SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
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(Name of Registrant as Specified in Its Charter)
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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/X/ No fee required
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1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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[GRAPHIC OMITTED]
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
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NOTICE OF ANNUAL MEETING OF
HOLDERS OF CERTIFICATES OF BENEFICIAL INTEREST
DECEMBER 16, 1997
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The Annual Meeting of Holders of Certificates of Beneficial Interest
("Shareholders") of Pennsylvania Real Estate Investment Trust (the "Trust")
will be held on Tuesday, December 16, 1997 at 11:00 a.m. at the Philadelphia
Marriott West, 111 Crawford Road, West Conshohocken, Pennsylvania for the
following purposes:
(1) To elect three Trustees;
(2) To consider and vote upon proposed amendments to the 1990 Stock
Option Plan for Non-Employee Trustees; and
(3) To transact such other business as may properly be brought before
the meeting or any adjournment thereof.
The Trustees have fixed the close of business on November 12, 1997 as the
record date for the determination of shareholders entitled to notice of and to
vote at the meeting.
All shareholders are cordially invited to attend the meeting. Whether or
not you expect to attend the meeting in person, please mark, sign and date the
enclosed proxy and return it promptly in order that your shares may be voted.
If you attend the meeting, you may revoke your proxy and vote in person.
By Order of the Board of Trustees
JEFFREY A. LINN
Secretary
Fort Washington, Pa.
November 14, 1997
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
455 Pennsylvania Avenue
Suite 135
Fort Washington, Pennsylvania 19034
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PROXY STATEMENT FOR ANNUAL MEETING
OF HOLDERS OF CERTIFICATES OF BENEFICIAL INTEREST
TO BE HELD ON DECEMBER 16, 1997
This proxy statement and the enclosed proxy are being sent to Holders of
Certificates of Beneficial Interest of the Pennsylvania Real Estate Investment
Trust (the "Trust") on or about November 18, 1997 in connection with the
solicitation of proxies for use at the Annual Meeting of Holders of
Certificates of Beneficial Interest ("Shareholders") of the Trust to be held on
December 16, 1997 at 11:00 a.m. at the Philadelphia Marriott West, 111 Crawford
Road, Conshohocken, Pennsylvania.
The enclosed proxy is solicited on behalf of the Board of Trustees of the
Trust. The proxy is revocable at any time prior to its use by delivering a
subsequently executed proxy or written notice of revocation to the Secretary of
the Trust. The Annual Report of the Trust, including financial statements, for
the year ended August 31, 1997, on which no action will be requested at the
Annual Meeting, is included herewith. It is not to be regarded as proxy
solicitation material.
As of November 12, 1997, there were 8,685,098 Certificates of Beneficial
Interest in the Trust ("Shares") outstanding, each of which is entitled to one
vote on all matters to be presented at the meeting.
The Trust will bear the cost of preparing and mailing this Notice and
Proxy Statement and the enclosed proxy. Trustees, officers and regular
employees of the Trust may solicit proxies by personal interview, mail,
telephone or telegraph. Such persons will receive no compensation for any such
solicitation activities other than their regular salary but will be reimbursed
for actual expenses in connection therewith. Arrangements will be made with
brokerage houses and other custodians, nominees and fiduciaries for proxy
material to be sent to their principals, and the Trust will reimburse such
persons for their expenses in so doing.
PROPOSAL NO. 1:
ELECTION OF TRUSTEES
The Trustees intend to cause William R. Dimeling, George F. Rubin and
Rosemarie B. Greco, the three Trustees whose terms expire at the 1997 Annual
Meeting, to be nominated for re-election at the 1997 Annual Meeting as Class C
Trustees to serve until the Annual Meeting to be held in the spring of 2001 and
until their respective successors have been duly elected and have qualified. If
any of the foregoing nominees becomes unable to or declines to serve, the
persons named in the accompanying proxy shall have discretionary authority to
vote for a substitute or substitutes unless the Board of Trustees reduces the
number of Trustees to be elected. Jack Farber and Robert G. Rogers, each of
whom had been Class C Trustees, resigned in August and September of 1997,
respectively. The Board of Trustees elected George F. Rubin and Rosemarie B.
Greco to serve as Class C Trustees to fill the vacancies created by the
resignations of Messrs. Farber and Rogers. Mr. George F. Rubin and Ms. Greco
were appointed in connection with the Trust's acquisition of The Rubin
Organization, Inc. and certain related transactions, on September 30, 1997.
The Trust Agreement of the Trust provides that nominations for election to
the office of Trustee at any Annual or Special Meeting of Shareholders shall be
made by the Trustees, or by petition in writing delivered to the Secretary of
the Trust not fewer than thirty-five (35) days prior to such Shareholders'
meeting signed by the holders of at least two percent (2%) of the Shares
outstanding on the date of such petition. Unless nominations shall have been
made as aforesaid, they shall not be considered at such meeting unless the
number of persons nominated as aforesaid shall be fewer than the number of
persons to be elected to the office of Trustee at such meeting in which event
nominations for the Trustee positions which would not otherwise be filled may
be made at the meeting by any person entitled to vote in the election of
Trustees.
1
Assuming a quorum is present, the three nominees receiving the highest
number of votes cast at the Annual Meeting will be elected Trustees. For such
purposes, the withholding of authority to vote or the specific direction not to
cast a vote, such as a broker non-vote, will not constitute the casting of a
vote in the election of Trustees.
The Board of Trustees of the Trust currently consists of nine members who
serve staggered three year terms. In October, 1997, the Trust announced that it
would change its fiscal year end to December 31, commencing with the year
ending December 31, 1998. There will be no Annual Meeting of Shareholders of
the Trust in calendar year 1998. The next Annual Meeting of Shareholders of the
Trust will be held in the Spring of 1999. As a result, Class A Trustees,
originally elected to serve until the Trust's Annual Meeting in December of
1998 will serve until the next Annual Meeting of Shareholders of the Trust to
be held in the Spring of 1999, Class B Trustees originally elected to serve
until the Trust's Annual Meeting in December of 1999, will serve until the
Annual Meeting of the Shareholders of the Trust to be held in the Spring of
2000, and Class C Trustees to be elected at the Annual Meeting of Shareholders
on December 16, 1997, will serve until the Annual Meeting of Shareholders of
the Trust to be held in the Spring of 2001. The terms of the Trustees in all
three classes will continue until their successors shall have been elected and
qualified.
2
The following table sets forth certain information concerning the three
(3) nominees for the office of Class C Trustee, the six (6) Trustees to
continue in office after the 1997 Annual Meeting and the executive officers of
the Trust, including their ages, principal occupations and the number of Shares
of the Trust beneficially owned by them as of October 1, 1997.
Shares Beneficially Owned
on October 1, 1997 (1)
Principal Occupation Trustee -----------------------------------
Name Age and Affiliations Since Number Percent
- ------- ----- ------------------------------------------------ --------- ------------------------- --------
Nominees for the
Office of Trustee
Class C Trustees; Terms Expire
in 1997
William R. Dimeling 56 Partner in Dimeling, Schreiber and Park, a 1982 7,187 (2) *
private investment partnership. Director of
Aero Services International, Inc., a fixed base
operator for private aviation. Director,
Addison Capital Shares.
George F. Rubin (3) 54 President, PREIT-RUBIN, Inc. (formerly 1997 1,400 (4) *
named "The Rubin Organization, Inc.,"
acquired by the Trust in September 1997)
since 1992.
Rosemarie B. Greco (3)51 Businesswoman. Formerly President, 1997 -0- *
CoreStates Financial Corp. and President and
Chief Executive Officer, CoreStates Bank,
N.A. Director, General Accident Insurance
Company of America.
Trustees whose
Terms Continue
Class A Trustees; Terms Expire
in 1999
Sylvan M. Cohen 83 Chairman of the Board of Trustees of the 1960 650,291 7.5%(5)
Trust. Chief Executive Officer of the Trust
until September 30, 1997. Of counsel to the
Philadelphia law firm of Drinker Biddle &
Reath LLP and formerly partner in the
Philadelphia law firm of Cohen, Shapiro,
Polisher, Shiekman and Cohen. Director of
FPA Corporation. Trustee of EQK Realty
Investments I and Trustee of Arbor Property
Trust.
Lee H. Javitch 86 Private Investor. Former Chairman and Chief 1985 5,500 (2) *
Executive Officer of Giant Food Stores, Inc.,
an owner and operator of supermarkets.
Director of Dauphin Deposit Corp. Director of
First Maryland BanCorp.
Jonathan B. Weller 50 President and Chief Operating Officer of the 1994 105,910 *(6)
Trust. From 1988 to 1993, Executive Vice
President and Director of Eastdil Realty, Inc.,
a real estate investment banking firm.
Class B Trustees; Terms Expire
in 2000
Ronald Rubin (3) 67 Since September 30, 1997, Chief Executive 1997 -0-(7) *
Officer of the Trust. From 1992 to September
1997, Chairman and Chief Executive Officer
of The Rubin Organization, Inc. (now named
PREIT-RUBIN, Inc.). Director, PECO Energy
Corp.
Leonard I. Korman 61 Chairman and Chief Executive Officer, 1996 482,663 5.6%(8)
Korman Commercial Properties, Inc., a
commercial real estate management and
development firm since January, 1996.
General partner, The Korman Co., a real
estate management and development firm,
since 1984. Director, CoreStates Bank, N.A.
3
Shares Beneficially Owned
on October 1, 1997 (1)
Principal Occupation Trustee -----------------------------------
Name Age and Affiliations Since Number Percent
- ------- ----- ------------------------------------------------ --------- ------------------------- --------
Jeffrey P. Orleans 51 Chairman of the Board, Chief Executive 1986 51,413 (9) *
Officer and Director of FPA Corporation, a
residential real estate developer. Chief
Executive Officer of Orleans Construction
Corp., a residential real estate developer,
prior to FPA Corporation's acquisition of
such company in 1993.
Non-Trustee
Executive Officers
Edward A. Glickman 40 Since September 30, 1997, Executive Vice -- -0-(10) *
President and Chief Financial Officer of the
Trust. From 1993 to 1997, Executive Vice
President and Chief Financial Officer of The
Rubin Organization, Inc. (now named PREIT-
RUBIN, Inc.).
Jeffrey A. Linn 48 Senior Vice President-Acquisitions and -- 29,771 (11) *
Secretary of the Trust
Dante J. Massimini 64 Senior Vice President-Finance and Treasurer -- 20,931 (12) *
of the Trust
All Trustees and executive -- -- 1,354,814 (13) 15.6%
officers as a group (12
persons)
- ------------
* Less than one percent
(1) Unless otherwise indicated in the following footnotes, each Trustee and
Non-Trustee executive officer has sole voting and investment power with
respect to all such Shares.
(2) Includes 5,500 Shares subject to options that are currently exercisable.
(3) Pursuant to the TRO Contribution Agreement, dated as of July 30, 1997 (the
"TRO Contribution Agreement"), the Trust acquired all of the outstanding
non-voting shares of capital stock of The Rubin Organization, Inc. In
accordance with Section 5.19 of the TRO Contribution Agreement, the Board
of Trustees of the Trust elected Ronald Rubin, George F. Rubin and
Rosemarie B. Greco as Trustees of the Trust to fill the vacancies created
by the resignations of Robert Freedman, Jack Farber and Robert G. Rogers.
Ronald Rubin and George F. Rubin are brothers.
(4) Includes 900 Shares held by a trust, the beneficiary of which is Mr.
Rubin's daughter. Mr. Rubin is not a trustee of that trust. Also includes
500 shares held by Mr. Rubin's spouse. Mr. Rubin disclaims beneficial
ownership of all Shares referred to in this footnote. Excludes 86,055
Class A units of limited partnership interests in PREIT Associates, L.P.,
first redeemable on September 30, 1998 for cash or, at the option of the
Trust, for a like number of Shares.
(5) Includes 186,558 Shares owned by Mr. Cohen's spouse, 37,056 Shares owned
by a trust of which Mr. Cohen's wife is a co-trustee, 252 Shares owned by
a corporation 50% of whose outstanding shares are owned by Mr. Cohen and
the remaining 50% of whose outstanding shares are owned by Jeffrey P.
Orleans, a Trustee of the Trust, 71,815 Shares owned by a charitable
remainder unitrust of which Mr. Cohen is a co-trustee, and 28,523 Shares
subject to options that are currently exercisable. Mr. Cohen disclaims
beneficial ownership of all of the Shares referred to in this footnote
other than Shares owned by trusts of which Mr. Cohen is a trustee or a
co-trustee, Shares owned of record by Mr. Cohen's wife and the Shares
subject to options.
(6) Includes 94,710 Shares subject to options that are currently exercisable,
and 400 Shares held by Mr. Weller as custodian for his children under the
New York Uniform Gifts to Minors Act.
(7) Excludes 143,440 Class A units of limited partnership interests in PREIT
Associates, L.P., first redeemable on September 30, 1998 for cash or, at
the option of the Trust, for a like number of Shares.
4
(8) Includes (i) 420 Shares owned by Mr. Korman's spouse, (ii) 87,570 Shares
held by a charitable foundation of which Mr. Korman is a co-trustee, and
(iii) 151,585 Shares held by trusts of which Mr. Korman is a co-trustee.
Mr. Korman disclaims beneficial ownership of all but 10,528 of the
foregoing Shares.
(9) Includes 450 Shares owned by Mr. Orleans' spouse, 1,000 Shares for which
Mr. Orleans is custodian for his children under the Pennsylvania Uniform
Gifts to Minors Act, 947 Shares owned by an adult daughter of Mr. Orleans,
360 Shares held by trusts of which Mr. Orleans is co-trustee, 252 Shares
owned by a corporation 50% of whose shares are owned by Mr. Orleans and
the remaining 50% of whose shares are owned by Sylvan M. Cohen, Chairman
of the Board of Trustees of the Trust and 3,000 Shares subject to options
that are currently exercisable. Mr. Orleans disclaims beneficial ownership
of the Shares owned by Mr. Orleans' wife and certain Shares for which he
serves as custodian under the Pennsylvania Uniform Gifts to Minors Act.
(10) Excludes 13,606 Class A units of limited partnership interests in PREIT
Associates, L.P., redeemable first on September 30, 1998 for cash or, at
the option of the Trust, for a like number of Shares.
(11) Includes 21,431 Shares subject to options that are currently exercisable
and 500 Shares that are held by Mr. Linn as custodian for his son under
the Pennsylvania Uniform Gifts to Minors Act.
(12) Includes 20,331 Shares subject to options that are currently exercisable.
(13) Includes 178,995 Shares subject to options that are currently exercisable.
In certain instances, two Trustees beneficially own the same Shares
because they share voting or investment power over such Shares. Such
Shares have been counted only once in this total.
5
PROPOSAL NO. 2:
AMENDMENT NO. 1 TO THE 1990 STOCK OPTION PLAN
FOR NON-EMPLOYEE TRUSTEES
The Trust's 1990 Stock Option Plan for Non-Employee Trustees (the "Trustee
Plan") was approved in its original form by the Trustees on September 17, 1990
and by the Shareholders on December 19, 1990. As originally approved, the 1990
Stock Option Plan authorized the granting of non-qualified stock options to
purchase up to an aggregate of 100,000 of the Trust's Shares to Trustees of the
Trust who were not employees of the Trust or any affiliate of the Trust. Under
the Trustee Plan as approved in its original form, options to purchase 1,000
Shares are granted automatically to each non-employee Trustee on the last
trading day in January of each of the years 1991 through 1997. Options to
purchase 52,750 Shares remain available under the Trustee Plan.
By unanimous written consent dated October 7, 1997, the Trustees adopted,
subject to approval by the Shareholders at the Annual Meeting, an amendment to
the Trustee Plan (the "1997 Amendments"). The 1997 Amendments approved by the
Trustees:
o Grant the Committee of the Board of Trustees that is authorized to
interpret and administer the Trustee Plan (the "Committee") the power to
revise previously granted options held by a Trustee who is terminating his
or her service on the Board of Trustees to extend the expiration date of
all or any portion of any outstanding options held by such Trustee, and to
accelerate the vesting of all or any portion of such options; and
o Extend the period in which options shall be automatically granted on an
annual basis under the Trustee Plan through the last trading day of
January, 2004.
Mr. Jack Farber and Mr. Robert Freedman resigned as Trustees of the Trust
in August, 1997 and September, 1997, respectively, after an aggregate of 35
years of service in that position. Under the Trustee Plan, without giving
effect to the proposed 1997 Amendments, only options that were vested on the
dates of their respective resignations would be exercisable and such options
would expire three months after such resignations, or on their stated
expiration dates, whichever occurs first. At Mr. Farber's resignation in
August, 1997, he had 8,000 unexpired, unexercised options under the Trustee
Plan, 5,500 of which were exercisable. Mr. Farber exercised 5,500 such options
at the time of his resignation, leaving him with 2,500, none of which had
vested. At Mr. Freedman's resignation in September, 1997, he had 8,000
unexpired, unexercised options under the Trustee Plan, 5,500 of which were
exercisable. In recognition of their service to the Trust, the options
previously granted to Messrs. Farber and Freedman have been amended by the
Trust, subject to approval by the Shareholders of the 1997 Amendments, in order
to extend the exercise dates (to November 22, 1999 in the case of Mr. Farber
and December 31, 1999 in the case of Mr. Freedman) and accelerate the vesting
of such options. The Trust has accrued an expense of $50,000 in respect of
extending the options of Messrs. Farber and Freedman. If the 1997 Amendments
are approved, the amendments to the remaining options of Messrs. Farber and
Freedman will automatically take effect.
Set forth below is a general description of the Trustee Plan, as amended
to give effect to the 1997 Amendments. Such description is qualified in its
entirety by reference to the Trustee Plan, reflecting the 1997 Amendments,
which is attached hereto as Appendix A. For a description of the federal income
taxes associated with the Trustee Plan, see "Federal Income Tax Consequences"
below.
Shares Subject to the Trustee Plan
Under the Trustee Plan, non-qualified stock options ("NQSO's") to purchase
up to an aggregate of 100,000 of the Trust's Shares may be issued by the Trust
to Trustees of the Trust who are not employees of the Trust or any affiliate of
the Trust, subject to adjustments to reflect any stock splits, stock dividends,
share combinations or similar changes in the Trust. Shares issuable under the
Trustee Plan may be authorized but unissued shares or reacquired shares, and
the Trust may purchase shares for this purpose.
Administration
The Trustee Plan will continue to be administered by the Committee, which
consists of Trustees who are not eligible to participate in the Trustee Plan.
The Committee members will have full authority, subject to the terms of the
Trustee Plan, to administer the Trustee Plan.
6
Amendment and Duration of the Trustee Plan
Except to the extent limited by the Trustee Plan, the Board of Trustees of
the Trust will continue to have the power, without the consent of the
Shareholders, to discontinue, amend or revise the terms of the Trustee Plan.
The Trustee Plan provides that, without the approval of the Shareholders, no
amendment or revision shall change the selection or eligibility of Trustees to
receive options under the Trustee Plan, the number of shares subject to any
such options or the Plan, the purchase price thereunder, or materially increase
the benefits accruing to participants under the Trustee Plan.
No options may be granted after options are granted automatically on the
last trading day of January, 2004, but options outstanding at that time will
remain exercisable in accordance with their terms.
Terms and Conditions of Stock Options
Non-qualified stock options may be granted under the Trustee Plan for
terms of not more than ten years at an exercise price per share equal to 100%
of the fair market value of the Shares underlying the options on the date of
the grant of the option. Each option granted under the Trustee Plan will become
exercisable and mature in four equal installments, commencing on the first
anniversary of the date of the grant and annually thereafter. Generally, each
option under the Trustee Plan expires ten years from the date of the grant.
Pursuant to the 1997 Amendments, the Committee may, in its discretion, revise
previously granted options held by a Trustee who is terminating his or her
service on the Board to extend the exercise period and accelerate the vesting
of such options. Options granted under the Trustee Plan may be exercised only
upon payment to the Trust of the full exercise price in cash or by check at the
time of exercise. Options are not assignable or transferrable by any optionee
other than by will or by laws of descent and distribution.
Stock Option Agreements
The Trustee Plan requires that optionees enter into written agreements
with the Trust which incorporate the terms and conditions of the options as set
forth in the Trustee Plan.
Adjustments Upon Mergers and Other Events
In the event the Shares, as presently constituted, shall be changed into
or exchanged for a different number or kind of securities of the Trust or of
another trust or corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, split or otherwise), then there shall be
substituted for or added to each Share previously underlying options granted
under the Trustee Plan the number or kind of Shares or other securities into
which each outstanding Share was changed or for which such Share was exchanged.
In addition, the Board of Trustees has the power to make appropriate amendments
to the price and other terms of such options as the Board may deem to be
equitable. Notwithstanding the foregoing, the Board of Trustees has the power,
in the event a merger or consolidation of the Trust or other specified events,
to accelerate the vesting and termination of outstanding options, require
forfeiture of all options upon payment of certain amounts, or to make such
other amendments to such options as the Board of Trustees deems equitable.
Other Considerations
The Trustee Plan is not qualified under Section 401(a) of the Code and,
based upon current law and published interpretations, the Trust believes that
the Trustee Plan is not subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended.
At August 31, 1997, options in respect of 47,250 Shares had been granted
under the Trustee Plan, 9,000 of which have been exercised. If the 1997
Amendments are approved by the Shareholders, options to purchase 1,000 Shares
shall be granted automatically to each eligible Trustee on the last trading day
of in each January through 2004.
Required Vote
The affirmative vote of the holders of a majority of the Shares present in
person or by proxy and casting a vote on this Proposal will be necessary to
approve adoption of the 1997 Amendments to the 1990 Stock Option Plan for
Non-Employee Trustees. For purposes of the foregoing, abstentions and broker
non-votes shall not be deemed to be votes cast.
7
Board Recommendation
The Board of Trustees recommends that Shareholders vote FOR approval of
the 1997 Amendments to the 1990 Stock Option Plan for Non-Employee Trustees.
FEDERAL INCOME TAX CONSEQUENCES
Based upon the advice of counsel, the Trust believes that the normal
operation of the Trustee Plan should generally have, under the Code and
regulations and rulings thereunder, all as in effect on October 31, 1997, the
principal federal income tax consequences described below. It should be noted
that the consequences described below do not take into account any changes to
the Code with the regulations thereunder which may occur after October 31,
1997.
(1) The optionee will not recognize taxable income and the Trust will not
be entitled to a deduction upon the grant of an NQSO.
(2) Generally, the optionee will recognize ordinary income at the time of
the exercise of the NQSO, in an amount equal to the excess of the fair market
value of the Shares at the time of such exercise over the exercise price.
(3) The Trust will be entitled to a deduction to the extent of the
ordinary income recognized by the optionee in accordance with the rules of
Section 83 of the Code (and Section 162(m), to the extent applicable) and the
regulations thereunder.
(4) Gain or loss recognized by the recipient upon a subsequent disposition
of such Shares will be short-, mid-, long-term capital gain or loss, if such
Shares are otherwise capital assets in the hands of the recipient.
8
ADDITIONAL INFORMATION
Summary Compensation Table
The following table sets forth certain information concerning the
compensation paid by the Trust during the fiscal years ended August 31, 1997,
1996 and 1995 to the Trust's Chief Executive Officer and the four other most
highly compensated executive officers of the Trust.
Long Term
Compensation
Annual Compensation Awards
------------------------------------------------- -------------
All Other
Name and Principal Other Annual Compensation
Position Year Salary ($) Bonus ($) Compensation($)(1) Options (#) ($) (2)
- ------------------------- ------ ------------ ----------- -------------------- ------------- -------------
Sylvan M. Cohen 1997 $345,000 0 0 0 $ 9,070
Chairman and Chief 1996 342,333 0 0 0 9,070
Executive Officer 1995 333,000 0 0 20,000 9,070
and Trustee
Jonathan B. Weller 1997 $301,731 50,000 $22,414 20,000 25,871
President and Chief 1996 297,212 0 7,182 20,000 25,608
Operating Officer and 1995 281,539 0 37,463 35,000 32,408
Trustee
Robert G. Rogers 1997 $193,365 0 33,414 0 0
Executive Vice 1996 191,923 0 7,182 5,000 69,654
President and 1995 183,269 0 0 10,000 72,499
Trustee(3)
Jeffrey A. Linn 1997 $134,375 20,000 33,835 10,000 14,042
Senior Vice President- 1996 130,797 0 5,163 10,000 14,114
Acquisitions and 1995 116,346 0 0 15,000 18,021
Secretary
Dante J. Massimini 1997 $128,365 5,000 39,204 5,000 60,661
Senior Vice President- 1996 125,673 0 5,174 5,000 59,897
Finance and 1995 116,538 0 0 10,000 54,706
Treasurer
- ------------
(1) Amounts shown in Fiscal 1997 represent (a) discretionary contributions by
the Trust to the accounts of Messrs. Weller, Rogers, Linn and Massimini,
in the Company's 401(k) retirement plan in the amounts of $7,164, $7,164,
$6,010 and $5,704, respectively, and (b) paid accrued vacation salary of
$15,250, $26,250, $27,825 and $33,500, respectively. Amounts shown in
Fiscal 1996 represent discretionary contributions by the Trust to the
accounts of the named executive officers in the Company's 401(k)
retirement plan. Amounts shown for Fiscal 1995 for Mr. Weller include
$14,352 for relocation expenses, $12,378 for reimbursement for taxes
resulting from payment of living expenses on behalf of Mr. Weller in 1994
and $10,733 in respect of a leased automobile.
(2) All amounts for Mr. Cohen represent annual premium payments on life
insurance provided under Mr. Cohen's employment agreement. Amounts for Mr.
Weller include $9,750 of annual premium payments on life insurance
provided under Mr. Weller's employment agreement. All other amounts
represent anticipated contributions by the Trust with respect to Fiscal
1997 and actual contributions for Fiscal 1996 and Fiscal 1995 under the
Supplemental Retirement Plan approved during Fiscal 1995 in which Messrs.
Weller, Rogers, Massimini and Linn are participants.
(3) Mr. Rogers resigned from the Board of Trustees in August 1997 and will
retire from his position as Executive Vice President of the Trust
effective December 31, 1997.
9
Employment Agreements
The Trust entered into an Employment Agreement with Mr. Cohen on July 16,
1982, which was amended and restated on March 14, 1985 and further amended as
of January 1, 1990 and September 29, 1997. The Employment Agreement provides
that Mr. Cohen is to serve as Chairman of the Board of Trustees of the Trust
and Chairman of the Property Committee of the Board of Trustees. Pursuant to
the 1997 amendment, the employment term shall continue until December 31, 2000,
with automatic calendar year renewals thereafter that will continue until
written notice of termination is delivered by either Mr. Cohen or the Trust at
least 180 days prior to the end of the then current term. The current annual
base compensation is $345,000, and the agreement provides that base
compensation cannot be unilaterally decreased by the Trust. Mr. Cohen was not a
participant in the Trust's defined benefit pension plan, which was terminated
during Fiscal 1995, nor is he a participant in the non-qualified retirement
plan which was established during Fiscal 1995 and in which the other executive
officers of the Trust named in the Summary Compensation Table are participants.
Following the termination of Mr. Cohen's employment for any reason (including
expiration of the term) other than termination for specified cause, the Trust
is required to make payments to Mr. Cohen and, in the event his wife survives
him, to Mr. Cohen's widow. Post-termination payments to Mr. Cohen are to
continue for the balance of his lifetime at a rate equal to, subject to an
annual cost-of-living adjustment, 50% of the rate of Mr. Cohen's highest annual
basic compensation during his employment with the Trust. If Mr. Cohen is
survived by his wife, the Trust is to pay her for the balance of her lifetime
at a rate equal to, subject to an annual cost-of-living adjustment, (i) 25% of
the rate of Mr. Cohen's highest annual basic compensation during Mr. Cohen's
employment with the Trust or (ii) if higher than the rate specified in
subclause (i), 50% of the rate of the adjusted payments to which Mr. Cohen
shall have been entitled at the time of his death. During fiscal 1996, the
Trust was not required to accrue on its financial statements any additional
amount in respect of the aforementioned post-termination payments. As of the
end of fiscal 1996, such accrual equals approximately $900,000. The Employment
Agreement also requires the Trust to maintain $150,000 of life insurance
coverage on Mr. Cohen's life, payable to beneficiaries designated by Mr. Cohen.
The Trust entered into an Employment Agreement with Mr. Weller on December
14, 1993. The Employment Agreement provides that Mr. Weller is to serve as
President and Chief Operating Officer of the Trust with responsibility for the
day-to-day management of the Trust. The employment term, which began on January
31, 1994, is three years, a period that is automatically extended, as of
January 31, 1996 and each January 31 thereafter, for a new three year term
beginning on such January 31 unless the Trust gives Mr. Weller written notice
at least 60 days prior to January 31 in a year that the term is not to be
extended as of such January 31. The agreement further provides for an initial
annual base salary of $275,000 and provides that if the annual salary is
increased, such increased annual salary thereafter constitutes the annual base
salary for purposes of the agreement. Mr. Weller's annual base salary under the
agreement currently is $305,000. In accordance with the Employment Agreement,
on December 14, 1993, the Trust granted Mr. Weller non-qualified stock options
to purchase 100,000 Shares of the Trust at an exercise price equal to the fair
market value of the Shares on such date. See "ADDITIONAL INFORMATION -- Stock
Option Plans" below. The Trust is required to provide certain employee benefits
to Mr. Weller, including $1,500,000 of life insurance. Mr. Weller was required
to invest a minimum of $250,000 in Shares of the Trust. Upon a termination of
employment by Mr. Weller for specified good reason (including delivery by the
Trust of written notice that the term of the agreement is not to be renewed for
a new three-year period) or by the Trust other than for cause, disability or
death, Mr. Weller is entitled to receive a lump-sum cash payment equal to the
sum of any unpaid annual base salary through the date of termination and the
amount of annual base salary that would have been paid during the remaining
term of employment, discounted on a present value basis. The Employment
Agreement provides that all options to purchase Shares granted to Mr. Weller
vest and become immediately exercisable upon a change of control of the Trust
or upon a termination of employment by the Trust without cause or by Mr. Weller
for good reason or upon Mr. Weller's death or disability. The Employment
Agreement provides that, in the event any payments to Mr. Weller result in the
imposition on Mr. Weller of an excise tax under Section 4999 of the Internal
Revenue Code, the Trust shall pay Mr. Weller an additional amount sufficient to
reimburse him for such excise tax.
Mr. Rogers' employment agreement with the Trust was terminated on
September 30, 1997. Pursuant to an Employment Extension and Separation
Agreement, dated October 3, 1997, by and between Mr. Rogers and the Trust (a)
Mr. Rogers' employment has been extended through December 31, 1997 at his
current rate of compensation, and (b) from January 1, 1998 through March 31,
1998, Mr. Rogers will make himself available to the
10
Trust up to three days a month for business consulting (any number over three
days a month will be compensated at a specified additional rate). The agreement
also provides, among other things, for (i) a $50,000 payment to Mr. Rogers on
January 2, 1998, (ii) a $25,000 payment to Mr. Rogers on or before each of
December 26, 1998 and 1999, (iii) medical insurance reimbursements for Mr.
Rogers and his spouse for the remainder of their natural lives, and (iv) the
immediate vesting of all Trust options held by him and the extension of the
exercise date of the same to June 30, 2000. The Trust has accrued $250,000 in
respect of the cost of extending Mr. Rogers' options.
The Trust has an employment agreement with Mr. Linn, who serves as Senior
Vice President -- Acquisitions and Secretary of the Trust. The agreement has an
initial term expiring December 31, 1999 with automatic one-year renewals unless
either party gives the other not less than 180 days notice prior to the
expiration of the then current term. The agreement provides that the annual
base compensation shall be $136,500 per year and that such amount may be
increased (but not decreased) by the Board of Trustees.
The Trust has an employment agreement with Mr. Massimini, who serves as
Senior Vice President-Finance and Treasurer. The agreement has a term expiring
September 30, 1998, with automatic one-year renewals thereafter until written
notice of termination is delivered at least 180 days prior to the expiration of
the then-current term.
Stock Option Tables
The following table sets forth certain information with respect to options
to purchase Shares granted to certain executive officers named in the Summary
Compensation Table during the fiscal year ended August 31, 1997. Mr. Cohen was
not granted options in the fiscal year ended August 31, 1997.
Options Granted in Fiscal 1997
Individual Grants
------------------------------------------------------------ Potential Realizable
Value at Assumed
% of Total Annual Rates of Stock
Options Price Appreciation for
Options Granted to Exercise Option Term (1)
Granted Employees in Price Expiration ----------------------
Name (#) Fiscal Year Per Share Date 5% 10%
- -------------------- -------------- -------------- ----------- ------------ ---------- ---------
Jonathan B. Weller 20,000(2) 44.4% $22.75 12/06/06 $324,673 $822,785
Jeffrey A. Linn 10,000(3) 22.2% $22.75 12/06/06 $162,337 $411,393
Dante J. Massimini 5,000(4) 11.1% $22.75 12/06/06 $ 81,168 $205,696
- ------------
(1) These amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the end of the option term.
These gains are based on assumed rates of share appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date. The assumed annual rates of share appreciation are
specified by the Securities and Exchange Commission and are not intended
to forecast possible future appreciation of the Trust's share price.
(2) Becomes exercisable in four equal and consecutive annual installments of
5,000 shares each, commencing on January 1, 1998.
(3) Becomes exercisable in four equal and consecutive annual installments of
2,500 shares each, commencing on January 1, 1998.
(4) Becomes exercisable in four successive annual installments of 1,125 shares
each, commencing January 1, 1998.
11
The following table sets forth certain information as to the exercise of
options to purchase Shares during the fiscal year ended August 31, 1997 by the
persons named in the Summary Compensation Table and the fiscal year-end value
of unexercised options.
Aggregate Option Exercises in Fiscal Year Ended August 31, 1997
and August 31, 1997 Option Values
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired August 31, 1997 August 31, 1997(1)
on Value ------------------------------- ------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------- ---------- ---------- ------------- --------------- ------------- --------------
Sylvan M. Cohen ......... -- -- 28,768 56,232 $135,119 $244,611
Jonathan B. Weller ...... -- -- 94,710 80,290 231,219 331,056
Robert G. Rogers(2) ...... -- -- 32,046 19,954 210,576 84,732
Dante J. Massimini ...... -- -- 20,331 24,044 95,735 116,905
Jeffrey A. Linn ......... -- -- 21,431 34,819 103,663 170,818
- ------------
(1) In-the-money options are those where the fair market value of the
underlying securities exceeds the exercise price of the option. All of the
options held by the named executive officers were in-the-money except for
options granted in December 1993. Dollar amounts shown represent the
difference between the option exercise price and the fair market value of
the Shares at August 31, 1997. The closing price of the Shares on August
31, 1997 was $25.813 per Share.
(2) Pursuant to the Employment Extension and Separation Agreement, dated
October 3, 1997, by and between the Trust and Mr. Rogers, all options
granted to Mr. Rogers have become vested and are immediately exercisable
as of October 3, 1997.
Stock Option Plans
Pursuant to the Trust's 1990 Incentive and Non-Qualified Stock Option Plan
(the "Employee Plan"), incentive stock options designed to qualify under
Section 422A of the Internal Revenue Code and non-qualified stock options to
purchase up to an aggregate of 400,000 of the Trust's Shares may be issued by
the Trust to officers and key employees of the Trust. The Employee Plan is
administered by a committee of the Board, currently the Executive Compensation
and Human Resources Committee, which has authority to determine the persons to
whom options will be granted, the number of option shares, the exercise price,
the date of grant, and the term of options granted under the Employee Plan. The
Employee Plan requires that the exercise price not be less than 100% of the
fair market value of the Shares on the date of grant.
The Company also has a 1990 Stock Option Plan for Non-Employee Trustees
(the "Trustee Plan") which is described above under proposal number 2.
In connection with the TRO Transaction (as hereinafter defined), the Trust
adopted the 1997 Stock Option Plan (the "1997 Plan"). Pursuant to the 1997
Plan, incentive stock options designed to qualify under Section 422A of the
Internal Revenue Code and non-qualified stock options to purchase up to an
aggregate of 560,000 of the Trust's Shares may be granted by the Trust to key
employees of the Trust and PREIT-RUBIN, Inc. The 1997 Plan is administered by
the Executive Compensation and Human Resources Committee, which has authority
to determine the persons to whom options will be granted, the number of option
shares, the exercise price, the date of grant, and the term of options granted
under the Employee Plan. The 1997 Plan requires that the exercise price not be
less than the fair market value of the Shares on the grant date. As of October
31, 1997, options to purchase up to 455,000 Shares have been granted under the
1997 Plan, all at an exercise price of $25.41 per share, none of which are
vested. Of such amounts, options on 150,000 shares, 75,000 shares and 50,000
shares were granted to Messrs. Ronald Rubin, George Rubin and Edward Glickman,
respectively.
In accordance with the terms of Mr. Weller's Employment Agreement with the
Trust, the Trust adopted the 1993 Jonathan B. Weller Non Qualified Stock Option
Plan (the "Weller Plan"). Under the Weller Plan, on December 14, 1993 the Trust
granted Mr. Weller options to purchase 100,000 Shares at an exercise price
equal to the fair market value of the Shares on such date. Such options have a
term of ten years and become exercisable in four equal annual installments of
25,000 Shares each, commencing on the first anniversary of the grant date,
subject to earlier exercisability under certain specified circumstances.
12
Other Benefit Plans
Section 401(k) Plan. The Trust maintains a 401(k) profit sharing and
retirement savings plan in which substantially all of the officers and
employees are eligible to participate.
Supplemental Retirement Plan. The Trust maintains a Supplemental
Retirement Plan in which the executive officers named in the Summary
Compensation Table other than Mr. Cohen are participants. Under the
Supplemental Retirement Plan, the Trust is required to make defined
contributions to the plan annually in amounts equal to amounts that would have
been required to be contributed under the Trust's defined benefit pension plan,
which was terminated in fiscal 1995, in order to fund the targeted retirement
benefit (after taking into account amounts distributed under the terminated
defined benefit pension plan, together with an assumed rate of return thereon).
The Trust has recorded $92,000, $160,000 and $168,000 of contributions due
under the provisions of this plan for years ended August 31, 1997, 1996 and
1995, respectively.
PREIT-RUBIN Stock Bonus Plan. PREIT-RUBIN, Inc. has established a stock
bonus plan for all of its employees who have completed at least one year of
service as of the effective date of the plan (September 30, 1997). The plan is
expected to be qualified for favorable tax treatment under section 401(a) of
the Internal Revenue Code and all of the outstanding voting common shares of
TRO are held by the trust established under the plan.
PREIT-RUBIN contributed all of its voting common shares to the plan for
the plan year ending December 31, 1997. The shares will be allocated to the
plan accounts of the eligible employees as of December 31, 1997, pro rata,
based on their covered compensation for 1997. The shares held by the plan will
be appraised as of the effective date, and as of each December 31 thereafter.
The value of an employee's account under the plan will be payable to the
employee upon termination of service. Since PREIT-RUBIN's Articles of
Incorporation restrict ownership of all of the outstanding voting common shares
of PREIT-RUBIN to PREIT-RUBIN employees or to a tax-qualified plan for the
benefit of employees, benefits to terminated employees will be paid only in
cash.
Voting on major corporate transactions (including mergers,
recapitalizations, liquidations, and similar transactions) will be passed
through by the plan trustee, CoreStates Bank, N.A., to the plan's participants.
Voting by the plan trustee on other matters will be directed by majority vote
of the PREIT-RUBIN Stock Bonus Plan Committee, who are appointed by the Board
of Directors of PREIT-RUBIN.
Incentive Bonus Plan. The Trust and PREIT-RUBIN have established an
incentive bonus plan, effective January 1, 1998, for certain officers and key
employees of the Trust and PREIT-RUBIN. The plan is a nonqualified, unfunded
plan with bonuses to be paid from the general assets of the Trust.
The Executive Compensation and Human Resources Committee (the "Committee")
of the Board of Trustees of the Trust administers the plan. The Committee has
designated those officers and key employees who are eligible to receive a bonus
under the plan, and each of the individuals who entered into employment
agreements in connection with the TRO Transaction (as herein defined) have been
included as eligible to participate in the plan. A bonus pool has been created
equal to a graduated percentage of "Adjusted Funds Available for Distribution,"
which is generally defined as funds from operations less the sum of all
obligations of the Trust, including annual capital expenditures, reserves for
capital expenditures, distributions by the Trust and its operating partnership
and working capital reserves. One-half of the pool will be paid to the
participants based on set individual percentages. All or a portion of the
remainder of the pool may be awarded by senior management (in its discretion,
but subject to the approval of the Committee) to any of the participants in the
plan and/or to any other employees of the Trust or PREIT-RUBIN who achieved the
goals and objectives stated in the Trust's business plan. The plan provides
that in no event will incentive compensation paid under the plan exceed
$1,500,000 in any plan year.
Bonuses will be paid in single-sum cash payments within a reasonable time
after the Trust's fiscal year-end financial statements are approved. Except as
provided in a participant's employment agreement, only participants who are
employed by the Trust or PREIT-RUBIN on December 31 of each plan year will be
eligible to receive payments under the plan (unless the participant was no
longer an employee due to a reorganization, or because he retired on or after
age 65, became disabled, or died).
Transactions with Management
On September 30, 1997, the Trust consummated, a transaction (the "TRO
Transaction") in which the Trust, inter alia, (i) formed a Delaware limited
partnership (the "Operating Partnership"), of which the Trust is the general
partner and a business trust wholly-owned by the Trust is an initial limited
partner, (ii) transferred to the
13
Operating Partnership its interests in its real property assets, or the
economic benefits thereof, in exchange for the issuance to the Trust's business
trust subsidiary of Class A units of limited partner interest in the Operating
Partnership ("OP Units" or "Class A OP Units") and to the Trust of a general
partner interest in the Operating Partnership, (iii) caused the Operating
Partnership to acquire all of the issued and outstanding non-voting common
shares of The Rubin Organization, Inc. (renamed, "PREIT-RUBIN, Inc.") ("TRO"),
representing 95% of the total equity of TRO, in exchange for 200,000 Class A OP
Units and a contingent obligation to issue up to 800,000 additional Class A OP
Units over a five year period based on the levels of the Trust's funds from
operations ("FFO") per share during such period, (iv) caused the Operating
Partnership to acquire, or to become obligated to acquire, in exchange for
additional Class A OP Units, the interests of certain affiliates of TRO,
including Ronald and George Rubin, and Edward Glickman, currently Chief
Financial Officer of the Trust, and entities in which they own interests ("TRO
Affiliates"), or their rights or obligations to acquire interests, in three
existing shopping centers, or portions thereof (the "Existing Properties"), and
in two shopping centers currently under construction (the "Development
Properties"), (v) caused the Operating Partnership to acquire the pre-
development rights, subject to the obligations of certain TRO Affiliates, in
certain additional proposed shopping centers (the "Predevelopment Properties")
in exchange for (A) additional Class A OP Units computed based upon one-half of
the net profit to the Operating Partnership at completion of such project
determined as set forth in the relevant documents, and (B) the reimbursement by
the Operating Partnership of certain of TRO's pre-closing expenses relating to
such properties, (vi) implemented, directly or indirectly, employment
agreements with ten members of TRO management, including Ronald Rubin, who
became the Chief Executive Officer of the Trust and George F. Rubin who
continued as President of TRO, and (vii) elected three designees of TRO, Ronald
Rubin, George F. Rubin and Rosemarie B. Greco, as trustees of the Trust. Ronald
Rubin's employment agreement is for an initial term of five (5) years and
provides for annual base compensation of not less than $345,000 per annum. The
employment agreements of Messrs. George F. Rubin and Edward Glickman are for
initial terms of two years and provide for base compensation of $250,000 per
annum and $230,000 per annum, respectively.
The OP Units referred to above are redeemable by the Operating
Partnership, at the option of the holder, beginning one year following the
dates of their respective issuance for an amount per Unit equal to the average
closing price of a Share on the twenty trading days immediately prior to the
date notice of redemption is received by the Trust in its capacity as general
partner of the Operating Partnership. The Trust has the right to acquire any OP
Units tendered for redemption for (i) cash, or (ii) Shares, on the basis of one
Share for each OP Unit (subject to adjustments for share splits and other
capital changes). Redeeming holders of OP Units who receive Shares from the
Trust will have certain rights to cause the Trust to register such Shares for
resale under the federal securities laws. Ronald Rubin, George F. Rubin and
Edward Glickman, who currently serve as Chief Executive Officer of the Trust,
President of PREIT-RUBIN, Inc., and Chief Financial Officer of the Trust,
respectively, as a result of the TRO Transaction, will each be prohibited from
reselling more than one-half of the Shares to which he would be entitled upon
redemption of Class A Units held by them during the five year period following
the completion of the TRO Transaction if he continues to hold executive
positions with the Trust or TRO during such period.
In the TRO Transaction, in exchange for their direct and indirect
interests in TRO and certain affiliated entities, (i) Ronald Rubin, currently
Chief Executive Officer of the Trust and a Trustee, received, directly or
indirectly, beneficial ownership of 143,440 Class A OP Units, (ii) George F.
Rubin, currently the President of TRO and a Trustee, received, directly or
indirectly, beneficial ownership of 86,055 Class A OP Units, and (iii) Edward
Glickman, currently Chief Financial Officer of the Trust, received, directly or
indirectly, beneficial ownership of 13,606 Class A OP Units. All such
individuals will also be eligible to receive additional Class A OP Units in
respect of contingent payments for their equity in TRO and the payment by the
Trust for the Development and Predevelopment Properties in which the Trust
acquired interests in the TRO Transaction, all in accordance with the valuation
and payment provisions of the applicable agreements. It is anticipated that
holders of Class A OP Units will receive distributions at the approximate
times, and in the same amounts, as dividends are paid by the Trust to the
Shareholders. Generally, each of such Class A OP Units is redeemable for cash,
or at the option of the Trust, for one Share. Certain of the Class A OP Units
issued in the TRO Transaction are subject to pledges in favor of the Operating
Partnership until certain obligations of TRO are satisfied.
14
The amount of consideration paid by the Trust and the manner in which it
would be paid was approved by a Special Acquisition Committee of the Board of
Trustees and by the Board of Trustees. The Board received an opinion from
Lehman Brothers that the consideration to be paid was fair from a financial
point of view, and the Shareholders of the Trust approved the completion by the
Trust of the TRO Transaction at a Special Meeting of Shareholders held on
September 29, 1997. The Board of Trustees has established a committee
consisting of Leonard I. Korman, Chair, Rosemarie B. Greco and William R.
Dimeling for the purpose of addressing and resolving any matters pertaining to
the TRO Transaction as they arise on an on-going basis.
PREIT-RUBIN provides real estate management and other services to entities
properties in which Mr. Ronald Rubin and/or other TRO Affiliates have direct or
indirect interests.
During fiscal 1997, the Trust paid or accrued fees and costs to the
Philadelphia law firm of Drinker Biddle & Reath LLP, general counsel for the
Trust, for legal services rendered to the Trust, its subsidiaries and its
affiliates, including partnerships and other ventures in which the Trust is
involved. Sylvan M. Cohen, Chairman of the Trust, and Chief Executive Officer
of the Trust until September 30, 1997, and Robert Freedman, a Trustee of the
Trust until September 1997, are of counsel to such firm.
Rosemarie B. Greco is the former President and Chief Executive Officer of
CoreStates Bank, N.A., and the former President of its parent company,
CoreStates Financial Corp. Mr. Leonard I. Korman is a Director of CoreStates
Bank, N.A. CoreStates Bank, N.A. has been, and will continue to be, a primary
source of financing for the Trust. At November 1, 1997, the Trust was indebted
(i) to CoreStates Bank, N.A. and the other banks in the lending group in the
aggregate principal amount of approximately $95.3 million on an existing line
of credit in the total amount of $150 million, and (ii) to a two-bank group, of
which CoreStates Bank, N.A. is a member, for $33.9 million on an existing $35
million term loan facility. All borrowing arrangements from the Trust from
CoreStates Bank, N.A. have been on terms which the Trust believes are at least
as favorable to the Trust as would be available from other lending sources.
Board Matters
The Trust has a standing Audit Committee and a standing Executive
Compensation and Human Resources Committee. There is no standing nominating
committee.
The Audit Committee, which is currently comprised of Rosemarie B. Greco,
Chair, Lee H. Javitch and Jeffrey P. Orleans, met once during the 1997 fiscal
year. The principal duties of the Audit Committee are to recommend independent
public accountants for appointment by the Trust; to review with the independent
accountants the planned scope and results of the annual audit and their reports
and recommendations; and to review with the independent accountants matters
relating to the Trust's system of internal controls.
The Executive Compensation and Human Resources Committee, which is
currently comprised of Leonard I. Korman, Chair, William R. Dimeling and Lee H.
Javitch, met two times during the 1997 fiscal year. The principal duties of the
Executive Compensation and Human Resources Committee are to recommend
compensation arrangements for the executive officers of the Trust, and to
administer the Trust's 1990 Incentive and Non-Qualified Stock Option Plan.
In addition to the Executive Compensation and Human Resources Committee
and the Audit Committee, the Trust has a standing Property Committee. The
Property Committee, which is currently comprised of Sylvan Cohen, Chair,
Leonard I. Korman, Jeffrey Orleans, Jonathan Weller (ex officio) and Ronald
Rubin (ex officio), met once in the 1997 fiscal year. The principal duties of
the Property Committee are to review acquisitions and dispositions of portfolio
properties proposed by management and make recommendations thereon to the Board
of Trustees.
15
The Board of Trustees has constituted a Special Committee, consisting of
Leonard I. Korman, Chair, Rosemarie B. Greco and William R. Dimeling, to review
on an on-going basis any issues which may arise in the implementation of the
TRO Transaction.
The Board of Trustees established a Special Acquisition Committee during
1996 and 1997 to consult with management on issues relating to the negotiation
of the TRO Transaction. The Committee, which consisted of Messrs. Jack Farber,
Leonard I. Korman and Jeffrey P. Orleans, met several times during the course
of such negotiations. Each member of the Committee received a one-time payment
of $10,000 in respect of their service on the Committee.
In fiscal 1997, the Board of Trustees met five times. Trustees who are not
officers of the Trust receive an annual retainer of $7,000 plus $1,250 per
Board of Trustees meeting attended and $750 per committee meeting attended. The
Trust made one-time cash payments of $25,000 each to Mr. Jack Farber and Mr.
Robert Freedman upon their resignations as Trustee in August and September,
1997, respectively, after 26 years and 9 years of service, respectively. All of
the trustees attended at least 75% of Board and applicable committee meetings
in fiscal 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Trust's executive officers and directors and
persons who own more than ten percent of a registered class of the Trust's
equity securities (collectively, the "reporting persons") to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and to furnish the Trust with copies of these reports.
Based on the Trust's review of the copies of the reports received by it,
and written representations, if any, received from reporting persons with
respect to the filing of reports on Form 3, 4 and 5, the Trust believes that
all filings required to be made by the reporting persons for Fiscal 1997 were
made on a timely basis.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
During fiscal 1997, Sylvan M. Cohen served on the Compensation Committee
of FPA Corporation, and the Chairman of the Board and Chief Executive Officer
of FPA Corporation, Jeffrey P. Orleans, served as a Trustee of the Trust.
REPORT OF EXECUTIVE COMPENSATION AND HUMAN
RESOURCES COMMITTEE ON EXECUTIVE COMPENSATION
The Trust's compensation for executive officers is the responsibility of
the entire Board of Trustees acting upon the recommendation of the Executive
Compensation and Human Resources Committee (the "Committee"). The Committee is
also responsible for administering the policies that govern the Trust's 1990
Incentive and Non Qualified Stock Option Plan and the Trust's 1997 Stock Option
Plan. The Committee consists of three non-employee Trustees of the Trust.
It is the Board of Trustees' belief that the Trust's investment goal is to
invest in assets that provide the opportunity for cash flow growth and capital
appreciation in real terms. Accordingly, the Board of Trustees believes that
the Trust's overall performance in any year should be based on the Trust's
performance in all aspects of the Trust's business during that year, including
development, management, acquisition and capital structure, as well as
financial accomplishments.
The members of the Committee believe that the Trust's success is largely
due to the efforts of its employees and, in particular, the leadership
exercised by its officers. Therefore the Committee believes it is important to:
16
o Adopt compensation programs that enhance the Trust's ability to attract
and retain qualified officers while providing the financial motivation
necessary to achieve continued high levels of Trust performance.
o Provide equity-based incentives for executives to ensure that they are
motivated over the long term to respond to the Trust's challenges and
opportunities as owners rather than only employees.
o Provide a mix of cash and stock-based compensation programs that are
competitive with a select group of real estate investment trusts that the
members of the Committee believe are comparable to the Trust.
Each executive officer's salary, including that of the Chief Executive
Officer and that of the Chief Operating Officer, is based upon his employment
contract and the competitive market for the executive officer's services,
considering the executive's specific responsibilities, experience and overall
performance. The Committee reviews each executive officer's salary and adjusts
the salary to account for inflation, any change in the executive's
responsibilities and any change in the competitive marketplace. The Committee
believes that the Trust's overall performance is best measured by the
enhancement of long-term shareholder value. The Committee further believes
that, as a result of the nature of the Trust's business, funds from operations
is a better measurement of the Trust's performance as opposed to its reported
net income. This standard has been adopted by the National Association of Real
Estate Investment Trusts. The Committee recommends compensation levels of the
Trust's executive officers, on an annual basis, to the Board of Trustees. For
the fiscal year of the Trust ending August 31, 1997, the Committee also
recommended cash bonuses to Messrs. Weller, Linn and Massimini, on account of
their special efforts in completing the TRO transaction.
Effective January 1, 1998, the Committee will administer an Incentive
Bonus Plan to reward employees of the Trust and PREIT-RUBIN who contribute to
the achievement of pre-established goals.
The Committee also periodically awards discretionary stock options to
executive officers. These awards are based upon the performance of the
individual executive, the Trust's financial results and the executive officer's
accomplishments in his area of responsibility. The Committee believes that
stock option awards are an important element in the Trust's compensation
structure as such awards promote alignment of the interests of the employees
with the interests of the shareholders.
Executive Compensation and Human Resources Committee
Leonard I. Korman, Chairman
William R. Dimeling
Lee H. Javitch
17
PERFORMANCE GRAPH
The graph below compares the Trust's cumulative shareholder return with
the cumulative total return of the S&P 500 and the index of all equity real
estate investment trusts excluding health care real estate investment trusts as
prepared by the National Association of Real Estate Investment Trusts
("NAREIT"). Equity real estate investment trusts are defined as those which
derive more than 75% of their income from equity investments in real estate
assets. The graph assumes that the value of the investment in each of the three
was $100 at August 31, 1992 and that all dividends were reinvested.
(August 31, 1992=$100.00)
250 |-------------------------------------------------------------------------|
| @ |
| % |
225 |-------------------------------------------------------------------------|
| |
| |
200 |-------------------------------------------------------------------------|
| |
| |
175 |-------------------------------------------------------------------------|
| % |
| # |
150 |---------------------------------------%-------------@-------------------|
| |
| % % @ |
125 --------------------------#-----------------------------------------------|
| # @ # # |
| @ |
100 |#%@----------------------------------------------------------------------|
| |
| |
75 |-----------|-------------|-------------|-------------|----------|--------|
|
1992 1993 1994 1995 1996 1997
-----------------------------------------------------------
# = Trust % = Equity w/o Health Care @ = S&P 500
-----------------------------------------------------------
18
PRINCIPAL SECURITY HOLDERS
The following table sets forth certain information as of October 1, 1997
concerning beneficial ownership of the Trust's Shares by the only persons shown
by Securities and Exchange Commission records or the Trust's records to own
beneficially more than 5% of the Trust's Shares:
Amount and
Nature of Percent of
Title of Name and Address Beneficial Outstanding
Class of Beneficial Owner Ownership Shares
- ---------------------------- -------------------------- ------------- ------------
Certificates of Beneficial Sylvan M. Cohen 650,291 (1) 7.5%
Interest 455 Pennsylvania Avenue
Suite 135
Fort Washington, PA 19034
Certificates of Beneficial Leonard I. Korman 482,663 (2) 5.6%
Interest Two Neshaminy Interplex
Trevose, PA 19047
- ------------
(1) See footnote 5 to table appearing under the heading "ELECTION OF TRUSTEES."
(2) See footnote 8 to table appearing under the heading "ELECTION OF TRUSTEES."
OTHER MATTERS
The Trust has selected Arthur Andersen LLP to be its principal independent
public accountants for the current fiscal year. The accounting firm has been
the principal independent public accounting firm for the Trust for more than
twenty-five years. Representatives of Arthur Andersen LLP are expected to be
present at the Annual Meeting and to be available to respond to appropriate
questions. The representatives of Arthur Andersen LLP will be given an
opportunity to make a statement, if they so desire.
The management of the Trust knows of no matters other than those stated
above to come before the meeting. However, if any other matters should properly
come before the meeting, the enclosed proxy confers discretionary authority
with respect thereto.
SHAREHOLDERS' PROPOSALS
Under Securities and Exchange Commission rules, certain shareholder
proposals may be included in the Trust's proxy statement. Any shareholder
desiring to have such a proposal included in the Trust's proxy statement for
the Annual Meeting to be held in 1999 must deliver a proposal in full
compliance with Rule 14a-8 under the Securities Exchange Act of 1934 to the
Trust's executive offices a reasonable time prior to the date the Trust first
mails solicitation material with respect to such meeting.
By Order of the Board of Trustees
Jeffrey A. Linn
Secretary
November 14, 1997
19
APPENDIX A
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
1990 STOCK OPTION PLAN
FOR NON-EMPLOYEE TRUSTEES*
1. Purpose. The purpose of this 1990 Stock Option Plan for Non-Employee
Trustees (the "Plan") of the Pennsylvania Real Estate Investment Trust (the
"Trust") is to increase the ownership interest in the Trust of Non-Employee
Trustees whose services are considered essential to the Trust's continued
progress and to provide a further incentive to serve as a Trustee of the Trust.
2. The Plan. The Plan shall consist of options to acquire Shares of
Beneficial Interest, par value $1.00 per share, of the Trust (the "Shares").
3. Administration. The Plan shall be administered by a Committee
consisting of Trustees who are not eligible to participate in the Plan (the
"Committee"). Subject to the provisions of the Plan, the Committee shall be
authorized to interpret the Plan, to establish, amend and rescind any rules or
regulations relating to the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan. However, the
Committee shall have no discretion with the respect to the eligibility or
selection of Trustees to receive options under the Plan, the number of shares
subject to any such options or the Plan, or the purchase price thereunder.
Further, the Committee shall not have the authority to take any action to make
any determination that would materially increase the benefits accruing to
Trustees under the Plan except that the Committee may, in its discretion,
revise previously granted Options, held by a Trustee who is terminating his or
her service on such Board, to extend the exercise date of all or any portion of
any outstanding Options held by such Trustee and to accelerate the vesting of
all or any portion of such outstanding Options to a schedule in advance of that
set forth in clause (iii) of Section 7 hereof. Subject to the provisions of the
Plan, the Committee shall be authorized to interpret the Plan, to establish,
amend and rescind any rules and regulations relating to the Plan, and to make
all other determinations necessary or advisable for the administration of the
Plan; providing, however, that the Committee shall have no discretion with
respect to the eligibility or selection of Trustees to receive options under
the Plan, the number of Shares subject to any such options or the Plan, for the
purchase price thereunder, and provided further that the Committee shall not
have the authority to take any action to make any determination that would
materially increase the benefits accruing to participants under the Plan. The
determination of the Committee in the administration of the Plan, as described
herein, shall be final and conclusive and binding upon all persons including,
without limitation, the Trust, its shareholders and persons granted options
under the Plan. The Secretary of the Trust shall be authorized to implement the
Plan in accordance with its terms and to take such actions of a ministerial
nature as shall be necessary to effectuate the intent and purposes thereof. The
validity, construction and effect of the Plan and any rules and regulations
relating to the Plan shall be determined in accordance with the laws of the
Commonwealth of Pennsylvania.
4. Participation in the Plan. Trustees of the Trust who are not employees
of the Trust or any affiliate of the Trust shall be eligible to participate in
the Plan ("Eligible Trustees").
5. Shares Subject to the Plan. Subject to adjustment as provided in
Section 8, an aggregate of One Hundred Thousand (100,000) Shares shall be
available for issuance upon the exercise of options granted under the Plan. The
Shares deliverable upon the exercise of an option may be made available from
unissued Shares not reserved for any other purpose or Shares reacquired by the
Trust, including Shares purchased in the open market or in private
transactions. If any option granted under the Plan shall expire or terminate
for any reason without having been exercised in full, the Shares subject to,
but not delivered under, such option may again become available for the grant
of other options under the Plan.
6. Non-Statutory Stock Options. All options granted under the Plan shall
be non-statutory options not intended to qualify under Section 422A of the
Internal Revenue Code of 1986, as amended.
- ------------
* Reflects the changes in the Plan proposed to be effected by the 1997
Amendments; language proposed to be added in by the 1997 Amendments is in
bold; language proposed to be deleted by the 1997 Amendments is struck
through.
20
7. Terms, Conditions and Form of Options. Each option granted under this
Plan shall be evidenced by a written agreement with the Trust, in such form as
the Committee shall from time to time approve, which agreements shall comply
with and be subject to the following terms and conditions:
(i) Option Grant Dates. Options to purchase 1,000 Shares (as adjusted
pursuant to Section 8) shall be granted automatically to each Eligible
Trustee on the last trading day of stock on the national securities
exchange upon which the shares are principally traded or if the shares are
not listed on a national securities exchange and are traded
over-the-counter the date of the last trade as reported by NASDAQ or if not
reported by NASDAQ the last trade which was reported as being made in each
January through 2004, except that the first grant shall be made on the
first such trading day immediately following approval of the Plan by the
shareholders at the 1990 Annual Meeting of Shareholders (the "1990 Grant").
Options to purchase 1,000 Shares (as adjusted pursuant to the Section 8)
shall be granted automatically to each Eligible Trustee on the last trading
day of stock on the American Stock Exchange or other national securities
exchange upon which the shares are traded or if the shares are not listed
on a national securities exchange and are traded over the counter the date
of the last trade as reported by NASDAQ or if not reported by NASDAQ the
last trade which was reported as being made in each January through 1997,
except that the first grant shall be made on the first such trading day
immediately following approval of the Plan by the shareholders at the 1990
Annual Meeting of Shareholders (the "1990 Grant").
(ii) Purchase Price. The purchase price of Shares upon exercise of an
option shall be 100% of the fair market value of the Shares on the date of
grant of an option; which shall be: (i) if the Shares are listed on a national
securities exchange, the closing price of the Shares on such date; provided,
however, if on such date the Shares were traded on more than one national
securities exchange, then the closing price on the exchange on which the
greatest volume of Shares were traded on such day; (ii) if the Shares are not
listed on a national securities exchange and are traded over-the-counter, the
last sale price of the Shares on such date as reported by NASDAQ or, if not
reported by NASDAQ, the average of the closing bid and asked prices for the
Shares on such date; and (iii) if the Shares are neither listed on a national
securities exchange nor traded in the over-the-counter market, such value as
the Committee shall in good faith determine. If the Shares are listed on a
national securities exchange or are traded over-the-counter but are not traded
on the date of grant, then the price shall be determined by the Committee by
applying the principles contained in Proposed Treasury Regulation section
1.422A-2(e) and Treasury Regulation section 20.2031-2 or successor provisions
thereto. The fair market value of the Shares shall be determined by, and in
accordance with, procedures to be established by the Committee, whose
determination shall be final.
(iii) Exercisability and Term of Options. Each option granted under the
Plan will become exercisable and mature in four equal installments, commencing
on the first anniversary of the date of grant and annually thereafter except
that for the 1990 Grant the first installment shall mature and become
exercisable on January 31, 1991, and each subsequent installment of such grant
shall mature and become exercisable on the last day of each subsequent January.
Each option granted under the Plan shall expire ten years from the date of the
grant and shall be subject to earlier termination as hereinafter provided.
(iv) Termination of Service. In the event of the termination of service on
the Board by the holder of any option, other than by reason of total and
permanent disability or death as set forth in Paragraph (v) hereof, the then
outstanding options of such holder may be exercised only to the extent that
they were exercisable on the date of such termination and shall expire three
months after such termination, or on their stated expiration date, whichever
occurs first.
(v) Disability or Death. In the event of termination of service by reason
of the total and permanent disability of the holder of any option, each of the
then outstanding options of such holder will continue to mature and become
exercisable in accordance with Paragraph (iii) above, and the holder may
exercise the matured installments at any time within five years after such
disability, but in no event after the expiration date of the term of the
option. In the event of the death of the holder of any option, each of the then
outstanding options of such holder will immediately mature in full and become
exercisable by the holder's legal representative at any time within a period of
five years after death, but in no event after the expiration date of the term
of the
21
option. However, if the holder dies within five years following termination of
service on the Board by reason of total and permanent disability, such option
shall only be exercisable for two years after the holder's death or five years
after total and permanent disability, whichever is longer, or until the
expiration date of the term of the option, if earlier.
(vi) Payment. Options may be exercised only upon payment to the Trust in
full of the purchase price of the Shares to be delivered. Such payment shall be
made only in cash or check at the time of purchase.
8. Adjustment upon Changes in Shares.
(i) In the event the Shares, as presently constituted, shall be changed
into or exchanged for a different number or kind or shares of stock or
other securities of the Trust or of another trust or corporation (whether
by reason of merger, consolidation, recapitalization, reclassification,
split, reverse split, combination of shares or otherwise), then there shall
be substituted for or added to each Share theretofore appropriated or
thereafter subject or which may become subject to an option under this
Plan, the number and kind of Shares or other securities into which each
outstanding Share shall be so changed or for which each such Share shall be
exchanged or to which each such Share shall be entitled, as the case may
be. Outstanding options shall also be appropriately amended as to price and
other terms as may be necessary to reflect the foregoing events. In the
event there shall be any other change in the number or kind of the
outstanding Shares or of any share or other securities into which such
Shares shall have been changed, or for which it shall have been exchanged,
then, if the Board shall, in its sole discretion, determine that such
change equitably requires an adjustment in any option theretofore granted
or which may be granted under the Plan, such adjustments shall be made in
accordance with such determination.
(ii) Notwithstanding Section (i) above, the Board shall have the power,
in the event of the disposition of all or substantially all of the assets
of the Trust, or the dissolution of the Trust, or the merger or
consolidation of the Trust with or into any other real estate investment
trust, corporation, or the merger or consolidation of any other real estate
investment trust or corporation into the Trust, or the making of a tender
offer to purchase all or a substantial portion of the Shares of the Trust,
to amend all outstanding options (upon such conditions as it shall deem
appropriate) to (a) permit the exercise of all such options prior to the
effectiveness of any such transaction and to terminate such options as of
such effectiveness, or (b) require the forfeiture of all options, provided
the Trust pays to the Grantee the excess of the fair market value of the
Shares in which the Grantee's rights have not become vested at such date
over the purchase price, as provided for in Section 7(ii) hereof, or (c)
make such other provisions as the Board shall deem equitable.
9. Options Non-Assignable and Non-Transferable. Each option and all rights
thereunder shall be non-assignable and non-transferable other than by will or
the laws of descent and distribution and shall be exercisable during the
holder's lifetime only by the holder or the holder's guardian or legal
representative.
10. Limitations of Rights.
(i) No Right to Continue as a Trustee. Neither the Plan nor the granting
of an option nor any other action taken pursuant to the Plan, shall
constitute or be evidence of any agreement or understanding, express or
implied, that the Trustee has a right to continue as a Trustee for any
period of time, or at any particular rate of compensation.
(ii) No Shareholders' Rights for Optionee. An optionee shall have no
rights as a shareholder with respect to the Shares covered by options
granted hereunder until the date of the issuance of a stock certificate
therefor, and no adjustment will be made for dividend distributions or
other rights for which the record date is prior to the date such
certificate is issued.
11. Effective Date and duration of Plan. The Plan shall become effective
immediately following approval by the shareholders at the 1990 Annual Meeting
of shareholders. The period during which option grants shall be made under the
Plan shall terminate on the day following the 1997 Annual Meeting of
Shareholders (unless the Plan is extended or terminated and an earlier date by
shareholders) but such termination shall not affect the terms of any then
outstanding options.
22
12. Amendment, Suspension or Termination of the Plan. The Board of
Trustees may suspend or terminate the Plan or revise or amend it in any respect
whatsoever; provided, however, that without approval of the shareholders, no
revision or amendment shall change the selection or eligibility of Trustees to
receive options under the Plan, the number of Shares subject to any such
options or the Plan, the purchase price thereunder, or materially increase the
benefits accruing to participants under the Plan.
13. Notice. Any written notice to the Trust required by any of the
provisions of this Plan shall be addressed to the Secretary of the Trust and
shall become effective when it is received.
14. Use of Proceeds. Proceeds from the sale of Shares pursuant to options
granted under the Plan shall constitute general funds of the Trust.
15. Fractional Shares. No fractional Shares shall be issued pursuant to
options granted hereunder, but in lieu thereof, the cash value of such
fractions shall be paid.
16. Expenses of the Plan. All of the expenses of administering the Plan
shall be paid by the Trust.
17. Compliance with Applicable Law. Notwithstanding anything herein to the
contrary, the Trust shall not be obligated to cause to be issued or delivered
any certificates for Shares to be delivered pursuant to the exercise of an
option unless and until the Trust is advised by its counsel that the issuance
and delivery of such certificates is in compliance with all applicable laws,
regulations or governmental authority and the requirements of any exchange upon
which Shares are traded. The Trust shall in no event be obligated to register
any securities pursuant to the Securities Act of 1933 (as now in effect or as
hereafter amended) or to take any other action in order to cause the issuance
and delivery of such certificates to comply with any such law, regulations or
requirement. The Committee may require, as a condition of the issuance and
delivery of such certificates and in order to insure compliance with such laws,
regulations and requirements, such representations as the Committee, in its
sole discretion, deems necessary or desirable. Each option shall be subject to
the further requirement that if at any time the Board shall determine in its
discretion that the listing or qualification of the Shares subject to such
option, under any securities exchange or association requirements or under any
applicable law, where the consent or approval of any governmental regulatory
body, is necessary as a condition of, or in connection with, the granting of
such option or the issuance of Shares thereunder, such option may not be
exercised in whole or in part unless such listing, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Board.
18. Governing Law. Except to the extent pre-empted by federal law, this
Plan shall be construed and enforced in accordance with, and governed by, the
laws of the Commonwealth of Pennsylvania.
Date of Adoption
By the Board: September 17, 1990
Date of Approval
By the Shareholders: December 19, 1990.
23
/X/ Please mark your
votes as in this
example.
1. Election of WITHHOLD
Three (3) Class C FOR all AUTHORITY to
Trustees: nominees listed vote for all
except as marked nominees listed
[ ] [ ]
Nominees: William R. Dimeling, George F. Rubin
and Rosemarie B. Greco
(INSTRUCTION: To withhold authority to vote for
any individual nominee,
strike a line through
the nominee's name above.)
2. ADOPTION OF THE 1997 AMENDMENTS TO VOTE FOR AGAINST ABSTAIN
THE 1990 STOCK OPTION PLAN
FOR NON-EMPLOYEE TRUSTEES [ ] [ ] [ ]
3. IN THEIR DISCRETION, THE PROXIES
ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
THE SHARES REPRESENTED BY THIS PROXY, DULY EXECUTED, WILL BE VOTED AS
INSTRUCTED ABOVE. IF INSTRUCTIONS ARE NOT GIVEN, THEY WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES LISTED IN PROPOSAL NO. 1 ABOVE AND FOR ADOPTION OF THE
1997 AMENDMENTS TO THE 1990 STOCK OPTION PLAN FOR NON-EMPLOYEE TRUSTEES. You
are urged to sign and return this proxy so that you may be sure that your
shares will be voted.
Signature_______________________________________ Dated:__________________, 1997
----
Please sign exactly as your name appears hereon. When certificate(s) are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
This Proxy is Solicited on behalf of the Board of Trustees
The undersigned, revoking all prior proxies, hereby appoints SYLVAN M.
COHEN, LEE H. JAVITCH and WILLIAM R. DIMELING, and each and any of them, as
proxies of the undersigned, with full power of substitution, to vote and act
with respect to all Certificates of Beneficial Interest of Pennsylvania Real
Estate Investment Trust (the "Shares") held of record by the undersigned at the
close of business on November 12, 1997 at the Annual Meeting of Holders of
Certificates of Beneficial Interest to be held on Tuesday, December 16, 1997
and at any adjournment thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE, NO POSTAGE REQUIRED.
(continued on reverse side)