[LOGO] Pennsylvania Real Estate Investment Trust
200 South Broad Street
Philadelphia, PA 19102
www.preit.com [LOGO]
Phone: 215-875-0700
Fax: 215-546-7311
Toll Free: 866-875-0700
FOR FURTHER INFORMATION:
AT THE COMPANY AT FRB/WEBER SHANDWICK
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Edward A. Glickman Joe Calabrese Georganne Palffy Judith Sylk-Siegel
Executive Vice President (General Info) (Analyst Info) (Media Info)
and CFO (215) 875-0700 (212) 445-8434 (312) 266-7800 (212) 445-8431
FOR IMMEDIATE RELEASE
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May 2, 2002
Pennsylvania Real Estate Investment Trust Reports
2002 First Quarter Results
Philadelphia, PA, May 2, 2002-- Pennsylvania Real Estate Investment Trust (NYSE:
PEI) today announced that the results for the first quarter ended March 31, 2002
exceeded the Company's guidance provided in March 2002.
2002 First Quarter Highlights
o FFO for the 2002 first quarter increased 7.7% to $10.6 million from $9.9
million in the 2001 first quarter.
o Combined net operating income (NOI), increased 5.8% to $23.1 million in
the first quarter of 2002 from $21.9 million for the first quarter of
2001.
o Same store multifamily NOI increased 3.5% from the 2001 first
quarter.
o Same store NOI for the Company's shopping center portfolio increased
3.9% from the 2001 first quarter.
First Quarter Results
For the first quarter ended March 31, 2002, the Company's total funds from
operations (FFO) increased by 7.7% to $10,642,000 from $9,881,000 for the
comparable three-month period in 2001.The increase is a result of internal
growth in the Company's portfolio and the commencement of operations from
recently completed development properties. Weighted average shares of beneficial
interest/Operating Partnership units (collectively, shares) increased by 15.6%
to 17,843,000 from 15,430,000 for the quarters ending March 31, 2002 and March
31, 2001, respectively, due primarily to the Company's public offering of 2.0
million shares in July 2001. FFO per share is $0.60 for the first quarter of
2002 as compared to $0.64 in the first quarter of 2001. The decrease is
primarily due to the increase in the weighted average shares outstanding.
NAREIT defines FFO 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 Results
May 2, 2002
Page 2
NOI from wholly-owned properties and the Company's proportionate share of
partnerships and joint venture properties increased by 5.8% to $23,129,000 for
the 2002 first quarter from $21,859,000 for the first quarter of 2001. This
increase is due to improved performance in the Company's retail and multifamily
portfolios and the completion of development projects.
Net income for the first quarter ended March 31, 2002 was $3,727,000, or $0.23
per share, on 15,927,000 weighted average beneficial interest shares
outstanding, compared to $5,092,000 or $0.37 per share, on 13,669,000 total
weighted average beneficial interest shares outstanding for the 2001 first
quarter. Net income for the first quarter of 2001 included a gain on the sale of
the Company's interest in Ingleside Shopping Center in Thorndale, PA totaling
$1.8 million, or $0.13 per share.
Same Store NOI Growth -- Retail and Multifamily Portfolios
Same store NOI for the Company's retail portfolio, increased 3.9% over the 2001
first quarter. The increase over the comparable period was primarily driven by
higher revenues from leasing of vacant space, lease turnover and scheduled rent
increases.
Of note, retail occupancy rates in the 2002 first quarter increased to 94.3%,
380 basis points higher than the 90.5% reported in the 2001 first quarter. The
Company's power centers and enclosed malls were 97.6% and 93.7% occupied,
respectively, as of March 31, 2002. The Company's mall properties reported that
sales decreased 2.3% to $374 per square foot in the trailing twelve months ended
March 31, 2002, from $383 per square foot for the comparable period ended March
31, 2001. During 2001 sales at the Company's mall properties were $391 per
square foot.
Same store NOI for the Company's multifamily properties increased 3.5% over the
2001 first quarter. The 2002 first quarter same store NOI growth was driven by a
4.1% increase in rents and a 2.6% decrease in operating expenses, partially
offset by an increase in vacancy and concessions. The decrease in operating
expenses was primarily the result of a reduction in utility costs from the prior
period. The Company is stringently managing its exposure to utility expenses by
continuing its submetering efforts. As discussed in previous releases, the
Company expects to be impacted by higher insurance costs throughout 2002.
Occupancy in the multifamily portfolio was 94.3% as of March 31, 2002, or 130
basis points lower than 95.6% reported in the 2001 first quarter. This decrease
in occupancy is primarily the result of soft market conditions at Boca Palms in
Boca Raton, FL, which was 85.1% occupied at March 31, 2002 and accounted for 28%
of the increase in vacancies and concessions for the portfolio. Excluding Boca
Palms, the portfolio's occupancy was 95.1% at March 31, 2002.
Portfolio Composition
The Company ended the 2002 first quarter with investments in real estate of
$837.1 million, an increase of $2.7 million over 2001's year-end level of $834.4
million. Investments in real estate at March 31, 2001 included $34.2 million of
construction in progress. On a cost basis, the Company's portfolio is now 61.7%
retail, 33.9% multifamily, 4.1% retail development and 0.3% industrial.
PREIT Announces First Quarter Results
May 2, 2002
Page 3
PREIT Announces First Quarter Results
May 2, 2002
Page 4
Strategic Update
Ronald Rubin, Chairman and Chief Executive Officer of PREIT said, "While the
market remains inherently challenging, our quarterly results were above our
expectations. The 7.7% increase in FFO and 5.8% increase in combined NOI
reflects the positive performance from our retail and multifamily portfolios and
the effects of our development activity during 2001. PREIT continues to realize
operating efficiencies as we aggressively lease and manage our assets,
increasing current cash flow and earning solid returns on investments. We
continue to selectively commit capital to advance our development and
redevelopment initiatives in order to maintain a pipeline of attractive
investment opportunities with high-value-added potential."
Jonathan B. Weller, PREIT's President and Chief Operating Officer commented,
"The Company continues to execute its acquisition strategy and, after the end of
the quarter, acquired Beaver Valley Mall, a 1.1 million square foot enclosed
regional mall located in Beaver County, PA, 15 miles north of the Pittsburgh
International Airport. PREIT continues to source attractive retail acquisition
opportunities within our target markets where our redevelopment expertise can
create enhanced returns." Mr. Weller added, "Our leasing efforts produced solid
results with the signing of 21 new and renewal leases during the quarter. While
leasing challenges remain, we are confident of our ability to handle these
challenges in an effective manner."
2002 Second Quarter and Fiscal Year Forecast
The Company noted that it is currently estimating FFO to be approximately $0.64
to $0.66 for the second quarter ending June 30, 2002 and $2.73 to $2.77 per
share for the year ending December 31, 2002. This estimate is expressly subject
to the cautionary statement at the end of this release.
Development Pipeline
The Company has noted previously the completion of the 424,722 square foot
Creekview Shopping Center in Warrington, Pennsylvania. During the first quarter
ending March 31, 2002, a 25,000 square foot Bed Bath & Beyond was opened as well
as Cingular Wireless, Duron Paints, and a 38,000 square foot L.A. Fitness
facility. The property has achieved 100% occupancy.
In addition, the Company is actively pursuing a 479,000 square foot power center
development in New Garden Township, Pennsylvania and a 210,000 square foot
grocery store anchored shopping center in South Brunswick, New Jersey.
The Company, through a joint venture partnership, has filed a complaint against
the Delaware Department of Transportation and the Delaware Secretary of
Transportation arising from their prior agreements to take actions necessary for
development of the joint venture's Christiana Phase II Power Center. The
ultimate disposition of this proceeding and the related delay in the development
of this property is not clear at this time.
Finally, the Company has reclassified $4 million of its investment in its
Pavilion at Market East property, allocating $750,000 to the Company's Red Rose
Commons property and $3.25 million to the Company's Metroplex Shopping Center
Property. This reclassification reflects the Company's satisfaction of
obligations to provide its joint venture partner with certain investment
opportunities. The Company retains a 50% interest in the Pavilion at Market East
project, and the joint venture continues to own the unimproved land. The Company
does not know when or if development of this property will occur.
PREIT Announces First Quarter Results
May 2, 2002
Page 5
Leasing Update
Significant leasing accomplishments during the quarter included:
During the first quarter of 2002 the Company executed 21 leases encompassing
65,433 square feet at an average rent per square foot of $23.31. Of this total,
new leases for previously leased space accounted for seven transactions at an
average minimum rent of $30.79, an increase of 25.7% over the previous minimum
rent. In addition, the Company renewed 11 leases representing 24,264 square feet
at an average minimum rent of $27.92, an increase of 14.8% over the previous
average minimum rent. The Company also executed transactions for three formerly
vacant spaces at an average rent of $12.58 per square foot, including a 20,000
square foot Bed Bath & Beyond at The Commons at Magnolia.
Beaver Valley Mall Acquisition
As previously announced, shortly after the close of the 2002 first quarter, the
Company acquired Beaver Valley Mall, a 1.1 million square foot enclosed regional
mall in Beaver County, Pennsylvania, 15 miles north of the Pittsburgh
International Airport. The property was acquired from the California Public
Employees' Retirement System (CalPERS) for $61.3 million. The acquisition price
equates to a capitalization rate of 11.1%, based on projected 2002 NOI. The mall
is anchored by Kaufmann's, JC Penney, Sears and Boscov's and contains
approximately 323,000 square feet of in-line mall stores and 109,000 square feet
of convenience stores and outparcels. A strong roster of well-known tenants
features American Eagle Outfitters, Gadzooks and Victoria's Secret. The property
occupies approximately 136.7 acres and is 91.5% occupied. Total annual sales for
2001 were approximately $123 million and same store sales were $264 per square
foot in 2001.
Refinancing
In March 2002, the Company refinanced Camp Hill Plaza Apartments in Camp Hill,
PA with a $12.8 million mortgage bearing an interest rate of 7.02% with a
10-year maturity. The new financing replaced a $6.1 million mortgage at a 9.5%
interest rate. The Company recorded a $77,000 extraordinary loss in connection
with the refinancing.
As of March 31, 2002, the Company had approximately $107.6 million outstanding
under the $175 million revolving portion of its bank credit facility.
Capital Resources
Edward Glickman, Chief Financial Officer of PREIT, commented, " During this
quarter we augmented our financing flexibility with the placement of Creekview
Shopping Center into our line of credit collateral pool. Similarly, we expect to
add Paxton Towne Centre into the pool during the second quarter of 2002. These
transactions are designed to provide the Company with enhanced borrowing
capacity." The Company also noted that its debt to market capitalization
decreased from 61.9% on March 31, 2001 to 52.8% on March 31, 2002.
PREIT Announces First Quarter Results
May 2, 2002
Page 6
PREIT Announces First Quarter Results
May 2, 2002
Page 7
Conference Call Information
Management has scheduled a conference call for 11:00 am Eastern Daylight Time on
May 2, 2002 to review the Company's first quarter results, market trends and
future outlook. To listen to the call, please dial (888) 792-1093 or (703)
871-3597 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 at 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. The online archive of the webcast will be available for 14
days following the call.
PREIT to Webcast Annual Meeting
The Company's Annual Meeting of Shareholders is scheduled for 11:00 am EDT on
Thursday, May 9, 2002 at the Park Hyatt at the Bellevue, 200 South Broad Street,
Philadelphia, Pennsylvania. A webcast of the annual meeting presentation will be
available live online at www.preit.com on a listen only basis. A replay of the
annual meeting will also be available on the Company's website.
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 12.0 million square feet) and apartment communities
(approximately 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 3 retail properties under development, which PREIT expects
will add approximately 1.0 million square feet to its portfolio. PREIT 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.
Pennsylvania Real Estate Investment Trust
Selected Financial Data
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FUNDS FROM OPERATIONS Three Months Ended
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(In thousands, except per share results) March 31, 2002 March 31, 2001
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Income before minority interest in operating partnership $ 4,252 $ 5,717
Income from disposed real estate - 31
Less: Gains on sales of interests in real estate - (1,806)
Add: Depreciation and amortization:
Wholly owned & consolidated partnership, net 4,893 (a) 4,230 (a)
Unconsolidated partnerships & joint ventures 1,497 (a) 1,603 (a)
Excess purchase price over net asset acquired - 106
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FUNDS FROM OPERATIONS $ 10,642 (b) $ 9,881 (b)
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FUNDS FROM OPERATIONS PER SHARE AND OP UNITS $0.60 $0.64
================== ==================
Weighted average number shares outstanding 15,927 13,669
Weighted average effect of full conversion of OP units 1,916 1,761
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Total weighted average shares of outstanding including OP units 17,843 15,430
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a) Excludes depreciation of non-real estate assets and amortization of
deferred financing costs. These amounts were previously included in the
depreciation amounts and deducted in a separate line.
b) Includes the non-cash effect of straight-line rents of $257,000 and
$326,000 for 2002 and 2001 respectively.
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OPERATING RESULTS Three Months Ended
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(In thousands, except per share results) March 31, 2002 March 31, 2001
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REAL ESTATE REVENUES
Base rent $ 21,675 $ 20,563
Percent rent 374 333
Expense reimbursement 2,693 2,797
Lease termination 80 129
Other real estate revenue 809 861
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Total real estate revenue 25,631 24,683
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Management company revenue 2,174 2,152
Interest and other income 19 161
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27,824 26,996
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EXPENSES
Property payroll and benefits 1,935 1,779
Real estate and other taxes 2,005 1,915
Utilities 1,072 1,243
Other operating expenses 3,344 3,431
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Total property operating expenses 8,356 8,368
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Depreciation and amortization 4,957 4,291
Corporate payroll and benefits 3,510 3,218
Other general and administrative expenses 2,469 1,982
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Total general & administrative expenses 5,979 5,200
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Interest expense 5,846 6,639
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25,138 24,498
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Income before equity in unconsolidated entities,
gains on sales of interests in real estate and
minority interest in operating partnership 2,686 2,498
Equity in income of partnerships and joint ventures 1,566 1,413
Gains on sales of interests in real estate - 1,806 (1)
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Income before minority interest in operating partnership 4,252 5,717
Minority interest in operating partnership (448) (656)
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Income from operations 3,804 5,061
Income from disposed real estate - 31
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Income before extraordinary item 3,804 5,092
Loss on early extinguishment of debt (77) -
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NET INCOME $ 3,727 $ 5,092
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PER SHARE DATA
Net income before gains on sales $0.23 $0.24
Gains on sales of interests in real estate - 0.13 (1)
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BASIC INCOME PER SHARE $0.23 $0.37
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DILUTED INCOME PER SHARE $0.23 $0.37
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Weighted average number shares outstanding 15,927 13,669
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1) 2001 includes gain on sale of interest in Ingleside Shopping Center,
Thorndale, PA.
(In thousands)
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EQUITY IN INCOME OF PARTNERSHIPS Three Months Ended
---------------------------------------------
AND JOINT VENTURES March 31, 2002 March 31, 2001
- --------------------------------------------- -------------------- -------------------
Gross revenues from real estate $ 23,796 $ 22,329 (a)
==================== ===================
Expenses:
Property operating expenses 8,326 7,982
Mortgage and bank loan interest 7,895 7,434
Depreciation and amortization 4,148 3,998
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20,369 19,414
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3,427 2,915
Partner's share (1,861) (1,502)
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EQUITY IN INCOME OF PARTNERSHIPS
AND JOINT VENTURES $ 1,566 $ 1,413
==================== ===================
a) The results of operations for a property sold in 2001 are excluded from
2001 results, in order to comply with current GAAP (Generally Accepted
Accounting Principles) rules.
Supplemental Information for Wholly Owned Properties
and the Company's Proportionate Share of Partnerships and Joint Ventures
(In thousands)
- ---------------------------------------------
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION Three Months Ended
---------------------------------------------
AND AMORTIZATIONS ("EBITDA") March 31, 2002 March 31, 2001
- --------------------------------------------- --------------------- --------------------
Gross revenues $ 25,631 $ 24,683
Operating expenses (8,356) (8,368)
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Net operating income: wholly-owned properties 17,275 16,315
Company's proportionate share of partnerships and
joint ventures net operating income 5,854 5,544
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Combined net operating income 23,129 21,859
Interest income 19 161
Company's proportionate share of PREIT-RUBIN, Inc.
net operating income (loss)
Management company revenue 2,174 2,152
Total general & administrative expenses (5,979) (5,200)
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EBITDA $ 19,343 $ 18,972
==================== ==================
(In thousands)
MORTGAGE NOTES, BANK AND CONSTRUCTION LOANS PAYABLE
- --------------------------------------------------- -------------------- -------------------
Wholly-owned properties March 31, 2001 December 31, 2001
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---------------------------------------------
Mortgage notes payable $ 263,424 $ 257,873
Bank loans payable 104,500 98,500
Construction loan payable - 4,000
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367,924 360,373
Company's proportionate share of
partnerships and joint ventures
Mortgage notes payable 145,177 145,803
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Total mortgage notes and bank loans payable $ 513,101 $ 506,176
==================== ===================