SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) December 18, 1998
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Pennsylvania Real Estate Investment Trust
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(Exact Name of Registrant as Specified in Charter)
Pennsylvania 1-6300 23-6216339
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
The Bellevue, 200 S. Broad Street, Philadelphia, Pennsylvania 19102
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (215) 875-0700
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455 Pennsylvania Avenue, Fort Washington, Pennsylvania 19034
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(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events
(a) Audited Financial Statements as of and for the four month
period ended December 31, 1997
Effective October 14, 1997, the Registrant changed its fiscal year end
from August 31 of each year to December 31 of each year. On February 17, 1998,
the Registrant filed a Transition Report on Form 10-Q for the transition period
from September 1, 1997 to December 31, 1997. The Registrant now desires to
provide investors and the public with more recent audited financial statements.
The Registrant, therefore, hereby files its audited financial statements for the
year ended December 31, 1997.
(b) Statement Regarding Adjustment of Earnout Performance
Benchmarks Under The TRO Contribution Agreement
The Registrant entered into the TRO Contribution Agreement as of July
30, 1997 (the "Agreement"). The Agreement provided, among other things, for
distribution of the dilutive effects of the Registrant's offerings among the
Registrant and the former shareholders and debtholders of The Rubin
Organization, Inc. (collectively the "TRO shareholders"). Pursuant to Section
5.19(b) of the Agreement, at the request of holders of more than one-third of
the outstanding Class A Units issued to TRO shareholders and affiliates, a
Special Committee of Trustees reviewed the impact of a recent public offering by
the Registrant on the earnout performance benchmarks (the "Benchmarks")
contained in the Agreement. Based on its analysis, the Special Committee
adjusted the Benchmarks to distribute the dilutive effect of the Registrant's
December 1997 public offering among the Registrant and the TRO shareholders. The
adjustment is provided for in the Statement Regarding Adjustment of Earnout
Performance Benchmarks Under The TRO Contribution Agreement, dated December 29,
1998 and filed as an exhibit hereto.
(c) Settlement of Berman Litigation
On December 18, 1998, the Registrant settled certain litigation with
Daniel Berman and Robert Berman and/or entities owned or controlled by them
(collectively, the "Bermans"), partners of the Registrant with respect to
certain properties, including all claims by the Bermans and counterclaims by the
Registrant. The litigation had been ongoing since May of 1994 and was discussed
in various of the Registrant's public filings since that date. Pursuant to the
settlement, the Registrant received the Bermans' 50% interest in the Fox Run
multifamily community in Bear, Delaware (414 units), the Eagle's Nest
multifamily community in Coral Springs, Florida (264 units) and an undeveloped
14 acre parcel in Coral Springs, Florida that will accommodate the development
of approximately 260 units. The Registrant paid the Bermans $775,000 and assumed
the remaining 50% of the debt outstanding on the properties. In addition, the
Registrant refinanced the Fox Run property, whereby the existing financing of
$14.3 million with a weighted average interest rate of 7.78% was replaced with a
new mortgage in the amount of $14.6 million with an interest rate of 6.54% and a
maturity in December 2008. The Registrant paid a prepayment penalty of $270,000
in connection with the refinancing. The savings in interest payments will be
approximately $150,000, or $.01 per share. The Registrant will assume the
management of the Fox Run and Eagle's Nest apartment communities and intends to
sell the undeveloped parcel.
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(d) Exhibits
10.1 Statement Regarding Adjustment of Earnout Performance
Benchmarks Under The TRO Contribution Agreement, dated
December 29, 1998.
23.1 Consent of Arthur Andersen LLP (independent public
accountants of the Registrant)
99.1 Financial Statements
Consolidated Balance Sheets at December 31, 1997,
August 31, 1997 and August 31, 1996
Consolidated Statements of Income and Shareholders'
Equity for the four month period ended December 31,
1997 and for the fiscal years ended August 31, 1997,
1996 and 1995
Consolidated Statements of Cash Flows for the four
month period ended December 31, 1997 and for the
fiscal years ended August 31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
99.2 Management's Discussion and Analysis of Financial
Condition and Results of Operations
99.3 Selected Financial Data
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Pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, the Registrant has duly
caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
Date: December 30, 1998 By: /s/ Jonathan B. Weller
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Jonathan B. Weller
President and Chief Operating Officer
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Exhibit Index
Number Exhibit Page Number
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10.1 Statement Regarding Adjustment of Earnout Performance Benchmarks
Under the TRO Contribution Agreement, dated December 29, 1998
23.1 Consent of Arthur Andersen LLP (independent public accountants of
the Registrant)
99.1 Financial Statements
99.2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
99.3 Selected Financial Data
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