THIRD AMENDMENT TO FIRST AMENDED AND RESTATED
                        AGREEMENT OF LIMITED PARTNERSHIP

         This Third Amendment to First Amended and Restated Agreement of Limited
Partnership (the "Amendment") is made as of the 13th day of October, 1998, by
Pennsylvania Real Estate Investment Trust, a Pennsylvania business trust
("PREIT").

                                   Background

         PREIT is the general partner of PREIT Associates, L.P., a Delaware
limited partnership (the "Limited Partnership").

         Pursuant to Sections 16.15(A) and 16.15(C) of the First Amended and
Restated Agreement of Limited Partnership of PREIT Associates, L.P., dated as of
September 30, 1997 (as previously amended, the "Partnership Agreement"), PREIT
is authorized to amend certain sections of the Partnership Agreement in its sole
discretion and without the consent of any other partner of the Limited
Partnership, unless a partner in the Limited Partnership would be adversely
affected by such amendment.

         PREIT has determined that this Amendment will not adversely affect any
partner of the Limited Partnership.

         NOW, THEREFORE, PREIT, acting as the sole general partner of the
Limited Partnership, hereby agrees as follows:

                  1. Section 6.1(A) of the Partnership Agreement is hereby
amended to add a new subsection (6), to read in its entirety as follows:


                  "(6) Notwithstanding anything to the contrary herein, except
         as may be otherwise specifically provided in any subscription
         agreement, contribution agreement or other document governing the
         issuance of Units after the date hereof, the first distribution that is
         otherwise payable pursuant to Section 6.1 hereof in respect of each
         Unit following its issuance (the "First Distribution") shall be an
         amount equal to the product of (i) the distribution otherwise payable
         in respect of such Unit in the absence of this Section 6.1(A)(6) and
         (ii) a fraction whose numerator equals the number of days between the
         date of issuance of such Unit and the record date for the First
         Distribution, and whose denominator equals the number of days between
         the record date for the last distribution made prior to the date of
         issuance of such Unit and the record date for the First Distribution;
         provided that this Section 6.1(A)(6) shall not apply to Units to be
         issued pursuant to the Hillview Contribution Agreement, the Northeast
         Contribution Agreement, the Predevelopment Properties Contribution
         Agreement, the subscription agreement with Albert H. Marta, dated
         January 26, 1998, the TRO Contribution Agreement, the Purchase and Sale
         and Contribution Agreement dated as of September 17, 1998 among the
         Partnership, Edgewater Associates #3 Limited Partnership and certain
         other parties or to any Units issued prior to October 13, 1998."




                  2. Section 6.1(A)(5) of the Partnership Agreement is hereby
amended by inserting the words "or any definitive written agreement entered into
on or after October 13, 1998" after the words "TRO Contribution Agreement" at
the end of such subsection.

                  3. The Partnership Agreement, as amended hereby, is hereby
ratified and confirmed in all respects.


         IN WITNESS WHEREOF, PREIT has caused this Amendment to be executed by
its duly authorized representative as of the date first written above.

                                   PENNSYLVANIA REAL ESTATE INVESTMENT TRUST


                                   By /s/ Jonathan B. Weller               
                                      -------------------------------------
                                      Name:  Jonathan B. Weller
                                      Title: President