As filed with the Securities and Exchange Commission on October 21, 2003
                                                           Registration No. 333-
================================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                 --------------
                                    FORM S-3
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                                 ---------------
                    PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
             (Exact Name of Registrant as Specified in Its Charter)
                                 ---------------


                                                                                                
                            Pennsylvania                                                        23-6216339
                   (State or Other Jurisdiction of                                (I.R.S. Employer Identification Number)
                     Incorporation or Organization)

                                                                                               Bruce Goldman
                                                                                 Executive Vice President-General Counsel
                                                                                          and Assistant Secretary
                  The Bellevue, 200 S. Broad Street                                  The Bellevue, 200 S. Broad Street
                  Philadelphia, Pennsylvania  19102                                  Philadelphia, Pennsylvania 19102
                         (215) 875-0700                                                        (215) 875-0700
          (Address, Including Zip Code, and Telephone Number,                (Name, Address, Including Zip Code, and Telephone
   Including Area Code, of Registrant's Principal Executive Offices)         Number, Including Area Code, of Agent for Service)

                             -----------------------
                                    Copy to:
                             Howard A. Blum, Esquire
                            Robert C. Juelke, Esquire
                           Drinker Biddle & Reath LLP
                     One Logan Square, 18th & Cherry Streets
                      Philadelphia, Pennsylvania 19103-6996
                                 (215) 988-2700

         Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
         If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
         If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
         If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_| _________
         If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_| ___________
         If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|

                         CALCULATION OF REGISTRATION FEE


======================================= ===================== ======================== ========================= ================
                                                Amount             Proposed Maximum        Proposed Maximum           Amount of
           Title of Shares                       to be              Offering Price             Aggregate            Registration
          to be Registered                   Registered(1)           Per Share (2)         Offering Price(2)             Fee
--------------------------------------- --------------------- ------------------------ ------------------------- ----------------
                                                                                                           
Shares of Beneficial Interest, par            2,500,000                $34.38                $85,950,000               $6,954
value $1.00 per share (and associated
rights)
======================================= ===================== ======================== ========================= ================

(1) In the event of a share split, share dividend or similar transaction
involving the Registrant's shares, in order to prevent dilution, the number of
shares registered automatically shall be increased to cover the additional
shares in accordance with Rule 416(a) under the Securities Act of 1933.
(2) Estimated pursuant to Rule 457(h) solely for the purpose of calculating the
registration fee. The price and fee are based on the average of the highest and
lowest selling prices of the Registrant's shares of beneficial interest on
October 16, 2003 on the New York Stock Exchange.

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.


The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

                  SUBJECT TO COMPLETION, DATED OCTOBER 21, 2003

PROSPECTUS

                                     PREIT
                                [GRAPHIC OMITTED]

                    Pennsylvania Real Estate Investment Trust

                     2,500,000 SHARES OF BENEFICIAL INTEREST

         In recognition of the importance to our success of our non-employee
trustees, officers and other key employees and of the officers and key employees
of our subsidiaries, and pursuant to our obligations under our agreement to
merge with Crown American Realty Trust, our Board of Trustees adopted the
Pennsylvania Real Estate Investment Trust 2003 Equity Incentive Plan, as
amended. The 2003 Plan allows us to:

               o  issue incentive and nonqualified options to purchase shares of
                  beneficial interest in us, as well as restricted shares, share
                  appreciation rights, performance shares, contract shares,
                  bonus shares and dividend equivalent rights to our
                  non-employee trustees, officers and other key employees and to
                  the officers and key employees of our subsidiaries; and

               o  issue options to purchase shares of beneficial interest in us
                  to former trustees, officers and employees of Crown and its
                  subsidiaries as replacement awards for awards issued under
                  Crown equity plans (provided the merger with Crown is
                  consummated), whether or not such individuals become our
                  trustees, officers or employees or trustees, officers or
                  employees of our subsidiaries.

         We expect the 2003 Plan to help us to attract and retain key
individuals with the training, experience and expertise we desire, and to
furnish additional incentive to these key individuals to promote our financial
success by providing them with an equity ownership interest in us and/or an
equity-based incentive to further our interests. Subject to any future
adjustments for share splits and similar events, the total number of shares that
may be issued under the 2003 Plan is 2,500,000 if our merger with Crown occurs
and 1,500,000 if the merger does not occur. In either case, the total number of
shares that may be issued includes the shares that remained available under the
Pennsylvania Real Estate Investment Trust 1999 Equity Incentive Plan when it was
amended - subject to approval of the 2003 Plan by our shareholders - to suspend
the issuance of awards.

         On October 20, 2003, the closing price of our shares on the New York
Stock Exchange was $34.35 per share. Our principal executive offices are located
at The Bellevue, 200 S. Broad Street, Philadelphia, Pennsylvania 19102, and our
telephone number is (215) 875-0700.

         Consider carefully the Risk Factors beginning on page 2 before deciding
to invest in our shares.

These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Securities and Exchange Commission passed upon
the accuracy or adequacy of this prospectus. Any representation to the contrary
is a criminal offense.

                The date of this prospectus is __________, 2003.







                                TABLE OF CONTENTS


PENNSYLVANIA REAL ESTATE INVESTMENT TRUST...............................     1

RISK FACTORS............................................................     2

USE OF PROCEEDS.........................................................    18

DESCRIPTION OF THE PLAN.................................................    19

DESCRIPTION OF SHARES OF BENEFICIAL INTEREST............................    32

FEDERAL INCOME TAX CONSIDERATIONS.......................................    44

LEGAL MATTERS...........................................................    61

EXPERTS.................................................................    61

WHERE YOU CAN FIND MORE INFORMATION.....................................    63

FORWARD LOOKING STATEMENTS..............................................    65





                    PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

         PREIT, which is organized as a business trust under Pennsylvania law,
is a fully integrated, self-administered and self-managed real estate investment
trust, founded in 1960, that acquires, develops, redevelops and operates retail
properties. We conduct substantially all of our operations through PREIT
Associates, L.P., and we have elected, and conduct our operations in a manner
intended, to comply with the requirements for qualification as a real estate
investment trust (a "REIT") under the Real Estate Investment Trust Act of 1960,
Sections 856-60 of the Internal Revenue Code of 1986, as amended.

         Our principal executive offices are located at The Bellevue, 200 S.
Broad St., Philadelphia, Pennsylvania, 19102, and our telephone number is (215)
875-0700.





                                  RISK FACTORS

Risks Related to Our Properties and Our Business

Our retail properties are concentrated in the Mid-Atlantic region of the United
States and adverse market conditions in that region may impact the ability of
our tenants to make lease payments and to renew leases, which may reduce the
amount of income generated by our properties.

         Our retail properties currently are concentrated in the Mid-Atlantic
region of the United States. To the extent adverse conditions affecting retail
properties - such as population trends and changing demographics, income, sales
and property tax laws, availability and costs of financing, construction costs
and weather conditions that may increase energy costs - are particularly adverse
in Pennsylvania or in the Mid-Atlantic region, our results of operations will be
more notably affected. If the sales of stores operating at our properties were
to decline significantly due to economic conditions, the risk that our tenants
will be unable to fulfill the terms of their leases or will enter into
bankruptcy may increase. In particular, economic and market conditions in the
Mid-Atlantic region have a substantial impact on the performance of our anchor
and other tenants and may impact the ability of our tenants to make lease
payments and to renew their leases. If, as a result of such tenant difficulties,
our properties do not generate sufficient income to meet our operating expenses,
including debt service, our results of operations would be adversely affected.

Our substantial debt, a significant portion of which is variable rate debt, may
adversely affect our operating results and put us at a competitive disadvantage.

         As a result of our substantial debt obligations, we may not have
sufficient cash flow from operations to meet required payments of principal and
interest on our debt or to pay distributions on our securities at historical or
recently announced increased rates, which could affect our ability to qualify as
a REIT or to make necessary investments in new business initiatives. In
addition, increases in interest rates on our existing indebtedness, which
includes a significant portion of variable rate debt, would increase our
interest expense, which could harm our cash flow and our ability to pay
distributions.

         We also will assume significant indebtedness in connection with our
proposed merger with Crown American Realty Trust. As of June 30, 2003, Crown had
approximately $753.7 million in total debt outstanding, all of which was secured
by its real estate assets. This excludes Crown's pro rata portion of $18.6
million of outstanding debt owed by Palmer Park Mall Venture, a joint venture
between us and Crown that holds title to the Palmer Park Mall. We currently
expect to repay a portion of Crown's outstanding debt with proceeds from
additional debt financings that we currently are negotiating with prospective
lenders, but we cannot assure you that we can obtain additional debt financings
on favorable terms, if at all. Following the merger, we also will be obligated
to pay a quarterly dividend of $1.375 per share to the holders of the 11%
preferred shares that we will issue in connection with the merger.



                                      -2-


         Our existing indebtedness, and our increased leverage as a result of
the Crown merger, could have negative consequences to our shareholders,
including:

         o  requiring us to use a significant portion of our cash flow from
            operations to make interest and principal payments on our debt
            rather than for other purposes such as working capital, capital
            expenditures or dividends;

         o  harming our ability to obtain additional financing in the future for
            working capital, capital expenditures, acquisitions, development
            activities or other general corporate purposes;

         o  limiting our flexibility to plan for or react to changes in business
            and economic conditions; and

         o  making us more vulnerable to a downturn in our business or the
            economy generally.

         Further, our existing $200 million revolving credit facility expires on
December 28, 2003 and may be extended for an additional year only with the
approval of the lenders. We may be unable to extend the term of this credit
facility or to replace this facility on favorable terms, if at all.

Our financial covenants may restrict our operating or acquisition activities,
which may harm our financial condition and operating results.

         Our existing $200 million credit facility currently requires our
operating partnership, PREIT Associates, L.P., to maintain certain asset and
income to debt ratios and minimum income and net worth levels. These covenants
could reduce our flexibility in conducting our operations by limiting our
ability to borrow and may create a risk of default on our debt if we cannot
continue to satisfy these covenants. If we default under this credit facility,
the lenders could require us to repay the debt immediately and could take
possession of the properties securing the credit facility. We rely on borrowings
under this credit facility to finance acquisitions, construction of our
development properties, renovations and capital improvements to our properties
and for working capital. If we are unable to borrow under our credit facility or
to refinance existing indebtedness, our financial condition and results of
operations would be adversely impacted.

We may be unable to manage effectively our rapid growth and expansion in the
retail sector, which may result in disruptions to our business.

         We recently completed the acquisition of six shopping malls from The
Rouse Company. In addition, we expect to make future acquisitions or investments
in real properties, other assets and other companies, including our pending
merger with Crown American Realty Trust. The merger involves the integration of
two large and complex real estate businesses that currently operate
independently. We have retained the services of Generative Leadership Group and
PricewaterhouseCoopers, LLP to assist with the integration of the Crown assets
and personnel. Following the merger and the related transactions, the gross
leasable area of our owned, managed or leased retail properties will be
approximately 115% higher than it was prior to the Rouse shopping mall
acquisition. We also recently completed the sale of all 19 properties in our
multifamily portfolio.


                                      -3-


         The integration efforts required in connection with the merger and the
Rouse shopping mall acquisition, together with our continuing efforts to
transform our strategic focus to ownership of retail properties, are substantial
and may cause disruptions in our operations and divert management's attention
away from day-to-day operations, which could impair our relationships with our
current tenants and employees. In addition, the Rouse shopping mall acquisition
and the Crown merger pose specific risks for our ongoing operations, including
that:

         o  we may not achieve the expected operating efficiencies,
            value-creation potential, economies of scale or other benefits of
            those transactions;

         o  we may not have adequate personnel and financial and other resources
            to successfully handle our substantially increased operations;

         o  we may not be successful in leasing space in properties acquired
            from Rouse or to be acquired from Crown in the merger;

         o  we may not be able to successfully take advantage of or maintain
            Crown's relationships with tenants, particularly if key personnel of
            Crown with longstanding relationships with Crown tenants terminate
            their employment or are terminated in connection with the merger;

         o  the combined portfolio may not perform at the level we anticipate;

         o  we may experience difficulties and incur unforeseen expenses in
            connection with assimilating and retaining Crown employees,
            assimilating Crown's business and assimilating the properties
            acquired from Rouse and Crown; and

         o  we may experience problems and incur unforeseen expenses in
            connection with upgrading and expanding our systems and processes
            required as a result of the Rouse shopping mall acquisition and the
            Crown merger.

         If we fail to integrate successfully these properties and/or fail to
realize the intended benefits of these transactions, our operating results and
financial condition may be materially harmed.

Competition may impede our ability to renew leases or re-let space as leases
expire and require us to undertake unbudgeted capital improvements, which could
harm our operating results.

         We face competition from similar retail centers that are near our
retail properties with respect to the renewal of leases and re-letting of space
as leases expire. Any new competitive properties that are developed close to our
existing properties also may impact our ability to lease space to creditworthy
tenants. Increased competition for tenants may require us to make capital
improvements to properties that we would not have otherwise planned to make. Any
unbudgeted capital improvements could adversely affect our results of
operations. Also, to the extent we are unable to renew leases or re-let space as
leases expire, it would result in decreased cash flow from tenants and adversely
affect our results of operations.



                                      -4-



Rising operating expenses could reduce our cash flow and funds available for
future distributions.

         Our properties and any properties we acquire in the future are and will
be subject to operating risks common to real estate in general, any or all of
which may negatively affect us. If any property is not fully occupied or if
rents are being paid in an amount that is insufficient to cover operating
expenses, then we could be required to expend funds for that property's
operating expenses. The properties will be subject to increases in real estate
and other tax rates, utility costs, operating expenses, insurance costs, repair
and maintenance costs and administrative expenses.

         Although some of our properties are leased on terms that require
tenants to pay a portion of the expenses associated with the property, renewals
of leases or future leases may not be negotiated on that basis, in which event
we will have to pay those costs. If we are unable to lease properties on a basis
requiring the tenants to pay all or some of the expenses associated with the
property, or if tenants fail to pay required tax, utility and other impositions,
we could be required to pay those costs, which could adversely affect our
operating results.

Any tenant bankruptcies or leasing delays we encounter, particularly with
respect to our anchor tenants, could adversely affect our operating results and
financial condition.

         We receive a substantial portion of our income as rent under long term
leases. At any time, any of our tenants may experience a downturn in its
business that may weaken its financial condition. Our tenants may delay lease
commencement, fail to make rental payments when due, or declare bankruptcy. Any
leasing delays, tenant failures to make rental payments when due or tenant
bankruptcies could result in the termination of the tenant's lease and,
particularly in the case of a key anchor tenant, material losses to us and harm
to our results of operations. Some of our tenants occupy stores at multiple
locations in our portfolio, and so the impact of any bankruptcy of those tenants
may be more significant on us than others. If tenants are unable to comply with
the terms of our leases, we may modify lease terms in ways that are unfavorable
to us. In addition, under many of our leases, our tenants pay rent based on a
percentage of their sales or other operating results. Accordingly, declines in
these tenants' performance directly impacts our operating results.

         In addition to the loss of rental payments from an anchor tenant, a
lease termination by an anchor tenant or a failure by that anchor tenant to
occupy the premises could result in lease terminations or reductions in rent by
other tenants of the same shopping center whose leases permit cancellation or
rent reduction if an anchor tenant's lease is terminated. In that event, we may
be unable to re-lease the vacated space. In addition, the leases of some anchor
tenants may permit the anchor tenant to transfer its lease to another retailer.
The transfer to a new anchor tenant could cause customer traffic in the retail
center to decrease, which could reduce the income generated by that retail
center. A transfer of a lease to a new anchor tenant also could allow other
tenants to make reduced rental payments or to terminate their leases at the
retail center, which could adversely affect our results of operations.

                                      -5-



We depend upon income generated by PREIT-RUBIN's management of properties owned
by third parties, and the loss, interruption or termination of one or more
management contracts could harm our operating results.

         Risks associated with PREIT-RUBIN's management of properties owned by
third parties include:

         o  the property owner's termination of the management contract;

         o  loss of the management contract in connection with a property sale;

         o  non-renewal of the management contract after expiration;

         o  renewal of the management contract on terms less favorable than
            current terms;

         o  decline in management fees as a result of general real estate market
            conditions or local market factors; and

         o  claims of losses due to allegations of mismanagement.

         The occurrence of one or more of these events could adversely affect
our results of operations.

We may not be successful in identifying suitable acquisitions that meet our
criteria, which may impede our growth.

         Integral to our business strategy has been our strategic acquisitions
of retail properties. Our ability to expand through acquisitions requires us to
identify suitable acquisition candidates or investment opportunities that meet
our criteria and are compatible with our growth strategy. We analyze potential
acquisitions on a property-by-property and market-by-market basis. We may not be
successful in identifying suitable real estate properties or other assets in our
existing geographic markets or that otherwise meet our acquisition criteria or
in consummating acquisitions or investments on satisfactory terms. Failures in
identifying or consummating acquisitions could reduce the number of acquisitions
we complete and slow our growth, which could adversely affect our results of
operations.

We face increasing competition for the acquisition of real estate properties and
other assets, which may impede our ability to make future acquisitions or may
increase the cost of these acquisitions.

         We compete with many other entities engaged in real estate investment
activities for acquisitions of retail shopping centers, including institutional
pension funds, other REITs and other owner-operators of retail properties. These
competitors may drive up the price we must pay for real estate properties, other
assets or other companies we seek to acquire or may succeed in acquiring those
properties, assets or companies themselves. In addition, our potential
acquisition targets may find our competitors to be more attractive suitors
because they may have greater resources, may be willing to pay more, or may have
more compatible operating philosophy. In particular, larger REITs may enjoy


                                      -6-


significant competitive advantages that result from, among other things, a lower
cost of capital and enhanced operating efficiencies. In addition, the number of
entities and the amount of funds competing for suitable investment properties
may increase. This would result in increased demand for these assets and
therefore increased prices paid for them. If we pay higher prices for
properties, our profitability will be reduced, and shareholders may experience a
lower return on their investment.

Illiquidity of real estate investments could significantly impede our ability to
respond to adverse changes in the performance of our properties and harm our
financial condition.

         Because real estate investments are relatively illiquid, our ability to
promptly sell one or more properties in our portfolio in response to changing
economic, financial and investment conditions is limited. The real estate market
is affected by many factors, such as general economic conditions, availability
of financing, interest rates and other factors, including supply and demand,
that are beyond our control. We cannot predict whether we will be able to sell
any property for the price or on the terms we set, or whether any price or other
terms offered by a prospective purchaser would be acceptable to us. We also
cannot predict the length of time needed to find a willing purchaser and to
close the sale of a property.

         We may be required to expend funds to correct defects or to make
improvements before a property can be sold. We cannot assure you that we will
have funds available to correct those defects or to make those improvements, and
if we cannot do so, we may not be able to sell the property, or may be required
to sell the property on unfavorable terms. In acquiring a property, we may agree
to provisions that materially restrict us from selling that property for a
period of time or impose other restrictions, such as limitations on the amount
of debt that can be placed or repaid on that property. These factors and any
others that would impede our ability to respond to adverse changes in the
performance of our properties could significantly harm our financial condition
and operating results.

We have entered into tax protection agreements for the benefit of some limited
partners of PREIT Associates, L.P. that may limit our ability to sell some of
our properties that we may otherwise want to sell, which could harm our
financial condition.

         As the general partner of PREIT Associates, L.P. we have agreed to
indemnify certain former property owners who have become limited partners of
PREIT Associates, L.P. against tax liability that they may incur if we sell
these properties within a certain number of years in a taxable transaction. In
particular, we have provided tax protection of up to approximately $5.0 million
related to the August 1998 acquisition of the Woods Apartments for a period of
eight years ending in August 2006. Because the Woods Apartments were sold in
connection with the disposition of the multifamily portfolio and because that
transaction was treated as a tax-free exchange in connection with the
acquisition of Exton Square Mall, The Gallery at Market East and Moorestown Mall
from The Rouse Company, we now are obligated to provide tax protection to the
former owner of the Woods Apartments if we sell any of Exton Square Mall, The
Gallery at Market East or Moorestown Mall prior to August 2006. In addition, we
have agreed to provide substantial tax protection to Mark E. Pasquerilla and
entities affiliated with him in connection with our proposed merger with Crown.
In some cases, these agreements may make it uneconomical for us to sell these
properties, even in circumstances in which it otherwise would be advantageous to
do so, which could harm our ability to address liquidity needs in the future or
otherwise harm our financial condition.


                                      -7-


Our investments in development properties may not yield anticipated returns,
which would harm our operating results and reduce the amount of funds available
for distributions.

         A key component of our growth strategy is exploring our rights in
development properties, including our current projects at Christiana Power
Center Phase II, Newark, Delaware and New Garden, New Garden Township,
Pennsylvania. Christiana Power Center Phase II was to be completed by September
30, 2002 but has experienced significant delays and has not been completed.
These delays have led to higher than anticipated costs and we currently do not
expect the development of Christiana Power Center Phase II to be completed until
the first quarter of 2005, if at all. The development of New Garden is expected
to be completed in the fourth quarter of 2004. To the extent we continue these
development projects or enter into new development projects, they will be
subject to a number of risks, including, among others:

         o  inability to obtain required zoning, occupancy and other
            governmental approvals;

         o  expenditure of money and time on projects that may never be
            completed;

         o  higher than estimated construction costs;

         o  cost overruns and timing delays due to lack of availability of
            materials and labor, delays in receipt of zoning and other
            regulatory approvals, weather conditions and other factors outside
            our control; and

         o  inability to obtain permanent financing upon completion of
            development activities.

         Unanticipated delays or expenses associated with our development
properties could adversely affect the investment returns from these projects and
adversely affect our financial condition and results of operations.

Some of our properties are in need of maintenance and/or renovation, which could
harm our operating results.

         Some of our retail properties, including two of the six retail
properties acquired as part of the Rouse shopping mall acquisition and some of
the malls that we expect to acquire in our merger with Crown, were constructed
or last renovated more than 10 years ago. Older properties may generate lower
rentals or may require significant expense for maintenance and/or renovations,
which could harm our results of operations.

Our business and, in particular, our acquisition integration efforts could be
harmed if Ronald Rubin, our chairman and chief executive officer, and other
members of our senior management team terminate their employment with us.

         Our future success depends, to a significant extent, upon the continued
services of Ronald Rubin - our chairman and chief executive officer - and of our
corporate management team. We are critically dependent upon our corporate
management team and other key employees to lead our integration efforts for
acquisitions. Although we have entered into employment agreements with Mr. Rubin
and certain other members of our corporate management team, they could elect to
terminate those agreements at any time. In addition, although we have purchased
a key man life insurance policy in the amount of $5 million to cover Mr. Rubin,
we cannot assure you that this would compensate us for the loss of his services.
Further, under the terms of his employment agreement with us, Edward A.
Glickman, our chief financial officer, is entitled to terminate his employment
with us for good reason upon completion of our proposed merger with Crown unless
he is offered a three year employment agreement following the merger providing
him with the same title and responsibilities and the same or greater
compensation and benefits as in effect immediately before the merger. If Mr.
Glickman were to so terminate his employment, he would be entitled to, among
other things, three times the sum of his current salary plus the average of his
annual bonus over the three years before the merger. The loss of services of one
or more members of our corporate management team could harm our business and our
prospects.

                                       -8-


We hold substantial investments in unconsolidated partnerships and joint
ventures, which we may not be able to successfully manage.

         Many of our retail properties are owned by partnerships in which we are
a general partner or by joint ventures in which we have substantially the same
powers as a general partner. Under the terms of the partnership and joint
venture agreements, major decisions, such as a sale, lease, refinancing,
expansion or rehabilitation of a property, or a change of property manager,
require the consent of all partners or co-venturers. Accordingly, necessary
actions may be delayed significantly because decisions must be unanimous and it
may be difficult or even impossible to remove a partner or co-venturer that is
serving as the property manager.

         Business disagreements with partners may arise. We may incur
substantial expenses in resolving these disputes. To preserve our investment, we
may be required to make commitments to or on behalf of a partnership or joint
venture during a dispute. Moreover, we cannot assure you that our resolution of
a dispute with a partner will be on terms that are favorable to us.

         Other risks of investments in partnerships and joint ventures include:

         o  partners or co-venturers might become bankrupt or fail to fund their
            share of required capital contributions;

         o  partners or co-venturers might have business interests or goals that
            are inconsistent with our business interests or goals;

         o  partners or co-venturers may be in a position to take action
            contrary to our policies or objectives; and

         o  we may incur liability for the actions of our partners or
            co-venturers.

We may be unable to obtain long term financing required to finance our
partnerships and joint ventures, which could harm our operating results.

         The profitability of each partnership or joint venture in which we are
a partner or co-venturer that has short-term financing or debt requiring a
balloon payment is dependent on the availability of long-term financing on
satisfactory terms. If satisfactory long-term financing is not available, we may
have to rely on other sources of short-term financing, equity contributions or
the proceeds of refinancing other properties to satisfy debt obligations which
may not be as favorable to us. Although we do not own the entire interest in
connection with many of the properties held by these partnerships and joint
ventures, we may be required to pay the full amount of any obligation of the
partnership or joint venture that we have guaranteed in whole or in part or we
may elect to pay a partnership's or joint venture's obligation to protect our
equity interest in its properties and assets, which could cause us to use a
substantial portion of our funds from operations, reducing amounts available for
distribution.


                                      -9-


The costs of compliance with environmental laws may harm our operating results.

         Under various federal, state and local laws, ordinances and
regulations, an owner, former owner or operator of real estate may be liable for
the costs of removal or remediation of hazardous or toxic substances present at,
on, under, in or released from its property. They also may be liable to the
government or to third parties for substantial property damage, investigation
costs or clean up costs. In addition, some environmental laws create a lien on
the contaminated site in favor of the government for damages and costs the
government incurs in connection with the contamination. Contamination may affect
adversely the owner's ability to sell or lease real estate or borrow with real
estate as collateral.

         From time to time, we respond to inquiries from environmental
authorities with respect to properties both currently and formerly owned by us.
We are aware of certain environmental matters at some of our properties,
including ground water contamination, and the presence of asbestos containing
materials. We have, in the past, performed remediation of such environmental
matters, but we may be required in the future to perform testing relating to
these matters and further remediation may be required. As of the date of this
prospectus, we have reserved $0.1 million for future remediation of these
matters, but we may incur costs associated with such remediation that exceed
such amount.

         In addition, at five of the properties in which we currently have an
interest, and at two properties in which we formerly had an interest,
environmental conditions have been or continue to be investigated and have not
been fully remediated. Groundwater contamination has been found at five of these
properties. While the former owners of two of the properties with groundwater
contamination presently are remediating such contamination, any failure of such
former owners to properly remediate such contamination could result in liability
to us for such contamination. Dry cleaning operations were performed at three of
the properties. Soil contamination has been identified at two of the properties
having dry cleaning operations and groundwater contamination was found at the
third property having dry cleaning operations. Although these properties may be
eligible under state law for remediation with state funds, we cannot assure you
that sufficient funds will be available under state legislation to pay the full
costs of any such remediation and we may incur costs in connection with such
remediation.

       Asbestos-containing materials are present in a number of our properties,
primarily in the form of floor tiles and adhesives. Fire-proofing material
containing asbestos is present at some of our properties in limited
concentrations or in limited areas. We have taken certain actions to remediate
or to comply with disclosure requirements, as necessary or appropriate, in
connection with the foregoing, but we may be required to take additional actions
or to make additional expenditures.

       We are aware of environmental concerns at Christiana Power Center Phase
II, one of our development properties. The final costs and necessary remediation
are not known and may cause us to decide not to develop the property, which
would result in us having incurred unnecessary development costs and could have
an adverse impact on our operating results. We also are a party to a number of
agreements for the purchase of property for development in which initial



                                      -10-


environmental investigations have revealed environmental risk factors that might
require remediation by the owner or prior owners of the property. Such
environmental risks may cause us to decide not to purchase such properties,
which would result in us having incurred unnecessary development expenses and
could adversely affect our results of operations.

         In addition, the malls that we expect to acquire as part of our merger
with Crown have some environmental issues. Many of these malls contain, or at
one time contained, underground and/or above ground storage tanks used to store
waste oils or other petroleum products primarily related to the operation of
auto service center establishments at those malls, three malls were constructed
on sites a portion of which previously had been used as landfills and two malls
were constructed on former strip mines. In some cases, the underground storage
tanks have been abandoned in place, filled in with inert materials or removed
and replaced with above ground tanks. Historical records indicate that soil and
groundwater contamination from underground tanks and, in one case, a hydraulic
lift, requiring remediation has occurred at five of the malls, and subsurface
investigations (Phase II assessments) and remediation work either are ongoing or
are scheduled to be conducted at three of those malls. In addition, dry cleaning
operations formerly were conducted at two of the malls. There also are minor
amounts of asbestos-containing materials in most of the Crown malls, primarily
in the form of floor tiles, mastics and roofing materials. Fireproofing and
insulation containing asbestos also are present in some of the malls in
non-public areas, such as mechanical rooms. Two of the Crown malls also contain
wastewater treatment facilities that treat wastewater at the malls before
discharge into local streams. Operation of these facilities is subject to
federal and state regulation.

       Our environmental liability coverage for the types of environmental
liabilities described above, which currently covers liability for pollution and
on-site remediation of up to $2 million in any single claim and $4 million in
the aggregate, may be inadequate, which could result in our being obligated to
fund those liabilities.

       In addition to the costs of remediation described above, we may incur
additional costs to comply with federal, state and local laws, ordinances and
regulations relating to environmental protection and human health and safety
generally. We cannot assure you that future laws, ordinances or regulations will
not impose any material environmental liability, or that the current
environmental condition of our properties will not be affected by the operations
of our tenants, by the existing condition of the land, by operations in the
vicinity of the properties - such as the presence of underground storage tanks -
or by the activities of unrelated third parties. In addition, there are various
local, state and federal fire, health, life-safety and similar regulations that
may be applicable to our operations, and that may subject us to liability in the
form of fines or damages for noncompliance.

If we suffer losses that are not covered by insurance or that are in excess of
our insurance coverage limits, we could lose invested capital and anticipated
profits.

         Catastrophic losses - such as losses due to wars, earthquakes, floods,
hurricanes, pollution and environmental matters - generally either are
uninsurable or are not economically insurable, or may be subject to insurance
coverage limitations, such as large deductibles or co-payments. If one of these
events occurred to, or caused the destruction of, one or more of our properties,
we could lose both our invested capital and anticipated profits from that
property. In addition, if we are unable to obtain insurance in the future at
acceptable levels and at a reasonable cost, the possibility of losses in excess
of our insurance coverage may increase and we may not be able to comply with
covenants under our debt agreements, which could adversely affect our financial
condition.

Some of our properties are held by special purpose entities and are not
generally available to satisfy creditors' claims in bankruptcy, which could
impair our ability to borrow.

         Some of our properties are owned or ground-leased by subsidiaries that
we created solely to own or ground-lease those properties. The mortgaged
properties and related assets are restricted solely for the payment of the
related loans and are not available to pay our other debts, which could impair
our ability to borrow, which in turn could harm our business.


                                      -11-


RISKS RELATED TO OUR PROPOSED MERGER WITH CROWN AMERICAN REALTY TRUST

The shares that we issue to common shareholders of Crown American Realty Trust
in the merger may have a market value that is higher than expected.

         Crown common shareholders will receive 0.3589 of our common shares in
the merger for each Crown common share they own at the time of the closing of
the merger. The market price of our common shares at the time of the merger
closing may vary significantly from the price on the date that the merger
agreement was signed. These price variations may arise due to, among other
things, changes in our business, operations, financial condition and prospects,
market assessments of the likelihood that the merger will be completed and the
timing of its completion, demand for retail space in the Mid-Atlantic region and
other markets, the financial condition of current or prospective tenants,
interest rates, general market and economic conditions, factors affecting the
retail industry in general and other factors.

         The exchange ratio for Crown common shares to be converted into our
common shares in the merger was fixed at the time the merger agreement was
signed and will not be adjusted based on changes in the trading price of our
common shares or Crown common shares before the closing of the merger. The
merger agreement does not provide Crown or us the right to terminate the merger
agreement based upon fluctuations in the market price of our common shares.
Accordingly, increases in the market price of our common shares when compared
with the market price at the time the merger agreement was signed could cause
the total value of the consideration we are required to pay to Crown common
shareholders in the merger to be higher than expected, resulting in us
effectively paying a higher than expected amount in the merger.

Our operating performance may be adversely affected following the merger if we
choose not to sell specified assets acquired in the merger.

         As a result of the merger, we will acquire six Crown properties that
have occupancy rates and sales volume substantially lower than that of the
remainder of Crown's properties being acquired in the merger. After the merger,
we intend to pursue the reposition and potential disposition of these
properties. We currently expect to make investments in some of these properties
in order to reposition them for potential sale. However, we cannot predict
whether we will be able to sell any property for the price or on the terms we
set. We also cannot predict the length of time needed to find a willing
purchaser and to close the sale of a property. In addition, whether or not we
ultimately sell these properties, we may not recover our investment in these
properties, which could harm our financial condition and results of operations.

We may incur substantial expenses and payments if the merger does not occur,
which could materially harm our financial condition.

         We already have incurred substantial expenses in connection with the
merger. We cannot assure you that the merger will be consummated. The merger
agreement provides for us to pay a termination fee of $20 million, $7 million or
$3.5 million if we terminate the merger agreement under specified circumstances.
Any of these payment obligations could materially harm our financial condition.


                                      -12-



         The $20 million termination fee represented approximately 1.26% of our
approximate $1.592 billion market capitalization at the time the merger
agreement was signed. The $20 million termination fee could adversely affect our
ability to engage in another transaction that did not include the Crown merger
if we incurred such payment obligation upon a termination of the merger
agreement with Crown.

After the merger, Mark E. Pasquerilla will exercise influence over us and may
delay, defer or prevent us from taking actions that would be beneficial to our
shareholders.

         Before the merger, none of our shareholders owned more than 5% of our
outstanding common shares on a fully diluted basis assuming the redemption of
units of limited partnership interest in PREIT Associates, L.P. ("PREIT
Partnership Units") for our common shares. Following the merger, Mark E.
Pasquerilla and his affiliates will own approximately 6.31% of our outstanding
common shares assuming the redemption of their PREIT Partnership Units for our
common shares. Mr. Pasquerilla also will become a member of our board of
trustees. Accordingly, Mr. Pasquerilla may be able to exercise influence over
the outcome of certain matters such as decisions relating to the election of the
board of trustees and the determination of our day-to-day corporate and
management policies, and possibly over the outcome of any proposed merger or
consolidation that we consider. Mr. Pasquerilla's ownership interest in us may
discourage third parties from seeking to acquire control of us, which may
adversely affect the market price of our common shares. As a condition to the
merger, Mr. Pasquerilla and certain of his affiliates will enter into a
standstill agreement that would limit their rights in connection with, among
other things, a proposed change in control of us. However, we cannot assure you
that Mr. Pasquerilla and his affiliates will abide by the terms of the
standstill agreement, and the standstill agreement will not prevent Mr.
Pasquerilla from voting his shares or taking other actions with respect to
matters not covered by the standstill agreement.

We could be disqualified as a REIT or have to pay taxes if Crown does not
qualify as a REIT at the time of the merger.

         If Crown failed to qualify as a REIT at the time of the merger, we may
have undistributed "C corporation earnings and profits." If that occurred and
Crown did not distribute the earnings and profits prior to the merger
transaction, we may not qualify as a REIT. In addition, we might be liable for
taxes owed by Crown as a result of its failure to qualify as a REIT for years
prior to the merger. Finally, if Crown did not qualify as a REIT at the time of
the merger, we would be required to pay corporate income tax on any gain
existing at the time of the merger transaction on assets acquired in the
transaction if those assets were sold within ten years after the transaction.
This would be the case even though the merger is expected to qualify as a
"tax-free reorganization." Although we will receive an opinion from Reed Smith
LLP, legal counsel to Crown, that Crown qualifies as a REIT at the time of the
merger, this opinion will not be binding on courts or the Internal Revenue
Service.


                                      -13-


RISKS RELATED TO OUR ORGANIZATION AND STRUCTURE

Some of our officers have interests in properties that we manage and therefore
may have conflicts of interest that could adversely affect our business.

         We provide management, leasing and development services for
partnerships and other ventures in which some of our officers, including Ronald
Rubin, our chairman and chief executive officer, have either direct or indirect
ownership interests. In addition, we lease substantial office space from
Bellevue Associates, an entity in which some of our officers have an interest.
Our officers who have interests in both sides of these transactions face a
conflict of interest in deciding to enter into these agreements and in
negotiating their terms, which could result in our obtaining terms that are less
favorable than we might otherwise obtain, which could adversely affect our
business.

Limited partners of PREIT Associates, L.P. may vote on certain fundamental
changes we propose, which could inhibit a change in control that might result in
a premium to our shareholders.

         Our assets generally are held through PREIT Associates, L.P., a
Delaware limited partnership of which we are the sole general partner. We
currently hold a majority of the outstanding PREIT Partnership Units. However,
PREIT Associates may from time to time issue additional PREIT Partnership Units
to third parties in exchange for contributions of property to PREIT Associates.
These issuances will dilute our percentage ownership of PREIT Associates. PREIT
Partnership Units generally do not carry a right to vote on any matter voted on
by our shareholders, although limited partner interests may, under certain
circumstances, be redeemed for our shares. However, before the date on which at
least half of PREIT Partnership Units issued on September 30, 1997 in connection
with our acquisition of The Rubin Organization have been redeemed, the holders
of PREIT Partnership Units issued on September 30, 1997 are entitled to vote
such units and additional units received or to be received pursuant to the
transactions that were the subject of the September 30, 1997 issuance, along
with our shareholders as a single class, on any proposal to merge, consolidate
or sell substantially all of our assets. Our partnership interest in PREIT
Associates is not included for purposes of determining when half of the
partnership interests issued on September 30, 1997 have been redeemed, nor are
they counted as votes. These existing rights could inhibit a change in control
that might otherwise result in a premium to our shareholders. In addition, we
cannot assure you that we will not agree to extend comparable rights to other
limited partners in PREIT Associates.

Our organizational documents contain provisions that may discourage a takeover
of us and depress our share price.

         Our organizational documents contain provisions that may have an
anti-takeover effect and inhibit a change in our management. These provisions
include:

         (1)  There are ownership limits and restrictions on transferability in
              our trust agreement. In order to protect our status as a REIT, no
              more than 50% of the value of our outstanding shares (after taking
              into account options to acquire shares) may be owned, directly or


                                      -14-


              constructively, by five or fewer individuals and the shares must
              be beneficially owned by 100 or more persons during at least 335
              days of a taxable year of 12 months or during a proportionate part
              of a shorter taxable year. To assist us in satisfying these tests,
              subject to some exceptions, our trust agreement prohibits any
              shareholder from owning more than 9.9% of our outstanding shares
              of beneficial interest (exclusive of preferred shares) or more
              than 9.9% of any class or series of preferred shares. The trust
              agreement also prohibits transfers of shares that would cause a
              shareholder to exceed the 9.9% limit or cause us to be
              beneficially owned by fewer than 100 persons. Our board of
              trustees may exempt a person from the 9.9% ownership limit if they
              receive a ruling from the Internal Revenue Service or an opinion
              of counsel or tax accountants that exceeding the 9.9% ownership
              limit as to that person would not jeopardize our tax status as a
              REIT. Absent an exemption, this restriction may:

              o  discourage a tender offer or other transactions or a change in
                 management or control that might involve a premium price for
                 our shares or otherwise be in the best interests of our
                 shareholders; or

              o  compel a shareholder who had acquired more than 9.9% of our
                 shares to transfer the additional shares to a trust and, as a
                 result, to forfeit the benefits of owning the additional
                 shares.

         (2)  Our trust agreement permits our board of trustees to issue
              preferred shares with terms that may discourage a third party from
              acquiring our company. Our trust agreement permits our board of
              trustees to create and issue multiple classes and series of
              preferred shares and classes and series of preferred shares having
              preferences to the existing shares on any matter, including rights
              in liquidation or to dividends and option rights and other
              securities having conversion or option rights and may authorize
              the creation and issuance by our subsidiaries and affiliates of
              securities having conversion and option rights in respect of our
              shares. Our trust agreement further provides that the terms of
              such rights or other securities may provide for disparate
              treatment of certain holders or groups of holders of such rights
              or other securities. The issuance of such rights or other
              securities could have the effect of delaying or preventing a
              change in control over us, even if a change in control were in the
              shareholders' interest.

         (3)  Our staggered board of trustees may affect the ability of a
              shareholder to take control of our company. Our board of trustees
              has three classes of trustees. The term of office of one class
              expires each year. Trustees for each class are elected for three
              year terms upon the expiration of the term of the respective
              class. The staggered terms for trustees may affect the ability of
              a shareholder to take control of us, even if a change in control
              were in the best interests of our shareholders.

         In addition, we have adopted a shareholder rights plan that may
discourage a tender offer or other transaction that might involve a premium
price for our shares or otherwise be in the best interests of our shareholders.


                                      -15-




RISKS RELATED TO THE REAL ESTATE INDUSTRY

Negative perceptions of the retail sector generally may result in a decline in
our share price.

         A substantial portion of our portfolio consists of retail shopping
centers and we expect to continue to focus on acquiring retail shopping centers
in the future. To the extent that the investing public has a negative perception
of the retail sector, the value of our shares could be negatively impacted,
which could result in our shares trading at a discount below the inherent value
of our assets as a whole.

Costs associated with complying with the Americans with Disabilities Act may
adversely affect our financial condition and results of operations.

         Our properties are subject to the Americans with Disabilities Act of
1990. Under the Americans with Disabilities Act, all places of public
accommodation are required to comply with rules related to access and use by
disabled persons. The Americans with Disabilities Act's requirements could
require costly modifications to our properties and could result in imposition of
injunctive relief, monetary penalties or, in some cases, an award of damages.
Future legislation also may impose additional requirements that we cannot
predict.

Legislative actions, higher insurance costs and potential new accounting
pronouncements could increase our operating expenses and impact our financial
condition and results of operations.

         In order to comply with the Sarbanes-Oxley Act of 2002 as well as
proposed changes to listing standards by the New York Stock Exchange, we have
been and continue to be enhancing our internal controls, hiring additional
personnel and utilizing additional outside legal, accounting and advisory
services. These activities increase our operating expenses. In addition,
insurers likely will increase premiums as a result of higher claims rates
incurred over the past year, so our premiums for our insurance policies,
including our directors' and officers' insurance policies, may increase.

         We cannot predict the impact that proposed accounting pronouncements,
such as the proposed accounting treatment that would require merger costs to be
expensed in the period in which they are incurred, will have on our financial
condition or results of operations.

Possible terrorist activity or other acts of violence or war could adversely
affect our financial condition and results of operations.

         Future terrorist attacks in the United States, such as the attacks that
occurred in New York and Washington, D.C. on September 11, 2001, and other acts
of terrorism or war, may result in declining economic activity, which could harm
the demand for and the value of our properties and may adversely affect the
value of an investment in our securities. A decrease in retail demand could make
it difficult for us to renew or re-lease our properties at lease rates equal to
or above historical rates. Terrorist activities also could directly impact the
value of our properties through damage, destruction or loss, and the
availability of insurance for such acts may be lower, or cost more, which could



                                      -16-



adversely affect our financial condition and results of operations. To the
extent that our tenants are impacted by future attacks, their businesses
similarly could be adversely affected, including their ability to continue to
meet obligations under their existing leases. These acts may erode business and
consumer confidence and spending, and may result in increased volatility in
national and international financial markets and economies. Any one of these
events may decrease demand for real estate, decrease or delay the occupancy of
our new or renovated properties, increase our operating expenses due to
increased physical security for our properties and limit our access to capital
or increase our cost of raising capital.

TAX RISKS

If we fail to qualify as a REIT our shareholders could be adversely affected.

         We believe that we have qualified as a REIT since our inception and
intend to continue to qualify as a REIT. However, we cannot assure shareholders
that we have been qualified or will remain qualified. To qualify as a REIT, we
must comply with certain highly technical and complex requirements under the
Internal Revenue Code. We cannot be certain we have complied with such
requirements because there are very limited judicial and administrative
interpretations of these provisions. Even a technical or inadvertent mistake
could jeopardize our REIT status. In addition, facts and circumstances that may
be beyond our control may affect our ability to qualify as a REIT. We cannot
assure you that new legislation, regulations, administrative interpretations or
court decisions will not change the tax laws significantly with respect to our
qualification as a REIT or with respect to the federal income tax consequences
of qualification.

         If we fail to qualify as a REIT, we will be subject to federal income
tax on our taxable income at regular corporate rates. Also, unless the Internal
Revenue Service granted us relief under statutory provisions, we would remain
disqualified from treatment as a REIT for the four taxable years following the
year during which we first failed to qualify. The additional tax incurred at
regular corporate rates would reduce significantly the cash flow available for
distribution to shareholders and for debt service. In addition, we would no
longer be required to make any distributions to shareholders.

We may be unable to comply with the strict income distribution requirements
applicable to REITs or compliance with such requirements could adversely affect
our financial condition.

         To obtain the favorable treatment associated with qualifying as a REIT,
we are required each year to distribute to our shareholders at least 90% of our
net taxable income. In addition, we are subject to a tax on the undistributed
portion of our income at regular corporate rates and may also be subject to a 4%
excise tax on this undistributed income. We could be required to seek to borrow
funds on a short-term basis to meet the distribution requirements that are
necessary to achieve the tax benefits associated with qualifying as a REIT, even
if conditions are not favorable for borrowing, which could adversely affect our
financial condition.

                                      -17-



Recent change in taxation of corporate dividends may adversely affect the value
of our shares.

         President Bush signed the Jobs and Growth Tax Relief Reconciliation Act
of 2003 into law on May 28, 2003 (the "Jobs and Growth Tax Act"). The Jobs and
Growth Tax Act, among other things, generally reduces to 15% the maximum
marginal rate of federal tax payable by individuals on dividends received from a
regular C corporation. This reduced tax rate, however, will not apply to
dividends paid to individuals by a REIT on its shares except for certain limited
amounts. The earnings of a REIT that are distributed to its shareholders
generally will remain subject to less federal income taxation than earnings of a
non-REIT C corporation that are distributed to its shareholders net of
corporate-level income tax. The Jobs and Growth Tax Act, however, could cause
individual investors to view shares of regular C corporations as more attractive
relative to shares of REITs than was the case prior to the enactment of the
legislation because the dividends from regular C corporations generally will be
taxed at a lower rate, while dividends from REITs generally will be taxed at the
federal income tax rate applicable to ordinary income, up to a maximum marginal
rate of 35%. We cannot predict what effect, if any, the enactment of this
legislation may have on the value of the stock of REITs in general or on the
value of our shares in particular, either in terms of price or relative to other
investments.

                                 USE OF PROCEEDS

         We will use the proceeds, if any, from the issuance of shares under the
2003 Equity Incentive Plan for general purposes and as working capital.



                                      -18-





                             DESCRIPTION OF THE PLAN

         The following summary of the material provisions of the Pennsylvania
Real Estate Investment Trust 2003 Equity Incentive Plan, as amended through
Amendment No. 1 (the "2003 Plan"), is qualified in its entirety by reference to
the 2003 Plan and any applicable agreements entered into under the 2003 Plan.

Purpose of the 2003 Plan

         The 2003 Plan provides a means for us to:

         o  award equity-based benefits to our officers and other key employees,
            the officers and key employees of our subsidiaries, and our
            non-employee trustees; and

         o  issue options to former trustees, officers and employees of Crown
            American Realty Trust and its subsidiaries as replacement awards for
            awards issued under Crown equity plans (provided the merger with
            Crown is consummated), whether or not such individuals become our
            trustees, officers or employees or trustees, officers or employees
            of our subsidiaries.

         We adopted the 2003 Plan to attract and retain key individuals with the
training, experience and expertise we desire, and to furnish additional
incentive to these key individuals to promote our financial success by providing
them with an equity ownership interest in us and/or an equity-based incentive to
further our interests. We also adopted the 2003 Plan to fulfill our obligations
under our merger agreement with Crown to issue replacement awards to former
trustees of Crown and to certain former employees of its subsidiaries.

Eligibility

         We may grant awards under the 2003 Plan to our non-employee trustees,
officers and key employees, to officers and key employees of our subsidiaries
and - if the merger with Crown is consummated - to former non-employee trustees,
officers and employees of Crown and its subsidiaries.

Shares Subject to the 2003 Plan

         Aggregate Available. Subject to any future adjustment for share splits
and similar events, the total number of shares that we can issue under the 2003
Plan is 2,500,000 if the merger with Crown occurs and 1,500,000 if the merger
does not occur. In either case, the shares available under the 2003 Plan include
the shares that remained available under the Pennsylvania Real Estate Investment
Trust 1999 Equity Incentive Plan when it was amended to suspend - subject to
approval of the 2003 Plan by our shareholders - the issuance of awards).


                                      -19-



         Additional Rules. Shares delivered under the 2003 Plan may be
authorized but unissued shares or reacquired shares. We may purchase shares to
be delivered under the 2003 Plan if we determine that it is advisable to do so.
You may not receive options and/or share appreciation rights for more than
250,000 shares during any calendar year under the 2003 Plan. In addition, the
aggregate fair market value, determined at the time the option is granted, of
shares with respect to which options that qualify as incentive stock options
("ISOs") under the Code are exercisable for the first time by you during any
calendar year, under the 2003 Plan and under any other ISO plan of ours or of
our subsidiaries, may not exceed $100,000. If any award that requires you to
exercise the award for shares to be delivered terminates without having been
exercised in full, or if any award payable in cash or shares is paid in cash
rather than in shares, the unexercised portion of the award or the portion that
was paid in cash will continue to be available for future awards.

Adjustments in Shares; Corporate Transactions

         If a share dividend, share split, reverse split or similar change in
our capitalization occurs, our Executive Compensation and Human Resources
Committee (the "Committee") will make appropriate adjustments to the maximum
number of shares that may be delivered under the 2003 Plan, the maximum number
of shares with respect to which options or share appreciation rights may be
granted to you in any calendar year, the exercise price of outstanding awards
and the number of shares issuable after an award is exercised or vests.

         If a corporate transaction occurs (such as a merger, consolidation or
acquisition of property or shares), each outstanding award will be assumed by
the surviving or successor entity. In the event of a proposed corporate
transaction, however, the Committee may terminate all or a portion of any
outstanding award, effective upon the closing of the corporate transaction, if
the Committee determines that doing so is in our best interests. If so, the
Committee will give you, if you hold an option or a share appreciation right,
not less than seven days' notice before the termination, and you may exercise
any option or share appreciation right that is to be so terminated, to the
extent it is then exercisable, before the termination. Further, in the event of
a corporate transaction, the Committee, in its discretion, may:

         o  accelerate the date on which options and share appreciation rights
            become exercisable;

         o  remove restrictions from outstanding restricted shares;

         o  cause the delivery of any performance shares, even if the associated
            performance goals have not been met;

         o  cause the delivery of any contract shares even if the date such
            shares are to be delivered has not been reached; and/or

         o  cause the payment of any dividend equivalent rights.


                                      -20-



Finally, the Committee may, in lieu of the action described above, arrange to
have the surviving or acquiring entity grant you a replacement award that, in
the judgment of the Committee, is substantially equivalent to the replaced
award.

Securities that may be Offered

         Share Options. The 2003 Plan permits the Committee to grant ISOs and
options that do not qualify as ISOs ("NQSOs"). Only our key employees or those
of our subsidiaries may receive ISOs. The Committee also determines the exercise
price of each option. The exercise price of an ISO, however, may not be less
than 100% of the fair market value of the underlying shares on the date of grant
(110% in the case of an ISO granted to a greater-than-10% shareholder, if any).
The exercise price of any option may not be less than the par value of the
underlying shares. The Committee may not reduce the exercise price of an option
after it is granted.

         The Committee will fix the term of each option, but no term may exceed
10 years from the date of grant (five years in the case of an ISO granted to a
greater-than-10% shareholder, if any). The Committee will determine at what time
or times each option may be exercised. The exercisability of options may be
subject to any restrictions the Committee may determine, including your having
to meet one or more performance goals based on the performance criteria set
forth in "Performances Shares" below. Options may be made exercisable in
installments, and the exercisability of options may be accelerated by the
Committee.

         The exercise price of an option granted under the 2003 Plan must be
paid in full in cash or by check, bank draft or money order or, if the terms of
the option permit, by delivery of shares you have held for a period of time
required for them to be "mature" shares for accounting purposes, by delivery of
an irrevocable undertaking by a broker to deliver promptly to us sufficient
funds to pay the exercise price, or by any combination of the foregoing.

         Share Appreciation Rights. The Committee may grant share appreciation
rights, either alone or in tandem with options, entitling you upon exercise to
receive an amount in cash and/or shares, as determined by the Committee,
measured by the increase since the date of grant in the value of the shares
covered by the right. Share appreciation rights granted in tandem with options
will be exercisable only at the time or times, and to the extent, that the
related option is exercisable and will terminate after the exercise of the
related option. The Committee may accelerate the date or dates on which share
appreciation rights not granted in tandem with share options may be exercised.
Share appreciation rights may be subject to any restrictions the Committee may
determine (including your having to meet one or more goals based on the
performance criteria set forth in "Performance Shares" below).

         Restricted Shares. The Committee may grant shares to you without
payment, but subject to any restrictions the Committee may determine (including
your having to meet one or more goals based on the performance criteria set
forth in "Performance Shares" below). The Committee may accelerate the date(s)
on which the restrictions will lapse. Before the lapse of restrictions on
restricted shares, you will have voting and dividend rights on the shares,
unless the Committee determines otherwise. If you make an election under Section
83(b) of the Code with respect to restricted shares, regarding the immediate
recognition of income, you must provide us with a copy of the election within 10
days of filing your election with the Internal Revenue Service.


                                      -21-



         Performance Shares. The Committee may grant awards entitling you to
receive shares without payment if certain performance criteria are met. Receipt
of the shares may be conditioned on your achievement of goals using one or more
of the following criteria: funds from operations, return on assets, return on
net assets, asset turnover, return on equity, return on capital, market price
appreciation of shares, economic value added, total shareholder return, net
income, pre-tax income, earnings per share, operating profit margin, net income
margin, sales margin, cash flow, market share, inventory turnover, sales growth,
capacity utilization, increase in customer base, environmental health and
safety, diversity or quality. The business criteria may be expressed in absolute
terms or relative to the performance of other individuals or companies or to
that of an index. The Committee may waive or modify any conditions in a
performance share award at any time.

         Contract Shares. The Committee may grant awards entitling you to
receive shares without payment if you continue providing services to us or to
one of our subsidiaries through the date or dates specified in your award
agreement.

         Bonus Shares. The Committee may grant awards entitling you to receive
shares without payment as a bonus to you for services provided to us or to one
of our subsidiaries.

         Dividend Equivalent Rights. The Committee may grant awards entitling
you to receive a benefit in lieu of cash dividends that would have been payable
on any or all shares subject to another award granted to you, or that would have
been payable on a number of notional shares unrelated to any award, in either
case had the shares been outstanding.

Listing and Registration of Shares

         If at any time we determine, in our discretion, that the listing,
registration or qualification of shares issuable under the 2003 Plan on any
securities exchange or under the laws of any jurisdiction or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the operation of the 2003 Plan, or that we
or our shareholders or key employees should seek to obtain an exemption from any
above-listed requirements or to continue any listing, registration or
qualification, then the purchase or grant of shares under the 2003 Plan will be
postponed unless and until the listing, registration, qualification, consent,
approval or action has been effected, obtained or taken under conditions we deem
acceptable. In addition, if you acquire shares under the 2003 Plan, you may be
required to assure us satisfactorily that you are acquiring the shares for
investment and not with a view to distribution.




                                      -22-


Restrictions on Resale and Related Matters

         The following is a brief summary of some of the restrictions on the
resale of shares acquired under the 2003 Plan. The application of federal
securities laws in particular situations may be complex, and you should seek
professional advice before reselling your shares.

         Securities Act of 1933 and Rule 144. Shares acquired under the 2003
Plan will be registered under the Securities Act of 1933, as amended (the
"Securities Act"). Accordingly, the shares are not "restricted securities"
within the meaning of Rule 144 under the Securities Act and, except for resales
by our "affiliates," may be resold without reference to the requirements of Rule
144. Our "affiliates," under applicable SEC regulations and interpretations, are
persons who, alone or with others, directly or indirectly, control us. Despite
the registration of shares under the 2003 Plan, our "affiliates" may only sell
shares in an exempt non-public sale or in compliance with the volume and manner
of sale requirements of Rule 144.

         Short-Swing Profit Restrictions. Section 16(b) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules thereunder,
generally require directors, "officers" (as defined in the rules) and direct or
indirect beneficial owners of more than 10% of our shares to repay us any
"profits," as determined under the rules, that they may realize, directly or
indirectly, from any purchase and sale, or sale and purchase, of our equity
securities in any period of less than six months. The grant of an option in
accordance with the 2003 Plan is an exempt purchase for short-swing profit
liability purposes. Further, the exercise of an option under the 2003 Plan is
not considered a purchase for short-swing profit liability purposes. The sale of
shares received after exercising an option, except for the sale of previously
held shares to pay the exercise price of an option, will be a non-exempt sale
for purposes of short-swing profit liability, and so will be matched with other
non-exempt purchases within six months before or after the sale.

         The grant of a share appreciation right under the 2003 Plan generally
is not considered a purchase for short-swing profit liability purposes. Further,
the exercise of a share appreciation right under the 2003 Plan is not considered
a purchase or sale for short-swing profit liability purposes.

         The grant of a restricted share in accordance with the terms of the
2003 Plan is also exempt for short-swing profit liability purposes. The lapse of
restrictions when a restricted share vests under the 2003 Plan also is exempt
for short-swing profit liability purposes. Accordingly, the grant and vesting of
a restricted share under the 2003 Plan will not be matched with any other
share-related transaction, and will not result in short-swing profit liability.
The sale of shares received under a restricted share award under the 2003 Plan,
however, will constitute a non-exempt sale for purposes of short-swing profit
liability, and so will be matched with non-exempt purchases within six months
before or after the sale.

         The grant of performance shares under the 2003 Plan similarly is exempt
from short-swing profit liability, as is the vesting of performance shares. The
sale of the shares received pursuant to the performance share award, however, is
not exempt from short-swing profit liability and will be matched with non-exempt
purchases made within six months before or after the sale.




                                      -23-


         The grant of contract shares under the 2003 Plan similarly is exempt
from short-swing profit liability, as is the delivery of contract shares. The
sale of the shares received pursuant to the contract share award, however, is
not exempt from short-swing profit liability and will be matched with non-exempt
purchases made within six months before or after the sale.

         The grant of bonus shares under the 2003 Plan similarly is exempt from
short-swing profit liability. The sale of the shares received pursuant to the
bonus share award, however, is not exempt from short-swing profit liability and
will be matched with non-exempt purchases made within six months before or after
the sale.

         Other. The resale of shares issued under the 2003 Plan, whether after
the exercise of options received or through other awards under the 2003 Plan, is
subject to other applicable provisions of the securities laws, including
prohibitions against trading on inside information, as well as to the applicable
terms of the 2003 Plan and of any share option or other agreements we enter into
with you. Further, we refer you to "--Federal Income Tax Consequences" below for
information concerning the federal income tax consequences of awards you have
received under the 2003 Plan.

Administration

         The 2003 Plan is administered by our Executive Compensation and Human
Resources Committee, which consists of at least two trustees who are appointed
by, and serve at the pleasure of, our Board of Trustees. The Committee has full
authority, subject to the terms of the 2003 Plan and the merger agreement with
Crown, to select the individuals to be granted awards under the 2003 Plan, to
grant awards on our behalf, to set the terms of the awards and generally to
administer the 2003 Plan. You may obtain additional information about the 2003
Plan and/or the Committee by contacting Pennsylvania Real Estate Investment
Trust, The Bellevue, 200 South Broad Street, Third Floor, Philadelphia, PA
19102, Attention: Executive Compensation and Human Resources Committee;
telephone 215-875-0700.

Amendment and Duration of 2003 Plan

         The Committee may at any time discontinue granting awards under the
2003 Plan and the Committee may amend any outstanding award, other than lowering
the exercise price of options. The Board may at any time terminate or amend the
2003 Plan, except that the following amendments may not be made without our
shareholders' approval:

         o  an increase in the maximum number of shares with respect to which
            ISOs may be granted under the 2003 Plan;

         o  a change in the class of employees eligible to receive ISOs under
            the 2003 Plan;

         o  an extension of the 2003 Plan's duration with respect to ISOs;


                                      -24-



         o  any amendment to the 2003 Plan requiring shareholder approval under
            the $1 million deduction limit on compensation in Section 162(m) of
            the Code; and

         o  any amendment of the 2003 Plan requiring shareholder approval under
            the rules of the New York Stock Exchange, or as required under any
            other applicable law, rule or regulation.

Further, no amendment or termination of the 2003 Plan may adversely affect your
rights, without your consent, under any award previously granted. ISOs may not
be granted under the 2003 Plan after July 23, 2013.

Transferability

         No ISO granted under the 2003 Plan may be transferred other than by
will or by the laws of descent and distribution. No other award may be
transferred except to the extent provided in your award agreement. During your
lifetime, an award requiring exercise may be exercised only by you, or in the
event of your incapacity, the person(s) legally appointed to act on your behalf.

Treatment of Awards after Termination of Service

         If your employment or service terminates by reason of death or
disability, all options and share appreciation rights then held by you that were
not exercisable immediately before the termination of service will terminate on
that date, except as otherwise stated in your award agreement or your employment
agreement. Any options or share appreciation rights that were exercisable or
that became exercisable upon such an event will remain exercisable for one year
from the date of termination, or for a shorter or longer period as stated in
your award agreement or employment agreement. In the event of any other
termination of employment or service, all options and share appreciation rights
held by you that are not then exercisable will terminate, except as otherwise
stated in your award agreement or employment agreement. Any options or share
appreciation rights that were exercisable generally will continue to be
exercisable for three months, or for a shorter or longer period as stated in
your award agreement or employment agreement. Notwithstanding the
post-termination exercise periods described above, no option or share
appreciation right may be exercised beyond its original term.

         If your employment or service is terminated for any reason, including
death or disability, before the lapse of the restrictions on your restricted
shares, you must forfeit the shares to us; except that your award agreement or
employment agreement may provide that the restrictions lapse after a particular
kind of termination of service. Except as otherwise stated in your award
agreement or employment agreement, rights under performance share awards,
contract share awards, bonus share awards and dividend equivalent rights to
which you have not become irrevocably entitled will terminate upon your death,
retirement or other termination of employment or service with us.



                                      -25-


Federal Income Tax Consequences

         We believe that, with respect to options and other awards granted under
the 2003 Plan, the normal operation of the 2003 Plan generally should have,
under the Code and the regulations and rulings thereunder, all as in effect on
October 1, 2003, the principal federal income tax consequences described below.
The consequences described below do not take into account any changes to the
Code or the regulations thereunder that may occur after October 1, 2003.

         ISOs. To the extent options granted to you under the 2003 Plan qualify
the ISOs under Section 422 of the Code, our principal federal income tax
consequences and yours generally should be as follows:

                  (1) You will not recognize taxable income on the grant of the
         ISO. Moreover, you generally will not recognize taxable income on your
         exercise of the ISO, provided you were our employee or that of any of
         our subsidiary corporations, as defined in Section 424(f) of the Code,
         during the entire period from the date of grant of the ISO until three
         months before the date of exercise, increased to 12 months if
         employment ceased due to permanent and total disability. An amount,
         generally equal to the excess of the fair market value of the shares
         over the exercise price at the time of exercise, however, will be
         included in your alternative minimum taxable income in the year of
         exercise. The employment requirement is waived if you die. Of course,
         in all of these situations, the ISO itself may provide a shorter
         exercise period after employment ceases than the allowable period under
         the Code. If the employment requirements described above are not met,
         the tax consequences relating to NQSOs, discussed below, will apply.

                  (2) If you dispose of the shares acquired under the ISO at
         least two years after we grant you the ISO and at least one year
         following the date the shares are transferred to you following your
         exercise of the ISO, you will recognize a long-term capital gain or
         loss equal to the difference between the amount realized on the
         disposition and the exercise price, assuming you held the shares as
         capital assets.

                  (3) If you make a disqualifying disposition of the shares,
         that is, you dispose of the shares within two years after we grant you
         the ISO or within one year after the shares are transferred to you
         following exercise of the ISO, but all other requirements of Section
         422 of the Code are met, you generally will recognize ordinary income
         on disposition of the shares in an amount equal to the lesser of (i)
         the fair market value of the shares on the date of exercise minus the
         exercise price, or (ii) the amount realized on disposition minus the
         exercise price. Disqualifying dispositions of shares may also,
         depending on the sales price, result in either long-term or short-term
         capital gain or loss under the Code rules that govern other stock
         dispositions, assuming that you held the shares as capital assets.

                  (4) If all requirements of Section 422 of the Code, including
         the holding and employment requirements described in (1) and (2) above,
         are met, we are not entitled to any federal income tax deduction with
         respect to the ISO. If any of the requirements are not met, we will be
         allowed a federal income tax deduction to the extent of the ordinary
         income includable in your gross income in accordance with the
         provisions of Section 83 of the Code, and Section 162(m) of the Code to
         the extent applicable, and the regulations under those Sections.


                                      -26-



         NQSOs. If options, when granted to you under the 2003 Plan, are NQSOs
or if options, when granted to you, are intended to be ISOs but fail to qualify
as ISOs, our principal federal income tax consequences and yours generally
should be as follows:

                  (1) You will not recognize taxable income on the grant of the
         NQSO.

                  (2) You will recognize ordinary income at the time you
         exercise the NQSO, in an amount equal to the excess of the shares' fair
         market value at the time of the exercise over the exercise price.

                  (3) We will not be entitled to a deduction on the grant of the
         NQSO. We will be entitled to a deduction to the extent of the ordinary
         income you recognized in accordance with the rules of Section 83 of the
         Code, and Section 162(m) of the Code to the extent applicable, and the
         regulations under those Sections.

                  (4) Gain or loss that you recognize after a subsequent
         disposition of shares will be short-term or long-term capital gain or
         loss, if the shares are otherwise capital assets in your hands.

                  (5) Section 162(m) of the Code generally limits the extent to
         which the compensation paid to our chief executive officer, or the
         person acting in that capacity, and the four highest compensated
         executives other than the chief executive officer (collectively, the
         "Covered Employees") is deductible by us when the annual compensation
         for any Covered Employee exceeds $1,000,000 in a taxable year.
         Compensation for purposes of Section 162(m) includes cash compensation
         and non-cash benefits paid for services, including, with respect to
         NQSOs, the difference between the exercise price and the market value
         of the shares at the time of exercise, subject to some exclusions.
         However, if the 2003 Plan is approved by our shareholders, the spread
         on the exercise of NQSOs will not be treated as compensation for
         purposes of Section 162(m). Thus, we will be entitled to deduct any
         compensation recognized on the exercise of the NQSOs granted under the
         2003 Plan.

         Share Appreciation Rights. To the extent that we grant you share
appreciation rights under the 2003 Plan and you exercise them, our principal
federal income tax consequences and yours generally should be as follows:

                  (1) When we grant the share appreciation right, you recognize
         no taxable income, and we are not entitled to a deduction.

                  (2) When you exercise the share appreciation right, you
         recognize ordinary income as of the date of exercise in an amount equal
         to the excess of the fair market value of the shares on the date of
         exercise over the value on their date of grant.


                                      -27-



                  (3) We are entitled to a deduction, in the same year in which
         you recognize income, to the extent of the amount includable in your
         gross income and in accordance with the rules of Section 83 of the
         Code, and Section 162(m) of the Code to the extent applicable, and the
         regulations under those Sections.

                  (4) Our otherwise allowable deduction for compensation paid or
         accrued to any Covered Employee generally is limited under Section
         162(m) of the Code to $1,000,000 per taxable year. However, if the 2003
         Plan is approved by our shareholders, the spread upon exercise of share
         appreciation rights will not be treated as compensation for purposes of
         Section 162(m). Thus, we will be entitled to deduct any compensation
         recognized on your exercise of share appreciation rights granted under
         the 2003 Plan.

         Restricted Shares. Our principal federal income tax consequences and
yours if you are granted restricted shares under the 2003 Plan generally should
be as follows:

                  (1) When we grant you restricted shares, you will not
         recognize taxable income, and we will not be entitled to a deduction,
         unless you timely elect under Section 83(b) of the Code to be taxed at
         the time of the grant.

                  (2) When we pay dividends attributable to restricted shares,
         you will recognize ordinary income.

                  (3) After the lapse of all restrictions on shares issued
         through a restricted share award, you will recognize ordinary income in
         an amount equal to the fair market value of the shares on the date of
         vesting, unless you elected previously and timely under Section 83(b)
         of the Code to be taxed at the time of grant.

                  (4) The basis of the shares you receive after the vesting of
         restricted shares is the amount you recognized as income attributable
         to the shares, as described in (3) above. Your holding period for the
         shares begins on the day after the date of vesting. When you dispose of
         the shares, you will recognize a long-term or short-term capital gain
         or loss, under Code rules that govern stock dispositions, assuming that
         you held the shares as capital assets.

                  (5) Generally, we will be entitled to a deduction, in the same
         year in which you recognize income, equal to the amount of ordinary
         income includable in your gross income in accordance with the rules of
         Section 83 of the Code, and Section 162(m) of the Code to the extent
         applicable, and the regulations under those Sections.

                  (6) The otherwise allowable deduction for compensation paid or
         accrued to any Covered Employee generally is limited under Section
         162(m) of the Code to $1,000,000 per taxable year. Restricted share
         grants, and the dividends received on them, should be treated as
         compensation for purposes of this $1,000,000 limit (unless the Covered
         Employee's vesting in them is subject to performance criteria).


                                      -28-



                  (7) We recognize no gain or loss when we issue restricted
         shares under the 2003 Plan.

         Performance Shares. Our principal federal income tax consequences and
yours if you are granted performance shares under the 2003 Plan generally should
be as follows:

                  (1) When we grant you performance shares, you will recognize
         ordinary income in an amount equal to the fair market value of the
         shares on the date of grant.

                  (2) The basis of the shares you receive through the
         performance share award is the amount you recognize as income
         attributable to the shares, as described in (1) above. Your holding
         period for the shares begins on the day after the date of the grant.
         When you dispose of the shares, you will recognize a long-term or
         short-term capital gain or loss, under Code rules that govern stock
         dispositions, assuming that you held the shares as capital assets.

                  (3) Generally, we will be entitled to a deduction, in the same
         year in which you recognize income, equal to the amount of ordinary
         income includable in your gross income in accordance with the rules of
         Section 83 of the Code, and Section 162(m) of the Code to the extent
         applicable, and the regulations under those Sections.

                  (4) The otherwise allowable deduction for compensation paid or
         accrued to any Covered Employee generally is limited under Section
         162(m) of the Code to $1,000,000 per year. However, if the 2003 Plan is
         approved by our shareholders, the performance shares will not be
         treated as compensation for purposes of Section 162(m). Thus, we will
         be entitled to deduct any compensation recognized through the Covered
         Employee's receipt of the performance shares.

                  (5) We recognize no gain or loss when we issue performance
         shares under the 2003 Plan.

         Contract Shares. Our principal federal income tax consequences and
yours if you are granted contract shares under the 2003 Plan generally should be
as follows:

                  (1) You will not recognize taxable income on the grant of the
         contract shares.

                  (2) When we deliver the contract shares to you, you will
         recognize ordinary income in an amount equal to the fair market value
         of the shares on the date of delivery.

                  (3) The basis of the shares you receive through the contract
         share award is the amount you recognize as income attributable to the
         shares, as described in (2) above. Your holding period for the shares
         begins on the day after the date of the delivery. When you dispose of
         the shares, you will recognize a long-term or short-term capital gain
         or loss, under Code rules that govern stock dispositions, assuming that
         you held the shares as capital assets.


                                      -29-


                  (4) Generally, we will be entitled to a deduction, in the same
         year in which you recognize income, equal to the amount of ordinary
         income includable in your gross income in accordance with the rules of
         Section 83 of the Code, and Section 162(m) of the Code to the extent
         applicable, and the regulations under those Sections.

                  (5) The otherwise allowable deduction for compensation paid or
         accrued to any Covered Employee generally is limited under Section
         162(m) of the Code to $1,000,000 per taxable year. Contract share
         awards should be treated as compensation for purposes of this
         $1,000,000 limit.

                  (6) We recognize no gain or loss when we issue contract shares
         under the 2003 Plan.

         Bonus Shares. Our principal federal income tax consequences and yours
if you are granted bonus shares under the 2003 Plan generally should be as
follows:

                  (1) When we grant you the bonus shares, you will recognize
         ordinary income in an amount equal to the fair market value of the
         shares on the date of grant.

                  (2) The basis of the shares you receive through the bonus
         share award is the amount you recognize as income attributable to the
         shares, as described in (1) above. Your holding period for the shares
         begins on the day after the date of the grant. When you dispose of the
         shares, you will recognize a long-term or short-term capital gain or
         loss, under Code rules that govern stock dispositions, assuming that
         you held the shares as capital assets.

                  (3) Generally, we will be entitled to a deduction, in the same
         year in which you recognize income, equal to the amount of ordinary
         income includable in your gross income in accordance with the rules of
         Section 83 of the Code, and Section 162(m) of the Code to the extent
         applicable, and the regulations under those Sections.

                  (4) The otherwise allowable deduction for compensation paid or
         accrued to any Covered Employee generally is limited under Section
         162(m) of the Code to $1,000,000 per year. However, if the 2003 Plan is
         approved by our shareholders, the bonus shares will not be treated as
         remuneration for purposes of Section 162(m) if they are payable only
         upon the Covered Employee's meeting certain performance criteria. In
         that case, we will be entitled to deduct any compensation recognized
         through the Covered Employee's receipt of the bonus shares.

                  (5) We recognize no gain or loss when we issue bonus shares
         under the 2003 Plan.



                                      -30-



         Dividend Equivalent Rights. If we grant you dividend equivalent rights
under the 2003 Plan, our principal federal income tax consequences and yours
generally should be as follows:

                  (1) You will recognize ordinary income not later than the date
         that the dividend equivalent rights are paid to you.

                  (2) We are entitled to a deduction, in the same year in which
         you recognize income, equal to the amount includable in your gross
         income in accordance with the rules of Section 83 of the Code, and
         Section 162(m) of the Code to the extent applicable, and the
         regulations under those Sections.

                  (3) Our otherwise allowable deduction for compensation paid or
         accrued generally is limited under Section 162(m) of the Code to
         $1,000,000 per Covered Employee per year. Amounts attributable to
         dividend equivalent rights should be treated as compensation for
         purposes of the $1,000,000 limit.

Withholding Requirements

         Our obligation to deliver shares after the exercise of any option,
share appreciation right or other award under the 2003 Plan is subject to any
applicable federal, state and local income tax withholding requirements. In
addition, we are required to withhold FICA (Social Security) taxes on your
income if you are an employee. In the case of an award under which shares may be
delivered, the Committee may require that you remit to us an amount sufficient
to satisfy the withholding requirements, or make other arrangements satisfactory
to the Committee with regard to those requirements, before the delivery of any
shares to you.

         The Committee may permit or require you to satisfy these withholding
obligations with respect to awards paid in shares by electing to have shares
withheld from the award. Various additional tax consequences result from the use
of shares to satisfy the withholding requirements. If you contemplate
withholding shares in this manner, we strongly urge you to consult your tax
advisor with respect to the associated tax treatment.

Other Considerations

         The 2003 Plan is not a tax-qualified plan under Section 401(a) of the
Code and, based on current law and published interpretations, we believe the
2003 Plan is not subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended.

         The above paragraphs are only a summary of some of the federal income
tax consequences relating to the 2003 Plan. We have not considered the effects
of state, local and other laws, including, without limitation, tax laws, on the
2003 Plan or on you. These laws will vary depending on the particular
jurisdiction(s) involved.

Because of the complexities involved in the application of federal, state and
local tax laws to specific circumstances, and the uncertainties as to possible
future changes in the tax laws, we strongly urge you to consult a tax advisor
with respect to your own situation.


                                      -31-



                  DESCRIPTION OF SHARES OF BENEFICIAL INTEREST

         The following summary of the material terms of PREIT's shares of
beneficial interest does not include all of the terms of the shares and should
be read together with the trust agreement and by-laws of PREIT and applicable
Pennsylvania law. In addition, this summary includes a description of the 11.00%
Non-Convertible, Senior Preferred Shares of Beneficial Interest, par value $0.01
per share, liquidation preference $50.00 per share (the "11% preferred shares")
of PREIT that will be issued by PREIT to the holders of the 11% preferred shares
of Crown American Realty Trust upon completion of PREIT's proposed merger with
Crown. Accordingly, you should read the form of the designating amendment to
PREIT's trust agreement for such preferred shares. The PREIT trust agreement and
by-laws and the form of designating amendment are incorporated by reference into
the registration statement of which this prospectus is a part.

Authorized Capital Stock

         Under the PREIT trust agreement, PREIT has the authority to issue up to
100,000,000 shares of beneficial interest and up to 25,000,000 preferred shares.

Shares of Beneficial Interest

         Voting, Dividend and Other Rights. Subject to the provisions of the
PREIT trust agreement regarding "Excess Shares" (See "--REIT Ownership
Limitations and Transfer Restrictions Applicable to PREIT Shares of Beneficial
Interest and 11% Preferred Shares"), (i) the holders of PREIT shares are
entitled to one vote per share on all matters voted on by shareholders,
including elections of trustees, and (ii) subject to the rights of holders of
any preferred shares, including the PREIT 11% preferred shares, the holders of
PREIT shares are entitled to a pro rata portion of such distributions as may be
declared from time to time by the trustees from funds available therefor, and
upon liquidation are entitled to receive pro rata all of the assets available
for distribution to such holders. See "--New 11% Preferred Shares--Dividends and
--Liquidation." The majority of shares voting on a matter at a meeting at which
at least a majority of the outstanding shares are present in person or by proxy
constitutes the act of the shareholders, except with respect to the election of
trustees (see below). The PREIT trust agreement permits the holders of
securities of PREIT affiliates to vote with PREIT shareholders on certain
matters, and PREIT trustees have granted that right to certain holders of
currently outstanding PREIT Partnership Units with respect to fundamental
changes in PREIT (i.e. mergers, consolidations and sales of substantially all of
PREIT's assets). See "- Summary of the Operating Partnership Agreement and PREIT
Partnership Units - Authorization of PREIT Partnership Units and Voting Rights."
Shareholders do not have any pre-emptive rights to purchase PREIT securities.

         The PREIT trust agreement provides that the trustees may issue multiple
classes and series of shares of beneficial interest and, subject to the rights
of the holders of the PREIT 11% preferred shares, classes and series of
preferred shares having preferences to the existing shares in any matter,
including rights in liquidation or to dividends and option rights (including
shareholder rights plans), and other securities having conversion or option
rights and may authorize the creation and issuance by PREIT subsidiaries and



                                      -32-



affiliates of securities having conversion and option rights in respect of
shares. Thus, the rights of holders of existing shares of beneficial interest
are subject and junior to preferred rights, including the rights of holders of
the PREIT 11% preferred shares as to dividends and in liquidation (and other
such matters) and to the extent set forth in any subsequently authorized
preferred shares or class of preferred shares.

         Board of Trustees. The board of trustees is divided into three classes
serving staggered three-year terms. The PREIT trust agreement does not provide
for cumulative voting in the election of trustees, and the candidates receiving
the highest number of votes are elected to the office of trustee.

         Trustee Nomination Process. The PREIT trust agreement provides that
nominations for election to the office of trustee at any annual or special
meeting of shareholders shall be made by the trustees, or by petition in writing
delivered to the secretary not fewer than 35 days before the meeting signed by
the holders of at least two percent of the shares outstanding on the date of the
petition. Nominations not made in accordance with these procedures will not be
considered unless the number of persons nominated is fewer than the number of
persons to be elected to the office of trustee at the meeting. In this latter
event, nominations for the trustee positions that would not otherwise be filled
may be made at the meeting by any person entitled to vote in the election of
trustees.

New 11% Preferred Shares

         In connection with the proposed merger of PREIT and Crown, PREIT will
issue 11% preferred shares to current holders of Crown 11% preferred shares. The
number of shares designated as PREIT 11% preferred shares will be 2,475,000. The
number of 11.00% preferred shares may be decreased by the PREIT board from time
to time, though not below the number of PREIT 11% preferred shares then
outstanding. The terms of the new PREIT 11% preferred shares will be identical
in all material respects to the existing Crown 11% preferred shares.

         Rank. The PREIT 11% preferred shares will, with respect to dividend
rights and rights upon liquidation, dissolution or winding up of PREIT, rank
senior to all classes or series of equity securities of PREIT, except that the
PREIT 11% preferred shares will rank on a parity with additional preferred
shares issued by PREIT the terms of which specifically provide that such
preferred shares rank on a parity with the PREIT 11% preferred shares with
respect to dividend rights or rights upon liquidation, dissolution or winding up
of PREIT so long as the aggregate liquidation preference of the additional
preferred shares and the PREIT 11% preferred shares together do not exceed
$123,750,000.

         Dividends. Holders of the PREIT 11% preferred shares will be entitled
to receive, when, as and if declared by the board of trustees, out of funds
legally available for the payment of dividends, cumulative, preferential cash
dividends in an amount per share equal to $5.50 per annum. Each dividend will be
payable to holders of record as they appear on the transfer books of PREIT on
the record date as provided below.

         In addition, holders of the PREIT 11% preferred shares may be eligible
to receive additional dividends ("Additional Dividends") from time to time if
PREIT's "Total Debt" (as defined in the designating amendment) exceeds the
product of 6.5 times "EBITDA" (as defined in the designating amendment) (the



                                      -33-


"Leverage Ratio") without the consent of the holders of at least 50% of the
PREIT 11% preferred shares outstanding at that time. Holders who consent to a
waiver of such restriction will be paid a consent fee. If required to be paid,
Additional Dividends will be for an amount per share equal to 0.25% of the
Preferred Liquidation Preference Amount (as defined below) on an annualized
basis for the first quarter with respect to which an Additional Dividend is due.
For each quarter thereafter that PREIT continues to exceed the permitted
Leverage Ratio, the Additional Dividend will increase by an amount per share
equal to an additional 0.25% of the Preferred Liquidation Preference Amount on
an annualized basis. However, the maximum total dividend on the PREIT 11%
preferred shares, including any Additional Dividends, will not at any time
exceed 13% of the Preferred Liquidation Preference Amount per annum.

         If any PREIT 11% preferred shares are outstanding, no full dividends
will be declared or paid or set apart for payment on the capital shares of PREIT
or any other series ranking, as to dividends, on a parity with or junior to the
PREIT 11% preferred shares for any period unless full cumulative dividends
(including any Additional Dividends) have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof set apart for
such payment on the PREIT 11% preferred shares for all past dividend periods and
the then current dividend period. When dividends are not paid in full (or a sum
sufficient for such full payment is not so set apart) upon the PREIT 11%
preferred shares and the shares of any series of preferred shares ranking on a
parity as to dividends with the PREIT 11% preferred shares, all dividends
declared upon the PREIT 11% preferred shares and any series of preferred shares
ranking on a parity as to dividends with the PREIT 11% preferred shares will be
declared pro rata so that the amount of dividends declared per share on the
PREIT 11% preferred shares and such other series of preferred shares will in all
cases bear to each other the same ratio that accrued and unpaid dividends per
PREIT 11% preferred share and such other series of preferred shares bear to each
other. No interest, or sum of money in lieu of interest, will be payable in
respect of any dividend payment or payments on the PREIT 11% preferred shares
which may be in arrears.

         Except as provided in the immediately preceding paragraph, unless full
cumulative dividends (including any Additional Dividends) on the PREIT 11%
preferred shares have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment for
all past dividend periods and the then current dividend period, no dividends
(other than distributions payable in PREIT common shares or other capital shares
ranking junior to the PREIT 11% preferred shares as to dividends and upon
liquidation, dissolution or winding up of PREIT) will be declared or paid or set
aside for payment, and no other distribution will be declared or made, upon the
PREIT common shares or any other capital shares of PREIT ranking junior to or on
a parity with the PREIT 11% preferred shares as to dividends, nor will any PREIT
common shares or any other capital shares of PREIT ranking junior to or on a
parity with the PREIT 11% preferred shares as to dividends or upon liquidation,
dissolution or winding up of PREIT be redeemed, purchased or otherwise acquired
for any consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any such shares) by PREIT (except by conversion into
or exchange for other capital shares of PREIT ranking junior to the PREIT 11%
preferred shares as to dividends and upon liquidation, dissolution and winding
up).


                                      -34-


         Any dividend payment made on PREIT 11% preferred shares will first be
credited against the earliest accrued but unpaid dividend due with respect to
the PREIT 11% preferred shares which remains payable.

         Liquidation Rights. In the event of any liquidation, dissolution or
winding up of PREIT, the holders of PREIT 11% preferred shares will be entitled
to be paid out of the assets of PREIT legally available for distribution to its
shareholders a liquidation preference equal to the sum of $50.00 per share plus
an amount equal to any accrued and unpaid dividends thereon (whether or not
earned or declared) to the date of payment (the "Preferred Liquidation
Preference Amount"), before any distribution of assets is made to holders of
PREIT common shares or any other capital shares that rank junior to the PREIT
11% preferred shares as to liquidation rights. After payment of the full amount
of the liquidating distributions to which they are entitled, the holders of the
PREIT 11% preferred shares will have no right or claim to any of the remaining
assets of PREIT.

         If liquidating distributions have been made in full to all holders of
PREIT 11% preferred shares, the remaining assets of PREIT will be distributed
among the holders of any other classes or series of capital shares ranking
junior to PREIT 11% preferred shares upon liquidation, dissolution or winding up
of PREIT, according to their respective rights and preferences and in each case
according to their respective number of shares.

         The consolidation or merger of PREIT with or into any other
corporation, or the sale, lease, transfer or conveyance of all or substantially
all of the property or business of PREIT, will not be deemed to constitute a
liquidation, dissolution or winding up of PREIT for these purposes.

         Redemption. The PREIT 11% preferred shares will not be redeemable prior
to July 31, 2007, except under certain limited circumstances to preserve PREIT's
status as a REIT. See "--REIT Ownership Limitations and Transfer Restrictions
Applicable to PREIT Shares of Beneficial Interest and 11% Preferred Shares." On
and after July 31, 2007, PREIT, at its option (to the extent PREIT has legally
available funds) upon not less than 30 nor more than 60 days written notice, may
redeem the PREIT 11% preferred shares, in whole or in part, at any time or from
time to time, during the periods and at the redemption price set forth below
plus any accrued and unpaid dividends to the date of redemption:

                                                        Redemption Price
              Redemption Period                         Per 11% Preferred Share
              -----------------                         -----------------------

              July 31, 2007 through July 30, 2009              $52.50
              July 31, 2009 through July 30, 2010              $51.50
              On or after July 31, 2010                        $50.00

         Notwithstanding the foregoing, unless full cumulative dividends on all
outstanding PREIT 11% preferred shares have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for payment for all past dividend periods and the then current dividend
period, (i) no PREIT 11% preferred shares will be redeemed unless all
outstanding PREIT 11% preferred shares are simultaneously redeemed; except, that
the foregoing will not prevent the purchase or acquisition of PREIT 11%


                                      -35-



preferred shares pursuant to a purchase or exchange offer made on the same terms
to holders of all outstanding PREIT 11% preferred shares, and (ii) PREIT will
not purchase or otherwise acquire directly or indirectly through a subsidiary or
otherwise, any PREIT 11% preferred shares.

         If fewer than all of the outstanding PREIT 11% preferred shares are to
be redeemed, the number of shares to be redeemed will be determined by PREIT and
such shares may be redeemed pro rata from the holders of record of such shares
in proportion to the number of such shares held by such holders (as nearly as
may be practicable without creating fractional PREIT 11% preferred shares) or
any other equitable method determined by PREIT.

         All PREIT 11% preferred shares redeemed will be retired and will be
restored to the status of authorized and unissued preferred shares, without
designation as to series, and may thereafter be reissued as any series of
preferred shares.

         The PREIT 11% preferred shares have no stated maturity and will not be
subject to any sinking fund.

         Voting Rights. Holders of the PREIT 11% preferred shares will not have
any voting rights, except as set forth below or as otherwise from time to time
required by law. Subject to the provisions in the PREIT trust agreement
regarding Excess Shares, in any matter in which the PREIT 11% preferred shares
may vote, including any action by written consent, each share will be entitled
to one vote. The holders of each share may separately designate a proxy for the
vote to which that share is entitled.

         Whenever dividends on any PREIT 11% preferred shares have been in
arrears for six or more quarterly dividend periods (regardless of whether such
periods are consecutive), the holders of such PREIT 11% preferred shares (voting
separately as a class with all other series of preferred shares upon which
rights to vote on such matter with PREIT 11% preferred shares have been
conferred and are then exercisable) will be entitled to vote for the election of
two additional trustees of PREIT at a special meeting called by the holders of
record of at least 10% of the PREIT 11% preferred shares and any other preferred
shares, if any (unless the request is received less than 90 days before the date
fixed for the next annual or special meeting of the shareholders), or at the
next annual meeting of shareholders, and at each subsequent annual meeting until
all dividends accumulated on such PREIT 11% preferred shares for the past
dividend periods and the then current dividend period have been fully paid or
declared and a sum sufficient for the payment thereof set aside for payment. In
this event, the entire board will be increased by two trustees. Each of the two
trustees will be elected to serve until the earlier of (i) the election and
qualification of the trustee's successor or (ii) payment of the dividend
arrearage for the PREIT 11% preferred shares.

         If any trustee elected by the holders of the PREIT 11% preferred shares
ceases to serve as a trustee before the trustee's term expires, the holders of
the PREIT 11% preferred shares (and any other series of preferred shares, if
any, entitled to vote on such matter, as described above) then outstanding may,
at a special meeting of the holders called as provided above, elect a successor
to hold office for the unexpired term of the trustee whose place is vacant.


                                      -36-


         So long as any PREIT 11% preferred shares remain outstanding, PREIT
will not (i) without the affirmative vote or consent of the holders of all of
the PREIT 11% preferred shares outstanding at the time (such series voting
separately as a class), authorize, create or issue, or increase the authorized
or issued amount of, any class or series of capital shares ranking senior to the
PREIT 11% preferred shares with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up, or create,
authorize or issue any obligation or security convertible into or evidencing the
right to purchase any such shares; or (ii) without the affirmative vote or
consent of the holders of at least two-thirds of the PREIT 11% preferred shares
outstanding at the time (such series voting separately as a class), amend, alter
or repeal the provisions of the PREIT trust agreement, whether by merger,
consolidation or otherwise, so as to materially and adversely affect any right,
preference, privilege or voting power of the PREIT 11% preferred shares or the
holders thereof; except that any increase in the amount of the authorized
preferred shares, or the creation or issuance of any other series of preferred
shares, or any increase in the amount of authorized shares of preferred shares
or any other series of preferred shares, in each case ranking on a parity with
or junior to the PREIT 11% preferred shares with respect to payment of dividends
or the distribution of assets upon liquidation, dissolution or winding up of
PREIT, will not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.

         The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required is
effected, all outstanding PREIT 11% preferred shares have been redeemed or
called for redemption upon proper notice and sufficient funds have been
deposited in trust to effect such redemption.

PREIT Shareholder Rights Plan

         The following summary of the Rights Agreement, dated as of April 30,
1999, as the same may be amended from time to time (the "Rights Agreement"),
between PREIT and American Stock Transfer and Trust Company, as rights agent
(the "Rights Agent") does not include all of the terms thereof and should be
read together with the Rights Agreement, which is incorporated by reference into
the registration statement of which this prospectus is a part.

         PREIT has adopted a shareholder rights plan. The description and terms
of the rights are set forth in the Rights Agreement. Each right entitles its
registered holder to purchase from PREIT one share at a price of $70.00 (the
"Exercise Price"), subject to certain adjustments.

         The rights, unless earlier redeemed or exchanged by the board of
trustees, become exercisable upon the close of business on the day (the
"Distribution Date") that is the earlier of (i) the tenth day following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person"), with certain exceptions set forth below, has acquired
beneficial ownership or voting control of 15% or more of PREIT outstanding
voting shares, and (ii) the tenth business day (or such later date as may be
determined by the board of trustees prior to such time as any person or group of
affiliated or associated persons becomes an Acquiring Person) after the date of
the commencement or public announcement of a person's or group's intention to
commence a tender or exchange offer the consummation of which would result in
the acquisition of beneficial ownership or voting control of 15% or more PREIT
outstanding voting shares (even if no shares are actually acquired pursuant to
such offer). The rights will expire at the close of business on March 31, 2009,
unless earlier redeemed or exchanged by PREIT as described below.



                                      -37-


         Unless the rights are redeemed or exchanged, if a person or group of
affiliated or associated persons become an Acquiring Person, each holder of
record of a right, other than the Acquiring Person (whose rights will become
null and void), will have the right to pay the Exercise Price in return for
shares having a market value equal to double the Exercise Price. In addition,
after a person or group becomes an Acquiring Person, if PREIT were to undergo a
change of control, each holder of record of a right, other than the Acquiring
Person (whose rights will become null and void), will have the right to pay the
Exercise Price in return for shares of the acquiring entity having a market
value equal to double the Exercise Price.

         At any time after any person or group of affiliated or associated
persons becomes an Acquiring Person and prior to the acquisition by such
Acquiring Person of 50% or more of PREIT's outstanding voting shares, the board
of trustees may exchange the rights (other than rights owned by the Acquiring
Person which will have become null and void), in whole or in part, at an
exchange ratio of one share per right (subject to adjustment).

         The rights have anti-takeover effects in that they will cause
substantial dilution to a person or group of affiliated or associated persons
that attempts to acquire PREIT on terms not approved by the board of trustees.
The rights should not interfere with any merger or other business combination
approved by the board of trustees because the rights may be redeemed by PREIT at
$0.001 per right at any time until the close of business on the tenth day (or
such later date as described above) after a person or group has obtained
beneficial ownership or voting control of 15% or more of PREIT voting shares.

Transfer Agent and Registrar

         The transfer agent and registrar for the PREIT shares of beneficial
interest is, and for the PREIT 11% preferred shares will be, American Stock
Transfer & Trust Co.

Limited Liability of Shareholders

         The PREIT trust agreement provides that shareholders, to the fullest
extent permitted by applicable law, are not liable for any act, omission or
liability of a trustee and that the trustees have no power to bind shareholders
personally. Notwithstanding the foregoing, there may be liability in some
jurisdictions that may decline to recognize a business trust as a valid
organization. With respect to all types of claims in such jurisdictions, and
with respect to tort claims, certain contract claims and possible tax claims in
jurisdictions where the business trust is treated as a partnership for certain
purposes, shareholders may be personally liable for such obligations to the
extent that PREIT does not satisfy such claims. PREIT conducts substantially all
of its business in jurisdictions other than the Commonwealth of Pennsylvania in
entities recognized in the relevant jurisdiction to limit the liability of
equity owners. PREIT carries insurance in amounts that it deems adequate to
cover foreseeable tort claims.

Summary of the Operating Partnership Agreement and PREIT Partnership Units

         The following summary of the First Amended and Restated Agreement of
Limited Partnership of PREIT Associates, L.P., as amended (the "Operating
Partnership Agreement"), and PREIT Partnership Units does not include all of the
terms thereof and should be read together with the Operating Partnership
Agreement, which is incorporated by reference into the registration statement of
which this prospectus is a part.


                                      -38-



         General. PREIT is the sole general partner of PREIT Associates. PREIT
contributed to PREIT Associates, or to entities wholly owned by PREIT
Associates, the real estate interests owned, directly or indirectly, by PREIT,
or the economic benefits thereof, in exchange for a general partnership interest
in PREIT Associates and a number of Class A PREIT Partnership Units that
equaled, in the aggregate, the number of PREIT shares of beneficial interest
issued and outstanding on September 30, 1997. Pursuant to the proposed merger
between PREIT and Crown American Realty Trust, PREIT Associates will issue to
PREIT, 11% Senior Preferred Units, representing another class of PREIT
Partnership Units. The number of 11% PREIT Partnership Units issued will at any
time always equal the number of PREIT 11% preferred shares outstanding. See
"--New 11% Preferred Shares" for a description of the PREIT 11% preferred
shares.

         Management. Under the Operating Partnership Agreement, PREIT, as the
sole general partner of PREIT Associates, has the authority, to the exclusion of
the limited partners, to make all management decisions on behalf of PREIT
Associates. In addition, PREIT, as general partner, will have the ability to
cause PREIT Associates to create and issue subsequent classes of limited or
preferred partner interests with terms different from the limited partner and
general partner interests currently outstanding. PREIT has agreed in the
Operating Partnership Agreement to conduct substantially all of its business
activities through PREIT Associates unless a majority in interest of the PREIT
Partnership Units (exclusive of PREIT Partnership Units owned by it) consent to
the conduct of business activities outside PREIT Associates.

         Authorization of PREIT Partnership Units and Voting Rights. The
Operating Partnership Agreement authorizes the issuance of an unlimited number
of PREIT Partnership Units in one or more classes. Holders of PREIT Partnership
Units are entitled to distributions from PREIT Associates as and when made by
PREIT as the general partner. Because PREIT will, of necessity, have to make
distributions on the Class A PREIT Partnership Units held directly or indirectly
by PREIT at the times and in the amounts as will permit PREIT to make
distributions to PREIT shareholders necessary to preserve its status as a REIT
for federal income tax purposes, it is anticipated that the other holders of
PREIT Partnership Units will receive such distributions at the approximate time,
and in the same amounts, as distributions are declared and paid by PREIT to
PREIT shareholders.

         Holders of PREIT Partnership Units generally will have no right to vote
on any matter voted on by holders of PREIT shares except that, prior to the date
on which at least half of the PREIT Partnership Units issued on September 30,
1997 in connection with the organization of PREIT Associates have been redeemed,
the holders of PREIT Partnership Units issued and outstanding on September 30,
1997 are entitled to vote those PREIT Partnership Units and additional PREIT
Partnership Units that they may have received and may receive in the future
pursuant to the transactions that were the subject of the September 30, 1997
issuance, along with PREIT shareholders as a single class, on any proposal to
merge, consolidate, or sell substantially all of the assets of PREIT. PREIT
Partnership Units owned by PREIT are not included for purposes of determining
when half of the PREIT Partnership Units issued and outstanding on September 30,
1997 have been redeemed, nor are they counted as votes. If the holders of PREIT



                                      -39-



shares vote on such a transaction and holders of PREIT Partnership Units are
entitled to vote thereon, each covered PREIT Partnership Unit will be entitled
to one vote for each share issuable by PREIT upon the redemption of such PREIT
Partnership Unit and the necessary vote to effect such action shall be the sum
of an absolute majority of the outstanding PREIT Partnership Units entitled to
vote on such matter and the applicable vote of the holders of PREIT outstanding
shares, which such vote may be met by any combination of holders of PREIT
Partnership Units or shares.

         The Operating Partnership Agreement also provides that PREIT may not
engage in a fundamental transaction (e.g., a merger) unless, by the terms of
such transaction, the PREIT Partnership Units are treated in the same manner as
that number of shares for which they are exchangeable by PREIT upon notice of
redemption are treated. Holders of PREIT Partnership Units also have the right
to vote on certain amendments to the Operating Partnership Agreement. In
addition, so long as any 11% PREIT Partnership Units remain outstanding, PREIT
Associates will not (i) without the affirmative vote or consent of the holders
of all of the 11% PREIT Partnership Units outstanding at the time, authorize,
create or issue, or increase the authorized or issued amount of, any class or
series of capital shares ranking senior to the 11% PREIT Partnership Units with
respect to payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up, or create, authorize or issue any obligation or
security convertible into or evidencing the right to purchase any such shares;
or (ii) without the affirmative vote or consent of the holders of at least
two-thirds of the 11% PREIT Partnership Units outstanding at the time (such
series voting separately as a class), amend, alter or repeal the provisions of
the Operating Partnership Agreement, whether by merger, consolidation or
otherwise, so as to materially and adversely affect any right, preference,
privilege or voting power of the 11% PREIT Partnership Units or the holders
thereof; provided, however, that any increase in the amount of the authorized
preferred units, or the creation or issuance of any other series of preferred
units, or any increase in the amount of authorized shares of preferred units or
any other series of preferred units, in each case ranking on a parity with or
junior to the 11% PREIT Partnership Units with respect to payment of dividends
or the distribution of assets upon liquidation, dissolution or winding up of
PREIT Associates, will not be deemed to materially and adversely affect such
rights, preferences, privileges or voting powers.

         Redemption Rights. Class A and Class B PREIT Partnership Units are
redeemable by PREIT Associates at the election of a limited partner holding such
units, at such time, and for such consideration, as set forth in the Operating
Partnership Agreement. In general, and subject to certain exceptions and
limitations, holders of Class A PREIT Partnership Units (other than PREIT and
PREIT subsidiaries) may, beginning one year following the respective issue
dates, give one or more notices of redemption with respect to all or any part of
the Class A PREIT Partnership Units so received and then held by such party.
Class B PREIT Partnership Units are redeemable at the option of the holder at
any time after issuance. The 11% PREIT Partnership Units will be redeemable in
the same amounts and during the same time periods as the PREIT 11% preferred
shares. See "--New 11% Preferred Shares--Redemption."

         If a notice of redemption is given, PREIT has the right to elect to
acquire the PREIT Partnership Units tendered for redemption for its own account,
either in exchange for the issuance of a like number of shares (subject to
adjustments for stock splits, recapitalizations, and like events) or a cash



                                      -40-



payment equal to the average closing price of the shares over the ten
consecutive trading days immediately prior to receipt by PREIT, in its capacity
as general partner of PREIT Associates, of the notice of redemption. If PREIT
declines to exercise such right, then on the tenth day following tender for
redemption, PREIT Associates will pay a cash amount equal to the number of Class
A or Class B PREIT Partnership Units so tendered multiplied by such average
closing price. PREIT Associates is required to distribute to PREIT such
additional amounts as may required from time to time to pay the redemption price
of the PREIT 11% preferred shares and such payment shall also be treated as
payment of the redemption of the same number of 11% PREIT Partnership Units
deemed to be redeemed.

         Ranking; Liquidation. The 11% PREIT Partnership Units will, with
respect to distribution rights and rights upon liquidation, rank senior to the
other PREIT Partnership Units. Upon liquidation of PREIT Associates, each 11%
PREIT Partnership Unit will be entitled to receive a liquidation preference
equal to $50.00, plus any accrued and unpaid dividends on the PREIT 11%
preferred shares prior to payment or distribution of any amounts to other PREIT
Partnership Units.

REIT Ownership Limitations and Transfer Restrictions Applicable to PREIT Shares
of Beneficial Interest and 11% Preferred Shares

         Among the requirements for qualification as a REIT under the Internal
Revenue Code are (i) not more than 50% in value of PREIT outstanding shares,
including the shares of beneficial interest and the PREIT 11% preferred shares
(after taking into account options to acquire shares), may be owned, directly or
indirectly, by five or fewer individuals (as defined in the Internal Revenue
Code to include certain entities) during the last half of a taxable year, (ii)
the shares must be beneficially owned by 100 or more persons during at least 335
days of a taxable year of 12 months or during a proportionate part of a shorter
taxable year, and (iii) certain percentages of PREIT's gross income must be from
particular activities. In order to continue to qualify as a REIT under the
Internal Revenue Code, the trustees have adopted, and PREIT shareholders have
approved, provisions of the PREIT trust agreement that restrict the ownership
and transfer of shares (the "Ownership Limit Provisions").

         The Ownership Limit Provisions provide that no person may beneficially
own, or be deemed to own by virtue of the attribution provisions of the Internal
Revenue Code, more than 9.9% of any separate class of PREIT shares. For this
purpose, the shares of beneficial interest and the PREIT 11% preferred shares
are treated as separate classes. The trustees may exempt a person from the
Ownership Limit Provisions with a ruling from the Internal Revenue Service or an
opinion of counsel or PREIT's tax accountants to the effect that such ownership
will not jeopardize PREIT's status as a REIT.

         Issuance or transfers of shares in violation of the Ownership Limit
Provisions or which would cause PREIT to be beneficially owned by fewer than 100
persons are void ab initio and the intended transferee acquires no rights to the
shares.

         In the event of a purported transfer or other event that would, if
effective, result in the ownership of shares in violation of the Ownership Limit
Provisions, such transfer or other event with respect to that number of shares
that would be owned by the transferee in excess of the Ownership Limit


                                      -41-


Provisions automatically are exchanged for an equal number of excess shares (the
"Excess Shares"), authorized by the PREIT trust agreement, according to the
rules set forth therein, to the extent necessary to insure that the purported
transfer or other event does not result in the ownership of shares in violation
of the Ownership Limit Provisions. Any purported transferee or other purported
holder of Excess Shares is required to give written notice to PREIT of a
purported transfer or other event that would result in the issuance of Excess
Shares.

         Excess Shares are not treasury shares but rather continue as issued and
outstanding shares of beneficial interest. While outstanding, Excess Shares will
be held in trust. The trustee of such trust shall be PREIT. The beneficiary of
such trust shall be designated by the purported holder of the Excess Shares.
Excess Shares are not entitled to any dividends or distributions. If, after the
purported transfer or other event resulting in an exchange of shares of
beneficial interest for Excess Shares and prior to PREIT's discovery of such
exchange, dividends or distributions are paid with respect to the shares that
were exchanged for Excess Shares, then such dividends or distributions are to be
repaid to PREIT upon demand. Excess Shares participate ratably (based on the
total number of shares and Excess Shares) in any liquidation, dissolution or
winding up of PREIT. Except as required by law, holders of Excess Shares are not
entitled to vote such shares on any matter. While Excess Shares are held in
trust, any interest in that trust may be transferred by the trustee only to a
person whose ownership of shares will not violate the Ownership Limit
Provisions, at which time the Excess Shares will be automatically exchanged for
the same number of shares of the same type and class as the shares for which the
Excess Shares were originally exchanged. Prior to any transfer of any interest
in the Excess Shares held in trust, the purported transferee or other purported
holder, as the case may be, must give advance notice to PREIT of the intended
transfer and PREIT must waive in writing its purchase rights. The PREIT trust
agreement contains provisions that are designed to insure that the purported
transferee or other purported holder of Excess Shares does not receive in return
for such a transfer an amount that reflects any appreciation in the shares for
which Excess Shares were exchanged during the period that such Excess Shares
were outstanding. Any amount received by a purported transferee or other
purported holder in excess of the amount permitted to be received must be paid
to PREIT. If the foregoing restrictions are determined to be invalid by any
court of competent jurisdiction then the intended transferee or holder of any
Excess Shares may be deemed, at PREIT's option, to have acted as an agent on
PREIT's behalf in acquiring such Excess Shares and to hold such Excess Shares on
PREIT's behalf.

         The PREIT trust agreement further provides that Excess Shares shall be
deemed to have been offered for sale to PREIT at the lesser of (i) the price
paid for the shares by the purported transferee or, in the case of a gift,
devise or other transaction, the market price for such shares at the time of
such gift, devise or other transaction or (ii) the market price for the shares
on the date PREIT or its designee exercises its option to purchase the Excess
Shares. PREIT may purchase such Excess Shares during a 90-day period, beginning
on the date of the violative transfer if the original transferee-shareholder
gives notice to PREIT of the transfer or, if no notice is given, the date the
board of trustees determines that a violative transfer or other event resulting
in an exchange of shares for the Excess Shares has occurred.


                                      -42-


         Each shareholder upon demand is required to disclose to PREIT in
writing such information with respect to the direct, indirect and constructive
ownership of shares as the board of trustees deems necessary to comply with the
provisions of the PREIT trust agreement or the Internal Revenue Code applicable
to a REIT or to comply with the requirements of any taxing authority or
governmental agency. Certificates representing shares of any class or series
issued after September 29, 1997 will bear a legend referring to the restrictions
described above.

Certain Provisions Affecting a Change in Control

         In addition to PREIT's shareholder rights plan, the following may deter
a potential acquiror from acquiring PREIT:

         Ownership Limits and Restrictions on Transferability. In order to
protect PREIT's status as a REIT, no more than 50% of the value of PREIT's
outstanding shares (after taking into account options to acquire shares) may be
owned, directly or constructively, by five or fewer individuals and the shares
must be beneficially owned by 100 or more persons during at least 335 days of a
taxable year of 12 months or during a proportionate part of a shorter taxable
year. To assist it in satisfying these tests, subject to some exceptions,
PREIT's trust agreement prohibits any shareholder from owning more than 9.9% of
PREIT's outstanding shares of beneficial interest (exclusive of preferred
shares) or more than 9.9% of any class or series of preferred shares. The trust
agreement also prohibits transfers of shares that would cause a shareholder to
exceed the 9.9% limit or cause PREIT to be beneficially owned by fewer than 100
persons. PREIT's board of trustees may exempt a person from the 9.9% ownership
limit if they receive a ruling from the Internal Revenue Service or an opinion
of counsel or tax accountants that exceeding the 9.9% ownership limit as to that
person would not jeopardize PREIT's tax status as a REIT. Absent an exemption,
this restriction may discourage a tender offer or other transaction or change in
management or control that might involve a premium price for PREIT's shares or
otherwise be in the best interests of PREIT's shareholders.

         Staggered Board. PREIT's board of trustees has three classes of
trustees. The term of office of one class expires each year. Trustees for each
class are elected for three year terms upon the expiration of the term of the
respective class. The staggered terms for trustees may affect the ability of a
shareholder to take control of PREIT, even if a change in control were in the
best interests of PREIT's shareholders.

         Multiple Classes and Series of Shares of Beneficial Interest. PREIT's
trust agreement permits its board of trustees to create and issue multiple
classes and series of preferred shares and classes and series of preferred
shares having preferences to the existing shares on any matter, including rights
in liquidation or to dividends and option rights (including shareholder rights
plans), and other securities having conversion or option rights and may
authorize the creation and issuance by PREIT's subsidiaries and affiliates of
securities having conversion and option rights in respect of shares. PREIT's
trust agreement further provides that the terms of such rights or other
securities may provide for disparate treatment of certain holders or groups of
holders of such rights or other securities. The issuance of such rights or
preferred shares could have the effect of delaying or preventing a change in
control over PREIT, even if a change in control were in the best interests of
PREIT's shareholders.

                                      -43-



                        FEDERAL INCOME TAX CONSIDERATIONS

         The following discussion summarizes the federal income tax
considerations that may be material to an owner of shares of PREIT. The
following discussion, which is not exhaustive of all possible tax
considerations, does not give a detailed discussion of any state, local or
foreign tax considerations; nor does it discuss all of the aspects of federal
income taxation that may be relevant to a prospective shareholder in light of
his or her particular circumstances or to certain types of shareholders who are
subject to special treatment under the federal income tax laws (including, but
not limited to, (1) insurance companies, (2) tax-exempt entities, (3) financial
institutions, (4) broker-dealers, (5) foreign corporations, (6) persons who are
not citizens or residents of the United States, (7) trusts, estates, regulated
investment companies, other REITs, or S corporations, (8) persons subject to the
alternative minimum tax, (9) persons holding their shares as part of a hedge,
straddle, conversion or other risk-reduction or constructive sale transaction,
(10) persons holding the shares through a partnership or similar pass-through
entity, (11) persons with a "functional currency" other than the U.S. dollar,
(12) U.S. expatriates and (13) persons who do not hold the shares as a capital
asset).

THIS DISCUSSION IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSTRUED TO BE, TAX
ADVICE. YOU ARE ADVISED TO CONSULT WITH YOUR OWN TAX ADVISOR REGARDING THE
SPECIFIC TAX CONSEQUENCES TO YOU OF THE OWNERSHIP OF SHARES IN AN ENTITY
ELECTING TO BE TAXED AS A REIT, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND
OTHER TAX CONSEQUENCES AND POTENTIAL CHANGES IN APPLICABLE TAX LAWS.

Taxation of PREIT

         General. If PREIT qualifies for taxation as a REIT, it generally will
not be subject to federal corporate income taxes on net income that it currently
distributes to shareholders but PREIT's shareholders will generally be taxed at
ordinary income rates on dividends that they receive other than dividends
designated by PREIT as capital gain dividends or qualified dividend income. This
differs from non-REIT C corporations, which generally are subject to federal
corporate income taxes but whose individual stockholders are currently taxed on
dividends they receive at capital gains rates. In general, income earned by a
REIT and distributed to its shareholders will be subject to less federal income
taxation than if such income were earned by a non-REIT C corporation, subjected
to corporate income tax, and then distributed to shareholders and subjected to
tax at capital gain rates.

         While PREIT is generally not subject to corporate income taxes on
income that PREIT distributes currently to shareholders, PREIT will be subject
to federal tax as follows:

         1. PREIT will be taxed at regular corporate rates on any "REIT taxable
income." REIT taxable income is the taxable income of a REIT subject to
specified adjustments, including a deduction for dividends paid.



                                      -44-


         2. Under some circumstances, PREIT may be subject to the "alternative
minimum tax" due to PREIT's undistributed items of tax preference and
alternative minimum tax adjustments, if any.

         3. If PREIT has net income from the sale or other disposition of
"foreclosure property" that is held primarily for sale to customers in the
ordinary course of business, or other nonqualifying income from foreclosure
property, PREIT will be subject to tax at the highest corporate rate on this
income.

         4. PREIT's net income from "prohibited transactions" will be subject to
a 100% tax. In general, prohibited transactions are sales or other dispositions
of property, other than foreclosure property, held primarily for sale to
customers in the ordinary course of business.

         5. If PREIT fails to satisfy either the 75% or the 95% gross income
test discussed below, but nonetheless maintains, its qualification as a REIT
because other requirements are met, PREIT will be subject to a tax equal to the
gross income attributable to the greater of (1) the amount by which 75% of
PREIT's gross income exceeds the amount qualifying under the 75% test for the
taxable year or (2) the amount by which 90% of PREIT's gross income exceeds the
amount of PREIT's income qualifying under the 95% test for the taxable year,
multiplied in either case by a fraction reflecting the ratio of PREIT's net
income to its gross income.

         6. PREIT generally will be subject to a 4% excise tax on any shortfall
to the extent PREIT fails to distribute during each calendar year (or pay income
taxes on) at least the sum of:

         o  85% of PREIT's ordinary income for the year;

         o  95% of PREIT's capital gain net income for the year; and

         o  any undistributed taxable income from prior taxable years.

         7. PREIT will be subject to a 100% penalty tax on amounts received by
PREIT (or on certain expenses deducted by a taxable REIT subsidiary) if certain
arrangements among PREIT, its tenants and/or a taxable REIT subsidiary of PREIT,
as further described below, are not comparable to similar arrangements among
unrelated parties.

         8. If PREIT acquires any assets from a taxable C corporation in a
carry-over basis transaction, PREIT could be liable for specified tax
liabilities inherited from that C corporation with respect to that corporation's
"built-in gain" in its assets. Built-in gain is the amount by which an asset's
fair market value exceeds its adjusted tax basis at the time PREIT acquired the
asset. Applicable Treasury regulations, however, allow PREIT to avoid the
recognition of gain and the imposition of corporate level tax with respect to a
built-in gain asset acquired in a carry-over basis transaction from a C
corporation unless and until PREIT disposes of that built-in gain asset during
the 10-year period following its acquisition, at which time PREIT would
recognize, and would be subject to tax at the highest regular corporate rate on,
the built-in gain.

                                      -45-


         If PREIT is subject to taxation on its REIT taxable income or is
subject to tax due to the sale of a built-in gain asset that was acquired in a
carry-over basis transaction from a C corporation, some of the dividends PREIT
pays to its shareholders may be subject to tax at the reduced capital gains
rates, rather than ordinary income rates.

         In addition, notwithstanding PREIT's status as a REIT, PREIT may also
have to pay certain state and local income taxes, because not all states and
localities treat REITs in the same manner that they are treated for federal
income tax purposes. Moreover, each of PREIT's taxable REIT subsidiaries (as
further described below) is subject to federal corporate income tax on its net
income.

         Requirements for REIT Qualification. The Internal Revenue Code
generally defines a REIT as a corporation, trust or association (1) that is
managed by one or more trustees or directors; (2) the beneficial ownership of
which is evidenced by transferable shares of stock, or by transferable
certificates of beneficial interest; (3) that would be taxable as a domestic
corporation, but for Sections 856 through 859 of the Internal Revenue Code; (4)
that is neither a financial institution nor an insurance company subject to
certain provisions of the Internal Revenue Code; (5) the beneficial ownership of
which is held by 100 or more persons; (6) not more than 50% in value of the
outstanding shares of which are owned, directly or indirectly, by five or fewer
individuals (as defined in the Internal Revenue Code to include certain
entities) during the last half of each taxable year; (7) that makes an election
to be a REIT for the current taxable year or previously has made such an
election which has not been terminated or revoked; and (8) that meets certain
other tests, described below, regarding the nature of its income and assets. The
Internal Revenue Code provides that conditions (1) through (4), inclusive, must
be met during the entire taxable year and that condition (5) must be met during
at least 335 days of a taxable year of 12 months, or during a proportionate part
of a taxable year of less than 12 months. PREIT's trust agreement contains
certain restrictions regarding the transfers of its shares and provides certain
disclosure requirements for 1% or greater shareholders that are intended to
assist PREIT in continuing to satisfy the share ownership requirements described
in (5) and (6) above. These restrictions, however, may not ensure that PREIT
will be able to satisfy these share ownership requirements. If PREIT fails to
satisfy these ownership requirements, PREIT will fail to qualify as a REIT.

         In addition, PREIT must satisfy all relevant filing and other
administrative requirements established by the Internal Revenue Service that
must be met to maintain REIT status, use a calendar year for federal income tax
purposes, and comply with the record keeping requirements of the Internal
Revenue Code and regulations promulgated thereunder. To qualify as a REIT, PREIT
cannot have at the end of any taxable year any undistributed earnings and
profits that are attributable to a non-REIT taxable year.

         A REIT is permitted to have wholly owned subsidiaries. Such a
subsidiary will constitute a "qualified REIT subsidiary" unless the REIT elects
to have it treated instead as a "taxable REIT subsidiary." A qualified REIT
subsidiary is not treated as a separate entity for federal income tax purposes.
Rather, all of the assets, liabilities and items of income, deductions and
credit of a qualified REIT subsidiary are treated as if they were those of the
REIT. A qualified REIT subsidiary is not subject to federal corporate income
taxation, although it may be subject to state and local taxation in some states.


                                      -46-



         A REIT is also generally permitted to own any percentage of the stock
of a "taxable REIT subsidiary," provided that the aggregate value of the REIT's
interests in taxable REIT subsidiaries does not exceed 20% of the value of the
REIT's gross assets and the aggregate value of the REIT's interests in its
taxable REIT subsidiaries and the securities of other issuers does not exceed
25% of the value of the REIT's gross assets. Provided that certain limitations
on operating activities are satisfied, an entity that is taxable as a
corporation and is wholly or partially owned by a REIT will qualify as a
"taxable REIT subsidiary" if both the REIT and the subsidiary so elect. A
taxable REIT subsidiary is subject to federal income tax, and state and local
income tax where applicable, as a regular C corporation. If a REIT receives
dividends from a taxable REIT subsidiary, then dividends from the REIT to its
shareholders, to the extent attributable to the taxable REIT subsidiary
dividends, generally will be eligible to be subject to tax at reduced capital
gains rates, rather than taxed at ordinary income rates.

         A REIT is deemed to own its proportionate share of the assets of a
partnership in which it is a partner and is deemed to receive its proportionate
share of the income of the partnership. Thus, PREIT's proportionate share of the
assets, liabilities and items of income of PREIT Associates, L.P. and each of
the real estate partnerships or other pass-through entities in which PREIT
Associates holds an interest (the "Title Holding Partnerships") will be treated
as assets, liabilities and items of income of PREIT for purposes of applying the
requirements described herein, provided that PREIT Associates and the Title
Holding Partnerships are treated as partnerships for federal income tax
purposes.

         Income Tests. To maintain its qualification as a REIT, a REIT must
satisfy two gross income requirements each year. First, at least 75% of a REIT's
gross income each year (other than gross income from prohibited transactions)
must be derived directly or indirectly from investments in real property or
mortgages on real property (including "rents from real property" and, in certain
circumstances, interest) or from certain types of temporary investments. Second,
at least 95% of a REIT's gross income each year (other than gross income from
prohibited transactions) must be derived from the same items that qualify under
the 75% income test, and/or from dividends, interest and gain from the sale or
disposition of stock or securities.

         Rents will qualify as "rents from real property" in satisfying the
gross income requirements for a REIT described above only if several conditions
are met. These conditions relate to the identity of the tenant, the computation
of the rent payable and the nature of the property leased. First, the amount of
rent must not be based in whole or in part on the income or profits of any
person. However, an amount received or accrued generally will not be excluded
from rents from real property solely by reason of being based on a fixed
percentage or percentages of receipts or sales. Second, rents received from a
"related party tenant" will not qualify as rents from real property in
satisfying the gross income tests unless the tenant is a taxable REIT
subsidiary, at least 90% of the property is leased to unrelated tenants and the
rent paid by the taxable REIT subsidiary is substantially comparable to the rent
paid by the unrelated tenants for comparable space. A tenant is a related party
tenant if the REIT, or an actual or constructive owner of 10% or more of the
REIT, actually or constructively owns 10% or more of the tenant. Third, if rent
attributable to personal property, leased in connection with a lease of real
property, is greater than 15% of the total rent received under the lease, then
the portion of rent attributable to the personal property will not qualify as
rents from real property.

                                      -47-


         PREIT does not anticipate receiving rents that fail to meet these
conditions in amounts that, together with other types of nonqualifying income
earned by PREIT, would cause PREIT to fail to satisfy the gross income tests.

         In addition, for rents to qualify as "rents from real property," PREIT
generally must not furnish or render more than a de minimis amount of services
to tenants, other than through an "independent contractor" from whom PREIT
derives no revenue or a taxable REIT subsidiary. The "independent contractor"
requirement, however, does not apply to the extent the services provided by
PREIT are "usually or customarily rendered" in connection with the rental of
space for occupancy only and are not otherwise considered "rendered to the
occupant." If the impermissible tenant service income (which is the greater of
the amount actually received from an impermissible service to tenants or 150% of
the cost of such service) that PREIT receives with respect to a property exceeds
1% of PREIT's total income from that property, then all of the income from that
property will fail to qualify as rents from real property. Although PREIT-RUBIN,
which, together with PREIT Services, LLC, comprise PREIT's commercial property
development and management business, renders services with respect to rental
properties of PREIT Associates and the Title Holding Partnerships, and
PREIT-RUBIN does not constitute an "independent contractor" for this purpose,
PREIT believes that the services being provided by PREIT-RUBIN with respect to
these properties in past years have been usual or customary and should not
otherwise be considered "rendered to the occupant." Moreover, for years
beginning after December 31, 2000, PREIT and PREIT- RUBIN have elected for
PREIT-RUBIN to be treated as a taxable REIT subsidiary. PREIT believes that the
aggregate amount of any nonqualifying income in any taxable year earned by PREIT
Associates and the Title Holding Partnerships has not caused, and will not
cause, PREIT to exceed the limits on nonqualifying income under the 75% and 95%
gross income tests.

         PREIT Associates owns all of the outstanding shares of PREIT-RUBIN. As
a taxable REIT subsidiary, PREIT-RUBIN is taxable as a regular corporation.
PREIT-RUBIN performs management, development and leasing services for PREIT
Associates and other real estate owned in whole or in part by third parties. The
third-party income earned by and taxed to PREIT-RUBIN would be nonqualifying
income if earned directly by PREIT. As a result of the corporate structure, all
third-party and other services income will be earned by and taxed to PREIT-RUBIN
at applicable federal and state corporate income tax rates and will be received
by PREIT only indirectly as dividends, after reduction by these taxes. Any such
dividends will be qualifying income under the 95% test but will not be
qualifying income for purposes of the 75% test.

         If PREIT fails to satisfy one or both of the 75% and 95% gross income
tests for any taxable year, it may nevertheless qualify as a REIT for that year
if it is entitled to relief under the Internal Revenue Code. It is not possible,
however, to state whether in all circumstances PREIT would be entitled to the
benefit of these relief provisions. Even if these relief provisions were to
apply, however, a tax would be imposed with respect to the "excess net income"
attributable to the failure to satisfy the 75% and 95% gross income tests.

         Asset Tests. PREIT, at the close of each quarter of its taxable year,
must satisfy several tests relating to the nature of its assets: (1) at least
75% of the value of PREIT's total assets must be represented by "real estate

                                      -48-


assets," cash, cash items and government securities; (2) not more than 25% of
PREIT's total assets may be represented by securities other than those in the
75% asset class; (3) of the investments included in the 25% asset class (other
than shares of a taxable REIT subsidiary or a qualified REIT subsidiary), the
value of any one issuer's securities owned by PREIT may not exceed 5% of the
value of PREIT's total assets, and PREIT may not own more than 10% of the vote
or value of any one issuer's outstanding securities; and (4) not more than 20%
of PREIT's total assets may be represented by the securities of one or more
taxable REIT subsidiaries.

         Securities, for purposes of the asset tests, may include debt PREIT
holds from other issuers. However, debt PREIT holds in an issuer will not be
taken into account for purposes of the 10% value test if the debt securities
meet the "straight debt" safe harbor and (1) the issuer is an individual, (2)
the only securities of the issuer that PREIT holds are straight debt or (3) if
the issuer is a partnership, PREIT holds at least a 20 percent profits interest
in the partnership. Debt will meet the "straight debt" safe harbor if the debt
is a written unconditional promise to pay on demand or on a specified date a sum
certain in money, the debt is not convertible, directly or indirectly, into
stock, and the interest rate and the interest payment dates of the debt are not
contingent on profits, the borrower's discretion or similar factors.

         PREIT believes that it has complied, and anticipates that it will
continue to comply, with these asset tests. PREIT is deemed to hold directly its
proportionate share of all real estate and other assets of PREIT Associates and
all assets deemed owned by PREIT Associates through its ownership of partnership
interests in other partnerships. As a result, PREIT believes that more than 75%
of its assets are real estate assets. In addition, PREIT does not plan to hold
any securities other than securities in a qualified REIT subsidiary or taxable
REIT subsidiary of PREIT representing more than 10% of the vote or value of any
one issuer's common stock, or securities of any one issuer the value of which
exceeds 5% of the value of PREIT's gross assets. Further, PREIT does not plan to
hold securities of taxable REIT subsidiaries that, in the aggregate, exceed 20%
of the total value of PREIT's assets. As previously discussed, PREIT is deemed
to own its proportionate share of the assets of a partnership in which it is a
partner so that the partnership interest, itself, is not a security for purposes
of this asset test.

         After initially meeting the asset tests at the close of any quarter,
PREIT will not lose its status as a REIT for failure to satisfy the asset tests
at the end of a later quarter solely by reason of changes in asset values. If
the failure to satisfy the asset tests results from an acquisition of securities
or other property during a quarter, the failure can be cured by disposition of
sufficient nonqualifying assets within 30 days after the close of that quarter.
PREIT intends to maintain adequate records of the value of its assets to ensure
compliance with the asset tests, and to take any other action within 30 days
after the close of any quarter as may be required to cure any noncompliance. No
assurance can be given, however, that this other action will always be
successful.

         Annual Distribution Requirements. To qualify as a REIT, PREIT generally
must distribute to its shareholders each year at least 90% of its REIT taxable
income (computed without the dividends paid deduction and excluding net capital
gains) and 90% of PREIT's net income after tax, if any, from foreclosure
property, minus the sum of certain items of noncash income. Distributions must



                                      -49-


generally be made during the taxable year to which they relate. Distributions
may be made in the following year in two circumstances. First, if PREIT declares
a dividend in October, November, or December of any year with a record date in
one of these months and pays the dividend on or before January 31 of the
following year, PREIT will be treated as having paid the dividend on December 31
of the year in which the dividend was declared. Second, distributions may be
made in the following year if the dividends are declared before PREIT timely
files its tax return for the year and if made before the first regular dividend
payment made after such declaration. To the extent that PREIT does not
distribute all of its net capital gain or distributes at least 90%, but less
than 100% of its REIT taxable income, as adjusted, PREIT will be subject to tax
on the undistributed amounts at regular corporate tax rates.
In addition, PREIT may be subject to a 4% nondeductible excise tax on the excess
of the required distribution over the sum of the amounts actually distributed
and amounts retained for which federal income tax was paid if PREIT fails to
distribute during a calendar year (or, in the case of distributions with
declaration and record dates falling in the last three months of the calendar
year, by the end of January following such calendar year) at least the sum of
(1) 85% of PREIT's REIT ordinary income for such year, (2) 95% of PREIT's REIT
capital gain net income for such year, and (3) any undistributed taxable income
from prior periods.

         PREIT may elect to retain rather than distribute all or a portion of
its net capital gains and pay the tax on the gains. In that case, PREIT may
elect to have its shareholders include their proportionate share of the
undistributed net capital gains in income as long-term capital gains and receive
a credit for their share of the tax paid by PREIT. For purposes of the 4% excise
tax described above, any retained amounts would be treated as having been
distributed.

         PREIT believes that it has made, and expects to continue to make,
timely distributions sufficient to satisfy the annual 90% distribution
requirement. It is possible, however, that PREIT, from time to time, may not
have sufficient cash or other liquid assets to meet the 90% distribution
requirement and to avoid all corporate-level taxes. In that event, PREIT may
arrange for short-term, or possibly long-term, borrowing (by itself or by PREIT
Associates) to meet the 90% distribution requirement and avoid the
corporate-level taxes.

         Under some circumstances, PREIT may be able to rectify a failure to
meet the distribution requirement for a year by paying deficiency dividends to
shareholders in a later year, which may be included in PREIT's deduction for
dividends paid for the earlier year. Thus, PREIT may be able to avoid being
taxed on amounts distributed as deficiency dividends. However, PREIT will be
required to pay interest based upon the amount of any deduction taken for
deficiency dividends.

         Failure to Qualify. If PREIT fails to qualify for taxation as a REIT in
any taxable year, PREIT will be subject to tax (including any applicable
alternative minimum tax) on its taxable income at regular corporate rates. If
PREIT fails to qualify as a REIT, it will not be required to make any
distributions to its shareholders and any distributions that are made will not
be deductible by PREIT. As a result, PREIT's failure to qualify as a REIT would
significantly reduce both the cash available for distributions by PREIT to its
shareholders and its earnings. In addition, if PREIT fails to qualify as a REIT,
all distributions to shareholders, to the extent of PREIT's current and
accumulated earnings and profits, will be taxable as regular corporate


                                      -50-



dividends, which means that shareholders taxed as individuals currently would be
taxed on those dividends at capital gains rates and corporate shareholders
generally would be entitled to a dividends received deduction with respect to
such dividends. Unless entitled to relief under specific statutory provisions,
PREIT also will be disqualified from taxation as a REIT for the four taxable
years following the year during which qualification was lost. It is not possible
to state whether in all circumstances PREIT would be entitled to this statutory
relief.

         Limitations Applicable to Taxable REIT Subsidiaries. Certain provisions
of the Internal Revenue Code are designed to curtail a REIT's ability to
minimize the taxable income of any taxable REIT subsidiary, such as PREIT-RUBIN.
A 100% tax will apply to any excessive interest expense or other deductions paid
by a taxable REIT subsidiary to the REIT and to any amounts by which the taxable
REIT subsidiary undercharges tenants of the REIT. Also, there are limitations on
the deductibility of interest by highly leveraged taxable REIT subsidiaries.

Income Taxation of PREIT Associates, the Title Holding Partnerships and their
Partners

         The following discussion summarizes certain federal income tax
considerations applicable to PREIT's investment in PREIT Associates and the
Title Holding Partnerships:

         Classification of PREIT Associates and Title Holding Partnerships as
Partnerships. PREIT will be entitled to include in its income its distributive
share of the income and to deduct its distributive share of the losses of PREIT
Associates (including PREIT Associates' share of the income or losses of the
Title Holding Partnerships) only if PREIT Associates and the Title Holding
Partnerships (collectively, the "Partnerships") are classified for federal
income tax purposes as partnerships rather than as associations taxable as
corporations. The Partnerships have not elected, and do not intend to elect, to
be taxable for federal income tax purposes as corporations. Accordingly, under
applicable "check-the-box" regulations, they should be classified as
partnerships for federal income tax purposes.

         Partnership Allocations. Although a partnership agreement generally
will determine the allocation of income and losses among partners, the
allocations will be disregarded for tax purposes under Section 704(b) of the
Internal Revenue Code if they do not comply with the provisions of Section
704(b) of the Internal Revenue Code and the Treasury Regulations promulgated
thereunder as to substantial economic effect and other requirements.

         If an allocation is not recognized for federal income tax purposes, the
item subject to the allocation will be reallocated in accordance with the
partners' interests in the partnership, which will be determined by taking into
account all of the facts and circumstances relating to the economic arrangement
of the partners with respect to the item. PREIT Associates' allocations of
taxable income and loss are intended to comply with the requirements of Section
704(b) of the Internal Revenue Code and the Treasury Regulations promulgated
thereunder.

         Tax Allocations With Respect to Contributed Properties. The properties
contributed directly or indirectly to PREIT Associates have generally been
appreciated as of the time of contribution, and it is likely that properties
contributed in the future will also be appreciated. Under Section 704(c) of the
Internal Revenue Code, items of income, gain, loss and deduction attributable to



                                      -51-



appreciated or depreciated property that is contributed to a partnership in
exchange for an interest in the partnership must be allocated for federal income
tax purposes in a manner so that the contributor is charged with or benefits
from the unrealized gain or unrealized loss associated with the property at the
time of the contribution. The amount of the unrealized gain or unrealized loss
is generally equal to the difference between the fair market value of the
contributed property at the time of contribution and the adjusted tax basis of
the property at the time of contribution. The partnership agreements of the
Partnerships require allocations of income, gain, loss and deduction
attributable to the contributed property to be made in a manner that is
consistent with Section 704(c) of the Internal Revenue Code. If the Partnerships
sell contributed property at a gain or loss, the gain or loss will be allocated
to the contributing partner(s) generally to the extent of the precontribution
unrealized gain or loss.

         Depreciation. The Partnerships' assets other than cash consist largely
of appreciated property contributed by its partners. Assets contributed to a
partnership in a tax-free transaction carry over their depreciation schedules.
Accordingly, PREIT Associates' depreciation deductions for its real property are
based largely on the historic depreciation schedules for the properties. The
properties are being depreciated over a range of 15 to 40 years using various
methods of depreciation which were determined at the time that each item of
depreciable property was placed in service. Any real property purchased by the
Partnerships will be depreciated over at least 39 years, except that residential
buildings will be depreciated over 27.5 years, and land is nondepreciable. In
certain instances where a partnership interest rather than real estate is
contributed to the Partnership, the real estate may not carry over its
depreciation schedule but rather may, similarly, be subject to the lengthier
depreciation period.

         Section 704(c) of the Internal Revenue Code requires that depreciation
as well as gain and loss be allocated in a manner so as to take into account the
variation between the fair market value and tax basis of the property
contributed. Depreciation with respect to any property purchased by PREIT
Associates subsequent to the admission of its partners, however, will be
allocated among the partners in accordance with their respective percentage
interests in the Partnerships.

         Sale of Partnership Property. Generally, any gain realized by a
partnership on the sale of property held by the partnership for more than one
year will be long-term capital gain, except for any portion of the gain that is
treated as depreciation or cost recovery recapture. However, under the REIT
requirements, PREIT's share as a partner of any gain realized by the
Partnerships on the sale of any property held as inventory or other property
held primarily for sale to customers in the ordinary course of a trade or
business will be treated as income from a prohibited transaction that is subject
to a 100% penalty tax. The prohibited transaction income could also have an
adverse effect upon PREIT's ability to satisfy the income tests for REIT status.
Under existing law, whether property is held as inventory or primarily for sale
to customers in the ordinary course of a trade or business is a question of fact
that depends on all the facts and circumstances with respect to the particular
transaction. A safe harbor to avoid classification as a prohibited transaction
exists as to real estate assets held for the production of rental income by a
REIT for at least four years where in any taxable year the REIT has made no more
than seven sales of property or, in the alternative, the aggregate of the
adjusted bases of all properties sold does not exceed 10% of the adjusted bases
of all of the REIT's properties during the year and the expenditures includable



                                      -52-


in a property's net sales price. The Partnerships intend to hold properties for
investment with a view to long-term appreciation, to engage in the business of
acquiring, developing, owning, and operating and leasing properties and to make
occasional sales of the properties as are consistent with PREIT's and PREIT
Associates' investment objectives. No assurance can be given, however, that no
property sale by the Partnerships will constitute a sale of inventory or other
property held primarily for sale to customers.

Taxation of Shareholders

         Taxation of Taxable Domestic Shareholders. As long as PREIT qualifies
as a REIT, distributions made to PREIT's taxable domestic shareholders (or "U.S.
shareholders") out of current or accumulated earnings and profits (and not
designated as capital gain dividends or qualified dividend income) will be taken
into account by them as ordinary income (at graduated federal income tax rates
up to 35%). In determining the extent to which a distribution constitutes a
dividend for tax purposes, PREIT's earnings and profits will be allocated first
to distributions with respect to its preferred shares and then to its common
shares. Corporate shareholders will not be eligible for the dividends-received
deduction as to such amounts. Dividends paid by a REIT will generally not
constitute qualified dividends that are taxed at the recently reduced federal
capital gain tax rates (up to only 15%) that are generally applicable to
dividend income earned by individuals from non-REIT C corporations, except to
the extent the REIT dividends are attributable to dividend income earned by the
REIT or are attributable to other REIT income on which certain income taxes have
been paid by the REIT. PREIT does not anticipate that any substantial amount of
its dividends will constitute qualified dividends.

         Distributions in excess of current and accumulated earnings and profits
will not be taxable to a U.S. shareholder to the extent that the distributions
do not exceed the adjusted basis of the shareholder's shares. Rather, such
distributions will reduce the adjusted basis of such shares. To the extent that
distributions exceed the adjusted basis of a U.S. shareholder's shares, the
distributions will be taxable as capital gains, assuming the shares are a
capital asset in the hands of the U.S. shareholder.

         Distributions will generally be taxable, if at all, in the year of the
distribution. However, if PREIT declares a dividend in October, November, or
December of any year with a record date in one of these months and pays the
dividend on or before January 31 of the following year, PREIT will be treated as
having paid the dividend, and the shareholder will be treated as having received
the dividend, on December 31 of the year in which the dividend was declared.

         PREIT may elect to designate distributions of its net capital gain as
"capital gain dividends." Capital gain dividends are taxed to PREIT's U.S.
shareholders as gain from the sale or exchange of a capital asset held for more
than one year. This tax treatment applies regardless of the period during which
the shareholders have held their shares. If PREIT designates any portion of a
dividend as a capital gain dividend, the amount that will be taxable to the
shareholder as capital gain will be detailed to U.S. shareholders on Internal
Revenue Service Form 1099-DIV. Corporate shareholders, however, may be required
to treat up to 20% of capital gain dividends as ordinary income.



                                      -53-



         Instead of paying capital gain dividends, PREIT may elect to require
shareholders to include PREIT's undistributed net capital gains in their income.
If PREIT makes such an election, U.S. shareholders (1) will include in their
income as long-term capital gains their proportionate share of such
undistributed capital gains and (2) will be deemed to have paid their
proportionate share of the tax paid by PREIT on such undistributed capital gains
and thereby receive a credit or refund for such amount. A U.S. shareholder of
PREIT's shares will increase the basis in its shares by the difference between
the amount of capital gain included in its income and the amount of tax it is
deemed to have paid. PREIT's earnings and profits will be adjusted
appropriately.

         PREIT must classify portions of its designated capital gain dividend
into the following categories:

         1. a 15% gain distribution, which will be taxable to non-corporate U.S.
shareholders at a maximum rate of 15%; or

         2. an unrecaptured Section 1250 gain distribution, which will be
taxable to non-corporate U.S. shareholders at a maximum rate of 25%.

In addition, a 20% gain distribution, which would be taxable to non-corporate
U.S. shareholders of PREIT's shares at a maximum rate of 20%, rather than 15%,
may be applicable for capital gain dividends attributable to PREIT's capital
gains for periods prior to May 6, 2003.

         Distributions made by PREIT and gain arising from the sale or exchange
by a U.S. shareholder of PREIT's shares will not be treated as passive activity
income, and as a result, U.S. shareholders of PREIT's shares generally will not
be able to apply any "passive losses" against this income or gain. In addition,
taxable distributions from PREIT generally will be treated as investment income
for purposes of the investment interest limitations. A U.S. shareholder of
PREIT's shares may elect to treat capital gain dividends, capital gains from the
disposition of shares and income designated as qualified dividend income as
investment income for purposes of the investment interest limitation, in which
case the applicable gain or income will be taxed at ordinary income tax rates.
U.S. shareholders of PREIT's shares may not include in their individual income
tax returns any of PREIT's net operating losses or capital losses. PREIT's
operating or capital losses would be carried over by PREIT for potential offset
against future income, subject to applicable limitations. PREIT will notify
shareholders regarding the portions of distributions for each year that
constitute ordinary income, return of capital and capital gain. In general, a
domestic shareholder will realize capital gain or loss on the disposition of
shares equal to the difference between (1) the amount of cash and the fair
market value of any property received on the disposition and (2) the
shareholder's adjusted basis of the shares. The gain or loss generally will
constitute long-term capital gain or loss if the shareholder has held the shares
for more than one year. For an individual shareholder, a long-term capital gain
will generally be taxable at a maximum rate of 15%.

         Loss upon a sale or exchange of shares by a shareholder who has held
the shares for six months or less (after applying certain holding period rules)
will be treated as a long-term capital loss to the extent of distributions from
PREIT required to be treated by the shareholder as long-term capital gain
(including both 15%- and 25%-rate gain).


                                      -54-


         Taxation of Tax-Exempt Shareholders. PREIT does not expect that
distributions by PREIT to a shareholder that is a tax-exempt entity will
constitute "unrelated business taxable income" ("UBTI"), provided that the
tax-exempt entity has not financed the acquisition of its shares with
"acquisition indebtedness" within the meaning of the Internal Revenue Code and
the shares are not otherwise used in an unrelated trade or business of the
tax-exempt entity. However, for a tax-exempt shareholder that is a social club,
voluntary employee benefit association, supplemental unemployment benefit trust,
or qualified group legal services plan exempt from federal income taxation under
Internal Revenue Code Sections 501(c)(7), (c)(9), (c)(17) and (c)(20),
respectively, or a single parent title-holding corporation exempt under Section
501(c)(2) the income of which is payable to any of the aforementioned tax-exempt
organizations, income from an investment in PREIT's shares will constitute UBTI
unless the organization properly sets aside or reserves such amounts for
purposes specified in the Internal Revenue Code. These tax exempt shareholders
should consult their own tax advisors concerning these "set aside" and reserve
requirements.

         Notwithstanding the above, however, a portion of the dividends paid by
a "pension held REIT" are treated as UBTI as to any trust which is described in
Section 401(a) of the Internal Revenue Code, is tax-exempt under Section 501(a)
of the Internal Revenue Code, and holds more than 10%, by value, of the
interests in the REIT. Tax-exempt pension funds that are described in Section
401(a) of the Internal Revenue Code are referred to below as "pension trusts."

         A REIT is a "pension held REIT" if it meets the following two tests:

         1. it would not have qualified as a REIT but for Section 856(h)(3) of
the Internal Revenue Code, which provides that shares owned by pension trusts
will be treated, for purposes of determining whether the REIT is closely held,
as owned by the beneficiaries of the trust rather than by the trust itself; and

         2. either (a) at least one pension trust holds more than 25% of the
value of the interests in the REIT, or (b) a group of pension trusts, each
individually holding more than 10% of the value of the REIT's shares,
collectively owns more than 50% of the value of the REIT's shares.

The percentage of any REIT dividend from a "pension held REIT" that is treated
as UBTI is equal to the ratio of the UBTI earned by the REIT, treating the REIT
as if it were a pension trust and therefore subject to tax on UBTI, to the total
gross income of the REIT. An exception applies where the percentage is less than
5% for any year, in which case none of the dividends would be treated as UBTI.

         Based on the current estimated ownership of PREIT's common and
preferred shares and as a result of certain limitations on transfer and
ownership of common and preferred shares contained in PREIT's trust agreement,
PREIT does not expect to be classified as a "pension held REIT."



                                      -55-


         Taxation of Non-U.S. Shareholders. The rules governing U.S. federal
income taxation of nonresident alien individuals, foreign corporations, foreign
partnerships and other foreign shareholders (collectively, "Non-U.S.
Shareholders") are complex, and no attempt will be made herein to provide more
than a limited summary of these rules. Prospective Non-U.S. Shareholders should
consult with their own tax advisor to determine the impact of U.S. federal,
state and local income tax laws with regard to an investment in shares,
including any reporting requirements. In particular, Non-U.S. Shareholders who
are engaged in a trade or business in the United States, and Non-U.S.
Shareholders who are individuals and who were present in the United States for
183 days or more during the tax year and have a "tax home" in the United States,
may be subject to tax rules different from those described below.

         Distributions that are not attributable to gain from sales or exchanges
by PREIT of U.S. real property interests and not designated by PREIT as capital
gain dividends or qualified dividend income will be treated as dividends of
ordinary income to the extent that they are made out of current or accumulated
earnings and profits of PREIT. These distributions, ordinarily, will be subject
to a withholding tax equal to 30% of the gross amount of the distribution unless
an applicable tax treaty reduces that tax or the dividends are treated as
effectively connected with the conduct by the Non-U.S. Shareholder of a U.S.
trade or business. Under some treaties, however, lower rates generally
applicable to dividends do not apply to dividends from REITs. Dividends that are
effectively connected with a trade or business will be subject to tax on a net
basis, that is, after allowance for deductions, at graduated rates, in the same
manner as U.S. shareholders are taxed with respect to these dividends, and are
generally not subject to withholding. Applicable certification and disclosure
requirements must be satisfied to be exempt from withholding under the
effectively connected income exception. Any dividends received by a corporate
Non-U.S. Shareholder that is engaged in a U.S. trade or business also may be
subject to an additional branch profits tax at a 30% rate, or lower applicable
treaty rate. PREIT expects to withhold U.S. income tax at the rate of 30% on any
dividend distributions, not designated as (or deemed to be) capital gain
dividends, made to a Non-U.S. Shareholder unless:

         o  a lower treaty rate applies and the Non-U.S. Shareholder furnishes
            an Internal Revenue Service Form W-8BEN to PREIT evidencing
            eligibility for that reduced rate; or

         o  the Non-U.S. Shareholder furnishes an Internal Revenue Service Form
            W-8ECI to PREIT claiming that the distribution is effectively
            connected income.

         Distributions in excess of current and accumulated earnings and profits
of PREIT will not be taxable to a Non-U.S. Shareholder to the extent that they
do not exceed the adjusted basis of the shareholder's shares, but rather will
reduce the adjusted basis of the shares. To the extent that these distributions
exceed the adjusted basis of a Non-U.S. Shareholder's shares, they will give
rise to tax liability if the Non-U.S. Shareholder would otherwise be subject to
tax on any gain from the sale or disposition of shares as described below (in
which case they also may be subject to a 30% branch profits tax if the
shareholder is a foreign corporation). If it cannot be determined at the time a
distribution is made whether or not the distribution will be in excess of
current or accumulated earnings and profits, the entire distribution will be
subject to withholding at the rate applicable to dividends. However, the
Non-U.S. Shareholder may seek a refund of the amounts from the Internal Revenue
Service if it is subsequently determined that the distribution was, in fact, in
excess of current or accumulated earnings and profits of PREIT.

                                      -56-



         PREIT may be required to withhold at least 10% of any distribution in
excess of its current and accumulated earnings and profits, even if a lower
treaty rate applies or the Non-U.S. Shareholder is not liable for tax on the
receipt of that distribution. However, a Non-U.S. Shareholder may seek a refund
of these amounts from the Internal Revenue Service if the Non-U.S. Shareholder's
U.S. tax liability with respect to the distribution is less than the amount
withheld.

         PREIT generally will be required to withhold and remit to the Internal
Revenue Service 35% of any distributions to Non-U.S. Shareholders that are
designated as capital gain dividends, or, if greater, 35% of a distribution that
could have been designated as a capital gain dividend. Distributions can be
designated as capital gains to the extent of PREIT's net capital gain for the
taxable year of the distribution. The amount withheld is creditable against the
Non-U.S. Shareholder's United States federal income tax liability.

         Although the law is not entirely clear on the matter, it appears that
amounts of undistributed capital gain that are designated by PREIT as deemed
distributions (as discussed under "Taxation of Taxable Domestic Shareholders"
above) would be treated with respect to Non-U.S. Shareholders in the manner
outlined in the preceding paragraph for actual distributions by PREIT of capital
gain dividends. Under that approach, the Non-U.S. Shareholders would be able to
offset as a credit against their United States federal income tax liability
resulting therefrom their proportionate share of the tax paid by PREIT on the
undistributed capital gains (and to receive from the Internal Revenue Service a
refund to the extent their proportionate share of the tax paid by PREIT were to
exceed their actual United States federal income tax liability).
Under the Foreign Investment in Real Property Tax Act, which is referred to as
"FIRPTA," distributions to a Non-U.S. Shareholder that are attributable to gain
from sales or exchanges by PREIT of U.S. real property interests, whether or not
designated as a capital gain dividend, will cause the Non-U.S. Shareholder to be
treated as recognizing gain that is income effectively connected with a U.S.
trade or business. Non-U.S. Shareholders will be taxed on this gain at the same
rates applicable to U.S. shareholders, subject to a special alternative minimum
tax in the case of nonresident alien individuals. Also, this gain may be subject
to a 30% (or lower applicable treaty rate) branch profits tax in the hands of a
Non-U.S. Shareholder that is a corporation.

         Gain recognized by a Non-U.S. Shareholder upon a sale or exchange of
PREIT's shares generally will not be subject to United States taxation unless:


                                      -57-



         o  the investment in PREIT's shares is effectively connected with a
            U.S. trade or business (or, in the case of a Non-U.S. Shareholder
            that is an eligible resident of a foreign country that has an
            applicable tax treaty with the U.S., a U.S. permanent establishment
            of the Non-U.S. Shareholder), in which case the Non-U.S. Shareholder
            will be subject to the same treatment as a domestic shareholder with
            respect to any gain or loss;

         o  the Non-U.S. Shareholder is a nonresident alien individual who is
            present in the United States for 183 days or more during the taxable
            year and has a tax home in the United States, in which case the
            nonresident alien individual will be subject to a 30% tax on the
            individual's net capital gains for the taxable year; or

         o  PREIT's shares constitute a U.S. real property interests within the
            meaning of FIRPTA, as described below.

         PREIT's shares will constitute U.S. real property interests within the
meaning of FIRPTA unless PREIT is a "domestically controlled REIT," defined
generally as a REIT for which at all times during a defined testing period less
than 50% in value of its stock has been held directly or indirectly by foreign
persons. PREIT believes that it is a domestically controlled REIT, and,
therefore, that its shares do not constitute U.S. real property interests.
However, because PREIT's shares are publicly traded, PREIT cannot guarantee that
it is or will continue to be a domestically controlled REIT.

         Even if PREIT were not to qualify as a domestically controlled REIT at
the time a Non-U.S. Shareholder sells PREIT's shares, gain arising from the sale
still would not be subject to FIRPTA tax if:

         o  the class of shares sold is "regularly traded" on an established
            securities market, such as the NYSE (which PREIT believes to be the
            case); and

         o  the selling Non-U.S. Shareholder has owned, actually or
            constructively, no more than 5% of the outstanding class of shares
            during the five-year period ending on the date of the sale.

         If the gain on the sale of shares were to be subject to tax under
FIRPTA, the Non-U.S. Shareholder would be subject to the same treatment as U.S.
shareholders with respect to the gain (subject to applicable alternative minimum
tax and a special alternative minimum tax in the case of nonresident alien
individuals).

Backup Withholding Tax and Information Reporting

         In general, information-reporting requirements will apply to payments
of dividends on PREIT's shares to some U.S. shareholders, unless an exception
applies.

         The payor is required to withhold tax on such payments at the rate of
28% if (1) the payee fails to furnish a taxpayer identification number, or TIN,
to the payor or to establish an exemption from backup withholding, or (2) the
Internal Revenue Service notifies the payor that the TIN furnished by the payee
is incorrect.

         In addition, a payor of the dividends on PREIT's shares is required to
withhold tax at a rate of 28% if (1) there has been a notified payee
under-reporting with respect to interest, dividends or original issue discount
described in Section 3406(c) of the Internal Revenue Code, or (2) there has been
a failure of the payee to certify under the penalty of perjury that the payee is
not subject to backup withholding under the Internal Revenue Code.


                                      -58-


         Some shareholders, including corporations, may be exempt from backup
withholding. Any amounts withheld under the backup withholding rules from a
payment to a shareholder will be allowed as a credit against the shareholder's
United States federal income tax and may entitle the shareholder to a refund,
provided that the required information is furnished to the Internal Revenue
Service.

         The payor will be required to furnish annually to the Internal Revenue
Service and to PREIT's shareholders information relating to the amount of
dividends paid on PREIT's shares, and that information reporting may also apply
to payments of proceeds from the sale of PREIT's shares. Some shareholders,
including corporations, financial institutions and certain tax-exempt
organizations, are generally not subject to information reporting.

         With regard to Non-U.S. Shareholders, information reporting generally
will apply to payments of dividends on PREIT's shares, and backup withholding
described above for a U.S. shareholder will apply, unless the payee certifies
that it is not a U.S. person or otherwise establishes an exemption.

         The payment of the proceeds from the disposition of PREIT's shares to
or through the U.S. office of a U.S. or foreign broker will be subject to
information reporting and backup withholding as described above for U.S.
shareholders unless the Non-U.S. Shareholder satisfies the requirements
necessary to be an exempt Non-U.S. Shareholder or otherwise qualifies for an
exemption. The proceeds of a disposition by a Non-U.S. Shareholder of PREIT's
shares to or through a foreign office of a broker generally will not be subject
to information reporting or backup withholding. However, if the broker is a U.S.
person, a controlled foreign corporation for U.S. tax purposes, a foreign person
50% or more of whose gross income from all sources for specified periods is from
activities that are effectively connected with a U.S. trade or business, a
foreign partnership if partners who hold more than 50% of the interest in the
partnership are U.S. persons, or a foreign partnership that is engaged in the
conduct of a trade or business in the U.S., then information reporting generally
will apply as though the payment was made through a U.S. office of a U.S. or
foreign broker.

         Applicable Treasury regulations provide presumptions regarding the
status of a PREIT shareholder when payments to such shareholder cannot be
reliably associated with appropriate documentation provided to the payor.
Because the application of these Treasury regulations varies depending on the
shareholder's particular circumstances, you are advised to consult your tax
advisor regarding the information reporting requirements applicable to you.


                                      -59-



Sunset of Tax Provisions

         Several of the tax considerations described herein are subject to a
sunset provision. The sunset provision generally provides that for taxable years
beginning after December 31, 2008, certain provisions that are currently in the
Internal Revenue Code will revert back to a prior version of those provisions.
These provisions include those related to the 15% capital gains rate and its
application to qualified dividend income and other tax rates described herein.
Prospective shareholders should consult their own tax advisors regarding the
possible effects of these sunset provisions.

Other Tax Considerations

         PREIT and its shareholders may be subject to state or local taxation in
various state or local jurisdictions, including those in which it or they
transact business or reside. The state and local tax treatment of PREIT and its
shareholders may not conform to the federal income tax consequences discussed
above. Prospective shareholders should consult their own tax advisors regarding
the effect of state and local tax laws on an investment in shares of PREIT.

Tax Shelter Reporting

         Under recently promulgated Treasury regulations, if a taxpayer
recognizes a loss of $2 million or more, in the case of an individual taxpayer,
or $10 million or more, in the case of a corporate taxpayer, the taxpayer may be
required to file a disclosure statement with the Internal Revenue Service on
Form 8886. Losses on sales of portfolio securities are in many cases exempt from
this reporting requirement, but sales of REIT shares currently are not excepted.
The fact that a loss is reportable under these regulations does not affect the
legal determination of whether the taxpayer's treatment of the loss is proper.
Stockholders should consult their tax advisors to determine the applicability of
these regulations in light of their individual circumstances.



                                      -60-



                                  LEGAL MATTERS

         The legality of the shares offered hereby will be passed upon for us by
Drinker Biddle & Reath LLP. Drinker Biddle & Reath LLP will also pass on certain
federal income tax matters respecting us.

                                     EXPERTS

         The consolidated financial statements and schedules of PREIT and
subsidiaries as of December 31, 2002 and 2001, and for each of the years in the
three-year period ended December 31, 2002 included in PREIT's Current Report on
Form 8-K dated June 27, 2003 and filed on August 12, 2003 have been incorporated
herein by reference in reliance upon the reports of KPMG LLP and Ernst & Young
LLP, independent accountants, incorporated by reference herein, and upon the
authority of said firms as experts in accounting and auditing.

         The report of KPMG LLP dated March 27, 2003, except as to note 16,
which is as of June 27, 2003, refers to the fact that PREIT has adopted
Statement of Financial Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets and Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible Assets as of January
1, 2002.

         The financial statements of Lehigh Valley Associates at December 31,
2002 and December 31, 2001, and for the three years ended December 31, 2002
incorporated by reference in PREIT's Current Report on Form 8-K dated June 27,
2003 and filed on August 12, 2003, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon included therein and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such reports given on the authority of such
firm as experts in accounting and auditing.

         The statement of revenue and certain expenses of WG Park, L.P. for the
year ended December 31, 2002 included in PREIT's Current Report on Form 8-K
dated September 12, 2003 and filed on September 17, 2003 have been incorporated
herein by reference in reliance upon the report of KPMG LLP, independent
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. The report of KPMG LLP dated
September 12, 2003, includes a paragraph that states that the statement was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission, as described in note 2, and is not intended
to be a complete presentation of the WG Park, L.P. revenue and expenses.


                                      -61-



         The combined statements of revenues and certain expenses of the Subject
Properties - First Close and the Subject Properties - Second Close for the year
ended December 31, 2002 and the statements of revenues and certain expenses of
Cherry Hill Mall for the years ended December 31, 2002, 2001 and 2000 included
in PREIT's Current Report on Form 8-K/A No. 2 dated April 28, 2003 (filed on
September 26, 2003) have been incorporated herein by reference in reliance upon
the report of KPMG LLP, independent accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing. The reports of KPMG LLP dated April 29, 2003 include a paragraph that
states that the statements were prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission, as described in
note 2, and are not intended to be a complete presentation of the revenues and
expenses of the Subject Properties - First Close, the Subject Properties -
Second Close and Cherry Hill Mall.

         The consolidated financial statements and schedules of Crown American
Realty Trust at December 31, 2002, and for the three years then ended
incorporated by reference in Crown American Realty Trust's Current Report on
Form 8-K dated June 9, 2003 and filed June 19, 2003, have been audited by Ernst
& Young LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements and schedules are incorporated herein by reference in reliance upon
such report given on the authority of such firm as experts in accounting and
auditing.


                                      -62-



                       WHERE YOU CAN FIND MORE INFORMATION

         We are subject to the informational requirements of the Securities
Exchange Act of 1934, which require us to file reports, proxy statements and
other information with the SEC. You may read and copy our SEC filings at the
SEC's Public Reference Facilities, which are in Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549 and the SEC's following regional offices: 233
Broadway, New York, New York 10279 and 175 W. Jackson Boulevard, Chicago,
Illinois 60604. Copies of the material can be obtained from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates, by calling 1-800-SEC-0330. The SEC also maintains an Internet
web site at http://www.sec.gov that contains our SEC filings. In addition, our
shares are listed on the New York Stock Exchange and our SEC filings can be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.

         We filed with the SEC a registration statement on Form S-3 under the
Securities Act of 1933 with respect to the securities we are offering by this
prospectus. This prospectus does not contain all of the information set forth in
the registration statement because we have omitted some of the information as
permitted by the SEC's rules and regulations. Statements contained in this
prospectus as to the contents of any contract or other document are not
necessarily complete. In each instance, each statement is qualified, in all
respects, by reference to the copy of the applicable contract or document filed
as an exhibit to the registration statement. For further information about us
and our securities, we refer you to the registration statement and the exhibits
and schedules that may be obtained from the SEC at its principal office in
Washington, D.C. after payment of the SEC's prescribed fees.

         The SEC allows us to "incorporate by reference" the information in
documents we file with them. This means that we can disclose important
information by referring you to these documents. The information we incorporate
by reference is an important part of this prospectus, and information in
documents we file after the date of this prospectus automatically will update
and supersede information in this prospectus.

         We filed the documents listed below under the Exchange Act with the
SEC, and we incorporate each of the documents, and all documents filed after the
date of this prospectus under Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act, into this prospectus by reference:

         1. 2002 Annual Report on Form 10-K, filed on March 31, 2003.

         2. Quarterly Reports on Form 10-Q for the quarters ended March 31,
2003, filed on May 15, 2003, and June 30, 2003, filed on August 14, 2003.

         3. Current Reports on Form 8-K dated April 3, 2003 (filed on April 10,
2003), dated April 28, 2003 (filed on May 13, 2003, amended on June 20, 2003,
amended on September 26, 2003), dated May 13, 2003 (filed on May 22, 2003),
dated May 30, 2003 (filed on June 16, 2003, amended on August 8, 2003, amended
on September 29, 2003), dated June 27, 2003 (filed on August 12, 2003), dated
August 15, 2003 (filed on August 15, 2003 and amended on August 25, 2003), dated
August 21, 2003 (filed on August 21, 2003) and dated September 2, 2003 (filed on
September 17, 2003).



                                      -63-



         4. Registration Statement on Form 8-A12B, filed on December 17, 1997,
setting forth the description of our common shares, and filed on May 3, 1999,
setting forth the description of rights to purchase PREIT common shares,
including any amendment or reports filed for the purpose of updating such
information.

         5. Registration Statement on Form S-4, filed on August 13, 2003
(amended on October 1, 2003).

         We will provide without charge to each person to whom a copy of this
prospectus is delivered, after their written or oral request, a copy of any or
all of the documents we have incorporated in this prospectus by reference.
Written requests for copies should be addressed to:

                    Pennsylvania Real Estate Investment Trust
                            Attention: Bruce Goldman,
                      Senior Vice President-General Counsel
                                  The Bellevue
                               200 S. Broad Street
                        Philadelphia, Pennsylvania 19102
                            Telephone: (215) 875-0700



                                      -64-



                           FORWARD LOOKING STATEMENTS

         This prospectus, together with other statements and information
publicly disseminated by us, contains certain "forward-looking statements"
within the meaning of 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 and strategies, anticipated
events or trends and other matters that are not historical facts. These
forward-looking statements reflect our current views about future events and are
subject to risks, uncertainties and changes in circumstances that may cause
future events, achievements or results to differ materially from those expressed
or implied by the forward-looking statement. Factors that may cause our actual
results to differ materially from those expressed or implied by our
forward-looking statements include, but are not limited to:

         o  the timing and full realization of the expected benefits from the
            recently completed and currently proposed transactions;

         o  the cost, timing and difficulty of integrating the properties
            recently acquired or currently proposed to be acquired into our
            business; and

         o  greater than expected operating costs, financing costs and business
            disruption associated with the recently completed and currently
            proposed transactions, including without limitation, difficulties in
            maintaining relationships with employees and tenants following the
            consummation of such transactions.

         Additional factors that may cause our actual results to differ
materially from those expressed or implied in our forward-looking statements
include those discussed in the section entitled "Risk Factors." We do not intend
to and disclaim any duty or obligation to update or revise any forward-looking
statements to reflect new information, future events or otherwise.


                                      -65-



                                     PART II
                     INFORMATION NOT REQUIRED IN PROSPECTUS


Item 14.  Other Expenses of Issuance and Distribution.

The following table sets forth the costs and expenses, other than selling or
underwriting discounts and commissions, we will incur in connection with the
issuance and distribution of the securities being registered. All amounts shown
are estimated except the SEC registration fee.

         Securities and Exchange Commission Registration Fee......... $ 6,954
         Legal Fees and Expenses.....................................  50,000
         Miscellaneous Expenses......................................   2,500
                                                                      -------
         Total....................................................... $59,454
                                                                      =======


Item 15.  Indemnification of Directors and Officers.

         The PREIT trust agreement, as amended, provides that:

         o  no trustee shall be personally liable to any person or entity for
            any of PREIT's acts, omissions or obligations;

         o  no trustee shall be personally liable for monetary damages for any
            action, or any failure to act, except to the extent a Pennsylvania
            business corporation's director would remain liable under the
            provisions of Section 1713 of the Pennsylvania Business Corporation
            Law; and

         o  no officer who performs his duties in good faith, in a manner
            reasonably believed to be in PREIT's best interests and with the
            care, skill and diligence a person of ordinary prudence would use
            will be liable by reason of having been an officer.

         Pennsylvania law permits and the PREIT trust agreement and by-laws
provide that every trustee and officer is entitled as of right to be indemnified
by PREIT against reasonable expenses (including attorney's fees) and any
liability, loss, judgment, excise tax, fine, penalty, or settlement they pay or
incur in connection with an actual (whether pending or completed) or threatened
claim, action, suit or proceeding, whether civil, criminal, administrative,
investigative or otherwise, whether brought by or in PREIT's right or otherwise,
in which he or she may be involved, as a party or otherwise, by reason of being
or having been a trustee or officer or because the person is or was serving in
any capacity at PREIT's request as a trustee, director, officer, employee,
agent, partner, fiduciary or other representative of another REIT, corporation,
partnership, joint venture, trust, employee benefit plan or other entity
provided, however, that:

         o  no right of indemnification will exist with respect to an action
            brought by a trustee or officer against PREIT; and


                                        II-1



         o  no indemnification will be made in any case where the act or failure
            to act giving rise to the claim for indemnification is determined by
            the final judgment of a court of competent jurisdiction to have
            constituted willful misconduct or recklessness.

         The right to indemnification is contractual in nature and includes the
right to be paid in advance the expenses incurred in connection with any
proceedings; provided, however, that advance payments must be made in accordance
with applicable law and must be accompanied by an undertaking by or on behalf of
the applicable trustee or officer to repay all amounts so advanced if it is
determined ultimately that the applicable trustee or officer is not entitled to
indemnification under PREIT's trust agreement.

         In addition, the PREIT trust agreement and Pennsylvania law permit
PREIT to provide similar indemnification to employees, agents and other persons
who are not trustees or officers. Pennsylvania law also permits indemnification
in connection with a proceeding brought by or in PREIT's right to procure a
judgment in PREIT's favor and requires indemnification in certain cases where
the trustee or officer is the prevailing party. Certain of the employment
agreements PREIT has entered into with its officers provide the officer
indemnification. Generally, these contracts require PREIT to indemnify the
officer to the fullest extent permitted under PREIT's trust agreement. The
limited partnership agreement for PREIT Associates, PREIT's operating
partnership, also provides for indemnification of PREIT, its trustees and its
officers for any and all actions with respect to PREIT Associates; provided,
however, that PREIT Associates will not provide indemnity for:

         o  willful misconduct or knowing violation of the law;

         o  any transaction where the covered person received an improper
            personal benefit in violation or breach of PREIT Associates' limited
            partnership agreement;

         o  any violation of PREIT Associates' limited partnership agreement; or

         o  any liability the person may have to PREIT Associates under certain
            specified documents.

         Currently, PREIT maintains directors' and officers' liability insurance
for its trustees and officers.

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to trustees, officers, or persons
controlling PREIT pursuant to the foregoing provisions, PREIT has been informed
that in the Securities and Exchange Commission's opinion, the indemnification is
against public policy as expressed in the Securities Act of 1933, as amended,
and is, therefore, unenforceable. In addition, indemnification may be limited by
state securities laws.



                                        II-2





Item 16.  Exhibits.

(a)      Exhibits:

Exhibit
Number      Description
-------     -----------

5           Opinion of Drinker Biddle & Reath LLP

8           Opinion of Drinker Biddle & Reath LLP regarding tax matters

23.1        Consent of KPMG LLP (Independent Public Accountants of the
            Registrant)

23.2        Consent of KPMG LLP (Independent Public Accountants of the
            Registrant)

23.3        Consent of Ernst & Young LLP (Independent Auditors of Lehigh Valley
            Associates)

23.4        Consent of Ernst & Young LLP (Independent Auditors of Lehigh Valley
            Associates)

23.5        Consent of Ernst & Young LLP (Independent Auditors of Crown American
            Realty Trust)

23.6        Consent of Drinker Biddle & Reath LLP (included in Exhibits 5 and 8)

24          Powers of Attorney (included on signature page)



Item 17.  Undertakings.

The undersigned registrant hereby undertakes:

         (1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

                  (i) To include any prospectus required by section 10(a)(3) of
the Securities Act;

                  (ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the SEC pursuant to rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;



                                      II-3


                  (iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;

provided, however, that the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the SEC by the registrant pursuant to Section 13 or
15(d) of the Exchange Act that are incorporated by reference in the registration
statement;

         (2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

         (3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.

         (4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

         (5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a trustee, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.



                                      II-4



                                   SIGNATURES


         Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Philadelphia, Commonwealth of Pennsylvania, on
October 20, 2003.

                                    PENNSYLVANIA REAL ESTATE INVESTMENT TRUST



                                    By:  /s/ Jonathan B. Weller
                                         --------------------------------------
                                         Jonathan B. Weller,
                                         President and Chief Operating Officer


                                                   POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below, does hereby constitute and appoint RONALD RUBIN and JONATHAN B.
WELLER, and each of them, his or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this registration
statement and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or his or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.

         Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:



                                      II-5





                    Name                                          Capacity                                   Date
                    ----                                          --------                                   ----
                                                                                                        


/s/ Ronald Rubin                                Chairman, Chief Executive Officer and Trustee          October 20, 2003
-----------------------------------
Ronald Rubin

/s/ Jonathan B. Weller                          President, Chief Operating Officer and                 October 20, 2003
-----------------------------------             Trustee
Jonathan B. Weller

/s/ Rosemarie B. Greco                          Trustee                                                October 20, 2003
-----------------------------------
Rosemarie B. Greco

/s/ Lee H. Javitch                              Trustee                                                October 15, 2003
-----------------------------------
Lee H. Javitch

/s/ Leonard I. Korman                           Trustee                                                October 20, 2003
-----------------------------------
Leonard I. Korman

/s/ Ira Lubert                                  Trustee                                                October 20, 2003
-----------------------------------
Ira Lubert

/s/ Jeffrey P. Orleans                          Trustee                                                October 20, 2003
-----------------------------------
Jeffrey P. Orleans

/s/ John J. Roberts                             Trustee                                                October 20, 2003
-----------------------------------
John J. Roberts

/s/ George F. Rubin                             Trustee                                                October 20, 2003
-----------------------------------
George F. Rubin

/s/ Edward A. Glickman                          Executive Vice President and Chief Financial           October 16, 2003
-----------------------------------             Officer
Edward A. Glickman

/s/ David J. Bryant                             Senior Vice President - Finance and                    October 16, 2003
-----------------------------------             Treasurer (Chief Accounting Officer)
David J. Bryant


                                      II-6




                                  EXHIBIT INDEX

Exhibit
Number      Description

5           Opinion of Drinker Biddle & Reath LLP

8           Opinion of Drinker Biddle & Reath LLP regarding tax matters

23.1        Consent of KPMG LLP (Independent Public Accountants of the
            Registrant)

23.2        Consent of KPMG LLP (Independent Public Accountants of the
            Registrant)

23.3        Consent of Ernst & Young LLP (Independent Auditors of Lehigh Valley
            Associates)

23.4        Consent of Ernst & Young LLP (Independent Auditors of Lehigh Valley
            Associates)

23.5        Consent of Ernst & Young LLP (Independent Auditors of Crown American
            Realty Trust)

23.6        Consent of Drinker Biddle & Reath LLP (included in Exhibits 5 and 8)


24          Powers of Attorney (included on signature page)


                                      II-7