes to the unaudited consolidated financial statements.

4

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2008

(Unaudited)

1. BASIS OF PRESENTATION

Pennsylvania Real Estate Investment Trust (“PREIT” or the “Company”) prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the included disclosures are adequate to make the information presented not misleading. The unaudited consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto included in PREIT’s Annual Report on Form 10-K for the year ended December 31, 2007. In management’s opinion, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the consolidated financial position of the Company and its subsidiaries and the consolidated results of its operations and its cash flows are included. The results of operations for the interim periods presented are not necessarily indicative of the results for the full year.

PREIT, a Pennsylvania business trust founded in 1960 and one of the first equity real estate investment trusts (“REITs”) in the United States, has a primary investment focus on retail shopping malls and strip and power centers located in the eastern half of the United States, primarily in the Mid-Atlantic region. As of September 30, 2008, the Company’s portfolio consisted of a total of 56 properties. The Company’s operating portfolio contains 52 retail properties in 13 states and includes 38 shopping malls and 14 strip and power centers. The remaining four properties in the Company’s portfolio are held for ground-up development.

The Company holds its interest in its portfolio of properties through its operating partnership, PREIT Associates, L.P. (the “Operating Partnership”). The Company is the sole general partner of the Operating Partnership and, as of September 30, 2008, the Company held a 94.6% interest in the Operating Partnership, and consolidates it for reporting purposes. The presentation of consolidated financial statements does not itself imply that the assets of any consolidated entity (including any special-purpose entity formed for a particular project) are available to pay the liabilities of any other consolidated entity, or that the liabilities of any consolidated entity (including any special-purpose entity formed for a particular project) are obligations of any other consolidated entity.

Pursuant to the terms of the partnership agreement of the Operating Partnership, each of the limited partners has the right to redeem such partner’s units of limited partnership interest in the Operating Partnership (“OP Units”) for cash or, at the election of the Company, the Company may acquire such OP Units for common shares of the Company on a one-for-one basis. In some cases, the right to tender OP Units for redemption begins one year following the respective issue date of the OP Units and in other cases immediately. In the event of the redemption for cash of all of the outstanding OP Units held by limited partners and not owned by the Company, the total amount that would have been distributed as of September 30, 2008 would have been $42.2 million, which is calculated using the Company’s September 30, 2008 share price multiplied by the outstanding OP Units held by limited partners other than the Company.

The Company provides its management, leasing and real estate development services through two companies: PREIT Services, LLC (“PREIT Services”), which generally develops and manages properties that the Company consolidates for financial reporting purposes, and PREIT-RUBIN, Inc. (“PRI”), which generally develops and manages properties that the Company does not consolidate for financial reporting purposes, including properties owned by partnerships in which the Company owns an interest and properties that are owned by third parties in which the Company does not have an interest. PREIT Services and PRI are consolidated. Because PRI is a taxable REIT subsidiary as defined by federal tax laws, it is capable of offering a broad range of services to tenants without jeopardizing the Company’s continued qualification as a real estate investment trust under federal tax law.

Certain prior period amounts have been reclassified to conform with the current year presentation.

2. RECENT ACCOUNTING PRONOUNCEMENTS

In May 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)” (“FSP 14-1”). FSP 14-1 clarifies that convertible debt instruments that may be settled in cash upon either mandatory or optional conversion (including partial cash settlement) are not addressed by paragraph 12 of APB Opinion No. 14, “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants.” The value assigned to the debt component is the estimated fair value of a similar bond without the conversion feature, which would result in the debt being recorded at a discount. The resulting debt discount would be amortized over the period during which the debt is expected to be outstanding as additional non-cash interest expense. The Company’s $287.5 million exchangeable senior notes are within the scope of FSP 14-1; therefore, the Company will be required to record debt components of the notes at fair value as of the date of issuance, and amortize the discount as an increase to interest

5

expense over the expected life of the debt. The implementation of this standard will result in a decrease to net income and earnings per share for all periods presented; however, there is no effect on the Company’s cash interest payments. FSP 14-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years and shall be applied retrospectively to all periods presented. Early adoption of FSP 14-1 is not permitted. The Company anticipates that as a result of the application of this standard, its annual net income will decrease by approximately $4 million. Additionally, the Company anticipates that the application of this standard will decrease its debt balance as of December 31, 2008 by approximately $19 million, with a corresponding increase to shareholders’ equity.

SFAS No. 161

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS No. 161”). SFAS No. 161 requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. The Company will adopt the provisions of SFAS No. 161 beginning on January 1, 2009 and will make the required disclosures in accordance with the pronouncement.

SFAS No. 141 R

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (rev. 2007), “Business Combinations (a revision of Statement No. 141)” (“SFAS No. 141 R”). This statement applies to all transactions or other events in which an entity obtains control of one or more businesses, including those combinations achieved without the transfer of consideration. SFAS No. 141 R retains the fundamental requirement in SFAS No. 141 that the acquisition method of accounting be used for all business combinations. SFAS No. 141 R expands the scope to include all business combinations and requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at their fair values as of the acquisition date. Additionally, SFAS No. 141 R changes the way entities account for business combinations achieved in stages by requiring the identifiable assets and liabilities to be measured at fair value at the acquisition date. SFAS No. 141 R requires entities to directly expense transaction costs. The Company will adopt the provisions of this statement beginning on January 1, 2009, prospectively. The Company has determined that the adoption of SFAS No. 141 R will not have a material impact on the Company’s consolidated financial statements.

SFAS No. 160

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS No. 160”). SFAS No. 160 establishes accounting and reporting standards for a noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 will be effective for the Company beginning on January 1, 2009. The Company has determined that the adoption of SFAS No. 160 will not have a material impact on the Company’s consolidated financial statements.

SFAS No. 157

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 established a new definition of fair value, provided guidance on how to measure fair value and established new disclosure requirements of assets and liabilities at their fair value measurements. The adoption of SFAS No. 157 did not have a material impact on the Company’s financial statements. The Company has deferred the application of SFAS No. 157 to non-financial assets and liabilities as allowed by FSP 157-2, “Partial Deferral of the Effective Date of Statement 157,” which was issued by the FASB in February 2008.

SFAS No. 159

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159 expands opportunities to use fair value measurement in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 became effective for the Company beginning on January 1, 2008. The adoption of SFAS No. 159 did not have a material effect on the Company’s financial statements because the Company did not elect to measure any financial assets or liabilities at fair value.

3. REAL ESTATE ACTIVITIES

Investments in real estate as of September 30, 2008 and December 31, 2007 were comprised of the following:

(in thousands of dollars)	As of September 30, 2008			As of December 31, 2007
Buildings, improvements and construction in progress	$	3,071,526		$	2,819,210
Land, including land held for development		569,193			548,084
Total investments in real estate		3,640,719			3,367,294
Accumulated depreciation		(486,076	)		(401,502	)
Net investments in real estate	$	3,154,643		$	2,965,792

6

Capitalization of Costs

Costs incurred in relation to development and redevelopment projects for interest, property taxes and insurance are capitalized only during periods in which activities necessary to prepare the property for its intended use are in progress. Costs incurred for such items after the property is substantially complete and ready for its intended use are charged to expense as incurred. Capitalized costs, as well as tenant inducement amounts and internal and external commissions, are recorded in construction in progress. The Company capitalizes a portion of development department employees’ compensation and benefits related to time spent involved in development and redevelopment projects.

The Company capitalizes payments made to obtain options to acquire real property. All other related costs that are incurred before acquisition are capitalized if the acquisition of the property is probable. If the property is acquired, such costs are included in the amount recorded as the initial value of the asset. Capitalized pre-acquisition costs are charged to “abandoned project costs, income taxes and other expenses” when it is probable that the property will not be acquired. The Company recorded abandoned project costs of $0.3 million and $0.1 million for the three months ended September 30, 2008 and 2007, respectively, and $1.6 million and $0.3 million for the nine months ended September 30, 2008 and 2007, respectively.

The Company capitalizes salaries, commissions and benefits related to time spent by leasing and legal department personnel involved in originating leases with third-party tenants.

The following table summarizes the Company’s capitalized salaries and benefits, real estate taxes and interest for the three and nine months ended September 30, 2008 and September 30, 2007.

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands of dollars)	2008		2007		2008		2007
Development/Redevelopment Activities:
Salaries and benefits	$	770	$	603	$	2,416	$	1,591
Real estate taxes	$	666	$	520	$	1,746	$	1,818
Interest	$	4,145	$	4,455	$	11,584	$	11,883
Leasing Activities:
Salaries and benefits	$	1,166	$	1,011	$	3,971	$	3,502

2008 Acquisitions

In July 2008, the Company acquired a parcel in Lancaster, Pennsylvania for $8.0 million plus customary closing costs.

In the first quarter of 2008, the Company entered into an agreement under which it acquired a 0.1% general partnership interest and a 49.8% limited partnership interest in Bala Cynwyd Associates, L.P. (“BCA”), and an option to purchase the remaining partnership interests in BCA in two closings that are anticipated to take place in February 2009 and February 2010. BCA is the owner of One Cherry Hill Plaza, an office building located within the boundaries of the Company’s Cherry Hill Mall in Cherry Hill, New Jersey. The Company acquired its interests in BCA for $4.0 million in cash paid at the first closing in February 2008. The Company has the ability to exercise an option to acquire the remaining interests for a total purchase price of $15.3 million, a portion of which is payable in OP Units.

Three of the Company’s officers/trustees are partners in the entities that own the remaining general partnership interests and limited partnership interests that the Company did not own as of March 31, 2008. In accordance with the Company’s Related Party Transactions Policy, a Special Committee consisting exclusively of independent members of the Company’s Board of Trustees considered and approved the terms of the transaction subject to final approval by the Company’s Board of Trustees. The disinterested members of the Company’s Board of Trustees approved the transaction.

The Company has consolidated BCA for financial reporting purposes.

2008 Dispositions

In August 2008, the Company sold a parcel adjacent to New River Valley Mall in Christiansburg, Virginia to the Virginia Department of Transportation for $0.1 million. The Company recorded a gain of $49,000 from this transaction.

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4. INVESTMENTS IN PARTNERSHIPS

The following table presents summarized financial information of the equity investments in the Company’s unconsolidated partnerships as of September 30, 2008 and December 31, 2007:

(in thousands of dollars)	As of September 30, 2008			As of December 31, 2007
ASSETS:
Investments in real estate, at cost:
Retail properties	$	387,557		$	386,050
Construction in progress		4,826			4,773
Total investments in real estate		392,383			390,823
Accumulated depreciation		(99,138	)		(87,961	)
Net investments in real estate		293,245			302,862
Cash and cash equivalents		11,685			10,604
Deferred costs and other assets, net		26,520			25,608
Total assets		331,450			339,074
LIABILITIES AND PARTNERS’ DEFICIT:
Mortgage notes payable		375,284			378,317
Other liabilities		18,270			27,668
Total liabilities		393,554			405,985
Net deficit		(62,104	)		(66,911	)
Partners’ share		(31,237	)		(33,025	)
Company’s share		(30,867	)		(33,886	)
Excess investment (1)		15,448			15,151
Advances		5,567			5,993
Net investments and advances	$	(9,852	)	$	(12,742	)
Investment in partnerships, at equity	$	36,130		$	36,424
Distributions in excess of partnership investments		(45,982	)		(49,166	)
Net investments and advances	$	(9,852	)	$	(12,742	)

⁽¹⁾ Excess investment represents the unamortized difference between the Company’s investment and the Company’s share of the equity in the underlying net investment in the partnerships. The excess investment is amortized over the life of the properties, and the amortization is included in “Equity in income of partnerships.”

The following table summarizes the Company’s share of equity in income of partnerships for the three and nine months ended September 30, 2008 and 2007:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands of dollars)	2008			2007			2008			2007
Real estate revenue	$	19,143		$	16,977		$	56,435		$	50,542
Expenses:
Property operating expenses		(6,130	)		(5,097	)		(17,011	)		(15,225	)
Interest expense		(4,740	)		(6,053	)		(15,912	)		(18,406	)
Depreciation and amortization		(3,975	)		(3,303	)		(11,799	)		(9,881	)
Total expenses		(14,845	)		(14,453	)		(44,722	)		(43,512	)
Net income		4,298			2,524			11,713			7,030
Less: Partners’ share		(2,068	)		(1,262	)		(5,788	)		(3,515	)
Company’s share		2,230			1,262			5,925			3,515
Amortization of excess investment		(61	)		(114	)		(187	)		(243	)
Equity in income of partnerships	$	2,169		$	1,148		$	5,738		$	3,272

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In October 2008, the unconsolidated partnership that owns Whitehall Mall in Allentown, Pennsylvania entered into a new $12.4 million, 10 year mortgage to replace the prior mortgage on the property. The Company’s interest in the unconsolidated partnership is 50%.

In July 2006, the unconsolidated partnership that owns Lehigh Valley Mall in Whitehall, Pennsylvania entered into a $150.0 million mortgage loan that is secured by Lehigh Valley Mall. The Company owns an indirect 50% ownership interest in this entity. The mortgage loan had an initial term of 12 months, during which monthly payments of interest only were required. The loan bears interest at the one month LIBOR rate, reset monthly, plus a spread of 56 basis points. There are three one-year extension options, provided that there is no event of default and that the borrower buys an interest rate cap for the term of any applicable extension. In August 2007 and June 2008, the partnership that owns the mall exercised the first and second one-year extension options, respectively.

5. FINANCING ACTIVITY

General

In September 2008, the Company entered into a senior unsecured Term Loan Agreement (the “Term Loan”) under which it borrowed $170.0 million. Also in September, the Company closed agreements for an aggregate of $286.3 million through four separate loan transactions, each of which is secured by a mortgage on an operating retail property owned by the Company. The Company used the proceeds of these four mortgage loans, a portion of the Term Loan borrowing and a borrowing under its Credit Facility to repay the Company’s $400.9 million, 15 property real estate mortgage investment conduit (the “REMIC”) in full. In connection with this repayment, the 15 malls were released from the liens under the REMIC, and, as described below, four of these malls were used to secure new mortgage financings. The Company assumed the REMIC in connection with its 2003 merger with Crown American Realty Trust.

Credit Facility

The amounts borrowed under the Company’s Credit Facility bear interest at a rate between 0.95% and 2.00% per annum over LIBOR based on the Company’s leverage. In determining the Company’s leverage, the capitalization rate used to calculate Gross Asset Value is 7.50%. In October 2008, the Company exercised its option to extend the term of its $500.0 million senior unsecured Credit Facility by 14 months to a new expiration date in March 2010.

As of September 30, 2008, $380.0 million was outstanding under the Credit Facility. The Company had pledged $11.0 million under the Credit Facility as collateral for letters of credit, and the unused portion of the Credit Facility that was available to the Company was $109.0 million at September 30, 2008. The weighted average effective interest rate based on amounts borrowed was 4.29% and 4.59% for the three and nine months ended September 30, 2008, respectively. The weighted average interest rate on outstanding Credit Facility borrowings at September 30, 2008 was 3.92%.

The Credit Facility contains affirmative and negative covenants and requirements customarily found in facilities of this type. As of September 30, 2008, the Company was in compliance with all of these debt covenants.

Senior Unsecured Term Loan

In September 2008, the Company borrowed an aggregate of $170.0 million under its Term Loan. Also in September 2008, the Company swapped the floating interest rate on $130.0 million of the Term Loan balance to a fixed rate of 5.33%, effective October 1, 2008. In October 2008, the Company swapped the floating interest rate on the remaining $40.0 million of the Term Loan balance to a fixed rate of 5.15%. The Company may increase the outstanding amount of the Term Loan, subject to certain conditions and to the participation of additional lenders, on one additional occasion before the initial maturity date of March 20, 2010. The weighted average effective interest rate based on amounts borrowed was 5.25%. The weighted average interest rate on amounts outstanding at September 30, 2008 was 4.65%.

Interest under the Term Loan is payable monthly in arrears, and no principal payment is due until the end of the term. The Term Loan contains lender yield protection provisions. The Company may not prepay the loan during the first twelve months of the term, but may prepay all or a portion of the Term Loan beginning in the thirteenth month, subject to a prepayment fee. The Company and certain of its subsidiaries are guarantors of the obligations arising under the Term Loan.

The Term Loan contains customary affirmative and negative covenants, including compliance with certain financial covenants that are materially the same as those contained in the Company’s Credit Facility. As of September 30, 2008, the Company was in compliance with all of these convenants.

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Mortgage Activity

In January 2008, the Company completed a $55.0 million supplemental financing of Cherry Hill Mall in Cherry Hill, New Jersey. The loan has a fixed interest rate of 5.51% and will mature in October 2012. The maturity date coincides with that of the existing first mortgage on the property, which was put in place in September 2005. The first 24 payments of the new loan will be interest only, followed by principal and interest payments calculated based on a 360-month amortization schedule. The proceeds were used to pay down a portion of the Credit Facility and for general corporate purposes.

In May 2008, the Company entered into a $20.0 million mortgage loan that is secured by Creekview Center in Warrington, Pennsylvania. The mortgage loan has a variable interest rate of 215 basis points over one-month LIBOR with a term of two years and three one-year extension options. The variable interest rate was swapped to a fixed rate of 5.56% for the initial term of the loan. The proceeds of this mortgage loan were used to repay a portion of the amount outstanding under the Company’s Credit Facility and for general corporate purposes.

In June 2008, the Company entered into a $45.0 million mortgage loan that is secured by Christiana Center in Christiana, Delaware. The mortgage loan has a variable interest rate of 185 basis points over one-month LIBOR with a term of three years and two one-year extension options. Repayment is interest only during the initial term of the loan. The variable interest rate was swapped to a fixed rate of 5.865% for the initial term of the loan. The proceeds of this mortgage loan were used to repay a portion of the amount outstanding under the Company’s Credit Facility and for general corporate purposes.

In July 2008, the Company repaid a $12.7 million mortgage loan on Crossroads Mall in Beckley, West Virginia, using $12.6 million from its Credit Facility and available working capital.

In July 2008, the Company entered into a $54.0 million interest only mortgage loan that is secured by Paxton Towne Centre in Harrisburg, Pennsylvania. The mortgage loan has an initial variable interest rate of 200 basis points over one-month LIBOR, with a term of three years and two one-year extension options. The variable interest rate was swapped to a fixed rate of 5.837% for the initial term of the loan. The proceeds of this mortgage loan were used to repay a portion of the amount outstanding under the Company’s Credit Facility and for general corporate purposes.

In September 2008, the Company entered into a $97.0 million mortgage loan that is secured by Patrick Henry Mall in Newport News, Virginia. The mortgage loan bears interest at a fixed annual rate of 6.34% and has a seven-year term.

In September 2008, the Company entered into a $60.0 million mortgage loan facility that is secured by Jacksonville Mall in Jacksonville, North Carolina. The Company initially borrowed $56.3 million. On one occasion prior to March 9, 2010, the Company may request an increase in the principal amount of the loan of up to $3.7 million, or a total outstanding principal amount of $60.0 million, subject to the satisfaction of a financial condition and the absence of any events of default. The loan bears interest at an annual rate equal to, at the election of the borrower, LIBOR (2.49% in effect at September 30, 2008) plus 210 basis points, or a base rate equal to the prime rate, or if greater, the federal funds rate plus 50 basis points, plus a margin of 50 basis points. The loan has a five-year term that may be extended at the borrower’s election for up to two additional one-year periods, subject to the satisfaction of financial covenants, including a debt service coverage ratio and a leverage ratio, and the absence of any events of default. Interest only is payable until the maturity date. The variable interest rate was swapped to a fixed rate of 5.83% for the initial term of the loan.

In September 2008, the Company entered into a $68.0 million mortgage loan that is secured by Logan Valley Mall in Altoona, Pennsylvania. The loan bears interest at an annual rate equal to, at the election of the borrower, LIBOR (2.49% in effect at September 30, 2008) plus 210 basis points, or a base rate equal to the prime rate, or if greater, the federal funds rate plus 50 basis points, plus a margin of 50 basis points. The loan has a five-year term that may be extended at the borrower’s election for up to two additional one-year periods, subject to the satisfaction of financial covenants, including a debt service coverage ratio and a leverage ratio, and the absence of any events of default. Interest only is payable until the maturity date. The variable interest rate was swapped to a fixed rate of 5.79% for the initial term of the loan.

In September 2008, the Company entered into a $65.0 million mortgage loan that is secured by Wyoming Valley Mall in Wilkes-Barre, Pennsylvania. The loan bears interest at an annual rate equal to, at the borrower’s election, LIBOR (2.49% in effect at September 30, 2008) plus 225 basis points, or a base rate equal to the prime rate, or if greater, the federal funds rate plus 50 basis points, plus a margin of 50 basis points. The loan has a five-year term that may be extended at the borrower’s election for up to two additional one-year periods, subject to the satisfaction of financial covenants, including a debt service coverage ratio and a leverage ratio, and the absence of any events of default. Interest only is payable until the maturity date. The variable interest rate was swapped to a fixed rate of 5.85% for the initial term of the loan.

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6. COMPREHENSIVE (LOSS) INCOME

The following table sets forth the computation of comprehensive (loss) income for the three and nine months ended September 30, 2008 and 2007, respectively.

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands of dollars)	2008			2007			2008			2007
Net (loss) income	$	(7,631	)	$	1,499		$	(12,657	)	$	14,458
Unrealized (loss) gain on derivatives		(5,707	)		(12,635	)		(7,718	)		2,287
Other comprehensive income (loss)		38			9			(147	)		27
Total comprehensive (loss) income	$	(13,300	)	$	(11,127	)	$	(20,522	)	$	16,772

7. CASH FLOW INFORMATION

Cash paid for interest was $84.8 million (net of capitalized interest of $11.6 million) and $74.8 million (net of capitalized interest of $11.9 million) for the nine months ended September 30, 2008 and 2007, respectively. In connection with the acquisition of partnership interests in Bala Cynwyd Associates in the first quarter of 2008, the Company consolidated an $8.0 million mortgage loan. In June 2007, the Company issued 1,580,211 common shares of beneficial interest in exchange for a like number of OP Units in a transaction with an entity that is an affiliate of Mark Pasquerilla, a trustee of the Company.

8. RELATED PARTY TRANSACTIONS

PRI provides management, leasing and development services for 11 properties owned by partnerships and other entities in which certain officers or trustees of the Company and of PRI or members of their immediate families and affiliated entities have direct or indirect ownership interests. Total revenue earned by PRI for such services was $0.3 million and $0.2 million for the three months ended September 30, 2008 and 2007, respectively, and $0.8 million and $0.6 million for the nine months ended September 30, 2008, and 2007, respectively.

The Company leases its principal executive offices from Bellevue Associates (the “Landlord”). Ronald Rubin and George F. Rubin, collectively with members of their immediate families and affiliated entities, own approximately a 50% interest in the Landlord. The office lease has a 10 year term that commenced on November 1, 2004. The Company’s base rent is $1.4 million per year during the first five years of the office lease and $1.5 million during the second five years. Total rent expense under this lease was $0.4 million for each of the three months ended September 30, 2008 and 2007 and $1.2 million for each of the nine months ended September 30, 2008 and 2007.

The Company uses an airplane in which Ronald Rubin owns a fractional interest. The Company paid approximately $80,000 and $23,000 in the three months ended September 30, 2008 and 2007, respectively, and approximately $174,000 and $50,000 in the nine months ended September 30, 2008 and 2007, respectively, for flight time used by employees on Company-related business.

9. COMMITMENTS AND CONTINGENCIES

Development and Redevelopment Activities

In connection with its current ground-up development and its redevelopment projects, the Company has made contractual commitments on some of these projects in the form of tenant allowances, lease termination fees and contracts with general contractors and other professional service providers. As of September 30, 2008, the remainder to be paid against such contractual and other commitments was $70.8 million, which is expected to be financed through the Credit Facility or through various other capital sources.

Tax Protection Agreements

The Company has entered into tax protection agreements in connection with certain completed property acquisitions. Under these agreements, the Company has agreed not to dispose of certain protected properties in a taxable transaction until certain dates. In some cases, members of the Company’s senior management and/or Board of Trustees are the beneficiaries of these agreements.

Other

In the normal course of business, the Company has become and may, in the future, become involved in legal actions relating to the ownership and operations of its properties and the properties it manages for third parties. In management’s opinion, the resolution of any such pending legal actions is not expected to have a material adverse effect on the Company’s consolidated financial position or results of operations.

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10. DERIVATIVES

On January 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; the standard does not require any new fair value measurements of reported balances.

SFAS No. 157 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, SFAS No. 157 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Currently, the Company uses interest rate swaps to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs.

To comply with the provisions of SFAS No. 157, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. However, as of September 30, 2008, the Company has assessed the significance of the effect of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

Forward Starting Interest Rate Swaps

During the nine months ended September 30, 2008, the Company cash settled all of its forward-starting interest rate swaps with an aggregate notional amount of $400.0 million. The Company paid an aggregate of $16.5 million in cash to settle these swaps. The swaps were settled in anticipation of the Company’s issuance of long term debt. Accumulated other comprehensive loss as of September 30, 2008 includes a net loss of $14.9 million relating to forward-starting swaps that the Company has cash settled that are being amortized over 10 year periods commencing on the closing dates of the debt instruments that are associated with these settled swaps.

During the second quarter of 2008, the Company revised its estimates regarding the expected terms of its anticipated issuances of long term debt. This change in estimates resulted in hedge ineffectiveness for a portion of the forward starting swaps that were outstanding on the date that the estimates changed. The Company recorded a gain due to hedge ineffectiveness of $46,000 for the three months ended September 30, 2008. The Company recorded a net loss of $358,000 due to hedge ineffectiveness for the nine months ended September 30, 2008. Also, for several of these swaps, the result of this change in estimates was that the swaps were no longer designated as cash flow hedges pursuant to SFAS No. 133 since they no longer met the SFAS No. 133 requirements for hedge accounting. The Company recorded a net gain of $2.4 million in the second quarter of 2008 in connection with these swaps. The net gain represents the change in the fair market value of the swaps from the date of de-designation to the date when the swaps were either settled or redesignated. The swap net gain and the net hedge ineffectiveness gain/ loss are recorded in interest expense in the accompanying statements of income.

Interest Rate Swaps:

As of September 30, 2008, the Company had entered into nine interest rate swap agreements that have a blended rate of 3.46% on a notional amount of $438.2 million maturing on various dates through September 2013.

The Company entered into these interest rate swap agreements in order to hedge the interest payments associated with the Company’s 2008 issuances of floating rate long-term debt. The Company assessed the effectiveness of these swaps as hedges at inception and on September 30, 2008 and considered these swaps to be highly effective cash flow hedges under SFAS No. 133.

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The Company’s interest rate swaps will be settled in cash.

As of September 30, 2008, the aggregate estimated unrealized net gain attributed to these interest rate swaps was $1.5 million. The carrying amount of the derivative assets is reflected in deferred costs and other assets, the associated liabilities are reflected in accrued expenses and other liabilities and the net unrealized gain is reflected in accumulated other comprehensive loss, respectively, in the accompanying balance sheets.

The following table summarizes the terms and fair values of the Company’s interest rate swap derivative instruments at September 30, 2008. The notional amounts at September 30, 2008 provide an indication of the extent of the Company’s involvement in these instruments at that time, but do not represent exposure to credit, interest rate or market risks.

Notional Value	Fair Value at September 30, 2008(1)	Interest Rate		Maturity Date
Interest Rate Swaps
$20.0 million	$ (0.1) million	3.41	%	June 1, 2010
$45.0 million	(0.6) million	4.02	%	June 19, 2011
$54.0 million	(0.5) million	3.84	%	July 25, 2011
$25.0 million	0.1 million	2.86	%	March 20, 2010
$75.0 million	0.4 million	2.83	%	March 20, 2010
$30.0 million	0.2 million	2.79	%	March 20, 2010
$65.0 million	0.9 million	3.60	%	September 9, 2013
$68.0 million	0.7 million	3.69	%	September 9, 2013
$56.3 million	0.4 million	3.73	%	September 9, 2013
	$1.5 million

⁽¹⁾ As of September 30, 2008, derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. As of September 30, 2008, the Company does not have any significant fair value measurements using significant unobservable inputs (Level 3).

11. SHARE REPURCHASE PROGRAM

In December 2007, the Company’s Board of Trustees authorized a program to repurchase up to $100.0 million of the Company’s common shares. Under the program, the Company may repurchase shares from time to time through solicited or unsolicited transactions in the open market or in privately negotiated or other transactions. The program will be in effect from January 1, 2008 until December 31, 2009, subject to the Company’s authority to terminate the program earlier. Repurchased shares are treated as authorized but unissued shares. In accordance with Accounting Principles Board Opinion No. 6, “Status of Accounting Research Bulletins,” the Company accounts for the purchase price of the shares repurchased as a reduction of shareholder’s equity and allocates the purchase price between retained earnings, shares of beneficial interest and capital contributed in excess of par as required. The Company did not repurchase any shares in the nine months ended September 30, 2008.

13

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following analysis of our consolidated financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the notes thereto included elsewhere in this report.

OVERVIEW

Pennsylvania Real Estate Investment Trust, a Pennsylvania business trust founded in 1960 and one of the first equity REITs in the United States, has a primary investment focus on retail shopping malls and strip and power centers located in the eastern half of the United States, primarily in the Mid-Atlantic region. Our portfolio currently consists of a total of 56 properties. Our operating portfolio contains 52 retail properties in 13 states and includes 38 shopping malls and 14 strip and power centers. The retail properties have a total of approximately 34.4 million square feet. The retail properties we consolidate for financial reporting purposes have a total of approximately 29.9 million square feet, of which we own approximately 23.5 million square feet. The retail properties that are owned by unconsolidated partnerships with third parties have a total of approximately 4.5 million square feet, of which 2.9 million square feet are owned by such partnerships. The ground-up development portion of our portfolio contains four properties in two states, with two classified as “mixed use” (a combination of retail and other uses), one classified as retail and one classified as “other.”

Our primary business is owning and operating shopping malls and strip and power centers. We evaluate operating results and allocate resources on a property-by-property basis, and do not distinguish or evaluate our consolidated operations on a geographic basis. No individual property constitutes more than 10% of our consolidated revenue or assets, and thus the individual properties have been aggregated into one reportable segment based upon their similarities with regard to the nature of our properties and the nature of our tenants and operational processes, as well as long-term financial performance. In addition, no single tenant accounts for 10% or more of our consolidated revenue, and none of our properties are located outside the United States.

We hold our interests in our portfolio of properties through our operating partnership, PREIT Associates, L.P. (“PREIT Associates”). We are the sole general partner of PREIT Associates and, as of September 30, 2008, held a 94.6% controlling interest in PREIT Associates. We consolidate PREIT Associates for financial reporting purposes. We hold our investments in seven of the 52 retail properties and one of the four ground-up development properties in our portfolio through unconsolidated partnerships with third parties in which we own a 40%-50% interest. We hold a non-controlling interest in each unconsolidated partnership, and account for such partnerships using the equity method of accounting. We do not control any of these equity method investees for the following reasons:

• Except for two properties that we co-manage with our partner, all of the other entities are managed on a day-to-day basis by one of our partners as the managing general partner in each of the respective partnerships. In the case of the co-managed properties, all decisions in the ordinary course of business are made jointly.

• The managing general partner is responsible for establishing the operating and capital decisions of the partnership, including budgets, in the ordinary course of business.

• All major decisions of each partnership, such as the sale, refinancing, expansion or rehabilitation of the property, require the approval of all partners.

• Voting rights and the sharing of profits and losses are generally in proportion to the ownership percentages of each partner.

We record the earnings from the unconsolidated partnerships using the equity method of accounting under the income statement caption entitled “Equity in income of partnerships,” rather than consolidating the results of the unconsolidated partnerships with our results. Changes in our investments in these entities are recorded in the balance sheet caption entitled “Investment in partnerships, at equity.” In the case of deficit investment balances, such amounts are recorded in “Distributions in excess of partnership investments.”

For further information regarding our unconsolidated partnerships, see Note 4 to our unaudited consolidated financial statements.

We provide our management, leasing and development services through PREIT Services, LLC, which generally manages and develops properties that we consolidate for financial reporting purposes, and PREIT-RUBIN, Inc. (“PRI”), which generally manages and develops properties that we own interests in through partnerships with third parties and properties that are owned by third parties in which we do not have an interest. One of our long-term objectives is to obtain managerial control of as many of our assets as possible. Due to the nature of our existing partnership arrangements, we cannot anticipate when this objective will be achieved, if at all.

Our revenue consists primarily of fixed rental income, additional rent in the form of expense reimbursements, and percentage rent (rent that is based on a percentage of our tenants’ sales or a percentage of sales in excess of thresholds that are specified in the leases) derived from our income producing retail properties. We also receive income from our real estate partnership investments and from the management and leasing services PRI provides.

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Our net loss allocable to common shareholders was $7.6 million for the three months ended September 30, 2008, compared to net income available to common shareholders of $13.7 million for the three months ended September 30, 2007. For the three months ended September 30, 2008, net loss allocable to common shareholders was affected by increased depreciation and amortization as a result of development and redevelopment assets having been placed in service, increased interest expense as a result of a higher aggregate debt balance and increased property operating expenses compared to the three months ended September 30, 2007. For the three months ended September 30, 2007, net income available to common shareholders was increased by $13.3 million on the redemption of our then-outstanding preferred shares and a $0.2 million gain on the sale of a non-operating real estate parcel, and was reduced by $1.1 million of dividends on our then-outstanding preferred shares.

Our net loss allocable to common shareholders was $12.7 million for the nine months ended September 30, 2008, compared to net income available to common shareholders of $19.9 million for the nine months ended September 30, 2007. For the nine months ended September 30, 2008, net loss allocable to common shareholders was affected by increased depreciation and amortization as a result of development and redevelopment assets having been placed in service, increased interest expense as a result of a higher aggregate debt balance, increased property operating expenses and increased abandoned project costs compared to the nine months ended September 30, 2007, offset by $2.0 million of net gains on forward starting swap activities For the nine months ended September 30, 2007 net income available to common shareholders was increased by $13.3 million on the redemption of our then-outstanding preferred shares, a $6.7 million gain on the sale of Schuylkill Mall, a $1.7 million gain on the sale of a non-operating real estate parcel, a $0.6 million gain on the sale of an operating retail parcel, $0.8 million of condemnation proceeds associated with highway improvements at Capital City Mall in Harrisburg, Pennsylvania, and was reduced by $7.9 million of dividends on our then-outstanding preferred shares.

ACQUISITIONS, DISPOSITIONS, REDEVELOPMENT, AND DEVELOPMENT ACTIVITIES

We record our acquisitions based on estimates of fair value, as determined by management, based on information available and on assumptions about future performance. These allocations are subject to revisions, in accordance with GAAP, during the twelve month periods following the closings of the respective acquisitions.

We are actively involved in evaluating additional acquisition opportunities. Our evaluation includes an analysis of whether the properties meet the investment criteria we apply, given economic, market and other circumstances.

Acquisitions

In February 2008, we acquired a 49.9% ownership interest in Bala Cynwyd Associates L.P., which owns One Cherry Hill Plaza, an office building located within the boundaries of Cherry Hill Mall, New Jersey. See “Related Party Transactions” for further information about this transaction.

In July 2008, we acquired a parcel in Lancaster, Pennsylvania for $8.0 million plus customary closing costs.

Dispositions

In August 2008, we sold a parcel adjacent to New River Valley Mall in Christiansburg, Virginia to the Virginia Department of Transportation for $0.1 million. We recorded a gain of $49,000 from this transaction.

Development and Redevelopment

We are engaged in the redevelopment of 10 of our consolidated properties. We might undertake redevelopment projects at additional properties in the future. These projects may include the introduction of residential, office or other uses to our properties. As of September 30, 2008, we had incurred $389.0 million of costs related to our redevelopment properties. The costs identified to date to complete these projects are expected to be $193.2 million in the aggregate.

The following table sets forth the amount of our estimated total investment and the amounts invested as of September 30, 2008 in each redevelopment project:

Redevelopment Project	Estimated Project Cost		Invested as of September 30, 2008
Cherry Hill Mall	$	211.0 million	$	134.2 million
Plymouth Meeting Mall		96.6 million		73.2 million
Voorhees Town Center		79.3 million		50.5 million
The Gallery at Market East		80.6 million		43.4 million
Willow Grove Park		40.2 million		36.4 million
North Hanover Mall		35.1 million		24.0 million
Moorestown Mall		14.5 million		10.1 million
Wiregrass Commons Mall		12.1 million		8.6 million
Jacksonville Mall		7.7 million		6.4 million
Gadsden Mall		5.1 million		2.2 million
			$	389.0 million

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We are engaged in the ground-up development of four retail and other mixed use projects that we believe meet the financial hurdles that we apply, given economic, market and other circumstances. We also own and manage two properties that are now operating while some remaining development takes place. As of September 30, 2008, we had incurred $171.4 million of costs related to these ground-up projects. The costs identified to date to complete these ground-up projects are expected to be $51.5 million in the aggregate, excluding the Springhills (Gainesville, Florida) and Pavilion at Market East (Philadelphia, Pennsylvania) projects, because details of those projects and the related costs have not been determined. In each case, we will evaluate the financing opportunities available to us at the time a project requires funding. In cases where the project is undertaken with a partner, our flexibility in funding the project might be restricted by the partnership agreement or the covenants contained in our Credit Facility, which limit our involvement or flexibility in such projects.

We generally seek to develop these projects in areas that we believe evidence the likelihood of supporting additional retail development and have desirable population or income trends, and where we believe the projects have the potential for strong competitive positions. We will consider other uses of a property that would have synergies with our retail development and redevelopment based on several factors, including local demographics, market demand for other uses such as residential and office, and applicable land use regulations. We generally have several development projects under way at one time. These projects are typically in various stages of the development process. We manage all aspects of these undertakings, including market and trade area research, site selection, acquisition, preliminary development work, construction and leasing. We monitor our developments closely, including costs and tenant interest.

The following table sets forth the amount of our estimated total investment and the amounts invested as of September 30, 2008 in each ground-up development project:

Development Project	Estimated Project Cost		Invested as of September 30, 2008		Actual/Expected Initial Occupancy Date
Operating Properties with Development Activity:
Monroe Marketplace	$	73.9 million	$	51.6 million	2008
Sunrise Plaza		39.9 million		37.4 million	2007
Development Properties:
Pitney Road Plaza		20.3 million		9.1 million	2009
White Clay Point		56.5 million		41.0 million	2010
Springhills		To be determined		30.7 million	To be determined
Pavilion at Market East(1)		To be determined		1.6 million	To be determined
			$	171.4 million

⁽¹⁾ The property is unconsolidated. The amount shown represents our share.

In connection with the ground-up development and redevelopment projects listed above and other projects ongoing at our other properties, we have made contractual and other commitments in the form of tenant allowances, lease termination amounts and contracts with general contractors and other professional service providers. As of September 30, 2008, the remainder to be paid against such contractual and other commitments was $70.8 million, which is expected to be financed through our Credit Facility or through various other capital sources. The development and redevelopment projects listed in this report on which these commitments have been made have total expected remaining costs of $244.7 million.

OFF BALANCE SHEET ARRANGEMENTS

We have no material off-balance sheet items other than the partnerships described in Note 4 to the unaudited consolidated financial statements and in the “Overview” section above.

RELATED PARTY TRANSACTIONS

PRI provides management, leasing and development services for 11 properties owned by partnerships and other entities in which certain officers or trustees of the Company and of PRI or members of their immediate families and affiliated entities have indirect ownership interests. Total revenue earned by PRI for such services were $0.3 million and $0.2 million for the three months ended September 30, 2008 and 2007, respectively, and were $0.8 million and $0.6 million for the nine months ended September 30, 2008 and 2007, respectively.

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We lease our principal executive offices from Bellevue Associates (the “Landlord”). Ronald Rubin and George F. Rubin, collectively with members of their immediate families and affiliated entities, own approximately a 50% interest in the Landlord. The office lease has a 10 year term that commenced on November 1, 2004. Our base rent is $1.4 million per year during the first five years of the office lease and $1.5 million per year during the second five years. Total rent expense under this lease was $0.4 million for each of the three months ended September 30, 2008 and 2007 and $1.2 million for each of the nine months ended September 30, 2008 and 2007.

We use an airplane in which Ronald Rubin owns a fractional interest. We paid $80,000 and $23,000 in the three months ended September 30, 2008 and 2007 and $174,000 and $50,000 in the nine months ended September 30, 2008 and 2007, respectively, for flight time used by employees on Company-related business.

In the first quarter of 2008, we entered into an agreement under which we acquired a 0.1% general partnership interest and a 49.8% limited partnership interest in Bala Cynwyd Associates, L.P. (“BCA”), and an option to purchase the remaining partnership interests in BCA in two closings that are anticipated to take place in February 2009 and February 2010. BCA is the owner of One Cherry Hill Plaza, an office building located within the boundaries of our Cherry Hill Mall in Cherry Hill, New Jersey. We acquired our interests in BCA for $4.0 million in cash paid at the first closing in February 2008. We have the ability to exercise an option to acquire the remaining interests for a combination of cash and OP Units. The aggregate consideration to be exchanged for all of the partnership interests in BCA is $15.3 million.

Three of our officers/trustees are partners in the entities that own the remaining general partnership and limited partnership interests in BCA that we do not own. In accordance with our Related Party Transactions Policy, a Special Committee consisting exclusively of independent members of our Board of Trustees considered and approved the terms of the transaction, subject to final approval by our Board of Trustees. The disinterested members of our Board of Trustees approved the transaction.

CRITICAL ACCOUNTING POLICIES

Critical accounting policies are those that require the application of management’s most difficult, subjective, or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. In preparing the consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. In preparing the financial statements, management has utilized available information, including our past history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses.

Our management makes complex or subjective assumptions and judgments with respect to applying its critical accounting policies. In making these judgments and assumptions, management considers, among other factors:

• events and changes in property, market and economic conditions;

• estimated future cash flows from property operations; and

• the risk of loss on specific accounts or amounts.

The estimates and assumptions made by management in applying critical accounting policies have not changed materially during 2008 and 2007, and none of these estimates or assumptions have proven to be materially incorrect or resulted in our recording any significant adjustments relating to prior periods. We will continue to monitor the key factors underlying our estimates and judgments, but no change is currently expected. See our Annual Report on Form 10-K for the year ended December 31, 2007, for a summary of the accounting policies that management believes are critical to the preparation of the consolidated financial statements.

RESULTS OF OPERATIONS

Comparison of Three and Nine Months Ended September 30, 2008 and 2007

Overview

Our results for the three and nine months ended September 30, 2008 and 2007 were significantly affected by challenging conditions in the economy and by ongoing redevelopment initiatives that were in various stages at several of our consolidated mall properties and, to a lesser extent, by new properties which we acquired or developed and are now operating. While we might undertake a redevelopment project to maximize the long-term performance of the property, in the short term, the operations and performance of the property, as measured by occupancy and net operating income, can be negatively affected by the project. For the three months ended September 30, 2008, net loss allocable to common shareholders was affected by increased depreciation and amortization as a result of development and redevelopment assets having been placed in service, increased interest expense as a result of a higher

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aggregate debt balance and increased property operating expenses compared to the three months ended September 30, 2007. For the three months ended September 30, 2007, net income available to common shareholders was increased by $13.3 million on the redemption of our then-outstanding preferred shares, a $1.7 million gain on the sale of a non-operating parcel, a $0.6 million gain on the sale of an operating retail parcel, and was reduced by $1.1 million of dividends on our then-outstanding preferred shares. For the nine months ended September 30, 2008, net loss allocable to common shareholders was affected by increased depreciation and amortization as a result of development and redevelopment assets having been placed in service, increased interest expense, increased property operating expenses and increased abandoned project costs compared to the nine months ended September 30, 2007, offset by $2.0 million of net gains on forward starting swap activities, For the nine months ended September 30, 2007, net income available to common shareholders was increased by $13.3 million on the redemption of our then-outstanding preferred shares, a $6.7 million gain on the sale of Schuylkill Mall in Frackville, Pennsylvania, a $0.6 million gain on the sale of an operating retail parcel, $0.8 million of condemnation proceeds associated with highway improvements at Capital City Mall in Harrisburg, Pennsylvania, and was reduced by $7.9 million of dividends on our then-outstanding preferred shares.

The table below sets forth certain occupancy statistics as of September 30, 2008 and 2007:

	Occupancy as of September 30,
	Wholly Owned				Partnership
	2008		2007		2008		2007
Enclosed malls weighted average:
Total excluding anchors	86.0	%	87.0	%	92.4	%	93.4	%
Total including anchors	88.5	%	89.8	%	94.0	%	95.0	%
Retail portfolio weighted average:
Total excluding anchors	87.0	%	87.7	%	92.9	%	93.7	%
Total including anchors	89.3	%	90.3	%	95.0	%	95.6	%
Strip and power centers weighted average	98.8	%	98.1	%	95.5	%	95.9	%

The following information sets forth our results of operations for the three and nine months ended September 30, 2008 and 2007:

	Three Months Ended September 30,						% Change 2007 to 2008
(in thousands of dollars)	2008			2007
Real estate revenue	$	113,685		$	110,797		3	%
Property operating expenses		(47,744	)		(44,391	)	8	%
Management company revenue		1,181			854		38	%
Interest and other income		240			535		(55	)%
General and administrative expenses, abandoned project costs, income taxes and other expenses		(10,675	)		(9,997	)	7	%
Interest expense, net		(28,450	)		(24,866	)	14	%
Depreciation and amortization		(38,435	)		(32,743	)	17	%
Equity in income of partnerships		2,169			1,148		89	%
Gains on sales of non-operating real estate		49			247		(80	)%
Minority interest		349			(103	)	NM
(Loss) income from continuing operations		(7,631	)		1,481		NM
Income from discontinued operations		—			18		N/A
Net (loss) income	$	(7,631	)	$	1,499		NM

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	Nine Months Ended September 30,						% Change 2007 to 2008
(in thousands of dollars)	2008			2007
Real estate revenue	$	340,463		$	331,988		3	%
Property operating expenses		(137,156	)		(131,126	)	5	%
Management company revenue		2,992			1,827		64	%
Interest and other income		622			2,323		(73	)%
General and administrative expenses, abandoned project costs, income taxes and other expenses		(33,592	)		(31,834	)	6	%
Interest expense, net		(80,817	)		(72,338	)	12	%
Depreciation and amortization		(111,455	)		(96,970	)	15	%
Equity in income of partnerships		5,738			3,272		75	%
Gains on sales of interests in real estate		—			579		N/A
Gains on sales of non-operating real estate		49			1,731		(97	)%
Minority interest		499			(884	)	NM
(Loss) income from continuing operations		(12,657	)		8,568		NM
Income from discontinued operations		—			5,890		N/A
Net (loss) income	$	(12,657	)	$	14,458		NM

The amounts reflected as (loss) income from continuing operations in the table above reflect our consolidated properties, with the exception of properties that are classified as discontinued operations. Our unconsolidated partnerships are presented under the equity method of accounting in the line item “Equity in income of partnerships.”

Real Estate Revenue

Real estate revenue increased by $2.9 million, or 3%, for the three months ended September 30, 2008 compared to the three months ended September 30, 2007, including an increase of $1.1 million from properties that were under development during 2007 that are now placed in service, and an increase of $0.4 million from One Cherry Hill Plaza (acquired in February 2008). Real estate revenue from properties that were owned by us prior to July 1, 2007 increased by $1.4 million, primarily due to increases of $1.9 million in expense reimbursements and $0.3 million in base rent, which is comprised of minimum rent, straight line rent and rent from tenants that pay a percentage of sales in lieu of minimum rent, partially offset by decreases of $0.4 million in lease termination revenue, $0.2 million in percentage rent and $0.2 million in other revenue.

Expense reimbursements increased by $1.9 million, or 6%, primarily due to increases in common area maintenance expense and utility expense as discussed below under Property Operating Expenses. Base rent increased primarily due to an increase in rental rates and increased occupancy at current redevelopment projects, including a $0.2 million increase at Cherry Hill Mall and a $0.2 million increase at Plymouth Meeting Mall. Additionally, base rent increased by $0.4 million at Voorhees Town Center as ground rent commenced in connection with the residential portion of the redevelopment and a tenant took occupancy of a newly constructed 48,710 square foot office building. Partially offsetting the increases, base rent decreased by $0.2 million at Wiregrass Commons as occupancy decreased in connection with the current redevelopment there. Also, base rent decreased by $0.2 million at Woodland Mall due to an above market lease adjustment resulting from the early departure of one tenant. Lease termination revenue decreased by $0.4 million primarily due to amounts received from one tenant in the three months ended September 30, 2007. Percentage rent decreased by $0.2 million primarily due to a decrease in tenant sales compared to the three months ended September 30, 2007. Percentage rent also decreased in connection with a trend among certain tenants toward slightly higher minimum rent and higher thresholds at which percentage rent begins. Other revenue decreased by $0.2 million, primarily due to a $0.2 million decrease in marketing revenue. The decrease in marketing revenue was offset by a corresponding $0.2 million decrease in marketing expense. Marketing revenue is generally recognized in tandem with marketing expense.

Real estate revenue increased by $8.5 million, or 3%, in the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007, including an increase of $3.0 million from properties that were under development during 2007 that are now placed in service and an increase of $1.2 million from One Cherry Hill Plaza (acquired in February 2008). Real estate revenue from properties that were owned by us prior to January 1, 2007 increased by $4.3 million, primarily due to increases of $2.9 million in base rent, $2.0 million in expense reimbursements and $1.2 million in lease termination revenue, partially offset by decreases of $1.4 million in percentage rent and $0.4 million in other revenue.

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Base rent increased primarily due to an increase in rental rates and increased occupancy at recently completed and current redevelopment projects, including a $0.9 million increase at redevelopment projects completed in 2007 and a combined $2.5 million increase at five of our current redevelopment projects: Cherry Hill Mall ($0.9 million), Plymouth Meeting Mall ($0.6 million), Voorhees Town Center ($0.4 million), North Hanover Mall ($0.4 million) and Willow Grove Park ($0.2 million). Partially offsetting the increases, base rent decreased at Orlando Fashion Square by $0.5 million, including a $0.2 million above market lease adjustment resulting from the early departure of one tenant. Expense reimbursements increased by $2.0 million, primarily due to increases in common area maintenance expense and real estate tax expense, as discussed below under Property Operating Expenses. Lease termination revenue increased by $1.2 million, primarily due to amounts received from one tenant in the nine months ended September 30, 2008. Percentage rent decreased by $1.4 million primarily due to a decrease in tenant sales compared to the nine months ended September 30, 2007. Percentage rent also decreased in connection with a trend among certain tenants toward slightly higher minimum rent and higher thresholds at which percentage rent begins. Other revenue decreased by $0.4 million, primarily due to a $0.3 million decrease in convenience center income. We ended our sales of convenience center items, such as candy and soft drinks, during 2008 at five of our malls. The decrease in convenience center income was offset by a corresponding $0.3 million decrease in convenience center expense.

Real estate revenue for the three and nine months ended September 30, 2008 were affected, in part, by unfavorable economic conditions, which have appeared to deteriorate in recent months. It is unclear how long these unfavorable conditions will continue. Trade groups expect retail sales growth for the 2008 holiday shopping season to be lower than the past few years. These economic conditions also present significant challenges for retailers. A number of retailers have delayed or cancelled new store openings, closed existing stores and, in some cases, filed for bankruptcy protection. Such store closings and bankruptcy filings by tenants at our properties affect the occupancy at our malls and the rent and expense reimbursements that we receive. Further, the lower sales expected for the 2008 holiday season might reduce the amount of percentage rent that we receive, if sales exceed the applicable thresholds by a lower amount or not at all.

Property Operating Expenses

Property operating expenses increased by $3.3 million, or 8%, in the three months ended September 30, 2008 compared to the three months ended September 30, 2007. Property operating expenses from properties that were owned by us prior to July 1, 2007 increased by $2.9 million, primarily due to a $1.5 million increase in common area maintenance expense, a $1.3 million increase in other property operating expenses and a $0.1 million increase in utility expense. Property operating expenses also included an increase of $0.2 million from properties that were under development during 2007 that are now placed in service and an increase of $0.2 million from One Cherry Hill Plaza (acquired in February 2008).

Common area maintenance expenses increased by $1.5 million in the three months ended September 30, 2008 primarily due to increases of $0.5 million in repairs and maintenance expense, $0.3 million in security expense, $0.3 million in common area utility expense, $0.2 million in on-site management office expense and $0.1 million in insurance expense. Other property operating expenses increased by $1.3 million due to an increase of $1.3 million in bad debt expense, including an increase of $0.5 million associated with the August 2008 Boscov’s, Inc. Chapter 11 bankruptcy filing. Boscov’s is a tenant at eight of our malls and has agreements to open stores at Willow Grove Park and North Hanover Mall. While Boscov’s has not announced that it intends to close stores at any of our malls, if circumstances change and stores are closed or are not opened, such events could adversely affect our results of operations. Bad debt expense was also affected by an increase in accounts receivable delinquencies, as some of our tenants have seen a reduction in sales due to adverse economic conditions, and have delayed payment of rent to us.

Property operating expenses increased by $6.0 million, or 5%, in the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007. Property operating expenses from properties that were owned by us prior to January 1, 2007 increased by $5.0 million, primarily due to a $2.0 million increase in common area maintenance expense, $1.9 million increase in other property operating expenses, $0.9 million increase in real estate tax expense and a $0.2 million increase in utility expense. Property operating expenses also included an increase of $0.4 million from properties that were under development during 2007 that are now placed in service and an increase of $0.6 million from One Cherry Hill Plaza (acquired in February 2008).

Common area maintenance expenses increased by $2.0 million, or 3%, in the nine months ended September 30, 2008 primarily due to increases of $1.2 million in repairs and maintenance expense, $0.7 million in security expense, $0.5 million in common area utility expense, $0.4 million in on-site management office expense and $0.2 million in insurance expense, partially offset by a $1.2 million decrease in snow removal expense. Other property operating expenses increased by $1.9 million, including an increase of $1.9 million in bad debt expense. The increase in bad debt expense was affected by a $0.9 million increase associated with seven tenant bankruptcy filings, including $0.5 million associated with Boscov’s. Real estate tax expense increased by $0.9 million primarily due to increased tax rates in the jurisdictions where properties are located. Utility expense increased by $0.2 million primarily due to increased electric rates at one of our New Jersey properties.

The proportion of property operating expenses recovered from tenants during the nine months ended September 30, 2008 was lower than the level of recovery in prior years, primarily because of a trend toward gross leases and percentage of sales leases. While not representing a majority, there has nevertheless been an increase in the number of tenants that are not required to pay their proportionate share of common area maintenance costs. We have entered into some gross leases and percentage of sales leases in relation to or with tenants affected by redevelopment projects, and we believe that the proportion of property operating expenses recovered is likely to improve as the redevelopment projects are completed and tenants at such properties enter into longer term leases.

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General and Administrative Expenses, Abandoned Project Costs, Income Taxes and Other Expenses

General and administrative expenses, abandoned project costs, income taxes and other expenses increased by $0.7 million, or 7%, in the three months ended September 30, 2008 compared to the three months ended September 30, 2007. This increase was due to a $0.3 million increase in taxes and a $0.3 million increase in payroll. Abandoned project costs, income taxes and other expenses in the aggregate increased by $0.1 million in the three months ended September 30, 2008 compared to the three months ended September 30, 2007.

General and administrative expenses, abandoned project costs, income taxes and other expenses increased by $1.8 million, or 6%, in the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007. The increase was due to a $1.3 million increase in abandoned project costs, a $0.3 million increase in payroll expenses, a $0.3 million increase in travel related expenses and a $0.2 million increase in other miscellaneous expenses, offset by a $0.3 million decrease in income taxes and other expenses.

Interest Expense

Interest expense increased $3.6 million, or 14%, in the three months ended September 30, 2008 compared to the three months ended September 30, 2007. The increase was attributable to a $3.5 million increase related to new mortgage financings in 2008, a $1.3 million increase in Credit Facility interest (due to larger amounts outstanding in the three months ended September 30, 2008 compared to September 30, 2007), and a $0.5 million increase related to the Term Loan financing completed in September 2008. These increases were partially offset by a decrease in mortgage interest of $1.7 million related to the REMIC mortgage repaid in September 2008, a decrease in capitalized interest of $0.3 million (due to lower rates) and a $0.3 million decrease in interest paid on mortgage loans outstanding during the three months ended September 30, 2008 due to principal amortization.

Interest expense increased $8.5 million, or 12%, in the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007. The increase was attributable to a $4.6 million increase related to the exchangeable senior notes issued in May 2007, a $5.0 million increase related to other new mortgage financings in 2008, a $2.8 million increase related to the refinancing of The Mall at Prince Georges in 2007, and a $0.5 million increase related to the Term Loan financing completed in September 2008. These increases were partially offset by a net gain of $2.0 million on forward starting swap activities, a decrease in mortgage interest of $1.7 million related to the REMIC repaid in September 2008 and a $0.7 million decrease in interest paid on mortgage loans outstanding during the nine months ended September 30, 2008 due to principal amortization.

Depreciation and Amortization

Depreciation and amortization expense increased by $5.7 million, or 17%, in the three months ended September 30, 2008 compared to the three months ended September 30, 2007. Depreciation and amortization increased $4.8 million at properties that were owned and operated by us prior to July 1, 2007 primarily due to a higher asset base resulting from capital improvements at our properties, particularly at current and recently completed redevelopment properties. Depreciation and amortization increased $0.5 million from properties under development during 2007 that are now placed in service and $0.4 million from One Cherry Hill Plaza, which was acquired in February 2008.

Depreciation and amortization expense increased by $14.5 million, or 15%, in the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007. Depreciation and amortization increased by $12.0 million at properties that were owned and operated by us prior to July 1, 2007 primarily due to a higher asset base resulting from capital improvements at our properties, particularly at current and recently completed redevelopment properties. Depreciation and amortization increased $1.5 million from properties under development during 2007 that are now placed in service and $1.0 million from One Cherry Hill Plaza. Also contributing to the increase was $0.5 million of in-place lease amortization expense resulting from the early closure of three department stores.

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Discontinued Operations

We have presented the operating results of Schuylkill Mall, which was sold in March 2007, as discontinued operations.

Property operating results, gain on sale of discontinued operations and related minority interest for Schuylkill Mall for the periods presented were as follows (there was no activity in the three and nine months ended September 30, 2008):

(in thousands of dollars)	Three Months Ended September 30, 2007			Nine Months Ended September 30, 2007
Property operating results of Schuylkill Mall	$	19		$	(118	)
Gain on sale of Schuylkill Mall		—			6,699
Minority interest		(1	)		(691	)
Income from discontinued operations	$	18		$	5,890

NET OPERATING INCOME

Net operating income (a non-GAAP measure) is derived from real estate revenue (determined in accordance with GAAP) minus property operating expenses (determined in accordance with GAAP). It 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 our financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity; nor is it indicative of funds available for our cash needs, including our ability to make cash distributions. We believe that net income is the most directly comparable GAAP measurement to net operating income. We believe that net operating income is helpful to management and investors as a measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. Net operating income excludes management company revenue, interest income, general and administrative expenses, abandoned project costs, income taxes and other expenses, interest expense, depreciation and amortization, gains on sales of interests in real estate and gains on sales of non-operating real estate.

The following table presents net operating income results for the three and nine months ended September 30, 2008 and 2007. The results are presented using the “proportionate-consolidation method” (a non-GAAP measure), which presents our share of the results of our partnership investments. Under GAAP, we account for our non-controlling partnership investments under the equity method of accounting. Property operating results for retail properties that we owned for the full periods presented (“Same Store”) exclude properties acquired or disposed of during the periods presented:

	Three Months Ended September 30, 2008							Three Months Ended September 30, 2007
(in thousands of dollars)	Real Estate Revenue		Property Operating Expenses			Net Operating Income		Real Estate Revenue		Property Operating Expenses			Net Operating Income
Same Store	$	121,454	$	(50,227	)	$	71,227	$	119,234	$	(46,979	)	$	72,255
Non Same Store		1,756		(552	)		1,204		73		(13	)		60
Total	$	123,210		(50,779	)	$	72,431	$	119,307	$	(46,992	)	$	72,315

	% Change 2008 vs. 2007
	Same Store		Total
Real estate revenue	1.9	%	3.3	%
Property operating expenses	6.9	%	8.1	%
Net operating income	(1.4	)%	0.2	%

Total net operating income increased by $0.1 million in the three months ended September 30, 2008 compared to three months ended September 30, 2007. Same Store net operating income decreased by $1.0 million in three months ended September 30, 2008 compared to three months ended September 30, 2007. Non Same Store net operating income increased by $1.1 million. See “Results of Operations—Real Estate Revenue” and “—Property Operating Expenses” for further discussion of these variances.

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	Nine Months Ended September 30, 2008							Nine Months Ended September 30, 2007
(in thousands of dollars)	Real Estate Revenue		Property Operating Expenses			Net Operating Income		Real Estate Revenue		Property Operating Expenses			Net Operating Income
Same Store	$	363,574	$	(144,234	)	$	219,340	$	357,101	$	(138,756	)	$	218,345
Non Same Store		4,941		(1,581	)		3,360		1,240		(883	)		357
Total	$	368,515	$	(145,815	)	$	222,700	$	358,341	$	(139,639	)	$	218,702

	% Change 2008 vs. 2007
	Same Store		Total
Real estate revenue	1.8	%	2.8	%
Property operating expenses	3.9	%	4.4	%
Net operating income	0.5	%	1.8	%

Total net operating income increased by $4.0 million in the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007. Same Store net operating income increased by $1.0 million in the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007. Non Same Store net operating income increased by $3.0 million. See “Results of Operations—Real Estate Revenue” and “—Property Operating Expenses” for further discussion of these variances.

The following information is provided to reconcile net income to net operating income:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands of dollars)	2008			2007			2008			2007
Net (loss) income	$	(7,631	)	$	1,499		$	(12,657	)	$	14,458
Adjustments:
Depreciation and amortization
Wholly owned and consolidated partnerships		38,435			32,743			111,455			96,970
Unconsolidated partnerships		1,970			1,714			5,987			5,127
Discontinued operations		—			—			—			215
Interest expense, net
Wholly owned and consolidated partnerships		28,450			24,866			80,817			72,338
Unconsolidated partnerships		2,351			3,028			7,668			9,208
Discontinued operations		—			—			—			136
Minority interest		(349	)		104			(499	)		1,575
General and administrative expenses, abandoned project costs, income taxes and other expenses		10,675			9,997			33,592			31,834
Gain on sale of discontinued operations		—			—			—			(6,699	)
Gains on sales of interests in real estate		—			—			—			(579	)
Gains on sales of non-operating real estate		(49	)		(247	)		(49	)		(1,731	)
Management company revenue		(1,181	)		(854	)		(2,992	)		(1,827	)
Interest and other income		(240	)		(535	)		(622	)		(2,323	)
Property net operating income	$	72,431		$	72,315		$	222,700		$	218,702

FUNDS FROM OPERATIONS

The National Association of Real Estate Investment Trusts (“NAREIT”) defines Funds From Operations, which is a non-GAAP measure, as income before gains and losses on sales of operating properties and extraordinary items (computed in accordance with GAAP); plus real estate depreciation; plus or minus adjustments for unconsolidated partnerships to reflect funds from operations on the same basis. We compute Funds From Operations by taking the amount determined pursuant to the NAREIT definition and subtracting dividends on preferred shares (“FFO”) (for periods during which we had preferred shares outstanding).

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Funds From Operations is a commonly used measure of operating performance and profitability in the real estate industry, and we use FFO and FFO per diluted share and OP Unit as supplemental non-GAAP measures to compare our Company’s performance to that of our industry peers. Similarly, FFO per diluted share and OP Unit is a useful measure because it reflects the dilutive impact of outstanding convertible securities. In addition, we use FFO and FFO per diluted share and OP Unit as one of the performance measures for determining bonus amounts earned under certain of our performance-based executive compensation programs. We compute Funds From Operations in accordance with standards established by NAREIT, less dividends on preferred shares (for periods during which we had preferred shares outstanding), which may not be comparable to Funds From Operations reported by other REITs that do not define the term in accordance with the current NAREIT definition, or that interpret the current NAREIT definition differently than we do.

FFO does not include gains and losses on sales of operating real estate assets, which are included in the determination of net income in accordance with GAAP. Accordingly, FFO is not a comprehensive measure of our operating cash flows. In addition, since FFO does not include depreciation on real estate assets, FFO may not be a useful performance measure when comparing our operating performance to that of other non-real estate commercial enterprises. We compensate for these limitations by using FFO in conjunction with other GAAP financial performance measures, such as net income and net cash provided by operating activities, and other non-GAAP financial performance measures, such as net operating income. FFO 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 our financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available for our cash needs, including our ability to make cash distributions.

We believe that net income is the most directly comparable GAAP measurement to FFO. We believe that FFO is helpful to management and investors as a measure of operating performance because it excludes various items included in net income that do not relate to or are not indicative of operating performance, such as various non-recurring items that are considered extraordinary under GAAP, gains on sales of operating real estate and depreciation and amortization of real estate.

FFO was $31.8 million for the three months ended September 30, 2008, a decrease of $16.0 million, or 33%, compared to $47.7 million for the three months ended September 30, 2007, which included the $13.3 million effect of the July 2007 redemption of our then-outstanding preferred shares. FFO per diluted share decreased $0.39 per diluted share to $0.77 per diluted share for the three months ended September 30, 2008, compared to $1.16 per diluted share for the three months ended September 30, 2007.

FFO was $102.3 million for the nine months ended September 30, 2008, a decrease of $12.5 million, or 11%, compared to $114.8 million for the nine months ended September 30, 2007, which included the $13.3 million effect of the July 2007 redemption of our then-outstanding preferred shares. FFO per diluted share decreased $0.30 per diluted share to $2.49 per diluted share for the nine months ended September 30, 2008, compared to $2.79 per diluted share for the nine months ended September 30, 2007.

The three and nine months ended September 30, 2007 reflect $0.33 and $0.32 per share, respectively, from the redemption of all of the Company’s then-outstanding preferred shares in July 2007.

The shares used to calculate FFO per diluted share include common shares and OP Units not held by us. FFO per diluted share also includes the effect of common share equivalents.

The following information is provided to reconcile net income to FFO, and to show the items included in our FFO for the periods indicated:

(in thousands of dollars)	Three Months Ended September 30, 2008			Per share (including OP Units)			Three Months Ended September 30, 2007			Per share (including OP Units)
Net (loss) income	$	(7,631	)	$	(0.19	)	$	1,499		$	0.04
Adjustments:
Minority interest		(349	)		(0.01	)		104			—
Dividends on preferred shares		—			—			(1,134	)		(0.03	)
Redemption of preferred shares								13,347			0.33
Depreciation and amortization:
Wholly owned and consolidated partnerships (1)		37,766			0.92			32,178			0.78
Unconsolidated partnerships (1)		1,970			0.05			1,714			0.04
Funds from operations (2)	$	31,756		$	0.77		$	47,708		$	1.16
Weighted average number of shares outstanding		38,840						38,181
Weighted average effect of full conversion of OP Units		2,238						2,694
Effect of common share equivalents		12						295
Total weighted average shares outstanding, including OP Units		41,090						41,170

⁽¹⁾ Excludes depreciation of non-real estate assets and amortization of deferred financing costs.

⁽²⁾ Includes the non-cash effect of straight-line rent of $0.6 million for each of the three months ended September 30, 2008 and 2007, respectively.

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(in thousands of dollars)	Nine Months Ended September 30, 2008			Per share (including OP Units)			Nine Months Ended September 30, 2007			Per share (including OP Units)
Net (loss) income	$	(12,657	)	$	(0.31	)	$	14,458		$	0.35
Adjustments
Minority interest		(499	)		(0.01	)		1,575		$	0.04
Dividends on preferred shares		—			—			(7,941	)		(0.19	)
Redemption of preferred shares								13,347			0.32
Gains on sales of interests in real estate		—			—			(579	)		(0.01	)
Gain on sale of discontinued operations		—			—			(6,699	)		(0.16	)
Depreciation and amortization:
Wholly owned and consolidated partnerships (1)		109,484			2.67			95,275			2.31
Unconsolidated partnerships (1)		5,987			0.14			5,127			0.12
Discontinued operations (1)		—			—			215			0.01
Funds from operations (2)	$	102,315		$	2.49		$	114,778		$	2.79
Weighted average number of shares outstanding		38,781						37,219
Weighted average effect of full conversion of OP Units		2,239						3,610
Effect of common share equivalents		18						363
Total weighted average shares outstanding, including OP Units		41,038						41,192

⁽¹⁾ Excludes depreciation of non-real estate assets and amortization of deferred financing costs.

⁽²⁾ Includes the non-cash effect of straight-line rent of $2.3 million and $1.5 million for the nine months ended September 30, 2008 and 2007, respectively.

LIQUIDITY AND CAPITAL RESOURCES

This “Liquidity and Capital Resources” section contains certain “forward-looking statements” that relate to expectations and projections that are not historical facts. These forward-looking statements reflect our current views about our future liquidity and capital resources, and are subject to risks and uncertainties that might cause our actual liquidity and capital resources to differ materially from the forward-looking statements. Additional factors that might affect our liquidity and capital resources include those discussed in the section entitled “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2007 filed with the Securities and Exchange Commission and in Part II of this Quarterly Report on Form 10-Q. We do not intend to update or revise any forward-looking statements about our liquidity and capital resources to reflect new information, future events or otherwise.

Capital Resources

We expect to meet our short-term liquidity requirements, including distributions to shareholders, recurring capital expenditures, tenant improvements and leasing commissions, but excluding development and redevelopment projects, generally through our available working capital and net cash provided by operations. We believe that our net cash provided by operations will be sufficient to allow us to make any distributions necessary to enable us to continue to qualify as a REIT under the Internal Revenue Code of 1986, as amended. The aggregate distributions made to common shareholders and OP Unitholders in the nine months ended September 30, 2008 were $71.0 million. The following are some of the factors that could affect our cash flows and require the funding of future distributions, recurring capital expenditures, tenant improvements or leasing commissions with sources other than operating cash flows:

• adverse changes or prolonged downturns in general, local or retail industry economic, financial, credit market or competitive conditions, leading to a reduction in real estate revenue or cash flows or an increase in expenses;

• inability to achieve targets for, or decreases in, property occupancy and rental rates, or higher costs or delays in completion of our development and redevelopment projects, resulting in lower real estate revenue and operating income;

• deterioration in our tenants’ business operations and financial stability, including tenant bankruptcies, leasing delays or terminations, or lower sales, causing deferrals or declines in rent, percentage rent and cash flows;

• increases in interest rates resulting in higher borrowing costs; and

• increases in operating costs that cannot be passed on to tenants, resulting in reduced operating income and cash flows.

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We expect to meet certain of our current obligations to fund existing development and redevelopment projects and certain long-term capital requirements, including future development and redevelopment projects, property and portfolio acquisitions, expenses associated with acquisitions, scheduled debt maturities, renovations, expansions and other non-recurring capital improvements through a variety of capital sources, including secured or unsecured indebtedness. Consistent with our stated capital strategy, we might seek to place long-term debt on certain of our unencumbered or stabilized properties. We also expect to raise capital through selective sales of assets and the issuance of additional equity securities, when warranted. Furthermore, we might seek to satisfy our long-term capital requirements through the formation of joint ventures with institutional partners, private equity investors or other REITs.

We expect that our significant expenditures related to the redevelopment and development projects listed in this report will continue over the next several quarters. For the remainder of 2008, we expect to spend an additional $79.0 million on the development and redevelopment projects listed in this report. We expect that our construction in progress balance will peak in the first half of 2009. Construction in progress represents the aggregate expenditures on projects less amounts placed in service. Generally, assets are placed in service upon substantial completion or when tenants begin occupancy and rent payments commence. Following the repayment of the REMIC in September 2008, our portfolio includes several additional unencumbered properties. As discussed below in more detail, in September 2008 we obtained an unsecured Term Loan, and to date we have borrowed $170.0 million under that Term Loan. We anticipate obtaining secured loans on a limited number of properties to fund a portion of the amounts needed for the development and redevelopment projects listed in this report. In general, when the credit markets are tight, as they are now, we encounter resistance from lenders when we seek financing or refinancing for properties. If we are unable to arrange some or all of the anticipated loans, we might have to seek alternative capital sources or defer certain expenditures related to our development or redevelopment projects, which could adversely affect our results of operations.

In December 2003, we announced that the SEC had declared effective a $500.0 million universal shelf registration statement. Under rules adopted by the SEC in 2005, this registration statement will expire in December 2008. The Company expects to replace its current universal shelf registration statements with a new universal shelf registration statement. Currently, we may use our shelf registration statement to offer and sell common shares of beneficial interest, preferred shares and various types of debt securities, among other types of securities, to the public. However, we may be unable to issue securities under the shelf registration statement, or otherwise, on terms that are favorable to us, if at all.

Financing Activity

In September 2008, we entered into a senior unsecured Term Loan Agreement with Wells Fargo Bank, National Association, as agent, sole bookrunner and lead arranger. We borrowed $170.0 million in aggregate under the Term Loan Agreement. Also in September, we borrowed an aggregate of $286.3 million through four separate loan transactions, each of which is secured by a mortgage on an operating retail property we own. We used the proceeds from a borrowing under the Term Loan Agreement, these four mortgage loans and a borrowing under our Credit Facility to repay our $400.9 million, 15 property real estate mortgage investment conduit, or REMIC, in full. In connection with this repayment, the 15 malls were released from the liens under the REMIC, and, as described below, four of these malls were used to secure new mortgage financings. We assumed the REMIC in connection with our 2003 merger with Crown American Realty Trust.

Credit Facility

The amounts borrowed under our $500.0 million Credit Facility bear interest at a rate between 0.95% and 2.00% per annum over LIBOR based on our leverage. In determining our leverage, the capitalization rate used to calculate Gross Asset Value is 7.50%. The availability of funds under the Credit Facility is subject to our compliance with financial and other covenants and agreements. In October 2008, we exercised an option to extend the term of the Credit Facility to March 2010.

The following are some of the potential impediments to accessing additional funds under the Credit Facility:

• constraining leverage, interest coverage and tangible net worth covenants under the Credit Facility;

• increased interest rates affecting coverage ratios;

• reduction in our consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) affecting coverage ratios; and

• reduction in our net operating income or increased indebtedness affecting leverage ratios.

As of September 30, 2008, $380.0 million was outstanding under the Credit Facility. In addition, we pledged $11.0 million under the Credit Facility as collateral for letters of credit. The unused portion of the Credit Facility that was available to us was $109.0 million. The weighted average effective interest rate based on amounts borrowed was 4.29% and 4.59% for the three and nine months ended September 30, 2008, respectively. The weighted average interest rate on outstanding Credit Facility borrowings at September 30, 2008 was 3.92%.

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We must repay the entire principal amount outstanding under the Credit Facility at the end of its term. We may prepay any revolving loan at any time without premium or penalty. Accrued and unpaid interest on the outstanding principal amount under the Credit Facility is payable monthly, and any unpaid amount is payable at the end of the term. The Credit Facility has a facility fee of 0.15% to 0.25% per annum of the total commitments, depending on our leverage and without regard to usage. The Credit Facility contains lender yield protection provisions related to LIBOR loans. We and certain of our subsidiaries are guarantors of the obligations arising under the Credit Facility.

The Credit Facility contains affirmative and negative covenants and requirements customarily found in facilities of this type. As of September 30, 2008, we were in compliance with all of these covenants.

Upon the expiration of any applicable cure period following an event of default, the lenders may declare all of our obligations in connection with the Credit Facility immediately due and payable, and the commitments of the lenders to make further loans under the Credit Facility will terminate. Upon the occurrence of a voluntary or involuntary bankruptcy proceeding of the Company, PREIT Associates, PRI or any material subsidiary, all outstanding amounts will automatically become immediately due and payable and the commitments of the lenders to make further loans will automatically terminate.

Senior Unsecured Term Loan

In September 2008, we borrowed an aggregate of $170.0 million under our senior unsecured Term Loan Agreement. Also in September 2008, we swapped the floating interest rate on $130.0 million of the Term Loan balance to a fixed rate of 5.33%, effective October 1, 2008. In October 2008, we swapped the floating interest rate on the remaining $40.0 million of the term loan balance to a fixed rate of 5.15%. We may increase the outstanding amount of the term loan, subject to certain conditions and to the participation of additional lenders, on one additional occasion before the initial maturity date of March 20, 2010. The weighted average effective interest rate based on amounts borrowed was 5.25%. The weighted average interest rate on amounts outstanding at September 30, 2008 was 4.65%.

Interest under the Term Loan Agreement is payable monthly in arrears, and no principal payment is due until the end of the term. The Term Loan Agreement contains lender yield protection provisions. We may not prepay the loan during the first twelve months of the term, but may prepay all or a portion of the term loan beginning in the thirteenth month, subject to a prepayment fee. We and certain of our subsidiaries are guarantors of the obligations arising under the term loan.

The Term Loan Agreement contains customary representations and affirmative and negative covenants, including compliance with certain financial covenants that are materially the same as those contained in our Credit Facility. As of September 30, 2008, we were in compliance with all of these covenants.

Mortgage Activity

In January 2008, we completed a $55.0 million supplemental financing of Cherry Hill Mall in Cherry Hill, New Jersey. The loan has a fixed interest rate of 5.51% and will mature in October 2012. The maturity date coincides with that of the existing first mortgage on the property, which was put in place in September 2005. The first 24 payments of the new loan will be interest only, followed by principal and interest payments calculated based on a 360-month amortization schedule. The proceeds were used to pay down a portion of our revolving Credit Facility, and for general corporate purposes.

In May 2008, we entered into a $20.0 million mortgage loan that is secured by Creekview Center in Warrington, Pennsylvania. The mortgage loan had a variable interest rate of 215 basis points over one-month LIBOR with a term of two years and three one-year extension options. The variable interest rate was swapped to a fixed rate of 5.56% for the initial term of the loan.

In June 2008, we entered into a $45.0 million mortgage loan that is secured by the Christiana Center in Christiana, Delaware. The mortgage loan has a variable interest rate of 185 basis points over one-month LIBOR with a term of three years and two one-year extension options. Repayment is interest only during the initial term of the loan. The variable interest rate was swapped to a fixed rate of 5.865% for the initial term of the loan.

In July 2006, the unconsolidated partnership that owns Lehigh Valley Mall in Whitehall, Pennsylvania entered into a $150.0 million mortgage loan that is secured by Lehigh Valley Mall. We own an indirect 50% ownership interest in this entity. The mortgage loan had an initial term of 12 months, during which monthly payments of interest only are required. The loan bears interest at the one

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month LIBOR rate, reset monthly, plus a spread of 56 basis points. There are three one-year extension options, provided that there is no event of default and that the borrower buys an interest rate cap for the term of any applicable extension. In June 2008, the partnership that owns the mall exercised the second one-year extension option.

In July 2008, we repaid a $12.7 mortgage loan on Crossroads Mall in Beckley, West Virginia, using $12.6 million from our Credit Facility and available working capital.

In July 2008, we entered into a $54.0 million interest only mortgage loan that is secured by Paxton Towne Centre in Harrisburg, Pennsylvania. The mortgage loan has a variable interest rate of 200 basis points over one-month LIBOR, with a term of three years and two one-year extension options. The variable interest rate was swapped to a fixed rate of 5.837% for the initial term of the loan. The proceeds of this mortgage loan were used to repay a portion of the amount outstanding under our Credit Facility and for general corporate purposes.

In September 2008, we entered into a $97.0 mortgage loan that is secured by Patrick Henry Mall in Newport News, Virginia. The mortgage loan bears interest at an annual rate of 6.34% and has a seven-year term.

In September 2008, we entered into a $60.0 mortgage loan facility that is secured by Jacksonville Mall in Jacksonville, North Carolina. We initially borrowed $56.3 million. On one occasion prior to March 9, 2010, we may request an increase in the principal amount of the loan of up to $3.7 million, or a total outstanding principal amount of $60.0 million, subject to the satisfaction of a financial condition and the absence of any events of default. The loan bears interest at an annual rate equal to, at our election, LIBOR (2.49% in effect at September 30, 2008) plus 210 basis points, or a base rate equal to the prime rate, or if greater, the federal funds rate plus 50 basis points, plus a margin of 50 basis points. The loan has a five-year term that may be extended at our election for up to two additional one-year periods, subject to the satisfaction of financial covenants, including a debt service coverage ratio and a leverage ratio, and the absence of any events of default. Interest only is payable until the maturity date. The variable interest rate was swapped to a fixed rate of 5.83% for the initial term of the loan.

In September 2008, we entered into a $68.0 million mortgage loan that is secured by Logan Valley Mall in Altoona, Pennsylvania. The loan bears interest at an annual rate equal to, at our election, LIBOR (2.49% in effect at September 30, 2008) plus 210 basis points, or a base rate equal to the prime rate, or if greater, the federal funds rate plus 50 basis points, plus a margin of 50 basis points. The loan has a five-year term that may be extended at our election for up to two additional one-year periods, subject to the satisfaction of financial covenants, including a debt service coverage ratio and a leverage ratio, and the absence of any events of default. Interest only is payable until the maturity date. The variable interest rate was swapped to a fixed rate of 5.79% for the initial term of the loan.

In September 2008, we entered into a $65.0 million mortgage loan that is secured by Wyoming Valley Mall in Wilkes Barre, Pennsylvania. The loan bears interest at an annual rate equal to, at our election, LIBOR (2.49% in effect at September 30, 2008) plus 225 basis points, or a base rate equal to the prime rate, or if greater, the federal funds rate plus 50 basis points, plus a margin of 50 basis points. The loan has a five-year term that may be extended at the borrower’s election for up to two additional one-year periods, subject to the satisfaction of financial covenants, including a debt service coverage ratio and a leverage ratio, and the absence of any events of default. Interest only is payable until the maturity date. The variable interest rate was swapped to a fixed rate of 5.85% for the initial term of the loan.

In October 2008, the unconsolidated partnership that owns Whitehall Mall, Allentown, Pennsylvania entered into a new $12.4 million 10 year mortgage to replace the prior mortgage on the property. The Company’s interest in the unconsolidated partnership is 50%.

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The following table sets forth a summary of significant mortgage, Credit Facility, senior unsecured Term Loan and exchangeable senior notes activity for the nine months ended September 30, 2008:

(in thousands of dollars)	Mortgage Notes Payable			Credit Facility		Exchangeable Senior Notes		Senior Unsecured Term Loan
Balance at January 1, 2008	$	1,643,122		$	330,000	$	287,500	$	—
Cherry Hill Mall mortgage supplemental financing		55,000			—		—		—
One Cherry Hill Plaza financing		8,000			—		—		—
Christiana Center financing		45,000			—		—		—
Creekview Center financing		20,000			—		—		—
Paxton Towne Centre financing		54,000			—		—		—
Patrick Henry Mall financing		97,000			—		—		—
Jacksonville Mall financing		56,265			—		—		—
Logan Valley Mall financing		68,000			—		—		—
Wyoming Valley Mall financing		65,000			—		—		—
Senior unsecured Term Loan financing		—			—		—		170,000
REMIC repayment		(400,949	)		—		—		—
Crossroads Mall Mortgage repayment		(12,668	)		—		—		—
Principal amortization		(17,669	)		—		—		—
Net Credit Facility borrowings		—			50,000		—		—
Balance at September 30, 2008	$	1,680,101		$	380,000	$	287,500	$	170,000

Derivatives

As of September 30, 2008, we had a total of nine interest rate swap agreements, as described in Note 10 to our unaudited consolidated financial statements. The interest rate swap agreements have an aggregate notional value of $438.2 million and mature on various dates through September 2013.

Mortgage Notes

Mortgage notes payable, which are secured by 22 of our consolidated properties, are due in installments over various terms extending to the year 2017. Fifteen of the mortgage notes bear interest at a fixed rate and six of the mortgage notes bear interest at variable rates that have been swapped to a fixed rate. These 21 mortgage notes have interest rates that range from 4.95% to 7.61% and had a weighted average interest rate of 5.82% at September 30, 2008. We also have one property with a variable rate mortgage that had a rate of 3.78% at September 30, 2008. Mortgage notes payable for properties owned by unconsolidated partnerships are accounted for in “Investments in partnerships, at equity” and “Distributions in excess of partnership investments” on the consolidated balance sheets and are not included in the table below.

The following table outlines the timing of principal payments related to our mortgage notes associated with our consolidated properties as of September 30, 2008.

	Payments by Period
(in thousands of dollars)	Total		Through December 31, 2008		2009-2010		2011-2012		2013 and later
Principal payments	$	110,208	$	3,981	$	34,492	$	36,591	$	35,144
Balloon payments		1,569,893		93,034		77,457		458,638		940,764
Total	$	1,680,101	$	97,015	$	111,949	$	495,229	$	975,908

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Contractual Obligations

The following table presents our aggregate contractual obligations as of September 30, 2008 for the periods presented:

(in thousands of dollars)	Total		Through December 31, 2008		2009-2010		2011-2012		2013 and later
Mortgages (1)	$	1,680,101	$	97,015	$	111,949	$	495,229	$	975,908
Interest on mortgages		470,863		22,630		169,579		144,317		134,337
Credit Facility		380,000		—		380,000		—		—
Exchangeable senior notes		287,500		—		—		287,500		—
Interest on exchangeable senior notes		169		12		92		65		—
Senior unsecured term loan		170,000		—		170,000		—		—
Interest on term loan		13,183		2,197		10,986
Capital leases (2)		216		42		174		—		—
Operating leases		11,643		712		5,109		3,677		2,145
Ground leases		54,478		235		1,974		1,834		50,435
Development and redevelopment commitments (3)		70,763		26,859		43,904		—		—
Other long-term liabilities (4)		3,525		—		3,525		—		—
Total	$	3,142,441	$	149,702	$	897,292	$	932,622	$	1,162,825

(1) Includes amounts reflected in the “Mortgage Notes” table above. Excludes the indebtedness of our unconsolidated partnerships.

(2) Includes interest.

(3) The timing of the payment of these amounts is uncertain. We estimate that a significant portion of these amounts will be paid in the upcoming year, but situations could arise at these development and redevelopment projects that could delay the settlement of these obligations.

(4) Represents incentive compensation.

CASH FLOWS

Net cash provided by operating activities totaled $94.8 million for the nine months ended September 30, 2008, compared to $101.1 million for the nine months ended September 30, 2007. The most significant components of the Company’s cash flows from operating activities were net operating income, interest expense and general and administrative expenses. See “Results of Operations” and “Net Operating Income” for an analysis of the changes in these components for the periods presented.

Cash flows used for investing activities were $260.5 million for the nine months ended September 30, 2008, compared to $143.9 million for the nine months ended September 30, 2007. Investing activities for 2008 reflect investment in construction in progress of $225.9 million and real estate improvements of $23.7 million, both of which primarily relate to our development and redevelopment activities. Investing activities also reflect $4.0 million paid to acquire partnership interests. Cash flows for the nine months ended September 30, 2007 included $31.4 million of sales proceeds that did not recur.

Cash flows provided by financing activities were $157.3 million for the nine months ended September 30, 2008, compared to $50.6 million for the nine months ended September 30, 2007. Cash flows provided by financing activities for the nine months ended September 30, 2008 were primarily affected by $460.3 million of proceeds from the mortgage loans on seven properties and the supplemental financing of Cherry Hill Mall, as well as $170.0 in borrowings from a senior unsecured Term Loan and $50.0 million in borrowings from the Credit Facility. The Company used $413.6 million of these proceeds to repay the REMIC and the mortgage note on Crossroads Mall. Cash flows from financing activities were also affected by dividends and distributions of $71.0 million and principal installments on mortgage notes payable of $17.7 million in the nine months ended September 30, 2008. Cash flows for the nine months ended September 30, 2007 included only $150.0 million of proceeds from mortgage loans, $56.7 million of mortgage loan repayment and $130.0 million for the redemption of the preferred shares.

COMMITMENTS

At September 30, 2008, we had $70.8 million of contractual obligations to complete our development and redevelopment projects, including those listed in this report and other projects currently ongoing at our other properties. Total expected costs for the projects with such commitments are $294.8 million over the remaining terms of these projects. We expect to finance these amounts through borrowings under our Credit Facility or through various other capital sources. See “– Liquidity and Capital Resources – Capital Resources.”

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CONTINGENT LIABILITIES

We are aware of certain environmental matters at some of our properties, including ground water contamination and the presence of asbestos containing materials. We have, in the past, performed remediation of such environmental matters, and we are not aware of any significant remaining potential liability relating to these environmental matters. We may be required in the future to perform testing relating to these matters. We have insurance coverage for certain environmental claims up to $5.0 million per occurrence and up to $5.0 million in the aggregate.

COMPETITION AND TENANT CREDIT RISK

Competition in the retail real estate industry is intense. We compete with other public and private retail real estate companies, including companies that own or manage malls, power centers, lifestyle centers, strip centers, factory outlet centers, theme/festival centers and community centers, as well as other commercial real estate developers and real estate owners, particularly those with properties near our properties, on the basis of location and rent charged. We compete with these companies to attract customers to our properties, as well as to attract anchor and in-line store tenants. We also compete to acquire land for new site development. Our malls and our strip and power centers face competition from similar retail centers, including more recently developed or renovated centers, that are near our retail properties. We also face competition from a variety of different retail formats, including internet retailers, discount or value retailers, home shopping networks, mail order operators, catalogs, and telemarketers. This competition could have a material adverse effect on our ability to lease space and on the amount of rent that we receive. Our tenants face competition from companies at the same and other properties and from other retail formats as well.

Also, a significant amount of capital has and might continue to provide funding for the acquisition and development of properties that might compete with our properties. The development of competing retail properties and the related increased competition for tenants might require us to make capital improvements to properties that we would have deferred or would not have otherwise planned to make and might also affect the occupancy and net operating income of such properties. Any such redevelopments, undertaken individually or collectively, involve costs and expenses that could adversely affect our results of operations.

We compete with many other entities engaged in real estate investment activities for acquisitions of malls, other retail properties and other prime development sites, including institutional pension funds, other REITs and other owner-operators of retail properties. These competitors might drive up the price we must pay for properties, parcels, other assets or other companies we seek to acquire, or might themselves succeed in acquiring those properties, parcels, assets or companies. In addition, our potential acquisition targets might find our competitors to be more attractive suitors if they have greater resources, are willing to pay more, or have a more compatible operating philosophy. In particular, larger REITs might enjoy significant competitive advantages that result from, among other things, a lower cost of capital, a better ability to raise capital, a better ability to finance an acquisition, and enhanced operating efficiencies. Also, the number of entities competing for suitable investment properties or desirable development sites has increased and might continue to increase, resulting in increased demand for these assets and therefore increased prices paid for them. We might not succeed in acquiring retail properties or development sites that we seek, or, if we pay higher prices for properties, or generate lower cash flow from an acquired property than we expect, our investment returns will be reduced, which will adversely affect the value of our securities.

We receive a substantial portion of our operating income as rent under long-term leases with tenants. At any time, any tenant having space in one or more of our properties could experience a downturn in its business that might weaken its financial condition. These tenants might defer or fail to make rental payments when due, delay lease commencement, voluntarily vacate the premises or declare bankruptcy, which could result in the termination of the tenant’s lease, and could result in material losses to us and harm to our results of operations. Also, it might take time to terminate leases of underperforming or nonperforming tenants and we might incur costs to remove such tenants. Some of our tenants occupy stores at multiple locations in our portfolio, and so the effect of any bankruptcy of those tenants might be more significant to us than the bankruptcy of other tenants. In addition, under many of our leases, our tenants pay rent based on a percentage of their sales. Accordingly, declines in these tenants’ sales directly affect our results of operations. Also, if tenants are unable to comply with the terms of their leases, we might modify lease terms in ways that are less favorable to us.

SEASONALITY

There is seasonality in the retail real estate industry. Retail property leases often provide for the payment of a portion of rent based on a percentage of a tenant’s sales over certain levels. Income from such rent is recorded only after the minimum sales levels have been met. The sales levels are often met in the fourth quarter, during the December holiday season. Also, many new and temporary leases are entered into later in the year in anticipation of the holiday season and there is a higher concentration of tenants vacating their space early in the year. As a result, our occupancy and cash flows are generally higher in the fourth quarter and lower in the first quarter, excluding the effect of ongoing redevelopment projects. Our concentration in the retail sector increases our exposure to seasonality and is expected to continue to result in a greater percentage of our cash flows being received in the fourth quarter.

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INFLATION

Inflation can have many effects on financial performance. Retail property leases often provide for the payment of rent based on a percentage of sales, which may increase with inflation. Leases may also provide for tenants to bear all or a portion of operating expenses, which may reduce the impact of such increases on us. However, rent increases may not keep up with inflation.

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for the quarter ended September 30, 2008, together with other statements and information publicly disseminated by us, contain certain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements relate to expectations, beliefs, projections, future plans, strategies, anticipated events, trends and other matters that are not historical facts. These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and changes in circumstances that might cause future events, achievements or results to differ materially from those expressed or implied by the forward-looking statements. In particular, our business might be affected by uncertainties affecting real estate businesses generally as well as the following, among other factors:

• general economic, financial and political conditions, including credit market conditions, changes in interest rates or the possibility of war or terrorist attacks;

• changes in local market conditions, such as the supply of or demand for retail space, or other competitive factors;

• changes in the retail industry, including consolidation and store closings;

• concentration of our properties in the Mid-Atlantic region;

• risks relating to development and redevelopment activities, including risks associated with construction and receipt of governmental and tenant approvals;

• our ability to raise capital through public and private offerings of debt or equity securities and other financing risks, including the availability of adequate funds at a reasonable cost;

• our ability to simultaneously manage several redevelopment and development projects, including projects involving mixed use;

• our ability to maintain and increase property occupancy and rental rates;

• our dependence on our tenants’ business operations and their financial stability, including anchor tenants;

• increases in operating costs that cannot be passed on to tenants;

• our ability to acquire additional properties and our ability to integrate acquired properties into our existing portfolio;

• our short- and long-term liquidity position;

• possible environmental liabilities;

• our ability to obtain insurance at a reasonable cost; and

• existence of complex regulations, including those relating to our status as a REIT, and the adverse consequences if we were to fail to qualify as a REIT.

Additional factors that might cause future events, achievements or results to differ materially from those expressed or implied by our forward-looking statements include those discussed in the section entitled “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2007 and in Part II of this Quarterly Report on Form 10-Q. We do not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market interest rates. As of September 30, 2008, our consolidated debt portfolio consisted primarily of $380.0 million borrowed under our senior unsecured Credit Facility, which bears interest at a LIBOR rate plus an applicable margin, $170.0 million borrowed under our senior unsecured Term Loan, of which $130.0 million has been swapped to a fixed rate of 5.33% and the remaining $40.0 million has been swapped to a fixed rate of 5.15%, $1,680.1 million in fixed and variable rate mortgage notes, excluding $4.6 million of mortgage debt premium, and senior unsecured exchangeable notes of $287.5 million.

Mortgage notes payable, which are secured by 22 of our consolidated properties, are due in installments over various terms extending to the year 2017. Fifteen of the mortgage notes bear interest at a fixed rate and six of the mortgage notes bear interest at variable rates that have been swapped to a fixed rate. These 21 mortgage notes have interest rates that range from 4.95% to 7.61% and had a weighted average interest rate of 5.82% at September 30, 2008. We also have one property with a variable rate mortgage that had a rate of 3.78% at September 30, 2008. Mortgage notes payable for properties owned by unconsolidated partnerships are accounted for in “Investments in partnerships, at equity” and “Distributions in excess of partnership investments” on the consolidated balance sheets and are not included in the table below.

Our interest rate risk is monitored using a variety of techniques. The table below presents the principal amounts of the expected annual maturities and the weighted average interest rates for the principal payments in the specified periods:

	Fixed Rate Debt					Variable Rate Debt
(in thousands of dollars) Year Ended December 31,	Principal Payments			Weighted Average Interest Rate		Principal Payments			Weighted Average Interest Rate(1)
2008	$	97,015		6.91	%	$	—		—
2009	$	66,453		5.83	%	$	8,000		3.78	%
2010	$	207,496	(2)	5.35	%	$	380,000	(3)	3.92	%
2011	$	118,147		5.82	%	$	—		—
2012	$	664,582		4.88	%	$	—		—
2013 and thereafter	$	975,909		5.52	%	$	—		—

⁽¹⁾ Based on the weighted average interest rate in effect as of September 30, 2008.

⁽²⁾ Includes the senior unsecured Term Loan of $170.0 million that was swapped to a blended fixed rate of 5.29% effective in the fourth quarter of 2008.

⁽³⁾ Our Credit Facility, which has an outstanding balance of $380.0 million, has a term that expires in March 2010.

Changes in market interest rates have different effects on the fixed and variable portions of our debt portfolio. A change in market interest rates applicable to the fixed portion of the debt portfolio impacts the fair value, but it has no impact on interest incurred or cash flows. A change in market interest rates applicable to the variable portion of the debt portfolio impacts the interest incurred and cash flows, but does not impact the fair value. The following sensitivity analysis related to the fixed debt portfolio, which includes the effects of the interest rate swap agreements described below, assumes an immediate 100 basis point change in interest rates from their actual September 30, 2008 levels, with all other variables held constant. A 100 basis point increase in market interest rates would result in a decrease in the fair value of our debt of $61.5 million at September 30, 2008. A 100 basis point decrease in market interest rates would result in an increase in the fair value of our debt of $65.2 million at September 30, 2008. Based on the variable rate debt included in our debt portfolio, as of September 30, 2008 (including the term loan, which was swapped to a fixed rate in the fourth quarter of 2008), a 100 basis point increase in interest rates would result in an additional $5.6 million in interest annually, and a 100 basis point decrease would reduce interest incurred by $5.6 million annually. Excluding the impact of the term loan, a 100 basis point increase in interest rates would result in an additional $3.9 million in interest annually, and a 100 basis point decrease would reduce interest incurred by $3.9 million annually.

To manage interest rate risk and limit overall interest cost, we may employ interest rate swaps, options, forwards, caps and floors, or a combination thereof, depending on the underlying exposure. Interest rate differentials that arise under swap contracts are recognized in interest expense over the life of the contracts. If interest rates rise, the resulting cost of funds is expected to be lower than that which would have been available if debt with matching characteristics was issued directly. Conversely, if interest rates fall, the resulting costs would be expected to be higher. We may also employ forwards or purchased options to hedge qualifying anticipated transactions. Gains and losses are deferred and recognized in net income in the same period that the underlying transaction occurs, expires or is otherwise terminated. See Note 10 to our unaudited consolidated financial statements.

We currently have $438.2 million notional amount of interest rate swap agreements that have a blended rate of 3.46% maturing on various dates through September 2013.

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Because the information presented above includes only those exposures that exist as of September 30, 2008, it does not consider changes, exposures or positions which could arise after that date. The information presented herein has limited predictive value. As a result, the ultimate realized gain or loss or expense as a result of interest rate fluctuations will depend on the exposures that arise during the period, and the hedging arrangements we have in place.

ITEM 4. CONTROLS AND PROCEDURES

We are committed to providing accurate and timely disclosure in satisfaction of our SEC reporting obligations. In 2002, we established a Disclosure Committee to formalize our disclosure controls and procedures. Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2008, and have concluded as follows:

• Our disclosure controls and procedures are designed to ensure that the information that we are required to disclose in our reports under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported accurately and on a timely basis.

• Our disclosure controls and procedures are effective to ensure that information that we are required to disclose in our Exchange Act reports is accumulated, communicated to management and disclosed in a timely manner.

There was no change in our internal controls over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the normal course of business, we have become and might in the future become involved in legal actions relating to the ownership and operation of our properties and the properties we manages for third parties. In management’s opinion, the resolution of any such pending legal actions are not expected to have a material adverse effect on our consolidated financial position or results of operations.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the risks that could materially affect our business, financial condition or results of operations, which are discussed under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2007, as well as the following:

Disruptions in the capital and credit markets, as have been experienced during 2008, could adversely affect our ability to access funds.

Our access to funds under the Credit Facility is dependent on the ability of the banks that are parties to the Credit Facility to meet their funding commitments. These banks might have incurred losses or might now have reduced capital reserves as a result of their prior lending to other borrowers, their holdings of certain mortgage securities or their other financial relationships, in part because of the general weakening of the U.S. national economy and the increased financial instability of many borrowers. As a result, these banks might be or become capital constrained and might tighten their lending standards, or become insolvent. If they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests from other borrowers within a short period of time, these banks might not be able to meet their funding commitments under our Credit Facility. If we were unable to draw funds under our Credit Facility because of a lender default or if we were unable to obtain other cost-effective financing from other prospective sources of debt capital, our financial condition and results of operations would be adversely affected.

Disruptions in the capital and credit markets as a result of uncertainty in the U.S. economy, changing or increased regulation, reduced financing alternatives or failures of significant financial institutions could adversely affect one or more banks in our Credit Facility or otherwise adversely affect our access to funds. These disruptions could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding could be arranged, if such financing is available on acceptable terms, or at all. Such measures could include deferring development and redevelopment projects or other capital expenditures and reducing or eliminating future cash dividend payments or other discretionary uses of cash.

The recent disruptions in the overall economy and the financial markets might adversely impact our financial condition and results of operations.

The recent disruptions in the overall economy and financial markets is likely to reduce consumer confidence in the economy, negatively affect consumer spending on retail goods and decrease the revenue generated by our properties or the value of our properties. Trade groups have projected that the December 2008 holiday shopping season will be among the lowest in several years. This might result in delays or cancellations of the openings of new retail stores at our properties or the inability of our current tenants to meet their obligations to us, either of which could adversely affect our ability to meet our debt service requirements, comply with the covenants under our Credit Facility, make capital expenditures and make distributions to shareholders. These changes could have a material adverse effect on our financial condition and results of operations. There can be no assurance that government responses to the disruptions in the economy and in the financial markets will restore consumer confidence.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following table shows the total number of shares that we acquired in the three months ended September 30, 2008 and the average price paid per share. The purchases reflected in the table were pursuant to employees’ use of shares to pay the withholding taxes payable upon the receipt of shares. The table shows the aggregate dollar amount of shares that may be repurchased under our existing share repurchase program.

Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs(1)
July 1 – July 31, 2008	288	$	19.56	—	$	100,000,000
August 1 – August 31, 2008	—		—	—		100,000,000
September 1 – September 30, 2008	—		—	—		100,000,000
Total	288	$	19.56	—	$	100,000,000

⁽¹⁾ In December 2007, we announced that our Board of Trustees authorized a program to repurchase up to $100.0 million of our common shares in the open market or in privately negotiated or other transactions from January 1, 2008 until December 31, 2009.

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ITEM 6. EXHIBITS

10.1*	Term Loan Agreement dated as of September 3, 2008 by and among PREIT Associates, L.P., PREIT-RUBIN, Inc., Pennsylvania Real Estate Investment Trust, Wells Fargo Bank, National Association, the financial institutions party thereto and the other parties thereto.
10.2*	Guaranty dated as of September 3, 2008 in favor of Wells Fargo Bank, National Association by and among PREIT Associates, L.P. , PREIT-RUBIN, Inc., Pennsylvania Real Estate Investment Trust, the financial institutions party thereto and the other parties thereto.
10.3*	Amendment Agreement dated as of September 10, 2008 by and between Valley View Downs, LP, Centaur Pennsylvania, LLC, PR Valley View Downs, L.P. and PREIT-RUBIN, Inc.
31.1*	Certification pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1+	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2+	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Filed herewith

+ Furnished herewith

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SIGNATURE OF REGISTRANT

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
Date: November 7, 2008
	By:	/s/ Ronald Rubin
		Ronald Rubin Chief Executive Officer
	By:	/s/ Robert F. McCadden
		Robert F. McCadden Executive Vice President and Chief Financial Officer
	By:	/s/ Jonathen Bell
		Jonathen Bell Senior Vice President - Chief Accounting Officer (Principal Accounting Officer)

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EX-10.1

Exhibit 10.1

$83,500,000 Term Loan Facility

(subject to increase to $250,000,000)

TERM LOAN AGREEMENT

Dated as of September 3, 2008

by and among

PREIT ASSOCIATES, L.P.

and

PREIT-RUBIN, INC.

as Borrower,

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST,

as Parent,

THE FINANCIAL INSTITUTIONS PARTY HERETO

AND THEIR ASSIGNEES UNDER SECTION 11.5.(c),

as Lenders,

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Agent, Lead Arranger and Sole Bookrunner

TABLE OF CONTENTS*

Article I. Definitions	1
Section 1.1. Definitions	1
Section 1.2. General; References to Times	1
Article II. Credit Facilities	2
Section 2.1. Term Loans	2
Section 2.2. Rates and Payment of Interest on Loans	3
Section 2.3. Number of Interest Periods	3
Section 2.4. Repayment of Loans	3
Section 2.5. Late Charges	3
Section 2.6. Prepayments	4
Section 2.7. Continuation	4
Section 2.8. Conversion	4
Section 2.9. Notes	5
Section 2.10. Extension of Termination Date	5
Section 2.11. Joint and Several Liability	5
Section 2.12. Actions of the Borrower	7
Section 2.13. Funds Transfer Disbursements	7
Section 2.14. Additional Term Loans	8
Article III. Payments, Fees and Other General Provisions	9
Section 3.1. Payments	9
Section 3.2. Pro Rata Treatment	9
Section 3.3. Sharing of Payments, Etc.	9
Section 3.4. Several Obligations	10
Section 3.5. Fees	10
Section 3.6. Computations	11
Section 3.7. Usury	11
Section 3.8. Statements of Account	11
Section 3.9. Defaulting Lenders	11
Section 3.10. Taxes	12
Article IV. Yield Protection, Etc.	14
Section 4.1. Additional Costs; Capital Adequacy	14
Section 4.2. Suspension of LIBOR Loans	15
Section 4.3. Illegality	16
Section 4.4. Compensation	16
Section 4.5. Treatment of Affected Loans	16
Section 4.6. Affected Lenders	17
Section 4.7. Assumptions Concerning Funding of LIBOR Loans	18

* This Table of Contents is not part of the Credit Agreement and is provided as a convenience only.

- i -

Section 4.8. Change of Lending Office	18
Article V. Conditions Precedent	18
Section 5.1. Initial Conditions Precedent	18
Section 5.2. Conditions Precedent to All Credit Events	20
Section 5.3. Conditions as Covenants	21
Article VI. Representations and Warranties	21
Section 6.1. Representations and Warranties	21
Section 6.2. Survival of Representations and Warranties, Etc.	27
Article VII. Affirmative Covenants	28
Section 7.1. Financial Reporting and Other Information	28
Section 7.2. Preservation of Existence and Similar Matters	32
Section 7.3. Compliance with Applicable Law	32
Section 7.4. Maintenance of Property	32
Section 7.5. Conduct of Business	32
Section 7.6. Insurance	32
Section 7.7. Payment of Taxes and Claims	33
Section 7.8. Books and Records; Visits and Inspections	33
Section 7.9. Use of Proceeds	33
Section 7.10. Environmental Matters	34
Section 7.11. Further Assurances	34
Section 7.12. Material Contracts	34
Section 7.13. REIT Status	35
Section 7.14. Exchange Listing	35
Section 7.15. Guarantors	35
Section 7.16. Release of PREIT-Rubin, Inc. as Borrower	36
Section 7.17. Interest Rate Agreements	36
Article VIII. Negative Covenants	36
Section 8.1. Financial Covenants	36
Section 8.2. Restricted Payments	39
Section 8.3. Liens; Negative Pledges	40
Section 8.4. Restrictions on Intercompany Transfers	41
Section 8.5. Mergers, Acquisitions and Sales of Assets	41
Section 8.6. Fiscal Year	41
Section 8.7. Modifications of Organizational Documents and Material Contracts	42
Section 8.8. Transactions with Affiliates	42
Section 8.9. ERISA Exemptions	42
Article IX. Default	42
Section 9.1. Events of Default	42
Section 9.2. Remedies Upon Event of Default	47
Section 9.3. Marshaling; Payments Set Aside	47

- ii -

Section 9.4. Allocation of Proceeds	47
Section 9.5. Performance by Agent	48
Section 9.6. Rescission of Acceleration by Requisite Lenders	48
Section 9.7. Rights Cumulative	49
Article X. The Agent	49
Section 10.1. Appointment and Authorization	49
Section 10.2. Agent’s Reliance, Etc.	50
Section 10.3. Notice of Defaults	51
Section 10.4. Wells Fargo as Lender	51
Section 10.5. Approvals of Lenders	51
Section 10.6. Lender Credit Decision, Etc.	52
Section 10.7. Indemnification of Agent	52
Section 10.8. Successor Agent	53
Section 10.9. Titled Agents	54
Article XI. Miscellaneous	54
Section 11.1. Notices	54
Section 11.2. Expenses	55
Section 11.3. Setoff	56
Section 11.4. Litigation; Jurisdiction; Other Matters; Waivers	56
Section 11.5. Successors and Assigns	57
Section 11.6. Amendments and Waivers	59
Section 11.7. Nonliability of Agent and Lenders	61
Section 11.8. Confidentiality	61
Section 11.9. Indemnification	62
Section 11.10. Termination; Survival	63
Section 11.11. Severability of Provisions	63
Section 11.12. GOVERNING LAW	63
Section 11.13. Counterparts	63
Section 11.14. Obligations with Respect to Loan Parties	63
Section 11.15. Limitation of Liability	64
Section 11.16. Entire Agreement	64
Section 11.17. Construction	64
Section 11.18. Time of the Essence	64
Section 11.19. Electronic Delivery of Certain Information	64

- iii -

THIS TERM LOAN AGREEMENT dated as of September 3, 2008, by and among PREIT ASSOCIATES, L.P., a Delaware limited partnership (“PREIT”), PREIT-RUBIN, INC., a Pennsylvania corporation (“PREIT-RUBIN”; together with PREIT, each a Borrower and collectively, the “Borrower”), PENNSYLVANIA REAL ESTATE INVESTMENT TRUST, a Pennsylvania business trust (the “Parent”), each of the financial institutions initially a signatory hereto together with their assignees pursuant to Section 11.5.(c), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Lead Arranger (the “Lead Arranger”), as Sole Bookrunner (the “Sole Bookrunner”), and as Agent.

WHEREAS, the Lenders are willing to make available to the Borrower term loans in an aggregate principal amount of $83,500,000 (which amount may be increased to $250,000,000) on and subject to the terms and conditions contained herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto agree as follows:

ARTICLE I. DEFINITIONS

Section 1.1. Definitions.

In addition to terms defined elsewhere herein, the capitalized terms used herein shall have their respective defined meanings as set forth in Annex I.

Section 1.2. General; References to Times.

Unless otherwise indicated, all accounting terms, ratios and measurements shall be interpreted or determined in accordance with GAAP as in effect as of the Agreement Date; provided, however, notwithstanding anything contained herein to the contrary, for purposes of the financial covenants set forth in Section 8.1. of this Agreement, the phrase “Parent and its Subsidiaries determined on a consolidated basis” (and similar phrases having the same meaning) shall not be deemed to include the consolidation of any FIN 46 Entity but shall include a percentage of the assets, liabilities, income or loss attributable to each FIN 46 Entity equal to the Parent’s direct or indirect ownership interest in such entity without regard to FIN 46. Notwithstanding the foregoing, if at any time any change in GAAP, including without limitation, the implementation of FAS 141, would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Requisite Lenders shall so request, the Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Requisite Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. References in this Agreement to “Sections”, “Articles”, “Exhibits” and “Schedules” are to sections, articles,

exhibits and schedules herein and hereto unless otherwise indicated. References in this Agreement to any document, instrument or agreement (a) shall include all exhibits, schedules and other attachments thereto, (b) shall include, unless otherwise indicated, all documents, instruments or agreements issued or executed in replacement thereof, to the extent permitted hereby and (c) shall mean, unless otherwise indicated, such document, instrument or agreement, or replacement thereto, as amended, supplemented, restated or otherwise modified from time to time to the extent permitted hereby and in effect at any given time. Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter. Unless explicitly set forth to the contrary, a reference to “Subsidiary” means a Subsidiary of the Parent or a Subsidiary of such Subsidiary and a reference to an “Affiliate” means a reference to an Affiliate of the Borrower. Titles and captions of Articles, Sections, subsections and clauses in this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement. Unless otherwise indicated, all references to time are references to San Francisco, California time.

ARTICLE II. CREDIT FACILITIES

Section 2.1. Term Loans.

(a) Making of Term Loans. Subject to the terms and conditions set forth in this Agreement, each Lender severally and not jointly agrees to make a Loan to the Borrower on the Effective Date, in a principal amount equal to such Lender’s Commitment. Each Base Rate Loan shall be in an aggregate minimum amount of $500,000 and integral multiples of $100,000 in excess thereof. Each LIBOR Loan shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $250,000 in excess of that amount. Once repaid, the principal amount of a Loan may not be reborrowed.

(b) Requests for Loans. Not later than 9:00 a.m. San Francisco time at least three (3) Business Days prior to the Effective Date, the Borrower shall deliver to the Agent the Notice of Borrowing. The Notice of Borrowing shall be irrevocable once given and binding on the Borrower. Prior to delivering the Notice of Borrowing, the Borrower may (without specifying whether a Loan will be a Base Rate Loan or a LIBOR Loan) request that the Agent provide the Borrower with the most recent LIBOR available to the Agent. The Agent shall provide such quoted rate to the Borrower on the date of such request or as soon as possible thereafter.

(c) Funding of Loans. Each Lender shall deposit an amount equal to the Loan to be made by such Lender to the Borrower with the Agent at the Principal Office, in immediately available funds not later than 9:00 a.m. San Francisco time on the Effective Date. Subject to fulfillment of all applicable conditions set forth herein, the Agent shall make available to the Borrower at the Principal Office, not later than 12:00 noon San Francisco time on the Effective Date, the proceeds of such amounts received by the Agent. No Lender shall be responsible for the failure of any other Lender to make a Loan or to perform any other obligation to be made or performed by such other Lender hereunder, and the failure of any Lender to make a Loan or to perform any other obligation to be made or performed by it hereunder shall not relieve the obligation of any other Lender to make any Loan or to perform any other obligation to be made or performed by such other Lender.

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Section 2.2. Rates and Payment of Interest on Loans.

(a) Rates. The Borrower promises to pay to the Agent for the account of each Lender interest on the unpaid principal amount of the Loan made by such Lender for the period from and including the date of the making of such Loan to but excluding the date such Loan shall be paid in full, at the following per annum rates:

(i) with respect to any portion of such Loan that is a Base Rate Loan, at the Base Rate (as in effect from time to time), plus the Applicable Margin; and

(ii) with respect to any portion of such Loan that is a LIBOR Loan, at LIBOR for such Loan for the Interest Period therefor (from the first day to, but excluding, the last day of such Interest Period), plus the Applicable Margin.

Notwithstanding the foregoing, during the continuance of an Event of Default, the Borrower shall pay to the Agent for the account of each Lender interest at the Post-Default Rate on the outstanding principal amount of the Loan made by such Lender and on any other amount payable by the Borrower hereunder or under the Note held by such Lender to or for the account of such Lender (including without limitation, accrued but unpaid interest to the extent permitted under Applicable Law).

(b) Payment of Interest. All accrued and unpaid interest on the outstanding principal amount of each Loan shall be payable (i) monthly in arrears on the first day of each month, commencing with the first full month occurring after the Effective Date and (ii) on any date on which the principal balance of such Loan is due and payable in full (whether at maturity, due to acceleration or otherwise). Interest payable at the Post-Default Rate shall be payable from time to time on demand. All determinations by the Agent of an interest rate hereunder shall be conclusive and binding on the Lenders and the Borrower for all purposes, absent manifest error.

Section 2.3. Number of Interest Periods.

There may be no more than 3 different Interest Periods outstanding at the same time with respect to the Loans.

Section 2.4. Repayment of Loans.

The Borrower shall repay the entire outstanding principal amount of, and all accrued and unpaid interest on, the Loans on the Termination Date.

Section 2.5. Late Charges.

If any payment required under this Agreement is not paid within 10 days after it becomes due and payable, the Requisite Lenders may, by notice to the Borrower, require that the Borrower pay a late charge for late payment to compensate the Lenders for the loss of use of funds and for the expenses of handling the delinquent payment, in an amount not to exceed four percent (4.0%) of such delinquent payment. Such late charge shall be paid in any event not later than the due date of the next subsequent installment of principal and/or interest. In the event the maturity of the Obligations hereunder occurs or is accelerated pursuant to Section 9.2., this Section shall apply only to payments overdue prior to the time of such acceleration. This Section shall not be deemed to be a waiver of the Lenders’ right to accelerate payment of any of the Obligations as permitted under the terms of this Agreement.

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Section 2.6. Prepayments.

Subject to Section 4.4. and payment of any Fees payable under Section 3.5(c), the Borrower may prepay the Loans, in whole or part, at any time during the period from and including the date one year following the Agreement Date to but excluding the Termination Date. The Borrower shall give the Agent at least three (3) Business Days prior written notice of the prepayment of the Loans. Each voluntary prepayment of the Loans shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $100,000 in excess thereof or, if the Loans are being prepaid in full at such time, the prepayment may be in such other amount as is then outstanding.

Section 2.7. Continuation.

So long as no Event of Default exists, the Borrower may on any Business Day, with respect to any LIBOR Loan, elect to maintain such LIBOR Loan or any portion thereof as a LIBOR Loan by selecting a new Interest Period for such LIBOR Loan or any portion thereof. Each new Interest Period selected under this Section shall commence on the last day of the immediately preceding Interest Period. Each selection of a new Interest Period shall be made by the Borrower giving to the Agent a Notice of Continuation not later than 9:00 a.m. (San Francisco time) on the third Business Day prior to the date of any such Continuation. Such notice by the Borrower of a Continuation shall be by telephone or telecopy, confirmed immediately in writing if by telephone, in the form of a Notice of Continuation, specifying (a) the proposed date of such Continuation, (b) the LIBOR Loan and portion thereof subject to such Continuation and (c) the duration of the selected Interest Period, all of which shall be specified in such manner as is necessary to comply with all limitations on Loans outstanding hereunder. Each Notice of Continuation shall be irrevocable by and binding on the Borrower once given. Promptly after receipt of a Notice of Continuation, the Agent shall notify each Lender by telecopy, or other similar form of transmission of the proposed Continuation. If the Borrower shall fail to select in a timely manner a new Interest Period for any LIBOR Loan in accordance with this Section, such Loan will automatically, on the last day of the current Interest Period therefor, Continue as a LIBOR Loan having an Interest Period of one month notwithstanding the Borrower not complying with this Section.

Section 2.8. Conversion.

So long as no Event of Default exists, the Borrower may on any Business Day, upon the Borrower’s giving of a Notice of Conversion to the Agent, Convert all or a portion of a Loan of one Type into a Loan of another Type. Any Conversion of a LIBOR Loan into a Base Rate Loan shall be made on, and only on, the last day of an Interest Period for such LIBOR Loan and, upon

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Conversion of a Base Rate Loan into a LIBOR Loan, the Borrower shall pay accrued interest to the date of Conversion on the principal amount so Converted. Each such Notice of Conversion shall be given not later than 9:00 a.m. (San Francisco time) one Business Day prior to the date of any proposed Conversion into Base Rate Loans and three Business Days prior to the date of any proposed Conversion into LIBOR Loans. Promptly after receipt of a Notice of Conversion, the Agent shall notify each Lender by telecopy, or other similar form of transmission of the proposed Conversion. Subject to the restrictions specified above, each Notice of Conversion shall be by telephone (confirmed immediately in writing) or telecopy in the form of a Notice of Conversion specifying (a) the requested date of such Conversion, (b) the Type of Loan to be Converted, (c) the portion of such Type of Loan to be Converted, (d) the Type of Loan such Loan is to be Converted into and (e) if such Conversion is into a LIBOR Loan, the requested duration of the Interest Period of such Loan. Each Notice of Conversion shall be irrevocable by and binding on the Borrower once given.

Section 2.9. Notes.

The Loan made by each Lender shall, in addition to this Agreement, also be evidenced by a Note, payable to the order of such Lender in a principal amount equal to the amount of its Commitment as originally in effect and otherwise duly completed (or if such Lender was not a Lender on the Effective Date, in a principal amount equal to the initial principal amount of the Loan of such Lender).

Section 2.10. Extension of Termination Date.

The Borrower shall have the right, exercisable one time, to extend the Termination Date by one year. The Borrower may exercise such right only by executing and delivering to the Agent at least 90 days but not more than 180 days prior to the current Termination Date, a written request for such extension (an “Extension Request”). The Agent shall forward to each Lender a copy of the Extension Request received by the Agent promptly upon receipt thereof. Subject to satisfaction of the following conditions, the Termination Date shall be extended for one year: (a) immediately prior to such extension and immediately after giving effect thereto, (i) no Default or Event of Default shall exist and (ii) the representations and warranties made or deemed made by the Borrower and each other Loan Party in the Loan Documents to which any of them is a party, shall be true and correct in all material respects on and as of the date of such extension with the same force and effect as if made on and as of such date (except to the extent that such representations and warranties expressly relate solely to an earlier date) and (b) the Borrower shall have paid the Fees payable under Section 3.5.(b).

Section 2.11. Joint and Several Liability.

(a) The obligations of each Borrower hereunder and under the other Loan Documents to which either Borrower is a party shall be joint and several, and accordingly, each Borrower confirms that it is liable for the full amount of the Obligations, regardless of whether incurred by such Borrower or the other Borrower.

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(b) Each Borrower represents and warrants to the Agent and the Lenders that each Borrower, though separate legal entities, are mutually dependent on each other in the conduct of their respective businesses as an integrated operation and have determined it to be in their mutual best interests to obtain financing from the Lenders through their collective efforts.

(c) Neither the Agent nor any Lender shall be obligated or required before enforcing any Loan Document against a Borrower: (a) to pursue any right or remedy any of them may have against the other Borrower, any Guarantor or any other Person or commence any suit or other proceeding against the other Borrower, any Guarantor or any other Person in any court or other tribunal; (b) to make any claim in a liquidation or bankruptcy of the other Borrower, any Guarantor or any other Person; or (c) to make demand of the other Borrower, any Guarantor or any other Person or to enforce or seek to enforce or realize upon any collateral security held by the Agent or any Lender which may secure any of the Obligations.

(d) It is the intent of each Borrower, the Agent and the Lenders that in any proceeding of the types described in Sections 9.1(e) or 9.1(f), a Borrower’s maximum obligation hereunder shall equal, but not exceed, the maximum amount which would not otherwise cause the obligations of such Borrower hereunder to be avoidable or unenforceable against such Borrower in such proceeding as a result of Applicable Law, including without limitation, (i) Section 548 of the Bankruptcy Code of 1978 and (ii) any state fraudulent transfer or fraudulent conveyance act or statute applied in such proceeding, whether by virtue of Section 544 of the Bankruptcy Code of 1978 or otherwise. The Applicable Laws under which the possible avoidance or unenforceability of the obligations of such Borrower hereunder shall be determined in any such proceeding are referred to as the “Avoidance Provisions”. Accordingly, to the extent that the obligations of either Borrower hereunder would otherwise be subject to avoidance under the Avoidance Provisions, the maximum Obligations for which such Borrower shall be liable hereunder shall be reduced to that amount which, as of the time any of the Obligations are deemed to have been incurred under the Avoidance Provisions, would not cause the obligations of such Borrower hereunder, to be subject to avoidance under the Avoidance Provisions. This subsection is intended solely to preserve the rights of the Agent and the Lenders hereunder to the maximum extent that would not cause the obligations of either Borrower hereunder to be subject to avoidance under the Avoidance Provisions, and no Borrower or any other Person shall have any right or claim under this Section that would not otherwise be available to such Person under the Avoidance Provisions.

(e) Each Borrower assumes all responsibility for being and keeping itself informed of the financial condition of the other Borrower, and of all other circumstances bearing upon the risk of nonpayment of any of the Obligations and the nature, scope and extent of the risks that such Borrower assumes and incurs hereunder, and agrees that neither the Agent nor any Lender shall have any duty whatsoever to advise either Borrower of information regarding such circumstances or risks.

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Section 2.12. Actions of the Borrower.

Each Borrower hereby appoints the other Borrower to act as its agent for all purposes under the Loan Documents (including, without limitation, with respect to all matters related to the borrowing and repayment of Loans). Each Borrower acknowledges and agrees that (a) one Borrower may execute such documents as such Borrower deems appropriate in its sole discretion, and with respect to any such document executed by only one Borrower, each Borrower shall be bound by and obligated by all of the terms of any such document, (b) any notice or other communication delivered by the Agent or any Lender hereunder to either Borrower shall be deemed to have been delivered to each Borrower and (c) the Agent and the Lenders shall accept (and shall be permitted to rely on) any document or agreement executed by both Borrowers or either Borrower individually. Each Borrower agrees that any action taken by one Borrower without the consent of, or notice to, the other Borrower shall not release or discharge either Borrower from its obligations hereunder.

Section 2.13. Funds Transfer Disbursements.

(a) Generally. The Borrower hereby authorizes the Agent to disburse the proceeds of the Loans made by the Lenders pursuant to the Loan Documents as requested by an authorized representative of the Borrower to any of the accounts designated in the Transfer Authorizer Designation Form. The Borrower agrees to be bound by any transfer request: (i) authorized or transmitted by the Borrower; or, (ii) made in the Borrower’s name and accepted by the Agent in good faith and in compliance with these transfer instructions, even if not properly authorized by the Borrower. The Borrower further agrees and acknowledges that the Agent may rely solely on any bank routing number or identifying bank account number or name provided by the Borrower to effect a wire or funds transfer even if the information provided by the Borrower identifies a different bank or account holder than named by the Borrower. The Agent is not obligated or required in any way to take any actions to detect errors in information provided by the Borrower. If the Agent takes any actions in an attempt to detect errors in the transmission or content of transfer or requests or takes any actions in an attempt to detect unauthorized funds transfer requests, the Borrower agrees that no matter how many times the Agent takes these actions the Agent will not in any situation be liable for failing to take or correctly perform these actions in the future and such actions shall not become any part of the transfer disbursement procedures authorized under this provision, the Loan Documents, or any agreement between the Agent and the Borrower. The Borrower agrees to notify the Agent of any errors in the transfer of any funds or of any unauthorized or improperly authorized transfer requests within fourteen (14) days after the Agent’s confirmation to the Borrower of such transfer.

(b) Funds Transfer. The Agent will, in its sole discretion, determine the funds transfer system and the means by which each transfer will be made. The Agent may delay or refuse to accept a funds transfer request if the transfer would: (i) violate the terms of this authorization (ii) require use of a bank unacceptable to the Agent or any Lender or prohibited by any Governmental Authority; (iii) cause the Agent or any Lender to violate any Federal Reserve or other regulatory risk control program or guideline, or (iv) otherwise cause the Agent or any Lender to violate any Applicable Law or regulation.

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(c) Limitation of Liability. Neither the Agent nor any Lender shall be liable to the Borrower or any other parties for (i) errors, acts or failures to act of others, including other entities, banks, communications carriers or clearinghouses, through which the Borrower’s transfers may be made or information received or transmitted, and no such entity shall be deemed an agent of the Agent or any Lender, (ii) any loss, liability or delay caused by fires, earthquakes, wars, civil disturbances, power surges or failures, acts of government, labor disputes, failures in communications networks, legal constraints or other events beyond the Agent’s or any Lender’s control, or (iii) any special, consequential, indirect or punitive damages, whether or not (x) any claim for these damages is based on tort or contract or (y) the Agent, any Lender or the Borrower knew or should have known the likelihood of these damages in any situation. Neither the Agent nor any Lender makes any representations or warranties other than those expressly made in this Agreement.

Section 2.14. Additional Term Loans.

The Borrower shall have the right up to three times prior to March 20, 2010 to request increases in the aggregate amount of the Loans by providing written notice to the Agent, which notice shall be irrevocable once given. Any such increase in the Loans must be in an aggregate minimum amount of $10,000,000 and integral multiples of $1,000,000 in excess thereof (or such lesser aggregate minimum amount as the Agent and the Borrower may agree); provided, that after giving effect to any such increase pursuant to this Section, the aggregate outstanding principal amount of the Loans may not exceed $250,000,000. Any such increase shall be effected either by an existing Lender increasing the principal amount of its Loan or by a Person becoming a Lender hereunder and making a Loan to the Borrower. No existing Lender shall be required to increase the amount of its Loan hereunder and any Person becoming a Lender under this Agreement in connection with any such requested increase must be an Eligible Assignee unless the Agent and the Borrower otherwise agree. No increase in the aggregate outstanding principal amount of the Loans may be effected under this Section (x) if a Default or Event of Default shall be in existence on the effective date of such increase, (y) if any representation or warranty made or deemed made by the Borrower or any other Loan Party in any Loan Document to which any such Loan Party is a party is not (or would not be) true or correct on the effective date of such increase (except to the extent that such representation or warranty expressly relates solely to an earlier date (in which case such representation or warranty shall have been true and accurate on and as of such earlier date) and except for changes in factual circumstances not prohibited hereunder) or (z) unless prior to, or at the time of, such increase the principal amount of the Loan held by Wells Fargo is $50,000,000 or less. In connection with any increase in the aggregate amount of the Loans pursuant to this subsection, (a) any Lender becoming a party hereto shall execute such documents and agreements as the Agent may reasonably request and (b) the Borrower shall make appropriate arrangements so that each new Lender, and any existing Lender increasing the amount of its Loan, receives a new or replacement Note, as appropriate, in the amount of such Lender’s Loan within 2 Business Days of the effectiveness of the applicable increase.

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ARTICLE III. PAYMENTS, FEES AND OTHER GENERAL PROVISIONS

Section 3.1. Payments.

Except to the extent otherwise provided herein, all payments of principal, interest and other amounts to be made by the Borrower under this Agreement, the Notes or any other Loan Document shall be made in Dollars, in immediately available funds, without setoff, deduction or counterclaim, to the Agent at the Principal Office, not later than 11:00 a.m. San Francisco time on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day). Subject to Section 9.4., the Borrower shall, at the time of making each payment under this Agreement or any other Loan Document, specify to the Agent the amounts payable by the Borrower hereunder to which such payment is to be applied. Each payment received by the Agent for the account of a Lender under this Agreement or any Note shall be paid to such Lender by wire transfer of immediately available funds in accordance with the wiring instructions provided by such Lender to the Agent from time to time, for the account of such Lender at the applicable Lending Office of such Lender. In the event the Agent fails to pay such amounts to such Lender within one Business Day of receipt of such amounts, the Agent shall pay interest on such amount at a rate per annum equal to the Federal Funds Rate from time to time in effect. If the due date of any payment under this Agreement or any other Loan Document would otherwise fall on a day which is not a Business Day such date shall be extended to the next succeeding Business Day and interest shall continue to accrue at the rate, if any, applicable to such payment for the period of such extension.

Section 3.2. Pro Rata Treatment.

Except to the extent otherwise provided in this Agreement: (a) the making of the Loans by the Lenders under Section 2.1. shall be made by the Lenders pro rata according to the amounts of their respective Commitments and the payment of the Fees under Section 3.5.(a), (b) and (c) shall be made for the account of the Lenders pro rata in accordance with the respective unpaid principal amounts of the Loans held by them; (b) each payment or prepayment of principal of the Loans by the Borrower shall be made for the account of the Lenders pro rata in accordance with the respective unpaid principal amounts of the Loans held by them; (c) each payment of interest on the Loans by the Borrower shall be made for the account of the Lenders pro rata in accordance with the amounts of interest on such Loans then due and payable to the respective Lenders; and (d) the Conversion and Continuation of the Loans of a particular Type (other than Conversions provided for by Section 4.5.) shall be made pro rata among the Lenders according to the principal amounts of their respective Loans and the then current Interest Period for each Lender’s portion of each Loan of such Type shall be coterminous.

Section 3.3. Sharing of Payments, Etc.

If a Lender shall obtain payment of any principal of, or interest on, the Loan made by it under this Agreement or shall obtain payment on any other Obligation owing by the Borrower or any other Loan Party through the exercise of any right of set-off, banker’s lien or counterclaim or similar right or otherwise or through voluntary prepayments directly to a Lender or other payments made by

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the Borrower or any other Loan Party to a Lender not in accordance with the terms of this Agreement and such payment should be distributed to the Lenders in accordance with Section 3.2. or Section 9.4., such Lender shall promptly purchase from such other Lenders participations in (or, if and to the extent specified by such Lender, direct interests in) the Loans made by the other Lenders or other Obligations owed to such other Lenders in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all the Lenders shall share the benefit of such payment (net of any reasonable expenses which may actually be incurred by such Lender in obtaining or preserving such benefit) in accordance with the requirements of Section 3.2. or Section 9.4., as applicable. To such end, all the Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored. The Borrower agrees that any Lender so purchasing a participation (or direct interest) in the Loans or other Obligations owed to such other Lenders may exercise all rights of set-off, banker’s lien, counterclaim or similar rights with respect to such participation as fully as if such Lender were a direct holder of Loans in the amount of such participation. Nothing contained herein shall require any Lender to exercise any such right or shall affect the right of any Lender to exercise and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of the Borrower.

Section 3.4. Several Obligations.

No Lender shall be responsible for the failure of any other Lender to make a Loan or to perform any other obligation to be made or performed by such other Lender hereunder, and the failure of any Lender to make a Loan or to perform any other obligation to be made or performed by it hereunder shall not relieve the obligation of any other Lender to make any Loan or to perform any other obligation to be made or performed by such other Lender.

Section 3.5. Fees.

(a) Loan Fees. On the Effective Date, the Borrower agrees to pay to the Agent all loan fees as have been agreed to in writing by the Borrower and the Agent and as have been agreed to in writing by the Borrower and any Lender.

(b) Extension Fee. If, pursuant to Section 2.10., the Borrower exercises its right to extend the Termination Date, the Borrower agrees to pay to the Agent for the account of each Lender an extension fee equal to 0.25% of the outstanding principal balance of such Lender’s Loan at such time. Such fee shall be paid to the Agent for the account of the Lenders prior to, and as a condition to, any such extension.

(c) Prepayment Fee. If, pursuant to Section 2.6., the Borrower prepays the Loans, in whole or part at any time prior to March 20, 2010, the Borrower agrees to pay to the Agent for the account of each Lender a prepayment fee equal to one-fourth of one percent (0.25%) of the amount of such prepayment. The Borrowers and the Lenders agree that such prepayment fee is a reasonable calculation of the Lenders’ lost profits in view of the difficulties and impracticality of determining actual damages resulting from an early prepayment of the Loans.

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(d) Agent’s Fees. The Borrower agrees to pay the administrative and other fees of the Agent as may be agreed to in writing from time to time.

Section 3.6. Computations.

Unless otherwise expressly set forth herein, any accrued interest on any Loan, any Fees or other Obligations due hereunder shall be computed on the basis of a year of 360 days and the actual number of days elapsed.

Section 3.7. Usury.

In no event shall the amount of interest due or payable on the Loans or other Obligations exceed the maximum rate of interest allowed by Applicable Law and, if any such payment is paid by the Borrower or received by any Lender, then such excess sum shall be credited as a payment of principal, unless the Borrower shall notify the respective Lender in writing that the Borrower elects to have such excess sum returned to it forthwith. It is the express intent of the parties hereto that the Borrower not pay and that the Lenders not receive, directly or indirectly, in any manner whatsoever, interest in excess of that which may be lawfully paid by the Borrower under Applicable Law. The parties hereto hereby agree and stipulate that the only charge imposed upon the Borrower for the use of money in connection with this Agreement is and shall be the interest described in Sections 2.2.(a)(i) and (ii). Notwithstanding the foregoing, the parties hereto further agree and stipulate that all agency fees, syndication fees, loan fees, underwriting fees, default charges, late charges, funding or “breakage” charges, increased cost charges, attorneys’ fees and reimbursement for costs and expenses paid by the Agent or any Lender to third parties or for damages incurred by the Agent or any Lender, are charges made to compensate the Agent or any such Lender for underwriting or administrative services and costs or losses performed or incurred, and to be performed or incurred, by the Agent and the Lenders in connection with this Agreement. Unless otherwise expressly provided herein, all fees and all charges, other than charges for the use of money, shall be fully earned and nonrefundable when due.

Section 3.8. Statements of Account.

The Agent will account to the Borrower monthly with a statement of Loans, accrued interest and Fees, charges and payments made pursuant to this Agreement and the other Loan Documents, and such account rendered by the Agent shall be deemed conclusive upon the Borrower absent manifest error. The failure of the Agent to deliver such a statement of accounts shall not relieve or discharge the Borrower from any of its obligations hereunder.

Section 3.9. Defaulting Lenders.

(a) Defaulting Lender. If for any reason any Lender (a “Defaulting Lender”) shall fail or refuse to perform any of its obligations under this Agreement or any other Loan Document to which it is a party within the time period specified for performance of such obligation or, if no time period is specified, if such failure or refusal continues for a period of 2 Business Days after notice from the

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Agent, then, in addition to the rights and remedies that may be available to the Agent or the Borrower under this Agreement or Applicable Law, such Defaulting Lender’s right to participate in the administration of the Loans, this Agreement and the other Loan Documents, including without limitation, any right (i) to vote in respect of, to consent to or to direct any action or inaction of the Agent or in respect of any other matter requiring the vote or consent of all Lenders or Requisite Lenders or (ii) to be taken into account in the calculation of Requisite Lenders, shall be suspended during the pendency of such failure or refusal. If for any reason a Lender fails to make timely payment to the Agent of any amount required to be paid to the Agent hereunder (without giving effect to any notice or cure periods), in addition to other rights and remedies which the Agent or the Borrower may have under the immediately preceding provisions or otherwise, the Agent shall be entitled (i) to collect interest from such Defaulting Lender on such delinquent payment for the period from the date on which the payment was due until the date on which the payment is made at the Federal Funds Rate, (ii) to withhold or setoff and to apply in satisfaction of the defaulted payment and any related interest, any amounts otherwise payable to such Defaulting Lender under this Agreement or any other Loan Document and (iii) to bring an action or suit against such Defaulting Lender in a court of competent jurisdiction to recover the defaulted amount and any related interest. Any amounts received by the Agent in respect of a Defaulting Lender’s Loan shall not be paid to such Defaulting Lender and shall be held by the Agent and paid to such Defaulting Lender upon the Defaulting Lender’s curing of its default.

(b) Assignment of Defaulting Lender’s Loan. The Borrower may demand that a Defaulting Lender, and upon such demand the Defaulting Lender shall promptly, assign its Loan to an Eligible Assignee for a purchase price equal to the principal balance of the Loan then owing to such Defaulting Lender plus any accrued but unpaid interest thereon and accrued but unpaid fees owing to such Defaulting Lender. Upon any such assignment, the Defaulting Lender’s interest in its Loan and its rights hereunder (but not its liability in respect thereof or under the Loan Documents or this Agreement to the extent the same relate to the period prior to the effective date of the purchase) shall terminate on the date of assignment, and the Defaulting Lender shall promptly execute all documents reasonably requested to surrender and transfer such interest to the Assignee thereof, including an appropriate Assignment and Acceptance Agreement and, notwithstanding Section 11.5.(c), shall pay to the Agent an assignment fee in the amount of $9,000. It shall be the sole responsibility of the Borrower to find an Eligible Assignee willing to acquire the Defaulting Lender’s Loan under this Section and at no time shall the Agent or any Lender be obligated in any way whatsoever to assist in finding an Eligible Assignee or to purchase a Defaulting Lender’s Loan. The exercise by the Borrower of its rights under this clause shall be at the Borrower’s sole cost and expense and at no cost or expense to the Agent or any of the other Lenders (excluding the Defaulting Lender). Nothing contained in this Section is intended to limit in any way whatsoever the rights and remedies that the Borrower may have with respect to the Defaulting Lender hereunder or otherwise.

Section 3.10. Taxes.

(a) Taxes Generally. All payments by the Borrower of principal of, and interest on, the Loans and all other Obligations shall be made free and clear of and without deduction for any present or future excise, stamp or other taxes, fees, duties, levies, imposts, charges, deductions, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding

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(i) franchise taxes, (ii) any taxes (other than withholding taxes) that would not be imposed but for a connection between the Agent or a Lender and the jurisdiction imposing such taxes (other than a connection arising solely by virtue of the activities of the Agent or such Lender pursuant to or in respect of this Agreement or any other Loan Document), (iii) any taxes imposed on or measured by any Lender’s assets, net income, receipts or branch profits and (iv) any taxes arising after the Agreement Date solely as a result of or attributable to a Lender changing its designated Lending Office after the date such Lender becomes a party hereto (such non-excluded items being collectively called “Taxes”). If any withholding or deduction from any payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any Applicable Law, then the Borrower will:

(i) pay directly to the relevant Governmental Authority the full amount required to be so withheld or deducted;

(ii) promptly forward to the Agent an official receipt or other documentation satisfactory to the Agent evidencing such payment to such Governmental Authority; and

(iii) pay to the Agent for its account or the account of the applicable Lender, as the case may be, such additional amount or amounts as is necessary to ensure that the net amount actually received by the Agent or such Lender will equal the full amount that the Agent or such Lender would have received had no such withholding or deduction been required.

(b) Tax Indemnification. If the Borrower fails to pay any Taxes when due to the appropriate Governmental Authority or fails to remit to the Agent, for its account or the account of the respective Lender, as the case may be, the required receipts or other required documentary evidence, the Borrower shall indemnify the Agent and the Lenders for any incremental Taxes, interest or penalties that may become payable by the Agent or any Lender as a result of any such failure. For purposes of this Section, a distribution hereunder by the Agent or any Lender to or for the account of any Lender shall be deemed a payment by the Borrower.

(c) Tax Forms. Prior to the date that any Lender or Participant organized under the laws of a jurisdiction outside the United States of America becomes a party hereto, such Person shall deliver to the Borrower and the Agent such certificates, documents or other evidence, as required by the Internal Revenue Code or Treasury Regulations issued pursuant thereto (including Internal Revenue Service Forms W-8ECI and W-8BEN, as applicable, or appropriate successor forms), properly completed, currently effective and duly executed by such Lender or Participant establishing that payments to it hereunder and under the Notes are (i) not subject to United States Federal backup withholding tax and (ii) not subject to United States Federal withholding tax under the Code. Each such Lender or Participant shall (x) deliver further copies of such forms or other appropriate certifications on or before the date that any such forms expire or become obsolete and after the occurrence of any event requiring a change in the most recent form delivered to the Borrower and (y) obtain such extensions of the time for filing, and renew such forms and certifications thereof, as

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may be reasonably requested by the Borrower or the Agent. The Borrower shall not be required to pay any amount pursuant to last sentence of subsection (a) above to any Lender or Participant that is organized under the laws of a jurisdiction outside of the United States of America or the Agent, if it is organized under the laws of a jurisdiction outside of the United States of America, if such Lender, Participant or the Agent, as applicable, fails to comply with the requirements of this subsection. If any such Lender or Participant fails to deliver the above forms or other documentation, then the Agent may withhold from such payment to such Lender such amounts as are required by the Code. If any Governmental Authority asserts that the Agent did not properly withhold or backup withhold, as the case may be, any tax or other amount from payments made to or for the account of any Lender, such Lender shall indemnify the Agent therefor, including all penalties and interest, any taxes imposed by any jurisdiction on the amounts payable to the Agent under this Section, and costs and expenses (including all fees and disbursements of any law firm or other external counsel and the allocated cost of internal legal services and all disbursements of internal counsel) of the Agent. The obligation of the Lenders under this Section shall survive repayment of all Obligations and the resignation or replacement of the Agent.

ARTICLE IV. YIELD PROTECTION, ETC.

Section 4.1. Additional Costs; Capital Adequacy.

(a) Additional Costs. The Borrower shall promptly pay to the Agent for the account of a Lender from time to time such amounts as such Lender may reasonably determine to be necessary to compensate such Lender for any costs incurred by such Lender that it reasonably determines are attributable to its making or maintaining of any LIBOR Loans or its obligation to make any LIBOR Loans hereunder, any reduction in any amount receivable by such Lender under this Agreement or any of the other Loan Documents in respect of any of such LIBOR Loans or such obligation or the maintenance by such Lender of capital in respect of its LIBOR Loans (such increases in costs and reductions in amounts receivable being herein called “Additional Costs”), resulting from any Regulatory Change that: (i) changes the basis of taxation of any amounts payable to such Lender under this Agreement or any of the other Loan Documents in respect of any of such LIBOR Loans (other than taxes imposed on or measured by the overall net income of such Lender or of its Lending Office for any of such LIBOR Loans by the jurisdiction in which such Lender has its principal office or such Lending Office), or (ii) imposes or modifies any reserve, special deposit or similar requirements (excluding Regulation D of the Board of Governors of the Federal Reserve System or other similar reserve requirement applicable to any other category of liabilities or category of extensions of credit or other assets by reference to which the interest rate on LIBOR Loans is determined) relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, or other credit extended by, or any other acquisition of funds by such Lender (or its parent corporation), or any commitment of such Lender or (iii) has or would have the effect of reducing the rate of return on capital of such Lender to a level below that which such Lender could have achieved but for such Regulatory Change (taking into consideration such Lender’s policies with respect to capital adequacy).

(b) Lender’s Suspension of LIBOR Loans. Without limiting the effect of the provisions of the immediately preceding subsection (a), if by reason of any Regulatory Change, any Lender either (i) incurs Additional Costs based on or measured by the excess above a specified level of the amount of a category of deposits or other liabilities of such Lender that includes deposits by reference to which

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the interest rate on LIBOR Loans is determined as provided in this Agreement or a category of extensions of credit or other assets of such Lender that includes LIBOR Loans or (ii) becomes subject to restrictions on the amount of such a category of liabilities or assets that it may hold, then, if such Lender so elects by notice to the Borrower (with a copy to the Agent), the obligation of such Lender to Continue, or to Convert Base Rate Loans into, LIBOR Loans hereunder shall be suspended until such Regulatory Change ceases to be in effect (in which case the provisions of Section 4.5. shall apply).

(c) Notification and Determination of Additional Costs. Each of the Agent and each Lender, as the case may be, agrees to notify the Borrower of any event occurring after the Agreement Date entitling the Agent or such Lender to compensation under any of the preceding subsections of this Section as promptly as practicable; provided, however, that the failure of the Agent or any Lender to give such notice shall not release the Borrower from any of its obligations hereunder. The Agent and each Lender, as the case may be, agrees to furnish to the Borrower (and in the case of a Lender to the Agent as well) a certificate setting forth the basis and amount of each request for compensation under this Section. Determinations by the Agent or such Lender, as the case may be, of the effect of any Regulatory Change shall be conclusive, absent manifest error, provided that such determinations are made on a reasonable basis and in good faith.

Section 4.2. Suspension of LIBOR Loans.

Anything herein to the contrary notwithstanding, if, on or prior to the determination of any LIBOR for any Interest Period:

(a) the Agent reasonably determines (which determination shall be conclusive, absent manifest error) that quotations of interest rates for the relevant deposits referred to in the definition of LIBOR are not being provided in the relevant amounts or for the relevant maturities for purposes of determining rates of interest for LIBOR Loans as provided herein or is otherwise unable to determine LIBOR, or

(b) the Agent reasonably determines (which determination shall be conclusive) that the relevant rates of interest referred to in the definition of LIBOR upon the basis of which the rate of interest for LIBOR Loans for such Interest Period is to be determined are not likely to adequately cover the cost to any Lender of maintaining LIBOR Loans for such Interest Period;

then the Agent shall give the Borrower and each Lender prompt notice thereof and, so long as such condition remains in effect, the Lenders shall be under no obligation to, and shall not, Continue LIBOR Loans or Convert Loans into LIBOR Loans and the Borrower shall, on the last day of each current Interest Period for each outstanding LIBOR Loan, either prepay such Loan or Convert such Loan into a Base Rate Loan.

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Section 4.3. Illegality.

Notwithstanding any other provision of this Agreement, if any Lender shall determine (which determination shall be conclusive and binding) that it is unlawful for such Lender to honor its obligation to maintain LIBOR Loans hereunder, then such Lender shall promptly notify the Borrower thereof (with a copy of such notice to the Agent) and such Lender’s obligation to Continue, or to Convert Base Rate Loans into, LIBOR Loans shall be suspended until such time as such Lender may again maintain LIBOR Loans (in which case the provisions of Section 4.5.shall be applicable).

Section 4.4. Compensation.

The Borrower shall pay to the Agent for the account of each Lender, upon the request of such Lender through the Agent, such amount or amounts as shall be sufficient to compensate such Lender for any loss, cost or expense that such Lender reasonably determines is attributable to:

(a) any payment or prepayment (whether mandatory or optional) of a LIBOR Loan, or Conversion of a LIBOR Loan, made by such Lender for any reason (including, without limitation, acceleration) on a date other than the last day of the Interest Period for such Loan; or

(b) any failure by the Borrower for any reason (including, without limitation, the failure of any of the applicable conditions precedent specified in Article V. to be satisfied) to borrow a LIBOR Loan from such Lender on the date for such borrowing, or to Convert a Base Rate Loan into a LIBOR Loan or Continue a LIBOR Loan on the requested date of such Conversion or Continuation.

Not in limitation of the foregoing, such compensation shall include, without limitation; in the case of a LIBOR Loan, an amount equal to the then present value of (i) the amount of interest that would have accrued on such LIBOR Loan for the remainder of the Interest Period at the rate applicable to such LIBOR Loan, less (ii) the amount of interest that would accrue on the same LIBOR Loan for the same period if LIBOR were set on the date on which such LIBOR Loan was repaid, prepaid or Converted or the date on which the Borrower failed to borrow, Convert or Continue such LIBOR Loan, as applicable, calculating present value by using as a discount rate LIBOR quoted on such date plus the Applicable Margin. Upon the Borrower’s request (made through the Agent), any Lender seeking compensation under this Section shall provide the Borrower with a statement setting forth the basis for requesting such compensation and the method for determining the amount thereof. Any such statement shall be conclusive absent manifest error.

Section 4.5. Treatment of Affected Loans.

If the obligation of any Lender to Continue, or to Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to Section 4.1.(b), Section 4.2., or Section 4.3. then such Lender’s LIBOR Loans shall be automatically Converted into Base Rate Loans on the last day(s) of the then current Interest Period(s) for LIBOR Loans (or, in the case of a Conversion required by Section 4.1.(b), Section 4.2., or Section 4.3. on such earlier date as such Lender may specify to the Borrower with a copy to the Agent) and, unless and until such Lender gives notice as provided below that the circumstances specified in Section 4.1., Section 4.2., or Section 4.3. that gave rise to such Conversion no longer exist:

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(a) to the extent that such Lender’s LIBOR Loans have been so Converted, all payments and prepayments of principal that would otherwise be applied to such Lender’s LIBOR Loans shall be applied instead to its Base Rate Loans; and

(b) all Loans that would otherwise be Continued by such Lender as LIBOR Loans shall be Continued instead as Base Rate Loans, and all Base Rate Loans of such Lender that would otherwise be Converted into LIBOR Loans shall remain as Base Rate Loans.

If such Lender gives notice to the Borrower (with a copy to the Agent) that the circumstances specified in Section 4.1. or Section 4.3. that gave rise to the Conversion of such Lender’s LIBOR Loans pursuant to this Section no longer exist (which such Lender agrees to do promptly upon such circumstances ceasing to exist) at a time when LIBOR Loans made by other Lenders are outstanding, then such Lender’s Base Rate Loans shall be automatically Converted, on the first day(s) of the next succeeding Interest Period(s) for such outstanding LIBOR Loans, to the extent necessary so that, after giving effect thereto, all Loans held by the Lenders holding LIBOR Loans and by such Lender are held pro rata (as to principal amounts, Types and Interest Periods) in accordance with the respective unpaid principal amount of the Loans held by each of the Lenders.

Section 4.6. Affected Lenders.

If (a) a Lender requests compensation pursuant to Section 3.10. or 4.1., and the Requisite Lenders are not also doing the same, or (b) the obligation of any Lender to Continue, or to Convert Base Rate Loans into LIBOR Loans shall be suspended pursuant to Section 4.1., 4.2. or 4.3. but the obligation of the Requisite Lenders shall not have been suspended under such Sections, then, so long as there does not then exist any Default or Event of Default, the Borrower may demand that such Lender (the “Affected Lender”), and upon such demand the Affected Lender shall promptly assign its Loan to an Eligible Assignee subject to and in accordance with the provisions of Section 11.5.(c) for a purchase price equal to the principal balance of the Loan then owing to the Affected Lender plus any accrued but unpaid interest thereon and accrued but unpaid fees owing to the Affected Lender. Each of the Agent, the Borrower and the Affected Lender shall reasonably cooperate in effectuating the replacement of such Affected Lender under this Section, but at no time shall the Agent, such Affected Lender nor any other Lender be obligated in any way whatsoever to initiate any such replacement or to assist in finding an Eligible Assignee. The exercise by the Borrower of its rights under this Section shall be at the Borrower’s sole cost and expense and at no cost or expense to the Agent, the Affected Lender or any of the other Lenders. The terms of this Section shall not in any way limit the Borrower’s obligation to pay to any Affected Lender compensation owing to such Affected Lender pursuant to Section 3.10. or 4.1.

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Section 4.7. Assumptions Concerning Funding of LIBOR Loans.

Calculation of all amounts payable to a Lender under this Article IV. shall be made as though such Lender had actually funded LIBOR Loans through the purchase of deposits in the relevant market bearing interest at the rate applicable to such LIBOR Loans in an amount equal to the amount of the LIBOR Loans and having a maturity comparable to the relevant Interest Period; provided, however, that each Lender may fund each of its LIBOR Loans in any manner it sees fit and the foregoing assumption shall be used only for calculation of amounts payable under this Article IV.

Section 4.8. Change of Lending Office.

Each Lender agrees that it will use reasonable efforts to designate an alternate Lending Office with respect to any portion of its Loan affected by the matters or circumstances described in Sections 3.10., 4.1. or 4.3. to reduce the liability of the Borrower or avoid the results provided thereunder, so long as such designation is not disadvantageous to such Lender as determined by such Lender in its sole discretion, except that such Lender shall have no obligation to designate a Lending Office located in the United States of America.

ARTICLE V. CONDITIONS PRECEDENT

Section 5.1. Initial Conditions Precedent.

The obligation of the Lenders to make the Loans, is subject to the following conditions precedent:

(a) The Agent shall have received each of the following, in form and substance satisfactory to the Agent:

(i) counterparts of this Agreement executed by each of the parties hereto;

(ii) Notes executed by the Borrower, payable to each Lender and complying with the terms of Section 2.9.;

(iii) the Guaranty executed by each of the Guarantors initially to be a party thereto;

(iv) an opinion of counsel to the Parent, the Borrower, and the Guarantors, addressed to the Agent and the Lenders and covering the matters set forth on Exhibit G;

(v) a certificate of incumbency signed by the Secretary or Assistant Secretary of the Parent with respect to each of the officers of the Parent authorized to execute and deliver on behalf of the Parent and the Borrower the Loan Documents to which the Parent or the Borrower is a party and to execute and deliver (or make by telephone in the case of Notices of Conversion or Continuation) on behalf of the Borrower the Notice of Borrowing, Notices of Conversion and Notices of Continuation;

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(vi) a certified copy (certified by the Secretary or Assistant Secretary of the Parent) of all necessary action taken by the Parent to authorize the execution, delivery and performance of the Loan Documents to which either the Parent or the Borrower is a party;

(vii) the certificate or articles of incorporation, articles of organization, certificate of limited partnership, declaration of trust or other comparable organizational instrument (if any) of the Parent, the Borrower and each Guarantor, certified as of a recent date by the Secretary of State of the State of formation in the case of the Parent, PREIT and PREIT-RUBIN and certified as of the Effective Date by the Secretary or Assistant Secretary (or other individual performing similar functions) in the case of the Parent, PREIT, PREIT-RUBIN and each Guarantor;

(viii) a Certificate of Good Standing or certificate of similar meaning with respect to the Parent, the Borrower and each Guarantor (and in the case of a limited partnership, the general partner of such Guarantor) issued as of a recent date by the Secretary of State of the State of formation of each such Person and certificates of qualification to transact business or other comparable certificates issued by each Secretary of State (and any state department of taxation, as applicable) of each state in which such Person is required to be so qualified;

(ix) a certificate of incumbency signed by the Secretary or Assistant Secretary (or other individual performing similar functions) of each Guarantor with respect to each of the officers of such Person authorized to execute and deliver the Loan Documents to which such Person is a party;

(x) copies certified by the Secretary or Assistant Secretary (or other individual performing similar functions) of the Parent, the Borrower and each Guarantor of the by-laws of such Person, if a corporation, the operating agreement, if a limited liability company, the partnership agreement, if a limited or general partnership, or other comparable document in the case of any other form of legal entity;

(xi) copies certified by the Secretary or Assistant Secretary (or other individual performing similar functions) of each Guarantor of all corporate, partnership, member or other necessary action taken by each Guarantor to authorize the execution, delivery and performance of the Loan Documents to which it is a party;

(xii) the Notice of Borrowing from the Borrower;

(xiii) the Transfer Authorizer Designation effective as of the Agreement Date;

(xiv) evidence satisfactory to the Agent that the Fees, if any, then due and payable under Section 3.5., together with all other fees, expenses and reimbursement amounts due and payable to the Agent and any of the Lenders for which payment has been demanded, have been paid; and

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(xv) such other documents and instruments as the Agent, or any Lender through the Agent, may reasonably request.

(b) In the good faith judgment of the Agent:

(i) There shall not have occurred or become known to the Agent or the Lenders any event, condition, situation or status since the date of the information contained in the financial and business projections, budgets, pro forma data and forecasts concerning the Parent, the Borrower and the other Subsidiaries delivered to the Agent and the Lenders prior to the Agreement Date that has had or could reasonably be expected to have a Material Adverse Effect;

(ii) No litigation, action, suit, investigation or other arbitral, administrative or judicial proceeding shall be pending or threatened which could reasonably be expected to (A) have a Material Adverse Effect or (B) restrain or enjoin, impose materially burdensome conditions on, or otherwise materially and adversely affect the ability of any Loan Party to fulfill its obligations under the Loan Documents to which it is a party; and

(iii) The Parent, the Borrower and the other Loan Parties shall have received all approvals, consents and waivers, and shall have made or given all necessary filings and notices as shall be required to consummate the transactions contemplated hereby without the occurrence of any default under or violation of (A) any Applicable Law or (B) any agreement, document or instrument to which any Loan Party is a party or by which any of them or their respective properties is bound, except for such approvals, consents, waivers, filings and notices the receipt, making or giving of which, or the failure to make, give or receive which, would not reasonably be likely to (1) have a Material Adverse Effect, or (2) restrain or enjoin, impose materially burdensome conditions on, or otherwise materially and adversely affect the ability of the Borrower, the Parent or any other Loan Party to fulfill its obligations under the Loan Documents to which it is a party.

Section 5.2. Conditions Precedent to All Credit Events.

The obligation of the Lenders to make the Loans, is subject to the further condition precedent that: (a) no Default, or Event of Default shall have occurred and be continuing as of the date of the making of the Loans or would exist immediately after giving effect thereto; (b) the representations and warranties made or deemed made by each Loan Party in the Loan Documents to which any of them is a party, shall be true and correct on and as of the date of the making of the Loans with the same force and effect as if made on and as of such date except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date) and except for changes in

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factual circumstances not prohibited hereunder and (c) in the case of the borrowing of the Loans, the Agent shall have received the Notice of Borrowing. Each Credit Event shall constitute a certification by the Borrower to the effect set forth in the preceding sentence (both as of the date of the giving of notice relating to such Credit Event and, unless the Borrower otherwise notifies the Agent prior to the date of such Credit Event, as of the date of the occurrence of such Credit Event). In addition, the Borrower shall be deemed to have represented to the Agent and the Lenders at the time the Loans are made that all conditions to the making of the Loans contained in Article V. have been satisfied or waived as permitted hereunder.

Section 5.3. Conditions as Covenants.

If the Lenders make the Loans, prior to the satisfaction of all conditions precedent set forth in Sections 5.1. and 5.2., the Borrower shall nevertheless cause such condition or conditions to be satisfied within 5 Business Days after the date of the making of the Loans unless waived as permitted hereunder. Unless set forth in writing to the contrary, the making of its Loan by a Lender shall constitute a confirmation by such Lender to the Agent and the other Lenders that insofar as such Lender is concerned the Borrower has satisfied the conditions precedent for the Loans set forth in Sections 5.1. and 5.2.

ARTICLE VI. REPRESENTATIONS AND WARRANTIES

Section 6.1. Representations and Warranties.

In order to induce the Agent and each Lender to enter into this Agreement and the Lenders to make the Loans, each of the Borrowers and the Parent represents and warrants to the Agent and each Lender as follows:

(a) Organization; Power; Qualification. Each of the Loan Parties is a corporation, partnership or other legal entity, duly organized or formed, validly existing and in good standing under the jurisdiction of its incorporation or formation, has the power and authority to own or lease its respective properties and to carry on its respective business as now being and hereafter proposed to be conducted and is duly qualified and is in good standing as a foreign corporation, partnership or other legal entity, and authorized to do business, in each jurisdiction in which the character of its properties or the nature of its business requires such qualification or authorization and where the failure to be so qualified or authorized could reasonably be expected to have, in each instance, a Material Adverse Effect.

(b) Ownership Structure. Part I of Schedule 6.1.(b) is a complete and correct list, as of the Agreement Date of all Subsidiaries of the Parent, setting forth for each such Subsidiary (i) the jurisdiction of organization of such Subsidiary, (ii) each Person holding any Equity Interest in such Subsidiary, (iii) the nature of the Equity Interests held by each such Person and (iv) the percentage of ownership of such Subsidiary represented by such Equity Interests. Except as disclosed in Part I of Schedule 6.1.(b), (w) each of the Parent and its Subsidiaries owns, free and clear of all Liens, and has the unencumbered right to vote, all outstanding Equity Interests in each Person shown to be held by it on such Schedule, (x) all of the issued and outstanding capital stock of each such Person organized as a corporation is validly issued, fully paid and nonassessable and (y) there are no outstanding subscriptions, options,

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warrants, commitments, preemptive rights or agreements of any kind (including, without limitation, any stockholders’ or voting trust agreements) for the issuance, sale, registration or voting of, or outstanding securities convertible into, any additional shares of capital stock of any class, or partnership or other ownership interests of any type in, any such Person. Part II of Schedule 6.1.(b) correctly sets forth, as of the Agreement Date, all Unconsolidated Affiliates of the Parent, including the correct legal name of such Person, the type of legal entity which each such Person is, and all Equity Interests in such Person held directly or indirectly by the Parent.

(c) Authorization of Loan Documents and Borrowings. The Borrower has the right and power, and has taken all necessary action to authorize it, to borrow hereunder. The Parent, the Borrower and each other Loan Party has the right and power, and has taken all necessary action to authorize it, to execute, deliver and perform each of the Loan Documents to which it is a party in accordance with their respective terms and to consummate the transactions contemplated hereby and thereby. The Loan Documents to which the Parent, the Borrower or any other Loan Party is a party have been duly executed and delivered by duly authorized signatories of such Person and each is a legal, valid and binding obligation of such Person enforceable against such Person in accordance with its respective terms, except as the same may be limited by bankruptcy, insolvency, fraudulent conveyance and other similar laws affecting the rights of creditors generally and the availability of equitable remedies for the enforcement of certain obligations (other than the payment of principal) contained herein or therein may be limited by equitable principles generally.

(d) Compliance of Loan Documents and Borrowing with Laws, etc. The execution, delivery and performance of this Agreement and the other Loan Documents to which the Parent, the Borrower or any other Loan Party is a party in accordance with their respective terms, and the borrowings hereunder, do not and will not, by the passage of time, the giving of notice, or both: (i) require any Governmental Approval or violate any Applicable Law (including all Environmental Laws) relating to any Loan Party or any other Subsidiary; (ii) result in a breach of or constitute a default under the declaration of trust, certificate or articles of incorporation, bylaws, partnership agreement or other organizational documents of any Loan Party or any other Subsidiary, or any indenture, agreement or other instrument to which any Loan Party or any other Subsidiary is a party or by which it or any of its respective properties may be bound, including, without limitation, the Existing Revolving Credit Agreement; or (iii) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by any Loan Party or any other Subsidiary other than in favor of the Agent for the benefit of the Lenders.

(e) Compliance with Law; Governmental Approvals. Each Loan Party and each other Subsidiary is in compliance with each Governmental Approval applicable to it and in compliance with all other Applicable Law relating to such Loan Party or such other Subsidiary except for noncompliances which, and Governmental Approvals the failure to possess could not reasonably be expected to have a Material Adverse Effect.

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(f) Title to Properties. Schedule 6.1.(f) is, as of the Agreement Date, a complete and correct listing of all Properties of the Parent, the Borrower, the other Loan Parties and all other Subsidiaries, setting forth, for each such Property, (i) to the best of the Loan Parties’ knowledge, the current occupancy status of such Property, (ii) whether such Property is a Project Under Development and, (iii) if such Property is a Project Under Development, the status of completion of such Property. Each of the Parent, the Borrower, the other Loan Parties and all other Subsidiaries has good, marketable and legal title to, or a valid leasehold interest in, its respective assets necessary to the conduct of their businesses.

(g) Existing Indebtedness; Liabilities. Part I of Schedule 6.1.(g) is, as of the Agreement Date, a complete and correct listing of all Indebtedness (including all Guarantees of Indebtedness) of the Parent, the Borrower, the other Loan Parties, the other Subsidiaries and any Unconsolidated Affiliates, and if such Indebtedness is secured by any Lien, a description of all of the property subject to such Lien. As of the Agreement Date, the Loan Parties and the other Subsidiaries have performed and are in compliance with all of the terms of all Indebtedness of the Loan Parties and other Subsidiaries and all instruments and agreements relating thereto, and no default or event of default, or event or condition which with the giving of notice, the lapse of time, or both, would constitute such a default or event of default, exists with respect to any such Indebtedness. Part II of Schedule 6.1.(g) is, as of the Agreement Date, to the best of the Loan Parties’ knowledge, a complete and correct listing of all Total Liabilities of the Parent, the Borrower, the other Loan Parties and the other Subsidiaries (excluding any Indebtedness set forth on Part I of such Schedule but including Contingent Obligations not set forth on Part I of such Schedule).

(h) Material Contracts. Schedule 6.1.(h) is, as of the Agreement Date, a true, correct and complete listing of all Material Contracts. As of the Agreement Date, all such Material Contracts are in full force and effect and each Loan Party and the other Subsidiaries that are parties to any Material Contract has performed and is in compliance with all of the terms of such Material Contract, and no default or event of default, or event or condition which with the giving of notice, the lapse of time, or both, would constitute such a default or event of default, exists with respect to any such Material Contract.

(i) Litigation. Except as set forth on Schedule 6.1.(i), there are no actions, suits, proceedings or, to the knowledge of the Parent or the Borrower, any investigations by any Governmental Authority pending (nor, to the knowledge of the Parent or the Borrower, are there any actions, suits, proceedings or investigations by any Governmental Authority threatened, nor is there any basis therefor) against or in any other way relating adversely to or affecting the Parent, the Borrower, any other Loan Party or any other Subsidiary or any of its respective property in any court or before any arbitrator of any kind or before or by any other Governmental Authority which could reasonably be expected to have a Material Adverse Effect, and there are no strikes, slow downs, work stoppages or walkouts or other labor disputes in progress or threatened relating to any Loan Party or any other Subsidiary which could reasonably be expected to have a Material Adverse Effect.

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(j) Taxes. All federal, state and other tax returns of the Loan Parties and the other Subsidiaries required by Applicable Law to be filed have been duly filed, and all federal, state and other taxes, assessments and other governmental charges or levies upon any Loan Party or any other Subsidiary and its respective properties, income, profits and assets which are due and payable have been paid, except any such nonpayment which is at the time permitted under Section 7.7. All charges, accruals and reserves on the books of the Parent and each of its Subsidiaries in respect of any taxes or other governmental charges are in accordance with GAAP.

(k) Financial Statements. The Parent has furnished to each Lender copies of (i) the audited consolidated balance sheet of the Parent and its consolidated Subsidiaries for the fiscal year ending December 31, 2007, and the related consolidated statements of income, shareholders’ equity and cash flows for the fiscal year ending on such date, with the opinion thereon of KPMG LLP and (ii) the unaudited consolidated balance sheet of the Parent and its consolidated Subsidiaries for the fiscal quarter ending March 31, 2008, and the related consolidated statements of income, shareholders’ equity and cash flows of the Parent and its consolidated Subsidiaries for the fiscal quarter ending on such date. Such balance sheets and statements (including in each case related schedules and notes) present fairly, in accordance with GAAP consistently applied throughout the periods involved, and in all material respects, the consolidated financial position of the Parent and its consolidated Subsidiaries as at their respective dates and the results of operations and the cash flow for such periods (subject, as to interim statements, to changes resulting from normal year-end audit adjustments). Neither the Parent nor any of its Subsidiaries has on the Agreement Date any material contingent liabilities, liabilities, liabilities for taxes, unusual or long-term commitments or unrealized or forward anticipated losses from any unfavorable commitments, except as referred to or reflected or provided for in said financial statements.

(l) No Material Adverse Change. Since December 31, 2007, there has been no material adverse change in the consolidated financial condition, results of operations, business or prospects of the Parent and its consolidated Subsidiaries taken as a whole. Each of the Parent, the Borrower, the other Loan Parties and the other Subsidiaries is Solvent.

(m) ERISA. No member of the ERISA Group maintains or has ever maintained any Benefit Plan. No member of the ERISA Group contributes or is obligated to contribute to or has ever contributed to or been obligated to contribute to any Multiemployer Plan. No member of the ERISA Group has failed to make any contribution or payment in respect of any Benefit Arrangement, or made any amendment to any Benefit Arrangement, which has resulted or, to the Borrower’s or the Parent’s knowledge, could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code.

(n) Absence of Defaults. No Loan Party nor any other Subsidiary is in default under its declaration of trust, certificate or articles of incorporation, bylaws, partnership agreement or other similar organizational documents, and no event has occurred, which has not been remedied, cured or waived: (i) which constitutes a Default or an Event of Default; or (ii) which constitutes, or which with the passage of time, the giving of notice, or both, would constitute, a default or event of default by any Loan Party or any other Subsidiary under any agreement (excluding any Loan Document) or judgment, decree or order to which any Loan Party or any other Subsidiary is a party or by which any such Person or any of its respective properties may be bound where such default or event of default could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

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(o) Environmental Laws. Each of the Loan Parties and the other Subsidiaries is in compliance with all applicable Environmental Laws and has obtained all Governmental Approvals which are required under Environmental Laws and is in compliance with all terms and conditions of such Governmental Approvals, where with respect to each of the foregoing the failure to obtain or to comply with could be reasonably expected to have a Material Adverse Effect. Except for any of the following matters that could not be reasonably expected to have a Material Adverse Effect, neither the Parent nor the Borrower is aware of, nor has either received notice of, any past or present events, conditions, circumstances, activities, practices, incidents, actions, or plans which, with respect to any Loan Party or any other Subsidiary, may unreasonably interfere with or prevent compliance or continued compliance with Environmental Laws, or may give rise to any common-law or legal liability, based on or related to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling or the emission, discharge, release or threatened release into the environment, of any Hazardous Material; and there is no civil, criminal, or administrative action, suit, demand, claim, hearing, notice, or demand letter, notice of violation, investigation, or proceeding pending or, to the Parent’s or the Borrower’s knowledge after due inquiry, threatened, against any Loan Party or any other Subsidiary relating in any way to Environmental Laws which could be reasonably expected to have a Material Adverse Effect.

(p) Investment Company; Etc. No Loan Party nor any other Subsidiary is (i) an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or (ii) subject to any other Applicable Law which purports to regulate or restrict its ability to borrow money or to consummate the transactions contemplated by this Agreement or to perform its obligations under any Loan Document to which it is a party.

(q) Margin Stock. No Loan Party nor any other Subsidiary is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System.

(r) Affiliate Transactions. Except as permitted by Section 8.8., no Loan Party is a party to or bound by any agreement or arrangement (whether oral or written) to which any Affiliate of the Borrower is a party.

(s) Intellectual Property. Each Loan Party and each other Subsidiary own or have the right to use, under valid license agreements or otherwise, all material patents, licenses, franchises, trademarks, trademark rights, trade names, trade name rights, trade secrets and copyrights (collectively, “Intellectual Property”) necessary to the conduct of the businesses of the Borrower and its Subsidiaries, taken as a whole, as now conducted and as contemplated by the Loan Documents, without known conflict with any patent, license,

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franchise, trademark, trade secret, trade name, copyright, or other proprietary right of any other Person. All such Intellectual Property is fully protected and/or duly and properly registered, filed or issued in the appropriate office and jurisdictions for such registrations, filing or issuances. No material claim has been asserted by any Person with respect to the use of any such Intellectual Property, or challenging or questioning the validity or effectiveness of any such Intellectual Property. The use of such Intellectual Property by the Loan Parties and the other Subsidiaries does not infringe on the rights of any Person, subject to such claims and infringements as do not, in the aggregate, give rise to any liabilities on the part of any Loan Party or any other Subsidiary that could reasonably be expected to have a Material Adverse Effect.

(t) Business. As of the Agreement Date, the Parent, the Borrower, the other Loan Parties and the other Subsidiaries are engaged in the business of acquiring, developing, owning, operating and managing primarily retail real estate, but also office, multi-family and industrial properties, together with related business activities and investments incidental thereto.

(u) Accuracy and Completeness of Information. All written information, reports and other papers and data (excluding financial projections or other forward looking statements) furnished to the Agent or any Lender by, or at the direction of, the Parent, the Borrower, any other Loan Party or any other Subsidiary were, at the time the same were so furnished, to the best of the Parent’s and the Borrower’s knowledge, complete and correct in all material respects, to the extent necessary to give the recipient a true and accurate knowledge of the subject matter, or, in the case of financial statements, present fairly, in accordance with GAAP consistently applied throughout the periods involved, the financial position of the Persons involved as at the date thereof and the results of operations for such periods. All financial projections and other forward looking statements prepared by or on behalf of the Parent, the Borrower or any other Loan Party or Subsidiary that have been or may hereafter be made available to the Agent or any Lender were or will be prepared in good faith based on reasonable assumptions. No document furnished or written statement made, in each case by, or at the direction of any Loan Party or any other Subsidiary to the Agent or any Lender in connection with the negotiation, preparation or execution of any Loan Document contains or will contain any untrue statement of a fact material to the creditworthiness of any Loan Party or any other Subsidiary or omits or will omit to state a fact material to the creditworthiness of any Loan Party or any other Subsidiary which is necessary in order to make the statements contained therein not misleading.

(v) Not Plan Assets. None of the assets of any Loan Party or any other Subsidiary constitutes “plan assets” within the meaning of ERISA, the Internal Revenue Code and the respective regulations promulgated thereunder, of any ERISA Benefit Plan. The execution, delivery and performance of the Loan Documents by the Loan Parties, and the borrowing and repayment of amounts thereunder, do not and will not constitute “prohibited transactions” under ERISA or the Internal Revenue Code for which no statutory or administrative exemption is available.

(x) Non-Guarantor Subsidiaries. Schedule 6.1.(x) is, as of the Agreement Date, a complete and correct list of all Subsidiaries which are not required to become a Guarantor as of the Agreement Date, setting forth for each such Person, the correct legal name of such Person, the type of legal entity which each such Person is, all equity interests in such Person held directly or indirectly by the Parent and the reason such Subsidiary is not required to become a Guarantor as of the Agreement Date.

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(y) OFAC. None of the Borrower, any of the other Loan Parties, any of the other Subsidiaries, or any other Affiliate of the Borrower: (i) is a person named on the list of Specially Designated Nationals or Blocked Persons maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) available at http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as otherwise published from time to time; (ii) is (A) an agency of the government of a country, (B) an organization controlled by a country, or (C) a person resident in a country that is subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise published from time to time, as such program may be applicable to such agency, organization or person; or (iii) derives any of its assets or operating income from investments in or transactions with any such country, agency, organization or person; and none of the proceeds from the Loans will be used to finance any operations, investments or activities in, or make any payments to, any such country, agency, organization, or person.

Section 6.2. Survival of Representations and Warranties, Etc.

All statements contained in any certificate, financial statement or other instrument delivered by, or at the direction of, any Loan Party or any other Subsidiary to the Agent or any Lender (other than the content of any projections or other similar forward looking statements) pursuant to or in connection with this Agreement or any of the other Loan Documents (including, but not limited to, any such statement made in or in connection with any amendment thereto or any statement contained in any certificate, financial statement or other instrument delivered by, or at the direction of, the Parent or the Borrower prior to the Agreement Date and delivered to the Agent or any Lender in connection with closing the transactions contemplated hereby) shall constitute representations and warranties made by the Parent and the Borrower under this Agreement. All representations and warranties made under this Agreement and the other Loan Documents shall be deemed to be made at and as of the Agreement Date, the Effective Date and at and as of the date of the occurrence of any Credit Event, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date) and except for changes in factual circumstances not prohibited hereunder. All such representations and warranties shall survive the effectiveness of this Agreement, the execution and delivery of the Loan Documents and the making of the Loans.

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ARTICLE VII. AFFIRMATIVE COVENANTS

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if required pursuant to Section 11.6., all of the Lenders) shall otherwise consent in the manner provided for in Section 11.6., the Borrower and the Parent, as applicable, shall comply with the following covenants:

Section 7.1. Financial Reporting and Other Information.

The Parent shall furnish to the Agent each of the following:

(a) Quarterly Financial Statements. As soon as available and in any event when the same is required to be filed with the Securities and Exchange Commission, but in no event later than 45 days after the close of each of the first, second and third fiscal quarters of the Parent, the unaudited consolidated balance sheet of the Parent and its Subsidiaries as at the end of such period and the related unaudited consolidated statements of income and cash flows of the Parent and its Subsidiaries for such period, and setting forth in each case in comparative form the figures for the corresponding periods of the previous fiscal year, all of which shall be accompanied by a statement signed by the chief financial officer of the Parent on behalf of the Parent stating that, in his or her opinion, such statements present fairly, in accordance with GAAP and in all material respects, the consolidated financial position of the Parent and its Subsidiaries as at the date thereof and the results of operations for such period (subject to normal year-end audit adjustments).

(b) Year-End Statements. As soon as available and in any event when the same is required to be filed with the Securities and Exchange Commission, but in no event later than 90 days after the end of each fiscal year of the Parent, the audited consolidated balance sheet of the Parent and its Subsidiaries as at the end of such fiscal year and the related audited consolidated statements of income and cash flows of the Parent and its Subsidiaries for such fiscal year, setting forth in comparative form the figures as at the end of and for the previous fiscal year, all of which shall be (a) accompanied by a statement signed by the chief financial officer of the Parent on behalf of the Parent stating that, in his or her opinion, such statements present fairly, in accordance with GAAP and in all material respects, the financial position of the Parent and its Subsidiaries as at the date thereof and the result of operations for such period and (b) certified by KPMG LLP or any other independent certified public accountants of recognized national standing acceptable to the Agent and the Requisite Lenders, whose opinion shall be unqualified and in scope and substance satisfactory to the Agent and the Requisite Lenders and who shall have authorized the Parent to deliver such financial statements and certification thereof to the Agent and the Lenders pursuant to this Agreement.

(c) Compliance Certificate. At the time the financial statements are furnished pursuant to the immediately preceding subsections (a) and (b), a certificate substantially in the form of Exhibit H (a “Compliance Certificate”) executed on behalf of the Parent by the chief financial officer of the Parent (i) setting forth as of the end of such quarterly accounting period or fiscal year, as the case may be, the calculations required to establish whether or not the Parent and the Borrower, as applicable, were in compliance with the covenants contained in Section 8.1., including, without limitation, the reconciliation calculations and other calculations utilized by the Parent to adjust the results set forth in the Parent’s financial statements (which may include a consolidation of FIN 46 Entities) to account for the FIN 46 Entities in accordance with Section 1.2 hereof; and (ii) stating that no Default or Event of Default exists, or, if such is not the case, specifying such Default or Event of Default and its nature, when it occurred and, whether it is continuing and the steps being taken by the Parent or the Borrower with respect to such event, condition or failure.

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(d) Reports from Accountants. Upon the request of the Agent, copies of all reports, if any, submitted to the Parent or its Board of Trustees by its independent public accountants including, without limitation, any management report.

(e) Shareholder Information. Promptly upon the mailing thereof to the shareholders of the Parent generally, copies of all financial statements, reports, proxy statements and other written information so mailed and promptly upon the issuance thereof copies of all press releases issued by the Parent, the Borrower, any Subsidiary or any other Loan Party; provided, however, the Parent need not deliver any such information to the Agent so long as the Parent makes such information generally available on its website free of charge and the Parent notifies the Agent when any such information has been posted to the Parent’s website.

(f) Securities Filings. Within 10 Business Days of the filing thereof, copies of all registration statements (excluding the exhibits thereto and any registration statements on Form S-8 or its equivalent), reports on Forms 10-K, 10-Q and 8-K (or their equivalents) and all other periodic reports which the Parent, any other Loan Party or any other Subsidiary shall file with the Securities and Exchange Commission (or any Governmental Authority substituted therefor) or any national securities exchange; provided, however, the Parent need not deliver any such information to the Agent so long as the Parent makes such information generally available on its website free of charge and the Parent notifies the Agent when any such information has been posted to the Parent’s website.

(g) [Reserved.]

(h) Annual Budget and Plans of the Parent. No later than 15 days after the beginning of each fiscal year of the Parent, projected balance sheets, operating statements and cash flow budgets of the Parent and its Subsidiaries on a consolidated basis for each quarter of such fiscal year, all itemized in reasonable detail. The foregoing shall be accompanied by pro forma calculations, together with detailed assumptions, required to establish whether or not the Parent, and when appropriate its consolidated Subsidiaries, will be in compliance with the covenants contained in Section 8.1. at the end of each fiscal quarter of such fiscal year.

(i) Report on Sources and Uses Funds. Within 20 Business Days of the Agent’s request therefor, a report in form and substance reasonably satisfactory to the Agent detailing the Parent’s, together with its Subsidiaries’, projected sources and uses of cash for the period of four consecutive fiscal quarters immediately following the date of the Agent’s request. Such sources shall include but not be limited to excess operating cash flow, availability under this Agreement, unused availability under committed development loans, unfunded committed equity and any other committed sources of funds. Such uses shall include but not be limited to cash obligations for binding acquisitions, unfunded development costs, capital expenditures, debt service, overhead, dividends, maturing project loans, hedge settlements and other anticipated uses of cash.

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(j) Ownership Share/Recourse Share Calculations. Promptly upon the request of the Agent, evidence of the Parent’s calculation of the Ownership Share and Recourse Share with respect to a Subsidiary or an Unconsolidated Affiliate, such evidence to be in form and detail reasonably satisfactory to the Agent.

(k) ERISA Notices. If and when any member of the ERISA Group (i) gives notice to the PBGC of any “reportable event” (as defined in Section 4043 of ERISA) with respect to any Benefit Plan which might constitute grounds for a termination of such Benefit Plan under Title IV of ERISA, or knows that the plan administrator of any Benefit Plan has given notice of any such reportable event, a copy of the notice of such reportable event given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer any Benefit Plan, a copy of such notice; (iv) applies for a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code, a copy of such application; (v) gives notice of intent to terminate any Benefit Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Benefit Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or contribution to any Benefit Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Benefit Plan or Benefit Arrangement which has resulted or, to the Parent’s or the Borrower’s knowledge, could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code, a certificate of the controller of the Borrower setting forth details as to such occurrence and action, if any, which the Borrower or applicable member of the ERISA Group is required or proposes to take.

(l) Litigation and Governmental Proceedings. To the extent the Parent or the Borrower is aware of the same, prompt notice of the commencement of any proceeding or investigation by or before any Governmental Authority and any action or proceeding in any court or other tribunal or before any arbitrator against or in any other way relating adversely to, or adversely affecting, the Parent, the Borrower, any other Loan Party or any other Subsidiary or any of their respective properties, assets or businesses which, if determined or resolved adversely to such Person, could reasonably be expected to have a Material Adverse Effect, and prompt notice of the receipt of notice that any United States income tax returns of the Parent, the Borrower or any of its Subsidiaries are being audited.

(m) Modification of Organizational Documents. At least five (5) Business Days prior to the effectiveness thereof, a copy of any material amendment or other material modification to the Trust Agreement, the Partnership Agreement or other similar organizational documents of the Parent or the Borrower.

(n) Material Adverse Change. Prompt notice of any change in the business, assets, liabilities, financial condition, results of operations of the Parent, the Borrower, any Subsidiary or any other Loan Party which has had or could reasonably be expected to have Material Adverse Effect.

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(o) Default. Prompt notice of the occurrence of (i) any Default, or (ii) Event of Default, or (iii) the occurrence of any event which constitutes or which with the passage of time, the giving of notice, or otherwise, would constitute an event of default by the Parent, the Borrower, any other Loan Party or any other Subsidiary under any Material Contract to which any such Person is a party or by which any such Person or any of its respective properties may be bound.

(p) Material Contracts. Promptly upon entering into any Material Contract after the Agreement Date, a copy of such Material Contract to the Agent.

(q) Other Information, Etc. From time to time and promptly upon each request, such data, certificates, reports, statements, opinions of counsel, documents or further information regarding the business, assets, liabilities, financial condition, results of operations of the Parent, the Borrower, any other Loan Party or any other Subsidiary as the Agent (or any Lender through the Agent) may reasonably request.

(r) USA Patriot Act Notice; Compliance. The USA Patriot Act of 2001 (Public Law 107-56) and federal regulations issued with respect thereto require all financial institutions to obtain, verify and record certain information that identifies individuals or business entities which open an “account” with such financial institution. Consequently, a Lender (for itself and/or as Agent for all Lenders hereunder) may from time-to-time request, and the Borrower shall, and shall cause the other Loan Parties, to provide to such Lender, such Loan Party’s name, address, tax identification number and/or such other identification information as shall be necessary for such Lender to comply with federal law. An “account” for this purpose may include, without limitation, a deposit account, cash management service, a transaction or asset account, a credit account, a loan or other extension of credit, and/or other financial services product.

(s) Public/Private Information. The Parent and the Borrower shall cooperate with the Agent in connection with the publication of certain materials and/or information provided by or on behalf of the Parent or the Borrower. Documents required to be delivered pursuant to the Loan Documents shall be delivered by or on behalf of the Parent or Borrower, as applicable, to the Agent and the Lenders (collectively, “Information Materials”) pursuant to this Article and shall designate Information Materials (a) that are either available to the public or not material with respect to the Parent, the Borrower and their respective Subsidiaries or any of their respective securities for purposes of United States federal and state securities laws, as “Public Information” and (b) that are not Public Information as “Private Information”.

Upon receipt of any of the items referred to above (other than items requested under the preceding subsection (q)), the Agent shall promptly forward a copy thereof to each Lender at its Lending Office (or in the case of items available on the Parent’s website, the Agent shall give each Lender notice thereof). Upon receipt of any item requested by a Lender under the preceding subsection (q), the Agent shall promptly forward a copy thereof to such Lender at its Lending Office.

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Section 7.2. Preservation of Existence and Similar Matters.

Except as otherwise permitted under Section 8.5., the Borrower and the Parent shall preserve and maintain, and cause each Subsidiary to preserve and maintain, its respective existence, rights, franchises, licenses and privileges in the jurisdiction of its incorporation or formation and qualify and remain qualified and authorized to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification and authorization and where the failure to be so authorized and qualified could reasonably be expected to have a Material Adverse Effect.

Section 7.3. Compliance with Applicable Law.

The Borrower and the Parent shall comply, and cause each Subsidiary to comply, with all Applicable Law, including the obtaining of all Governmental Approvals, the failure with which to comply could reasonably be expected to have a Material Adverse Effect.

Section 7.4. Maintenance of Property.

In addition to the requirements of any of the other Loan Documents, the Borrower and the Parent shall, and shall cause each Subsidiary to, (a) protect and preserve all of its properties, including, but not limited to, all Intellectual Property, and maintain in good repair, working order and condition all tangible properties, ordinary wear and tear and casualty excepted, and (b) from time to time make or cause to be made all needed and appropriate repairs, renewals, replacements and additions to such properties, so that the business carried on in connection therewith may be properly and advantageously conducted at all times except where the failure to do any of the foregoing under clauses (a) and (b) herein could not reasonably be expected to have a Material Adverse Effect.

Section 7.5. Conduct of Business.

The Parent and the Borrower shall at all times carry on, and, except as permitted under Section 8.5., cause each of their Subsidiaries to carry on, its respective businesses as described in Section 6.1.(t).

Section 7.6. Insurance.

The Borrower and the Parent shall maintain, and cause each Loan Party to maintain, insurance with financially sound and reputable insurance companies against such risks and in such amounts as is customarily maintained by similar businesses or as may be required by Applicable Law. The Borrower and the Parent shall from time to time deliver to the Agent upon request a detailed list, together with copies of all policies of the insurance then in effect, stating the names of the insurance companies, the amounts and rates of the insurance, the dates of the expiration thereof and the properties and risks covered thereby.

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Section 7.7. Payment of Taxes and Claims.

The Borrower and the Parent shall pay or discharge, and cause each Subsidiary to pay and discharge, when due (a) all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or upon any properties belonging to it, and (b) all lawful claims of materialmen, mechanics, carriers, warehousemen and landlords for labor, materials, supplies and rentals which, if unpaid, might become a Lien on any properties of such Person, except in each case, any such non-payment or failure to discharge which could not reasonably be expected to have a Material Adverse Effect; provided, however, that this Section shall not require the payment or discharge of any such tax, assessment, charge, levy or claim which is being contested in good faith by appropriate proceedings which operate to suspend the collection thereof and for which adequate reserves have been established on the books of the Borrower, the Parent or such Subsidiary, as applicable, in accordance with GAAP.

Section 7.8. Books and Records; Visits and Inspections.

The Borrower and the Parent will keep, and will cause each Subsidiary to keep, proper books of record and account in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities. The Borrower and the Parent will permit, and will cause each Subsidiary to permit, representatives of the Agent or any Lender to visit and inspect any of their respective properties, to examine and make abstracts from any of their respective books and records and to discuss their respective affairs, finances and accounts with their respective officers, employees and independent public accountants in the Borrower’s presence prior to an Event of Default, all at such reasonable times during business hours and as often as may reasonably be desired and so long as no Event of Default shall have occurred and be continuing, with reasonable notice and, at any time after the occurrence and during the continuance of a Default or Event of Default, all at the Borrower’s expense.

Section 7.9. Use of Proceeds.

(a) Loans. The Borrower will only use the proceeds of Loans (i) for the payment of pre-development and development costs incurred in connection with Properties; (ii) to finance acquisitions and the general working capital needs of the Parent, the Borrower and the Borrower’s Subsidiaries; (iii) to finance the repayment of Indebtedness of the Parent, the Borrower and the Borrower’s Subsidiaries; (iv) to finance Investments in Unconsolidated Affiliates of the Parent; and (v) for other general corporate purposes of the Parent, the Borrower and the Borrower’s Subsidiaries.

(b) Margin Stock. The Borrower and the Parent shall not, and shall not permit any Subsidiary, to use any part of the proceeds of any Loan to purchase or carry, or to reduce or retire or refinance any credit incurred to purchase or carry, any margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System) or to extend credit to others for the purpose of purchasing or carrying any such margin stock; provided, however, subject to the other terms and conditions of the Loan Documents,

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the Borrower may use proceeds of Loans (i) to purchase Equity Interests of publicly traded Persons to the extent permitted under Section 8.1.(e)(ii); (ii) to repurchase Preferred Equity Interests of the Parent issued and outstanding as of the Effective Date (and Equity Interests issued in exchange or replacement for such Preferred Equity Interests); and (iii) to repurchase outstanding common Equity Interests of the Parent so long as the aggregate amount of such proceeds used to repurchase such common Equity Interest does not exceed $50,000,000 during the term of this Agreement. Notwithstanding any other provision of this Agreement or any other Loan Document, no Loan shall be made if the Agent determines that making of such Loan could reasonably be expected to result in a violation of such Regulation U.

Section 7.10. Environmental Matters.

The Borrower and the Parent shall comply, and cause all of its Subsidiaries to comply, with all Environmental Laws the failure to comply with which could reasonably be expected to have a Material Adverse Effect. If the Borrower, the Parent or any Subsidiary shall (a) receive notice that any violation of any Environmental Law may have been committed or is about to be committed by such Person, (b) receive notice that any administrative or judicial complaint or order has been filed or is about to be filed against the Borrower, any Subsidiary or any other Loan Party alleging violations of any Environmental Law or requiring the Borrower, or Subsidiary or any other Loan Party to take any action in connection with the release of Hazardous Materials or (c) receive any notice from a Governmental Authority or private party alleging that the Borrower, or Subsidiary or any other Loan Party may be liable or responsible for costs associated with a response to or cleanup of a release of a Hazardous Materials or any damages caused thereby, the Borrower shall provide the Agent with a copy of such notice within 10 days after the receipt thereof by the Borrower or any of the Subsidiaries. The Borrower, the Parent and the Subsidiaries shall promptly take all actions necessary to prevent the imposition of any Liens on any of their respective properties arising out of or related to any Environmental Laws.

Section 7.11. Further Assurances.

At the Borrower’s cost and expense, upon request of the Agent, the Borrower shall duly execute and deliver or cause to be duly executed and delivered, to the Agent such further instruments, documents and certificates, and do and cause to be done such further acts that may be reasonably necessary or advisable in the reasonable opinion of the Agent to carry out more effectively the provisions and purposes of this Agreement and the other Loan Documents.

Section 7.12. Material Contracts.

The Borrower and the Parent shall, and shall cause each Subsidiary to, duly and punctually perform and comply with any and all material representations, warranties, covenants and agreements expressed as binding upon the Borrower, the Parent or such Subsidiary under any Material Contract neither the Borrower nor the Parent shall, nor shall the Borrower permit any Subsidiary, to do or knowingly permit to be done anything to impair materially the value of any of the Material Contracts.

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Section 7.13. REIT Status.

The Parent shall at all times maintain its status as a REIT.

Section 7.14. Exchange Listing.

The Parent shall maintain at least one class of common shares of the Parent having trading privileges on the New York Stock Exchange or the American Stock Exchange or which is subject to price quotations on The NASDAQ Stock Market’s National Market System.

Section 7.15. Guarantors.

(a) Generally. Subject to subsection (d) below, the Parent shall cause any Subsidiary (other than an Excluded Subsidiary) of the Parent or the Borrower that is not already a Guarantor and to which any of the following conditions apply (each a “New Guarantor”), to execute and deliver to the Agent an Accession Agreement to the Guaranty, together with the other items required to be delivered under the immediately following subsection (b):

(i) such Subsidiary Guarantees, or otherwise becomes obligated in respect of, any Indebtedness of any other Person (other than Indebtedness under Guarantees which are solely Guarantees of performance and not of payment and other Guarantees of such Person for liabilities arising from Nonrecourse Exceptions); or

(ii) such Subsidiary is a Wholly Owned Subsidiary.

Any such Accession Agreement and the other items required under such subsection (b) must be delivered to the Agent no later than 45 days following the last day of the Parent’s fiscal quarter during which any of the above conditions first applies to a Subsidiary. Notwithstanding the foregoing, if the assets of a Subsidiary consist solely of (x) Equity Interests in another Subsidiary and (y) cash and other assets of nominal value incidental to such Subsidiary’s ownership of the other Subsidiary, and such other Subsidiary is not required to become a Guarantor under the terms of this Section, then such Subsidiary shall not be required to become a Guarantor under the terms of this Section.

(b) Required Deliveries. Each Accession Agreement delivered by a New Guarantor under the immediately preceding subsection (a) shall be accompanied by (i) the items that would have been delivered under Sections 5.1.(a)(iv), and (vii) through (xi) if such New Guarantor had been a Guarantor on the Agreement Date; (ii) if such New Guarantor is not a Wholly Owned Subsidiary, a written acknowledgement of all Persons (other than Loan Parties) holding Equity Interests in such New Guarantor, pursuant to which such Persons acknowledge and consent to the Guaranty made by such New Guarantor and (iii) such other documents and instruments as the Agent may reasonably request.

(c) Release of Certain Guarantors. The Borrower may request in writing that the Agent release a Guarantor, other than the Parent, if (i) such Guarantor (A) upon its release as a Guarantor will become an Excluded Subsidiary or cease to be a Subsidiary or

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(B) is no longer required to be a party to the Guaranty under this Section, in any such case as a result of events or transactions not otherwise prohibited under any of the Loan Documents and (ii) no Event of Default shall then be in existence or would occur as a result of such release. Together with any such request, the Borrower shall deliver to the Agent a certificate signed by the chief financial officer of the Parent certifying that the conditions set forth in immediately preceding clauses (i) and (ii) will be true and correct upon the release of such Guarantor. No later than 10 Business Days following the Agent’s receipt of such written request and the related certificate, and so long as the conditions set forth in immediately preceding clauses (i) and (ii) will be true and correct, the release shall be effective and Agent shall execute and deliver, at the sole cost and expense of the Borrower, such documents as Borrower may reasonably request to evidence such release.

Section 7.16. Release of PREIT-Rubin, Inc. as Borrower.

PREIT-Rubin, Inc. may request in writing that the Agent release it as a Borrower (but not as a Guarantor unless otherwise permitted by Section 7.15(c)), so long as PREIT Associates, L.P. delivers a certificate signed by the chief financial officer of the Parent certifying that no Event of Default then exists or would occur as a result of such release. No later than 5 Business Days following the Agent’s receipt of such written request and the related certificate, and so long as the condition set forth above will be true and correct, the release shall be effective and Agent shall execute and deliver, at the sole cost and expense of the Borrower, such documents as Borrower may reasonably request to evidence such release. Upon the effectiveness of such release, the defined term “Borrower” as used in the Loan Documents shall mean PREIT Associates, L.P. and its successors and permitted assigns.

Section 7.17. Interest Rate Agreements.

No later than 30 days after the Agreement Date, the Borrower shall enter into, and thereafter maintain until March 20, 2010, Interest Rate Agreements, which shall be on terms, for periods and with counterparties reasonably acceptable to the Agent, and pursuant to which the Borrower is protected against increases in interest rates from and after the date of such contracts as to a notional amount of not less than 80% of the outstanding principal balance of the Loans.

ARTICLE VIII. NEGATIVE COVENANTS

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if required pursuant to Section 11.6., all of the Lenders) shall otherwise consent in the manner set forth in Section 11.6., the Borrower and the Parent, as applicable, shall comply with the following covenants:

Section 8.1. Financial Covenants.

(a) Minimum Tangible Net Worth. The Parent shall not permit its Tangible Net Worth determined on a consolidated basis at the end of any fiscal quarter to be less than (i) 75% of the Tangible Net Worth of the Parent as of December 31, 2007, plus (ii) 75% of the Net Proceeds of all Equity Issuances effected at any time after December 31, 2007 by the Parent or any of its Subsidiaries to any

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Person other than the Parent or any of its Subsidiaries (in the case of any Equity Issuance effected by a Subsidiary, the amount of such Net Proceeds shall be appropriately adjusted to account for minority interests consistent with GAAP). Net Proceeds from the following Equity Issuances shall be excluded from the immediately preceding clause (ii): (x) Equity Issuances of Equity Interest of the Parent made after December 31, 2007 solely in exchange for (A) other Equity Interest of the Parent or (B) common operating units of the Borrower and (y) Equity Issuances to employees and trustees of the Parent and its Subsidiaries as part of a stock bonus plan, restricted stock plan or similar plan but only to the extent neither the Parent nor any Subsidiary received cash in connection with any such Equity Issuance.

(b) Ratio of Total Liabilities to Gross Asset Value. The Parent shall not permit the ratio of (i) Total Liabilities of the Parent and its Subsidiaries determined on a consolidated basis to (ii) Gross Asset Value of the Parent and its Subsidiaries determined on a consolidated basis, to exceed 0.65 to 1.00 at any time; provided, however, that if such ratio exceeds 0.65 to 1.00, then such failure to comply with the foregoing covenant shall not constitute a Default or Event of Default and the Parent shall be deemed in compliance with this Section 8.1(b) so long as (x) such ratio does not exceed 0.65 to 1.00 more than one time during the term of this Agreement for a period of not more than two consecutive fiscal quarters and (y) during such period such ratio does not exceed 0.70 to 1.00.

(c) Ratio of EBITDA to Interest Expense. The Parent shall not permit the ratio of (i) EBITDA of the Parent and its Subsidiaries determined on a consolidated basis for the period of four consecutive fiscal quarters most recently ending to (ii) Interest Expense of the Parent and its Subsidiaries determined on a consolidated basis for such period, to be less than 1.70 to 1 for any such period.

(d) Ratio of Adjusted EBITDA to Fixed Charges. The Parent shall not permit the ratio of (i) Adjusted EBITDA of the Parent and its Subsidiaries determined on a consolidated basis for the period of four consecutive fiscal quarters most recently ending to (ii) Fixed Charges of the Parent and its Subsidiaries determined on a consolidated basis for such period, to be less than (A) 1.40 to 1 for any such period ending on or before December 31, 2008 and (B) 1.50 to 1 for any such period ending after December 31, 2008.

(e) Permitted Investments. The Parent and the Borrower shall not make any Investment in or otherwise own, and shall not permit any Subsidiary to make any Investment in or otherwise own, the following items which would cause the aggregate value of such holdings of the Parent, the Borrower and its Subsidiaries to exceed the following percentages of Gross Asset Value:

(i) unimproved real estate and predevelopment costs such that the aggregate value of all such unimproved real estate and predevelopment costs, calculated on the basis of cost, exceeds 5.0% of Gross Asset Value;

(ii) Investments in Persons (other than Investments in Subsidiaries and Unconsolidated Affiliates) such that the aggregate value of such Investment calculated on the basis of cost exceeds 5.0% of Gross Asset Value;

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(iii) Mortgages in favor of the Parent, the Borrower or any other Subsidiary, such that the aggregate amount of Indebtedness secured by such Mortgages exceeds 5.0% of Gross Asset Value (excluding any Mortgage encumbering any Property owned by a Subsidiary the accounts of which are required to be consolidated with those of the Parent under GAAP); and

(iv) Investments in Subsidiaries that are not Wholly Owned Subsidiaries and Investments in Unconsolidated Affiliates such that the aggregate value of such Investments calculated on the basis of cost, exceeds 20.0% of Gross Asset Value.

In addition to the foregoing limitations, (x) the aggregate value of the Investments and the other items subject to the limitations in the preceding clauses (i) through (iii) shall not exceed 10.0% of Gross Asset Value and (y) the amount of Gross Asset Value attributable to any one Property shall not exceed 15.0% of Gross Asset Value at any time.

(f) Properties under Development or Redevelopment. The Parent and the Borrower shall not permit the aggregate amount of Total Budgeted Cost Until Stabilization with respect to all Projects Under Development owned by the Parent, the Borrower, any Subsidiary or any Unconsolidated Affiliate to exceed (i) 20.0% of Gross Asset Value at any time on or before June 30, 2009, and (ii) 15.0% of Gross Asset Value at any time after June 30, 2009. For purposes of this subsection, Total Budgeted Cost Until Stabilization with respect to any Project Under Development owned by an Unconsolidated Affiliate of the Parent shall equal the greater of (i) the product of (x) the Parent’s Ownership Share in such Unconsolidated Affiliate and (y) the Total Budgeted Cost Until Stabilization for such Property and (ii) the Parent’s Recourse Share of all Indebtedness of such Unconsolidated Affiliate.

(g) [Reserved.]

(h) Floating Rate Indebtedness. The Parent and the Borrower will not, and will not permit any of their respective Subsidiaries or Unconsolidated Affiliates to, incur, assume or suffer to exist at any time Floating Rate Indebtedness in an aggregate outstanding principal amount in excess of one-third of all Indebtedness of the Parent, its Subsidiaries and its Unconsolidated Affiliates determined on a consolidated basis.

(i) Secured Indebtedness. The Parent shall not permit the ratio of (i) Secured Indebtedness of the Parent, its Subsidiaries and its Unconsolidated Affiliates to (ii) Gross Asset Value, to exceed 0.60 to 1.00 at any time.

(j) Secured Recourse Indebtedness. The Parent shall not permit the ratio of (i) Secured Indebtedness of the Borrower or the Guarantors which is not Nonrecourse Indebtedness to (ii) Gross Asset Value, to exceed 0.25 to 1.00 at any time.

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(k) Ratio of EBITDA to Indebtedness. The Parent shall not permit the ratio of (i) EBITDA of the Parent and its Subsidiaries determined on a consolidated basis for the period of four consecutive fiscal quarters most recently ending to (ii) all Indebtedness of the Parent, its Subsidiaries and Unconsolidated Affiliates determined on a consolidated basis at the end of such period, to be less than 0.09750 to 1.00; provided, however, that if such ratio is less than 0.09750 to 1.00, then such failure to comply with the foregoing covenant shall not constitute a Default or an Event of Default and the Parent shall be deemed to be in compliance with this Section 8.1.(k) so long as (x) such ratio is not less than 0.09750 to 1.00 more than one time during the term of this Agreement for a period of not more than two consecutive fiscal quarters and (y) during such period such ratio is not less than 0.09250 to 1.00. For purposes of determining this ratio, if a Property has been acquired during the past four quarters, the amount of EBITDA attributable to such Property and to be included in the ratio shall be determined as follows: (x) if the Property was acquired more than 30 days prior to the date of determination of the ratio, the EBITDA for the Property since the date such Property was acquired by the Parent, the Borrower, any other Subsidiary or an Unconsolidated Affiliate, as the case may be, shall be appropriately annualized and (y) otherwise, the amount of EBITDA for such Property shall be the actual EBITDA attributable to the Property during the last four consecutive fiscal quarters most recently ended. Any certification by the Parent or the Borrower of EBITDA included under the immediately preceding clause (y) shall be limited to its knowledge.

For purposes of determining compliance with immediately preceding subsections (h), (i) and (k), the Indebtedness of the Parent shall include the greater of the Parent’s Recourse Share or Ownership Share of the Indebtedness of the Parent’s Unconsolidated Affiliates.

Section 8.2. Restricted Payments.

The Parent and the Borrower will not declare or make, or permit any other Subsidiary to declare or make, any Restricted Payment; provided, however, that:

(a) the Parent may acquire limited partnership interests in the Borrower in exchange for cash or common stock of the Parent;

(b) the Parent may declare or make cash distributions to its shareholders during any period of four consecutive fiscal quarters in an aggregate amount not to exceed the greater of (i) 95.0% of Funds From Operations of the Parent for such period or (ii) the amount for the Parent to remain in compliance with Section 7.13.;

(c) the Parent may make cash distributions to its shareholders to the extent necessary to avoid any liability for taxes imposed under Sections 857(b)(1), 857(b)(3) and 4981 of the Internal Revenue Code;

(d) the Parent may make cash payments to repurchase outstanding Equity Interests of the Parent;

(e) the Parent may cause the Borrower (directly or indirectly through any intermediate Subsidiaries) to make distributions to the Parent and to the limited partners of the Borrower, and the Parent may cause other Subsidiaries of the Parent to make distributions to the Parent and to other holders of Equity Interests in such Subsidiaries, in each case, so long as immediately after giving effect to any such distribution no Default or Event of Default would exist; and

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(f) subject to the following sentence, if a Default or Event of Default shall have occurred and be continuing, the Parent may only declare or make cash distributions to its shareholders during any fiscal year in an aggregate amount not to exceed the minimum amount necessary for the Parent to remain in compliance with Section 7.13., and in connection therewith, the Parent may cause its Subsidiaries (directly or indirectly through any intermediate Subsidiaries) to make distributions to the Parent, to its other Subsidiaries and, solely to the extent required to do pursuant to the organization documents of a Subsidiary, other holders of Equity Interests in such Subsidiary.

Notwithstanding the foregoing, if a Default or Event of Default specified in Section 9.1.(a), Section 9.1.(e) or Section 9.1.(f) shall have occurred and be continuing, or if as a result of the occurrence of any other Event of Default the Obligations have been accelerated pursuant to Section 9.2.(a), the Parent and the Borrower shall not, and shall not permit any other Subsidiary to, make any Restricted Payments to any Person whatsoever other than to the Borrower or any Subsidiary.

Section 8.3. Liens; Negative Pledges.

(a) The Parent and the Borrower shall not, and shall not permit any other Loan Party to, grant a Lien (a “Senior Lien”) in any of its assets to secure Indebtedness subject to the terms of this subsection without effectively providing that the Obligations shall be secured equally and ratably with (or prior to) such Indebtedness. This subsection only applies to Indebtedness of the types described in clauses (a), (b)(i), (b)(ii) and (e) of the definition of the term “Indebtedness” that was not secured by a Lien at the time such Indebtedness was incurred. For purposes of this subsection, Indebtedness shall be deemed incurred on the earlier of (i) the date the principal agreement evidencing such Indebtedness became effective or (ii) the date any of the proceeds of such Indebtedness were made available to, or to the order of, the Parent, the Borrower, any Subsidiary or any other Loan Party. Liens of the type described in clause (d) of the definition of the term “Lien” shall not be considered Senior Liens. Any Lien created to secure the Obligations pursuant to this subsection shall provide by its terms that such Lien shall be automatically and unconditionally released and discharged upon the release and discharge of the applicable Senior Lien.

(b) The Parent and the Borrower shall not, and shall not permit any Subsidiary or other Loan Party to, enter into, assume or otherwise be bound by any Negative Pledge of assets owned by such Person except for a Negative Pledge contained (i) in the Existing Revolving Credit Agreement and (ii) in any agreement (A) evidencing Indebtedness and secured by a Lien, in each case, which the Parent, the Borrower or such Subsidiary may create, incur, assume, or permit or suffer to exist without causing a Default or Event of Default to exist and (B) which prohibits the creation of any other Lien on only the property securing such Indebtedness as of the date such agreement was entered into. Notwithstanding anything to the contrary set forth in this Agreement, for purposes of this Section 8.3.(b), the term “Existing Revolving Credit Agreement” shall not include any document or agreement entered into by the Borrower that replaces the Existing Revolving Credit Agreement after March 20, 2010 or such earlier date that the Existing Revolving Credit Agreement terminates.

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Section 8.4. Restrictions on Intercompany Transfers.

The Borrower shall not create or otherwise cause or suffer to exist or become effective, or permit any Subsidiary (other than an Excluded Subsidiary) to create or otherwise cause or suffer to exist or become effective, any consensual encumbrance or restriction of any kind on the ability of such Subsidiary to: (i) pay dividends or make any other distribution on any of such Subsidiary’s capital stock or other equity interests owned by the Borrower or such Subsidiary of the Borrower; (ii) pay any Indebtedness owed to the Borrower or any Subsidiary; (iii) make loans or advances to the Borrower or any Subsidiary; or (iv) transfer any of its property or assets to the Borrower or any Subsidiary; provided, however that the Borrower or any such Subsidiary may have provision for preferred, priority or guaranteed payments to a joint venture partner of such Subsidiary.

Section 8.5. Mergers, Acquisitions and Sales of Assets.

The Parent and the Borrower shall not, and shall not permit any other Loan Party or any other Subsidiary of the Parent or the Borrower to: (a) engage in any transaction of merger or consolidation; (b) liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution); (c) convey, sell, lease, sublease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any substantial part of its business or assets, or the capital stock of or other Equity Interests in any of its Subsidiaries, whether now owned or hereafter acquired or (d) acquire a Substantial Amount of the assets of, or make an Investment of a Substantial Amount in, any other Person; unless, (i) immediately prior thereto, and immediately thereafter and after giving effect thereto, no Default or Event of Default is or would be in existence; (ii) in the case of a consolidation or merger involving the Parent or the Borrower, the Parent or the Borrower, as the case may be, shall be the survivor thereof and, (iii) in the case of the acquisition, Investment or sale of a Substantial Amount of assets, the Parent shall have given the Agent and the Lenders at least 30 days prior written notice of such, acquisition, Investment or sale, such notice to be accompanied by a Compliance Certificate, calculated on a pro forma basis, evidencing the continued compliance by the Borrower and the Parent with the terms and conditions of this Agreement and the other Loan Documents, including without limitation, the financial covenants contained in Section 8.1., after giving effect to such acquisition, Investment or sale.

Section 8.6. Fiscal Year.

The Parent shall not change its fiscal year from that in effect as of the Agreement Date.

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Section 8.7. Modifications of Organizational Documents and Material Contracts.

The Parent shall not amend, supplement, restate or otherwise modify the Trust Agreement, and the Borrower shall not amend, supplement, restate or otherwise modify the Partnership Agreement, in each case in any respect, without the prior written consent of the Agent and the Requisite Lenders unless such amendment, supplement, restatement or other modification could not reasonably be expected to have in a Material Adverse Effect. The Borrower and the Parent shall not enter into, and shall not permit any Subsidiary or other Loan Party to enter into, any amendment or modification to any Material Contract that could reasonably be expected to have a Material Adverse Effect.

Section 8.8. Transactions with Affiliates.

The Borrower and the Parent shall not permit to exist or enter into, and will not permit any of its Subsidiaries to permit to exist or enter into, any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate, except (a) transactions in the ordinary course of and pursuant to the reasonable requirements of the business of the Borrower, the Parent or any Subsidiary and upon fair and reasonable terms which are no less favorable to the Borrower, the Parent or such Subsidiary than would be obtained in a comparable arm’s length transaction with a Person that is not an Affiliate and (b) transactions between or among the Parent, the Borrower and it Subsidiaries.

Section 8.9. ERISA Exemptions.

The Borrower and the Parent shall not permit, and shall not permit any other Loan Party or any other Subsidiary to permit, any of its respective assets to become or be deemed to be “plan assets” within the meaning of ERISA, the Internal Revenue Code and the respective regulations promulgated thereunder.

ARTICLE IX. DEFAULT

Section 9.1. Events of Default.

Each of the following shall constitute an Event of Default, whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of Applicable Law or pursuant to any judgment or order of any Governmental Authority:

(a) Default in Payment. The Borrower shall fail to pay when due under this Agreement or any other Loan Document (whether upon demand, at maturity, by reason of acceleration or otherwise) the principal of, or any interest on, any of the Loans, or shall fail to pay any of the other payment Obligations owing by the Borrower under this Agreement or any other Loan Document, or any other Loan Party shall fail to pay when due any payment obligation owing by such Loan Party under any Loan Document to which it is a party and any such failure shall continue for a period of five (5) calendar days thereafter.

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(b) Default in Performance.

(i) The Borrower or the Parent shall fail to perform or observe any term, covenant, condition or agreement on its part to be performed or observed and contained in Sections 7.1.(o), Section 7.17. or Article VIII.; or

(ii) The Borrower, the Parent or any other Loan Party shall fail to perform or observe any term, covenant, condition or agreement contained in this Agreement or any other Loan Document to which it is a party and not otherwise mentioned in this Section and such failure shall continue for a period of 30 days after the earlier of (x) the date upon which the Borrower obtains knowledge of such failure or (y) the date upon which the Parent or the Borrower has received written notice of such failure from the Agent; provided, however, that if any such failure referred to in this clause (ii) is reasonably capable of being cured but not within such 30-day period and the Borrower has in good faith commenced to cure such failure prior to the expiration of such 30-day period and continues to diligently prosecute such cure, no Event of Default shall be deemed to have occurred unless such failure has not been cured within 30 calendar days after the last day of such initial 30-day period;

(c) Misrepresentations. Any written statement, representation or warranty made or deemed made by or on behalf of the Borrower, the Parent or any other Loan Party under this Agreement or under any other Loan Document, or any amendment hereto or thereto, or in any other writing or statement (other than forward looking statements) at any time furnished by, or at the direction of, the Borrower, the Parent or any other Loan Party to the Agent or any Lender, shall at any time prove to have been incorrect or misleading in any material respect when furnished or made.

(d) Indebtedness Cross-Default.

(i) The Parent, the Borrower, any other Loan Party, any other Subsidiary shall fail to pay when due and payable the principal of, or interest on, any Indebtedness (other than the Loans) having an aggregate outstanding principal amount of $10,000,000 or more (or $80,000,000 or more in the case of Nonrecourse Indebtedness), and in any such case such failure shall continue beyond any applicable notice and cure periods; or

(ii) The maturity of any such Indebtedness shall have (x) been accelerated in accordance with the provisions of any indenture, contract or instrument evidencing, providing for the creation of or otherwise concerning such Indebtedness or (y) been required to be prepaid or repurchased prior to the stated maturity thereof.

(e) Voluntary Bankruptcy Proceeding. The Borrower, the Parent or any Material Subsidiary shall: (i) commence a voluntary case under the Bankruptcy Code of 1978, as amended or other federal bankruptcy laws (as now or hereafter in effect); (ii) file a petition seeking to take advantage of any other Applicable Laws, domestic or foreign, relating to bankruptcy, insolvency,

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reorganization, winding-up, or composition or adjustment of debts; (iii) consent to, or fail to contest in a timely and appropriate manner, any petition filed against it in an involuntary case under such bankruptcy laws or other Applicable Laws or consent to any proceeding or action described in the immediately following subsection; (iv) apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee, or liquidator of itself or of a substantial part of its property, domestic or foreign; (v) admit in writing its inability to pay its debts as they become due; (vi) make a general assignment for the benefit of creditors; (vii) make a conveyance fraudulent as to creditors under any Applicable Law; or (viii) take any corporate or partnership action for the purpose of effecting any of the foregoing.

(f) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be commenced against the Borrower, the Parent or any Material Subsidiary in any court of competent jurisdiction seeking: (i) relief under the Bankruptcy Code of 1978, as amended or other federal bankruptcy laws (as now or hereafter in effect) or under any other Applicable Laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts; or (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of such Person, or of all or any substantial part of the assets, domestic or foreign, of such Person, and in the case of either clause (i) or (ii) such case or proceeding shall continue undismissed or unstayed for a period of 60 consecutive days, or an order granting the relief requested in such case or proceeding (including, but not limited to, an order for relief under such Bankruptcy Code or such other federal bankruptcy laws) shall be entered.

(g) Revocation of Loan Documents. The Borrower, the Parent or any other Loan Party shall disavow, revoke or terminate in writing any Loan Document to which it is a party or shall otherwise challenge or contest in any action, suit or proceeding in any court or before any Governmental Authority the validity or enforceability of any Loan Document.

(h) Judgment. A judgment or order for the payment of money shall be entered against the Borrower, the Parent or any other Loan Party, by any court or other tribunal and (i) such judgment or order shall continue for a period of 30 days without being paid, bonded over, stayed or dismissed through appropriate appellate proceedings (provided however, that if a bond has been issued in favor of the claimant or other Person obtaining such judgment or order, the issuer of such bond shall have executed an agreement in form and substance satisfactory to the Agent pursuant to which the issuer of such bond waives any Lien it may have on the assets of any Loan Party), and (ii) either (A) the amount for which the insurer has denied liability exceeds, individually or together with all other such judgments or orders entered against the Borrower, the Parent and the other Loan Parties, $10,000,000 (or $80,000,000 or more if the judgment or order for the payment of money directly relates to Nonrecourse Indebtedness and is itself nonrecourse) in amount or (B) could reasonably be expected to have a Material Adverse Effect.

(i) Attachment. A warrant, writ of attachment, execution or similar process shall be issued against any property of the Borrower, the Parent or any other Loan Party, which exceeds, individually or together with all other such warrants, writs, executions and processes, $10,000,000 (or $80,000,000 or more if the warrant, writ of attachment, execution or similar process directly relates to Nonrecourse Indebtedness and is itself nonrecourse) in amount and such warrant, writ, execution or process shall not be paid,

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discharged, vacated, stayed or bonded for a period of 30 days; provided however, that if a bond has been issued in favor of the claimant or other Person obtaining such warrant, writ of attachment, execution or process, the issuer of such bond shall have executed an agreement in form and substance satisfactory to the Agent pursuant to which the issuer of such bond waives any Lien it may have on the assets of any Loan Party.

(j) ERISA.

(i) Any member of the ERISA Group shall fail to pay when due an amount or amounts aggregating in excess of $1,000,000 which it shall have become liable to pay under Title IV of ERISA and such failure shall continue for a period of 30 days; or

(ii) Notice of intent to terminate a Material Plan shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing, the liability resulting therefrom shall exceed $1,000,000 and either (A) such notice shall not have been revoked or rescinded after 30 days from the filing thereof or (B) such Material Plan shall be terminated; or

(iii) The PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan, the liability resulting therefrom shall exceed $1,000,000 and either (A) such proceedings shall not have been dismissed or terminated after 30 days from the filing thereof or (B) such Material Plan shall be terminated or such liability shall be imposed; or

(iv) A condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated, the liability resulting therefrom shall exceed $1,000,000 and such condition shall exist for a period of 30 days; or

(v) There shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which could cause one or more members of the ERISA Group to incur an obligation to pay on a current annual basis during the term of this Agreement an amount in excess of $1,000,000.

(k) Loan Documents. An Event of Default (as defined therein) shall occur under any of the other Loan Documents;

(l) Change of Control/Change in Management.

(i)(A) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person will be deemed to

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have “beneficial ownership” of all securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 20% of the total voting power of the then outstanding voting shares of the Parent other than such Persons who are, as of the Agreement Date, current officers or trustees of the Parent, or Affiliates of current officers or trustees of the Parent or (B) during any period of 12 consecutive months ending after the Agreement Date, individuals who at the beginning of any such 12-month period constituted the Board of Trustees of the Parent (together with any new trustees whose election by such Board or whose nomination for election by the shareholders of the Parent was approved by a vote of a majority of the trustees then still in office who were either trustees at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Trustees of the Parent then in office;

(ii) If three or more of the following five individuals shall cease for any reason (other than death, disability or resignation) to be principally involved in the senior management of the Parent: Ronald Rubin, George Rubin, Robert McCadden, Joseph Coradino, and Edward Glickman (each a “Principal Officer”);

(iii) If three or more of the Principal Officers shall die, become disabled or resign and the Parent shall have failed to replace the resulting vacancies in senior management with individuals reasonably acceptable to the Agent and the Requisite Lenders and such failure shall continue for a period in excess of 120 days; or

(iv) The Parent or a Wholly Owned Subsidiary of the Parent that is a Guarantor shall cease (A) to be the sole general partner of the Borrower or (B) to own and control, directly or indirectly, at least 80.0% (or such lesser percentage as may be acceptable to the Agent) of all partnership interests of the Borrower.

(m) Strike; Casualty. Any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than 30 consecutive days beyond the coverage period of any applicable business interruption insurance, the cessation or substantial curtailment of revenue producing activities of the Borrower or its Subsidiaries taken as a whole and only if any such event or circumstance could reasonably be expected to have a Material Adverse Effect.

(n) Existing Revolving Credit Agreement. An Event of Default under (and as defined in) the Existing Revolving Credit Agreement shall occur.

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Section 9.2. Remedies Upon Event of Default.

Upon the occurrence of an Event of Default the following provisions shall apply:

(a) Acceleration; Termination of Facilities.

(i) Automatic. Upon the occurrence of an Event of Default specified in Sections 9.1.(e) or 9.1.(f), (A) the principal of, and all accrued interest on, the Loans and the Notes at the time outstanding and (B) all of the other Obligations of the Borrower, including, but not limited to, the other amounts owed to the Lenders and the Agent under this Agreement, the Notes or any of the other Loan Documents, shall become immediately and automatically due and payable without presentment, demand, protest, or other notice of any kind, all of which are expressly waived by the Borrower.

(ii) Optional. If any other Event of Default shall have occurred and be continuing, the Agent may, and at the direction of the Requisite Lenders shall: declare (A) the principal of, and accrued interest on, the Loans and the Notes at the time outstanding and (B) all of the other Obligations, including, but not limited to, the other amounts owed to the Lenders and the Agent under this Agreement, such Notes or any of the other Loan Documents to be forthwith due and payable, whereupon the same shall immediately become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by the Borrower.

(b) Loan Documents. The Requisite Lenders may direct the Agent to, and the Agent if so directed shall, exercise any and all of its rights and remedies under or in respect of any and all of the other Loan Documents.

(c) Applicable Law. The Requisite Lenders may direct the Agent to, and the Agent if so directed shall, exercise all other rights and remedies it may have under any Applicable Law.

Section 9.3. Marshaling; Payments Set Aside.

Neither the Agent nor any Lender shall be under any obligation to marshal any assets in favor of any Loan Party or any other party or against or in payment of any or all of the Obligations. To the extent that any Loan Party makes a payment or payments to the Agent and/or any Lender, or the Agent and/or any Lender enforce their security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such recovery, the Obligations or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor, shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

Section 9.4. Allocation of Proceeds.

If an Event of Default shall have occurred and be continuing and maturity of any of the Obligations has been accelerated, all payments received by the Agent under any of the Loan Documents, in respect of any principal of or interest on the Obligations or any other amounts payable by the Borrower or any other Loan Party hereunder or thereunder, shall be applied in the following order and priority:

(a) amounts due to the Agent and the Lenders in respect of Fees and other fees and expenses due under Section 11.2.;

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(b) payments of interest on the Loans, to be applied for the ratable benefit of the Lenders, in such order as the Lenders may determine in their sole discretion;

(c) payments of principal of the Loans and obligations owing under any Interest Rate Agreement between the Borrower and any Lender, or Affiliate thereof, to be applied for the ratable benefit of the Lenders or their respective Affiliates, as applicable, in such order as the Lenders may determine in their sole discretion;

(d) amounts due to the Agent and the Lenders pursuant to Sections 10.7. and 11.9.;

(e) payments of all other amounts due under any of the Loan Documents, if any, to be applied for the ratable benefit of the Lenders; and

(f) any amount remaining after application as provided above, shall be paid to the Borrower or whomever else may be legally entitled thereto.

Section 9.5. Performance by Agent.

If the Borrower shall fail to perform any covenant, duty or agreement contained in any of the Loan Documents, the Agent may perform or attempt to perform such covenant, duty or agreement on behalf of the Borrower after the expiration of any cure or grace periods set forth herein. In such event, the Borrower shall, at the request of the Agent, promptly pay any amount reasonably expended by the Agent in such performance or attempted performance to the Agent, together with interest thereon at the applicable Post-Default Rate from the date of such expenditure until paid. Notwithstanding the foregoing, neither the Agent nor any Lender shall have any liability or responsibility whatsoever for the performance of any obligation of the Borrower under this Agreement or any other Loan Document.

Section 9.6. Rescission of Acceleration by Requisite Lenders.

If at any time after acceleration of the maturity of the Loans and the other Obligations, the Borrower shall pay all arrears of interest and all payments on account of principal of the Obligations which shall have become due otherwise than by acceleration (with interest on principal and, to the extent permitted by Applicable Law, on overdue interest, at the rates specified in this Agreement) and all Events of Default and Defaults (other than nonpayment of principal of and accrued interest on the Obligations due and payable solely by virtue of acceleration) shall become remedied or waived to the satisfaction of the Requisite Lenders, then by written notice to the Borrower, the Requisite Lenders may elect, in the sole discretion of such Requisite Lenders, to rescind and annul the acceleration and its consequences. The provisions of the preceding sentence are intended merely to bind all of the Lenders to a decision which may be made at the election of the Requisite Lenders, and are not intended to benefit the Borrower and do not give the Borrower the right to require the Lenders to rescind or annul any acceleration hereunder, even if the conditions set forth herein are satisfied.

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Section 9.7. Rights Cumulative.

The rights and remedies of the Agent and the Lenders under this Agreement and each of the other Loan Documents shall be cumulative and not exclusive of any rights or remedies which any of them may otherwise have under Applicable Law. In exercising their respective rights and remedies, the Agent and the Lenders may be selective and no failure or delay by the Agent or any of the Lenders in exercising any right shall operate as a waiver of it, nor shall any single or partial exercise of any power or right preclude its other or further exercise or the exercise of any other power or right.

ARTICLE X. THE AGENT

Section 10.1. Appointment and Authorization.

Each Lender hereby irrevocably appoints and authorizes the Agent to take such action as contractual representative on such Lender’s behalf and to exercise such powers under this Agreement and the other Loan Documents as are specifically delegated to the Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. Not in limitation of the foregoing, each Lender authorizes and directs the Agent to enter into the Loan Documents for the benefit of the Lenders. Each Lender hereby agrees that, except as otherwise set forth herein, any action taken by the Requisite Lenders in accordance with the provisions of this Agreement or the Loan Documents, and the exercise by the Requisite Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders. Nothing herein shall be construed to deem the Agent a trustee or fiduciary for any Lender or to impose on the Agent duties or obligations other than those expressly provided for herein. Without limiting the generality of the foregoing, the use of the terms “Agent”, “Agent”, “agent” and similar terms in the Loan Documents with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law. Instead, use of such terms is merely a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. The Agent will also furnish to any Lender, upon the request of such Lender, a copy (or, where appropriate, an original) of any document, instrument, agreement, certificate or notice furnished to the Agent by the Borrower, the Parent, any Loan Party or any other Affiliate of the Borrower, pursuant to this Agreement or any other Loan Document not already delivered to such Lender pursuant to the terms of this Agreement or any such other Loan Document. As to any matters not expressly provided for by the Loan Documents (including, without limitation, enforcement or collection of any of the Obligations), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Requisite Lenders (or all of the Lenders if explicitly required under any other provision of this Agreement), and such instructions shall be binding upon all Lenders and all holders of any of the Obligations;

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provided, however, that, notwithstanding anything in this Agreement to the contrary, the Agent shall not be required to take any action which exposes the Agent to personal liability or which is contrary to this Agreement or any other Loan Document or Applicable Law. Not in limitation of the foregoing, the Agent shall exercise any right or remedy it or the Lenders may have under any Loan Document upon the occurrence of a Default or an Event of Default unless the Requisite Lenders have directed the Agent otherwise. Without limiting the foregoing, no Lender shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of the Requisite Lenders, or where applicable, all the Lenders.

Section 10.2. Agent’s Reliance, Etc.

Notwithstanding any other provisions of this Agreement or any other Loan Documents, neither the Agent nor any of its directors, officers, agents, employees or counsel shall be liable for any action taken or not taken by it under or in connection with this Agreement or any other Loan Document, except for its or their own gross negligence or willful misconduct in connection with its duties expressly set forth herein or therein. Without limiting the generality of the foregoing, the Agent: may consult with legal counsel (including its own counsel or counsel for the Borrower or any other Loan Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts. Neither the Agent nor any of its directors, officers, agents, employees or counsel: (a) makes any warranty or representation to any Lender or any other Person and shall be responsible to any Lender or any other Person for any statement, warranty or representation made or deemed made by the Borrower, the Parent, any other Loan Party or any other Person in or in connection with this Agreement or any other Loan Document; (b) shall have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any other Loan Document or the satisfaction of any conditions precedent under this Agreement or any Loan Document on the part of the Borrower, the Parent or other Persons or inspect the property, books or records of the Borrower, the Parent or any other Person; (c) shall be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document, any other instrument or document furnished pursuant thereto or any collateral covered thereby or the perfection or priority of any Lien in favor of the Agent on behalf of the Lenders in any such collateral; (d) shall have any liability in respect of any recitals, statements, certifications, representations or warranties contained in any of the Loan Documents or any other document, instrument, agreement, certificate or statement delivered in connection therewith; and (e) shall incur any liability under or in respect of this Agreement or any other Loan Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telephone, telecopy or electronic mail) believed by it to be genuine and signed, sent or given by the proper party or parties. The Agent may execute any of its duties under the Loan Documents by or through agents, employees or attorneys-in-fact and shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct.

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Section 10.3. Notice of Defaults.

The Agent shall not be deemed to have knowledge or notice of the occurrence of a Default or Event of Default unless the Agent has received notice from a Lender or the Borrower referring to this Agreement, describing with reasonable specificity such Default or Event of Default and stating that such notice is a “notice of default”. If any Lender (excluding the Lender which is also serving as the Agent) becomes aware of any Default or Event of Default, it shall promptly send to the Agent such a “notice of default”. Further, if the Agent receives such a “notice of default,” the Agent shall give prompt notice thereof to the Lenders.

Section 10.4. Wells Fargo as Lender.

Wells Fargo, as a Lender, shall have the same rights and powers under this Agreement and any other Loan Document as any other Lender and may exercise the same as though it were not the Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include Wells Fargo in each case in its individual capacity. Wells Fargo and its affiliates may each accept deposits from, maintain deposits or credit balances for, invest in, lend money to, act as trustee under indentures of, serve as financial advisor to, and generally engage in any kind of business with the Borrower, the Parent any other Loan Party or any other affiliate thereof as if it were any other bank and without any duty to account therefor to the other Lenders. Further, the Agent and any affiliate may accept fees and other consideration from the Borrower for services in connection with this Agreement and otherwise without having to account for the same to the other Lenders. The Lenders acknowledge that, pursuant to such activities, Wells Fargo or its affiliates may receive information regarding the Borrower, the Parent, other Loan Parties, other Subsidiaries and other Affiliates (including information that may be subject to confidentiality obligations in favor of such Person) and acknowledge that the Agent shall be under no obligation to provide such information to them.

Section 10.5. Approvals of Lenders.

All communications from the Agent to any Lender requesting such Lender’s determination, consent, approval or disapproval (a) shall be given in the form of a written notice to such Lender, (b) shall be accompanied by a description of the matter or issue as to which such determination, approval, consent or disapproval is requested, or shall advise such Lender where information, if any, regarding such matter or issue may be inspected, or shall otherwise describe the matter or issue to be resolved, (c) shall include, if reasonably requested by such Lender and to the extent not previously provided to such Lender, written materials and a summary of all oral information provided to the Agent by the Borrower in respect of the matter or issue to be resolved, and (d) shall include the Agent’s recommended course of action or determination in respect thereof. Unless a Lender shall give written notice to the Agent that it specifically objects to the recommendation or determination of the Agent (together with a reasonable written explanation of the reasons behind such objection) within 10 Business Days (or such lesser or greater period as may be specifically required under the express terms of the Loan Documents) of receipt of such communication, such Lender shall be deemed to have conclusively approved of or consented to such recommendation or determination.

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Section 10.6. Lender Credit Decision, Etc.

Each Lender expressly acknowledges and agrees that neither the Agent nor any of its officers, directors, employees, agents, counsel, attorneys-in-fact or other affiliates has made any representations or warranties to such Lender and that no act by the Agent hereafter taken, including any review of the affairs of the Borrower, the Parent, any other Loan Party or any other Subsidiary or Affiliate, shall be deemed to constitute any such representation or warranty by the Agent to any Lender. Each Lender acknowledges that it has, independently and without reliance upon the Agent, any other Lender or counsel to the Agent, or any of their respective officers, directors, employees, agents or counsel, and based on the financial statements of the Parent, the Borrower, the other Loan Parties, the other Subsidiaries and other Affiliates, and inquiries of such Persons, its independent due diligence of the business and affairs of the Parent, the Borrower, the other Loan Parties, the other Subsidiaries and other Persons, its review of the Loan Documents, the legal opinions required to be delivered to it hereunder, the advice of its own counsel and such other documents and information as it has deemed appropriate, made its own credit and legal analysis and decision to enter into this Agreement and the transactions contemplated hereby. Each Lender also acknowledges that it will, independently and without reliance upon the Agent, any other Lender or counsel to the Agent or any of their respective officers, directors, employees and agents, and based on such review, advice, documents and information as it shall deem appropriate at the time, continue to make its own decisions in taking or not taking action under the Loan Documents. The Agent shall not be required to keep itself informed as to the performance or observance by the Parent, the Borrower or any other Loan Party of the Loan Documents or any other document referred to or provided for therein or to inspect the properties or books of, or make any other investigation of, the Parent, the Borrower, any other Loan Party or any other Subsidiary. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Agent under this Agreement or any of the other Loan Documents, the Agent shall have no duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, financial and other condition or creditworthiness of the Parent, the Borrower, any other Loan Party or any other Affiliate thereof which may come into possession of the Agent or any of its officers, directors, employees, agents, attorneys-in-fact or other Affiliates. Each Lender acknowledges that the Agent’s legal counsel in connection with the transactions contemplated by this Agreement is only acting as counsel to the Agent and is not acting as counsel to such Lender.

Section 10.7. Indemnification of Agent.

Regardless of whether the transactions contemplated by this Agreement and the other Loan Documents are consummated, each Lender agrees to indemnify the Agent (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so) pro rata in accordance with such Lender’s respective Pro Rata Share, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may at any time be imposed on, incurred by, or asserted against the Agent (in its capacity as Agent but not as a “Lender”) in any way relating to or arising out of the Loan Documents, any transaction contemplated hereby or thereby or any action taken or

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omitted by the Agent under the Loan Documents (collectively, “Indemnifiable Amounts”); provided, however, that no Lender shall be liable for any portion of such Indemnifiable Amounts to the extent resulting from the Agent’s gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final, non-appealable judgment; provided, however, that no action taken in accordance with the directions of the Requisite Lenders (or all of the Lenders if expressly required hereunder) shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section. Without limiting the generality of the foregoing, each Lender agrees to reimburse the Agent (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so) promptly upon demand for its ratable share of any out-of-pocket expenses (including the reasonable fees and expenses of the counsel to the Agent) incurred by the Agent in connection with the preparation, negotiation, execution, administration, or enforcement (whether through negotiations, legal proceedings, or otherwise) of, or legal advice with respect to the rights or responsibilities of the parties under, the Loan Documents, any suit or action brought by the Agent to enforce the terms of the Loan Documents and/or collect any Obligations, any “lender liability” suit or claim brought against the Agent and/or the Lenders, and any claim or suit brought against the Agent and/or the Lenders arising under any Environmental Laws. Such out-of-pocket expenses (including counsel fees) shall be advanced by the Lenders on the request of the Agent notwithstanding any claim or assertion that the Agent is not entitled to indemnification hereunder upon receipt of an undertaking by the Agent that the Agent will reimburse the Lenders if it is actually and finally determined by a court of competent jurisdiction that the Agent is not so entitled to indemnification. The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder or under the other Loan Documents and the termination of this Agreement. If the Borrower shall reimburse the Agent for any Indemnifiable Amount following payment by any Lender to the Agent in respect of such Indemnifiable Amount pursuant to this Section, the Agent shall share such reimbursement on a ratable basis with each Lender making any such payment.

Section 10.8. Successor Agent.

The Agent may resign at any time as Agent under the Loan Documents by giving written notice thereof to the Lenders and the Borrower. Upon any such resignation, the Requisite Lenders shall have the right to appoint a successor Agent which appointment shall, provided no Default or Event of Default exists, be subject to the Borrower’s approval, which approval shall not be unreasonably withheld or delayed. If no successor Agent shall have been so appointed in accordance with the immediately preceding sentence, and shall have accepted such appointment, within 30 days after the current Agent’s giving of notice of resignation, then the current Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a Lender, if any Lender shall be willing to serve, and otherwise shall be an Eligible Assignee. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the current Agent, and the current Agent shall be discharged from its duties and obligations under the Loan Documents. After any Agent’s resignation hereunder as Agent, the provisions of this Article X. shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under the Loan Documents. Notwithstanding anything contained herein to the contrary, the Agent may assign its rights and duties under the Loan Documents to any of its affiliates by giving the Borrower and each Lender prior written notice.

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Section 10.9. Titled Agents.

The Lead Arranger, in such capacity, assumes no responsibility or obligation hereunder, including, without limitation, for servicing, enforcement or collection of any of the Loans, nor any duties as an agent hereunder for the Lenders. The title given to the Lead Arranger is solely honorific and implies no fiduciary responsibility on the part of the Lead Arranger to the Agent, any Lender, the Borrower or any other Loan Party and the use of such title does not impose on the Lead Arranger any duties or obligations greater than those of any other Lender or entitle the Lead Arranger to any rights other than those to which any other Lender is entitled.

ARTICLE XI. MISCELLANEOUS

Section 11.1. Notices.

Unless otherwise provided herein, communications provided for hereunder shall be in writing and shall be mailed, telecopied or delivered as follows:

If to the Borrower:

PREIT Associates, L.P.

200 South Broad Street

Philadelphia, PA 19102

Attention: Andrew Ioannou

Telephone: (215) 875-0700

Telecopy: (215) 546-7311

With a copy of notices of Defaults, Events of Default or notices pursuant to Article IX. to:

PREIT Associates, L.P.

200 South Broad Street

Philadelphia, PA 19102

Attention: Bruce Goldman

Telephone: (215) 875-0700

Telecopy: (215) 546-7311

and

Drinker Biddle & Reath LLP

One Logan Square

18^th and Cherry Streets

Philadelphia, PA 19103

Attention: Howard A. Blum

Telephone: (215) 988-2700

Telecopy: (215) 988-2757

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If to the Agent or a Lender:

To the address or telecopy number, as applicable, of the Agent or such Lender, as the case may be, set forth on its signature page hereto or, in the case of a Lender, in the applicable Assignment and Acceptance Agreement.

or, as to each party at such other address as shall be designated by such party in a written notice to the other parties delivered in compliance with this Section. All such notices and other communications shall be effective (i) if mailed, when received; (ii) if telecopied, upon mechanical confirmation of transmission if received on a Business Day prior to 5:00 p.m. local time at the point of destination and, if otherwise, on the next succeeding Business Day; or (iii) if hand delivered, when delivered. Notwithstanding the immediately preceding sentence, all notices or communications to the Agent or any Lender under Article II. shall be effective only when actually received. Any notice to the Borrower received by any individual designated by the Borrower to receive such notice shall be effective notwithstanding the fact that any other individual designated by the Borrower to receive a copy of such notice did not receive such copy. The Agent and each Lender shall not incur any liability to the Borrower (nor shall the Agent incur any liability to the Lenders) for acting upon any telephonic notice referred to in this Agreement which the Agent or such Lender, as the case may be, believes in good faith to have been given by a Person authorized to deliver such notice or for otherwise acting in good faith hereunder. In addition to the Agent’s Lending Office, the Borrower shall send copies of the notices described in Article II. to the following address of the Agent:

Wells Fargo Bank, National Association

Disbursement and Operations Center

2120 East Park Place, Suite 100

El Segundo, California 90245

Attention: Disbursement Administrator, Ivonne Lopez

Telecopy Number: (310) 615-1014

Telephone Number: (310) 335-9515

Section 11.2. Expenses.

The Borrower agrees (a) to pay or reimburse the Agent for all of its reasonable out-of-pocket costs and expenses incurred in connection with the preparation, negotiation and execution of, and any amendment, supplement or modification to, any of the Loan Documents, and the consummation of the transactions contemplated thereby, including the reasonable fees and disbursements of counsel to the Agent, (b) to pay or reimburse the Agent and, after the occurrence and during the continuance of an Event of Default, the Lenders, for all their costs and expenses incurred in connection with the enforcement or preservation of any rights under the Loan Documents, including the reasonable fees and disbursements of their respective counsel (including the allocated fees and expenses of in-house counsel) and any payments in indemnification or otherwise payable by the Lenders to the Agent pursuant to the Loan

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Documents, (c) to pay, indemnify and hold the Agent and the Lenders harmless from any and all recording and filing fees and any and all liabilities with respect to, or resulting from any failure to pay or delay in paying, documentary, stamp, excise and other similar taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of any of the Loan Documents, or consummation of any amendment, supplement or modification of, or any waiver or consent under or in respect of, any Loan Document and (d) to the extent not already covered by any of the preceding subsections, to pay the fees and disbursements of counsel to the Agent and any Lender incurred in connection with the representation of the Agent or such Lender in any matter relating to or arising out of any bankruptcy or other proceeding of the type described in Sections 9.1.(e) or 9.1.(f), including, without limitation (i) any motion for relief from any stay or similar order, (ii) the negotiation, preparation, execution and delivery of any document relating to the Obligations and (iii) the negotiation and preparation of any debtor-in-possession financing or any plan of reorganization of the Parent, the Borrower or any other Loan Party, whether proposed by the Parent, the Borrower, such Loan Party, the Lenders or any other Person, and whether such fees and expenses are incurred prior to, during or after the commencement of such proceeding or the confirmation or conclusion of any such proceeding.

Section 11.3. Setoff.

Subject to Section 3.3. and in addition to any rights now or hereafter granted under Applicable Law and not by way of limitation of any such rights, the Agent, each Lender and each Participant is hereby authorized by the Borrower, at any time or from time to time while an Event of Default exists, without notice to the Borrower or to any other Person, any such notice being hereby expressly waived, but in the case of a Lender or a Participant subject to receipt of the prior written consent of the Requisite Lenders exercised in their sole discretion, to set off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other indebtedness at any time held or owing by the Agent, such Lender or any affiliate of the Agent or such Lender, to or for the credit or the account of the Borrower against and on account of any of the Obligations, irrespective of whether or not any or all of the Loans and all other Obligations have been declared to be, or have otherwise become, due and payable as permitted by Section 9.2., and although such obligations shall be contingent or unmatured. Promptly following any such set-off the Agent shall notify the Borrower thereof and of the application of such set-off, provided that the failure to give such notice shall not invalidate such set-off.

Section 11.4. Litigation; Jurisdiction; Other Matters; Waivers.

(a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY BETWEEN OR AMONG THE BORROWER, THE PARENT, THE AGENT OR ANY OF THE LENDERS WOULD BE BASED ON DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT AND WOULD RESULT IN DELAY AND EXPENSE TO THE PARTIES. ACCORDINGLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE LENDERS, THE AGENT, THE PARENT AND THE BORROWER HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST ANY PARTY HERETO ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR BY REASON OF ANY OTHER SUIT, CAUSE OF ACTION OR DISPUTE WHATSOEVER BETWEEN OR AMONG THE BORROWER, THE AGENT OR ANY OF THE LENDERS OF ANY KIND OR NATURE.

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(b) EACH OF THE BORROWER, THE PARENT, THE AGENT AND EACH LENDER HEREBY AGREES THAT THE FEDERAL DISTRICT COURT OF THE EASTERN DISTRICT OF PENNSYLVANIA AND ANY STATE COURT LOCATED IN PHILADELPHIA COUNTY, PENNSYLVANIA, SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG THE BORROWER, THE PARENT, THE AGENT OR ANY OF THE LENDERS, PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE LOANS OR ANY OTHER LOAN DOCUMENT OR TO ANY MATTER ARISING HEREFROM OR THEREFROM. THE BORROWER AND EACH OF THE LENDERS EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS.

(c) EACH PARTY FURTHER WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME.

(d) THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY THE AGENT OR ANY LENDER OR THE ENFORCEMENT BY THE AGENT OR ANY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION.

(e) THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT.

Section 11.5. Successors and Assigns.

(a) Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Borrower may not assign or otherwise transfer any of is rights under this Agreement without the prior written consent of all the Lenders (and any such assignment or transfer to which all of the Lenders have not consented shall be void).

(b) Participations. Any Lender may at any time grant to an affiliate of such Lender, or one or more banks or other financial institutions (each a “Participant” ) participating interests in its Loan or the Obligations owing to such Lender. Except as otherwise provided in Section 3.3., no Participant shall have any rights or benefits under this Agreement or any other Loan Document. In the event of any such grant by a Lender of a participating interest to a Participant, such Lender shall remain responsible for the

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performance of its obligations hereunder, and the Borrower and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement pursuant to which any Lender may grant such a participating interest shall provide that such Lender shall retain the sole right and responsibility to enforce the obligations of the Borrower hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided, however, such Lender may agree with the Participant that it will not, without the consent of the Participant, agree to (i) increase the principal amount of such Lender’s Loan (unless such increase will not result in a increase in the Participant’s share), (ii) extend the date fixed for the payment of principal on the Loans or portions thereof owing to such Lender, or (iii) reduce the rate at which interest is payable thereon. An assignment or other transfer which is not permitted by subsection (c) or (d) below shall be given effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection (b). The selling Lender shall promptly notify the Agent and the Borrower of the sale of any participation hereunder and the terms thereof.

(c) Assignments. Any Lender may with the prior written consent of the Agent and the Borrower (which consent in each case, shall not be unreasonably withheld) at any time assign to one or more Eligible Assignee (each an “Assignee”) all or a portion of its rights and obligations under this Agreement and the Notes; provided, however, (i) no such consent by the Borrower shall be required (x) if a Default or Event of Default shall exist or (y) in the case of an assignment to another Lender, to an affiliate of the assigning Lender or to an affiliate of another Lender; (ii) any partial assignment shall be in an amount at least equal to $10,000,000 and after giving effect to such assignment the assigning Lender retains a portion of its Loan having a principal amount of at least $10,000,000, or in either case, such lesser amount to which the Agent and, subject to the immediately preceding clause (i), the Borrower may agree; (iii) each such assignment shall be effected by means of an Assignment and Assumption Agreement and (iv) such Lender must give the Agent at least 10 days (or such shorter period as the Agent may agree in its sole discretion) prior written notice of any such assignment. Upon execution and delivery of such instrument and payment by such Assignee to such transferor Lender of an amount equal to the purchase price agreed between such transferor Lender and such Assignee, such Assignee shall be deemed to be a Lender party to this Agreement and shall have all the rights and obligations of a Lender with a Loan as set forth in such Assignment and Assumption Agreement, and the transferor Lender shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by any party shall be required. Upon the consummation of any assignment pursuant to this subsection (c), the transferor Lender, the Agent and the Borrower shall make appropriate arrangements so that new Notes are issued to the Assignee and such transferor Lender, as appropriate. In connection with any such assignment, the transferor Lender shall pay to the Agent an administrative fee for processing such assignment in the amount of $4,500. Anything in this Section to the contrary notwithstanding, no Lender may assign or participate any interest in any Loan held by it hereunder to the Borrower, or any of its respective affiliates or Subsidiaries.

(d) Register. The Agent shall maintain a copy of each Assignment and Acceptance Agreement delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the principal amount of the Loan owing to each Lender from time to time (the “Register”). The Borrower, the Agent and the Lenders may treat each Person whose name is

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recorded in the Register as a Lender hereunder for all purposes of this Agreement and the other Loan Documents. The Register and copies of each Assignment and Acceptance Agreement shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice to the Agent. Upon its receipt of an Assignment and Acceptance Agreement executed by an assigning Lender, together with each Note subject to such assignment (a “Surrendered Note”), the Agent shall, if such Assignment and Acceptance Agreement has been completed and if the Agent receives the processing and recording fee described in subsection (c) above, (i) accept such Assignment and Acceptance Agreement, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof, and return each Surrendered Note, to the Borrower.

(e) Federal Reserve Bank Assignments. In addition to the assignments and participations permitted under the foregoing provisions of the Section, and without the need to comply with any of the formal or procedural requirements of this Section, any Lender may at any time and from time to time, pledge and assign all or any portion of its rights under all or any of the Loan Documents to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from its obligations thereunder. To facilitate any such pledge or assignment, Agent shall, at the request of such Lender, enter into a letter agreement with the Federal Reserve Bank in, or substantially in, the form of the exhibit to Appendix C to the Federal Reserve Bank of New York Operating Circular No 10, as amended from time to time.

(f) Information to Assignee, Etc. A Lender may furnish any information concerning the Parent the Borrower, any Subsidiary or any other Loan Party in the possession of such Lender from time to time to Assignees and Participants (including prospective Assignees and Participants) subject to compliance with the applicable terms of Section 11.8.

(g) Assignments Requiring Registration. Each Lender agrees that, without the prior written consent of the Borrower and the Agent, it will not make any assignment hereunder in any manner or under any circumstances that would require registration or qualification of, or filings in respect of, any Loan or Note under the Securities Act or any other securities laws of the United States of America or of any other jurisdiction.

Section 11.6. Amendments and Waivers.

(a) Generally. Except as otherwise expressly provided in this Agreement, (i) any consent or approval required or permitted by this Agreement or in any Loan Document to be given by the Lenders may be given, (ii) any term of this Agreement or of any other Loan Document (other than any fee letter solely between the Borrower and the Agent) may be amended, (iii) the performance or observance by the Borrower or any other Loan Party of any terms of this Agreement or such other Loan Document (other than any fee letter solely between the Borrower and the Agent) may be waived, and (iv) the continuance of any Default or Event of Default may be waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the written consent of the Requisite Lenders (or the Agent at the written direction of the Requisite Lenders), and, in the case of an amendment to any Loan

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Document, the written consent of each Loan Party which is party thereto. Notwithstanding the previous sentence, the Agent, shall be authorized on behalf of all the Lenders, without the necessity of any notice to, or further consent from, any Lender, to waive the imposition of the late fees provided in Section 2.5., up to a maximum of 3 times per calendar year.

(b) Unanimous Consent. Notwithstanding the foregoing, no amendment, waiver or consent shall, unless in writing, and signed by all of the Lenders other than any Defaulting Lender (or the Agent at the written direction of the Lenders other than any Defaulting Lender), do any of the following:

(i) increase the principal amount of the Loan held by each Lender (excluding any increase (x) pursuant to Section 2.14. or (y) as a result of an assignment of a Lender’s Loan permitted under Section 11.5.) or subject the Lenders to any additional obligations;

(ii) reduce the principal of, or interest rates that have accrued or that will be charged on the outstanding principal amount of, the Loans or other Obligations;

(iii) reduce the amount of any Fees payable to the Lenders hereunder;

(iv) modify the definition of the term “Termination Date” or postpone any date fixed for any payment of principal of, or interest on, the Loans or for the payment of Fees or any other Obligations;

(v) change the Pro Rata Shares (excluding any change as a result of any increase in the amount of the Loans pursuant to Section 2.14. or an assignment of Loans permitted under Section 11.5.);

(vi) amend this Section or amend the definitions of the terms used in this Agreement or the other Loan Documents insofar as such definitions affect the substance of this Section;

(vii) modify the definition of the term “Requisite Lenders” or modify in any other manner the number or percentage of the Lenders required to make any determinations or waive any rights hereunder or to modify any provision hereof;

(viii) release any Guarantor from its obligations under the Guaranty except as contemplated under Section 7.15.(c); or

(ix) waive a Default or Event of Default under Section 9.1.(a), except as contemplated by Section 9.6.

(c) Amendment of Agent’s Duties, Etc. No amendment, waiver or consent unless in writing and signed by the Agent, in addition to the Lenders required hereinabove to take such action, shall affect the rights or duties of the Agent under this Agreement or any of the other Loan Documents. No waiver shall extend to or affect any obligation not expressly waived or impair any right consequent

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thereon and any amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose set forth therein. No course of dealing or delay or omission on the part of the Agent or any Lender in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto. Any Event of Default occurring hereunder shall continue to exist until such time as such Event of Default is waived in writing in accordance with the terms of this Section, notwithstanding any attempted cure or other action by the Borrower, the Parent, any other Loan Party or any other Person subsequent to the occurrence of such Event of Default. Except as otherwise explicitly provided for herein or in any other Loan Document, no notice to or demand upon the Borrower shall entitle the Borrower to other or further notice or demand in similar or other circumstances.

Section 11.7. Nonliability of Agent and Lenders.

The relationship between the Borrower, on the one hand, and the Lenders and the Agent, on the other hand, shall be solely that of borrower and lender. Neither the Agent nor any Lender shall have any fiduciary responsibilities to the Borrower and no provision in this Agreement or in any of the other Loan Documents, and no course of dealing between or among any of the parties hereto, shall be deemed to create any fiduciary duty owing by the Agent or any Lender to any Lender, the Borrower, any Subsidiary or any other Loan Party. Neither the Agent nor any Lender undertakes any responsibility to the Parent or the Borrower to review or inform the Parent or the Borrower of any matter in connection with any phase of the business or operations of the Parent or the Borrower.

Section 11.8. Confidentiality.

Except as otherwise provided by Applicable Law, the Agent and each Lender shall utilize all non-public information obtained pursuant to the requirements of this Agreement which has been identified as confidential or proprietary by the Parent or the Borrower in accordance with its customary procedure for handling confidential information of this nature and in accordance with safe and sound banking practices but in any event may make disclosure: (a) to any of their respective affiliates (provided any such affiliate shall agree to keep such information confidential in accordance with the terms of this Section); (b) as reasonably required by any bona fide Assignee, Participant or other transferee in connection with the contemplated transfer of any Loan or participations therein as permitted hereunder (provided they shall agree to keep such information confidential in accordance with the terms of this Section); (c) as required by any Governmental Authority or representative thereof or pursuant to legal process; (d) to the independent auditors and other professional advisors (provided they shall be notified of the confidential nature of the information of the Agent or any Lender and shall agree to keep such information confidential in accordance with the terms of this Section); and (e) after the happening and during the continuance of an Event of Default, to any other Person, in connection with the exercise by the Agent or the Lenders of rights hereunder or under any of the other Loan Documents. The Agent and each Lender agrees to use any such non-public information solely in connection with the transactions contemplated by this Agreement and the other Loan Documents. Notwithstanding anything to the contrary set forth herein or in any other written or oral understanding or agreement to which the parties hereto are parties or by which they are bound, the parties hereto acknowledge and agree that any obligations of confidentiality contained herein and therein do not apply and have not applied from the commencement of discussions between the parties to the tax treatment and tax structure of the transactions contemplated by the Loan Documents (and any related transactions or arrangements).

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Section 11.9. Indemnification.

(a) The Borrower shall and hereby agrees to indemnify, defend and hold harmless the Agent, any affiliate of the Agent, and each of the Lenders and their respective directors, officers, shareholders, agents, employees and counsel (each referred to herein as an “Indemnified Party”) from and against any and all losses, costs, claims, damages, liabilities, deficiencies, judgments or expenses of every kind and nature (including, without limitation, amounts paid in settlement, court costs and the fees and disbursements of counsel incurred in connection with any litigation, investigation, claim or proceeding or any advice rendered in connection therewith) incurred by an Indemnified Party in connection with, arising out of, or by reason of, any suit, cause of action, claim, arbitration, investigation or settlement, consent decree or other proceeding (the foregoing referred to herein as an “Indemnity Proceeding”) which is in any way related directly or indirectly to: (i) this Agreement or any other Loan Document or the transactions contemplated hereby or thereby; (ii) the making of any Loans; (iii) any actual or proposed use by the Borrower of the proceeds of the Loans; (iv) the Agent’s or any Lender’s entering into this Agreement; (v) the fact that the Agent and the Lenders have established the credit facility evidenced hereby in favor of the Borrower; (vi) the fact that the Agent and the Lenders are creditors of the Borrower and have or are alleged to have information regarding the financial condition, strategic plans or business operations of the Parent, the Borrower and the other Subsidiaries; (vii) the fact that the Agent and the Lenders are material creditors of the Borrower and are alleged to influence directly or indirectly the business decisions or affairs of the Parent, the Borrower and the other Subsidiaries or their financial condition; (viii) the exercise of any right or remedy the Agent or the Lenders may have under this Agreement or the other Loan Documents; provided, however, that the Borrower shall not be obligated to indemnify any Indemnified Party for any acts or omissions of such Indemnified Party in connection with matters described in clause (i) and this clause (viii) to the extent found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct; or (ix) any violation or non-compliance by the Borrower or any Subsidiary of any Applicable Law (including any Environmental Law) including, but not limited to, any Indemnity Proceeding commenced by (A) the Internal Revenue Service or state taxing authority or (B) any Governmental Authority or other Person under any Environmental Law, including any Indemnity Proceeding commenced by a Governmental Authority or other Person seeking remedial or other action to cause the Borrower or its Subsidiaries (or its respective properties) (or the Agent and/or the Lenders as successors to the Borrower) to be in compliance with such Environmental Laws.

(b) The Borrower’s indemnification obligations under this Section shall apply to all Indemnity Proceedings arising out of, or related to, the foregoing whether or not an Indemnified Party is a named party in such Indemnity Proceeding. In this connection, this indemnification shall cover all costs and expenses of any Indemnified Party in connection with any deposition of any Indemnified

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Party or compliance with any subpoena (including any subpoena requesting the production of documents). This indemnification shall, among other things, apply to any Indemnity Proceeding commenced by other creditors of the Borrower or any Subsidiary, any shareholder of the Borrower or any Subsidiary (whether such shareholder(s) are prosecuting such Indemnity Proceeding in their individual capacity or derivatively on behalf of the Borrower), any account debtor of the Borrower or any Subsidiary or by any Governmental Authority. If and to the extent that the obligations of the Borrower hereunder are unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under Applicable Law. The Borrower’s obligations hereunder are in addition to, and not in substitution of, any other obligation in respect of indemnification contained in this Agreement or any other Loan Document.

Section 11.10. Termination; Survival.

At such time as all Obligations (other than obligations which survive as provided in the following sentence) have been paid and satisfied in full, this Agreement shall terminate. Notwithstanding any termination of this Agreement, or of the other Loan Documents, the indemnities to which the Agent and the Lenders are entitled under the provisions of Sections 10.7., 11.2. and 11.9. and any other provision of this Agreement and the other Loan Documents, and the waivers of jury trial and submission to jurisdictions contained in Section 11.4., shall continue in full force and effect and shall protect the Agent and the Lenders against events arising after such termination as well as before.

Section 11.11. Severability of Provisions.

Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions or affecting the validity or enforceability of such provision in any other jurisdiction.

Section 11.12. GOVERNING LAW.

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH COMMONWEALTH.

Section 11.13. Counterparts.

This Agreement and any amendments, waivers, consents or supplements may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all of which counterparts together shall constitute but one and the same instrument.

Section 11.14. Obligations with Respect to Loan Parties.

The obligations of the Borrower or the Parent to direct or prohibit the taking of certain actions by the other Loan Parties as specified herein shall be absolute and not subject to any defense the Borrower or the Parent may have that the Borrower or the Parent does not control such Loan Parties.

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Section 11.15. Limitation of Liability.

Neither the Agent, any Lender, nor any affiliate, officer, director, employee, attorney, or agent of the Agent or any Lender shall have any liability with respect to, and the Borrower and the Parent each hereby waives, releases, and agrees not to sue any of them upon, any claim for any special, indirect, incidental, or consequential damages suffered or incurred by the Borrower or the Parent in connection with, arising out of, or in any way related to, this Agreement or any of the other Loan Documents, or any of the transactions contemplated by this Agreement or any of the other Loan Documents. The Borrower and the Parent each hereby waives, releases, and agrees not to sue the Agent or any Lender or any of their respective affiliates, officers, directors, employees, attorneys, or agents for punitive damages in respect of any claim in connection with, arising out of, or in any way related to, this Agreement or any of the other Loan Documents, or any of the transactions contemplated by this Agreement or financed hereby. Notwithstanding anything in this Section to the contrary, no Defaulting Lender shall be entitled to claim any of the benefits of this Section.

Section 11.16. Entire Agreement.

This Agreement and the other Loan Documents referred to herein embody the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements, representations, and understandings, whether written or oral, relating to the subject matter hereof and may not be contradicted or varied by evidence of prior, contemporaneous, or subsequent oral agreements or discussions of the parties hereto. There are no oral agreements among the parties hereto.

Section 11.17. Construction.

The Borrower, the Parent, the Agent and each Lender acknowledge that each of them has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review this Agreement and the other Loan Documents with its legal counsel and that this Agreement and the other Loan Documents shall be construed as if jointly drafted by the Borrower, the Parent, the Agent and each Lender.

Section 11.18. Time of the Essence.

Time is of the essence of each and every provision of this Agreement.

Section 11.19. Electronic Delivery of Certain Information.

(a) Documents required to be delivered pursuant to the Loan Documents shall be delivered by electronic communication and delivery, including, the Internet, e-mail or intranet websites to which the Agent and each Lender have access (including a commercial, third-party website such as www.Edgar.com <http://www.Edgar.com> or a website sponsored or hosted by the Agent or the

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Borrower) provided that the foregoing shall not apply to (A) notices to any Lender pursuant to Article II. and (B) any Lender that has notified the Agent or the Borrower that it cannot or does not want to receive electronic communications. The Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic delivery pursuant to procedures approved by it for all or particular notices or communications. Documents or notices delivered electronically shall be deemed to have been delivered twenty-four (24) hours after the date and time on which the Agent or the Borrower posts such documents or the documents become available on a commercial website and the Agent or the Borrower notifies each Lender of said posting and provides a link thereto provided if such notice or other communication is not sent or posted during the normal business hours of the recipient, said posting date and time shall be deemed to have commenced as of 9:00 a.m. on the opening of business on the next business day for the recipient. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the certificate required by Section 7.1.(c) to the Agent and shall deliver paper copies of any documents to the Agent or to any Lender that requests such paper copies until a written request to cease delivering paper copies is given by the Agent or such Lender. Except for the certificates required by Section 7.1.(c), the Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents delivered electronically, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery. Each Lender shall be solely responsible for requesting delivery to it of paper copies and maintaining its paper or electronic documents.

(b) Documents required to be delivered pursuant to Article II. may be delivered electronically to a website provided for such purpose by the Agent pursuant to the procedures provided to the Borrower by the Agent.

[Signatures on Next Page]

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IN WITNESS WHEREOF, the parties hereto have caused this Term Loan Agreement to be executed by their authorized officers all as of the day and year first above written.

PREIT ASSOCIATES, L.P.
By:	Pennsylvania Real Estate Investment Trust, its general partner
	By:	/s/ Bruce Goldman
		Name: Bruce Goldman
		Title: Executive Vice President and General Counsel
PREIT-RUBIN, INC.
	By:	/s/ Bruce Goldman
		Name:	Bruce Goldman
		Title: Executive Vice President and General Counsel

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
By:	/s/ Andrew Ioannou
	Name: Andrew Ioannou
	Title: Treasurer

[Signatures Continued on Next Page]

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[Signature Page to Term Loan Agreement

with PREIT Associates, L.P. and PREIT-RUBIN, Inc.]

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent and as a Lender
By:	/s/ Stephen F. Gray
	Name:	Stephen F. Gray
	Title:	Vice President
Address for Notices:
Wells Fargo Bank, National Association Real Estate Group 1750 H Street, N.W., Suite 400 Washington, DC 20006 Attention: Erin Peart, S.V.P. Telecopier:    (202) 429-2984 Telephone:    (202) 303-3012 with a copy to: Wells Fargo Bank, National Association Real Estate Group Two Logan Square, Suite 1910 100-120 North 18th Street Philadelphia, PA 19103 Attention: Loan Administration Manager Telecopier:    (215) 561-3812 Telephone:    (215) 640-6382

[Signatures Continued on Next Page]

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[Signature Page to Term Loan Agreement

with PREIT Associates, L.P. and PREIT-RUBIN, Inc.]

WILMINGTON TRUST OF PENNSYLVANIA
By:	/s/ Michael Post
	Name:	Michael Post
	Title:	AVP
Lending Office (all Types of Loans) and Address for Notices:
Wilmington Trust of Pennsylvania 2003 S. Easton Road, Suite 204 Doylestown, PA 18901 Attn: Michael E. Post Telecopier: 267.880.7008 Telephone: 267.880.7011

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ANNEX I

DEFINED TERMS

“Accession Agreement” means an Accession Agreement substantially in the form of Annex I to the Guaranty.

“Additional Costs” has the meaning given that term in Section 4.1.

“Adjusted EBITDA” means, for any Person and for any given period, (a) the EBITDA of such Person and its Subsidiaries determined on a consolidated basis for such period, plus (b) rent payments made during such period by such Person and its Subsidiaries in respect of ground leases minus (c) the Reserve for Replacements for all Properties owned by such Person and its Subsidiaries. Adjusted EBITDA shall be (i) increased by the greater of a Person’s Ownership Share or Recourse Share of rent payments made during such period by any Unconsolidated Affiliate of such Person in respect of ground leases and (ii) decreased by the greater of a Person’s Ownership Share or Recourse Share of the Reserve for Replacements for all Properties owned by Unconsolidated Affiliates of such Person.

“Adjusted NOI” means, for any Property and for a given period, the sum of the following (without duplication): (a) rents and other revenues received in the ordinary course from such Property (including proceeds of rent loss insurance but excluding pre-paid rents and revenues and security deposits except to the extent applied in satisfaction of tenants’ obligations for rent) minus (b) all expenses paid or accrued related to the ownership, operation or maintenance of such Property, including but not limited to taxes, assessments and other similar charges, insurance, utilities, payroll costs, maintenance, repair and landscaping expenses, marketing expenses, and general and administrative expenses (including an appropriate allocation for legal, accounting, advertising, marketing and other expenses incurred in connection with such Property, but specifically excluding general overhead expenses of the Borrower and the Parent) minus (c) the Reserve for Replacements for such Property as of the end of such period minus (d) the greater of (i) the actual property management fee paid during such period and (ii) an imputed management fee in the amount of three percent (3.0%) of the base rent revenues for such Property for such period.

“Affected Lender” has the meaning given that term in Section 4.6.

“Affiliate” means with respect to a given Person, any other Person (other than the Agent or any Lender): (a) directly or indirectly controlling, controlled by, or under common control with, such given Person; (b) directly or indirectly owning or holding five percent (5.0%) or more of any equity interest in such given Person; or (c) five percent (5.0%) or more of whose voting stock or other equity interest is directly or indirectly owned or held by such given Person. For purposes of this definition, “control” (including with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”) means the possession directly or indirectly of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or by contract or otherwise. The Affiliates of a Person shall include any officer or director (or other Persons holding similar positions) of such Person.

“Agent” means Wells Fargo Bank, National Association, as contractual representative for the Lenders under the terms of this Agreement and the other Loan Documents, and together with its successors and assigns.

“Agreement Date” means the date as of which this Agreement is dated.

“Applicable Law” means all applicable provisions of constitutions, statutes, rules, regulations and orders of all governmental bodies and all orders and decrees of all courts, tribunals and arbitrators.

“Applicable Margin” means (a) with respect to LIBOR Loans and Base Rate Loans based on the Daily LIBO Rate, 2.50% and (b) with respect to Base Rate Loans based on the Prime Rate, 1.50%.

“Assignee” has the meaning given that term in Section 11.5.(c).

“Assignment and Acceptance Agreement” means an Assignment and Acceptance Agreement among a Lender, an Assignee and the Agent, substantially in the form of Exhibit A.

“Bankruptcy Event” means with respect to a Person, any of the events of the type described or referred to in Section 9.1.(e) or (f).

“Base Rate” means the Daily LIBO Rate; provided, that if for any reason the Daily LIBO Rate is unavailable, Base Rate shall mean the Prime Rate.

“Base Rate Loan” means any portion of a Loan bearing interest at a rate based on the Base Rate.

“Benefit Arrangement” means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Benefit Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group.

“Benefit Plan” means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA Group.

“Borrower” means, subject to Section 7.16 hereof, PREIT Associates, L.P. and PREIT-Rubin, Inc., individually and collectively and shall include their respective successors and permitted assigns; provided, however, that solely as used in Section 7.1(m), Section 8.2(e) and the first sentence of Section 8.7, the term “Borrower” shall only be deemed to be PREIT Associates, L.P. and its successors and permitted assigns.

“Business Day” means (a) any day other than a Saturday, Sunday or other day on which banks in Philadelphia, Pennsylvania or San Francisco, California are authorized or required to close and (b) with reference to a LIBOR Loan, any such day that is also a day on which dealings in Dollar deposits are carried out in the London interbank market.

“Capitalized Lease Obligation” means obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP. The amount of a Capitalized Lease Obligation is the capitalized amount of such obligation determined in accordance with GAAP.

“Cash Equivalents” means: (a) securities issued, guaranteed or insured by the United States of America or any of its agencies with maturities of not more than one year from the date acquired; (b) certificates of deposit with maturities of not more than one year from the date acquired issued by a United States federal or state chartered commercial bank of recognized standing, which has capital and unimpaired surplus in excess of $500,000,000 and which bank or its holding company has a short-term commercial paper rating of at least A-1 or the equivalent by S&P or at least P-1 or the equivalent by Moody’s; (c) reverse repurchase agreements with terms of not more than seven days from the date acquired, for securities of the type described in clause (a) above and entered into only with commercial banks having the qualifications described in clause (b) above; (d) commercial paper issued by any Person incorporated under the laws of the United States of America or any State thereof and rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s, in each case with maturities of not more than one year from the date acquired; and (e) investments in money market funds registered under the Investment Company Act of 1940, which have net assets of at least $500,000,000 and at least 85% of whose assets consist of securities and other obligations of the type described in clauses (a) through (d) above.

“CIP Adjustment” means, at any time of determination, the sum of (i) 75% of Construction in Progress attributable to Properties (or portions thereof) that were Placed in Service in the fiscal quarter of the Parent most recently ended plus, (ii) 50% of Construction in Progress attributable to Properties (or portions thereof) that were Placed in Service in the fiscal quarter of the Parent prior to the immediate preceding fiscal quarter of the Parent most recently ended plus, (iii) 25% of Construction in Progress attributable to Properties (or portions thereof) that were Placed in Service two fiscal quarters of the Parent prior to the immediately preceding fiscal quarter of the Parent most recently ended. For purposes of this definition, if portions of a Property are considered to have been Placed in Service although other portions of such Property have not, the portions Placed in Service and the portions not considered Placed in Service shall each be accounted for as a separate Property.

“Commitment” means, as to each Lender, such Lender’s obligation to make a Loan pursuant to Section 2.1. in an amount up to, but not exceeding the amount set forth for such Lender on Schedule 1 as such Lender’s “Commitment Amount”.

“Compliance Certificate” has the meaning given that term in Section 7.1.(c).

“Construction in Progress” means, at any time of determination, an amount equal to the aggregate costs incurred to date with respect to Projects Under Development. For the avoidance of doubt, the aggregate costs associated with any Property (or portion thereof) that is considered to have been Placed in Service (including in accordance with the second sentence of the definition of CIP Adjustment) shall be excluded from Construction in Progress.

“Contingent Obligation” as applied to any Person, means any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other payment obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto. Contingent Obligations shall include (i) any Guaranty of the Indebtedness of another (other than of such Person for liabilities arising from Nonrecourse Exceptions), (ii) the obligation to make take-or-pay or similar payments if required regardless of nonperformance by any other party or parties to an agreement, and (iii) any liability of such Person for the Indebtedness of another through any agreement to purchase, repurchase or otherwise acquire such obligation or any property constituting security therefor, to provide funds for the payment or discharge of such obligation or to maintain the solvency, financial condition or any balance sheet item or level of income of another. The amount of any Contingent Obligation shall be equal to the amount of the obligation so guaranteed or otherwise supported or, if not a fixed and determined amount, the maximum amount so guaranteed.

“Continue”, “Continuation” and “Continued” each refers to the continuation of a LIBOR Loan from one Interest Period to another Interest Period pursuant to Section 2.7.

“Convert”, “Conversion” and “Converted” each refers to the conversion of a Loan of one Type into a Loan of another Type pursuant to Section 2.8.

“Credit Event” means any of the following: (a) the making (or deemed making) of any Loan, (b) the continuation of a LIBOR Loan and (c) the Conversion of a Base Rate Loan into a LIBOR Loan.

“Credit Rating” means, for any Person, the lowest rating assigned by a Rating Agency to each series of rated senior unsecured long term indebtedness of such Person.

“Daily LIBO Rate” means (i) the rate of interest quoted by the Agent from time to time as the London Inter-Bank Offered Rate for deposits in U.S. Dollars at approximately 9:00 a.m. Pacific time for a period of one day divided by (ii) a percentage equal to 1 minus the stated maximum rate (stated as a decimal) of all reserves, if any, required to be maintained with respect to Eurocurrency

funding (currently referred to as “Eurocurrency liabilities”) as specified in Regulation D of the Board of Governors of the Federal Reserve System (or against any other category of liabilities which includes deposits by reference to which the interest rate on LIBOR loans is determined or any applicable category of extensions of credit or other assets which includes loans by an office of any Lender outside of the United States of America). Any change in such maximum rate shall result in a change in Daily LIBO Rate on the date on which such change in such maximum rate becomes effective.

“Default” means any of the events specified in Section 9.1., whether or not there has been satisfied any requirement for the giving of notice, the lapse of time, or both.

“Defaulting Lender” has the meaning set forth in Section 3.9.

“Dollars” or “$” means the lawful currency of the United States of America.

“EBITDA” means, with respect to any Person for any period and without duplication, net earnings (loss) of such Person for such period (excluding equity in net earnings or net loss of Unconsolidated Affiliates) plus the sum of the following amounts (but only to the extent included in determining net earnings (loss) for such period): (a) depreciation and amortization expense and other non-cash charges of such Person for such period, including without limitation, non-cash compensation expense recorded under Financial Accounting Standards Board Statement No. 123 (Revised 2004), Accounting for Stock Based Compensation of such Person for such period, plus (b) interest expense of such Person for such period, plus (c) all provisions for any federal, state or other income tax of such Person in respect of such period, minus (plus) (d) extraordinary gains (losses) of such Person for such period, plus (e) the greater of such Person’s (i) Ownership Share or (ii) Recourse Share of the EBITDA of the Unconsolidated Affiliates of such Person for such period, plus (f) acquisition related costs of such Person expensed pursuant to FAS 141, that would otherwise have been capitalized under GAAP immediately prior to the effectiveness of FAS 141. For purposes of this definition, net earnings (loss) shall be determined before minority interests and distributions to holders of Preferred Stock.

“Effective Date” means the later of (a) the Agreement Date and (b) the date on which all of the conditions precedent set forth in Section 5.1. shall have been fulfilled or waived in accordance with the provisions of Section 11.6.

“Eligible Assignee” means any Person that is: (a) an existing Lender; (b) a commercial bank, trust company, savings and loan association, savings bank, insurance company, investment bank or pension fund organized under the laws of the United States of America, any state thereof or the District of Columbia, and having total assets in excess of $5,000,000,000; or (c) a commercial bank organized under the laws of any other country which is a member of the Organisation for Economic Co-operation and Development, or a political subdivision of any such country, and having total assets in excess of $10,000,000,000, provided that such bank is acting through a branch or agency located in the United States of America. If such entity is not currently a Lender, such entity’s (or in the case of a bank which is a subsidiary, such bank’s parent’s) senior unsecured long term indebtedness must be rated BBB or higher by S&P, Baa2 or higher by Moody’s or the equivalent or higher of either such rating by another rating agency acceptable to the Agent.

“Environmental Laws” means any Applicable Law relating to environmental protection or the manufacture, storage, disposal or clean-up of Hazardous Materials including, without limitation, the following: Clean Air Act, 42 U.S.C. § 7401 et seq.; Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; Solid Waste Disposal Act, 42 U.S.C. § 6901 et seq.; Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq.; National Environmental Policy Act, 42 U.S.C. § 4321 et seq.; regulations of the Environmental Protection Agency and any applicable rule of common law and any judicial interpretation thereof relating primarily to the environment or Hazardous Materials.

“Equity Interest” means, with respect to any Person, any share of capital stock of (or other ownership or profit interests in) such Person, any warrant, option or other right for the purchase or other acquisition from such Person of any share of capital stock of (or other ownership or profit interests in) such Person, any security convertible into or exchangeable for any share of capital stock of (or other ownership or profit interests in) such Person or warrant, right or option for the purchase or other acquisition from such Person of such shares (or such other interests), and any other ownership or profit interest in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such share, warrant, option, right or other interest is authorized or otherwise existing on any date of determination.

“Equity Issuance” means any issuance or sale by a Person of any Equity Interest.

“ERISA” means the Employee Retirement Income Security Act of 1974, as in effect from time to time.

“ERISA Group” means the Borrower, any Subsidiary and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower or any Subsidiary, are treated as a single employer under Section 414 of the Internal Revenue Code.

“Event of Default” means any of the events specified in Section 9.1., provided that any requirement for notice or lapse of time or any other condition has been satisfied.

“Excluded Subsidiary” means any Subsidiary (a) holding title to assets which are or are to become collateral for any Secured Indebtedness of such Subsidiary; and (b) which is prohibited from Guarantying the Indebtedness of any other Person pursuant to (i) any document, instrument or agreement evidencing such Secured Indebtedness, (ii) a provision of such Subsidiary’s organizational documents which provision was included in such Subsidiary’s organizational documents as a condition to the extension of such Secured Indebtedness or (iii) any fiduciary obligation owing to the holders of an Equity Interest in such Subsidiary and imposed under Applicable Law.

“Extension Request” has that meaning set forth in Section 2.10.

“Existing Revolving Credit Agreement” means that certain Credit Agreement dated as of November 20, 2003 by and between the Borrower, the Parent, the financial institutions party thereto as “Lenders”, and Wells Fargo, as Agent.

“Fair Market Value” means, with respect to any asset, the price which could be negotiated in an arm’s-length free market transaction, for cash, between a willing seller and a willing buyer, neither of which is under pressure or compulsion to complete the transaction. Fair Market Value shall be determined by the Board of Directors of the Parent acting in good faith conclusively evidenced by a board resolution thereof delivered to the Agent or, with respect to any asset valued at up to $5,000,000, such determination may be made by the chief financial officer of the Parent evidenced by an officer’s certificate delivered to the Agent.

“FAS 141” means Financial Accounting Standards Board Statement No. 141 (Revised 2007), Business Combinations.

“Federal Funds Rate” means, for any day, the rate per annum (rounded upward to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate quoted to the Agent by federal funds dealers selected by the Agent on such day on such transaction as determined by the Agent.

“Fees” means the fees and commissions provided for or referred to in Section 3.5. (excluding any fees referred to in Section 3.5.(d)).

“FIN 46” means FASB Interpretation No. 46 as issued by the Financial Accounting Standards Board.

“FIN 46 Entities” means those Persons who (a) are neither Guarantors or Subsidiaries of the Parent and (b) who are consolidated with the Parent in the financial statements of the Parent solely by reason of the application of FIN 46.

“Fixed Charges” means, with respect to a Person and for a given period, (a) such Person’s Interest Expense for such period, plus (b) regularly scheduled principal payments on Indebtedness of such Person and its Subsidiaries made during such period, other than any balloon, bullet or similar principal payment payable on any Indebtedness of such Person which repays such Indebtedness in full, plus (c) Preferred Dividends paid by such Person and its Subsidiaries during such period, plus (d) rent payments made during such period by such Person and its Subsidiaries in respect of ground leases. Fixed Charges shall include the greater of such Person’s Ownership Share or Recourse Share of the amount of any of the items described in the immediately preceding clause (b) though (d) of such Person’s Unconsolidated Affiliates.

“Floating Rate Indebtedness” means all Indebtedness of a Person which bears interest at a variable rate during the scheduled life of such Indebtedness and for which such Person has not obtained Interest Rate Agreements which effectively cause such variable rates to be equivalent to fixed rates less than or equal to 10.0% per annum.

“Funds From Operations” means, with respect to a Person and for a given period, (a) net income (loss) of such Person determined on a consolidated basis for such period minus (or plus) (b) gains (or losses) from debt restructuring and sales of operating property during such period plus (c) depreciation with respect to such Person’s real estate assets and amortization (other than amortization of deferred financing costs) of such Person for such period, all after adjustment for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated entities will be calculated to reflect funds from operations on the same basis.

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination.

“Governmental Approvals” means all authorizations, consents, approvals, permits, licenses and exemptions of, registrations and filings with, and reports to, all Governmental Authorities.

“Governmental Authority” means any national, state or local government (whether domestic or foreign), any political subdivision thereof or any other governmental, quasi-governmental, judicial, public or statutory instrumentality, authority, body, agency, bureau or entity (including, without limitation, the Federal Deposit Insurance Corporation, the Comptroller of the Currency or the Federal Reserve Board, any central bank or any comparable authority) or any arbitrator with authority to bind a party at law.

“Gross Asset Value” means, at a given time, the sum (without duplication) of (a) Operating Real Estate Value at such time, plus (b) all cash and Cash Equivalents (excluding cash and Cash Equivalents the disposition of which is restricted (other than restrictions on cash held in an exchange account by a “qualified intermediary” in connection with the sale of a property pursuant to and qualifying for tax treatment under Section 1031 of the Internal Revenue Code)), and all accounts receivable net of reserves, of the Parent and its Subsidiaries at such time, plus (c) the current book value of all land held for future development owned in whole or in part by the Parent and its Subsidiaries, plus (d) predevelopment costs associated with land referred to in the immediately preceding clause (c) and, subject to the immediately following sentence, refundable deposits associated with land that is not owned by the Parent and its

Subsidiaries, to the extent such predevelopment costs and refundable deposits are included in the Parent’s publicly filed financial statements, plus (e) the amount of Construction in Progress, plus (f) the CIP Adjustment plus (g) the purchase price paid by the Parent or any Subsidiary (less any amounts paid to the Parent or such Subsidiary as a purchase price adjustment, held in escrow, retained as a contingency reserve, or in connection with other similar arrangements) for any Property acquired by the Parent or such Subsidiary during the immediately preceding four fiscal quarters of the Parent, plus (h) with respect to each Unconsolidated Affiliate of the Parent, the greater of the Parent’s (i) Ownership Share or (ii) Recourse Share of (v) all cash and Cash Equivalents of such Unconsolidated Affiliate (excluding cash and Cash Equivalents the disposition of which is restricted (other than restrictions on cash held in an exchange account by a “qualified intermediary” in connection with the sale of a property pursuant to and qualifying for tax treatment under Section 1031 of the Internal Revenue Code)), (w) current book value of all land held for future development owned in whole or part by such Unconsolidated Affiliate and predevelopment costs associated with such land, (x) Construction in Progress of such Unconsolidated Affiliate as of the end of the Parent’s fiscal quarter most recently ended, (y) such Unconsolidated Affiliate’s Operating Real Estate Value, and (z) such Unconsolidated Affiliate’s CIP Adjustment, plus (i) the contractual purchase price of Properties of the Parent and its Subsidiaries subject to purchase obligations, repurchase obligations, forward commitments and unfunded obligations to the extent such obligations and commitments are included in determinations of Total Liabilities. If obligations under a contract to purchase or otherwise acquire unimproved or fully developed real property are included when determining Total Liabilities and the seller under such contract does not have the right to specifically enforce such contract, then only an amount equal to the aggregate amount of due diligence deposits, earnest money payments and other similar payments made under the contract which, at such time, would be subject to forfeiture upon termination of the contract, shall be included in Gross Asset Value. If obligations under a contract to purchase or otherwise acquire real property being renovated or developed by a third party are included when determining Total Liabilities and such real property is not owned or leased by the Borrower or any of its Subsidiaries, then only the amount equal to the maximum amount reasonably estimated to be payable by such Person to such third party under a contract between such Person and such third party during the remaining term of such contract, shall be included in Gross Asset Value. To the extent that the current book value of land held for development plus predevelopment costs included pursuant to clause (d) above exceeds 5.0% of Gross Asset Value (determined without giving effect to this sentence), such excess shall be excluded in determining Gross Asset Value.

“Guarantor” means any Person that is party to the Guaranty as a “Guarantor” and shall in any event include the Parent.

“Guaranty”, “Guaranteed” or to “Guarantee” as applied to any obligation means and includes: (a) a guaranty (other than by endorsement of negotiable instruments for collection in the ordinary course of business), directly or indirectly, in any manner, of any part or all of such obligation, or (b) an agreement, direct or indirect, contingent or otherwise, and whether or not constituting a guaranty, the practical effect of which is to assure the payment or performance (or payment of damages in the event of nonperformance) of any part or all of such obligation whether by: (i) the purchase of securities or obligations, (ii) the purchase, sale or

lease (as lessee or lessor) of property or the purchase or sale of services primarily for the purpose of enabling the obligor with respect to such obligation to make any payment or performance (or payment of damages in the event of nonperformance) of or on account of any part or all of such obligation, or to assure the owner of such obligation against loss, (iii) the supplying of funds to or in any other manner investing in the obligor with respect to such obligation, (iv) repayment of amounts drawn down by beneficiaries of letters of credit, or (v) the supplying of funds to or investing in a Person on account of all or any part of such Person’s obligation under a Guaranty of any obligation or indemnifying or holding harmless, in any way, such Person against any part or all of such obligation. As the context requires, “Guaranty” shall also mean the guaranty executed and delivered pursuant to Section 5.1. and substantially in the form of Exhibit B.

“Hazardous Materials” means all or any of the following: (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable Environmental Laws as “hazardous substances”, “hazardous materials”, “hazardous wastes”, “toxic substances” or any other formulation intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity or “TLCP” toxicity, “EP toxicity”; (b) oil, petroleum or petroleum derived substances, natural gas, natural gas liquids or synthetic gas and drilling fluids, produced waters and other wastes associated with the exploration, development or production of crude oil, natural gas or geothermal resources; (c) any flammable substances or explosives or any radioactive materials; (d) asbestos in any form; (e) toxic mold and (f) electrical equipment which contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of fifty parts per million.

“Indebtedness” means, with respect to a Person, at the time of computation thereof, all of the following (without duplication): (a) obligations of such Person in respect of money borrowed; (b) obligations of such Person (other than trade debt incurred in the ordinary course of business), whether or not for money borrowed (i) represented by notes payable, or drafts accepted, in each case representing extensions of credit, (ii) evidenced by bonds, debentures, notes or similar instruments, or (iii) constituting purchase money indebtedness, conditional sales contracts, title retention debt instruments or other similar instruments, upon which interest charges are customarily paid or that are issued or assumed as full or partial payment for property; (c) all master lease obligations; (d) Capitalized Lease Obligations of such Person; (e) all reimbursement obligations of such Person under any letters of credit or acceptances that have been presented for payment; (f) all Indebtedness of other Persons which (i) such Person has Guaranteed (other than Guarantees which are solely Guarantees of performance and not of payment and other Guarantees of such Person for liabilities arising from Nonrecourse Exceptions) or is otherwise recourse to such Person or (ii) is secured by a Lien on any property of such Person; provided, that such Indebtedness shall be limited to the value of such property so encumbered; and (g) the Recourse Share of all Indebtedness of any partnership of which such Person is a general partner. For purposes of this definition preferred equity of a Person shall not be considered to be Indebtedness.

“Intellectual Property” has the meaning given that term in Section 6.1.

“Interest Expense” means, with respect to a Person and for any period, (a) all paid, accrued or capitalized interest expense (including, without limitation, interest expense attributable to Capitalized Lease Obligations but excluding capitalized interest funded from an interest reserve in a construction loan) of such Person and in any event shall include all letter of credit fees and all interest expense with respect to any Indebtedness in respect of which such Person is wholly or partially liable whether pursuant to any repayment, interest carry, performance Guarantee or otherwise, plus (b) to the extent not already included in the foregoing clause (a) the greater of such Person’s (i) Ownership Share or (ii) Recourse Share of all paid, accrued or capitalized interest expense (as limited above) for such period of Unconsolidated Affiliates of such Person.

“Interest Period” means with respect to any LIBOR Loan, the period commencing on the date of the borrowing, Conversion or Continuation of such Loan and ending on the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each Interest Period shall be one, two, three or six months as the Borrower may, in the Notice of Borrowing, Notice of Continuation or Notice of Conversion, select. In no event shall an Interest Period of a Loan extend beyond the Termination Date. Whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day; provided, however, that if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day.

“Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar contractual agreement or arrangement entered into with a nationally recognized financial institution then having a Credit Rating of BBB- or higher by S&P or Baa3 or higher by Moody’s for the purpose of protecting against fluctuations in interest rates.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.

“Investment” means, with respect to any Person and whether or not such investment constitutes a controlling interest in such Person: (a) the purchase or other acquisition of any share of capital stock, evidence of Indebtedness or other security issued by any other Person; (b) any loan, advance or extension of credit to, or contribution (in the form of money or goods) to the capital of, any other Person; (c) any Guaranty of the Indebtedness of any other Person; (d) any other investment in any other Person; and (e) any commitment or option to make an Investment in any other Person.

“Lender” means each financial institution from time to time party hereto as a “Lender” together with its respective successors and permitted assigns.

“Lending Office” means, for each Lender and for each Type of Loan, the office of such Lender specified as such on its signature page hereto or in the applicable Assignment and Acceptance Agreement, or such other office of such Lender as such Lender may notify the Agent in writing from time to time.

“LIBOR” means, for the Interest Period for any LIBOR Loan, (i) the rate of interest quoted by the Agent from time to time as the London Inter-Bank Offered Rate for deposits in U.S. Dollars at approximately 9:00 a.m. Pacific time, two (2) Business Days prior to the date of commencement of such Interest Period for purposes of calculating effective rates of interest for loans or obligations making reference thereto for an amount approximately equal to the applicable LIBOR Loan and for a period of time approximately equal to such Interest Period divided by (ii) a percentage equal to 1 minus the stated maximum rate (stated as a decimal) of all reserves, if any, required to be maintained with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”) as specified in Regulation D of the Board of Governors of the Federal Reserve System (or against any other category of liabilities which includes deposits by reference to which the interest rate on LIBOR Loans is determined or any applicable category of extensions of credit or other assets which includes loans by an office of any Lender outside of the United States of America). Any change in such maximum rate shall result in a change in LIBOR on the date on which such change in such maximum rate becomes effective.

“LIBOR Loan” means any portion of a Loan bearing interest at a rate based on LIBOR.

“Lien” as applied to the property of any Person means: (a) any security interest, encumbrance, mortgage, deed to secure debt, deed of trust, pledge, lien, charge or lease constituting a Capitalized Lease Obligation, conditional sale or other title retention agreement, or other security title or encumbrance of any kind in respect of any property of such Person, or upon the income or profits therefrom; (b) any arrangement, express or implied, under which any property of such Person is transferred, sequestered or otherwise identified for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to the payment of the general, unsecured creditors of such Person; (c) the filing of any financing statement under the Uniform Commercial Code or its equivalent in any jurisdiction, excluding any financing statement filed to give notice of the existence of an operating lease; and (d) any agreement by such Person to grant, give or otherwise convey any of the foregoing.

“Loan” means a loan made by a Lender pursuant to Section 2.1.

“Loan Document” means this Agreement, each Note, the Guaranty, and each other document or instrument now or hereafter executed and delivered by a Loan Party in connection with, pursuant to or relating to this Agreement.

“Loan Party” means each of the Borrower, the Parent and each other Guarantor. Schedule 1.1. sets forth the Loan Parties in addition to the Borrower and the Parent as of the Agreement Date.

“Material Adverse Effect” means a materially adverse effect on (a) the business, assets, liabilities, financial condition, results of operations or business prospects of the Borrower and its Subsidiaries taken as a whole, or the Parent and its Subsidiaries taken as a whole, (b) the legal ability of the Borrower or any other Loan Party that is a Material Subsidiary to perform its obligations under any Loan Document to which it is a party, (c) the validity or enforceability of any of the Loan Documents, (d) the rights and remedies of the Lenders and the Agent under any of such Loan Documents or (e) the timely payment of the principal of or interest on the Loans or other amounts payable in connection therewith.

“Material Contract” means any contract or other arrangement (other than Loan Documents), whether written or oral, to which the Parent, the Borrower, any other Loan Party or any other Subsidiary is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto could reasonably be expected to have a Material Adverse Effect.

“Material Plan” means at any time a Benefit Plan or Benefit Plans having aggregate Unfunded Liabilities in excess of $1,000,000.

“Material Subsidiary” means one or more Subsidiaries (other than the Borrower) to which more than $25,000,000 of Gross Asset Value is directly or indirectly attributable.

“Moody’s” means Moody’s Investors Service, Inc.

“Mortgage” means a mortgage, deed of trust, deed to secure debt or similar security instrument made or to be made by a Person owning an interest in real estate granting a Lien on such interest in real estate as security for the payment of Indebtedness.

“Multiemployer Plan” means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the ERISA Group during such five year period.

“Negative Pledge” means, with respect to a given asset, any provision of a document, instrument or agreement (other than any Loan Document) which prohibits or purports to prohibit the creation of any Lien on such asset as security for Indebtedness of the Person owning such asset or any other Person, provided, however, that an agreement that conditions a Person’s ability to encumber its assets upon the maintenance of one or more specified ratios that limit a Person’s ability to encumber its assets but that do not generally prohibit the encumbrance of its assets, or the encumbrance of specific assets, shall not constitute a Negative Pledge.

“Net Proceeds” means with respect to an Equity Issuance by a Person, the aggregate amount of all cash or the Fair Market Value of all other property received by such Person in respect of such Equity Issuance net of investment banking fees, legal fees, accountants fees, underwriting discounts and commissions and other customary fees and expenses actually incurred by such Person in connection with such Equity Issuance.

“Nonrecourse Exceptions” means, with respect to Nonrecourse Indebtedness, reasonable and customary exceptions for fraud, willful misrepresentation, misapplication of funds (including misappropriation of security deposits and failure to apply rents to operating expenses or debt service), indemnities relating to environmental matters and waste of property constituting security for such

Nonrecourse Indebtedness, post-default interest, attorney’s fees and other costs of collection to the extent not covered by the value of the property constituting security for such Nonrecourse Indebtedness and other similar exceptions to nonrecourse liability. Nonrecourse Exceptions shall also include the contingent liability of a Person in respect of Nonrecourse Indebtedness of another Person providing for liability arising upon the occurrence of a Bankruptcy Event with respect to such other Person or the occurrence of other contingent events such as a violation of a due on sale clause or a due on finance clause or a violation of special purpose entity covenants (whether such liability arises under a Guaranty of such Nonrecourse Indebtedness enforceable only upon the occurrence of such Bankruptcy Event or such other contingent event, as an obligation to pay to the holder of such Nonrecourse Indebtedness damages resulting from the occurrence of such Bankruptcy Event or other contingent event, or otherwise); provided, however, upon the occurrence of any Bankruptcy Event or other contingent event with respect to such other Person, or once such liability shall otherwise cease to be contingent, then such liability shall no longer be considered to be Nonrecourse Indebtedness.

“Nonrecourse Indebtedness” means, with respect to a Person, (a) Indebtedness for borrowed money in respect of which recourse for payment is contractually limited to specific assets of such Person encumbered by a Lien securing such Indebtedness or (b) if such Person is a Single Asset Entity, any Indebtedness for borrowed money of such Person. Liability of a Person under (i) a Guaranty of Nonrecourse Exceptions or (ii) completion guarantees for Projects Under Development, to the extent relating to the Nonrecourse Indebtedness of another Person, shall not, in and of itself, prevent such liability from being characterized as Nonrecourse Indebtedness.

“Note” means a promissory note of the Borrower substantially in the form of Exhibit F, payable to the order of a Lender in a principal amount equal to the amount of such Lender’s Commitment as originally in effect and otherwise duly completed.

“Notice of Borrowing” means a notice in the form of Exhibit C to be delivered to the Agent evidencing the Borrower’s request for the borrowing of the Loans.

“Notice of Continuation” means a notice in the form of Exhibit D to be delivered to the Agent pursuant to Section 2.7. evidencing the Borrower’s request for the Continuation of a LIBOR Loan.

“Notice of Conversion” means a notice in the form of Exhibit E to be delivered to the Agent pursuant to Section 2.8. evidencing the Borrower’s request for the Conversion of a Loan from one Type to another Type.

“Obligations” means, individually and collectively: (a) the aggregate principal balance of, and all accrued and unpaid interest on, the Loans and (b) all other indebtedness, liabilities, obligations, covenants and duties of the Borrower owing to the Agent or any Lender of every kind, nature and description, under or in respect of this Agreement, any of the other Loan Documents, including, without limitation, the Fees, any other fees payable under any Loan Document and indemnification obligations, whether direct or indirect, absolute or contingent, due or not due, contractual or tortious, liquidated or unliquidated, and whether or not evidenced by any promissory note.

“Occupancy Rate” means, with respect to a Property at any time, the ratio, expressed as a percentage, of (a) the net rentable square footage of such Property actually occupied by tenants paying rent (including each tenant in occupancy during a free rent period negotiated under the terms of its lease and space provided to and accepted by a tenant for performance by the tenant of fit-up work) pursuant to binding leases as to which no monetary default has occurred and is continuing to (b) the aggregate net rentable square footage of such Property. When determining the Occupancy Rate of a Property, a tenant will be deemed to be in occupancy provided such tenant (A) is paying rent to the extent required under the lease, (B) has taken physical possession of its leased space, and (C) if not already open for business, the Borrower reasonably anticipates that such tenant will be open for business within 90 days of the date such tenant first took possession of such space.

“Off Balance Sheet Liabilities” means, with respect to any Person, (a) any repurchase obligation or liability of such Person with respect to any accounts or notes receivable sold, transferred or otherwise disposed of by such Person, (b) any repurchase obligation or liability of such Person with respect to property or assets leased by such Person as lessee and (c) all obligations of such Person under any synthetic lease, tax retention operating lease, off balance sheet loan or similar off balance sheet financing, if in the case of this clause (c), the transaction giving rise to such obligation (i) is considered indebtedness for borrowed money for tax purposes but is classified as an operating lease or (ii) does not (and is not required to pursuant to GAAP) appear as a liability on the balance sheet of such Person. The obligations or liabilities of a Person as lessee under any operating lease shall not be included within this definition so long as the terms of such operating lease do not require any payment by or on behalf of such Person at the scheduled termination date of such operating lease, pursuant to a required purchase by or on behalf of such Person of the property or assets subject to such operating lease.

“Operating Real Estate Value” means, as of a given date, the Adjusted NOI for all Properties of the Parent, its Subsidiaries and its Unconsolidated Affiliates for the four fiscal-quarter period most recently ended divided by 7.50%. For purposes of determining Operating Real Estate Value (a) Adjusted NOI from Properties acquired by the Parent, any Subsidiary or any Unconsolidated Affiliate during the immediately preceding four fiscal quarters of the Parent or disposed of by any such Person during the immediately preceding fiscal quarter of the Parent, shall be excluded and (b) with respect to a Property owned by an Unconsolidated Affiliate, only the greater of the Parent’s (i) Ownership Share or (ii) Recourse Share of the Adjusted NOI, as applicable, of such Property shall be used when determining Operating Real Estate Value. If the Parent, the Borrower or their Subsidiaries own Equity Interests in an Unconsolidated Affiliate which owns a Property the Adjusted NOI of which has not been excluded from determinations of Operating Real Estate Value by virtue of the immediately preceding clause (a), and such Unconsolidated Affiliate then becomes a Subsidiary as a result of the acquisition by the Parent, the Borrower or their Subsidiaries of additional Equity Interests or otherwise, the Adjusted NOI for Properties owned by such Unconsolidated Affiliate which has become a Subsidiary shall continue to be included in determinations of Operating Real Estate Value and not be excluded by virtue of the immediately preceding clause (a).

“Ownership Share” means, with respect to any Subsidiary of a Person or any Unconsolidated Affiliate of a Person, the greater of (a) such Person’s relative nominal direct and indirect ownership interest (expressed as a percentage) in such Subsidiary or Unconsolidated Affiliate or (b) such Person’s relative direct and indirect economic interest (calculated as a percentage) in such Subsidiary or Unconsolidated Affiliate determined in accordance with the applicable provisions of the declaration of trust, articles or certificate of incorporation, articles of organization, partnership agreement, joint venture agreement or other applicable organizational document of such Subsidiary or Unconsolidated Affiliate.

“Parent” has the meaning set forth in the introductory paragraph hereof and shall include the Parent’s successors and permitted assigns.

“Participant” has the meaning given that term in Section 11.5.(b).

“Partnership Agreement” means that certain First Amended and Restated Agreement of Limited Partnership Agreement of PREIT Associates, L.P. dated as of September 30, 1997, by and among Pennsylvania Real Estate Investment Trust, as the general partner and the limited partners whose names are set forth therein, as amended and in effect on the Effective Date.

“PBGC” means the Pension Benefit Guaranty Corporation and any successor agency.

“Permitted Liens” means (a) Liens securing taxes, assessments and other charges or levies imposed by any Governmental Authority (excluding any Lien imposed pursuant to any of the provisions of ERISA or pursuant to any Environmental Laws) or the claims of materialmen, mechanics, carriers, warehousemen or landlords for labor, materials, supplies or rentals incurred in the ordinary course of business, which are not at the time required to be paid or discharged under Section 7.7.; (b) Liens consisting of deposits or pledges made, in the ordinary course of business, in connection with, or to secure payment of, obligations under workmen’s compensation, unemployment insurance or similar Applicable Laws; (c) Liens consisting of encumbrances in the nature of zoning restrictions, easements, and rights or restrictions of record on the use of real property, which do not materially detract from the value of such property or impair the use thereof in the business of such Person; (d) the rights of tenants under leases or subleases not interfering with the ordinary conduct of business of the Borrower and (e) Liens in favor of the Agent for the benefit of the Lenders.

“Person” means an individual, corporation, partnership, limited liability company, association, trust or unincorporated organization, or a government or any agency or political subdivision thereof.

“Placed in Service” means for each Project Under Development (or portion thereof), the time, determined in accordance with GAAP, at which the ground-up construction, redevelopment and/or expansion of such Property is considered substantially completed and such Property is held available for occupancy subject only to completion of tenant improvements but in any event shall be deemed to have occurred no later than one year from cessation of major construction activity (as distinguished from activities such as routine maintenance, punch list items and cleanup).

“Post-Default Rate” means, in respect of any principal of any Loan or any other Obligation that is not paid when due (whether at stated maturity, by acceleration, by optional or mandatory prepayment or otherwise), a rate per annum equal to 5.0% plus the Base Rate as in effect from time to time.

“Preferred Dividends” means, for any period and without duplication, all Restricted Payments paid during such period on Preferred Stock issued by the Parent or a Subsidiary. Preferred Dividends shall not include dividends or distributions (a) paid or payable solely in Equity Interests (other than Equity Interests redeemable at the option of the holder) payable to holders of such class of Equity Interests; (b) paid or payable to the Parent, the Borrower or another Subsidiary; or (c) constituting balloon, bullet or similar redemptions resulting in the redemption of Preferred Stock.

“Preferred Equity Interest” means, with respect to any Person, shares of capital stock of, or other Equity Interests in, such Person which are entitled to preference or priority over any other capital stock of, or other Equity Interest in, such Person in respect of the payment of dividends or distribution of assets upon liquidation or both.

“Prime Rate” means a base rate of interest which the Agent establishes from time to time. Any change in the Prime Rate shall be effective on the day such change is announced by the Agent at its principal office in San Francisco, California.

“Principal Office” means 2120 E. Park Place, Suite 100, El Segundo, California 90245.

“Project Under Development” means a Property owned by the Parent, any Subsidiary or any Unconsolidated Affiliate on which ground-up construction, redevelopment, and/or expansion has commenced. A Property undergoing ordinary course capital improvements which would qualify as recurring capital expenditures or incurring costs due to ordinary course turnover of non-anchor tenant space, shall not be considered to be a Project Under Development. A Property or portions of that Property shall no longer be considered a Project Under Development after the earlier of (i) the time it is Placed in Service, and (ii) the Borrower’s election (which election shall be irrevocable without the Agent’s consent) to no longer treat such Property (or portion thereof) as a Project Under Development.

“Property” means a parcel (or group of related parcels) of real property developed (or which is to be developed) principally for retail, industrial or residential multi-family use.

“Pro Rata Share” means, as to each Lender, the ratio, expressed as a percentage, of (a) the unpaid principal amount of such Lender’s Loan to (b) the aggregate unpaid principal amount of all Loans.

“Rating Agencies” means each of Moody’s and S&P.

“Recourse Share” means, with respect to any Person, the portion (calculated as a percentage) of the total Indebtedness of another Person guaranteed by such Person, or which is otherwise recourse to such Person (other than Indebtedness consisting of Guarantees which are solely Guarantees of performance and not of payment and other Guarantees of such Person for liabilities arising from Nonrecourse Exceptions).

“Register” has the meaning given that term in Section 11.5.(d).

“Regulatory Change” means, with respect to any Lender, any change effective after the Agreement Date (or with respect to any Lender that becomes a party to this Agreement after the Agreement Date, any change effective after the date on which such Lender becomes a party hereto) in Applicable Law (including without limitation, Regulation D of the Board of Governors of the Federal Reserve System) or the adoption or making after such date of any interpretation, directive or request applying to a class of banks, including such Lender, of or under any Applicable Law (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) by any Governmental Authority or monetary authority charged with the interpretation or administration thereof or compliance by any Lender with any request or directive regarding capital adequacy.

“REIT” means a Person qualifying for treatment as a “real estate investment trust” under the Internal Revenue Code.

“Requisite Lenders” means, as of any date, Lenders (which shall include the Lender then acting as Agent) holding at least 66-2/3% of the aggregate outstanding principal amount of the Loans; provided that (a) in determining such percentage at any given time, all then existing Defaulting Lenders will be disregarded and excluded, and the Pro Rata Shares of the Loans of the Lenders shall be redetermined, for voting purposes only, to exclude the Pro Rata Shares of the Loans of such Defaulting Lenders, and (b) at all times when two or more Lenders are party to this Agreement, the term “Requisite Lenders” shall in no event mean less than two Lenders.

“Reserve for Replacements” means, for any period and with respect to any Property, an amount equal to (a)(i) the aggregate square footage of all completed space of such Property times (ii) $0.15 times (b) the number of days in such period divided by (c) 365. The Properties included in the calculation of Reserve for Replacements shall not include those Properties or portions thereof with respect to which or to the extent that a third party (x) owns the improvements thereon, (y) is a party to a ground lease with the Parent, the Borrower or a Subsidiary with respect to the land therein and (z) is contractually obligated to make all repairs and capital improvements and replacements thereof.

“Restricted Payment” means: (a) any dividend or other distribution, direct or indirect, on account of any Equity Interest of the Parent or any of its Subsidiaries now or hereafter outstanding, except a dividend payable to holders of Equity Interests solely in the form of Equity Interests of the Parent or any such Subsidiary, as the case may be; (b) any redemption, conversion, exchange,

retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares or similar units of any class of stock or other equity interest of the Parent or any of its Subsidiaries now or hereafter outstanding; and (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares or similar units of any class of stock or other equity interest of the Parent or any of its Subsidiaries now or hereafter outstanding.

“S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc.

“Secured Indebtedness” means, with respect to a Person as of any given date and without duplication, (a) the aggregate principal amount of all Indebtedness of such Person outstanding at such date and that is secured in any manner by any Lien and (b) Indebtedness of such Person under a Guaranty of Secured Indebtedness of another Person. In the case of the Parent, shall include (without duplication) the Parent’s Ownership Share of the Secured Indebtedness of its Unconsolidated Affiliates.

“Securities Act” means the Securities Act of 1933, as amended from time to time, together with all rules and regulations issued thereunder.

“Single Asset Entity” means a Person (other than an individual) that (a) only owns a single Property; (b) is engaged only in the business of owning, developing and/or leasing such Property; and (c) receives substantially all of its gross revenues from such Property. In addition, if the assets of a Person consist solely of (i) Equity Interests in one other Single Asset Entity and (ii) cash and other assets of nominal value incidental to such Person’s ownership of the other Single Asset Entity, such Person shall also be deemed to be a Single Asset Entity for purposes of this Agreement.

“Solvent” means, when used with respect to any Person, that (a) the fair value and the fair salable value of its assets (excluding any Indebtedness due from any affiliate of such Person) are each in excess of the fair valuation of its total liabilities (including all contingent liabilities); and (b) such Person is able to pay its debts or other obligations in the ordinary course as they mature and (c) that the Person has capital not unreasonably small to carry on its business and all business in which it proposes to be engaged.

“Subsidiary” means, for any Person, any corporation, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or other entity (without regard to the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.

“Substantial Amount” means, at the time of determination thereof, an amount in excess of 30.0% of total consolidated assets (exclusive of depreciation) at such time of the Parent and its Subsidiaries determined on a consolidated basis.

“Tangible Net Worth” means, for any Person and as of a given date, such Person’s total consolidated stockholder’s equity plus, in the case of the Parent, increases in accumulated depreciation and amortization occurring after December 31, 2007, minus (to the extent reflected in determining stockholders’ equity of such Person): (a) the amount of any write-up in the book value of any assets reflected in any balance sheet resulting from revaluation thereof or any write-up in excess of the cost of such assets acquired, and (b) the aggregate of all amounts appearing on the assets side of any such balance sheet for patents, patent applications, copyrights, trademarks, trade names, goodwill and other like assets which would be classified as intangible assets under GAAP, all determined on a consolidated basis.

“Taxes” has the meaning given that term in Section 3.10.

“Termination Date” means March 20, 2010 or such later date to which such date may be extended in accordance with Section 2.10.

“Total Budgeted Cost Until Stabilization” means, with respect to a Project Under Development, and at any time, the aggregate amount of all costs budgeted to be paid, incurred or otherwise expended or accrued by the Parent, the Borrower, a Subsidiary or an Unconsolidated Affiliate with respect to such Property to achieve an Occupancy Rate of 100%, including without limitation, all amounts budgeted with respect to all of the following: (a) acquisition of land and any related site improvements, demolition costs, architecture, engineering, construction/project management and development fees, legal fees and entitlement fees; (b) a reasonable and appropriate reserve for construction interest; (c) tenant improvements; (d) leasing commissions and other leasing costs, (e) infrastructure costs and (f) other hard and soft costs associated with the development or redevelopment of such Property. With respect to any Property that is a redevelopment involving the addition of gross leasable area, the Total Budgeted Cost Until Stabilization shall include all budgeted costs for expansions of the Property associated with the additional gross leasable area and all budgeted costs for renovations and other expenditures. With respect to any Property to be developed from the ground up in more than one phase, the Total Budgeted Cost Until Stabilization shall exclude budgeted costs (other than costs relating to acquisition of land and related site improvements, demolition costs, architecture, engineering, construction/project management and development fees, legal fees and entitlement fees) to the extent relating to any phase for which (i) construction has not yet commenced and (ii) a binding construction contract or lease agreement has not been entered into by the Parent, the Borrower, any other Subsidiary or any Unconsolidated Affiliate, as the case may be. The calculation of Total Budgeted Cost Until Stabilization herein shall be net of (x) any amount of budgeted costs attributable to portions of any Property that have been Placed in Service and (y) the aggregate sale proceeds of a sale of a pad site within a Project under Development that are payable pursuant to a binding sale contract with a third party approved by the Agent.

“Total Liabilities” means, as to any Person as of a given date, all liabilities which would, in conformity with GAAP, be properly classified as a liability on the consolidated balance sheet of such Person as of such date, and in any event shall include (without duplication): (a) all Indebtedness of such Person (whether or not Nonrecourse Indebtedness and whether or not secured by a Lien),

including without limitation, Capitalized Lease Obligations and the full stated amount of undrawn letters of credit issued for the account of such Person, but excluding (i) letters of credit secured with cash collateral, (ii) letters of credit issued solely in lieu of a non-payment performance obligation and (iii) letters of credit securing a refundable obligation under a binding contract; (b) all accounts payable (including tenant deposits accounted for as payables but excluding tenant deposits held as restricted cash and not included in the calculation of Gross Asset Value pursuant to clause (b) of the definition of such term) and accrued expenses of such Person; (c) all purchase and repurchase obligations and forward commitments of such Person to the extent such obligations or commitments are evidenced by a binding purchase agreement (forward commitments shall include without limitation forward equity commitments and commitments to purchase properties); (d) all unfunded obligations of such Person; (e) all lease obligations of such Person (including ground leases) to the extent required under GAAP to be classified as a liability on the balance sheet of such Person; (f) all Contingent Obligations and Off Balance Sheet Liabilities of such Person; (g) all liabilities of any Unconsolidated Affiliate of such Person, which liabilities such Person has Guaranteed or is otherwise obligated on a recourse basis; and (h) the greater of such Person’s (i) Ownership Share or (ii) Recourse Share of the Indebtedness of any Unconsolidated Affiliate of such Person, including Nonrecourse Indebtedness of such Person. For purposes of clauses (c) and (d) of this definition, the amount of Total Liabilities of a Person at any given time in respect of a contract to purchase or otherwise acquire unimproved or fully developed real property shall be equal to (i) the total purchase price payable by such Person under the contract if, at such time, the seller of such real property would be entitled to specifically enforce the contract against such Person, otherwise and (ii) the aggregate amount of due diligence deposits, earnest money payments and other similar payments made by such Person under the contract which, at such time, would be subject to forfeiture upon termination of the contract. For purposes of clause (c) of this definition, the amount of Total Liabilities of a Person at any given time in respect of a contract to purchase or otherwise acquire real property being renovated or developed by a third party shall be equal to the maximum amount reasonably estimated to be payable by such Person to such third party under a contract between such Person and such third party during the remaining term of such contract. For purposes of this definition, if the assets of a Subsidiary of a Person consist solely of Equity Interests in one Unconsolidated Affiliate of such Person and such Person is not otherwise obligated in respect of the Indebtedness of such Unconsolidated Affiliate, then only such Person’s Ownership Share of the Indebtedness of such Unconsolidated Affiliate shall be included as Total Liabilities of such Person. For purposes of determining the Total Liabilities of the Parent and the Subsidiaries, the amount of any Indebtedness assumed by the Parent or any Subsidiary at the time of an acquisition which the Parent is required under GAAP to reflect at fair value on a balance sheet, shall be equal to outstanding principal balance of such Indebtedness and not the fair value of such Indebtedness as would be reflected on the Parent’s balance sheet.

“Transfer Authorizer Designation” means a form substantially in the form of Exhibit I to be delivered to the Agent pursuant to Section 5.1.

“Trust Agreement” means that certain Pennsylvania Real Estate Investment Trust Trust Agreement, as amended and restated as of December 16, 1997, among the trustees a party thereto, as amended and in effect on the Effective Date.

“Type” with respect to any portion of a Loan, refers to whether such portion is a LIBOR Loan or a Base Rate Loan.

“Unconsolidated Affiliate” means, with respect to any Person, any other Person in whom such Person holds an Investment, which Investment is accounted for in the financial statements of such Person on an equity basis of accounting and whose financial results would not be consolidated in accordance with GAAP with the financial results of such Person on the consolidated financial statements of such Person.

“Unfunded Liabilities” means, with respect to any Benefit Plan at any time, the amount (if any) by which (a) the value of all benefit liabilities under such Benefit Plan, determined on a plan termination basis using the assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (b) the fair market value of all Benefit Plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Benefit Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA.

“Wells Fargo” means Wells Fargo Bank, National Association, and its successors and permitted assigns.

“Wholly Owned Subsidiary” means any Subsidiary of a Person all of the equity securities or other ownership interests (other than, in the case of a corporation, directors’ qualifying shares) of which are at the time directly or indirectly owned or controlled by such Person or one or more other Subsidiaries of such Person or by such Person and one or more other Subsidiaries of such Person. In the case of the Parent, the term “Wholly Owned Subsidiary” shall also include any Subsidiary of the Parent (a) of which the Parent owns or controls, directly, or indirectly through one or more other Subsidiaries, substantially all of the equity securities or other ownership interests and (b) over which the Parent possesses sufficient control to warrant treating such Subsidiary as if it were otherwise a Wholly Owned Subsidiary, in each case, as determined by the Agent.

EX-10.2

Exhibit 10.2

GUARANTY

THIS GUARANTY dated as of September 3, 2008 executed and delivered by each of the undersigned and the other Persons from time to time party hereto pursuant to the execution and delivery of an Accession Agreement in the form of Annex I hereto (all of the undersigned, together with such other Persons each a “Guarantor” and collectively, the “Guarantors”) in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as Agent (the “Agent”) for the Lenders under that certain Term Loan Agreement dated as of September 3 , 2008 (as amended, restated, supplemented or otherwise modified from time to time, the “Term Loan Agreement”), by and among PREIT Associates, L.P. (“PREIT”), PREIT-RUBIN, Inc. (“PREIT-RUBIN; together with PREIT, each individually, a “Borrower” and collectively, the “Borrower”), Pennsylvania Real Estate Investment Trust (the “Parent”), the financial institutions party thereto and their assignees under Section 11.5.(c) thereof, the Agent and the other parties thereto, for the benefit of the Guarantied Parties (as defined below).

WHEREAS, pursuant to the Term Loan Agreement, the Agent and the Lenders have agreed to make available to the Borrower certain financial accommodations on the terms and conditions set forth therein;

WHEREAS, the Borrower may from time to time enter into Interest Rate Agreements with one or more of the Lenders, or any Affiliate thereof (such Affiliate, a “Lender Affiliate”; together with the Lenders and the Agent, each a “Guarantied Party” and collectively, the “Guarantied Parties”);

WHEREAS, the Parent is the sole general partner of the Borrower;

WHEREAS, each other Guarantor is a Subsidiary of the Borrower or the Parent;

WHEREAS, the Borrower, each Guarantor and the other Loan Parties, though separate legal entities, are mutually dependent on each other in the conduct of their respective businesses as an integrated operation and have determined it to be in their mutual best interests to obtain financing from the Agent and the Lenders through their collective efforts;

WHEREAS, each Guarantor acknowledges that it will receive direct and indirect benefits from the Agent and the Lenders making such financial accommodations available to the Borrower under the Term Loan Agreement and from the Guarantied Parties’ entering into Interest Rate Agreements with any Borrower, and accordingly, each such Guarantor is willing to guarantee certain of the Borrower’s obligations to the Agent and the Lenders and each Guarantor is willing to guarantee the Borrower’s obligations to the Guarantied Parties under any Interest Rate Agreement, in each case, on the terms and conditions contained herein; and

WHEREAS, it is a condition precedent to the effectiveness of the Term Loan Agreement and the extension of financial accommodations under the Term Loan Agreement and to any Guarantied Party’s entering into any Interest Rate Agreement with the Borrower, that the Guarantors execute and deliver this Agreement;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each Guarantor, each Guarantor agrees as follows:

Section 1. Guaranty. Each Guarantor hereby absolutely, irrevocably and unconditionally guaranties the due and punctual payment and performance when due, whether at stated maturity, by acceleration or otherwise, of all of the following (collectively referred to as the “Guarantied Obligations”): (a) all indebtedness and obligations owing by the Borrower to any Lender or the Agent under or in connection with the Term Loan Agreement and any other Loan Document to which the Borrower is a party, including without limitation, the repayment of all principal of the Loans and the payment of all interest, fees, charges, reasonable attorneys fees and other amounts payable to any Lender or the Agent thereunder or in connection therewith; (b) any and all extensions, renewals, modifications, amendments or substitutions of the foregoing; (c) all expenses, including, without limitation, reasonable attorneys’ fees and disbursements, that are incurred by the Lenders and the Agent in the enforcement of any of the foregoing or any obligation of such Guarantor hereunder and (d) all obligations and liabilities of the Borrower owing to any Guarantied Party under any Interest Rate Agreement to which the Borrower is party; and (e) all other Obligations.

Section 2. Guaranty of Payment and Not of Collection. This Guaranty is a guaranty of payment, and not of collection, and a debt of each Guarantor for its own account. Accordingly, the Guarantied Parties shall not be obligated or required before enforcing this Guaranty against any Guarantor: (a) to pursue any right or remedy the Guarantied Parties may have against any Loan Party or any other Person or commence any suit or other proceeding against any Loan Party or any other Person in any court or other tribunal; (b) to make any claim in a liquidation or bankruptcy of any Loan Party or any other Person; or (c) to make demand of any Loan Party or any other Person or to enforce or seek to enforce or realize upon any collateral security held by the Guarantied Parties which may secure any of the Guarantied Obligations.

Section 3. Guaranty Absolute. Each Guarantor guarantees that the Guarantied Obligations will be paid strictly in accordance with the terms of the documents evidencing the same, regardless of any Applicable Law now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Agent or the other Guarantied Parties with respect thereto. The liability of each Guarantor under this Guaranty shall be absolute, irrevocable and unconditional in accordance with its terms and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by, any circumstance or occurrence whatsoever, including without limitation, the following (whether or not such Guarantor consents thereto or has notice thereof):

(a)(i) any change in the amount, interest rate or due date or other term of any of the Guarantied Obligations, (ii) any change in the time, place or manner of payment of all or any portion of the Guarantied Obligations, (iii) any amendment or waiver of, or consent to the departure from or other indulgence with respect to, the Term Loan Agreement, any other Loan Document, any Interest Rate Agreement between the Borrower and any Guarantied Party, or any other document or instrument evidencing or relating to any Guarantied Obligations, or (iv) any waiver, renewal, extension, addition, or supplement to, or deletion from, or any other action or inaction under or in respect of, the Term Loan Agreement, any of the other Loan Documents, or any other documents, instruments or agreements relating to the Guarantied Obligations or any other instrument or agreement referred to therein or evidencing any Guarantied Obligations or any assignment or transfer of any of the foregoing;

(b) any lack of validity or enforceability of the Term Loan Agreement, any of the other Loan Documents, any Interest Rate Agreement between the Borrower and any Guarantied Party, or any other document, instrument or agreement referred to therein or evidencing any Guarantied Obligations or any assignment or transfer of any of the foregoing;

(c) any furnishing to the Agent or any other Guarantied Party of any security for the Guarantied Obligations, or any sale, exchange, release or surrender of, or realization on, any collateral securing any of the Guarantied Obligations;

(d) any settlement or compromise of any of the Guarantied Obligations, any security therefor, or any liability of any other party with respect to the Guarantied Obligations, or any subordination of the payment of the Guarantied Obligations to the payment of any other liability of any Loan Party;

(e) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to such Loan Party or any other Person, or any action taken with respect to this Guaranty by any trustee or receiver, or by any court, in any such proceeding;

(f) any invalidity or nonperfection of any security interest or lien on, or any other impairment of, any collateral securing any of the Guaranteed Obligations or any failure of the Agent or any other Person to preserve any such collateral security or any other impairment of any such collateral;

(g) any act or failure to act by any Loan Party or any other Person which may adversely affect such Guarantor’s subrogation rights, if any, against such Loan Party to recover payments made under this Guaranty;

(h) any application of sums paid by any Loan Party or any other Person with respect to the liabilities of the Borrower to the Agent or other Guarantied Parties, regardless of what liabilities of the Borrower remain unpaid;

(i) any defect, limitation or insufficiency in the borrowing powers of the Borrower or in the exercise thereof; or

(j) any other circumstance which might otherwise constitute a defense available to, or a discharge of, a Guarantor hereunder (other than termination of this Guaranty as provided in Section 20. hereof).

Section 4. Action with Respect to Guarantied Obligations. The Guarantied Parties may, at any time and from time to time, without the consent of, or notice to, any Guarantor, and without discharging any Guarantor from its obligations hereunder take any and all actions described in Section 3. and may otherwise: (a) amend, modify, alter or supplement the terms of any of the Guarantied Obligations, including, but not limited to, extending or shortening the time of payment of any of the Guarantied Obligations or

changing the interest rate that may accrue on any of the Guarantied Obligations; (b) amend, modify, alter or supplement the Term Loan Agreement, any other Loan Document, or any Interest Rate Agreement between the Borrower and any Guarantied Party; (c) sell, exchange, release or otherwise deal with all, or any part, of any collateral securing any of the Guarantied Obligations; (d) release any Loan Party or other Person liable in any manner for the payment or collection of the Guarantied Obligations; (e) exercise, or refrain from exercising, any rights against any Loan Party or any other Person; and (f) apply any sum, by whomsoever paid or however realized, to the Guarantied Obligations in such order as the Guarantied Parties shall elect.

Section 5. Representations and Warranties. Each Guarantor hereby makes to the Agent and the other Guarantied Parties all of the representations and warranties made by the Borrower with respect to or in any way relating to such Guarantor in the Term Loan Agreement, the other Loan Documents, or Interest Rate Agreement between the Borrower and any Guarantied Party, as if the same were set forth herein in full.

Section 6. Covenants. Each Guarantor will comply with all covenants which the Borrower is to cause such Guarantor to comply with under the terms of the Term Loan Agreement or any of the other Loan Documents.

Section 7. Waiver. Each Guarantor, to the fullest extent permitted by Applicable Law, hereby waives notice of acceptance hereof or any presentment, demand, protest or notice of any kind, and any other act or thing, or omission or delay to do any other act or thing, which in any manner or to any extent might vary the risk of such Guarantor or which otherwise might operate to discharge such Guarantor from its obligations hereunder.

Section 8. Inability to Accelerate Loan. If the Agent and/or the other Guarantied Parties are prevented under Applicable Law or otherwise from demanding or accelerating payment of any of the Guarantied Obligations by reason of any automatic stay or otherwise, the Agent and/or the other Guarantied Parties shall be entitled to receive from each Guarantor, upon demand therefor, the sums which otherwise would have been due had such demand or acceleration occurred.

Section 9. Reinstatement of Guarantied Obligations. If claim is ever made on the Agent or any other Guarantied Party for repayment or recovery of any amount or amounts received in payment or on account of any of the Guarantied Obligations, and the Agent or such other Guarantied Party repays all or part of said amount by reason of (a) any judgment, decree or order of any court or administrative body of competent jurisdiction, or (b) any settlement or compromise of any such claim effected by the Agent or such other Guarantied Party with any such claimant (including the Borrower or a trustee in bankruptcy for the Borrower), then and in such event each Guarantor agrees that any such judgment, decree, order, settlement or compromise shall be binding on it, notwithstanding any revocation hereof or the cancellation of the Term Loan Agreement, any of the other Loan Documents, any Interest Rate Agreement between the Borrower and any Guarantied Party, or any other instrument evidencing any liability of the Borrower, and such Guarantor shall be and remain liable to the Agent or such other Guarantied Party for the amounts so repaid or recovered to the same extent as if such amount had never originally been paid to the Agent or such other Guarantied Party.

Section 10. Subrogation. Each Guarantor hereby forever waives to the fullest extent possible any and all claims such Guarantor may have against the Borrower arising out of any payment by such Guarantor to the Agent and the other Guarantied Parties of any of the obligations pursuant to this Guaranty, including, but not limited to, all such claims of such Guarantor arising out of any right of subrogation, indemnity, reimbursement, contribution, exoneration, payment or any other claim, cause of action, right or remedy against the Borrower, whether such claim arises at law, in equity, or out of any written or oral agreement between or among such Guarantor, the Borrower or otherwise. The waivers set forth above are intended by each Guarantor, the Agent and the other Guarantied Parties to be for the benefit of the Borrower, and such waivers shall be enforceable by the Borrower, or any of their successors or assigns, as an absolute defense to any action by such Guarantor against the Borrower or the assets of the Borrower, which action arises out of any payment by the Borrower to the Agent or other Guarantied Parties upon any of these obligations. The waivers set forth herein may not be revoked by any Guarantor without the prior written consent of the Agent and the Borrower.

Section 11. Payments Free and Clear. All sums payable by each Guarantor hereunder, whether of principal, interest, fees, expenses, premiums or otherwise, shall be paid in full, without set-off or counterclaim or any deduction or withholding whatsoever (including any Taxes), and if such Guarantor is required by Applicable Law or by any Governmental Authority to make any such deduction or withholding, provided the requirements set forth in Section 3.10 of the Term Loan Agreement are satisfied, such Guarantor shall pay to the Agent and the Lenders such additional amount as will result in the receipt by the Agent and the Lenders of the full amount payable hereunder had such deduction or withholding not occurred or been required.

Section 12. Set-off. In addition to any rights now or hereafter granted under any of the other Loan Documents or Applicable Law and not by way of limitation of any such rights, each Guarantor hereby authorizes the Agent and each other Guarantied Party, at any time or from time to time, during the continuance of any Event of Default without any prior notice to such Guarantor or to any other Person, any such notice being hereby expressly waived, but in the case of a Lender or its Affiliate, subject to receipt of the prior written consent of the Agent exercised in its sole discretion, to set-off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other indebtedness at any time held or owing by the Agent, such Lender or any Affiliate of the Agent or such Lender, to or for the credit or the account of such Guarantor against and on account of any of the Guarantied Obligations, although such obligations shall be contingent or unmatured. Each Guarantor agrees, to the fullest extent permitted by Applicable Law, that any Participant may exercise rights of setoff or counterclaim and other rights with respect to its participation as fully as if such Participant were a direct creditor of such Guarantor in the amount of such participation.

Section 13. Subordination. Each Guarantor hereby expressly covenants and agrees for the benefit of the Agent and the other Guarantied Parties that all obligations and liabilities of the Borrower to such Guarantor of whatever description, including without limitation, all intercompany receivables of such Guarantor from the Borrower (collectively, the “Junior Claims”) shall be subordinate and junior in right of payment to all Guarantied Obligations. If an Event of Default shall have occurred and be continuing, then no Guarantor shall accept any direct or indirect payment (in cash, property, securities by setoff or otherwise) from the Borrower on account of or in any manner in respect of any Junior Claim until all of the Guarantied Obligations have been indefeasibly paid in full.

Section 14. Avoidance Provisions. It is the intent of each Guarantor, the Agent and the other Guarantied Parties that in any Proceeding, such Guarantor’s maximum obligation hereunder shall equal, but not exceed, the maximum amount which would not otherwise cause the obligations of such Guarantor hereunder (or any other obligations of such Guarantor to the Agent and the other Guarantied Parties) to be avoidable or unenforceable against such Guarantor in such Proceeding as a result of Applicable Law, including without limitation, (a) Section 548 of the Bankruptcy Code of 1978, as amended (the “Bankruptcy Code”) and (b) any state fraudulent transfer or fraudulent conveyance act or statute applied in such Proceeding, whether by virtue of Section 544 of the Bankruptcy Code or otherwise. The Applicable Laws under which the possible avoidance or unenforceability of the obligations of such Guarantor hereunder (or any other obligations of such Guarantor to the Agent and the other Guarantied Parties) shall be determined in any such Proceeding are referred to as the “Avoidance Provisions”. Accordingly, to the extent that the obligations of any Guarantor hereunder would otherwise be subject to avoidance under the Avoidance Provisions, the maximum Guarantied Obligations for which such Guarantor shall be liable hereunder shall be reduced to that amount which, as of the time any of the Guarantied Obligations are deemed to have been incurred under the Avoidance Provisions, would not cause the obligations of any Guarantor hereunder (or any other obligations of such Guarantor to the Agent and the other Guarantied Parties), to be subject to avoidance under the Avoidance Provisions. This Section is intended solely to preserve the rights of the Agent and the other Guarantied Parties hereunder to the maximum extent that would not cause the obligations of any Guarantor hereunder to be subject to avoidance under the Avoidance Provisions, and no Guarantor or any other Person shall have any right or claim under this Section as against the Agent and the other Guarantied Parties that would not otherwise be available to such Person under the Avoidance Provisions.

Section 15. Information. Each Guarantor assumes all responsibility for being and keeping itself informed of the financial condition of the Loan Parties, and of all other circumstances bearing upon the risk of nonpayment of any of the Guarantied Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that neither the Agent nor any other Guarantied Party shall have any duty whatsoever to advise any Guarantor of information regarding such circumstances or risks.

Section 16. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH COMMONWEALTH.

SECTION 17. LITIGATION; JURISDICTION; OTHER MATTERS; WAIVERS.

(a) EACH GUARANTOR, AND EACH OF THE AGENT AND THE OTHER GUARANTIED PARTIES BY ACCEPTING THE BENEFITS HEREOF, ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY BETWEEN OR AMONG ANY GUARANTOR, THE AGENT OR ANY OF THE OTHER GUARANTIED PARTIES WOULD BE BASED ON DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT AND WOULD RESULT IN DELAY AND EXPENSE TO THE PARTIES. ACCORDINGLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE AGENT, THE OTHER

GUARANTIED PARTIES AND EACH GUARANTOR HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST ANY PARTY HERETO ARISING OUT OF THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR IN CONNECTION WITH ANY COLLATERAL OR ANY LIEN OR BY REASON OF ANY OTHER SUIT, CAUSE OF ACTION OR DISPUTE WHATSOEVER BETWEEN OR AMONG ANY GUARANTOR, THE AGENT OR ANY OF THE LENDERS OF ANY KIND OR NATURE.

(b) EACH GUARANTOR, THE AGENT, AND EACH OTHER GUARANTIED PARTY BY ACEPTING THE BENFITS HEREOF, HEREBY AGREES THAT THE FEDERAL DISTRICT COURT OF THE EASTERN DISTRICT OF PENNSYLVANIA OR, AT THE OPTION OF THE AGENT, ANY STATE COURT LOCATED IN PHILADELPHIA COUNTY, PENNSYLVANIA, SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG ANY GUARANTOR, THE AGENT, OR ANY OF THE OTHER GUARANTIED PARTIES, PERTAINING DIRECTLY OR INDIRECTLY TO THIS GUARANTY, OR ANY OTHER LOAN DOCUMENT OR TO ANY MATTER ARISING HEREFROM OR THEREFROM OR THE COLLATERAL. EACH GUARANTOR AND EACH OF THE GUARANTIED PARTIES EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS.

(c) EACH PARTY FURTHER WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME.

(d) THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY THE AGENT OR ANY OTHER GUARANTIED PARTY OR THE ENFORCEMENT BY THE AGENT OR ANY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION.

(e) THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER OBLIGATIONS AND THE TERMINATION OF THIS GUARANTY.

Section 18. Loan Accounts. The Agent and each Lender may maintain books and accounts setting forth the amounts of principal, interest and other sums paid and payable with respect to the Guarantied Obligations arising under or in connection with the Term Loan Agreement, and in the case of any dispute relating to any of the Guarantied Obligations or otherwise, the entries in such books and accounts shall constitute prima facie evidence of the outstanding amount of such Guarantied Obligations and the amounts paid and payable with respect thereto absent manifest error. The failure of the Agent or any Lender to maintain such books and accounts shall not in any way relieve or discharge any Guarantor of any of its obligations hereunder.

Section 19. Waiver of Remedies. No delay or failure on the part of the Agent or any other Guarantied Party in the exercise of any right or remedy it may have against any Guarantor hereunder or otherwise shall operate as a waiver thereof, and no single or partial exercise by the Agent or any other Guarantied Party of any such right or remedy shall preclude other or further exercise thereof or the exercise of any other such right or remedy.

Section 20. Termination. This Guaranty shall remain in full force and effect until the indefeasible payment in full of the Guarantied Obligations and the other Obligations and the termination or cancellation of the Term Loan Agreement and all Interest Rate Agreements between the Borrower and any Guarantied Party.

Section 21. Successors and Assigns. Each reference herein to the Agent or any other Guarantied Party shall be deemed to include such Person’s respective successors and assigns (including, but not limited to, any holder of the Guarantied Obligations) in whose favor the provisions of this Guaranty also shall inure, and each reference herein to each Guarantor shall be deemed to include such Guarantor’s successors and assigns, upon whom this Guaranty also shall be binding. The Guarantied Parties may, in accordance with the applicable provisions of the Term Loan Agreement and any Interest Rate Agreement between the Borrower and any Guarantied Party, assign, transfer or sell any Guarantied Obligations, or grant or sell participations in any Guarantied Obligation, to any Person without the consent of, or notice to, any Guarantor and without releasing, discharging or modifying any Guarantor’s obligations hereunder. Each Guarantor hereby consents to the delivery by the Agent or any other Guarantied Party to any Assignee or Participant (or any prospective Assignee or Participant) of any financial or other information regarding any Loan Party. No Guarantor may assign or transfer its obligations hereunder to any Person without the prior written consent of all Lenders and any such assignment or other transfer to which all of the Lenders have not so consented shall by null and void.

Section 22. JOINT AND SEVERAL OBLIGATIONS. THE OBLIGATIONS OF THE GUARANTORS HEREUNDER SHALL BE JOINT AND SEVERAL, AND ACCORDINGLY, EACH GUARANTOR CONFIRMS THAT IT IS LIABLE FOR THE FULL AMOUNT OF THE “GUARANTIED OBLIGATIONS” AND ALL OF THE OBLIGATIONS AND LIABILITIES OF EACH OF THE OTHER GUARANTORS HEREUNDER.

Section 23. Amendments. This Guaranty may not be amended except in writing signed by the Agent and each Guarantor.

Section 24. Payments. All payments to be made by any Guarantor pursuant to this Guaranty shall be made in Dollars, in immediately available funds to the Agent at its Principal Office, not later than 11:00 a.m., on the date one Business Day after demand therefor.

Section 25. Notices. All notices, requests and other communications hereunder shall be in writing (including facsimile transmission or similar writing) and shall be given (a) to each Guarantor at its address set forth below its signature hereto, (b) to the Agent or any other Guarantied Party at its address for notices provided for in the Term Loan Agreement or Interest Rate Agreement between the Borrower and any Guarantied Party, as applicable, or (c) as to each such party at such other address as such party shall designate in a written notice to the other parties. Each such notice, request or other communication shall be effective (i) if mailed, when received; (ii) if telecopied, when transmitted; or (iii) if hand delivered, when delivered; provided, however, that any notice of a change of address for notices shall not be effective until received.

Section 26. Severability. In case any provision of this Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 27. Headings. Section headings used in this Guaranty are for convenience only and shall not affect the construction of this Guaranty.

Section 28. Limitation of Liability. Neither the Agent nor any other Guarantied Party, nor any affiliate, officer, director, employee, attorney, or agent of the Agent or any other Guarantied Party, shall have any liability with respect to, and each Guarantor hereby waives, releases, and agrees not to sue any of them upon, any claim for any special, indirect, incidental, or consequential damages suffered or incurred by a Guarantor in connection with, arising out of, or in any way related to, this Guaranty, any of the other Loan Documents, any Interest Rate Agreement between the Borrower and any Guarantied Party, or any of the transactions contemplated by this Guaranty, the Term Loan Agreement or any of the other Loan Documents. Each Guarantor hereby waives, releases, and agrees not to sue the Agent or any other Guarantied Party or any of the Agent’s or any other Guarantied Party’s affiliates, officers, directors, employees, attorneys, or agents for punitive damages in respect of any claim in connection with, arising out of, or in any way related to, this Guaranty, the Term Loan Agreement, any of the other Loan Documents, any Interest Rate Agreement between the Borrower and any Guarantied Party, or any of the transactions contemplated by the Term Loan Agreement or financed thereby or by any Interest Rate Agreement between the Borrower and any Guarantied Party. Notwithstanding anything in this Section to the contrary, no Defaulting Lender shall be entitled to claim any of the benefits of this Section.

Section 29. Electronic Delivery of Certain Information. Each Guarantor acknowledges and agrees that information regarding such Guarantor may be delivered electronically pursuant to Section 11.19 of the Term Loan Agreement.

Section 30. Definitions. (a) For the purposes of this Guaranty:

“Proceeding” means any of the following: (i) a voluntary or involuntary case concerning any Guarantor shall be commenced under the Bankruptcy Code of 1978, as amended; (ii) a custodian (as defined in such Bankruptcy Code or any other applicable bankruptcy laws) is appointed for, or takes charge of, all or any substantial part of the property of any Guarantor; (iii) any other proceeding under any Applicable Law, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding-up or composition for adjustment of debts, whether now or hereafter in effect, is commenced relating to any Guarantor; (iv) any Guarantor is adjudicated insolvent or bankrupt; (v) any order of relief or other order approving any such case or proceeding is entered by a court of competent jurisdiction; (vi) any Guarantor makes a general assignment for the benefit of creditors; (vii) any Guarantor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; (viii) any Guarantor shall call a meeting of its creditors with a view to arranging a composition or adjustment of its debts; (ix) any Guarantor shall by any act or failure to act indicate its consent to, approval of or acquiescence in any of the foregoing; or (x) any corporate action shall be taken by any Guarantor for the purpose of effecting any of the foregoing.

(b) Terms not otherwise defined herein are used herein with the respective meanings given them in the Term Loan Agreement.

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IN WITNESS WHEREOF, each Guarantor has duly executed and delivered this Guaranty as of the date and year first written above.

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST PREIT-RUBIN, INC. PREIT-RUBIN OP, INC. PR GC INC. PR VENTURES, INC. PR LYCOMING SERVICE ASSOCIATES PR SERVICES CORPORATION
By:	/s/ Bruce Goldman
Name:	Bruce Goldman
Title:	Executive Vice President
PR SPRINGFIELD ASSOCIATES, L.P.
	By: PR Springfield Trust, by its duly authorized Trustee
		By:	/s/ Jeffrey A. Linn
		Name:	Jeffrey A. Linn
		Title:	Trustee
PR SPRINGFIELD TRUST, by its duly authorized Trustee
	By:	/s/ Jeffrey A. Linn
		Name:	Jeffrey A. Linn
		Title:	Trustee
RUBIN II, INC.
By:	/s/ George F. Rubin
Name:	George F. Rubin
Title:	Treasurer

PR JK LLC
	By:	/s/ Jeffrey A. Linn
	Name:	Jeffrey A. Linn
	Title:	Director
1150 PLYMOUTH ASSOCIATES, INC. EXTON LICENSE, INC. R8267 PLYMOUTH ENTERPRISES, INC.
	By:	/s/ Joseph Coradino
	Name:	Joseph Coradino
	Title:	Treasurer
PREIT PROTECTIVE TRUST 1, by its duly authorized Trustee
	By: PREIT-RUBIN, Inc., Trustee
		By:	/s/ Bruce Goldman
		Name:	Bruce Goldman
		Title:	Executive Vice President
PREIT TRS, INC.
	By:	/s/ Bruce Goldman
		Name: Bruce Goldman
		Title: President
ECHELON BEVERAGE LLC
	By:	/s/ Cynthia Boulden
	Name:	Cynthia Boulden
	Title:	Manager

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ROOSEVELT II ASSOCIATES, L.P.			PR ECHELON LIMITED PARTNERSHIP
	By: PR Northeast LLC, sole general partner			By: PR Echelon LLC, sole general partner
		By: PREIT Associates, L.P., sole member			By: PREIT Associates, L.P., sole member
			PR ECHELON LLC
PR FLORENCE LLC				By: PREIT Associates, L.P., sole member
	By: PREIT Associates, L.P., sole member		PLYMOUTH GROUND ASSOCIATES LP
PR GALLERY I LIMITED PARTNERSHIP				By: Plymouth Ground Associates LLC, sole general
	By: PR Gallery I LLC, sole general partner				By: PREIT Associates, L.P., sole member
		By: PREIT Associates, L.P., sole member	PLYMOUTH GROUND ASSOCIATES LLC
PR GALLERY I LLC				By: PREIT Associates, L.P., sole member
	By: PREIT Associates, L.P., sole member		PR CUMBERLAND OUTPARCEL LLC
PR PLYMOUTH MEETING LIMITED PARTNERSHIP				By: PREIT Associates, L.P., sole member
	By: PR Plymouth Meeting LLC, sole general Partner		PREIT GADSDEN MALL LLC
		By: PREIT Associates, L.P., sole member		By: PREIT Associates, L.P., sole member
PR PLYMOUTH MEETING LLC			PREIT GADSDEN OFFICE LLC
	By: PREIT Associates, L.P., sole member			By: PREIT Associates, L.P., sole member
PR EXTON LIMITED PARTNERSHIP
	By: PR Exton LLC, sole general partner
		By: PREIT Associates, L.P., sole member
PR EXTON LLC
	By: PREIT Associates, L.P., sole member
			By: Pennsylvania Real Estate Investment Trust, sole general partner
			By:	/s/ Bruce Goldman
			Name:	Bruce Goldman
			Title:	Executive Vice President

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PR NORTHEAST LIMITED PARTNERSHIP			PR CROSSROADS I, LLC
	By: PR Northeast LLC, sole general partner			By: PREIT Associates, L.P., sole member
		By: PREIT Associates, L.P., sole member	PR CROSSROADS II, LLC
PR NORTHEAST LLC				By: PREIT Associates, L.P., sole member
	By: PREIT Associates, L.P., sole member		PR VALLEY VIEW DOWNS LIMITED PARTNERSHIP
ROOSEVELT ASSOCIATES, L.P.				By: PR Valley View Downs LLC, sole general partner
					By: PREIT Associates, L.P., sole member
	By: PR Northeast LLC, sole general partner		PR VALLEY VIEW DOWNS LLC
		By: PREIT Associates, L.P., sole member		By: PREIT Associates, L.P., sole member
PR BVM, LLC			PR ORLANDO FASHION SQUARE LLC
	By: PREIT Associates, L.P., sole member			By: PREIT Associates, L.P., sole member
PR AEKI PLYMOUTH, L.P.			PR NORTHEAST WHITAKER AVENUE, L.P.
	By: PR AEKI Plymouth LLC, sole general partner			By: PR Northeast Whitaker Avenue LLC, sole general partner
PR AEKI PLYMOUTH LLC					By: PREIT Associates, L.P., sole member
	By: PREIT Associates, L.P., sole member		PR NORTHEAST WHITAKER AVENUE LLC
PREIT SERVICES LLC				By: PREIT Associates, L.P., sole member
	By: PREIT Associates, L.P., sole member		PR LACEY LLC
PR NEW GARDEN LIMITED PARTNERSHIP				By: PREIT Associates, L.P., sole member
	By: PR New Garden LLC, sole general partner		PR HOLDING SUB LIMITED PARTNERSHIP
		By: PREIT Associates, L.P., sole member		By: PR Holding Sub LLC, sole general partner
PR NEW GARDEN LLC					By: PREIT Associates, L.P., sole member
	By: PREIT Associates, L.P., sole member		PR HOLDING SUB LLC
PR WESTGATE LIMITED PARTNERSHIP				By: PREIT Associates, L.P., sole member
	By: PR Westgate LLC, sole general Partner		PR ACQUISITION SUB LLC
		By: PREIT Associates, L.P., sole member		By: PREIT Associates, L.P., sole member
PR WESTGATE LLC
	By: PREIT Associates, L.P., sole member
PR WIREGRASS COMMONS LLC
	By: PREIT Associates, L.P., sole member
			By: Pennsylvania Real Estate Investment Trust, sole general partner
			By:	/s/ Bruce Goldman
			Name:	Bruce Goldman
			Title:	Executive Vice President

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ECHELON TITLE LLC						X-I HOLDING L.P.
	By: PR Echelon Limited Partnership, sole member						By: XGP LLC, general partner
		By: PR Echelon LLC, general partner						By: PR Exton Limited Partnership, sole member
					By: PREIT Associates, L.P., sole member				By: PR Exton LLC, general partner
EXTON SQUARE PROPERTY LLC										By: PREIT Associates, L.P., sole member
	By: X-I Holding L.P., managing member					X-II HOLDING L.P.
		By: XGP LLC, general partner					By: XGP LLC, general partner
			By: PR Exton Limited Partnership, sole member					By: PR Exton Limited Partnership, sole member
				By: PR Exton LLC, general partner					By: PR Exton LLC, general partner
					By: PREIT Associates, L.P., sole member					By: PREIT Associates, L.P., sole member
EXTON SQUARE 1, LLC						KEYSTONE PHILADELPHIA PROPERTIES, L.P.
EXTON SQUARE 2, LLC							By: Keystone Philadelphia Properties, LLC, general partner
EXTON SQUARE 3, LLC								By: PR Gallery II, LLC, sole member
EXTON SQUARE 4, LLC									By: PREIT Associates, L.P., sole member
EXTON SQUARE 5, LLC						KEYSTONE PHILADELPHIA PROPERTIES, LLC
EXTON SQUARE 6, LLC							By: PR Gallery II, LLC, sole member
EXTON SQUARE 7, LLC								By: PREIT Associates, L.P., sole member
EXTON SQUARE 8, LLC						PR GALLERY II LIMITED PARTNERSHIP
EXTON SQUARE 9, LLC							By: PR Gallery II LLC, general partner
EXTON SQUARE 10, LLC								By: PREIT Associates, L.P., sole member
EXTON SQUARE 11, LLC						PR GALLERY II LLC
	By: X-II Holding L.P., sole member						By: PREIT Associates, L.P., sole member
		By: XGP LLC, general partner				PR RADIO DRIVE LLC
			By: PR Exton Limited Partnership, sole member				By: PREIT Associates, L.P., sole member
				By: PR Exton LLC, general partner
					By: PREIT Associates, L.P., sole member
PR SWEDES SQUARE LLC
		By: PREIT Associates, L.P., sole member
XGP LLC
	By: PR Exton Limited Partnership, sole member
		By: PR Exton LLC, general partner
			By: PREIT Associates, L.P., sole member
						By: Pennsylvania Real Estate Investment Trust, sole general partner
						By:	/s/ Bruce Goldman
						Name:	Bruce Goldman
						Title:	Executive Vice President

[Signatures Continued on Next Page]

ECHELON RESIDENTIAL UNIT OWNER LLC, a Delaware limited liability company		PR NEW RIVER LLC, a Virginia limited liability company
	By: Echelon Title LLC, sole member			By: PREIT Associates, L.P., sole member
	By: PREIT Associates, L.P., sole member	WG PARK – ANCHOR B, LLC, a Delaware limited liability company
WG PARK – ANCHOR B LP, a Delaware limited partnership				By: PREIT Associates, L.P., sole member
	By: WG Park – Anchor B, LLC, sole general partner	PR WOODLAND K-OUTPARCEL LLC, a Delaware limited liability company
	By: PREIT Associates, L.P., sole member			By: PREIT Associates, L.P., sole member
PR WIREGRASS ANCHOR LLC, a Delaware limited liability company		PR LANCASTER LIMITED PARTNERSHIP, a Pennsylvania limited partnership
	By: PREIT Associates, L.P., sole member			By: PR Lancaster LLC, sole general partner
PR GAINESVILLE LIMITED PARTNERSHIP, a Delaware limited partnership				By: PREIT Associates, L.P., sole member
	By: PR Gainesville LLC, a Delaware limited liability company, sole general partner	PR LANCASTER LLC, a Delaware limited liability company
	By: PREIT Associates, L.P., sole member			By: PREIT Associates, L.P., sole member
PR GAINESVILLE LLC, a Delaware limited liability company		PR LANCASTER HOLDINGS LIMITED PARTNERSHIP, a Pennsylvania limited partnership
	By: PREIT Associates, L.P., sole member			By: PR Lancaster LLC, sole general partner
PR GV LP, a Delaware limited partnership				By: PREIT Associates, L.P., sole member
	By: PR GV LLC, sole general partner
	By: PREIT Associates, L.P., sole member
PR GV LLC, a Delaware limited liability company
	By: PREIT Associates, L.P., sole member
		By: Pennsylvania Real Estate Investment Trust, sole general partner
			By:	/s/ Andrew Ioannou
				Name: Andrew Ioannou
				Title: Treasurer

I - 2

PR NEW GARDEN RESIDENTIAL LIMITED PARTNERSHIP, a Pennsylvania limited partnership		PR NEW GARDEN RESIDENTIAL LLC, a Delaware limited liability company
	By: PR New Garden Residential LLC, sole general partner
		By: PREIT – RUBIN, Inc., sole member
			By:	/s/ Andrew Ioannou
				Name:	Andrew Ioannou
				Title:	Vice President – Capital Markets

I - 3

EX-10.3

Exhibit 10.3

AMENDMENT AGREEMENT

This Amendment Agreement (“Agreement”) is made as of the 10^th day of September, 2008, by and among Valley View Downs, LP, a Pennsylvania partnership (“Partnership”), Centaur Pennsylvania, LLC, an Indiana limited liability company (“Centaur PA”), PR Valley View Downs, L.P., a Pennsylvania limited partnership (“PREIT”), and PREIT-RUBIN, INC., a Delaware corporation (“Developer”).

RECITALS:

A. Partnership sought and obtained a harness racing license from the Pennsylvania Harness Racing Commission to operate a race track in Lawrence County, Pennsylvania (“Project”). Partnership sought, but has been unsuccessful in obtaining, a Category 1 slot license for Alternative Gaming from the Pennsylvania Gaming Control Board. As a result, Centaur, Inc., the ultimate parent of Partnership, desires to sell its equity interest in Partnership.

B. Partnership, Centaur PA and PREIT entered into a Binding Memorandum Of Understanding dated October 7, 2004, which was amended by the parties thereto and by Developer by Amendment No. 1 to Binding Memorandum of Understanding dated October 1, 2007 (collectively “MOU”), pursuant to which the parties agreed on certain matters, including the scheduled return, with interest of the Initial PREIT Payment, agreement upon the Termination Payment and its scheduled payment in lieu of certain rights in favor of PREIT and the execution of an agreement for development services and the scheduled payment of the Development Fee.

C. Pursuant to the terms of the MOU, Partnership and Developer entered into a Development Agreement dated October 1, 2007 (“Development Agreement”), pursuant to which Developer agreed to provide certain services in exchange for the Development Fee.

D. As a result of regulatory delays in Pennsylvania, Partnership has ceased its development activities with respect to the Project. Therefore, the activities contemplated to be performed by PREIT and Developer will not be required and there will be insufficient funds to satisfy the payments specified under the MOU and Development Agreement.

E. Notwithstanding the stated considerations and repayments set forth in the MOU and the Development Agreement, the parties desire to establish a mechanism for termination of the MOU and the Development Agreement as well as a discounted payment in lieu of the stated financial obligations under the MOU and the Development Agreement.

F. The Partnership and Centaur PA are each Subsidiary Guarantors of certain loans to Centaur LLC, which loan agreements are in the process of being amended and restated and require, interalia, that the Project, or equity interests therein, be sold.

G. Capitalized Terms used but not defined in this Agreement shall have the meanings as described in the MOU, the Development Agreement and the Amended Loan Agreements as defined in Section 5(c) below.

NOW, THEREFORE, in consideration of the foregoing and of their mutual promises, the parties hereby agree as follows:

1. Definitions.

(a) “Capital Transaction” means either (i) the sale of all or substantially all of the assets of Partnership, (ii) the sale of all or substantially all of the partnership interests in Partnership, (iii) the sale of all or substantially all of the membership interests of Centaur Pennsylvania, LLC, (iv) a merger or related transaction which results in the equivalent of the sale described in items (ii) and (iii), or (v) a sale of equity interests in Partnership and/or Centaur Pennsylvania, LLC which results in Centaur, LLC owning, directly or indirectly, no more than a 67% interest in Partnership and wherein Partnership has simultaneously entered into a management or other oversight agreement with an affiliate of the buyer or buyer’s designee, the practical effect of which will be that neither Centaur, LLC nor any affiliate of Centaur, LLC or any principal or employee of Centaur LLC or affiliate thereof, or any relative of any such principal or employee would retain or receive any material economic value with respect to the Project after the date of such transaction, or (vi) any other transaction pursuant to which substantially all of the economic benefit of the Project is transferred by sale or contract to any unaffiliated third party.

(b) “Outside Closing Date” means September 30, 2010.

(c) “Discount Payment” means the sum of Thirteen Million Dollars ($13,000,000).

2. Suspension of Payments. Notwithstanding the scheduled payments identified in the MOU and the Development Agreement, the parties agree that no payments with respect to the Initial PREIT Payment, the Termination Amount, the Development Fee or otherwise will be payable by the Partnership prior to the Outside Closing Date and all such payments shall be suspended until that date. In the event that a Capital Transaction does not occur by the Outside Closing Date, then the scheduled dates for payment of the Initial PREIT Payment, the Termination Amount and the Development Fee under the MOU and the Development Agreement shall resume and be reset such that all suspended payments shall thereafter commence on the day after the Outside Closing Date and shall be thereafter be payable on their respective future reset payment dates.

3. Capital Transaction. (a) Partnership shall notify PREIT in writing promptly after the execution of definitive documents respecting a Capital Transaction that a definitive agreement has been reached. Such notice shall include the identity of the parties, the sale price and the estimated funds available for Permitted Pennsylvania Project Proceeds Payments. Upon request of PREIT, Partnership shall forward a copy of the executed definitive documents to PREIT. Such definitive documents and all information provided to PREIT relative to such transaction shall be subject to the provisions of the Confidentiality Agreement executed by PREIT in connection with this Agreement.

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(b) In the event a Capital Transaction occurs by the Outside Closing Date, then notwithstanding the amounts scheduled to be paid or reimbursed under the MOU and the Development Agreement, PREIT and Developer agree to accept, in lieu thereof, the Discount Payment in full satisfaction of all financial obligations of Partnership under the MOU and the Development Agreement, including but not limited to amounts otherwise due respecting the Initial PREIT Payment, the Termination Amount and the Development Fee. The Discount Payment shall be payable in cash on the date of the consummation of the Capital Transaction. The Discount Payment shall be transmitted via wire transfers and allocated between PREIT and Developer as mutually directed by them to Partnership in writing on or before the date of closing of the Capital Transaction and, in the absence of mutual agreement and written direction, shall be payable by check jointly to both of them. In exchange for the Discount Payment, Developer and PREIT agree to enter into mutual terminations of the Development Agreement and MOU, respectively, simultaneously with receipt of payment.

4. Application of Proceeds. The net proceeds of the Pennsylvania Project Sale, to the extent such proceeds are available for Permitted Pennsylvania Project Proceeds Payments, shall be applied first to pay the Discount Payment and the other Permitted Pennsylvania Project Proceeds Payments in full prior to the payment of any other obligations of Partnership, Centaur PA or any Affiliate thereof.

5. Representations. To induce PREIT and Developer to enter into this Agreement, Partnership and Centaur PA represent and warrant as set forth below.

(a) The Racing License is held by Partnership, and Partnership is the applicant for the Gaming License.

(b) All or substantially all of the interests in Partnership are held by Centaur PA or an Affiliate thereof. No interests in Partnership are held individually by principals or employees of Centaur LLC or principals or employees of an Affiliate thereof.

(c) The draft copies of the Amended and Restated First Lien Revolving Credit and Term Loan Agreement (Milbank Draft 9/9/2008) and the Amended and Restated Second Lien Term Loan Agreement (Milbank Draft 9/9/2008) (collectively, the “Amended Loan Agreements”) delivered to PREIT are true and correct copies thereof and are final drafts in all substantial respects material to PREIT.

(d) If Centaur LLC is unable to close under the Amended Loan Agreements, it is extremely likely that Centaur LLC will cause Partnership and Centaur PA to file for protection under Chapter 11 of the bankruptcy laws of the United States.

(e) Centaur LLC intends to comply with the provisions of Section 5.21 of each of the Amended Loan Agreements.

(f) Centaur LLC has received sufficient commitments from other creditors of Partnership and Centaur PA to reduce their respective obligations to such other creditors that it reasonably expects PREIT and Developer to receive the full Discount Payment at the closing a Capital Transaction if the net proceeds equal or exceed $150 million.

(g) Neither Partnership nor Centaur PA has granted a security interest in the funds available for Permitted Pennsylvania Project Proceeds Payments to any other Person.

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6. Covenant. Partnership and Centaur PA agree that if Centaur LLC enters into a further amendment or modification to the Amended Loan Agreements that would result in a change to the definition of “Permitted Pennsylvania Project Proceeds Payments” to reduce the amount of $20,000,000 described in item (i), to increase the amount of $130,000,000 in item (b) or that would result in other changes that would prevent or preclude the payment of the Discount Payment upon the closing of a Capital Transaction notwithstanding sales proceeds of $150,000,000 from such Capital Transaction, then Centaur LLC shall provide a payment guaranty to PREIT and Developer in a form reasonably satisfactory to them of Valley View’s and Centaur PA’s obligations to pay the Discount Payment at the closing of a Capital Transaction in accordance with the terms of this Agreement.

7. Performance. Centaur LLC is entering into this Agreement solely to agree to use reasonable business efforts to cause Partnership and Centaur PA to comply with their respective agreements hereunder.

8. Acknowledgment. Partnership and Centaur PA acknowledge that PREIT and Developer are entering into this Agreement in reliance on the representations and agreements made by Partnership and Centaur PA herein.

9. Agreements Ratified and Confirmed. Except as amended hereby, the MOU and Development Agreement shall remain unchanged and in full force and effect.

10. Counterparts. This Agreement may be executed in multiple counterparts.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written.

PARTNERSHIP:
VALLEY VIEW DOWNS, L.P., a Pennsylvania limited partnership
By:	VALLEY VIEW DOWNS GP, LLC, an Indiana limited liability company, its general partner
	By:	/s/ Kurt E. Wilson
		Kurt E. Wilson, Authorized Representative

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CENTAUR PA:
CENTAUR PENNSYLVANIA, LLC
By:	/s/ Kurt E. Wilson
	Kurt E. Wilson, Authorized Representative
CENTAUR LLC, an Indiana limited liability company
By:	/s/ Kurt E. Wilson
	Kurt E. Wilson, Authorized Representative
DEVELOPER:
PREIT-RUBIN, INC., a Delaware corporation
By:	/s/ Robert F. McCadden
	(Signature)
Robert F. McCadden
Executive Vice President and Chief Financial Officer
	(Printed Name and Title)

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PREIT:
PR VALLEY VIEW DOWNS, L.P.
By:	PR VALLEY VIEW DOWNS, LLC, its general partner
	By:	PREIT ASSOCIATES, L.P., its sole member
		By:	PENNSYLVANIA REAL ESTATE INVESTMENT TRUST, its general partner
By:	/s/ Robert F. McCadden
	(Signature)
Robert F. McCadden
Executive Vice President and Chief Financial Officer
(Printed Name and Title)

- 6 -

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Ronald Rubin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Pennsylvania Real Estate Investment Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of trustees (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2008	/s/ Ronald Rubin
	Name:	Ronald Rubin
	Title:	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Robert F. McCadden, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Pennsylvania Real Estate Investment Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of trustees (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2008	/s/ Robert F. McCadden
	Name:	Robert F. McCadden
	Title:	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

I, Ronald Rubin, the Chief Executive Officer of Pennsylvania Real Estate Investment Trust (the “Company”), hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Form 10-Q of the Company for the quarter ended September 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 7, 2008	/s/ Ronald Rubin
	Name:	Ronald Rubin
	Title:	Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

I, Robert F. McCadden, the Executive Vice President and Chief Financial Officer of Pennsylvania Real Estate Investment Trust (the “Company”), hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Form 10-Q of the Company for the quarter ended September 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 7, 2008	/s/ Robert F. McCadden
	Name:	Robert F. McCadden
	Title:	Executive Vice President and Chief Financial Officer