PREIT Reports Fourth Quarter and Full Year 2020 Results | News

PHILADELPHIA, March 11, 2021 /PRNewswire/ — PREIT (NYSE: PEI) today reported results for the three months and year ended December 31, 2020.  A description of each non-GAAP financial measure and the related reconciliation to the comparable GAAP financial measure is located in the tables accompanying this release.

Three Months Ended

December 31,

Year Ended December 31,

(per share amounts)

2020

2019

2020

2019

Net loss – basic and diluted

$

(2.62)

$

(0.29)

$

(3.72)

$

(0.52)

FFO

(0.22)

0.28

(0.02)

1.33

FFO, as adjusted

(0.13)

0.34

(0.01)

1.05

FFO from assets transferred in 2019 and 2020

(0.01)

(0.02)

FFO, as adjusted for assets transferred

$

(0.13)

$

0.33

$

(0.01)

$

1.03

“The PREIT team, and portfolio, proved to be resilient as we navigated uncertain terrain.  Our targeted strategy of dispositions and anchor replacements over the past several years created a real estate portfolio of bullseye locations in high barrier-to-entry markets that stands the test of time,” said Joseph F. Coradino, Chairman and CEO of PREIT.  “Our portfolio is comprised of a differentiated mix of uses that attracts robust demand from a variety of non-retail uses, strengthening the Company and fortifying our revenue stream. At the same time, we are well-positioned for a strong return to brick and mortar shopping and leisure as restrictions ease and vaccinations continue.”

  • Same Store NOI, excluding lease termination revenue, decreased 33.3% for the three months ended December 31, 2020 compared to the three months ended December 31, 2019.
    • The quarter was impacted by a decrease in revenue of $22.1 million primarily resulting from bankruptcies and related store closings, an increase in credit losses for challenged tenants as well as decreased percentage sales revenue resulting from restrictions limiting consumer traffic related to the COVID-19 pandemic.
  • Same Store NOI, excluding lease termination revenue, decreased 28.2% for the year ended December 31, 2020 compared to December 31, 2019.
    • The year was impacted by a decrease in revenue of $75.0 million primarily resulting from bankruptcies and related store closings, an increase in credit losses for challenged tenants, the accounting for rental abatements as well as decreased percentage sales revenue resulting from mall closures related to the COVID-19 pandemic.
  • In support of challenged tenants, PREIT granted just under $12 million in rent abatements.
  • Cash collections continued to improve, increasing to 112% of billings for Q4 2020.   
  • Core Mall total occupancy was 90.3%.  Core Mall non-anchor occupancy was 89.4%.
  • Core Mall non-anchor leased space, at 90.1%, exceeds occupied space by 70 basis points when factoring in executed new leases slated for future occupancy.
  • Average renewal spreads for the quarter ended December 31, 2020 were 1.4% in the wholly-owned portfolio for spaces less than 10,000 square feet.
  • The Company supported local economies, paying over $66 million in real estate taxes during 2020.
  • The Company completed its financial restructuring, extending its debt maturity schedule and improving its liquidity position. 

Leasing and Redevelopment

  • 358,000 square feet of leases are signed for future openings, which is expected to contribute annual gross rent of $8.4 million.
  • Leasing momentum continued with over 600,000 square feet of new stores opening in the portfolio during the year.
  • Construction is underway for Aldi to open its first store in the portfolio at Dartmouth Mall during Q3 2021.
  • A lease has been executed for a new self-storage facility in previously unused below grade space at Mall at Prince George’s with an anticipated opening in Q1 2022.
  • A lease with Tilt Studios was signed to replace JC Penney at Magnolia Mall in Florence, SC.
  • A transaction has been executed with Cooper Hospital for an outpatient location in the former Sears space at Moorestown Mall in Moorestown, NJ.

COVID-19 Impact and Response

  • During 2020, the Company experienced varying levels of property closures and continued restrictions on certain businesses.
  • Core mall traffic at comparable properties was approximately 74% of 2019 traffic during the holiday season.
  • Cash collections for April through December totaled 80% of billings for those months.
  • In continuous support of its tenants, PREIT has developed and implemented its own contactless pick up solution, Mall2Go, and developed a branded parking lot activation series, Park and Play, that has resulted in two dozen events being held between late July and mid-September at its properties.
  • Across its portfolio, the Company has hosted blood drives and food donation drives, provided meals to area essential workers, and donated much needed protective supplies. Read more about our efforts here.
  • The Company launched sMALL surprises, an innovative e-commerce platform delivering curated surprise packs from our mall retailers based on the recipient’s interests.
  • The Company launched an initiative to support black-owned businesses and brands throughout its portfolio to empower its customers to make more informed purchasing decisions, noting that black-owned businesses were disproportionately challenged by the pandemic.

Primary Factors Affecting Financial Results for the Three Months Ended December 31, 2020 and 2019

  • Net loss attributable to PREIT common shareholders was $202.1 million (which takes into consideration the accrual of preferred dividends that accumulated during the quarter but have not been paid), or $2.62 per basic and diluted share for the three months ended December 31, 2020, compared to net loss attributable to PREIT common shareholders of $21.7 million, or $0.29 per basic and diluted share for the three months ended December 31, 2019.
  • As a result of the revaluation of assets at our Fashion District Philadelphia partnership, the Company recognized a loss on remeasurement of $148.5 million in the quarter.
  • Same Store NOI, including lease terminations, decreased by $20.7 million, or 34.4%. The decrease is primarily due to lost revenues from bankrupt tenants, an increase in credit losses and a decrease in percentage of sales revenue due to COVID-19 related store closures, partially offset by new store openings, including contributions from replacement anchors.
  • Non-Same Store NOI decreased by $1.6 million, primarily due to lost revenues from bankrupt tenants, an increase in credit losses and a decrease in percentage of sales revenue due to COVID-19 related mall closures. Other decreases in NOI from Non-Same Store properties is due to the derecognition of property at Valley View Mall during the third quarter of 2020.
  • FFO for the three months ended December 31, 2020 was $(0.22) per diluted share and OP Unit compared to $0.28 per diluted share and OP Unit for the three months ended December 31, 2019. Adjustments to FFO in the fourth quarter of 2020 were related to $0.05 per share from reorganization expenses and $0.04 per share from loss on hedge ineffectiveness. Adjustments to FFO in the 2019 quarter included $0.04 per share of provision for employee separation expenses and $0.03 per share of impairment of development land parcels.

All NOI and FFO amounts referenced as primary factors affecting financial results above include our share of unconsolidated properties’ revenues and expenses. Additional information regarding changes in operating results for the three months ended December 31, 2020 and 2019 is included on page 16.

Debt Restructuring and Chapter 11 Process

On December 11, 2020, the Company announced that it had successfully completed its financial restructuring and emerged from Chapter 11.

The Company’s new credit facility provides the Company access to up to $130 million of new capital to support its operations and continue advancing its strategic priorities. In addition to recapitalizing its business, PREIT’s debt maturity schedule has been extended, providing the Company with enhanced financial flexibility. 

Asset Dispositions

Multifamily Land Parcels: The Company has executed agreements of sale for land parcels for anticipated multifamily development in the amount of $87.2 million. The agreements are with multiple buyers across five properties for 2,200 units as part of Phase I of the Company’s previously announced multifamily land sale plan.  Closing on the transactions is subject to customary due diligence provisions and securing entitlements. 

Hotel Parcels: The Company has an executed agreement of sale to convey a land parcel for anticipated hotel development in the amount of $2.5 million for approximately 125 rooms. Closing on the transaction is subject to customary due diligence provisions and securing entitlements.

Retail Operations

Due to COVID-related mall closures impacting a significant portion of the year, the Company is not reporting tenant sales at this time.

2021 Outlook

The Company is not issuing detailed guidance at this time.

Conference Call Information

Management has scheduled a conference call for 11:00 a.m. Eastern Time on Friday March 12, 2021, to review the Company’s results and future outlook.  To listen to the call, please dial 1-844-885-9139 (domestic toll free), or 1-647-689-4441 (international), and request to join the PREIT call, Conference ID 4671799, at least fifteen minutes before the scheduled start time as callers could experience delays.  Investors can also access the call in a “listen only” mode via the internet at the Company’s website, preit.com.  Please allow extra time prior to the call to visit the site and download the necessary software to listen to the Internet broadcast.  Financial and statistical information expected to be discussed on the call will also be available on the Company’s website.

For interested individuals unable to join the conference call, the online archive of the webcast will also be available for one year following the call.

About PREIT

PREIT (NYSE:PEI) is a publicly traded real estate investment trust that owns and manages quality properties in compelling markets. PREIT’s robust portfolio of carefully curated retail and lifestyle offerings mixed with destination dining and entertainment experiences are located primarily in the densely-populated eastern U.S. with concentrations in the mid-Atlantic’s top MSAs. Since 2012, the Company has driven a transformation guided by an emphasis on portfolio quality and balance sheet strength driven by disciplined capital expenditures. Additional information is available at www.preit.com or on Twitter or LinkedIn.

Rounding

Certain summarized information in the tables above may not total due to rounding.

Definitions

Funds From Operations (“FFO”)

The National Association of Real Estate Investment Trusts (“NAREIT”) defines Funds From Operations (“FFO”), which is a non-GAAP measure commonly used by REITs, as net income (computed in accordance with GAAP) excluding (i) depreciation and amortization of real estate, (ii) gains and losses on sales of certain real estate assets, (iii) gains and losses from change in control and (iv) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. We compute FFO in accordance with standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition, or that interpret the current NAREIT definition differently than we do. NAREIT’s established guidance provides that excluding impairment write downs of depreciable real estate is consistent with the NAREIT definition.

FFO is a commonly used measure of operating performance and profitability among REITs. We use FFO and FFO per diluted share and unit of limited partnership interest in our operating partnership (“OP Unit”) in measuring our performance against our peers and as one of the performance measures for determining incentive compensation amounts earned under certain of our performance-based executive compensation programs.

FFO does not include gains and losses on sales of operating real estate assets or impairment write downs of depreciable real estate (including development land parcels), which are included in the determination of net loss in accordance with GAAP. Accordingly, FFO is not a comprehensive measure of our operating cash flows. In addition, since FFO does not include depreciation on real estate assets, FFO may not be a useful performance measure when comparing our operating performance to that of other non-real estate commercial enterprises. We compensate for these limitations by using FFO in conjunction with other GAAP financial performance measures, such as net loss and net cash used in operating activities, and other non-GAAP financial performance measures, such as NOI. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net loss (determined in accordance with GAAP) as an indication of our financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available for our cash needs, including our ability to make cash distributions. We believe that net loss is the most directly comparable GAAP measurement to FFO.

When applicable, we also present FFO, as adjusted, and FFO per diluted share and OP Unit, as adjusted, which are non-GAAP measures, for the years ended December 31, 2020 and 2019, respectively, to show the effect of such items as gain or loss on debt extinguishment (including accelerated amortization of financing costs), impairment of assets, provision for employee separation expense, insurance recoveries or losses, net, gain on derecognition of property, loss on hedge ineffectiveness and reorganization expenses which had an effect on our results of operations, but are not, in our opinion, indicative of our ongoing operating performance.

We believe that FFO is helpful to management and investors as a measure of operating performance because it excludes various items included in net loss that do not relate to or are not indicative of operating performance, such as gains on sales of operating real estate and depreciation and amortization of real estate, among others. We believe that Funds From Operations, as adjusted, is helpful to management and investors as a measure of operating performance because it adjusts FFO to exclude items that management does not believe are indicative of our operating performance, such as gain or loss on debt extinguishment (including accelerated amortization of financing costs), impairment of assets, provision for employee separation expense, insurance recoveries or losses, net, gain on derecognition of property, loss on hedge ineffectiveness and reorganization expenses.

When applicable, we also present FFO, as adjusted, and FFO per diluted share and OP Unit, as adjusted, which are non-GAAP measures, for the years ended December 31, 2020 and 2019, respectively, to show the effect of such items as gain or loss on debt extinguishment (including accelerated amortization of financing costs), impairment of assets, provision for employee separation expense, insurance recoveries or losses, net, gain on derecognition of property, loss on hedge ineffectiveness and reorganization expenses which had an effect on our results of operations, but are not, in our opinion, indicative of our ongoing operating performance.

We believe that FFO is helpful to management and investors as a measure of operating performance because it excludes various items included in net loss that do not relate to or are not indicative of operating performance, such as gains on sales of operating real estate and depreciation and amortization of real estate, among others. We believe that Funds From Operations, as adjusted, is helpful to management and investors as a measure of operating performance because it adjusts FFO to exclude items that management does not believe are indicative of our operating performance, such as gain or loss on debt extinguishment (including accelerated amortization of financing costs), impairment of assets, provision for employee separation expense, insurance recoveries or losses, net, gain on derecognition of property, loss on hedge ineffectiveness and reorganization expenses.

Net Operating Income (“NOI”)

NOI (a non-GAAP measure) is derived from real estate revenue (determined in accordance with GAAP, including lease termination revenue), minus property operating expenses (determined in accordance with GAAP), plus our pro rata share of revenue and property operating expenses of our unconsolidated partnership investments. NOI does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net loss (determined in accordance with GAAP) as an indication of our financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity. It is not indicative of funds available for our cash needs, including our ability to make cash distributions. We believe NOI is helpful to management and investors as a measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. We believe that net loss is the most directly comparable GAAP measure to NOI. NOI excludes other income, general and administrative expenses, provision for employee separation expenses, interest expense, depreciation and amortization, insurance recoveries, gain/loss on debt extinguishment, gain on derecognition of property, impairment of assets, gains on sales of real estate by equity method investees, equity in loss/income of partnerships, loss on remeasurement of assets by equity method investee, gain on sale of non operating real estate, gain/loss on sale of real estate, impairment of development land parcel, project costs and other expenses and reorganization expenses.

Same Store NOI is calculated using retail properties owned for the full periods presented and excludes properties acquired or disposed of, under redevelopment, or designated as non-core during the periods presented. In 2018, Wyoming Valley Mall was designated as non-core and subsequently conveyed to the lender of the mortgage loan secured by that property in 2019. In 2019, Exton Square Mall and Valley View Mall were designated as non-core and are excluded from Same Store NOI. Non Same Store NOI is calculated using the retail properties excluded from the calculation of Same Store NOI.

Financial Information of our Unconsolidated Properties

The non-GAAP financial measures of FFO and NOI presented in this press release incorporate financial information attributable to our share of unconsolidated properties. This proportionate financial information is also non-GAAP financial information, but we believe that it is helpful information because it reflects the proportionate contribution from our unconsolidated properties that are owned through investments accounted for under GAAP using the equity method of accounting. Under such method, earnings from these unconsolidated partnerships are recorded in our statements of operations prepared in accordance with GAAP under the caption entitled “Equity in (loss) income of partnerships.”

To derive the proportionate financial information from our unconsolidated properties, we multiplied the percentage of our economic interest in each partnership on a property-by-property basis by each line item.  Under the partnership agreements relating to our current unconsolidated partnerships with third parties, we own a 25% to 50% economic interest in such partnerships, and there are generally no provisions in such partnership agreements relating to special non-proportionate allocations of income or loss, and there are no preferred or priority returns of capital or other similar provisions.  While this method approximates our indirect economic interest in our pro rata share of the revenue and expenses of our unconsolidated partnerships, we do not have a direct legal claim to the assets, liabilities, revenues or expenses of the unconsolidated partnerships beyond our rights as an equity owner in the event of any liquidation of such entity.  Our percentage ownership is not necessarily indicative of the legal and economic implications of our ownership interest.  Accordingly, NOI and FFO results based on our share of the results of unconsolidated partnerships do not represent cash generated from our investments in these partnerships.

Core Properties

Core Properties include all operating retail properties except for Exton Square Mall and Fashion District Philadelphia.  Valley View Mall was previously designated as a non-core property. In August 2020, a court order assigned a special servicer to operate the property on behalf of the lender of the mortgage loan secured by the property and a court order was issued in September 2020 to conduct a foreclosure sale of the property.  Although we have not yet conveyed the property because foreclosure proceedings are ongoing, we no longer operate the property as a result of the court order assigning the special servicer. Core Malls excludes these properties, power centers and Gloucester Premium Outlets.

Forward Looking Statements

This press release contains certain forward-looking statements that can be identified by the use of words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “project,” and similar expressions. Forward-looking statements relate to expectations, beliefs, projections, future plans, strategies, anticipated events, trends and other matters that are not historical facts. These forward-looking statements reflect our current views about future events, achievements or results and are subject to risks, uncertainties and changes in circumstances that might cause future events, achievements or results to differ materially from those expressed or implied by the forward-looking statements. In particular, our business might be materially and adversely affected by the following:

  • 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 and may continue to exacerbate many of the risks listed below;
  • changes in the retail and real estate industries, including bankruptcies, consolidation and store closings, particularly among anchor tenants;
  • current economic conditions, including current high rates of unemployment and its effects on consumer confidence and spending, and the corresponding effects on tenant business performance, prospects, solvency and leasing 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 to tenants;
  • the effects of online shopping and other uses of technology on our retail tenants;
  • risks related to our development and redevelopment 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 sell properties that we seek to dispose of or our ability to obtain prices we seek;
  • potential losses on impairment of certain long-lived assets, such as real estate, including losses that we might be required to record in connection with any disposition of assets;
  • our substantial debt and our ability to remain in compliance with our financial covenants under our debt facilities;
  • our ability to raise capital, including through sales of properties or interests in properties, subject to the terms of our Credit Agreements; and
  • potential dilution from any capital raising transactions or other equity issuances.

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 the sections entitled “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 and in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020 and any subsequent reports we may file with the SEC. We do not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.

CONTACT: AT THE COMPANY

Mario Ventresca

EVP & CFO

(215) 875-0703

Heather Crowell

EVP, Strategy and Communications

(215) 454-1241

[email protected]

**     Quarterly supplemental financial and operating     **

**     information will be available on www.preit.com     **

Pennsylvania Real Estate Investment Trust

Selected Financial Data

Three Months Ended

December 31,

Year Ended

December 31,

(in thousands of dollars)

2020

2019

2020

2019

REVENUE:

Real estate revenue:

Lease revenue

$

58,828

$

78,643

$

237,141

$

302,311

Expense reimbursements

4,142

4,637

15,462

19,979

Other real estate revenue

3,529

5,049

8,333

12,668

Total real estate revenue

66,499

88,329

260,936

334,958

Other income

123

393

887

1,834

Total revenue

66,622

88,722

261,823

336,792

EXPENSES:

Operating expenses:

Property operating expenses:

CAM and real estate taxes

(26,104)

(27,369)

(106,522)

(113,260)

Utilities

(2,858)

(3,383)

(11,829)

(14,733)

Other property operating expenses

(2,848)

(2,750)

(8,547)

(8,565)

Total property operating expenses

(31,810)

(33,502)

(126,898)

(136,558)

Depreciation and amortization

(30,765)

(39,699)

(126,362)

(137,784)

General and administrative expenses

(19,480)

(12,591)

(50,272)

(46,010)

Provision for employee separation expenses

(55)

(2,611)

(1,227)

(3,689)

Insurance recoveries, net

(132)

586

4,362

Project costs and other expenses

(7)

(17)

(294)

(284)

Total operating expenses

(82,117)

(88,552)

(304,467)

(319,963)

Interest expense, net

(30,042)

(17,001)

(84,341)

(63,987)

(Loss) gain on debt extinguishment, net

(1,487)

27

(1,487)

24,859

Gain on derecognition of property

1,121

8,127

Impairment of assets

(1,455)

(1,455)

Impairment of development land parcel

(2,098)

(3,562)

Reorganization expenses

(3,769)

(3,769)

Total expenses

(116,294)

(109,079)

(385,938)

(364,108)

Loss before equity in (loss) income of partnerships, loss on remeasurement of assets by equity method investee, gain on sales of real estate by equity method investee, gain on sales of real estate, net, and gain on sales of interests in non operating real estate, net of adjustment

(49,672)

(20,357)

(124,115)

(27,316)

Equity in (loss) income of partnerships

(2,746)

2,153

(5,544)

8,289

Loss on remeasurement of assets by equity method investee

(148,545)

(148,545)

Gain on sales of real estate by equity method investee

553

Gain on sales of real estate, net

274

72

11,444

2,744

Gain on sales of interests in non operating real estate

228

2,718

54

2,730

Net loss

(200,461)

(15,414)

(266,706)

(13,000)

Less: net loss attributable to noncontrolling interest

5,192

565

7,189

2,128

Net loss attributable to PREIT

(195,269)

(14,849)

(259,517)

(10,872)

Less: preferred share dividends

(6,844)

(6,844)

(27,375)

(27,375)

Net loss attributable to PREIT common shareholders

$

(202,113)

$

(21,693)

$

(286,892)

$

(38,247)

 

Three Months Ended

December 31,

Year Ended

December 31,

(in thousands, except per share amounts)

2020

2019

2020

2019

Net loss

$

(200,462)

$

(15,414)

$

(266,706)

$

(13,000)

Noncontrolling interest

5,193

565

7,189

2,128

Cumulative preferred share dividends

(6,844)

(6,844)

(27,375)

(27,375)

Dividends on unvested restricted shares

(219)

(363)

(883)

Net loss used to calculate loss per share—basic and diluted

$

(202,112)

$

(21,912)

$

(287,255)

$

(39,130)

Basic and diluted loss per share:

$

(2.62)

$

(0.29)

$

(3.72)

$

(0.52)

(in thousands of shares)

Weighted average shares outstanding—basic

77,457

76,557

77,227

75,221

Effect of common share equivalents(1)

Weighted average shares outstanding—diluted

77,457

76,557

77,227

75,221

(1)

The Company had net losses in all periods presented. Therefore, the effects of common share equivalents of 285 and 485 for the three months ended December 31, 2020 and 2019, respectively, and, 380 and 452 for the year ended December 30, 2020 and 2019, respectively, are excluded from the calculation of diluted loss per share for these periods because they would be antidilutive.

 

Three Months Ended

December 31,

Year Ended

December 31,

(in thousands of dollars)

2020

2019

2020

2019

Comprehensive loss:

Net loss

$

(200,461)

$

(15,414)

$

(266,706)

$

(13,000)

Unrealized gain (loss) on derivatives

4,498

2,903

(11,252)

(18,937)

Reclassification adjustment of loss from de-designated interest rate swaps

2,818

2,818

Amortization of settled swaps

2

3

75

85

Total comprehensive loss

(193,143)

(12,508)

(275,065)

(31,852)

Less: comprehensive loss attributable to noncontrolling interest

5,083

491

7,484

3,016

Comprehensive loss attributable to PREIT

$

(188,060)

$

(12,017)

$

(267,581)

$

(28,836)

The following table presents a reconciliation of net loss determined in accordance with GAAP to (i) FFO attributable to common shareholders and OP Unit holders, (ii) FFO, as adjusted, attributable to common shareholders and OP Unit holders, (iii) FFO, as adjusted for assets sold, (iv) FFO attributable to common shareholders and OP Unit holders per diluted share and OP Unit, (v) FFO, as adjusted, attributable to common shareholders and OP Unit holders per diluted share and OP Unit, and (vi) FFO, as adjusted for assets sold per diluted share and OP Unit for the three months and year ended December 31, 2020 and 2019, respectively:

Three Months Ended December 31,

Year Ended December 31,

(in thousands, except per share amounts)

2020

2019

2020

2019

Net loss

$

(200,461)

$

(15,414)

$

(266,706)

$

(13,000)

Depreciation and amortization on real estate:

Consolidated properties

30,402

39,296

124,940

136,422

PREIT’s share of equity method investments

4,244

3,421

16,641

9,874

Gain on sales of real estate, net

(274)

(72)

(11,444)

(2,756)

Loss on remeasurement of assets by equity method investee

148,545

148,545

Impairment of assets

1,455

1,455

Dividend on preferred shares

(6,843)

(13,687)

(27,375)

Funds from operations attributable to common shareholders and OP Unit holders

$

(17,544)

$

21,843

$

(1,711)

$

104,620

Insurance recoveries, net

132

(586)

(4,362)

Reorganization expenses

3,769

3,769

Loss (gain) on debt extinguishment, net

1,487

(27)

1,487

(24,859)

Gain on derecognition of property

(1,121)

(8,127)

Loss on hedge ineffectiveness

2,912

2,912

Impairment of development land parcel

2,098

3,562

Provision for employee separation expenses

55

2,611

1,227

3,689

Funds from operations, as adjusted, attributable to common shareholders and OP Unit holders

$

(10,442)

$

26,657

$

(1,029)

$

82,650

Funds from operations attributable to common shareholders and OP Unit holders per diluted share and OP Unit

$

(0.22)

$

0.28

$

(0.02)

$

1.33

Funds from operations, as adjusted, attributable to common shareholders and OP Unit holders per diluted share and OP Unit

$

(0.13)

$

0.34

$

(0.01)

$

1.05

Funds from operations, as adjusted for assets sold per diluted share and OP Unit

$

(0.13)

$

0.34

$

(0.01)

$

1.05

(in thousands of shares)

Weighted average number of shares outstanding

77,457

76,557

77,227

75,221

Weighted average effect of full conversion of OP Units

1,979

2,023

2,012

3,221

Effect of common share equivalents

285

485

380

453

Total weighted average shares outstanding, including OP Units

79,721

79,065

79,619

78,895

NOI for the three months ended December 31, 2020 and 2019:

Same Store

Change

Non Same Store

Total

(in thousands of dollars)

2020

2019

$

%

2020

2019

2020

2019

NOI from consolidated properties

$

34,095

$

52,666

$

(18,571)

(35.3)

%

$

594

$

2,162

$

34,689

$

54,828

NOI attributable to equity method investments, at ownership share

5,359

7,451

(2,092)

(28.1)

%

903

923

6,262

8,374

Total NOI

39,454

60,117

(20,663)

(34.4)

%

1,497

3,085

40,951

63,202

Less: lease termination revenue

32

1,018

(986)

(96.9)

%

1

32

1,019

Total NOI excluding lease termination revenue

$

39,422

$

59,099

$

(19,677)

(33.3)

%

$

1,497

$

3,084

$

40,919

$

62,183

NOI for the year ended December 31, 2020 and 2019:

Same Store

Change

Non Same Store

Total

(in thousands of dollars)

2020

2019

$

%

2020

2019

2020

2019

NOI from consolidated properties

$

132,264

$

185,874

$

(53,610)

(28.8)

%

$

1,774

$

12,526

$

134,038

$

198,400

NOI attributable to equity method investments, at ownership share

22,869

28,597

(5,728)

(20.0)

%

1,687

732

24,556

29,329

Total NOI

155,133

214,471

(59,338)

(27.7)

%

3,461

13,258

158,594

227,729

Less: lease termination revenue

2,268

1,531

737

48.1

%

18

2,268

1,549

Total NOI excluding lease termination revenue

$

152,865

$

212,940

$

(60,075)

(28.2)

%

$

3,461

$

13,240

$

156,326

$

226,180

The table below reconciles net loss to NOI of our consolidated properties for the three months and year ended December 31, 2020 and 2019.

Three Months Ended

December 31,

Year Ended December 31,

(in thousands of dollars)

2020

2019

2020

2019

Net (loss) income

$

(200,461)

$

(15,414)

$

(266,706)

$

(13,000)

Other income

(123)

(393)

(887)

(1,834)

Depreciation and amortization

30,765

39,699

126,362

137,784

General and administrative expenses

19,480

12,591

50,271

46,010

Insurance recoveries, net

132

(586)

(4,362)

Provision for employee separation expense

55

2,611

1,228

3,689

Project costs and other expenses

7

17

294

283

Interest expense, net

30,042

17,001

84,341

63,987

Impairment of assets

1,455

1,455

Impairment of development land parcel

2,098

3,562

Gain on debt extinguishment, net

1,487

(27)

1,487

(24,859)

Gain on derecognition of property

(1,121)

(8,127)

Reorganization expenses

3,769

3,769

Equity in (income) loss of partnerships

2,746

(2,153)

5,544

(8,289)

Loss on remeasurement of assets by equity method investee

148,545

148,545

Gain on sales of real estate by equity method investee

(553)

(Loss) Gain on sales of interests in real estate, net

(274)

(72)

(11,444)

(2,756)

(Loss) Gain on sales of interest in non operating real estate

(228)

(2,718)

(54)

(2,717)

NOI from consolidated properties

34,689

54,828

134,038

198,400

Less: Non Same Store NOI of consolidated properties

594

2,163

1,774

12,526

Same Store NOI from consolidated properties

34,095

52,665

132,264

185,874

Less: Same Store lease termination revenue

14

963

2,268

1,426

Same Store NOI excluding lease termination revenue

$

34,081

$

51,702

$

129,996

$

184,448

The table below reconciles equity in (loss) income of partnerships to NOI of equity method investments at ownership share for the three months and year ended December 31, 2020 and 2019:

Three Months Ended

December 31,

Year Ended December 31,

2020

2019

2020

2019

Equity in (loss) income of partnerships

$

(2,746)

$

2,153

$

(5,544)

$

8,289

Other income

(10)

(29)

(48)

(76)

Depreciation and amortization

4,244

3,422

16,640

9,874

Interest and other expenses

4,774

2,828

13,508

11,243

Net operating income from equity method investments at ownership share

6,262

8,374

24,556

29,330

Less: Non Same Store NOI from equity method investments at ownership share

903

923

1,687

732

Same Store NOI of equity method investments at ownership share

5,359

7,451

22,869

28,598

Less: Same Store lease termination revenue

18

55

18

105

Same Store NOI from equity method investments excluding lease termination revenue at ownership share

$

5,341

$

7,396

$

22,851

$

28,493

 

December 31,

2020

2019

(in thousands of dollars)

ASSETS:

INVESTMENTS IN REAL ESTATE, at cost:

Operating properties

$

3,168,536

$

3,099,034

Construction in progress

46,285

106,011

Land held for development

5,516

5,881

Total investments in real estate

3,220,337

3,210,926

Accumulated depreciation

(1,308,427)

(1,202,722)

Net investments in real estate

1,911,910

2,008,204

INVESTMENTS IN PARTNERSHIPS, at equity:

27,066

159,993

OTHER ASSETS:

Cash and cash equivalents

43,309

12,211

Tenant and other receivables, net

54,532

41,261

Intangible assets

11,392

13,404

Deferred costs and other assets, net

127,593

103,688

Assets held for sale

1,384

12,506

Total assets

$

2,177,186

$

2,351,267

LIABILITIES:

Mortgage loans payable, net

$

884,503

$

899,753

Term Loans, net

908,473

548,025

Revolving Facility

54,830

255,000

Tenants’ deposits and deferred rent

8,899

13,006

Distributions in excess of partnership investments

76,586

87,916

Fair value of derivative liabilities

23,292

13,126

Accrued expenses and other liabilities

93,663

107,016

Total liabilities

2,050,246

1,923,842

EQUITY:

Total equity

126,940

427,425

Total liabilities and equity

$

2,177,186

$

2,351,267

Changes in Funds from Operations for the three months and year ended December 31, 2020 as compared to the three months and year ended December 31, 2019 (all per share amounts on a diluted basis unless otherwise noted; per share amounts rounded to the nearest half penny; amounts may not total due to rounding)

 (in thousands, except per share amounts)

Three Months

Ended

December 31

Per Diluted

Share and OP

Unit

Year Ended

December 31

Per Diluted

Share and OP

Unit

Funds from Operations, as adjusted December 31, 2019

$

26,657

$

0.34

$

82,650

$

1.05

Changes – Q4 2019 to Q4 2020

Contribution from anchor replacements and new box tenants

1,422

0.02

4,650

0.06

Impact from bankruptcies

(1,694)

(0.02)

(3,356)

(0.05)

Other leasing activity, including base rent and net CAM and real estate tax recoveries

(7,590)

(0.10)

(32,931)

(0.42)

Lease termination revenue

(949)

(0.01)

824

0.01

Credit losses

(8,271)

(0.11)

(19,739)

(0.25)

Other

(1,488)

(0.02)

(3,057)

(0.04)

Same Store NOI from unconsolidated properties

(2,092)

(0.03)

(5,729)

(0.08)

Same Store NOI

(20,662)

(0.26)

(59,339)

(0.75)

Non Same Store NOI

(1,588)

(0.02)

(9,797)

(0.13)

Dilutive effect of asset sales

(718)

(0.01)

(1,851)

(0.03)

General and administrative expenses

(6,890)

(0.09)

(4,262)

(0.06)

Capitalization of leasing costs

(238)

(0.01)

(756)

(0.01)

Gain on debt extinguishment

(1,514)

(0.02)

(26,346)

(0.34)

Gain on sales of non-operating real estate

228

0.01

54

Other

9,327

0.12

41,539

0.53

Interest expense, net

(15,044)

(0.19)

(22,921)

(0.29)

Increase in weighted average shares

(0.01)

Funds from Operations, as adjusted December 31, 2020

$

(10,442)

$

(0.13)

$

(1,029)

$

(0.01)

Insurance recoveries, net

586

0.01

Reorganization expenses

(3,769)

(0.05)

(3,769)

(0.05)

Gain on derecognition of property

1,121

0.02

8,127

0.11

Loss gain on debt extinguishment

(1,487)

(0.02)

(1,487)

(0.02)

Provision for employee separation expense

(55)

(1,227)

(0.02)

Loss on hedge ineffectiveness

(2,912)

(0.04)

(2,912)

(0.04)

Funds from Operations December 31, 2020

$

(17,544)

$

(0.22)

$

(1,711)

$

(0.02)

 

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