Dated April 30, 2013
Filed Pursuant to Rule 433
Registration Statement No. 333-178599
Relating to Preliminary Prospectus Supplement
Dated April 30, 2013 to Prospectus Dated January 12, 2012
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
April 2013
WE’RE PREIT
AND WE BUILD TRUST
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 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 or
implied by the forward-looking statements. In particular, our business might be materially and adversely affected by
uncertainties affecting real estate businesses generally as well as the following, among other factors: our substantial
debt and stated value of preferred shares and our high leverage ratio; constraining leverage, interest and tangible net
worth covenants under our 2013 Credit Facility; potential losses on impairment of certain long-lived assets, such as
real estate, or of intangible assets, such as goodwill; potential losses on impairment of assets that we might be
required to record in connection with any dispositions of assets; recent changes to our corporate management team
and any resulting modifications to our business strategies; our ability to refinance our existing indebtedness when it
matures, on favorable terms or at all; our ability to raise capital, including through the issuance of equity or equityrelated
securities if market conditions are favorable, through joint ventures or other partnerships, through sales of
properties or interests in properties, or through other actions; our short- and long-term liquidity position; current
economic conditions and their effect on employment and consumer confidence and spending and the corresponding
effects on tenant business performance, prospects, solvency and leasing decisions and on our cash flows, and the
value and potential impairment of our properties; general economic, financial and political conditions, including credit
and capital market conditions, changes in interest rates or unemployment; changes in the retail industry, including
consolidation and store closings, particularly among anchor tenants; the effects of online shopping and other uses of
technology on our retail tenants; our ability to maintain and increase property occupancy, sales and rental rates, in
light of the relatively high number of leases that have expired or are expiring in the next two years; increases in
operating costs that cannot be passed on to tenants; risks relating to development and redevelopment activities;
concentration of our properties in the Mid-Atlantic region; changes in local market conditions, such as the supply of or
demand for retail space, or other competitive factors; potential dilution from any capital raising transactions; possible
environmental liabilities; our ability to obtain insurance at a reasonable cost; and existence of complex regulations,
including those relating to our status as a REIT, and the adverse consequences if we were to fail to qualify as a
REIT. 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 in the section of our Annual Report on
Form 10-K in the section entitled “Item 1A. Risk Factors” and our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2013. We do not intend to update or revise any forward-looking statements to reflect new
information, future events or otherwise.
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Transaction Overview
Issuer (Ticker) Pennsylvania Real Estate Investment Trust (NYSE:
PEI)
Offering Type Overnight follow-on common equity offering (100%
primary shares)
Shares Offered 10,000,000 shares
Offering Size Approximately $200 million
Use of Proceeds Repay outstanding indebtedness on the line of credit
and general corporate purposes
Dividend Yield 3.5%, annualized dividend of $0.72 (1)
Bookrunners Wells Fargo Securities, BofA, Citi, and J.P. Morgan
Expected Pricing May 1, 2013 (before market open)
| (1) |
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Assumes a share price of $20.31 as of April 29th, 2013 |
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Company Overview
Region Malls/
Centers
GLA
(000s) % of GLA
Philadelphia Metro 13 11,323 36.1%
Other PA, NJ 16 10,920 34.8%
VA, MD 5 3,723 11.9%
Other 9 5,381 17.2%
Development 3 Land -
TOTAL (2) 46 31,347 100.0%
| (1) |
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Information as of March 31, 2013 |
| (2) |
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Information as of March 31, 2013 pro forma for 907 Market Street acquisition |
PREIT is a principal landlord in the
6th largest MSA—Philadelphia, PA
• PREIT was founded in 1960 as one of
the first publicly held equity REITs
• Primary concentration is enclosed
regional malls
• Total mall occupancy of 93.4%, nonanchor
occupancy of 89.9% (1)
• TTM Comparable sales PSF of $381 (1)
Investment Thesis
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• New leadership driving organizational change
• Clearly defined strategic roadmap to improving shareholder
value
• Significant progress made with further upside
• Nearly 80% of Same Store NOI comes from quality assets
with sales PSF of $419 (1)
• Opportunity to drive asset values in Core Growth portfolio
• Control over 45% of the enclosed mall GLA in Philadelphia, the
country’s 6th largest MSA
| (1) |
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Represents trailing twelve months |
Strategic Roadmap
Drive shareholder value through creation of dynamic and
compelling shopping environments.
Vision
Operational
Excellence
Strategic
Objectives
Elevating
Portfolio
Quality
Balance
Sheet
Improvement
Positioning
for Growth
- Monetize sales
growth
- Drive occupancy
- Increase renewal
spreads
- Increase
ancillary
revenues
- Grow dividend
Implementation
Tactics
- Property sales
- Merchandising
strategies
- Expand quality
retailer
relationships
- Pare portfolio as
necessary
- Recast secured
credit facility to
unsecured
- Preferred
shares
- Property sales
- Extend
maturities and
reduce interest
- Opportunistic
equity issuance
- Harvest returns
on investments
- Capitalize on
organic
opportunities
- Strategic
acquisition
program
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Significant Progress toward
Strategic Objectives
• Recast credit facility from secured to
unsecured in April 2013
• Leverage down 11.6% from December
2011 (1)
• Sold or under contract to sell 2 high
quality power centers
• Refinanced over $700 million in
maturing mortgages at favorable rates
since 1/1/12
• Total shareholder return of 76.5% in
2012 places PREIT in the 99th
percentile of the MSCI US REIT Index
| (1) |
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Leverage measured as consolidated debt to gross asset value |
| (2) |
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As of March 31, 2013 |
Balance Sheet Improvement
Elevating Portfolio Quality
Operational Excellence (2)
• Sold 2 underperforming malls
• Developed strategic merchandising
plans for 9 assets
• Same store mall occupancy up 170 bps
to 93.4%
• Same store non-anchor mall occupancy
up 220 bps to 89.9%
• Portfolio same store sales increased to
$381
• Same store NOI increased 2.6%
• Renewal rents increased 4.9% in Q1
2013, representing 4th consecutive
quarter of increases
Positioning for Growth
• On April 17, 2013, announced the
acquisition of 907 Market Street
• Completes PREIT’s ownership of the
Gallery at Market East
Portfolio Quality
Growth over prior period (2)
Category
% of TTM
same store
NOI (3)
Avg comp
sales psf
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NOI
Avg comp
sales
psf(4)
Gross rent
| (4) |
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Non-anchor
occupancy
Premier malls 32.7% $535 4.1% 0.6% 3.2% 1.2%
Core growth malls 47.0% $358 0.1%—0.3% 0.8% 2.6%
Opportunistic malls 11.1% $270 -0.7%—1.8%—1.6% 0.1%
Non Core malls 4.6% $242 4.4%—2.0%—4.0% 6.8%
Total malls 95.4% $381 1.5% 0.0% 1.2% 2.2%
| (1) |
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Represents trailing twelve months |
| (2) |
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March 2013 compared to March 2012 |
| (3) |
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Excludes properties sold in 2013 or under agreement of sale |
| (4) |
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Tenants under 10,000 square feet |
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Nearly 80% of SS NOI comes from assets with sales PSF averaging $419(1)
Significant value creation opportunities exist within Core Growth portfolio
Financial Priorities
Completed:
• Used proceeds from preferred shares to repay term loan and other debt
• Closed sales of Orlando Fashion Square, Phillipsburg Mall and Paxton
Towne Centre
• Raised dividend to reflect improved operating metrics
• Recast secured credit facility to $400 million unsecured
Ongoing:
• Christiana Center under contract
• Further asset sales to improve portfolio quality and reduce leverage
• Continue to extend debt maturities and improve the terms of our maturing
financial instruments
• Unencumber assets to optimize financing options
• Maintain strong liquidity position
Management focused on maintaining platform built on financial strength
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Reducing Leverage
$ 2,836
40%
50%
60%
70%
80%
$1,000
$1,500
$2,000
$2,500
$3,000
Debt Leverage Ratio
Noncore
Asset
Sales
Equity Offering
Asset Sales Preferred
Offerings
10
(in millions)
Pro Forma Debt Maturities
(in millions)
• Maturities as of March 31, 2013, pro forma for the 2013 Credit Facility and purchase of 907 Market Street with $10 million of
mortgage debt. Also pro forma for $192 million potential credit facility repayment with proceeds from
this equity offering.
• In order to exercise the extension options available, the properties must meet certain conditions as set
forth in the loan documents including, among other conditions, a minimum debt service coverage
requirement.
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$0
$100
$200
$300
$400
$500
Mortgage loans Mortgage loans with extension option Credit Facility
Focus on Operational Excellence
Measure of
Success
Q4 2012
Actual
Q1 2013
Actual
2013
Targets
Leverage (1) 62.4% 55.3% <60.0%
Debt/EBITDA (2) 8.4x 8.0x < 8.0x
SS NOI growth 1.8% 2.6% 1.5 – 3.0%
Total mall
occupancy 93.9% 93.4% >94.5%
Occupancy cost
% 12.3% 12.3% 12.4%
Sales PSF $372 $381 >$400
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| (1) |
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Leverage measured as consolidated debt to gross asset value |
| (2) |
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EBITDA calculated in accordance with 2010 and 2013 Credit Facility quarterly compliance packages |
Growth Opportunities
13
The Gallery at Market East, Philadelphia, PA
Exton Square Mall, Exton, PA
Moorestown Mall, Moorestown, NJ
Plymouth Meeting Mall, Plymouth Meeting, PA
Key Takeaways
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• New leadership driving organizational change
• Clearly defined strategic roadmap to improving shareholder
value
• Significant progress made with further upside
• Nearly 80% of Same Store NOI comes from quality assets
with sales PSF of $419 (1)
• Opportunity to drive asset values in Core Growth portfolio
• Control over 45% of the enclosed mall GLA in Philadelphia, the
country’s 6th largest MSA
| (1) |
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Represents trailing twelve months |
Pennsylvania Real Estate Investment Trust (the “Issuer”) has filed a registration statement, a prospectus dated January 12, 2012 and a preliminary prospectus supplement dated April 30, 2013 with the Securities and Exchange Commission (“SEC”) for the offering to which this communication relates. Before you invest, you should read the registration statement, the prospectus and the related preliminary prospectus supplement and other documents the Issuer has filed with the SEC for more complete information about the Issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the Issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus and preliminary prospectus supplement if you request it by calling Wells Fargo Securities, LLC toll-free at 1-800-326-5897, Merrill Lynch, Pierce, Fenner & Smith Incorporated toll-free at 1-800-294-1322, Citigroup Global Markets Inc. toll-free at 1-800-831-9146 or J.P. Morgan Securities LLC toll-free at 1-866-803-9204.
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Thank you
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST