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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. On ~~July 29, 2019, 77,549,217~~May 15, 2020, 78,876,389 shares of beneficial interest, par value $1.00 per share, of the Registrant were outstanding.

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.

	June 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
(in thousands, except per share amounts)	(unaudited)						(Unaudited)
ASSETS:
INVESTMENTS IN REAL ESTATE, at cost:
Operating properties	$	3,069,397		$	3,063,531		$	3,140,293		$	3,099,034
Construction in progress		150,808			115,182			81,485			106,011
Land held for development		5,881			5,881			5,881			5,881
Total investments in real estate		3,226,086			3,184,594			3,227,659			3,210,926
Accumulated depreciation		(1,177,549	)		(1,118,582	)		(1,230,657	)		(1,202,722	)
Net investments in real estate		2,048,537			2,066,012			1,997,002			2,008,204
INVESTMENTS IN PARTNERSHIPS, at equity:		153,318			131,124			167,167			159,993
OTHER ASSETS:
Cash and cash equivalents		15,227			18,084			5,351			12,211
Tenant and other receivables, net		34,151			38,914
Intangible assets (net of accumulated amortization of $17,449 and $15,543 at June 30, 2019 and December 31, 2018, respectively)		15,963			17,868
Tenant and other receivables								36,929			41,261
Intangible assets (net of accumulated amortization of $17,733 and $18,248 at March 31, 2020 and December 31, 2019, respectively)								12,846			13,404
Deferred costs and other assets, net		98,255			110,805			98,110			103,688
Assets held for sale		9,482			22,307			6,536			12,506
Total assets	$	2,374,933		$	2,405,114		$	2,323,941		$	2,351,267
LIABILITIES:
Mortgage loans payable, net	$	981,521		$	1,047,906		$	896,495		$	899,753
Term Loans, net		547,643			547,289			548,216			548,025
Revolving Facilities		182,000			65,000			289,000			255,000
Tenants’ deposits and deferred rent		9,243			15,400			5,918			13,006
Distributions in excess of partnership investments		89,652			92,057			85,770			87,916
Fair value of derivative liabilities		13,577			3,010			31,695			13,126
Accrued expenses and other liabilities		88,447			87,901			94,882			107,016
Total liabilities		1,912,083			1,858,563			1,951,976			1,923,842
COMMITMENTS AND CONTINGENCIES (Note 6):
COMMITMENTS AND CONTINGENCIES:
EQUITY:
Series B Preferred Shares, $.01 par value per share; 25,000 shares authorized; 3,450 shares issued and outstanding at June 30, 2019 and December 31, 2018; liquidation preference of $86,250		35			35
Series C Preferred Shares, $.01 par value per share; 25,000 shares authorized; 6,900 shares issued and outstanding at June 30, 2019 and December 31, 2018; liquidation preference of $172,500		69			69
Series D Preferred Shares, $.01 par value per share; 25,000 shares authorized; 5,000 shares issued and outstanding at June 30, 2019 and December 31, 2018; liquidation preference of $125,000		50			50
Shares of beneficial interest, $1.00 par value per share; 200,000 shares authorized; 77,547 shares issued and outstanding at June 30, 2019 and 70,495 shares issued and outstanding at December 31, 2018		77,547			70,495
Series B Preferred Shares, $.01 par value per share; 25,000 shares authorized; 3,450 shares issued and outstanding at March 31, 2020 and December 31, 2019; liquidation preference of $86,250								35			35
Series C Preferred Shares, $.01 par value per share; 25,000 shares authorized; 6,900 shares issued and outstanding at March 31, 2020 and December 31, 2019; liquidation preference of $172,500								69			69
Series D Preferred Shares, $.01 par value per share; 25,000 shares authorized; 5,000 shares issued and outstanding at March 31, 2020 and December 31, 2019; liquidation preference of $125,000								50			50
Shares of beneficial interest, $1.00 par value per share; 200,000 shares authorized; 78,840 shares issued and outstanding at March 31, 2020 and 77,550 shares issued and outstanding at December 31, 2019								78,840			77,550
Capital contributed in excess of par		1,763,798			1,671,042			1,767,175			1,766,883
Accumulated other comprehensive (loss) income		(11,875	)		5,408			(31,796	)		(12,556	)
Distributions in excess of net income		(1,371,499	)		(1,306,318	)		(1,444,721	)		(1,408,352	)
Total equity—Pennsylvania Real Estate Investment Trust		458,125			440,781			369,652			423,679
Noncontrolling interest		4,725			105,770			2,313			3,746
Total equity		462,850			546,551			371,965			427,425
Total liabilities and equity	$	2,374,933		$	2,405,114		$	2,323,941		$	2,351,267

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
(in thousands of dollars)	2019			2018			2019			2018			2020			2019
REVENUE:
Real estate revenue:
Lease revenue	$	73,744		$	83,453		$	150,358		$	161,451		$	67,721		$	76,615
Expense reimbursements		4,916			5,395			9,978			10,629			4,305			5,062
Other real estate revenue		2,417			2,274			5,417			4,435			1,924			3,001
Total real estate revenue		81,077			91,122			165,753			176,515			73,950			84,678
Other income		315			851			942			1,740			293			627
Total revenue		81,392			91,973			166,695			178,255			74,243			85,305
EXPENSES:
Operating expenses:
Property operating expenses:
CAM and real estate taxes		(28,168	)		(27,347	)		(57,571	)		(56,743	)		(27,517	)		(29,403	)
Utilities		(3,681	)		(3,804	)		(7,341	)		(7,713	)		(2,922	)		(3,660	)
Other property operating expenses		(1,913	)		(2,908	)		(3,979	)		(6,308	)		(2,098	)		(2,065	)
Total property operating expenses		(33,762	)		(34,059	)		(68,891	)		(70,764	)		(32,537	)		(35,128	)
Depreciation and amortization		(31,946	)		(33,356	)		(66,849	)		(67,386	)		(30,269	)		(34,904	)
General and administrative expenses		(11,609	)		(9,396	)		(22,814	)		(19,528	)		(10,695	)		(11,205	)
Provision for employee separation expenses		(141	)		(395	)		(860	)		(395	)		(73	)		(719	)
Insurance recoveries, net		1,852			-			1,616			-			-			(236	)
Project costs and other expenses		(130	)		(139	)		(187	)		(251	)		(95	)		(58	)
Total operating expenses		(75,736	)		(77,345	)		(157,985	)		(158,324	)		(73,669	)		(82,250	)
Interest expense, net		(15,554	)		(15,982	)		(31,452	)		(30,883	)		(16,858	)		(15,898	)
Loss on debt extinguishment		-			-			(4,768	)		-
Impairment of assets		-			(34,286	)		-			(34,286	)
Loss on debt extinguishment, net														-			(4,768	)
Impairment of development land parcel		-			-			(1,464	)		-			-			(1,464	)
Total expenses		(91,290	)		(127,613	)		(195,669	)		(223,493	)		(90,527	)		(104,380	)
Loss before equity in income of partnerships, gain on sales of real estate by equity method investee, gain on sales of real estate, net, and adjustment to gain on sales of interests in non operating real estate		(9,898	)		(35,640	)		(28,974	)		(45,238	)
Loss before equity in income of partnerships, gain on sales of real estate by equity method investee, gain on sales of real estate, net, and adjustment to loss on sales of interests in non operating real estate														(16,284	)		(19,075	)
Equity in income of partnerships		2,316			2,571			4,605			5,709			819			2,289
Gain (adjustment to gain) on sales of real estate by equity method investee		(11	)		-			553			2,773
Gain on sales of real estate by equity method investee														-			563
Gain on sales of real estate, net		1,513			748			1,513			748			1,962			-
Adjustment to gain on sales of interests in non operating real estate		-			-			-			(25	)
Loss on sales of interests in non operating real estate														(46	)		-
Net loss		(6,080	)		(32,321	)		(22,303	)		(36,033	)		(13,549	)		(16,223	)
Less: net loss attributable to noncontrolling interest		329			4,119			2,017			5,231			516			1,688
Net loss attributable to PREIT		(5,751	)		(28,202	)		(20,286	)		(30,802	)		(13,033	)		(14,535	)
Less: preferred share dividends		(6,844	)		(6,844	)		(13,688	)		(13,688	)		(6,844	)		(6,844	)
Net loss attributable to PREIT common shareholders	$	(12,595	)	$	(35,046	)	$	(33,974	)	$	(44,490	)	$	(19,877	)	$	(21,379	)

	Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
(in thousands, except per share amounts)	2019			2018			2019			2018				2020			2019
Net loss	$	(6,080	)	$	(32,321	)	$	(22,303	)	$	(36,033	)		$	(13,549	)	$	(16,223	)
Noncontrolling interest		329			4,119			2,017			5,231				516			1,688
Preferred share dividends		(6,844	)		(6,844	)		(13,688	)		(13,688	)			(6,844	)		(6,844	)
Dividends on unvested restricted shares		(224	)		(138	)		(441	)		(276	)			(350	)		(218	)
Net loss used to calculate loss per share—basic and diluted	$	(12,819	)	$	(35,184	)	$	(34,415	)	$	(44,766	)		$	(20,227	)	$	(21,597	)
Basic and diluted loss per share:	$	(0.17	)	$	(0.50	)	$	(0.47	)	$	(0.64	)
Basic and diluted income (loss) per share:														$	(0.26	)	$	(0.30	)

(in thousands of shares)
Weighted average shares outstanding—basic		76,405			69,747			73,896			69,675				76,774			71,358
Effect of common share equivalents⁽¹⁾		—			—			—			—				—			—
Weighted average shares outstanding—diluted		76,405			69,747			73,896			69,675				76,774			71,358


⁽¹⁾ The Company had net losses used to calculate earnings per share for all periods presented. Therefore, the effects of common share equivalents of 520 and 309 for the three months ended March 31, 2020 and 2019, respectively, are excluded from the calculation of diluted loss per share for these periods because they would be antidilutive.													⁽¹⁾ The Company had net losses used to calculate earnings per share for all periods presented. Therefore, the effects of common share equivalents of 520 and 309 for the three months ended March 31, 2020 and 2019, respectively, are excluded from the calculation of diluted loss per share for these periods because they would be antidilutive.

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
(in thousands of dollars)	2019			2018			2019			2018			2020			2019
Comprehensive (loss) income:
Comprehensive loss:
Net loss	$	(6,080	)	$	(32,321	)	$	(22,303	)	$	(36,033	)	$	(13,549	)	$	(16,223	)
Unrealized (loss) gain on derivatives		(11,723	)		2,929			(18,231	)		7,757
Unrealized loss on derivatives														(19,751	)		(6,508	)
Amortization of settled swaps		76			264			78			539			5			2
Total comprehensive (loss) income		(17,727	)		(29,128	)		(40,456	)		(27,737	)
Total comprehensive loss														(33,295	)		(22,729	)
Less: comprehensive loss attributable to noncontrolling interest		634			3,780			2,887			4,350			1,021			2,253
Comprehensive (loss) income attributable to PREIT	$	(17,093	)	$	(25,348	)	$	(37,569	)	$	(23,387	)
Comprehensive loss attributable to PREIT													$	(32,274	)	$	(20,476	)

				PREIT Shareholders																							PREIT Shareholders
				Preferred Shares $.01 par						Shares of Beneficial		Capital Contributed			Accumulated Other			Distributions			Non-						Preferred Shares $.01 par						Shares of Beneficial		Capital Contributed			Accumulated Other			Distributions			Non-
(in thousands of dollars, except per share amounts)	Total Equity			Series B		Series C		Series D		Interest, $1.00 Par		in Excess of Par			Comprehensive Income			in Excess of Net Income			controlling interest			Total Equity			Series B		Series C		Series D		Interest, $1.00 Par		in Excess of Par			Comprehensive (Loss) Income			in Excess of Net Income			controlling interest
Balance January 1, 2019	$	546,551		$	35	$	69	$	50	$	70,495	$	1,671,042		$	5,408		$	(1,306,318	)	$	105,770
Net loss		(16,223	)		—		—		—		—		—			—			(14,535	)		(1,688	)
Other comprehensive loss		(6,506	)		—		—		—		—		—			(5,941	)		—			(565	)
Shares issued upon redemption of Operating Partnership units		—			—		—		—		6,250		89,736			—			—			(95,986	)
Shares issued under employee compensation plans, net of shares retired		(326	)		—		—		—		638		(964	)		—			—			—
Amortization of deferred compensation		1,922			—		—		—		—		1,922			—			—			—
Dividends paid to common shareholders ($0.21 per share)		(14,930	)		—		—		—		—		—			—			(14,930	)		—
Dividends paid to Series B preferred shareholders ($0.4609 per share)		(1,590	)		—		—		—		—		—			—			(1,590	)		—
Dividends paid to Series C preferred shareholders ($0.45 per share)		(3,105	)		—		—		—		—		—			—			(3,105	)		—
Dividends paid to Series D preferred shareholders ($0.4297 per share)		(2,148	)		—		—		—		—		—			—			(2,148	)		—
Noncontrolling interests:
Distributions paid to Operating Partnership unit holders ($0.21 per unit)		(1,698	)		—		—		—		—		—			—			—			(1,698	)
Balance March 31, 2019	$	501,947		$	35	$	69	$	50	$	77,383	$	1,761,736		$	(533	)	$	(1,342,626	)	$	5,833
Balance January 1, 2020																								$	427,425		$	35	$	69	$	50	$	77,550	$	1,766,883		$	(12,556	)	$	(1,408,352	)	$	3,746
Net loss		(6,080	)		—		—		—		—		—			—			(5,751	)		(329	)		(13,549	)		—		—		—		—		—			—			(13,033	)		(516	)
Other comprehensive loss		(11,647	)		—		—		—		—		—			(11,342	)		—			(305	)		(19,746	)		—		—		—	��	—		—			(19,240	)		—			(506	)
Shares issued under employee compensation plans, net of shares retired		337			—		—		—		164		173			—			—			—			(42	)		—		—		—		1,290		(1,332	)		—			—			—
Amortization of deferred compensation		1,889			—		—		—		—		1,889			—			—			—			1,624			—		—		—		—		1,624			—			—			—
Dividends paid to common shareholders ($0.21 per share)		(16,278	)		—		—		—		—		—			—			(16,278	)		—			(16,492	)		—		—		—		—		—			—			(16,492	)		—
Dividends paid to Series B preferred shareholders ($0.4609 per share)		(1,591	)		—		—		—		—		—			—			(1,591	)		—			(1,591	)		—		—		—		—		—			—			(1,591	)		—
Dividends paid to Series C preferred shareholders ($0.45 per share)		(3,105	)		—		—		—		—		—			—			(3,105	)		—			(3,105	)		—		—		—		—		—			—			(3,105	)		—
Dividends paid to Series D preferred shareholders ($0.4297 per share)		(2,148	)		—		—		—		—		—			—			(2,148	)		—			(2,148	)		—		—		—		—		—			—			(2,148	)		—
Noncontrolling interests:
Distributions paid to Operating Partnership unit holders ($0.21 per unit)		(464	)		—		—		—		—		—			—			—			(464	)		(411	)		—		—		—		—		—			—			—			(411	)
Other changes in noncontrolling interest, net		(10	)		—		—		—		—		—			—			—			(10	)
Balance June 30, 2019	$	462,850		$	35	$	69	$	50	$	77,547	$	1,763,798		$	(11,875	)	$	(1,371,499	)	$	4,725
Balance March 31, 2020																								$	371,965		$	35	$	69	$	50	$	78,840	$	1,767,175		$	(31,796	)	$	(1,444,721	)	$	2,313

				PREIT Shareholders
				Preferred Shares $.01 par						Shares of Beneficial		Capital Contributed			Accumulated Other			Distributions			Non-
(in thousands of dollars, except per share amounts)	Total Equity			Series B		Series C		Series D		Interest, $1.00 Par		in Excess of Par			Comprehensive (Loss) Income			in Excess of Net Income			controlling interest
Balance January 1, 2019	$	546,551		$	35	$	69	$	50	$	70,495	$	1,671,042		$	5,408		$	(1,306,318	)	$	105,770
Net loss		(16,223	)		—		—		—		—		—			—			(14,535	)		(1,688	)
Other comprehensive loss		(6,506	)		—		—				—		—			(5,941	)		—			(565	)
Shares issued upon redemption of Operating Partnership units		—			—		—		—		6,250		89,736			—			—			(95,986	)
Shares issued under employee compensation plans, net of shares retired		(326	)		—		—		—		638		(964	)		—			—			—
Amortization of deferred compensation		1,922			—		—		—		—		1,922			—			—			—
Dividends paid to common shareholders ($0.21 per share)		(14,930	)		—		—		—		—		—			—			(14,930	)		—
Dividends paid to Series B preferred shareholders ($0.4609 per share)		(1,590	)		—		—		—		—		—			—			(1,590	)		—
Dividends paid to Series C preferred shareholders ($0.4500 per share)		(3,105	)		—		—		—		—		—			—			(3,105	)		—
Dividends paid to Series D preferred shareholders ($0.4297 per share)		(2,148	)		—		—		—		—		—			—			(2,148	)		—
Noncontrolling interests:
Distributions paid to Operating Partnership unit holders ($0.21 per unit)		(1,698	)		—		—		—		—		—			—			—			(1,698	)
Balance March 31, 2019	$	501,947		$	35	$	69	$	50	$	77,383	$	1,761,736		$	(533	)	$	(1,342,626	)	$	5,833

PREIT Shareholders

Preferred Shares $.01 par

Shares of
Beneficial

Capital
Contributed

Accumulated
Other

Distributions

Non-

(in thousands of dollars, except per share amounts)

Total
Equity

Series
B

Series
C

Series
D

Interest,
$1.00 Par

in Excess of
Par

Comprehensive
Income

in Excess of
Net Income

controlling
interest

Balance January 1, 2018

$
760,991

$
35

$
69

$
50

$
69,983

$
1,663,966

$
7,226

$
(1,109,469
)

$
129,131

Net loss

(3,712
)

—

—

—

—

—

—

(2,601
)

(1,111
)
Other comprehensive income

5,103

—

—

—

—

4,562

—

541

Shares issued under employee compensation
   plans, net of shares retired

(195
)

—

—

—

370

(565
)

—

—

—

Amortization of deferred compensation

1,924

—

—

—

—

1,924

—

—

—

Dividends paid to common shareholders
   ($0.21 per share)

(14,766
)

—

—

—

—

—

—

(14,766
)

—

Dividends paid to Series B preferred
   shareholders ($0.4609 per share)

(1,590
)

—

—

—

—

—

—

(1,590
)

—

Dividends paid to Series C preferred
   shareholders ($0.4500 per share)

(3,105
)

—

—

—

—

—

—

(3,105
)

—

Dividends paid to Series D preferred
   shareholders ($0.4297 per share)

(2,149
)

—

—

—

—

—

—

(2,149
)

—

Noncontrolling interests:

Distributions paid to Operating Partnership
   unit holders ($0.21 per unit)

(1,737
)

—

—

—

—

—

—

—

(1,737
)
Balance March 31, 2018

$
740,764

$
35

$
69

$
50

$
70,353

$
1,665,325

$
11,788

$
(1,133,680
)

$
126,824

Net loss

(32,321
)

—

—

—

—

—

—

(28,202
)

(4,119
)
Other comprehensive income

3,193

—

—

—

—

—

2,854

—

339

Shares issued under employee compensation
   plans, net of shares retired

363

—

—

—

97

266

—

—

—

Amortization of deferred compensation

1,711

—

—

—

—

1,711

—

—

—

Dividends paid to common shareholders
   ($0.21 per share)

(14,787
)

—

—

—

—

—

—

(14,787
)

—

Dividends paid to Series B preferred
   shareholders ($0.4609 per share)

(1,590
)

—

—

—

—

—

—

(1,590
)

—

Dividends paid to Series C preferred
   shareholders ($0.4500 per share)

(3,105
)

—

—

—

—

—

—

(3,105
)

—

Dividends paid to Series D preferred
   shareholders ($0.4297 per share)

(2,149
)

—

—

—

—

—

—

(2,149
)

—

Noncontrolling interests:

—

—

—

—

—

—

—

—

—

Distributions paid to Operating Partnership
   unit holders ($0.21 per unit)

(1,737
)

—

—

—

—

—

—

—

(1,737
)
Balance June 30, 2018

$
690,342

$
35

$
69

$
50

$
70,450

$
1,667,302

$
14,642

$
(1,183,513
)

$
121,307

	Six Months Ended June 30,						Three Months Ended March 31,
(in thousands of dollars)	2019			2018			2020			2019
Cash flows from operating activities:
Net loss	$	(22,303	)	$	(36,033	)	$	(13,549	)	$	(16,223	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		60,862			61,606			28,263			31,838
Amortization		8,558			7,134			2,994			4,353
Straight-line rent adjustments		(1,551	)		(1,132	)		(886	)		(1,517	)
Provision for doubtful accounts		—			1,747
Non-cash lease termination revenue		—			(4,200	)
Amortization of deferred compensation		3,811			3,635			1,624			1,922
Loss on debt extinguishment		4,768			—
(Gains) losses on sales of interests in real estate, net		(1,513	)		(748	)
Adjustment to gains on sales of interests in non operating real estate		—			25
Loss on debt extinguishment, net								—			4,768
Gain on sales of interests in real estate and non-operating real estate, net								(1,916	)		—
Equity in income of partnerships		(4,605	)		(5,709	)		(819	)		(2,289	)
Gain on sale of real estate by equity method investee		(553	)		(2,773	)
Gain on sales of real estate by equity method investee								—			(563	)
Cash distributions from partnerships		14,912			3,815			845			2,357
Impairment of assets		1,464			34,286
Impairment of development land parcel								—			1,464
Change in assets and liabilities:
Net change in other assets		5,482			9,041			11,674			6,961
Net change in other liabilities		(6,984	)		4,412			(13,836	)		(10,055	)
Net cash provided by operating activities		62,348			75,106			14,394			23,016
Cash flows from investing activities:
Investments in consolidated real estate acquisitions		—			(11,400	)
Distribution of financing proceeds from equity method investee		—			123,000
Cash proceeds from sales of real estate		34,080			1,636			8,003			4,823
Cash proceeds from sale of mortgage		8,000			—			—			8,000
Proceeds from insurance claims related to damage to real estate assets								—			2,275
Cash distributions from partnerships of proceeds from real estate sold		879			19,727			—			879
Proceeds from insurance claims related to damage to real estate assets		4,475			—
Investments in partnerships		(35,222	)		(31,411	)
Additions to construction in progress								(20,157	)		(28,087	)
Investments in real estate improvements		(13,913	)		(17,187	)		(2,414	)		(6,361	)
Additions to construction in progress		(63,831	)		(22,373	)
Additions to leasehold improvements and corporate fixed assets								(4,714	)		(73	)
Investments in equity method investees								(9,346	)		(19,885	)
Capitalized leasing costs		(476	)		(8,941	)		(164	)		(320	)
Additions to leasehold improvements and corporate fixed assets		(242	)		(31	)
Net cash (used in) provided by investing activities		(66,250	)		53,020
Net cash used in investing activities								(28,792	)		(38,749	)
Cash flows from financing activities:
(Repayments of) proceeds from mortgage loans and finance lease liabilities		(63,599	)		10,185
Net borrowings (repayments) under revolving facility		117,000			(53,000	)
Net borrowings under revolving facilities								34,000			97,000
Repayments of mortgage loans and finance lease liabilities								(157	)		(63,442	)
Principal installments on mortgage loans								(3,475	)		(3,818	)
Payment of deferred financing costs								(212	)		(13	)
Value of shares of beneficial interest issued								424			306
Dividends paid to common shareholders		(31,208	)		(29,553	)		(16,492	)		(14,930	)
Dividends paid to preferred shareholders		(13,688	)		(13,688	)		(6,844	)		(6,843	)
Distributions paid to Operating Partnership unit holders and noncontrolling interest		(2,162	)		(3,474	)		(411	)		(1,698	)
Principal installments on mortgage loans		(8,286	)		(9,433	)
Payment of deferred financing costs		(78	)		(6,514	)
Value of shares of beneficial interest issued		642			846
Value of shares retired under equity incentive plans, net of shares issued		(632	)		(678	)		(466	)		(632	)
Net cash (used in) financing activities		(2,011	)		(105,309	)
Net cash provided by financing activities								6,367			5,930
Net change in cash, cash equivalents, and restricted cash		(5,913	)		22,817			(8,031	)		(9,803	)
Cash, cash equivalents, and restricted cash, beginning of period		32,445			33,953			19,629			32,445
Cash, cash equivalents, and restricted cash, end of period	$	26,532		$	56,770		$	11,598		$	22,642

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.~~Commission (the “SEC”). 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 we believe that the included disclosures are adequate to make the information presented not misleading. Our 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, ~~2018.~~2019. In our opinion, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position, the consolidated results of our operations, consolidated statements of ~~other~~ comprehensive income (loss), consolidated statements of equity and our consolidated statements of 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 located in the eastern half of the United States, primarily in the Mid-Atlantic region. ~~Our~~As of March 31, 2020, our portfolio ~~currently~~ consists of a total of 2726 properties operating in ~~nine~~9 states, including 21 shopping malls, ~~four~~4 other retail properties and ~~two~~1 development ~~or redevelopment properties. We have one property under redevelopment classified as “retail” (redevelopment of~~property. The ~~Gallery at Market East into Fashion District Philadelphia (“Fashion District Philadelphia”)). One other~~ property in our portfolio that is classified as under ~~development; however, we do~~development does not currently have any activity occurring at this property. We also have one undeveloped land parcel located in Gainesville, Florida, a portion of which was sold in March 2019 and the remaining portion of which was classified as held for sale as of June 30, 2019.occurring.

We hold our interest in our portfolio of properties through our operating partnership, PREIT Associates, L.P. (“PREIT Associates” or the “Operating Partnership”). We are the sole general partner of the Operating Partnership and, as of ~~June 30, 2019,~~March 31, 2020, we held a 97.5% controlling interest in the Operating Partnership (after the redemption of 6,250,000 OP Units (as defined below) during the first quarter of 2019, which is discussed in more detail in Note ~~5 to our unaudited consolidated financial statements)~~5), and consolidated 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 our election, we may acquire such OP Units in exchange for our common shares on a ~~one-for-one~~1-for-one basis, in some cases beginning one year following the respective issue dates of the OP Units and in other cases immediately. If all of the outstanding OP Units held by limited partners had been redeemed for cash as of ~~June 30, 2019,~~March 31, 2020, the total amount that would have been distributed would have been ~~$13.1~~$1.8 million, which is calculated using our ~~June 28, 2019 (which was the last trading day in the second quarter of 2019)~~March 31, 2020 closing price on the New York Stock Exchange of ~~$6.50~~$0.91 per share multiplied by the number of outstanding OP Units held by limited partners, which was 2,022,635 as of ~~June 30, 2019.~~March 31, 2020.

We provide management, leasing and real estate development services through ~~two~~2 of our subsidiaries: PREIT Services, LLC (“PREIT Services”), which generally develops and manages properties that we consolidate for financial reporting purposes, and PREIT-RUBIN, Inc. (“PRI”), which generally develops and manages properties that we do not consolidate for financial reporting purposes, including properties owned by partnerships in which we own an interest and properties that are owned by third parties in which we do not have an interest. PREIT Services and PRI are consolidated. PRI is a taxable REIT subsidiary, as defined by federal tax laws, which means that it is able to offer an expanded menu of services to tenants without jeopardizing our continuing qualification as a REIT under federal tax law.

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. Due to the nature of our operating properties, which involve retail shopping, we have concluded that our individual properties have similar economic characteristics and meet all other aggregation criteria. Accordingly, we have aggregated our individual properties into ~~one~~1 reportable segment. In addition, no single tenant accounts for 10% or more of consolidated revenue, and none of our properties are located outside the United States.

The 2020 global outbreak of a novel coronavirus (COVID-19) has adversely impacted, and will likely continue to impact, our business, financial condition, liquidity and operating results, as well as our tenants’ businesses. The continued spread of COVID-19 has also led to unprecedented global economic disruption and volatility in financial markets. We anticipate that our future business, financial condition, liquidity and results of operations, including our results for 2020 and potentially thereafter, will be materially impacted by the COVID-19 pandemic. It remains highly uncertain how long the global pandemic, economic challenges and restrictions on day-to-day life will last. Given the unprecedented and rapidly evolving developments, we cannot reasonably predict or estimate its ultimate impact on us or our tenants, or on our ability or the ability of our tenants to resume more normal operations.

COVID-19 impacted our properties and caused the closures of all our properties with the first closure occurring on March 12, 2020. The first property reopening occurred in late April 2020 while others remain closed until individual states’ stay at home orders are lifted. Since most of the closures occurred in the second half of March 2020, the impact of the closures on our first quarter 2020 financial results was not significant.

Under the accounting guidance related to the presentation of financial statements, when preparing financial statements for each annual and interim reporting period, management has the responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. As a result of the considerations articulated below, we believe there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.

In applying the accounting guidance, management considered our current financial condition and liquidity sources, including current funds available, forecasted future cash flows and our conditional and unconditional obligations due over the next twelve months. Management specifically considered the following: (i) our senior unsecured facility, which includes a revolving facility maturing in 2022 with a balance of $289.0 million as of March 31, 2020 and term loans maturing in 2023 with a balance of $550.0 million as of March 31, 2020; (ii) our mortgage loans with varying maturities through 2025 with a principal balance of $896.5 million as of March 31, 2020; (iii) the financial covenant compliance requirements of our credit agreements; and (iv) recurring costs of operating our business.

On March 30, 2020, the Company amended its 2014 7-Year Term Loan and 2018 Term Loan Facility to provide certain debt covenant relief through September 30, 2020. The Company anticipates not meeting certain financial covenants applicable under the credit agreements after September 30, 2020. The Company continues to work with the lender group to obtain a longer term financing solution prior to the expiration of the initial modification. However, further deterioration in our financial results due to COVID-19 could affect our covenant compliance prior to September 30, 2020. In addition, the Company plans to complete the sale-leaseback of certain properties, sell certain real estate assets and continue to control certain operational costs. Due to the inherent risks, unknown results and significant uncertainties associated with each of these matters and the direct correlation between these matters and our ability to satisfy our financial obligations that may arise over the applicable twelve month period, we are unable to conclude that it is probable that we will be able to meet our obligations arising within twelve months of the date of issuance of these financial statements under the parameters set forth in this accounting guidance.

As a result, management evaluated whether this was mitigated by our approved plans and expectations for the applicable period under the second step of this accounting standard.

Fair value accounting applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements. Fair value measurements are 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, these accounting requirements establish 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 we have 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 might 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, and 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. Our 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. We utilize the fair value hierarchy in our accounting for derivatives (Level 2) and financial instruments (Level 2) and in our reviews for impairment of real estate assets (Level 3) and goodwill (Level 3).

Real estate investments and related intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the property might not be recoverable, which is referred to as a “triggering event.” The COVID-19 impact on the economy and market conditions, together with the resulting closures of our properties, was deemed to be a triggering event as of March 31, 2020 which led to an impairment review. In connection with our review of our long-lived assets for impairment, we utilize qualitative and quantitative factors in order to estimate fair value. The significant qualitative factors that we use include age and condition of the property, market conditions in the property’s trade area, competition with other shopping centers within the property’s trade area and the creditworthiness and performance of the property’s tenants. The significant quantitative factors that we use include historical and forecasted financial and operating information relating to the property, such as net operating income, occupancy statistics, vacancy projections and tenants’ sales levels.

If there is a triggering event in relation to a property to be held and used, we will estimate the aggregate future cash flows, net of estimated capital expenditures, to be generated by the property, undiscounted and without interest charges. In addition, this estimate may consider a probability weighted cash flow estimation approach when alternative courses of action to recover the carrying amount of a long-lived asset are under consideration or when a range of possible values is estimated.

The determination of undiscounted cash flows requires significant estimates by our management, including the expected course of action at the balance sheet date that would lead to such cash flows. Subsequent changes in estimated undiscounted cash flows arising from changes in the anticipated action to be taken with respect to the property could affect the determination of whether an impairment exists, and the effects of such changes could materially affect our net income. If the estimated undiscounted cash flows are less than the carrying value of the property, the carrying value is written down to its fair value.

Assessment of our ability to recover certain lease related costs must be made when we have a reason to believe that a tenant might not be able to perform under the terms of the lease as originally expected. This requires us to make estimates as to the recoverability of such costs.

An other-than-temporary impairment of an investment in an unconsolidated joint venture is recognized when the carrying value of the investment is not considered recoverable based on evaluation of the severity and duration of the decline in value. To the extent impairment has occurred, the excess carrying value of the asset over its estimated fair value is recorded as a reduction to income. We concluded that there was no impairment as of March 31, 2020.

Effective January 1, ~~2019,~~2020, we adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASC 842”) and related guidance using the optional transition method and elected to apply the provisions of the standard as of the adoption date rather than the earliest date presented. Prior period amounts were not restated. We implemented the standard using the following practical expedients:

~~The adoption of this standard had the following effects on our financial statements as of June 30, 2019 and for the three and six months ended June 30, 2019:~~

As of January 1, 2019, for leases under which the Company is a lessee, we recorded a right-of-use (“ROU”) asset of $24.6 million and corresponding lease liability for all leases previously accounted for as operating leases under ASC 840. The Company also derecognized an unfavorable ground lease liability of $5.5 million and reduced the corresponding ROU asset by the same amount. As of June 30, 2019, the ROU asset was $17.7 million and is included in deferred costs and other assets, net and the lease liability was $23.7 million and is included in accrued expenses and other liabilities in the accompanying consolidated balance sheet.

Effective January 1, 2019, we changed our fixed CAM revenue recognition to be recognized prospectively on a straight-line basis. In the three and six months ended June 30, 2019, $0.7 million and $1.3 million, respectively, of such revenues were recognized and are included within lease revenue in the accompanying consolidated statements of operations; previously, such amounts were recognized as billed in accordance with the terms of the respective leases.

We review the collectability of both billed and unbilled lease revenues each reporting period, taking into consideration the tenant’s payment history, credit profile and other factors, including its operating performance. For any tenant receivable balances deemed to be uncollectible, under ASC 842 we record an offset for credit losses directly to Lease revenue in the consolidated statement of operations. Previously, under ASC 840, uncollectible tenants’ receivables were reported in Other property operating expenses in the consolidated statement of operations.

For leases under which the Company is a lessor, certain internal leasing and legal costs that were previously capitalized under ASC 840 are now recorded as period costs under ASC 842. For the three and six months ended June 30, 2018, we capitalized $1.5 million and $2.7 million of internal leasing and legal salaries and benefits, respectively. No such costs were capitalized for the three and six months ended June 30, 2019. We will continue to amortize previously capitalized initial direct costs over the remaining terms of the associated leases.

~~In October 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-16, Derivatives and Hedging (Topic 815):~~ ~~Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) as a Benchmark Interest Rate for Hedge Accounting.~~ This ASU adds the OIS rate based on SOFR as a U.S. benchmark interest rate to facilitate the LIBOR to SOFR transition and provide sufficient lead time for entities to prepare for changes to interest rate hedging strategies for both risk management and hedge accounting purposes. Because we adopted ASU 2017-12, this guidance became effective January 1, 2019. The adoption of this guidance did not have a material impact on our consolidated financial statements.

~~In June 2016, the FASB issued~~ ASU 2016-13, Financial Instruments - Credit Losses (“ASC 326”), and subsequently issued amendments to the initial and transitional guidance within ASU 2018-19, ASU 2019-04 and ASU ~~2019-05 between November 2018 and May 2019.~~2019-05. ASU 2016-13 introduced new guidance for an approach based on expected losses to estimate credit losses on certain types of financial instruments, and will affect our accounting for trade receivables and notes receivable. ~~We will adopt this new standard on January 1, 2020. We are currently evaluating the impact that the~~The adoption of ~~the new standard will~~this guidance did not have a material impact on our consolidated financial statements.

In April 2020, the Financial Accounting Standards Board issued a Staff Question-and-Answer (“Q&A”) to clarify whether lease concessions related to the effects of COVID-19 require the application of the lease modification guidance under ASU 2016-02, Leases (Topic 842) (“ASC 842”). Under ASC 842, we would have to determine, on a lease-by-lease basis, if a lease concession was the result of a new arrangement reached with the tenant or an enforceable right and obligation within the existing lease. The ~~Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Income~~Q&A allows for the ~~three~~bypass of a lease-by-lease analysis and ~~six months ended June 30, 2018 include~~for us to elect to either apply the lease modification accounting framework or not, to all of the lease concessions we make with similar characteristics and circumstances. We are continuing to assess the impact of ~~correcting~~this Q&A guidance in light of our ongoing negotiations with tenants.

On May 19, 2020, we announced that our Board of Trustees declared a ~~computational error by increasing the net loss (and comprehensive loss) attributable~~quarterly cash dividend of $0.02 per common share payable on June 15, 2020 to noncontrolling interest by $0.7 million for the three months ended June 30, 2018 and by $1.4 million for the six months ended June 30, 2018. The adjustments also decreased the amount of loss (and comprehensive loss) attributable to PREIT and PREIT common shareholders ~~by the same amount. The adjustments~~of record on June 1, 2020. Simultaneously, our Board of Trustees also ~~decreased the amount~~declared quarterly cash dividends of ~~basic and diluted loss~~$0.4609375 per share ~~by $0.01 for the three months ended~~on our 7.375% Series B Cumulative Redeemable PerpetualPreferred Shares, $0.450000 per share on our 7.20% Series C Preferred Shares, and $0.4296875 per share on our 6.875% Series D Preferred Shares. These dividends are also payable on June ~~30, 2018 and by $0.02 for the six months ended~~15, 2020 to holders of record on June ~~30. 2018.~~1, 2020.

~~These corrections had no impact on the previously reported amounts of net income (loss), total equity, and consolidated cash flows from operating, investing or financing activities.~~

We evaluated these corrections and determined, based on quantitative and qualitative factors, that the changes were not material to the consolidated financial statements taken as a whole for any previously filed consolidated financial statements.

Investments in real estate as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 were comprised of the following:

(in thousands of dollars)	As of June 30, 2019			As of December 31, 2018			March 31, 2020			December 31, 2019
Buildings, improvements and construction in progress	$	2,761,444		$	2,719,400		$	2,761,543		$	2,753,039
Land, including land held for development		464,642			465,194			466,116			457,887
Total investments in real estate		3,226,086			3,184,594			3,227,659			3,210,926
Accumulated depreciation		(1,177,549	)		(1,118,582	)		(1,230,657	)		(1,202,722	)
Net investments in real estate	$	2,048,537		$	2,066,012		$	1,997,002		$	2,008,204

The following table summarizes our capitalized interest, compensation, including commissions, and real estate taxes for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~ 2019:

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
(in thousands of dollars)	2019		2018		2019		2018		2020		2019
Development/Redevelopment Activities:
Interest ⁽¹⁾	$	2,325	$	1,281	$	4,329	$	2,907	$	910	$	2,004
Compensation		336		277		688		715		344		352
Real estate taxes		345		216		421		380		197		76
Leasing Activities:
Compensation, including commissions ⁽²⁾		156		1,769		476		3,941		164		320

In November 2019, we entered into an agreement to sell 14 tenant occupied parcels across five properties — Magnolia Mall, Capital City Mall, Woodland Mall, Jacksonville Mall and Valley Mall — for total consideration of $29.9 million. As of December 31, 2019, we completed the dispositions on three outparcels at Capital City Mall and Magnolia Mall for total consideration of $5.2 million. In connection with these sales, we recorded a gain of $2.7 million. In January 2020, the sale of the outparcel at Woodland Mall for a total consideration of $5.1 million was completed and in March 2020, the sale of two outparcels at Magnolia Mall for a total consideration of $2.9 million was completed with a resulting gain on sale of $1.9 million which was recorded in March 2020.

In March 2019, we entered into an agreement of sale with a buyer to sell an undeveloped land parcel located in Gainesville, Florida for total consideration of $15.0 million and the sale transaction was split into ~~two~~four parcels. The first parcel was sold in March 2019 for $5.0 million. ~~The transaction with respect to~~As a result of executing the ~~remaining parcel is expected to close in the second half~~agreement of ~~2019. In connection with these transactions,~~sale, we recorded losses on impairment of assets of $1.5 ~~million. The remaining land~~million in the first quarter of 2019. Subsequently, we closed on the sale of two parcels in November 2019 and the sale of the final parcel ~~was classified as held~~closed in December 2019 for ~~sale in our consolidated balance sheet as of June 30, 2019.~~

~~In April 2019, we sold an undeveloped land parcel located in New Garden Township, Pennsylvania, for total~~aggregate consideration of $11.0 million, consisting of $8.25 million in cash and $2.75 million of preferred stock. We ascribed no value for accounting purposes to the preferred shares as they are not tradeable, cannot be transferred or sold and have no redemption feature. Up to $1.25 million of the cash consideration received is subject to claw-back if the buyer does not receive entitlements for a stipulated number of housing units, which has been recorded as a liability in our consolidated balance sheet. In connection with this sale, we recorded a gain of $0.2$10.0 million.

~~In April 2019, we sold a Whole Foods store located on a parcel adjacent to Exton Square Mall for total consideration of $22.1 million. In connection with this sale, we recorded a gain of $1.3 million.~~

~~In July 2019, we sold an outparcel located at Valley View Mall in La Crosse, Wisconsin for total consideration of $1.4 million.~~

The following table presents summarized financial information of the equity investments in our unconsolidated partnerships as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018:~~2019:

(in thousands of dollars)	June 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS:
Investments in real estate, at cost:
Operating properties	$	587,779		$	575,149		$	917,354		$	883,530
Construction in progress		444,080			420,771			236,807			251,029
Total investments in real estate		1,031,859			995,920			1,154,161			1,134,559
Accumulated depreciation		(219,159	)		(212,574	)		(236,332	)		(229,877	)
Net investments in real estate		812,700			783,346			917,829			904,682
Cash and cash equivalents		29,431			20,446			24,153			34,766
Deferred costs and other assets, net		33,099			30,549			77,257			43,476
Total assets		875,230			834,341			1,019,239			982,924
LIABILITIES AND PARTNERS’ INVESTMENT:
Mortgage loans payable, net		503,068			507,090			496,978			499,057	��
FDP Term Loan, net		248,159			247,901			299,263			299,091
Other liabilities		34,875			34,463			99,318			79,166
Total liabilities		786,102			789,454			895,559			877,314
Net investment	$	89,128		$	44,887		$	123,680		$	105,610
Partners’ share		42,837			21,583			59,845			50,997
PREIT’s share		46,291			23,304			63,835			54,613
Excess investment⁽¹⁾		17,375			15,763			17,562			17,464
Net investments and advances	$	63,666		$	39,067		$	81,397		$	72,077
Reconciliation to comparable GAAP balance sheet item:
Investment in partnerships, at equity	$	153,318		$	131,124		$	167,167		$	159,993
Distributions in excess of partnership investments		(89,652	)		(92,057	)		(85,770	)		(87,916	)
Net investment	$	63,666		$	39,067		$	81,397		$	72,077

We record distributions from our equity investments using the nature of the distribution approach.

The following table summarizes our share of equity in income of partnerships for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
(in thousands of dollars)	2019			2018			2019			2018			2020			2019
Real estate revenue	$	23,443		$	23,890		$	46,894		$	49,901		$	27,200		$	23,451
Operating expenses:
Property operating and other expenses		(7,543	)		(7,524	)		(15,527	)		(15,705	)		(11,229	)		(7,985	)
Interest expense⁽¹⁾		(5,843	)		(5,834	)		(11,651	)		(11,568	)		(6,360	)		(5,807	)
Depreciation and amortization		(4,705	)		(4,880	)		(9,358	)		(9,869	)		(7,617	)		(4,652	)
Total expenses		(18,091	)		(18,238	)		(36,536	)		(37,142	)		(25,206	)		(18,444	)
Net income		5,352			5,652			10,358			12,759			1,994			5,007
Partners’ share		(2,900	)		(3,089	)		(5,587	)		(6,991	)		(1,178	)		(2,687	)
PREIT’s share		2,452			2,563			4,771			5,768			816			2,320
Amortization of and adjustments to excess investment, net		(136	)		8			(166	)		(59	)		3			(31	)
Equity in income of partnerships	$	2,316		$	2,571		$	4,605		$	5,709		$	819		$	2,289
⁽¹⁾Net of capitalized interest expense of $1,479 and $1,302 for the three months ended June 30, 2019 and 2018, and $2,951 and $1,921 for the six months ended June 30, 2019 and 2018, respectively.

12⁽¹⁾ Net of capitalized interest expense of $1,091 and $1,472 for the three months ended March 31, 2020 and 2019, respectively.

In March 2019, a partnership in which we hold a 25% interest sold an undeveloped land parcel adjacent to Gloucester Premium Outlets for $3.8 million. The partnership recorded a gain on sale of $2.3 million, of which our share was $0.6 million, which is recorded in gain on ~~sale~~sales of real estate by equity method investee in the accompanying consolidated statement of operations.

In February 2018, a partnership in which we hold a 50% ownership share sold its office condominium interest in 907 Market Street in Philadelphia, Pennsylvania for $41.8 million. The partnership recorded a gain on sale of $5.5 million, of which our share was $2.8 million. The partnership distributed to us proceeds of $19.7 million in connection with this transaction in February 2018.

In January 2018, our Fashion District Philadelphia redevelopment project joint venture entity entered into a $250.0 million term loan (the “FDP Term Loan”). We and our partner in the project, The Macerich Company (“Macerich”), each own a 50% partnership interest in Fashion District Philadelphia. The FDP Term Loan matures in January 2023, and bears interest at a variable rate of LIBOR plus 2.00%. PREIT and Macerich secured the FDP Term Loan by pledging their respective equity interests in the entities that own Fashion District Philadelphia. The entire $250.0 million available under the FDP Term Loan was drawn during the first quarter of 2018, and we received an aggregate $123.0 million as a distribution of our share of the draws in 2018. In July 2019, the FDP Term Loan was modified to increase the total potential borrowings from $250.0 million to $350.0 million. ~~$26.0~~A total of $51.0 million was drawn ~~in July~~during the third quarter of 2019 and we received an aggregate ~~$12.5~~distributions of $25.0 million as ~~a distribution of~~ our share of the ~~draw in July 2019.~~draws.

We have a 50% ownership interest in Lehigh Valley Associates L.P. (“LVA”) and Fashion District Philadelphia (“FDP”). The financial information of LVA isand FDP are included in the amounts above. Summarized balance sheet information as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, and summarized statement of operations information for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ for ~~this entity,~~these entities, which isare accounted for using the equity method, are as follows:

(in thousands of dollars)	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Summarized balance sheet information
Total assets	$	53,218	$	52,255	$	61,362	$	62,504
Mortgage loan payable, net		193,717		196,328		191,114		191,998

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
(in thousands of dollars)	2019			2018			2019			2018			2020			2019
Summarized statement of operations information
Revenue	$	8,184		$	8,472		$	16,583		$	17,604		$	7,879		$	8,399
Property operating expenses		(1,887	)		(2,124	)		(4,213	)		(4,529	)		(2,213	)		(2,326	)
Interest expense		(2,019	)		(2,052	)		(4,028	)		(4,097	)		(1,934	)		(2,009	)
Net income		3,471			3,616			6,709			7,642			2,922			3,238
PREIT’s share of equity in income of partnership		1,736			1,808			3,355			3,821			1,461			1,619

As of ~~June 30, 2019,~~March 31, 2020, we have entered into ~~two~~2 credit agreements (collectively, as amended, the “Credit Agreements”): (1) the 2018 Credit Agreement, which, as described in more detail below, includes (a) the ~~$400~~$375 million 2018 Revolving Facility, and (b) the $300 million 2018 Term Loan Facility, and (2) the $250 million 2014 7-Year Term Loan. The 2018 Term Loan Facility and the 2014 7-Year Term Loan are collectively referred to as the “Term Loans.” As discussed further below and in Note 1 to our unaudited consolidated financial statements, on March 30, 2020, we entered into amendments of our Credit Agreements. Among other things, the amendments reduced the aggregate Revolving Commitment under the 2018 Revolving Facility by $25 million to $375 million.

As of ~~June 30, 2019,~~March 31, 2020, we had borrowed the full $550.0 million available under the Term Loans ~~in the aggregate,~~ and ~~$182.0~~$289.0 million ~~was borrowed~~ under the 2018 Revolving Facility. The carrying value of the Term Loans on our consolidated balance sheet as of ~~June 30, 2018~~March 31, 2020 is net of ~~$2.4~~$1.8 million of unamortized debt issuance costs. ~~Following recent property sales, the~~The net operating income (“NOI”) from our ~~remaining~~ unencumbered properties is at a level such that ~~pursuant to~~within the Unencumbered Debt Yield covenant (as described below), under the Credit Agreements, the maximum unsecured amount that was available ~~for~~to us ~~to borrow under the 2018 Revolving Facility~~ as of ~~June 30, 2019~~March 31, 2020 was ~~$123.6 million.~~

Amounts borrowed under the Credit Agreements, either under the 2018 Revolving Facility or the Term Loans, which may be either LIBOR Loans or Base Rate Loans, bear interest at the rate specified below per annum, depending on our leverage, unless and until we receive an investment grade credit rating and provide notice to the Administrative Agent, as defined therein (the “Rating Date”), after which alternative rates would apply, as described in the Credit Agreements. In determining our leverage (the ratio of Total Liabilities to Gross Asset Value), the capitalization rate used to calculate Gross Asset Value is (a) 6.50% for each property having an average sales per square foot of more than $500 for the most recent period of 12 consecutive months, and (b) 7.50% for any other property. The 2018 Revolving Facility is subject to a facility fee, which depends on leverage and was ~~0.30%~~0.35% as of ~~June 30, 2019,~~March 31, 2020, which is recorded in interest expense in the consolidated statements of operations.

		Applicable Margin													Applicable Margin
Level	Ratio of Total Liabilities to Gross Asset Value	Revolving Loans that are LIBOR Loans			Revolving Loans that are Base Rate Loans			Term Loans that are LIBOR Loans			Term Loans that are Base Rate Loans			Ratio of Total Liabilities to Gross Asset Value	Revolving Loans that are LIBOR Loans			Revolving Loans that are Base Rate Loans			Term Loans that are LIBOR Loans			Term Loans that are Base Rate Loans
1	Less than 0.450 to 1.00		1.20	%		0.20	%		1.35	%		0.35	%	Less than 0.450 to 1.00		1.20	%		0.20	%		1.35	%		0.35	%
2	Equal to or greater than 0.450 to 1.00 but less than 0.500 to 1.00		1.25	%		0.25	%		1.45	%		0.45	%	Equal to or greater than 0.450 to 1.00 but less than 0.500 to 1.00		1.25	%		0.25	%		1.45	%		0.45	%
3	Equal to or greater than 0.500 to 1.00 but less than 0.550 to 1.00 ₍₁₎		1.30	%		0.30	%		1.60	%		0.60	%	Equal to or greater than 0.500 to 1.00 but less than 0.550 to 1.00		1.30	%		0.30	%		1.60	%		0.60	%
4	Equal to or greater than 0.550 to 1.00		1.55	%		0.55	%		1.90	%		0.90	%	Equal to or greater than 0.550 to but less than 0.600 to 1.000		1.55	%		0.55	%		1.90	%		0.90	%
5														Equal to or greater than 0.600 to 1.000 ⁽¹⁾		1.90	%		0.90	%		2.25	%		1.25	%

The Credit Agreements contain certain affirmative and negative covenants, ~~including,~~several of which were amended on March 30, 2020. The affirmative and negative covenants, as amended, include, without limitation, requirements that PREIT maintain, on a consolidated basis: (1) Minimum Tangible Net Worth of $1,463.2 million, plus 75% of the Net Proceeds of all Equity Issuances effected at any time after ~~June 30,~~March 31, 2018; (2) maximum ratio of Total Liabilities to Gross Asset Value of 0.65:1 at any time prior to and including September 30, 2020, or 0.60:1 at any time thereafter, provided that it will not be a Default if after September 30, 2020, the ratio exceeds 0.60:1 but does not exceed 0.625:1 for more than ~~two~~2 consecutive quarters on more than ~~two~~2 occasions during the remainder of the term; (3) minimum ratio of Adjusted EBITDA to Fixed Charges of 1.40 to 1.00 for any period ending on or before September 30, 2020, or 1.50:1;1 for any period ending thereafter; (4) minimum Unencumbered Debt Yield of (a) ~~11.0% through~~10.0% at any time prior to and including ~~June~~September 30, 2020, (b) 11.25% any time after ~~June~~September 30, 2020 through and including June 30, 2021, and (c) 11.50% any time thereafter; (5) minimum Unencumbered NOI to Unsecured Interest Expense of 1.75:1; (6) maximum ratio of Secured Indebtedness to Gross Asset Value of 0.60:1; and (7) Distributions may not exceed (a) with respect to our preferred shares, the amounts required by the terms of the preferred shares, and (b) with respect to our common shares, the greater of (i) 95.0% of Funds From Operations (FFO), and (ii) 110% of REIT taxable income for a fiscal year. Our Credit Agreements also require us to maintain unrestricted cash liquidity of $25 million at all times prior to September 30, 2020, such liquidity to be comprised of unrestricted cash and cash equivalents plus undrawn availability under the 2018 Revolving Facility. The covenants and restrictions in the Credit Agreements limit our ability to incur additional indebtedness, grant liens on assets and enter into negative pledge agreements, merge, consolidate or sell all or substantially all of its assets, and enter into transactions with ~~affiliates.~~affiliates and the amendments dated March 30, 2020 limit our ability to enter into sale-leaseback transactions with respect to Unencumbered Properties. The Credit Agreements are subject to customary events of default and are cross-defaulted with one another.

As of ~~June 30, 2019,~~March 31, 2020, the Borrower was in compliance with all financial covenants in the Credit Agreements.

We may prepay the amounts due under the Credit Agreements at any time without premium or penalty, subject to reimbursement obligations for the lenders’ breakage costs for LIBOR borrowings. We must make prepayments under the 2018 Term Loan Facility in an amount equal to 54.55% of any Net Cash Proceeds received from certain Capital Events (provided that any Net Cash Proceeds from Capital Events in excess of $150 million must be applied 50% toward repayment of outstanding amounts under the 2018 Revolving Facility with 54.55% of the remaining 50% applied to prepay amounts under the 2018 Term Loan Facility), subject to certain exceptions. If we have more than $50 million of unrestricted cash on our balance sheet for five consecutive days any time prior to September 30, 2020, we must prepay the 2018 Revolving Facility with our excess cash above $50 million. We must also make prepayments under the 7-Year Term Loan in an amount equal to 45.45% of any Net Cash Proceeds received from certain Capital Events (provided that any Net Cash Proceeds from Capital Events in excess of $150 million must be applied 50% toward repayment of outstanding amounts under the 2018 Revolving Facility with 45.45% of the remaining 50% applied to prepay the amounts outstanding under the 7-Year Term Loan), subject to certain exceptions. We also must make monthly principal amortization payments of $1.09 million of the term loan under the 2018 Credit Agreement and of $909 thousand of the term loan under the 7-Year Term Loan, in each case for the months of April, May, June, July, August and September of 2020.

Upon the expiration of any applicable cure period ~~following~~for an event of default (except with respect to bankruptcy as described in the next sentence), the lenders may declare all of the obligations in connection with the Credit Agreements immediately due and payable.

Upon the occurrence of a voluntary or involuntary bankruptcy proceeding of PREIT, PALP, PRI, any material subsidiary, any subsidiary that owns or leases an Unencumbered Property or certain other subsidiaries, all outstanding amounts would automatically become immediately due and payable.

~~Table~~ In the event of ~~Contents~~an involuntary bankruptcy proceeding, we have a limited time period to obtain a dismissal of the involuntary bankruptcy prior to the occurrence of an event of default.

Interest expense and deferred financing fee amortization ~~and accelerated financing costs, if any,~~ related to the Credit Agreements for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ were as follows:

The aggregate carrying values and estimated fair values of mortgage loans based on interest rates and market conditions at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 were as follows:

	June 30, 2019				December 31, 2018				March 31, 2020				December 31, 2019
(in millions of dollars)	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Mortgage loans⁽¹⁾	$	981.5	$	955.8	$	1,047.9	$	1,002.3	$	896.5	$	895.2	$	899.8	$	873.9

The mortgage loans contain various customary default provisions. ~~As of June 30, 2019, we were in default on the mortgage loan secured by Wyoming Valley Mall as described below.~~

In March 2019, we defeased a $58.5 million mortgage loan including accrued interest, secured by Capital City Mall in Camp Hill, Pennsylvania using funds from our 2018 Revolving Facility and the balance from available working capital. We recorded a loss on debt extinguishment of $4.8 million in March 2019 in connection with this defeasance.

~~In April 2019, we received a notice from the servicer of the Cumberland Mall mortgage of a cash sweep event due to the failure of an anchor tenant to renew for a full term.~~

We follow established risk management policies designed to limit our interest rate risk on our interest bearing liabilities, as further discussed in ~~note~~Note 7 to our unaudited consolidated financial statements.

Cash paid for interest was ~~$26.9~~$14.9 million (net of capitalized interest of ~~$4.3~~$0.9 million) and ~~$28.9~~$14.5 million (net of capitalized interest of ~~$2.9~~$2.0 million) for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

In our statement of cash flows, we show cash flows on our Revolving Facilities on a net basis. Aggregate borrowings on our Revolving Facilities were ~~$150.0~~$34.0 million and ~~$0.0~~$107.0 million for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. Aggregate paydowns were ~~$33.0~~$0.0 million and ~~$53.0~~$10.0 million for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

Accrued construction costs decreased by ~~$15.5~~$5.3 million in the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 and decreased by ~~$4.6~~$13.9 million in the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, representing non-cash changes in investment in real estate and construction in progress.

In the first quarter of 2019, we issued 6,250,000 common shares of beneficial interest in the Company in exchange for a like number of OP Units in our Operating Partnership. The shares were issued to Vornado Investments LLC, an affiliate of Franconia Two, L.P., the holder of the OP Units.

The following table provides a summary of cash, cash equivalents, and restricted cash reported within the statement of cash flows as of ~~June 30, 2019~~March 31, 2020 and ~~2018.~~2019.

	June 30,				March 31,
(in thousands of dollars)	2019		2018		2020		2019
Cash and cash equivalents	$	15,227	$	42,198	$	5,351	$	10,416
Restricted cash included in other assets		11,305		14,572		6,247		12,226
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	26,532	$	56,770	$	11,598	$	22,642

Our restricted cash consists of cash held in escrow by banks for real estate taxes and other purposes.

As of ~~June 30, 2019,~~March 31, 2020, we had unaccrued contractual and other commitments related to our capital improvement projects and development projects of ~~$118.5~~$56.8 million, including ~~$61.0~~$32.8 million of commitments related to the redevelopment of Fashion District Philadelphia, in the form of tenant allowances and contracts with general service providers and other professional service providers. For purposes of this disclosure, the contractual obligations and other commitments related to Fashion District Philadelphia are included at 100% of the obligation and not at our 50% ownership share. In addition, our operating partnership, PREIT Associates, has jointly and severally guaranteed the obligations of the joint venture we formed with Macerich to develop Fashion District Philadelphia to commence and complete a comprehensive redevelopment of that property costing not less than $300.0 million within 48 months after commencement of construction, which was March 14, 2016. As of ~~June 30, 2019,~~March 31, 2020, we ~~expect to meet~~believe we have satisfied this obligation.

In ~~2019,~~2020, we terminated the employment of certain employees and officers. In connection with the departure of those employees and officers, we recorded $0.1 ~~and $0.9~~ million of employee separation expense in the three ~~and six~~ months ended ~~June 30, 2019, respectively,~~March 31, 2020, compared to ~~$0.4 million and $0.4~~$0.7 million for the three ~~and six~~ months ended ~~June 30, 2018, respectively.~~March 31, 2019. As of ~~June 30, 2019,~~March 31, 2020, we had ~~$0.8~~$0.4 million of severance accrued and unpaid related to activities related to the termination of employment of employees.

During September 2018, Jacksonville Mall in Jacksonville, North Carolina incurred property damage and an interruption of business operations as a result of Hurricane Florence. The property was closed for business during and immediately after the natural disaster, however, significant remediation efforts were quickly undertaken, and the mall was reopened shortly thereafter.

During the three ~~and six~~ months ended ~~June 30,~~March 31, 2019, we recorded net recoveries of approximately ~~$1.9 million and $1.6 million, respectively.~~$0.2 million. These net recoveries primarily relate to remediation ~~expenses.~~expenses and business interruption claims. $0.1 million of the recoveries received relate to business interruption.

In the normal course of business, we are exposed to financial market risks, including interest rate risk on our interest bearing liabilities. We attempt to limit these risks by following established risk management policies, procedures and strategies, including the use of financial instruments such as derivatives. We do not use financial instruments for trading or speculative purposes.

For derivatives that have been designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in “Accumulated other comprehensive income” and subsequently reclassified into “Interest expense, net” in the same periods during which the hedged transaction affects earnings. As of ~~June 30, 2019,~~March 31, 2020, all of our outstanding derivatives are designated as cash flow hedges. We recognize all derivatives at fair value as either assets or liabilities in the accompanying consolidated balance sheets.

During the next 12 months, we estimate that ~~less than $0.1~~$13.0 million will be reclassified as a decrease to interest expense in connection with derivatives. The recognition of these amounts, however, could be accelerated in the event that we repay amounts outstanding on the debt instruments and do not replace them with new ~~borrowings.~~borrowings or that the debt becomes due under the terms of the agreements.

As of ~~June 30, 2019,~~March 31, 2020, we had interest rate swap agreements outstanding with a weighted average base interest rate of 1.85% on a notional amount of ~~$796.5~~$795.2 million, maturing on various dates through May 2023, and a forward starting interest rate swap ~~agreements~~agreement with a weighted average interest rate of 2.75% on a notional amount of $100.0 million, with an effective date in June 2020, and a maturity date in May 2023. We entered into these interest rate swap agreements in order to hedge the interest payments associated with our issuances of variable interest rate long term debt. The interest rate swap agreements are net settled monthly.

The following table summarizes the terms and estimated fair values of our interest rate swap derivative instruments designated as cash flow hedges of interest rate risk at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 based on the year they mature. The notional values provide an indication of the extent of our involvement in these instruments, but do not represent exposure to credit, interest rate or market risks. In the accompanying consolidated balance sheets, the carrying amount of derivative assets is reflected in “Deferred costs and other assets, net” and the carrying amount of derivative liabilities is reflected in “Accrued expenses and other liabilities.”

Maturity Date	Aggregate Notional Value at June 30, 2019 (in millions of dollars)		Aggregate Fair Value at June 30, 2019⁽¹⁾ (in millions of dollars)			Aggregate Fair Value at December 31, 2018 ₍₁₎ (in millions of dollars)			Weighted Average Interest Rate			Aggregate Notional Value at March 31, 2020 (in millions of dollars)		Aggregate Fair Value at March 31, 2020 ⁽¹⁾ (in millions of dollars)			Aggregate Fair Value at December 31, 2019 ⁽¹⁾ (in millions of dollars)			Weighted Average Interest Rate
Interest Rate Swaps
2020	$	100.0	$	0.6		$	1.9			1.23	%	$	100.0	$	(0.1	)	$	0.2			1.23	%
2021		496.5		(0.6	)		8.1			1.65	%		495.2		(10.1	)		(1.4	)		1.65	%
2022		—		—			—			—	%		-		-			-			-
2023		200.0		(7.9	)		(2.0	)		2.67	%		200.0		(14.5	)		(7.3	)		2.67	%
Forward Starting Swaps
2023		100.0		(3.3	)		(1.0	)		2.75	%		100.0		(7.0	)		(3.4	)		2.75	%
Total	$	896.5	$	(11.2	)	$	7.0			1.95	%	$	895.2	$	(31.7	)	$	(11.9	)		1.95	%

The tables below present the effect of derivative financial instruments on accumulated other comprehensive income and on our consolidated statements of operations for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:

	Three Months Ended June 30,											Six Months Ended June 30,											Three Months Ended March 31,
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative Instruments					Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Interest Expense						Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative Instruments					Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Interest Expense						Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative Instruments						Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Interest Expense
(in millions of dollars)	2019			2018		2019			2018			2019			2018		2019			2018			2020			2019			2020		2019
Derivatives in Cash Flow Hedging Relationships
Interest rate products	$	(10.5	)	$	3.8	$	(1.2	)	$	(0.6	)	$	(15.8	)	$	8.9	$	(2.3	)	$	(0.6	)	$	(20.1	)	$	(5.3	)	$	0.4	$	(1.2	)

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
(in millions of dollars)	2019			2018			2019			2018			2020			2019
Total interest expense presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded	$	(15.6	)	$	(16.0	)	$	(31.5	)	$	(30.9	)	$	(16.9	)	$	(15.9	)
Amount of gain (loss) reclassified from accumulated other comprehensive income into interest expense	$	(1.2	)	$	(0.6	)	$	(2.3	)	$	(0.6	)
Amount of loss reclassified from accumulated other comprehensive income into interest expense													$	0.4		$	(1.2	)

We have agreements with some of our derivative counterparties that contain a provision pursuant to which, if our entity that originated such derivative instruments defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations. As of ~~June 30, 2019,~~March 31, 2020, we were not in default on any of our derivative obligations.

We have an agreement with a derivative counterparty that incorporates the loan covenant provisions of our loan agreement with a lender affiliated with the derivative counterparty. Failure to comply with the loan covenant provisions would result in our being in default on any derivative instrument obligations covered by the agreement.

As of ~~June 30, 2019,~~March 31, 2020, the fair value of derivatives in a liability position, which excludes accrued interest but includes any adjustment for nonperformance risk related to these agreements, was ~~$13.6~~$31.7 million. If we had breached any of the default provisions in these agreements as of ~~June 30, 2019,~~March 31, 2020, we might have been required to settle our obligations under the agreements at their termination value (including accrued interest) of ~~$14.0~~$32.9 million. We had not breached any of these provisions as of ~~June 30, 2019.~~March 31, 2020.

~~As discussed in Note 1, we adopted the new lease accounting standard effective January 1, 2019.~~

We have entered into ground leases for portions of the land at Springfield Town Center and Plymouth Meeting Mall. We have also entered into an office lease for our headquarters location, as well as vehicle, solar panel and equipment leases as a lessee. The initial terms of these agreements generally range from three to 40 years, with certain agreements containing extension options for up to an additional 60 years. As of ~~June 30, 2019,~~March 31, 2020, we included only those renewal options we were reasonably certain of exercising. Upon lease execution, the Company measures a liability for the present value of future lease payments over the noncancellable period of the lease and any renewal option period we are reasonably certain of exercising. Certain agreements require that we pay a portion of reimbursable expenses such as CAM, utilities, insurance and real estate taxes. These payments are not included in the calculation of the lease liability and are presented as variable lease costs.

We applied judgments related to the determination of the discount rates used to calculate the lease liability upon adoption of ASC 842 at January 1, 2019. In order to calculate our incremental borrowing rate under ASC 842, we utilized judgments and estimates regarding our implied credit rating using market data and made other adjustments to determine an appropriate incremental borrowing rate as of January 1, 2019.

The following table presents additional information pertaining to the Company’s leases:

	Three Months Ended June 30, 2019								Six Months Ended June 30, 2019								Three Months Ended March 31, 2020
(in thousands of dollars)	Solar Panel Leases		Ground Leases		Office, equipment, and vehicle leases		Total		Solar Panel Leases		Ground Leases		Office, equipment, and vehicle leases		Total		Solar Panel Leases		Ground Leases		Office, equipment, and vehicle leases		Total
Finance lease cost:
Amortization of right-of-use assets	$	187	$	—	$	—	$	187	$	375	$	—	$	—	$	375	$	204	$	—	$	—	$	204
Interest on lease liabilities		74		—		—		74		150		—		—		150		79		—		—		79
Operating lease costs		—		436		549		985		—		875		1,091		1,966		—		436		342		778
Variable lease costs		—		41		23		64		—		82		68		150		—		43		43		86
Total lease costs	$	261	$	477	$	572	$	1,310	$	525	$	957	$	1,159	$	2,641	$	283	$	479	$	385	$	1,147

Other information related to leases as of and for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 is as follows:

(in thousands of dollars)
Cash paid for the amounts included in the measurement of lease liabilities
Operating cash flows used for finance leases	$	150		$	70
Operating cash flows used for operating leases	$	1,186		$	492
Financing cash flows used for finance leases	$	312		$	173
Weighted average remaining lease term-finance leases (months)		105			95
Weighted average remaining lease term-operating leases (months)		346			306
Weighted average discount rate-finance leases		4.41	%		4.37	%
Weighted average discount rate-operating leases		6.63	%		6.43	%

Future payments against lease liabilities as of ~~June 30,~~March 31, 2020 are as follows:

Future payments against lease liabilities as of December 31, 2019 are as follows:

(in thousands of dollars)	Finance leases			Operating leases			Total			Finance leases			Operating leases			Total
July 1 to December 31, 2019	$	463		$	1,479		$	1,942
Year ending December 31,
2020		925			2,003			2,928		$	925		$	2,237		$	3,162
2021		925			1,928			2,853			925			2,730			3,655
2022		925			1,646			2,571			925			2,538			3,463
2023		925			1,606			2,531			925			2,485			3,410
2024											925			2,373			3,298
Thereafter		3,923			48,437			52,360			2,999			46,853			49,852
Total undiscounted lease payments		8,086			57,099			65,185			7,624			59,216			66,840
Less imputed interest		(1,386	)		(33,394	)		(34,780	)		(1,242	)		(28,965	)		(30,207	)
Total lease liabilities	$	6,700		$	23,705		$	30,405		$	6,382		$	30,251		$	36,633

~~Future minimum lease payments under these agreements as of December 31, 2018 were as follows:~~

As of ~~June 30, 2019,~~March 31, 2020, the fixed contractual lease payments, including minimum rents and fixed CAM amounts, to be received over the next five years pursuant to the terms of noncancellable operating leases with initial terms greater than one year are included in the table below. The amounts presented assume that no leases are renewed and no renewal options are exercised. Additionally, the table does not include variable lease payments that may be received under certain leases for percentage rents or the reimbursement of operating costs, such as common area expenses, utilities, insurance and real estate taxes. These variable lease payments are recognized in the period when the applicable expenditures are incurred or, in the case of percentage rents, when the sales data is made available.

(in thousands of dollars)
July 1 to December 31, 2019	$	110,415
2020		207,929
April 1 to December 31, 2020			$	236,741
2021		191,280		219,447
2022		171,463		198,743
2023		151,535		177,228
2024				154,973
Thereafter		513,061		538,710
	$	1,345,683	$	1,525,842

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. The disclosures in this report are complementary to those made in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. As disclosed in our Current Report on Form 8-K filed with the SEC on May 11, 2020, we are filing this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 (the “Quarterly Report”) on a delayed basis in reliance on the conditional filing relief provided under the SEC’s Order, as amended (Release No. 34-88465) under Section 36 of the Securities Exchange Act of 1934, as amended, due to circumstances related to the novel coronavirus (COVID-19) pandemic. The impacts of the COVID-19 pandemic have disrupted our business and operations and substantial management time and effort have been diverted to address the health and safety needs of our employees, mall customers, tenants and properties, including a substantial amount of the accounting, finance and management team’s attention to analyze the impact on our liquidity and financial condition. We have also transitioned our business operations to a remote working model and furloughed or reduced the hours of many employees. Certain service providers on which we rely to assist in the preparation of the Quarterly Report have also experienced operational disruptions. These impacts delayed our ability to finalize our quarterly close process and prepare our financial statements and disclosures. As a result of these factors, we were unable to finalize and file the Quarterly Report on a timely basis to meet our original filing deadline of May 11, 2020, and are filing the Quarterly Report on May 21, 2020, which is within the additional 45 days allotted by the SEC’s Order.

Pennsylvania Real Estate Investment Trust, 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 located in the eastern half of the United States, primarily in the Mid-Atlantic region.

We currently own interests in 2726 retail properties, of which 25 are operating properties and ~~two are~~one is a development ~~or redevelopment properties.~~property. The 25 operating properties include 21 shopping malls and four other retail properties, have a total of ~~20.0~~20.3 million square feet and are located in nine states. We and partnerships in which we hold an interest own ~~15.6~~15.9 million square feet at these properties (excluding space owned by anchors or third parties).

There are 1918 operating retail properties in our portfolio that we consolidate for financial reporting purposes. These consolidated properties have a total of ~~15.9~~15.4 million square feet, of which we own ~~12.9~~12.4 million square feet. The ~~six~~seven operating retail properties that are owned by unconsolidated partnerships with third parties have a total of ~~4.1~~4.9 million square feet, of which ~~2.8~~3.6 million square feet are owned by such partnerships. When we refer to “Same Store” properties, we are referring to properties that have been owned for the full periods presented and exclude properties acquired, disposed of, under redevelopment or designated as a non-core property during the periods presented. Core properties include all operating retail properties except for Exton Square Mall, ~~Wyoming Valley Mall, and~~ Valley View Mall and ~~also include~~ Fashion District ~~Philadelphia, which is currently under redevelopment. We~~Philadelphia. “Core Malls” also ~~have one undeveloped land parcel located in Gainesville, Florida, a portion of which was sold in March 2019.~~excludes these properties as well as power centers and Gloucester Premium Outlets.

We have one ~~property under redevelopment classified as “retail” (redevelopment of The Gallery at Market East into Fashion District Philadelphia). We have one other~~ property in our portfolio that is classified as under development; however, we do not currently have any activity occurring at this property.

Fashion District Philadelphia opened on September 19, 2019. Fashion District Philadelphia is an aggregation of properties spanning three blocks in downtown Philadelphia that were formerly known as Gallery I, Gallery II and 907 Market Street. Joining Century 21 and Burlington in 2019 were multiple dining and entertainment venues including Market Eats, a multi offering food court, City Winery, AMC Theatres, and Round 1 Bowling & Amusement. In addition, Nike Factory Store, Ulta, and H & M have opened Philadelphia flagship stores at the property since its opening in September 2019.

Our primary business is owning and operating retail shopping malls, which we do primarily through our operating partnership, PREIT Associates, L.P. (“PREIT Associates” or the “Operating Partnership”). We provide management, leasing and real estate development services through PREIT Services, LLC (“PREIT Services”), which generally develops and manages properties that we consolidate for financial reporting purposes, and PREIT-RUBIN, Inc. (“PRI”), which generally develops and manages properties that we do not consolidate for financial reporting purposes, including properties owned by partnerships in which we own an interest and properties that are owned by third parties in which we do not have an interest. PRI is a taxable REIT subsidiary, as defined by federal tax laws, which means that it is able to offer additional services to tenants without jeopardizing our continuing qualification as a REIT under federal tax law.

Our revenue consists primarily of fixed rental income, additional rent in the form of fixed and variable 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 properties. We also receive income from our real estate partnership investments and from the management and leasing services PRI provides.

Net loss for the three months ended ~~June 30, 2019~~March 31, 2020 was ~~$6.1 million, a decreased loss of $26.2~~$13.5 million compared to a net loss of ~~$32.3~~$16.2 million for the three months ended ~~June 30, 2018.~~March 31, 2019. This ~~decreased loss primarily reflected an impairment of assets of $34.3 million for the three months ended June 30, 2018, which was not repeated in 2019, and which was partially offset by: (a) a $6.9~~$2.7 million decrease was primarily due to: (a) non-recurring items recorded in ~~lease termination revenues; (b) a $1.5 million decrease in capitalized leasing costs as a result of~~ the ~~adoption of ASC 842 effective January 1, 2019; and (c) a $2.0 million decrease in non-Same Store NOI.~~

Net loss for the six months ended June 30, 2019 was $22.3 million, a decreased loss of $13.7 million compared to a net loss of $36.0 million for the six months ended June 30, 2018. This decreased loss primarily reflected an impairment of assets of $34.3 million for the six months ended June 30, 2018, which was not repeated in 2019, and which was partially offset by: (a) a $6.7 million decrease in lease termination revenues; (b)prior year including a loss on debt extinguishment of $4.8 million ~~incurred in connection with the defeasance of a mortgage loan recorded in the first quarter of 2019; (c)~~and an asset impairment charge of $1.5 million on an undeveloped land parcel, ~~recorded~~both of which had a favorable impact on the current year; (b) a decrease in depreciation and amortization of $4.6 million in the ~~first quarter of 2019; (d)~~current period; and (c) a ~~$2.2 million decrease in gains~~gain on the sale of real estate of $1.9 million recorded in the three months ended March 31, 2020; partially offset by ~~equity method investees; (e)~~ a ~~$2.7~~$10.7 million decrease in ~~capitalized leasing costs~~real estate revenue as ~~a result~~described below in our Results of the adoption of ASC 842 effective January 1, 2019; (f) a $0.5 million increase in employee separation expenses; (g) $0.4 million of dilution from asset sales; (h) a $3.3 million decrease in non-Same Store NOI; and (i) a $0.6 million increase in interest expense.Operations.

See “Non-GAAP Supplemental Financial Measures” below for more information about our use of ~~non-Same~~Same Store NOI aand Non Same Store NOI, which are non-GAAP ~~measure.~~measures.

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. Due to the nature of our operating properties, which involve retail shopping, we have concluded that our individual properties have similar economic characteristics and meet all other aggregation criteria. Accordingly, we have aggregated our individual properties into one reportable segment. 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.

Conditions in the economy have caused fluctuations and variations in business and consumer confidence, retail sales, and consumer spending on retail goods. Further, traditional mall tenants, including department store anchors and smaller format retail tenants, face significant challenges resulting from changing consumer expectations, the convenience of e-commerce shopping, competition from fast fashion retailers, the expansion of outlet centers, and declining mall traffic, among other factors. Additionally, in March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) a global pandemic. The global COVID-19 pandemic has caused significant disruptions to our industry and many other industries and has contributed to significant volatility in the financial markets. Our business and operations and those of many of our tenants have been materially and adversely impacted by the government-mandated travel restrictions, business closures and property shutdowns and the implementation of “social distancing” and certain other measures to prevent the further spread of the virus.

As a result of the COVID-19 pandemic, during March 2020, we temporarily closed all of our enclosed shopping malls. Certain of our malls have since re-opened and are adhering to social distancing and sanitation and safety protocols. The pandemic’s full effect was not experienced in the first quarter of 2020, but is expected to have a more significant impact on our financial condition, liquidity and results of operations in the second quarter of 2020 and thereafter. During March and April, we received many requests from tenants relating to rent relief or deferral. As of the filing date of this Quarterly Report on Form 10-Q, a substantial amount of contractual rent receivables for April and May remains outstanding and are under negotiation. We believe that our rent collections are probable, but expect that collections will continue to be below our tenants’ rent obligations as long as governmental orders require non-essential businesses to remain closed and residents to stay at home. We continue to record rental revenue during this period. Collections and requests for rent relief and deferral during this period may not be indicative of future periods.

We have taken several steps to respond to the pandemic and enhance our liquidity position, including staff reductions, reduction of capital expenditures and operating expenses, engagement with our lenders to negotiate modifications to our debt facilities and instruments, and a 90% common share dividend reduction, and we anticipate further actions will be necessary to address the impacts of the pandemic, which may include suspension or further reduction of share dividends. It remains highly uncertain and difficult to predict how long the pandemic and the economic challenges and restrictions it has resulted in will last, but we expect the pandemic to continue to have an adverse impact on our business, financial condition, liquidity and results of operations. See “Item 1A. Risk Factors -The COVID-19 global pandemic and the public health and governmental actions in response have adversely affected, and will likely continue to adversely affect, our business, financial condition, liquidity and operating results. The extent and duration of such effects are highly uncertain and cannot be predicted.”

In recent years, there has been an increased level of tenant bankruptcies and store closings by tenants who have been significantly impacted by these ~~factors.~~factors, and the impacts of the global COVID-19 pandemic have created additional economic challenges for many of our tenants.

~~Though~~Although we ~~expect~~opened certain tenants at our redevelopment projects in 2019 and early 2020 and expect additional tenant openings later in 2020 subsequent to ~~open in~~ the ~~fall of 2019,~~COVID-19 pandemic shutdowns, we also have tenants who continue to face significant economic challenges, particularly in light of the COVID-19 pandemic, and we are in active discussions to restructure certain leasing arrangements through, among other things, downsizing and rent relief, which is expected to have a significant and unfavorable impact on our operating results.

The table below sets forth information related to our tenants in bankruptcy for our consolidated and unconsolidated properties (excluding tenants in bankruptcy at sold properties):

	Pre-bankruptcy								Units Closed						Pre-bankruptcy								Units Closed
Year	Number of Tenants⁽¹⁾		Number of locations impacted		GLA⁽²⁾		PREIT’s Share of Annualized Gross Rent⁽³⁾ (in thousands)		Number of locations closed		GLA⁽²⁾		PREIT’s Share of Annualized Gross Rent⁽³⁾ (in thousands)		Number of Tenants⁽¹⁾		Number of locations impacted		GLA⁽²⁾		PREIT’s Share of Annualized Gross Rent⁽³⁾ (in thousands)		Number of locations closed		GLA⁽²⁾		PREIT’s Share of Annualized Gross Rent⁽³⁾ (in thousands)
2019 (Six Months)
2020 (Three Months Ended March 31)
Consolidated properties		7		63		217,377	$	8,758		61		200,494	$	8,461		1		1		10,377	$	271,842		—		—	$	—
Unconsolidated properties		4		9		29,365		945		7		26,399		840		3		3		24,108		584,367		—		—		—
Total		7		72		246,742	$	9,703		68		226,893	$	9,301		3		4		34,485	$	856,209		—		—	$	—
2018 (Full Year)
2019 (Full Year)
Consolidated properties		10		43		1,221,433	$	7,072		5		267,715	$	1,601		9		71		400,516	$	14,656		63		242,742	$	9,480
Unconsolidated properties		3		5		14,977		402		—		—		—		8		14		56,030		1,481		8		32,024		915
Total		10		48		1,236,410	$	7,474		5		267,715	$	1,601		11		85		456,546	$	16,137		71		274,766	$	10,395

In recent years, through property dispositions, proactive store recaptures, lease terminations and other activities, we have made efforts to reduce our risks associated with certain department store concentrations.

During 2019, we re-opened or introduced additional tenants to former anchor positions at Woodland Mall in Grand Rapids, Michigan, Valley Mall in Hagerstown, Maryland and ~~have implemented our ongoing anchor replacement program. In December 2016, we acquired the~~Plymouth Meeting Mall, in Plymouth Meeting, Pennsylvania. We opened Von Maur and Urban Outfitters, on a site formerly occupied by Sears ~~property~~ at Woodland Mall and in-line lease-up continues. At Valley Mall, we opened Onelife Fitness in ~~2017~~February 2019 to complete the former Macy’s redevelopment and during the year we ~~recaptured~~signed a lease with Dick’s Sporting Goods to occupy the former Sears ~~premises~~store at ~~Capital City~~the property. Dick’s Sporting Goods opened in the first quarter of 2020. At Plymouth Meeting Mall, we opened Burlington, Dick’s Sporting Goods, Edge Fitness and ~~Magnolia Mall (we have since re-leased~~Miller’s Ale House in the ~~Capital City Mall~~former Macy’s location during 2019, and ~~Magnolia Mall spaces). Also~~the last tenant, Michael’s, opened in the first quarter of 2020. In 2017, we purchased the Macy’s ~~locations~~location at Moorestown Mall ~~Valley View~~in Moorestown, New Jersey and opened Sierra Trading in 2019 and Michael’s in the first quarter of 2020.

Construction was completed in the first quarter of 2020 giving way to the opening of Burlington in place of a former Sears at Dartmouth Mall in Dartmouth, Massachusetts. We expect to continue to move forward with several outparcels at Dartmouth Mall resulting from the Sears recapture and ~~Valley Mall locations and we re-leased all of these former Macy’s stores. The replacement tenant~~working with large format prospects for ~~Macy’s~~space adjacent to Burlington.

We currently have three vacant anchor positions at Valley View Mall ~~filed for bankruptcy~~in La Crosse, Wisconsin and ~~subsequently~~during 2019, an additional anchor, Sears, closed ~~that store. We terminated~~at Exton Square Mall in Exton, Pennsylvania. In January 2020, the ~~lease of the Sears~~Lord & Taylor store at ~~Dartmouth~~Moorestown Mall ~~effective~~ in ~~2019~~Moorestown, New Jersey closed and ~~have entered into a lease for a replacement tenant.~~we are working with several retail and entertainment prospects to fill the space. We ~~have entered into a ground lease for~~had been notified by Sears of its plans to close stores at Moorestown Mall in Moorestown, New Jersey and Jacksonville Mall in Jacksonville, North Carolina, which it subsequently did close in April 2020. Sears continues to be financially obligated pursuant to the ~~land associated with the Macy’s store located~~leases at ~~Plymouth Meeting Mall and have executed leases with five replacement tenants for that location.~~

The table below sets forth information related to our anchor replacement program:

Property

Former Anchors

GLA

(in '000's)

Date Closed

Decommission Date

Replacement Tenant(s)

GLA

(in '000's)

Actual/Targeted Occupancy Date

Former Anchors

GLA

(in '000's)

Date Closed

Decommission

Date

Replacement Tenant(s)

GLA

(in '000's)

Actual/Targeted

Occupancy Date

Completed:

Dartmouth Mall

Sears

108

Q3 19

Burlington

Q1 20

Moorestown Mall

Macy's

200

Q1 17

Q2 17

HomeSense

Q3 18

Five Below

Q4 18

Magnolia Mall

Sears

Q1 17

Q2 17

Burlington

Q3 17

HomeGoods

Q2 18

Five Below

Q2 18

Moorestown Mall

Macy's

200

Q1 17

Q2 17

HomeSense

Q3 18

Five Below

Q4 18

Sierra Trading Post

Q1 19

Sierra Trading Post

Q1 19

Michael's

Q1 20

Valley Mall

Macy's

120

Q1 16

Q4 17

Tilt Studio

Q3 18

Macy's

120

Q1 16

Q4 17

Tilt Studio

Q3 18

One Life Fitness

Q3 18

One Life Fitness

Q3 18

Bon-Ton

123

Q1 18

Belk

123

Q4 18

Bon-Ton

123

Q1 18

Belk

123

Q4 18

Woodland Mall

Sears

313

Q2 17

REI

Q2 19

Sears

Q3 17

Q2 18

Dick's Sporting Goods

Q1 20

In progress:

Plymouth Meeting Mall

Macy's⁽¹⁾

215

Q1 17

Q2 17

Burlington

Q4 19

Macy's⁽¹⁾

215

Q1 17

Q2 17

Burlington

Q3 19

Dick's Sporting Goods

Q4 19

Dick's Sporting Goods

Q3 19

Edge Fitness

Q4 19

Miller's Ale House

Q3 19

Michael's

Q1 20

Edge Fitness

Q4 19

Miller's Ale House

Q4 19

Michael's

Q1 20

Valley Mall

Sears

123

Q3 17

Q2 18

Dick's Sporting Goods

Q1 20

Moorestown Mall

Macy's

see above

Michael's

Q1 20

Woodland Mall

Sears

see above

Von Maur

Q4 19

Urban Outfitters

Q4 19

Black Rock Bar & Grill

Q3 19

Restaurants and small shops

Q4 19

Willow Grove Park

JC Penney

125

Q3 17

Q1 18

Studio Movie Grill

Q1 20

JC Penney

125

Q3 17

Q1 18

Yard House

Q4 19

Yard House

Q4 19

Restaurant and entertainment space

Q4 19

Dartmouth Mall

Sears

108

Q3 19

Burlington

Q2 20

In Progress:

Willow Grove Park

JC Penney

See above

Studio Movie Grill

⁽²⁾

In response to anchor store closings and other trends in the retail space, we have been changing the mix of tenants at our properties. We have been reducing the percentage of traditional mall tenants and increasing the share of space dedicated to dining, entertainment, fast fashion, off price, and large format box tenants. Some of these changes may result in the redevelopment of all or a portion of our properties. See “—Capital Improvements, Redevelopment and Development Projects.”

To fund the capital necessary to replace anchors and to maintain a reasonable level of leverage, we expect to use a variety of means available to us, subject to and in accordance with the terms of our Credit Agreements. These steps might include (i) making additional borrowings under our ~~2018 Revolving Facility,~~Credit Agreements (assuming continued compliance with the financial covenants thereunder), (ii) obtaining construction loans on specific projects, (iii) selling properties or interests in properties with values in excess of their mortgage loans (if applicable) and applying the excess proceeds to fund capital expenditures or for debt reduction, (iv) obtaining capital from joint ventures or other partnerships or arrangements involving our contribution of assets with institutional investors, private equity investors or other REITs, or (v) obtaining equity capital, including through the issuance of common or preferred equity securities if market conditions are favorable, or through other actions. As discussed in Note 4 to our unaudited consolidated financial statements, we entered into amendments to our Credit Agreements in March 2020 to provide certain debt covenant relief through September 30, 2020, in anticipation of a longer term solution prior to the expiration of the initial modification. Accordingly, we anticipate entering into additional modifications of our Credit Agreements and, in light of the effects of COVID-19 on our business, operations, liquidity and financial condition, we are also in discussions with the lenders of our properties’ mortgage loans to seek modifications of such loans. No assurance can be provided that we will obtain such modifications.

We might engage in various types of capital improvement projects at our operating properties. Such projects vary in cost and complexity, and can include building out new or existing space for individual tenants, upgrading common areas or exterior areas such as parking lots, or redeveloping the entire property, among other projects. Project costs are accumulated in “Construction in progress” on our consolidated balance sheet until the asset is placed into service, and amounted to ~~$150.8~~$81.5 million as of ~~June 30, 2019.~~March 31, 2020.

As of March 31, 2020, we had unaccrued contractual and other commitments related to our capital improvement projects and development projects at our consolidated and unconsolidated properties of $56.8 million, including $32.8 million of commitments related to the redevelopment of Fashion District Philadelphia, in the form of tenant allowances and contracts with general service providers and other professional service providers.

In 2014, we entered into a 50/50 joint venture with The Macerich Company (“Macerich”) to redevelop Fashion District Philadelphia. As we redevelop Fashion District Philadelphia, operating results in the short term, as measured by sales, occupancy, real estate revenue, property operating expenses, Net Operating Income (“NOI”) and depreciation, will continue to be affected until the newly constructed space is completed, leased and occupied. Fashion District Philadelphia ~~is scheduled to open~~opened in September ~~2019.~~2019 and is not yet fully stabilized as development work is continuing.

In January 2018, we along with Macerich, our partner in the Fashion District Philadelphia redevelopment project, ~~joint venture entity~~ entered into a $250.0 million term loan (the “FDP Term Loan”). The initial term of the FDP Term Loan is five years, and bears interest at a variable rate of 2.00% over LIBOR. PREIT and Macerich ~~have~~ secured the FDP Term Loan by pledging their respective equity interests of 50% each in the entities that own ~~the~~ Fashion District Philadelphia. The entire $250.0 million available under the FDP Term Loan was drawn during the first quarter of 2018, and we received an aggregate of $123.0 million as a distribution of our share of the ~~draws.~~

draw in 2018. In July 2019, the FDP Term Loan was modified to increase the total maximum potential borrowings ~~under the FDP Term Loan~~ from $250.0 million to $350.0 million. ~~In July 2019, $26.0~~A total of $51.0 million was drawn during the third quarter of 2019 and we received an aggregate distributions of ~~$12.5~~$25.0 million as ~~a distribution for~~ our share of the ~~draw~~draws.

We also own one development property, but we do not expect to make any significant investment at this property in ~~July 2019. As of July 31, 2019, lender commitments have not been received for~~ the ~~remaining $74.0 million available under the FDP Term Loan.~~short term.

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 might 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 consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. In preparing the consolidated 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. Management has also considered 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 in determining its estimates and judgments. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may affect comparability of our results of operations to those of companies in a similar business. The estimates and assumptions made by management in applying Critical Accounting Policies have not changed materially during ~~2019~~2020 or ~~2018,~~2019, except as otherwise noted, 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.

For additional information regarding our Critical Accounting Policies, see “Critical Accounting Policies” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

Real estate investments and related intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the property might not be ~~recoverable. A~~recoverable, which is referred to as a “triggering event.” The COVID-19 impact on the economy and market conditions, together with the resulting closures of our properties, was deemed to be a triggering event at March 31, 2020 which led to an impairment review. In connection with our review of our long-lived assets for impairment, we utilize qualitative and quantitative factors in order to estimate fair value. The significant qualitative factors that we use include age and condition of the property, market conditions in the property’s trade area, competition with other shopping centers within the property’s trade area and the creditworthiness and performance of the property’s tenants. The significant quantitative factors that we use include historical and forecasted financial and operating information relating to the property, such as net operating income, occupancy statistics, vacancy projections and tenants’ sales levels.

If there is a triggering event in relation to a property to be held and used, ~~is considered impaired only if management’s~~we will estimate of the aggregate future cash flows, less estimated capital expenditures, to be generated by the property, undiscounted and without interest ~~charges, are less than~~charges. In addition, this estimate may consider a probability weighted cash flow estimation approach when alternative courses of action to recover the carrying ~~value~~amount of ~~the property. This estimate takes into~~a long-lived asset are under consideration ~~factors such as expected future operating income, trends and prospects, as well as the effects~~or when a range of ~~demand, competition and other factors.~~possible values is estimated.

The determination of undiscounted cash flows requires significant estimates by management, including the expected course of action at the balance sheet date that would lead to such cash flows. Subsequent changes in estimated undiscounted cash flows arising from changes in the anticipated action to be taken with respect to the property could impact the determination of whether an impairment exists and whether the effects could materially affect our net income. To the extent estimated undiscounted cash flows are less than the carrying value of the property, the loss will be measured as the excess of the carrying amount of the property over the estimated fair value of the property.

Assessment of our ability to recover certain lease related costs must be made when we have a reason to believe that the tenant might not be able to perform under the terms of the lease as originally expected. This requires us to make estimates as to the recoverability of such costs.

An other than temporary impairment of an investment in an unconsolidated joint venture is recognized when the carrying value of the investment is not considered recoverable based on evaluation of the severity and duration of the decline in value. To the extent impairment has occurred, the excess carrying value of the asset over its estimated fair value is charged to income.

If We concluded that there is a triggering event in relation to a property to be held and used, we will estimate the aggregate future cash flows, less estimated capital expenditures, to be generated by the property, undiscounted and without interest charges. In addition, this estimate may consider a probability weighted cash flow estimation approach when alternative courseswas no impairment as of ~~action to recover the carrying amount of a long-lived asset are under consideration or when a range of possible values is estimated.~~

See Note 1 to our unaudited consolidated financial statements for descriptions of new accounting developments.

We have no material off-balance sheet items other than (i) the ~~unconsolidated~~ partnerships described in Note 3 to ~~the~~our unaudited consolidated financial statements and in the “Overview” section ~~above.~~

above, (ii) unaccrued contractual commitments related to our capital improvement and development projects at our consolidated and unconsolidated properties, and (iii) specifically with respect to our joint venture formed with Macerich to develop Fashion District Philadelphia, our operating partnership, PREIT Associates, has jointly and severally guaranteed the obligations of the joint venture to complete a comprehensive redevelopment of that property costing not less than $300.0 million within 48 months after commencement of construction, which was March 14, 2016, and has severally guaranteed its 50% share of the FDP Term Loan (see Note 3 to our unaudited consolidated financial statements), which currently has $301.0 million outstanding (our share of which is $150.5 million). If our Fashion District Philadelphia joint venture were unable to satisfy its obligations under the FDP Term Loan and we were required to satisfy its payment obligations under the guarantee, this could have a material impact on our liquidity and available capital resources. The FDP Term Loan balance will become due in 2023.

Net loss for the three months ended March 31, 2020 was $13.5 million compared to a net loss of $16.2 million for the three months ended March 31, 2019. This $2.7 million decrease was primarily due to: (a) non-recurring items recorded in the prior year including a loss on debt extinguishment of $4.8 million and an asset impairment charge of $1.5 million on an undeveloped land parcel both of which had a favorable impact on the current year; (b) a decrease in depreciation and amortization of $4.6 million in the current period; and (c) a gain on the sale of real estate of $2.0 million recorded in the three months ended March 31, 2020; partially offset by a $10.7 million decrease in real estate revenue as described below. See “—Real Estate Revenue.”

The table below sets forth certain occupancy statistics for our properties as of ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:

	Occupancy⁽¹⁾ at June 30,																		Occupancy⁽¹⁾ at March 31, 2020
	Consolidated Properties						Unconsolidated Properties⁽²⁾						Combined⁽²⁾						Consolidated Properties						Unconsolidated Properties						Combined⁽²⁾
	2019			2018			2019			2018			2019			2018			2020			2019			2020			2019			2020			2019
Retail portfolio weighted average:(3)
Total excluding anchors		89.0	%		90.3	%		89.8	%		92.5	%		89.2	%		90.8	%		89.1	%		90.6	%		87.7	%		90.7	%		88.8	%		90.7	%
Total including anchors		90.3	%		92.7	%		91.7	%		93.9	%		90.6	%		92.9	%		90.0	%		91.3	%		90.0	%		92.4	%		90.0	%		91.5	%
Core Malls weighted average:⁽³⁾⁽⁴⁾
Total excluding anchors		90.4	%		91.6	%		86.3	%		92.3	%		89.9	%		91.7	%		90.8	%		91.9	%		86.2	%		88.9	%		90.3	%		91.5	%
Total including anchors		94.0	%		93.5	%		90.6	%		94.8	%		93.7	%		93.7	%		93.2	%		95.0	%		90.6	%		92.4	%		92.9	%		94.7	%

The table below sets forth summary leasing activity information with respect to our consolidated and unconsolidated properties for the three months ended ~~June 30, 2019:~~March 31, 2020:

		Number		GLA		Term		Initial Rent per square foot ("psf")		Previous Rent psf		Initial Gross Rent Renewal Spread⁽¹⁾						Average Rent Renewal Spread⁽²⁾			Annualized Tenant Improvements psf⁽³⁾		Number		GLA		Term		Initial Rent per square foot ("psf")		Previous Rent psf		Initial Gross Rent Renewal Spread⁽¹⁾						Average Rent Renewal Spread⁽²⁾			Annualized Tenant Improvements psf⁽³⁾
												$			%			%															$			%			%
Non Anchor
New Leases
Under 10k square feet ("sf")	Consolidated		38		80,837		5.1	$	40.38												$	10.99		28		65,591		6.7	$	41.32	N/A		N/A			N/A			N/A			$	9.27
	Unconsolidated⁽⁴⁾		4		15,346		3.7		46.19													-
Total Under 10k sf			42		96,183		4.9	$	41.31	n/a		n/a			n/a			n/a			$	9.66

Over 10k sf	Consolidated		1		12,147		10.0	$	38.79	n/a		n/a			n/a			n/a			$	-		-		-		-		-	N/A		N/A			N/A			N/A				-
Total New Leases			43		108,330		5.4	$	41.02	n/a		n/a			n/a			n/a			$	7.67		28		65,591		6.7	$	41.32	N/A		N/A			N/A			N/A			$	9.27

Renewal Leases
Under 10k sf	Consolidated		26		51,466		2.8	$	54.23	$	52.16	$	2.07			4.0	%		9.8	%	$	2.76		55		150,527		2.8	$	51.10	$	54.52	$	(3.41	)		(6.3	%)		(1.3	%)	$	0.01
	Unconsolidated⁽⁴⁾		5		21,576		3.9		58.89		67.58		(8.69	)		(12.9	%)		(1.6	%)		3.34
Total Under 10k sf			31		73,042		3.1	$	55.61	$	56.71	$	(1.11	)		(2.0	%)		5.6	%	$	2.98

Over 10k sf	Consolidated		2		52,012		5.0	$	10.31	$	9.53	$	0.78			8.2	%		9.5	%				1		11,344		2.0		26.45		28.98		(2.53	)		(8.7	%)		(8.7	%)		-
Total Fixed Rent			33		125,054		3.9	$	36.77	$	37.09	$	(0.32	)		(0.9	%)		6.1	%	$	1.39		56		161,871		2.8	$	49.37	$	52.73	$	(3.35	)		(6.4	%)		(1.6	%)	$	0.01
Percentage in Lieu	Consolidated		8		24,855		1.5	$	25.40	$	50.30	$	(24.90	)		(49.5	%)	n/a			$	-
Total Renewal Leases			41		149,909		3.5	$	34.88	$	39.28	$	(4.40	)		(11.2	%)		6.1	%	$	1.29
Total Percentage in Lieu																								11		17,719		1.2		53.00		90.92		(37.92	)		(41.7	%)	N/A				-
Total Renewal Leases ⁽⁴⁾																								67		179,590		2.6	$	49.73	$	56.49	$	(6.76	)		(12.0	%)				$	0.02
Total Non Anchor			84		258,239		4.3	$	37.46															95		245,181		3.7	$	47.48

Anchor
New Leases			-		-		-	$	-	n/a		n/a			n/a			n/a			n/a
Renewal Leases	Consolidated		-		-		-		-	n/a		n/a			n/a			n/a			n/a
Total			-		-		-	$	-

~~The table below sets forth summary leasing activity information with respect to our consolidated and unconsolidated properties for the six months ended June 30, 2019:~~

Number

GLA

Term

Initial Rent per square foot ("psf")

Previous Rent psf

Initial Gross Rent Renewal Spread⁽¹⁾

Average Rent Renewal Spread⁽²⁾

Annualized Tenant Improvements psf⁽³⁾

$

%

%

Non Anchor

New Leases

Under 10k square feet ("sf")

Consolidated

57

151,548

7.0

$
41.13

$
13.64

Unconsolidated⁽⁴⁾

5

20,846

5.7

47.17

12.75

Total Under 10k sf

62

172,394

6.8

$
41.86

n/a

n/a

n/a

n/a

$
13.55

Over 10k sf

Consolidated

2

32,238

9.4

19.73

n/a

n/a

n/a

n/a

-

Total New Leases

64

204,632

7.2

$
38.37

n/a

n/a

n/a

n/a

$
10.81

Renewal Leases

Under 10k sf

Consolidated

52

115,299

3.2

$
57.11

$
54.69

$
2.42

4.4
%

4.7
%

$
2.64

Unconsolidated⁽⁴⁾

8

25,301

3.6

60.93

67.99

(7.06
)

(10.4
%)

(0.7
%)

3.12

Total Under 10k sf

60

140,600

3.3

$
57.80

$
57.08

$
0.71

1.3
%

3.5
%

$
2.74

Over 10k sf

Consolidated

6

132,171

4.9

$
12.94

$
12.25

$
0.69

5.6
%

6.3
%

$
0.66

Total Fixed Rent

66

272,771

4.0

$
36.06

$
35.36

$
0.70

2.0
%

4.0
%

$
1.52

Percentage in Lieu

Consolidated

40

145,682

1.8

$
29.87

$
44.83

$
(14.96
)

(33.4
%)

n/a

$
-

Total Renewal Leases

106

418,453

3.3

$
33.91

$
38.66

$
(4.75
)

(12.3
%)

4.0
%

$
1.23

Total Non Anchor

170

623,085

4.6

$
35.38

Anchor

New Leases

1

43,840

10.4

$
16.50

n/a

n/a

n/a

n/a

$
11.62

Renewal Leases

Consolidated

6

629,743

3.8

3.48

$
4.26

$
(0.78
)

(18.3
%)

n/a

$
-

Total

7

673,583

4.2

$
4.33

Net loss for the three months ended June 30, 2019 was $6.1 million, a decreased loss of $26.2 million compared to a net loss of $32.3 million for the three months ended June 30, 2018. This decreased loss primarily reflected an impairment of assets of $34.3 million for the three months ended June 30, 2018, which was not repeated in 2019, and which was partially offset by: (a) a $6.9 million decrease in lease termination revenues; (b) a $1.5 million decrease in capitalized leasing costs as a result of the adoption of ASC 842 effective January 1, 2019; and (c) a $2.0 million decrease in non-Same Store NOI.

Net loss for the six months ended June 30, 2019 was $22.3 million, a decreased loss of $13.7 million compared to a net loss of $36.0 million for the six months ended June 30, 2018. This decreased loss primarily reflected an impairment of assets of $34.3 million for the six months ended June 30, 2018, which was not repeated in 2019, and which was partially offset by: (a) a $6.7 million decrease in lease termination revenues (b) a loss on debt extinguishment of $4.8 million incurred in connection with the defeasance of a mortgage loan recorded in the first quarter of 2019; (c) an asset impairment of $1.5 million on an undeveloped land parcel recorded in the first quarter of 2019; (d) a $2.2 million decrease in gains on sale of real estate by equity method investees; (e) a $2.7 million decrease in capitalized leasing costs as a result of the adoption of ASC 842 effective January 1, 2019; (f) a $0.5 million increase in employee separation expenses; (g) $0.4 million of dilution from asset sales; (h) a $3.3 million decrease in non-Same Store NOI; and (i) a $0.6 million increase in interest expense.

~~See “Non-GAAP Supplemental Financial Measures—Net Operating Income” for the definition and additional discussion about Net Operating Income, a non-GAAP measure.~~

The following table sets forth our results of operations for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018.~~2019.

	Three Months Ended June 30,						% Change 2018 to 2019				Six Months Ended June 30,						% Change 2018 to 2019				Three Months Ended March 31,						% Change 2019 to 2020
(in thousands of dollars)	2019			2018							2019			2018							2020			2019
Real estate revenue	$	81,077		$	91,122			(11	)	%	$	165,753		$	176,515			(6	)	%	$	73,950		$	84,678			(13	)	%
Property operating expenses		(33,762	)		(34,059	)		(1	)	%		(68,891	)		(70,764	)		(3	)	%		(32,537	)		(35,128	)		(7	)	%
Other income		315			851			(63	)	%		942			1,740			(46	)	%		293			627			(53	)	%
Depreciation and amortization		(31,946	)		(33,356	)		(4	)	%		(66,849	)		(67,386	)		(1	)	%		(30,269	)		(34,904	)		(13	)	%
General and administrative expenses		(11,609	)		(9,396	)		24		%		(22,814	)		(19,528	)		17		%		(10,695	)		(11,205	)		(5	)	%
Provision for employee separation expenses		(141	)		(395	)		(64	)	%		(860	)		(395	)		118		%		(73	)		(719	)		(90	)	%
Insurance recoveries, net		1,852			-			0		%		1,616			-			0		%		-			(236	)		(100	)	%
Project costs and other expenses		(130	)		(139	)		(6	)	%		(187	)		(251	)		(25	)	%		(95	)		(58	)		64		%
Interest expense, net		(15,554	)		(15,982	)		(3	)	%		(31,452	)		(30,883	)		2		%		(16,858	)		(15,898	)		6		%
Loss on debt extinguishment		-			-			0		%		(4,768	)		-			0		%
Impairment of assets		-			(34,286	)		(100	)	%		-			(34,286	)		(100	)	%
Loss on debt extinguishment, net																						-			(4,768	)		(100	)	%
Impairment of development land parcel		-			-			0		%		(1,464	)		-			0		%		-			(1,464	)		(100	)	%
Equity in income of partnerships		2,316			2,571			(10	)	%		4,605			5,709			(19	)	%		819			2,289			(64	)	%
Gain (loss) on sales of real estate by equity method investee		(11	)		-			0		%		553			2,773			(80	)	%
Gain on sales of real estate by equity method investee																						-			563			(100	)	%
Gain on sales of real estate, net		1,513			748			102		%		1,513			748			102		%		1,962			-			100		%
Adjustment to gain on sales of interests in non operating real estate		—			—			0		%		—			(25	)		(100	)	%
Loss on sales of interests in non operating real estate																						(46	)		-			100		%
Net loss	$	(6,080	)	$	(32,321	)		(81	)	%	$	(22,303	)	$	(36,033	)		(38	)	%	$	(13,549	)	$	(16,223	)		(16	)	%

The amounts in the preceding tables reflect our consolidated properties and our unconsolidated properties. Our unconsolidated properties are presented under the equity method of accounting in the line item “Equity in income of partnerships.”

Effective January 1, 2019, we adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASC 842”) and related guidance using the optional transition method and elected to apply the provisions of the standard as of the adoption date rather than the earliest date presented. Prior period amounts were not restated. Since we adopted the practical expedient in ASC 842, which allows us to avoid separating lease (minimum rent) and non-lease rental income (common area maintenance and real estate tax reimbursements), all rental income earned pursuant to tenant leases is reflected as one line, “Lease revenue,” in the consolidated statement of operations. Utility reimbursements are presented separately in “Expense reimbursements.” We review the collectability of both billed and unbilled lease revenues each reporting period, taking into consideration the tenant’s payment history, credit profile and other factors, including its operating performance. For any tenant receivable balances deemed to be uncollectible, under ASC 842 we record an offset for credit losses directly to Lease revenue in the consolidated statement of operations. Previously, under ASC 840, uncollectible tenants’ receivables were reported in Other property operating expenses in the consolidated statement of operations.

The following table reports the breakdown of real estate revenues based on the terms of the lease contracts for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:

	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended March 31,
(in thousands of dollars)	2019			2018		2019			2018		2020			2019
Contractual lease payments:
Base rent	$	54,103		$	55,369	$	109,988		$	111,343	$	51,048		$	55,885
CAM reimbursement income		10,873			11,201		22,549			22,802		10,168			11,645
Real estate tax income		8,871			9,632		18,380			19,929		8,496			9,540
Percentage rent		156			161		164			256		19			9
Lease termination revenue		156			7,090		469			7,121		9			313
		74,159			83,453		151,550			161,451		69,740			77,392
Less: credit losses		(415	)		—		(1,192	)		—		(2,019	)		(777	)
Lease revenue		73,744			83,453		150,358			161,451		67,721			76,615
Expense reimbursements		4,916			5,395		9,978			10,629		4,305			5,062
Other real estate revenue		2,417			2,274		5,417			4,435		1,924			3,001
Total real estate revenue	$	81,077		$	91,122	$	165,753		$	176,515	$	73,950		$	84,678

The Company has presented the above information to provide additional detail about the components of lease revenue based on the terms of the underlying lease contracts. The presentation of contractual lease payments is not, and is not intended to be, a presentation in accordance with GAAP. The Company believes this information is useful to investors, securities analysts and other interested parties to evaluate the Company’s performance.

Real estate revenue decreased by ~~$10.0~~$10.7 million, or ~~11%~~13%, in the three months ended ~~June 30, 2019~~March 31, 2020 compared to the three months ended ~~June 30, 2018,~~March 31, 2019, primarily due to:

~~Real estate revenue decreased by $10.8 million, or 6%, in the six months ended June 30, 2019 compared to the six months ended June 30, 2018, primarily due to:~~

Property operating expenses decreased by ~~$0.3~~$2.6 million, or 1%7%, in the three months ended ~~June 30, 2019~~March 31, 2020 compared to the three months ended ~~June 30, 2018,~~March 31, 2019, primarily due to:

~~Property operating expenses decreased by $1.9 million, or 3%, in the six months ended June 30, 2019 compared to the six months ended June 30, 2018, primarily due to:~~

Depreciation and amortization expense decreased by ~~$1.4~~$4.6 million, or 4%13%, in the three months ended ~~June 30, 2019~~March 31, 2020 compared to the three months ended ~~June 30, 2018,~~March 31, 2019, primarily due to a decrease of $1.8 million at three properties that have a lower asset base resulting from impairment charges during 2018; partially offset by an increase of $0.4 million due to a higher asset base resulting from capital improvements related to new tenants at our same store properties, as well as accelerated amortization of capital improvements associated with store closings.to:

Depreciation and amortization expense decreased by $0.5 million, or 1%, in the six months ended June 30, 2019 compared to the six months ended June 30, 2018, primarily due to a decrease of $2.7 million at three properties that have a lower asset base resulting from impairment charges during 2018; partially offset by an increase of $2.2 million due to a higher asset base resulting from capital improvements related to new tenants at our same store properties, as well as accelerated amortization of capital improvements associated with store closings.

General and administrative expenses ~~increased~~decreased by ~~$2.2~~$0.5 million, or ~~24%~~5%, in the three months ended ~~June 30, 2019~~March 31, 2020 compared to the three months ended ~~June 30, 2018~~March 31, 2019 primarily due to ~~certain internal leasing~~lower payroll and legal costs that were previously capitalized under ASC 840 now being recorded as period costs under ASC 842 and included in general and administrative expenses. For the three months ended June 30, 2018, we capitalized $1.6 million of internal leasing and legal salaries and benefits. No such costs were capitalized for the three months ended June 30, 2019. Incentiveincentive compensation expenses ~~also increased by $0.4 million, primarily due to higher costs related to equity compensation plans.~~

General and administrative expenses increased by $3.3 million, or 17%, in the six months ended June 30, 2019 compared to the six months ended June 30, 2018 primarily due to certain internal leasing and legal costs that were previously capitalized under ASC 840 now being recorded as period costs under ASC 842 and included in general and administrative expenses. For the six months ended June 30, 2018, we capitalized $2.7 million of internal leasing and legal salaries and benefits. No such costs were capitalized for the six months ended June 30, 2019. Incentive compensation expenses also increased by $0.5 million, primarily due to higher costs related to equity compensation plans..

Interest expense ~~decreased~~increased by ~~$0.4~~$1.0 million, or 3%6%, in the three months ended ~~June 30, 2019~~March 31, 2020 compared to the three months ended June 30, 2018. This decrease was primarily due to greater amounts of capitalized interest in 2019, partially offset by higher weighted average interest rates and higher weighted average debt balances. Our weighted average effective borrowing rate was 4.23% for the three months ended June 30, 2019 compared to 4.21% for the three months ended June 30, 2018. Our weighted average debt balance was $1,690.4 million for the three months ended June 30, 2019, compared to $1,606.3 million for the three months ended June 30, 2018.

~~Interest expense increased by $0.6 million, or 2%, in the six months ended June 30, 2019 compared to the six months ended June 30, 2018.~~March 31, 2019. This increase was primarily due to higher weighted average ~~interest rates and higher weighted average~~ debt balances, partially offset by ~~greater amounts of capitalized~~slightly lower weighted average interest ~~in 2019.~~rates. Our weighted average effective borrowing rate was ~~4.25%~~4.2% for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to ~~4.14%~~4.3% for the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. Our weighted average debt balance was ~~$1,683.7~~$1,714.2 million for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~$1,613.8~~$1,679.8 million for the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019.

There were no losses on debt extinguishment for the three months ended March 31, 2020. During the three months ended March 31, 2019, we defeased a $58.5 million mortgage loan including accrued interest, secured by Capital City Mall in Camp Hill, Pennsylvania using funds from our 2018 Revolving Facility and the balance from available working capital. We recorded a loss on debt extinguishment of $4.8 million in March 2019 in connection with this defeasance.

There was no impairment of assets for the three months ended March 31, 2020. Impairment of development land parcel for the ~~six~~three months ended ~~June 30,~~March 31, 2019 was $1.5 million in connection with the sale of a land parcel in Gainesville, Florida.

Impairment of assets for the three and six months ended June 30, 2018 consisted of $32.2 million in connection with Wyoming Valley Mall, Wilkes-Barre, Pennsylvania and $2.1 million in connection with sale negotiations with a prospective buyer of a land parcel in Gainesville, Florida.

Equity in income of partnerships decreased by ~~$0.3~~$1.5 million, or ~~10%~~64%, in the three months ended ~~June 30, 2019~~March 31, 2020 compared to the three months ended ~~June 30, 2018,~~March 31, 2019, primarily due to ~~lower lease revenue in 2019 due to a decrease in lease revenue~~higher operating expenses, interest expense and depreciation and amortization at ~~Same Store~~our partnership properties.

Equity in income of partnerships decreased by $1.1 million, or 19%, in the six months ended June 30, 2019 compared to the three months ended June 30, 2018, primarily due to lower lease revenue in 2019 following the sale of an office condominium unit at Fashion District Philadelphia in the first quarter of 2018 and higher lease termination revenue in the six months ended June 30, 2018.

There were no sales of real estate by equity method investees in the three months ended March 31, 2020. In the three months ended March 31, 2019, a partnership in which we hold a 25% interest share sold an undeveloped land parcel adjacent to Gloucester Premium Outlets for $3.8 million. The partnership recorded a gain on sale of $2.3 million, of which our share was $0.6 million, which is recorded in gain on sale of real estate by equity method investee in the accompanying consolidated statement of operations.

Gain on sale of real estate by equity method investee was $2.8 million in the six months ended June 30, 2018, resulting from our 50% share of a $5.5 million gain on the sale of a condominium interest in 907 Market Street in Philadelphia, Pennsylvania by a partnership in which we hold a 50% ownership interest.

In ~~April 2019,~~January 2020, we ~~sold a Whole Foods store located on a parcel adjacent to Exton Square~~completed the sale of an outparcel at Woodland Mall in Grand Rapids, Michigan for total consideration of ~~$22.1~~$5.2 million. In March 2020, we completed the sale of two outparcels at Magnolia Mall in Florence, South Carolina for total consideration of $2.9 million. In connection with ~~this~~the March sale, we recorded a gain of ~~$1.3~~$2.0 million.

In April 2019, we sold an undeveloped land parcel located in New Garden Township, Pennsylvania, for total consideration of $11.0 million, consisting of $8.25 million in cash and $2.75 million of preferred stock. We ascribed There were no value for accounting purposes to the preferred shares as they are not tradeable, cannot be transferred or sold and have no redemption feature. Up to $1.25 million of the cash consideration received is subject to claw-back if the buyer does not receive entitlements for a stipulated number of housing units. In connection with this sale, we recorded a gain of $0.2 million.

~~Gain~~gains on sales of real estate ~~was $0.7 million~~ in the ~~six~~three months ended ~~June 30, 2018, resulting from the sale of an outparcel at Magnolia Mall in Florence, South Carolina.~~March 31, 2019.

The preceding discussion analyzes our financial condition and results of operations in accordance with generally accepted accounting principles, or GAAP, for the periods presented. We also use Net Operating Income (“NOI”) and Funds from Operations (“FFO”), which are non-GAAP financial measures, to supplement our analysis and discussion of our operating performance:

NOI and FFO are commonly used non-GAAP financial measures of operating performance in the real estate industry, and we use them as supplemental non-GAAP measures to compare our performance between different periods and to compare our performance to that of our industry peers. Our computation of NOI, FFO and other non-GAAP financial measures, such as Same Store NOI, ~~non-Same~~Non Same Store NOI, NOI attributable to our share of unconsolidated properties, and FFO, as adjusted, may not be comparable to other similarly titled measures used by our industry peers. None of these measures are measures of performance in accordance with GAAP, and they have limitations as analytical tools. They should not be considered as alternative measures of our net income, operating performance, cash flow or liquidity. They are not indicative of funds available for our cash needs, including our ability to make cash distributions. Please see below for a discussion of these non-GAAP measures and their respective reconciliation to the most directly comparable GAAP measure.

The non-GAAP financial measures presented below incorporate financial information attributable to our share of unconsolidated properties. This proportionate financial information is non-GAAP financial information, but we believe that it is helpful information because it reflects the pro rata contribution from our unconsolidated properties that are owned through investments accounted for under GAAP using the equity method of accounting. Under such method, earnings from these unconsolidated partnerships are recorded in our statements of operations prepared in accordance with GAAP under the caption entitled “Equity in income of partnerships.”

To derive the proportionate financial information reflected in the tables below as “unconsolidated,” we multiplied the percentage of our economic interest in each partnership on a property-by-property basis by each line item. Under the partnership agreements relating to our current unconsolidated partnerships with third parties, we own a 25% to 50% economic interest in such partnerships, and there are generally no provisions in such partnership agreements relating to special non-pro rata allocations of income or loss, and there are no preferred or priority returns of capital or other similar provisions. While this method approximates our indirect economic interest in our pro rata share of the revenue and expenses of our unconsolidated partnerships, we do not have a direct legal claim to the assets, liabilities, revenues or expenses of the unconsolidated partnerships beyond our rights as an equity owner in the event of any liquidation of such entity. Our percentage ownership is not necessarily indicative of the legal and economic implications of our ownership interest. Accordingly, NOI and FFO results based on our share of the results of unconsolidated partnerships do not represent cash generated from our investments in these partnerships.

We have determined that we hold a non controlling interest in each of our unconsolidated partnerships, and account for such partnerships using the equity method of accounting, because:

We hold legal title to a property owned by one of our unconsolidated partnerships through a tenancy in common arrangement. For this property, such legal title is held by us and another entity, and each has an undivided interest in title to the property. With respect to this property, under the applicable agreements between us and the entity with ownership interests, we and such other entity have joint control because decisions regarding matters such as the sale, refinancing, expansion or rehabilitation of the property require the approval of both us and the other entity owning an interest in the property. Hence, we account for this property like our other unconsolidated partnerships using the equity method of accounting. The balance sheet items arising from this property appear under the caption “Investments in partnerships, at equity.”

For further information regarding our unconsolidated partnerships, see Note 3 to our unaudited consolidated financial statements.

NOI (a non-GAAP measure) is derived from real estate revenue (determined in accordance with GAAP, including lease termination revenue), minus property operating expenses (determined in accordance with GAAP), plus our pro rata share of revenue and property operating expenses of our unconsolidated partnership investments. NOI excludes other income, general and administrative expenses, insurance recoveries, employee separation expenses, interest expense, depreciation and amortization, impairment of assets, gains/ adjustment to gains on sale of interest in non operating real estate, gain on ~~sale~~sales of interest in real estate by equity method investee, gains/ losses on sales of interests in real estate, net, gain or loss on debt extinguishment, and project costs and other expenses. We believe that net income is the most directly comparable GAAP measure to NOI.

Same Store NOI is calculated using retail properties owned for the full periods presented and excludes properties acquired, disposed, under redevelopment or designated as non-core during the periods presented. ~~Non-Same~~In 2018, Wyoming Valley Mall was designated as non-core and subsequently conveyed to the lender of the mortgage loan secured by that property in September 2019. In 2019, Exton Square and Valley View Malls were designated as non-core and are excluded from Same Store NOI. Non Same Store NOI is calculated using the retail properties excluded from the calculation of Same Store NOI.

The table below reconciles net loss to NOI of our consolidated properties for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
(in thousands of dollars)	2019			2018			2019			2018			2020			2019
Net loss	$	(6,080	)	$	(32,321	)	$	(22,303	)	$	(36,033	)	$	(13,549	)	$	(16,223	)
Other income		(315	)		(851	)		(942	)		(1,740	)		(293	)		(628	)
Depreciation and amortization		31,946			33,356			66,849			67,386			30,269			34,904
General and administrative expenses		11,609			9,396			22,814			19,528			10,695			11,205
Insurance recoveries, net		(1,852	)		-			(1,616	)		-			-			236
Provision for employee separation expense		141			395			860			395
Provision for employee separation expenses														73			719
Project costs and other expenses		129			139			188			251			95			58
Interest expense, net		15,554			15,982			31,452			30,883			16,858			15,898
Impairment of assets		-			34,286			-			34,286
Loss on debt extinguishment														-			4,768
Impairment of development land parcel		-			-			1,464			-			-			1,464
Equity in income of partnerships		(2,316	)		(2,571	)		(4,605	)		(5,709	)		(819	)		(2,289	)
Loss on debt extinguishment		-			-			4,768			-
Adjustment to gain on sales of real estate by equity method investee		11			-			(553	)		(2,773	)
Adjustment to gain on sales of interests in non operating real estate		—			—			—			25
(Gain) on sales of interests in real estate, net		(1,513	)		(748	)		(1,513	)		(748	)
Gain on sales of real estate by equity method investee														-			(563	)
Gain on sales of interests in real estate, net														(1,962	)		-
Loss on sales of non-operating real estate														46			-
NOI from consolidated properties	$	47,314		$	57,063		$	96,863		$	105,751		$	41,413		$	49,549

The table below reconciles equity in income of partnerships to NOI of our share of unconsolidated properties for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
(in thousands of dollars)	2019			2018			2019			2018			2020			2019
Equity in income of partnerships	$	2,316		$	2,571		$	4,605		$	5,709		$	819		$	2,289
Other income		(11	)		(12	)		(23	)		(23	)		(14	)		(12	)
Depreciation and amortization		2,082			2,145			4,051			4,385			3,610			1,970
Interest and other expenses		2,815			2,706			5,591			5,378			3,029			2,776
NOI from equity method investments at ownership share	$	7,202		$	7,410		$	14,224		$	15,449		$	7,444		$	7,023

The table below presents total NOI and total NOI excluding lease termination revenue for the three months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:

	Same Store				Non Same Store				Total (non-GAAP)				Same Store				Non Same Store					Total (non-GAAP)
(in thousands of dollars)	2019		2018		2019		2018		2019		2018		2020		2019		2020		2019			2020		2019
NOI from consolidated properties	$	44,082	$	51,741	$	3,232	$	5,322	$	47,314	$	57,063	$	40,430	$	45,271	$	983	$	4,278		$	41,413	$	49,549
NOI from equity method investments at ownership share		7,067		7,354		135		56		7,202		7,410		6,612		7,052		832		(29	)		7,444		7,023
Total NOI		51,149		59,095		3,367		5,378		54,516		64,473		47,042		52,323		1,815		4,249			48,857		56,572
Less: lease termination revenue		159		6,553		1		542		160		7,095		9		300		-		16			9		316
Total NOI excluding lease termination revenue	$	50,990	$	52,542	$	3,366	$	4,836	$	54,356	$	57,378	$	47,033	$	52,023	$	1,815	$	4,233		$	48,848	$	56,256

Total NOI decreased by ~~$10.0~~$7.7 million in the three months ended ~~June 30, 2019~~March 31, 2020 compared to the three months ended ~~June 30, 2018, primarily~~March 31, 2019 due to (a) a ~~$6.9 million decrease in lease termination revenue and a $1.6~~$5.3 million decrease in Same Store NOI ~~excluding lease termination revenue.~~and (b) a decrease of $2.4 million in Non Same Store NOI. The decrease in Same Store NOI is primarily due to lost revenues from bankrupt tenants, an increase in credit losses and a decrease in percentage of sales revenue due to COVID-19 related mall closures. The decrease in NOI from Non Same Store properties is ~~primarily~~ due to the conveyance of Wyoming Valley Mall and lower ~~NOI~~ contributions from ~~Valley View and Wyoming Valley Malls, due to~~Exton Square Mall, resulting from an anchor ~~closings~~closing and related co-tenancy revenue ~~adjustments.~~adjustments, the sale of an outparcel during the second quarter of 2019 and a decrease in other non-recurring revenues compared to the first quarter of 2019. See “— Real Estate Revenue” and “— Property Operating Expenses” above for further information about the factors affecting NOI from our consolidated properties.

~~The table below presents total NOI and total NOI excluding lease termination revenue for the six months ended June 30, 2019 and 2018:~~

Total NOI decreased by $10.1 million in the six months ended June 30, 2019 compared to the six months ended June 30, 2018, primarily due to a $6.7 million decrease in lease termination revenue and a $2.8 million decrease in non-Same Store NOI excluding lease termination revenue. The decrease in Non Same Store properties is primarily due to the sale of an office property by an equity method investee in February 2018, and lower NOI contributions from Valley View and Wyoming Valley Malls, due to anchor closings and related co-tenancy revenue adjustments. See “— ~~Real Estate Revenue” and “—~~ ~~Property Operating Expenses” above for further information about the factors affecting NOI from our consolidated properties.~~

The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO, which is a non-GAAP measure commonly used by REITs, as net income (computed in accordance with GAAP) excluding (i) depreciation and amortization related to real estate, (ii) gains and losses from the sale of certain real estate assets, (iii) gains and losses from change in control, and (iv) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. We compute FFO in accordance with standards established by NAREIT, which may not be comparable to FFO 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 is a commonly used measure of operating performance and profitability among REITs. We use FFO and FFO per diluted share and unit of limited partnership interest in our operating partnership (“OP Unit”) and, when applicable, related measures such as Funds From Operations, as adjusted, in measuring our performance against our peers and as one of the performance measures for determining incentive compensation amounts earned under certain of our performance-based executive compensation programs.

FFO does not include gains and losses on sales of operating real estate assets or impairment write downs of depreciable real estate, 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 NOI. 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 also present Funds From Operations, as adjusted, and Funds From Operations per diluted share and OP Unit, as adjusted, which are non-GAAP measures, for the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively, to show the effect of such items as gain or loss on debt extinguishment (including accelerated amortization of financing costs), impairment of assets, provision for employee separation expense and insurance recoveries or losses, net, which affected our results of operations, but are not, in our opinion, indicative of our operating performance.

The following table presents a reconciliation of net loss determined in accordance with GAAP to FFO attributable to common shareholders and OP Unit holders, FFO attributable to common shareholders and OP Unit holders per diluted share and OP Unit, FFO attributable to common shareholders and OP Unit holders, as adjusted, and FFO attributable to common shareholders and OP Unit holders per diluted share and OP Unit, as adjusted for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~ 2019:

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
(in thousands, except per share amounts)	2019			2018			2019			2018			2020			2019
Net loss	$	(6,080	)	$	(32,321	)	$	(22,303	)	$	(36,033	)	$	(13,549	)	$	(16,223	)
Depreciation and amortization on real estate:
Consolidated properties		31,612			33,002			66,178			66,664			29,944			34,565
PREIT’s share of equity method investments		2,081			2,145			4,051			4,385			3,610			1,970
Gain on sales of real estate by equity method investee		—			—			—			(2,773	)
Gain on sales of interest in real estate, net		(1,513	)		(748	)		(1,513	)		(748	)		(1,962	)		-
Impairment of assets		—			34,286			—			34,286
Preferred share dividends		(6,844	)		(6,844	)		(13,688	)		(13,688	)		(6,844	)		(6,844	)
Funds from operations attributable to common shareholders and OP Unit holders		19,256			29,520			32,725			52,093			11,199			13,468
Loss on debt extinguishment		-			-			4,768			-
Accelerated amortization of financing costs		-			363			-			363
Loss on debt extinguishment, net														-			4,768
Impairment of development land parcel		-			-			1,464			-			-			1,464
Provision for employee separation expense		141			395			860			395			73			719
Insurance losses, net		(1,852	)		-			(1,616	)		-
Insurance recoveries, net														-			236
Funds from operations, as adjusted, attributable to common shareholders and OP Unit holders	$	17,545		$	30,278		$	38,201		$	52,851		$	11,272		$	20,655
Funds from operations attributable to common shareholders and OP Unit holders per diluted share and OP Unit	$	0.24		$	0.38		$	0.41		$	0.67		$	0.14		$	0.17
Funds from operations, as adjusted, attributable to common shareholders and OP Unit holders per diluted share and OP Unit	$	0.22		$	0.39		$	0.48		$	0.68		$	0.14		$	0.26
Weighted average number of shares outstanding		76,405			69,747			73,896			69,675			76,774			71,358
Weighted average effect of full conversion of OP Units		2,023			8,273			4,440			8,273			2,023			6,884
Effect of common share equivalents		683			367			595			340			520			309
Total weighted average shares outstanding, including OP Units		79,111			78,387			78,931			78,288			79,317			78,551

FFO attributable to common shareholders and OP Unit holders was ~~$19.3~~$11.2 million for the three months ended ~~June 30, 2019,~~March 31, 2020, a decrease of ~~$10.3~~$2.3 million, or ~~34.8%~~16.8%, compared to ~~$29.5~~$13.5 million for the three months ended ~~June 30, 2018.~~March 31, 2019.

FFO attributable to common shareholders and OP Unit holders per diluted share and OP Unit was ~~$0.24~~$0.14 and ~~$0.38~~$0.17 for the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

FFO, attributable to common shareholders and OP Unit holders was $32.7 million for the six months ended June 30, 2019, a decrease of $19.4 million or 37.2%, compared to $52.1 million for the six months ended June 30, 2018.

~~FFO~~as adjusted, attributable to common shareholders and OP Unit holders per diluted share and OP Unit was ~~$0.41~~$0.14 and ~~$0.67~~$0.26 for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

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 herein and in the section entitled “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 filed with the ~~Securities and Exchange Commission.~~SEC. 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.

We currently expect to meet our short-term liquidity requirements, including distributions to shareholders, recurring capital expenditures, tenant improvements and leasing commissions, but excluding acquisitions and redevelopment and development projects, generally through our available working capital and net cash provided by operations ~~borrowings under~~and our 2018 Revolving Facility, subject to the terms and conditions of our 2018 Revolving ~~Facility,~~Facility. See “Identical covenants and ~~asset sales, including~~common provisions contained in the ~~sale~~Credit Agreements” below for covenant information. We expect to spend approximately $56.8 million related to our capital improvements and development projects. In connection with the impacts of ~~land parcels~~the COVID-19 pandemic on our business, we have announced that, beginning with the second quarter of 2020, we intend to ~~third parties for multifamily and hotel developments.~~reduce the common share dividend per share by 90% to $0.02. 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.~~amended, though we may determine it is appropriate to suspend or further reduce dividends from current levels. The aggregate quarter’s distributions made to preferred shareholders, common shareholders and OP Unit holders for the ~~six~~three months ended~~June 30, 2019~~ March 31, 2020 were ~~$47.1~~$23.3 million, based on the quarter’s distributions of ~~$0.9218~~$0.4609 per Series B Preferred Share, ~~$0.9000~~distributions of $0.45 per Series C Preferred Share, ~~$0.8594~~distributions of $0.4297 per Series D Preferred Share and ~~$0.42~~distributions of $0.21 per common share and OP Unit.On May 19, 2020, we announced that our Board of Trustees declared a quarterly cash dividend of $0.02 per common share payable on June 15, 2020 to common shareholders of record on June 1, 2020. Simultaneously, our Board of Trustees also declared quarterly cash dividends of $0.4609375 per share on our 7.375% Series B Cumulative Redeemable PerpetualPreferred Shares, $0.450000 per share on our 7.20% Series C Preferred Shares, and $0.4296875 per share on our 6.875% Series D Preferred Shares. These dividends are also payable on June 15, 2020 to holders of record on June 1, 2020.

In December ~~2017,~~2019, our universal shelf registration statement was filed with the SEC and, in January 2020, it became effective. We may use the availability under 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.

During the first quarter of 2020, we raised capital from a number of sources, including proceeds of $8.0 million from asset sales and net proceeds of $34.0 million from our revolving facilities. In April 2020, in light of the impact of COVID-19 on our business and limited capital resources, we applied for and received a loan in the amount of $4.5 million under the Paycheck Protection Program (PPP) of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. PPP loans are eligible for forgiveness pursuant to program guidelines to the extent the proceeds are used for qualifying purposes within the eight-weeks following loan funding. No assurance can be provided that any portion of our loan will be forgiven. On April 23, 2020, the Small Business Administration (“SBA”) issued new guidance about the eligibility of a public company with substantial market value and access to capital markets to qualify for a PPP loan. On April 28, 2020, the SBA and the Department of Treasury announced that the SBA will review all PPP loans in excess of $2 million and for which the borrower applies for forgiveness. We believe, including on the basis of advice of external legal counsel, that we qualify for the loan under the PPP guidelines, but should we be audited or reviewed as a result of applying for forgiveness or otherwise, such audit or review could result in the diversion of management’s time and attention, and legal and reputational costs. If we were to be audited and receive an adverse finding in such audit, we could be required to return the full amount of the PPP loan, which could reduce our liquidity, and potentially subject us to additional fines and penalties.

We are actively seeking to raise additional capital, including through asset dispositions identified through our portfolio property reviews. Disposing of these properties can enable us to redeploy or recycle our capital to other uses. During December 2019 and subsequently, we have executed agreements of sale that are expected to provide an aggregate of up to approximately $281.0 million in proceeds and net liquidity improvement of approximately $133.0 million. These agreements include a sale-leaseback transaction for five properties, the sale of land parcels for multifamily residential development, the sale of operating outparcels and the sale of land parcels for hotel development. We have also executed letters of intent with other potential buyers to sell several land parcels for multifamily residential development. Each of the transactions is subject to numerous closing conditions, including the completion of due diligence and securing of entitlements, and closing of the transactions cannot be assured or the timing of their completion yet estimated with certainty. We are also engaging in discussions with the lenders under our Credit Agreements and the lenders of our properties’ mortgage loans for modifications of those loans in an effort to ensure continued compliance with the obligations thereunder and, to the extent applicable, continued ability to borrow thereunder.

The following are some of the factors that could affect our cash flows and require the funding of future cash distributions, recurring capital expenditures, tenant improvements or leasing commissions with sources other than operating cash flows:

In addition, we are continuing to monitor the COVID-19 pandemic and the related business and travel restrictions and changes to behavior intended to reduce its spread, and its impact on our tenants, their supply chains and customers and the retail industry. Thus far, the pandemic and the actions taken to address it have had an adverse effect on our business, operations, liquidity and financial condition.

As a result of the COVID-19 pandemic, during March 2020, we temporarily closed all of our enclosed shopping malls. Certain of our malls have since re-opened and are adhering to social distancing and sanitation and safety protocols. The pandemic’s full effect was not experienced in the first quarter of 2020, but is expected to have a more significant impact on our financial condition, liquidity and results of operations in the second quarter of 2020 and thereafter. During March and April, we received many requests from tenants relating to rent relief or deferral. As of the filing date of this Quarterly Report on Form 10-Q, a substantial amount of contractual rent receivables for April and May remains outstanding and are under negotiation. We believe that our rent collections are probable, but expect that collections will continue to be below our tenants’ rent obligations as long as governmental orders require non-essential businesses to remain closed and residents to stay at home. While we continue to record rental revenue, the reduced collection levels have impacted our liquidity position and are expected to continue to do so.

The magnitude and duration of the pandemic and its continuing impact on our business, operations, liquidity and financial condition are currently uncertain, as this continues to evolve globally. However, if the outbreak and its impacts continue on their current trajectory, such impacts could continue to grow and affect us in a material way. To the extent that our tenants and their customers and suppliers continue to be impacted by the coronavirus outbreak, or by the other risks, this could continue to materially disrupt our business operations. See “Item 1A. Risk Factors -The COVID-19 global pandemic and the public health and governmental actions in response have adversely affected, and will likely continue to adversely affect, our business, financial condition, liquidity and operating results. The extent and duration of such effects are highly uncertain and cannot be predicted.”

We expect to meet certain of our longer-term requirements, such as obligations to fund redevelopment and development projects, certain capital requirements (including scheduled debt maturities), future property and portfolio acquisitions, renovations, expansions and other non-recurring capital improvements, through a variety of capital sources, subject to the terms and conditions of our Credit Agreements, as further described below.

The capital and credit markets fluctuate and, at times, limit access to debt and equity financing for companies. While we generally expect ~~to continue~~ to be able to access capital, as a result of the COVID-19 pandemic, access to debt and equity financing is currently limited and there is no assurance we will be able to ~~do so~~access capital and credit markets in the future or on ~~similar~~ terms and ~~conditions.~~conditions that are attractive or acceptable to us.

In July 2017, the Financial Conduct Authority ~~(the~~(“FCA”), which is the authority that regulates ~~LIBOR)~~LIBOR, announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Alternative Reference Rates Committee ("ARRC") has ~~proposed that~~identified the Secured Overnight Financing Rate ("SOFR") isas the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. ~~ARRC has proposed~~We are not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets. Any changes adopted by FCA or other governing bodies in the method used for determining LIBOR may result in a ~~paced market transition plan~~sudden or prolonged increase or decrease in reported LIBOR. If that were to ~~SOFR from USD-LIBOR~~occur, our interest payments could change, perhaps substantially. In addition, uncertainty about the extent and ~~organizations~~manner of future changes may result in interest rates and/or payments that are ~~currently working on industry wide and company specific transition plans as it relates~~higher or lower than if LIBOR were to ~~derivatives and cash markets exposed to USD-LIBOR.~~ remain available in its current form.

We have material contracts that are indexed to ~~USD-LIBOR~~LIBOR and are monitoring ~~this activity~~ and evaluating the related ~~risks. To~~risks, which include interest on loans or amounts received and paid on derivative instruments. These risks arise in connection with transitioning contracts to a new alternative rate,

including any resulting value transfer that may occur. The value of loans, securities, and derivative instruments tied to LIBOR could also be affected if LIBOR is limited or discontinued. For some instruments, the ~~extent that~~method of transitioning to an alternative rate may be challenging, as they may require negotiation with the respective counterparty.

If a contract is not transitioned to an alternative rate and LIBOR is discontinued, the impact on our contracts is likely to vary by contract. If LIBOR is discontinued or if the methods of calculating LIBOR change from their current form, interest rates on our current or future indebtedness may be adversely affected.

While we expect LIBOR to be available in substantially its current form until the end of 2021, it is possible that ~~rely on~~LIBOR will become unavailable prior to that point. This could occur, for example, if a requisite number of banks decline to make submissions to the LIBOR ~~benchmark do not provide for replacement rates, we may seek~~administrator. In that case, the risks associated with the transition to ~~amend such contracts.~~an alternative reference rate would be accelerated and magnified.

We have entered into two credit agreements (collectively, as amended, the “Credit Agreements”): (1) the 2018 Credit Agreement, which includes (a) the ~~$400~~$375 million 2018 Revolving Facility and (b) the $300 million 2018 Term Loan Facility, and (2) the $250 million 2014 7-Year Term Loan. The 2018 Term Loan Facility and the 2014 7-Year Term Loan are collectively referred to as the “Term Loans.”

~~See~~ On March 30, 2020, we entered into amendments of our Credit Agreements, as discussed in Note 4 ~~in the notes~~ to our unaudited consolidated financial ~~statements~~statements.

As of March 31, 2020, we had borrowed $550.0 million under the Term Loans and $289.0 million under the 2018 Revolving Facility. The carrying value of the Term Loans on our consolidated balance sheet as of March 31, 2020 is net of $1.8 million of unamortized debt issuance costs. The net operating income (“NOI”) from our unencumbered properties is at a level such that within the Unencumbered Debt Yield covenant (see Note 4 to our unaudited consolidated financial statements) under the Credit Agreements, the maximum amount that was available to be borrowed by us under the 2018 Revolving Facility as of March 31, 2020 was $65.3 million, which is not reduced by any usage of the borrowing capacity to fulfill our unrestricted cash liquidity requirement of $25 million as described further in ~~this Quarterly Report on Form 10-Q~~Note 4 to our unaudited consolidated financial statements.

See Note 4 to our unaudited consolidated financial statements for a description of the identical covenants and common provisions contained in the Credit Agreements.

37On March 30, 2020, we entered into an amendment of our Credit Agreements. The primary purpose of the amendments is to provide certain debt covenant relief through September 30, 2020. As of March 31, 2020, we were in compliance with all such financial covenants. However, we anticipate not meeting certain financial covenants applicable under the Credit Agreements during 2020. It was initially anticipated that we would not be in compliance with certain covenants after September 30, 2020, however, in light of COVID-19, our ability to comply with our financial covenants may be impacted prior to September 30, 2020. We plan to continue to work with our lender group to pursue a longer term financing solution prior to any inability to comply with the financial covenants thereunder. In addition, we plan to complete the sale-leaseback of certain properties, sell certain real estate assets and control certain operational costs, and we have also achieved deferral on approximately $11.6 million in real estate tax payments. Due to the inherent risks, unknown results and significant uncertainties associated with each of these matters and the direct correlation between these matters and our ability to satisfy our financial obligations that may arise in 2020, we are unable to conclude that it is probable that we will be able to meet our obligations arising within twelve months of the date of issuance of these financial statements and continue as a going concern.

As a result, management evaluated whether this was mitigated by our approved plans and expectations for the applicable period under the second step of the going concern accounting standard.

Our ability to satisfy obligations under our senior unsecured credit facility and mortgage loans, maintain compliance with our debt covenants and fund recurring costs of operations depends primarily on management’s ability to obtain relief from the lender group in regards to debt covenants, execute the sale-leaseback of certain properties, complete the sale of certain real estate assets which will provide cash from those sales, and continue to control operational costs. While controlling operational costs is within management’s control to some extent, executing the sale-leaseback transactions, selling real estate assets, and obtaining relief from the lender group through modified debt covenant requirements involve performance by third parties and therefore cannot be considered probable of occurring. In particular, as of the date of the filing of this Quarterly Report on Form 10-Q, we are in active discussions with the lenders participating in our credit facilities to modify the terms of the Credit Agreements and obtain long term debt covenant relief. See “Item 1A. Risk Factors -If we are unable to comply with the covenants in our Credit Agreements, we might be adversely affected” and “We have determined that there is substantial doubt about our ability to continue as a going concern.”

As of June 30, 2019, we had borrowed $550.0 million under the Term Loans and $182.0 million was outstanding under our 2018 Revolving Facility. Pursuant to certain covenants in the 2018 Revolving Facility, the unused portion of the 2018 Revolving Facility that was available to us as of June 30, 2019 was $123.6 million.

As of ~~June 30, 2019,~~March 31, 2020, we had interest rate swap agreements outstanding with a weighted average base interest rate of ~~1.85%~~1.87% on a notional amount of ~~$796.5~~$795.2 million, maturing on various dates through May 2023 and a forward starting interest rate swap agreement with a weighted average interest rate of 2.75% on a notional amount of $100.0 million, with an effective date ofin June 2020 and a maturity date ofin May 2023. We entered into these interest rate swap agreements in order to hedge the interest payments associated with our issuances of variable interest rate long term debt. The interest rate swap agreements are net settled monthly.

We assessed the effectiveness of these swap agreements as hedges at inception and continue to do so on a quarterly basis. On March 31, 2020, we considered these interest rate swap agreements to be highly effective as cash flow hedges.

As of March 31, 2020, the fair value of derivatives in a liability position, which excludes accrued interest but includes any adjustment for nonperformance risk related to these agreements, was $31.7 million. If we had breached any of the default provisions in these agreements as of March 31, 2020, we might have been required to settle our obligations under the agreements at their termination value (including accrued interest) of $32.9 million. We had not breached any of these provisions as of March 31, 2020.

The carrying amount of the associated assets are recorded in “Deferred costs and other assets,” liabilities are reflected in “Fair value of derivative instruments” and the net unrealized loss is reflected in “Accumulated other comprehensive loss” in the accompanying consolidated balance sheets and consolidated statements of comprehensive income.

WeIn April 2020, we received a notice of transfer of servicing ~~dated July 9, 2018,~~ from the special servicer for the mortgage loan secured by ~~Wyoming~~ Valley View Mall, which had a balance of ~~$73.4~~$27.3 million as of June 30, 2019 . Our subsidiary that is the borrower under the loan also received a notice of default on the loan from the lender, dated December 14, 2018. The loan is subject to a cash sweep arrangement as a result of an anchor tenant trigger event. We have entered into an agreement with the lender to jointly market the property for sale for a stipulated period of time. If the property is not sold, we expect to convey the property to the lender by deed in lieu of foreclosure; however, we make no assurances that such a transaction will be completed.

In April 2019, we received a notice from the servicer of the Cumberland Mall mortgage of a cash sweep event due to the failure of an anchor tenant to renew for a full term. We expect the cash sweep period to terminate before the end of 2019.

As of ~~June 30, 2019,~~March 31, 2020, our mortgage loans, which are secured by 10nine of our consolidated properties, are due in installments over various terms extending to October 2025. ~~Seven~~Six of these mortgage loans bear interest at fixed interest rates that range from 3.88% to 5.95% and had a weighted average interest rate of ~~4.19%~~4.08% at ~~June 30, 2019.~~March 31, 2020. Three of our mortgage loans bear interest at variable rates, a portion of which have been swapped to fixed rates, and, taking into consideration the impact of interest rate swaps, had a weighted average interest rate of ~~4.74%~~3.83% at ~~June 30, 2019.~~March 31, 2020. The weighted average interest rate of all consolidated mortgage loans was ~~4.34%~~4.01% at ~~June 30, 2019.~~March 31, 2020. Mortgage loans 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 consolidated mortgage loans as of ~~June 30, 2019:~~March 31, 2020:

(in thousands of dollars)	Total		Remainder of 2019		2020-2021		2022-2023		Thereafter		Total		Remainder of 2020		2021-2022		2023-2024		Thereafter
Principal payments	$	80,664	$	9,121	$	37,735	$	22,997	$	10,811	$	61,509	$	12,790	$	31,324	$	12,989	$	4,406
Balloon payments		903,327		—		215,946		476,035		211,346		836,581		27,161		544,775		53,299		211,346
Total	$	983,991	$	9,121	$	253,681	$	499,032	$	222,157	$	898,090	$	39,951	$	576,099	$	66,288	$	215,752
Less: unamortized debt issuance costs		2,470										1,595
Carrying value of mortgage notes payable	$	981,521									$	896,495

In light of the effects of COVID-19 on our business, operations, liquidity and financial condition, we are also in discussions with the lenders of our properties’ mortgage loans to seek modifications of such loans. No assurance can be provided that we will obtain such modifications.

The following table presents our aggregate contractual obligations as of ~~June 30, 2019~~March 31, 2020 for the periods presented:

(in thousands of dollars)	Total		Remainder of 2019		2020-2021		2022-2023		Thereafter		Total		Remainder of 2020		2021-2022		2023-2024		Thereafter
Mortgage loan principal payments	$	983,991	$	9,121	$	253,681	$	499,032	$	222,157	$	898,090	$	39,951	$	576,099	$	66,288	$	215,752
Term Loans		550,000		—		250,000		—		300,000		550,000		—		250,000		300,000		—
2018 Revolving Facility		182,000		—		—		—		182,000		289,000		—		289,000		—		—
Interest on indebtedness⁽²⁾⁽¹⁾		234,821		33,747		127,655		58,096		15,323		163,543		50,228		88,275		18,659		6,381
Operating leases		1,534		804		646		84		-		3,679		391		1,621		1,667		—
Ground leases		55,565		675		3,285		3,168		48,437		54,553		1,212		3,319		3,169		46,853
Development and redevelopment commitments⁽³⁾⁽²⁾		118,527		106,043		12,484		—		—		56,798		54,880		1,918		—		—
Total	$	2,126,438	$	150,390	$	647,751	$	560,380	$	767,917	$	2,015,663	$	146,662	$	1,210,232	$	389,783	$	268,986

Annual dividends on our 3,450,000 7.375% Series B Preferred Shares ($25.00 liquidation preference), our 6,900,000 7.20% Series C Preferred Shares ($25.00 liquidation preference) and our 5,000,000 6.875% Series D Preferred Shares ($25.00 liquidation preference) are expected to be $6.4 million, $12.4 million and $8.6 million, respectively, in the aggregate.

Net cash provided by operating activities totaled ~~$62.3~~$14.4 million for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to ~~$75.1~~$23.0 million for the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. This decrease was due to changes in working capital between periods, ~~higher interest payments made during the six months ended June 30, 2019,~~ dilution from assets sold in ~~the first six months of June 30, 2018,~~2019, and ~~the impact of changes~~distributions from ~~the new lease accounting standard which requires the expensing of certain leasing costs that were permitted to be capitalized under the previous standard,~~partnerships, among other factors.

Cash flows used in investing activities were ~~$66.3~~$28.8 million for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to cash flows ~~provided by~~used in investing activities of ~~$53.0~~$38.7 million for the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. Cash flows provided by investing activities for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 included ~~$42.1~~$8.0 million of proceeds from asset sales including the sale of two land parcels and a Whole Foods store, the sale of a mortgage loan and cash distributions of proceeds from real estate sold by an equity method investee, as well as $4.5 million of insurance proceeds.three outparcels. Cash flows used in investing activities included additions to construction in progress of ~~$63.8~~$20.2 million, investments in partnerships of ~~$35.2~~$9.3 million (primarily at Fashion District Philadelphia), and real estate improvements of ~~$13.9~~$2.4 million (primarily related to ongoing improvements at our properties).

Cash flows provided by investing activities for the six months ended June 30, 2018 included $123.0 million of distributions from our new Fashion District Philadelphia term loan and $19.7 million of proceeds from our share of the sale of the condominium space at 907 Market Street, partially offset by additions to construction in progress of $22.4 million, investments in partnerships of $31.4 million (primarily at Fashion District Philadelphia), and real estate improvements of $17.2 million (primarily related to ongoing improvements at our properties).

~~Cash flows used in~~ financing activities were ~~$2.0~~$6.4 million for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to cash flows ~~used in~~provided by financing activities of ~~$105.3~~$5.9 million for the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. Cash flows used in financing activities for the first ~~six~~three months of ~~2019~~2020 included aggregate dividends and distributions of ~~$47.1~~$23.7 million, and principal installments on mortgage loans of ~~$8.3~~$3.5 million, ~~and $63.3 million used to defease the mortgage secured by Capital City Mall~~ partially offset by ~~$117.0~~$34.0 million of net borrowings under our 2018 Revolving Facility.

Cash flows ~~used in~~provided by financing activities for the ~~first six~~three months ~~of 2018~~ended March 31, 2019, included ~~$53.0~~$97.0 million of net ~~repayments on~~borrowings under our ~~2013~~2018 Revolving Facility, partially offset by aggregate dividends and distributions of ~~$46.7~~$23.5 million, ~~and~~ principal installments on mortgage loans of ~~$9.4~~$3.8 million, ~~partially offset by $10.2~~and $63.3 million ~~of borrowing~~used to defease the mortgage secured by ~~Viewmont~~the Capital City Mall.

We are aware of certain environmental matters at some of our properties. 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 or of any obligation to satisfy requirements for further remediation. We may be required in the future to perform testing relating to these matters. We have insurance coverage for certain environmental claims up to $25.0 million per occurrence and up to $25.0 million in the aggregate. See our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, in the section entitled “Item 1A. Risk Factors—We might incur costs to comply with environmental laws, which could have an adverse effect on our results of operations.”

Competition in the retail real estate market is intense. We compete with other public and private retail real estate companies, including companies that own or manage malls, power centers, strip centers, lifestyle 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 several factors, including location and rent charged. We compete with these companies to attract customers to our properties, as well as to attract anchor and non-anchor stores and other tenants. We also compete to acquire land for new site development or to acquire parcels or properties to add to our existing properties. Our malls and our other operating properties 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. Our tenants face competition from companies at the same and other properties and from other retail formats as well, including internet retailers. This competition could have a material adverse effect on our ability to lease space and on the amount of rent and expense reimbursements that we receive.

The existence or development of competing retail properties and the related increased competition for tenants might, subject to the terms and conditions of the Credit Agreements, 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 total sales, sales per square foot, occupancy and net operating income of such properties. Any such capital improvements, undertaken individually or collectively, would 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 prime development sites or sites adjacent to our properties, including institutional pension funds, other REITs and other owner-operators of retail properties. When we seek to make acquisitions, competitors might drive up the price we must pay for properties, parcels, other assets or other companies 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, better cash flow and enhanced operating efficiencies. We might not succeed in acquiring retail properties or development sites that we seek, or, if we pay a higher price for a property and/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 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. Such tenants might enter into or renew leases with relatively shorter terms. Such tenants might also defer or fail to make rental payments when due, delay or defer lease commencement, voluntarily vacate the premises or declare bankruptcy, which could result in the termination of the tenant’s lease or preclude the collection of rent in connection with the space for a period of time, 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. The COVID-19 pandemic and the economic challenges resulting from it have exacerbated these risks. Some of our tenants occupy stores at multiple locations in our portfolio, and so the effect of any bankruptcy or store closings of those tenants might be more significant to us than the bankruptcy or store closings of other tenants. See “Item 2. Properties—Major Tenants” in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. In addition, under many of our leases, our tenants pay rent based, in whole or in part, 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, or otherwise seek changes to the terms, including changes to the amount of rent, we might modify lease terms in ways that are less favorable to us. Given current conditions in the economy, certain industries and the capital markets, particularly in light of the COVID-19 pandemic, in some instances retailers that have sought protection from creditors under bankruptcy law have had difficulty in obtaining debtor-in-possession financing, which has decreased the likelihood that such retailers will emerge from bankruptcy protection and has limited their alternatives.

There is seasonality in the retail real estate industry. Retail property leases often provide for the payment of all or a portion of rent based on a percentage of a tenant’s sales revenue, or sales revenue 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 November/December holiday season. Also, many new and temporary leases are entered into later in the year in anticipation of the holiday season and a higher number of tenants vacate 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 and second quarters. Our concentration in the retail sector increases our exposure to seasonality and has resulted, and is expected to continue to result, in a greater percentage of our cash flows being received in the fourth quarter. There is potential for an impact to our holiday season sales levels if COVID-19 related closures are prolonged into the end of 2020 or customer traffic is impacted by social distancing guidelines or COVID-19 related concerns.

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 might increase with inflation. Leases might also provide for tenants to bear all or a portion of operating expenses, which might reduce the impact of such increases on us. However, rent increases might not keep up with inflation, or if we recover a smaller proportion of property operating expenses, we might bear more costs if such expenses increase because of inflation.

This Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2019~~March 31, 2020 , together with other statements and information publicly disseminated by us, contain certain forward-looking statements that can be identified by the use of words such as “anticipate,” “believe,” “estimate,” “expect,” “project,” “intend,” “may” or similar expressions. Forward-looking statements relate to expectations, beliefs, projections, future plans, strategies, anticipated events, trends and other matters, including our expectations regarding the impact of COVID-19 on our business, that are not historical facts. These forward-looking statements reflect our current views about future events, achievements, or results, cost reductions, dividend payments and the impact of COVID-19 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 materially and adversely affected by the following:

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 herein and in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 in the section entitled “Item 1A. Risk Factors” and any subsequent reports we file with the SEC. We do not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.

The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market interest rates. As of ~~June 30, 2019,~~March 31, 2020, our consolidated debt portfolio consisted of ~~$984.0~~$896.5 million of fixed and variable rate mortgage loans (net of debt issuance costs), $300.0 million borrowed under our 2018 Term Loan Facility, which bore interest at a rate of ~~4.04%~~3.83% and $250.0 million borrowed under our 2014 7-Year Term Loan, which bore interest at a rate of ~~4.04%~~3.83%. As of ~~June 30, 2019, $182.0~~March 31, 2020, $289.0 million was outstanding under our 2018 Revolving Facility, which bore interest at a rate of ~~3.70%~~2.81%.

Our mortgage loans, which are secured by 10nine of our consolidated properties, are due in installments over various terms extending to October 2025. ~~Seven~~Six of these mortgage loans bear interest at fixed interest rates that range from 3.88% to 5.95%, and had a weighted average interest rate of ~~4.19%~~4.08% at ~~June 30, 2019.~~March 31, 2020. Three of our mortgage loans bear interest at variable rates, a portion of which has been swapped to fixed rates, and, taking into consideration the impact of interest rate swaps, had a weighted average interest rate of ~~4.74%~~3.83% at ~~June 30, 2019.~~March 31, 2020. The weighted average interest rate of all consolidated mortgage loans was ~~4.34%~~4.01% at ~~June 30, 2019.~~March 31, 2020. Mortgage loans 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 due in the respective years and the weighted average interest rates for the principal payments in the specified periods:

	Fixed Rate Debt					Variable Rate Debt						Fixed Rate Debt					Variable Rate Debt
(in thousands of dollars) For the Year Ending December 31,	Principal Payments		Weighted Average Interest Rate⁽¹⁾			Principal Payments			Weighted Average Interest Rate⁽¹⁾			Principal Payments		Weighted Average Interest Rate⁽¹⁾			Principal Payments			Weighted Average Interest Rate⁽¹⁾
2019	$	8,281		4.17	%	$	840			4.40	%
2020		43,926		5.02	%		1,680	₍₂₎		4.40	%	$	38,691		5.01	%	$	1,260			3.58	%
2021		17,173		4.11	%		440,902	₍₂₎		4.13	%		15,745		4.01	%		440,902	⁽²⁾		3.80	%
2022		304,044		3.97	%		248,912	₍₂₎		3.79	%		302,539		3.96	%		355,912	⁽²⁾		2.87	%
2023 and thereafter		350,233		4.24	%		300,000			4.04	%
2023													59,883		3.99	%		300,000	⁽²⁾		3.83	%
2024 and thereafter													222,156		4.04	%		—			—

As of ~~June 30, 2019,~~March 31, 2020, we had ~~$992.3~~$1,098.1 million of variable rate debt. ~~Also, as~~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 ~~June 30, 2019,~~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, and in some cases have been, 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.

As of March 31, 2020, we had ~~entered into~~ interest rate swap agreements outstanding with an aggregate weighted average interest rate of ~~1.85%~~1.67% on a notional amount of ~~$796.5~~$795.2 million maturing on various dates through May 2023 and a forward starting interest rate swap ~~agreements~~agreement with a weighted average interest rate of 2.75% on a notional amount of $100.0 million, with an effective date in June 2020 and a maturity date in May 2023.

Changes in market interest rates have different effects on the fixed and variable rate portions of our debt portfolio. A change in market interest rates applicable to the fixed portion of the debt portfolio affects the fair value, but it has no effect on interest incurred or cash flows. A change in market interest rates applicable to the variable portion of the debt portfolio affects the interest incurred and cash flows, but does not affect the fair value. The following sensitivity analysis related to our debt portfolio, which includes the effects of our interest rate swap agreements, assumes an immediate 100 basis point change in interest rates from their actual ~~June 30, 2019~~March 31, 2020 levels, with all other variables held constant.

A 100 basis point increase in market interest rates would have resulted in a decrease in our net financial instrument position of ~~$45.9~~$35.5 million at ~~June 30, 2019.~~March 31, 2020. A 100 basis point decrease in market interest rates would have resulted in an increase in our net financial instrument position of ~~$47.9~~$36.8 million at ~~June 30, 2019.~~March 31, 2020. Based on the variable rate debt included in our debt portfolio at ~~June 30, 2019,~~March 31, 2020, a 100 basis point increase in interest rates would have resulted in an additional ~~$2.0~~$3.0 million in interest expense annually. A 100 basis point decrease would have reduced interest incurred by ~~$2.0~~$3.0 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, and in some cases have been, 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 7 of the notes to our unaudited consolidated financial statements.

Because the information presented above includes only those exposures that existed as of ~~June 30, 2019,~~March 31, 2020, it does not consider changes, exposures or positions which have arisen or could arise after that date. The information presented herein has limited predictive value. As a result, the ultimate realized gain or loss or expense with respect to interest rate fluctuations will depend on the exposures that arise during the period, our hedging strategies at the time and interest rates.

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 ~~June 30, 2019,~~March 31, 2020, and have concluded as follows:

We have incorporated the effects of COVID-19 into our control structure, primarily as a result of our employees working remotely. We have not experienced any material impact to our internal control over financial reporting to date as a result of the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 pandemic’s effect on our internal control processes in order to minimize the impact to their design and operating effectiveness. There was no change in our internal control 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 control over financial reporting.

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 that we manage 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 our consolidated financial position or results of operations.

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. The following is an update to the Company’s risk factors and should be read in conjunction with the risk factors previously disclosed under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

The COVID-19 global pandemic and the public health and governmental actions in response have ~~experienced, security breaches through cyber attacks. A significant privacy breach or IT system disruption could~~adversely affected, and will likely continue to adversely affect, our business, financial condition, liquidity and ~~we might~~operating results. The extent and duration of such effects are highly uncertain and cannot be ~~required~~predicted.

The 2020 global outbreak of a novel coronavirus (COVID-19), which was declared a pandemic by the World Health Organization on March 11, 2020, has resulted in travel restrictions, business closures, property shutdowns, government-imposed stay-at-home orders and the implementation of “social distancing” and certain other measures to ~~increase our spending on data~~prevent the further spread of the virus, all of which have adversely impacted, and ~~system security, which could adversely affect our financial condition.~~

~~We rely on information technology networks and systems, including the Internet,~~will likely continue to ~~process, transmit and store electronic information, and to manage or support a variety of business processes and activities. In addition,~~impact, our business, ~~relationships~~financial condition, liquidity and operating results, as well as our tenants’ businesses. The continued spread of COVID-19 has also led to unprecedented global economic disruption and volatility in financial markets. We anticipate that our future business, financial condition, liquidity and results of operations, including our results for 2020 and potentially thereafter, will be materially impacted by the COVID-19 pandemic. It remains highly uncertain how long the global pandemic, economic challenges and restrictions on day-to-day life will last. Given the unprecedented and rapidly evolving developments, we cannot reasonably predict or estimate its ultimate impact on us or our tenants, or on our ability or the ability of our tenants to resume more normal operations.

While we have taken several responsive steps (including staff reductions, reduction of capital expenditures and operating expenses, engagement with our ~~tenants~~lenders to negotiate modifications to our debt facilities and ~~vendors involve~~instruments, and a 90% common share dividend reduction), we anticipate that further actions will be necessary to address the ~~storage~~impacts of the pandemic, which may include suspension or further reduction of share dividends. The spread of COVID-19 and transmission of proprietary information and sensitive or confidential data. Like many businesses today, we have experienced an increase in cyber-threats and attempted intrusions. Our systems are subjectmeasures taken to reduce its spread subjects us to a variety of ~~forms~~risks and could result in the following impacts, some of ~~cyber attacks~~which have already occurred and could continue and increase the longer the crisis continues:

Ultimately, the significance of COVID-19 on our business remains highly uncertain and will depend on, among other things, the extent and duration of the pandemic, the severity of the disease and the number of people infected with the ~~objective~~virus, the effects on the economy of ~~gaining unauthorized access~~the pandemic and of the measures taken by governmental authorities and other third parties restricting day-to-day life and the length of time that such measures remain in place, and implementation of governmental programs to ~~our systems or data or disrupting our operations. Security breaches have, from time to time, occurred~~assist businesses and ~~may occur in~~consumers impacted by the ~~future. Due to the nature of these attacks, there is a risk that an attack or intrusion remains undetected for a period of time. Though the cyber attacks~~COVID-19 pandemic. While we have experienced ~~have not had a material impact on our financial results to date,~~ and we maintain cyber liability insurance coverage, there remains a risk that breaches in security could expose us, our tenants or our employees to a risk of loss, misappropriation of assets that cannot be recovered, or misuse of proprietary information and of sensitive or confidential data. In addition, our information technology systems, some of which are managed or hosted by third-parties, may be susceptible to damage, disruptions or shutdowns due to computer viruses, attacks by computer hackers, telecommunication failures, user errors or catastrophic events, failures during the process of upgrading or replacing software, databases or components thereof, power outages or hardware failures. Any of these occurrences could result in disruptions in our operations, the loss of existing or potential tenants or shoppers, damage to our brand and reputation, regulatory compliance efforts and costs, remediation costs, and litigation and potential liability. Even the most well-protected information remains potentially vulnerable, because the techniques and sophistication used to conduct cyber attacks and breaches of IT systems, as well as the sources of these attacks, change frequently and are often not recognized until they are launched and have been put in place for a period of time. Although we make substantial efforts to maintain the security of our networks and related systems, there can be no assurance that our security efforts will be effective or that attempted security breaches would not be successful or damaging. Our efforts include conducting periodic assessments of internal and external threats to and vulnerabilities of our information and technology systems, security controls and processes in place and the effectiveness of our management of cybersecurity risk. The results of these assessments are used to create and implement strategies designed to prevent, detect and respond to cybersecurity threats, and we expect to continue to employ cybersecurity risk mitigation measures, as well as seek to improve and expand such measures. We may incur increasing costs to deploy additional personnel and protection technologies, to train employees and engage third-party experts and consultants, or to notify employees, suppliers or the general public as partexperience an adverse impact on our notification obligations. The cost and operational consequences of implementing further data or system protection measures or remediation efforts could be significant. Our processes, procedures and controls to reduce these risks, our increased awareness of the risk of a cyber incident, and our insurance coverage, however, do not guarantee that ourbusiness, financial ~~results would not be materially impacted by a cyber incident.~~

Our retailer tenants’ businesses also require the collection, transmission and retention of large volumes of shopper and employee data, including credit and debit card numbers and other personally identifiable information, in various information technology systems. The consequences of cyber attacks perpetrated against our retailer tenants, which may include the misappropriation of assets or sensitive information or an operational disruption, could diminish consumer confidence and spending, result in fines, legal claims or proceedings or other liability, as well as significant remediation costs, any of which could have a material and adverse effect on their financial condition, liquidity and results of operations, ~~and~~we cannot estimate the extent to which COVID-19 will impact our future business, ~~generally. This could, in turn, have an adverse effect on our~~ financial condition, liquidity or results of operations.

If we are unable to comply with the covenants in our Credit Agreements, we will be adversely affected.

The Credit Agreements require us to satisfy certain customary affirmative and negative covenants and to meet numerous financial tests, including tests relating to our leverage, unencumbered debt yield, interest coverage, fixed charge coverage, tangible net worth, corporate debt yield and facility debt yield. These covenants could limit our ability to respond to changes and competition, reduce our flexibility in conducting our operations by limiting our ability to borrow money, sell or place liens on assets, manage our cash flows, repurchase securities, make capital expenditures or make distributions to shareholders, and restrict our ability to pursue acquisitions, redevelopment and development projects. We ~~are subject~~expect the current conditions in the economy and the retail industry, particularly in light of the COVID-19 pandemic and the resulting unprecedented global economic disruption (including disruptions to ~~risks associated with increases~~our and our tenants’ businesses and operations), to continue to affect our operating results. The leverage covenant in ~~interest~~the Credit Agreements generally takes our net operating income and applies capitalization rates ~~including in connection with~~to calculate Gross Asset Value, and consequently, deterioration or improvement to our ~~variable interest rate debt.~~

Asoperating performance also affects the calculation of June 30, 2019, we had $992.3 million of indebtedness with variable interest rates, although we have fixed the interest rates on an aggregate of $796.5 million of this variable rate debt by using derivative instruments.our leverage. In addition, a material decline in future operating results could affect our ~~unconsolidated partnerships have $149.7 million, at~~ability to comply with other financial ratio covenants contained in our ~~proportionate share,~~Credit Agreements, which are calculated on a trailing four quarter basis. While we are unable to predict or estimate the duration and scope of ~~indebtedness with variable rates. We~~the effects of the COVID-19 pandemic on our future operating results, we anticipate such effects will be material. Also, we might ~~incur additional variable rate debt~~be restricted in the ~~future,~~amount we can borrow based on the Unencumbered Debt Yield covenant under the Credit Agreements. Following recent property sales, the NOI from our remaining unencumbered properties is at a level such that the maximum amount that was available to be borrowed by us under the 2018 Revolving Facility was $65.3 million as of March 31, 2020, which is not reduced by any usage of the borrowing capacity to fulfill our unrestricted cash liquidity requirement of $25 million as described further in Note 4 to our unaudited consolidated financial statements.

Furthermore, to determine our compliance with the Credit Agreements, including the covenants, we must apply our judgment to our facts, taking into account our past practice, and interpret the contractual provisions in the agreements. To the extent that our lenders interpret these differently than us, we may have disagreements or disputes, and if we are unable to resolve them, these disagreements may result in material limitations on our ability to access funding under the facility, protracted negotiations, and/or legal proceedings.

We have determined that, as of March 31, 2020, we were in compliance with all the financial covenants in our Credit Agreements. Particularly in light of recent property sales, reduction in our asset base and the impacts of the COVID-19 pandemic on our business, however, we are at increased risk of being unable to comply with these covenants or having reduced borrowing capacity. We currently anticipate not meeting certain financial covenants applicable under the Credit Agreements during 2020. We regularly engage in discussions with lenders that participate in our senior unsecured credit facility regarding our capital and liquidity resources and needs, including to explore alternatives and ensure that we will remain in compliance with our financial covenants and have continued access to funding under the facility, which alternatives may include waivers or amendments. As discussed in “Liquidity and Capital Resources – Identical covenants and common provisions contained in the Credit Agreements,” on March 30, 2020, we entered into amendments of our Credit Agreements to obtain certain debt covenant relief through September 30, 2020. It was initially anticipated that we would not be in compliance with certain covenants after September 30, 2020, however, in light of COVID-19, our ability to comply with our financial covenants may be impacted prior to September 30, 2020. As of the date of the filing of this Quarterly Report on Form 10-Q, we are in active discussions with the lenders participating in our credit facilities to further modify the terms of those agreements, obtain debt covenant relief and pursue a longer term financing solution. There is no assurance that we could obtain such waivers or amendments, and even if obtained, we would likely incur additional costs. Our inability to obtain any such waiver or amendment could result in a breach and a possible event of default under our Credit Agreements, which could allow the lenders to discontinue lending or issuing letters of credit, terminate any commitments they have made to provide us with additional funds, and/or declare amounts outstanding to be immediately due and payable. If a default were to occur, we might have to refinance the debt through secured or unsecured debt financing or private or public offerings of debt or equity securities. If we are unable to do so, ~~the proportion~~we might have to liquidate assets, potentially on unfavorable terms. No assurance can be provided that we would be able to liquidate assets in a timely fashion or in satisfaction of our ~~debt with variable interest rates might increase. See “Part I. Item 3. Quantitative~~obligations. Any of such consequences could negatively affect our financial position, results of operations, cash flow and ~~Qualitative Disclosures About Market Risk.”~~ ability to make capital expenditures and distributions to shareholders.

~~An increase~~We have determined that there is substantial doubt about our ability to continue as a going concern.

In evaluating whether there are conditions or events, considered in ~~market interest rates applicable~~the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the ~~variable portion~~date that the financial statements are issued, our management considered our current financial condition and liquidity sources, including current funds available, forecasted future cash flows and our conditional and unconditional obligations due over the next twelve months. Management considered the following: (i) our senior unsecured facility, which includes a revolving facility maturing in 2022 with a balance of $289.0 million as of March 31, 2020 and term loans maturing in 2023 with a balance of $550.0 million as of December 31, 2019; (ii) our mortgage loans with varying maturities through 2025 with a principal balance of $896.5 million as of March 31, 2020; (iii) the financial covenant compliance requirements of our credit agreements; and (iv) recurring costs of operating our business. As a result of the considerations articulated below, management concluded there is substantial doubt about our ability to continue as a going concern.

Although we plan to control costs, complete the sale-leaseback of certain properties, sell certain real estate assets and continue to work with the lenders participating in our credit facilities to obtain debt ~~portfolio would increase~~covenant relief and pursue longer term financing solutions, and we are also in discussions with the ~~interest incurred~~lenders of our properties’ mortgage loans to seek modification of those loans, there are inherent risks, unknown results and ~~cash flows necessary to service such debt, subject to our hedging arrangements on such debt. This has~~significant uncertainties associated with each of these matters and ~~could, in~~ the ~~future, adversely affect our results of operations~~direct correlation between these matters and our ability to ~~make distributions~~satisfy financial obligations that may arise over the applicable twelve month period. Our ability to ~~shareholders. Also, in coming years, as~~satisfy obligations under our ~~current~~senior unsecured credit facility and mortgage loans, ~~mature, if these mortgage loans are refinanced at higher interest rates than the rates~~maintain compliance with our debt covenants and fund recurring costs of operations, particularly in ~~effect at the time~~light of the ~~prior loans,~~current COVID-19 pandemic and resulting adverse impacts on our ~~interest expense in connection with debt secured by our properties will increase, and could adversely affect our results of operations and~~business, depends on management’s ability to ~~make distributions~~execute the sale-leaseback transactions, to ~~shareholders.~~complete the sale of certain real estate assets, which sales will provide cash, to continue to control costs, and to obtain relief from lenders participating in our credit facilities and from lenders under our properties’ mortgage loans. While controlling costs is within management’s control to some extent, executing the sale-leaseback transactions, selling real estate assets and obtaining relief from lenders or other long term financing solutions involve performance by third parties and therefore cannot be considered probable of occurring.

~~Furthermore,~~The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the ~~expected discontinuation~~realization of ~~the London Inter-Bank Offered Rate (LIBOR) after 2021~~assets and the ~~transition away from LIBOR presents various risks~~satisfaction of liabilities and ~~challenges, including with respect to our borrowings and hedging arrangements that rely on~~commitments in the LIBOR benchmark. Various parties are working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR. We have material contracts indexed to USD-LIBOR and are monitoring this activity and evaluating the related risk. To the extent that our contracts that rely on the LIBOR benchmarknormal course of business. The financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. Management is taking steps to mitigate the associated risks, but we can provide ~~for replacement rates, we may seek~~no assurance that cash generated from our operations together with cash received in the future from our various sources of funding will be sufficient to amend such contracts. While we are focused on effective planning for the phase-out of LIBOR, the transition may divert management attention and could have other adverse consequences for us, including by requiringenable us to ~~pay higher interest on our obligations.~~continue as a going concern.

The following table shows the total number of shares that we acquired in the three months ended ~~June 30, 2019~~March 31, 2020 and the average price paid per share (in thousands of shares).

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		23-6216339
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~200 South Broad~~One Commerce Square 2005 Market Street, Suite 1000 Philadelphia, PA		~~19102~~19103
(Address of principal executive offices)		(Zip Code)

Title of each class	Trading Symbol(s)	Name of Exchange on which registered
Shares of Beneficial Interest, par value $1.00 per share	PEI	New York Stock Exchange
Series B Preferred Shares, par value $0.01 per share	PEIPrB	New York Stock Exchange
Series C Preferred Shares, par value $0.01 per share	PEIPrC	New York Stock Exchange
Series D Preferred Shares, par value $0.01 per share	PEIPrD	New York Stock Exchange


Large accelerated filer	☒☐	Accelerated filer	☐☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


			Page
	PART I—FINANCIAL INFORMATION

Item 1.		Financial Statements (Unaudited):	1

		Consolidated Balance Sheets—~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019	1

		Consolidated Statements of Operations—Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	2

		Consolidated Statements of Comprehensive ~~Income—~~Income (Loss)—Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	4

		Consolidated Statements of Equity—Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	5

		Consolidated Statements of Cash Flows— ~~Six~~Three Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	76

		Notes to Unaudited Consolidated Financial Statements	87

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	2120

Item 3.		Quantitative and Qualitative Disclosures About Market Risk	4240

Item 4.		Controls and Procedures	4341

		PART II—OTHER INFORMATION

Item 1.		Legal Proceedings	4442

Item 1A.		Risk Factors	4442

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	4544

Item 3.		Not Applicable

Item 4.		Not Applicable

Item 5.		Not Applicable

Item 6.		Exhibits	4645

Signatures			4746

(in thousands of dollars)	Finance leases			Operating leases			Total
April 1 to December 31, 2020	$	728		$	1,603		$	2,331
2021		970			2,465			3,435
2022		968			2,475			3,443
2023		964			2,449			3,413
2024		930			2,387			3,317
Thereafter		2,997			53,545			56,542
Total undiscounted lease payments		7,557			64,924			72,481
Less imputed interest		(1,179	)		(34,895	)		(36,074	)
Total lease liabilities	$	6,378		$	30,029		$	36,407

3.1	Amendment to Amended and Restated Trust Agreement dated December 18, 2008, as amended, dated as of March 31, 2020, filed as Exhibit 3.1 to PREIT’s Current Report on Form 8-K filed on March 31, 2020, is incorporated herein by reference.

3.2	By-Laws of PREIT (as amended through March 31, 2020), filed as Exhibit 3.2 to PREIT’s Current Report on Form 8-K filed on March 31, 2020, is incorporated herein by reference.

10.1*+	2020-2022 Equity Award Program.

10.2*+	Form of Restricted Share Unit Award Agreement.

10.3*+	Form of Restricted Share Award Agreement.

10.4+	Employment Agreement, dated as of January 1, 2020, between PREIT and Mario C. Ventresca, Jr., filed as Exhibit 99.1 to PREIT’s Current Report on Form 8-K/A filed on March 9, 2020, is incorporated herein by reference.

10.5	Sixth Amendment to Seven-Year Term Loan Agreement dated as of January 8, 2014, as amended, by and among PREIT Associates, L.P., PREIT-RUBIN, Inc., PREIT, and the financial institutions party thereto, dated as of March 30, 2020, filed as Exhibit 10.1 to PREIT’s Current Report on Form 8-K filed on March 31, 2020, is incorporated herein by reference.

10.6	First Amendment to Amended and Restated Credit Agreement dated as of May 24, 2018, by and among PREIT Associates, L.P., PREIT-RUBIN, Inc., PREIT and the financial institutions party thereto, dated as of March 31, 2020, filed as Exhibit 10.2 to PREIT’s Current Report on Form 8-K filed on March 31, 2020, is incorporated herein by reference.

10.7*	Letter Agreement executed by Wells Fargo, National Association amending 7-Year Term Loan and 2018 Credit Agreement, dated May 1, 2020.

31.1*	Certification pursuant to Exchange Act Rules 13a-14(a)/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)/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.

101.INS*	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*	Inline XBRL Taxonomy Extension Schema Document.

101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.


104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.INS).


		PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
Date:	~~August 2, 2019~~May 21, 2020
		By:	/s/ Joseph F. Coradino
			Joseph F. Coradino
			Chairman and Chief Executive Officer

		By:	/s/ ~~Robert F. McCadden~~Mario C. Ventresca, Jr.
			~~Robert F. McCadden~~Mario C. Ventresca, Jr.
			Executive Vice President and Chief Financial Officer