CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
(in thousands of dollars)	2022			2021			2022			2021
Comprehensive loss:
Net loss	$	(11,015	)	$	(25,380	)	$	(43,988	)	$	(69,360	)
Unrealized gain (loss) on derivatives		3,612			2,668			9,419			5,269
Amortization of settled swaps		5			2			5			5
Total comprehensive loss		(7,398	)		(22,710	)		(34,564	)		(64,086	)
Less: comprehensive loss attributable to noncontrolling interest		179			718			610			1,888
Comprehensive loss attributable to PREIT	$	(7,219	)	$	(21,992	)	$	(33,954	)	$	(62,198	)

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

CONSOLIDATED STATEMENTS OF EQUITY

Three and Six Months Ended

June 30, 2022 and 2021

(Unaudited)


				PREIT Shareholders
				Preferred Shares $.01 par						Shares of Beneficial			Capital Contributed			Accumulated Other			Distributions			Non-
(in thousands of dollars, except per share amounts)	Total Equity			Series B		Series C		Series D		Interest, $1.00 Par			in Excess of Par			Comprehensive Loss			in Excess of Net Income			controlling interest
Balance January 1, 2022	$	7,047		$	35	$	69	$	50	$	5,347		$	1,851,866		$	(8,830	)	$	(1,832,375	)	$	(9,115	)
Net loss		(32,973	)		—		—		—		—			—			—			(32,469	)		(504	)
Other comprehensive income		5,807			—		—		—		—			—			5,734			—			73
Shares issued under employee compensation plan, net of shares retired		4,449			—		—		—		28			4,421			—			—			—
Amortization of deferred compensation		814			—		—		—		—			814			—			—			—
Balance March 31, 2022		(14,856	)		35		69		50		5,375			1,857,101			(3,096	)		(1,864,844	)		(9,546	)
Net loss		(11,015	)		—		—		—		—			—			—			(10,790	)		(225	)
Other comprehensive income		3,617			—		—		—		—			—			3,571			—			46
Shares issued under employee compensation plans, net of shares retired		(175	)		—		—		—		(6	)		(169	)		—			—			—
Amortization of deferred compensation		564			—		—		—					564			—			—			—
Balance June 30, 2022	$	(21,865	)	$	35	$	69	$	50	$	5,369		$	1,857,496		$	475		$	(1,875,634	)	$	(9,725	)


				PREIT Shareholders
				Preferred Shares $.01 par						Shares of Beneficial			Capital Contributed			Accumulated Other			Distributions			Non-
(in thousands of dollars, except per share amounts)	Total Equity			Series B		Series C		Series D		Interest, $1.00 Par			in Excess of Par			Comprehensive Loss			in Excess of Net Income			controlling interest
Balance January 1, 2021	$	126,940		$	35	$	69	$	50	$	5,302		$	1,846,012		$	(20,620	)	$	(1,699,638	)	$	(4,270	)
Net loss		(43,980	)		—		—		—		—			—			—			(42,746	)		(1,234	)
Other comprehensive loss		2,604			—		—		—		—			—			2,540			—			64
Shares issued under employee compensation plans, net of shares retired		(647	)		—		—		—		(18	)		(629	)		—			—			—
Amortization of deferred compensation		1,321			—		—		—		—			1,321			—			—			—
Balance March 31, 2021		86,238			35		69		50		5,284			1,846,704			(18,080	)		(1,742,384	)		(5,440	)
Net loss		(25,380	)		—		—		—		—			—			—			(24,597	)		(783	)
Other comprehensive income (loss)		2,670			—		—		—		—			—			2,605			—			65
Amortization of deferred compensation		1,149			—		—		—		—			1,149			—			—			—
Other changes in noncontrolling interest, net		38			—		—		—		—			—			—			—			38
Balance June 30, 2021	$	64,715		$	35	$	69	$	50	$	5,284		$	1,847,853		$	(15,475	)	$	(1,766,981	)	$	(6,120	)

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

On April 13, 2021, we entered into Agency Resignation, Appointment, Acceptance and Waiver Agreements pursuant to which Wells Fargo Bank resigned as Administrative Agent and Wilmington Savings Fund Society, FSB was appointed successor Administrative Agent under the First Lien Credit Agreement, the Second Lien Credit Agreement and, in each case, the related loan documents. There is currently no successor letter of credit issuer under the First Lien Revolving Facility, accordingly, the Company cannot currently access the letters of credit sub-facility.

The consolidated mortgage loans contain various customary default provisions. As of ~~September~~June 30, ~~2017,~~2022, we were not in default on any of the consolidated mortgage loans.

The following table represents mortgage payments which will come due during the following periods:

Table of Contents


(in thousands of dollars)
July 1 to December 31, 2022	$	406,127
2023		188,109
2024		215,752
2025		-
2026		-
Thereafter		-
	$	809,988

Mortgage Loan ~~Activity~~

~~In March 2017, we repaid a $150.6 million~~Activity

Cumberland Mall Mortgage

Our mortgage loan ~~(including accrued interest of $0.6 million),~~ secured by ~~The~~the property at Cumberland Mall in Vineland, New Jersey had an outstanding June 30, 2022 balance of $38.3 million and matured on August 1, 2022. Such balance was not repaid on or prior to the maturity date, and we are currently pursuing all options related to the debt at ~~Prince Georges in Hyattsville, Maryland using $110.0 million from~~this property.

Woodland Amendment

On December 10, 2021, certain of our ~~2013 Revolving Facility and the balance from available working capital.~~

~~Interest Rate Risk~~

~~We follow established risk management policies designed to limit our interest rate risk on our interest bearing liabilities, as further discussed in note 7~~consolidated subsidiaries entered into an amendment to our ~~unaudited consolidated financial statements.~~mortgage loan secured by the property at Woodland Mall in Grand Rapids, Michigan, which provides for an extension of the maturity date until December 10, 2022. The Company capitalized $0.3 million of lender fees as additional debt issuance costs in connection with the amendment. As of June 30, 2022, the mortgage loan has an outstanding balance of $111.7 million,

Forbearance Agreements

During 2020, we executed forbearance and loan modification agreements for Cherry Hill Mall, Cumberland Mall, Dartmouth Mall, Francis Scott Key Mall, Viewmont Mall, and Woodland Mall. These arrangements allowed us to defer principal payments, and in some cases interest as well, between May and August 2020 depending on the terms of each agreement. At the end of the deferral period, repayment of deferred amounts spanned from four to six months. The repayment periods ranged from August 2020 through February 2021 pursuant to the terms of the specific agreements. Certain of these forbearance and loan modification agreements also imposed certain additional informational reporting requirements during the applicable modification periods. As of June 30, 2022, we had repaid all principal and interest deferrals.

5. CASH FLOW INFORMATION

We consider all highly liquid short-term investments with a maturity of three months or less at purchase or acquisition to be cash equivalents.

At June 30, 2022 and 2021, cash and cash equivalents and restricted cash totaled $36.8 million and $46.6 million, respectively, and

included tenant security deposits of $1.8 million and $1.4 million, respectively.

Cash paid for interest was $~~40.6~~33.1 million ~~(net of capitalized interest of~~ ~~$5.5 million~~) and $~~50.2~~34.6 million ~~(net of capitalized interest of~~ ~~$2.2 million~~) for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~,2021, respectively, net of amounts capitalized of $45 thousand and $0.1 million, respectively.

In our statement of cash flows, we ~~show~~report cash flows on our revolving ~~facility~~facilities on a net basis. Aggregate ~~borrowings~~repayments on our ~~2013~~First Lien Revolving Facility and Term Loan were $~~236.0~~38.5 million and $~~250.0~~19.8 million, respectively, for the ~~nine~~six months ended ~~September~~June 30, ~~2017 and 2016, respectively. Aggregate paydowns (excluding~~2022. We had 0 borrowings or repayments on our First Lien Revolving Facility for the ~~non cash item discussed below) were $233.0~~six months ended June 30, 2021.

Accrued construction costs decreased by $3.9 million and ~~$200.0~~$4.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016, respectively. A $150.0 million paydown~~2021, respectively, representing non-cash changes in investment in real estate and construction in progress.

The following table provides a summary of cash, cash equivalents, and restricted cash reported within the ~~2013 Revolving Facility was made~~statement of cash flows as of June 30, 2022 and 2021.


	June 30,
(in thousands of dollars)	2022		2021
Cash and cash equivalents	$	24,008	$	38,794
Restricted cash included in other assets		12,805		7,806
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	36,813	$	46,600

Our restricted cash consists of cash held in ~~the nine months ended September 30, 2017, which was directly paid from the 2014 7-Year Term Loan additional borrowing and is considered to be a non-cash transaction.~~

~~Table of Contents~~

~~6. COMMITMENTS AND CONTINGENCIES~~

~~Contractual Obligations~~

~~As of~~ ~~September 30, 2017, we had unaccrued contractual~~escrow by banks for real estate taxes and other ~~commitments related to our capital improvement projects and development projects of~~ ~~$115.9 million~~, including commitments related to the redevelopment of Fashion District Philadelphia, in the form of tenant allowances and contracts with general service providers and other professional service providers. In addition, our operating partnership, PREIT Associates, has jointly and severally guaranteed the obligations of the joint venture we formed with Macerich to develop Fashion District Philadelphia to commence and complete a comprehensive redevelopment of that property costing not less than $300.0 million within 48 months after commencement of construction which was March 14, 2016.purposes.

~~Provision for Employee Separation Expense~~

In 2017 and 2016, we terminated the employment of certain employees and officers. In connection with the departure of those employees and officers, we recorded $0.2 million of employee separation expenses for the three months ended September 30, 2016 and no employee separation expenses for the three months ended September 30, 2017, and $1.1 million and $1.4 million for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, $0.8 million of these amounts are accrued and unpaid.

6. DERIVATIVES

In the normal course of business, we are exposed to financial market risks, including interest rate risk on our interest bearing liabilities. We attempt to limit these risks by following established risk management policies, procedures and strategies, including the use of financial instruments such as derivatives. We do not use financial instruments for trading or speculative purposes.

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Cash Flow Hedges of Interest Rate Risk

~~Our outstanding~~

For derivatives that have been designated ~~under applicable accounting authority as cash flow hedges. The effective portion of changes in the fair value of derivatives designated as,~~ and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in “Accumulated other comprehensive ~~income~~ (loss)” income” and is subsequently reclassified into ~~earnings~~“Interest expense, net” in the ~~period that~~same periods during which the hedged transaction affects earnings. Through December 10, 2020, all of our derivatives were designated and qualified as cash flow hedges of interest rate risk.

On December 10, 2020 as a result of the Financial Restructuring, we de-designated 7 of our interest rate swaps which were previously designated cash flow hedges against the 2018 Credit Facility andseven-year Term Loan, as the occurrence of the hedged forecasted ~~transaction affects earnings. To~~transactions was no longer probable during the ~~extent these instruments are ineffective~~hedged time period due to the Financial Restructuring as described in Note 4. As such, the Company accelerated the reclassification of a portion of the amounts in other comprehensive (loss) income to earnings which resulted in a loss of $2.8 million that was recorded within interest expense, net in the consolidated statement of operations. Additionally, on December 10, 2020, the Company voluntarily de-designated the remaining 13 interest swaps that were also previously designated as cash flow hedges against the 2018 Credit Facility and seven-year Term Loan. Upon de-designation, the accumulated other comprehensive (loss) income balance of each of these de-designated derivatives will be separately reclassified to earnings as the originally hedged forecasted transactions affect earnings. Through December 10, 2020, the changes in fair value of the derivatives were recorded to accumulated other comprehensive (loss) income in the consolidated balance sheets.

On December 22, 2020, we re-designated 9 interest rate swaps with a notional amount of $375.0 million as cash flow hedges of interest rate risk against the First Lien Term Loan Facility. These interest rate swaps qualified for hedge accounting treatment with changes in the fair value of ~~these instruments are~~the derivatives recorded ~~in “Interest expense, net.”~~ through accumulated other comprehensive (loss) income.

As of June 30, 2022, we had 7 total derivatives which were designated as cash flow hedges.

We recognize all derivatives at fair value as either assets or liabilities in the accompanying consolidated balance sheets. ~~The carrying amount of the~~Our derivative assets ~~is reflected~~are recorded in “Deferred costs and other ~~assets, net,” the amount~~assets” and our derivative liabilities are recorded in “Fair value of the associated liabilities is reflected in “Accrued expenses and other liabilities” and the amount of the net unrealized income or loss is reflected in “Accumulated other comprehensive income (loss)derivative instruments.” ~~in the accompanying balance sheets.~~

Amounts reported in “Accumulated other comprehensive income (loss)” that are related to derivatives will be reclassified to “Interest expense, net” as interest payments are made on our corresponding debt. During

Over the next 12twelve months, we estimate that $~~0.3~~1.0 million will be reclassified as ~~an increase~~a decrease to interest ~~expense in connection with derivatives.~~expense. The ~~amortization~~recognition of these amounts could be accelerated in the event that we repay amounts outstanding on the debt instruments and do not replace them with new borrowings.

Non-designated Hedges

Derivatives not designated as hedges are not speculative; they are also used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements. For swaps that were not re-designated subsequent to December 10, 2020, changes in the fair value of derivatives were recorded directly in earnings as interest expense in the consolidated statement of operations. During the six months ended June 30, 2022, we had 0 non-designated swaps mature. As of June 30, 2022, we had 0 derivatives which were not designated in hedging relationships.

Interest Rate Swaps

As of ~~September~~June 30, ~~2017~~,2022, we had ~~entered into~~ 30 interest rate swap agreements designated in qualifying hedging relationships outstanding with a weighted average base interest rate of ~~1.35%~~2.70% on a notional amount of $~~749.6~~300.0 million,, maturing on various dates through December 2021, and one forward starting interest rate swap agreement with a base interest rate of 1.42% on a notional amount of $48.0 million, which will be effective starting January 2018 and will mature in ~~February 2021.~~

May 2023. We originally entered into these interest rate swap agreements in order to hedge the interest payments associated with our issuances of variable interest rate long term debt. ~~We have assessed the effectiveness of these interest rate swap agreements as hedges at inception and on a quarterly basis. As of~~ ~~September 30, 2017, we considered these interest rate swap agreements to be highly effective as cash flow hedges.~~ The interest rate swap agreements are net settled monthly.

~~Accumulated other comprehensive loss as of~~ ~~September 30, 2017~~ ~~includes a net loss of~~ ~~$1.0 million~~ ~~relating to forward starting swaps that we cash settled in prior years that are being amortized over~~ 10 ~~year periods commencing on the closing dates of the debt instruments that are associated with these settled swaps through August 2018.~~

~~Table of Contents~~

The following table summarizes the terms and estimated fair values of our interest rate swap derivative instruments at ~~September~~as of June 30, ~~2017~~2022 and December 31, ~~2016~~.2021 based on the year they mature. The notional values provide an indication of the extent of our involvement in these instruments, but do not represent exposure to credit, interest rate or market risks.


Maturity Date	Aggregate Notional Value at June 30, 2022 (in millions of dollars)		Aggregate Fair Value at June 30, 2022 (1) (in millions of dollars)		Aggregate Fair Value at December 31, 2021 (1) (in millions of dollars)			Weighted Average Interest Rate
Derivatives in Cash Flow Hedging Relationships
Interest Rate Swaps
2023	$	300.0	$	1.0	$	(8.1	)		2.70	%

(1)

As of June 30, 2022 and December 31, 2021, derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy and we did not have any significant recurring fair value measurements related to derivative instruments using significant unobservable inputs (Level 3).

(in millions of dollars)
Notional Value

Fair Value at
September 30, 2017 ⁽¹⁾

Fair Value at
December 31, 2016 ⁽¹⁾

Interest
Rate
Effective Date of Forward Starting Swap Maturity Date
Interest Rate Swaps
28.1 N/A
$ —
1.38 % January 2, 2017
48.0 $ —
(0.1 ) 1.12 % January 1, 2018
7.6 —
—
1.00 % January 1, 2018
55.0 —
(0.1 ) 1.12 % January 1, 2018
30.0 —
(0.3 ) 1.78 % January 2, 2019
25.0 0.2
0.3
0.70 % January 2, 2019
20.0 —
(0.2 ) 1.78 % January 2, 2019
20.0 (0.1 ) (0.2 ) 1.78 % January 2, 2019
20.0 (0.1 ) (0.2 ) 1.79 % January 2, 2019
20.0 (0.1 ) (0.2 ) 1.79 % January 2, 2019
20.0 (0.1 ) (0.2 ) 1.79 % January 2, 2019
25.0 0.1
0.1
1.16 % January 2, 2019
25.0 0.1
0.1
1.16 % January 2, 2019
25.0 0.1
0.1
1.16 % January 2, 2019
20.0 0.1
—
1.16 % January 2, 2019
20.0 0.3
0.2
1.23 % June 26, 2020
20.0 0.3
0.2
1.23 % June 26, 2020
20.0 0.3
0.2
1.23 % June 26, 2020
20.0 0.3
0.2
1.23 % June 26, 2020
20.0 0.3
0.2
1.24 % June 26, 2020
9.0 0.1
0.2
1.19 % February 1, 2021
35.0 0.8
0.9
1.01 % March 1, 2021
35.0 0.8
0.9
1.02 % March 1, 2021
20.0 0.5
0.5
1.01 % March 1, 2021
20.0 0.5
0.5
1.02 % March 1, 2021
20.0 0.5
0.5
1.02 % March 1, 2021
50.0 0.1
N/A
1.75 % December 29, 2021
25.0 0.1
N/A
1.75 % December 29, 2021
25.0 0.1
N/A
1.75 % December 29, 2021
25.0 0.1
N/A
1.75 % December 29, 2021
25.0 0.1
N/A
1.75 % December 29, 2021

Forward Starting Swap
48.0 0.5
0.7
1.42 % January 2, 2018 February 1, 2021
$ 5.9
$ 4.3

~~_________________________~~


⁽¹⁾	~~As of~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016~~, derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy and we did not have any significant recurring fair value measurements related to derivative instruments using significant unobservable inputs (Level 3).

Table of Contents

The ~~table~~tables below ~~presents~~present the effect of derivative financial instruments on ~~our consolidated statements of operations~~accumulated other comprehensive income (loss) and on our ~~share of our partnerships’~~consolidated statements of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~:2021:


	Three Months Ended June 30,									Six Months Ended June 30,
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative Instruments					Amount of Loss Reclassified from Accumulated Other Comprehensive Income into Interest Expense				Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative Instruments					Amount of Loss Reclassified from Accumulated Other Comprehensive Income into Interest Expense
(in millions of dollars)	2022		2021			2022		2021		2022		2021			2022		2021
Derivatives in Cash Flow Hedging Relationships
Interest rate products	$	2.2	$	(0.3	)	$	1.5	$	3.0	$	6.1	$	(0.3	)	$	3.4	$	5.6


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions of dollars)	2022			2021			2022			2021
Total interest expense presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded	$	(32.6	)	$	(32.0	)		(64.0	)	$	(62.7	)
Amount of loss reclassified from accumulated other comprehensive income into interest expense	$	1.5		$	3.0			3.4		$	5.6

Three Months Ended
September 30, Nine Months Ended
September 30,
Consolidated
Statements of
Operations
Location
(in millions of dollars) 2017 2016 2017 2016
Derivatives in cash flow hedging relationships:
Interest rate products
Gain (loss) recognized in Other Comprehensive Income (Loss) on derivatives $ 0.1
$ 2.6
$ 0.2
$ (8.1 ) N/A
Loss reclassified from Accumulated Other Comprehensive Income into income (effective portion) $ 0.4
$ 1.3
$ 1.9
$ 3.9
Interest expense
Loss recognized in income on derivatives (ineffective portion and amount excluded from effectiveness testing)

$ —

$ (0.1 ) Interest expense

As we did not have any derivatives which were not designated in hedging relationships, our non-designated swaps had no impact on the financial statements for the three and six months ended June 30, 2022. The impact of our non-designated swaps resulted in a loss of approximately $58 thousand and $94 thousand for the three and six months ended June 30, 2021, respectively, which is recognized in interest expense, net in the consolidated statement of operations.

Credit-Risk-Related Contingent Features

We have agreements with some of our derivative counterparties that contain a provision pursuant to which, if our entity that originated such derivative instruments defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared to be in default on our derivative obligations. As of ~~September~~June 30, ~~2017~~,2022, we were not in default on any of our derivative obligations.

We have an agreement with a derivative counterparty that incorporates the loan covenant provisions of our loan agreement with a lender affiliated with the derivative counterparty. Failure to comply with the loan covenant provisions would result in our being in default on any derivative instrument obligations covered by the agreement.

As of ~~September~~June 30, ~~2017~~,2022, the ~~fair value of~~Company did 0t have any derivatives in a net liability ~~position, which excludes accrued interest but includes any adjustment~~position.

7. LEASES

As Lessee

We have entered into ground leases for ~~nonperformance risk related to~~portions of the land at Springfield Town Center and Plymouth Meeting Mall. We have also entered into an office lease for our headquarters location, as well as vehicle, solar panel and equipment leases as a lessee. The initial terms of these agreements ~~was $0.4 million. If we had breached any~~generally range from three to 40 years, with certain agreements containing extension options for up to an additional 60 years. Upon lease execution, the Company measures a liability for the present value of future lease payments over the noncancelable period of the ~~default provisions in these~~lease and any renewal option period we are reasonably certain of exercising. Certain agreements ~~as of~~ ~~September 30, 2017~~,require that we ~~might have been required to settle our obligations under the agreements at their termination value (including accrued interest) of $0.4 million. We had not breached any of these provisions as of~~ ~~September 30, 2017~~.

~~8. EQUITY OFFERINGS~~

~~Preferred Share Offerings~~

In January 2017, we issued 6,900,000 7.20% Series C Cumulative Redeemable Perpetual Preferred Shares (the “Series C Preferred Shares”) in a public offering at $25.00 per share. We received net proceeds from the offering of approximately $166.3 million after deducting payment of the underwriting discount of $5.4 million ($0.7875 per Series C Preferred Share) and offering expenses of $0.7 million. We usedpay a portion of reimbursable expenses such as CAM, utilities, insurance and real estate taxes. These payments are not included in the ~~net proceeds from this offering to repay all $117.0 million~~calculation of the ~~then-outstanding borrowings under~~lease liability and are presented as variable lease costs.

Our leases do not provide a readily determinable implicit interest rate; therefore, we estimate our ~~2013 Revolving Facility.~~incremental borrowing rate to calculate the present value of remaining lease payments. In determining our incremental borrowing rate, we considered the lease term, market interest rates and estimates regarding our implied credit rating using market data with adjustments to determine an appropriate incremental borrowing rate.

Table of Contents

The following table presents additional information pertaining to the Company’s leases:


	Three Months Ended June 30,
	2022								2021
(in thousands of dollars)	Solar Panel Leases		Ground Leases		Office, equipment, and vehicle leases		Total		Solar Panel Leases		Ground Leases		Office, equipment, and vehicle leases		Total
Finance lease cost:
Amortization of right-of-use assets	$	203	$	0	$	0	$	203	$	203	$	0	$	0	$	203
Interest on lease liabilities		54		0		0		54		62		0		0		62
Operating lease costs		0		586		67		653		0		437		327		764
Variable lease costs		0		45		218		263		0		45		107		152
Total lease costs	$	257	$	631	$	285	$	1,173	$	265	$	482	$	434	$	1,181

	Six Months Ended June 30,
	2022								2021
(in thousands of dollars)	Solar Panel Leases		Ground Leases		Office, equipment, and vehicle leases		Total		Solar Panel Leases		Ground Leases		Office, equipment, and vehicle leases		Total
Finance lease cost:
Amortization of right-of-use assets	$	405	$	—	$	—	$	405	$	405	$	—	$	—	$	405
Interest on lease liabilities		132		—		—		132		125		—		—		125
Operating lease costs		—		1,171		135		1,306		—		873		638		1,511
Variable lease costs		—		91		424		515		—		90		170		260
Total lease costs	$	537	$	1,262	$	559	$	2,358	$	530	$	963	$	808	$	2,301

Other information related to leases as of and for the six months ended June 30, 2022 and 2021 are as follows:


(in thousands of dollars)	2022			2021
Cash paid for the amounts included in the measurement of lease liabilities
Operating cash flows used for finance leases	$	123		$	125
Operating cash flows used for operating leases	$	1,308		$	1,290
Financing cash flows used for finance leases	$	372		$	372
Weighted average remaining lease term-finance leases (months)		69			80
Weighted average remaining lease term-operating leases (months)		287			293
Weighted average discount rate-finance leases		4.34	%		4.35	%
Weighted average discount rate-operating leases		6.45	%		6.43	%

~~In September 2017, we issued 4,800,000 6.875% Series D Cumulative Redeemable Perpetual Preferred Shares (the “Series D Preferred Shares”)~~

Future payments against lease liabilities, which are recorded in ~~a public offering at $25.00 per share. We~~Accrued expenses and other liabilities, as of June 30, 2022 are as follows:


(in thousands of dollars)	Finance leases			Operating leases			Total
July 1 to December 31, 2022	$	494		$	1,294		$	1,788
2023		983			2,556			3,539
2024		949			2,471			3,420
2025		929			2,427			3,356
2026		925			2,429			3,354
Thereafter		1,147			48,658			49,805
Total undiscounted lease payments		5,427			59,835			65,262
Less imputed interest		(633	)		(30,690	)		(31,323	)
Total lease liabilities	$	4,794		$	29,145		$	33,939

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As Lessor

As of June 30, 2022, the fixed contractual lease payments, including minimum rents and fixed CAM amounts, to be received ~~net proceeds from~~over the offering of approximately $115.7 million after deducting payment of the underwriting discount of $3.8 million ($0.7875 per Series D Preferred Share) and offering expenses of $0.5 million. In October 2017, we issued an additional 200,000 6.875% Series D Preferred Sharesnext five years pursuant to the ~~underwriter’s exercise~~terms of ~~an overallotment option~~noncancelable operating leases with initial terms greater than one year are included in the table below. The amounts presented assume that no leases are renewed and no renewal options are exercised. Additionally, the table does not include variable lease payments that may be received under certain leases for percentage rents or the reimbursement of operating costs, such as common area expenses, utilities, insurance and real estate taxes. These variable lease payments are recognized in the period when the applicable expenditures are incurred or, in the case of percentage rents, when the sales data is made available.


(in thousands of dollars)
July 1 to December 31, 2022	$	95,322
2023		174,441
2024		151,194
2025		121,263
2026		101,281
Thereafter		266,295
	$	909,796

8. COMMITMENTS AND CONTINGENCIES

Contractual Obligations

As of June 30, 2022, we had unaccrued contractual and other commitments related to our capital improvement projects and development projects of $4.3 million, including $0.5 million of commitments related to the redevelopment of Fashion District Philadelphia, in the form of tenant allowances and contracts with general service providers and other professional service providers. For purposes of this disclosure, the contractual obligations and other commitments related to Fashion District Philadelphia are included at ~~$25.00 per share. We received net proceeds from this additional offering of approximately $4.8 million after deducting payment~~100% of the ~~underwriting discount~~obligation and not at our 50% ownership share.

Preferred Dividend Arrearages

We have aggregate authorized preferred shares of ~~$0.2~~25.0 million, ~~($0.7875 per Series D Preferred Share). We used~~where each series of authorized preferred shares is equal to the ~~net proceeds from the offering~~number of ~~our Series D Preferred Shares to redeem all~~preferred shares outstanding of ~~our then outstanding Series A Cumulative Redeemable Perpetual Preferred Shares (the “Series A Preferred Shares”) and for general corporate purposes.~~

~~We may not redeem~~that series. Dividends on the Series ~~C Preferred Shares and the~~B, Series D Preferred Shares before January 27, 2022 and September 15, 2022, respectively, except to preserve our status as a REIT or upon the occurrence of a Change of Control, as defined in the Trust Agreement

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~~addendums designating the Series~~ C ~~Preferred Shares~~ and Series D ~~Preferred Shares. On~~preferred shares are cumulative and ~~after January 27,~~therefore will continue to accrue at an annual rate of $1.8436 per share, $1.80 per share and $1.7188 per share, respectively. As of June 30, 2022, ~~for~~the cumulative amount of unpaid dividends on our issued and outstanding preferred shares totaled $54.7 million. This consisted of unpaid dividends per share on the Series ~~C Preferred Shares and September 15, 2022 for the~~B, Series ~~D Preferred Shares, we may redeem any or all of the Series~~ C Preferred Shares or Series D Preferred Shares at $25.00 per share plus any accrued and unpaid dividends. In addition, upon the occurrence of a Change of Control, we may redeem any or all of the Series C Preferred Shares or Series D Preferred Shares for cash within 120 days after the first date on which such Change of Control occurred at $25.00 per share plus any accrued and unpaid dividends. The Series C Preferred Shares and Series D ~~Preferred Shares have no stated maturity, are not subject~~preferred shares of $3.69 per share, $3.60 per share and $3.44 per share, respectively. On August 2, 2022, our preferred shareholders elected two independent trustees to ~~any sinking fund or mandatory redemption~~our Board of Trustees in accordance with the provisions ~~and will remain outstanding indefinitely unless we redeem or otherwise repurchase them or they are converted.~~

~~Preferred Share Redemption~~

~~On October 12, 2017 (the “Redemption Date”), the Company redeemed all 4,600,000 of its Series A Preferred Shares remaining issued and outstanding as~~ of the Redemption Date, for $115.0 million (the redemption price of $25.00 per share) plus accrued and unpaid dividends of $0.7 million (the amount equal to all accrued and unpaid dividends on the Series A Preferred Shares (whether or not declared) from September 15, 2017 to but excluding the Redemption Date). The Series A Preferred Shares were initially issued in April 2012. As a result of this redemption, the $4.1 million excessdesignating amendments of the ~~redemption price over the carrying amount of the Series A Preferred Shares will be included in Net income (loss) attributed to PREIT common shareholders in the fourth quarter of 2017.~~

~~9. HISTORIC TAX CREDITS~~

In the second quarter of 2012, we closed a transaction with a counterparty (the “Counterparty”) related to the historic rehabilitation of an office building located at 801 Market Street in Philadelphia, Pennsylvania (the “Project”), which has two stages of development. The Counterparty contributed equity of $5.5 million to the first stage through December 31, 2013Company's Amended and $5.8 million to the second stage through September 30, 2014. In exchange for its contributions into the Project, the Counterparty received substantially all of the historic rehabilitation tax credits associated with the Project as a distribution. The Counterparty’s contributions, other than the amounts allocated to a put option (whereby we might be obligated or entitled to repurchase the Counterparty’s ownership interest in the Project), are classified as “Accrued expenses and other liabilities” and recognized as “Other income” in the consolidated financial statements as our obligation to deliver tax credits is relieved.Restated Trust Agreement.

The tax credits are subject to a five year credit recapture period, as defined in the Internal Revenue Code of 1986, as amended, beginning one year after the completion of the Project, which was the second quarter of 2012 for the first stage and the second quarter of 2013 for the second stage. Our obligation to the Counterparty with respect to the tax credits is ratably relieved annually in the third quarter of each year, upon the expiration of each portion of the recapture period and the satisfaction of other revenue recognition criteria.

With regard to the first stage, we recognized the contribution received of $0.9 million from the Counterparty as “Other income” in each of the third quarters of 2017 and 2016, respectively, for the fifth and final recapture period and the fourth recapture period. With regard to the second stage, we recognized the contribution received of $1.0 million in each of the third quarters of 2017 and 2016, respectively related to the fourth and third recapture periods. We also recorded $0.2 million of priority returns earned by the Counterparty in each of the three and nine months ended September 30, 2017 and 2016. In the aggregate, we recorded net income of $1.8 million to “Other income” in the consolidated statements of operations in connection with the Project in each of the three and nine months ended September 30, 2017 and 2016, respectively.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following analysis of our consolidated financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the notes thereto included elsewhere in this report.

The disclosures in this report are complementary to those made in our Annual Report on Form 10-K for the year ended December 31, 2021.

OVERVIEW

~~Pennsylvania Real Estate Investment Trust,~~

PREIT, a Pennsylvania business trust founded in 1960 and one of the first equity real estate investment trusts (“REITs”) in the United States, has a primary investment focus on ~~retail~~ shopping malls located in the eastern half of the United States, primarily in the Mid-Atlantic region.

We currently own interests in 2824 retail properties, ~~in nine states,~~ of which 2423 are operating properties and ~~four are development properties,~~ one ~~of which~~ is a ~~former operating property that is currently partially closed and undergoing a major reconstruction (see Fashion District Philadelphia discussion below).~~development property. The 2423 operating properties include 20 shopping malls and ~~four~~three other ~~operating~~ retail properties, have a total of ~~19.6~~19.3 million square feet and are located in eight states. We and partnerships in which we ~~own~~hold an interest own ~~15.0~~14.8 million square feet at these properties (excluding space owned by ~~anchors)~~anchors or third parties).

There are 1817 operating retail properties in our portfolio that we consolidate for financial reporting purposes. These consolidated ~~operating~~ properties have a total of ~~15.4~~14.7 million square feet, of which we own ~~12.2~~11.5 million square feet. The six operating retail properties that are owned by unconsolidated partnerships with third parties have a total of ~~4.1~~4.6 million square feet of which ~~2.8~~3.3 million square feet are owned by such partnerships. ~~The above~~When we refer to “Same Store” properties, we are referring to properties that have been owned for the full periods presented and exclude properties acquired or disposed of, under redevelopment or designated as a non-core property ~~counts and square feet do not~~during the periods presented. Core properties include all operating retail properties except for Exton Square Mall. Valley View Mall was previously designated as a non-core property, but has since been removed altogether. As discussed further in ~~La Crosse, Wisconsin because this~~Note 2 to our consolidated financial statements, a foreclosure sale judgment with respect to Valley View Mall was ordered by the court and we no longer operate the property. The foreclosure proceedings for Valley View Mall were completed in May 2022. “Core Malls” consists of core proprieties other than power centers.

We have one property ~~has been classified as “held for sale” as of September 30, 2017.~~

~~The development portion of~~in our portfolio ~~contains four properties in two states, with two classified as “mixed use” (a combination of retail and other uses), one~~that is classified as ~~“retail” (The Gallery~~under development; however, we do not currently have any activity occurring at Market East into Fashion District Philadelphia (“Fashion District Philadelphia”)), and one classified as “other.” We have two properties (Woodland Mall in Grand Rapids Michigan and The Mall at Prince Georges in Hyattsville, Maryland) that have redevelopment projects currently underway. We also have five properties with projects underway to replace vacant anchor stores (Exton Square Mall in Exton, Pennsylvania, Moorestown Mall in Moorestown, New Jersey, Valley Mall in Hagerstown, Maryland, Willow Grove Park in Willow Grove, Pennsylvania and Woodland Mall in Grand Rapids, Michigan).

this property.

Our primary business is owning, operating and ~~operating retail~~redeveloping shopping malls, which we do primarily do through our operating partnership, PREIT Associates, L.P. (“PREIT Associates” or the “Operating Partnership”). We believe our distinctive real estate is at the forefront of enabling communities to flourish through the built environment by providing opportunities to create vibrant multi-use destinations. In general, our malls include carefully curated retail and lifestyle offerings, including national and regional department stores, large format retailers and other anchors, mixed with destination dining and entertainment experiences. In recent years, we have increased the portion of our mall properties that are leased to non-traditional mall tenants, including life sciences, healthcare, supermarkets and self-storage facilities.

We provide management, leasing and real estate development services through PREIT Services, LLC (“PREIT Services”), which generally develops and manages properties that we consolidate for financial reporting purposes, and PREIT-RUBIN, Inc. (“PRI”), which generally develops and manages properties that we do not consolidate for financial reporting purposes, including properties owned by partnerships in which we own ~~interests through partnerships with third parties~~an interest, and properties that are owned by third parties in which we do not have an interest. PRI is a taxable REIT subsidiary, as defined by federal tax laws, which means that it is able to offer additional services to tenants without jeopardizing our continuing qualification as a REIT under federal tax law.

~~We have continuously made efforts to improve~~

Our revenue consists primarily of fixed rental income, additional rent in the ~~overall quality~~form of expense reimbursements, and percentage rent (rent that is based on a percentage of our ~~portfolio~~tenants’ sales or a percentage of sales in excess of thresholds that are specified in the leases) derived from our income producing properties. We also receive income from our real estate partnership investments and from the management and leasing services PRI provides.

The COVID-19 global pandemic that began in early 2020 has adversely impacted and continues to ~~achieve operational excellence. Since 2013,~~impact our business, financial condition, liquidity and operating results, as well as our tenants’ businesses. The prolonged and increased spread of COVID-19 has also led to unprecedented global economic disruption and volatility in financial markets. Some of our tenants’ financial health and business viability have been adversely impacted and their creditworthiness has deteriorated. We anticipate that our future business, financial condition, liquidity and results of operations, including in 2021 and potentially in future periods, will continue to be materially impacted by the COVID-19 pandemic. Although we have ~~executed~~operated in the COVID-19 environment for approximately two years, uncertainty remains as to how long the global pandemic, economic challenges and restrictions on day-to-day life and business operations will continue to impact us or our tenants.

COVID-19 closures of our properties began on March 12, 2020 and continued through the reopening of our last property on July 3, 2020; all of our properties have remained open since that time and are employing safety and sanitation measures designed to address the risks posed by COVID-19. As of August 9, 2022, government-imposed capacity restrictions are no longer in place in the Company’s markets. Following the pandemic-related closures, approximately 4% of our tenants failed to re-open (inclusive of tenants that filed for bankruptcy protection in the aftermath). As a ~~strategic disposition program whereby~~result of the challenging environment created by COVID-19, primarily beginning in the second quarter of 2020, many of our

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tenants have sought rent relief and deferral and several have failed to pay rent due. Although we continue to make progress in collecting COVID-19-period rents, we have ~~sold 17~~also initiated legal proceedings against certain tenants for failure to pay. Collections improved in 2022 and 2021 as compared to 2020. We believe that our rent collections are probable, but expect that collections will continue to be below our tenants’ rent obligations as long as the effects of COVID-19 affect the financial strength of our ~~lower-productivity malls, with one more property currently~~tenants. Although market fundamentals improved during 2021 and into 2022, the impacts of COVID-19, including the emergence of new variants and various impacts on the ~~market (Valley View Mall). We have also sought~~global supply chain, create significant uncertainty and are likely to ~~improve the quality of~~continue impact our ~~remaining properties through remerchandising~~operations and redevelopment activities. Where possible, we have sought to proactively replace challenged department stores with a diverse mix of high-performance retailers. Approximately 20% of our retail space is committed to dining and entertainment. Since 2012, we have added over one million square feet of spaceresults in ~~the categories of dining, entertainment, fast fashion, grocery, health & wellness and off-price retailers.~~

2022.

Net ~~income~~loss for the three months ended ~~September~~June 30, ~~2017~~2022 was ~~$12.3 million, an increase in earnings of $9.4~~$11.0 million compared to net ~~income~~loss of ~~$2.9~~$25.4 million for the three months ended ~~September~~June 30, ~~2016.~~2021. This ~~increase~~$14.4 million decrease in net loss was primarily due toto: : (a) a ~~$6.7 million~~decrease in real estate revenue of $0.9 million; (b) a decrease in gain on ~~the sale~~debt extinguishment of debt of $4.6 million; (c) an increase in gain on sales of interest in real estate of $2.7 million; (d) an increase on gain on sales of equity method investment of $9.1 million; (e) a decrease in gain on sales of real estate by an equity method investee ~~a decrease in impairment~~ of ~~assets from $9.9 million in the third quarter of 2016 to $1.8 million in the third quarter of 2017~~$1.3 million; and (f) an increase in ~~Same Store Net Operating Income (excluding lease termination revenue)~~gain on sales of ~~$1.5 million, partially offset by decreases in lease termination revenue~~non-operating real estate of $3.5 million and Non-Same Store Net Operating Income of $3.6 million . See “Use of Non-GAAP Measures—Net Operating Income” for the definition and additional discussion about Net Operating Income, a non-GAAP measure.

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$8.8 million.

Net loss for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 was ~~$41.5 million, a decrease in earnings of $55.5~~$44.0 million compared to net ~~income~~loss of ~~$14.0~~$69.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2021. This $25.4 million decrease in net loss was primarily due toto: (a) an increase in ~~impairment~~real estate revenue of ~~assets~~$3.0 million resulting from the recovering economic conditions following the impact of ~~$31.2 million,~~COVID-19 on our tenants; (b) a decrease in ~~gains~~gain on ~~sale~~debt extinguishment of debt of $4.6 million; (c) an increase in gain on sales of interest in real estate of ~~$23.3 million and~~$2.7 million; (d) an increase on gain on sales of equity method investment of $9.1 million; (e) a decrease in ~~Non-Same Store Net Operating Income of $12.4 million, partially offset by a $9.5 million decrease in interest expense and a $6.7 million~~ gain on ~~the sale~~sales of real estate by an equity method ~~investee. See “Use~~investee of ~~Non-GAAP Measures—Net Operating Income” for the definition~~$1.3 million; (f) an increase in gain on sales of non-operating real estate of $8.8 million; and ~~additional discussion about Net Operating Income, a non-GAAP measure.~~

(g) an increase in gain on sale of preferred equity interest of $3.7 million.

We evaluate operating results and allocate resources on a property-by-property basis, and do not distinguish or evaluate our consolidated operations on a geographic basis. Due to the nature of our operating properties, which involve retail shopping, dining and entertainment, we have concluded that our individual properties have similar economic characteristics and meet all other aggregation criteria. Accordingly, wehave aggregated our individual properties into one reportable segment. In addition, no single tenant accounts for 10% or more of our consolidated revenue, and none of our properties are located outside the United States.

Current Economic and Industry Conditions

and Impact of COVID-19

Conditions in the economy have caused fluctuations and variations in business and consumer confidence, retail sales, and consumer spending on retail ~~goods.~~goods, destination dining and entertainment. Further, traditional mall tenants, including department store anchors and smaller format retail tenants face significant challenges resulting from changing consumer expectations, the convenience of e-commerce shopping, competition from fast fashion retailers, the expansion of outlet centers, and declining mall traffic, among other factors.

In recent years, there has been an increased level of tenant bankruptcies and store closings by tenants who have been significantly impacted by these factors.

All of these factors have been exacerbated by the ongoing impact of the COVID-19 pandemic.

The table below sets forth information related to our tenants in bankruptcy for our consolidated and unconsolidated properties (excluding tenants in bankruptcy at sold properties):

Pre-bankruptcy Units Closed
Year
Number of Tenants ⁽¹⁾
Number of locations impacted
GLA⁽²⁾

PREIT’s Share of Annualized Gross Rent⁽²⁾
(in thousands)
Number of locations closed
GLA⁽²⁾

PREIT’s Share of Annualized Gross Rent ⁽³⁾(in thousands)
2017 (Nine Months)
Consolidated properties 13
69
310,585
$ 9,541.6
17
90,508
$ 2,959.7
Unconsolidated properties 8
15
183,956
2,021.5
6
81,531
949.3
Total 14
84
494,541
$ 11,563.1
23
172,039
$ 3,909.0

2016 (Full Year)
Consolidated properties 7
38
137,111
$ 6,738.7
20
73,011
$ 3,181.5
Unconsolidated properties 6
10
86,012
1,166.9
4
64,809
471.4
Total 9
48
223,123
$ 7,905.6
24
137,820
$ 3,652.9

^{Pre-bankruptcy Units Closed
Year Number of
Tenants (1) Number of
locations
impacted GLA(2) PREIT’s
Share of
Annualized
Gross Rent(3)
(in thousands) Number of
locations
closed GLA(2) PREIT’s
Share of
Annualized
Gross Rent(3)
(in thousands)
2022 (through June 30, 2022)
Consolidated properties — — — $ — — — $ —
Unconsolidated properties — — — — — — —
Total — — — $ — — — $ —
2021 (Full Year)
Consolidated properties 5 10 331,314 $ 1,589 5 18,344 $ 380
Unconsolidated properties 1 1 4,046 57 1 4,046 57
Total 5 11 335,360 $ 1,646 6 22,390 $ 437}

(1)Total represents unique ~~tenants.~~

^{tenants and includes both tenant-owned and landlord-owned stores. As a result, amounts may not total.}

(2)Gross Leasable Area (“GLA”) in square feet.

(3)Includes our share of tenant gross rent from partnership properties based on PREIT’s ownership percentage in the respective equity method investments as of ~~September~~June 30, ~~2017.~~

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2022.

Anchor Replacements

In recent years, through property dispositions, proactive store recaptures, lease terminations and other activities, we have made efforts to reduce our risks associated with certain department store concentrations. ~~In December 2016,~~

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During 2019, we ~~acquired the Sears property~~re-opened or introduced additional tenants to former anchor positions at Woodland Mall ~~and we have recaptured the Sears premises at Capital City Mall and Magnolia~~in Grand Rapids, Michigan, Valley Mall in ~~2017.~~Hagerstown, Maryland and Plymouth Meeting Mall, in Plymouth Meeting, Pennsylvania. Dick’s Sporting Goods at Valley Mall opened in the first quarter of 2020. At Plymouth Meeting Mall, we opened Michaels in the first quarter of 2020. In 2017, we purchased the Macy’s ~~locations~~location at Moorestown Mall ~~Valley View~~in Moorestown, New Jersey and opened HomeSense, Sierra Trading, Five Below and Michaels between 2018 and the first quarter of 2020. During 2021, we opened Power Warehouse and during the first quarter of 2022, we opened HomeGoods at Cumberland Mall in Vineland, New Jersey.

Construction was completed in the first quarter of 2020 giving way to the opening of Burlington in place of a former Sears at Dartmouth Mall in Dartmouth, Massachusetts. Aldi also opened in the space adjacent to Burlington in September 2021. We expect to continue to move forward with several outparcels at Dartmouth Mall resulting from the Sears recapture and ~~Valley~~to work with large format prospects for the additional space adjacent to Burlington, but have experienced delays due to the impact of the COVID-19 pandemic.

During 2019, an anchor tenant, Sears, closed at Exton Square Mall ~~locations. We are~~ in ~~negotiations~~Exton, Pennsylvania. In January 2020, the Lord & Taylor store at Moorestown Mall in Moorestown, New Jersey closed and we executed a lease with Turn 7, which opened in the fourth quarter of 2021. Sears closed its stores at Moorestown Mall in Moorestown, New Jersey and Jacksonville Mall in Jacksonville, North Carolina in April 2020. Sears continues to ~~purchase~~be financially obligated pursuant to the ~~leasehold associated with~~lease at the ~~Macy’s store located~~Jacksonville Mall location. In July 2021, the former Sears site at ~~Plymouth Meeting Mall.~~

Moorestown Mall was sold to Cooper University Health Care. In May 2020, J.C. Penney filed for bankruptcy and announced the closure of its stores at The ~~table below sets forth information related~~Mall at Prince George's in Hyattsville, Maryland, and Magnolia Mall in Florence, South Carolina. The Magnolia Mall location has been leased to ~~our anchor replacement program:~~

Former/Existing Anchors Replacement Tenant(s)
Property Name GLA '000's Date Store Closed/Closing Date De-commissioned Name
GLA
'000's
Actual/Targeted Occupancy Date
Completed:⁽¹⁾

Cumberland Mall
JC Penney⁽²⁾
51 Q3 15 Q3 15 Dick's Sporting Goods 50 Q4 16
Exton Square Mall
JC Penney⁽²⁾
118 Q2 15 N/A Round 1 58 Q4 16
Viewmont Mall
Sears⁽²⁾
193 Q3 16 Q2 17 Dick's Sporting Goods/Field & Stream 90 Q3 17
Home Goods 23 Q3 17
Capital City Mall
Sears⁽²⁾
101 Q1 17 Q2 17 Dick's Sporting Goods 62 Q3 17
Sears Appliance 15 Q4 17
Fine Wine & Good Spirits 12 Q4 17
Magnolia Mall
Sears ⁽²⁾
91 Q1 17 Q2 17 Burlington 46 Q3 17
Home Goods, Five Below and outparcels 45 Q2 18
Valley View Mall
Macys ⁽²⁾⁽³⁾
100 Q2 17 Q2 17 Herberger's 100 Q3 17
In process:
Exton Square Mall
K-mart ⁽²⁾
96 Q1 16 Q2 16 Whole Foods 58 Q1 18
Valley Mall
Macy's⁽²⁾⁽³⁾
120 Q1 16 N/A Large format fitness facility 70 Q4 18
Tilt Studio 49 Q3 18

BonTon ⁽²⁾
123 Q1 18 N/A Belk 123 Q4 18
Moorestown Mall
Macy's ⁽²⁾⁽⁴⁾
200 Q1 17 Q3 17 Off-price outdoor gear retailer 18 Q4 18
Off-price home furnishings retailer 25 Q4 18
Woodland Mall
Sears ⁽²⁾⁽⁶⁾
313 Q2 17 Q2 17 Von Maur 86 Q4 19
Restaurants and small shop space TBD Q4 19
Willow Grove Park
JC Penney ⁽²⁾⁽⁷⁾
124 Q3 17 N/A TBD TBD TBD
Pending:
Plymouth Meeting Mall
Macy's ⁽⁵⁾
215 Q1 17 N/A TBD TBD TBD


⁽¹⁾	~~Principal replacement tenants opened and remaining portion still in progress~~


⁽²⁾	~~Property is PREIT owned~~


⁽³⁾	~~Property was purchased by PREIT in April 2017~~


⁽⁴⁾	~~Property was purchased by PREIT in July 2017~~


⁽⁵⁾	~~Property is third-party owned~~


⁽⁶⁾	~~Purchased by PREIT in the fourth quarter of 2016~~


⁽⁷⁾	~~Closed in July 2017~~

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Tilt Studio, an entertainment concept that opened in October 2021.

In response to anchor store closings and other trends in the retail space, we have been changing the mix of tenants at our properties. WeIn general, our malls include national and regional department stores, large format retailers and other anchors, mixed with destination dining and entertainment experiences, however, in recent years, we have been reducing the percentage of traditional mall tenants and increasing the share of space dedicated to ~~dining, entertainment, fast fashion, off price, and large format box~~non-traditional mall tenants. ~~Some of these changes may result in the redevelopment of all or a portion~~Approximately 29% of our ~~properties.~~mall space is committed to non-traditional tenants offering services such as dining and entertainment, health and wellness, off-price retail and fast fashion. See “—Capital Improvements, Redevelopment and Development Projects.”

To fund the capital necessary to replace anchors and to maintain a reasonable level of leverage, we expect to use a variety of means available to us, subject to and in accordance with the terms of our Credit Agreements. These steps might include (i) making additional borrowings under our ~~credit facility,~~Credit Agreements (assuming availability and continued compliance with the financial covenants thereunder), (ii) obtaining construction loans on specific projects, (iii) selling properties or interests in properties with values in excess of their mortgage loans (if applicable) and applying the excess proceeds to fund capital expenditures or for debt reduction, or (iv) obtaining capital from joint ventures or other partnerships or arrangements involving our contribution of assets with institutional investors, private equity investors or other ~~REITs, or (v) obtaining equity capital, including through the issuance of common or preferred equity securities if market conditions are favorable, or through other actions.~~

REITs.

Capital Improvements, Redevelopment and Development Projects

We might engage in various types of capital improvement projects at our operating properties. Such projects vary in cost and complexity, and can include building out new or existing space for individual tenants, upgrading common areas or exterior areas such as parking lots, or redeveloping the entire property, among other projects. Project costs are accumulated in “Construction in progress” on our consolidated balance sheet until the asset is placed into service, and amounted to ~~$129.6~~$45.5 million as of ~~September~~June 30, ~~2017.~~

2022.

As of June 30, 2022, we had unaccrued contractual and other commitments related to our capital improvement projects and development projects at our consolidated and unconsolidated properties of $4.3 million, including $0.5 million of commitments related to the redevelopment of Fashion District Philadelphia, in the form of contracts with general service providers and other professional service providers.

In 2014, we entered into a 50/50 joint venture with The Macerich Company (“Macerich”) to redevelop Fashion District Philadelphia. As we redevelop Fashion District Philadelphia, operating results in the short term, as measured by sales, occupancy, real estate revenue, property operating expenses, ~~NOI~~Net Operating Income (“NOI”) and depreciation, will ~~likely~~ continue to be ~~negatively~~ affected until the newly constructed space is completed, leased and occupied.

In January 2018, the Company and Macerich entered into a $250.0 million term loan (as amended in July 2019 to increase the total maximum potential borrowings to $350.0 million) to fund the ongoing redevelopment of Fashion District Philadelphia and to repay capital contributions to the venture previously made by the partners. A total of $51.0 million was drawn during the third quarter of 2019 and we received aggregate distributions of $25.0 million as our share of the draws. On December 10, 2020, PM Gallery LP, together with certain other subsidiaries owned indirectly by us and Macerich (including the fee and leasehold owners of the properties that are part of the Fashion District Philadelphia project), entered into an Amended and Restated Term Loan Agreement (the “FDP Loan Agreement”). In connection with the execution of the FDP Loan Agreement, a $100.0 million principal payment was made (and funded indirectly by Macerich, the “Partnership Loan”) to pay down the existing loan, reducing the outstanding principal under the FDP Loan Agreement from $301.0 million to $201.0 million. The joint venture must repay the Partnership Loan plus 15% accrued interest to Macerich, in its capacity as the lender, prior to the resumption of 50/50 cash distributions to us and Macerich. In connection with the execution of the FDP Loan Agreement, the governing structure of PM Gallery LP was

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modified such that, effective as of January 1, 2021, Macerich is responsible for the entity’s operations and, subject to limited exceptions, controls major decisions. The Company considered the changes to the governing structure of PM Gallery LP and determined the investment qualifies as a variable interest entity and would continue to be accounted for under the equity method of accounting.

The FDP Loan Agreement provides for (i) a maturity date of January 22, 2023, with the potential for a one-year extension upon the borrowers’ satisfaction of certain conditions, (ii) an interest rate at the borrowers’ option with respect to each advance of either (A) the Base Rate (defined as the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50%, and (c) the LIBOR Market Index Rate plus 1.00%) plus 2.50% or (B) LIBOR for the applicable period plus 3.50%, (iii) a full recourse guarantee of 50% of the borrowers’ obligations by PREIT Associates, L.P., on a several basis, (iv) a full recourse guarantee of certain of the borrowers’ obligations by The Macerich Partnership, L.P., up to a maximum of $50.0 million, on a several basis, (v) a pledge of the equity interests of certain indirect subsidiaries of PREIT and Macerich, as well as of PREIT-RUBIN, Inc. and one of its subsidiaries, that have a direct or indirect ownership interest in the borrowers, (vi) a non-recourse carve-out guaranty and a hazardous materials indemnity by each of PREIT Associates, L.P. and The Macerich Partnership, L.P., and (vii) mortgages of the borrowers’ fee and leasehold interests in the properties that are part of the Fashion District Philadelphia project and certain other properties. The FDP Loan Agreement contains certain covenants typical for loans of its type.

We ~~are~~ also ~~engaged~~own an interest in ~~several types of~~a development ~~projects. However,~~property, but we do not expect to make any significant investment ~~in these projects~~at this property in the short ~~term, other than the redevelopment of Fashion District Philadelphia.~~

term.

CRITICAL ACCOUNTING POLICIES

AND ESTIMATES

Critical Accounting Policies are those that require the application of management’s most difficult, subjective, or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that might change in subsequent periods. In preparing the unaudited consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. In preparing the unaudited consolidated financial statements, management has utilized available information, including ~~historical experience,~~our past history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality. Management has also considered events and changes in property, market and economic conditions, estimated future cash flows from property operations and the risk of loss on specific accounts or amounts in determining its estimates and judgments. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may affect comparability of our results of operations to those of companies in a similar ~~businesses.~~business. The estimates and assumptions made by management in applying ~~Critical Accounting Policies~~critical accounting policies have not changed materially during ~~2017 or 2016~~2022 and 2021, except as otherwise noted, and none of these estimates or assumptions have proven to be materially incorrect or resulted in our recording any significant adjustments relating to prior periods. We will continue to monitor the key factors underlying our estimates and judgments, but no change is currently expected.

For additional information regarding our Critical Accounting Policies, see “Critical Accounting ~~Policies”~~Policies and Estimates” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

2021.

Asset Impairment

Real estate investments and related intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the property might not be ~~recoverable.~~recoverable, which is referred to as a "triggering event.". A property to be held and used is considered impaired only if management’s estimate of the aggregate future cash flows, less estimated capital expenditures, to be generated by the property, undiscounted and without interest charges, are less than the carrying value of the property. This estimate takes into consideration factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors.

If there is a triggering event in relation to a property to be held and used, we will estimate the aggregate future cash flows, less estimated capital expenditures, to be generated by the property, undiscounted and without interest charges. In addition, ~~these estimates~~this estimate may consider a probability weighted cash flow estimation approach when alternative courses of action to recover the carrying amount of a long-lived asset are under consideration or when a range of possible values is estimated.

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The determination of undiscounted cash flows requires significant estimates by management, including the expected course of action at the balance sheet date that would lead to such cash flows. Subsequent changes in estimated undiscounted cash flows arising from changes in the anticipated action to be taken with respect to the property could impact the determination of whether an impairment exists and whether the effects could materially affect our net income. To the extent estimated undiscounted cash flows are less than the carrying value of the property, the loss will be measured as the excess of the carrying amount of the property over the estimated fair value of the property.

Our intent is to hold and operate our properties long-term, which reduces the likelihood that our carrying value is not recoverable. A shortened holding period would increase the likelihood that the carrying value is not recoverable.

Assessment of our ability to recover certain lease related costs must be made when we have a reason to believe that the tenant might not be able to perform under the terms of the lease as originally expected. This requires us to make estimates as to the recoverability of such costs. ~~See “Results~~

An other-than-temporary impairment of ~~Operations” for a description~~an investment in an unconsolidated joint venture is recognized when the carrying value of the ~~losses~~investment is not considered recoverable based on evaluation of the severity and duration of the decline in value. To the extent impairment has occurred, the excess carrying value of ~~assets~~the asset over its estimated fair value is recorded ~~during~~as reduction to income.

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During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022, no asset impairment loss was recorded. During the three months ended June 30, 2021, we recorded an impairment loss of $1.3 million in connection with our classification of Valley View Center as held for sale. The June 30, 2021 impairment loss is included in the consolidated statement of operations.

Revenue and ~~2016.~~

Receivables

We derive over 95% of our revenue from tenant rent and other tenant-related activities. Tenant rent includes base rent, percentage rent, expense reimbursements (such as reimbursements of costs of common area maintenance (“CAM”), real estate taxes and utilities), and the amortization of above-market and below-market lease intangibles.

We accrue revenue under leases, provided that it is probable that we will collect substantially all of the lease revenue that is due under the terms of the lease both at inception and on an ongoing basis. When collectability of lease revenue is not probable, leases are prospectively accounted for on a cash basis and any difference between the revenue that has been accrued and the cash collected from the tenant over the life of the lease is recognized as a current period adjustment to lease revenue. We review the collectability of our tenant receivables related to tenant rent including base rent, straight-line rent, expense reimbursements and other revenue or income by specifically analyzing billed and unbilled revenues, including straight-line rent receivable, and considering historical collection issues, tenant creditworthiness and current economic and industry trends. Our revenue recognition and receivables collectability analysis places particular emphasis on past-due accounts and considers the nature and age of the receivables, the payment history and financial condition of the payor, the basis for any disputes or negotiations with the payor, and other information that could affect collectability.

We record base rent on a straight-line basis, which means that the monthly base rent revenue according to the terms of our leases with our tenants is adjusted so that an average monthly rent is recorded for each tenant over the term of its lease. When tenants vacate prior to the end of their lease, we accelerate amortization of any related unamortized straight-line rent balances, and unamortized above-market and below-market intangible balances are amortized as a decrease or increase to real estate revenue, respectively.

Percentage rent represents rental revenue that the tenant pays based on a percentage of its sales, either as a percentage of its total sales or as a percentage of sales over a certain threshold. In the latter case, we do not record percentage rent until the sales threshold has been reached.

Revenue for rent received from tenants prior to their due dates is deferred until the period to which the rent applies.

In addition to base rent, certain lease agreements contain provisions that require tenants to reimburse a fixed or pro rata share of certain CAM costs, real estate taxes and utilities. Tenants generally make monthly expense reimbursement payments based on a budgeted amount determined at the beginning of the year. Effective January 1, 2019, we recognize fixed CAM revenue prospectively on a straight-line basis.

Certain lease agreements contain co-tenancy clauses that can change the amount of rent or the type of rent that tenants are required to pay, or, in some cases, can allow the tenant to terminate their lease, in the event that certain events take place, such as a decline in property occupancy levels below certain defined levels or the vacating of an anchor store. Co-tenancy clauses do not generally have any retroactive effect when they are triggered. The effect of co-tenancy clauses is applied on a prospective basis to recognize the new rent that is in effect.

Payments made to tenants as inducements to enter into a lease are treated as deferred costs that are amortized as a reduction of rental revenue over the term of the related lease.

Lease termination fee revenue is recognized in the period when a termination agreement is signed, collectability is assured, and the tenant has vacated the space. In the event that a tenant is in bankruptcy when the termination agreement is signed, termination fee income is deferred and recognized when it is received.

Utility reimbursement revenue is presented separate from rental revenue based on actual usage as the pattern of transfer is not aligned with the use of the property.

We also generate revenue by providing management services to third parties, including property management, brokerage, leasing and development. Management fees generally are a percentage of managed property revenue or cash receipts. Leasing fees are earned upon the consummation of new leases. Development fees are earned over the time period of the development activity and are recognized on the percentage of completion method. These activities are collectively included in “Other income” in the consolidated statements of operations.

Revenue from the reimbursement of marketing expenses is generated through tenant leases that require tenants to reimburse a defined amount of property marketing expenses. Our contractual performance obligations are fulfilled as marketing expenditures are made. Tenant payments are received monthly as required by the respective lease terms. We defer income recognition if the reimbursements exceed the aggregate marketing expenditures made through that date. Deferred marketing reimbursement revenue is recorded in tenants’ deposits and deferred rent on the consolidated balance sheet. The marketing reimbursements are recognized as revenue at the time that the marketing expenditures occur.

Property management revenue from management and development activities is generated through contracts with third party owners of real estate properties or with certain of our joint ventures, and is recorded in other income in the consolidated statements of operations. In the case of management fees, our performance obligations are fulfilled over time as the management services are performed and the associated revenues are recognized on a monthly basis when the customer is billed. In the case of development fees, our performance obligations are fulfilled over

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time as we perform certain stipulated development activities as set forth in the respective development agreements and the associated revenues are recognized on a monthly basis when the customer is billed.

New Accounting Developments

See ~~note~~Note 1 to our unaudited consolidated financial statements for descriptions of new accounting developments.

~~OFF BALANCE SHEET ARRANGEMENTS~~

~~We have no material off-balance sheet items other than the unconsolidated partnerships described in note 3 to the unaudited consolidated financial statements and in the “Overview” section above.~~

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RESULTS OF OPERATIONS

Overview

Net loss for the three months ended June 30, 2022 was $11.0 million compared to net loss of $25.4 million for the three months ended June 30, 2021. This $14.4 million decrease in net loss was primarily due to: (a) a decrease in real estate revenue of $0.9 million; (b) a decrease in gain on debt extinguishment of debt of $4.6 million; (c) an increase in gain on sales of interest in real estate of $2.7 million; (d) an increase on gain on sales of equity method investment of $9.1 million; (e) a decrease in gain on sales of real estate by equity method investee of $1.3 million; and (f) an increase in gain on sales of non-operating real estate of $8.8 million.

Net loss for the six months ended June 30, 2022 was $44.0 million compared to net loss of $69.4 million for the six months ended June 30, 2021. This $25.4 million decrease in net loss was primarily due to: (a) an increase in real estate revenue of $3.0 million resulting from the recovering economic conditions following the impact of COVID-19 on our tenants; (b) a decrease in gain on debt extinguishment of debt of $4.6 million; (c) an increase in gain on sales of interest in real estate of $2.7 million; (d) an increase on gain on sales of equity method investment of $9.1 million; (e) a decrease in gain on sales of real estate by equity method investee of $1.3 million; (f) an increase in gain on sales of non-operating real estate of $8.8 million; and (g) an increase in gain on sale of preferred equity interest of $3.7 million.

Occupancy

The table below sets forth certain occupancy statistics for our properties as of ~~September~~June 30, ~~2017~~2022 and ~~2016~~:

Occupancy ⁽¹⁾ at September 30,

Consolidated
Properties

Unconsolidated
Properties⁽²⁾

Combined⁽²⁾⁽³⁾
2017 2016 2017 2016 2017 2016
Retail portfolio weighted average:
Total excluding anchors 91.7 % 92.0 % 92.1 % 93.8 % 91.8 % 92.4 %
Total including anchors 93.9 % 94.4 % 93.5 % 95.0 % 93.8 % 94.6 %
Malls weighted average:
Total excluding anchors 92.3 % 92.1 % 89.5 % 94.8 % 92.0 % 92.4 %
Total including anchors 94.2 % 94.5 % 92.9 % 96.4 % 94.1 % 94.8 %
Other retail properties 36.7 % 83.1 % 94.0 % 93.8 % 91.3 % 93.3 %

~~_________________________~~

⁽¹⁾

Occupancy for both periods presented includes all tenants irrespective of the term of their agreements. Retail portfolio and mall occupancy for all periods presented includes a property classified as held for sale in 2017 because the Company has not yet entered into a purchase and sale agreement with respect to this property and excludes properties sold or classified as held for sale in 2016. Fashion District Philadelphia is excluded for 2016 and 2017 because the property is currently partially closed and undergoing a major reconstruction.


⁽²⁾	We own a 25% to 50% interest in each of our unconsolidated properties, and do not control such properties. Our percentage ownership is not necessarily indicative of the legal and economic implications of our ownership interest. See "—Use of Non GAAP Measures" for further details on our ownership interests in our unconsolidated properties.


⁽³⁾	Combined occupancy is calculated by using occupied gross leasable area (“GLA”) for consolidated and unconsolidated properties and dividing by total GLA for consolidated and unconsolidated properties.

2021:


	Occupancy(1) at June 30,
	Consolidated Properties						Unconsolidated Properties						Combined(2)
	2022			2021			2022			2021			2022			2021
Retail portfolio weighted average (3):
Total excluding anchors		90.5	%		86.5	%		87.6	%		80.8	%		89.8	%		84.8	%
Total including anchors		92.3	%		89.0	%		90.2	%		84.4	%		91.8	%		87.9	%
Core Malls weighted average: (4)
Total excluding anchors		92.7	%		88.5	%		80.3	%		74.6	%		90.5	%		86.0	%
Total including anchors		95.3	%		90.5	%		85.6	%		81.4	%		93.8	%		89.0	%

(1) Occupancy for all periods presented includes all tenants irrespective of the term of their agreement.

(2) Combined occupancy is calculated by using occupied gross leasable area (“GLA”) for consolidated and unconsolidated properties and dividing by total GLA for consolidated and unconsolidated properties.

(3) Retail portfolio includes all retail properties including Fashion District Philadelphia.

(4) Core Malls excludes Exton Square Mall and power centers.

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Leasing Activity

The table below sets forth summary leasing activity information with respect to our consolidated and unconsolidated properties for the three months ended ~~September~~June 30, ~~2017~~:

Initial Gross Rent Spread ⁽¹⁾

Avg Rent Spread ⁽²⁾

Annualized Tenant Improvements psf ⁽³⁾
Number
GLA
(in square feet)

Term
(years)
Initial Rent psf Previous Rent psf $ % %
Non Anchor
New Leases
Under 10,000 sf 29
60,419
7.7
$ 52.50
N/A N/A N/A N/A $ 10.72
Over 10,000 sf 3
92,448
10.0
16.90
N/A N/A N/A N/A 6.02
Total New Leases 32
152,867
7.9
$ 30.97
N/A N/A N/A N/A $ 7.88

Renewal Leases
Under 10,000 sf 49
110,385
3.4
$ 56.86
$ 57.84
$ (0.98 ) (1.7)% 0.1% $ 0.21
Over 10,000 sf 6
114,589
4.0
22.12
24.55
(2.43 ) (9.9)% (6.4)% —
Total Fixed Rent 55
224,974
3.5
$ 39.17
$ 40.88
$ (1.71 ) (4.2)% (1.9)% $ 0.10
Percentage in Lieu 0
—
0.0
$ —
$ —
N/A N/A N/A $ —
Total Renewal Leases 55
224,974
3.5
$ 39.17
$ 40.88
$ (1.71 ) (4.2)% (1.9)% $ —
Total Non Anchor⁽⁴⁾
87
377,841
5.1
$ 35.85

Anchor
New Leases —
—
—
$ —
N/A N/A N/A N/A $ —
Renewal Leases 4
336,207
6.3
$ 6.78
$ 6.69
$ 0.09
1.3% N/A $ —
Total 4
336,207
6.3
$ 6.78

~~_________________________~~

⁽¹⁾

Initial gross rent renewal spread is computed by comparing the initial rent per square foot in the new lease to the final rent per square foot amount in the expiring lease. For purposes of this computation, the rent amount includes minimum rent, common area maintenance (“CAM”) charges, estimated real estate tax reimbursements and marketing charges, but excludes percentage rent. In certain cases, a lower rent amount may be payable for a period of time until specified conditions in the lease are satisfied.


⁽²⁾	Average renewal spread is computed by comparing the average rent per square foot over the new lease term to the final rent per square foot amount in the expiring lease. For purposes of this computation, the rent amount includes minimum rent and fixed CAM charges, but excludes pro rata CAM charges, estimated real estate tax reimbursements, marketing charges and percentage rent.


⁽³⁾	~~Tenant improvements and certain other leasing costs are presented as annualized amounts per square foot and are spread uniformly over the initial lease term.~~

⁽⁴⁾

Includes 13 leases and 112,466 square feet of GLA with respect to our unconsolidated partnerships. Excluding these leases, the initial gross rent spread was 3.3% for leases under 10,000 square feet and 3.8% for all non anchor leases. Excluding these leases, the average rent spread was 4.6% for leases under 10,000 square feet and 5.5% for all non anchor leases. We own a 25% to 50% interest in each of our unconsolidated properties and do not control such properties. Our percentage ownership is not necessarily indicative of the legal and economic implications of our ownership interest. See "—Use of Non GAAP Measures" for further details on our ownership interests in our unconsolidated properties.

2022:


	Number		GLA		Term		Initial Rent per square foot ("psf")		Previous Rent psf		Initial Gross Rent Renewal Spread(1)						Average Rent Renewal Spread(2)			Annualized Tenant Improvements psf(3)
											$			%			%
Non Anchor
New Leases
Under 10k square feet ("sf")		51		131,077		5.0	$	30.92	N/A		N/A			N/A			N/A			$	4.40
Over 10k sf		2		33,246		10.0		21.31	N/A		N/A			N/A			N/A				11.39
Total New Leases		53		164,323		6.0	$	28.98	N/A		N/A			N/A			N/A			$	6.76

Renewal Leases
Under 10k sf		30		51,340		3.2	$	80.12	$	79.07	$	1.05			1.3	%		5.7	%	$	-
Over 10k sf		3		87,431		2.2		12.67		14.73		(2.06	)		(14.0	%)		(14.4	%)		-
Total Fixed Rent		33		138,771		2.6	$	37.62	$	38.53	$	(0.91	)		(2.4	%)		0.3	%	$	-
Total Percentage in Lieu		22		47,313		2.9		44.50		44.16		0.34			0.8	%	N/A				-
Total Renewal Leases		55		186,084		2.7	$	39.37	$	39.96	$	(0.59	)		(1.5	%)	N/A			$	-
Total Non Anchor (4)		108		350,407		4.2	$	34.50

Anchor
New Leases		-		-		-	$	-	$	-	$	-		N/A			N/A			$	-
Renewal Leases		2		447,900		7.8		5.06		5.06		-		-			N/A				-
Total		2		447,900		7.8	$	5.06

(1) Initial gross rent renewal spread is computed by comparing the initial rent per square foot in the new lease to the final rent per square foot amount in the expiring lease. For purposes of this computation, the rent amount includes minimum rent, common area maintenance (“CAM”) charges, estimated real estate tax reimbursements and marketing charges, but excludes percentage rent. In certain cases, a lower rent amount may be payable for a period of time until specified conditions in the lease are satisfied.

(2) Average rent renewal spread is computed by comparing the average rent per square foot over the new lease term to the final rent per square foot amount in the expiring lease. For purposes of this computation, the rent amount includes minimum rent and fixed CAM charges, but excludes pro rata CAM charges, estimated real estate tax reimbursements, marketing charges and percentage rent.

(3) These leasing costs are presented as annualized amounts per square foot and are spread uniformly over the initial lease term.

(4) Includes 9 leases and 21,079 square feet of GLA with respect to our unconsolidated partnerships. We own a 25% to 50% interest in each of our unconsolidated properties and do not control such properties. Our percentage ownership is not necessarily indicative of the legal and economic implications of our ownership interest. See “— Non-GAAP Supplemental Financial Measures” for further details on our ownership interests in our unconsolidated properties.

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The table below sets forth summary leasing activity information with respect to our consolidated and unconsolidated properties for the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~

Initial Gross Rent Spread ⁽¹⁾

Avg Rent Spread ⁽²⁾

Annualized Tenant Improvements psf ⁽³⁾
Number
GLA
(in square feet)

Term
(years)
Initial Rent psf Previous Rent psf $ % %
Non Anchor
New Leases
Under 10,000 sf 125
243,748
6.7
$ 47.21
N/A N/A N/A N/A $ 7.34
Over 10,000 sf 16
302,913
9.9
17.00
N/A N/A N/A N/A 7.03
Total New Leases 141
546,661
7.1
$ 30.47
N/A N/A N/A N/A $ 7.17

Renewal Leases
Under 10,000 sf 203
403,753
3.8
$ 60.82
$ 60.10
$ 0.72
1.2% 3.8% $ 0.07
Over 10,000 sf 15
319,025
3.3
16.62
17.31
(0.69 ) (4.0)% 0.9% —
Total Fixed Rent 218
722,778
3.7
$ 41.31
$ 41.21
$ 0.10
0.2% 3.3% $ 0.04
Percentage in Lieu 3
14,843
1.7
$ 5.51
$ 5.51
— —% N/A $ —
Total Renewal Leases 221
737,621
3.7
$ 40.59
$ 40.49
$ 0.10
0.2% 3.3% $ 0.05
Total Non Anchor⁽⁴⁾
362
1,284,282
5.0
$ 36.28

Anchor
New Leases 5
349,972
11.0
$ 7.70
N/A N/A N/A N/A $ 1.38
Renewal Leases 7
935,972
7.4
$ 5.23
$ 5.20
$ 0.03
0.6% N/A $ —
Total 12
1,285,944
8.9
$ 5.90

~~_________________________~~

⁽¹⁾


⁽²⁾	Average renewal spread is computed by comparing the average rent per square foot over the new lease term to the final rent per square foot amount in the expiring lease. For purposes of this computation, the rent amount includes minimum rent and fixed CAM charges, but excludes pro rata CAM charges, estimated real estate tax reimbursements, marketing charges and percentage rent.


⁽³⁾	~~Tenant improvements and certain other leasing costs are presented as annualized amounts per square foot and are spread uniformly over the initial lease term.~~

⁽⁴⁾

Includes 32 leases and 381,880 square feet of GLA with respect to our unconsolidated partnerships. We own a 25% to 50% interest in each of our unconsolidated properties and do not control such properties. Excluding these leases, the initial gross rent spread was 2.8% for leases under 10,000 square feet and 2.9% for all non anchor leases. Excluding these leases, the average rent spread was 5.3% for leases under 10,000 square feet and 5.8% for all non anchor leases.Our percentage ownership is not necessarily indicative of the legal and economic implications of our ownership interest. See "—Use of Non GAAP Measures" for further details on our ownership interests in our unconsolidated properties.

2022:


	Number		GLA		Term		Initial Rent per square foot ("psf")		Previous Rent psf		Initial Gross Rent Renewal Spread(1)						Average Rent Renewal Spread(2)			Annualized Tenant Improvements psf(3)
											$			%			%
Non Anchor
New Leases
Under 10k square feet ("sf")		86		209,130		5.5	$	34.65	N/A		N/A			N/A			N/A			$	5.57
Over 10k sf		4		74,696		11.4	$	16.98	N/A		N/A			N/A			N/A				8.08
Total New Leases		90		283,826		7.1	$	30.00	N/A		N/A			N/A			N/A			$	6.63

Renewal Leases
Under 10k sf		63		151,321		3.9	$	61.40	$	61.87	$	(0.47	)		(0.8	%)		4.7	%	$	0.94
Over 10k sf		6		157,166		3.1		17.83		18.63		(0.80	)		(4.3	%)		(4.4	%)		2.08
Total Fixed Rent		69		308,487		3.4	$	39.20	$	39.84	$	(0.64	)		(1.6	%)		2.3	%	$	1.46
Total Percentage in Lieu		35		95,660		2.6	$	31.96	$	32.18		(0.22	)		(0.7	%)		0.0	%		0.75
Total Renewal Leases (4)		104		404,147		3.2	$	37.49	$	38.03	$	(0.54	)		(1.4	%)	N/A			$	1.33
Total Non Anchor		194		687,973		4.8	$	34.40

Anchor
New Leases		-		-		-	$	-	N/A		N/A			N/A			N/A			$	-
Renewal Leases		2		447,900		7.8		5.06		5.06		-			0.0	%	N/A				-
Total		2		447,900		7.8	$	5.06

(3) These leasing costs are presented as annualized amounts per square foot and are spread uniformly over the initial lease term.

(4) Includes 12 leases and 33,335 square feet of GLA with respect to our unconsolidated partnerships. We own a 25% to 50% interest in each of our unconsolidated properties and do not control such properties. Our percentage ownership is not necessarily indicative of the legal and economic implications of our ownership interest. See “— Non-GAAP Supplemental Financial Measures” for further details on our ownership interests in our unconsolidated properties.

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~~Overview~~

Net income for the three months ended September 30, 2017 was $12.3 million, an increase in earnings of $9.4 million compared to net income of $2.9 million for the three months ended September 30, 2016. This increase was primarily due to a $6.7 million gain on the sale of real estate by an equity method investee, a decrease in impairment of assets from $9.9 million in the third quarter of 2016 to $1.8 million in the third quarter of 2017 and an increase in Same Store Net Operating Income (excluding lease termination revenue) of $1.5 million, partially offset by decreases in lease termination revenue of $3.5 million and Non-Same Store Net Operating Income of $3.6 million . See “Use of Non-GAAP Measures—Net Operating Income” for the definition and additional discussion about Net Operating Income, a non-GAAP measure.

Net loss for the nine months ended September 30, 2017 was $41.5 million, a decrease in earnings of $55.5 million compared to net income of $14.0 million for the nine months ended September 30, 2016. This decrease was primarily due to an increase in impairment of assets of $31.2 million, a decrease in gains on sale of real estate of $23.3 million and a decrease in Non-Same Store Net Operating Income of $12.4 million, partially offset by a $9.5 million decrease in interest expense and a $6.7 million gain on the sale of real estate by an equity method investee. See “Use of Non-GAAP Measures—Net Operating Income” for the definition and additional discussion about Net Operating Income, a non-GAAP measure.

The following table sets forth our results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016.~~

Three Months Ended
September 30, % Change
2016 to
2017 Nine Months Ended
September 30, % Change
2016 to
2017
(in thousands of dollars) 2017 2016 2017 2016
Real estate revenue $ 86,719
$ 96,260
(10 )% $ 263,553
$ 290,455
(9 )%
Property operating expenses (33,303 ) (37,249 ) (11 )% (105,509 ) (117,892 ) (11 )%
Other income 2,492
2,600
(4 )% 4,172
4,630
(10 )%
Depreciation and amortization (29,966 ) (26,820 ) 12 % (94,652 ) (92,217 ) 3 %
General and administrative expenses (8,288 ) (8,244 ) 1 % (26,561 ) (25,713 ) 3 %
Provision for employee separation expense —
(162 ) (100 )% (1,053 ) (1,355 ) (22 )%
Project costs and other expenses (150 ) (1,080 ) (86 )% (547 ) (1,374 ) (60 )%
Interest expense, net (14,342 ) (17,198 ) (17 )% (44,098 ) (53,611 ) (18 )%
Impairment of assets (1,825 ) (9,865 ) (82 )% (55,742 ) (24,589 ) 127 %
Equity in income of partnerships 4,254
4,643
(8 )% 12,144
12,718
(5 )%
Gain on sale of real estate by equity method investee 6,718
—
6,718
—

Gain on sales of interests in non operating real estate —
—
— % 486
9
5,300 %
(Losses) gains on sales of interests in real estate, net (9 ) 31
(129 )% (374 ) 22,953
(102 )%
Net income (loss) $ 12,300
$ 2,916
322 % $ (41,463 ) $ 14,014
(396 )%

2021.


	Three Months Ended June 30,						% Change 2021 to 2022				Six Months Ended June 30,						% Change 2021 to 2022
(in thousands of dollars)	2022			2021							2022			2021
Real estate revenue	$	73,058		$	73,956			(1.2	)	%	$	142,252		$	139,234			2.2		%
Property operating expenses		(31,802	)		(30,765	)		3.4		%		(65,375	)		(63,924	)		2.3		%
Other income		69			162			(57.4	)	%		310			288			7.6		%
Depreciation and amortization		(28,382	)		(29,686	)		(4.4	)	%		(57,492	)		(59,525	)		(3.4	)	%
General and administrative expenses		(9,744	)		(13,535	)		(28.0	)	%		(21,227	)		(25,366	)		(16.3	)	%
Provision for employee separation expenses		85			(149	)		(157.0	)	%		1			(240	)		(100.4	)	%
Insurance recoveries, net		—			670			(100.0	)	%		—			670			(100.0	)	%
Project costs and other expenses		(19	)		(77	)		(75.3	)	%		(79	)		(179	)		(55.9	)	%
Interest expense, net		(32,601	)		(31,978	)		1.9		%		(63,992	)		(62,709	)		2.0		%
Reorganization expenses		—			(69	)		(100.0	)	%		—			(267	)		(100.0	)	%
Gain on debt extinguishment, net		—			4,587			(100.0	)	%		—			4,587			(100.0	)	%
Impairment of assets		—			(1,302	)		(100.0	)	%		—			(1,302	)		(100.0	)	%
Equity in (loss) income of partnerships		(1,188	)		2,433			(148.8	)	%		(1,583	)		(1,000	)		58.3		%
Gain (loss) on sales of interests in real estate		1,701			(974	)		(274.6	)	%		1,701			(974	)		(274.6	)	%
Gain on sale of equity method investment		9,053						100.0		%		9,053						100.0		%
Gain on sales of real estate by equity method investee		—			1,347			(100.0	)	%		—			1,347			(100.0	)	%
Gain on sales of non operating real estate		8,755			—			0.0		%		8,755			—			0.0		%
Gain on sale of preferred equity interest		—			—			100.0		%		3,688			—			100.0		%
Net loss	$	(11,015	)	$	(25,380	)		(56.6	)	%	$	(43,988	)	$	(69,360	)		(36.6	)	%

The amounts in the preceding tables reflect our consolidated properties and our unconsolidated properties. Our unconsolidated properties are presented under the equity method of accounting in the line item “Equity in (loss) income of partnerships.”

Real Estate Revenue

We include all rental income earned pursuant to tenant leases under the “Lease revenue” line item in the consolidated statements of operations. Utility reimbursements are presented separately in “Expense reimbursements” as the pattern of transfer is not aligned with the use of the property. We review the collectability of both billed and unbilled lease revenues each reporting period, taking into consideration the tenant’s payment history, credit profile and other factors, including the tenant’s operating performance. For any tenant receivable balance deemed to be uncollectible, we record an offset for credit losses directly to Lease revenue in the consolidated statements of operations.

The following table reports the breakdown of real estate ~~revenue~~

revenues based on the terms of the lease contracts for the three and six months ended June 30, 2022 and 2021:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands of dollars)	2022		2021		2022		2021
Contractual lease payments:
Base rent	$	48,452	$	49,613		96,107	$	95,530
CAM reimbursement income	$	8,306		8,301		16,782		16,660
Real estate tax income	$	7,154		6,677		14,321		13,621
Percentage rent	$	472		217		585		205
Lease termination revenue	$	1,530		622		1,539		659
		65,914		65,430		129,334		126,675
Less: credit losses		738		2,682		759		1,345
Lease revenue		66,652		68,112		130,093		128,020
Expense reimbursements		4,215		3,887		8,359		7,786
Other real estate revenue		2,191		1,957		3,800		3,428
Total real estate revenue	$	73,058	$	73,956		142,252	$	139,234

Real Estate Revenue

Real estate revenue decreased by $~~9.5~~$0.9 million,, or ~~10%~~1%, in the three months ended ~~September~~June 30, ~~2017~~2022 compared to the three months ended ~~September~~June 30, ~~2016~~,2021, primarily due to:

~~a decrease~~

Table of ~~$6.7 million in real estate revenue related to properties sold in 2016 and 2017;~~

Contents

•

~~a decrease~~an increase of ~~$2.9~~$1.5 million in same store ~~lease terminations, including~~credit losses due to the ~~effect~~collection of ~~a $2.9 million lease termination fee received~~receivables from ~~one tenant~~the resolution of COVID-19 related issues with tenants across our portfolio for ~~two locations during~~ the three months ~~ending September~~ended June 30, ~~2016;~~

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•

a decrease of ~~$0.7~~$0.9 million ~~in same~~at non-same store ~~common area expense reimbursements,~~properties Valley View Mall and Exton Square Mall due to ~~a decrease in common area expense (see “—Property Operating Expenses”), as well as~~ lower occupancy and the collection of receivables from the resolution of COVID-19 related issues with tenants for the three months ended June 30, 2021 at ~~some properties~~Exton Square Mall, and ~~rental concessions made to some tenants under which~~ the ~~terms~~sale of ~~their leases were modified such that they no longer pay expense reimbursements;~~the strip center at Valley View Mall in the third quarter of 2021;

Real estate revenue increased by $3.0 million, or 2%, in the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily due to:

Property operating expenses increased by $1.5 million, or 2%, in the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily due to:

General and ~~$0.2 million on a land parcel located at Sunrise Plaza in Forked River, New Jersey.~~

•

increases in interest rates, resulting in higher borrowing costs.

In addition, we are continuing to monitor the COVID-19 pandemic and the related restrictions and changes to behavior intended to reduce its spread, and its impact on our tenants, their supply chains and customers and the retail industry. Thus far, the pandemic and the actions taken to address it and the related overall worsening of economic conditions have had an adverse effect on our business, operations, liquidity and financial condition.

As of the third quarter of 2020, all of our malls had re-opened while adhering to social distancing and sanitation and safety protocols designed to address the risks posed by COVID-19. The pandemic’s effect, primarily beginning in the second quarter of 2020, had a significant impact on our operations, financial condition, liquidity and results of operations in 2020, 2021, and the first half of 2022 and its impact is expected to continue through future periods. We believe that our rent collections are probable, but expect that collections will continue to be below our tenants’ rent obligations as long as lingering effects of COVID-19, including continued outbreaks with the emergence of new variants, affect the return of customers to malls and the financial strength of our tenants. While we continue to record rental revenue, the reduced collection levels had impacted our liquidity position and may continue to do so. 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 expect to meet certain of our longer-term requirements, such as obligations to fund redevelopment and development projects, ~~and~~ certain capital requirements, ~~(including scheduled debt maturities), future property and portfolio acquisitions,~~ renovations, expansions and other non-recurring capital improvements, through a variety of capital sources, subject to the terms and conditions of our Credit ~~Agreements.~~

Agreements, as further described below.

LIBOR Alternative

In ~~December 2014, our universal shelf registration statement was filed~~July 2017, the Financial Conduct Authority (“FCA”), which is the authority that regulates LIBOR, announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Alternative Reference Rates Committee (“ARRC”) has identified the Secured Overnight Financing Rate (“SOFR”) as the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. The FCA no longer publishes one-week and two-month U.S. dollar LIBOR rates and plans to cease publishing all other LIBOR tenors (overnight, one-month, three-month, six-month and 12-month) on June 30, 2023. It is not presently known whether SOFR or any other alternative reference rates will attain broad market acceptance as replacements of LIBOR. There remains uncertainty as to how the financial services industry will address the discontinuance of LIBOR in financial instruments that are indexed to LIBOR. Further, various financial instruments indexed to LIBOR could experience different outcomes based on their contractual terms, ability to amend those terms, market or product type, legal or regulatory jurisdiction, and other factors. Alternative reference rates that replace LIBOR may not yield the same or similar economic results over the lives of the financial instruments, which could adversely affect the value of and return on these instruments.

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We have material contracts that are indexed to LIBOR and are monitoring and evaluating the related risks, which include interest on loans or amounts received and paid on derivative instruments. These risks arise in connection with transitioning contracts to a new alternative rate, including any resulting value transfer that may occur. The value of loans, securities, and derivative instruments tied to LIBOR could also be affected if LIBOR is limited or discontinued. For some instruments, the method of transitioning to an alternative rate may be challenging, as they may require negotiation with the ~~SEC~~respective counterparty.

If a contract is not transitioned to an alternative rate and ~~became effective. We~~LIBOR is discontinued, the impact on our contracts is likely to vary by contract. If LIBOR is phased out and changes implemented, interest rates on our current or future indebtedness may ~~use~~be adversely affected.

While we expect LIBOR to be available in substantially its current form until the ~~availability under our shelf registration statement~~end of 2022, it is possible that LIBOR will become unavailable prior to ~~offer and sell common shares~~that point. This could occur, for example, if a requisite number of ~~beneficial interest, preferred shares and various types of debt securities, among other types of securities,~~banks decline to make submissions to the ~~public.~~

LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate would be accelerated and magnified.

Credit Agreements

We have entered into ~~four~~two secured credit agreements (collectively, as amended, the “Credit Agreements”): ~~(1)~~(a) the ~~2013~~First Lien Credit Agreement, which, as described in more detail below, includes (i) the $130.0 million First Lien Revolving Facility, ~~(2)~~and (ii) the $384.5 million First Lien Term Loan Facility, and (b) the Second Lien Credit Agreement, which, as described in more detail below, includes the $535.2 million Second Lien Term Loan Facility. The First Lien Term Loan Facility and the Second Lien Term Loan Facility are collectively referred to as the “Term Loans.” The Credit Agreements refinanced our previously existing credit agreements in effect prior to the effective date, including our secured term loan under the Credit Agreement dated as of August 11, 2020 (as amended, the “Bridge Credit Agreement”), our Seven-Year Term Loan Agreement entered into on January 8, 2014 (as amended, the “7-Year Term Loan”), and our 2018 Amended and Restated Credit Agreement entered into on May 24, 2018 (as amended, the “2018 Credit Agreement”).

As of June 30, 2022, we had borrowed $971.8 million under the Term Loans and $16.1 million under the First Lien Revolving Facility. The carrying value of the Term Loans on our consolidated balance sheet as of June 30, 2022 is net of $3.0 million of unamortized debt issuance costs. The maximum amount that was available to be borrowed by us under the First Lien Revolving Facility as of June 30, 2022 was $113.9 million.

Our obligations under the Credit Agreements are guaranteed by certain of our subsidiaries. Our obligations under the Credit Agreements and the guaranties are secured by mortgages and deeds of trust on a portfolio of 10 of our subsidiaries’ properties, including nine malls and one additional parcel. The obligations are further secured by a lien on substantially all of our personal property pursuant to collateral agreements and a pledge of substantially all of the equity interests held by us and the guarantors, pursuant to pledge agreements, in each case subject to limited exceptions.

The maturity date of the Credit Agreements is December 10, 2022 (or such earlier date that the obligations under the applicable Credit Agreement have been accelerated), unless extended by one year until December 10, 2023 at our option (the “Maturity Date”). Any such extension would be subject to our fulfillment of certain conditions including maintaining minimum liquidity of $35.0 million, a minimum corporate debt yield of 8.0% and a maximum loan-to-value ratio of 105% for the total first lien and second lien loans and letters of credit and the Borrowing Base Properties as determined by an appraisal (provided that we may obtain a second appraisal of each Borrowing Base Property prepared by a nationally recognized appraisal firm and use the highest appraised value), and provided that no default or event of default exists and our representations and warranties are true in all material respects.

First Lien Credit Agreement

On December 10, 2020, we entered into an Amended and Restated First Lien Credit Agreement (the “First Lien Credit Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo Bank”) and the other financial institutions signatory thereto and their assignees, for secured loan facilities consisting of: (i) a secured first lien revolving credit facility allowing for borrowings up to $130.0 million, including a sub-facility for letters of credit to be issued thereunder in an aggregate stated amount of up to $10.0 million (collectively, the “First Lien Revolving Facility”), and (ii) a $384.5 million secured first lien term loan facility (the “First Lien Term Loan Facility”).

Amounts borrowed under the First Lien Credit Agreement may be either Base Rate Loans or LIBOR Loans. Base Rate Loans bear interest at the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50% and (c) the LIBOR Market Index Rate plus 1.0%, provided that the Base Rate will not be less than 1.50% per annum, in each case plus (w) for revolving loans, 2.50% per annum, and (x) for term loans, 4.74% per annum. LIBOR Loans bear interest at LIBOR plus (y) for revolving loans, 3.50% per annum, and (z) for term loans, 5.74% per annum, in each case, provided that LIBOR will not be less than 0.50% per annum. Interest is due to be paid in cash on the last day of each applicable interest period (with rolling 30-day interest periods) and on the Maturity Date. We must pay certain fees to the administrative agent for the account of the lenders in connection with the First Lien Credit Agreement, including an unused fee for the account of the revolving lenders, which will accrue (i) 0.35% per annum on the daily amount of the unused revolving commitments when that amount is greater than or equal to 50% of the aggregate amount of revolving commitments, and (ii) 0.25% when that amount is less than 50% of the aggregate amount of revolving commitments. Accrued and unpaid unused fees will be payable quarterly in arrears during the term of the First Lien Credit

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Agreement and on the Revolving Termination Date (or any earlier date of termination of the revolving commitments or reduction of the revolving commitments to zero).

Letters of credit and the proceeds of revolving loans may be used (i) to refinance indebtedness under the Bridge Credit Agreement (which agreement was canceled and refinanced upon our entry into the Credit Agreements), (ii) for working capital and general corporate purposes (subject to certain exceptions set forth in the First Lien Credit Agreement, including limitations on investments in non-Borrowing Base Properties), and (iii) to fund professional fee payments and other fees and expenses subject to the provisions of the Plan and related confirmation order and for other uses permitted by the provisions of the First Lien Credit Agreement, Plan and confirmation order, in each case consistent with an approved annual business plan. The proceeds of term loans may only be used to refinance existing indebtedness under the 2018 Credit Agreement and the 7-Year Term ~~Loan, (3)~~Loan. We may terminate or reduce the ~~2014 5-Year~~amount of the revolving commitments at any time and from time to time without penalty or premium, subject to the terms of the First Lien Credit Agreement.

Second Lien Credit Agreement

On December 10, 2020, we also entered into a Second Lien Credit Agreement (the “Second Lien Credit Agreement”) with Wells Fargo Bank and the other financial institutions signatory thereto and their assignees for a $535.2 million secured second lien term loan facility (the “Second Lien Term Loan Facility”).

Amounts borrowed under the Second Lien Credit Agreement may be either Base Rate Loans or LIBOR Loans. Base Rate Loans bear interest at the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50% and ~~(4)~~(c) the ~~2015 5-Year~~LIBOR Market Index Rate plus 1.0%, provided that the Base Rate will not be less than 1.50% per annum, in each case plus 7.00% per annum. LIBOR Loans bear interest at LIBOR plus 8.00% per annum, provided that LIBOR will not be less than 0.50% per annum. Interest is due to be paid in kind on the last day of each applicable interest period (with rolling 30-day interest periods) by adding the accrued and unpaid amount thereof to the principal balance of the loans under the Second Lien Credit Agreement and then accruing interest on the increased principal amount (provided that after the discharge of our Senior Debt Obligations, interest will be paid in cash). We must pay certain fees to the administrative agent for the account of the lenders in connection with the Second Lien Credit Agreement.

The proceeds of loans under the Second Lien Credit Agreement may only be used to refinance existing indebtedness under the 2018 Credit Agreement and the 7-Year Term Loan.

~~See note 4~~

On February 8, 2021, the Company entered into the first amendment to the Second Lien Credit Agreement (“First Amendment”). The First Amendment provided for elimination of approximately $5.3 million of the disputed default interest that was capitalized into the principal balance of the Second Lien Term Loan Facility, reducing the outstanding principal amount of loans outstanding under the Second Lien Credit Agreement, retroactively as of December 10, 2020, to $535.2 million. The First Amendment also eliminated the disputed PIK interest that was capitalized through the date of the amendment.

On April 13, 2021, we entered into Agency Resignation, Appointment, Acceptance and Waiver Agreements pursuant to which Wells Fargo Bank resigned as Administrative Agent and Wilmington Savings Fund Society, FSB was appointed successor Administrative Agent under the First Lien Credit Agreement, the Second Lien Credit Agreement and, in each case, the ~~notes to our audited consolidated financial statements in~~related loan documents. There is currently no successor letter of credit issuer under the First Lien Revolving Facility, accordingly, the Company cannot currently access the letters of credit sub-facility.

See our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2021 for additional information on the Credit Agreements.

FDP Loan Agreement

As described in note 4 of our consolidated financial statements, PM Gallery LP, a Delaware limited partnership and joint venture entity owned indirectly by us and The Macerich Company (“Macerich”), previously entered into a $250.0 million term loan in January 2018 (as amended in July 2019 to increase the total maximum potential borrowings to $350.0 million) to fund the ongoing redevelopment of Fashion District Philadelphia and to repay capital contributions to the venture previously made by the partners. On December 10, 2020, PM Gallery LP, together with certain other subsidiaries owned indirectly by us and Macerich (including the fee and leasehold owners of the properties that are part of the Fashion District Philadelphia project), entered into an Amended and Restated Term Loan Agreement (the “FDP Loan Agreement”). In connection with the execution of the FDP Loan Agreement, a $100.0 million principal payment was made (and funded indirectly by Macerich) to pay down the existing loan, reducing the outstanding principal under the FDP Loan Agreement from $301.0 million to $201.0 million. In connection with the execution of the FDP Loan Agreement, the governing structure of PM Gallery LP was modified such that, effective as of January 1, 2021, Macerich is responsible for the entity’s operations and, subject to limited exceptions, controls major decisions.

The FDP Loan Agreement provides for (i) a maturity date of January 22, 2023, with the potential for a ~~description~~one-year extension upon the borrowers’ satisfaction of certain conditions, (ii) an interest rate at the borrowers’ option with respect to each advance of either (A) the Base Rate (defined as the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50%, and (c) the LIBOR Market Index Rate plus 1.00%) plus 2.50% or (B) LIBOR for the applicable period plus 3.50%, (iii) a full recourse guarantee of 50% of the ~~identical covenants~~borrowers’ obligations by PREIT Associates, L.P., on a several basis, (iv) a full recourse guarantee of certain of the borrowers’ obligations by The Macerich Partnership, L.P., up to a maximum of $50.0 million, on a several basis, (v) a pledge of the equity interests of certain indirect subsidiaries of PREIT and ~~common provisions contained~~Macerich, as

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well as of PREIT-RUBIN, Inc. and one of its subsidiaries, that have a direct or indirect ownership interest in the ~~Credit Agreements.~~

~~Table~~borrowers, (vi) a non-recourse carve-out guaranty and a hazardous materials indemnity by each of ~~Contents~~

~~In May 2017, we borrowed an additional $150.0 million on~~PREIT Associates, L.P. and The Macerich Partnership, L.P., and (vii) mortgages of the ~~2014 7-Year~~borrowers’ fee and leasehold interests in the properties that are part of the Fashion District Philadelphia project and certain other properties. The FDP Loan Agreement contains certain covenants typical for loans of its type. As noted above, PREIT Associates L.P. has severally guaranteed its 50% share of the FDP Term Loan (see Note 3 to our consolidated financial statements), which had $194.6 million outstanding as of June 30, 2022 (our share of which is $97.3 million). The joint venture also has the outstanding Partnership Loan of $119.1 million outstanding as of June 30, 2022 (our share of which is $59.5 million) and the majority of the proceeds were used to pay down the FDP Term Loan in December 2020 and the remainder was used to ~~repay borrowings~~fund ongoing capital expenditures at the property as well as accrued interest. We monitor the joint venture's cash flow and its ability to meet its debt service requirements. If the joint venture were unable to satisfy its obligations under the ~~2013 Revolving Facility.~~FDP Term Loan, and we were required to satisfy the payment obligations under the guarantee, this could have a material impact on our liquidity and available capital resources. There are also circumstances in which a default of the FDP Term Loan could give rise to an event of default under our Credit Agreements. See Going Concern Considerations section in Note 1 of our audited consolidated financial statements for further information.

Preferred Shares

We have 3,450,000 7.375% Series B Cumulative Redeemable Perpetual Preferred Shares (the “Series B Preferred Shares”) outstanding, 6,900,000 7.20% Series C Cumulative Redeemable Perpetual Preferred Shares (the “Series C Preferred Shares”) outstanding and 5,000,000 6.875% Series D Cumulative Redeemable Perpetual Preferred Shares (the “Series D Preferred Shares”) outstanding. Upon 30 days’ notice, we may redeem any or all of the Series B Preferred Shares or Series C Preferred Shares at $25.00 per share plus any accrued and unpaid dividends. We may not redeem the Series D Preferred Shares before September 15, 2022, except to preserve our status as a REIT or upon the occurrence of a Change of Control, as defined in the Trust Agreement addendums designating the Series D Preferred Shares. On and after January 27, 2022 and September 15, 2022, we may redeem any or all of the Series C Preferred Shares or the Series D Preferred Shares, respectively, at $25.00 per share plus any accrued and unpaid dividends. In addition, upon the occurrence of a Change of Control, we may redeem any or all of the Series D Preferred Shares for cash within 120 days after the first date on which such Change of Control occurs at $25.00 per share plus any accrued and unpaid dividends. The Series B Preferred Shares, the Series C Preferred Shares and the Series D Preferred Shares have no stated maturity, are not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless we redeem or otherwise repurchase them or they are converted.

In 2020, the Company suspended payment of its preferred share dividends. Dividends on the Series B, Series C and Series D preferred shares are cumulative and therefore will continue to accrue at an annual rate of $1.8436 per share, $1.80 per share and $1.7188 per share, respectively. As of ~~September~~June 30, ~~2017,~~2022, the cumulative amount of unpaid dividends on our issued and outstanding preferred shares totaled $54.7 million. This consisted of unpaid dividends per share on the Series B, Series C and Series D preferred shares of $3.69 per share, $3.60 per share and $3.44 per share, respectively.

Both the First Lien Credit Agreement and the Second Lien Credit Agreement prohibit any redemption of preferred shares so long as such agreements remain in effect.

Mortgage Loan Activity—Consolidated Properties

On December 10, 2021, we entered into an amendment to our mortgage loan secured by the property at Woodland Mall in Grand Rapids, Michigan, which provides for an extension of the maturity date until December 10, 2022 and has an outstanding balance of $111.7 million as of June 30, 2022. We capitalized $0.3 million of lender fees as additional debt issuance costs in connection with the amendment.

During the year ended December 31, 2020, we entered into forbearance and loan modification agreements for our consolidated properties Cherry Hill Mall, Cumberland Mall, Dartmouth Mall, Francis Scott Key Mall, Viewmont Mall, and Woodland Mall and for our unconsolidated partnership properties Metroplex and Springfield Mall. These arrangements allowed us to defer principal payments, and in some cases interest as well, on the mortgages between May and August of 2020 depending on the terms of the contract. At the end of each deferment period, the repayment period spans from four to six months to pay back the deferred amounts. The repayment periods ranged from August 2020 through February 2021 depending on the terms of the specific agreements. As of June 30, 2022, we had ~~borrowed $550.0 million under~~repaid all principal and interest deferrals.

In the ~~Term~~second quarter of 2020, we defaulted on the mortgage loan secured by Valley View Mall due to a missed payment on June 1, 2020, and not paying the balloon payment of $27.2 million. In the third quarter of 2020, the operations of the property were transferred to a receiver and foreclosure was filed. We recorded a gain on derecognition of property during the third quarter 2020 and recorded the mortgage balance and an offsetting contract asset on our consolidated balance sheets. In May 2022, the foreclosure proceedings were completed and both the mortgage balance and contract asset were written off. As such, no mortgage balance or contract asset in relation to Valley View Mall remains on our consolidated balance sheet as of June 30, 2022.

Mortgage Loans

Our mortgage loans, which are secured by eight of our consolidated properties, are due in installments over various terms extending to the year 2025. Five of these mortgage loans bear interest at fixed interest rates that range from 3.88% to 4.40% and ~~no amounts were outstanding under~~had a weighted average interest rate of 4.02% at June 30, 2022. Three of our ~~2013 Revolving Facility, $15.8 million~~mortgage loans bear interest at variable rates and had a weighted average interest rate of 4.94% at June

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30, 2022. The weighted average interest rate of all consolidated mortgage loans was ~~pledged as collateral~~4.24% at June 30, 2022. Mortgage loans for ~~letters~~properties owned by unconsolidated partnerships are accounted for in “Investments in partnerships, at equity” and “Distributions in excess of ~~credit,~~partnership investments,” and are not included in the table below.

The following table outlines the timing of principal payments and balloon payments pursuant to ~~certain covenants~~the terms of our mortgage loans on our consolidated properties as of June 30, 2022:


(in thousands of dollars)	Total		Remainder of 2022		2023-2024		2025-2026		Thereafter
Principal payments	$	22,548	$	5,150	$	12,992	$	4,406	$	—
Balloon payments		787,440		400,977		175,117		211,346		—
Total		809,988	$	406,127	$	188,109	$	215,752	$	—
Less: unamortized debt issuance costs		1,344
Carrying value of mortgage notes payable	$	808,644

Contractual Obligations

The following table presents our aggregate contractual obligations as of June 30, 2022 for the periods presented:


(in thousands of dollars)	Total		Remainder of 2022			2023-2024		2025-2026		Thereafter
Mortgage loans	$	809,988	$	406,127		$	188,109	$	215,752	$	—
Term Loans		996,019		996,019	(1)				—		—
First Lien Revolving Facility		16,078		16,078			—		—		—
Interest on indebtedness(2)		59,780		26,222			27,177		6,381		—
Operating leases		9,087		501			1,859		1,689		5,038
Ground leases		50,748		792			3,168		3,168		43,620
Finance leases		5,427		493			1,932		1,854		1,148
Development and redevelopment commitments(3)		4,321		2,440			1,881		—		—
Total	$	1,951,448	$	1,448,672		$	224,126	$	228,844	$	49,806

(1) Includes our First Lien Term Loan of $359.6 million and the anticipated maturity date balance of our Second Lien Term Loan Facility of $612.2 million, which includes estimated capitalized PIK interest based on current interest rates.

(2) Includes interest payments expected to be made on consolidated debt, including those in ~~the 2013 Revolving Facility, the unused portion~~connection with interest rate swap agreements.

(3) The timing of the ~~2013 Revolving Facility~~payments of these amounts is uncertain. We expect that ~~was available~~a significant majority of such payments (of which we include 100% of our obligations related to ~~us was $189.7 million.~~

Fashion District Philadelphia, which opened in September 2019) will be made prior to December 31, 2022, but cannot provide any assurance that changed circumstances at these projects will not delay the settlement of these obligations.

Interest Rate Derivative Agreements

As of ~~September~~June 30, ~~2017,~~2022, we had ~~entered into 30~~ interest rate swap agreements designated in qualifying hedging relationships outstanding with a weighted average base interest rate of ~~1.35%~~2.70% on a notional amount of ~~$749.6~~$300.0 million, maturing on various dates through December 2021 and one forward starting interest rate swap agreement with an interest rate of 1.42% on a notional amount of $48.0 million, which will be effective starting January 2018 and will mature in ~~February 2021.~~

May 2023. We originally entered into these interest rate swap agreements in order to hedge the interest payments associated with our issuances of variable interest rate long term debt. We have assessed the effectiveness of these interest rate swap agreements as hedges at inception and on a quarterly basis. As of September 30, 2017, we considered these interest rate swap agreements to be highly effective as cash flow hedges. The interest rate swap agreements are net settled monthly.

~~Accumulated~~

For derivatives that have been designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in “Accumulated other comprehensive ~~loss~~(loss) income” and subsequently reclassified into “Interest expense, net” in the same periods during which the hedged transaction affects earnings. Through December 10, 2020, all of our derivatives were designated and qualified as cash flow hedges of ~~September 30, 2017 includes~~interest rate risk.

On December 10, 2020 as a ~~net~~result of the Financial Restructuring, we de-designated seven of our interest rate swaps which were previously designated cash flow hedges against the 2018 Credit Facility and 7-year Term Loan, as the hedged forecasted transactions were no longer probable to occur during the hedged time period due to the Financial Restructuring as described in Note 1. As such, the Company accelerated the reclassification of a portion of the amounts in other comprehensive (loss) income to earnings which resulted in a loss of $2.8 million that was recorded within interest expense, net in the consolidated statement of operations. Additionally, on December 10, 2020, the Company voluntarily de-designated the remaining thirteen interest swaps that were also previously designated as cash flow hedges against the 2018 Credit Facility and 7-year Term Loan. Upon de-designation, the accumulated other comprehensive (loss) income balance of each of these de-designated derivatives will be separately reclassified to earnings as the originally hedged forecasted transactions affect earnings. Through December 10, 2020, the changes in fair value of the derivatives were recorded to accumulated other comprehensive (loss) income in the consolidated balance sheets.

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On December 22, 2020, we re-designated nine interest rate swaps with a notional amount of $375.0 million as cash flow hedges of interest rate risk against the First Lien Term Loan Facility. These interest rate swaps qualified for hedge accounting treatment with changes in the fair value of the derivatives recorded through accumulated other comprehensive (loss) income.

As of June 30, 2022, we had 7 total derivatives which were designated as cash flow hedges.

We recognize all derivatives at fair value as either assets or liabilities in the accompanying consolidated balance sheets. Our derivative assets are recorded in “Deferred costs and other assets” and our derivative liabilities are recorded in “Fair value of derivative instruments.”

Over the next twelve months we estimate that $1.0 million ~~relating~~will be reclassified as a decrease to ~~forward starting swaps~~interest expense in connection with our designated derivatives. The recognition of these amounts could be accelerated in the event that we ~~cash settled in prior years that are being amortized over 10 year periods commencing~~repay amounts outstanding on ~~the closing dates of~~ the debt instruments and do not replace them with new borrowings.

Derivatives not designated as hedges are not speculative and are also used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements. For swaps that ~~are associated with these settled swaps.~~

~~As of September 30, 2017,~~were not re-designated subsequent to December 10, 2020, changes in the fair value of derivatives are recorded directly in ~~a net liability position, which excludes accrued~~earnings as interest ~~but includes any adjustment for nonperformance risk related to these agreements, was $0.4 million. If~~expense in the consolidated statement of operations. During the six months ended June 30, 2022 we had breached any of the default provisions in these agreements as of September 30, 2017, we might have been required to settle our obligations under the agreements at their termination value (including accrued interest) of $0.4 million. We had not breached any of these provisions as of September 30, 2017.

~~Mortgage Loan Activity~~

In March 2017, we repaid a $150.6 million mortgage loan (including accrued interest of $0.6 million) secured by The Mall at Prince Georges in Hyattsville, Maryland using $110.0 million from our 2013 Revolving Facility and the balance from available working capital.

~~Mortgage Loans~~

no non-designated swaps mature. As of ~~September~~June 30, ~~2017, our mortgage loans,~~2022, we had no derivatives which are secured by 11 of our consolidated and held for sale properties, are due in installments over various terms extending to October 2025. Eight of these mortgage loans bear interest at fixed interest rates that range from 3.88% to 5.95% and had a weighted average interest rate of 4.28% at September 30, 2017. Three of our mortgage loans bear interest at variable rates and had a weighted average interest rate of 3.48% at September 30, 2017. The weighted average interest rate of all consolidated mortgage loans was 4.23% at September 30, 2017. Mortgage loans for properties owned by unconsolidated partnerships are accounted for in “Investments in partnerships, at equity” and “Distributions in excess of partnership investments” on the consolidated balance sheets and are not included in the table below.

~~The following table outlines the timing of principal payments related to our consolidated mortgage loans as of September 30, 2017:~~

(in thousands of dollars) Total Remainder of 2017 2018-2019 2020-2021 Thereafter
Principal payments $ 113,591
$ 5,229
$ 36,855
$ 38,635
$ 32,872
Balloon payments 922,453
—
68,469
178,600
675,384
Total $ 1,036,044
$ 5,229
$ 105,324
$ 217,235
$ 708,256
Less: unamortized debt issuance costs 3,466

Carrying value of mortgage notes payable $ 1,032,578

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~~The following table outlines the timing of principal payments related to our mortgage loan related to assets held for sale as of September 30, 2017:~~

(in thousands of dollars) Total Remainder of 2017 2018-2019 2020-2021 Thereafter
Principal payments $ 1,598
$ 91
$ 1,189
$ 318
$ —
Balloon payments 27,161
—
—
27,161
—
Total $ 28,759
$ 91
$ 1,189
$ 27,479
$ —
Less: unamortized debt issuance costs 153

Carrying value of mortgage notes payable $ 28,606

~~Contractual Obligations~~

~~The following table presents our aggregate contractual obligations as of September 30, 2017 for the periods presented:~~

(in thousands of dollars) Total Remainder of 2017 2018-2019 2020-2021 Thereafter
Mortgage loan principal payments $ 1,036,044
$ 5,229
$ 105,324
$ 217,235
$ 708,256
Mortgage loan principal payments related to assets held for sale 28,759
91
1,189
27,479
—
Term Loans 550,000
—
150,000
400,000
—
2013 Revolving Facility⁽¹⁾
—
—
—
—
—
Interest on indebtedness ⁽¹⁾⁽²⁾
263,909
14,822
108,357
86,978
53,752
Operating leases 4,713
528
3,779
406
—
Ground leases 7,280
140
1,120
1,120
4,900
Development and redevelopment commitments ⁽³⁾
115,878
49,601
66,277
—
—
Total $ 2,006,583
$ 70,411
$ 436,046
$ 733,218
$ 766,908

~~_________________________~~

⁽¹⁾~~As of September 30, 2017, no amounts~~ were ~~outstanding under the 2013 Revolving Facility; currently $20.0 million is outstanding under the 2013 Revolving Facility, which has a maturity date in 2018, plus two one-year extension options.~~

⁽²⁾~~Includes payments expected to be made in connection with interest rate swaps and a forward starting interest rate swap agreement.~~

⁽³⁾The timing of the payments of these amounts is uncertain. We expect that these payments will be made during the remainder of 2017 and in 2018, but cannot provide any assurance that changed circumstances at these projects will not delay the settlement of these obligations. In addition, our operating partnership, PREIT Associates and Macerich, have jointly and severally guaranteed the obligations of the joint venture we formed with Macerich to develop Fashion District Philadelphia to commence and complete a comprehensive redevelopment of that property costing not less than $300.0 million within 48 months after commencement of construction, which was March 14, 2016.

~~Preferred Share Dividends~~

Annual dividends on our 3,450,000 7.375% Series B Preferred Shares ($25.00 liquidation preference), our 6,900,000 7.20% Series C Preferred Shares ($25.00 liquidation preference) and our 5,000,000 6.875% Series D Preferred Shares ($25.00 liquidation preference) are expected to be $6.4 million, $12.4 million and $8.6 million respectively. The 8.25% Series A Preferred Shares were redeemed in October 2017 and no further dividends will be paid on these preferred shares.

non-designated.

CASH FLOWS

Net cash provided by operating activities totaled ~~$93.0~~$31.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 compared to ~~$104.2~~net cash provided by operating activities of $34.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016. The~~2021. This decrease in ~~2017 is primarily~~cash provided by operating activities was due to ~~properties sold~~changes in ~~2017~~working capital between periods primarily as a result of strong collections of outstanding accounts receivable in the first half of the prior year, which are included in change in other assets in our statement of cash flows.

Cash flows provided by investing activities were $22.2 million for the six months ended June 30, 2022 compared to cash flows used in investing activities of $14.4 million for the six months ended June 30, 2021. Cash flows provided by investing activities for the six months ended June 30, 2022 included $28.1 million in proceeds from sales of real estate and ~~2016.~~

equity method investment, and $2.4 million of proceeds from sale of preferred equity interest partially offset by $1.6 million of additions to construction in progress and $5.9 million of investments in real estate improvements.

Cash flows used in investing activities ~~were $79.7 million~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2017 compared~~2021 included $5.3 million of additions to ~~cash flows provided by investing activities~~construction in progress and $9.3 million of ~~$67.9 million for the nine months ended September 30, 2016.~~ investments in real estate improvements.

Cash flows used in ~~investing~~

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activities for the nine months ended September 30, 2017 included investment in construction in progress of $93.2 million, investments in partnerships of $56.8 million (primarily at Fashion District Philadelphia) and real estate improvements of $36.9 million (primarily related to ongoing improvements at our properties), partially offset by $77.8 million of proceeds from sales of Logan Valley Mall, Beaver Valley Mall, Crossroads Mall and two non operating parcels and $30.3 million of distributions from partnerships of proceeds from real estate sold. Investing activities for the first nine months of 2016 included $154.8 million in proceeds from the sale of five operating properties and one outparcel, partially offset by investment in construction in progress of $48.3 million and real estate improvements of $32.8 million, primarily related to ongoing improvements at our properties.

~~Cash flows provided by~~ financing activities were ~~$53.9~~$74.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 compared to cash flows used in financing activities of ~~$169.5~~$24.9 million for the ~~nine~~six months ended ~~September~~June 30, 2016. Cash flows provided by financing activities for the first nine months of 2017 included $282.0 million of proceeds from our 2017 Series C and D Preferred Share offerings and $3.0 million of net borrowings on our 2013 Revolving Facility, partially offset by the mortgage loan repayments of The Mall of Prince Georges of $150.0 million, aggregate dividends and distributions of $68.9 million, and principal installments on mortgage loans of $12.6 million.2021. Cash flows used in financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022 included $15.3 million of principal payments on mortgage ~~loan~~loans, along with $0.4 million of deferred financing costs paid for our Woodland Mall mortgage extension. Aggregate repayments ~~of 280.3 million, dividends~~on our First Lien Revolving Facility and ~~distributions of $60.9~~Term Loans were $38.5 million and $19.8 million, respectively, during the six months ended June 30, 2022. Additionally, the value of shares retired under the equity incentive plan, net of shares issued, was $5.3 million.

Cash flows used in financing activities for the six months ended June 30, 2021 included $14.7 million of principal ~~installment~~ payments on mortgage loans, $135.2 million in paydowns of ~~$12.7~~Francis Scott Key and Viewmont Malls’ mortgages, along with $0.9 million ~~partially~~of deferred financing costs paid for our Woodland Mall, Francis Scott Key Mall, and Viewmont Mall mortgage extensions. These were offset by ~~$130.0~~$127.7 million proceeds from refinancing of the ~~mortgage on Woodland Mall, $50.0~~Francis Scott Key and Viewmont Malls mortgages. We also had $0.6 million of shares retired under our equity compensation plan, net ~~2013 Revolving Facility borrowings, and an additional borrowing~~ of ~~$9.0 million from the mortgage loan secured by Viewmont Mall.~~

shares issued.

ENVIRONMENTAL

We are aware of certain environmental matters at some of our properties. We have, in the past, performed remediation of such environmental matters, and we are not aware of any significant remaining potential liability relating to these environmental matters or of any obligation to satisfy requirements for further remediation. We may be required in the future to perform testing relating to these matters. We have insurance coverage for certain environmental claims up to ~~$25.0~~$10.0 million per occurrence and up to ~~$25.0~~$10.0 million in the ~~aggregate.~~aggregate over our two year policy term. See our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2021, in the section entitled “Item 1A. Risk ~~Factors —We~~Factors— Risks Related to Our Business and Our Properties—We might incur costs to comply with environmental laws, which could have an adverse effect on our results of operations.”

COMPETITION AND TENANT CREDIT RISK

Competition in the retail real estate market is intense. We compete with other public and private retail real estate companies, including companies that own or manage malls, power centers, strip centers, lifestyle centers, factory outlet centers, theme/festival centers and community centers, as well as other commercial real estate developers and real estate owners, particularly those with properties near our properties, on the basis of several factors, including location and rent charged. We compete with these companies to attract customers to our properties, as well as to attract anchor and ~~in-line stores~~non-anchor store and other tenants. ~~We also compete to acquire land for new site development or to acquire parcels or properties to add to our existing properties.~~ Our malls and our other ~~retail~~operating properties face competition

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from similar retail, destination dining and entertainment centers, including more recently developed or renovated centers that are near our ~~retail~~ properties. We also face competition from a variety of different retail formats, including internet retailers, discount or value retailers, home shopping networks, mail order operators, catalogs, and telemarketers. Our tenants face competition from companies at the same and other properties and from other retail ~~channels or~~ formats as well, including internet retailers. They also face competition for employees in the current largely constrained labor market, which could impact their operations and operation costs. This competition could have a material adverse effect on our ability to lease space and on the amount of rent and expense reimbursements that we receive.

The existence or development of competing retail properties and the related increased competition for tenants might, subject to the terms and conditions of ~~our~~the Credit Agreements, ~~lead~~require us to make capital improvements to properties that we would have deferred or would not have otherwise planned to make and might also affect the total sales, occupancy and net operating income of such properties.

Any such capital improvements, undertaken individually or collectively, would involve costs and expenses that could adversely affect our results of operations.

~~We compete with many other entities engaged in real estate investment activities for~~

If we seek to make acquisitions, ~~of malls, other retail properties and prime development sites or sites adjacent to our properties, including~~competitors (such as institutional ~~pension funds,~~investors, other REITs and other owner-operators of retail ~~properties. When we seek to make acquisitions, competitors~~properties) might drive up the price we must pay for properties, parcels, other assets or other companies or might themselves succeed in acquiring those properties, parcels, assets or companies. In addition, our potential acquisition targets might find our competitors to be more attractive suitors if they have greater resources, are willing to pay more, or have a more compatible operating philosophy. In particular, larger REITs might enjoy significant competitive advantages that result from, among other things, a lower cost of capital, a better ability to raise capital, a better ability to finance an acquisition, better cash flow and enhanced operating efficiencies. We might not succeed in acquiring retail properties or development sites that we seek, or, if we pay a higher price for a property ~~or site,~~ and/or generate lower cash flow from an acquired property ~~or site~~ than we expect, our investment returns will be reduced, which will adversely affect the value of our securities.

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We receive a substantial portion of our operating income as rent under leases with tenants. At any time, any tenant having space in one or more of our properties could experience a downturn in its business that might weaken its financial ~~condition, as was the case for a few of our tenants in recent periods.~~condition. Such tenants might enter into or renew leases with relatively shorter terms. Such tenants might also defer or fail to make rental payments when due, delay or defer lease commencement, voluntarily vacate the premises or declare bankruptcy, which could result in the termination of the tenant’s lease or preclude the collection of rent in connection with the space for a period of time, and could result in material losses to us and harm to our results of operations. Also, it might take time to terminate leases of underperforming or nonperforming tenants and we might incur costs to remove such tenants. Some of our tenants occupy stores at multiple locations in our portfolio, and so the effect of any bankruptcy or store ~~closing~~closings of those tenants might be more significant to us than the bankruptcy or store closings of other tenants. In addition, under many of our leases, our tenants pay rent based, in whole or in part, on a percentage of their sales. Accordingly, declines in these tenants’ sales directly affect our results of operations. Also, if tenants are unable to comply with the terms of ~~our~~their leases, or otherwise seek changes to the terms, including changes to the amount of rent, we might modify lease terms in ways that are less favorable to us. Given current conditions in the economy, certain industries and the capital markets, in some instances retailers that have sought protection from creditors under bankruptcy law have had difficulty in obtaining debtor-in-possession financing, which has decreased the likelihood that such retailers will emerge from bankruptcy protection and has limited their alternatives.

All of these factors have been exacerbated by the impact of the ongoing COVID-19 pandemic.

SEASONALITY

There is seasonality in the retail real estate industry. Retail property leases often provide for the payment of all or a portion of rent based on a percentage of a tenant’s sales revenue, or sales revenue over certain levels. Income from such rent is recorded only after the minimum sales levels have been met. The sales levels are often met in the fourth quarter, during the November/December holiday season. Also, many new and temporary leases are entered into later in the year in anticipation of the holiday season and a higher number of tenants vacate their space early in the year. As a result, our occupancy and cash flows are generally higher in the fourth quarter and lower in the first and second quarters. Our concentration in the retail sector increases our exposure to seasonality and has resulted, and is expected to continue to result, in a greater percentage of our cash flows being received in the fourth quarter.

INFLATION

Inflation can have many effects on financial performance. Retail property leases often provide for the payment of rent based on a percentage of sales, which might increase with inflation. Customers might spend less at our retailers, which might decrease our rent based on a percentage of sales, due to inflation. Leases ~~may~~might also provide for tenants to bear all or a portion of operating expenses, which might reduce the impact of such increases on us. However, rent increases might not keep up with inflation, or if we recover a smaller proportion of property operating expenses, we might bear more costs if such expenses increase because of inflation.

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2017,~~2022 , together with other statements and information publicly disseminated by us, contain certain ~~“forward-looking statements” within~~forward-looking statements that can be identified by the ~~meaning~~use of ~~the federal securities laws.~~words such as “anticipate,” “believe,” “estimate,” “expect,” “project,” “intend,” “may” or similar expressions. Forward-looking statements relate to expectations, beliefs, projections, future plans, strategies, anticipated events, trends and other matters, including our expectations regarding the impact of COVID-19 on our business, that are not historical facts. When used, the words “anticipate,” “believe,” “estimate,” “target,” “goal,” ”expect,” “intend,” “may,” “plan,” “project,” “result,” “should,” “will,” and similar expressions, which do not relate solely to historical matters, are intended to identify forward looking statements. These forward-looking statements reflect our current views about future events, achievements, or results, cost reductions, dividend payments and the impact of COVID-19 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:~~following:

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•

the effectiveness of our financial restructuring and any additional strategies that we may employ to address our liquidity and capital resources in the future;

•

our ability to achieve forecasted revenue and pro forma leverage ratio and generate free cash flow to further reduce indebtedness;

•

the COVID-19 global pandemic and the public health and governmental response, which have created periods of significant economic disruption and also have and may continue to exacerbate many of the risks listed herein;

•

changes in the retail ~~industry,~~and real estate industries, including bankruptcies, consolidation and store closings, particularly among anchor 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~~•

changes in ~~operating costs that cannot be passed on to tenants;~~

~~current~~ economic conditions, including unemployment rates and ~~the state of employment growth and~~its effects on consumer confidence and spending, supply chain challenges, the current inflationary environment, and the corresponding effects on tenant business performance, prospects, solvency and leasing ~~decisions~~decisions;

•

our inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise;

•

our ability to maintain and increase property occupancy, sales and rental rates;

•

increases in operating costs that cannot be passed on ~~our cash flows, and~~to tenants, which may be exacerbated in the ~~value and potential impairment of our properties;~~current inflationary environment;

•

the effects of online shopping and other uses of technology on our retail tenants;

•

risks related to our development and redevelopment ~~activities;~~activities, including delays, cost overruns and our inability to reach projected occupancy or rental rates;

•

social unrest and acts of vandalism or violence at malls, including our properties, or at other similar spaces, and the potential effect on traffic and sales;

~~our ability to identify and execute on suitable acquisition opportunities and to integrate acquired properties into our portfolio;~~

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~~our partnerships and joint ventures with third parties to acquire or develop properties;~~

~~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;~~

~~changes to our corporate management team and any resulting modifications to our business strategies;~~

•

our ability to sell properties that we seek to dispose of, ~~or our ability~~which may be delayed by, among other things, the failure to obtain ~~prices we seek;~~zoning, occupancy and other governmental approvals and permits or, to the extent required, approvals of other third parties;

•

potential losses on impairment of certain long-lived assets, such as real estate, ~~or of intangible assets, such as goodwill,~~ including ~~such~~ losses that we might be required to record in connection with any ~~dispositions~~disposition of assets;

•

our substantial debt, ~~and the liquidation preference value~~particularly in light of ~~our preferred shares~~increasing interest rates, and our ~~high leverage ratio;~~

~~constraining leverage, unencumbered debt yield, interest and tangible net worth~~ability to remain in compliance with our financial covenants under our ~~principal credit agreements;~~debt facilities;

~~our ability to refinance our existing indebtedness when it matures, on favorable terms or at all;~~

•

our ability to raise capital, including ~~through joint ventures or other partnerships,~~ through sales of properties or interests in properties, ~~through~~subject to the ~~issuance~~terms of ~~equity or equity-related securities if market conditions are favorable, or through other actions;~~our Credit Agreements; and

~~our short- and long-term liquidity position;~~

•

potential dilution from any capital raising transactions or other equity ~~issuances; and~~issuances.

~~general economic, financial and political conditions, including credit and capital market conditions, changes in interest rates or unemployment.~~

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 herein and in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2021 in the section entitled “Item 1A. Risk ~~Factors.”~~Factors” and any subsequent reports we file with the SEC. We do not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market interest rates. As of ~~September~~June 30, ~~2017~~,2022, our consolidated debt portfolio consisted ~~primarily~~ of ~~$1,032.6~~$808.6 million of fixed and variable rate mortgage loans (net of debt issuance costs), ~~$150.0~~$16.1 million ~~borrowed~~ outstanding under our ~~2014 5-Year Term Loan~~First Lien Revolver, which bore interest at a rate of ~~2.69%~~4.7%, ~~$150.0~~$359.6 million borrowed under our ~~2015 5-Year~~First Lien Term Loan Facility, which bore interest at a rate of ~~2.69%~~6.8%, and ~~$250.0~~$612.2 million borrowed under our ~~2014 7-Year~~Second Lien Term Loan Facility, which bore interest at a rate of ~~2.69%~~9.2%. ~~As of September 30, 2017, no amounts were outstanding under our 2013 Revolving Facility.~~

Our mortgage loans, which are secured by 11eight of our consolidated properties, ~~(including one property that is classified as held for sale)~~ are due in installments over various terms extending to October ~~2025. Eight~~2025. Five of ~~these~~our mortgage loans bear interest at fixed interest rates that range from 3.88% to ~~5.95%~~4.40%, and had a weighted average interest rate of ~~4.28%~~4.02% at ~~September~~June 30, ~~2017~~. 2022. Three of our mortgage loans bear interest at variable rates, a portion of which has been swapped to fixed rates, and had a weighted average interest rate of ~~3.48%~~4.94% at ~~September~~June 30, ~~2017~~.2022. The weighted average interest rate of all consolidated mortgage loans was ~~4.23%~~4.24% at ~~September~~June 30, ~~2017~~.2022. Mortgage loans for properties owned by unconsolidated partnerships are accounted for in “Investments in partnerships, at equity” and “Distributions in excess of partnership investments” on the consolidated balance sheets and are not included in the table below.

Our interest rate risk is monitored using a variety of techniques. The table below presents the principal amounts of the expected annual maturities due in the respective years and the weighted average interest rates for the principal payments in the specified periods:

Fixed Rate Debt Variable Rate Debt
(in thousands of dollars)
For the Year Ending December 31,
Principal
Payments

Weighted
Average
Interest Rate ⁽¹⁾

Principal
Payments

Weighted
Average
Interest Rate⁽¹⁾
2017 $ 4,900
4.21 % $ 420
3.24 %
2018 16,972
4.25 % 70,149
3.78 %
2019 17,713
4.25 % 151,680
⁽²⁾
2.34 %
2020 45,272
5.03 % 151,680
⁽²⁾
2.24 %
2021 and thereafter 726,858
4.21 % 429,160
⁽²⁾
2.99 %

~~_________________________~~


⁽¹⁾	~~Based on the weighted average interest rates in effect as of~~ ~~September 30, 2017~~.


⁽²⁾	~~Includes Term Loan debt balance of $550.0 million with a weighted average interest rate of 2.69% as of~~ ~~September 30, 2017~~.


	Fixed Rate Debt					Variable Rate Debt
(in thousands of dollars) For the Year Ending December 31,	Principal Payments		Weighted Average Interest Rate(1)			Principal Payments			Weighted Average Interest Rate(1)
2022	$	294,427		3.96	%	$	1,099,623	(2)		8.03	%
2023		59,887		3.99	%		-			0.00	%
2024		6,405		4.04	%		121,818			4.66	%
2025		215,752		4.02	%		-			0.00	%
2026 and thereafter		—		—			—			—

(1) Based on the weighted average interest rates in effect as of June 30, 2022 and does not include the effect of our interest rate swap derivative instruments as described below.

(2) Includes term loan debt of $971.8 million under our First Lien Term Loan Facility and Second Lien Term Loan Facility with a weighted average interest rate of 8.31% as of June 30, 2022.

As of ~~September~~June 30, ~~2017~~,2022, we had ~~$803.1~~$1,221.4 million of variable rate debt. ~~Also, as of~~ ~~September 30, 2017, we had entered into~~ 30 ~~interest rate swap agreements with an aggregate weighted average interest rate of~~ ~~1.35%~~ ~~on a notional amount of~~ ~~$749.6 million~~ maturing on various dates through December 2021 and one forward starting interest rate swap agreement with an interest rate of 1.42% on a notional amount of $48.0 million, which will be effective starting January 2018 and maturing in February 2021.

Changes in market interest rates have different effects on the fixed and variable rate portions of our debt portfolio. A change in market interest rates applicable to the fixed portion of the debt portfolio affects the fair value, but it has no effect on interest incurred or cash flows. A change in market interest rates applicable to the variable portion of the debt portfolio affects the interest incurred and cash flows, but does not affect the fair value. The following sensitivity analysis related to our debt portfolio, which includes the effects of our interest rate swap agreements, assumes an immediate 100 basis point change in interest rates from their actual ~~September 30, 2017~~ ~~levels, with all other variables held constant.~~

~~A 100 basis point increase in market interest rates would have resulted in a decrease in our net financial instrument position of~~ ~~$53.9 million~~ at ~~September 30, 2017. A 100 basis point decrease in market interest rates would have resulted in an increase in our net financial instrument position of~~ ~~$56.8 million~~ at ~~September 30, 2017. Based on the variable rate debt included in our debt portfolio at September 30, 2017, a 100 basis point increase in interest rates would have resulted in an additional~~ ~~$0.6 million~~ ~~in interest expense annually. A 100 basis point decrease would have reduced interest incurred by~~ ~~$0.6 million~~ ~~annually.~~

To manage interest rate risk and limit overall interest cost, we may employ interest rate swaps, options, forwards, caps and floors, or a combination thereof, depending on the underlying exposure. Interest rate differentials that arise under swap contracts are recognized in interest expense over the life of the contracts. If interest rates rise, the resulting cost of funds is expected to be lower than that which would have been available if debt with matching characteristics was issued directly. Conversely, if interest rates fall, the resulting costs would be expected to be, and in some cases have been, higher. We may also employ forwards or purchased options to hedge qualifying anticipated transactions. Gains and losses are deferred and recognized in net ~~income~~loss in the same period that the underlying transaction occurs, expires or is otherwise terminated. See ~~note 7~~Note 6 of the notes to our unaudited consolidated financial ~~statements.~~

statements for further information.

As of June 30, 2022, we had interest rate swap agreements outstanding with a weighted average base interest rate of 2.70% on a notional amount of $300.0 million, maturing in May 2023. See Item 2. Management’s Discussion and Analysis—Liquidity and Capital Resources—Interest Rate Derivative Agreements for a discussion of changes to the designation of certain of our interest rate swap agreements in 2020.

Changes in market interest rates have different effects on the fixed and variable rate portions of our debt portfolio. A change in market interest rates applicable to the fixed portion of the debt portfolio affects the fair value, but it has no effect on interest incurred or cash flows. A change in market interest rates applicable to the variable portion of the debt portfolio affects the interest incurred and cash flows, but does not affect the fair value. The following sensitivity analysis related to our debt portfolio, which includes the effects of our interest rate swap agreements, assumes an immediate 100 basis point change in interest rates from their actual June 30, 2022 levels, with all other variables held constant.

A 100 basis point increase in market interest rates would have resulted in a decrease in our net financial instrument position of $17.7 million at June 30, 2022. A 100 basis point decrease in market interest rates would have resulted in an increase in our net financial instrument position of $16.9 million at June 30, 2022. Based on the variable rate debt included in our debt portfolio at June 30, 2022, a 100 basis point increase in interest rates would have resulted in an additional $9.2 million in interest expense annually. A 100 basis point decrease would have reduced interest incurred by $9.2 million annually.

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Because the information presented above includes only those exposures that existed as of ~~September~~June 30, ~~2017~~,2022, it does not consider changes, exposures or positions which have arisen or could arise after that date. The information presented herein has limited predictive value. As a result, the ultimate realized gain or loss or expense with respect to interest rate fluctuations will depend on the exposures that arise during the period, our hedging strategies at the time and interest rates.

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ITEM 4. CONTROLS AND PROCEDURES.

We are committed to providing accurate and timely disclosure in satisfaction of our SEC reporting obligations. In 2002, we established a Disclosure Committee to formalize our disclosure controls and procedures. ~~Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure~~Disclosure controls and procedures ~~as of~~ ~~September 30, 2017, and have concluded as follows:~~

~~Our disclosure~~include, without limitation, controls and procedures ~~are~~ designed to ensure ~~that the~~that:

• information that we are required to disclose in our reports under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and ~~forms.~~

~~Our disclosure controls~~forms; and ~~procedures are effective to ensure that~~

• material information ~~that we are~~ required to ~~disclose~~be disclosed in our reports filed under the Exchange Act ~~reports~~ is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") evaluated our disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our CEO and CFO concluded that as of June 30, 2022, our disclosure controls and procedures were not effective due to the material weaknesses in our internal control over financial reporting.

The ineffectiveness of our internal control over financial reporting was due to material weaknesses in our internal control over financial reporting which we identified and previously reported in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2021.

Management’s Remediation Efforts

Management of the Company and the Board of Trustees are committed to maintaining a strong internal control environment and to making further progress in its remediation efforts during 2022. During 2021, we commenced efforts at the remediation of a material weakness identified as of December 31, 2020. Our remediation activities that commenced in 2021 did result in attracting and retaining sufficient personnel with requisite financial expertise and appropriately considering risks of fraud, including the possibility of management override of controls and proper segregation of duties, and our remediation activities are ongoing. The Company's 2021 remediation measures included the following:

•

The Company hired and retained individuals with the appropriate skills and provided in-depth re-training to control owners related to technical accounting and internal control over financial reporting;

•

The Company has enhanced its reconciliations and management review controls with the added stability of new hires and the implementation of technology solutions to automate visibility and enforcement of the independent review and documentation of journal entries, including proper segregation of duties, thus mitigating risks of both unintentional errors and fraud; and

~~There was no change~~•

Development of processes and procedures to enhance the precision of management review of financial statement information including implementation of an automated workflow for manual journal entry review and posting.

Management believes that it is making progress with the ongoing remediation efforts that include completion and implementation of design to enhance precision of management review controls and ensure reliability of information used in the controls will reduce the risk that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis. We will monitor and evaluate the remediation steps to ensure our internal control over financial reporting is effective to address control deficiencies or as we determine it necessary to modify the remediation plan described above. We will continue to report regularly to our Audit Committee on the progress of our remediation plan.

Changes in Internal Control over Financial Reporting

Other than our actions to remediate the material weaknesses relating to our internal controls over financial reporting ~~that occurred~~as described above, there were no changes in our internal control over financial reporting during the ~~period covered by this report~~quarter ended June 30, 2022 that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal ~~controls~~control over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

In the normal course of business, we have become and might in the future become involved in legal actions relating to our business, including but not limited to commercial disputes, rent collection actions and other matters related to the ownership and operation of our properties and the properties that we manage for third parties. In management’s opinion, the resolution of any such pending legal actions is not expected to have a material adverse effect on our consolidated financial position or results of operations.

On November 1, 2020, we and certain of our wholly owned subsidiaries commenced voluntary cases under chapter 11 of title 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware under the caption In re Pennsylvania Real Estate Investment Trust, et al. and filed our prepackaged chapter 11 plan of reorganization with the Bankruptcy Court. On November 30, 2020, the Bankruptcy Court entered an order confirming the Plan. The Plan became effective and we subsequently emerged from bankruptcy on December 10, 2020. The final decree closing the bankruptcy case was entered by the Bankruptcy Court on March 11, 2021.

ITEM 1A. RISK FACTORS.

In addition to the other information set forth in this report, you should carefully consider the risks that could materially affect our business, financial condition or results of operations, which are discussed under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Issuer Purchases of Equity Securities

~~The following table shows the total number of~~

We did not acquire any shares ~~that we acquired~~ in the three and six months ended ~~September~~June 30, ~~2017~~2022.

Limitations upon the Payment of Dividends

The Credit Agreements provide generally that we may only make dividend payments in the minimum amount necessary to maintain our status as a REIT. We must maintain our status as a REIT at all times.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Preferred Dividend Arrearage

Dividends on the Series B, Series C and ~~the average price paid~~Series D preferred shares are cumulative and therefore will continue to accrue at an annual rate of $0.4609 per share, ~~(in thousands~~$0.45 per share and $0.4297 per share, respectively. As of ~~shares).~~

Period
Total Number
of Shares
Purchased

Average Price
Paid per
Share

Total Number of
Shares Purchased
as part of Publicly
Announced Plans
or Programs

Maximum Number
(or Approximate Dollar
Value) of Shares that
May Yet Be Purchased
Under the Plans or
Programs
July 1 - July 31, 2017 2,500
$ 11.59
—
$ —
August 1 - August 31, 2017 —
—
—
—
September 1 - September 30, 2017 495
10.26
—
—
Total 2,995
$ 11.37
—
$ —

August 9, 2022, the cumulative amount of unpaid dividends on our issued and outstanding preferred shares totaled $54.7 million. This consisted of unpaid dividends per share on the Series B, Series C and Series D preferred shares of $3.69 per share, $3.60 per share and $3.44 per share, respectively.

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ITEM 6.EXHIBITS.



~~1.1~~ 3.1	Purchase Agreement dated September 7, 2017, by and among PREIT, Preit Associates, L.P. and Wells Fargo Securities LLC, as representative of the several Underwriters listed on Schedule A attached thereto, filed as Exhibit 1.1 to PREIT’s Current Report in Form 8-K filed on September 11, 2017, is incorporated herein by reference.

~~3.1~~	Amended and Restated Trust Agreement dated December 18, 2008, filed as Exhibit 3.1 to PREIT’s Current Report on Form 8-K filed on December 23, 2008, is incorporated herein by reference.

3.2	Amendment, dated June 7, 2012, to Amended and Restated Trust Agreement of Pennsylvania Real Estate Investment Trust dated December 18, 2008, as amended, filed as Exhibit 3.1 to PREIT’s Current Report on Form 8-K filed on June 12, 2012, is incorporated herein by reference.

3.3	Amendment to Amended and Restated Trust Agreement dated December 18, 2008, as amended, dated as of March 30, 2020, filed as Exhibit 3.1 to PREIT’s Current Report on Form 8-K filed on March 31, 2020, is incorporated herein by reference.

3.4	Amendment to Amended and Restated Trust Agreement dated December 18, 2008, as amended, dated as of June 15, 2022, filed as Exhibit 3.1 to PREIT’s Current Report on Form 8-K filed on June 22, 2022, is incorporated herein by reference.

3.5	By-Laws of PREIT (as amended through March 31, 2020), filed as Exhibit 3.2 to PREIT’s Current Report on Form 8-K filed on March 31, 2020, is incorporated herein by reference.

3.6	Designating Amendment to Trust Agreement, designating the rights, preferences, privileges, qualifications, limitations and restrictions of PREIT’s 8.25% Series A Cumulative Redeemable Perpetual Preferred Shares, liquidation preference $25.00 per share, par value $0.01 per share, filed as Exhibit 3.2 to PREIT’s Form 8-A filed on April 20, 2012, is incorporated herein by reference.

~~3.3~~ 3.7	Amendment, dated June 7, 2012, to Amended and Restated Trust Agreement of Pennsylvania Real Estate Investment Trust dated December 18, 2008, as amended, filed as Exhibit 3.1 to PREIT’s Current Report on Form 8-K filed on June 12, 2012, is incorporated herein by reference.

~~3.4~~	Second Designating Amendment to Trust Agreement, designating the rights, preferences, privileges, qualifications, limitations and restrictions of PREIT’s 7.375% Series B Cumulative Redeemable Perpetual Preferred Shares, liquidation preference $25.00 per share, par value $0.01 per share, filed as Exhibit 3.2 to PREIT’s Form 8-A filed on October 11, 2012, is incorporated herein by reference.

~~3.5~~ 3.8	Third Designating Amendment to Trust Agreement, designating the rights, preferences, privileges, qualifications, limitations and restrictions of PREIT’s 7.20% Series C Cumulative Redeemable Perpetual Preferred Shares, liquidation preference $25.00 per share, par value $0.01 per share, filed as Exhibit 3.4 to PREIT’s Form 8-A filed on January 27, 2017, is incorporated herein by reference.

~~3.6~~ 3.9	Fourth Designating Amendment to Trust Agreement, designating the rights, preferences, privileges, qualifications, limitations and restrictions of PREIT’s 6.875% Series D Cumulative Redeemable Perpetual Preferred Shares, liquidation ~~preferences~~preference $25.00 per share, par value $0.01 per share, filed as Exhibit 3.5 to PREIT’s Form 8-A filed on September 11, 2017, is incorporated herein by reference.

~~4.1~~ 10.1+	~~Fourth Addendum to First Amended~~ Letter Agreement, dated as of May 19, 2022 by and ~~Restated Agreement of Limited Partnership of~~between PREIT ~~Associates, L. P. designating the rights, obligations, duties~~Services, LLC and ~~preferences of the Series D Preferred units, filed~~Joseph J. Aristone. Filed as Exhibit 10.1 to PREIT’s Current Report on ~~form~~Form 8-K filed on ~~September 11, 2017,~~May 19, 2022, is incorporated herein by reference.

~~10.1~~ 10.2+	~~2017 - 2019 Restricted Share Unit Program~~ Retention Bonus Letter Agreement, dated as of May 19, 2022, by and between PREIT Services, LLC and Joseph J. Aristone, filed as Exhibit 10.2 to PREIT's Current Report on Form 8-K filed on May 19, 2022, is incorporated herein by reference.

~~10.2~~ 10.3+	Form of Restricted Share Unit ~~And~~and Dividend Equivalent Rights Award ~~Agreement~~Notice, filed as Exhibit 10.1 to PREIT's Current Report on Form 8-K filed on June 8, 2022, is incorporated herein by reference.

~~31.1~~ 31.1*	Certification pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~31.2~~ 31.2*	Certification pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~32.1~~ 32.1**	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~32.2~~ 32.2**	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~101~~ 101.INS*	~~Pursuant to Rule 405 of Regulation S-T,~~ Inline XBRL Instance Document – the ~~following financial information from~~instance document does not appear in the ~~Company’s Quarterly Report on Form 10-Q for~~Interactive Data File because its XBRL tags are embedded within the ~~period ended September 30, 2017 is formatted in~~Inline XBRL interactive data files: (i) Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016; (ii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016; (iii) Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016; (iv) Consolidated Statements of Equity for the nine months ended September 30, 2017; (v) Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016; and (vi) Notes to Unaudited Consolidated Financial Statements. document.

101.SCH*	Inline XBRL Taxonomy Extension Schema Document.

101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document.

Table of Contents



101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.INS).

* Filed herewith

** Furnished herewith

+ Management contract or compensatory plan or arrangement.

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SIGNATURE OF REGISTRANT

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
Date:	~~November 2, 2017~~ August 9, 2022
		By:	/s/ Joseph F. Coradino
			Joseph F. Coradino
			Chairman and Chief Executive Officer

		By:	/s/ ~~Robert F. McCadden~~Mario C. Ventresca, Jr.
			~~Robert F. McCadden~~ Mario C. Ventresca, Jr.
			Executive Vice President and Chief Financial Officer

		By:	/s/ ~~Jonathen Bell~~Sathana Semonsky
			~~Jonathen Bell~~ Sathana Semonsky
			~~Senior~~ Vice President and Chief Accounting Officer
			~~(Principal Accounting Officer)~~

~~Table of Contents~~

~~Exhibit Index~~



~~1.1~~	Purchase Agreement dated September 7, 2017, by and among PREIT, Preit Associates, L.P. and Wells Fargo Securities LLC, as representative of the several Underwriters listed on Schedule A attached thereto, filed as Exhibit 1.1 to PREIT’s Current Report in Form 8-K filed on September 11, 2017, is incorporated herein by reference.

~~3.1~~	~~Amended and Restated Trust Agreement dated December 18, 2008, filed as Exhibit 3.1 to PREIT’s Current Report on Form 8-K filed on December 23, 2008, is incorporated herein by reference.~~

~~3.2~~	Designating Amendment to Trust Agreement designating the rights, preferences, privileges, qualifications, limitations and restrictions of PREIT’s 8.25% Series A Cumulative Redeemable Perpetual Preferred Shares, liquidation preference $25.00 per share, par value $0.01 per share, filed as Exhibit 3.2 to PREIT’s Form 8-A filed on April 20, 2012, is incorporated herein by reference.

~~3.3~~	Amendment, dated June 7, 2012, to Amended and Restated Trust Agreement of Pennsylvania Real Estate Investment Trust dated December 18, 2008, as amended, filed as Exhibit 3.1 to PREIT’s Current Report on Form 8-K filed on June 12, 2012, is incorporated herein by reference.

~~3.4~~	Second Designating Amendment to Trust Agreement designating the rights, preferences, privileges, qualifications, limitations and restrictions of PREIT’s 7.375% Series B Cumulative Redeemable Perpetual Preferred Shares, liquidation preference $25.00 per share, par value $0.01 per share, filed as Exhibit 3.2 to PREIT’s Form 8-A filed on October 11, 2012, is incorporated herein by reference.

~~3.5~~	Third Designating Amendment to Trust Agreement designating the rights, preferences, privileges, qualifications, limitations and restrictions of PREIT’s 7.20% Series C Cumulative Redeemable Perpetual Preferred Shares, liquidation preference $25.00 per share par value $0.01 per share, filed as Exhibit 3.4 to PREIT’s Form 8-A filed on January 27, 2017, is incorporated by reference.

~~3.6~~	Fourth Designating Amendment to Trust Agreement designating the rights, preferences, privileges, qualifications, limitations and restrictions of PREIT’s 6.875% Series D Cumulative Redeemable Perpetual Preferred Shares, liquidation preferences $25.00 per share par value $0.01 per share, filed as Exhibit 3.5 to PREIT’s Form 8-A filed on September 11, 2017, is incorporated by reference.

~~4.1~~	Fourth Addendum to First Amended and Restated Agreement of Limited Partnership of PREIT Associates, L. P. designating the rights, obligations, duties and preferences of the Series D Preferred units, filed as Exhibit 10.1 to PREIT’s Current Report on form 8-K filed on September 11, 2017, is incorporated herein by reference.

10.1*	~~2017 - 2019 Restricted Share Unit Program~~

10.2*	~~Form of Restricted Share Unit And Dividend Equivalent Rights Award Agreement~~

31.1*	~~Certification pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

31.2*	~~Certification pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

32.1**	~~Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

32.2**	~~Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

101*	Pursuant to Rule 405 of Regulation S-T, the following financial information from the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2017 is formatted in XBRL interactive data files: (i) Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016; (ii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016; (iii) Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016; (iv) Consolidated Statements of Equity for the nine months ended September 30, 2017; (v) Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016; and (vi) Notes to Unaudited Consolidated Financial Statements.

~~_______________________~~

~~Table of Contents~~



*	~~filed herewith~~



**	~~furnished herewith~~



Pennsylvania		23-6216339
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~200 South Broad~~ One Commerce Square 2005 Market Street, Suite 1000 Philadelphia, PA		~~19102~~ 19103
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of Exchange on which registered
Shares of Beneficial Interest, par value $1.00 per share	PEI	New York Stock Exchange
Series B Preferred Shares, par value $0.01 per share	PEIPrB	New York Stock Exchange
Series C Preferred Shares, par value $0.01 per share	PEIPrC	New York Stock Exchange
Series D Preferred Shares, par value $0.01 per share	PEIPrD	New York Stock Exchange



Large accelerated filer	x ☐		Accelerated filer	o ☒
Non-accelerated filer	o ☐	~~(Do not check if a smaller reporting company)~~	Smaller reporting company	o ☒
			Emerging growth company	o ☐



			Page
	PART I—FINANCIAL INFORMATION

Item 1.		Financial Statements (Unaudited):	1

		Consolidated Balance Sheets—~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021	1

		Consolidated Statements of Operations—Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021	2

		Consolidated Statements of Comprehensive ~~(Loss) Income—~~Loss—Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021	4

		Consolidated Statements of Equity—~~Nine~~Three and Six Months Ended ~~September~~June 30, ~~2017~~2022 and 2021	5

		Consolidated Statements of Cash Flows—~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021	6

		Notes to Unaudited Consolidated Financial Statements	7

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	19	23

Item 3.		Quantitative and Qualitative Disclosures About Market Risk	41	48

Item 4.		Controls and Procedures	42	50

		PART II—OTHER INFORMATION

Item 1.		Legal Proceedings	43	51

Item 1A.		Risk Factors	43	51

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	43	51

Item 3.	~~Not Applicable~~	— Defaults Upon Senior Securities	51

Item 4.		Not Applicable	—

Item 5.		Not Applicable	—

Item 6.	~~Exhibits~~	44Exhibits	52

Signatures		45	54



(in thousands, except per share amounts)	September 30, 2017			December 31, 2016
	(unaudited)
ASSETS:
INVESTMENTS IN REAL ESTATE, at cost:
Operating properties	$	3,084,759		$	3,196,529
Construction in progress	129,614			97,575
Land held for development	5,881			5,910
Total investments in real estate	3,220,254			3,300,014
Accumulated depreciation	(1,082,840		)	(1,060,845		)
Net investments in real estate	2,137,414			2,239,169
INVESTMENTS IN PARTNERSHIPS, at equity:	201,000			168,608
OTHER ASSETS:
Cash and cash equivalents	76,942			9,803
Tenant and other receivables (net of allowance for doubtful accounts of $6,599 and $6,236 at September 30, 2017 and December 31, 2016, respectively)	34,745			39,026
Intangible assets (net of accumulated amortization of $12,643 and $11,064 at September 30, 2017 and December 31, 2016, respectively)	18,167			19,746
Deferred costs and other assets, net	107,304			93,800
Assets held for sale	49,074			46,680
Total assets	$	2,624,646		$	2,616,832
LIABILITIES:
Mortgage loans payable, net	$	1,032,578		$	1,222,859
Term Loans, net	547,567			397,043
Revolving Facility	—			147,000
Tenants’ deposits and deferred rent	12,234			13,262
Distributions in excess of partnership investments	59,871			61,833
Fair value of derivative liabilities	445			1,520
Liabilities related to assets held for sale	32,295			2,658
Accrued expenses and other liabilities	58,542			68,251
Total liabilities	1,743,532			1,914,426
COMMITMENTS AND CONTINGENCIES (Note 6):
EQUITY:
Series A Preferred Shares, $.01 par value per share; 25,000 preferred shares authorized; 4,600 shares of Series A Preferred Shares issued and outstanding at each of September 30, 2017 and December 31, 2016; liquidation preference of $115,000	46			46
Series B Preferred Shares, $.01 par value per share; 25,000 preferred shares authorized; 3,450 shares of Series B Preferred Shares issued and outstanding at each of September 30, 2017 and December 31, 2016; liquidation preference of $86,250	35			35
Series C Preferred Shares, $.01 par value per share; 25,000 preferred shares authorized; 6,900 shares of Series C Preferred Shares issued and outstanding at September 30, 2017; liquidation preference of $172,500	69			—
Series D Preferred Shares, $.01 par value per share; 25,000 preferred shares authorized; 4,800 shares of Series D Preferred Shares issued and outstanding at September 30, 2017; liquidation preference of $120,000	48			—
Shares of beneficial interest, $1.00 par value per share; 200,000 shares authorized; issued and outstanding 69,888 shares at September 30, 2017 and 69,553 shares at December 31, 2016	69,888			69,553
Capital contributed in excess of par	1,768,540			1,481,787
Accumulated other comprehensive income	3,534			1,622
Distributions in excess of net income	(1,098,547		)	(997,789		)
Total equity—Pennsylvania Real Estate Investment Trust	743,613			555,254
Noncontrolling interest	137,501			147,152
Total equity	881,114			702,406
Total liabilities and equity	$	2,624,646		$	2,616,832



x	~~Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~



o	~~Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~


(in thousands, except per share amounts)	June 30, 2022			December 31, 2021
ASSETS:
INVESTMENTS IN REAL ESTATE, at cost:
Operating properties	$	3,113,836		$	3,156,194
Construction in progress		45,472			45,828
Land held for development		4,339			4,339
Total investments in real estate		3,163,647			3,206,361
Accumulated depreciation		(1,443,004	)		(1,405,260	)
Net investments in real estate		1,720,643			1,801,101
INVESTMENTS IN PARTNERSHIPS, at equity:		7,967			16,525
OTHER ASSETS:
Cash and cash equivalents		24,008			43,852
Tenant and other receivables		32,173			42,501
Intangible assets (net of accumulated amortization of $22,274 and $21,598 at June 30, 2022 and December 31, 2021, respectively)		9,378			10,054
Deferred costs and other assets, net		93,198			128,923
Assets held for sale		41,304			8,780
Total assets	$	1,928,671		$	2,051,736
LIABILITIES:
Mortgage loans payable, net	$	808,644		$	851,283
Term Loans, net		968,871			959,137
Revolving Facilities		16,078			54,549
Tenants’ deposits and deferred rent		9,322			10,180
Distributions in excess of partnership investments		72,680			71,570
Fair value of derivative instruments		-			8,427
Accrued expenses and other liabilities		74,941			89,543
Total liabilities		1,950,536			2,044,689
COMMITMENTS AND CONTINGENCIES (Note 8)
EQUITY:
Series B Preferred Shares, $.01 par value per share; 25,000 shares authorized; 3,450 shares issued and outstanding; liquidation preference of $98,971 and $95,791 at June 30, 2022 and December 31, 2021, respectively		35			35
Series C Preferred Shares, $.01 par value per share; 25,000 shares authorized; 6,900 shares issued and outstanding; liquidation preference of $197,340 and $191,130 at June 30, 2022 and December 31, 2021, respectively		69			69
Series D Preferred Shares, $.01 par value per share; 25,000 shares authorized; 5,000 shares issued and outstanding; liquidation preference of $142,188 and $137,891 at June 30, 2022 and December 31, 2021, respectively		50			50
Shares of beneficial interest, $1.00 par value per share; 13,333 shares authorized; 5,369 and 5,347 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		5,369			5,347
Capital contributed in excess of par		1,857,496			1,851,866
Accumulated other comprehensive loss		475			(8,830	)
Distributions in excess of net income		(1,875,634	)		(1,832,375	)
Total equity (deficit) – Pennsylvania Real Estate Investment Trust		(12,140	)		16,162
Noncontrolling interest		(9,725	)		(9,115	)
Total equity (deficit)		(21,865	)		7,047
Total liabilities and equity	$	1,928,671		$	2,051,736

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands of dollars)	2017			2016			2017			2016
REVENUE:
Real estate revenue:
Base rent	$	56,874		$	60,188		$	171,078		$	188,424
Expense reimbursements	26,900			29,059			81,981			89,063
Percentage rent	593			825			1,223			1,661
Lease termination revenue	7			3,012			2,279			3,263
Other real estate revenue	2,345			3,176			6,992			8,044
Total real estate revenue	86,719			96,260			263,553			290,455
Other income	2,492			2,600			4,172			4,630
Total revenue	89,211			98,860			267,725			295,085
EXPENSES:
Operating expenses:
Property operating expenses:
CAM and real estate taxes	(25,772		)	(29,373		)	(83,985		)	(94,058		)
Utilities	(4,444		)	(4,753		)	(12,407		)	(13,216		)
Other property operating expenses	(3,087		)	(3,123		)	(9,117		)	(10,618		)
Total property operating expenses	(33,303		)	(37,249		)	(105,509		)	(117,892		)
Depreciation and amortization	(29,966		)	(26,820		)	(94,652		)	(92,217		)
General and administrative expenses	(8,288		)	(8,244		)	(26,561		)	(25,713		)
Provision for employee separation expenses	—			(162		)	(1,053		)	(1,355		)
Project costs and other expenses	(150		)	(1,080		)	(547		)	(1,374		)
Total operating expenses	(71,707		)	(73,555		)	(228,322		)	(238,551		)
Interest expense, net	(14,342		)	(17,198		)	(44,098		)	(53,611		)
Impairment of assets	(1,825		)	(9,865		)	(55,742		)	(24,589		)
Total expenses	(87,874		)	(100,618		)	(328,162		)	(316,751		)
Income (loss) before equity in income of partnerships, gain on sale of real estate by equity method investee, gains on sales of interests in non operating real estate and (losses) gains on sales of real estate	1,337			(1,758		)	(60,437		)	(21,666		)
Equity in income of partnerships	4,254			4,643			12,144			12,718
Gain on sale of real estate by equity method investee	6,718			—			6,718			—
Gains on sales of interests in non operating real estate	—			—			486			9
(Losses) gains on sales of interests in real estate, net	(9		)	31			(374		)	22,953
Net income (loss)	12,300			2,916			(41,463		)	14,014
Less: net (income available) loss attributable to noncontrolling interest	(1,305		)	(312		)	4,416			(1,502		)
Net income available (loss attributable) to PREIT	10,995			2,604			(37,047		)	12,512
Less: preferred share dividends	(7,525		)	(3,962		)	(20,797		)	(11,886		)
Net income (loss) attributable to PREIT common shareholders	$	3,470		$	(1,358	)	$	(57,844	)	$	626



				PREIT Shareholders
				Preferred Shares $.01 par								Shares of Beneficial Interest, $1.00 Par		Capital Contributed in Excess of Par		Accumulated Other Comprehensive Income		Distributions in Excess of Net Income
(in thousands of dollars, except per share amounts)	Total Equity			Series A		Series B		Series C		Series D		Shares of Beneficial Interest, $1.00 Par		Capital Contributed in Excess of Par		Accumulated Other Comprehensive Income		Distributions in Excess of Net Income			Non- controlling interest
Balance December 31, 2016	$	702,406		$	46	$	35	$	—	$	—	$	69,553	$	1,481,787	$	1,622	$	(997,789	)	$	147,152
Net loss	(41,463		)	—		—		—		—		—		—		—		(37,047		)	(4,416		)
Other comprehensive income	2,141			—		—		—				—		—		1,912		—			229
Preferred shares issued in 2017 Series C and D preferred share offerings, net	282,005			—		—		69		48		—		281,888		—		—			—
Shares issued upon redemption of Operating Partnership units	—			—		—		—		—		21		199		—		—			(220		)
Shares issued under employee compensation plans, net of shares retired	462			—		—		—		—		314		148		—		—			—
Amortization of deferred compensation	4,518			—		—		—		—		—		4,518		—		—			—
Distributions paid to common shareholders ($0.63 per share)	(43,959		)	—		—		—		—		—		—		—		(43,959		)	—
Distributions paid to Series A preferred shareholders ($1.5498 per share)	(7,116		)	—		—		—		—		—		—		—		(7,116		)	—
Distributions paid to Series B preferred shareholders ($1.3827 per share)	(4,770		)	—		—		—		—		—		—		—		(4,770		)	—
Distributions paid to Series C preferred shareholders ($1.14 per share)	(7,866		)	—		—		—		—		—		—		—		(7,866		)	—
Noncontrolling interests:
Distributions paid to Operating Partnership unit holders ($0.63 per unit)	(5,232		)	—		—		—		—		—		—		—		—			(5,232		)
Other distributions to noncontrolling interests, net	(12		)	—		—		—				—		—		—		—			(12		)
Balance September 30, 2017	$	881,114		$	46	$	35	$	69	$	48	$	69,888	$	1,768,540	$	3,534	$	(1,098,547	)	$	137,501



(in thousands of dollars)	As of September 30, 2017			As of December 31, 2016
Buildings, improvements and construction in progress	$	2,727,880		$	2,794,213
Land, including land held for development	492,374			505,801
Total investments in real estate	3,220,254			3,300,014
Accumulated depreciation	(1,082,840		)	(1,060,845		)
Net investments in real estate	$	2,137,414		$	2,239,169



Sale Date	Property and Location	Description of Real Estate Sold	Capitalization Rate		Sale Price		Gain
Sale Date	Property and Location	Description of Real Estate Sold	Capitalization Rate		(in millions)
2017 Activity:
January	Beaver Valley Mall, Monaca, Pennsylvania	Mall	15.6	%	$	24.2	$	—
	Crossroads Mall, Beckley, West Virginia	Mall	15.5	%	24.8		—
August	Logan Valley Mall Altoona, Pennsylvania	Mall	16.5	%	33.2		—



(in thousands of dollars)	As of September 30, 2017			As of December 31, 2016
ASSETS:
Investments in real estate, at cost:
Operating properties	$	612,623		$	649,960
Construction in progress	261,735			160,699
Total investments in real estate	874,358			810,659
Accumulated depreciation	(201,964		)	(207,987		)
Net investments in real estate	672,394			602,672
Cash and cash equivalents	47,431			27,643
Deferred costs and other assets, net	34,218			37,705
Total assets	754,043			668,020
LIABILITIES AND PARTNERS’ INVESTMENT:
Mortgage loans payable, net	440,315			445,224
Other liabilities	54,079			23,945
Total liabilities	494,394			469,169
Net investment	259,649			198,851
Partners’ share	130,627			101,045
PREIT’s share	129,022			97,806
Excess investment⁽¹⁾	12,107			8,969
Net investments and advances	$	141,129		$	106,775

Investment in partnerships, at equity	$	201,000		$	168,608
Distributions in excess of partnership investments	(59,871		)	(61,833		)
Net investments and advances	$	141,129		$	106,775


⁽¹⁾	Excess investment represents the unamortized difference between our investment and our share of the equity in the underlying net investment in the unconsolidated partnerships. The excess investment is amortized over the life of the properties, and the amortization is included in “Equity in income of partnerships.”



	As of
(in thousands of dollars)	September 30, 2017		December 31, 2016
Summarized balance sheet information
Total assets	$	46,280	$	49,264
Mortgage loan payable	124,653		126,520



		Applicable Margin
Level	Ratio of Total Liabilities to Gross Asset Value	2013 Revolving Facility		Term Loans
1	Less than 0.450 to 1.00	1.20%		1.35%
2	Equal to or greater than 0.450 to 1.00 but less than 0.500 to 1.00	1.25%	⁽¹⁾	1.45%	⁽¹⁾
3	Equal to or greater than 0.500 to 1.00 but less than 0.550 to 1.00	1.30%		1.60%
4	Equal to or greater than 0.550 to 1.00	1.55%		1.90%



(in millions of dollars) Notional Value	Fair Value at September 30, 2017 ⁽¹⁾			Fair Value at December 31, 2016 ⁽¹⁾			Interest Rate		Effective Date of Forward Starting Swap	Maturity Date
Interest Rate Swaps
28.1	N/A			$	—		1.38	%		January 2, 2017
48.0	$	—		(0.1		)	1.12	%		January 1, 2018
7.6	—			—			1.00	%		January 1, 2018
55.0	—			(0.1		)	1.12	%		January 1, 2018
30.0	—			(0.3		)	1.78	%		January 2, 2019
25.0	0.2			0.3			0.70	%		January 2, 2019
20.0	—			(0.2		)	1.78	%		January 2, 2019
20.0	(0.1		)	(0.2		)	1.78	%		January 2, 2019
20.0	(0.1		)	(0.2		)	1.79	%		January 2, 2019
20.0	(0.1		)	(0.2		)	1.79	%		January 2, 2019
20.0	(0.1		)	(0.2		)	1.79	%		January 2, 2019
25.0	0.1			0.1			1.16	%		January 2, 2019
25.0	0.1			0.1			1.16	%		January 2, 2019
25.0	0.1			0.1			1.16	%		January 2, 2019
20.0	0.1			—			1.16	%		January 2, 2019
20.0	0.3			0.2			1.23	%		June 26, 2020
20.0	0.3			0.2			1.23	%		June 26, 2020
20.0	0.3			0.2			1.23	%		June 26, 2020
20.0	0.3			0.2			1.23	%		June 26, 2020
20.0	0.3			0.2			1.24	%		June 26, 2020
9.0	0.1			0.2			1.19	%		February 1, 2021
35.0	0.8			0.9			1.01	%		March 1, 2021
35.0	0.8			0.9			1.02	%		March 1, 2021
20.0	0.5			0.5			1.01	%		March 1, 2021
20.0	0.5			0.5			1.02	%		March 1, 2021
20.0	0.5			0.5			1.02	%		March 1, 2021
50.0	0.1			N/A			1.75	%		December 29, 2021
25.0	0.1			N/A			1.75	%		December 29, 2021
25.0	0.1			N/A			1.75	%		December 29, 2021
25.0	0.1			N/A			1.75	%		December 29, 2021
25.0	0.1			N/A			1.75	%		December 29, 2021

Forward Starting Swap
48.0	0.5			0.7			1.42	%	January 2, 2018	February 1, 2021
	$	5.9		$	4.3



	Three Months Ended September 30,				Nine Months Ended September 30,					Consolidated Statements of Operations Location
(in millions of dollars)	2017		2016		2017		2016			Consolidated Statements of Operations Location
Derivatives in cash flow hedging relationships:
Interest rate products
Gain (loss) recognized in Other Comprehensive Income (Loss) on derivatives	$	0.1	$	2.6	$	0.2	$	(8.1	)	N/A
Loss reclassified from Accumulated Other Comprehensive Income into income (effective portion)	$	0.4	$	1.3	$	1.9	$	3.9		Interest expense
Loss recognized in income on derivatives (ineffective portion and amount excluded from effectiveness testing)			$	—			$	(0.1	)	Interest expense



	Pre-bankruptcy					Units Closed
Year	Number of Tenants ⁽¹⁾	Number of locations impacted	GLA⁽²⁾	PREIT’s Share of Annualized Gross Rent⁽²⁾ (in thousands)		Number of locations closed	GLA⁽²⁾	PREIT’s Share of Annualized Gross Rent ⁽³⁾(in thousands)
2017 (Nine Months)
Consolidated properties	13	69	310,585	$	9,541.6	17	90,508	$	2,959.7
Unconsolidated properties	8	15	183,956	2,021.5		6	81,531	949.3
Total	14	84	494,541	$	11,563.1	23	172,039	$	3,909.0

2016 (Full Year)
Consolidated properties	7	38	137,111	$	6,738.7	20	73,011	$	3,181.5
Unconsolidated properties	6	10	86,012	1,166.9		4	64,809	471.4
Total	9	48	223,123	$	7,905.6	24	137,820	$	3,652.9



		Former/Existing Anchors				Replacement Tenant(s)
Property		Name	GLA '000's	Date Store Closed/Closing	Date De-commissioned	Name	GLA '000's	Actual/Targeted Occupancy Date
Completed:⁽¹⁾
	Cumberland Mall	JC Penney⁽²⁾	51	Q3 15	Q3 15	Dick's Sporting Goods	50	Q4 16
	Exton Square Mall	JC Penney⁽²⁾	118	Q2 15	N/A	Round 1	58	Q4 16
	Viewmont Mall	Sears⁽²⁾	193	Q3 16	Q2 17	Dick's Sporting Goods/Field & Stream	90	Q3 17
	Viewmont Mall	Sears⁽²⁾	193	Q3 16	Q2 17	Home Goods	23	Q3 17
	Capital City Mall	Sears⁽²⁾	101	Q1 17	Q2 17	Dick's Sporting Goods	62	Q3 17
						Sears Appliance	15	Q4 17
						Fine Wine & Good Spirits	12	Q4 17
	Magnolia Mall	Sears ⁽²⁾	91	Q1 17	Q2 17	Burlington	46	Q3 17
	Magnolia Mall	Sears ⁽²⁾	91	Q1 17	Q2 17	Home Goods, Five Below and outparcels	45	Q2 18
	Valley View Mall	Macys ⁽²⁾⁽³⁾	100	Q2 17	Q2 17	Herberger's	100	Q3 17
In process:
	Exton Square Mall	K-mart ⁽²⁾	96	Q1 16	Q2 16	Whole Foods	58	Q1 18
	Valley Mall	Macy's⁽²⁾⁽³⁾	120	Q1 16	N/A	Large format fitness facility	70	Q4 18
		Macy's⁽²⁾⁽³⁾	120	Q1 16	N/A	Tilt Studio	49	Q3 18
		BonTon ⁽²⁾	123	Q1 18	N/A	Belk	123	Q4 18
	Moorestown Mall	Macy's ⁽²⁾⁽⁴⁾	200	Q1 17	Q3 17	Off-price outdoor gear retailer	18	Q4 18
	Moorestown Mall	Macy's ⁽²⁾⁽⁴⁾	200	Q1 17	Q3 17	Off-price home furnishings retailer	25	Q4 18
	Woodland Mall	Sears ⁽²⁾⁽⁶⁾	313	Q2 17	Q2 17	Von Maur	86	Q4 19
	Woodland Mall	Sears ⁽²⁾⁽⁶⁾	313	Q2 17	Q2 17	Restaurants and small shop space	TBD	Q4 19
	Willow Grove Park	JC Penney ⁽²⁾⁽⁷⁾	124	Q3 17	N/A	TBD	TBD	TBD
Pending:
	Plymouth Meeting Mall	Macy's ⁽⁵⁾	215	Q1 17	N/A	TBD	TBD	TBD



	Occupancy ⁽¹⁾ at September 30,
	Consolidated Properties				Unconsolidated Properties⁽²⁾				Combined⁽²⁾⁽³⁾
	2017		2016		2017		2016		2017		2016
Retail portfolio weighted average:
Total excluding anchors	91.7	%	92.0	%	92.1	%	93.8	%	91.8	%	92.4	%
Total including anchors	93.9	%	94.4	%	93.5	%	95.0	%	93.8	%	94.6	%
Malls weighted average:
Total excluding anchors	92.3	%	92.1	%	89.5	%	94.8	%	92.0	%	92.4	%
Total including anchors	94.2	%	94.5	%	92.9	%	96.4	%	94.1	%	94.8	%
Other retail properties	36.7	%	83.1	%	94.0	%	93.8	%	91.3	%	93.3	%



								Initial Gross Rent Spread ⁽¹⁾				Avg Rent Spread ⁽²⁾	Annualized Tenant Improvements psf ⁽³⁾
	Number	GLA (in square feet)	Term (years)	Initial Rent psf		Previous Rent psf		$			%	%	Annualized Tenant Improvements psf ⁽³⁾
Non Anchor
New Leases
Under 10,000 sf	29	60,419	7.7	$	52.50	N/A		N/A			N/A	N/A	$	10.72
Over 10,000 sf	3	92,448	10.0	16.90		N/A		N/A			N/A	N/A	6.02
Total New Leases	32	152,867	7.9	$	30.97	N/A		N/A			N/A	N/A	$	7.88

Renewal Leases
Under 10,000 sf	49	110,385	3.4	$	56.86	$	57.84	$	(0.98	)	(1.7)%	0.1%	$	0.21
Over 10,000 sf	6	114,589	4.0	22.12		24.55		(2.43		)	(9.9)%	(6.4)%	—
Total Fixed Rent	55	224,974	3.5	$	39.17	$	40.88	$	(1.71	)	(4.2)%	(1.9)%	$	0.10
Percentage in Lieu	0	—	0.0	$	—	$	—	N/A			N/A	N/A	$	—
Total Renewal Leases	55	224,974	3.5	$	39.17	$	40.88	$	(1.71	)	(4.2)%	(1.9)%	$	—
Total Non Anchor⁽⁴⁾	87	377,841	5.1	$	35.85

Anchor
New Leases	—	—	—	$	—	N/A		N/A			N/A	N/A	$	—
Renewal Leases	4	336,207	6.3	$	6.78	$	6.69	$	0.09		1.3%	N/A	$	—
Total	4	336,207	6.3	$	6.78



	Three Months Ended September 30,						% Change 2016 to 2017		Nine Months Ended September 30,						% Change 2016 to 2017
(in thousands of dollars)	2017			2016			% Change 2016 to 2017		2017			2016			% Change 2016 to 2017
Real estate revenue	$	86,719		$	96,260		(10	)%	$	263,553		$	290,455		(9	)%
Property operating expenses	(33,303		)	(37,249		)	(11	)%	(105,509		)	(117,892		)	(11	)%
Other income	2,492			2,600			(4	)%	4,172			4,630			(10	)%
Depreciation and amortization	(29,966		)	(26,820		)	12	%	(94,652		)	(92,217		)	3	%
General and administrative expenses	(8,288		)	(8,244		)	1	%	(26,561		)	(25,713		)	3	%
Provision for employee separation expense	—			(162		)	(100	)%	(1,053		)	(1,355		)	(22	)%
Project costs and other expenses	(150		)	(1,080		)	(86	)%	(547		)	(1,374		)	(60	)%
Interest expense, net	(14,342		)	(17,198		)	(17	)%	(44,098		)	(53,611		)	(18	)%
Impairment of assets	(1,825		)	(9,865		)	(82	)%	(55,742		)	(24,589		)	127	%
Equity in income of partnerships	4,254			4,643			(8	)%	12,144			12,718			(5	)%
Gain on sale of real estate by equity method investee	6,718			—					6,718			—
Gain on sales of interests in non operating real estate	—			—			—	%	486			9			5,300	%
(Losses) gains on sales of interests in real estate, net	(9		)	31			(129	)%	(374		)	22,953			(102	)%
Net income (loss)	$	12,300		$	2,916		322	%	$	(41,463	)	$	14,014		(396	)%



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2017			2016			2017			2016
Net income (loss)	$	12,300		$	2,916		$	(41,463	)	$	14,014
Other income	(2,492		)	(2,600		)	(4,172		)	(4,630		)
Depreciation and amortization	29,966			26,820			94,652			92,217
General and administrative expenses	8,288			8,244			26,561			25,713
Employee separation expenses	—			162			1,053			1,355
Project costs and other expenses	150			1,080			547			1,374
Interest expense, net	14,342			17,198			44,098			53,611
Impairment of assets	1,825			9,865			55,742			24,589
Equity in income of partnerships	(4,254		)	(4,643		)	(12,144		)	(12,718		)
Gain on sale of real estate by equity method investee	(6,718		)	—			(6,718		)	—
Gains on sales of non operating real estate	—			—			(486		)	(9		)
Losses (gains) on sales of interests in real estate, net	9			(31		)	374			(22,953		)
NOI - consolidated properties	$	53,416		$	59,011		$	158,044		$	172,563



	Same Store				Non Same Store				Total (non GAAP)
(in thousands)	2017		2016		2017		2016		2017		2016
NOI from consolidated properties	$	52,676	$	53,982	$	740	$	5,029	$	53,416	$	59,011
NOI from equity method investments at ownership share	7,604		8,347		2,098		1,438		9,702		9,785
Total NOI	60,280		62,329		2,838		6,467		63,118		68,796
Less: lease termination revenue	282		3,805		—		55		282		3,860
Total NOI - excluding lease termination revenue	$	59,998	$	58,524	$	2,838	$	6,412	$	62,836	$	64,936


	Same Store				Non Same Store					Total (non-GAAP)
(in thousands of dollars)	2022		2021		2022			2021		2022		2021
NOI from consolidated properties	$	41,469	$	42,617	$	(213	)	$	574	$	41,256	$	43,191
NOI from equity method investments at ownership share		7,275		10,544		560			658		7,835		11,202
Total NOI		48,744		53,161		347			1,232		49,091		54,393
Less: lease termination revenue		1,551		3,135		41			-		1,592		3,135
Total NOI excluding lease termination revenue	$	47,193	$	50,026	$	306		$	1,232	$	47,499	$	51,258


	Three Months Ended June 30						Six Months Ended June 30,
(in thousands, except per share amounts)	2022			2021			2022			2021
Net loss	$	(11,015	)	$	(25,380	)	$	(43,988	)	$	(69,360	)
Depreciation and amortization on real estate:
Consolidated properties		28,078			29,349			56,876			58,840
PREIT’s share of equity method investments		2,973			2,974			5,995			6,162
(Gain) loss on sales of interests in real estate		(1,701	)		974			(1,701	)		974
Gain on sale of equity method investment		(9,053	)		—			(9,053	)		—
Gain on sales of real estate by equity method investee		—			(1,347	)		—			(1,347	)
Impairment of Assets:
Consolidated properties		—			1,302			—			1,302
PREIT’s share of equity method investments		—			265			—			265
Funds from operations attributable to common shareholders and OP Unit holders		9,282			8,137			8,129			(3,164	)
Provision for employee separation expense		(85	)		149			(1	)		240
Gain on hedge ineffectiveness		—			(494	)		—			(1,797	)
Gain on debt extinguishment		—			(4,587	)		—			(4,587	)
Insurance recoveries, net		—			(670	)		—			(670	)
Reorganization expenses		—			69			—			267
Gain on sale of preferred equity interest		—			—			(3,688	)		—
Funds from operations, as adjusted, attributable to common shareholders and OP Unit holders	$	9,197		$	2,604		$	4,440		$	(9,711	)
Funds from operations attributable to common shareholders and OP Unit holders per diluted share and OP Unit (1)	$	1.72		$	1.51		$	1.51		$	(0.59	)
Funds from operations, as adjusted, attributable to common shareholders and OP Unit holders per diluted share and OP Unit (1)	$	1.71		$	0.48		$	0.83		$	(1.81	)
Weighted average number of shares outstanding		5,317			5,210			5,311			5,193
Weighted average effect of full conversion of OP Units		69			132			69			132
Effect of common share equivalents		—			61			—			54
Total weighted average shares outstanding, including OP Units		5,386			5,403			5,380			5,379



(in thousands of dollars)	Total		Remainder of 2017		2018-2019		2020-2021		Thereafter
Principal payments	$	113,591	$	5,229	$	36,855	$	38,635	$	32,872
Balloon payments	922,453		—		68,469		178,600		675,384
Total	$	1,036,044	$	5,229	$	105,324	$	217,235	$	708,256
Less: unamortized debt issuance costs	3,466
Carrying value of mortgage notes payable	$	1,032,578



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
July 1 - July 31, 2017	2,500	$	11.59	—	$	—
August 1 - August 31, 2017	—	—		—	—
September 1 - September 30, 2017	495	10.26		—	—
Total	2,995	$	11.37	—	$	—