PENNSYLVANIA REAL ESTATE INVESTMENT TRUST NYSE: PEI
New York, NY - June 2009 History
• Founded in 1960 – One of the first equity REITs in the U.S. • Merged with The Rubin Organization in 1997 – Focus on development and management of institutional quality assets across office, retail, multifamily, industrial and hospitality sectors. – Specialist in assisting financial institutions with REO turnaround – Acquired asset base and management company
2 History (continued)
• Changed strategic focus from diversified property base to retail in 2003 – Acquired 6 malls from The Rouse Company – Sold 19 multifamily properties – Merged with Crown American Realty Trust • $1 billion redevelopment program to be completed in 2010
3 Property Portfolio
Philadelphia Metro Area map on next page
• 56 properties – 38 malls – 14 centers – 4 under development • 35 million square feet
Information presented in this and subsequent slides includes our proportionate share of partnership properties. 4 Philadelphia Metro Area
• 17 properties – 9 malls – 6 centers – 2 under development • 11 million square feet – 32% of portfolio
5 Strategic Objectives
Asset Completion Balance Sheet and Stabilization Stabilization
Equity Recapitalization
6 Redevelopment Assets
2006 Completions 2007 Completions Underway Capital City Mall Beaver Valley Mall Cherry Hill Mall Cumberland Mall Francis Scott Key Mall Gallery at Market East Lycoming Mall Lehigh Valley Mall Plymouth Meeting Mall Patrick Henry Mall Magnolia Mall Voorhees Town Center Mall at Prince Georges New River Valley Mall Wiregrass Commons Mall Valley View Mall 2008 Completions Viewmont Mall Gadsden Mall Wyoming Valley Mall Jacksonville Mall Moorestown Mall
7 Capital Investments
$400 PREITPREIT is is nearing nearing completion completion of of its its five-year,five-year, $1 $1 billion billion redevelopment redevelopment andand development development program program $300 ) ons i l l i $200 n m i (
$100
$0 2006 2007 2008 1Q09 2Q-4Q'09E Acquisition Redevelopment Development
Projected costs are net of any expected tenant reimbursements, parcel sales, tax credits or other incentives. 8 Plymouth Meeting Mall
November 2007 Under Under Construction Construction Under Under Construction Construction
Under Construction
Plaza Shops Under Construction Under Construction
Under Construction
9 Plymouth Meeting Mall
April 2009
Under Construction
The Plaza Shops
10 Plymouth Meeting Mall
May 2008 – The Plaza Shops Under Construction
11 Plymouth Meeting Mall
May 2009 – The Plaza Shops
12 Plymouth Meeting Mall
May 2009 – Whole Foods Market Under Construction
13 Plymouth Meeting Mall
TODAY – Restaurants
14 Plymouth Meeting Mall
TODAY
15 Voorhees Town Center
November 2007
The Learning Experience Day Care Center
The Star Group HQ
Abitare Town Center Boulevard Residences
16 Voorhees Town Center
April 2009
The Learning Experience Day Care Center
The Star Group HQ
Intoxx Fitness Abitare Town Center Boulevard Residences
17 Voorhees Town Center
May 2009 – Boulevard Under Construction
18 Voorhees Town Center
May 2009 – Boulevard Under Construction
19 Voorhees Town Center
May 2009 – Rizzieri Masters Salon & Aveda School for Wellness & Beauty
20 Voorhees Town Center
May 2009 – Macy’s Grand Entrance
21 Voorhees Town Center
TODAY – The Star Group
22 Cherry Hill Mall
March 2008
Food Court
Parking Deck Under Construction
Under Construction
Bistro Row Under Construction
23 Cherry Hill Mall
TODAY
Food Court
Parking Deck
24 Cherry Hill Mall
2008 – Food Court Relocated
25 Cherry Hill Mall
March 2009 – Nordstrom Grand Opening
26 Cherry Hill Mall
March 2009 – Seasons 52 Opened
27 Cherry Hill Mall
March 2009 – Grand Center Court Unveiled
28 Funds to Completion
Redevelopment Projects Remaining Costs Invest to Date ($ in millions) (estimated)
Cherry Hill Mall, Cherry Hill, NJ $ 196.8 $ 21.2
The Gallery at Market East, Philadelphia, PA 78.3 3.3
Plymouth Meeting Mall, Plymouth Meeting, PA 83.7 12.9
Voorhees Town Center, Voorhees, NJ 56.1 26.9
Developments Remaining Costs Invest to Date ($ in millions) (estimated)
Pavilion at Market East, Philadelphia, PA $ 0.7 TBD
Pitney Road Plaza, Lancaster, PA 9.2 $11.1
Springhills, Gainesville, FL 32.1 TBD
White Clay Point, Landenberg, PA 42.9 TBD
As of March 31, 2009. 29 Tenants in Expansion Space
Cherry Hill Mall 28,711sf – California Pizza Kitchen – Capital Grille – Swarovski Crystal – Teavana – Urban Outfitters Plymouth Meeting Mall 87,176 sf –Ann Taylor Loft –Chico’s – Coldwater Creek – Jos A Bank – Whole Foods Other Properties 359,285 sf – Barnes & Noble Woodland Mall – Burlington Coat Factory Wiregrass Commons – Commonwealth of Pennsylvania Gallery at Market East – Rizzieri Institute Voorhees Town Center TOTAL NEW TENANT GLA 475,172sf
Scheduled to open from April 1, 2009 through December 31, 2009. Does not represent a complete list of new tenants. 30 Comp Store Sales
$361
$356 44 ..55% % d deec crree aass ee $343 $340
2006 2007 2008 1Q'09 31 Retail Occupancy
100.0%
95.0%
90.0%
85.0%
80.0% 2006 2007 2008 1Q'09
Total Non-Anchor 32 Mall Occupancy
100.0%
95.0%
90.0%
85.0%
80.0% 2006 2007 2008 1Q'09 Total Non-Anchor 33 Strip & Power Center Occupancy
100.0%
95.0%
90.0%
85.0%
80.0% 2006 2007 2008 1Q'09
Total Non-Anchor 34 Tenant Bankruptcies
1,000 TotalTotal GLA GLA = = 26,729 26,729 sf sf B.B. Moss,Moss, BallyBally’s,’s, BCBC Sports,Sports, CircuitCircuit CityCity,, DisnDisneyey,, DreamDream MachMachinine,e, Friedman/WhitehFriedman/Whitehaallll Jewelers,Jewelers, GooGooddyy’’s,s, KBKB ToyToys,s, LinensLinens N’N’ Things,Things, Stamor,Stamor, SteveSteve && 750 BarryBarry’’s,s, Tweeter,Tweeter, WilsonWilson’s’s LeathLeatheerr ) 627 sf nds a
hous 500 t Bachrach,Bachrach, Garfield’s,Garfield’s, n
i RitzRitz Camera,Camera, S&KS&K Menswear,Menswear, ZoundsZounds LA G ( 250
66 sf 0 2008 YTD 2009
Vacant Negotiating Assumed Executed Not Yet Determined 35 Financial Performance
$ in millions
$495 $496 $507
$306 $303 $307
$161 $148 * $147* $93 $95 $96
2006 2007 2008
Revenues NOI FFO FAD * Includes gain on exchangeable notes and asset impairment charges in 2008; preferred stock redemption in 2007 36 Financial Performance
$ in millions
$123 $122
$76 $72
$34 $29 $27 $24
1Q 2008 1Q 2009
Revenues NOI FFO FAD 37 Distributions
100% 99% 97% $3.90 $3.62 $3.57
$2.28 $2.28 $2.31 $2.28 $2.34 $2.28
2006 2007 2008 FFO FAD Dividends FAD Payout Ratio 38 Distributions
97.6%
$0.83 88.0%
$0.71 $0.65 $0.57 $0.59
$0.29
1Q 2008 1Q 2009 FFO FAD Dividends FAD Payout Ratio
2Q 2009 cash dividend of $0.15 per share is payable June 15, 2009. 39 Real Estate Investments (’07-’08)
$4,250
$4,000 $33 $55 $17 $19 $3,916 $257 ns) o i l l i $3,750 n m i ( $3,573
$3,500
$3,250
t nt x s 8 07 e en ion E nt 0 it p e 0 20 m m s 2 p p i Ca rm lo lo u i e e q a v v Ac mp de De I Re 40 2009 Financing Strategy
SOURCES USES • Retained Cash from Operations • Redevelopments – Cherry Hill Mall • Corporate Credit – The Gallery at Market East – Credit Facility – Plymouth Meeting Mall – $51 million available – Voorhees Town Center • Unencumbered Properties • 2009 Mortgage Maturities – 27% of NOI – Paid $16 million Palmer Park – 17 Malls Mall mortgage in January – 5 Centers – $47 million* remaining • Developments
As of March 31, 2009. * Maturity date assumes all renewal options are exercised. 41 Covenant Compliance
March 31, 2009 Actual Requirement Consolidated Liabilities / Gross Asset Value (1) 64.24% ≤ 65% EBITDA / Interest Expense 1.95 ≥ 1.7 Adjusted EBITDA / Fixed Charges 1.66 ≥ 1.5 EBITDA / Total Indebtedness (2) 9.98% ≥ 9.75% Secured Debt / Gross Asset Value 42.80% ≤ 60% Secured Recourse Debt / Gross Asset Value 1.80% ≤ 25%
(1) Credit Facility permits leverage to exceed 65% for two consecutive quarters, as long as it remains below 70%. (2) Credit Facility permits debt yield to be less than 9.75% for one period of two consecutive fiscal quarters but may not be less than 9.25%.
42 Debt Maturities
$600
) $400 s n illio m n i ( $200
$0 2009 2010 2011 2012 2013 Secured - WO Secured - JV Credit Facility Unsecured
Assumes all renewal options are exercised. 43 2009 Debt Maturities
Maturity Property Debt Strategy 2009 January Palmer Park Mall $ 15.7 million Paid Off May Red Rose Commons $ 12.4 million Refinance August Lehigh Valley Mall $ 75.0 million Extend August One Cherry Hill (office bldg) $ 8.0 million Extend October Valley View Mall $ 34.3 million Refinance December Springfield Mall $ 36.2 million Extend
As of March 31, 2009. 44 2010 Debt Maturities
Maturity Property Debt Strategy 2010 January Springfield Park $ 1.4 million Pay Off March Credit Facility up to $500.0 million Refinance March Term Loan $170.0 million Extend June Creekview Center $ 19.4 million Extend August Lehigh Valley Mall $ 75.0 million Refinance August One Cherry Hill (office bldg) $ 8.0 million Extend December Springfield Mall $ 36.2 million Refinance
As of March 31, 2009. 45 De-Levering Strategy
• Achieve pro forma returns on capital invested • Stabilize and grow core NOI • Reduce G&A expenses • Limit dividend payout • Sell non-strategic assets • Enter into joint ventures • Opportunistic repurchase of debt • Issue equity
46 Forward Looking Statements
This presentation contains certain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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 PREIT’s current views about future events and are subject to risks, uncertainties and changes in circumstances that might cause future events, achievements or results to differ materially from those expressed or implied by the forward-looking statements. More specifically, PREIT’s business might be affected by uncertainties affecting real estate businesses generally as well as the following, among other factors: general economic, financial and political conditions, including changes in interest rates or the possibility of war or terrorist attacks; changes in local market conditions or other competitive or retail industry factors in the regions where our properties are concentrated; PREIT’s ability to maintain and increase property occupancy and rental rates, and risks relating to development or redevelopment activities, including construction, obtaining entitlements and managing multiple projects simultaneously. In particular, the successful development or redevelopment of any property is subject to a number of risks, including, among others, that PREIT’s development or redevelopment plans might change, its development or redevelopment activities might be delayed and anticipated project costs might increase. Unanticipated expenses or delays would also adversely affect PREIT’s investment returns on a development or redevelopment project. Additionally, there can be no assurance that PREIT’s actual results will not differ significantly from the estimates set forth above, or that PREIT’s returns on its developments, redevelopments or acquisitions will be consistent with the estimates outlined in the related press releases or other disclosures. Investors are also directed to consider the risks and uncertainties discussed in documents PREIT has filed with the Securities and Exchange Commission and, in particular, PREIT's Annual Report on Form 10-K for the year ended December 31, 2008. PREIT does not intend to update or revise any forward- looking statements to reflect new information, future events or otherwise.
47 PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
NYSE: PEI