Exhibit 99.1
[GRAPHIC OMITTED] 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
FOR FURTHER INFORMATION:
AT THE COMPANY AT KCSA PUBLIC RELATIONS WORLDWIDE
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Robert McCadden Evan Smith, CFA Erica Pettit
EVP and CFO (Investor Relations) (Media Relations)
(215) 875-0700 (212) 896-1251 (212) 896-1248
FOR IMMEDIATE RELEASE
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August 5, 2004
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST REPORTS
2004 SECOND QUARTER & SIX MONTH RESULTS
o Raises 2004 FFO Guidance
PHILADELPHIA, PA, August 5, 2004, Pennsylvania Real Estate Investment Trust
("PREIT") (NYSE: PEI) today announced its results for the second quarter and six
months ended June 30, 2004. Net income available to common shareholders for the
second quarter of 2004 was $0.21 per diluted share. FFO per common share and
Operating Partnership unit ("share") for the second quarter of 2004 was $0.86,
which was above the midpoint of the Company's guidance provided in May 2004.
The Company also increased its 2004 FFO guidance range to be between $3.57 and
$3.65 per share.
2004 SECOND QUARTER HIGHLIGHTS
o Income from continuing operations for the second quarter of 2004 increased to
$9.4 million from $6.9 million in the second quarter of 2003.
o Net income available to common shareholders for the second quarter of 2004
decreased to $8.0 million from $144.6 million in the second quarter of 2003.
Net income in the second quarter of 2004 included income from discontinued
operations of $2.0 million compared to $137.8 million in the second quarter
of 2003.
o Net income available to common shareholders for the second quarter of 2004
was $0.21 per diluted share, a decrease from $8.54 per diluted share in the
second quarter of 2003. Net income per diluted share in the second quarter of
2004 included income from discontinued operations of $0.05 per share compared
to $8.14 per share in the second quarter of 2003.
o Funds From Operations (FFO) for the second quarter of 2004 increased by 129%
to $34.0 million from $14.8 million in the second quarter of 2003.
o FFO per share increased by 7.5% to $0.86 in the second quarter of 2004 from
$0.80 in the second quarter of 2003.
o Net Operating Income (NOI) for the second quarter of 2004 increased by 135%
to $64.8 million from $27.6 million in the second quarter of 2003.
PREIT Announces Second Quarter 2004 Results
August 5, 2004
Page 2
o Same store NOI for the Company's retail portfolio increased by 4.3% from the
second quarter of 2003.
See the financial tables on pages 10 and 11 for a reconciliation of the terms
FFO, NOI and earnings before interest, taxes, depreciation and amortization
(EBITDA) as used in this release to net income, the most directly comparable
GAAP measure.
Ronald Rubin, Chairman and Chief Executive Officer of PREIT, stated,"Our second
quarter results reflect the inherent quality of our properties and our ability
to create growth from within our portfolio. Our recent announcement regarding
Wal-Mart's move to Echelon Mall in Voorhees, NJ is a clear example of the way
PREIT takes creative approaches to revitalizing properties."
During 2003, the Company completed the sale of all the properties and joint
venture investments that comprised its multifamily portfolio. The 15
wholly-owned multifamily properties are classified as discontinued operations on
the consolidated statement of income for the second quarter of 2003 and six
months ended June 30, 2003. The four joint-venture multifamily properties are
included as continuing operations for the second quarter of 2003 and six months
ended June 30, 2003.
Also, as of June 30, 2004, six malls that were acquired in the November 2003
merger with Crown American Realty Trust ("Crown") are classified as assets held
for sale on the consolidated balance sheet and as discontinued operations on the
consolidated statement of income. Five of the six malls are currently under
agreement of sale. These five malls are Bradley Square Mall in Cleveland,
Tennessee; Martinsburg Mall in Martinsburg, West Virginia; Mount Berry Square
Mall in Rome, Georgia; Shenango Valley Mall in Hermitage, Pennsylvania; and West
Manchester Mall in York, Pennsylvania. The sixth mall, Schuylkill Mall in
Frackville, Pennsylvania, will continue to be held for sale by the Company.
Also, Rio Grande Mall, a joint venture property, in Rio Grande, New Jersey, is
under agreement of sale, and is included in continuing operations.
SECOND QUARTER RESULTS
Net income available to common shareholders for the second quarter ended June
30, 2004 was $7,989,000, or $0.21 per diluted share, on 35,737,000 weighted
average common shares outstanding (diluted), compared with $144,638,000, or
$8.54 per diluted share, on 16,931,000 weighted average common shares
outstanding (diluted) for the second quarter of 2003. Net income for the second
quarter of 2003 included a gain on sale of $150,201,000 from the sale of 13
wholly-owned multifamily properties and $4,401,000 from the sale of the
Company's interests in two joint venture multifamily properties.
For the second quarter of 2004, the Company's FFO increased by 129% to
$34,007,000 from $14,843,000 for the second quarter of 2003.
FFO per share increased by 7.5% to $0.86 in the second quarter of 2004 from
$0.80 in the second quarter of 2003. Weighted average shares outstanding
increased to 39,546,000 for the second quarter of 2004 from 18,615,000 for the
second quarter of 2003.
PREIT Announces Second Quarter 2004 Results
August 5, 2004
Page 3
NOI from wholly-owned properties and the Company's proportionate share of
partnerships and joint venture properties increased by 135% to $64,814,000 for
the second quarter of 2004 from $27,584,000 for the second quarter of 2003.
The results of the second quarter of 2004 reflect the acquisition of 26
wholly-owned shopping malls and the remaining 50% interest in Palmer Park Mall
in Easton, Pennsylvania as a result of the Company's merger with Crown on
November 20, 2003. The results of the second quarter of 2004 also reflect the
2003 acquisition of six shopping malls from The Rouse Company, the purchase in
2003 of the remaining 70% interest in Willow Grove Park in Willow Grove,
Pennsylvania and the purchase of The Gallery at Market East II in Philadelphia,
Pennsylvania in May, 2004. The increase in FFO and NOI in the second quarter of
2004 from these acquisitions was partially offset by the disposition of the
Company's 15 wholly-owned multifamily properties that were included as
discontinued operations during the second quarter of 2003 and the four joint
venture multifamily properties that were also sold in 2003 and were included as
continuing operations for the second quarter of 2003.
Revenues in the second quarter of 2004 were reduced by $203,000 due to the
amortization of above-and below-market lease intangibles (application of
Statement of Financial Accounting Standards ("SFAS") No. 141) compared to
$130,000 in the second quarter of 2003. Interest expense for the second quarter
of 2004 was reduced by $4,848,000 due to debt premium amortization compared to
$1,118,000 in the second quarter of 2003.
The per share amounts that were used to calculate net income per diluted share
were affected by the increase in weighted average shares outstanding, primarily
with regard to the 6.3 million common shares issued in connection with the
Company's public offering in August 2003 and the 11.7 million common shares
issued in connection with the merger with Crown in November 2003. FFO per share
was also affected by the 1.7 million Operating Partnership units issued in
connection with the merger with Crown in November 2003.
SIX-MONTH RESULTS
Net income available to common shareholders for the six months ended June 30,
2004 was $13,549,000, or $0.37 per diluted share, on 35,714,000 weighted average
shares of beneficial interest outstanding (diluted) compared to $149,615,000, or
$8.87 per diluted share, on 16,874,000 weighted average shares of beneficial
interest outstanding (diluted) for the six months ended June 30, 2003. Net
income for the six months ended June 30, 2003 included gains on sale of
$155,714,000 comprised of $150,201,000 from the sale of 13 wholly-owned
multifamily properties, $4,401,000 from the sale of the Company's interests in
two joint venture multifamily properties and $1,112,000 from the sale of land at
Crest Plaza Shopping Center in Allentown, Pennsylvania to Target.
FFO for the six months ended June 30, 2004 totaled $67,438,000, an increase of
156% over $26,376,000 for the comparable six-month period in 2003.
FFO per share for the six-month period ended June 30, 2004 increased by 19.6% to
$1.71 on 39,393,000 weighted average shares outstanding, compared to $1.43 per
share on 18,461,000 weighted average shares outstanding for the six months ended
June 30, 2003.
PREIT Announces Second Quarter 2004 Results
August 5, 2004
Page 4
NOI from wholly-owned properties and the Company's proportionate share of
partnerships and joint venture properties totaled $127,659,000 for the six
months ended June 30, 2004, an increase of 178% compared to $45,863,000 for the
six months ended June 30, 2003.
The results of the six months ended June 30, 2004 reflect the acquisition of 26
wholly-owned shopping malls and the remaining 50% interest in Palmer Park Mall
in Easton, Pennsylvania as a result of the Company's merger with Crown on
November 20, 2003. These results also reflect the 2003 acquisition of six
shopping malls from The Rouse Company, the purchase in 2003 of the remaining 70%
interest in Willow Grove Park in Willow Grove, Pennsylvania and the purchase of
The Gallery at Market East II in Philadelphia, Pennsylvania. The increase in FFO
and NOI in the second quarter of 2004 from these acquisitions was partially
offset by the disposition of the Company's 15 wholly-owned multifamily
properties that were included as discontinued operations and the four joint
venture multifamily properties that were also sold in 2003 and were included as
continuing operations for the second quarter 2003.The increase was also offset
by approximately $1,200,000 of bad debt expense related to tenants in
bankruptcy, including KB Toys, Gadzooks and FootAction and additional general
and administrative expenses related to corporate governance matters and the
integration with Crown, which were mentioned in the Company's press release on
June 17, 2004.
RETAIL PERFORMANCE & OCCUPANCY LEVELS
In the second quarter of 2004, same store NOI for the Company's retail portfolio
increased by 4.3%, or $631,000 compared to the second quarter of 2003, primarily
as a result of a 3.9% increase in total revenues.
Occupancy in the Company's same store retail portfolio increased to 95.2% as of
June 30, 2004, 140 basis points higher than the 93.8% occupancy rate as of June
30, 2003.
The Company's power centers and enclosed malls were 98.0% and 90.2% occupied,
respectively, as of June 30, 2004, compared to 97.7% and 88.0% occupied,
respectively, as of June 30, 2003. The Company's same store mall properties
reported sales of $348 per square foot in the trailing twelve months ended June
30, 2004, as compared to $350 per square foot in the comparable period ended
June 30, 2003.
LEASING UPDATE
During the second quarter of 2004, the Company executed 119 retail leases
encompassing 257,254 square feet at an average rent per square foot of $24.95.
New leases for previously leased space accounted for 17 transactions totaling
42,013 square feet at an average rent of $32.96, or $8.37 higher than the
average rent per square foot at the time of expiration. Eighty tenants renewed
leases, representing 178,337 square feet at an average renewal rent of $22.57
per square foot, an increase of $0.88 per square foot over the rent at
expiration. The Company also executed transactions for 22 formerly vacant spaces
totaling 36,904 square feet with an average rent of $27.35 per square foot.
PORTFOLIO COMPOSITION
The Company ended the second quarter of 2004 with investments in real estate
(excluding assets held for sale) of $2,528,585,000, an increase of $54,376,000
from $2,474,209,000 at the end of the first quarter of 2004. The increase is
primarily due to the acquisitions of The Gallery at Market East II and the
remaining 27% ownership interest in Cherry Hill Mall.
PREIT Announces Second Quarter 2004 Results
August 5, 2004
Page 5
Jonathan B. Weller, PREIT's Vice Chairman, commented, "The recent announcements
of the acquisition of The Gallery at Market East II and the agreements for the
disposition of several non-core properties illustrate our commitment to
strengthening our portfolio. We will continue to take every opportunity to
create shareholder value by focusing our best efforts on our properties with the
greatest potential for growth."
CAPITAL RESOURCES
Robert McCadden, PREIT's Executive Vice President and CFO, commented, "At the
end of the second quarter the Company had $280 million available under its line
of credit and, giving effect to the expected proceeds of $112 million from the
sale of six properties in the third quarter, the Company has adequate liquidity
for its redevelopment and development activities and opportunistic acquisitions
which may arise."
Edward Glickman, PREIT's President and COO, commented, "The addition of Robert
F. McCadden to our management team as Chief Financial Officer enhances our
operational capabilities and strategic focus."
2004 FORECAST
The Company estimates that for the calendar year 2004 net income available to
common shareholders will be between $1.10 and $1.18 per share and increases its
2004 FFO guidance range to be between $3.57 and $3.65 per share. The Company
estimates that for the third quarter 2004 net income available to common
shareholders will be between $0.29 and $0.33 per share and that FFO per share
will be between $0.84 and $0.88.
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ESTIMATED PER SHARE THIRD QUARTER 2004 CALENDAR YEAR 2004
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Net income available to common $0.29- $0.33 $ 1.10- $1.18
shareholders
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(Gain)/Loss on sales ($0.04) ($0.02)
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Depreciation and amortization $0.59 $2.49
(includes Company's proportional share
of joint ventures), net of minority
interest
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FFO $0.84- $0.88 $ 3.57- $3.65
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DIVIDEND DECLARATION
On July 30, 2004, PREIT announced that its Board of Trustees has declared a
quarterly cash dividend of $0.54 per common share. The dividend will be paid on
September 15, 2004, to common shareholders of record on September 1, 2004. The
September 15, 2004 dividend payment will be PREIT's 110th consecutive
distribution since its initial dividend paid in August 1962. Throughout its
history, the Company has never omitted or reduced a shareholder dividend.
PREIT also announced on July 30, 2004, that its Board of Trustees has declared a
regular quarterly dividend of $1.375 per share on its 11.00% senior preferred
shares. The dividend will be paid on September 15, 2004 to holders of record on
September 1, 2004.
PREIT Announces Second Quarter 2004 Results
August 5, 2004
Page 6
A copy of the Company's Distribution Reinvestment and Share Purchase Plan
prospectus, enrollment forms and other information is available on the Company's
web site at www.preit.com under Investor Information or by calling American
Stock Transfer & Trust Company at (800) 278-4353, or the Company at (215)
875-0735. You should read the prospectus carefully before making any investment
decisions.
OTHER EVENTS
AGREEMENTS FOR DISPOSITION OF FIVE MALLS AND ONE STRIP CENTER
On June 17, 2004, the Company announced that it had signed a definitive
agreement to sell five malls to Lightstone Real Estate Partners, LLC. The five
malls are classified by PREIT as assets held for sale.
The five malls are: Bradley Square Mall in Cleveland, Tennessee; Martinsburg
Mall in Martinsburg, West Virginia; Mount Berry Square Mall in Rome, Georgia;
Shenango Valley Mall in Hermitage, Pennsylvania; and West Manchester Mall in
York, Pennsylvania.
The net proceeds are estimated to be $108.5 million after closing costs. No gain
or loss is expected from the sale of the five malls.
The Company also has signed a definitive agreement to sell its 60% ownership
interest in Rio Grande Mall, a 166,000 square foot strip center, in Rio Grande,
New Jersey to Freeco Development LLC, an affiliate of the Company joint venture
partner. The net proceeds are estimated to be $4.0 million. The Company is
expected to record a gain of approximately $1.6 million in the third quarter of
2004 from this transaction.
ACQUISITION OF REMAINING 27% OWNERSHIP INTEREST IN CHERRY HILL MALL
On June 3, 2004, the Company announced that it has completed the acquisition of
the remaining 27% ownership interest in, and now owns 100% of, Cherry Hill Mall,
Cherry Hill, New Jersey. PREIT purchased the remaining equity in New Castle
Associates, which owns Cherry Hill Mall, for approximately 609,000 Operating
Partnership units at $29.285 per unit.
Cherry Hill Mall is a 1,266,000 square foot mall. As of June 30, 2004, the
in-line sales volume was $422 per square foot with in-line occupancy of 93.6%.
ACQUISITION OF THE GALLERY AT MARKET EAST II
On May 20, 2004, the Company announced that it had completed the acquisition of
The Gallery at Market East II, Philadelphia, PA, from 5 North Fifth Street,
L.P., for approximately $32 million. The acquisition was funded from the
Company's line of credit.
As of June 30, 2004, the in-line sales volume for The Gallery at Market East II
was $419 per square foot with in-line occupancy of 70.2%. The Company underwrote
the acquisition to generate an unleveraged return of approximately 9.5% on cost
based on anticipated operating income for 2004. This property is subject to two
ground leases with remaining terms of seventy-nine and twenty-nine years.
The Gallery at Market East II is 334,000 square feet and is part of The Gallery
at Market East, the largest retail complex in downtown Philadelphia. The Company
now owns 528,000 square feet of the 1.1 million total square footage of The
Gallery at Market East. The Gallery at Market East is anchored by Strawbridge's,
Big K-Mart and Burlington Coat Factory.
PREIT Announces Second Quarter 2004 Results
August 5, 2004
Page 7
SUBSEQUENT EVENTS
ECHELON MALL REDEVELOPMENT
On July 14, 2004 PREIT announced that Wal-Mart Stores, Inc. ("Wal-Mart")
(NYSE:WMT) will build a 147,550 square foot store at the Company's Echelon Mall
in Voorhees, New Jersey. The Wal-Mart store marks the beginning of the
redevelopment of Echelon Mall and will occupy an outparcel in the area
previously occupied by JC Penney. The Wal-Mart store will join Strawbridge's and
Boscov's as Echelon Mall's anchor tenants.
PREIT anticipates an investment of an additional $12 to $15 million to complete
Echelon Mall's redevelopment, not including the cost of constructing the
Wal-Mart store, which will be paid by Wal-Mart. PREIT expects to earn a return
of 10% to 12% on its incremental investment. Wal-Mart is expected to open in the
spring of 2006.
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 property and extraordinary items (computed in
accordance with GAAP); plus real estate depreciation; plus or minus adjustments
for unconsolidated partnership and joint ventures 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 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.
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 real estate and depreciation and
amortization of real estate.
PREIT Announces Second Quarter 2004 Results
August 5, 2004
Page 8
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.
EBITDA is earnings before interest, taxes, depreciation and amortization. On a
property level, EBITDA and NOI are equivalent; however, certain corporate
revenues and expenses are added and deducted to/from NOI to derive EBITDA on a
company wide basis. Specifically, management company revenues and interest
income are added to NOI while corporate payroll and other general and
administrative expenses are deducted from NOI to calculate EBITDA. The Company
believes that net income is the most directly comparable GAAP measurement to
EBITDA. The Company believes that EBITDA helps the Company and its investors
evaluate the ongoing operating performance of its properties and facilitate
comparisons with other REITs and real estate companies. These measures assist
management by providing a baseline to assess property-level results,
particularly as the Company acquires or sells assets. The EBITDA measures
presented by the Company may not be comparable to other similarly titled
measures of other companies.
CONFERENCE CALL INFORMATION
Management has scheduled a conference call for 3:00 P.M. EASTERN DAYLIGHT TIME
TODAY to review the Company's second quarter results, market trends and future
outlook. To listen to the call, please dial (800) 946-0783 (domestic) or (719)
457-2658 (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 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. Financial and statistical information expected
to be discussed on the call will also be available on the Company's website.
For interested individuals unable to join the conference call, a replay of the
call will be available through AUGUST 19, 2004, at (888) 203-1112 (domestic) or
(719) 457-0820 (international), (PASSCODE: 289550). The online archive of the
webcast will be available for 14 days following the call.
PREIT Announces Second Quarter 2004 Results
August 5, 2004
Page 9
ABOUT PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
Pennsylvania Real Estate Investment Trust, founded in 1960 and one of the second
equity REITs in the U.S., has a primary investment focus on retail shopping
malls and power centers (approximately 33.8 million square feet) located in the
eastern United States. PREIT's portfolio currently consists of 58 properties in
14 states. PREIT's portfolio includes 40 shopping malls, 14 strip and power
centers and four industrial properties. PREIT is headquartered in Philadelphia,
Pennsylvania. The Company's website can be found at www.preit.com.
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. 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. 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, 2003.
[FINANCIAL TABLES FOLLOW]
# # #
** A SUPPLEMENTAL QUARTERLY FINANCIAL PACKAGE **
WILL BE AVAILABLE ON THE COMPANY'S WEB SITE AT WWW.PREIT.COM.
PREIT Announces Second Quarter 2004 Results
August 5, 2004
Page 10
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
SELECTED FINANCIAL DATA
- ----------------------------------------------------------------------- ------------------------ ------------------------
FUNDS FROM OPERATIONS Three Months Ended Six Months Ended
- ----------------------------------------------------------------------- ------------------------ ------------------------
June 30, June 30, June 30, June 30,
(In thousands, except per share amounts) 2004 2003 2004 2003
--------- --------- --------- ---------
Net income $ 11,392 $ 144,638 $ 20,355 $ 149,615
Minority interest in Operating Partnership 1,053 823 1,837 1,110
Minority interest in Operating Partnership-discontinued operation 222 15,650 402 15,886
Dividends on preferred shares (3,403) -- (6,806) --
Gains on sales of interests in real estate -- (4,321) -- (5,513)
Gains on dispositions of discontinued operations -- (150,201) 550 (150,201)
Depreciation and amortization:
Wholly owned & consolidated partnerships, net 23,602 (a) 6,929 (a) 48,881 (a) 9,579 (a)
Unconsolidated partnerships & joint ventures 1,141 (a) 1,325 (a) 2,219 (a) 3,591 (a)
Discontinued operations -- -- -- 2,309
--------- --------- --------- ---------
FUNDS FROM OPERATIONS $ 34,007 (b) $ 14,843 (b) $ 67,438 (b) $ 26,376 (b)
========= ========= ========= =========
FUNDS FROM OPERATIONS PER SHARE AND OP UNITS $ 0.86 $ 0.80 $ 1.71 $ 1.43
========= ========= ========= =========
Weighted average number of shares outstanding 35,517 16,616 35,460 16,579
Weighted average effect of full conversion of OP units 4,029 1,999 3,933 1,882
--------- --------- --------- ---------
Total weighted average shares outstanding, including OP units 39,546 18,615 39,393 18,461
--------- --------- --------- ---------
Weighted average number of preferred shares 2,475 -- 2,475 --
--------- --------- --------- ---------
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 $1,218 and $612 for
the 2nd quarter 2004 and 2003, respectively, and $2,567 and $985 for the
six months ended June 30, 2004 and 2003, respectively.
- ----------------------------------------------------------------------- ------------------------ ------------------------
OPERATING RESULTS Three Months Ended Six Months Ended
- ----------------------------------------------------------------------- ------------------------ ------------------------
June 30, June 30, June 30, June 30,
(In thousands, except per share amounts) 2004 2003 2004 2003
--------- --------- --------- ---------
REVENUE:
Real estate revenues:
Base rent $ 62,029 $ 21,568 $ 123,373 $ 33,493
Percentage rent 1,312 205 3,484 478
Expense reimbursements 28,007 8,933 56,537 12,835
Lease termination revenue 961 -- 988 259
Other real estate revenues 2,069 787 4,001 1,121
--------- --------- --------- ---------
Total real estate revenues 94,378 31,493 188,383 48,186
--------- --------- --------- ---------
Management Company revenue 1,738 3,655 3,799 5,836
Interest and other income 431 193 685 335
--------- --------- --------- ---------
Total revenues 96,547 35,341 192,867 54,357
--------- --------- --------- ---------
EXPENSES:
Property operating expenses:
Property payroll and benefits (5,498) (1,622) (12,195) (2,635)
Real estate and other taxes (9,340) (2,916) (17,921) (4,211)
Utilities (7,019) (1,214) (13,341) (1,492)
Other operating expenses (12,456) (4,435) (26,490) (6,749)
--------- --------- --------- ---------
Total property operating expenses (34,313) (10,187) (69,947) (15,087)
--------- --------- --------- ---------
Depreciation and amortization (23,668) (6,994) (49,012) (10,507)
General and administrative expenses: -- --
Corporate payroll (6,205) (3,948) (12,897) (7,584)
Other general and administrative expenses (5,573) (3,569) (9,692) (6,259)
--------- --------- --------- ---------
Total general & administrative expenses (11,778) (7,517) (22,589) (13,843)
--------- --------- --------- ---------
Interest expense (17,757) (9,097) (35,564) (13,143)
--------- --------- --------- ---------
Total expenses (87,516) (33,795) (177,112) (52,580)
Income before equity in income of partnerships and joint
ventures, gains on sales of interests in real estate, minority
interest and discontinued operations 9,031 1,546 15,755 1,777
Equity in income of partnerships and joint ventures 1,648 2,023 3,413 3,800
Gains on sales of interests in real estate -- 4,321 -- 5,513
--------- --------- --------- ---------
Income before minority interest and discontinued operations 10,679 7,890 19,168 11,090
Minority interest in properties (213) (207) (632) (207)
Minority interest in Operating Partnership (1,053) (823) (1,837) (1,110)
--------- --------- --------- ---------
Income from continuing operations 9,413 6,860 16,699 9,773
--------- --------- --------- ---------
Discontinued operations:
Income from discontinued operations 2,207 3,227 4,622 5,527
Gains on disposition of discontinued operations -- 150,201 (550) 150,201
Minority interest in properties (6) -- (14) --
Minority interest in Operating Partnership (222) (15,650) (402) (15,886)
--------- --------- --------- ---------
Total discontinued operations 1,979 137,778 3,656 139,842
--------- --------- --------- ---------
Net income $ 11,392 $ 144,638 $ 20,355 $ 149,615
Dividends on preferred shares (3,403) -- (6,806) --
--------- --------- --------- ---------
Net income available to common shareholders $ 7,989 $ 144,638 $ 13,549 $ 149,615
========= ========= ========= =========
BASIC EARNINGS PER SHARE
From continuing operations $ 0.16 $ 0.41 $ 0.27 $ 0.59
From discontinued operations $ 0.06 $ 8.29 $ 0.10 $ 8.43
--------- --------- --------- ---------
TOTAL BASIC EARNINGS PER SHARE $ 0.22 $ 8.70 $ 0.37 $ 9.02
========= ========= ========= =========
DILUTED EARNINGS PER SHARE
From continuing operations $ 0.16 $ 0.40 $ 0.27 $ 0.58
From discontinued operations $ 0.05 $ 8.14 $ 0.10 8.29
--------- --------- --------- ---------
TOTAL DILUTED EARNINGS PER SHARE $ 0.21 $ 8.54 $ 0.37 $ 8.87
========= ========= ========= =========
Weighted average number of shares outstanding (diluted) 35,737 16,931 35,714 16,874
--------- --------- --------- ---------
PREIT Announces Second Quarter 2004 Results
August 5, 2004
Page 11
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
SELECTED FINANCIAL DATA
- ----------------------------------------------------------------------- ------------------------ ------------------------
EQUITY IN INCOME OF PARTNERSHIPS
AND JOINT VENTURES Three Months Ended Six Months Ended
- ----------------------------------------------------------------------- ------------------------ ------------------------
June 30, June 30, June 30, June 30,
(In thousands) 2004 2003 2004 2003
--------- --------- --------- ---------
Gross revenues from real estate $ 14,600 $ 22,916 $ 29,212 $ 46,626
======== ======== ======== ========
Expenses:
Property mangagement expenses (4,515) (7,374) (9,149) (15,790)
Mortgage interest expense (4,402) (7,286) (8,590) (14,790)
Depreciation and amortization (2,252) (3,955) (4,392) (8,198)
-------- -------- -------- --------
Total expenses (11,169) (18,615) (22,131) (38,778)
-------- -------- -------- --------
Net revenues from real estate 3,431 4,301 7,081 7,848
Less: Partners' share (1,754) (2,201) (3,584) (3,962)
-------- -------- -------- --------
Company's share 1,677 2,100 3,497 3,886
Amortization of excess investment (29) (77) (84) (86)
--
EQUITY IN INCOME OF PARTNERSHIPS -------- -------- -------- --------
AND JOINT VENTURES $ 1,648 $ 2,023 $ 3,413 $ 3,800
======== ======== ======== ========
Supplemental Information for Wholly Owned Properties
and the Company's Proportionate Share of Partnerships and Joint Ventures
- ----------------------------------------------------------------------- ------------------------ ------------------------
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION
AND AMORTIZATION ("EBITDA") Three Months Ended Six Months Ended
- ----------------------------------------------------------------------- ------------------------ ------------------------
June 30, June 30, June 30, June 30,
(In thousands) 2004 2003 2004 2003(1)
--------- --------- --------- ---------
Gross revenues $ 94,378 $ 31,493 $188,383 $ 48,186
Operating expenses (34,313) (10,187) (69,947) (15,087)
Minority interest in properties (213) (207) (632) (207)
-------- -------- -------- --------
Net operating income: wholly-owned properties 59,852 21,099 117,804 32,892
Company's proportionate share of partnerships and
joint ventures net operating income 4,962 6,485 9,855 12,971
-------- -------- -------- --------
Combined net operating income 64,814 27,584 127,659 45,863
Interest and other income 431 193 685 335
Management company revenue 1,738 3,655 3,799 5,836
Total general & administrative expenses (11,778) (7,517) (22,589) (13,843)
-------- -------- -------- --------
EBITDA $55,205(2) $23,915(2) $109,554(3) $ 38,191(3)
======== ======== ======== ========
1) NOI including the impact of disposed real estate assets was $67,895 and
$32,552 for the 3 months ended 6/30/04 and 6/30/03, respectively. NOI
including the impact of disposed real estate assets was $ 134,038 and $
58,741 for the 6 months ended 6/30/04 and 6/30/03, respectively.
2) EBITDA including the impact of disposed real estate assets was $58,284 and
$28,883 for the 3 months ended 6/30/04 and 6/30/03, respectively. EBITDA
including the impact of disposed real estate assets was $115,933 and
$51,068 for the 6 months ended 6/30/04 and 6/30/03, respectively.
- ----------------------------------------------------------------------- ------------------------ ------------------------
RECONCILIATION OF NET INCOME TO PROPERTY LEVEL EBITDA
AND TO PROPERTY LEVEL NET OPERATING INCOME Three Months Ended Six Months Ended
- ----------------------------------------------------------------------- ------------------------ ------------------------
June 30, June 30, June 30, June 30,
(In thousands) 2004 2003 2004 2003
--------- --------- --------- ---------
Net income $ 11,392 $ 144,638 $ 20,355 $ 149,615
Minority interest in Operating Partnership 1,053 823 1,837 1,110
Equity in income from partnerships and joint ventures (1,648) (2,023) (3,413) (3,800)
Company's proportionate share of partnerships and
joint ventures net operating income 4,962 6,485 9,855 12,971
Gains on sales of interests in real estate -- (4,321) -- (5,513)
Income from discontinued operations (1,979) (137,778) (3,656) (139,842)
Depreciation and amortization 23,668 6,994 49,012 10,507
Interest expense 17,757 9,097 35,564 13,143
-------- --------- --------- ---------
Property level EBITDA 55,205 23,915 109,554 38,191
Interest and other income (431) (193) (685) (335)
Management company revenue (1,738) (3,655) (3,799) (5,836)
Total general & administrative expenses 11,778 7,517 22,589 13,843
-------- --------- --------- ---------
PROPERTY LEVEL NET OPERATING INCOME $ 64,814 $ 27,584 $ 127,659 $ 45,863
======== ========= ========= =========
- ----------------------------------------------------------------------- --------------------------
MORTGAGE NOTES AND BANK
LOANS PAYABLE Six Months Ended
- ----------------------------------------------------------------------- -------------------------
June 30, December 31,
(In thousands) 2004 2003
--------- ------------
Wholly-owned properties
Mortgage notes payable $1,141,998 $1,150,054
Debt premium on mortgage notes payable 61,893 71,127
Bank loans payable 219,000 170,000
---------- ----------
1,422,891 1,391,181
Company's proportionate share of
partnerships and joint ventures
Mortgage notes payable 108,595 109,581
---------- ----------
Total mortgage notes and bank loans payable $1,531,486 $1,500,762
========== ==========