PEI Pennsylvania Real Estate Investment Trust Dashboard

Risks

• ITEM 1A. RISK FACTORS.
• RISKS RELATED TO OUR BUSINESS AND OUR PROPERTIES
• The COVID-19 global pandemic and the public health and governmental response have adversely affected, and will likely continue to adversely affect, our business, financial condition, liquidity and operating results. The extent and duration of such effects are uncertain, continuously changing and difficult to predict. Additionally, the future outbreak of any other highly infectious or contagious diseases may materially and adversely affect our business, financial condition, liquidity and operating results.
• We emerged from bankruptcy on December 10, 2020, which could adversely affect our business and relationships.
• Changes in the retail industry, particularly among anchor tenant retailers, could adversely affect our results of operations and financial condition.
• Approximately 36% of our non-anchor leases expire in 2021 or 2022 or are in holdover status, and if we are unable to renew these leases or re-lease the space covered by these leases on equivalent terms, we might experience reduced occupancy and traffic at our properties and lower rental revenue, net operating income and cash flows.
• We have identified a material weakness in our internal control over financial reporting which could, if not remediated, adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner, our liquidity and financial condition, and our stock price.
• We might be unable to effectively manage any redevelopment and development projects involving a mix of uses, or other unique aspects, such as a project located in a city rather than a suburb, which could affect our financial condition and results of operations.
• Expense reimbursements are relatively low and might continue to be relatively low. Also, operating expenses may increase in the future, reducing our cash flows.
• The valuation and accounting treatment of certain long-lived assets, such as real estate, or of intangible assets, such as goodwill, could result in future asset impairments, which would be recorded as operating losses.
• Conditions in the U.S. economy might adversely affect our cash flows from operations.
• Our retail properties are concentrated in the Eastern United States, particularly in the Mid-Atlantic region, and adverse market conditions in that region might affect the ability of our tenants to make lease payments and the interest of prospective tenants to enter into leases, which might reduce the amount of revenue generated by our properties.
• We have invested and may in the future invest in partnerships with third parties to acquire, develop or redevelop properties, and we might not control the management, redevelopment or disposition of these properties, or we might be exposed to other risks.
• Our business could be harmed if members of our corporate management team terminate their employment with us or otherwise are unable to continue in their current capacity or we are unable to attract and retain talented employees.
• We might incur costs to comply with environmental laws, which could have an adverse effect on our results of operations.
• Inflation may adversely affect our financial condition and results of operations.
• We face risks associated with, and have experienced, security breaches through cyber attacks. A significant privacy breach or IT system disruption could adversely affect our business and we might be required to increase our spending on data and system security, which could adversely affect our financial condition.
• RISKS RELATED TO THE REAL ESTATE INDUSTRY
• Online shopping and other uses of technology could affect the business models and viability of retailers, which could, in turn, affect their demand for retail real estate.
• We are subject to risks that affect the retail real estate environment generally.
• The retail real estate industry is highly competitive, and this competition could harm our ability to operate profitably.
• Acts of violence or war or other terrorist activity, including at our properties, could adversely affect our financial condition and results of operations.
• Social unrest and acts of vandalism or violence could adversely affect our business operations.
• The illiquidity of real estate investments might delay or prevent us from selling properties that we determine no longer meet the strategic and financial criteria we apply and could significantly affect our ability to respond in a timely manner to adverse changes in the performance of our properties and harm our financial condition.
• RISKS RELATED TO OUR INDEBTEDNESS AND OUR FINANCING
• We have substantial debt and stated value of preferred shares outstanding, which could adversely affect our overall financial health and our operating flexibility. We require significant cash flows to satisfy our debt service. These obligations may prevent us from using our cash flows for other purposes. If we are unable to satisfy these obligations, we might default on our debt and our financial condition and results of operations would be adversely affected.
• The covenants in our Credit Agreements limit our ability to take certain actions, which could adversely affect our business and our ability to raise capital.
• If we are unable to comply with the covenants in our Credit Agreements, we might be adversely affected.
• Secured indebtedness exposes us to the possibility of foreclosure, which could result in the loss of our investment in certain of our subsidiaries or in a property or group of properties or other assets subject to indebtedness.
• We might not be able to refinance our existing obligations or obtain the capital required to finance our activities.
• Our hedging arrangements might not be successful in limiting our risk exposure, and we might incur expenses in connection with these arrangements or their termination that could harm our results of operations or financial condition.
• We are subject to risks associated with increases in interest rates, including in connection with our variable interest rate debt.
• Our actual financial results after emergence from bankruptcy may not be comparable to our historical financial information as a result of the implementation of the Plan and the transactions contemplated thereby.
• RISKS RELATING TO OUR ORGANIZATION AND STRUCTURE
• Our organizational documents contain provisions that might discourage a takeover of us and depress our share price.
• Limited partners of PREIT Associates may vote on certain fundamental changes we propose, which could inhibit a change in control that might otherwise result in a premium to our shareholders.
• We have, in the past, and might again, in the future, enter into tax protection agreements for the benefit of certain former property owners, including some limited partners of PREIT Associates, that might affect our ability to sell or refinance some of our properties that we might otherwise want to sell or refinance, which could harm our financial condition.
• RISKS RELATING TO OUR SECURITIES
• We could face adverse consequences as a result of the actions of activist shareholders.
• Holders of our common shares might have their interest in us diluted by actions we take in the future.
• Many factors, including changes in interest rates and the negative perceptions of the retail sector generally, can have an adverse effect on the market value of our securities.
• We do not anticipate paying dividends on our shares in the foreseeable future.
• Individual taxpayers might perceive REIT securities as less desirable relative to the securities of other corporations because of the lower tax rate on certain dividends from such corporations, to the extent we pay dividends in the future, which might have an adverse effect on the market value of our securities.
• Our common shares could be delisted from the NYSE if we fail to meet applicable continued listing requirements, which could have materially adverse effects on our business.
• Any additional issuances of preferred shares in the future might adversely affect the earnings per share available to common shareholders and amounts available to common shareholders for any future payments of dividends.
• If we were to fail to qualify as a REIT, our shareholders would be adversely affected.
• We might be unable to comply with the strict income distribution requirements applicable to REITs, or compliance with such requirements could adversely affect our financial condition or cause us to forego otherwise attractive opportunities.
• There is a risk of changes in the tax law applicable to REITs or our tenants.
• We could face possible adverse federal, state and local tax audits and changes in state and local tax laws, which might result in an increase in our tax liability.