SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) July 3, 2001
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Pennsylvania Real Estate Investment Trust
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(Exact Name of Registrant as Specified in Charter)
Pennsylvania 1-6300 23-6216339
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
The Bellevue, 200 S. Broad Street, Philadelphia, Pennsylvania 19102
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (215) 875-0700
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(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events.
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Pennsylvania Real Estate Investment Trust (PREIT) announced today that
it has recently entered into agreements to take over the management and leasing
operations at two retail properties and one apartment complex. The management
and leasing fees under these arrangements will vary based upon the performance
of each property; however, PREIT currently expects these fees to aggregate
approximately $0.2 million for the remainder of 2001, and approximately $0.7
million in 2002. Starting on July 15, 2001, PREIT will manage, under a
three-year agreement, the 837,000 square-foot Harrisburg East Mall, located in
Harrisburg, Pennsylvania and owned by The Prudential Insurance Company of
America. Starting on January 1, 2002, PREIT will also manage, under a five-year
agreement, the 250,000 square foot Home Depot Plaza, located in Clifton Heights,
Pennsylvania. The Home Depot Plaza is owned by a partnership between Mainard,
Inc. and another entity. Two trustees of PREIT are also the principals of
Mainard, Inc. In addition, beginning on January 1, 2002, PREIT will manage and
lease pursuant to a five-year agreement, a 233-unit apartment complex located in
West Chester, Pennsylvania, which is owned by a partnership between PREIT and
another entity.
PREIT also announced the completion of a transaction with the Target
Corporation for the sale of eight acres of land at its Florence Commons Shopping
Center in Florence, South Carolina, which yielded net proceeds of $2.5 million.
The Company is working with Target to support the opening of a Target Store in
the second half of 2002, anchoring the redevelopment and expansion of this
center.
PREIT believes the retail leasing environment, which had been slowing,
may be stabilizing. PREIT thus remains committed to expediting its construction
and leasing activities at retail properties currently under development or
redevelopment. However, PREIT continues to be affected negatively by tenant
bankruptcies and leasing delays at several properties currently under
development, as previously discussed in PREIT's public announcements of its
results for the first quarter of 2001 and the full year 2000.
In particular, PREIT is being impacted by the recent bankruptcies of
retail tenants under multi-year lease agreements, including tenants expected to
occupy space yet to be constructed, such as Bradlees, Inc. (scheduled to begin
occupancy on February 1, 2001 at Northeast Tower Center in Philadelphia,
Pennsylvania) and Lechter's, Inc. (scheduled to begin occupancy on July 1, 2001
at Creekview Shopping Center in Warrington, Pennsylvania), and existing tenants
such as Homeplace, Inc. (ceased paying rent on July 1, 2001 at The Court at
Oxford Valley in Langhorne, Pennsylvania). In addition, confronting the recent
challenges of the retail leasing environment, PREIT entered into an agreement
with JC Penney Company, Inc. to induce them to keep their store open at Prince
Georges Plaza in Hyattsville, Maryland beyond the scheduled expiration of their
lease in July 2001.
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The amount of rent and expense reimbursements that PREIT would have
received under the four lease agreements as well as the cost of the inducement
that PREIT has agreed to pay totals approximately $2.2 million in 2001. Although
PREIT is actively seeking to re-lease three of these properties as well as
pursuing its bankruptcy claims, PREIT has not yet secured replacement tenants at
any of these properties. For the yet to be constructed spaces, until replacement
tenants are secured, PREIT will capitalize certain costs, including interest,
and will not incur certain expenses and required capital expenditures in
connection with their completion. Because of likely additional development
requirements at Creekview Shopping Center and Northeast Tower Center, PREIT
currently does not anticipate that, upon re-leasing the available space,
replacement tenants will begin occupancy before the beginning of 2002.
This Report contains certain "forward-looking statements" within the
meaning of Section 21E of the Securities and Exchange Act of 1934, as amended
and the Private Securities Litigation Reform Act of 1995. Forward-looking
statements relate to expectations, beliefs, projections, future plans and
strategies, anticipated events or trends and similar expressions concerning
matters that are not historical facts. These forward-looking statements reflect
PREIT management's current views about future events and are subject to risks,
uncertainties, assumptions and changes in circumstances that may cause PREIT's
actual results to differ significantly from those expressed in any
forward-looking statement. Certain factors that could cause actual results to
differ materially from expected results include changes in global economic,
business, competitive market and regulatory factors, many of which are outside
PREIT's control. For more information regarding risk factors relevant to PREIT
that could cause such a difference, please see PREIT's filings with the
Securities and Exchange Commission, including its most recent annual report on
Form 10-K. PREIT does not intend and disclaims any duty or obligation to update
or revise any industry information or forward-looking statements set forth in
this Report to reflect new information, future events or otherwise.
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Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
Date: July 3, 2001 By: /s/ Jonathan B. Weller
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Jonathan B. Weller
President and Chief Operating Officer
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