Pennsylvania Real Estate Investment Trust Reports Second Quarter 2007 Results

Pennsylvania Real Estate Investment Trust (NYSE: PEI) today reported results for the quarter and six months ended June 30, 2007.

Financial Results

• Net income available to common shareholders for the second quarter of 2007 was $0.5 million, or $0.01 per diluted share, unchanged from the second quarter of 2006. For the six months ended June 30, 2007, net income available to common shareholders was $6.2 million, or $0.15 per diluted share, compared to a net loss allocable to common shareholders of $(2.3) million, or $(0.08) per diluted share, for the first six months of 2006.
• Net Operating Income (“NOI”) from consolidated properties and the Company’s proportionate share of unconsolidated partnership properties was $72.9 million in the second quarter of 2007, unchanged from the second quarter of 2006. For the six months ended June 30, 2007, NOI was $146.4 million, a 1.3% decrease compared to $148.3 million for the six months ended June 30, 2006.
• Funds From Operations (“FFO”) for the second quarter of 2007 were $33.9 million, a 3.0% increase from $32.9 million in the second quarter of 2006. FFO per diluted share was $0.82 in the second quarter of 2007, a 1.2% increase compared to $0.81 in the second quarter of 2006. FFO for the six months ended June 30, 2007 was $67.1 million, or $1.62 per diluted share, representing increases of 3.9% and 2.5%, respectively, compared to $64.6 million, or $1.58 per diluted share, for the first six months of 2006.

Net income for the second quarter of 2007 includes a $1.5 million gain on the sale of a parcel at The Plaza at Magnolia in Florence, South Carolina and a $0.6 million gain on the sale of an outparcel with an operating restaurant at New River Valley Mall in Christiansburg, Virginia. Also included in net income for the six months ended June 30, 2007 is a $6.7 million gain on the sale of Schuylkill Mall in Frackville, Pennsylvania, and $0.8 million of condemnation proceeds associated with highway improvements at Capital City Mall in Camp Hill, Pennsylvania. In the first six months of 2006, net loss allocable to common shareholders was affected by $4.0 million of executive separation expenses associated with the retirement of Jonathan B. Weller, formerly a Vice Chairman of the Company, and $2.8 million of additional depreciation and amortization expense that was recorded in connection with the reclassification of Schuylkill Mall from held for sale to continuing operations.

FFO for the second quarter of 2007 includes the $1.5 million gain from the parcel sale at The Plaza at Magnolia. FFO for the first six months of 2007 also includes $0.8 million from condemnation proceeds at Capital City Mall, while FFO for the first six months of 2006 was affected by the $4.0 million executive separation expense.

   A description of each non-GAAP financial measure and the related     reconciliation to the comparable GAAP measure is located at                    the end of this press release.

Ronald Rubin, Chairman and Chief Executive Officer of the Company, said, “We are pleased with our progress and the results of our redevelopment strategy. Net operating income, sales per square foot and occupancy are up at the eight redeveloped and renovated properties we completed in 2006, compared to a year ago. By the end of the year, we will have substantially completed five additional redevelopments and look forward to similar results at these and other active projects.”

Retail Operating Metrics

The following tables set forth information regarding occupancy and sales per square foot in the Company’s retail portfolio as of June 30, 2007:

Same store NOI increased $0.7 million for the second quarter of 2007, an increase of 0.9% from the second quarter of 2006. For the first six months of 2007, same store NOI decreased by $0.7 million, or 0.5%, compared to the first six months of 2006. Same store results represent retail properties that the Company owned for the full periods presented.

“We continue to improve the quality of our portfolio,” said Joseph Coradino, President of PREIT Services, LLC and PREIT-RUBIN, Inc. “By introducing first to the portfolio tenants and achieving our vision for these properties, we are enhancing the attractiveness of our properties to current and prospective tenants and the experiences of our customers. Seventeen of our properties are generating sales in excess of $350 per square foot, with ten of those above $400.”

Redemption of Preferred Shares

As previously announced, today the Company is redeeming all of its 2.475 million outstanding 11% Non-Convertible Senior Preferred Shares (“Preferred Shares”) for $52.50 per share plus $0.7486 per share in accrued and unpaid dividends, for an aggregate payment of $53.2486 per share. Notice of redemption and related materials have been sent to holders of record of the Preferred Shares.

2007 Outlook

The Company reaffirms its 2007 full-year estimates, as announced in May, that net income available to common shareholders per diluted share and FFO per diluted share will be as follows:

This guidance assumes the redemption of the Company’s Preferred Shares on or about July 31, 2007. As a result of the redemption, the $13.3 million excess of the carrying amount of the Preferred Shares, net of expenses, over the redemption price accounts for $0.35 per diluted share of net income available to common shareholders and $0.32 per diluted share of FFO. These amounts are included in the estimates provided above.

Conference Call Information

The Company has scheduled a conference call for 3:00 p.m. Eastern Time today to review its second quarter and six months results, market trends, and future outlook. To listen to the call, please dial (877) 691-0878 (domestic) or (973) 935-8505 (international), at least five minutes before the scheduled start time. Investors can also access the call in a "listen only" mode via the Internet at the Company website, www.preit.com, or at www.viavid.net. Please allow extra time prior to the call to visit the site and download the necessary software to listen to the Internet broadcast. Financial and statistical information expected to be discussed on the call will also be available on the Company’s website.

For interested individuals unable to join the conference call, a replay of the call will be available through August 14, 2007 at (877) 519-4471 (domestic) or (973) 341-3080 (international), (Replay Pin Number: 8992564). The online archive of the webcast will be available for 14 days following the call.

About Pennsylvania Real Estate Investment Trust

Pennsylvania Real Estate Investment Trust, founded in 1960 and one of the first equity REITs in the United States, has a primary investment focus on retail shopping malls and power centers. Currently, the Company’s retail portfolio is approximately 34 million square feet and consists of 57 properties, including 38 shopping malls, 11 strip and power centers and eight properties under development. The Company’s properties are located in 13 states in the eastern half of the United States, primarily in the Mid-Atlantic region. The Company is headquartered in Philadelphia, Pennsylvania, and its website can be found at www.preit.com. PREIT is publicly traded on the NYSE under the symbol PEI.

Definitions

The National Association of Real Estate Investment Trusts (“NAREIT”) defines Funds From Operations, which is a non-GAAP measure, as income before gains (losses) on sales of operating properties and extraordinary items (computed in accordance with GAAP); plus real estate depreciation; plus or minus adjustments for unconsolidated partnerships to reflect funds from operations on the same basis. We compute Funds From Operations by taking the amount determined pursuant to the NAREIT definition and subtracting dividends on preferred shares (“FFO”).

Funds From Operations is a commonly used measure of operating performance and profitability in the REIT industry, and we use FFO as a supplemental non-GAAP measure to compare our Company’s performance to that of our industry peers. In addition, we use FFO as a performance measure for determining bonus amounts earned under certain of our performance-based executive compensation programs. The Company computes FFO in accordance with standards established by NAREIT, less dividends on preferred shares, which may not be comparable to Funds From Operations reported by other REITs that do not define the term in accordance with the current NAREIT definition, or that interpret the current NAREIT definition differently than the Company. FFO does not include gains or losses on sale of operating real estate assets, which are included in the determination of net income in accordance with GAAP. Accordingly, FFO is not a comprehensive measure of our operating cash flows. In addition, since FFO does not include depreciation on real estate assets, FFO may not be a useful performance measure when comparing our operating performance to that of other non-real estate commercial enterprises. We compensate for these limitations by using FFO in conjunction with other GAAP financial performance measures, such as net income and net cash provided by operating activities, and other non-GAAP financial performance measures, such as net operating income. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (determined in accordance with GAAP) as an indication of the Company's financial performance, or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity, nor is it indicative of funds available for the Company's cash needs, including its ability to make cash distributions.

The Company believes that net income is the most directly comparable GAAP measurement to FFO. The Company believes that FFO is helpful to management and investors as a measure of operating performance because it excludes various items included in net income that do not relate to or are not indicative of operating performance, such as various non-recurring items that are considered extraordinary under GAAP, gains on sales of operating real estate and depreciation and amortization of real estate.

Net operating income ("NOI"), which is a non-GAAP measure, is derived from revenues (determined in accordance with GAAP) minus property operating expenses (determined in accordance with GAAP). Net operating income is a non-GAAP measure. It does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (determined in accordance with GAAP) as an indication of the Company's financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity; nor is it indicative of funds available for the Company's cash needs, including its ability to make cash distributions. The Company believes that net income is the most directly comparable GAAP measurement to net operating income.

The Company believes that net operating income is helpful to management and investors as a measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. Net operating income excludes general and administrative expenses, management company revenues, interest income, interest expense, depreciation and amortization and gains on sales of interests in real estate.

This press release contains certain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements relate to expectations, beliefs, projections, future plans, strategies, anticipated events, trends and other matters that are not historical facts. These forward-looking statements reflect PREIT’s current views about future events and are subject to risks, uncertainties and changes in circumstances that might cause future events, achievements or results to differ materially from those expressed or implied by the forward-looking statements. More specifically, PREIT’s business might be affected by uncertainties affecting real estate businesses generally as well as the following, among other factors: general economic, financial and political conditions, including changes in interest rates or the possibility of war or terrorist attacks; changes in local market conditions or other competitive or retail industry factors in the regions where our properties are concentrated; PREIT’s ability to maintain and increase property occupancy and rental rates, and risks relating to development or redevelopment activities, including construction, obtaining entitlements and managing multiple projects simultaneously. Additionally, there can be no assurance that PREIT’s actual results will not differ significantly from the estimates set forth above, or that PREIT’s returns on its developments, redevelopments or acquisitions will be consistent with the estimates outlined in press releases or other disclosures. Investors are also directed to consider the risks and uncertainties discussed in documents PREIT has filed with the Securities and Exchange Commission and, in particular, PREIT's Annual Report on Form 10-K for the year ended December 31, 2006. PREIT does not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.

       **  Quarterly supplemental financial and operating  **       **  information will be available on www.preit.com  **

Contacts:

Pennsylvania Real Estate Investment Trust
Robert McCadden, 215-875-0735
EVP & CFO
or
Nurit Yaron, 215-875-0735
VP, Investor Relations