Table of Contents

Introduction

Company Information

2

Earnings Release

3

2020 Earnings Guidance

9

Changes in Funds from Operations for the Three Months and Year Ended December 31, 2019

11

Market Capitalization and Capital Resources

12

Operating Results

Statement of Operations – Three Months and Year Ended December 31, 2019 and 2018

13

Computation of Earnings Per Share – Three Months and Year Ended December 31, 2019 and 2018

14

Reconciliation of Net Operating Income and EBITDAre – Three Months and Year Ended December 31, 2019 and 2018

15

Reconciliation of Net Income (GAAP Measure) to Net Operating Income from Consolidated Properties (Non-GAAP Measure) -  Three Months Ended December 31, 2019 and December 31, 2018

16

Reconciliation of Equity in Income of Partnerships to Net Operating Income from Equity Method Investments, at Ownership Share (Non-GAAP Measure) - Three Months Ended December 31, 2019 and December 31, 2018

17

Reconciliation of Net Income (GAAP Measure) to Net Operating Income from Consolidated Properties (Non-GAAP Measure) - Year Ended December 31, 2019 and December 31, 2018

18

Reconciliation of Equity in Income of Partnerships to Net Operating Income from Equity Method Investments, at Ownership Share (Non-GAAP Measure) – Year Ended December 31, 2019 and December 31, 2018

19

Reconciliation of Funds From Operations and Funds Available for Distribution – Three Months and Year Ended December 31, 2019 and 2018

20

Condensed Consolidated Balance Sheet

22

Assets and Liabilities - Equity Method Investments, at Ownership Share

23

Operating Statistics

Leasing Activity Summary – Three Months Ended December 31, 2019

24

Leasing Activity Summary – Year Ended December 31, 2019

25

Summarized Sales and Rent Per Square Foot and Occupancy Percentages

26

Mall Occupancy Percentage and Sales Per Square Foot

27

Top Twenty Tenants

28

Lease Expirations

29

Property Information

30

Balance Sheet

Investment in Real Estate - Consolidated Properties

32

Investment in Real Estate - Equity Method Investments at Ownership Share

33

Anchor Replacement Summary

34

Property Redevelopment Table

35

Capital Expenditures – Three Months and Year Ended December 31, 2019

36

Debt Analysis

37

Debt Schedule

39

Selected Debt Ratios

40

Forward Looking Statements

41

Definitions

42

Research Coverage

Company

Analyst

Phone Number

Barclays Capital

Ross Smotrich

(212) 526-2306

Citi Investment Research

Michael Bilerman

Christy McElroy

(212) 816-1383

(212) 816-6981

Goldman Sachs & Co. LLC

Caitlin Burrows

(212) 902-4736

Green Street Advisors

Vince Tibone

(949) 640-8780

JP Morgan

Michael W. Mueller

(212) 622-6689

Stifel Nicolaus

Simon Yarmak

(443) 224-1346

SunTrust Robinson Humphrey

Ki Bin Kim

(212) 303-4124

Three Months Ended

December 31,

Year Ended

December 31,

(per share amounts)

2019

2018

2019

2018

Net income (loss) - basic and diluted

$

(0.29

)

$

(1.23

)

$

(0.52

)

$

(1.98

)

FFO

$

0.28

$

0.42

$

1.33

$

1.43

FFO, as adjusted

$

0.34

$

0.52

$

1.05

$

1.54

FFO from assets sold in 2019

$

-

$

(0.01

)

$

(0.02

)

$

(0.04

)

FFO, as adjusted for assets sold

$

0.34

$

0.51

$

1.03

$

1.50

•

Same Store NOI, excluding lease termination revenue, decreased 3.0% for the three months ended December 31, 2019 compared to December 31, 2018.  

•

The quarter was impacted by an incremental decrease in revenue of $2.3 million as a result of bankruptcies, related store closings and associated write-offs.  This was partially offset by incremental revenues from anchor replacements and other leasing activity of $1.1 million in the quarter.

•

Same Store NOI, excluding lease termination revenue, decreased 2.5% for the year ended December 31, 2019 compared to December 31, 2018.  Excluding the impact of revenue lost from bankruptcy-related store closings, Same Store NOI, excluding lease termination was positive.  

•

For the full year ended December 31, 2019, the Company was impacted by $6.9 million of lower revenue compared to the prior year as a result of bankruptcies, related store closings and associated write-offs, which was partially offset by $3.5 million in incremental rent from anchor replacements and other leasing activity.

•

NOI-weighted sales at our Core Malls increased to $547 per square foot.  Core Mall sales per square foot reached $539, a 5.6% increase over the prior year.  Average comparable sales per square foot at our top six properties rose 5.0% over the prior year to $646 with two properties generating sales over $700 per square foot.  

•

Core Mall total occupancy was 95.5%, an increase of 110 basis points compared to September 30, 2019. Core Mall non-anchor occupancy declined by only 70 basis points from last year despite the impact from bankruptcies and chain liquidations that resulted in 71 store closures in 274,000 square feet during the year ended December 31, 2019.

•

Non-anchor Leased space exceeds occupied space by 170 basis points when factoring in executed new leases slated for future occupancy, excluding Fashion District Philadelphia.

•

Average renewal spreads for the full year were strong in our wholly-owned portfolio at 6.7% for spaces less than 10,000 square feet and 5.5% for large format spaces.   Average renewal spreads for the entire portfolio were 2.5% for the year.

•

As part of the Company’s plan to improve our balance sheet, since last quarter, the Company has executed agreements of sale with expected gross proceeds of $312.6 million.  These include an agreement for the sale-leaseback of five properties for $153.6 million, the sale of land parcels for multifamily development in the amount of $125.3 million, $29.9 million related to operating outparcel sales, and $3.75 million related to the sale of land for hotel development.  Upon closing of these transactions, the Company expects to net nearly $200 million in additional liquidity.  These transactions, together with potential modifications to our credit facility covenants, create the runway needed in order to complete the execution of our business plan.

•

The Company anticipates not meeting certain financial covenants during 2020.  The Company has had discussions with its lenders to modify the terms of its debt covenants to ensure compliance through September 30, 2020 and anticipates further discussions with lenders to modify the terms of the debt agreements on a long term basis.  

•

Excluding Fashion District Philadelphia, 425,000 square feet of leases are signed for 2020 openings, which is expected to contribute annual gross rent of $13.1 million.

•

On September 19, 2019, the Company’s 50/50 joint venture with Macerich opened Fashion District Philadelphia, a four-level retail hub in Center City spanning nearly 900,000 square feet across three city blocks in the heart of downtown Philadelphia. The project, which represents an impressive collection of retail, entertainment and co-working uses, is 87% committed. Noteworthy post-opening additions include: AMC Theaters, Round One, Wonderspaces, Armani Exchange Outlet and Sephora.  Upcoming additions include: Primark, Industrious, Kate Spade, DSW Shoes and more.

•

At Plymouth Meeting Mall, Michael’s will join recently opened Burlington, DICK’s Sporting Goods, Miller’s Ale House and Edge Fitness in the location of the former Macy’s at the end of February 2020.  

•

On October 12, 2019, the expansion wing at Woodland Mall opened anchored by a brand new, top-quality Von Maur Department Store.  New tenants in the wing include: Urban Outfitters, Tricho Salon & Spa, Williams-Sonoma, Black Rock Bar & Grill, Paddle North and The Cheesecake Factory.  In Spring 2020, the expansion area will welcome White House | Black Market and Sephora.  

•

At Willow Grove Park, Yard House opened in December 2019 and construction continues on the 51,000 square foot Studio Movie Grill, which is projected to open in the first half of 2020.

•

At Valley Mall, DICK’s Sporting Goods is underway with fixturing and stocking with an anticipated opening in March 2020.  

•

At Dartmouth Mall, the 43,000 square foot Burlington is expected to open in March 2020.  The redevelopment plan also includes approximately 35,000 square feet of new outparcels to capitalize on the property’s location.

•

Net loss attributable to PREIT common shareholders was $21.7 million, or $0.29 per basic and diluted share for the three months ended December 31, 2019, compared to net loss attributable to PREIT common shareholders of $85.6 million, or $1.23 per basic and diluted share for the three months ended December 31, 2018. 

•

Same Store NOI decreased by $2.4 million, or 3.8%.  Revenue from new store openings, including contributions from replacement anchors, mitigated the impact of revenue lost to bankruptcies and associated store closings.  Lease termination revenue was $0.6 million less than the prior year’s quarter.

•

Non Same Store NOI decreased by $2.0 million, primarily driven by the disposition of Wyoming Valley Mall, anchor closings and associated co-tenancy rents at Valley View Mall and the sale of the Whole Foods parcel at Exton Square, slightly offset by contribution from Fashion District Philadelphia.

•

FFO for the three months ended December 31, 2019 was $0.28 per share and OP Unit compared to $0.42 per share and OP Unit for the three months ended December 31, 2018.  Adjustments to FFO in the 2019 quarter included $0.04 per share of provision for employee separation expenses and $0.03 of impairment of development land parcels.  Adjustments to FFO in the fourth quarter of 2018 included a loss on mortgage note impairment, provision for employee separation expenses, and net insurance recoveries that totaled $0.10 per share.

•

General and administrative expenses were impacted by the new lease accounting standard that now limits the capitalization of certain leasing costs. We expensed $1.1 million ($0.01 per share) of costs in the three months ended December 31, 2019 that would have been capitalized under the prior standard.

Closed

Under Contract

Total

Gainesville Development Parcel

$

15,000

$

-

$

15,000

New Garden Township Parcel⁽¹⁾

8,250

-

8,250

Wiregrass mortgage loan sale

8,000

-

8,000

Whole Foods Parcel⁽²⁾

10,500

-

10,500

Capital City transaction - incremental capacity⁽³⁾

40,000

-

40,000

Gloucester Premium Outlets Parcel

937

-

937

Fashion District Philadelphia Term Loan expansion ⁽⁴⁾

25,500

-

25,500

Valley View Mall Outparcel Sale

1,400

-

1,400

Sale of Multiple Outparcels ⁽⁵⁾

4,000

8,000

12,000

Sale of Land Parcels related to Hotel Development

-

3,750

3,750

Sale of Land Parcels for Multifamily Development

-

125,337

125,337

Sale Leaseback transaction (5 malls) ⁽⁵⁾

-

57,000

57,000

Total

$

113,587

$

194,087

$

307,674

⁽¹⁾ Represents cash proceeds; does not include $2.8 million of preferred stock received by the Company.

⁽²⁾ Represents the net liquidity to the Company after adjusting for line capacity.  Sale price was $22.1 million.

⁽³⁾ Represents the Company's approximate incremental borrowing capacity by the end of 2019, net of the Capital City mortgage loan defeasance.

⁽⁴⁾ Represents the Company's share of amounts available under the expanded capacity of the Fashion District Philadelphia term loan.

⁽⁵⁾ Represents the net liquidity to the Company after adjusting for line capacity.

Comp store sales for the year ended December 31, 2018

$

510

Organic sales growth

14

Impact of non-core malls

15

Comp store sales for the year ended December 31, 2019

$

539

⁽¹⁾ Based on reported sales by all comparable non-anchor tenants that lease individual spaces of less than 10,000 square feet and have occupied the space for at least 24 months.

2020 Guidance Range

(Estimates per diluted share)

Low

High

Net loss attributable to common shareholders

$

(0.68

)

$

(0.43

)

Depreciation and amortization, non-controlling interest and other

1.72

1.71

FFO per share

$

1.04

$

1.28

   Adjustments

-

-

FFO per share, as adjusted

$

1.04

$

1.28

•

Same Store NOI, excluding termination revenue is expected to grow between 0.5% and 1.5% with wholly-owned properties in the range of (0.2%) to 0.8% and joint venture properties increasing between 4.7% and 6.0%;

•

Lease termination revenues of $1.0 to $2.0 million;

•

Share of NOI from Fashion District included in Same Store NOI in Q4 2020;

•

Bankruptcy and store closings reserve of between $2.0 at the midpoint to $3.0 million at the low end of Same Store NOI guidance;

•

Land Sale Gains are expected to be between $14.4 and $28.8 million inclusive of the assumption that we close the hotel land sales and between two and four of the multifamily land sales in 2020;

•

Weighted average shares and OP units of 81.0 million for FFO and 77.0 million for Net (loss) income;

•

Capital expenditures in the range of $125 to $150 million, including redevelopment expenditures, recurring capital expenditures and tenant allowances; and

•

Our guidance does not incorporate the effects of the recently executed sale leaseback transaction, which are estimated to be approximately $0.06 dilutive to FFO per share on an annual basis.

•

Our guidance does not assume any other capital market transactions.

2019

2020 Guidance

Same Store NOI Growth

Actual

Low

Midpoint

High

Low

Midpoint

High

Same store NOI, excluding termination fees

Wholly-owned properties

$

184.5

$

184.1

$

185.1

$

186.0

-0.2

%

0.3

%

0.8

%

Joint venture properties

28.5

29.9

30.1

30.3

4.7

%

5.3

%

6.0

%

213.0

214.0

215.2

216.3

0.5

%

1.0

%

1.5

%

Non-same store NOI

13.2

11.2

11.4

11.6

NOI, excluding lease termination fees

226.2

225.2

226.6

227.9

Lease termination fees

1.5

1.0

1.5

2.0

Total NOI

$

227.7

$

226.2

$

228.1

$

229.9

G&A and leasing expenses

G&A

(46.0

)

(43.0

)

(42.5

)

(42.0

)

Leasing costs expensed under ASC 842

(0.5

)

-

-

-

Other income (expenses)

Corporate revenues

1.9

0.8

0.9

1.0

Land and outparcel sale gains

3.3

14.4

21.6

28.8

Provision for employee separation expenses

(3.7

)

-

-

-

Impairment of mortgage loan/land parcel

(3.6

)

-

-

-

Other, including non-real estate depreciation

(1.7

)

(2.1

)

(2.1

)

(2.0

)

Insurance losses (recoveries)

4.4

-

-

-

Capital costs

Interest expense, gross

(88.5

)

(85.0

)

(84.8

)

(84.6

)

Capitalized interest

13.8

-

-

-

Preferred dividends

(27.4

)

(27.4

)

(27.4

)

(27.4

)

Gain on debt extinguishment, net

24.9

-

-

-

Funds from Operations (FFO)

$

104.6

$

83.9

$

93.8

$

103.7

Adjustments

Impairment of mortgage loan/land parcel

3.6

-

-

-

Provision for employee separation expenses

3.7

-

-

-

Insurance recoveries, net

(4.4

)

-

-

-

Gain on debt extinguishment, net

(24.9

)

-

-

-

FFO as adjusted

$

82.6

$

83.9

$

93.8

$

103.7

Weighted average shares, including OP units

78.9

81.0

81.0

81.0

FFO per share

$

1.33

$

1.04

$

1.16

$

1.28

FFO, as adjusted per share

$

1.05

$

1.04

$

1.16

$

1.28

2019

2020 Guidance

Actual

Low

Midpoint

High

Net loss

$

(13.0

)

$

(25.4

)

$

(15.5

)

$

(5.6

)

Depreciation and amortization

146.3

136.6

136.6

136.6

Gain on sales of operating assets

(0.1

)

-

-

-

Impairment of real estate assets, other

1.5

0.1

0.1

0.1

Gain on sales of non operating assets

(2.7

)

-

-

-

Preferred share dividends

(27.4

)

(27.4

)

(27.4

)

(27.4

)

Funds From Operations (FFO)

$

104.6

$

83.9

$

93.8

$

103.7

Adjustments

Impairment of mortgage loan/land parcel

3.6

-

-

-

Provision for employee separation expenses

3.7

-

-

-

Insurance recoveries, net

(4.4

)

-

-

-

Gain on debt extinguishment, net

(24.9

)

-

-

-

FFO as adjusted

$

82.6

$

83.9

$

93.8

$

103.7

Net loss

(13.0

)

(25.4

)

(15.5

)

(5.6

)

Preferred share dividends

(27.4

)

(27.4

)

(27.4

)

(27.4

)

Noncontrolling interest

2.1

1.2

1.1

1.0

Dividends on unvested restricted shares

(0.9

)

(0.9

)

(0.9

)

(0.9

)

Net loss used to calculate EPS

$

(39.2

)

$

(52.5

)

$

(42.7

)

$

(32.9

)

Weighted average shares

75.2

77.0

77.0

77.0

Net loss per share

$

(0.52

)

$

(0.68

)

$

(0.55

)

$

(0.43

)

(in thousands, except per share amounts)

Three Months

Ended

December 31,

2019

Per Diluted

Share and OP

Unit

Year Ended

December 31,

2019

Per Diluted

Share and OP

Unit

Funds from Operations, as adjusted December 31, 2018

$

40,576

$

0.52

$

120,431

$

1.54

Changes - Q4 2018 to Q4 2019

Contribution from anchor replacements and new box tenants

888

0.010

2,918

0.035

Impact from 2019 bankruptcies

(2,214

)

(0.030

)

(5,653

)

(0.070

)

Other leasing activity, including base rent and net CAM and real estate tax recoveries

207

0.005

(1,682

)

(0.020

)

Lease termination revenue

(600

)

(0.010

)

(6,726

)

(0.085

)

Credit losses

(237

)

(0.005

)

(378

)

(0.005

)

Other

24

-

560

0.005

Same Store NOI from unconsolidated properties

(429

)

(0.005

)

(1,563

)

(0.020

)

Same Store NOI

(2,361

)

(0.030

)

(12,524

)

(0.160

)

Non Same Store NOI

(1,968

)

(0.025

)

(7,476

)

(0.095

)

Dilutive effect of asset sales

(666

)

(0.010

)

(1,724

)

(0.020

)

General and administrative expenses

(858

)

(0.010

)

(1,552

)

(0.020

)

Capitalization of leasing costs

(1,360

)

(0.015

)

(6,116

)

(0.080

)

Gain on sales of non-operating real estate

(5,408

)

(0.070

)

(5,383

)

(0.070

)

Other

394

0.005

(481

)

(0.005

)

Interest expense, net

(1,692

)

(0.020

)

(2,525

)

(0.030

)

Increase in weighted average shares

-

(0.005

)

-

(0.010

)

Funds from Operations, as adjusted December 31, 2019

$

26,657

$

0.34

$

82,650

$

1.05

Insurance recoveries, net

(132

)

-

4,362

0.055

Gain on debt extinguishment, net

27

-

24,859

0.320

Impairment of development land parcel

(2,098

)

(0.025

)

(3,562

)

(0.045

)

Provision for employee separation expense

(2,611

)

(0.035

)

(3,689

)

(0.045

)

Funds from Operations December 31, 2019

$

21,843

$

0.28

$

104,620

$

1.33

December 31,

2019

2018

MARKET CAPITALIZATION

EQUITY CAPITALIZATION

Common Shares Outstanding

77,550

70,495

OP Units Outstanding

2,023

8,272

Total Common Shares and OP Units Outstanding

79,573

78,767

Equity Market Capitalization—Common Shares and OP Units

$

424,124

$

467,880

Series B Preferred Shares, Nominal Value

86,250

86,250

Series C Preferred Shares, Nominal Value

172,500

172,500

Series D Preferred Shares, Nominal Value

125,000

125,000

Total Equity Market Capitalization

$

807,874

$

851,630

DEBT CAPITALIZATION

Secured Debt Balance ⁽¹⁾

$

1,280,208

$

1,408,325

Unsecured Debt Balance ^{(2) (3)}

805,000

615,000

Debt Capitalization

$

2,085,208

$

2,023,325

TOTAL MARKET CAPITALIZATION

$

2,893,082

$

2,874,955

Equity Capitalization/Total Market Capitalization

27.9

%

29.6

%

Debt Capitalization/Total Market Capitalization

72.1

%

70.4

%

Unsecured Debt Balance/Total Debt

38.6

%

30.4

%

CAPITAL RESOURCES

Cash and Cash Equivalents

$

26,922

$

27,367

Revolving Facility

400,000

400,000

Amount Outstanding

(255,000

)

(65,000

)

Letters of Credit

-

(5,126

)

Available Revolving Facility ⁽⁴⁾

$

145,000

$

329,874

Term Loans

700,500

675,000

Amount Borrowed

(700,500

)

(675,000

)

Available Term Loans

$

-

$

-

TOTAL

$

171,922

$

357,241

Shelf Registration

$

500,000

$

1,000,000

⁽¹⁾

Includes consolidated mortgage debt, our share of mortgage debt from equity method investments, and $150,500 of secured debt from our share of the FDP Term Loan.

⁽²⁾

The unsecured debt balance includes a 2018 Revolving Facility balance of $255,000 as of December 31, 2019 and $65,000 as of December 31, 2018.

⁽³⁾

The unsecured debt balance includes a Term Loan balance of $550,000 as of December 31, 2019 and 2018, respectively.

⁽⁴⁾

The available Credit Facility borrowings are subject to covenants that may restrict amounts that can be borrowed. Following recent property sales, the NOI from the Company’s remaining unencumbered properties is at a level such that the incremental unsecured amount that the Company may borrow as of December 31, 2019 within the Unencumbered Debt Yield covenant, under the $400.0 million 2018 Revolving Facility, is an aggregate of $25.9 million.

Three Months Ended

December 31,

Year Ended

December 31,

(in thousands of dollars)

2019

2018

2019

2018

REVENUE:

Real estate revenue:

Lease revenue

$

78,643

$

85,162

$

302,311

$

324,829

Expense reimbursements

4,637

5,014

19,979

21,322

Other real estate revenue

5,049

5,149

12,668

12,078

Total real estate revenue

88,329

95,325

334,958

358,229

Other income

393

717

1,834

4,171

Total revenue

88,722

96,042

336,792

362,400

EXPENSES:

Operating expenses:

Property operating expenses:

CAM and real estate taxes

(27,369

)

(28,666

)

(113,260

)

(113,235

)

Utilities

(3,383

)

(3,847

)

(14,733

)

(15,990

)

Other property operating expenses

(2,750

)

(3,257

)

(8,565

)

(12,007

)

Total property operating expenses

(33,502

)

(35,770

)

(136,558

)

(141,232

)

Depreciation and amortization

(39,699

)

(32,611

)

(137,784

)

(133,116

)

General and administrative expenses

(12,591

)

(10,373

)

(46,010

)

(38,342

)

Provision for employee separation expenses

(2,611

)

(183

)

(3,689

)

(1,139

)

Insurance recoveries, net

(132

)

714

4,362