Attached files

file filename
EX-32.2 - EXHIBIT 32.2 - PENNSYLVANIA REAL ESTATE INVESTMENT TRUSTa2016q3exhibit322.htm
EX-32.1 - EXHIBIT 32.1 - PENNSYLVANIA REAL ESTATE INVESTMENT TRUSTa2016q3exhibit321.htm
EX-31.2 - EXHIBIT 31.2 - PENNSYLVANIA REAL ESTATE INVESTMENT TRUSTa2016q3exhibit312.htm
EX-31.1 - EXHIBIT 31.1 - PENNSYLVANIA REAL ESTATE INVESTMENT TRUSTa2016q3exhibit311.htm

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________
Form 10-Q
____________________________________________________ 
x
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2016
or
o
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from                      to                     
Commission File Number: 1-6300
  ____________________________________________________
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
(Exact name of Registrant as specified in its charter)
  ____________________________________________________
Pennsylvania
 
23-6216339
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
200 South Broad Street
Philadelphia, PA
 
19102
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code (215) 875-0700
____________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
 
Accelerated filer
o
Non-accelerated filer
o
(Do not check if a smaller reporting company)
Smaller reporting company
o
Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  o   No  x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common shares of beneficial interest, $1.00 par value per share, outstanding at October 31, 2016: 69,538,313
 





PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

CONTENTS
 

 
 
Page
 
 
 
 
 
Item 1.
 
 
 
 
 

 
 
 
 

 
 
 
 

 
 
 
 

 
 
 
 

 
 
 
 

 
 
 
Item 2.

 
 
 
Item 3.

 
 
 
Item 4.

 
 
 
 
 
 
 
 
Item 1.

 
 
 
Item 1A.

 
 
 
Item 2.

 
 
 
Item 3.
Not Applicable

 
 
 
Item 4.
Not Applicable

 
 
 
Item 5.
Not Applicable

 
 
 
Item 6.

 
 
 
 


Except as the context otherwise requires, references in this Quarterly Report on Form 10-Q to “we,” “our,” “us,” the “Company” and “PREIT” refer to Pennsylvania Real Estate Investment Trust and its subsidiaries, including our operating partnership, PREIT Associates, L.P. References in this Quarterly Report on Form 10-Q to “PREIT Associates” or the “Operating Partnership” refer to PREIT Associates, L.P.




Item 1. FINANCIAL STATEMENTS
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
September 30,
2016
 
December 31,
2015
 
(unaudited)
 
 
ASSETS:
 
 
 
INVESTMENTS IN REAL ESTATE, at cost:
 
 
 
Operating properties
$
3,207,221

 
$
3,297,520

Construction in progress
98,925

 
64,019

Land held for development
5,908

 
6,350

Total investments in real estate
3,312,054

 
3,367,889

Accumulated depreciation
(1,052,550
)
 
(1,015,647
)
Net investments in real estate
2,259,504

 
2,352,242

INVESTMENTS IN PARTNERSHIPS, at equity:
166,149

 
161,029

OTHER ASSETS:
 
 
 
Cash and cash equivalents
25,384

 
22,855

Tenant and other receivables (net of allowance for doubtful accounts of $7,128 and $6,417 at September 30, 2016 and December 31, 2015, respectively)
31,721

 
40,324

Intangible assets (net of accumulated amortization of $10,664 and $13,441 at September 30, 2016 and December 31, 2015, respectively)
20,283

 
22,248

Deferred costs and other assets, net
90,975

 
75,450

Assets held for sale
30,715

 
126,244

Total assets
$
2,624,731

 
$
2,800,392

LIABILITIES:
 
 
 
Mortgage loans payable
$
1,227,690

 
$
1,321,331

Term Loans
396,856

 
398,040

Revolving Facility
115,000

 
65,000

Tenants’ deposits and deferred rent
15,374

 
14,631

Distributions in excess of partnership investments
61,617

 
65,547

Fair value of derivative liabilities
6,482

 
2,756

Liabilities related to assets held for sale
1,093

 
69,918

Accrued expenses and other liabilities
64,048

 
78,539

Total liabilities
1,888,160

 
2,015,762

COMMITMENTS AND CONTINGENCIES (Note 6):

 

EQUITY:
 
 
 
Series A Preferred Shares, $.01 par value per share; 25,000 preferred shares authorized; 4,600 shares of Series A Preferred Shares issued and outstanding at each of September 30, 2016 and December 31, 2015; liquidation preference of $115,000
46

 
46

Series B Preferred Shares, $.01 par value per share; 25,000 preferred shares authorized; 3,450 shares of Series B Preferred Shares issued and outstanding at each of September 30, 2016 and December 31, 2015; liquidation preference of $86,250
35

 
35

Shares of beneficial interest, $1.00 par value per share; 200,000 shares authorized; issued and outstanding 69,537 shares at September 30, 2016 and 69,197 shares at December 31, 2015
69,537

 
69,197

Capital contributed in excess of par
1,479,945

 
1,476,397

Accumulated other comprehensive loss
(8,100
)
 
(4,193
)
Distributions in excess of net income
(955,364
)
 
(912,221
)
Total equity—Pennsylvania Real Estate Investment Trust
586,099

 
629,261

Noncontrolling interest
150,472

 
155,369

Total equity
736,571

 
784,630

Total liabilities and equity
$
2,624,731

 
$
2,800,392


See accompanying notes to the unaudited consolidated financial statements.
1



PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(in thousands of dollars)
2016
 
2015
 
2016
 
2015
REVENUE:
 
 
 
 
 
 
 
Real estate revenue:
 
 
 
 
 
 
 
Base rent
$
60,188

 
$
68,378

 
$
188,424

 
$
200,069

Expense reimbursements
29,059

 
31,790

 
89,063

 
93,840

Percentage rent
825

 
866

 
1,661

 
1,712

Lease termination revenue
3,012

 
1,431

 
3,263

 
1,898

Other real estate revenue
3,176

 
2,355

 
8,044

 
6,967

Total real estate revenue
96,260

 
104,820

 
290,455

 
304,486

Other income
2,600

 
2,216

 
4,630

 
4,300

Total revenue
98,860

 
107,036

 
295,085

 
308,786

EXPENSES:
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 Property operating expenses:
 
 
 
 
 
 
 
CAM and real estate taxes
(29,373
)
 
(33,004
)
 
(94,058
)
 
(100,073
)
Utilities
(4,753
)
 
(5,311
)
 
(13,216
)
 
(15,419
)
Other property operating expenses
(3,123
)
 
(4,428
)
 
(10,618
)
 
(12,416
)
Total property operating expenses
(37,249
)
 
(42,743
)
 
(117,892
)
 
(127,908
)
 Depreciation and amortization
(26,820
)
 
(36,108
)
 
(92,217
)
 
(105,938
)
 General and administrative expenses
(8,244
)
 
(7,554
)
 
(25,713
)
 
(25,624
)
 Provision for employee separation expenses
(162
)
 
(136
)
 
(1,355
)
 
(136
)
 Acquisition costs and other expenses
(1,080
)
 
(427
)
 
(1,374
)
 
(5,696
)
Total operating expenses
(73,555
)
 
(86,968
)
 
(238,551
)
 
(265,302
)
Interest expense, net
(17,198
)
 
(19,668
)
 
(53,611
)
 
(60,939
)
Impairment of assets
(9,865
)
 
(51,412
)
 
(24,589
)
 
(86,319
)
Total expenses
(100,618
)
 
(158,048
)
 
(316,751
)
 
(412,560
)
Loss before equity in income of partnerships, gains on sales of interests in non operating real estate and gains on sales of real estate
(1,758
)
 
(51,012
)
 
(21,666
)
 
(103,774
)
Equity in income of partnerships
4,643

 
2,385

 
12,718

 
6,499

Gains on sales of interests in non operating real estate

 

 
9

 
43

Gain on sale of interests in real estate
31

 
12,386

 
22,953

 
12,386

Net income (loss)
2,916

 
(36,241
)
 
14,014

 
(84,846
)
Less: net (income) loss attributable to noncontrolling interest
(312
)
 
3,901

 
(1,502
)
 
8,073

Net income available (loss attributable) to PREIT
2,604

 
(32,340
)
 
12,512

 
(76,773
)
Less: preferred share dividends
(3,962
)
 
(3,962
)
 
(11,886
)
 
(11,886
)
Net (loss attributable) income available to PREIT common shareholders
$
(1,358
)
 
$
(36,302
)
 
$
626

 
$
(88,659
)


See accompanying notes to the unaudited consolidated financial statements.
2


 
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

(in thousands of dollars, except per share amounts)
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
2016
 
2015
 
2016
 
2015
Net income (loss)
$
2,916

 
$
(36,241
)
 
$
14,014

 
$
(84,846
)
Noncontrolling interest
(312
)
 
3,901

 
(1,502
)
 
8,073

Dividends on preferred shares
(3,962
)
 
(3,962
)
 
(11,886
)
 
(11,886
)
Dividends on unvested restricted shares
(81
)
 
(76
)
 
(241
)
 
(240
)
Net (loss) income used to calculate earnings (loss) per share—basic and diluted
$
(1,439
)
 
$
(36,378
)
 
$
385

 
$
(88,899
)
 
 
 
 
 
 
 
 
Basic and diluted (loss) earnings per share:
$
(0.02
)
 
$
(0.53
)
 
$
0.01

 
$
(1.29
)
 
 
 
 
 
 
 
 
(in thousands of shares)
 
 
 
 
 
 
 
Weighted average shares outstanding—basic
69,129

 
68,807

 
69,065

 
68,710

Effect of common share equivalents (1) 

 

 
386

 

Weighted average shares outstanding—diluted
69,129

 
68,807

 
69,451

 
68,710

_________________________
(1) 
The Company had net losses used to calculate earnings per share for the three months ended September 30, 2016 and the three and nine months ended September 30, 2015, therefore, the effects of common share equivalents of 361 and 352 for the three months ended September 2016 and 2015, respectively, and 423 for the nine months ended September 30, 2015 are excluded from the calculation of diluted loss per share for these periods because they would be antidilutive.



See accompanying notes to the unaudited consolidated financial statements.
3



PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(in thousands of dollars)
2016
 
2015
 
2016
 
2015
Comprehensive income (loss):
 
 
 
 
 
 
 
Net income (loss)
$
2,916

 
$
(36,241
)
 
$
14,014

 
$
(84,846
)
Unrealized gain (loss) on derivatives
3,823

 
(2,817
)
 
(4,755
)
 
(3,663
)
Amortization of losses on settled swaps, net of gains
123

 
202

 
375

 
1,212

Total comprehensive income (loss)
6,862

 
(38,856
)
 
9,634

 
(87,297
)
Less: comprehensive (income) loss attributable to noncontrolling interest
(729
)
 
4,184

 
(1,029
)
 
8,337

Comprehensive income (loss) PREIT
$
6,133

 
$
(34,672
)
 
$
8,605

 
$
(78,960
)


See accompanying notes to the unaudited consolidated financial statements.
4



PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
CONSOLIDATED STATEMENTS OF EQUITY
Nine Months Ended
September 30, 2016
(Unaudited)
 
 
 
 
PREIT Shareholders
 
 
(in thousands of dollars, except per share amounts)
Total
Equity
 
Series A
Preferred
Shares,
$.01 par
 
Series B
Preferred
Shares,
$.01 par
 
Shares of
Beneficial
Interest,
$1.00 Par
 
Capital
Contributed
in Excess of
Par
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Distributions
in Excess of
Net Income
 
Noncontrolling
interest
Balance December 31, 2015
$
784,630

 
$
46

 
$
35

 
$
69,197

 
$
1,476,397

 
$
(4,193
)
 
$
(912,221
)
 
$
155,369

Net income
14,014

 

 

 

 

 

 
12,512

 
1,502

Other comprehensive loss
(4,380
)
 

 

 

 

 
(3,907
)
 

 
(473
)
Shares issued upon redemption of Operating Partnership units

 

 

 
26

 
574

 

 

 
(600
)
Shares issued under employee compensation plans, net of shares retired
(1,230
)
 

 

 
314

 
(1,544
)
 

 

 

Amortization of deferred compensation
4,518

 

 

 

 
4,518

 

 

 

Distributions paid to common shareholders ($0.63 per share)
(43,769
)
 

 

 

 

 

 
(43,769
)
 

Distributions paid to Series A preferred shareholders ($1.5498 per share)
(7,116
)
 

 

 

 

 

 
(7,116
)
 

Distributions paid to Series B preferred shareholders ($1.3827 per share)
(4,770
)
 

 

 

 

 

 
(4,770
)
 

Noncontrolling interests:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributions paid to Operating Partnership unit holders ($0.63 per unit)
(5,245
)
 

 

 

 

 

 

 
(5,245
)
Other distributions to noncontrolling interests, net
(81
)
 

 

 

 

 

 

 
(81
)
Balance September 30, 2016
$
736,571

 
$
46

 
$
35

 
$
69,537

 
$
1,479,945

 
$
(8,100
)
 
$
(955,364
)
 
$
150,472



See accompanying notes to the unaudited consolidated financial statements.
5


PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 
Nine Months Ended 
 September 30,
(in thousands of dollars)
2016
 
2015
Cash flows from operating activities:
 
 
 
Net income (loss)
$
14,014

 
$
(84,846
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation
93,561

 
99,271

Amortization
686

 
8,766

Straight-line rent adjustments
(1,953
)
 
(1,321
)
Provision for doubtful accounts
1,513

 
2,945

Amortization of deferred compensation
4,518

 
4,678

Loss on hedge ineffectiveness
143

 
512

Gains on sales of interests in real estate and non operating real estate, net
(22,962
)
 
(12,429
)
Equity in income of partnerships in excess of distributions
(5,070
)
 
(3,006
)
Amortization of historic tax credits
(1,768
)
 
(1,591
)
Impairment of assets and expensed project costs
24,589

 
86,648

Change in assets and liabilities:
 
 
 
Net change in other assets
1,753

 
2,564

Net change in other liabilities
(4,872
)
 
(11,213
)
Net cash provided by operating activities
104,152

 
90,978

Cash flows from investing activities:
 
 
 
Investments in consolidated real estate acquisitions

 
(319,986
)
Additions to construction in progress
(48,312
)
 
(21,697
)
Investments in real estate improvements
(32,846
)
 
(33,922
)
Cash proceeds from sales of real estate
154,764

 
37,056

Additions to leasehold improvements
(449
)
 
(381
)
Investments in partnerships
(9,995
)
 
(18,906
)
Capitalized leasing costs
(4,394
)
 
(4,837
)
Decrease in cash escrows
3,098

 
1,803

Cash distributions from partnerships in excess of equity in income
6,014

 
4,873

Net cash provided by (used in) investing activities
67,880

 
(355,997
)
Cash flows from financing activities:
 
 
 
Borrowings from term loans

 
120,000

Net borrowings from revolving facility
50,000

 
210,000

Proceeds from mortgage loans
139,000

 
272,044

Principal installments on mortgage loans
(12,711
)
 
(14,945
)
Repayments of mortgage loans
(280,327
)
 
(272,776
)
Payment of deferred financing costs
(3,335
)
 
(3,634
)
Dividends paid to common shareholders
(43,769
)
 
(43,556
)
Dividends paid to preferred shareholders
(11,886
)
 
(11,886
)
Distributions paid to Operating Partnership unit holders and noncontrolling interest
(5,245
)
 
(3,951
)
Value of shares of beneficial interest issued
947

 
1,081

Value of shares retired under equity incentive plans, net of shares issued
(2,177
)
 
(5,655
)
Net cash (used in) provided by financing activities
(169,503
)
 
246,722

Net change in cash and cash equivalents
2,529

 
(18,297
)
Cash and cash equivalents, beginning of period
22,855

 
40,433

Cash and cash equivalents, end of period
$
25,384

 
$
22,136


See accompanying notes to the unaudited consolidated financial statements.
6


PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2016

1. BASIS OF PRESENTATION

Nature of Operations

Pennsylvania Real Estate Investment Trust (“PREIT” or the “Company”) prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe that the included disclosures are adequate to make the information presented not misleading. Our unaudited consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto included in PREIT’s Annual Report on Form 10-K for the year ended December 31, 2015. In our opinion, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position, the consolidated results of our operations, consolidated statements of other comprehensive income (loss), consolidated statements of equity and our consolidated statements of cash flows are included. The results of operations for the interim periods presented are not necessarily indicative of the results for the full year.

PREIT, a Pennsylvania business trust founded in 1960 and one of the first equity real estate investment trusts (“REITs”) in the United States, has a primary investment focus on retail shopping malls located in the eastern half of the United States, primarily in the Mid-Atlantic region. Our portfolio currently consists of a total of 31 properties in 11 states, including 23 operating shopping malls, four other operating retail properties and four development or redevelopment properties. Two of the development and redevelopment properties are classified as “mixed use” (a combination of retail and other uses), one is classified as “retail” (redevelopment of The Gallery at Market East into the Fashion Outlets of Philadelphia (“Fashion Outlets of Philadelphia”)), and one is classified as “other.” The above property counts do not include Beaver Valley Mall in Monaca, Pennsylvania because that property has been classified as “held for sale” as of September 30, 2016.

We hold our interest in our portfolio of properties through our operating partnership, PREIT Associates, L.P. (“PREIT Associates” or the “Operating Partnership”). We are the sole general partner of the Operating Partnership and, as of September 30, 2016, we held an 89.3% controlling interest in the Operating Partnership, and consolidated it for reporting purposes. The presentation of consolidated financial statements does not itself imply that the assets of any consolidated entity (including any special-purpose entity formed for a particular project) are available to pay the liabilities of any other consolidated entity, or that the liabilities of any consolidated entity (including any special-purpose entity formed for a particular project) are obligations of any other consolidated entity.

Pursuant to the terms of the partnership agreement of the Operating Partnership, each of the limited partners has the right to redeem such partner’s units of limited partnership interest in the Operating Partnership (“OP Units”) for cash or, at our election, we may acquire such OP Units in exchange for our common shares on a one-for-one basis, in some cases beginning one year following the respective issue dates of the OP Units and in other cases immediately. If all of the outstanding OP Units held by limited partners had been redeemed for cash as of September 30, 2016, the total amount that would have been distributed would have been $191.4 million, which is calculated using our September 30, 2016 closing price on the New York Stock Exchange of $23.03 per share multiplied by the number of outstanding OP Units held by limited partners, which was 8,312,676 as of September 30, 2016.

We provide management, leasing and real estate development services through two of our subsidiaries: PREIT Services, LLC (“PREIT Services”), which generally develops and manages properties that we consolidate for financial reporting purposes, and PREIT-RUBIN, Inc. (“PRI”), which generally develops and manages properties that we do not consolidate for financial reporting purposes, including properties owned by partnerships in which we own an interest and properties that are owned by third parties in which we do not have an interest. PREIT Services and PRI are consolidated. PRI is a taxable REIT subsidiary, as defined by federal tax laws, which means that it is able to offer an expanded menu of services to tenants without jeopardizing our continuing qualification as a REIT under federal tax law.

We evaluate operating results and allocate resources on a property-by-property basis, and do not distinguish or evaluate our consolidated operations on a geographic basis. Due to the nature of our operating properties, which involve retail shopping, we have concluded that our individual properties have similar economic characteristics and meet all other aggregation criteria. Accordingly, we have aggregated our individual properties into one reportable segment. In addition, no single tenant accounts for 10% or more of consolidated revenue, and none of our properties are located outside the United States.

7



Fair Value

Fair value accounting applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements. Fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, these accounting requirements establish a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access.

Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs might include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs for the asset or liability, and are typically based on an entity’s own assumptions, as there is little, if any, related market activity.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. We utilize the fair value hierarchy in our accounting for derivatives (Level 2) and financial instruments (Level 2) and in our reviews for impairment of real estate assets (Level 3) and goodwill (Level 3).

New Accounting Developments

In August 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-15 - Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows, including classification guidance for distributions received from equity method investments. The standard is effective for annual reporting periods beginning after December 15, 2017, however early adoption is permitted. The standard requires the use of the retrospective transition method. The Company is in the process of evaluating the impact of this new guidance.

In March 2016, the FASB issued guidance intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The new guidance allows for entities to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. In addition, the guidance allows employers to withhold shares to satisfy minimum statutory tax withholding requirements up to the employees’ maximum individual tax rate without causing the award to be classified as a liability. The guidance also stipulates that cash paid by an employer to a taxing authority when directly withholding shares for tax-withholding purposes should be classified as a financing activity on the statement of cash flows. This guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is in the process of evaluating the impact of this new guidance.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to record operating and financing leases as assets and liabilities on the balance sheet and lessors to expense costs that are not initial direct leasing costs. This standard will be effective for the first annual reporting period beginning after December 15, 2018. The Company is evaluating the effect that ASU No. 2016-02 will have on its consolidated financial statements and related disclosures.
 
In 2016, the Company adopted Accounting Standards Update (“ASU”) No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The Company evaluated the application of ASU No. 2015-02 and concluded that no change was required to its accounting of its interests in less than wholly owned joint ventures, however, the Operating Partnership now meets the criteria as a variable interest entity. The Company’s significant asset is its investment in the Operating Partnership,

8


and consequently, substantially all of the Company’s assets and liabilities represent those assets and liabilities of the Operating Partnership. All of the Company’s debt is also an obligation of the Operating Partnership.
 
In March 2015, the FASB issued “Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” and “Interest—Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” which intend to simplify the presentation of debt issuance costs. This guidance provides an amendment to the accounting guidance related to the presentation of debt issuance costs and is effective for fiscal years beginning after December 15, 2015, and we have adopted this guidance as of January 1, 2016.  This guidance is applied retrospectively to all prior periods.  Under the new guidance, debt issuance costs related to a note shall be reported in the Consolidated Balance Sheets as a direct deduction from the face amount of that note.  In this regard, debt issuance costs shall not be classified separately from related debt obligations as a deferred charge.  Therefore, as a result of adopting this guidance, the Company reclassified in its Consolidated Balance Sheets $4.2 million of debt issuance costs, net of accumulated amortization, at December 31, 2015, from “Deferred costs and other assets, net” to “Mortgage loans payable,” and $2.0 million of debt issuance costs at December 31, 2015, from “Deferred costs and other assets, net” to “Term loans,” thereby decreasing the carrying value of our recognized debt obligations for presentational purposes.
 
In May 2014, the FASB issued “Revenue from Contracts with Customers.” The objective of this new standard is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The core principle of this new standard is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. The new guidance is effective for annual reporting periods beginning after December 15, 2017 for public companies. Entities have the option of using either a full retrospective or modified approach to adopt this standard. We are currently evaluating the new guidance and have not determined the impact this standard might have on our consolidated financial statements, nor have we decided upon the method of adoption.

2. REAL ESTATE ACTIVITIES

Investments in real estate as of September 30, 2016 and December 31, 2015 were comprised of the following:
 
(in thousands of dollars)
As of September 30,
2016
 
As of December 31,
2015
Buildings, improvements and construction in progress
$
2,806,529

 
$
2,847,986

Land, including land held for development
505,525

 
519,903

Total investments in real estate
3,312,054

 
3,367,889

Accumulated depreciation
(1,052,550
)
 
(1,015,647
)
Net investments in real estate
$
2,259,504

 
$
2,352,242


Capitalization of Costs

The following table summarizes our capitalized salaries, commissions, benefits, real estate taxes and interest for the three and nine months ended September 30, 2016 and 2015:
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(in thousands of dollars)
2016
 
2015
 
2016
 
2015
Development/Redevelopment Activities:
 
 
 
 
 
 
 
Salaries and benefits
$
339

 
$
309

 
$
880

 
$
683

Real estate taxes
176

 
323

 
202

 
599

Interest
851

 
758

 
2,221

 
1,562

Leasing Activities:
 
 
 
 
 
 
 
Salaries, commissions and benefits
1,378

 
1,610

 
4,394

 
4,837


9



Dispositions

The following table presents our dispositions for the nine months ended September 30, 2016:
Sale Date
 
Property and Location
 
Description of Real Estate Sold
 
Capitalization Rate
 
Sale Price
 
(Loss) Gain
 
 
 
 
(in millions)
2016 Activity:
 
 
 
 
 
 
 
 
 
 
August 2016
 
Washington Crown Center
Washington, Pennsylvania
 
Mall
 
14.5
%
 
$
20.0

 
$
(0.1
)
June 2016
 
Street retail located on Walnut and Chestnut Streets, Philadelphia, Pennsylvania
 
Street Retail
 
3.2
%
 
45.0

 
20.3

March 2016
 
Lycoming Mall
Pennsdale, Pennsylvania
 
Mall
 
18.0
%
 
26.4

 
0.3

March 2016
 
Gadsden Mall,
Gadsden, Alabama,
New River Valley Mall,
Christiansburg, Virginia, and Wiregrass Commons Mall, Dothan, Alabama (1)
 
Three Malls (single combined transaction)
 
17.4
%
 
66.0

 
1.6

February 2016
 
Palmer Park Mall,
Easton, Pennsylvania
 
Mall
 
13.6
%
 
18.0

 
0.1

_________________________
(1) In connection with this transaction, we issued a mortgage loan to the buyer for $17.0 million, which is recorded in “Deferred costs and other assets, net” on our consolidated balance sheet. The mortgage loan is secured by Wiregrass Commons Mall, bears interest at the rate of 6.00% per annum and has a maturity date of April 2026.

Other Real Estate Activity

In September 2016, we sold an office building adjacent to Voorhees Town Center for $4.0 million, and recorded a gain of $0.1 million.

In July 2016, we sold a non operating parcel located at Beaver Valley Mall for $0.8 million, and recorded no gain or loss on the sale of this parcel.

In June 2016, we sold an operating parcel located at Monroe Retail Center for $2.1 million, and recorded a gain of $0.6 million.

In January 2016, we sold a non operating parcel located at Sunrise Plaza for $2.0 million, and recorded no gain or loss on the sale of this parcel.

Impairment of Assets

In September 2016 we recorded a loss on impairment of assets on Beaver Valley Mall, in Monaca, Pennsylvania of $9.9 million in connection with negotiations with a prospective buyer of the property. In connection with these negotiations, we determined that the holding period of the property was less than previously estimated, which we concluded was a triggering event, leading us to conduct an analysis of possible impairment at this property. Based upon the negotiations, we determined that the estimated undiscounted cash flows, net of capital expenditures for the property, were less than the carrying value of the property, and recorded a loss on impairment of assets.

In June 2016 we recorded a loss on impairment of assets on Washington Crown Center, in Washington, Pennsylvania of $14.1 million in connection with negotiations with a prospective buyer of the property. In connection with these negotiations, we determined that the holding period of the property was less than previously estimated, which we concluded was a triggering event, leading us to conduct an analysis of possible impairment at this property. Based upon the negotiations, we determined

10


that the estimated undiscounted cash flows, net of capital expenditures for the property, were less than the carrying value of the property, and recorded a loss on impairment of assets. The property was sold in August 2016.

In March 2016 we recorded a loss on impairment of assets on an office building located in Voorhees, New Jersey of $0.6 million in connection with negotiations with a prospective buyer of the property. In connection with these negotiations, we determined that the holding period of the property was less than previously estimated, which we concluded was a triggering event, leading us to conduct an analysis of possible impairment at this property. Based upon the negotiations, we determined that the estimated undiscounted cash flows, net of capital expenditures for the property, were less than the carrying value of the property, and recorded a loss on impairment of assets. The property was sold in September 2016.

3. INVESTMENTS IN PARTNERSHIPS

The following table presents summarized financial information of the equity investments in our unconsolidated partnerships as of September 30, 2016 and December 31, 2015:
 
(in thousands of dollars)
As of September 30, 2016
 
As of December 31, 2015
ASSETS:
 
 
 
Investments in real estate, at cost:
 
 
 
Operating properties
$
646,247

 
$
636,774

Construction in progress
147,686

 
126,199

Total investments in real estate
793,933

 
762,973

Accumulated depreciation
(201,602
)
 
(186,580
)
Net investments in real estate
592,331

 
576,393

Cash and cash equivalents
34,505

 
37,362

Deferred costs and other assets, net(1)
36,671

 
39,890

Total assets
663,507

 
653,645

LIABILITIES AND PARTNERS’ INVESTMENT:
 
 
 
Mortgage loans payable(1)
444,955

 
440,450

Other liabilities
22,131

 
30,425

Total liabilities
467,086

 
470,875

Net investment
196,421

 
182,770

Partners’ share
100,374

 
95,165

PREIT’s share
96,047

 
87,605

Excess investment (2)
8,485

 
7,877

Net investments and advances
$
104,532

 
$
95,482

 
 
 
 
Investment in partnerships, at equity
$
166,149

 
$
161,029

Distributions in excess of partnership investments
(61,617
)
 
(65,547
)
Net investments and advances
$
104,532

 
$
95,482

_________________________
(1) 
The December 31, 2015 balance has been adjusted in connection with the Company's adoption of ASU No. 2015-03 “Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs” (Note 1).
(2) 
Excess investment represents the unamortized difference between our investment and our share of the equity in the underlying net investment in the unconsolidated partnerships. The excess investment is amortized over the life of the properties, and the amortization is included in “Equity in income of partnerships.”

We record distributions from our equity investments as cash from operating activities up to an amount equal to the equity in income of partnerships. Amounts in excess of our share of the income in the equity investments are treated as a return of partnership capital and recorded as cash from investing activities.


11


The following table summarizes our share of equity in income of partnerships for the three and nine months ended September 30, 2016 and 2015:
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(in thousands of dollars)
2016
 
2015
 
2016
 
2015
Real estate revenue
$
29,475

 
$
25,432

 
$
85,867

 
$
76,285

Operating expenses:
 
 
 
 
 
 
 
Property operating expenses
(8,196
)
 
(8,768
)
 
(25,216
)
 
(28,819
)
Interest expense
(5,388
)
 
(5,211
)
 
(16,165
)
 
(15,653
)
Depreciation and amortization
(5,840
)
 
(6,508
)
 
(17,367
)
 
(18,806
)
Other expenses
(2
)
 

 
(4
)
 

Total expenses
(19,426
)
 
(20,487
)
 
(58,752
)
 
(63,278
)
Net income
10,049

 
4,945

 
27,115

 
13,007

Less: Partners’ share
(5,397
)
 
(2,647
)
 
(14,496
)
 
(6,667
)
PREIT’s share
4,652

 
2,298

 
12,619

 
6,340

Amortization of and adjustments to excess investment
(9
)
 
87

 
99

 
159

Equity in income of partnerships
$
4,643

 
$
2,385

 
$
12,718

 
$
6,499


Significant Unconsolidated Subsidiary

One of our unconsolidated subsidiaries, Lehigh Valley Associates LP, the owner of the substantial majority of Lehigh Valley Mall, in which we have a 50% partnership interest, met the conditions of significant unconsolidated subsidiaries as of September 30, 2016. The financial information of this entity is included in the amounts above. Summarized balance sheet information as of September 30, 2016 and December 31, 2015 and summarized statement of operations information for the three and nine months ended September 30, 2016 and 2015 for this entity, which is accounted for using the equity method, are as follows:
 
 
As of
 
(in thousands of dollars)
 
September 30, 2016
 
December 31, 2015
 
Summarized balance sheet information
 
 
 
 
 
     Total assets
 
$
50,765

 
$
48,352

 
     Mortgage loan payable
 
127,125

 
128,883

 

 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(in thousands of dollars)
 
2016
 
2015
 
2016
 
2015
Summarized statement of operations information
 
 
 
 
 
 
 
 
     Revenue
 
$
9,023

 
$
8,903

 
$
27,192

 
$
26,807

     Property operating expenses
 
(2,204
)
 
(2,200
)
 
(6,386
)
 
(7,219
)
     Interest expense
 
(1,888
)
 
(1,923
)
 
(5,691
)
 
(5,794
)
     Net income
 
4,066

 
3,964

 
12,544

 
11,284

     PREIT’s share of equity in income
 
 
 
 
 
 
 
 
          of partnership
 
2,033

 
1,982

 
6,272

 
5,642



12


4. FINANCING ACTIVITY

Credit Agreements

We have entered into four credit agreements (collectively, as amended, the “Credit Agreements”), as further discussed in our Annual Report on Form 10-K for the year ended December 31, 2015: (1) the 2013 Revolving Facility, (2) the 2014 7-Year Term Loan, (3) the 2014 5-Year Term Loan, and (4) the 2015 5-Year Term Loan. The 2014 7-Year Term Loan, the 2014 5-Year Term Loan and the 2015 5-Year Term Loan are collectively referred to as the “Term Loans.”

On June 30, 2016, Pennsylvania Real Estate Investment Trust (“PREIT”), PREIT Associates, L.P. (“PREIT Associates”) and PREIT-RUBIN, Inc. (“PRI” and, collectively with PREIT and PREIT Associates, the “Borrower”) entered into an Amendment (the “Amendment”) to the 2014 7-Year Term Loan. The Amendment increased potential borrowing under the 2014 7-Year Term Loan from $100.0 million to $250.0 million, and expanded the accordion feature of the 2014 7-Year Term Loan from up to $200.0 million to up to $400.0 million. Among other things, the Amendment lowered the interest rates in the applicable pricing grid and extended the termination date from January 7, 2021 to December 29, 2021. Pursuant to the Amendment, amounts borrowed under the 2014 7-Year Term Loan bear interest at a rate between 1.35% and 1.90% per annum, depending on PREIT’s leverage, in excess of LIBOR, which is a reduction from the former range of 1.80% to 2.35%.

As of September 30, 2016, we had borrowed $400.0 million under the Term Loans and $115.0 million under the 2013 Revolving Facility (with $7.4 million pledged as collateral for a letter of credit at September 30, 2016).
Interest expense and the deferred financing fee amortization related to the Credit Agreements for the three and nine months ended September 30, 2016 and 2015 were as follows:

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in thousands of dollars)
2016
 
2015
 
2016
 
2015
2013 Revolving Facility
 
 
 
 
 
 
 
 
 
Interest expense
 
$
805.0

 
$
649.6

 
$
2,277.4

 
$
2,357.1

 
Deferred financing amortization
 
198.7

 
209.8

 
596.2

 
1,181.3

 
 
 
 
 
 
 
 
 
 
Term Loans
 
 
 
 
 
 
 
 
 
Interest expense
 
3,125.0

 
2,707.0

 
9,161.9

 
5,935.7

 
Deferred financing amortization
 
190.9

 
118.3

 
431.5

 
273.8


Each of the Credit Agreements contain certain affirmative and negative covenants, which are identical to those contained in the other Credit Agreements, and which are described in detail in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. As of September 30, 2016, we were in compliance with all financial covenants in the Credit Agreements. Following recent property sales, the net operating income (“NOI”) from our remaining unencumbered properties is at a level such that pursuant to Unencumbered Debt Yield covenant (as described in our Annual Report on Form 10-K for the year ended December 31, 2015), the maximum unsecured amount that was available for us to borrow under the 2013 Revolving Facility as of September 30, 2016 was $201.6 million.

Amounts borrowed under the Credit Agreements bear interest at the rate specified below per annum, depending on our leverage, in excess of LIBOR, unless and until we receive an investment grade credit rating and provide notice to the administrative agent (the “Rating Date”), after which alternative rates would apply. In determining our leverage (the ratio of Total Liabilities to Gross Asset Value), the capitalization rate used to calculate Gross Asset Value is 6.50% for each property having an average sales per square foot of more than $500 for the most recent period of 12 consecutive months, and (b) 7.50% for any other property. The 2013 Revolving Facility is subject to a facility fee, which depends on leverage and is currently 0.25%, and is recorded in interest expense in the consolidated statements of operations.


13


The following table presents the applicable margin for each level for the Credit Agreements:
 
 
Applicable Margin
Level
Ratio of Total Liabilities
to Gross Asset Value
2013 Revolving Facility
 
2014 7-Year Term Loan
 
2014 5-Year Term Loan
 
2015 5-Year Term Loan
 
1
Less than 0.450 to 1.00
1.20%
 
1.35%
 
1.35%
 
1.35%
 
2
Equal to or greater than 0.450 to 1.00 but less than 0.500 to 1.00
1.25%
 
1.45%
 
1.45%
 
1.45%
 
3
Equal to or greater than 0.500 to 1.00 but less than 0.550 to 1.00
1.30%
(1) 
1.60%
(1) 
1.60%
(1) 
1.60%
(1) 
4
Equal to or greater than 0.550 to 1.00
1.55%
 
1.90%
 
1.90%
 
1.90%
 

(1) The rate in effect at September 30, 2016.

Mortgage Loans

The aggregate carrying values and estimated fair values of mortgage loans based on interest rates and market conditions at September 30, 2016 and December 31, 2015 were as follows:
 
September 30, 2016
 
December 31, 2015
(in millions of dollars)
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Mortgage loans
$
1,227.7

 
$
1,231.6

 
$
1,321.3

 
$
1,323.3


The mortgage loans contain various customary default provisions. As of September 30, 2016, we were not in default on any of the mortgage loans.

Mortgage Loan Activity

In April 2016, we entered into a $130.0 million mortgage loan secured by Woodland Mall in Grand Rapids, Michigan. The new mortgage loan bears interest at the rate of 2.00% plus LIBOR, and has a maturity date of April 2021. The proceeds from the new mortgage loan were used to pay down a portion of the Credit Facility borrowings that were used to repay the previous $141.2 million mortgage loan.

In March 2016, we borrowed an additional $9.0 million, lowered the interest rate to 2.35% plus LIBOR, and extended the maturity date to March 2021 on the mortgage loan secured by Viewmont Mall in Scranton, Pennsylvania.

In March 2016, we repaid a $79.3 million mortgage loan plus accrued interest secured by Valley Mall in Hagerstown, Maryland using $50.0 million from our 2013 Revolving Facility and the balance from available working capital.

In March 2016, we repaid a $32.8 million mortgage loan plus accrued interest secured by Lycoming Mall in Pennsdale, Pennsylvania in connection with the March 2016 sale of the property using proceeds from the sale and available working capital.

In March 2016, we repaid a $28.1 million mortgage loan plus accrued interest secured by New River Valley Mall in Christiansburg, Virginia in connection with the March 2016 sale of the property using proceeds from the sale.

Interest Rate Risk

We follow established risk management policies designed to limit our interest rate risk on our interest bearing liabilities, as further discussed in note 7 to our unaudited consolidated financial statements.

5. CASH FLOW INFORMATION

Cash paid for interest was $50.2 million (net of capitalized interest of $2.2 million) and $56.2 million (net of capitalized interest of less than $1.6 million) for the nine months ended September 30, 2016 and 2015, respectively.

In our statement of cash flows, we show cash flows on our revolving facility on a net basis. Aggregate borrowings on our 2013 Revolving Facility were $250.0 million and $290.0 million for the nine months ended September 30, 2016 and 2015,

14


respectively. Aggregate paydowns were $200.0 million and $230.0 million for the nine months ended September 30, 2016 and 2015, respectively.

In connection with the sale of Gadsden Mall, New River Valley Mall and Wiregrass Commons, we issued a mortgage note to the buyer in the amount of $17.0 million. The mortgage loan is secured by Wiregrass Commons Mall, bears interest at the rate of 6.00% per annum and has a maturity date of April 2026.

6. COMMITMENTS AND CONTINGENCIES

Contractual Obligations

As of September 30, 2016, we had unaccrued contractual and other commitments related to our capital improvement projects and development projects of $56.5 million, including commitments related to the redevelopment of the Fashion Outlets of Philadelphia, in the form of tenant allowances and contracts with general service providers and other professional service providers. In addition, our operating partnership, PREIT Associates, has jointly and severally guaranteed the obligations of the joint venture we formed with Macerich to develop the Fashion Outlets of Philadelphia to commence and complete a comprehensive redevelopment of that property costing not less than $300.0 million within 48 months after commencement of construction.

Provision for Employee Separation Expense

In 2016 and 2015, we terminated the employment of certain employees. In connection with the departure of those employees, we recorded $0.2 million and $1.4 million of employee separations expenses, respectively, for the three and nine months ended September 30, 2016.

Other

In 2015, in connection with the acquisition of Springfield Town Center in Springfield, Virginia, we recorded a contingent liability representing the estimated fair value of additional consideration that the seller would potentially be eligible to receive (the “Earnout”). As of December 31, 2015, the estimated fair value of the Earnout was $8.6 million. As of September 30, 2016, based on revised leasing assumptions and other factors, we revised our estimate and determined that the entire contingent liability associated with the Earnout should be eliminated. The change in the estimated fair value of this contingent liability is recorded as a component of depreciation and amortization expense in the accompanying consolidated statement of operations.


7. DERIVATIVES

In the normal course of business, we are exposed to financial market risks, including interest rate risk on our interest bearing liabilities. We attempt to limit these risks by following established risk management policies, procedures and strategies, including the use of financial instruments such as derivatives. We do not use financial instruments for trading or speculative purposes.

Cash Flow Hedges of Interest Rate Risk

Our outstanding derivatives have been designated under applicable accounting authority as cash flow hedges. The effective portion of changes in the fair value of derivatives designated as, and that qualify as, cash flow hedges is recorded in “Accumulated other comprehensive income (loss)” and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. To the extent these instruments are ineffective as cash flow hedges, changes in the fair value of these instruments are recorded in “Interest expense, net.” We recognize all derivatives at fair value as either assets or liabilities in the accompanying consolidated balance sheets. The carrying amount of the derivative assets is reflected in “Deferred costs and other assets, net,” the amount of the associated liabilities is reflected in “Accrued expenses and other liabilities” and the amount of the net unrealized income or loss is reflected in “Accumulated other comprehensive income (loss)” in the accompanying balance sheets.

Amounts reported in “Accumulated other comprehensive income (loss)” that are related to derivatives will be reclassified to “Interest expense, net” as interest payments are made on our corresponding debt. During the next 12 months, we estimate that $4.0 million will be reclassified as an increase to interest expense in connection with derivatives. The amortization of these amounts could be accelerated in the event that we repay amounts outstanding on the debt instruments and do not replace them with new borrowings.

15



Interest Rate Swaps

As of September 30, 2016, we had entered into 26 interest rate swap agreements with a weighted average base interest rate of 1.25% on a notional amount of $627.7 million, maturing on various dates through March 2021, and one forward starting interest rate swap agreement with a base interest rate of 1.42% on a notional amount of $48.0 million, which will be effective starting January 2018 and will mature in February 2021.

We entered into these interest rate swap agreements in order to hedge the interest payments associated with our issuances of variable interest rate long term debt. We have assessed the effectiveness of these interest rate swap agreements as hedges at inception and on a quarterly basis. As of September 30, 2016, except as set forth below, we considered these interest rate swap agreements to be highly effective as cash flow hedges. The interest rate swap agreements are net settled monthly.

In March 2016, in connection with the sale of, and repayment of, the mortgage loan secured by Lycoming Mall, we recorded a loss on hedge ineffectiveness of $0.1 million.

Accumulated other comprehensive loss as of September 30, 2016 includes a net loss of $1.7 million relating to forward starting swaps that we cash settled in prior years that are being amortized over 10 year periods commencing on the closing dates of the debt instruments that are associated with these settled swaps.



16


The following table summarizes the terms and estimated fair values of our interest rate swap derivative instruments at September 30, 2016 and December 31, 2015. The notional values provide an indication of the extent of our involvement in these instruments, but do not represent exposure to credit, interest rate or market risks.
(in millions of dollars)
Notional Value
 
Fair Value at
September 30, 2016 (1)
 
Fair Value at
December 31, 2015 (1)
 
Interest
Rate
 
Effective Date of Forward Starting Swap
 
Maturity Date
 
Interest Rate Swaps
 
 
 
 
 
 
 
 
 
 
 
$25.0
 
N/A (2)

 
$
(0.1
)
 
1.10
%
 
 
 
July 31, 2016
 
28.1
 
$
(0.1
)
 
(0.2
)
 
1.38
%
 
 
 
January 2, 2017
 
33.0
 
N/A(3)

 

 
3.72
%
 
 
 
December 1, 2017
 
48.0
 
(0.2
)
 
(0.1
)
 
1.12
%
 
 
 
January 1, 2018
 
7.6
 
0.1

 

 
1.00
%
 
 
 
January 1, 2018
 
55.0
 
(0.2
)
 
(0.1
)
 
1.12
%
 
 
 
January 1, 2018
 
30.0
 
(0.7
)
 
(0.5
)
 
1.78
%
 
 
 
January 2, 2019
 
25.0
 
(0.4
)
 
N/A

 
0.70
%
 
 
 
January 2, 2019
 
20.0
 
(0.4
)
 
(0.4
)
 
1.78
%
 
 
 
January 2, 2019
 
20.0
 
(0.4
)
 
(0.3
)
 
1.78
%
 
 
 
January 2, 2019
 
20.0
 
(0.4
)
 
(0.3
)
 
1.79
%
 
 
 
January 2, 2019
 
20.0
 
(0.4
)
 
(0.3
)
 
1.79
%
 
 
 
January 2, 2019
 
20.0
 
(0.4
)
 
(0.3
)
 
1.79
%
 
 
 
January 2, 2019
 
25.0
 
(0.2
)
 

 
1.16
%
 
 
 
January 2, 2019
 
25.0
 
(0.2
)
 

 
1.16
%
 
 
 
January 2, 2019
 
25.0
 
(0.2
)
 

 
1.16
%
 
 
 
January 2, 2019
 
20.0
 
(0.2
)
 

 
1.16
%
 
 
 
January 2, 2019
 
20.0
 
(0.2
)
 
0.1

 
1.23
%
 
 
 
June 26, 2020
 
20.0
 
(0.2
)
 
0.2

 
1.23
%
 
 
 
June 26, 2020
 
20.0
 
(0.2
)
 
0.2

 
1.23
%
 
 
 
June 26, 2020
 
20.0
 
(0.2
)
 
0.2

 
1.23
%
 
 
 
June 26, 2020
 
20.0
 
(0.2
)
 
0.2

 
1.24
%
 
 
 
June 26, 2020
 
9.0
 
(0.1
)
 
N/A

 
1.19
%
 
 
 
February 1, 2021
 
35.0
 
(0.1
)
 
N/A

 
1.01
%
 
 
 
March 1, 2021
 
35.0
 
(0.1
)
 
N/A

 
1.02
%
 
 
 
March 1, 2021
 
20.0
 
(0.1
)
 
N/A

 
1.01
%
 
 
 
March 1, 2021
 
20.0
 
(0.1
)
 
N/A

 
1.02
%
 
 
 
March 1, 2021
 
20.0
 
(0.1
)
 
N/A

 
1.02
%
 
 
 
March 1, 2021
 
 
 
 
 
 
 
 
 
 
 
 
 
Forward Starting Swap
 
 
 
 
 
 
 
 
 
48.0
 
(0.5
)
 
N/A

 
1.42
%
 
January 2, 2018
 
February 1, 2021
 
 
 
$
(6.4
)
 
$
(1.7
)
 
 
 
 
 
 
 
_________________________
(1) 
As of September 30, 2016 and December 31, 2015, derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy and we did not have any significant recurring fair value measurements related to derivative instruments using significant unobservable inputs (Level 3).
(2) 
This interest rate swap matured in July 2016.
(3) 
This interest rate swap was terminated effective March 23, 2016.



17


The table below presents the effect of derivative financial instruments on our consolidated statements of operations and on our share of our partnerships’ statements of operations for the three and nine months ended September 30, 2016 and 2015:
 
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
Consolidated
Statements of
Operations 
Location
(in millions of dollars)
 
2016
 
2015
 
2016
 
2015
 
Derivatives in cash flow hedging relationships:
 
 
 
 
 
 
 
 
 
 
Interest rate products
 
 
 
 
 
 
 
 
 
 
Gain (loss) recognized in Other Comprehensive Income (Loss) on derivatives
 
$
2.6

 
$
(3.9
)
 
$
(8.1
)
 
$
(5.5
)
 
N/A
Loss reclassified from Accumulated Other Comprehensive Income (Loss) into income (effective portion)
 
$
1.3

 
$
1.3

 
$
3.9

 
$
3.5

 
Interest expense
Loss recognized in income on derivatives (ineffective portion and amount excluded from effectiveness testing)
 
$

 
$

 
$
(0.1
)
 
$
(0.5
)
 
Interest expense

Credit-Risk-Related Contingent Features

We have agreements with some of our derivative counterparties that contain a provision pursuant to which, if our entity that originated such derivative instruments defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations. As of September 30, 2016, we were not in default on any of our derivative obligations.

We have an agreement with a derivative counterparty that incorporates the loan covenant provisions of our loan agreement with a lender affiliated with the derivative counterparty. Failure to comply with the loan covenant provisions would result in our being in default on any derivative instrument obligations covered by the agreement.

As of September 30, 2016, the fair value of derivatives in a net liability position, which excludes accrued interest but includes any adjustment for nonperformance risk related to these agreements, was $6.4 million. If we had breached any of the default provisions in these agreements as of September 30, 2016, we might have been required to settle our obligations under the agreements at their termination value (including accrued interest) of $7.0 million. We had not breached any of these provisions as of September 30, 2016.

8. HISTORIC TAX CREDITS
In the second quarter of 2012, we closed a transaction with a counterparty (the “Counterparty”) related to the historic rehabilitation of an office building located at 801 Market Street in Philadelphia, Pennsylvania (the “Project”), which has two stages of development. The Counterparty contributed equity of $5.5 million to the first stage through December 31, 2013 and $5.8 million to the second stage through September 30, 2014. In exchange for its contributions into the Project, the Counterparty received substantially all of the historic rehabilitation tax credits associated with the Project as a distribution. The Counterparty’s contributions, other than the amounts allocated to a put option (whereby we might be obligated or entitled to repurchase the Counterparty’s ownership interest in the Project), are classified as “Accrued expenses and other liabilities” and recognized as “Other income” in the consolidated financial statements as our obligation to deliver tax credits is relieved.
The tax credits are subject to a five year credit recapture period, as defined in the Internal Revenue Code of 1986, as amended, beginning one year after the completion of the Project, of which the first stage was completed in the second quarter of 2012, and the second stage was completed in the second quarter of 2013. Our obligation to the Counterparty with respect to the tax credits is ratably relieved annually in the third quarter of each year, upon the expiration of each portion of the recapture period and the satisfaction of other revenue recognition criteria. We recognized the contribution received of $0.9 million from the Counterparty as “Other income” in the consolidated statements of operations related to the fourth recapture period of the first stage and $1.0 million related to the third recapture period of the first stage in each of the three and nine months, respectively, ended September 30, 2016 and 2015. We recognized the contribution received of $0.9 million related to the third recapture period of the second stage, and $0.9 million related to the second recapture period of the second stage in each of the three and nine months, respectively, ended September 30, 2016 and 2015. We also recorded $0.2 million and $0.3 million, respectively, of priority returns earned by the Counterparty in each of the three and nine months ended September 30, 2016 and 2015.

18


In the aggregate, we recorded net income of $1.8 million to “Other income” in the consolidated statements of operations in connection with the Project in each of the three and nine months ended September 30, 2016 and 2015, respectively.


19


Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following analysis of our consolidated financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the notes thereto included elsewhere in this report.

OVERVIEW

Pennsylvania Real Estate Investment Trust, a Pennsylvania business trust founded in 1960 and one of the first equity real estate investment trusts (“REITs”) in the United States, has a primary investment focus on retail shopping malls located in the eastern half of the United States, primarily in the Mid-Atlantic region.

We currently own interests in 31 retail properties in 11 states, of which 27 are operating properties, three are development properties, and one is under redevelopment. The 27 operating properties include 23 shopping malls and four other operating retail properties, have a total of 22.1 million square feet and are located in 10 states. We and partnerships in which we own an interest own 16.5 million square feet at these properties (excluding space owned by anchors). The above property counts do not include Beaver Valley Mall in Monaca, Pennsylvania because that property has been classified as “held for sale” as of September 30, 2016.

There are 21 operating retail properties in our portfolio that we consolidate for financial reporting purposes. These consolidated operating properties have a total of 18.0 million square feet, of which we own 13.7 million square feet. The six operating retail properties that are owned by unconsolidated partnerships with third parties have a total of 4.1 million square feet, of which 2.8 million square feet are owned by such partnerships.

The development and redevelopment portion of our portfolio contains four properties in two states, with two classified as “mixed use” (a combination of retail and other uses), one is classified as “retail” (redevelopment of The Gallery at Market East into the Fashion Outlets of Philadelphia (“Fashion Outlets of Philadelphia”)), and one classified as “other.”

Our primary business is owning and operating retail shopping malls, which we primarily do through our operating partnership, PREIT Associates, L.P. (“PREIT Associates”). We provide management, leasing and real estate development services through PREIT Services, LLC (“PREIT Services”), which generally develops and manages properties that we consolidate for financial reporting purposes, and PREIT-RUBIN, Inc. (“PRI”), which generally develops and manages properties that we do not consolidate for financial reporting purposes, including properties in which we own interests through partnerships with third parties and properties that are owned by third parties in which we do not have an interest. PRI is a taxable REIT subsidiary, as defined by federal tax laws, which means that it is able to offer additional services to tenants without jeopardizing our continuing qualification as a REIT under federal tax law.

Net income for the three months ended September 30, 2016 was $2.9 million, an increase of $39.2 million compared to net loss of $36.2 million for the three months ended September 30, 2015. This increase was primarily due to a decrease of impairment of assets from $51.4 million in three months ended September 30, 2015 to $9.9 million in the three months ended September 30, 2016, a $13.6 million decrease in operating expenses (primarily due to property sales) and a decrease of $2.5 million in interest expense, partially offset by a decrease in gains on sales of real estate of $12.4 million, and an $8.2 million decrease in base rent as compared to the three months ended September 30, 2015.

Net income for the nine months ended September 30, 2016 was $14.0 million, an increase of $98.9 million compared to net loss of $84.8 million for the nine months ended September 30, 2015. This increase was primarily due to a decrease in impairment of assets from $86.3 million in the nine months ended September 30, 2015 to $24.6 million in the nine months ended September 30, 2016, $23.0 million of gains on the sales of real estate assets in the nine months ended September 30, 2016, decreases of $13.7 million and $7.3 million in depreciation and amortization expenses and interest expense, respectively, as compared to the nine months ended September 30, 2016, $3.4 million in acquisition costs primarily related to Springfield Town Center in 2015 that did not recur in 2016, and $1.8 million of shareholder activist defense costs incurred in 2015 that did not recur in 2016.

We evaluate operating results and allocate resources on a property-by-property basis, and do not distinguish or evaluate our consolidated operations on a geographic basis. Due to the nature of our operating properties, which involve retail shopping, we have concluded that our individual properties have similar economic characteristics and meet all other aggregation criteria. Accordingly, we have aggregated our individual properties into one reportable segment. In addition, no single tenant accounts for 10% or more of consolidated revenue, and none of our properties are located outside the United States.


20


Current Economic Conditions and Our Near Term Capital Needs

The conditions in the economy have caused relatively slow job growth and have caused fluctuations and variations in retail sales, business and consumer confidence, and consumer spending on retail goods. As a result, the sales and profit performance of certain retailers has fluctuated, and in some cases, has led to bankruptcy filings by them. We continue to adjust our plans and actions to take into account the current environment as it evolves. In particular, we continue to contemplate ways to maintain or reduce our leverage through a variety of means available to us, subject to and in accordance with the terms of our Credit Agreements. These steps might include (i) obtaining capital from joint ventures or other partnerships or arrangements involving our contribution of assets with institutional investors, private equity investors or other REITs, or through sales of properties or interests in properties with values in excess of their mortgage loans and application of the excess proceeds to debt reduction, and (ii) obtaining equity capital, including through the issuance of common or preferred equity securities if market conditions are favorable, or through other actions.

Capital Improvements, Redevelopment and Development Projects

At our operating properties, we might engage in various types of capital improvement projects. Such projects vary in cost and complexity, and can include building out new or existing space for individual tenants, upgrading common areas or exterior areas such as parking lots, or redeveloping the entire property, among other projects. Project costs are accumulated in “Construction in progress” on our consolidated balance sheet until the asset is placed into service, and amounted to $98.9 million as of September 30, 2016.

In 2014, we entered into a 50/50 joint venture with The Macerich Company (“Macerich”) to redevelop the Fashion Outlets of Philadelphia. As we redevelop the Fashion Outlets of Philadelphia, operating results in the short term, as measured by sales, occupancy, real estate revenue, property operating expenses, NOI and depreciation, will likely be negatively affected until the newly constructed space is completed, leased and occupied.

We are also engaged in several types of development projects. However, we do not expect to make any significant investment in these projects in the short term, other than the redevelopment of the Fashion Outlets of Philadelphia.

CRITICAL ACCOUNTING POLICIES

Critical Accounting Policies are those that require the application of management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that might change in subsequent periods. In preparing the unaudited consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. In preparing the financial statements, management has utilized available information, including historical experience, industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality. Management has also considered events and changes in property, market and economic conditions, estimated future cash flows from property operations and the risk of loss on specific accounts or amounts in determining its estimates and judgments. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may affect comparability of our results of operations to those of companies in similar businesses. The estimates and assumptions made by management in applying Critical Accounting Policies have not changed materially during 2016 or 2015 except as otherwise noted, and none of these estimates or assumptions have proven to be materially incorrect or resulted in our recording any significant adjustments relating to prior periods. We will continue to monitor the key factors underlying our estimates and judgments, but no change is currently expected.
For additional information regarding our Critical Accounting Policies, see “Critical Accounting Policies” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2015.

Asset Impairment

Real estate investments and related intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the property might not be recoverable. A property to be held and used is considered impaired only if management’s estimate of the aggregate future cash flows, less estimated capital expenditures, to be generated by the property, undiscounted and without interest charges, are less than the carrying value of the property. This estimate takes into consideration factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors. In addition, these estimates may consider a probability weighted cash flow estimation approach

21


when alternative courses of action to recover the carrying amount of a long-lived asset are under consideration or when a range of possible values is estimated.
The determination of undiscounted cash flows requires significant estimates by management, including the expected course of action at the balance sheet date that would lead to such cash flows. Subsequent changes in estimated undiscounted cash flows arising from changes in the anticipated action to be taken with respect to the property could impact the determination of whether an impairment exists and whether the effects could materially affect our net income. To the extent estimated undiscounted cash flows are less than the carrying value of the property, the loss will be measured as the excess of the carrying amount of the property over the estimated fair value of the property.
Assessment of our ability to recover certain lease related costs must be made when we have a reason to believe that the tenant might not be able to perform under the terms of the lease as originally expected. This requires us to make estimates as to the recoverability of such costs.
 
See “Results of Operations” for a description of the losses on impairment of assets recorded during the three and nine months ended September 30, 2016 and 2015.

New Accounting Developments

In August 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-15 - Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows, including classification guidance for distributions received from equity method investments. The standard is effective for annual reporting periods beginning after December 15, 2017, however early adoption is permitted. The standard requires the use of the retrospective transition method. The Company is in the process of evaluating the impact of this new guidance.

In March 2016, the FASB issued guidance intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The new guidance allows for entities to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. In addition, the guidance allows employers to withhold shares to satisfy minimum statutory tax withholding requirements up to the employees’ maximum individual tax rate without causing the award to be classified as a liability. The guidance also stipulates that cash paid by an employer to a taxing authority when directly withholding shares for tax-withholding purposes should be classified as a financing activity on the statement of cash flows. This guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is in the process of evaluating the impact of this new guidance.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to record operating and financing leases as assets and liabilities on the balance sheet and lessors to expense costs that are not initial direct leasing costs. This standard will be effective for the first annual reporting period beginning after December 15, 2018. The Company is evaluating the effect that ASU No. 2016-02 will have on its consolidated financial statements and related disclosures.
 
In 2016, the Company adopted Accounting Standards Update (“ASU”) No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The Company evaluated the application of ASU No. 2015-02 and concluded that no change was required to its accounting of its interests in less than wholly owned joint ventures, however, the Operating Partnership now meets the criteria as a variable interest entity. The Company’s significant asset is its investment in the Operating Partnership, and consequently, substantially all of the Company’s assets and liabilities represent those assets and liabilities of the Operating Partnership. All of the Company’s debt is also an obligation of the Operating Partnership.
 
In March 2015, the FASB issued “Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” and “Interest—Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” which intend to simplify the presentation of debt issuance costs. This guidance provides an amendment to the accounting guidance related to the presentation of debt issuance costs and is effective for fiscal years beginning after December 15, 2015, and we have adopted this guidance as of January 1, 2016.  This guidance is applied retrospectively to all prior periods.  Under the new guidance, debt issuance costs related to a note shall be reported in the Consolidated Balance Sheets as a direct deduction from the face amount of that note.  In this regard, debt issuance costs shall not be classified separately from related debt obligations as a deferred charge.  Therefore, as a result of adopting this guidance, the Company reclassified in its Consolidated Balance Sheets $4.2 million of debt issuance costs, net of

22


accumulated amortization, at December 31, 2015, from “Deferred costs and other assets, net” to “Mortgage loans payable,” and $2.0 million of debt issuance costs at December 31, 2015, from “Deferred costs and other assets, net” to “Term loans,” thereby decreasing the carrying value of our recognized debt obligations for presentational purposes.

In May 2014, the FASB issued “Revenue from Contracts with Customers.” The objective of this new standard is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The core principle of this new standard is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. The new guidance is effective for annual reporting periods beginning after December 15, 2017 for public companies. Entities have the option of using either a full retrospective or modified approach to adopt this standard. We are currently evaluating the new guidance and have not determined the impact this standard might have on our consolidated financial statements, nor have we decided upon the method of adoption.
 

OFF BALANCE SHEET ARRANGEMENTS

We have no material off-balance sheet items other than the unconsolidated partnerships described in note 3 to the unaudited consolidated financial statements and in the “Overview” section above.


23




RESULTS OF OPERATIONS

Occupancy

The table below sets forth certain occupancy statistics for our properties as of September 30, 2016 and 2015:
 
 
Occupancy (1) at September 30,
 
Consolidated
Properties
 
Unconsolidated
Properties(2)
 
Combined(2)(3)
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
Retail portfolio weighted average:
 
 
 
 
 
 
 
 
 
 
 
Total excluding anchors
92.1
%
 
91.7
%
 
93.8
%
 
94.1
%
 
92.5
%
 
92.2
%
Total including anchors
94.6
%
 
94.2
%
 
95.0
%
 
95.2
%
 
94.7
%
 
94.4
%
Malls weighted average:
 
 
 
 
 
 
 
 
 
 
 
Total excluding anchors
92.1
%
 
91.7
%
 
94.8
%
 
94.0
%
 
92.3
%
 
91.9
%
Total including anchors
94.6
%
 
94.2
%
 
96.4
%
 
95.9
%
 
94.8
%
 
94.4
%
Other retail properties
N/A

 
N/A

 
93.8
%
 
94.6
%
 
93.8
%
 
94.6
%
_________________________
(1) 
Occupancy for both periods presented includes all tenants irrespective of the term of their agreements. Retail portfolio and mall occupancy for all periods presented excludes properties sold or classified as held for sale in 2016 and 2015, and the Fashion Outlets of Philadelphia because the property is under redevelopment.
(2) 
We own a 25% to 50% interest in each of our unconsolidated properties and do not control such properties. Our percentage ownership is not necessarily indicative of the legal and economic implications of our ownership interest. See "—Use of Non GAAP Measures" for further details on our ownership interests in our unconsolidated properties.
(3) 
Combined occupancy is calculated by using occupied gross leasable area (“GLA”) for consolidated and unconsolidated properties and dividing by total GLA for consolidated and unconsolidated properties.



24


Leasing Activity

The table below sets forth summary leasing activity information with respect to our consolidated and unconsolidated properties for the three months ended September 30, 2016:
 
 
 
Initial Gross Rent Spread (1)
 
Avg Rent Spread (2)
 
Annualized Tenant Improvements psf (3)
 
 
Number
 
GLA
 
Term
 
Initial Rent psf
 
Previous Rent psf
 
$
 
%
 
%
 
Non Anchor
New Leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Under 10,000 sf
 
24

 
50,599

 
7.5

 
$
59.71

 
 N/A
 
N/A
 
N/A
 
N/A
 
$
11.73

Over 10,000 sf
 

 

 

 

 
 N/A
 
N/A
 
N/A
 
N/A
 

Total New Leases
 
24

 
50,599

 
7.5

 
$
59.71

 
 N/A
 
 N/A
 
 N/A
 
 N/A
 
$
11.73

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewal Leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Under 10,000 sf
 
36

 
105,880

 
4.3

 
$
50.42

 
$
48.24

 
$
2.18

 
4.5%
 
12.0%
 
$
0.39

Over 10,000 sf
 
4

 
105,957

 
3.5

 
14.26

 
13.41

 
0.85

 
6.3%
 
8.0%
 

Total Fixed Rent
 
40

 
211,837

 
4.2

 
$
32.33

 
$
30.82

 
$
1.51

 
4.9%
 
11.2%
 
$
0.21

Percentage in Lieu
 
2

 
12,402

 
2.0

 
$
14.99

 
$
22.73

 
$
(7.74
)
 
(34.1)%
 
N/A
 
$

Total Renewal Leases
 
42

 
224,239

 
4.1

 
$
31.37

 
$
30.37

 
$
1.00

 
3.3%
 
N/A
 
$
0.21

Total Non Anchor(4)
 
66

 
274,838

 
5.3

 
$
36.59