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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] Quarterly Report Pursuant To Section 13 or 15(d) of the Securities
Exchange Act Of 1934
For the quarterly period ended February 28, 1997
--------------------------
[ ] Transition Report Pursuant To Section 13 or 15(d) Of The Securities
Exchange Act Of 1934
For the transition period from ______________________ to _______________________
Commission File Number 1-6300
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Pennsylvania Real Estate Investment Trust
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-6216339
- ------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
455 Pennsylvania Avenue, Suite 135, Ft. Washington, PA 19034
- ------------------------------------------------------- ----------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (215) 542-9250
------------------------------
N/A
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the last 90 days. Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report (applicable
only to corporate issuers).
Shares of beneficial interest outstanding at April 1, 1997: 8,678,098
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This report includes a total of 13 pages.
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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
CONTENTS
Page
Part I. Financial Information
Financial Statements (Unaudited):
Consolidated Balance Sheets--February 28, 1997
and August 31, 1996 (Audited) 1-2
Consolidated Statements of Income--Three and Six Months
Ended February 28, 1997 and February 29, 1996 3
Consolidated Statements of Cash Flows--Six Months Ended
February 28, 1997 and February 29, 1996 4
Notes to Unaudited Consolidated Financial Statements 5-7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-11
Part II. Other Information
Item 4 (Items 1 through 3 not applicable) 12
Item 5 12
Item 6 12
Signatures 13
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
CONSOLIDATED BALANCE SHEETS
ASSETS
February 28, August 31,
1997 1996
--------------- ---------------
(Unaudited)
INVESTMENTS IN REAL ESTATE, at cost:
Apartment buildings $ 158,071,000 $ 156,102,000
Industrial properties 5,078,000 5,078,000
Shopping centers and retail stores 37,383,000 37,362,000
---------------- ----------------
Total investments in real estate 200,532,000 198,542,000
Less- Accumulated depreciation 47,666,000 44,693,000
---------------- ----------------
152,866,000 153,849,000
INVESTMENTS IN PARTNERSHIPS AND
JOINT VENTURES, at equity (Note 2) 10,000 16,995,000
NOTES RECEIVABLE -- 1,649,000
---------------- ----------------
152,876,000 172,493,000
LESS- Allowance for possible losses 1,930,000 2,042,000
---------------- ----------------
150,946,000 170,451,000
OTHER ASSETS:
Cash and cash equivalents 4,335,000 1,030,000
Rents and sundry receivables 451,000 608,000
Deferred costs, prepaid real estate taxes and expenses, net 5,730,000 5,636,000
---------------- ----------------
$ 161,462,000 $ 177,725,000
================ ================
The accompanying notes are an integral part of these statements.
1
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND BENEFICIARIES' EQUITY
February 28, August 31,
1997 1996
---------------- ----------------
(Unaudited)
LIABILITIES:
Mortgage notes payable $ 84,213,000 $ 84,833,000
Bank loans payable 26,853,000 39,315,000
Tenants' deposits and deferred rents 1,266,000 1,422,000
Accrued pension and retirement benefits 1,093,000 1,207,000
Accrued expenses and other liabilities 3,403,000 3,901,000
---------------- ----------------
116,828,000 130,678,000
---------------- ----------------
MINORITY INTEREST IN CONSOLIDATED PARTNERSHIP
(Note 2) 633,000 542,000
---------------- ----------------
COMMITMENTS AND CONTINGENCIES (Note 5)
BENEFICIARIES' EQUITY (Note 3):
Shares of beneficial interest, $1 par; authorized, unlimited; issued and
outstanding 8,678,098 shares at February 28, 1997 and 8,676,098 at
August 31, 1996 8,678,000 8,676,000
Capital contributed in excess of par 53,164,000 53,133,000
Distributions in excess of net income (17,841,000) (15,304,000)
---------------- ----------------
44,001,000 46,505,000
---------------- ----------------
$ 161,462,000 $ 177,725,000
================ ================
The accompanying notes are an integral part of these statements.
2
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
----------------------------- -----------------------------
February 28, February 29, February 28, February 29,
1997 1996 1997 1996
------------- ------------- ------------ ------------
REVENUES:
Gross revenues from real estate $ 10,117,000 $ 9,620,000 $ 20,085,000 $ 19,257,000
Interest and other income 69,000 47,000 164,000 85,000
------------- ------------- ------------- -------------
10,186,000 9,667,000 20,249,000 19,342,000
------------- ------------- ------------- -------------
EXPENSES:
Property operating expenses 4,175,000 4,132,000 8,187,000 7,913,000
Depreciation and amortization 1,555,000 1,404,000 3,096,000 2,856,000
General and administrative expenses 824,000 752,000 1,572,000 1,423,000
Mortgage and bank loan interest 2,248,000 2,441,000 4,605,000 4,858,000
Provision for losses on investments 500,000 -- 500,000 --
------------- ------------- ------------- ------------
9,302,000 8,729,000 17,960,000 17,050,000
------------- ------------- ------------- -------------
Income before minority interest, equity in
income of partnerships and joint ventures
and gains on sales of interests in real
estate 884,000 938,000 2,289,000 2,292,000
MINORITY INTEREST (83,000) (66,000) (174,000) (142,000)
EQUITY IN INCOME OF PARTNERSHIPS
AND JOINT VENTURES (Note 2) 719,000 1,464,000 2,045,000 3,031,000
GAINS ON SALES OF INTERESTS IN
REAL ESTATE 1,461,000 -- 1,461,000 --
------------- ------------- ------------- ------------
NET INCOME $ 2,981,000 $ 2,336,000 $ 5,621,000 $ 5,181,000
============= ============= ============= =============
NET INCOME PER SHARE $ 0.34 $ 0.27 $ 0.65 $ 0.60
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 8,678,098 8,676,098 8,677,527 8,676,098
============= ============= ============= =============
The accompanying notes are an integral part of these statements.
3
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
------------------------------------
February 28, February 29,
1997 1996
---------------- --------------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,621,000 $ 5,181,000
Adjustments to reconcile net income to
net cash provided by operating activities-
Minority interest in income of
consolidated partnership 174,000 142,000
Depreciation and amortization 3,096,000 2,856,000
Gains on sales of interests in real estate (1,461,000) --
Provision for losses on investments 500,000 --
Expenses charged against allowance for possible losses (611,000) (263,000)
Change in assets and liabilities-
Rents and sundry receivables 157,000 (37,000)
Deferred costs, prepaid real estate taxes and expenses (217,000) (745,000)
Accrued pension and retirement benefits (114,000) (93,000)
Accrued expenses and other liabilities (499,000) (325,000)
Tenants' deposits and deferred rents (156,000) (126,000)
--------------- ---------------
Net cash provided by operating activities 6,490,000 6,590,000
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in wholly owned real estate (1,991,000) (1,618,000)
Investments in partnerships and joint ventures (96,000) (153,000)
Increase in advances to partnerships and joint ventures (85,000) (107,000)
Cash distributions from partnerships and joint ventures in excess of equity
in income 16,557,000 1,652,000
Cash proceeds from sales of interests in partnerships and
joint ventures 2,069,000 --
Decrease in notes receivable 1,649,000 --
Cash distributions to minority partners (82,000) (109,000)
--------------- ---------------
Net cash provided by (used in) investing activities 18,021,000 (335,000)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal installments on mortgage notes payable (620,000) (572,000)
Repayment of bank loans payable (12,462,000) (5,100,000)
Increase in mortgage notes payable -- 8,800,000
Payment of deferred financing costs -- (704,000)
Shares of beneficial interest issued 33,000 --
Distributions paid to beneficiaries (8,157,000) (8,156,000)
--------------- ---------------
Net cash used in financing activities (21,206,000) (5,732,000)
--------------- ---------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,305,000 523,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,030,000 1,099,000
--------------- ---------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,335,000 $ 1,622,000
=============== ===============
The accompanying notes are an integral part of these statements.
4
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED FEBRUARY 28, 1997 AND FEBRUARY 29, 1996
1. BASIS OF PRESENTATION:
The consolidated financial statements have been prepared by the Registrant,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Registrant believes that the disclosures are adequate
to make the information presented not misleading. It is suggested that these
consolidated financial statements be read in conjunction with the audited
financial statements and the notes thereto included in the Registrant's latest
annual report on Form 10-K. In the opinion of the Registrant, all adjustments
and eliminations, consisting only of normal recurring adjustments, necessary to
present fairly the consolidated financial position of the Registrant as of
February 28, 1997 and August 31, 1996 and the consolidated results of its
operations for the three and six months ended February 28, 1997 and February 29,
1996 and cash flows for the six months ended February 28, 1997 and February 29,
1996, have been included. The results of operations for such interim periods are
not necessarily indicative of the results for the full year.
Certain reclassifications of prior year amounts have been made to conform with
the current year presentation.
2. INVESTMENTS IN PARTNERSHIPS AND JOINT VENTURES:
The following presents summarized information as to the Registrant's equity in
the assets and liabilities of 24 partnerships and joint ventures at February 28,
1997 and August 31, 1996, and the Registrant's equity in income for the three
and six months ended February 28, 1997 and February 29, 1996:
February 28, August 31,
ASSETS 1997 1996
------ ----------------- ----------------
(Unaudited)
Investments in real estate, at cost:
Apartment buildings $ 106,595,000 $ 105,480,000
Industrial property 1,264,000 1,264,000
Shopping centers and retail stores 116,316,000 128,936,000
Land 4,446,000 4,446,000
---------------- ----------------
Total investments in real estate 228,621,000 240,126,000
Less- Accumulated depreciation 69,028,000 73,989,000
---------------- ----------------
159,593,000 166,137,000
Cash and cash equivalents 7,579,000 5,589,000
Other assets 6,265,000 6,020,000
---------------- ----------------
Total assets 173,437,000 177,746,000
---------------- ----------------
LIABILITIES AND EQUITY
----------------------
Mortgage notes payable 164,000,000 133,578,000
Bank loans payable 8,300,000 9,124,000
Other liabilities 4,509,000 4,436,000
---------------- ----------------
Total liabilities 176,809,000 147,138,000
---------------- ----------------
Net equity (deficit) (3,372,000) 30,608,000
Partners' share (3,382,000) 13,613,000
---------------- -----------------
Investments in partnerships and joint ventures $ 10,000 $ 16,995,000
================ ================
5
EQUITY IN INCOME OF PARTNERSHIPS AND JOINT VENTURES
Three Months Ended Six Months Ended
--------------------------------- ---------------------------------
February 28, February 29, February 28, February 29,
1997 1996 1997 1996
--------------- --------------- --------------- ---------------
(Unaudited) (Unaudited)
Gross revenues from real estate $ 12,957,000 $ 13,768,000 $ 26,502,000 $ 26,834,000
--------------- --------------- --------------- ---------------
Expenses:
Property operating expenses 5,376,000 6,038,000 10,578,000 11,031,000
Mortgage and bank loan interest expense 3,379,000 3,007,000 6,810,000 6,194,000
Refinancing prepayment penalty 1,038,000 -- 1,465,000 --
Depreciation and amortization 1,651,000 1,760,000 3,408,000 3,464,000
--------------- --------------- --------------- ---------------
11,444,000 10,805,000 22,261,000 20,689,000
--------------- --------------- --------------- ---------------
1,513,000 2,963,000 4,241,000 6,145,000
Partners' share (794,000) (1,499,000) (2,196,000) (3,114,000)
--------------- --------------- --------------- ---------------
Equity in income of partnerships and joint
ventures $ 719,000 $ 1,464,000 $ 2,045,000 $ 3,031,000
=============== =============== =============== ===============
One partnership in which the Registrant is a general partner, and has control as
provided in the partnership agreement, has been consolidated for financial
statement presentation. All of the assets and liabilities are included in the
consolidated financial statements at 100%. The minority partner's interest is
35%.
3. DISTRIBUTIONS:
The Trust anticipates declaring a distribution on April 15, 1997 at its
regularly scheduled Trustees meeting. The per share amount declared in the
comparable period in fiscal 1996 for distribution was as follows:
Amount
Per
Date Declared Record Date Payment Date Share
------------- ----------- ------------ -----
April 10, 1996 April 30, 1996 May 15, 1996 $.47
4. CASH FLOW INFORMATION:
Cash paid for interest was $2,138,000 and $2,429,000 for the three months ended
February 28, 1997 and February 29, 1996, and $4,482,000 and $4,943,000 for the
six months ended February 28, 1997 and February 29, 1996, respectively.
6
5. COMMITMENTS AND CONTINGENCIES:
Environmental matters have arisen at certain properties in which the Registrant
has an interest for which reserves have previously been established. During the
six months ended February 28, 1997, the Registrant advanced funds totaling
$6,000 which were recorded against the previously established reserves.
The Registrant has been named as a defendant in a suit brought by persons and
their affiliates who are partners of the Registrant in three partnerships. The
Registrant is vigorously defending the suit and has denied the plaintiffs'
allegations. The Registrant also believes that it has viable claims against
certain of the same partners (or their affiliates) which it is asserting. As the
pleadings are not yet closed and discovery is still in the preliminary stages,
it is not possible to judge the ultimate outcome of these suits at this time.
However, Management does not believe that resolution of these matters will have
a material adverse effect on the Registrant's financial condition or results of
operations.
6. RECENT ACCOUNTING PRONOUNCEMENTS:
On March 3, 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share." The new statement is effective for fiscal years
ending after December 15, 1997. When adopted, the statement will require
implementing a new definition of earnings per share including restatement of
prior year amounts. Management has determined there will be no significant
impact upon adoption of the statement.
7
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
In December 1996, the Registrant sold to its partners the Registrant's
partnership interest in three shopping centers located in Pennsylvania, in
Lancaster, Waynesburg, and Beaver Falls for a cash consideration of $2,000,000
plus the assumption of debt of $3,560,000. The Registrant realized a gain of
$1,461,000. In addition, the Registrant's partners paid in full the outstanding
notes receivable and accrued interest in the amount of $1,286,000.
In January 1997, a partnership in which the Registrant has a 50% interest
completed the refinancing of its 433-unit apartment community in Omaha,
Nebraska, with the placement of a $20,500,000 ten-year mortgage maturing in
February 2007. The interest rate is 7.56% and amortization is based on a
thirty-year schedule. This replaced a mortgage in the amount of $18,800,000
which had an interest rate of 9.75%.
Funds from operations (FFO) increased by $305,000 and $398,000 for the three and
six months ended February 28, 1997, as compared to the same periods in 1996 as
follows:
Three Months Ended Six Months Ended
--------------------------------- ---------------------------------
February 28, February 28, February 28, February 28,
1997 1996 1997 1996
--------------- --------------- --------------- ---------------
Funds from Operations(1)
- ------------------------
Net income $ 2,981,000 $ 2,336,000 $ 5,621,000 $ 5,181,000
Less- Gains on sales of interests in real
estate (1,461,000) -- (1,461,000) --
Plus- Provision for losses on investments 500,000 -- 500,000 --
--------------- --------------- --------------- ---------------
2,020,000 2,336,000 4,660,000 5,181,000
Plus:
Depreciation and amortization-
Wholly owned and consolidated
partnership(2) 1,489,000 1,339,000 2,963,000 2,728,000
Unconsolidated partnerships and joint
ventures 799,000 868,000 1,651,000 1,711,000
Refinancing prepayment penalty 519,000 -- 733,000 --
Less:
Depreciation of non-real estate assets (58,000) (50,000) (109,000) (100,000)
Amortization of deferred financing costs (68,000) (97,000) (146,000) (166,000)
--------------- --------------- --------------- ---------------
Funds from operations $ 4,701,000 $ 4,396,000 $ 9,752,000 $ 9,354,000
=============== =============== =============== ===============
(1)Funds from operations ("FFO") is defined as income before gains (losses) on
investments and extraordinary items (computed in accordance with generally
accepted accounting principles "GAAP") plus real estate depreciation and
similar adjustments for unconsolidated joint ventures after adjustments for
non-real estate depreciation and amortization of financing costs. FFO should
not be construed as an alternative to net income (as determined in accordance
with GAAP) as an indicator of the Trust's operating performance, or to cash
flows from operating activities (as determined in accordance with GAAP) as a
measure of liquidity. In addition, the Trust's measure of FFO as presented
may not be comparable to similarly titled measures reported by other
companies.
(2)Net of minority interest for three months of $66,000 in 1997 and $64,000 in
1996 and for six months of $133,000 in 1997 and $128,000 in 1996.
8
Net cash provided by operating activities decreased to $6,490,000 from
$6,590,000 for the six months ended February 28, 1997, as compared to the same
period last year.
Net cash provided by investing activities was $18,021,000 for the six months
ended February 28, 1997 as compared to net cash used in investing activities of
$335,000 in the same period last year. The increase is primarily attributable to
aggregate partnership distributions of $15,400,000 the Registrant received from
the refinancing of Lehigh Valley Mall and Cambridge Hall Apartments in the First
Quarter 1997 and $2,000,000 proceeds from the sale of three shopping centers all
located in Pennsylvania in Lancaster, Waynesburg, and Beaver Falls in the Second
Quarter 1997.
Net cash used in financing activities was $21,206,000 for the six months ended
February 28, 1997 as compared to $5,732,000 used in the same period last year.
Financing activities in the six months ended February 28, 1997 included a
reduction in bank loans payable of $12,462,000 and distributions paid to
beneficiaries of $8,157,000. Financing activities in the six months ended
February 29, 1996 included a reduction in bank loans payable of $5,100,000, an
increase in mortgage notes payable of $8,800,000 on Shenandoah Apartments, and
distributions paid to beneficiaries of $8,156,000.
Results of Operations
Three-Month Periods Ended February 28, 1997 and February 29, 1996
Gross revenues from real estate increased by $497,000 to $10,117,000 for the
three month period ended February 28, 1997 as compared to the same period in the
prior year. The 1997 period included $201,000 of revenues attributable to
Forestville Plaza which the Registrant acquired its partners remaining 25%
interest in the prior fiscal year. The 1996 period included $129,000 of revenues
attributable to Chateau Apartments which the Registrant sold in the prior fiscal
year. Revenues from properties owned during both periods increased by $425,000
primarily as a result of increases in apartment revenues.
Operating expenses increased by $43,000 to $4,175,000. The 1997 period included
$68,000 of expenses attributable to Forestville Plaza which the Registrant
acquired its partners remaining 25% interest in the prior fiscal year. The 1996
period included $85,000 of expenses attributable to Chateau Apartments which the
Registrant sold in the prior year. Operating expenses from properties owned
during both periods increased by $60,000.
Depreciation and amortization increased by $151,000 to $1,555,000 primarily as a
result of the addition of the Forestville property, the deletion of the Chateau
property, and increases in depreciation on apartments.
General and administrative expenses increased by $72,000 to $824,000 primarily
as a result of costs associated with litigation.
Mortgage and bank loan interest expense decreased by $193,000 to $2,248,000 as a
result of decreased borrowing against the Registrant's credit facility.
9
In June 1996, a partnership in which the Registrant has a 50% interest signed an
option to sell a parcel of land at a stipulated price, subject to the buyer's
obtaining certain zoning variance approvals. In December 1996, the option
expired. As a result, management revised its estimate of the property's selling
price and recorded a $500,000 provision for investment losses in the second
quarter to reduce the property held for sale to its estimated net realizable
value.
For the three months ended February 28, 1997, $46,000 of carrying costs on land
held for sale were charged against the allowance for investment losses. In
addition, the Registrant charged against the allowance for investment losses
$521,000 note receivable which was forgiven in exchange for a limited
partnership interest in an entity which holds an interest in a shopping center
near Atlanta, Georgia. Based on management's assessment of the value of the
shopping center property and the Registrant's subordinated position, a nominal
value was assigned to the limited partnership interest obtained.
Equity in income of partnerships and joint ventures decreased by $745,000 to
$719,000, primarily as a result of an increase in mortgage interest expense of
$838,000. The increase in partnership mortgage interest expense is attributable
to a prepayment penalty in the amount of $1,038,000 ($519,000 of which was the
Registrant's proportional share) in connection with the Regency Apartments
refinancing in the Second Quarter, as well as additional interest associated
with the refinancing of Lehigh Valley Mall and Cambridge Hall Apartments during
the First Quarter 1997. The above described decrease was offset by an increase
in equity in income of $36,000 associated with the sale of three shopping
centers in the 1997 period. In addition, equity in income from properties owned
during both periods exclusive of the increase in mortgage interest mentioned
above increased by $57,000.
Operating results for the three months ended February 28, 1997 included
$1,461,000 gains on sales of interests in real estate described above.
Net income for the quarter ended February 28, 1997 increased to $2,981,000 from
$2,336,000 as reported in the comparable period in the prior year.
Six-Month Periods Ended February 28, 1997 and February 29, 1996
Gross revenues from real estate increased by $828,000 to $20,085,000 for the six
month period ended February 28, 1997 as compared to the same period in the prior
year. The 1997 period included $396,000 of revenues attributable to Forestville
Plaza which the Registrant acquired its partners remaining 25% interest in the
prior fiscal year. The 1996 period included $256,000 of revenues attributable to
Chateau Apartments which the Registrant sold in the prior fiscal year. Revenues
from properties owned during both periods increased by $688,000 primarily as a
result of increases in apartment revenues.
Operating expenses increased by $274,000 to $8,187,000. The 1997 period included
$147,000 of expenses attributable to Forestville Plaza which the Registrant
acquired its partners remaining 25% interest in the prior fiscal year. The 1996
period included $165,000 of expenses attributable to Chateau Apartments which
the Registrant sold in the prior year. Operating expenses from properties owned
during both periods increased by $292,000.
10
Depreciation and amortization increased by $240,000 to $3,096,000 primarily as a
result of the addition of the Forestville property, the deletion of the Chateau
property, and increases in depreciation on apartments.
General and administrative expenses increased by $149,000 to $1,572,000
primarily as a result of costs associated with litigation.
Mortgage and bank loan interest expense decreased $253,000 to $4,605,000 as a
result of decreased borrowing against the Registrant's credit facility.
Equity in income of partnerships and joint ventures decreased by $986,000 to
$2,045,000, primarily as a result of an increase in mortgage interest expense of
$1,313,000. The increase in partnership mortgage interest expense is
attributable to prepayment penalties of $1,466,000 ($733,000 of which was the
Registrant's proportional share) in connection with refinancings, as well as
additional interest associated with the refinancings of Regency Apartments
during the Second Quarter 1997 and Lehigh Valley Mall and Cambridge Hall
Apartments during the First Quarter 1997. The above described decrease was
offset by an increase in equity in income of $110,000 associated with the sale
of three shopping centers in the 1997 period. In addition, equity in income from
properties owned during both periods exclusive of the increase in mortgage
interest mentioned above increased by $217,000.
Operating results for the six month period ended February 28, 1997 included
$1,461,000 gains on sales of interests in real estate described above.
Net income for the six months period ended February 28, 1997 decreased to
$5,621,000 from $5,181,000 as reported in the comparable period in the prior
year.
11
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
The 1996 Annual Meeting of Holders of Certificates of Beneficial Interest of the
Registrant was held on December 20, 1996.
At such meeting, Messrs. Robert Freedman, Leonard I. Korman and Jeffrey P.
Orleans were reelected to the Board of Trustees of the Registrant for terms
expiring at the 1999 Annual Meeting. In such election, 7,339,681 votes were cast
for Mr. Freedman, 7,340,861 votes were cast for Mr. Korman and 7,340,861 votes
were cast for Mr. Orleans. Under the Trust Agreement for the Registrant, votes
cannot be cast against a candidate. Proxies filed at the 1996 Annual Meeting by
the holders of 67,154 shares withheld authority to vote for Mr. Freedman, those
filed by the holders of 65,974 shares withheld authority to vote for Mr. Korman
and those filed by the holders of 65,974 shares withheld authority to vote for
Mr. Orleans. No "broker non-votes" were received at the 1996 Annual Meeting. The
following persons continue as Trustees following the Annual Meeting; term
expiring at the 1997 Annual Meeting--William Dimeling, Jack Farber and Robert G.
Rogers; term expiring at the 1998 Annual Meeting--Sylvan M. Cohen, Lee H.
Javitch and Jonathan B. Weller.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - (27.)--Financial Data Schedule (included in
electronic filing format)
(b) Reports on Form 8-K - None
12
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned on its behalf by the undersigned thereunto duly authorized.
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
-----------------------------------------
Registrant
By /s/ Jonathan B. Weller
-----------------------------------------
Jonathan B. Weller,
President and Chief Operating Officer
By /s/ Dante J. Massimini
-----------------------------------------
Dante J. Massimini,
Senior Vice-President and Treasurer
Date: April 12, 1996
13