77281--3/13/2006--PENNSYLVANIA_REAL_ESTATE_INVESTMENT

related topics

{investment, property, distribution}

{loan, real, estate}

{debt, indebtedness, cash}

{acquisition, growth, future}

{loss, insurance, financial}

{condition, economic, financial}

{tax, income, asset}

{provision, law, control}

{competitive, industry, competition}

{regulation, change, law}

{operation, natural, condition}

{cost, regulation, environmental}

{interest, director, officer}

RISKS RELATED TO OUR BUSINESS AND OUR PROPERTIES Our retail properties are concentrated in the Mid-Atlantic region of the United States, and adverse market conditions in that region might affect the ability of our tenants to make lease payments and to renew leases, which might reduce the amount of income generated by our properties. Our investments in developing new properties and redeveloping older properties in need of renovation might not yield the returns we anticipate, which would harm our operating results and reduce the amount of funds available for distributions to shareholders. We might be unable to manage effectively our rapid growth, our simultaneous redevelopment projects or our new development projects, including any proposed mixed use projects, which might result in disruptions to our business and additional expense. The retail real estate industry is highly competitive, and this competition could harm our ability to operate profitably. Changes in the retail industry, particularly among retailers that serve as anchor tenants, could adversely affect our results of operations. Rising operating expenses could reduce our cash flow and funds available for future distributions. We face increasing competition for the acquisition of properties and other assets, which might impede our ability to make future acquisitions or might increase the cost of these acquisitions. We might not be successful in identifying suitable acquisitions that meet the criteria we apply, given economic, market or other circumstances, which might impede our growth. Any tenant bankruptcies or leasing delays or terminations we encounter could adversely affect our financial condition and results of operations. Our business could be harmed if Ronald Rubin, our chairman and chief executive officer, or other members of our senior management team terminate their employment with us. We have invested and expect to invest in the future in partnerships with third parties to acquire or develop properties, and we might not control the management, redevelopment or disposition of these properties, or we might be exposed to other risks. 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. We might incur costs to comply with environmental laws, which could have an adverse effect on our results of operations. RISKS RELATED TO OUR INDEBTEDNESS AND OUR FINANCING We have substantial debt, which might increase, as well as obligations to pay dividends on our preferred shares, and we require significant cash flows to satisfy these obligations. If we are unable to satisfy those obligations, we might be forced to dispose of one or more properties and there could be other negative consequences. We might not be able to obtain capital required to finance our business initiatives. The covenants in our Credit Facility might restrict our operations or acquisition activities, which might harm our ability to pursue new business initiatives and have a negative effect on our financial condition and results of operations. Payments by our direct and indirect subsidiaries of dividends and distributions to us might be adversely affected by prior payments to the creditors of these subsidiaries. Our hedging arrangements might not be successful in limiting our risk exposure, and we might be required to incur expenses in connection with these arrangements or their termination that could harm our results of operations or financial condition. RISKS RELATED TO THE REAL ESTATE INDUSTRY We are subject to risks that affect the retail real estate environment generally. Illiquidity of real estate investments could significantly affect our ability to respond to adverse changes in the performance of our properties and harm our financial condition. Possible terrorist activity or other acts of violence or war could adversely affect our financial condition and results of operations. RISKS RELATING TO OUR ORGANIZATION AND STRUCTURE Our organizational documents contain provisions that might discourage a takeover of us and depress our share price. Limited partners of PREIT Associates, L.P. may vote on certain fundamental changes we propose, which could inhibit a change in control that might otherwise result in a premium to our shareholders. We have entered into tax protection agreements for the benefit of certain former property owners, including some limited partners of PREIT Associates, L.P., that might limit our ability to sell some of our properties that we might otherwise want to sell, which could harm our financial condition. Some of our officers and trustees have interests in properties that we manage and therefore might have conflicts of interest that could adversely affect our business. RISKS RELATING TO OUR SECURITIES Many factors, including changes in interest rates and the negative perceptions of the retail sector generally, can have an adverse effect on the market value of our securities. If we were to fail to qualify as a REIT, our shareholders would be adversely affected. We might be unable to comply with the strict income distribution requirements applicable to REITs, or compliance with such requirements could adversely affect our financial condition.

Full 10-K form ▸

77281--3/13/2006--PENNSYLVANIA_REAL_ESTATE_INVESTMENT_TRUST