Exhibit 99.1

 

CONTACT: AT THE COMPANY

Mario Ventresca

EVP & CFO

(215) 875-0703

 

Heather Crowell

EVP, Strategy and Communications

(215) 454-1241

heather.crowell@preit.com

 

PREIT Reports Fourth Quarter and Full Year 2020 Results

 

 

Core Mall Total Leased Space reached 91.5%

 

Four Anchor Replacement Transactions Executed

 

Traffic approaching pre-COVID levels across portfolio

 

Philadelphia, March 11, 2021 - PREIT (NYSE: PEI) today reported results for the three months and year ended December 31, 2020.  A description of each non-GAAP financial measure and the related reconciliation to the comparable GAAP financial measure is located in the tables accompanying this release.

 

 

 

“The PREIT team, and portfolio, proved to be resilient as we navigated uncertain terrain.  Our targeted strategy of dispositions and anchor replacements over the past several years created a real estate portfolio of bullseye locations in high barrier-to-entry markets that stands the test of time,” said Joseph F. Coradino, Chairman and CEO of PREIT. “Our portfolio is comprised of a differentiated mix of uses that attracts robust demand from a variety of non-retail uses, strengthening the Company and fortifying our revenue stream. At the same time, we are well-positioned for a strong return to brick and mortar shopping and leisure as restrictions ease and vaccinations continue.”

 

 

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Leasing and Redevelopment

 

COVID-19 Impact and Response

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Primary Factors Affecting Financial Results for the Three Months Ended December 31, 2020 and 2019

 

All NOI and FFO amounts referenced as primary factors affecting financial results above include our share of unconsolidated properties’ revenues and expenses. Additional information regarding changes in operating results for the three months ended December 31, 2020 and 2019 is included on page 16.

 

Debt Restructuring and Chapter 11 Process

On December 11, 2020, the Company announced that it had successfully completed its financial restructuring and emerged from Chapter 11.

 

The Company’s new credit facility provides the Company access to up to $130 million of new capital to support its operations and continue advancing its strategic priorities. In addition to recapitalizing its business, PREIT's debt maturity schedule has been extended, providing the Company with enhanced financial flexibility. 

 

Asset Dispositions

Multifamily Land Parcels: The Company has executed agreements of sale for land parcels for anticipated multifamily development in the amount of $87.2 million. The agreements are with multiple buyers across five properties for 2,200 units as part of Phase I of the Company’s previously announced multifamily land sale plan.  Closing on the transactions is subject to customary due diligence provisions and securing entitlements.  

 

Hotel Parcels: The Company has an executed agreement of sale to convey a land parcel for anticipated hotel development in the amount of $2.5 million for approximately 125 rooms. Closing on the transaction is subject to customary due diligence provisions and securing entitlements.

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Retail Operations

Due to COVID-related mall closures impacting a significant portion of the year, the Company is not reporting tenant sales at this time.

 

2021 Outlook

The Company is not issuing detailed guidance at this time.

 

 

Conference Call Information

Management has scheduled a conference call for 11:00 a.m. Eastern Time on Friday  
March 12, 2021, to review the Company’s results and future outlook.  To listen to the call, please dial 1-844-885-9139 (domestic toll free), or 1-647-689-4441 (international), and request to join the PREIT call, Conference ID 4671799, at least fifteen minutes before the scheduled start time as callers could experience delays.  Investors can also access the call in a "listen only" mode via the internet at the Company’s website, preit.com.  Please allow extra time prior to the call to visit the site and download the necessary software to listen to the Internet broadcast.  Financial and statistical information expected to be discussed on the call will also be available on the Company’s website.

 

For interested individuals unable to join the conference call, the online archive of the webcast will also be available for one year following the call.

 

About PREIT

PREIT (NYSE:PEI) is a publicly traded real estate investment trust that owns and manages quality properties in compelling markets. PREIT’s robust portfolio of carefully curated retail and lifestyle offerings mixed with destination dining and entertainment experiences are located primarily in the densely-populated eastern U.S. with concentrations in the mid-Atlantic’s top MSAs. Since 2012, the Company has driven a transformation guided by an emphasis on portfolio quality and balance sheet strength driven by disciplined capital expenditures. Additional information is available at www.preit.com or on Twitter or LinkedIn.

 

Rounding

Certain summarized information in the tables above may not total due to rounding.

 

Definitions

 

Funds From Operations (“FFO”)

 

The National Association of Real Estate Investment Trusts (“NAREIT”) defines Funds From Operations (“FFO”), which is a non-GAAP measure commonly used by REITs, as net income (computed in accordance with GAAP) excluding (i) depreciation and amortization of real estate, (ii) gains and losses on sales of certain real estate assets, (iii) gains and losses from change in control and (iv) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. We compute FFO in accordance with standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition, or that interpret the current NAREIT definition differently than we do. NAREIT’s established guidance provides that excluding impairment write downs of depreciable real estate is consistent with the NAREIT definition.

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FFO is a commonly used measure of operating performance and profitability among REITs. We use FFO and FFO per diluted share and unit of limited partnership interest in our operating partnership (“OP Unit”) in measuring our performance against our peers and as one of the performance measures for determining incentive compensation amounts earned under certain of our performance-based executive compensation programs.

FFO does not include gains and losses on sales of operating real estate assets or impairment write downs of depreciable real estate (including development land parcels), which are included in the determination of net loss in accordance with GAAP. Accordingly, FFO is not a comprehensive measure of our operating cash flows. In addition, since FFO does not include depreciation on real estate assets, FFO may not be a useful performance measure when comparing our operating performance to that of other non-real estate commercial enterprises. We compensate for these limitations by using FFO in conjunction with other GAAP financial performance measures, such as net loss and net cash used in operating activities, and other non-GAAP financial performance measures, such as NOI. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net loss (determined in accordance with GAAP) as an indication of our financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available for our cash needs, including our ability to make cash distributions. We believe that net loss is the most directly comparable GAAP measurement to FFO.

When applicable, we also present FFO, as adjusted, and FFO per diluted share and OP Unit, as adjusted, which are non-GAAP measures, for the years ended December 31, 2020 and 2019, respectively, to show the effect of such items as gain or loss on debt extinguishment (including accelerated amortization of financing costs), impairment of assets, provision for employee separation expense, insurance recoveries or losses, net, gain on derecognition of property, loss on hedge ineffectiveness and reorganization expenses which had an effect on our results of operations, but are not, in our opinion, indicative of our ongoing operating performance.

We believe that FFO is helpful to management and investors as a measure of operating performance because it excludes various items included in net loss that do not relate to or are not indicative of operating performance, such as gains on sales of operating real estate and depreciation and amortization of real estate, among others. We believe that Funds From Operations, as adjusted, is helpful to management and investors as a measure of operating performance because it adjusts FFO to exclude items that management does not believe are indicative of our operating performance, such as gain or loss on debt extinguishment (including accelerated amortization of financing costs), impairment of assets, provision for employee separation expense, insurance recoveries or losses, net, gain on derecognition of property, loss on hedge ineffectiveness and reorganization expenses.

When applicable, we also present FFO, as adjusted, and FFO per diluted share and OP Unit, as adjusted, which are non-GAAP measures, for the years ended December 31, 2020 and 2019, respectively, to show the effect of such items as gain or loss on debt extinguishment (including accelerated amortization of financing costs), impairment of assets, provision for employee separation expense, insurance recoveries or losses, net, gain on derecognition of property, loss on hedge ineffectiveness and reorganization expenses which had an effect on our results of operations, but are not, in our opinion, indicative of our ongoing operating performance.

We believe that FFO is helpful to management and investors as a measure of operating performance because it excludes various items included in net loss that do not relate to or are not indicative of operating performance, such as gains on sales of operating real estate and depreciation and amortization of real estate, among others. We believe that Funds From Operations, as adjusted, is helpful to management and investors as a measure of operating performance because it adjusts FFO to exclude items that management does not believe are indicative of our operating performance, such as gain or loss on debt extinguishment (including accelerated amortization of financing costs), impairment of assets, provision for employee separation expense, insurance recoveries or losses, net, gain on derecognition of property, loss on hedge ineffectiveness and reorganization expenses.

 

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Net Operating Income (“NOI”)

 

NOI (a non-GAAP measure) is derived from real estate revenue (determined in accordance with GAAP, including lease termination revenue), minus property operating expenses (determined in accordance with GAAP), plus our pro rata share of revenue and property operating expenses of our unconsolidated partnership investments. NOI does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net loss (determined in accordance with GAAP) as an indication of our financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity. It is not indicative of funds available for our cash needs, including our ability to make cash distributions. We believe NOI is helpful to management and investors as a measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. We believe that net loss is the most directly comparable GAAP measure to NOI. NOI excludes other income, general and administrative expenses, provision for employee separation expenses, interest expense, depreciation and amortization, insurance recoveries, gain/loss on debt extinguishment, gain on derecognition of property, impairment of assets, gains on sales of real estate by equity method investees, equity in loss/income of partnerships, loss on remeasurement of assets by equity method investee, gain on sale of non operating real estate, gain/loss on sale of real estate, impairment of development land parcel, project costs and other expenses and reorganization expenses.

Same Store NOI is calculated using retail properties owned for the full periods presented and excludes properties acquired or disposed of, under redevelopment, or designated as non-core during the periods presented. In 2018, Wyoming Valley Mall was designated as non-core and subsequently conveyed to the lender of the mortgage loan secured by that property in 2019. In 2019, Exton Square Mall and Valley View Mall were designated as non-core and are excluded from Same Store NOI. Non Same Store NOI is calculated using the retail properties excluded from the calculation of Same Store NOI.

 

Financial Information of our Unconsolidated Properties

 

The non-GAAP financial measures of FFO and NOI presented in this press release incorporate financial information attributable to our share of unconsolidated properties. This proportionate financial information is also non-GAAP financial information, but we believe that it is helpful information because it reflects the proportionate contribution from our unconsolidated properties that are owned through investments accounted for under GAAP using the equity method of accounting. Under such method, earnings from these unconsolidated partnerships are recorded in our statements of operations prepared in accordance with GAAP under the caption entitled “Equity in (loss) income of partnerships.”

 

To derive the proportionate financial information from our unconsolidated properties, we multiplied the percentage of our economic interest in each partnership on a property-by-property basis by each line item.  Under the partnership agreements relating to our current unconsolidated partnerships with third parties, we own a 25% to 50% economic interest in such partnerships, and there are generally no provisions in such partnership agreements relating to special non-proportionate allocations of income or loss, and there are no preferred or priority returns of capital or other similar provisions.  While this method approximates our indirect economic interest in our pro rata share of the revenue and expenses of our unconsolidated partnerships, we do not have a direct legal claim to the assets, liabilities, revenues or expenses of the unconsolidated partnerships beyond our rights as an equity owner in the event of any liquidation of such entity.  Our percentage ownership is not necessarily indicative of the legal and economic implications of our ownership interest.  Accordingly, NOI and FFO results based on our share of the results of unconsolidated partnerships do not represent cash generated from our investments in these partnerships.

 

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Core Properties

 

Core Properties include all operating retail properties except for Exton Square Mall and Fashion District Philadelphia.  Valley View Mall was previously designated as a non-core property. In August 2020, a court order assigned a special servicer to operate the property on behalf of the lender of the mortgage loan secured by the property and a court order was issued in September 2020 to conduct a foreclosure sale of the property. Although we have not yet conveyed the property because foreclosure proceedings are ongoing, we no longer operate the property as a result of the court order assigning the special servicer. Core Malls excludes these properties, power centers and Gloucester Premium Outlets.

 

 

 

Forward Looking Statements

This press release contains certain forward-looking statements that can be identified by the use of words such as “anticipate,” “believe,” “estimate,” ”expect,” “intend,” “may,” “project,” and similar expressions. Forward-looking statements relate to expectations, beliefs, projections, future plans, strategies, anticipated events, trends and other matters that are not historical facts. These forward-looking statements reflect our current views about future events, achievements or results and are subject to risks, uncertainties and changes in circumstances that might cause future events, achievements or results to differ materially from those expressed

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or implied by the forward-looking statements. In particular, our business might be materially and adversely affected by the following:

 

 

Additional factors that might cause future events, achievements or results to differ materially from those expressed or implied by our forward-looking statements include those discussed herein and in the sections entitled “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 and in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020 and any subsequent reports we may file with the SEC. We do not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.

 

**     Quarterly supplemental financial and operating     **

**     information will be available on www.preit.com     **

 

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PREIT / 9     Pennsylvania Real Estate Investment Trust

                     Selected Financial Data

 

 

 

 

 

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PREIT / 10     Pennsylvania Real Estate Investment Trust

                     Selected Financial Data

 

 

 

 

⁽¹⁾ The Company had net losses in all periods presented. Therefore, the effects of common share equivalents of 285 and 485 for the three months ended December 31, 2020 and 2019, respectively, and, 380 and 452 for the year ended December 30, 2020 and 2019, respectively, are excluded from the calculation of diluted loss per share for these periods because they would be antidilutive.

 

 

 

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PREIT / 11     Pennsylvania Real Estate Investment Trust

                     Selected Financial Data

 

The following table presents a reconciliation of net loss determined in accordance with GAAP to (i) FFO attributable to common shareholders and OP Unit holders, (ii) FFO, as adjusted, attributable to common shareholders and OP Unit holders, (iii) FFO, as adjusted for assets sold, (iv) FFO attributable to common shareholders and OP Unit holders per diluted share and OP Unit, (v) FFO, as adjusted, attributable to common shareholders and OP Unit holders per diluted share and OP Unit, and (vi) FFO, as adjusted for assets sold per diluted share and OP Unit for the three months and year ended December 31, 2020 and 2019, respectively:

 

 

 

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PREIT / 12     Pennsylvania Real Estate Investment Trust

                     Selected Financial Data

 

NOI for the three months ended December 31, 2020 and 2019:

 

 

 

NOI for the year ended December 31, 2020 and 2019:

 

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PREIT / 13     Pennsylvania Real Estate Investment Trust

                     Selected Financial Data

 

The table below reconciles net loss to NOI of our consolidated properties for the three months and year ended December 31, 2020 and 2019.

 

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PREIT / 14     Pennsylvania Real Estate Investment Trust

                     Selected Financial Data

 

The table below reconciles equity in (loss) income of partnerships to NOI of equity method investments at ownership share for the three months and year ended December 31, 2020 and 2019:

 

 

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PREIT / 15     Pennsylvania Real Estate Investment Trust

                     Selected Financial Data

 

 

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PREIT / 16     Pennsylvania Real Estate Investment Trust

                     Selected Financial Data

 

Changes in Funds from Operations for the three months and year ended December 31, 2020 as compared to the three months and year ended December 31, 2019 (all per share amounts on a diluted basis unless otherwise noted; per share amounts rounded to the nearest half penny; amounts may not total due to rounding)