PEI Pennsylvania Real Estate Investment Trust

Management Discussion

• Net loss for the three months ended June 30, 2019 was $6.1 million, a decreased loss of $26.2 million compared to a net loss of $32.3 million for the three months ended June 30, 2018. This decreased loss primarily reflected an impairment of assets of $34.3 million for the three months ended June 30, 2018, which was not repeated in 2019, and which was partially offset by: (a) a $6.9 million decrease in lease termination revenues; (b) a $1.5 million decrease in capitalized leasing costs as a result of the adoption of ASC 842 effective January 1, 2019; and (c) a $2.0 million decrease in non-Same Store NOI.
• Net loss for the six months ended June 30, 2019 was $22.3 million, a decreased loss of $13.7 million compared to a net loss of $36.0 million for the six months ended June 30, 2018. This decreased loss primarily reflected an impairment of assets of $34.3 million for the six months ended June 30, 2018, which was not repeated in 2019, and which was partially offset by: (a) a $6.7 million decrease in lease termination revenues (b) a loss on debt extinguishment of $4.8 million incurred in connection with the defeasance of a mortgage loan recorded in the first quarter of 2019; (c) an asset impairment of $1.5 million on an undeveloped land parcel recorded in the first quarter of 2019; (d) a $2.2 million decrease in gains on sale of real estate by equity method investees; (e) a $2.7 million decrease in capitalized leasing costs as a result of the adoption of ASC 842 effective January 1, 2019; (f) a $0.5 million increase in employee separation expenses; (g) $0.4 million of dilution from asset sales; (h) a $3.3 million decrease in non-Same Store NOI; and (i) a $0.6 million increase in interest expense.
• See “Non-GAAP Supplemental Financial Measures—Net Operating Income” for the definition and additional discussion about Net Operating Income, a non-GAAP measure.