[LOGO] Pennsylvania Real Estate Investment Trust
200 South Broad Street
Philadelphia, PA 19102
www.preit.com
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Phone: 215-875-0700
Fax: 215-546-7311
FOR FURTHER INFORMATION:
AT THE COMPANY AT THE FINANCIAL RELATIONS BOARD/BSMG WORLDWIDE
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Edward A. Glickman Joe Calabrese Georganne Palffy Judith Sylk-Siegel
Executive Vice President and CFO (General Info) (Analyst Info) (Media Info)
(215) 875-0700 (212) 661-8030 (312) 266-7800 (212) 661-8030
FOR IMMEDIATE RELEASE
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May 9, 2001
Pennsylvania Real Estate Investment Trust Reports
First Quarter 2001 Results
Philadelphia, PA, May 9, 2001 -- Pennsylvania Real Estate Investment Trust
(NYSE: PEI) today announced results for the first quarter ended March 31, 2001
in line with the Company's recent guidance. The Company also reaffirmed three
strategic goals and initiatives that will drive its growth in 2001.
2001 First Quarter Highlights
o FFO for the first quarter of 2001 increased 3.7% to $9.9 million from $9.5
million in the 2000 first quarter.
o FFO per share for the first quarter of 2001 remained unchanged from the
first quarter of 2000 at $0.64 per share on a 3.7% increase in total
weighted average shares of beneficial interest/Operating Partnership units
(collectively, shares). Shares increased to 15.4 million during the first
quarter 2001 from 14.9 million shares during the first quarter of 2000.
o Combined net operating income increased 9.7% to $21.9 million from $20.0
million in the 2000 first quarter.
o Same store net operating income for the Company's shopping center portfolio
increased 7.1% from the 2000 first quarter.
First Quarter Results
For the first quarter ended March 31, 2001 the Company's funds from operations
(FFO) totaled $9,881,000, a 3.7% increase over FFO of $9,524,000 for the
comparable three-month period in 2000. This increase is due to the completion of
development projects and improved performance in the Company's retail portfolio.
First quarter 2001 FFO was $0.64 per share on 15,429,713 weighted average shares
compared to $0.64 per share on 14,880,708 weighted average shares for the three
months ended March 31, 2000. As calculated by NAREIT, FFO is defined as net
income, excluding extraordinary items, gain (or loss) on the sale of property,
plus real estate related depreciation and amortization.
PREIT Announces First Quarter 2001 Results
May 9, 2001
Page 2
Net operating income from wholly-owned properties and the Company's
proportionate share of partnerships and joint venture properties totaled
$21,911,000 for the 2001 first quarter, an increase of 9.7% from $19,980,000 in
the 2000 first quarter. This increase is due to the completion of development
projects and improved performance in the Company's retail portfolio.
Net income for the first quarter ended March 31, 2001 was $5,092,000, or $0.37
per share, on 13,668,943 total weighted average shares outstanding compared to
$6,389,000 or $0.48 per share, on 13,339,873 total weighted average shares
outstanding for the three months ended March 31, 2000, due to increased interest
expense and increases in non-cash depreciation and amortization. Net income in
the first quarter of 2001 included a gain on the sale of Ingleside Shopping
Center in Thorndale, PA totaling $1.8 million or $0.13 per share. Net income in
the first quarter of 2000 included the gain on the sale of the Company's
interest in Park Plaza shopping center in Pinellas Park, Florida totaling $2.3
million or $0.17 per share.
Effective January 1, 2001, the Company, in response to new tax law provisions,
converted its management company, PREIT-RUBIN, Inc. to a wholly-owned taxable
REIT subsidiary. For financial reporting purposes PREIT-RUBIN is no longer
accounted for as an unconsolidated entity and the Company's financial results,
beginning with the first quarter of 2001, reflects the consolidation of
PREIT-RUBIN into the Company.
Same Store NOI Growth -- Retail and Multifamily Portfolios
Same store net operating income for the Company's retail portfolio increased
7.1% over the 2000 first quarter. Contributing in part to the Company's strong
retail portfolio net operating income growth was the successful completion of 44
new and renewal leases representing 275,000 square feet. The renewal leases were
renewed at an average rent of $23.68, which was 22.1% higher than the previous
rent. Additionally, occupancy rates in the 2001 first quarter averaged 91.5%,
160 basis points higher than 89.9% reported in the 2000 first quarter. The
Company also reported that sales at its mall properties increased 6.7% to $382
per square foot for the trailing twelve months from $358 per square foot for the
comparable period.
Same store net operating income for the Company's portfolio of multifamily
properties increased 0.8% over the comparable quarter in 2000. During the 2001
first quarter the Company's multifamily revenues increased 3.6%. This growth was
negatively impacted by a 9.7% increase, excluding real estate taxes, in
operating expenses due primarily to a 17.8% increase in utility expenses,
including higher costs for gas and oil, and a 44% increase in insurance costs
over 2000. While the Company expects that it will continue to be impacted by
higher energy and insurance costs through the balance of the year, management is
stringently managing expenses and is examining, based on market conditions,
passing additional energy costs along to the tenant. The Company also noted that
occupancy rates decreased slightly in the 2001 first quarter to 95.6% from 96.0%
as of the 2000 first quarter.
PREIT Announces First Quarter 2001 Results
May 9, 2001
Page 3
Portfolio Composition
The Company ended the 2001 first quarter with investment in real estate of
$807.3 million, a net increase of $3.7 million over 2000's year-end level of
$803.6 million. As a result, on a cost basis, the Company's portfolio is now
34.6% multifamily, 59.0% retail, 6.1% retail development and 0.3% industrial.
Comments from Management
Ronald Rubin, Chief Executive Officer of PREIT said, "Our results this quarter
continue to be solid, reflecting the effectiveness of our retail development,
asset management programs and conservative investment philosophy emphasizing
transactions structured to protect return on investment. We remain confident
that our current development pipeline and the growing number of quality
properties in our portfolio underscore the enhanced value we are committed to
building for PREIT and its shareholders. Throughout the remainder of the year we
plan to maintain our focus on enhancing this value and will pursue other
strategic opportunities that may arise."
Strategic Update
Jonathan B. Weller, PREIT's President and Chief Operating Officer commented,
"Our retail development and redevelopment activities continue to be the key
drivers of the Company's growth. We expect to maintain this momentum throughout
2001 and beyond, where our focus will be to expedite construction and leasing
activities at retail properties currently under development while attaining
strong performance in the Company's core portfolio through strategic
redevelopment, renovation and retenanting efforts. Additionally, we continue to
stringently manage our business to achieve economies of scale and capitalize on
operating efficiencies throughout our entire portfolio."
PREIT is pursuing a broad range of internal and external growth strategies in
its primary markets and is focused on three strategic goals and initiatives
during 2001:
[ ] Construction in Progress: To position the Company for future growth,
management intends, during 2001, to continuously have $50 to $100 million
of development projects on-line. As of March 31, 2001 the Company's
construction in progress amounted to $49.2 million.
[ ] Built-in Development/Re-Development Backlog: Leveraging the Company's
in-depth market knowledge, strong tenant relationships and economies of
scale, management is focused on maintaining an active pipeline of new
properties in desirable locations to advance into the construction phase
as existing development projects are completed. The Company's current
backlog level consists of 6 projects with approximately 1.6 million square
feet of GLA and a potential investment of $110 million.
[ ] Return on Investment: Focused on taking full advantage of the favorable
growth opportunities within its markets, the Company is committed to a
solid investment philosophy that emphasizes quality real estate and
transactions structured to protect return on investment. Accordingly,
management's goal is to achieve a minimum 11% return on investment on its
development portfolio.
PREIT Announces First Quarter 2001 Results
May 9, 2001
Page 4
2001 Second Quarter and Fiscal Year Forecast
The Company noted that it is currently estimating FFO to be approximately $0.66
to $0.68 for the second quarter ending June 30, 2001 and $2.85 to $2.90 per
share for the calendar year ending December 31, 2001.
Development Pipeline
[ ] Creekview Shopping Center (Warrington, PA) - Construction of the 422,102
square foot shopping center is 61% complete as of March 31, 2001 and the
center is 93% leased.
[ ] Metroplex Shopping Center (Plymouth Meeting, PA) - Construction of the
788,187 square foot power center is 89% complete as of March 31, 2001 and
the center is 95% leased. During the first quarter several stores opened,
including Giant Supermarkets, Designer Shoe Warehouse, Gap/Gap Kids and
David's Bridal.
[ ] Paxton Towne Centre (Harrisburg, PA) - Construction of the 711,471 square
foot power center is 83% complete as of March 31, 2001 and the center is
90% leased. During the first quarter several stores opened, including Dress
Barn and David's Bridal.
Disposition
The Company also announced that after the close of the first quarter it sold to
Costco Wholesale a parcel of land at its Paxton Towne Centre property for $6.3
million. Costco is expected to build a 140,000 square foot store on the site.
Net proceeds will be used to reduce debt.
During the 2001 first quarter, the Company sold a non-core property, Ingleside
Shopping Center in Thorndale, PA, for total proceeds of $3.6 million and
recorded a gain of $1.8 million, a portion of which was structured to facilitate
a 1031 exchange.
Capital Resources
As of March 31, 2001, the Company had approximately $100.5 million and $5.6
million in letters of credit outstanding under the $175 million revolving
portion of its bank credit facility.
Edward Glickman, Chief Financial Officer of PREIT, added, "Our investment
strategy continues to be focused on opportunistically developing and acquiring
quality retail properties at attractive yields and prices, while selectively
selling non-core and stabilized assets for a high return on our original
investment and reinvesting the proceeds. With the $250 million combined
revolving credit and construction facility in place, the Company has ample
capital to fund its development pipeline in 2001."
Conference Call Information
The Company will conduct a conference call that will be broadcast simultaneously
over the Internet at 11:00 ET on Wednesday, May 9, 2001 to review the Company's
quarterly results, market trends and future outlook. The webcast will be
available to the public, on a listen-only basis, via the Internet at
www.streetevents.com or the Company's website at www.preit.com. Please allow
extra time prior to the webcast to visit the site and download the streaming
media software required to listen to the Internet broadcast. The online archive
of the webcast will be available for 30 days.
PREIT Announces First Quarter 2001 Results
May 9, 2001
Page 5
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 shopping centers
(approximately 10.6 million square feet) and apartment communities (7,242 units)
located primarily in the eastern United States. The Company's portfolio
currently consists of 46 properties in 10 states. In addition, there are 6
retail properties under development, which will add approximately 1.6 million
square feet to the portfolio. Pennsylvania Real Estate Investment Trust is
headquartered in Philadelphia, Pennsylvania.
The matters discussed in this report, as well as news releases issued from time
to time by PREIT include use of forward-looking terminology such as "may,"
"will," "should," "expect," "anticipate," "estimate," "plan," or "continue" or
the negative thereof or other variations thereon, or comparable terminology
which constitute "forward-looking statements." Such forward-looking statements
(including without limitation, information concerning PREIT's continuing
dividend levels, planned acquisition, development and divestiture activities,
short- and long-term liquidity position, ability to raise capital through public
and private offerings of debt and/or equity securities, availability of adequate
funds at reasonable cost, revenues and operating expenses for some or all of the
properties, leasing activities, occupancy rates, changes in local market
conditions or other competitive factors) involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of PREIT's results to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. PREIT disclaims any obligation to update any such
factors or to publicly announce the result of any revisions to any of the
forward-looking statements contained herein to reflect future events or
developments.
[Financial Tables Follow]
# # #
** A supplemental quarterly financial package **
is available on the Company's web site at www.preit.com.
To receive additional information on Pennsylvania Real Estate Investment
Trust via fax at no charge, please dial 1-800-PRO-INFO and enter the
ticker symbol PEI.
PREIT Announces First Quarter 2001 Results
May 9, 2001
Page 6
Pennsylvania Real Estate Investment Trust
Selected Financial Data
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FUNDS FROM OPERATIONS
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Three Months Ended
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March 31, 2001 March 31, 2000
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Income before minority interest in operating partnership $ 5,748,000 $ 7,129,000
Less: Gains on sales of interests in real estate (1,806,000) (2,263,000)
Add: Depreciation and amortization:
Wholly owned & consolidated partnership, net 4,570,000 3,710,000
Unconsolidated partnerships & joint ventures 1,603,000 1,122,000
Excess purchase price over net asset acquired 106,000 54,000
Less: Depreciation of non-real estate assets (65,000) (65,000)
Amortization of deferred financing assets (275,000) (163,000)
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FUNDS FROM OPERATIONS $ 9,881,000(1) $ 9,524,000(1)
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FUNDS FROM OPERATIONS PER SHARE AND OP UNITS $0.64 $0.64
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Weighted average number shares outstanding 13,668,943 13,339,873
Weighted average effect of full conversion of OP units 1,760,770 1,540,835
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Total weighted average shares of outstanding including OP units 15,429,713 14,880,708
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1) Includes the non-cash effect of straight-line rents of $247,000 and $296,000
for the 1st quarter 2001 and 2000, respectively.
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OPERATING RESULTS
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Three Months Ended
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March 31, 2001 March 31, 2000
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REAL ESTATE REVENUES
Base Rent $20,563,000 $19,886,000
Percent Rent 333,000 277,000
Expense Reimbursement 2,796,000 2,205,000
Lease Termination and Other Income 129,000 80,000
Other Real Estate Revenue 862,000 774,000
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Total Real Estate Revenue 24,683,000 23,222,000
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Management company revenue 2,152,000 -
Interest and other income 161,000 230,000
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26,996,000 23,452,000
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EXPENSES
Property Payroll and benefits 1,779,000 1,765,000
Real Estate and Other Taxes 1,915,000 1,753,000
Utilities 1,243,000 1,158,000
Other Operating Expenses 3,431,000 3,504,000
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Total Property Operating Expenses 8,368,000 8,180,000
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Depreciation and amortization 4,570,000 3,710,000
Corporate payroll and benefits 3,218,000 459,000
Other general and administrative expenses 1,982,000 576,000
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Total General & Administrative Expenses 5,200,000 1,035,000
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Interest expense 6,360,000 5,844,000
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24,498,000 18,769,000
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Income before equity in unconsolidated entities,
gains on sales of interests in real estate and
minority interest in operating partnership 2,498,000 4,683,000
Equity in loss of PREIT-RUBIN, Inc. - (1,489,000)
Equity in income of partnerships and joint ventures 1,444,000 1,672,000
Gains on sales of interests in real estate 1,806,000(1) 2,263,000(2)
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Income before minority interest in operating partnership 5,748,000 7,129,000
Minority interest in operating partnership (656,000) (740,000)
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NET INCOME $ 5,092,000 $ 6,389,000
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PER SHARE DATA
Net income before gains on sales of interests in real estate $0.24 $0.31
Gains on sales of interests in real estate $0.13(1) 0.17(2)
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BASIC INCOME PER SHARE $0.37 $0.48
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DILUTED INCOME PER SHARE $0.37 $0.48
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Weighted average number shares outstanding 13,668,943 13,339,873
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1) 2001 includes a gain on sale of Ingleside Shopping Center, Thorndale, PA.
2) 2000 includes a gain on sale of interest in Park Plaza shopping center in
Pinellas Park, Florida.
PREIT Announces First Quarter 2001 Results
May 9, 2001
Page 7
Pennsylvania Real Estate Investment Trust
Selected Financial Data
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EQUITY IN INCOME OF PARTNERSHIPS
AND JOINT VENTURES
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Three Months Ended
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March 31, 2001 March 31, 2000
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Gross revenues from real estate $ 22,422,000 $ 16,423,000
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Expenses:
Property operating expenses 7,985,000 5,468,000
Mortgage and bank loan interest 6,953,000 5,113,000
Depreciation and amortization 4,183,000 2,531,000
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19,121,000 13,112,000
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3,301,000 3,311,000
Partner's Share (1,677,000) (1,639,000)
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EQUITY IN INCOME OF PARTNERSHIPS
AND JOINT VENTURES $ 1,624,000 $ 1,672,000
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Supplemental Information for Wholly Owned Properties
and the Company's Proportionate Share of Partnerships and Joint Ventures
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EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION
AND AMORTIZATIONS ("EBITDA")
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Three Months Ended
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March 31, 2001 March 31, 2000
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Gross Revenues $ 24,683,000 $ 23,222,000
Operating expenses (8,368,000) (8,180,000)
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Net operating income: Wholly-owned properties 16,315,000 15,042,000
Company's proportionate share of partnerships and
joint ventures net operating income 5,596,000 4,938,000
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Combined net operating income 21,911,000 19,980,000
Interest income 161,000 230,000
Company's proportionate share of PREIT-RUBIN, Inc.
net operating income (loss) (1,129,000)
Management company revenue 2,152,000
Total General & Administrative Expenses (5,200,000)(1) (1,035,000)
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EBITDA $ 16,872,000 $ 18,046,000
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MORTGAGE NOTES, BANK AND CONSTRUCTION LOANS PAYABLE March 31, 2001 December 31, 2000
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Wholly-Owned Properties
Mortgage notes payable $261,368,000 $247,449,000
Bank Loans payable 100,500,000 110,300,000
Construction Loan Payable 28,119,000 24,647,000
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389,987,000 382,396,000
Company's Proportionate Share of
Partnerships and Joint Ventures
Mortgage notes payable 110,395,000 111,457,000
Bank loans payable 30,611,000 30,929,000
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Total mortgage notes and bank loans payable $530,993,000 $524,782,000
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(1) Total General & Administrative Expenses for 2001 includes PREIT-RUBIN, Inc.
expenses.