PEI Pennsylvania Real Estate Investment Trust

Management Discussion

• Net income for the three months ended September 30, 2019 was $24.7 million compared to a net loss of $1.6 million for the three months ended September 30, 2018. This $26.4 million change primarily reflects a gain on debt extinguishment of $29.6 million and net insurance recoveries of $2.9 million recorded in the three months ended September 30, 2019, which was partially offset by: (a) a $3.5 million decrease in Same Store NOI; (b) a $2.2 million decrease in Non Same Store NOI; (c) a $2.2 million increase in general and administrative expenses, primarily due to a $1.2 million decrease in capitalized leasing costs as a result of the adoption of ASC 842 effective January 1, 2019; and (d) a $1.2 million decrease in other income primarily due to historic tax credit revenues recorded in the 2018 period, which did not recur in the 2019 period, and lower corporate sponsorship revenues compared to the 2018 period.