Pennsylvania Real Estate Investment Trust (



Q4 2010 Earnings Conference Call

February 23, 2011, 3:00 pm ET


Garth Russell – IR, KCSA Strategic Communications

Ron Rubin – Chairman & CEO

Ed Glickman – President & COO

Bob McCadden – EVP & CFO

Joe Coradino – President of PREIT Services, LLC and PREIT-RUBIN, Inc.


Mani [ph] – Citi

Craig Schmidt – Bank of America-Merrill Lynch

Nathan Isbee – Stifel Nicolaus

Michael Mueller – JPMorgan

Ben Yang – KBW

Quentin Velleley – Citi

Cedrik Lachance – Green Street Advisors



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Good afternoon, ladies and gentlemen. Welcome to the Pennsylvania Real Estate Investment Trust Fourth-Quarter 2010 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator instructions) This conference is being recorded today, Wednesday, February 23, 2011.

I’d now like to turn the conference over to Garth Russell with KCSA Strategic Communications. Please go ahead, sir.

Garth Russell

Thank you, Britney. Before turning the call over to management for their prepared remarks, I’d like to state that this conference call will contain certain forward-looking statements within the meaning of the Federal Securities Laws. Forward-looking statements are related to “expectations,” “beliefs,” “projections,” “future plans,” “strategies,” “anticipated events,” “trends” and “other matters” that are not historical facts. These forward-looking statements reflect PREIT’s current views about future events 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.

PREIT’s business may be affected by uncertainties affecting real estate businesses generally as well as specific factors discussed in PREIT’s press releases, documents PREIT has filed with the Securities and Exchange Commission, and in particular, PREIT’s Annual Report on Form 10-K. PREIT does not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.

It’s now my pleasure to turn the call over to Ron Rubin, Chairman and CEO of PREIT. Ron, the floor is yours.

Ron Rubin

Thanks very much, Garth. Ladies and gentlemen, welcome to the Pennsylvania Real Estate Investment Trust Year-End 2010 Conference Call.

Joining me on the call today are Ed Glickman, the President; Bob McCadden, CFO; and Joe Coradino, President of our Management Company and Head of our Retail Operations. Also in the room today are Vice Chairman, George Rubin; and General Counsel, Bruce Goldman.

Today, we will discuss our fourth-quarter performance and our results for 2010. We will also discuss our expectations for 2011. After we conclude our remarks, the call will be opened as usual for your questions.

The company's performance improved in 2010, as consumers and retailers gained confidence in the economy, as the year progressed. This confidence has continued into 2011, though there still remain significant concerns with respect to employment growth, interest rates and geopolitical issues.

The company made significant progress on a number of fronts. We improved our balance sheet and reduced our leverage in part by refinancing our credit facility, by raising equity, and selling some non-core assets, using the proceeds to pay down debt.

The company's cash position is much stronger providing us with flexibility, should there be more opportunities to improve the balance sheet and grow our business.

On the operating front, we also achieved meaningful increases in occupancy and sales. We are working to continue these trends in 2011.

I’m also pleased with our annual same-store NOI performance, which is above our announced guidance.

We haven’t lost our opportunistic culture. However, we are being very selective, and with a quite uncertain acquisition environment, our management team has focused on strengthening our financial position and on improving our operational performance and investing in our own properties. In doing so, we are working to place and keep tenants in our malls, to improve our occupancy, and maximize NOI as part of our strategy to create long-term value for our shareholders.

With that, I will turn the call over to Ed Glickman.

Ed Glickman

Thanks, Ron. Good afternoon and thank you for joining us on the call. 2010 has been a year of great challenges and great accomplishments for the company. We began 2011 in a far better place than we were 12 months ago. While we still faced the changing landscape of the retail industry both the economy in general and our company in particular has made significant progress in the last 12 months.

At the end of 2009, we had just completed our redevelopment program and we were faced with both the operational challenges of bringing these projects online and the financial challenges of carrying the increased leverage from our investment.

Our newly renovated assets have been well received in the market with 27 of 38 malls showing improved same store sales. Overall, we are now at $350 per square foot. This is only 4% below our peak performance of $364 per square foot in June of 2007. We’re optimistic that our assets will continue to gain momentum as the overall economy continues its recovery.

At the same time, we have taken a number of decisive steps to improve our financial leverage. With the help of our bank group, we successfully restructured our credit facilities and then began the process of delevering by issuing equity and selling assets.

While we are not yet where we would like to be on either the operational side or the financial side of the business, we have demonstrated the ability to manage through a highly adverse environment and make demonstrable progress in achieving our stated goal.

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