Pennsylvania Real Estate Investment Trust (PREIT/NYSE: PEI) has completed the previously announced sale of Paxton Towne Centre, a power center in Harrisburg, Pennsylvania, for $76.8 million, representing a gain on sale of approximately $33.6 million. The sale marks another key step in PREIT executing its business plan. PREIT developed Paxton Towne Centre in 2001 for approximately $55 million and the property had a book value of $57.9 million as of September 30, 2012. The 717,000 square foot property is anchored by Target, Costco, Kohl’s, and Weis Markets. Other key retailers at the property include H.H. Gregg, Michael’s, Books-A-Million, Babies“R”Us and Bed, Bath and Beyond. The property secured a mortgage loan with an outstanding balance of $50.0 million. In connection with the transaction, the Company used $50.0 million in proceeds to repay this mortgage, yielding net proceeds of $24.9 million after closing costs and before certain post-closing obligations. The Company intends to use the proceeds to make further reductions in debt and for general corporate purposes. “By completing the sale of Paxton Towne Centre, PREIT is improving its balance sheet by reducing debt, while creating more focus on our core mall portfolio,” said Joseph F. Coradino, CEO of PREIT. “Market fundamentals have led to increased demand for high quality power centers, making this an ideal time to harvest the value created through development, management and leasing of this property.” PREIT also has received a non-refundable deposit to sell another non-core power center, Christiana Center in Newark, Delaware, to an affiliate of the Paxton Towne Centre buyer. This transaction is expected to close by the end of the first quarter of 2013. The contract price for the sale of Christiana Center is $75.0 million. The property currently secures a mortgage loan with an outstanding balance of $49.9 million as of September 30, 2012.
The blended capitalization rate on the sale of Paxton Towne Centre and the scheduled sale of Christiana Center would be approximately 6.7%.About Pennsylvania Real Estate Investment Trust Pennsylvania Real Estate Investment Trust, founded in 1960 and one of the first equity REITs in the U.S., has a primary investment focus on retail shopping malls. Currently, the Company's portfolio of 47 properties comprises 37 shopping malls, seven community and power centers, and three development properties. The Company’s properties are located in 13 states in the eastern half of the United States, primarily in the Mid-Atlantic region. The operating retail properties have approximately 31.9 million total square feet of space. PREIT, headquartered in Philadelphia, Pennsylvania, is publicly traded on the NYSE under the symbol PEI. The Company's website can be found at www.preit.com. Forward Looking Statements This press release contains certain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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 uncertainties affecting real estate businesses generally as well as the following, among other factors: our substantial debt and our high leverage ratio; constraining leverage, interest and tangible net worth covenants under our 2010 Credit Facility; potential losses on impairment of certain long-lived assets, such as real estate, or of intangible assets, such as goodwill; potential losses on impairment of assets that we might be required to record in connection with any dispositions of assets; recent changes to our corporate management team and any resulting modifications to our business strategies; our ability to refinance our existing indebtedness when it matures, on favorable terms or at all, due in part to the effects on us of dislocations and liquidity disruptions in the capital and credit markets; our ability to raise capital, including through the issuance of equity or equity-related securities if market conditions are favorable, through joint ventures or other partnerships, through sales of properties or interests in properties, or through other actions; our short- and long-term liquidity position; current economic conditions and their effect on employment, consumer confidence and spending and the corresponding effects on tenant business performance, prospects, solvency and leasing decisions and on our cash flows, and the value and potential impairment of our properties; general economic, financial and political conditions, including credit market conditions, changes in interest rates or unemployment; changes in the retail industry, including 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 in operating costs that cannot be passed on to tenants; risks relating to development and redevelopment activities; the effects of online shopping and other uses of technology on our retail tenants; 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; potential dilution from any capital raising transactions; possible environmental liabilities; our ability to obtain insurance at a reasonable cost; and existence of complex regulations, including those relating to our status as a REIT, and the adverse consequences if we were to fail to qualify as a REIT. 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 in the section of our Annual Report on Form 10-K in the section entitled “Item 1A. Risk Factors” and in our Quarterly Reports on Form 10-Q. We do not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.