Pennsylvania Real Estate Investment Trus Reports Operating Results (10-Q)

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Aug 10, 2009
Pennsylvania Real Estate Investment Trus (PEI, Financial) filed Quarterly Report for the period ended 2009-06-30.

PENNSYLVANIA R.E. INVEST. TR. is a real estate investment trust engaged in acquiring and holding for investment interests in real estate. Pennsylvania Real Estate Investment Trus has a market cap of $263.71 million; its shares were traded at around $6.56 with a P/E ratio of 2.02 and P/S ratio of 0.56. The dividend yield of Pennsylvania Real Estate Investment Trus stocks is 9.15%. Pennsylvania Real Estate Investment Trus had an annual average earning growth of 9.7% over the past 10 years. GuruFocus rated Pennsylvania Real Estate Investment Trus the business predictability rank of 5-star.

Highlight of Business Operations:

Net loss was $4.2 million for the three months ended June 30, 2009, compared to net loss of $3.8 million for the three months ended June 30, 2008. For the three months ended June 30, 2009, net loss was affected by decreased occupancy as a result of tenant bankruptcies and store closings in 2008 and 2009, increased depreciation and amortization as a result of redevelopment and development assets having been placed in service, increased interest expense as a result of a higher aggregate debt balance and properties placed in service and increased property operating expenses compared to the three months ended June 30, 2008. The results of operations for the three months ended June 30, 2009 included gain on extinguishment of debt of $8.5 million and gains on the sales of real estate of $1.7 million. The results of operations for the three months ended June 30, 2008 included a gain from hedging activities of $2.0 million.

Net loss was $15.7 million for the six months ended June 30, 2009, compared to net loss of $6.9 million for the six months ended June 30, 2008. For the six months ended June 30, 2009, net loss was affected by decreased revenue and occupancy as a result of tenant bankruptcies and store closings in 2008 and 2009, increased depreciation and amortization as a result of redevelopment and development assets having been placed in service, increased interest expense as a result of a higher aggregate debt balance and properties placed in service and increased property operating expenses compared to the six months ended June 30, 2008. The results of operations for the six months ended June 30, 2009 included gain on extinguishment of debt of $9.8 million and gains on the sales of real estate of $1.7 million. The results of operations for the six months ended June 30, 2008 included a gain from hedging activities of $2.0 million.

In June 2009, we sold a land parcel adjacent to North Hanover Mall in Hanover, Pennsylvania for $2.0 million. We recorded a gain of $1.4 million from this sale.

In June 2009, we sold a land parcel adjacent to Woodland Mall in Grand Rapids, Michigan for $2.7 million. The parcel contained a department store that was subject to a ground lease. We recorded a gain of $0.2 million from this sale.

PRI provides management, leasing and development services for eight properties owned by partnerships and other entities in which certain officers or trustees of the Company and of PRI or members of their immediate families and affiliated entities have indirect ownership interests. Total revenue earned by PRI for such services was $0.2 million and $0.3 million for the three months ended June 30, 2009 and 2008, respectively, and $0.4 million for each of the six months ended June 30, 2009 and 2008.

We lease our principal executive offices from Bellevue Associates (the Landlord). Ronald Rubin and George F. Rubin, collectively with members of their immediate families and affiliated entities, own approximately a 50% interest in the Landlord. The office lease has a 10 year term that commenced on November 1, 2004. Our base rent is $1.4 million per year during the first five years of the office lease and $1.5 million per year during the second five years. Total rent expense under this lease was $0.4 million for each of the three months ended June 30, 2009 and 2008, and $0.8 million for each of the six months ended June 30, 2009 and 2008.

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