Pennsylvania Real Estate Investment Trust Reports First Quarter 2009 Results

Business Wire, April 30, 2009

PHILADELPHIA -- Pennsylvania Real Estate Investment Trust (NYSE: PEI) today reported results for the quarter ended March 31, 2009.

Funds From Operations (“FFO”) for the quarter was $29.3 million, or $0.71 per diluted share, compared to $34.1 million, or $0.83 per diluted share, for the first quarter of 2008.

Net Operating Income (“NOI”) for the quarter was $71.9 million, compared to $75.8 million for the first quarter of 2008. A description of each non-GAAP financial measure and the related reconciliation to the comparable GAAP measure are located at the end of this press release.

Net loss attributable to PREIT for the first quarter of 2009 was $11.0 million, or $0.28 per diluted share, compared to a net loss of $2.9 million, or $0.08 per diluted share, for the first quarter of 2008. See below for a description of the primary factors affecting financial results.

Ronald Rubin, Chairman and Chief Executive Officer of the Company, said, “Our performance was in line with our expectations, and we will continue to draw on our experience to meet the challenges ahead. We are excited about the opportunities created by our redevelopment efforts at Cherry Hill Mall, Plymouth Meeting Mall, Voorhees Town Center and The Gallery at Market East, and we believe that PREIT is poised to take advantage of an improved economy.”

Primary Factors Affecting Financial Results

Results for the quarter ended March 31, 2009, included:

• Reduced occupancy at our enclosed malls and power centers because of store closings primarily from bankruptcies that occurred during 2008;
• Higher depreciation and amortization expense and interest expense as a result of the development and redevelopment assets that have been placed in service;
• A $1.3 million gain on extinguishment of debt resulting from our repurchase of $2.1 million aggregate principal amount of our exchangeable notes in privately negotiated transactions; and
• Adoption of FASB Staff Position APB 14-1, which resulted in a change in accounting for the Company’s exchangeable notes. Interest expense for the first quarter of 2009 included $0.8 million, or $0.02 per diluted share, of non-cash interest expense as a result of this change in accounting. As required, the accounting change was applied retrospectively to the prior year, resulting in a non-cash increase in interest expense of $0.9 million, or $0.02 per diluted share, from the amount previously reported for the quarter ended March 31, 2008.

Financing Activities

During the quarter, the Company repaid the mortgage loan on Palmer Park Mall in Easton, Pennsylvania with a balance of approximately $15.7 million, and obtained a $16.3 million mortgage loan secured by New River Valley Center, a recently constructed power center in Christiansburg, Virginia. The Company has $46.8 million in mortgage debt maturing in 2009, excluding maturities with renewal options.

Retail Operations

Joseph Coradino, President of PREIT Services, LLC and PREIT-RUBIN, Inc., said, “In March, we celebrated the openings of Nordstrom, Seasons 52 and Maggiano’s, among others, at Cherry Hill Mall. Tomorrow, at Plymouth Meeting Mall, we will open our new lifestyle wing with Ann Taylor Loft, Chico’s, Coldwater Creek, and Jos. A. Bank. The new retailers are transforming these properties and energizing shoppers.”

The following tables set forth information regarding occupancy and sales per square foot in the Company’s retail portfolio:

[Table Omitted]

[Table Omitted]

Same store NOI decreased 6.4% to $71.1 million for the quarter, including $0.4 million in lease termination revenue. For the first quarter of 2008, same store NOI was $75.7 million, including $0.9 million in lease termination revenue. Same store results represent retail properties that the Company owned for the full periods presented.

2009 Outlook

Based on the current outlook for 2009, the Company reaffirms its estimates that net loss per diluted share and FFO per diluted share will be as follows:

[Table Omitted]

Annual Meeting of Shareholders

The Annual Meeting of Shareholders is scheduled for 11:00 a.m. Eastern Time on Thursday, May 28, 2009 at the Park Hyatt at the Bellevue in Philadelphia, Pennsylvania.

Conference Call Information

Management has scheduled a conference call for 3:00 p.m. Eastern Time today to review the Company’s first quarter results, market trends, and future outlook. To listen to the call, please dial (800) 762-8779 (domestic) or (480) 629-9031 (international), at least five minutes before the scheduled start time. Investors can also access the call in a "listen only" mode via the Internet at the Company website, www.preit.com, or at www.viavid.net. Please allow extra time prior to the call to visit the site and download the necessary software to listen to the Internet broadcast. Financial and statistical information expected to be discussed on the call will also be available on the Company’s website.