Pennsylvania Real Estate Investment Trust (PRET) 8-K Results of Operations and Financial Condition

Pennsylvania Real Estate Investment Trust
200 South Broad Street
Philadelphia, PA 19102
www.preit.com
Phone: 215-875-0700
Fax: 215-546-7311
Toll Free: 866-875-0700

CONTACT: AT THE COMPANY	AT KCSA PUBLIC RELATIONS WORLDWIDE
Robert McCadden	Lewis Goldberg
EVP and CFO	(Media Relations)
(215) 875-0700	(212) 896-1216
Nurit Yaron
VP, Investor Relations
(215) 875-0700

FOR IMMEDIATE RELEASE
October 31, 2005

PREIT Reports Third Quarter and Nine Month 2005 Results
and Announces 2005 and 2006 Guidance

Philadelphia, PA, October 31, 2005 – Pennsylvania Real Estate Investment Trust (NYSE: PEI) today announced its results for the third quarter and nine months ended September 30, 2005.

Financial Results

• Net income available to common shareholders for the third quarter of 2005 was $14.5 million, compared to $10.9 million in the third quarter of 2004, an increase of 33.0%. On a per diluted share basis, net income was $0.39, compared to $0.30 in the third quarter of 2004, an increase of 30.0%. Net income available to common shareholders for the nine months ended September 30, 2005 was $28.0 million, compared to $24.4 million for the nine months ended September 30, 2004, an increase of 14.8%. On a per diluted share basis, net income was $0.74, compared to $0.66 in the nine months ended September 30, 2004, an increase of 12.1%. The Company’s financial results for the third quarter and nine months ended September 30, 2005 include gains recorded in connection with sales of the Company’s interests in properties and a prepayment penalty expense in connection with repayment of a mortgage loan prior to its scheduled maturity (see “Certain Third Quarter Items” below).

• Net Operating Income (“NOI”) from wholly owned properties and the Company’s proportionate share of partnership properties was $68.1 million in the third quarter of 2005, compared to $68.9 million in the third quarter of 2004, a decrease of 1.2%. For the nine months ended September 30, 2005, NOI was $207.0 million, compared to $203.5 million for the nine months ended September 30, 2004, an increase of 1.7%.

• Funds From Operations (“FFO”) for the third quarter of 2005 were $36.2 million, compared to $34.6 million in the third quarter of 2004, an increase of 4.6%. Beginning this quarter, the Company is presenting FFO per diluted share as a key measure of its financial performance, which includes the effect of common share equivalents (see “Presentation of FFO Per Diluted Share” below). FFO per diluted share was $0.88 in the third quarter of 2005, compared to $0.85 in the third quarter of 2004, an increase of 3.5%. For the nine months ended September 30, 2005, FFO was $106.5 million, compared to $102.1 million for the comparable period in 2004, an increase of 4.3%. FFO per diluted share was $2.58 for the first nine months of 2005, compared to $2.54 for the first nine months of 2004, an increase of 1.6%.

PREIT Reports Third Quarter and Nine Month Results
October 31, 2005
Page 2

A description of each non-GAAP financial measure and the related reconciliation to the comparable GAAP measure is located at the end of this press release.

Certain Third Quarter Items

The financial results for the three months and nine months ended September 30, 2005 include a gain of approximately $5.0 million from the Company’s sale of its 40% interest in Laurel Mall in Hazleton, Pennsylvania and a gain of approximately $3.7 million from the Company’s sale of its four industrial properties. Gains from the sales of these operating properties are excluded from the calculation of FFO.

The financial results also include a $3.0 million gain recorded by the Company in connection with the previously disclosed settlement of litigation relating to the undeveloped land parcel for the Christiana Power Center Phase II project. Under the settlement agreement, in July 2005, a partnership in which the Company holds a 50% interest sold approximately 111 acres of non-operating real estate on which the project would have been built to the Delaware Department of Transportation for $17.0 million, and the proceeds were received by the partnership. The Company and its partners are currently in discussions with respect to the allocation of these funds. The Company expects that it will receive reimbursement for the approximately $4.8 million of costs that it had incurred in connection with the project. In addition, although the parties have not yet come to terms, the Company expects to receive no less than $3.0 million of the remaining proceeds from the settlement, and recorded this amount for the third quarter. Excluding this gain recorded by the Company, FFO per basic share for the third quarter ended September 30, 2005 would have been $0.82, within the range of the Company’s previous guidance of $0.80 to $0.83 per basic share provided in August 2005.

In addition, the financial results for the three and nine months ended September 30, 2005 include the expense of a prepayment penalty of approximately $0.8 million. As previously disclosed, the expense was incurred when the Company repaid the previous mortgage loan on Magnolia Mall in Florence, South Carolina prior to its scheduled maturity as part of the refinancing of the property.

Retail Operating Metrics

As reflected below, the Company’s results for the third quarter of 2005 were affected, to a significant degree, by redevelopment initiatives that are in various stages at 10 of its 37 mall properties.

PREIT Reports Third Quarter and Nine Month Results
October 31, 2005
Page 3

Occupancy for the Company’s retail portfolio was 91.6% as of September 30, 2005, compared to 91.7% as of September 30, 2004. The in-line occupancy for the Company’s enclosed malls was 85.9% as of September 30, 2005, compared to 86.9% as of September 30, 2004. Occupancy for the 10 malls affected by redevelopment activities was 83.1% as of September 30, 2005, compared to 85.1% as of September 30, 2004. The Company’s power centers were 97.8% occupied as of September 30, 2005, versus 96.8% as of September 30, 2004.

Sales per square foot for the mall properties in the Company’s portfolio as of September 30, 2005 were $329 for the twelve months ended September 30, 2005, compared to $323 for the mall properties in the Company’s portfolio as of September 30, 2004 for the twelve months ended September 30, 2004.

Same store NOI for the Company’s retail portfolio for the third quarter of 2005 decreased by approximately $3.0 million, or 4.5%, compared to the third quarter of 2004. Same store NOI for the 10 redevelopment properties, including the properties in the early stages of the process, decreased by approximately $2.0 million, or 10.9%, compared to the third quarter of 2004. The same store NOI from the balance of the retail portfolio decreased by $1.0 million, or 2.1%, in the third quarter of 2005, primarily due to a decline in lease termination revenues of $1.2 million compared to the third quarter of 2004.

For the nine months ended September 30, 2005, same store NOI for the retail portfolio decreased by approximately $3.3 million, or 1.7%, from the comparable period in 2004. Same store NOI for the 10 redevelopment properties decreased by approximately $2.3 million, or 4.3%, compared to the nine months ended September 30, 2004. Same store NOI for the balance of the retail portfolio decreased by $1.0 million, or 0.7%. Same store results represent property operating results for retail properties that the Company owned for the full periods presented.

Leasing Update

During the third quarter of 2005, the Company executed 212 leases for in-line tenants encompassing approximately 542,000 square feet at an average rent per square foot of $24.64. In addition, three anchors renewed leases in accordance with their stated terms for approximately 308,000 square feet, with an average base rent of $3.07 per square foot.

Of the in-line leases the Company executed during the quarter, 71 leases totaling approximately 125,000 square feet were entered into with new in-line tenants in previously leased space. These leases were executed at an average rent of $36.89 per square foot, which is $5.16, or 16.3%, higher than the average rent per square foot paid by the previous tenant at the time of expiration. There were 90 in-line leases renewed for a total of approximately 212,000 square feet at an average base rent of $22.64 per square foot, an increase of $1.24 per square foot, or 5.8%, over the average rent at expiration. The Company also executed leases for 51 formerly vacant spaces totaling approximately 205,000 square feet with an average rent of $19.26 per square foot.

PREIT Reports Third Quarter and Nine Month Results
October 31, 2005
Page 4

Redevelopment Activity

Ronald Rubin, Chairman and Chief Executive Officer of PREIT, stated, “We are continuing to execute on our previously announced redevelopment initiatives. We are also continuing to examine our portfolio for mixed use and other opportunities.”

At Patrick Henry Mall in Newport News, Virginia, the expanded Dillard’s store has opened and construction of the new lifestyle wing, including the Borders and Red Robin locations, is on schedule for tenant openings during November 2005.  The shell of the Dick’s Sporting Goods store is constructed, with the opening slated for the first quarter of 2006.  At Capital City Mall in Camp Hill, Pennsylvania, construction has been completed on the new food court common area, with tenants currently in possession and completing the build out of their spaces in anticipation of November 2005 openings.  Phase II of the project, with demolition of the former food court and entrance, is underway. The Company expects spring 2006 openings for specialty retail tenants in this wing of the center.  At New River Valley Mall in Christiansburg, Virginia, construction of a Red Robin restaurant has commenced, with an expected opening during the first quarter of 2006.  Also, the Company anticipates a first quarter 2006 construction start for the Regal Cinema at the mall, with a December 2006 opening.

The following table briefly summarizes the Company’s redevelopment and remerchandising initiatives at certain of its mall properties:

Property	Description	Initial Occupancy Date	Estimated Project Cost
Capital City Mall      (Camp Hill, PA)	Relocation of food court and two new restaurants into former theater location; creation of a lifestyle addition in place of former food court; tenants include Hollister, Express (dual gender) and Victoria’s Secret.	4th Quarter 2005	$11.5 million
Patrick Henry Mall      (Newport News, VA)	Consolidation of two Dillard’s stores into one larger store and conversion of former Dillard’s store into a lifestyle addition; tenants include Borders, Dick’s Sporting Goods, Red Robin and Fox & Hound restaurants, Victoria’s Secret and Bath & Body Works.	4th Quarter 2005	$26.6 million

PREIT Reports Third Quarter and Nine Month Results
October 31, 2005
Page 5

Property	Description	Initial Occupancy Date	Estimated Project Cost
New River Valley Mall       (Christiansburg, VA)	Addition of Regal Cinema stadium-style theater on an out parcel along with a Red Robin restaurant, and an in-line sporting goods store; development of a ground-up power center adjacent to the mall.	1st Quarter 2006	$37.0 million
Lycoming Mall       (Pennsdale, PA)	Remerchandising of existing space with in-line Borders and Dick’s Sporting Goods. Best Buy and Applebee’s will be added on out parcels.	2nd Quarter 2006	$11.8 million
Valley View Mall       (LaCrosse, WI)	Remerchandising of existing space with an in-line Barnes & Noble.	4th Quarter 2006	$ 3.6 million
Francis Scott Key Mall       (Frederick, MD)	Remerchandising of existing space with an in-line Barnes & Noble.	4th Quarter 2006	$ 3.5 million
South Mall      (Allentown, PA)	Addition of a Ross Dress for Less and a freestanding Starbucks.	4th Quarter 2006	$ 6.9 million
Cherry Hill Mall      (Cherry Hill, NJ)	Phase I includes creation of Bistro Row and remerchandising of existing retail space.	1st Quarter 2007	$40.0 million
Plymouth Meeting Mall       (Plymouth Meeting, PA)	Phase I of redevelopment includes lifestyle addition anchored by Whole Foods and up to six upscale themed restaurants on out parcels.	4th Quarter 2007	$53.4 million
Echelon Mall       (Voorhees, NJ)	Will rename the property Voorhees Town Center. Under the current plans, the property will incorporate a portion of the existing mall, including Boscov’s and Strawbridge’s (Macy’s) department stores, as well as approximately 200,000 square feet of new lifestyle retail space, a food market and approximately 450 new luxury mid-rise condominium and rental apartment units to be developed by a residential developer.	To be determined	To be determined

Presentation of FFO Per Diluted Share

Beginning this quarter, the Company is presenting FFO per diluted share, which includes the effect of common share equivalents, as a key measure of its financial performance. The shares used to calculate both FFO per diluted share and FFO per basic share also include common shares and operating partnership units. Previously, the Company presented FFO per basic share, and disclosed its forward looking expectations only in terms of FFO per basic share. The difference between FFO per diluted share and FFO per basic share has historically been immaterial in most fiscal quarters. The financial tables at the end of this release include a presentation of the Company’s FFO per basic share and FFO per diluted share for the four quarters of 2004 and the first three quarters of 2005.

PREIT Reports Third Quarter and Nine Month Results
October 31, 2005
Page 6

2005 and 2006 Forecast

For 2005, the Company estimates that net income per diluted share will be between $1.12 and $1.20, that FFO per basic share will be between $3.72 and $3.80 and that FFO per diluted share will be between $3.67 and $3.75.

For 2006, the Company estimates that net income per diluted share will be between $0.59 and $0.71, that FFO per basic share will be between $3.62 and $3.74 and that FFO per diluted share will be between $3.57 and $3.69.  The Company’s expectations for its 2006 financial results are based on a number of assumptions. First, with respect to redevelopment activities, the Company is anticipating the substantial completion next year of its redevelopment initiatives at Capital City, New River Valley and Patrick Henry Malls. The Company also expects to commence construction as part of the planned redevelopments at Cherry Hill, Francis Scott Key, Lycoming, Plymouth Meeting, South and Valley View Malls. Further, the Company expects to refine and finalize plans for its mixed use development at Voorhees Town Center (currently Echelon Mall). The Company expects that these properties will continue to experience disruptions, which will impact operating results during the redevelopment process. In addition, the Company’s 2006 estimates assume that it will recognize gains of approximately $5 million from the sale of non-operating real estate.

Estimated Per Share	Calendar Year 2005			Calendar Year 2006
Diluted earnings per share	$	1.12-1.20		$	0.59-0.71
Gain on sales of operating properties, net of minority interest		(0.23	)		—
Depreciation and amortization (includes Company’s proportional share of partnerships), net of minority interest, and other		2.78			2.98
FFO per diluted share	$	3.67-3.75		$	3.57-3.69
Effect of common share equivalents		0.05			0.05
FFO per basic share	$	3.72-3.80		$	3.62-3.74

During 2006, the Company’s capital expenditures for its previously announced redevelopments are estimated to be approximately $58 million. In addition, the Company expects to spend approximately $96 million related to new power center and mixed-use developments, tenant improvements and recurring capital expenditures. While the Company reviews acquisition opportunities on an ongoing basis, the Company’s earnings guidance for 2006 does not reflect any financial impact from any properties it might acquire or dispose of in 2006.

PREIT Reports Third Quarter and Nine Month Results
October 31, 2005
Page 7

Edward Glickman, PREIT’s President and COO, commented, “As redevelopment initiatives gain traction, we anticipate earnings growth at the properties coming out of construction in late 2005 and early 2006. At the same time, we expect continued dislocation over the near term at our properties that are currently in the earlier stages of redevelopment. Overall, while we expect NOI to increase in 2006, our rate of growth will continue to reflect the ongoing repositioning efforts at many of our assets.”

Common Share Repurchase Program

The Company’s Board of Trustees has authorized a program to repurchase up to $100 million of the Company’s common shares until the end of 2007. (For additional information regarding the repurchase program, please see the Company’s October 31, 2005 press release.)

Recent Financing Activities

On September 30, 2005,the Company completed the previously announced refinancing of Cherry Hill Mall in Cherry Hill, New Jersey with a new $200 million first mortgage loan from Prudential Insurance Company of America and Northwestern Mutual. The loan has an interest rate of 5.42% and will mature in October 2012. Under the terms of the mortgage, the Company will have the right to convert the loan to a senior unsecured loan under prescribed conditions, including the achievement of a specified credit rating.

On July 28, 2005, the Company signed a commitment letter with Prudential Mortgage Capital Company and Teachers Insurance and Annuity Association of America for a $160 million first mortgage loan secured by Willow Grove Park in Willow Grove, Pennsylvania. The Company anticipates that the closing of this mortgage loan will take place in December 2005.

On July 11, 2005, the Company completed a $66.0 million refinancing of the mortgage loan on Magnolia Mall in Florence, South Carolina.

Robert McCadden, PREIT’s CFO, stated, “We expect to end 2005 with over $426 million of new long-term, fixed rate financings in place at a weighted average interest rate of 5.49% as a result of refinancing above-market interest rate mortgages at these three properties. Together with the $370 million of forward-starting interest rate swap agreements entered into earlier this year relating to our anticipated 2007 and 2008 financings, we have taken steps to mitigate the risk of future interest rate increases on our operating results. We are also pleased with Fitch Ratings’ recent announcement that it was revising its outlook on the Company to Positive from Stable and establishing a BB rating for the Company.”

Other events

On September 19, 2005, PREIT and Kravco Simon announced that they have entered into agreements under which PREIT and Kravco Simon Investments, L.P., a Simon Property Group affiliate (NYSE:SPG), will acquire Springfield Mall in Springfield, Pennsylvania for approximately $103.5 million. PREIT and Kravco Simon will each have a 50% ownership interest in the property. The Company expects that the closing of the transaction will take place in the fourth quarter of 2005.

PREIT Reports Third Quarter and Nine Month Results
October 31, 2005
Page 8

In August 2005, the Company acquired approximately 15 acres in Christiansburg, Virginia, adjacent to New River Valley Mall, for $4.1 million, which the Company plans to develop as a power center.

Subsequent Events

On October 28, 2005, the Board of Trustees of the Company declared a quarterly cash dividend of $0.57 per common share and $1.375 per 11% senior preferred share payable on December 15, 2005 to shareholders of record on December 1, 2005.

Press releases with respect to certain of these matters can be obtained from the Company’s website at www.preit.com or by contacting the Company’s Investor Relations Department.

Conference Call Information

The Company has scheduled a conference call for 3:00 p.m. Eastern Time today to review its third quarter results. To listen to the call, please dial (877) 691-0878 (domestic) or (973) 935-8505 (international) at least five minutes before the scheduled start time. Investors can also access the call in a “listen only” mode via the Internet at the Company website at www.preit.com or www.vcall.com. Please allow extra time prior to the call to visit the site and download the necessary software to listen to the Internet broadcast. Financial and statistical information expected to be discussed on the call will also be available on the Company’s website www.preit.com under the Investor Relations tab.

For interested individuals unable to join the conference call, a replay of the call will be available until November 13, 2005, at (877) 519-4471 (domestic) or (973) 341-3080 (international), (Passcode: 6583703). The online archive of the webcast will be available for 14 days following the call.

About Pennsylvania Real Estate Investment Trust

Pennsylvania Real Estate Investment Trust, founded in 1960 and one of the first equity REITs in the U.S., has a primary investment focus on retail shopping malls and power centers (approximately 32.8 million square feet) located in the eastern United States. PREIT’s portfolio currently consists of 51 properties in 12 states. PREIT’s portfolio includes 37 shopping malls, 13 strip and power centers and one office property. PREIT is headquartered in Philadelphia, Pennsylvania. PREIT’s website can be found at www.preit.com.

Definitions

The National Association of Real Estate Investment Trusts (“NAREIT”) defines Funds From Operations (“FFO”), which is a non-GAAP measure, as income before gains (losses) on sales of operating properties and extraordinary items (computed in accordance with GAAP); plus real estate depreciation; plus or minus adjustments for unconsolidated partnerships to reflect funds from operations on the same basis. FFO is a commonly used measure of operating performance and profitability in the REIT industry, and we use FFO as a supplemental non-GAAP measure to compare our Company’s performance to that of our industry peers. In addition, we use FFO as a performance measure for determining bonus amounts earned under certain of our performance-based executive compensation programs. The Company computes 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 the Company. FFO does not include gains (losses) on sale of operating real estate assets, which are included in the determination of net income in accordance with GAAP. Accordingly, FFO is not a comprehensive measure of our operating cash flows. In addition, since FFO does not include depreciation on real estate assets, FFO may not be a useful performance measure when comparing our operating performance to that of other non-real estate commercial enterprises. We compensate for these limitations by using FFO in conjunction with other GAAP financial performance measures, such as net income and net cash provided by operating activities, and other non-GAAP financial performance measures, such as net operating income. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (determined in accordance with GAAP) as an indication of the Company’s financial performance, or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company’s liquidity, nor is it indicative of funds available for the Company’s cash needs, including its ability to make cash distributions.

PREIT Reports Third Quarter and Nine Month Results
October 31, 2005
Page 9

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

Net operating income (“NOI”), which is a non-GAAP measure, is derived from revenues (determined in accordance with GAAP) minus property operating expenses (determined in accordance with GAAP). Net operating income is a non-GAAP measure. It does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (determined in accordance with GAAP) as an indication of the Company’s financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company’s liquidity; nor is it indicative of funds available for the Company’s cash needs, including its ability to make cash distributions. The Company believes that net income is the most directly comparable GAAP measurement to net operating income.

The Company believes that net operating income is helpful to management and investors as a measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. Net operating income excludes general and administrative expenses, management company revenues, interest income, interest expense, depreciation and amortization, income from discontinued operations and gains on sales of interests in real estate.

This press release contains certain “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and other matters that are not historical facts. These forward-looking statements reflect PREIT’s current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause future events, achievements or results to differ materially from those expressed by the forward-looking statements. Additionally, there can be no assurance that PREIT’s actual results will not differ significantly from the forecast and estimates set forth above, or that PREIT’s returns on its acquisitions will be consistent with the estimates outlined in the related press releases. PREIT’s business is subject to uncertainties regarding the revenues, operating expenses, leasing activities, occupancy rates, and other competitive factors relating to PREIT’s portfolio and changes in local market conditions as well as general economic, financial and political conditions, including the possibility of outbreak or escalation of war or terrorist attacks, any of which may cause future events, achievements or results to differ materially from those expressed by the forward-looking statements. In particular, the successful redevelopment of any property is subject to a number of risks, including, among others, that PREIT’s redevelopment plans might change, its redevelopment activities might be delayed, anticipated project costs may increase, and the Company might not enter into one or more of the leases referred to under “Redevelopment Activity.” Unanticipated expenses or delays would adversely affect PREIT’s investment returns on a redevelopment project. In addition, PREIT might not enter into an agreement for, or consummate, the mall financing for which it has received commitment letters. PREIT does not intend to and disclaims any duty or obligation to update or revise any forward-looking statements or industry information set forth in this press release to reflect new information, future events or otherwise. Investors are also directed to consider the risks and uncertainties discussed in documents PREIT has filed with the Securities and Exchange Commission and, in particular, PREIT’s Annual Report on Form 10-K for the year ended December 31, 2004.

[Financial Tables Follow]

# # #

** A supplemental quarterly financial package **

     will be available on the Company’s web site at www.preit.com.

PREIT Reports Third Quarter and Nine Month Results
October 31, 2005
Page 10

Pennsylvania Real Estate Investment Trust
Selected Financial Data

FUNDS FROM OPERATIONS			Three Months Ended								Nine Months Ended
(In thousands, except per share amounts)			September 30, 2005				September 30, 2004				September 30, 2005				September 30, 2004
Net income			$	17,895			$	14,268			$	38,190			$	34,623
	Adjustments:
	Minority interest in Operating Partnership			1,782				1,517				4,316				3,340
	Minority interest in Operating Partnership-discontinued operations			441				205				520				621
	Dividends on preferred shares			(3,403	)			(3,403	)			(10,209	)			(10,209	)
	Gains on sales of interests in real estate			(5,024	)			(1,529	)			(5,661	)			(1,529	)
	Gain/adjustment to gain on sale of discontinued operations			(3,736	)			—				(3,736	)			550
	Depreciation and amortization:
		Wholly owned & consolidated partnerships		27,176		(a)		22,548		(a)		79,760		(a)		71,405		(a)
		Unconsolidated partnerships		1,103		(a)		1,003		(a)		3,287		(a)		3,221		(a)
		Discontinued operations		—				13				13				38
FUNDS FROM OPERATIONS			$	36,234		(b)	$	34,622		(b)	$	106,480		(b)	$	102,060		(b)
Minority interest in properties			$	106			$	110			$	323			$	342
FUNDS FROM OPERATIONS FOR DILUTED CALCULATION			$	36,340			$	34,732			$	106,803			$	102,402
FUNDS FROM OPERATIONS PER SHARE AND OP UNITS			$	0.89			$	0.86			$	2.62			$	2.57
FUNDS FROM OPERATIONS PER SHARE AND OP UNITS-DILUTED			$	0.88			$	0.85			$	2.58			$	2.54
Weighted average number of shares outstanding				36,149				35,695				36,049				35,539
Weighted average effect of full conversion of OP units				4,593				4,436				4,621				4,102
Total weighted average shares outstanding, including OP units				40,742				40,131				40,670				39,641
Effect of common share equivalents				697				640				675				621
Total weighted average shares outstanding, including OP units-diluted				41,439				40,771				41,345				40,262

a)	Excludes depreciation of non-real estate assets, amortization of deferred financing costs and discontinued operations.
b)	Includes the non-cash effect of straight-line rents of $1,175 and $1,270 for the 3rd quarter 2005 and 2004, respectively, and $3,207 and $3,837 for the nine months ended September 30, 2005 and 2004, respectively.

STATEMENTS OF INCOME			Three Months Ended						Nine Months Ended
(In thousands, except per share amounts)			September 30, 2005			September 30, 2004			September 30, 2005			September 30, 2004
REVENUE:
	Real estate revenues:
	Base rent		$	67,403		$	62,188		$	199,880		$	185,391
	Percentage rent			1,437			1,647			5,926			5,131
	Expense reimbursements			32,045			29,857			92,735			86,371
	Lease termination revenue			176			1,691			2,198			2,678
	Other real estate revenues			2,322			2,063			6,612			6,065
		Total real estate revenues		103,383			97,446			307,351			285,636
	Management company revenue			1,136			1,831			3,887			5,630
	Interest and other income			293			180			737			865
		Total revenues		104,812			99,457			311,975			292,131
EXPENSES:
	Property operating expenses:
	CAM and real estate taxes			(28,483	)		(25,168	)		(84,236	)		(74,407	)
	Utilities			(6,421	)		(5,523	)		(16,823	)		(14,602	)
	Other			(5,749	)		(5,104	)		(15,885	)		(16,708	)
		Total property operating expenses		(40,653	)		(35,795	)		(116,944	)		(105,717	)
	Depreciation and amortization			(27,729	)		(22,912	)		(81,312	)		(72,438	)
	Other expenses
	General and administrative expenses			(8,412	)		(11,294	)		(27,833	)		(33,479	)
	Taxes			(78	)		—			(519	)		—
		Total other expenses		(8,490	)		(11,294	)		(28,352	)		(33,479	)
	Interest Expense:
	Interest expense excluding prepayment penalty			(20,745	)		(18,294	)		(60,187	)		(53,858	)
	Prepayment penalty			(803	)		—			(803	)		—
		Total interest expense		(21,548	)		(18,294	)		(60,990	)		(53,858	)
		Total expenses		(98,420	)		(88,295	)		(287,598	)		(265,492	)
Income before equity in income of partnerships,
	gains on sales of interests in real estate, minority
	interest and discontinued operations			6,392			11,162			24,377			26,639
Equity in income of partnerships				1,808			1,496			5,426			4,909
Gains on sales of interests in real estate				8,024			1,529			8,721			1,529
Income before minority interest and discontinued operations				16,224			14,187			38,524			33,077
	Minority interest in properties			(42	)		(48	)		(127	)		(545	)
	Minority interest in Operating Partnership			(1,782	)		(1,517	)		(4,316	)		(3,340	)
Income from continuing operations				14,400			12,622			34,081			29,192
Discontinued operations:
	Operating results from discontinued operations			200			1,856			893			6,622
	Gain/adjustment to gain on sale of discontinued operations			3,736			—			3,736			(550	)
	Minority interest in properties			—			(5	)		—			(20	)
	Minority interest in Operating Partnership			(441	)		(205	)		(520	)		(621	)
Income from discontinued operations				3,495			1,646			4,109			5,431
Net income				17,895			14,268			38,190			34,623
	Dividends on preferred shares			(3,403	)		(3,403	)		(10,209	)		(10,209	)
Net income available to common shareholders			$	14,492		$	10,865		$	27,981		$	24,414
BASIC EARNINGS PER SHARE
	From continuing operations		$	0.29		$	0.25		$	0.64		$	0.52
	From discontinued operations			0.10			0.05			0.11			0.15
TOTAL BASIC EARNINGS PER SHARE			$	0.39		$	0.30		$	0.75		$	0.67
DILUTED EARNINGS PER SHARE
	From continuing operations		$	0.29		$	0.25		$	0.63		$	0.51
	From discontinued operations			0.10			0.05			0.11			0.15
TOTAL DILUTED EARNINGS PER SHARE			$	0.39		$	0.30		$	0.74		$	0.66
Weighted average number of shares outstanding (for diluted EPS)				36,846			36,335			36,724			36,160

PREIT Reports Third Quarter and Nine Month Results
October 31, 2005
Page 11

Pennsylvania Real Estate Investment Trust
Selected Financial Data

NET OPERATING INCOME		Three Months Ended						Nine Months Ended
		September 30, 2005			September 30, 2004			September 30, 2005			September 30, 2004
(In thousands)
Net Income		$	17,895		$	14,268		$	38,190		$	34,623
Adjustments:
Depreciation and amortization:
	Wholly owned and consolidated partnerships		27,729			22,912			81,312			72,438
	Unconsolidated partnerships		1,103			1,003			3,287			3,221
	Discontinued operations		—			13			13			38
Interest Expense
	Wholly owned and consolidated partnerships		21,548			18,294			60,990			53,858
	Unconsolidated partnerships		1,958			2,011			6,033			6,233
	Discontinued operations		310			834			931			2,605
Minority interest in Operating Partnership
	Continuing operations		1,782			1,517			4,316			3,340
	Discontinued operations		441			205			520			621
Minority interest in properties
	Continuing operations		42			48			127			545
	Discontinued operations		—			5			—			20
Gains on sales of interests in real estate			(8,024	)		(1,529	)		(8,721	)		(1,529	)
Gain/adjustment to gain on sale of discontinued operations			(3,736	)		—			(3,736	)		550
General and administrative expenses and taxes			8,490			11,294			28,352			33,479
Management company revenue			(1,136	)		(1,831	)		(3,887	)		(5,630	)
Interest and other income			(293	)		(180	)		(737	)		(865	)
	Property net operating income	$	68,109		$	68,864		$	206,990		$	203,547
Same store retail properties		$	63,271		$	66,264		$	189,938		$	193,233
Non-same store properties			4,838			2,600			17,052			10,314
	Property net operating income	$	68,109		$	68,864		$	206,990		$	203,547

EQUITY IN INCOME OF PARTNERSHIPS			Three Months Ended						Nine Months Ended
			September 30, 2005			September 30, 2004			September 30, 2005			September 30, 2004
(In thousands)
Gross revenues from real estate		$	13,690		$	13,388		$	42,697		$	42,599
Expenses:
	Property operating expenses		(3,927	)		(4,234	)		(12,827	)		(13,382	)
	Mortgage interest expense		(3,952	)		(4,093	)		(12,230	)		(12,684	)
	Depreciation and amortization		(2,095	)		(1,980	)		(6,296	)		(6,373	)
Total expenses			(9,974	)		(10,307	)		(31,353	)		(32,439	)
Net income from real estate			3,716			3,081			11,344			10,160
Less: Partners’ share			(1,842	)		(1,557	)		(5,714	)		(5,140	)
Company’s share			1,874			1,524			5,630			5,020
Amortization of excess investment			(66	)		(28	)		(204	)		(111	)
EQUITY IN INCOME OF PARTNERSHIPS		$	1,808		$	1,496		$	5,426		$	4,909

PREIT Reports Third Quarter and Nine Month Results
October 31, 2005
Page 12

Pennsylvania Real Estate Investment Trust
Selected Financial Data

CONSOLIDATED BALANCE SHEET
				September 30, 2005			December 31, 2004
(In thousands)
ASSETS:
	INVESTMENTS IN REAL ESTATE, at cost:
		Retail properties		$	2,629,837		$	2,510,256
		Land held for development			6,100			9,863
		Construction in progress			58,534			10,952
			Total investments in real estate		2,694,471			2,531,071
		Less: accumulated depreciation			(203,953	)		(148,759	)
		NET INVESTMENTS IN REAL ESTATE			2,490,518			2,382,312
	INVESTMENTS IN PARTNERSHIPS, at equity				35,182			27,244
					2,525,700			2,409,556
	OTHER ASSETS:
		Assets held for sale			17,248			15,321
		Cash and cash equivalents			28,954			40,044
		Rents and other receivables (net of allowance for doubtful accounts
			of $10,386 and $9,394, at September 30, 2005
			and December 31, 2004, respectively)		33,352			31,982
		Intangible assets (net of accumulated amortization of $62,326 and
			$38,333 at September 30, 2005 and December 31, 2004, respectively)		165,746			171,850
		Deferred costs and other assets, net			68,442			62,650
			Total assets	$	2,839,442		$	2,731,403
LIABILITIES
	Mortgage notes payable			$	1,284,304		$	1,145,079
	Debt premium on mortgage notes payable				44,311			56,135
	Bank loan payable				276,000			271,000
	Liabilities related to assets held for sale				18,611			18,564
	Tenants’ deposits and deferred rents				16,485			13,457
	Investments in partnerships, deficit balances				13,531			13,758
	Accrued expenses and other liabilities				68,114			76,975
		Total liabilities			1,721,356			1,594,968
MINORITY INTEREST
	Minority interest in properties				3,159			3,585
	Minority interest in Operating Partnership				127,932			128,384
		Total minority interest			131,091			131,969
SHAREHOLDERS’ EQUITY
	Shares of beneficial interest, $1.00 par value per share; 100,000,000 shares
		authorized; issued and outstanding 36,714,000 shares at September 30, 2005
		and 36,272,000 shares at December 31, 2004			36,714			36,272
	Non-convertible senior preferred shares, 11% cumulative, $.01 par value
		per share; 2,475,000 shares authorized, issued and outstanding
		at September 30, 2005 and December 31, 2004			25			25
	Capital contributed in excess of par				916,937			899,506
	Deferred compensation				(14,284	)		(7,737	)
	Accumulated other comprehensive income (loss)				2,770			(1,821	)
	Retained earnings				44,833			78,221
		Total shareholders’ equity			986,995			1,004,466
			Total liabilities, minority interest and shareholders’ equity	$	2,839,442		$	2,731,403

PREIT Reports Third Quarter and Nine Month Results
October 31, 2005
Page 13

Pennsylvania Real Estate Investment Trust
Selected Financial Data

FUNDS FROM OPERATIONS
		For the three months ended
(In thousands, except per share amounts)		March 31, 2004			June 30, 2004			September 30, 2004			December 31, 2004			March 31, 2005			June 30, 2005			September 30, 2005
Net income		$	8,963		$	11,392		$	14,268		$	19,164		$	11,398		$	8,897		$	17,895
Minority interest in Operating Partnership			784			1,045			1,517			2,325			1,432			1,114			1,782
Minority interest in Operating Partnership-discontinued operations			180			229			205			32			21			47			441
Dividends on preferred shares			(3,403	)		(3,403	)		(3,403	)		(3,403	)		(3,403	)		(3,403	)		(3,403	)
Gains on sales of interests in real estate			—			—			(1,529	)		45			—			(636	)		(5,024	)
Gain/adjustment to gain on sale of discontinued operations			550			—			—			—			—			—			(3,736	)
Depreciation and amortization:
	Wholly owned & consolidated partnerships		25,279			23,590			22,548			24,406			25,641			26,956			27,176
	Unconsolidated partnerships		1,078			1,141			1,003			2,559			1,151			1,033			1,103
	Discontinued operations		—			13			13			13			—			—			—
FUNDS FROM OPERATIONS		$	33,431		$	34,007		$	34,622		$	45,141		$	36,240		$	34,008		$	36,234
Minority interest in properties		$	116		$	116		$	110		$	132		$	112		$	108		$	106
FUNDS FROM OPERATIONS FOR DILUTED CALCULATION		$	33,547		$	34,123		$	34,732		$	45,273		$	36,352		$	34,116		$	36,340
FUNDS FROM OPERATIONS PER SHARE AND OP UNITS		$	0.85		$	0.86		$	0.86		$	1.12		$	0.89		$	0.84		$	0.89
FUNDS FROM OPERATIONS PER SHARE AND OP UNITS-DILUTED		$	0.84		$	0.85		$	0.85		$	1.11		$	0.88		$	0.82		$	0.88
Weighted average number of shares outstanding			35,403			35,517			35,695			35,819			35,972			36,025			36,149
Weighted average effect of full conversion of OP units			3,836			4,029			4,436			4,426			4,584			4,686			4,593
Total weighted average shares outstanding, including OP units-basic			39,239			39,546			40,131			40,245			40,556			40,711			40,742
Effect of common share equivalents			718			561			640			718			651			661			697
Total weighted average shares outstanding, including OP units-diluted			39,957			40,107			40,771			40,963			41,207			41,372			41,439
			Year to date through the period ended
		March 31, 2004			June 30, 2004			September 30, 2004			December 31, 2004			March 31, 2005			June 30, 2005			September 30, 2005
Net income		$	8,963		$	20,355		$	34,623		$	53,788		$	11,398		$	20,295		$	38,190
Minority interest in Operating Partnership			784			1,822			3,340			5,664			1,432			2,534			4,316
Minority interest in Operating Partnership-discontinued operations			180			416			621			653			21			79			520
Dividends on preferred shares			(3,403	)		(6,806	)		(10,209	)		(13,613	)		(3,403	)		(6,806	)		(10,209	)
Gains on sales of interests in real estate			—			—			(1,529	)		(1,484	)		—			(637	)		(5,661	)
Gain/adjustment to gain on sale of discontinued operations			550			550			550			550			—			—			(3,736	)
Depreciation and amortization:
	Wholly owned & consolidated partnerships		25,279			48,857			71,405			95,813			25,641			52,585			79,760
	Unconsolidated partnerships		1,078			2,219			3,221			5,781			1,151			2,184			3,287
	Discontinued operations		—			25			38			50			—			13			13
FUNDS FROM OPERATIONS		$	33,431		$	67,438		$	102,060		$	147,202		$	36,240		$	70,247		$	106,480
Minority interest in properties		$	116		$	232		$	342		$	474		$	112		$	220		$	326
FUNDS FROM OPERATIONS FOR DILUTED CALCULATION		$	33,547		$	67,670		$	102,402		$	147,676		$	36,352		$	70,467		$	106,806
FUNDS FROM OPERATIONS PER SHARE AND OP UNITS		$	0.85		$	1.71		$	2.57		$	3.70		$	0.89		$	1.73		$	2.62
FUNDS FROM OPERATIONS PER SHARE AND OP UNITS-DILUTED		$	0.84		$	1.69		$	2.54		$	3.65		$	0.88		$	1.71		$	2.58
Weighted average number of shares outstanding			35,403			35,460			35,539			35,609			35,972			35,999			36,049
Weighted average effect of full conversion of OP units			3,836			3,933			4,102			4,183			4,584			4,635			4,621
Total weighted average shares outstanding, including OP units			39,239			39,393			39,641			39,792			40,556			40,634			40,670
Effect of common share equivalents			718			595			621			659			651			642			675
Total weighted average shares outstanding, including OP units-diluted			39,957			39,988			40,262			40,451			41,207			41,276			41,345