Pennsylvania Real Estate Investment Trust – ‘424B5’ on 12/19/97

As of:  Friday, 12/19/97   ·   Accession #:  950116-97-2326   ·   File #:  33-61115

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Prospectus   —   Rule 424(b)(5)
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Document/Exhibit                   Description                      Pages   Size 

 1: 424B5       Prospectus                                           167    931K 

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[GRAPHIC OMITTED]                                                               

PROSPECTUS SUPPLEMENT                                                           
(To Prospectus dated December 17, 1997)                                         

4,000,000 Shares  
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST                                       
Shares of Beneficial Interest 
---------------------   
Pennsylvania Real Estate Investment Trust (the "Company") is a fully  
integrated, self-administered and self-managed real estate investment trust     
("REIT") which acquires, develops, redevelops and operates retail and           
multifamily properties. Founded in 1960, the Company is one of the 15 largest   
publicly held operators of retail properties in the United States.              
   On September 30, 1997, the Company acquired The Rubin Organization, Inc.,
a commercial property development and management firm, and certain related real 
estate interests. The Company's portfolio includes interests in 17 shopping     
centers containing an aggregate of approximately 6.0 million square feet and    
interests in 19 multifamily properties containing 7,236 units. Substantially    
all of the Company's properties are located in the Eastern United States, with  
concentrations in the Mid-Atlantic states and in Florida. The Company also      
provides management, leasing and/or development services for 49 retail          
properties containing approximately 19.2 million square feet and 11 office      
buildings containing approximately 4.0 million square feet for affiliated and   
third-party property owners.                                                    
 All of the Company's Shares of Beneficial Interest, par value $1.00 per
share (the "Shares"), offered hereby (the "Offering") are being sold by the     
Company. To assist the Company in complying with certain qualification          
requirements applicable to REITs, the trust agreement of the Company (the       
"Trust Agreement") provides that no person may beneficially own more than 9.9%  
of the outstanding Shares, subject to certain specified exceptions. See         
"Description of Shares of Beneficial Interest--Restrictions on Transfer" in the 
accompanying Prospectus. Upon completion of the Offering, management and        
trustees of the Company will beneficially own approximately 11.7% of the equity 
in the Company.                                                                 

 The Shares are listed on the New York Stock Exchange (the "NYSE") under
the symbol "PEI." On December 17, 1997, the last reported sale price of the     
Shares on the NYSE was $22 3/8. See "Price Range of Shares and Distributions."  
---------------------   
   See "Risk Factors" beginning on page 4 of the accompanying Prospectus for
certain factors relevant to an investment in the Shares offered hereby.         
---------------------   
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND    
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON  
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT  
OR THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION  
TO THE CONTRARY IS A CRIMINAL OFFENSE.  
================================================================================
           Price to      Underwriting Discounts    Proceeds to
            Public        and Commissions (1)      Company (2)
--------------------------------------------------------------------------------
Per Share  ......  $    22.375        $     1.34            $    21.035         
--------------------------------------------------------------------------------
Total(3)   ......  $89,500,000        $5,360,000            $84,140,000         
================================================================================
(1) The Company has agreed to indemnify the Underwriters against certain        
liabilities, including liabilities under the Securities Act of 1933, as 
amended. See "Underwriting."                                            
(2) Before deducting expenses payable by the Company estimated at $950,000.     
(3) The Company has granted the Underwriters a 30-day option to purchase up to  
600,000 additional Shares on the same terms and conditions as set forth 
 above soley to cover over-allotments, if any. If such option is exercised
in full, the total Price to Public, Underwriting Discounts and          
 Commissions, and Proceeds to Company will be $102,925,000, $6,164,000 and
$96,761,000, respectively. See "Underwriting."                          
--------------------- 
The Shares offered by this Prospectus Supplement are offered by the   
several Underwriters, subject to prior sale, to withdrawal, cancellation or     
modification of the offer without notice, to delivery and acceptance by the     
Underwriters and to certain further conditions. It is expected that delivery of 
the Shares will be made at the offices of Lehman Brothers Inc., New York, New   
York on or about December 23, 1997.                                             
---------------------   
LEHMAN BROTHERS                                                                 
LEGG MASON WOOD WALKER                              
INCORPORATED                              
MERRILL LYNCH & CO. 
                        SALOMON SMITH BARNEY
                                                    WHEAT FIRST BUTCHER SINGER
December 17, 1997                                                               

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      [The inside front cover and inside back cover contain 11 pictures of
the following properties: (i) Northeast Tower Center (outside shot of The Home  
Depot with caption indicating anticipated acquisition date); (ii) Crest Plaza   
Shopping Center (outside shot of Weis Markets); (iii) Laurel Mall (aerial shot);
(iv) Hillview Shopping Center (outside shot of Target Greatland with caption    
indicating anticipated acquisition date); (v) Lehigh Valley Mall (two inside    
shots; before and after presentation); (vi) Hillview Shopping Center (outside   
night shot with caption indicating anticipated acquisition date); (vii)         
Cobblestone Apartments (outside shot); (viii) Eagle's Nest Apartments (outside  
shot); (ix) Hidden Lakes Apartments (outside shot); and (x) Palms of Pembroke   
Apartments (outside shot).]                                                     

   [The inside front cover also includes a map of the Eastern United
States setting forth the location of Existing, Acquisition and Development      
Properties and the headquarters and regional offices of the Company.]           

   CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SHARES. SUCH      
TRANSACTIONS MAY INCLUDE THE PURCHASE OF SHARES PRIOR TO THE PRICING OF THE     
OFFERING FOR THE PURPOSE OF MAINTAINING THE PRICE OF THE SHARES, THE PURCHASE   
OF SHARES FOLLOWING THE PRICING OF THE OFFERING TO COVER A SYNDICATE SHORT      
POSITION IN THE SHARES OR FOR THE PURPOSE OF MAINTAINING THE PRICE OF THE       
SHARES AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE           
ACTIVITIES, SEE "UNDERWRITING."                                                 

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SUMMARY 

 The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus Supplement and the           
accompanying Prospectus or incorporated therein by reference. Unless otherwise  
indicated, the information in this Prospectus Supplement assumes that the       
Underwriters' over-allotment option is not exercised. Pennsylvania Real Estate  
Investment Trust, a Pennsylvania business trust (the "Company"), conducts       
substantially all of its operations through PREIT Associates, L.P., a Delaware  
limited partnership (the "Operating Partnership"). As used herein, unless the   
context indicates otherwise, the term "Company" includes Pennsylvania Real      
Estate Investment Trust, the Operating Partnership and their subsidiaries and   
affiliates, including PREIT-RUBIN, Inc. (formerly The Rubin Organization,       
Inc.), a commercial property development and management firm in which the       
Company owns 95% of the economic interests in the form of non-voting common     
shares (together with its predecessors, "PREIT-RUBIN").                         

The Company 

   The Company is a fully integrated real estate operating company active in
acquiring, developing, redeveloping, managing and leasing retail and            
multifamily properties. Founded in 1960, the Company is one of the 15 largest   
publicly held operators of retail properties in the United States (in terms of  
square feet owned and/or managed). On September 30, 1997, the Company acquired  
The Rubin Organization, Inc., a commercial property development and management  
firm, and certain related real estate interests.                                

  The Company owns interests in 17 retail properties (the "Existing Retail
Properties") containing an aggregate of approximately 6.0 million square feet,  
19 multifamily properties (the "Multifamily Properties") containing an          
aggregate of 7,236 units, six industrial properties containing an aggregate of  
approximately 700,000 square feet and three parcels of undeveloped land. In     
addition, the Company has entered into agreements to acquire interests in two   
shopping centers containing an aggregate of approximately 824,000 square feet   
(the "Acquisition Properties"). The Company also owns interests in five         
shopping centers under development (the "Development Properties"), which are    
expected to contain an aggregate of approximately 2.2 million square feet upon  
completion. Two of the Development Properties are currently under construction, 
and the Company anticipates that the remaining three Development Properties     
will be completed by the year 2000.                                             

  The Company provides management, leasing and/or development services for
49 retail properties containing approximately 19.2 million square feet and 11   
office buildings containing approximately 4.0 million square feet for           
affiliated and third-party property owners.                                     

  The Company's management team has extensive experience in the commercial
real estate industry. The Company's 21 most senior corporate and property-level 
employees have an average of 23 years of experience in the real estate industry 
and an average of 15 years of experience with the Company and its predecessors. 
The Company has approximately 1,150 employees, approximately 1,000 of whom are  
located on-site at the Company's owned and managed properties. The Company      
maintains its headquarters in Fort Washington, Pennsylvania, a suburb of        
Philadelphia, and has regional offices in Chicago, Illinois, Atlanta, Georgia   
and Boca Raton, Florida.                                                        

Recent Developments 

Acquisition of The Rubin Organization, Inc. On September 30, 1997, the
Company acquired The Rubin Organization, Inc. (renamed "PREIT-RUBIN, Inc.") and 
interests in certain related retail properties (the "TRO Transaction") as part  
of the Company's previously announced strategy to acquire management, leasing   
and development expertise for retail properties, as well as to grow its         
portfolio of owned properties. Founded in 1946, The Rubin Organization was a    
Philadelphia-based owner, operator and developer of commercial real estate      
properties. As part of the TRO Transaction, the Company also acquired interests 
in four of the Existing Retail Properties containing an aggregate of            
approximately 2.1 million square feet, and obtained the right to                

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acquire the Acquisition Properties and four of the Development Properties. Of   
the four Existing Retail Properties acquired, two were purchased from entities  
affiliated with investor Samuel Zell for a combination of cash, assumption of   
debt and issuance of units of limited partner interest in the Operating         
Partnership ("OP Units").                                                       

The following table sets forth certain information regarding the four 
Existing Retail Properties acquired in the TRO Transaction:                     

Recent Acquisitions 

                                                                [Download Table]

                                                                         Percentage 
                             Percentage       Total          Owned        Leased at 
Property and Location          Owned       Square Feet    Square Feet     9/30/97   
---------------------------  ------------  -------------  -------------  -----------
                                                                                    
The Court at Oxford Valley                                                          
Langhorne, PA  ............       50%          692,000        457,000        100%   
Magnolia Mall                                                                       
Florence, SC   ............      100%          570,000        570,000         98%   
North Dartmouth Mall                                                                
North Dartmouth, MA  ......      100%          620,000        620,000         88%   
Springfield Park                                                                    
Springfield, PA(1)   ......       50%          209,000         65,000        N/A    
                                               -------        -------               
   Total ..................                  2,091,000      1,712,000               
                                             =========      =========               

------------                                                                    
(1) The Company owns an undivided one-half interest in one of three floors in   
this former department store as a tenant in common. The Company acquired
this vacant property for purposes of redevelopment.                     

The following table sets forth certain information regarding the      
Acquisition Properties:                                                         

Acquisition Properties  

                                                        [Enlarge/Download Table]

                           Percentage                                       Percentage   
                             To Be            Total          Owned           Leased at   
Property and Location       Acquired       Square Feet    Square Feet        9/30/97     
-------------------------  --------------  -------------  ----------------  -------------
                                                                                         
Hillview Shopping Center                                                                 
Cherry Hill, NJ .........        50%          340,000         340,000(1)        100%     
Northeast Tower Center(2)                                                                
Philadelphia, PA   ......       100%(3)       484,000         353,000(4)         99%(5)  
                                              -------         -------                    
   Total  ...............                     824,000         693,000                    
                                              =======         =======                    

------------                                                                    
(1) Includes 261,000 square feet of retail space situated on land leased to     
tenants which own their own buildings.                                  
(2) Information includes 121,000 square feet currently under development (Phase 
II). Phase I is 99% leased.                                             
(3) The Company will initially acquire an 89% interest in the partnerships      
which own this property and the right to acquire the remaining 11%      
interest not earlier than three years from the initial acquisition date.
(4) Includes 153,000 square feet of retail space situated on land leased to     
tenants which own their own buildings.                                  
(5) Of constructed and owned space.                                             

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The following table sets forth certain information regarding the                
Development Properties:                                                         

Development Properties  

                                                        [Enlarge/Download Table]

                                                   Planned                                          
                                   Percentage       Total                             Expected      
Property and Location             To Be Owned    Square Feet     Status(1)           Completion     
--------------------------------  -------------  -------------  --------------  --------------------
                                                                                                    
Christiana Power Center Phase I                                                                     
Newark, DE .....................       50%           295,000    Construction    Second half of 1998 
Red Rose Commons                                                                                    
Lancaster, PA ..................       50%(2)        463,000    Construction    Second half of 1998 
Warrington Shopping Center                                                                          
Warrington, PA   ...............      100%           415,000     Development    Second half of 1999 
Blue Route Metroplex                                                                                
Plymouth Meeting, PA   .........       50%(2)        760,000     Development    First half of 2000  
Christiana Power Center Phase II                                                                    
Newark, DE .....................       50%           300,000     Development    Second half of 2000 

                                                     -------                                        
   Total   .....................                   2,233,000                                        
                                                   =========                                        

------------                                                                    
(1) "Construction" indicates that construction activities, such as site         
preparation, ground-breaking activities, or exterior construction, have 
commenced. "Development" indicates that development activities, such as 
site surveys, preparation of architectural plans, or initiation of land 
use approvals or rezoning processes, have commenced (but "Construction" 
has not commenced).                                                     
(2) Subject to reduction as described under "The Company -- The TRO Transaction 
-- The Goldenberg Letter Agreement."                                    

Formation of Operating Partnership. The Company recently formed the   
Operating Partnership to hold substantially all of its assets. The Company      
believes that the operating partnership structure provides it with a            
competitive advantage in acquiring properties from sellers who desire to defer  
the tax consequences of a sale. Following the Offering, the Company will own a  
94.2% limited partner interest and a 1.0% sole general partner interest in the  
Operating Partnership. The Company anticipates that all future property         
acquisitions will be owned, directly or indirectly, by the Operating            
Partnership.                                                                    

   Expansion of Credit Facility. On September 30, 1997, the Company replaced
its $75.0 million credit facility with a $150.0 million credit facility (the    
"Credit Facility"). The prior credit facility carried an interest rate equal to 
the 30-day London Interbank Offered Rate ("LIBOR") plus 1.85%. The Company      
reduced the interest rate under the new Credit Facility to LIBOR plus 1.70%,    
which will be further reduced to LIBOR plus 1.40% following the Offering and    
the application of the net proceeds therefrom (see "Management's Discussion and 
Analysis of Financial Condition and Results of Operations -- Liquidity and      
Capital Resources -- The Credit Facility"). Following the Offering, the Company 
will have approximately $105.4 million available under the Credit Facility to   
fund additional growth.                                                         

 NYSE Listing. On November 14, 1997, the Shares commenced trading on the
NYSE. The Company believes that its listing on the NYSE will enhance            
shareholder value by increasing the liquidity of the Shares and increasing the  
Shares' appeal to institutional investors.                                      

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Business and Growth Strategies  

Business Strategies                                                             

  The Company's primary business objective is to maximize the total return
to its shareholders through growth in cash flow and appreciation in the value   
of its assets. The Company plans to achieve this objective by employing the     
operating strategies and capitalizing upon the internal and external growth     
opportunities described below.                                                  

Operating Strategies and Organizational Strengths                               

Fully Integrated Real Estate Operating Company. The Company is a fully
integrated real estate operating company active in acquiring, developing,       
redeveloping, managing and leasing retail and multifamily properties. The       
Company believes that the integration of The Rubin Organization's real estate   
operating skills with its own asset management skills will provide it with the  
ability to develop, acquire and manage a growing portfolio. In addition to      
leasing and property management, the Company's personnel also perform a number  
of staff and administrative functions, including financial services, lease      
administration, legal services, human resources, management information         
systems, marketing, purchasing and risk management.                             

 Development Capabilities. The Company's development group is staffed by
eight full-time development professionals who have significant experience in    
the development of retail, multifamily and other commercial properties. Over    
The Rubin Organization's 50-year history, it and its predecessors have been     
responsible for major development projects such as: Christiana Mall in Newark,  
Delaware; Willow Grove Park Mall in Willow Grove, Pennsylvania; Cumberland Mall 
in Vineland, New Jersey; Newburgh Mall in Newburgh, New York; and Mellon Bank   
Center and historic redevelopments such as The Bellevue and One Penn Center at  
Suburban Station, all in Philadelphia, Pennsylvania.                            

Benefits of Size. As one of the 15 largest publicly held operators of 
retail properties in the United States, the Company believes it has certain     
strategic and financial advantages over smaller operators. These advantages     
include: (i) strong relationships with tenants, facilitating the leasing of     
retail space in its properties; (ii) economies of scale in the operation of its 
properties; (iii) the enhanced ability to attract and retain qualified          
employees; and (iv) improved liquidity and access to capital.                   

Growth Strategies                                                               

The Company seeks to increase cash flow by intensively managing its   
properties and selectively acquiring, repositioning and developing additional   
retail and multifamily properties. The Company also intends to continue to      
pursue strategic acquisitions of other real estate companies and portfolios,    
such as the TRO Transaction, which complement its existing portfolio and        
management capabilities.                                                        

    Internal Growth Strategies. The Company seeks to increase cash flow at its
properties by achieving rent increases while maintaining high occupancy levels  
and aggressively controlling operating expenses. The Company believes that by   
applying its management and leasing skills and experience it can enhance the    
operating performance of the existing portfolio by increasing rents, optimizing 
the tenant mix of its retail and multifamily properties, maintaining high       
occupancy rates and internalizing property management and leasing               
responsibilities for certain of its properties now managed by third parties.    

   Acquisition Strategies. The Company's acquisition strategies focus on the
purchase of middle market retail properties and multifamily properties which    
the Company believes will benefit from more proactive management and leasing,   
selective re-tenanting and strategic capital improvements. The Company also     
intends to continue to take advantage of its third-party management business to 
evaluate and selectively acquire properties managed for its third-party         
clients.                                                                        

   In addition, the Company will continue to evaluate strategic acquisitions
and/or business combinations with other real estate companies and portfolio     
owners. The Company believes that the real estate industry is in a period of    
sustained consolidation, and that opportunities will arise to acquire other     
real estate companies.                                                          

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Repositioning and Redevelopment Strategies. The Company's ability to  
reposition and redevelop retail and multifamily properties is a core element of 
its business and growth strategies. The Company uses its internal redevelopment 
expertise and resources to create value in newly acquired properties,           
frequently in cases in which the prior owner was unable to maximize the         
property's value due to a lack of managerial or financial resources.            

Development of Power Center Retail Properties. The Company's property 
development strategy currently focuses on the construction of power centers in  
its core Mid-Atlantic markets. The Company's development and site selection     
strategy is tenant-driven: the Company uses its relationships with key power    
center tenants such as The Home Depot, Target and Kohl's to identify sites      
desirable to such retailers. After pre-leasing or pre-selling one or more       
portions of a targeted site to key anchor tenants, the Company is able to       
aggressively pre-lease the remaining space to other desirable retail tenants.   

The Offering  

                                                        [Enlarge/Download Table]
                                                                                                   
Shares offered .................................... 4,000,000                                      
Shares to be outstanding after the Offering  ...... 12,685,098(1)                                  
Use of proceeds   ................................. To repay indebtedness, including indebtedness  
                                                    incurred in connection with the Company's      
                                                    recent acquisition and development activities, 
                                                    and for general corporate purposes. See "Use of
                                                    Proceeds."                                     
NYSE symbol ....................................... "PEI"                                          

------------                                                                    
(1) Does not include Shares reserved for issuance upon redemption of 646,286    
issued and outstanding OP Units or 933,375 Shares reserved for issuance 
upon the exercise of options which have been granted by the Company,    
314,786 of which are currently exercisable and 618,589 of which become  
exercisable at various times over the next four years.                  

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Summary Financial and Operating Information 

    The following table sets forth certain financial and operating information
for the Company for each of the five years ended August 31, 1997. Such          
information should be read in conjunction with the Company's financial          
statements and the notes thereto, "Management's Discussion and Analysis of      
Financial Condition and Results of Operations" and pro forma financial          
statements contained elsewhere herein. Effective January 1, 1998, the Company's 
fiscal year will be reported on a calendar year basis. The unaudited pro forma  
information is presented as if the Offering and the TRO Transaction had been    
completed on August 31, 1997 for balance sheet purposes and on September 1,     
1996 for purposes of the income statement and other data. The unaudited pro     
forma information is not necessarily indicative of what the actual financial    
position or results of operations of the Company would have been as of and for  
the period presented, nor does it purport to represent the Company's future     
financial position or results of operations.                                    

                                                        [Enlarge/Download Table]

                                                               For the Fiscal Years Ended August 31,                      
                                         ---------------------------------------------------------------------------------
                                                                                   Historical                             
                                         Pro Forma     -------------------------------------------------------------------
                                          1997(1)        1997          1996          1995          1994          1993     
                                         -----------   -----------   -----------   -----------   -----------   -----------
                                                           (amounts in thousands, except per share data)                  
                                                                                                                          
Income Statement Data:                                                                                                    
Revenues:                                                                                                                 
 Gross revenues from real estate  ......  $52,721       $40,231       $38,985       $36,978       $27,640       $21,083   
 Interest and other income  ............      488           254           171           176           274           542   
                                          --------      --------      --------      --------      --------      --------  
   Total revenues  .....................   53,209        40,485        39,156        37,154        27,914        21,625   
Expenses:                                                                                                                 
 Property operating expenses   .........   20,253        16,289        16,102        14,859        11,758         8,959   
 Depreciation and amortization .........    8,816         6,259         5,908         5,286         3,541         2,784   
 General and administrative                                                                                               
   expenses  ...........................    3,324         3,324         3,119         3,091         2,528         1,873   
 Interest expense  .....................    9,167         9,086         9,831         8,908         4,162         2,222   
 Provision for losses on investments          500           500            --            --         1,795           320   
                                          --------      --------      --------      --------      --------      --------  
   Total expenses  .....................   42,060        35,458        34,960        32,144        23,784        16,158   
                                          --------      --------      --------      --------      --------      --------  
Income before other income and                                                                                            
 expense  ..............................   11,149         5,027         4,196         5,010         4,130         5,467   
Equity in income of partnerships and                                                                                      
 joint ventures ........................    4,757         4,337         6,258         6,381         4,416         4,750   
Equity in loss of PREIT-RUBIN  .........      (80)           --            --            --            --            --   
Gains on sales of interests in real                                                                                       
 estate   ..............................    1,069         1,069           865           119        12,362         3,875   
Minority interest  .....................     (999)         (198)         (275)         (285)         (221)          (92)  
                                          --------      --------      --------      --------      --------      --------  
Net income   ...........................  $15,896       $10,235       $11,044       $11,225       $20,687       $14,000   
                                          ========      ========      ========      ========      ========      ========  
Per Share Results:                                                                                                        
Income before gains on sales of                                                                                           
 interests in real estate   ............  $  1.17       $  1.06       $  1.17       $  1.28       $  0.96       $  1.17   
Gains on sales of interests in real                                                                                       
 estate   ..............................      .08          0.12          0.10          0.01          1.43          0.45   
                                         ---------     ---------     ---------     ---------     ---------     ---------  
Net income   ...........................  $  1.25       $  1.18       $  1.27       $  1.29       $  2.39       $  1.62   
                                         =========     =========     =========     =========     =========     =========  
Weighted average number of shares                                                                                         
 outstanding (2)   .....................   12,679         8,679         8,676         8,671         8,664         8,643   

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                                                        [Enlarge/Download Table]

                                               For the Fiscal Years Ended                              
                                                        August 31,                                     
                                             -------------------------------                           
                                                                Historical                             
                                                Pro Forma      -------------                           
                                                 1997(1)            1997                               
                                             ----------------  -------------                           
                                             (amounts in thousands, except                             
                                                     per share data)                                   
                                                                                                       
Balance Sheet Data                                                                                     
(at end of period):                                                                                    
Investments in real estate, at cost   ......   $  284,765      $ 202,443                               
Total assets  ..............................      262,636        165,657                               
Total debt .................................      116,069        117,412                               
Minority interest   ........................       15,672            540                               
Shareholders' equity   .....................      124,089         40,899                               
Other Data:                                                                                            
Cash flows from operating activities  ......           (3)        15,219                               
Cash flows from investing activities  ......           (3)         7,749                               
Cash flows from financing activities  ......           (3)       (22,599)                              
Funds from operations (4) ..................       29,171         19,660                               
EBITDA (5) .................................       48,719         35,169                               
Total leasable square footage of                                                                       
 retail properties (at end of period) ......    5,968,000      4,470,000                               
Total multifamily units (at end of                                                                     
period) ....................................        7,236          7,236                               
Number of properties (at end of                                                                        
period):                                                                                               
 Retail ....................................           17             15                               
 Multifamily  ..............................           19             19                               
Percentage leased (at end of period):                                                                  
 Retail ....................................           89%            87%                              
 Multifamily  ..............................           97%            97%                              


                                                         For the Fiscal Years Ended August 31,         
                                             ----------------------------------------------------------
                                                                      Historical                       
                                             ----------------------------------------------------------
                                                1996            1995           1994           1993     
                                             -------------  -------------  -------------  -------------
                                                     (amounts in thousands, except per share data)     
                                                                                                       
Balance Sheet Data                                                                                     
(at end of period):                                                                                    
Investments in real estate, at cost   ...... $ 198,542      $ 195,929      $ 154,281      $ 112,262    
Total assets  ..............................   177,725        181,336        142,495        107,854    
Total debt .................................   124,148        122,518         80,155         51,929    
Minority interest   ........................       542            528            408            331    
Shareholders' equity   .....................    46,505         51,771         56,748         51,852    
Other Data:                                                                                            
Cash flows from operating activities  ......    15,090         16,672         15,909         13,034    
Cash flows from investing activities  ......       933        (40,082)       (18,524)       (38,683)   
Cash flows from financing activities  ......   (16,091)        22,356          3,305         25,913    
Funds from operations (4) ..................    18,628         18,963         16,417         16,870    
EBITDA (5) .................................    34,423         33,936         24,854         27,161    
Total leasable square footage of                                                                       
 retail properties (at end of period) ...... 4,806,000      4,866,000      4,798,000      5,527,000    
Total multifamily units (at end of                                                                     
period) ....................................     7,236          7,337          6,815          6,107    
Number of properties (at end of                                                                        
period):                                                                                               
 Retail ....................................        18             18             19             22    
 Multifamily  ..............................        19             20             19             17    
Percentage leased (at end of period):                                                                  
 Retail ....................................        90%            92%            90%            90%   
 Multifamily  ..............................        95%            96%            95%            97%   

------------                                                                    
(1) See Notes to Management's Assumptions to Unaudited Pro Forma Consolidating  
Balance Sheet and Consolidating Income Statement contained elsewhere    
herein.                                                                 
(2) Weighted average number of Shares outstanding excludes Shares issuable upon 
conversion of outstanding OP Units and includes the dilutive effect of  
outstanding options. Income allocable to holders of OP Units is included
in minority interest.                                                   
(3) Pro forma information relating to cash flows from operating, investing and  
financing activities has not been included because the Company believes 
that the information would not be meaningful due to the number of       
assumptions required in order to calculate such information.            
(4) The White Paper on Funds from Operations approved by the Board of Governors 
  of the National Association of Real Estate Investment Trusts ("NAREIT") in
 March 1995 defines Funds from Operations as net income (loss) computed in
accordance with generally accepted accounting principles ("GAAP"),      
excluding gains (or losses) from debt restructuring and sales of        
properties, plus real estate related depreciation and amortization and  
 after adjustments for unconsolidated partnerships and joint ventures. The
Company believes that Funds from Operations is helpful to investors as a
measure of the performance of an equity REIT because, along with cash   
flows from operating activities, financing activities, and investing    
  activities, it provides investors with an indication of the ability of the
Company to incur and service debt, to make capital expenditures and to  
fund other cash needs. The Company computes Funds from Operations in    
accordance with standards established by NAREIT 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.   
Funds from Operations does not represent cash generated from operating  
activities in accordance with GAAP and should not be considered as an   
alternative to net income (determined in accordance with GAAP) as an    
indication of the Company's financial performance or 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 to fund
the Company's cash needs, including its ability to make cash            
distributions.                                                          
(5) EBITDA is defined as operating income before interest expense, income       
taxes, depreciation and amortization. The Company believes EBITDA is    
useful to investors as an indicator of the Company's ability to service 
  debt and pay cash distributions. EBITDA, as calculated by the Company, may
not be comparable to EBITDA reported by other REITs that do not define  
 EBITDA exactly as the Company defines the term. EBITDA does not represent
cash generated from operating activities determined in accordance with  
  GAAP and should not be considered as an alternative to operating income or
net income determined in accordance with GAAP as an indicator of        
performance or as an alternative to cash flows from operating activities
as an indicator of liquidity.                                           

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THE COMPANY 

General                                                                         

   The Company is a fully integrated real estate operating company active in
acquiring, developing, redeveloping, managing and leasing retail and            
multifamily properties. Founded in 1960, the Company is one of the 15 largest   
publicly held operators of retail properties in the United States (in terms of  
square feet owned and/or managed). On September 30, 1997, the Company acquired  
The Rubin Organization, Inc., a commercial property development and management  
firm, and certain related real estate interests.                                

The Company's portfolio includes interests in 17 shopping centers     
containing an aggregate of approximately 6.0 million square feet and interests  
in 19 multifamily properties containing an aggregate of 7,236 units.            
Substantially all of the Company's properties are located in the Eastern United 
States, with concentrations in the Mid-Atlantic states and in Florida. The      
Company also provides management, leasing and/or development services for 49    
retail properties containing approximately 19.2 million square feet and 11      
office buildings containing approximately 4.0 million square feet for           
affiliated and third-party property owners.                                     

  As used herein, unless the context indicates otherwise, the term "PREIT"
means Pennsylvania Real Estate Investment Trust and the term "TRO" means The    
Rubin Organization, Inc. (now known as PREIT-RUBIN), in each case prior to the  
date of the TRO Transaction.                                                    

Background                                                                      

   PREIT. PREIT was organized in 1960 as one of the first publicly held real
estate investment trusts in the United States. Prior to the TRO Transaction,    
PREIT had historically maintained a limited management staff and relied upon    
its joint venture partners to operate its retail properties. Over the past      
several years, PREIT sought a strategic combination with a real estate          
operating company in order to improve its growth prospects and increase its     
appeal to equity investors. To that end, PREIT identified and evaluated several 
potential transactions, culminating in the TRO Transaction in September 1997.   

TRO. Richard I. Rubin and Co., Inc., the predecessor of The Rubin     
Organization, Inc., was founded in Philadelphia in 1946 by Richard I. Rubin as  
a retail leasing firm. During the 30 years after its organization, the firm     
expanded its business into the development and management of commercial and     
multifamily properties. In the 1970's, Richard I. Rubin's son, Ronald Rubin,    
directed the firm toward larger projects, including enclosed malls and office   
buildings. By the 1980's, Richard I. Rubin and Co., Inc. had become well known  
for its major development projects in the Delaware Valley, such as Christiana   
Mall in Newark, Delaware, and the Mellon Bank Center and the historic           
renovation of the Bellevue Stratford Hotel in Philadelphia, Pennsylvania.       

    In 1992, Richard I. Rubin and Co., Inc. combined its business with Strouse
Greenberg and Co., Inc., a Philadelphia-based developer and manager of          
commercial properties, to form TRO. The combination with Strouse Greenberg      
significantly increased TRO's presence in the commercial property markets and   
positioned TRO to provide real estate services to a broader range of clients    
and properties in the retail, office, residential and hotel sectors. TRO's      
retail property business became the largest and best known segment of the       
business, with TRO becoming one of the 25 largest retail property managers in   
the United States (in terms of square feet managed) prior to its acquisition by 
PREIT.                                                                          

The TRO Transaction                                                             

On September 30, 1997, PREIT and TRO completed the TRO Transaction,   
pursuant to which:                                                    

o PREIT capitalized the Operating Partnership by transferring to it       
substantially all of its assets, or the beneficial interests therein, 
subject to its liabilities.                                           

o The Operating Partnership acquired all of the non-voting common shares, 
   constituting 95% of the economic interest in TRO, in exchange for 200,000
Class A OP Units and the obligation to issue up to 800,000 additional 
 Class A OP Units over the next five years, according to a formula based
    upon the Company's per Share growth in adjusted funds from operations (see
" --  Acquisition of TRO and Related Property Interests").            

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 o The Operating Partnership acquired the interests of certain affiliates of
TRO (the "TRO Affiliates") in: The Court at Oxford Valley, Langhorne, 
Pennsylvania; Magnolia Mall, Florence, South Carolina; North Dartmouth
  Mall, North Dartmouth, Massachusetts; and Springfield Park, Springfield,
Pennsylvania.                                                         

o The Operating Partnership agreed to acquire the interests of certain TRO
Affiliates in: Hillview Shopping Center, Cherry Hill, New Jersey; and 
Northeast Tower Center, Philadelphia, Pennsylvania.                   

o The Operating Partnership acquired the development rights of certain TRO
 Affiliates, subject to related obligations, in: Christiana Power Center
Phases I & II, Newark, Delaware; Red Rose Commons, Lancaster,         
 Pennsylvania; and Blue Route Metroplex, Plymouth Meeting, Pennsylvania.

o The Operating Partnership obtained rights of first refusal with respect 
 to the interests of certain TRO Affiliates in: Christiana Mall, Newark,
Delaware; Cumberland Mall, Vineland, New Jersey; and Fairfield Mall,  
Chicopee, Massachusetts.                                              

o Ronald Rubin was elected chief executive officer of the Company, Edward 
A. Glickman was elected chief financial officer and executive vice    
    president of the Company, and George F. Rubin continued in his capacity as
President of PREIT-RUBIN.                                             

o Ronald Rubin, George F. Rubin and Rosemarie B. Greco were elected as    
  trustees of the Company to fill vacancies created by the resignations of
Robert Freedman, Jack Farber and Robert G. Rogers.                    

Acquisition of TRO and Related Property Interests. As part of the TRO 
Transaction, the Company entered into a contribution agreement (the "TRO        
Contribution Agreement") pursuant to which it acquired all of the non-voting    
shares of TRO for 200,000 Class A OP Units and the obligation to issue up to    
800,000 additional Class A OP Units (the "Contingent TRO OP Units") over the    
following five-year period according to a formula based upon the Company's      
adjusted funds from operations ("Adjusted FFO") per Share during such period.   
Adjusted FFO is defined as the Company's consolidated net income for any period 
plus, to the extent deducted in computing such net income: (i) depreciation     
attributable to real property; (ii) certain amortization expenses; (iii) the    
expenses of the TRO Transaction; (iv) losses on the sale of real estate; (v)    
material write-downs on real estate; (vi) material prepayment penalties; and    
(vii) rents currently due in excess of rents reported, less: (i) rental revenue 
reported in excess of amounts currently due; (ii) lease termination fees; and   
(iii) gains on the sale of real estate. For the 12-month periods ending August  
31, 1996 and August 31, 1997, the Company's Adjusted FFO per Share (without     
giving effect to the TRO Transaction) was $2.15 and $2.26, respectively.        

 The TRO Contribution Agreement establishes "hurdle" and "target" levels
set forth below for the Company's Adjusted FFO per Share during specified       
earn-out periods to determine whether, and to what extent, the Contingent TRO   
OP Units will be issued:                                                        

                                                                [Download Table]

                                                     Base          Maximum    
                                  Adjusted        Contingent      Contingent  
                               FFO Per Share     TRO OP Units    TRO OP Units 
                             ------------------  --------------  -------------
Earn-Out Period              Hurdle     Target                                
---------------------------  --------   -------                               
                                                                              
10-1-97 to 12-31-97  ......  $0.58      $0.65         5,000          32,500   
1-1-98 to 12-31-98   ......  $2.40      $2.66        20,000         130,000   
1-1-99 to 12-31-99   ......  $2.53      $2.81        57,500         167,500   
1-1-00 to 12-31-00   ......  $2.65      $2.94        57,500         167,500   
1-1-01 to 12-31-01   ......  $2.83      $3.14        57,500         167,500   
1-1-02 to 9-30-02 .........  $2.19      $2.43        52,500         135,000   
                                                     ------         -------   
   Total ..................                         250,000         800,000   
                                                    =======         =======   

In general: (i) if the "hurdle" level for any earn-out period is not met, no    
Contingent TRO OP Units will be issued in such period; (ii) if the "target"     
level for any earn-out period is met, the maximum number of Contingent TRO OP   
Units for such period will be issued; and (iii) if Adjusted FFO per Share for   
any earn-out period is between the "hurdle" and the "target" levels, the        
Operating Partnership will issue the base Contingent TRO OP Units for such      
period plus a pro rata number of Contingent TRO OP Units based upon the amount  
by which Adjusted FFO per Share exceeds the "hurdle" but was less than the      
"target." To the                                                                

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extent the "target" levels of Adjusted FFO per Share are exceeded, the earn-out 
also provides the TRO principals with the ability to carry back to prior        
periods and to carry forward into the next period amounts in excess of the      
target in the current period, thereby earning additional Contingent TRO OP      
Units (but never more than the maximum amount).                                 

The TRO Contribution Agreement provides that in the event of a share  
split, share dividend or other similar change in the capitalization of the      
Company, the "hurdle" and "target" levels will be proportionately adjusted. The 
TRO Contribution Agreement also provides for the creation of a special          
committee of three independent Trustees to consider, among other matters,       
whether other equitable adjustments, either upward or downward, should be       
effected in the "hurdle" and "target" levels to reflect: (i) the incurrence by  
the Company of non-project specific indebtedness or the raising by the Company  
of equity capital; (ii) any breach by the Company of its representations or     
warranties in the TRO Contribution Agreement which may adversely affect         
Adjusted FFO; and (iii) the effect which any adverse judgment in litigation     
pending against the Company may have on Adjusted FFO. Due to the effect that    
the Offering will have on the TRO Class A Unitholders, the Company has been     
advised that, following the Offering, the TRO Affiliates will request that the  
special committee make downward adjustments in the "hurdle" and "target"        
levels. The special committee will review this request but is under no          
obligation to make modifications to the "hurdle" and "target" levels. If the    
levels are modified, the Company believes that the modifications will not have  
a material effect on the Company's funds from operations per Share.             

For provisions of the TRO Transaction relating to the valuation of the
Acquisition Properties, see "The Properties -- The Acquisition Properties." For 
provisions of the TRO Transaction relating to the valuation of the interests in 
the four Development Properties acquired in the TRO Transaction, see "The       
Properties -- The Development Properties."                                      

    The Goldenberg Letter Agreement. On September 30, 1997, as part of the TRO
Transaction, the Company acquired from TRO its rights and obligations           
(including those of certain TRO Affiliates) under a letter agreement (the       
"Goldenberg Letter Agreement") with The Goldenberg Group, a regional developer  
and manager of retail properties. The Goldenberg Letter Agreement contemplates  
the development of six power centers, three by The Goldenberg Group and three   
by the Company. The Goldenberg Letter Agreement provides that the entity        
developing each respective property will have the right to manage such          
property, but that each of the six properties will be 50% owned by The          
Goldenberg Group and 50% owned by the Company. The Company is obligated under   
the Goldenberg Letter Agreement to provide a $5.0 million revolving capital     
facility to fund pre-development expenses on The Goldenberg Group's three       
projects. In addition, the Company must fund all such expenses on the Company's 
three projects.                                                                 

The Court at Oxford Valley, one of the Existing Retail Properties, was
developed by The Goldenberg Group under the Goldenberg Letter Agreement, and    
Hillview Shopping Center, one of the Acquisition Properties, was developed by   
TRO under the Goldenberg Letter Agreement. The Goldenberg Group's remaining two 
development properties under the Goldenberg Letter Agreement are Red Rose       
Commons and Blue Route Metroplex.                                               

For each of the projects that The Goldenberg Group completes under The
Goldenberg Letter Agreement, the Company must offer The Goldenberg Group a 50%  
equity interest in a project which the Company will develop. If the Company     
fails to offer The Goldenberg Group such projects meeting certain criteria      
within 18 months of the closing of a construction loan on each of Red Rose      
Commons (which occurred on November 28, 1997) and Blue Route Metroplex (which   
is anticipated to occur in the next 24 months), then the interest of the        
Company in Red Rose Commons and/or Blue Route Metroplex, as the case may be,    
will be reduced from 50% to 25%. There can be no assurance that the Company     
will meet its obligations under The Goldenberg Letter Agreement and, therefore, 
that the Company's interest in Red Rose Commons and/or Blue Route Metroplex     
will not be reduced from 50% to 25%.                                            

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Right of First Refusal Properties. As part of the TRO Transaction, the
Company obtained rights of first refusal to purchase the interests of certain   
TRO Affiliates in the three retail properties listed below.                     

Right of First Refusal Properties 

                                                                [Download Table]

                                                         Percentage Interest 
                                           Total        Subject to the Right 
Property and Location                   Square Feet       of First Refusal   
-------------------------------------   -------------   ---------------------
                                                                             
Christiana Mall, Newark, DE .........     1,100,000               (1)        
Cumberland Mall, Vineland, NJ  ......       463,000             50%          
Fairfield Mall, Chicopee, MA   ......       418,000             50%          
                                          ---------                          
   Total  ...........................     1,981,000                          
                                          =========                          

------------                                                                    
(1) The interest subject to the right of first refusal is subject to adjustment 
in connection with the refinancing of the participating mortgage which  
currently encumbers this property.                                      

Benefits to the Company of the TRO Transaction                                  

The Company believes that the benefits of the TRO Transaction include:

o Enhanced Operating Performance of the Existing Retail Properties. The   
Company intends to apply TRO's experience in managing, leasing and    
  redeveloping retail properties to maximize the internal growth potential
of the Existing Retail Properties.                                    

o Acquisition Opportunities. The Company believes that TRO's extensive    
 relationships and expertise in the real estate industry, as well as its
third-party retail property management business, should result in a   
 significant increase in the number of potential acquisitions identified
and reviewed by the Company.                                          

o Development Opportunities. The Company anticipates that TRO's experience
and resources in developing retail properties should lead to continued
opportunities to develop new properties.                              

 o Capital Access. By acquiring TRO, the Company has significantly increased
its size and management depth, which the Company believes will make it
more attractive to equity investors.                                  

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Structure of the Company                                                        

The Company conducts substantially all of its activities through the  
Operating Partnership, of which the Company is the sole general partner. Set    
forth below is a diagram of the structure of the Company following the          
completion of the Offering:                                                     

      [GRAPHIC OMITTED] [The graphic sets forth the following information:
(i) the Company is a 1% general partner of the Operating Partnership and 100%   
owner of PREIT Property Trust; (ii) the minority limited partners owns a 4.8%   
limited partner interest in the Operating Partnership; (iii) PREIT Property     
Trust owns a 94.1% limited partner interest in the Operating Partnership; (iv)  
the Operating Partnership owns a 95% non-voting interest in PREIT-RUBIN, Inc.;  
(v) an employee stock bonus plan owns a 5% voting interest in PREIT-RUBIN, Inc. 
and (vi) the Operating Partnership has interests in 45 properties.]             

------------                                                                    
(1) The interests of the Operating Partnership in these properties range from   
25% to 100% (see "The Properties").                                             

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Competitive Advantages                                                          

   The Company believes it enjoys certain competitive advantages in pursuing
its business and growth strategies.                                             

Fully Integrated Organization. The Company is a fully integrated real 
estate operating company with extensive experience in acquiring, developing,    
redeveloping, managing and leasing retail and multifamily properties. The       
Company's 21 most senior corporate and property-level employees have an average 
of 23 years of experience in the commercial and residential real estate         
industry. The Company's diverse real estate capabilities allow it to pursue a   
broad range of growth strategies in its primary markets, and to maintain the    
flexibility to accommodate tenants' varying space needs through expansion,      
redevelopment and development activities.                                       

Focus on Value-Added Acquisition and Repositioning Strategies. The    
Company's acquisition strategy focuses primarily on the identification of       
underperforming retail and multifamily properties which the Company believes    
have the potential for improved cash flow and value appreciation. The Company   
seeks to achieve such improved performance through a number of means,           
including:                                                                      

  o Making strategic capital improvements designed to directly benefit the
property's rental rate structure.                                               

o For retail properties, using the Company's extensive relationships with 
 national and regional tenants to improve the property's occupancy level
and the quality of its tenants.                                       

o Applying the Company's management skills and purchasing power to reduce 
the property's operating expense ratios through economies of scale and
operating efficiencies.                                               

o Utilizing the Company's sophisticated management information systems to 
  closely monitor the property's operations and leasing status in order to
    gauge the effectiveness of its turnaround strategies on a real-time basis.

   With respect to its strategy of acquiring underperforming properties, the
Company attempts to differentiate between properties whose underperformance is  
a function of factors which the Company can improve (such as their tenant mix   
or physical condition) from those whose underperformance is driven by factors   
beyond the Company's control (such as their location). In its analysis of       
acquisition candidates, the Company applies its proprietary market research     
techniques, including the computerized analysis of demographic trends, to       
assess local market conditions.                                                 

   Development Expertise. The Company believes that the depth and experience
of its development group is an integral factor in executing its business        
strategy. The Company applies its development skills to both the development of 
new assets as well as the repositioning of underperforming properties. During   
the last 20 years, the development group has completed over $1.0 billion of     
development and redevelopment projects.                                         

The Company's property development initiatives currently focus on the 
construction of power center retail properties in the Company's core            
Mid-Atlantic markets. The Company currently has interests in seven retail       
properties containing approximately 3.1 million square feet in various stages   
of development, including four properties containing approximately 1.6 million  
square feet under construction. The Development Properties represent built-in   
growth potential which the Company believes will contribute to funds from       
operations beginning in 1998.                                                   

Benefits of Size. As one of the 15 largest publicly held operators of 
retail properties in the United States, the Company believes it has certain     
strategic and financial advantages over smaller operators. These advantages     
include: (i) strong relationships with tenants, facilitating the leasing of     
retail space in its properties; (ii) economies of scale in the operation of its 
properties; (iii) the enhanced ability to attract and retain qualified          
employees; and (iv) improved liquidity and access to capital.                   

o Strong Tenant Relationships. The Company manages and leases retail      
properties, including 49 shopping centers located in 19 states, for   
   affiliated and third-party owners. The breadth of the Company's owned and
    third-party managed portfolio generally provides it with extensive leasing
relationships with numerous national and regional tenants.            

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    As part of its ongoing relationships with such tenants, the Company is
often aware of tenant space needs and preferences early in the site   
  selection process, and is able to leverage this knowledge into the rapid
leasing of the properties as well as to identify new development      
opportunities. In addition, by having multiple locations to offer to  
    prospective tenants within a targeted market area, the Company believes it
is more likely to attract such tenants to its properties. The Company 
believes that these relationships lead to enhanced performance at the 
Company's owned properties, as well as additional tenant-driven       
acquisition and development opportunities.                            

 o Economies of Scale. The size of the Company's owned and managed portfolio
provides it with economies of scale in the operation and management of
    properties, directly benefiting the performance of the Company's owned and
 managed properties. Through the Company's Buying Economies Program (the
"BEP"), the Company negotiates national purchasing contracts with key 
 product and service vendors for items such as telephone service, paint,
floor coverings, landscaping and supplies. In this manner, the Company
   capitalizes upon its purchasing power to improve operating margins at its
  owned and managed properties. The success of the BEP is reflected by the
 fact that the Company is able to sell participation in the BEP to third
parties seeking to share in the benefits of the Company's purchasing  
power.                                                                

  An additional example of economies of scale is the Company's RubinEdge
program. Through this program, the Company negotiates bulk discounts on 
 products and services offered by merchants in its local market areas, and
passes those discounts along to tenants as a value-added benefit for    
locating in a property managed by the Company.                          

o Ability to Attract and Retain Qualified Employees. As a major owner and 
    operator of retail and multifamily properties within its markets, and as a
   publicly traded company, the Company believes that its ability to attract
and retain key employees is enhanced. Employees are attracted to the  
  Company by its reputation, its extensive presence within its markets and
    the potential for advancement opportunities in a growing organization. The
 Company's 21 most senior corporate and property-level employees have an
   average of 23 years experience in the real estate industry and an average
of 15 years with the Company and its predecessors.                    

o Improved Liquidity and Access to Capital. As a public company, the      
  Company believes that it has access to a broader and more cost efficient
range of capital sources than many private real estate companies and  
  opportunity funds with which the Company competes for acquisitions. Upon
completion of the Offering, the Company will have approximately $105.4
   million available under its Credit Facility, which the Company intends to
use to fund its growth strategies.                                    

   Strategic Information Systems. The Company has developed state-of-the-art
management information systems which it utilizes to monitor the performance of  
its existing properties and to strategically target markets for acquisition and 
development activities. The Company's information systems are designed to       
support an on-site management and accounting system at its properties. In       
addition, the Company's high-speed wide area network links each managed         
property with the Company's regional offices and headquarters on a real-time    
basis.                                                                          

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BUSINESS AND GROWTH STRATEGIES  

Business Strategies                                                             

  The Company's primary business objective is to maximize the total return
to its shareholders through growth in cash flow and appreciation in the value   
of its assets. The Company plans to achieve this objective by employing the     
operating strategies and capitalizing upon the internal and external growth     
opportunities described below.                                                  

Operating Strategies and Organizational Strengths                               

Fully Integrated Real Estate Operating Company. The Company is a fully
integrated real estate company active in acquiring, developing, redeveloping,   
managing and leasing retail and multifamily properties. The Company believes    
that in order to remain competitive in today's real estate market, it must be   
able both to identify growth opportunities and capitalize upon those            
opportunities with internal personnel and resources. In its acquisition of The  
Rubin Organization, the Company gained access to the real estate operating      
skills and capabilities which it required to take a more proactive stance       
towards the management of its existing assets, as well as to internally manage  
properties which it seeks to acquire and develop. In addition to leasing and    
property management, the Company's personnel also perform a number of staff and 
administrative functions, including financial services, lease administration,   
legal services, human resources, management information systems, marketing,     
purchasing and risk management.                                                 

 Development Capabilities. The Company's development group is staffed by
eight full-time development professionals who have significant experience in    
the development of retail, multifamily and other commercial properties. The     
development group is headed by Leonard B. Shore, Executive Vice President, who  
has over 42 years of experience in the development of commercial properties.    
Over The Rubin Organization's 50-year history, it and its predecessors have     
been responsible for major development projects such as Christiana Mall in      
Newark, Delaware; Willow Grove Park Mall in Willow Grove, Pennsylvania;         
Cumberland Mall in Vineland, New Jersey; Newburgh Mall in Newburgh, New York;   
and Mellon Bank Center, and historic redevelopments such as The Bellevue and    
One Penn Center at Suburban Station, all in Philadelphia, Pennsylvania.         

Proactive Leasing. The Company has implemented an aggressive leasing  
strategy based upon its knowledge of its markets and tenant needs. The key to   
the Company's strategic approach to retail leasing is its "Leasing Game Plan,"  
an annual review held for each managed property in early fall. In the Leasing   
Game Plan process, the Company's property management and leasing professionals  
meet to develop leasing strategies and establish performance goals for the      
properties for the coming year. This process also serves as the basis of the    
property budgeting process for the coming year.                                 

The Company's retail leasing and development groups have 13 leasing   
professionals with offices in Philadelphia and Chicago, headed by Pat A. Berns, 
Executive Vice President. Ms. Berns has over 18 years of experience in the      
leasing of retail properties, and the other professionals in the group have an  
average of eight years of experience. Leasing agents are given responsibility   
for both specific properties and specific tenants across the entire portfolio.  
The group is compensated on a team basis depending on the total commission      
revenue generated by the group. In 1996, the Company executed 156 tenant leases 
for over 1.4 million square feet in its managed portfolio. Year to date, the    
Company has executed 240 tenant leases for approximately 2.5 million square     
feet in its managed portfolio.                                                  

Examples of the Company's major tenant relationships include:         

o In 1996, the Company leased 13 sites to Kohl's, a Wisconsin-based       
retailer seeking to rapidly expand into the Delaware Valley. These 13 
properties were part of a joint venture between the Company and Kimco 
Realty Corp. to re-lease 26 properties leased or owned by the former  
Clover value retailing subsidiary of Strawbridge & Clothier.          

o During the last three years, the Company has facilitated the acquisition
 and/or development of eight Delaware Valley sites on behalf of The Home
  Depot. In these site acquisitions, the Company acted as developer, owner
and/or broker, depending on the situation and the needs of the tenant.

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o The Company recently built the first Target store in the Philadelphia   
  metropolitan area at the newly constructed Hillview Shopping Center. The
Company is also currently involved in two other Target development    
projects in the Delaware Valley.                                      

  Specialty Leasing.  In addition to its traditional leasing services, the
Company has been an innovator in the development and application of specialty   
leasing. Specialty leasing consists of utilizing all available space not        
currently leased to long-term tenants. The Company's Specialty Leasing Group is 
responsible for the kiosk space within enclosed malls and shopping centers      
which it manages, as well as the placement of temporary retail tenants into     
vacant space in enclosed malls and shopping centers. The Company has found that 
the creative use of specialty leasing can be an important source of incremental 
revenue in underperforming shopping centers as well as a major enhancement to   
the shopping atmosphere in an underleased mall. The Specialty Leasing Group is  
headed by Elaine Berger, who has substantial experience in bringing specialty   
leasing into traditional retail properties.                                     

   Intensive Property Management. Retail and multifamily property management
services are provided by skilled property management professionals who are      
organized on a regional basis. Retail property management is headed by William  
B. Berlin, Vice President, who has over 20 years of experience in the           
management of retail properties. Reporting to Mr. Berlin are six regional       
managers, five of whom are responsible for the enclosed malls in particular     
geographic areas and one of whom is responsible for the shopping centers and    
smaller properties. Each regional manager is, in turn, responsible for between  
five and ten shopping centers. All of the Company's managed enclosed malls are  
managed by an experienced on-site manager; all other retail properties are      
managed by a centralized group. The Company requires that all of its property   
managers have earned or be in the process of earning the Certified Shopping     
Center Manager designation from the International Council of Shopping Centers.  

    The Company's multifamily group manages ten of its multifamily communities
and provides asset management for the remaining nine. The Company's hands-on    
management practices emphasize resident services and resident retention. The    
Company maintains its primary multifamily management office at its headquarters 
in Fort Washington, Pennsylvania, and a regional management office in Boca      
Raton, Florida. The Company's multifamily group is headed by Raymond J. Trost,  
Vice President, who has 20 years of experience in multifamily property          
management and has earned the Certified Property Manager and Accredited         
Resident Manager designations from the Institute of Real Estate Management.     

   Marketing. The Company's managed enclosed malls are staffed by a group of
on-site marketing professionals whose goal is to promote the properties with    
consumers in their local market areas. Print and media advertising, as well as  
special events and services, are used to draw shoppers to the properties. All   
of the Company's regional marketing directors hold the Certified Marketing      
Director designation from the International Council of Shopping Centers.        

   The creation of marketing materials and programs for retail properties is
centrally coordinated by the Portfolio Marketing Group (the "PMG"), which is an 
advertising agency providing promotional and marketing services to the managed  
properties as well as other third-party clients. The PMG is headed by Cheryl    
Dougherty, who has over 15 years of experience in shopping center marketing,    
and is staffed by a team of 12 marketing professionals. The PMG creates and     
produces media and print work, catalogs and associated collateral materials and 
allows the Company to capture the profit margin on advertising expenditures.    

Marketing of the Company's multifamily properties is performed by     
experienced on-site leasing teams under the direction of one of the Company's   
regional managers. Occupancy in the Company's multifamily portfolio improved    
from 95% at August 31, 1996 to 97% at August 31, 1997. In order to improve      
occupancy, the Company offers its Preferred Employer Program, which targets     
major area employers and provides incentives to their employees, such as        
reduced application fees and security deposits and flexible lease terms, for    
locating in the Company's properties. Other marketing tools utilized by the     
Company include resident referral programs, internet-based advertising services 
and local apartment rental guides.                                              

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Growth Strategies                                                               

The Company seeks to increase cash flow by intensively managing its   
properties and selectively acquiring, repositioning and developing additional   
retail and multifamily properties. The Company also intends to continue to      
pursue strategic acquisitions of other real estate companies and portfolios,    
such as the TRO Transaction, which complement its existing portfolio and        
management capabilities.                                                        

    Internal Growth Strategies. The Company seeks to increase cash flow at its
properties by achieving rent increases while maintaining high occupancy levels  
and aggressively managing operating expenses. For the four years ended August   
31, 1997, the compounded annual growth rate in property-level earnings before   
interest, taxes, depreciation and amortization ("EBITDA") for the Company's     
multifamily and retail properties was 5.0% and 3.2%, respectively, on a same    
store basis. Same store performance data is calculated for the 16 multifamily   
properties and 12 shopping centers owned by the Company throughout the          
four-year period.                                                               

 The Company believes that by applying its management and leasing skills
and experience it can enhance the operating performance of the existing         
portfolio assets in the following ways:                                         

o Increasing Rents. A key aspect of the Company's strategy is to increase 
  base rents to market levels as leases expire. As of August 31, 1997, the
   Multifamily Properties had an average rent of $595 per month, compared to
   Company-quoted rents for new leases of $659 per month at such properties.
For enclosed mall leases expiring in 1998 in the Existing Retail      
 Properties, the weighted average annual rent was $13.84 per square foot
compared to Company-quoted weighted average rents of $14.18 per square
foot. These figures exclude Gateway Shopping Center, which was sold on
December 17, 1997, and Whitehall Mall, which is being redeveloped to a
revised configuration.                                                

o Optimizing Tenant Mix. The Company seeks to optimize the tenant mix in  
  its retail properties in order to increase their long-term drawing power
and tenant sales, thereby contributing to the Company's ability to    
maintain and increase rental rates. The primary goal of the Company's 
   retail leasing efforts is to obtain the most productive tenants available
in a given trade area, and to maintain the flexibility to adapt to    
changing trends in consumer tastes and retail demand.                 

o Maintaining High Occupancy Rates. The Company believes that it has been 
  successful in attracting, expanding and retaining retail and multifamily
tenants by emphasizing tenant satisfaction and retention. The Company 
 strives to be responsive to the needs of individual tenants through its
    on-site professional management and maintenance staff and, with respect to
    retail properties, by providing tenants with flexible leasing alternatives
to accommodate their changing space requirements.                     

   The Company's success in maintaining and improving occupancy rates is
    demonstrated, in part, by the Company's consistently high occupancy levels
  and by the number of existing tenants which have renewed their leases at
the Company's properties. As of August 31, 1997, the average occupancy
  rate for the Company's multifamily and retail portfolio was 97% and 87%,
respectively.                                                         

o Internalizing Outside Property Management and Leasing. Following the TRO
Transaction, the Company has the added opportunity to enhance property
cash flow by bringing in-house the property management and leasing    
function for certain of its retail properties now managed by third    
   parties. In these instances, the Company believes that it will be able to
  internalize the profit margin implicit in these management contracts, as
   well as more effectively lower operating expenses at such properties as a
   result of the economies of scale discussed above. In the first quarter of
    1998, the Company intends to assume the management of four of its Existing
Retail Properties, containing 694,000 square feet, which are currently
 managed by third parties. With respect to these properties, the Company
 paid third-party property managers approximately $175,000 in management
fees during the year ended August 31, 1997.                           

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Acquisition Strategies                                                          

The Company's acquisition strategies focus on the purchase of middle  
market retail properties and multifamily properties which the Company believes  
will benefit from more proactive management and leasing, selective re-tenanting 
and strategic capital improvements. The Company also intends to continue to     
take advantage of its third-party management business to evaluate and           
selectively acquire properties managed for its third-party clients.             

The Company intends to execute its strategy in the following ways:    

o Acquisition of Middle Market Shopping Centers. The Company's strategy   
    includes the acquisition of well-located enclosed shopping malls in middle
income markets (trade areas in which average annual household income  
    generally falls between $30,000 and $50,000). In some cases, these centers
may be older properties which remain competitive from a functional and
   location standpoint, but which typically have lower rental rates than the
newest properties in their markets and which may require capital      
improvements and re-tenanting.                                        

   The Company intends to target primary trade areas with populations in
   excess of 150,000 in which 20% or more of the population is under the age
of 19. The Company seeks to identify markets which exhibit strong     
potential demand for branded or "fashion" products, but which have few
  existing retail properties geared toward satisfying such demand. In this
   manner, the Company uses unsatisfied demand for branded products to drive
the re-tenanting and repositioning of its acquired shopping centers,  
adding a fashion-oriented anchor tenant and/or upgrading the in-line  
tenant mix.                                                           

     The Company believes that competition to acquire middle market shopping
 centers in its targeted markets is significantly more limited than that
  for larger, "trophy" shopping centers. As a result, the Company believes
it can acquire shopping centers which meet its investment criteria at 
attractive capitalization rates and at a discount to replacement cost.

   For example, the Company recently acquired Magnolia Mall in Florence,
South Carolina from an affiliate of Equity Properties and Development 
    Limited Partnership ("EPDLP"). The property is located at the intersection
 of Interstates 95 and 20 and is the only regional mall within a 70-mile
  radius. The county in which the mall is located contains 276,000 people,
    125,000 of whom are located within 15 miles of the property. The Company's
strategy for Magnolia Mall is to take advantage of what it believes is
unsatisfied demand for branded products in the trade area by upgrading
    merchant quality and replacing underperforming retailers with tenants such
as Gap and GapKids (scheduled to open February 1998). Further, an     
   opportunity exists to add an additional fashion-oriented anchor tenant to
the property. Magnolia Mall was purchased for a gross purchase price  
(including transaction costs) of $46.4 million, which represents an   
   initial capitalization rate of approximately 9.6% (calculated by dividing
 EBITDA for the nine months ended September 30, 1997, annualized, by the
gross purchase price).                                                

o Acquisition of Third-Party Managed Properties. The Company believes that
   the opportunity exists to continue to acquire certain properties which it
   currently manages on behalf of various third parties, including the three
   malls for which it holds a right of first refusal from TRO Affiliates. As
    the property manager and leasing agent for such properties, the Company is
in an advantageous position to evaluate the investment merits of such 
properties. Moreover, the Company believes it will be in a position to
acquire managed properties in negotiated transactions, as opposed to  
bidding processes.                                                    

o Corporate and Portfolio Acquisitions. The Company's growth strategy will
continue to include the evaluation of strategic acquisitions and/or   
business combinations with other real estate companies and portfolio  
   owners. The Company believes that the real estate industry is in a period
  of sustained consolidation, and that opportunities will arise to acquire
  other real estate companies. In this regard, the Company intends to seek
acquisition candidates with portfolios which complement the Company's 
    owned portfolio and where the Company's management skills and those of the
 target may be combined and then applied to enhance property values. The
   Company believes that the TRO Transaction and TRO's prior acquisitions of
Strouse Greenberg & Co., Inc. and the management business of EPDLP    
demonstrate the Company's ability to successfully identify, close and 
integrate strategic corporate and portfolio transactions.             

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o Acquisition of "Class B" Multifamily Properties. During the period      
  1992-1994, the Company's acquisition strategy focused on the purchase of
"Class B" multifamily properties in the Mid-Atlantic region and in    
  Florida. The Company's market research revealed the following conditions
existed at the time: (i) a number of markets were experiencing above  
average population and job growth as the economy was emerging from the
  recession of the early 1990's; (ii) new supply of multifamily properties
was minimal during the recession; (iii) multifamily properties were   
    available for purchase at significant discounts to their replacement cost;
and (iv) many "Class B" multifamily properties were suffering from    
 deferred maintenance due to their owners' inability to raise additional
capital.                                                              

    As a result, the Company embarked on an acquisition program focused on
 "Class B" apartment properties which could be purchased at discounts to
replacement cost and which could be upgraded through strategic capital
    expenditures aimed at increasing occupancy levels and rental rates. During
the period 1992-1994, the Company acquired eight properties containing
3,544 units (1,834 wholly owned units and 1,710 units through joint   
ventures). The initial total investment of the Company and its joint  
 venture partners in these properties was $130.7 million, or $36,871 per
   unit, including strategic capital improvements made following the initial
  investments. The average ratio of EBITDA to the Company's total purchase
 price (including initial capital expenditures) for these properties for
   the first full year following their purchase was approximately 10.0%. The
Company regularly reviews multifamily acquisition opportunities and   
intends to pursue such acquisitions as market conditions warrant.     

o Operating Partnership Unit Acquisitions. The Company recently formed the
  Operating Partnership. As an umbrella partnership REIT, or "UPREIT," the
Company will have the ability to acquire properties for OP Units and  
thereby may provide sellers with deferral of income taxes that would  
    otherwise be payable in a cash sale. The Company believes that its ability
to offer tax-efficient transactions to property sellers should        
  significantly expand the universe of potential acquisitions available to
the Company, and provides it with a competitive advantage over other  
  potential acquirers who are unable to offer tax-efficient consideration.
 An example of the Company's successful use of OP Units for acquisitions
includes the Company's purchase of Magnolia Mall from an affiliate of 
EPDLP for consideration which included OP Units.                      

Repositioning and Redevelopment Strategies                                      

  The Company's ability to reposition and redevelop retail and multifamily
properties is a core element of its business and growth strategies. The Company 
uses its internal redevelopment experience and resources to create value in     
newly acquired properties, frequently in cases in which the prior owner was     
unable to maximize the property's value due to a lack of managerial or          
financial resources.                                                            

   Given its expertise, the Company has the ability to conduct a broad range
of redevelopment activities designed to significantly improve the property's    
operating performance. The Company has redeveloped a number of properties for   
its own account and for third-party clients, including: Beaver Valley Mall, in  
Monaca, Pennsylvania; Hudson Mall, in Jersey City, New Jersey; Wayne Towne      
Center, in Wayne, New Jersey; Cumberland Mall, in Vineland, New Jersey; and     
most recently Richland Mall, in Quakertown, Pennsylvania.                       

Development of Power Center Retail Properties                                   

The Company's property development strategy currently focuses on the  
construction of retail power centers in its core Mid-Atlantic markets. Power    
centers are typically open-air centers with at least 250,000 square feet, and   
usually include at least three "category killer" and/or value-oriented retail   
anchor tenants. Such anchor tenants typically occupy between 60% and 80% of the 
total square footage in a power center. The tenant mix in a power center is     
designed to draw consumers from up to a 15-mile radius, creating a shopping     
destination. The majority of the Company's power center tenants are national    
and regional retailers with at least 15,000 to 150,000 square feet offering a   
variety of products.                                                            

    The Company's development and site selection strategy is tenant-driven, as
the Company uses its relationships with key power center tenants such as The    
Home Depot, Target and Kohl's to identify sites desirable to such retailers.    
After pre-leasing or pre-selling one or more portions of a targeted site to key 
anchor tenants, the Company is able to aggressively pre-lease the remaining     
space to other desirable retail tenants.                                        

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 The Company has significant experience in the adaptive redevelopment of
existing facilities in infill locations. Recently, the Company's development    
group has completed a number of power center projects on sites which were       
previously underutilized industrial/office locations, including:                

 o Delaware Avenue, Philadelphia, Pennsylvania: a 290,000 square foot center
containing The Home Depot, Wal-Mart and McDonalds located on the      
Philadelphia waterfront.                                              

 o Northeast Tower Center, Philadelphia, Pennsylvania: a 484,000 square foot
  center (of which 121,000 square feet remain to be constructed) including
    The Home Depot, Staples The Office Superstore, PETsMART and The Pep Boys -
Manny, Moe & Jack.                                                    

o Hillview Center, Cherry Hill, New Jersey: a 340,000 square foot center  
including Target and Kohl's.                                            

For a table summarizing certain developments currently in process, see "The     
Properties - The Development Properties."                                       

Third-Party Business                                                            

  The Company provides management, leasing and/or development services for
49 retail properties (containing approximately 19.2 million square feet) for    
affiliated and third-party property owners. The Company's third-party clients   
include institutions such as Aetna Life Insurance Company, The Mutual Life      
Insurance Company of New York, and an affiliate of ERE Yarmouth.                

The Company's largest third-party contract is the strategic alliance  
formed with EPDLP to manage, lease and redevelop 18 retail properties. Each of  
the management agreements is for a term of ten years and is cancelable only     
upon a sale of the property. The Company has acquired two properties from       
affiliates of EPDLP, Magnolia Mall and North Dartmouth Mall, and believes that  
there may be additional opportunities to acquire assets from this portfolio.    

    PREIT-RUBIN's management agreements typically provide for a one-year term,
cancelable upon 30 days' notice, with a fee equal to 3.0% to 5.0% of the        
shopping center's gross revenues. Leasing fees are paid either as-collected or  
on a one-time basis. Development services are provided to third-party clients   
on an hourly basis or a negotiated lump sum basis for the project. See "Risk    
Factors -- Risks of Third-Party Management Business" in the accompanying        
Prospectus.                                                                     

PREIT-RUBIN provides real estate development, management, leasing and 
other services to 28 properties in which Ronald Rubin (the Company's Chief      
Executive Officer) and/or other TRO Affiliates own interests. These 28          
properties consist of: two hotel and mixed use properties; eight office         
buildings; ten retail properties (eight with two or less tenants) which contain 
less than 200,000 square feet in the aggregate; the three retail properties for 
which the TRO Affiliates have granted the Company rights of first refusal (see  
"The Company -- Right of First Refusal Properties"); the two retail properties  
which the Company will acquire pursuant to existing agreements (see "The        
Properties -- Acquisition Properties"); and three parcels of land. The          
interests of Mr. Rubin and/or the TRO Affiliates in these 28 properties range   
between 11% and 81%, and Mr. Rubin and/or the TRO Affiliates generally exercise 
the right to select service providers for all of these properties.              

    The Company determined not to purchase these properties as part of the TRO
Transaction, with the exception of the right of first refusal properties and    
the Acquisition Properties, because of its belief that they are not consistent  
with the Company's investment strategy. All services provided to these 28       
properties are set forth in written agreements which the Company believes are   
no less favorable to the Company than agreements between the Company and        
unaffiliated third parties with respect to similar services. Pursuant to Mr.    
Rubin's employment agreement, Mr. Rubin is required to devote his full working  
time, energy, skill and best efforts to the performance of his duties to the    
Company.                                                                        

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USE OF PROCEEDS 

The net proceeds to the Company from the Offering, after deducting    
underwriting discounts and commissions and the estimated expenses of the        
Offering, are approximately $83.2 million ($95.8 million if the Underwriters'   
over-allotment option is exercised in full). The Company expects to use the net 
proceeds of the Offering as follows: (i) approximately $8.8 million for the     
prepayment of a mortgage loan secured by Cobblestone Apartments in Pompano      
Beach, Florida (the "Cobblestone Mortgage"); and (ii) approximately $74.4       
million for the repayment of amounts outstanding under the Credit Facility.     
Approximately $66.2 million of the indebtedness under the Credit Facility was   
incurred to finance various components of the TRO Transaction, including the    
Company's acquisition of three properties in connection with the TRO            
Transaction (Magnolia Mall, North Dartmouth Mall and Springfield Park), as well 
as to fund certain development expenses incurred in connection with the         
Development Properties. The Company expects to use any remaining net proceeds   
to fund the construction of the Christiana Power Center, Phase I, and for       
general corporate purposes. Pending the application of net proceeds from the    
Offering, the Company will invest such net proceeds in interest-bearing         
accounts and short-term interest-bearing securities in accordance with the      
requirements for qualification as a REIT for federal income tax purposes.       

The Cobblestone Mortgage bears interest at 8.25% and is scheduled to  
mature by its terms on December 1, 2002. The Credit Facility currently bears    
interest at LIBOR plus 1.70% and matures on September 30, 1999.                 
PRICE RANGE OF SHARES AND DISTRIBUTIONS 

 The Shares were traded on the American Stock Exchange ("ASE") under the
symbol "PEI" prior to November 14, 1997. On November 14, 1997, the Shares       
commenced trading on the NYSE. The following table sets forth, for the calendar 
quarters indicated, the high and low closing prices of the Shares on the ASE    
and NYSE, as applicable, and the distributions declared by the Company per      
Share for such calendar quarter.                                                

                                                                [Download Table]

                                                                   Distributions 
                                             High        Low         Per Share   
                                          -----------   ---------  --------------
                                                                                 
1995                                                                             
----                                                                             
First Quarter ........................... $21 1/4      $18 1/2         $ 0.47    
Second Quarter   ........................  23 5/8       19 7/8           0.47    
Third Quarter ...........................  21 3/4       20 1/8           0.47    
Fourth Quarter   ........................  21 7/8       19 1/4           0.47    

1996                                                                             
----                                                                             
First Quarter ...........................  21 3/4       21 1/4           0.47    
Second Quarter   ........................  21 5/8       19               0.47    
Third Quarter ...........................  21 5/8       18 3/4           0.47    
Fourth Quarter   ........................  25           21               0.47    

1997                                                                             
----                                                                             
First Quarter ...........................  25           20 3/4           0.47    
Second Quarter   ........................  23 3/8       20 7/8           0.47    
Third Quarter ...........................  27 1/4       22 1/2           0.47    
Fourth Quarter (through December 17) ....  25 9/16      22               0.47    

On December 17, 1997, the last reported sale price on the NYSE was    
$22 3/8. As of November 14, 1997, the Shares were held by approximately 1,400   
holders of record.                                                              

 Although the Company currently anticipates that cash distributions will
continue to be paid in the future (in March, June, September and December), the 
payment of future distributions by the Company will be at the discretion of the 
Board of Trustees and will depend on numerous factors, including the Company's  
cash flow, its financial condition, capital requirements, annual distribution   
requirements under the REIT provisions of the Internal Revenue Code of 1986, as 
amended (the "Code"), and such other factors as the Board of Trustees deems     
relevant.                                                                       

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CAPITALIZATION  

  The following table sets forth the capitalization of the Company: (i) on
an historical basis as of August 31, 1997; (ii) on a pro forma basis assuming,  
as of such date, the completion of the TRO Transaction; and (iii) on a pro      
forma basis as adjusted for the Offering and the application of the net         
proceeds as described under "Use of Proceeds." The information set forth in the 
following table should be read in conjunction with the Company's consolidated   
financial statements included herein.                                           

                                                        [Enlarge/Download Table]

                                                              August 31, 1997               
                                               ---------------------------------------------
                                                                                 Pro Forma  
                                               Historical       Pro Forma       as Adjusted 
                                               ------------   ---------------   ------------
                                                              (in thousands)                
                                                                                            
Mortgage loans payable   .....................  $  83,528       $ 108,728        $  99,881  
Credit Facility ..............................     33,884          90,531           16,188  
                                                ---------       ---------        ---------  
   Total debt   ..............................    117,412         199,259          116,069  
Minority interest  ...........................        540          15,672           15,672  
Shareholders equity:                                                                        
 Preferred Shares of Beneficial Interest,                                                   
   $1.00 par value; 25,000,000 authorized;                                                  
   none issued and outstanding ...............         --              --               --  
 Shares of Beneficial Interest,                                                             
   $1.00 par value, 100,000,000                                                             
   authorized; 8,685,098 issued and                                                         
   outstanding (8,685,098 pro forma                                                         
   and 12,685,098 pro forma,                                                                
   as adjusted) (1)   ........................      8,685           8,685           12,685  
 Additional paid in capital ..................     53,599          53,599          132,789  
 Distributions in excess of net income  ......    (21,385)        (21,385)         (21,385) 
                                                ---------       ---------        ---------  
 Total shareholders' equity ..................     40,899          40,899          124,089  
                                                ---------       ---------        ---------  
     Total capitalization   ..................  $ 158,851       $ 255,830        $ 255,830  
                                                =========       =========        =========  

------------                                                                    
(1) Does not include Shares reserved for issuance upon redemption of 646,286    
issued and outstanding OP Units or 933,375 Shares reserved for issuance 
upon the exercise of options which have been granted by the Company,    
314,786 of which are currently exercisable and 618,589 of which become  
exercisable at various times over the next four years.                  

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SELECTED FINANCIAL AND OPERATING DATA 

    The following table sets forth certain financial and operating information
for the Company for each of the five years ended August 31, 1997. Such          
information should be read in conjunction with the Company's financial          
statements and the notes thereto, "Management's Discussion and Analysis of      
Financial Condition and Results of Operations" and pro forma financial          
statements contained elsewhere herein. Effective January 1, 1998, the Company's 
fiscal year will be reported on a calendar year basis. The unaudited pro forma  
information is presented as if the Offering and the TRO Transaction had been    
completed on August 31, 1997 for balance sheet purposes and on September 1,     
1996 for purposes of the income statement and other data. The unaudited pro     
forma information is not necessarily indicative of what the actual financial    
position or results of operations of the Company would have been as of and for  
the period presented, nor does it purport to represent the Company's future     
financial position or results of operations.                                    

                                                        [Enlarge/Download Table]

                                                               For the Fiscal Years Ended August 31,                      
                                         ---------------------------------------------------------------------------------
                                                                                   Historical                             
                                         Pro Forma     -------------------------------------------------------------------
                                          1997(1)        1997          1996          1995          1994          1993     
                                         -----------   -----------   -----------   -----------   -----------   -----------
                                                           (amounts in thousands, except per share data)                  
                                                                                                                          
Income Statement Data:                                                                                                    
Revenues:                                                                                                                 
 Gross revenues from real estate  ......  $52,721       $40,231       $38,985       $36,978       $27,640       $21,083   
 Interest and other income  ............      488           254           171           176           274           542   
                                          --------      --------      --------      --------      --------      --------  
   Total revenues. .....................   53,209        40,485        39,156        37,154        27,914        21,625   
Expenses:                                                                                                                 
 Property operating expenses   .........   20,253        16,289        16,102        14,859        11,758         8,959   
 Depreciation and amortization .........    8,816         6,259         5,908         5,286         3,541         2,784   
 General and administrative                                                                                               
   expenses. ...........................    3,324         3,324         3,119         3,091         2,528         1,873   
 Interest expense. .....................    9,167         9,086         9,831         8,908         4,162         2,222   
 Provision for losses on investments          500           500            --            --         1,795           320   
                                          --------      --------      --------      --------      --------      --------  
   Total expense   .....................   42,060        35,458        34,960        32,144        23,784        16,158   
                                          --------      --------      --------      --------      --------      --------  
Income before other income and                                                                                            
 expense  ..............................   11,149         5,027         4,196         5,010         4,130         5,467   
Equity in income of partnerships and                                                                                      
 joint ventures.   .....................    4,757         4,337         6,258         6,381         4,416         4,750   
Equity in loss of PREIT-RUBIN  .........      (80)           --            --            --            --            --   
Gains on sales of interests in real                                                                                       
 estate   ..............................    1,069         1,069           865           119        12,362         3,875   
Minority interest  .....................     (999)         (198)         (275)         (285)         (221)          (92)  
                                          --------      --------      --------      --------      --------      --------  
Net income   ...........................  $15,896       $10,235       $11,044       $11,225       $20,687       $14,000   
                                          ========      ========      ========      ========      ========      ========  
Per Share Results:                                                                                                        
Income before gains on sales of                                                                                           
 interests in real estate   ............    $1.17         $1.06         $1.17         $1.28         $0.96         $1.17   
Gains on sales of interests in real                                                                                       
 estate   ..............................      .08          0.12          0.10          0.01          1.43          0.45   
                                         ---------     ---------     ---------     ---------     ---------     ---------  
Net income   ...........................    $1.25         $1.18         $1.27         $1.29         $2.39         $1.62   
                                         =========     =========     =========     =========     =========     =========  
Weighted average number of shares                                                                                         
 outstanding (2)   .....................   12,679         8,679         8,676         8,671         8,664         8,643   

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                                              For the Fiscal Years Ended                               
                                                       August 31,                                      
                                            -------------------------------                            
                                                                Historical                             
                                              Pro Forma       -------------                            
                                               1997(1)             1997                                
                                            ----------------  -------------                            
                                            (amounts in thousands, except                              
                                              per share and property data)                             
                                                                                                       
Balance Sheet Data                                                                                     
 (at end of period):                                                                                   
Investments in real estate, at cost  ......   $  284,765      $  202,443                               
Total assets.   ...........................      262,636         165,657                               
Total debt   ..............................      116,069         117,412                               
Minority interest  ........................       15,672             540                               
Shareholders' equity  .....................      124,089          40,899                               
Other Data:                                                                                            
Cash flows from operating activities.......           (3)         15,219                               
Cash flows from investing activities.......           (3)          7,749                               
Cash flows from financing activities.......           (3)        (22,599)                              
Funds from operations (4)   ...............       29,171          19,660                               
EBITDA (5).  ..............................       48,719          35,169                               
Total leasable square footage of                                                                       
 retail properties (at end of period)......    5,968,000       4,470,000                               
Total multifamily units (at end of                                                                     
 period)  .................................        7,236           7,236                               
Number of properties (at end of                                                                        
 period):                                                                                              
 Retail   .................................           17              15                               
 Multifamily ..............................           19              19                               
Percentage leased (at end of period):                                                                  
 Retail   .................................           89%             87%                              
 Multifamily ..............................           97%             97%                              


                                                       For the Fiscal Years Ended August 31,           
                                            ---------------------------------------------------------- 
                                                1996           1995           1994           1993      
                                            -------------  -------------  -------------  ------------- 
                                             (amounts in thousands, except per share and property data)
                                                                                                       
Balance Sheet Data                                                                                     
 (at end of period):                                                                                   
Investments in real estate, at cost  ...... $  198,542     $  195,929     $  154,281     $  112,262    
Total assets.   ...........................    177,725        181,336        142,495        107,854    
Total debt   ..............................    124,148        122,518         80,155         51,929    
Minority interest  ........................        542            528            408            331    
Shareholders' equity  .....................     46,505         51,771         56,748         51,852    
Other Data:                                                                                            
Cash flows from operating activities ......     15,090         16,672         15,909         13,034    
Cash flows from investing activities ......        933        (40,082)       (18,524)       (38,683)   
Cash flows from financing activities ......    (16,091)        22,356          3,305         25,913    
Funds from operations (4)   ...............     18,628         18,963         16,417         16,870    
EBITDA (5).  ..............................     34,423         33,936         24,854         27,161    
Total leasable square footage of                                                                       
 retail properties (at end of period) .....  4,806,000      4,866,000      4,798,000      5,527,000    
Total multifamily units (at end of                                                                     
 period)  .................................      7,236          7,337          6,815          6,107    
Number of properties (at end of                                                                        
 period):                                                                                              
 Retail   .................................         18             18             19             22    
 Multifamily ..............................         19             20             19             17    
Percentage leased (at end of period):                                                                  
 Retail   .................................         90%            92%            90%            90%   
 Multifamily ..............................         95%            96%            95%            97%   

------------                                                                    
(1) See Notes to Management's Assumptions to Unaudited Pro Forma Consolidating  
Balance Sheet and Consolidated Income Statement contained elsewhere     
herein.                                                                 
(2) Weighted average number of Shares outstanding excludes Shares issuable upon 
conversion of outstanding OP Units and includes the dilutive effect of  
outstanding options. Income allocable to holders of OP Units is included
in minority interest.                                                   
(3) Pro forma information relating to cash flows from operating, investing and  
financing activities has not been included because the Company believes 
that the information would not be meaningful due to the number of       
assumptions required in order to calculate such information.            
(4) The White Paper on Funds from Operations approved by the Board of Governors 
  of NAREIT in March 1995 defines Funds from Operations as net income (loss)
 (computed in accordance with GAAP), excluding gains (or losses) from debt
restructuring and sales of properties, plus real estate related         
depreciation and amortization and after adjustments for unconsolidated  
partnerships and joint ventures. The Company believes that Funds from   
Operations is helpful to investors as a measure of the performance of an
equity REIT because, along with cash flows from operating activities,   
  financing activities, and investing activities, it provides investors with
 an indication of the ability of the Company to incur and service debt, to
make capital expenditures and to fund other cash needs. The Company     
  computes Funds from Operations in accordance with standards established by
NAREIT 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. Funds from Operations does not represent  
cash generated from operating activities in accordance with GAAP and    
should not be considered as an alternative to net income (determined in 
accordance with GAAP) as an indication of the Company's financial       
performance or 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 to fund the Company's cash needs, including
its ability to make cash distributions.                                 
(5) EBITDA is defined as operating income before interest expense, income       
taxes, depreciation and amortization. The Company believes EBITDA is    
useful to investors as an indicator of the Company's ability to service 
  debt and pay cash distributions. EBITDA, as calculated by the Company, may
not be comparable to EBITDA reported by other REITs that do not define  
 EBITDA exactly as the Company defines the term. EBITDA does not represent
cash generated from operating activities determined in accordance with  
  GAAP and should not be considered as an alternative to operating income or
net income determined in accordance with GAAP as an indicator of        
performance or as an alternative to cash flows from operating activities
as an indicator of liquidity.                                           

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

The following discussion should be read in conjunction with the       
Consolidated Financial Statements of the Company and the notes thereto          
contained elsewhere herein.                                                     

Overview                                                                        

    The following discussion is based on the consolidated financial statements
of the Company and compares the results of operations of the Company for the    
fiscal year ended August 31, 1997 with the results of operations of the Company 
for the fiscal year ended August 31, 1996, and the results of operations of the 
Company for the fiscal year ended August 31, 1996 with the results of           
operations of the Company for the fiscal year ended December 31, 1995. The      
discussion set forth in "Results of Operations" below does not include the      
effects of the TRO Transaction, which occurred on September 30, 1997.           

Results of Operations                                                           

Fiscal 1997 Compared With Fiscal 1996                                           

   Gross revenues from real estate for the fiscal year ended August 31, 1997
increased by 3% to $40.2 million from $39.0 million in the prior year. The 1997 
period included $0.4 million of revenues attributable to Forestville Plaza in   
which the Company acquired its partners' remaining 25% interest in the prior    
fiscal year. The 1996 period included $0.5 million of revenues attributable to  
Chateau Apartments which the Company sold in June 1996. Revenues from           
properties owned during both periods increased by $1.0 million primarily as a   
result of increases in apartment revenues.                                      

   Operating expenses for the fiscal year ended August 31, 1997 increased 1%
to $16.3 million from $16.1 million in the prior year. The 1997 period included 
$0.2 million of expenses attributable to Forestville Plaza in which the Company 
acquired its partners' remaining 25% interest in the prior fiscal year. The     
1996 period included $0.3 million of expenses attributable to Chateau           
Apartments which the Company sold. Operating expenses from properties owned     
during both periods increased by $0.3 million.                                  

 Depreciation and amortization for the fiscal year ended August 31, 1997
increased by 7% to $6.3 million from $5.9 million in 1996, primarily as a       
result of ongoing capital expenditures in apartments.                           

  General and administrative expenses increased by 6% to $3.3 million from
$3.1 million in 1996, primarily as a result of costs associated with litigation 
with a partner.                                                                 

 Mortgage and bank loan interest expense decreased by 8% to $9.1 million
from $9.8 million in 1996, primarily as a result of decreased borrowing against 
the Company's credit facility.                                                  

    In fiscal year 1996, a partnership in which the Company has a 50% interest
signed an option to sell a parcel of land at a stipulated price, subject to the 
buyer's obtaining certain zoning variance approvals. In fiscal year 1997, the   
option expired. As a result, management revised its estimate of the property's  
selling price and recorded a $0.5 million provision for investment losses to    
reduce the property held for sale to its estimated net realizable value.        

Equity in income of partnerships and joint ventures decreased in the  
fiscal year ended August 31, 1997, by 32% to $4.3 million from $6.3 million in  
1996, primarily as a result of an increase in mortgage interest expense of $2.9 
million ($1.8 million of which was the Company's proportional share). The       
increase in partnership mortgage interest expense is attributable to prepayment 
fees of $1.9 million ($1.1 million of which was the Company's proportional      
share) in connection with refinancings, as well as additional interest expense  
associated with the refinancings, of Regency Apartments, Lehigh Valley Mall and 
Cambridge Hall Apartments in 1997. In addition, equity in income from           
properties owned during both periods exclusive of the increase in mortgage      
interest mentioned above increased by $0.5 million.                             

    Net income for the fiscal year ended August 31, 1997 before gains on sales
of interests in real estate decreased 10% to $9.2 million from $10.2 million    
for the comparable period in 1996. In fiscal year 1997, net gains on the sales  
of interests in real estate were $1.1 million, as compared to $0.9 million in   
1996. The net                                                                   

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gains on sales of interests in real estate of $1.1 million in 1997 consisted of 
gains on the sale of the Company's joint venture interest in shopping centers   
in Lancaster, Beaver Falls and Waynesburg, PA of $1.5 million, offset by a loss 
on the sale of a shopping Center in Margate, FL of $0.4 million. The gains in   
1996 totaling $0.9 million were derived from the sale of land in Bucks County,  
PA and the sale of the Chateau Apartments in Midland, TX. In 1997, net income   
was reduced by an accounting provision of $0.5 million for losses on land held  
for sale in the Company's investment portfolio and prepayment fees of $1.9      
million paid in connection with refinancing of two partnership properties, the  
Company's share of which was $1.1 million.                                      

Fiscal 1996 Compared With Fiscal 1995                                           

   Gross revenues from real estate for the fiscal year ended August 31, 1996
increased by 5% to $39.0 million from $37.0 million in 1995. The increase is    
due primarily to an increase in revenues of $1.2 million from the Boca Palms    
Apartments, which was acquired in November 1994 and $0.4 million from           
Forestville Plaza which became wholly owned during the year. Exclusive of Boca  
Palms Apartments and Forestville Plaza, revenues from properties owned during   
both periods increased 2% to $33.7 in 1996 from $33.1 million in 1995.          

  Operating expenses in the fiscal year ended August 31, 1996 increased by
8% to $16.1 million from $14.9 million in 1995. The increase is due primarily   
to $0.4 million of increased expenses from the Boca Palms Apartments,           
approximately $0.2 million of additional operating expenses as a result of the  
harsh winter weather in the Mid-Atlantic region and $0.1 million attributable   
to the increased ownership of Forestville Plaza.                                

  Depreciation and amortization increased by 13% to $5.9 million from $5.3
million in 1995, primarily as a result of the acquisition of Boca Palms, the    
remaining interest in Forestville Plaza, and ongoing capital expenditures.      
Interest expense increased by 11% to $9.9 million from $8.9 million in 1995 as  
a result of increased borrowings to finance the Boca Palms acquisition and for  
general corporate purposes.                                                     

 For fiscal year ended August 31, 1996, $0.7 million was charged against
the allowance for investment losses, $0.3 million for carrying costs for land   
held for sale, and $0.4 million of development expenses incurred at Crest       
Plaza, Allentown, Pennsylvania, for a potential expansion of the shopping       
center, including a Caldor store. The lease with Caldor was canceled and the    
cost was written off following a bankruptcy declaration by Caldor.              

Equity in income of partnerships and joint ventures decreased by 2% to
$6.3 million from $6.4 million in 1995, primarily as a result of a              
non-recurring lease termination fee received from a shopping center tenant in   
the amount of $0.2 million for fiscal year 1995. The Company's share of         
partnership and joint venture income in 1996 was also reduced by approximately  
$0.1 million as compared to the prior year due to higher operating expenses     
resulting from the harsh winter weather discussed earlier.                      

Net income for the fiscal year ended August 31, 1996, before gains on 
sales of interests in real estate, decreased by 8% to $10.2 million from $11.1  
million for the comparable period in 1995. In the 1996 period, the gains on the 
sales of interests in real estate were $0.9 million as compared to the 1995     
period which included a gain on sale of interest in real estate of $0.1         
million. Net income was reduced by an increase in operating expenses of $0.3    
million primarily due to winter conditions in the Mid-Atlantic region and the   
receipt in the prior year of $0.2 million as a non-recurring termination fee    
from a shopping center tenant.                                                  

Liquidity and Capital Resources                                                 

The Company expects to meet its short-term liquidity requirements     
generally through its available working capital and net cash provided by        
operations. The Company believes that the net cash provided by operations will  
be sufficient to allow the Company to make any distributions necessary to       
enable the Company to continue to qualify as a REIT under the Code. The Company 
also believes that the foregoing sources of liquidity will be sufficient to     
fund its short-term liquidity needs for the foreseeable future, including       
capital expenditures, tenant improvements and leasing commissions.              

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   The Company expects to meet certain long-term liquidity requirements such
as property acquisitions, scheduled debt maturities, renovations, expansions    
and other non-recurring capital improvements through long-term secured and      
unsecured indebtedness and the issuance of additional equity securities. The    
Company also expects to use funds available under its $150.0 million Credit     
Facility to fund acquisitions, development activities and capital improvements  
on an interim basis.                                                            

 In addition to amounts due under the Credit Facility and under the Term
Loan (as hereinafter defined), during the next three years mortgage loans       
secured by properties owned by three partnerships in which the Company has an   
interest mature by their terms. Balloon payments on these loans total $17.0     
million, of which the Company's proportionate share is $8.5 million.            

The Credit Facility                                                       

Coincident with the closing of the TRO Transaction, the Operating     
Partnership entered into the Credit Facility with a group of banks led by       
CoreStates Bank, N.A. The obligations of the Operating Partnership under the    
Credit Facility have been guaranteed by the Company.                            

The Credit Facility is for an initial term of two years and bears     
interest, at the borrower's election, at: (i) the higher of CoreStates' prime   
rate, or the Federal Funds lending rate, plus 0.5%, in each case as in effect   
from time to time; or (ii) 30-day LIBOR plus margins ranging from 1.1% to 1.7%, 
depending on the ratio of the Company's consolidated liabilities to gross asset 
value (the "Leverage Ratio"), each as determined pursuant to the terms of the   
Credit Facility.                                                                

The Credit Facility contains affirmative and negative covenants       
customarily found in facilities of this type, as well as requirements that the  
Company maintain, on a consolidated basis: (i) a maximum Leverage Ratio of 65%; 
(ii) a maximum ratio of Senior Liabilities (as defined in the Credit Facility   
agreement) to Unencumbered Asset Value (as defined in the Credit Facility       
agreement) of 73%; (iii) minimum tangible net worth of $115.0 million; (iv) a   
minimum ratio of annualized consolidated property net operating income to total 
annual debt service of 1.40:1; and (v) a minimum ratio of annualized            
consolidated property net operating income to pro forma debt service of 1.30:1. 
As of September 30, 1997, the Company's Leverage Ratio was approximately 58%.   
As long as the Leverage Ratio is 50% or greater, the lending banks will hold    
unrecorded mortgages on 11 unencumbered properties which the Operating          
Partnership owns, directly or indirectly, and would be entitled to record such  
mortgages upon any event of default. Immediately following the Offering, the    
Company's Leverage Ratio will be 43%.                                           

As of September 30, 1997, the Operating Partnership had drawn $95.0   
million on the Credit Facility, which was used to repay amounts outstanding on  
the Company's prior credit facility and to fund the cash portion of the TRO     
Transaction referred to in Note 10 of the Notes to Consolidated Financial       
Statements of the Company contained elsewhere herein.                           

Secured Term Loan                                                         

   In addition to the Credit Facility, the Company previously borrowed $35.0
million (the "Term Loan") from a bank group at a fixed rate of 8.62% until      
March 1998, at which time the rate is to be reset at either a fixed or floating 
rate at the option of the Company. The loan is secured by three apartment       
properties, had a balance of $34.0 million on August 31, 1997, and matures in   
March 1998. The Company may, at its option, extend the maturity of this loan    
for two additional one year periods upon the satisfaction of certain specified  
conditions. The Company believes that it satisfies all of the conditions for    
these optional extensions.                                                      

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Schedule of Indebtedness                                                  

   As of September 30, 1997, certain of the Company's properties are subject
to mortgage indebtedness as set forth below:                                    

                                                                [Download Table]

                                                  Percentage    Interest      
Property                   Location                 Owned        Rate(1)      
-------------------------  ---------------------  ------------  --------------
                                                                              
Multifamily Properties:                                                       
 Camp Hill                 Camp Hill, PA              100%        9.50%       
 Cobblestone               Pompano Beach, FL          100%        7.75(5)     
 Shenandoah Village        West Palm Beach, FL        100%        5.90        
 Emerald Point             Virginia Beach, VA          65%(4)     6.79        
 Cambridge Hall            West Chester, PA            50%        8.35        
                           Altamonte Springs,                                 
 Charter Pointe            FL                          40%(4)     7.50        
 Countrywood               Tampa, FL                   50%(4)     8.00        
 Eagle's Nest              Coral Springs, FL           50%        8.24        
 Fox Run                                                                      
  Phase 1                  Bear, DE                    50%        7.75        
  Phase 2                  Bear, DE                    50%        8.38        
  Phase 3                  Bear, DE                    50%        7.28        
 Fox Run Warminster        Warminster, PA              50%        7.88        
 Regency Lakeside          Omaha, NE                   50%(4)     7.56        
 Will-O-Hill               Reading, PA                 50%        7.75        
   Subtotal Multifamily Properties                                            
Retail Properties:                                                            
 Magnolia Mall             Florence, SC               100%        8.20        
 Mandarin Corners          Jacksonville, FL           100%        9.13        
 Ingleside Center          Thorndale, PA               50%        7.50        
 Ingleside Center          Thorndale, PA              100%        7.50        
 Laurel Mall               Hazleton, PA                40%        7.63        
 Lehigh Valley Mall        Allentown, PA               50%        7.90        
 Court at Oxford Valley    Langhorne, PA               50%        8.02        
 Park Plaza                Pinellas Park, FL           50%        7.75        
 Palmer Park Mall          Easton, PA                  50%      80% of        
                                                                 Prime        
 Palmer Park Mall          Easton, PA                  50%        8.75        
 Palmer Park Mall          Easton, PA                  50%      LIBOR +       
                                                                  1.75%       
 Punta Gorda Mall          Punta Gorda, FL             25%       10.25        
 Rio Mall                  Rio Grande, NJ              50%        8.63        
   Subtotal Existing Retail Properties                                        
Other Debt:                                                                   
 Line of Credit                                       100%      LIBOR +       
                                                                  1.70%       
 Secured Term Loan                                    100%        8.62        
 Palmer Park Bank Loan                                 50%         8.5%       
   Subtotal Other Debt:                                                       
     Total/Weighted Average                                       7.78%       


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                                                 Estimated                            Estimated    
                             Principal           Annual Debt                        Balance Due on 
Property                     Balance(2)           Service       Maturity Date(3)       Maturity    
-------------------------  -------------------  --------------  ------------------  ---------------
                                                                                                   
Multifamily Properties:                                                                            
 Camp Hill                  $    6,737,087       $    760,116         3/1/07         $   4,919,623 
 Cobblestone                     8,832,268            798,792        12/1/02             8,154,842 
 Shenandoah Village              8,640,000            597,960        10/1/25                    -- 
 Emerald Point                  16,872,414(6)       1,424,412         3/1/08            12,446,206 
 Cambridge Hall                  2,686,227            246,078        10/1/16             1,665,051 
 Charter Pointe                  2,194,066            220,411         2/1/06             1,547,768 
 Countrywood                     3,119,948            346,286         9/1/03             2,378,452 
 Eagle's Nest                    7,881,655            763,037        11/1/00             7,470,894 
 Fox Run                                                                                           
  Phase 1                        2,143,671            252,702        12/1/98             2,091,469 
  Phase 2                        2,332,305            245,436        12/1/98             2,286,373 
  Phase 3                        2,800,024            265,205        11/1/00             2,714,376 
 Fox Run Warminster              1,901,551            198,882         8/1/05             1,373,482 
 Regency Lakeside               10,188,529            865,093         2/1/07             8,924,075 
 Will-O-Hill                       895,082            101,436         8/1/12                    -- 
                            ----------------     ------------                        ------------- 
Subtotal Multifamily                                                                               
  Properties                     77,224,827          7,085,846                           55,972,611
                             ----------------     ------------                        -------------
Retail Properties:                                                                                 
 Magnolia Mall                  25,153,992          2,597,726         2/1/07            17,904,398 
 Mandarin Corners                8,398,637          1,002,192         8/1/08             4,064,056 
 Ingleside Center                  672,030            106,416         9/1/06                    -- 
 Ingleside Center                  884,736            148,536         8/1/00               626,193 
 Laurel Mall                    10,587,224          1,155,000        12/1/03             8,832,000 
 Lehigh Valley Mall             26,671,938          2,479,260        10/1/06            21,750,439 
 Court at Oxford Valley         24,616,800          2,319,426        7/10/11            15,966,965 
 Park Plaza                        135,421             75,915         9/7/99                    -- 
 Palmer Park Mall                  293,284             78,107        3/25/98               279,583 
 Palmer Park Mall                1,411,415            301,620        10/1/03                    -- 
 Palmer Park Mall                  938,960             69,577        3/25/98               938,960 
 Punta Gorda Mall                  536,039             69,480         2/1/98               532,375 
 Rio Mall                          210,809            103,845        12/1/99                    -- 
                            ----------------     ------------                        ------------- 
 Subtotal Existing             100,511,286         10,507,100                           70,894,969 
  Retail Properties         ----------------     ------------                        ------------- 

Other Debt:                                                                                        
 Line of Credit                 95,319,437          7,015,000        9/30/99            95,319,437 
 Secured Term Loan              33,926,568          3,400,000        3/20/98            33,926,568 
 Palmer Park Bank Loan             510,558            112,062         1/1/00               350,313 
                            ----------------     ------------                        ------------- 
   Subtotal Other Debt:        129,246,005         10,415,000                          129,246,005 
                            ----------------     ------------                        ------------- 
     Total/Weighted Average $  307,492,676       $ 28,007,946                        $ 256,113,585 
                            ================     ============                        ============= 

------------                                                                    
(1) Effective rate at September 30, 1997.                                       
(2) Represents the Company's proportionate share of principal balance.          
(3) As of September 30, 1997, the weighted average maturity of the Company's    
mortgage indebtedness was 7.6 years.                                    
(4) The Company's share of net cash flows from this property may be greater     
than its stated percentage interest because of certain preferred return 
provisions in the respective partnership agreements. Amounts shown as   
percentage owned in this this table represent the Company's share of net
 cash flow to which it is entitled after distribution of preferred returns
to all partners.                                                        
(5) Increased to 8.25% on December 1, 1997.                                     
(6) Represents 100% of debt secured by property; the Company's proportionate    
share is 65%; minority interest is 35%.                                 

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Interest Rate Protection                                                        

   In order to reduce exposure to variable interest rates, in March 1995 the
Company purchased a three-year interest rate cap on $15.0 million of            
indebtedness limiting the underlying 30-day LIBOR rate to 7.5% until March      
1998. In June 1995, the Company entered into a six-year interest rate swap      
agreement with CoreStates Bank, N.A. on $20.0 million of indebtedness which     
fixes a rate of 6.12% per annum versus 30-day LIBOR until 2001. As a result of  
these transactions, the Company has fixed or hedged $35.0 million of the        
outstanding balance on its Credit Facility as of August 31, 1997.               

Contingent Liability                                                            

The Company, along with certain of its joint venture partners, has    
guaranteed debt totaling $16.0 million, (See Notes 2 and 3 of the Notes to      
Consolidated Financial Statements of the Company contained elsewhere herein.)   

Cash Flows                                                                      

    Net cash provided by operating activities increased by approximately 1% to
$15.2 million for the year ended August 31, 1997 as compared to $15.1 million   
the same period last year. Operating cash flow was higher primarily as a result 
of timing of collections of receivables.                                        

 Net cash provided by investing activities was $7.7 million for the year
ended August 31, 1997 as compared to $0.9 million in the same period last year. 
For the year ended August 31, 1997, the Company refinanced two properties and   
received $15.4 million, sold interests in four shopping centers and received    
proceeds of $2.1 million, invested $6.2 million in real estate and incurred     
deposits to acquire real estate of $5.3 million. For the year ended August 31,  
1996, the Company sold two properties and received net cash proceeds of $5.2    
million.                                                                        

 Net cash used in financing activities increased by 40% to $22.6 million
for the year ended August 31, 1997 as compared to $16.1 million in the same     
period last year. Financing activities included a $5.4 million reduction in     
bank loans payable and distributions paid to shareholders of $16.3 million.     
Financing activities in 1996 included proceeds of a mortgage note payable on    
Shenandoah Village Apartments of $8.8 million, a $5.0 million reduction in bank 
loans payable and distributions paid to shareholders of $16.3 million.          

Funds from Operations                                                           

The White Paper on Funds from Operations approved by the Board of     
Governors of NAREIT in March 1995 defines Funds from Operations as net income   
(loss) (computed in accordance with GAAP), excluding gains (or losses) from     
debt restructuring and sales of properties, plus real estate related            
depreciation and amortization and after adjustments for unconsolidated          
partnerships and joint ventures. The Company believes that Funds from           
Operations is helpful to investors as a measure of the performance of an equity 
REIT because, along with cash flow from operating activities, financing         
activities, and investing activities, it provides investors with an indication  
of the ability of the Company to incur and service debt, to make capital        
expenditures and to fund other cash needs. The Company computes Funds from      
Operations in accordance with standards established by NAREIT 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. Funds from Operations   
does not represent cash generated from operating activities in accordance with  
GAAP and should not be considered as an alternative to net income (determined   
in accordance with GAAP) as an indication of the Company's financial            
performance or 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 to fund the Company's cash needs, including its ability to make 
cash distributions.                                                             

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  Funds from Operations for each of the previous five fiscal years were as
follows:                                                                        

                                                        [Enlarge/Download Table]

                                                                                     For the Fiscal                           
                                                                                 Years Ended August 31,                       
                                                          --------------------------------------------------------------------
                                                           1997          1996          1995           1994          1993      
                                                          -----------   -----------   -----------   ------------   -----------
                                                                                     (in thousands)                           
                                                                                                                              
Net income  .............................................  $ 10,235      $11,044       $11,225       $  20,687      $ 14,000  
Less:  Gains on sales of interests in real estate  ......    (1,069)        (865)         (119)        (12,362)       (3,875) 
Plus:  Provision for losses .............................       500           --            --           1,795           320  
    Depreciation and amortization                                                                                             
       Wholly owned and consolidated partnerships........     5,989        5,650         5,044           3,322         2,685  
       Unconsolidated partnerships and joint ventures....     3,380        3,334         3,214           3,229         4,119  
    Refinancing prepayment fees  ........................     1,133           --            --              --            --  
Less: Depreciation of non-real estate assets ............      (222)        (202)         (173)           (146)         (104) 
      Amortization of deferred financing costs ..........      (286)        (333)         (228)           (108)         (275) 
                                                           --------      -------       -------       ---------      --------  
Funds from operations   .................................  $ 19,660      $18,628       $18,963       $  16,417      $ 16,870  
                                                           ========      =======       =======       =========      ========  

Capital Expenditures                                                            

    During fiscal 1997, the Company made $3.6 million in capital expenditures:
$2.9 million for multifamily communities ($502 per unit owned, adjusted for     
partnership interests) and $0.7 million for shopping centers. The Company's     
policy is to capitalize expenditures for items which are expected to have       
useful lives exceeding one year, such as floor coverings, appliances and major  
exterior preparation and painting for apartments. During fiscal 1997, $0.8      
million ($171 per unit owned) was expended for floor covering and $0.3 million  
($71 per unit owned) for appliances.                                            

  In addition, the Company made $1.2 million in non-recurring improvements
to multifamily communities in 1997 which included $0.7 million for exterior     
preparation and painting.                                                       

Inflation                                                                       

Inflation can have many effects on the financial performance of the   
Company. Shopping center leases often provide for the payment of rents based on 
a percentage of sales which may increase with inflation. Leases may also        
require tenants to bear all or a portion of operating expenses, which may       
reduce the impact of expense increases on the Company. Apartment leases         
normally provide for a one-year term, which may allow the Company to seek       
increased rents as leases are renewed or when new tenants are obtained.         

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THE PROPERTIES  

The Existing Retail Properties                                                  

   The Company has interests in the 17 Existing Retail Properties containing
an aggregate of approximately 6.0 million square feet. The Company currently    
manages two of its wholly owned properties and expects to manage the remaining  
four wholly owned properties by the end of the first quarter of 1998. The       
Company's 11 joint venture retail properties are managed by the Company's joint 
venture partners, or an entity designated by the Company and the partner, and   
in most such instances a change in the management of the property requires the  
concurrence of both partners. Eight of the 17 Existing Retail Properties        
containing an aggregate of approximately 3.7 million square feet are located in 
Pennsylvania and four containing an aggregate of approximately 0.6 million      
square feet are located in Florida.                                             

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The following table sets forth certain information regarding the 17   
Existing Retail Properties as of (or for the fiscal year ended) August 31,      
1997:                                                                           

                                                        [Enlarge/Download Table]

                                                                     Year          Total       Owned                           
                                                   Percentage       Built/        Square       Square    Percentage            
Property Name                  Location              Owned       Renovated(1)     Feet(2)       Feet      Leased(3)            
-----------------------------  ------------------  ------------  --------------  -----------  ---------  ------------          
                                                                                                                               
Lehigh Valley Mall             Allentown, PA            50%        1977/1996     1,054,000     489,000        99%              
Court at Oxford Valley(5)      Langhorne, PA            50%             1996       692,000     457,000       100               
North Dartmouth Mall           North Dartmouth,        100%        1971/1987       620,000     620,000        88               
                               MA                                                                                              
Whitehall Mall                 Allentown, PA            50%        1964/1982       603,000     521,000        84               
Magnolia Mall                  Florence, SC            100%        1979/1992       570,000     570,000        98               
Laurel Mall                    Hazleton, PA             40%        1973/1995       558,000     558,000        97               
Palmer Park Mall(6)            Easton, PA               50%        1972/1982       349,000     349,000        68               
Forestville Shopping Center    Forestville, MD         100%        1974/1983       218,000     218,000        73               
Mandarin Corners               Jacksonville, FL        100%             1986       216,000     216,000        99               
Springfield Park(7)            Springfield, PA          50%        1963/1997       209,000      65,000       N/A               
Rio Mall                       Rio Grande, NJ           50%        1973/1992       161,000     161,000        73               


                                                                   In-Line Stores                    Property                  
                                                                    Average Base                     Revenue-                  
                                    Principal                         Rent Per        Property       Company's     Property    
Property Name                        Tenants         Base Rent     Square Foot(4)      Revenue        Share         EBITDA     
-----------------------------  -------------------  -------------  ----------------  -------------  ------------  -------------
                                                                                                                               
Lehigh Valley Mall             J.C. Penney,          $10,189,000       $ 21.75        $14,840,000    $7,420,000    $10,183,000 
                               Strawbridge's,                                                                                  
                               Macy's                                                                                          
Court at Oxford Valley(5)      Dick's Clothing &       7,048,000         14.65          8,125,000     4,062,000      6,367,000 
                               Sporting Goods,                                                                                 
                               Best Buy, Phar-                                                                                 
                               Mor, HomePlace,                                                                                 
                               The Home Depot,                                                                                 
                               BJ Wholesale Club                                                                               
North Dartmouth Mall           J.C. Penney,            3,977,000         23.52          6,268,000     6,268,000      4,047,000 
                               Sears, Ames,                                                                                    
                               General Cinema                                                                                  
                               Theatres                                                                                        
Whitehall Mall                 Sears, Kohl's           2,186,000         11.37          3,940,000     1,970,000      2,212,000 
Magnolia Mall                  J.C. Penney,            4,097,000         20.00          6,222,000     6,222,000      4,511,000 
                               Sears, Belk,                                                                                    
                               Rose's                                                                                          
Laurel Mall                    Boscov's Dept.          3,609,000         10.44          4,915,000     1,966,000      3,262,000 
                               Store, Kmart, J.C.                                                                              
                               Penney                                                                                          
Palmer Park Mall(6)            The Bon-Ton,            2,036,000         14.19          2,868,000     1,434,000      1,828,000 
                               Eckerd Drug Store                                                                               
Forestville Shopping Center    Ames                      638,000          6.44            766,000       766,000        462,000 
Mandarin Corners               Wal-Mart,               1,671,000         10.72          1,984,000     1,984,000      1,517,000 
                               Upton's, Carmike                                                                                
                               Cinemas                                                                                         
Springfield Park(7)            Target                    N/A              N/A             N/A            N/A           N/A     
Rio Mall                       Kmart, Staples            462,000         12.25            768,000       384,000        294,000 
                               The Office                                                                                      
                               Superstore                                                                                      


                                Property                                                                                       
                                EBITDA-                                                                                        
                                Company's                                                                                      
Property Name                    Share                                                                                         
-----------------------------  -----------                                                                                     
                                                                                                                               
Lehigh Valley Mall              $5,092,000                                                                                     
Court at Oxford Valley(5)        3,183,000                                                                                     
North Dartmouth Mall             4,047,000                                                                                     
Whitehall Mall                   1,106,000                                                                                     
Magnolia Mall                    4,511,000                                                                                     
Laurel Mall                      1,305,000                                                                                     
Palmer Park Mall(6)                914,000                                                                                     
Forestville Shopping Center        462,000                                                                                     
Mandarin Corners                 1,517,000                                                                                     
Springfield Park(7)                N/A                                                                                         
Rio Mall                           147,000                                                                                     

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                                                        [Enlarge/Download Table]


                                                                     Year          Total                                    
                                                   Percentage       Built/        Square                                    
Property Name                 Location               Owned       Renovated(1)     Feet(2)                                   
----------------------------  -------------------  ------------  --------------  -----------                                
                                                                                                                            
Crest Plaza                   Allentown, PA            100%        1959/1991        153,000                                 
Park Plaza Shopping Center    Pinellas Park, FL         50%        1963/1983        151,000                                 
South Blanding Village        Jacksonville, FL         100%             1986        107,000                                 
Ormond Beach Mall             Daytona                   25%        1966/1991        103,000                                 
                              Beach, FL                                                                                     
Ingleside Center              Thorndale, PA             70%(8)     1981/1995        102,000                                 
Punta Gorda Mall              Punta Gorda, FL           25%        1965/1992        102,000                                 
                                                                                  ---------                                 
  Total/weighted average                                                          5,968,000                                 
                                                                                  =========                                 


                                                                                             In-Line Stores                 
                                Owned                                                         Average Base                  
                               Square      Percentage         Principal                         Rent Per        Property    
Property Name                   Feet        Leased(3)          Tenants         Base Rent     Square Foot(4)      Revenue    
----------------------------  -----------  ------------  -------------------  -------------  ----------------  -------------
                                                                                                                            
Crest Plaza                      153,000       83%       Weis Market,          $   866,000        $ 6.30        $ 1,001,000 
                                                         Eckerd Drug Store                                                  
Park Plaza Shopping Center       151,000       95        Eckerd Drug               695,000          6.52            900,000 
                                                         Store, Ace                                                         
                                                         Hardware, Publix                                                   
                                                         Supermarket                                                        
South Blanding Village           107,000       94        Food Lion,                687,000          8.24            839,000 
                                                         Scotty's                                                           
Ormond Beach Mall                103,000       94        Belk-Lindsey,             345,000          5.43            512,000 
                                                         Publix                                                             
                                                         Supermarket,                                                       
                                                         Eckerd Drug Store                                                  
Ingleside Center                 102,000      100        Kmart                     444,000          N/A             448,000 
Punta Gorda Mall                 102,000       87        Beall's, Publix           340,000          5.30            612,000 
                                                         Supermarket,                                                       
                                                         Eckerd Drug Store                                                  
                               ---------   ----                                -----------                      ----------- 
  Total/weighted average       4,942,000   89.2%                               $39,290,000                      $55,008,000 
                               =========   ----                                ===========                      =========== 


                               Property                      Property                                                       
                               Revenue-                       EBITDA-                                                       
                               Company's      Property       Company's                                                      
Property Name                    Share         EBITDA          Share                                                        
----------------------------  -------------  -------------  ------------                                                    
                                                                                                                            
Crest Plaza                    $ 1,001,000    $   719,000    $   719,000                                                    
Park Plaza Shopping Center         450,000        626,000        313,000                                                    
South Blanding Village             839,000        593,000        593,000                                                    
Ormond Beach Mall                  128,000        344,000         86,000                                                    
Ingleside Center                   314,000        430,000        301,000                                                    
Punta Gorda Mall                   153,000        408,000        102,000                                                    
                               -----------    -----------    -----------                                                    
  Total/weighted average       $35,361,000    $37,803,000    $24,398,000                                                    
                               ===========    ===========    ===========                                                    

--------                                                                        
(1) Year initially completed and, where applicable, the most recent year in     
    which the property was substantially renovated or an additional phase of the
property was completed.                                                 
(2) Total Square Feet includes space owned or ground leased by anchors, and     
Owned Square Feet and Percent Leased excludes such space.               
(3) Percent Leased is calculated as a percent of Owned Square Feet for which    
leases were in effect as of August 31, 1997.                            
(4) Excludes space not owned by the Company and space subject to ground leases. 
(5) Rent, Revenue and EBITDA for The Court at Oxford Valley are based on        
annualized results for the nine months ended September 30, 1997.        
(6) Includes an 82,000 square foot Clover store currently vacant.               
(7) The Company owns an undivided one-half interest as a tenant in common in    
one of three floors in this former department store currently vacant and
  under development. Its share of reconstruction costs is approximately 15%.
(8) Represents a weighted average. The Company owns 100% of a portion of the    
 center and has a 50% interest in the partnership which owns the remaining
portion of the center.                                                  

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 The following table sets forth certain information, as of September 30,
1997, regarding principal tenants in the Existing Retail Properties:            

Principal Tenants 

                                                        [Enlarge/Download Table]

                                                 Square Footage    Square Footage    Total Square 
                                    Number of        Owned             Leased          Footage    
Tenant Name(1)                       Stores        By Tenant         By Tenant         Occupied   
----------------------------------  -----------  ----------------  ----------------  -------------
                                                                                                  
Ace Hardware                             1                --          20,000              20,000  
Ames                                     2                --         166,123             166,123  
BJ Wholesale Club                        1                --         105,000             105,000  
Beall's                                  1                --          22,000              22,000  
Belk                                     1                --         119,046             119,046  
Belk-Lindsey                             1                --          14,000              14,000  
Best Buy                                 1                --          59,495              59,495  
The Bon-Ton                              1                --          82,500              82,500  
Boscov's Department Store                1                --         183,000             183,000  
Dick's Clothing & Sporting Goods         1                --          63,115              63,115  
Eckerd Drug Store                        5                --          57,500              57,500  
Food Lion                                1                --          29,000              29,000  
The Home Depot                           1                --         130,000             130,000  
HomePlace                                1                --          54,096              54,096  
J.C. Penney                              4           188,000         254,359             442,359  
Kmart Corp.                              3                --         263,000             263,000  
Kohl's(2)                                1            82,000              --              82,000  
Macy's                                   1           212,000              --             212,000  
Phar-Mor(3)                              1                --          45,621              45,621  
Publix Supermarket                       3                --         106,000             106,000  
Rose's                                   1                --          53,000              53,000  
Scotty's                                 1                --          45,000              45,000  
Sears                                    3                --         412,604             412,604  
Staples The Office Superstore            1                --          20,000              20,000  
Strawbridge's                            1           165,000              --             165,000  
Target                                   1           140,000              --             140,000  
Upton's(4)                               1                --          51,800              51,800  
Wal-Mart                                 1                --          82,000              82,000  
Weis Market                              1                            45,000              45,000  
                                        --           -------       ---------           ---------  
  Total                                 43           787,000       2,483,259           3,270,259  
                                        ==           =======       =========           =========  

------------                                                                    
(1) Actual tenant may be an affiliate of the entity listed.                     
(2) Subleased to Kohl's by Kimco Realty Corp.                                   
(3) Subleased to Phar-Mor by an affiliate of Melville Realty Corporation.       
(4) Subleased to Upton's by J. Byron.                                           

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Set forth below is a description of each of the Existing Retail       
Properties:                                                                     

Lehigh Valley Mall. Lehigh Valley Mall is a 1.1 million square foot,  
two-level, enclosed regional mall located in Allentown, Pennsylvania at the     
intersection of Route 22 and Route 145 (MacArthur Road). The mall originally    
opened in 1977, and the Company completely renovated the mall's common areas in 
1996 with the addition of marble floors, new brighter lighting, landscaping,    
ceiling treatments and many new tenant store fronts. The mall is located on a   
100-acre site, with approximately 125 in-line stores and three anchors: J.C.    
Penney, Macy's and Strawbridge's. The Company has a 50% interest in the         
partnership which owns the mall.                                                

    The Court at Oxford Valley. The Court at Oxford Valley is a 692,000 square
foot power center located in Langhorne, Pennsylvania, directly opposite the 1.5 
million square foot Oxford Valley Mall. The Court, which opened in 1996, is     
located on a 95-acre site, with the following principal tenants: Dick's         
Clothing & Sporting Goods, Best Buy, Phar-Mor, HomePlace, BJ Wholesale Club and 
The Home Depot. BJ Wholesale Club and The Home Depot each own their stores. The 
Company has a 50% interest in the partnership which owns the shopping center.   

North Dartmouth Mall. North Dartmouth Mall is a 620,000 square foot,  
one-level, regional mall located in North Dartmouth, Massachusetts,             
approximately three miles west of New Bedford and eight miles east of Fall      
River, Massachusetts, directly accessible from Interstate 195. The mall, which  
opened in 1971 and was renovated in 1987, contains 50 in-line stores anchored   
by Sears, J.C. Penney, Ames and General Cinema Theatres. The Company owns 100%  
of, and manages, the mall.                                                      

Whitehall Mall. Whitehall Mall is a 603,000 square foot, one-level,   
enclosed regional mall located in Allentown, Pennsylvania, directly across from 
Lehigh Valley Mall. The mall was completed in 1964 and renovated in 1982. This  
mall is located on a 51-acre site, with 61 in-line stores anchored by Sears and 
Kohl's. The Company has a 50% interest in the mall as a tenant in common. The   
Company expects to commence redevelopment of Whitehall Mall in January 1998.    
When redeveloped, the mall will include the existing Sears and Kohl's stores as 
well as a number of additional value-oriented retailers in a revised            
configuration.                                                                  

    Magnolia Mall. Magnolia Mall is a 570,000 square foot, one-level, regional
mall located in Florence, South Carolina at the Highway 20 interchange of       
Interstate 95, approximately midway between Myrtle Beach and Columbia, South    
Carolina. The mall serves a geographically large primary trade area, with the   
closest regional shopping center located approximately 70 miles from the        
center. The mall was opened in 1979 and was renovated in 1992. The mall is      
located on an 88-acre site, with 66 in-line stores and four anchors: Sears,     
Belk, J.C. Penney and Rose's. The Company owns (subject to a ground lease) 100% 
of, and manages, the mall. Fee title may be purchased for $5.7 million in 2004. 

Laurel Mall. Laurel Mall is a 558,000 square foot, one-level, enclosed
mall located in Hazleton, Pennsylvania at the intersection of Interstate 81,    
Pennsylvania Route 309 and Airport Road. The mall opened in 1973, and was       
expanded in 1995 with the addition of J.C. Penney and 52,000 square feet of     
additional in-line space. The mall is located on a 55-acre site, with 72        
in-line stores and three anchors: Boscov's Department Store, J.C. Penney and    
Kmart Corp. The Company has a 40% interest in the partnership which owns the    
center.                                                                         

    Palmer Park Mall. Palmer Park Mall is a 349,000 square foot, enclosed mall
located in Easton, Pennsylvania, one mile north of U.S. Route 22 on             
Pennsylvania Route 248. The center, which opened in 1972 and was expanded and   
redeveloped in 1982, is located on a 50-acre site, with 59 in-line stores       
(including an Eckerd Drug Store) anchored by The Bon-Ton. Negotiations with a   
second anchor to replace a former Clover store are underway. Substantial        
redevelopment planning is proceeding with the purchase by the partnership       
owning the mall of the Clover building and the renovation of the Clover         
building. The Company has a 50% interest in the partnership which owns the      
mall.                                                                           

Forestville Shopping Center.  Forestville Shopping Center is a 218,000
square foot community center located in Forestville (suburban Washington, DC),  
Maryland on Old Marlboro Pike and Forestville Road (Interstate 495 and Route    
4). The center, which opened in 1974 and was renovated in 1983, is located on   
an 18-acre site, with 20 in-line stores anchored by Ames.                       

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 Mandarin Corners Shopping Center. Mandarin Corners Shopping Center is a
216,000 square foot community center located on San Jose Boulevard and          
Interstate 295, ten miles southwest of downtown Jacksonville, Florida. The      
center, which opened in 1986, is located on a 23-acre site, with 25 in-line     
stores anchored by Wal-Mart, which expanded in 1993, Upton's and Carmike        
Cinemas.                                                                        

    Springfield Park. Springfield Park is located in Springfield, Pennsylvania
at the intersection of Route 1 (Baltimore Pike) and Route 420, approximately    
one-half mile north of the Springfield Mall and about one mile north from the   
interchange of Route 1 and Interstate 476. Target, the Company and the          
Company's co-tenant acquired condominium interests in the former Strawbridge &  
Clothier store, now vacant. Target plans to occupy the lower levels, which will 
be expanded to approximately 147,000 square feet. The Company owns a 50%        
interest in the third level (approximately 65,000 square feet) and a 4,000      
square foot outparcel. All levels of the building have access to at-grade       
parking. The Company anticipates the releasing of the third level in the second 
half of 1998.                                                                   

 Rio Mall. Rio Mall is a 161,000 square foot community center located in
Rio Grande, New Jersey on a 16-acre site at the intersection of Route 9 and     
Route 47. The center, which opened in 1973, was renovated in 1992 with the      
expansion of Kmart. The center contains 16 in-line stores anchored by Kmart and 
Staples The Office Superstore. The Company has a 50% interest in the            
partnership which owns the center.                                              

Crest Plaza Shopping Center. Crest Plaza Shopping Center is a 153,000 
square foot neighborhood center located in South Whitehall Township,            
Pennsylvania on a 33-acre site at the intersection of Cedar Crest Boulevard and 
Walbert Avenue. The center, which opened in 1959, was renovated and expanded in 
1991. The center contains 21 in-line stores anchored by Weis Market.            

    Park Plaza Shopping Center. Park Plaza Shopping Center is a 151,000 square
foot neighborhood center located on 49th Street and Park Boulevard, Pinellas    
Park, Florida. The center opened in 1963 and was renovated in 1983, led by the  
expansion and remodeling of Publix Supermarket. The center is located on a      
15-acre site, with 24 in-line stores anchored by Publix Supermarket, Eckerd     
Drug Store and Ace Hardware. The Company has a 50% interest in the center as a  
tenant in common.                                                               

 South Blanding Village Shopping Center. South Blanding Village Shopping
Center is a 107,000 square foot neighborhood center located in Orange Park      
(suburban Jacksonville), Florida. The center, which opened in 1986, is located  
on a 17.5-acre site, with 13 in-line stores anchored by Food Lion and Scotty's. 

    Ormond Beach Mall. Ormond Beach Mall is a 103,000 square foot neighborhood
center located in Daytona Beach, Florida. The center, which opened in 1966, was 
expanded and remodeled in 1991. Ormond Beach Mall is located on an 11-acre      
site, with 18 in-line stores anchored by Publix Supermarket, Belk-Lindsay and   
Eckerd Drug. The Company has a 25% interest in the center as a tenant in        
common.                                                                         

  Ingleside Shopping Center. Ingleside Shopping Center is a 102,000 square
foot neighborhood center located in Thorndale, PA on a 10-acre site at the      
intersection of Lincoln Highway (Business U.S. Route 30) and Bailey Road,       
Chester County. The center, which opened in 1981, was redeveloped in 1995 with  
Kmart occupying the entire property. The Company owns 100% of a portion of the  
center and has a 50% interest in the partnership which owns the remaining       
portion of the center.                                                          

  Punta Gorda Mall. Punta Gorda Mall is a 102,000 square foot neighborhood
center located in Punta Gorda, Florida on U.S. Route 41 and Tamiami Trail. The  
center, which opened in 1965, was remodeled in 1992. The center is located on a 
77-acre site, and includes 21 in-line stores anchored by Publix Supermarket,    
Beall's and Eckerd Drug Store. The Company has a 25% interest in the center as  
a tenant in common.                                                             

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The following table sets forth scheduled lease expirations and certain
other information, as of August 31, 1997, for leases in place for the Existing  
Retail Properties assuming that none of the tenants exercises renewal options   
or termination rights:                                                          

                                                        [Enlarge/Download Table]

                                                                             Base Rent    Percent of Total Leased 
                                               Annualized    Approximate    Per Square          Square Feet       
                                 Number of     Base Rent     Square Feet     Foot of          Represented By      
                                  Expiring    of Expiring    of Expiring     Expiring            Expiring         
Year Ending December 31,          Leases        Leases         Leases         Leases              Leases          
-------------------------------  -----------  -------------  -------------  ------------  ------------------------
                                                                                                                  
1998   ........................       85       $ 2,726,056       303,954       $8.97               6.9%           
1999   ........................       50         1,929,919       327,654        5.89               7.4            
2000   ........................       56         1,752,427       158,080       11.00               3.6            
2001   ........................       72         3,531,402       432,572        8.16               9.8            
2002   ........................       46         1,929,045       178,057       10.83               4.0            
2003   ........................       37         2,662,176       231,062       11.52               5.2            
2004   ........................       28         2,830,863       224,083       12.63               5.1            
2005   ........................       32         2,049,362       124,892       16.41               2.8            
2006   ........................       48         4,717,681       554,385        8.51              12.6            
2007   ........................       26         3,587,946       496,852        7.22              11.3            
                                      --       -----------     ---------       -----              ----            
 Total/weighted average  ......      480       $27,716,877     3,031,591       $9.14              68.8%           
                                     ===       ===========     =========       -----              ====            

The Acquisition Properties                                                      

The Company has entered into agreements to acquire a 100% interest in 
Northeast Tower Center and a 50% interest in Hillview Shopping Center.          

Hillview Shopping Center and Northeast Tower Center are power centers 
being acquired from TRO Affiliates as part of the TRO Transaction. The          
Company's actual aggregate purchase price (in the form of assumed debt and      
equity) for each property will be based on the following formula: (i) leased    
space will be valued at a 10.0% capitalization rate on net cash flow (as        
defined in the agreements); and (ii) unleased space will be valued based on an  
appraisal process. The equity portion of the purchase price will be payable, in 
each case, in OP Units valued at $23.40 per unit, which was the average closing 
price of the Shares over the 20 trading days prior to July 30, 1997, the date   
that the definitive documentation for the TRO Transaction was executed.         
Accordingly, the actual equity portion of the purchase price will be a function 
of additional lease-up activity and other factors prior to the Company's        
purchase of the Acquisition Properties.                                         

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The following table sets forth certain information, as of November 28,
1997, regarding the Acquisition Properties:                                     

                                                        [Enlarge/Download Table]

                                                Percentage        Expected      Total                                   
                                                  To Be          Acquisition    Square                                  
Property Name               Location             Acquired           Date         Feet                                   
--------------------------  ------------------  --------------  -------------  ---------                                
                                                                                                                        
Hillview Shopping Center    Cherry Hill, NJ           50%           1998       340,000                                  
Northeast Tower Center      Philadelphia, PA         100%(3)        1999       484,000                                  
                                                                               -------                                  
  Total                                                                        824,000                                  
                                                                               =======                                  


                               Owned                                      Estimated                                     
                              Square                 Principal           Acquisition                 Construction       
Property Name                  Feet                   Tenants                Cost                       Status          
--------------------------  ----------------  ------------------------  --------------------  --------------------------
                                                                                                                        
Hillview Shopping Center     340,000(1)       Target, Kohl's,             $  14,700,000(2)    All tenants open except   
                                              PETsMART, HomePlace,                            PETsMART                  
                                              Babies 'R Us, Crown                                                       
                                              Books                                                                     
Northeast Tower Center       353,000(4)       The Home Depot,                25,700,000(5)    Phase I: 363,000 square   
                                              PETsMART, Staples The                           feet completed. Phase II: 
                                              Office Superstore, Old                          Expected completion is    
                                              Navy, The Pep Boys --                           Fall 1998                 
                                              Manny, Moe & Jack                                                         
                             -------                                      -------------                                 

  Total                      693,000                                      $  40,400,000                                 
                             =======                                      =============                                 

______________                                                                  
(1) Includes 261,000 square feet of retail space situated on land leased to     
tenants which own their own buildings.                                  
(2) Includes allocated portion of expected assumed indebtedness of $12.9        
million at Company's proportionate share.                               
(3) The Company will initially acquire an 89% interest in the partnerships      
which own this property and the right to acquire the remaining 11%      
interest not earlier than three years from the initial acquisition date.
(4) Includes 153,000 square feet of retail space situated on land leased to     
tenants which own their own buildings.                                  
(5) Includes expected assumed indebtedness of $20.5 million.                    

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Set forth below are descriptions of the Acquisition Properties.       

Hillview Shopping Center. Hillview Shopping Center is a 340,000 square
foot power center which opened in October 1997 and is located on Route 38 in    
Cherry Hill, New Jersey, directly opposite the 1.3 million square foot Cherry   
Hill Mall. Approximately 261,000 square feet of space represents stores owned   
by tenants located on land leased by the Company to such tenants. Tenants in    
the center include Target, Kohl's, Babies 'R Us, HomePlace, PETsMART, Crown     
Books and Silver Diner. The Company expects to acquire a 50% interest in the    
center held by the TRO Affiliates in early 1998.                                

 Northeast Tower Center. Northeast Tower Center is a 484,000 square foot
power center located on Roosevelt Boulevard (Route 1) in the northeast section  
of Philadelphia. The first phase of the center, totaling 363,000 square feet,   
was completed in 1997. The center is being developed by PREIT-RUBIN and all of  
the equity interests in the center are owned by TRO Affiliates. The tenants in  
the center include The Home Depot, PETsMART, The Pep Boys - Manny, Moe & Jack,  
Staples The Office Superstore and Old Navy. When fully completed, the center is 
expected to contain approximately ten other stores.                             

   Shortly after completion of the center, which is currently anticipated to
occur during fall 1998, the Company intends to initially acquire 89% of the     
interests of the partnerships which own the property. The Company will have the 
absolute right to acquire the remaining 11% no less than 36 months following    
the initial acquisition date.                                                   

The Development Properties                                                      

The Company or a joint venture partner has rights in five Development 
Properties, four of which (Red Rose Commons, Blue Route Metroplex, and          
Christiana Power Center Phases I and II) were acquired in connection with the   
TRO Transaction. As each of the four Development Properties is completed and    
leased up, it will be valued based on the following principles: (i) all space   
leased and occupied by "credit tenants" will be valued at ten times adjusted    
cash flow (computed as specified in the applicable contribution agreement       
between the Company and TRO); (ii) all space leased to a credit tenant but      
unoccupied will be valued at ten times adjusted cash flow calculated as though  
the space were built and occupied as set forth in the budget for such property; 
and (iii) space not leased or occupied, whether built or unbuilt, will be       
valued as mutually agreed upon or, failing agreement, by an appraisal process.  
The Company will be obligated to issue Class A OP Units equal to 50% of the     
amount, if any, by which the value of the Company's interest in each project    
exceeded the aggregate cost of such project at the time of completion, with     
provisions for netting negative amounts arising in connection with completion   
or abandonment of any project against earlier completed projects. There can be  
no assurance that construction will be commenced on any Development Property    
for which construction has not commenced as of the date hereof or that any      
Development Property for which construction has commenced will be completed as  
planned. See "Risk Factors -- Possible Environmental Liabilities" and "-- Risks 
of Development" in the accompanying Prospectus.                                 

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The following table sets forth certain information, as of November 10,
1997, regarding the Development Properties:                                     

                                                        [Enlarge/Download Table]

                                                                              Planned      Planned                
                                                               Percentage      Total        Owned                 
                                                                 To Be        Square       Square                 
Property Name                          Location                  Owned         Feet         Feet                  
-------------------------------------  ----------------------  ------------  -----------  -----------             
                                                                                                                  
Christiana Power Center Phase I        Newark, DE                   50%         295,000      142,000              
Red Rose Commons(2)                    Lancaster, PA                50%         463,000      265,000              
Warrington Shopping Center(3)          Warrington, PA              100%         415,000      140,000              
Blue Route Metroplex(2)(3)             Plymouth Meeting, PA         50%         760,000      319,000              
Christiana Power Center Phase II(4)    Newark, DE                   50%         300,000      150,000              
                                                                              ---------    ---------              
  Total                                                                       2,233,000    1,016,000              
                                                                              =========    =========              


                                                     Total          Estimated                                     
                                        Square     Estimated       Development                                    
                                        Feet       Development       Cost -                           Expected    
Property Name                           Leased        Cost        Company Share      Status(1)       Completion   
-------------------------------------  ---------  --------------  ---------------  --------------  ---------------
                                                                                                                  
Christiana Power Center Phase I         169,000    $ 37,800,000     $18,900,000    Construction    Second half of 
                                                                                                   1998           
Red Rose Commons(2)                     352,000      29,000,000      14,500,000    Construction    Second half of 
                                                                                                   1998           
Warrington Shopping Center(3)                --      13,900,000      13,900,000    Development     Second half of 
                                                                                                   1999           
Blue Route Metroplex(2)(3)                   --      48,400,000      24,200,000    Development     First half of  
                                                                                                   2000           
Christiana Power Center Phase II(4)          --              --              --    Development     Second half of 
                                                                                                   2000           
                                        -------    ------------     -----------                                   
  Total                                 521,000    $129,100,000     $71,500,000                                   
                                        =======    ============     ===========                                   

--------                                                                        
(1) "Construction" indicates that construction activities, such as site         
preparation, ground-breaking activities, or exterior construction, have 
commenced. "Development" indicates that development activities, such as 
site surveys, preparation of architectural plans, or initiation of land 
use approvals or rezoning processes, have commenced (but "Construction" 
has not commenced).                                                     
(2) Subject to reduction to 25% under the terms of the Goldenberg Letter        
   Agreement (see "The Company -- The TRO Transaction -- The Goldenberg Letter
Agreement").                                                            
(3) Construction of this project is subject to obtaining site plan approval.    
(4) This project is not currently zoned for retail use, and participation by    
the Company in the development is subject to rezoning.                  

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Set forth below are descriptions of the five Development Properties:  

Christiana Power Center -- Phases I and II. Christiana Power Center is
located adjacent to the Christiana Mall in Newark, Delaware at the Delaware     
Route 1 interchange of Interstate 95. Phase I of the center is expected to      
contain approximately 295,000 square feet, of which 137,000 square feet has     
been ground leased to Costco, 32,000 square feet is subject to a binding lease  
and the remaining 126,000 square feet is currently subject to discussions with  
various tenants. Construction of Phase I commenced in November 1997 and is      
expected to be completed in the second half of 1998.                            

Phase II of the Christiana Power Center is planned for 300,000 square 
feet. The construction of Phase II is subject to rezoning for retail use, and   
Phase II is not expected to open until the second half of 2000.                 

    Red Rose Commons. Red Rose Commons is a power center located in Lancaster,
Pennsylvania. This project is being developed in a joint venture with The       
Goldenberg Group in which the Company will have a 50% interest. The center is   
expected to contain 463,000 square feet and be anchored by The Home Depot, Weis 
Market, HomePlace, The Sports Authority, Office Max, PETsMART, Barnes & Noble   
Book Store and The Pep Boys - Manny, Moe & Jack. Construction commenced in      
November 1997, and the center is expected to open in the second half of 1998.   

    Warrington Shopping Center. Warrington Shopping Center is a proposed power
center expected to contain approximately 415,000 square feet located at the     
intersection of Route 611 and Street Road in Warrington, Pennsylvania.          
Development activity on this project is in the preliminary stages and a number  
of land use approvals and leasing commitments must be obtained prior to the     
commencement of construction in 1998.                                           

    Blue Route Metroplex. Blue Route Metroplex is located in Plymouth Meeting,
Pennsylvania. This proposed power center is expected to contain approximately   
760,000 square feet with an additional parcel for office or hotel development.  
The opening date for the Blue Route Metroplex is expected to occur during the   
first half of 2000. The site has been properly zoned for the intended uses and  
final site plan approval is pending. This project is being developed in a joint 
venture with The Goldenberg Group, in which the Company will have a 50%         
interest. The Company's interest in the property will be limited to the retail  
portion of the project.                                                         

The Multifamily Properties                                                      

  The Company has interests in 19 Multifamily Properties with an aggregate
of 7,236 units. The Company manages ten of its Multifamily Properties, and the  
nine remaining Multifamily Properties held are managed by the Company's         
partners.                                                                       

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The following table sets forth certain information regarding the 19   
Multifamily Properties as of (or for the period ended) August 31, 1997:         

                                                        [Enlarge/Download Table]

                                                                      Year        Number                               
                                                    Percentage       Built/         Of         Total       Percentage  
Property Name              Location                   Owned       Renovated(1)     Units    Square Feet     Occupied   
-------------------------  -----------------------  ------------  --------------  --------  -------------  ------------
                                                                                                                       
Emerald Point              Virginia Beach, VA            65%      1965/1993           862       846,000       96%      
Boca Palms                 Boca Raton, FL               100%      1970,1991           522       673,000        97      
                                                                     /1994                                             
Lakewood Hills             Harrisburg, PA               100%      1972, 1975,         562       630,000        96      
                                                                  1982/1988                                            
Regency Lakeside           Omaha, NE                     50%      1970/1990           433       492,000        99      
Kenwood Gardens            Toledo, OH                   100%      1951/1989           504       404,000        98      
Fox Run, Delaware          Bear, DE                      50%           1988           414       359,000        96      
Eagle's Nest               Coral Springs, FL             50%           1989           264       343,000        97      
Palms of Pembroke          Pembroke Pines, FL           100%      1989/1995           348       340,000        95      
Hidden Lakes               Dayton, OH                   100%      1987/1994           360       306,000        98      
Cobblestone                Pompano Beach, FL            100%      1986/1994           384       297,000        95      
Countrywood                Tampa, FL                     50%      1977/1997           536       295,000        95      
Shenandoah Village         West Palm Beach, FL          100%      1985/1993           220       286,000        97      
Marylander                 Baltimore, MD                100%      1951/1989           510       279,000        98      
Camp Hill Plaza            Camp Hill, PA                100%      1967/1994           300       277,000        97      
Charter Pointe             Altamonte Springs, FL         40%      1974/1993           312       258,000        96      
Fox Run                    Warminster, PA                50%      1969/1992           196       232,000        99      
Cambridge Hall             West Chester, PA              50%      1967/1993           232       186,000        99      
Will-O-Hill                Reading, PA                   50%      1970/1986           190       152,000        99      
2031 Locust Street         Philadelphia, PA             100%      1929/1986            87        89,000        98      
                                                                                    -----     ---------                
 Total/Weighted Average                                                             7,236     6,744,000       97%      
                                                                                    =====     =========                


                                        Monthly        Monthly                        Property                         
                            Average     Quoted         Quoted                         Revenue -                        
                             Rent        Rent           Rent           Property        Company       Property          
Property Name              per Unit    per Unit    per Square Foot      Revenue         Share         EBITDA           
-------------------------  ----------  ----------  -----------------  -------------  -------------  -------------      
                                                                                                                       
Emerald Point                $  463      $  515       $ 0.52          $ 4,943,000    $ 3,213,000    $ 2,829,000        
Boca Palms                      802         917         0.71            5,159,000      5,159,000      2,820,000        
Lakewood Hills                  590         663         0.59            4,036,000      4,036,000      2,409,000        
Regency Lakeside                886         933         0.82            4,690,000      2,345,000      2,896,000        
Kenwood Gardens                 362         422         0.53            2,294,000      2,294,000      1,002,000        
Fox Run, Delaware               588         609         0.70            3,224,000      1,612,000      1,858,000        
Eagle's Nest                    812         898         0.69            2,650,000      1,325,000      1,302,000        
Palms of Pembroke               788         901         0.92            3,598,000      3,598,000      2,142,000        
Hidden Lakes                    523         622         0.73            2,400,000      2,400,000      1,407,000        
Cobblestone                     644         724         0.94            3,106,000      3,106,000      1,791,000        
Countrywood                     409         443         0.80            2,796,000      1,398,000      1,242,000        
Shenandoah Village              820         923         0.71            2,279,000      2,279,000      1,246,000        
Marylander                      461         510         0.93            2,990,000      2,990,000      1,698,000        
Camp Hill Plaza                 598         675         0.73            2,214,000      2,214,000      1,359,000        
Charter Pointe                  470         518         0.63            1,840,000        736,000        831,000        
Fox Run                         637         671         0.57            1,512,000        756,000        766,000        
Cambridge Hall                  607         628         0.78            1,748,000        874,000        894,000        
Will-O-Hill                     487         522         0.65            1,142,000        571,000        592,000        
2031 Locust Street            1,172       1,302         1.27            1,290,000      1,290,000        627,000        
                             ------      ------       ------          -----------    -----------    -----------        
 Total/Weighted Average      $  595      $  659       $ 0.71          $53,911,000    $42,196,000    $29,711,000        
                             ------      ------       ------          ===========    ===========    ===========        

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                                                                [Download Table]

                             Property         
                             EBITDA -         
                              Company         
Property Name                  Share          
-------------------------  -------------------
                                              
Emerald Point                $  2,229,000(2)  
Boca Palms                      2,820,000     
Lakewood Hills                  2,409,000     
Regency Lakeside                2,016,000(2)  
Kenwood Gardens                 1,002,000     
Fox Run, Delaware                 929,000     
Eagle's Nest                      651,000     
Palms of Pembroke               2,142,000     
Hidden Lakes                    1,407,000     
Cobblestone                     1,791,000     
Countrywood                       881,000(2)  
Shenandoah Village              1,246,000     
Marylander                      1,698,000     
Camp Hill Plaza                 1,359,000     
Charter Pointe                    558,000(2)  
Fox Run                           383,000     
Cambridge Hall                    447,000     
Will-O-Hill                       296,000     
2031 Locust Street                627,000     
                             --------------   
 Total/Weighted Average      $ 24,891,000     
                             ==============   

--------                                                                        
(1) Year initially completed and most recently renovated, and where applicable, 
year(s) in which additional phases were completed at the property.      
(2) The Company's share of EBITDA from this property for the year ended August  
  31, 1997 is greater than its stated percentage interest because of certain
preferred return provisions in the respective partnership agreements.   

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Other Properties                                                                

    Shortly following the initial organization of the Company, it acquired six
industrial properties. The Company has not acquired any property of this type   
in over 20 years and the Company does not consider these properties to be part  
of its core portfolio. In the aggregate, these properties contributed less than 
3% of the Company's net rental income for the fiscal year ended August 31,      
1997, and the Company is currently evaluating the potential disposition of      
these assets.                                                                   

    The following table sets forth certain information, as of August 31, 1997,
regarding the six industrial properties:                                        

Industrial Properties 

                                                                [Download Table]

                               Year       Percentage      Square     Percentage 
Property and Location        Acquired       Owned         Feet         Leased   
--------------------------   ----------   ------------   ---------   -----------
                                                                                
Office and Warehouse                                                            
Annandale, VA ............     1962           100%       332,000        100%    
Warehouse                                                                       
Pennsauken, NJ   .........     1962           100%        12,000        100%    
Warehouse                                                                       
Allentown, PA ............     1962           100%        16,000        100%    
Warehouse                                                                       
Pennsauken, NJ   .........     1963           100%        30,000        100%    
Warehouse and Plant                                                             
Lowell, MA ...............     1963           100%       197,000        100%    
Warehouse and Plant                                                             
Ft. Washington, PA  ......     1962            50%       141,000        100%    
                                                         -------                
  Total ..................                               728,000                
                                                         =======                

  The Company also holds partial interests in three parcels of undeveloped
land. Over the next 12 months, the Company anticipates determining, with its    
respective joint venture partners, whether any of these parcels present         
appropriate development opportunities for the Company; in the event that they   
do not, the Company intends to consider the potential disposition of these      
assets.                                                                         

    The following table sets forth certain information, as of August 31, 1997,
regarding the three land parcels:                                               

Land Parcels  

 Year       Percentage
Location                    Acquired       Owned       Acres                    
-------------------------   ----------   -----------   ------                   
Rancocas, NJ ............     1971          75%         54                      
Elizabethtown, PA  ......     1972          50%         22                      
Coral Springs, FL  ......     1990          50%         14                      
                                  --
Total   ...............                               90                    
                                  ==

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MANAGEMENT  

Trustees and Officers                                                           

    The Company's Board of Trustees consists of nine members, five of whom are
not employed by or otherwise affiliated with the Company. The following table   
sets forth certain information with respect to the Trustees, senior officers,   
and other significant employees of the Company:                                 

                                                        [Enlarge/Download Table]

Name                          Age                          Position                       
----------------------------  -----  -----------------------------------------------------
                                                                                          
Trustees:                                                                                 
Sylvan M. Cohen ............   83    Chairman of the Board of Trustees                    
Ronald Rubin*   ............   66    Chief Executive Officer and Trustee                  
Jonathan B. Weller .........   51    President, Chief Operating Officer and Trustee       
George F. Rubin*   .........   54    President of PREIT-RUBIN and Trustee                 
William R. Dimeling   ......   56    Trustee                                              
Rosemarie B. Greco*   ......   51    Trustee                                              
Lee H. Javitch  ............   65    Trustee                                              
Leonard I. Korman  .........   61    Trustee                                              
Jeffrey P. Orleans .........   51    Trustee                                              

Senior Officers:                                                                          
Edward A. Glickman .........   40    Executive Vice President and Chief Financial Officer 
Jeffrey A. Linn ............   48    Senior Vice President-Acquisitions and Secretary     
Dante J. Massimini .........   64    Senior Vice President-Finance and Treasurer          
Raymond J. Trost   .........   42    Vice President-Multifamily Asset Management          
Leonard B. Shore   .........   66    Executive Vice President-Development of PREIT-       
                                     RUBIN                                                
Joseph F. Coradino .........   46    Executive Vice President of PREIT-RUBIN              
Alan F. Feldman ............   34    Chief Operating Officer-Retail Division of PREIT-    
                                     RUBIN                                                
Pat A. Berns ...............   43    Executive Vice President-Retail Leasing of PREIT-    
                                     RUBIN                                                
Other Significant Employees:                                                              
Elaine Berger   ............   43    Vice President-Specialty Leasing                     
William B. Berlin  .........   58    Vice President-Retail Management                     
Richard E. Brown   .........   45    Vice President-Asset Management                      
Timothy J. Bruce   .........   40    Vice President-Retail Leasing                        
David J. Bryant ............   39    Vice President-Financial Services                    
Harvey Diamond  ............   50    Vice President-Retail Leasing                        
Douglas S. Grayson .........   39    Vice President-Development                           
Eric M. Mallory ............   37    Vice President-Acquisitions                          
James L. Paterno   .........   34    Vice President-Office Leasing                        
Denny D. Moore  ............   41    Vice President-Retail Leasing                        

------------                                                                    
* Elected pursuant to the terms of the TRO Contribution Agreement.              

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Sylvan M. Cohen is Chairman of the Board of Trustees. Mr. Cohen was a 
founder of the Company in 1960 and served as its Chief Executive Officer for 37 
years. He is of counsel to the law firm of Drinker Biddle & Reath LLP and       
formerly a partner in the Philadelphia law firm of Cohen, Shapiro, Polisher,    
Shiekman and Cohen. Mr. Cohen is a former chairman of the National Association  
of Real Estate Investment Trusts and of the International Council of Shopping   
Centers ("ICSC"). He remains a member of the board of the ICSC. Mr. Cohen has   
served on numerous civic and charitable boards and is a member of the Advisory  
Board of the Real Estate Center at the Wharton School of the University of      
Pennsylvania. Mr. Cohen is a director of FPA Corporation, a trustee of EQK      
Realty Investments I, and a trustee of Arbor Property Trust. He is a graduate   
of the University of Pennsylvania and the University of Pennsylvania Law        
School.                                                                         

Ronald Rubin is Chief Executive Officer and Trustee. Mr. Rubin joined 
Richard I. Rubin and Co., Inc. in 1953 and served it in a number of capacities. 
He served as chairman and chief executive officer of The Rubin Organization,    
Inc. for over 25 years. Mr. Rubin is a past president of the Greater            
Philadelphia Chamber of Commerce and was instrumental in the organization of    
the Center City District, which is funded by local businesses to assure a       
cleaner, safer downtown in Philadelphia. Mr. Rubin has served on numerous       
boards and in various leadership positions in the Philadelphia community. He is 
a director of PECO Energy Corp. He is the brother of George F. Rubin.           

  Jonathan B. Weller is President and Chief Operating Officer and Trustee.
Mr. Weller joined the Company in 1993. From 1970 to 1993, Mr. Weller served in  
various capacities for Eastdil Realty, a real estate investment banking firm,   
where he most recently served as executive vice president and a member of the   
board of directors. Mr. Weller is a graduate of Williams College and the        
Columbia University Business School.                                            

   George F. Rubin is President of PREIT-RUBIN and Trustee. Mr. Rubin joined
The Rubin Organization, Inc. in 1970 and has served in various capacities since 
that time. Mr. Rubin is active in various retail organizations. He serves on    
the boards of various civic and educational and charitable organizations,       
including Lafayette College, Elwyn Institute and Thorncroft Therapeutic         
Horseback Riding, Inc., where he is chairman. He is a graduate of Lafayette     
College. He is the brother of Ronald Rubin.                                     

 William R. Dimeling, Trustee, has been a partner in Dimeling, Schreiber
and Park, an investment partnership since 1982. He is a general partner at      
Dimeling, Schreiber and Park Reorganization Fund, L.P., Funds I and II, and     
serves on the boards of a number of portfolio companies of those funds. He is   
also a director of Addison Capital Shares and Aero Services International, Inc. 
He is a graduate of Yale College and the University of Pennsylvania Law School. 

  Rosemarie B. Greco, Trustee, is a businesswoman. She served as president
and chief executive officer of CoreStates Bank, N.A. and as president of        
CoreStates Financial Corp. from August 1994 to August 1997. From 1991 to 1994,  
Ms. Greco served as chief retail banking officer of CoreStates and president of 
CoreStates First Pennsylvania Bank. Prior to 1991, Ms. Greco served as          
president of Fidelity Bank. Ms. Greco is a director of General Accident         
Insurance Company of America, and also serves on the boards of various civic    
and professional organizations. She is a graduate of St. Joseph's University.   

   Lee H. Javitch, Trustee, is a private investor. He served as chairman and
chief executive officer of Giant Food Stores, Inc. from 1979 to 1983. Prior to  
that time, he served in various senior management positions with Giant Foods.   
He is a director of First Maryland BanCorp and Dauphin Deposit Corp. He serves  
on the board of the Jewish Theological Seminary of America. He is a graduate of 
Syracuse University.                                                            

    Leonard I. Korman, Trustee, has been president and chief executive officer
of Korman Commercial Properties, Inc., a commercial real estate management and  
development firm, since 1996. He was a general partner of The Korman Co., a     
real estate management and development firm. He is a director of CoreStates     
Bank, N.A. and a trustee of the Pennsylvania Academy of Fine Arts and Albert    
Einstein Medical Center. Mr. Korman is a graduate of the Wharton School of the  
University of Pennsylvania.                                                     

 Jeffrey P. Orleans, Trustee, has served as chairman and chief executive
officer of FPA Corporation, a publicly held residential real estate developer,  
since 1993. Prior to that time, he was president of Orleans Construction        
Company. He is a director of New Jersey National Bank, the National Association 
of Home Builders and a trustee of Albert Einstein Medical Center as well as     
other civic, educational and professional organizations. Mr. Orleans is a       
graduate of Drexel University.                                                  

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Edward A. Glickman is Executive Vice President and Chief Financial    
Officer. He joined The Rubin Organization, Inc. in 1993. From 1989 to 1993, Mr. 
Glickman was employed by Presidential Realty Corporation, a publicly traded     
REIT, where he served as chief financial officer. Prior to that time, Mr.       
Glickman was employed by Shearson Lehman Brothers and Smith Barney. Mr.         
Glickman is a graduate of the University of Pennsylvania and the Harvard        
Business School.                                                                

  Jeffrey A. Linn is Senior Vice President for Acquisitions and Secretary.
Mr. Linn joined the Company in 1974 and has served in various capacities,       
including Vice President for Operations and Development. He is a board member   
of the National Housing Counsel and a member of ICSC. Mr. Linn is a graduate of 
Brandeis University.                                                            

  Dante J. Massimini is Senior Vice President and Treasurer. Mr. Massimini
joined the Company in 1971 and has held a number of positions since that time.  
Mr. Massimini is a graduate of LaSalle College.                                 

  Raymond J. Trost is Vice President for Multifamily Asset Management. Mr.
Trost joined the Company in 1983 and has held a number of positions since that  
time. Mr. Trost holds a real estate broker's license and is a licensed real     
estate appraiser. He holds various professional designations in the multifamily 
management industry.                                                            

  Leonard B. Shore is Executive Vice President-Development of PREIT-RUBIN.
Mr. Shore joined The Rubin Organization, Inc. in 1968 and has held a variety of 
positions in commercial real estate development, with 45 years of experience in 
the commercial real estate industry. Mr. Shore directed development for Willow  
Grove Park Mall, Willow Grove, Pennsylvania; Cumberland Mall, Vineland, New     
Jersey; Newburgh Mall, Newburgh, New York; and Christiana Mall, Newark,         
Delaware. In 1987-88, Mr. Shore directed the renovation of Philadelphia's       
historic Bellevue Stratford hotel into a mixed use facility. Mr. Shore is a     
graduate of Temple University.                                                  

Joseph F. Coradino is Executive Vice President of PREIT-RUBIN. Mr.    
Coradino joined The Rubin Organization, Inc. in 1981. Prior to that time, he    
was a leasing representative for Jackson Cross Company where he directed        
commercial brokerage activities for Southern New Jersey. Mr. Coradino began his 
real estate career with Kravitz Properties Inc., where he was a leasing         
specialist for enclosed mall shopping center space. Mr. Coradino has 20 years   
of experience in the commercial real estate industry, and is active in many     
professional, civic and charitable organizations. Mr. Coradino is a graduate of 
Temple University and the Schools of City Planning and Finance of the           
University of Arizona.                                                          

Alan F. Feldman is Chief Operating Officer-Retail Division, of        
PREIT-RUBIN. Mr. Feldman joined The Rubin Organization, Inc. in 1992. Prior to  
that time, Mr. Feldman was director of the community shopping center division   
of Strouse Greenberg & Co., Inc. Mr. Feldman has eight years of experience in   
the shopping center industry, and is a member of the ICSC. Mr. Feldman is a     
graduate of Tufts University and the Wharton School of the University of        
Pennsylvania.                                                                   

 Pat A. Berns is Executive Vice President-Retail Leasing of PREIT-RUBIN.
She joined The Rubin Organization, Inc. in 1983. Prior to joining The Rubin     
Organization, Inc., she was employed by First Union Real Estate, Cleveland,     
Ohio, as a leasing representative, and by R&B Enterprises as a space planner    
for commercial, retail and industrial properties. She is a member of the ICSC.  
Ms. Berns is a graduate of City College, New York.                              

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Executive Compensation                                                          

The following table sets forth certain information concerning the     
compensation paid by the Company during the fiscal years ended August 31, 1997, 
1996 and 1995 to the Company's Chief Executive Officer and the four other most  
highly compensated executive officers of the Company.                           

                                                        [Enlarge/Download Table]

                                                                                     Long Term                   
                                                                                    Compensation                 
                                                    Annual Compensation                Awards                    
                                          ----------------------------------------  --------------   All Other   
       Name and Principal                                         Other Annual                      Compensation 
            Position              Year     Salary      Bonus     Compensation(1)      Options           (2)      
--------------------------------  ------  ----------  ---------  -----------------  --------------  -------------
                                                                                                                 
Sylvan M. Cohen(3)                1997     $345,000    $     0        $     0                0         $ 9,070   
 Chairman and Chief               1996      342,333          0              0                0           9,070   
 Executive Officer and Trustee    1995      333,000          0              0           20,000           9,070   
Jonathan B. Weller                1997      301,731     50,000         22,414           20,000          26,611   
 President and Chief              1996      297,212          0          7,182           20,000          25,608   
 Operating Officer and Trustee    1995      281,539          0         37,463           35,000          32,408   
Robert G. Rogers(4)               1997      193,365          0         33,414                0               0   
 Executive Vice                   1996      191,923          0          7,182            5,000          69,654   
 President and Trustee            1995      183,269          0              0           10,000          72,499   
Jeffrey A. Linn                   1997      134,375     20,000         33,835           10,000          14,042   
 Senior Vice President-           1996      130,797          0          5,163           10,000          14,114   
 Acquisitions and                 1995      116,346          0              0           15,000          16,985   
 Secretary                                                                                                       
Dante J. Massimini                1997      128,365      5,000         39,204            5,000          60,661   
 Senior Vice President-           1996      125,673          0          5,174            5,000          59,897   
 Finance and                      1995      116,538          0              0           10,000          54,706   
 Treasurer                                                                                                       

------------                                                                    
(1) Amounts shown in fiscal 1997 represent: (i) discretionary contributions by  
 the Company to the accounts of Messrs. Weller, Rogers, Linn and Massimini
 in the Company's 401(k) retirement plan in the amounts of $7,164, $7,164,
 $6,010 and $5,704, respectively; and (ii) paid accrued vacation salary of
$15,250, $26,250, $27,825 and $33,500, respectively. Amounts shown in   
fiscal 1996 represent discretionary contributions by the Company to the 
accounts of the named executive officers in the Company's 401(k)        
retirement plan. Amounts shown for fiscal 1995 for Mr. Weller include   
$14,352 for relocation expenses, $12,378 for reimbursement for taxes    
 resulting from payment of living expenses on behalf of Mr. Weller in 1994
and $10,733 in respect of a leased automobile.                          
(2) All amounts for Mr. Cohen represent annual premium payments on life         
  insurance provided under Mr. Cohen's employment agreement. Amounts for Mr.
Weller include $9,750 of annual premium payments on life insurance      
provided under Mr. Weller's employment agreement. All other amounts     
  represent contributions by the Company with respect to fiscal 1997, fiscal
1996 and fiscal 1995 under the non-qualified retirement plan approved   
  during fiscal 1995 in which Messrs. Weller, Rogers, Massimini and Linn are
participants.                                                           
(3) Effective September 30, 1997, Mr. Cohen is no longer Chief Executive        
Officer.                                                                
(4) Mr. Rogers resigned as a Trustee of the Company effective September 30,     
1997 and as an officer of the Company effective December 31, 1997.      

Committees of the Board                                                         

The Company has a standing Audit Committee, Executive Compensation and
Human Resources Committee and Property Committee.                               

The Audit Committee is currently comprised of Ms. Rosemarie B. Greco  
(Chair), Mr. Lee H. Javitch and Mr. Jeffrey P. Orleans. The principal duties of 
the Audit Committee are to recommend independent public accountants for         
appointment by the Company; to review with the independent accountants the      
planned scope and results of the annual audit and their reports and             
recommendations; and to review with the independent accountants matters         
relating to the Company's system of internal controls.                          

The Executive Compensation and Human Resources Committee is currently 
comprised of Messrs. Leonard I. Korman (Chair), William R. Dimeling and Lee H.  
Javitch. The principal duties of the Executive Compensation and Human Resources 
Committee are to recommend compensation arrangements for the executive officers 
of the Company and to administer the Company's stock option plans.              

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  The Property Committee is currently comprised of Messrs. Sylvan M. Cohen
(Chair), Leonard I. Korman, and Jeffrey P. Orleans. Messrs. Ronald Rubin and    
Jonathan B. Weller serve as ex officio members of the Property Committee. The   
principal duties of the Property Committee are to review acquisitions and       
dispositions of portfolio properties proposed by management and make            
recommendations thereon to the Board of Trustees.                               

  The Trustees have also constituted a committee consisting of Mr. Leonard
I. Korman (Chair), Ms. Rosemarie B. Greco and Mr. William R. Dimeling for the   
purpose of addressing and resolving any matters which may arise in the          
implementation of the provisions of the TRO Transaction following the closing   
of the TRO Transaction.                                                         

Stock Option Plans                                                              

  Set forth below are the stock option plans of the Company and the number
of Shares authorized to be granted and outstanding under each:                  

                    Shares                       Options
                  Authorized To     Options      Currently
Plan                          Be Granted       Granted     Exercisable          
--------------------------   ---------------   ---------   ------------         
1990 Incentive                                                                  
and Non-Qualified                                                             
Stock Option Plan  ......      400,000        340,125       223,286           
Jonathan B. Weller                                                              
Non-Qualified                                                                 
Stock Option Plan  ......      100,000        100,000        75,000           
1990 Option Plan                                                                
for Non-Employee                                                              
Trustees  ...............      100,000         38,250        16,500           
1997 Stock Option                                                               
Plan   ..................      560,000        455,000             0           

The 1990 Incentive and Non-Qualified Stock Option Plan authorizes the 
grant of incentive of non-qualified stock options to key employees. The         
Jonathan B. Weller Non-Qualified Stock Option Plan was adopted by the Company   
pursuant to provisions of Mr. Weller's employment agreement and he is the only  
person eligible to receive options under such plan. The 1990 Option Plan for    
Non-Employee Trustees provides for the automatic grant of non-qualified stock   
options in respect of 1,000 Shares to each non-employee Trustee of the Company  
on the last trading day of January of each year at a price equal to the closing 
price of the Shares on that date.                                               

All options are granted with exercise prices equal to at least market 
value on the grant date, and it is the general policy of the Company that       
options vest in four equal annual installments commencing on the first          
anniversary of the grant date. All of the outstanding options expire ten years  
after their grant.                                                              

The 1997 Stock Option Plan was adopted in connection with the TRO     
Transaction and options on 455,000 Shares were granted to former TRO officers   
and employees on September 30, 1997 at an exercise price of $25.41 per Share.   
All options granted on September 30, 1997 vest in four equal annual             
installments commencing January 1, 1999, and on each anniversary date thereof.  
It is anticipated that the remaining 105,000 options authorized under the 1997  
Stock Option Plan will be granted over the next three months to approximately   
40 employees.                                                                   

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Employment Agreements                                                           

The Company and PREIT-RUBIN are parties to employment agreements with 
substantially all of their respective executive officers, including Messrs.     
Sylvan M. Cohen, Ronald Rubin, Jonathan B. Weller, George F. Rubin, Edward A.   
Glickman, Jeffrey A. Linn and Daniel J. Massimini.                              

  Mr. Cohen's employment agreement was originally entered into in 1985 and
has been amended and extended several times since that date. The current        
expiration date of Mr. Cohen's employment agreement is December 31, 2000. Mr.   
Cohen's employment agreement provides for current annual base compensation of   
$345,000 and for post-termination benefits for the life of Mr. Cohen equal to   
50% of the highest rate of Mr. Cohen's compensation while employed by the       
Company. Mr. Cohen's spouse is also entitled to payments under the contract if  
she survives him. Mr. Cohen did not participate in the Company's now terminated 
defined benefit plan and does not participate in the Company's defined          
contribution plan.                                                              

  The Company is party to an employment agreement with Ronald Rubin for an
initial term of five years, extending year-to-year thereafter until terminated  
by either party. The agreement took effect on September 30, 1997. During the    
period of his employment, Mr. Rubin is required to devote his full working      
time, energy, skill and best efforts to the performance of his duties. Under    
the agreement, he may not participate in any other business pursuits, except he 
may maintain his existing ownership interest in approximately 28 commercial     
properties in which the Company will have no interest so long as the aggregate  
time he devotes to such properties is insignificant and such activities do not  
interfere with, detract from or affect the performance of his duties to the     
Company.                                                                        

    The contract provides for annual base salary of $345,000, provided that at
all times during the terms of the contract the base salary be at least equal to 
the highest amount paid to any other person employed by the Company. For each   
fiscal year commencing after December 31, 1997, Mr. Rubin will be entitled to   
incentive compensation under the Company's cash incentive bonus plan. The       
contract also provides for the grant pursuant to the 1997 Stock Option Plan of  
non-qualified options to purchase 150,000 Shares. Such options were granted to  
Mr. Rubin on September 30, 1997 at an exercise price of $25.41, which was the   
closing price of the Shares on September 30, 1997. The options vest in four     
equal annual installments beginning January 1, 1999.                            

  If Mr. Rubin's employment is terminated other than for cause or a change
in control of the Company, he will be entitled to lump sum severance equal to   
the present value of his base salary and a target incentive bonus for the       
remaining portion of the contract term at the time of termination. If his       
employment is terminated pursuant to a change in control (including voluntary   
termination by Mr. Rubin within 60 days of a change in control), the Company    
must pay him up to three times the present value of his base salary and target  
incentive compensation, subject to all reductions necessary to preserve the     
deductibility of all such payments under the Code. During Mr. Rubin's           
employment and for one year thereafter if his employment is terminated for      
cause, Mr. Rubin is prohibited from competing with the Company as provided for  
therein. Any non-competition agreement would terminate upon a change in control 
of the Company.                                                                 

The Company is party to an employment agreement with Mr. Weller which 
provides that Mr. Weller is to serve as President and Chief Operating Officer   
of the Company with responsibility for the day-to-day management of the         
Company. The employment term, which began on January 31, 1994, was originally   
for a three year period, and was automatically extended, as of January 31, 1996 
and January 31, 1997. The agreement will be extended for new three-year terms   
beginning on each January 31 thereafter unless the Company gives Mr. Weller     
written notice at least 60 days prior to January 31 in a year that the term is  
not to be extended. Mr. Weller's annual base salary under the agreement         
currently is $305,000. In accordance with the employment agreement, on December 
14, 1993, the Company granted Mr. Weller non-qualified stock options to         
purchase 100,000 Shares of the Company at an exercise price equal to the fair   
market value of the Shares on such date.                                        

 Messrs. George F. Rubin's and Edward A. Glickman's employment contracts
are for two years and are automatically renewable for year-to-year terms        
thereafter unless prior notice is given by either party. In many respects,      
these contracts otherwise contain terms similar to those of the contract with   
Ronald Rubin, except that the severance payments upon a change in control are   
equal to two times the individual's base salary and                             

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targeted incentive compensation, subject to reduction to satisfy limitations on 
deductibility, and the individual may only obtain such payment if he resigns    
for Good Reason (as defined in the agreements) following a change in control.   
The annual base rates of compensation under such agreements for Messrs. George  
F. Rubin and Edward A. Glickman are $250,000 and $230,000 per annum,            
respectively.                                                                   

    The Company is also party to employment agreements with Messrs. Jeffrey A.
Linn and Dante J. Massimini. Mr. Linn's contract extends until December 31,     
2000. Mr. Massimini's employment agreement will expire on September 30, 1999.   
Mr. Linn serves as Senior Vice President-Acquisitions and Secretary and Mr.     
Massimini serves as Senior Vice President-Finance and Treasurer. The current    
annual base compensation for Mr. Linn and Mr. Massimini is $134,375 and         
$128,365, respectively.                                                         

Cash Incentive Bonus Plan                                                       

    Incentive Bonus Plan. The Company has established an incentive bonus plan,
effective January 1, 1998, for certain officers and key employees of the        
Company. The plan is a nonqualified, unfunded plan with bonuses to be paid from 
the general assets of the Company.                                              

  The Executive Compensation and Human Resources Committee of the Board of
Trustees administers the plan. The Committee has designated those officers and  
key employees who are eligible to receive a bonus under the plan, and each of   
the individuals who entered into employment agreements in connection with the   
TRO Transaction have been included as eligible to participate in the plan. A    
bonus pool has been created equal to a graduated percentage of "Adjusted Funds  
Available for Distribution," which is generally defined as funds from           
operations less certain adjustments, including annual capital expenditures,     
reserves for capital expenditures, distributions by the Company and working     
capital reserves. One-half of the pool will be paid to the participants based   
on set individual percentages. All or a portion of the remainder of the pool    
may be awarded by senior management (in its discretion, but subject to the      
approval of the Committee) to any of the participants in the plan and/or to any 
other employees of the Company who achieve the goals and objectives stated in   
the Trust's business plan. The plan provides that in no event will incentive    
compensation paid under the plan exceed $1,500,000 in any plan year.            

   Bonuses will be paid in single-sum cash payments within a reasonable time
after the Company's fiscal year-end financial statements are approved. Except   
as provided in a participant's employment agreement, only participants who are  
employed by the Company on December 31 of each plan year will be eligible to    
receive payments under the plan (unless the participant was no longer an        
employee due to a reorganization, or because he retired on or after age 65,     
became disabled, or died).                                                      

PREIT-RUBIN Stock Bonus Plan                                                    

Contemporaneously with the closing of the TRO Transaction, PREIT-RUBIN
established a stock bonus plan for all of its employees who have completed at   
least one year of service on the day prior to the effective date of the plan.   
The plan will qualify for favorable tax treatment under section 401(a) of the   
Internal Revenue Code and all of the outstanding voting common shares of        
PREIT-RUBIN will be held by the trust established under the plan.               

PREIT-RUBIN issued all of its voting common shares to the plan for the
plan year ending December 31, 1997. The shares will be allocated to the plan    
accounts of the eligible employees as of December 31, 1997, pro rata, based on  
their covered compensation for 1997. The shares held by the plan will be        
appraised annually as of each December 31. The value of an employee's account   
under the plan will be paid to the employee upon termination of service. Since  
the articles of incorporation of PREIT-RUBIN restrict ownership of all of the   
outstanding voting common shares of PREIT-RUBIN to employees of PREIT-RUBIN or  
to a tax-qualified plan for the benefit of employees, benefits to terminated    
employees will be paid only in cash.                                            

Voting on major corporate transactions (including mergers,            
recapitalizations, liquidations, and similar transactions) will be passed       
through by the plan trustee to the plan's participants. Voting by the plan      
trustee on other matters will be directed by majority vote of the Stock Bonus   
Plan Committee, who will be appointed by the Board of Directors of PREIT-RUBIN. 

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Other Benefit Plans                                                             

   The Company maintains a 401(k) profit sharing and retirement savings plan
in which substantially all of the officers and employees are eligible to        
participate and a Supplemental Retirement Plan in which the executive officers  
named in the Summary Compensation Table other than Mr. Cohen are participants.  
Under the Supplemental Retirement Plan, the Company is required to make defined 
contributions to the plan annually in amounts equal to amounts that would have  
been required to be contributed under the Company's defined benefit pension     
plan, which was terminated in fiscal 1995, in order to fund the targeted        
retirement benefit (after taking into account amounts distributed under the     
terminated defined benefit pension plan, together with an assumed rate of       
return thereon). The Company has recorded $92,000, $160,000 and $168,000 of     
contributions due under the provisions of the Supplemental Retirement Plan for  
the years ended August 31, 1997, 1996 and 1995, respectively.                   

Independent Trustee Compensation                                                

    Trustees who are not officers of the Company receive an annual retainer of
$7,000 plus $1,250 per Board of Trustees meeting attended and $750 per          
Committee meeting attended. The Company made one-time cash payments of $25,000  
each to Mr. Jack Farber and Mr. Robert Freedman upon their resignations as      
Trustees in August and September, 1997, respectively, after 26 years and nine   
years of service, respectively. The Company also made one-time cash payments in 
1997 of $10,000 to each of the three members of the Special Acquisition         
Committee of the Board which met in 1996 and 1997 in connection with the        
negotiation of the TRO Transaction.                                             

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PRINCIPAL SECURITYHOLDERS 

The following table sets forth certain information regarding the      
beneficial ownership of Shares and OP Units by: (i) each trustee of the         
Company; (ii) each executive officer of the Company; (iii) all trustees and     
executive officers of the Company as a group; and (iv) each person or entity    
who is expected to be the beneficial owner of 5% or more of the outstanding     
Shares immediately following the completion of the Offering. Except as          
indicated below, all of such Shares and OP Units are owned directly, and the    
indicated person has sole voting and investment power. The extent to which a    
person holds OP Units is set forth in the footnotes below. The address of each  
person listed below is c/o Pennsylvania Real Estate Investment Trust, 455       
Pennsylvania Avenue, Suite 135, Fort Washington, Pennsylvania 19034.            

                                                        [Enlarge/Download Table]

                                           Shares and OP Units Beneficially Owned(1)   
                                        -----------------------------------------------
                                                             Percentage     Percentage 
                                                             Before the      After the 
Name                                        Number            Offering       Offering  
--------------------------------------  ------------------   ------------   -----------
                                                                                       
Sylvan M. Cohen  .....................  650,291 (2)           6.9%           4.9%      
Ronald Rubin  ........................  143,584 (3)           1.5            1.1       
Jonathan B. Weller  ..................  105,910 (4)           1.1              *       
George F. Rubin  .....................   87,523 (5)             *              *       
William R. Dimeling ..................    7,187 (6)             *              *       
Rosemarie B. Greco  ..................        0                 *              *       
Lee H. Javitch   .....................    5,500 (6)             *              *       
Leonard I. Korman   ..................  482,663 (7)           5.2            3.6       
Jeffrey P. Orleans  ..................   51,413 (8)             *              *       
Edward A. Glickman  ..................   13,606 (9)             *              *       
Jeffrey A. Linn  .....................   29,771 (10)            *              *       
Dante J. Massimini  ..................   20,931 (11)            *              *       
                                        ---------            ----           ----       
   All Trustees and executive officers                                                 
    as a group (12 persons)  .........  1,586,338 (12)       16.7%          11.7%      
                                        ============         ====           ====       

------------                                                                    
* Less than one percent                                                         
(1) All data on holdings are as of November 1, 1997. Unless otherwise indicated 
  in the following footnotes, each Trustee and Non-Trustee executive officer
has sole voting and investment power with respect to all such Shares and
OP Units.                                                               
(2) Includes 186,558 Shares owned by Mr. Cohen's spouse, 37,056 Shares owned by 
a trust of which Mr. Cohen's wife is a co-trustee, 252 Shares owned by a
  corporation 50% of whose outstanding shares are owned by Mr. Cohen and the
  remaining 50% of whose outstanding shares are owned by Jeffrey P. Orleans,
a Trustee of the Company, 71,815 Shares owned by a charitable remainder 
 unitrust of which Mr. Cohen is a co-trustee, and 28,523 Shares subject to
options that are currently exercisable. Mr. Cohen disclaims beneficial  
ownership of all of the Shares referred to in this footnote other than  
Shares owned by trusts of which Mr. Cohen is a trustee or a co-trustee, 
Shares owned of record by Mr. Cohen's wife and the Shares subject to    
options.                                                                
(3) Represents Class A OP Units first redeemable on September 30, 1998 for cash 
or, at the option of the Company, for a like number of Shares.          
(4) Includes 94,710 Shares subject to options that are currently exercisable,   
 and 400 Shares held by Mr. Weller as custodian for his children under the
New York Uniform Gifts to Minors Act.                                   
(5) Includes 900 Shares held by a trust, the beneficiary of which is Mr.        
 Rubin's daughter. Mr. Rubin is not a trustee of that trust. Also includes
500 shares held by Mr. Rubin's spouse. Mr. Rubin disclaims beneficial   
  ownership of all Shares referred to in this footnote. Also includes 86,123
Class A OP Units first redeemable on September 30, 1998 for cash or, at 
the option of the Company, a like number of Shares.                     
(6) Includes 5,500 Shares subject to options that are currently exercisable.    
(7) Includes: (i) 420 Shares owned by Mr. Korman's spouse; (ii) 87,570 Shares   
held by a charitable foundation of which Mr. Korman is a co-trustee; and
(iii) 151,585 Shares held by trusts of which Mr. Korman is a co-trustee.
Mr. Korman disclaims beneficial ownership of all but 10,528 of the      
foregoing Shares.                                                       

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(8) Includes 450 Shares owned by Mr. Orleans' spouse, 1,000 Shares for which  
  Mr. Orleans is custodian for his children under the Pennsylvania Uniform
    Gifts to Minors Act, 947 Shares owned by an adult daughter of Mr. Orleans,
  360 Shares held by trusts of which Mr. Orleans is co-trustee, 252 Shares
 owned by a corporation 50% of whose shares are owned by Mr. Orleans and
  the remaining 50% of whose shares are owned by Sylvan M. Cohen, Chairman
of the Board of Trustees of the Company and 3,000 Shares subject to   
  options that are currently exercisable. Mr. Orleans disclaims beneficial
   ownership of the Shares owned by Mr. Orleans' wife and certain Shares for
which he serves as custodian under the Pennsylvania Uniform Gifts to  
Minors Act.                                                           
(9) Represents Class A OP Units redeemable first on September 30, 1998 for    
cash or, at the option of the Company, a like number of Shares.       
(10) Includes 21,431 Shares subject to options that are currently exercisable   
 and 500 Shares that are held by Mr. Linn as custodian for his son under
the Pennsylvania Uniform Gifts to Minors Act.                         
(11) Includes 20,331 Shares subject to options that are currently exercisable.  
(12) Includes 178,995 Shares subject to options that are currently exercisable. 
In certain instances, two Trustees beneficially own the same Shares   
because they share voting or investment power over such Shares. Such  
Shares have been counted only once in this total.                     

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UNDERWRITING  

The underwriters of the Offering (the "Underwriters"), for whom Lehman
Brothers Inc., Legg Mason Wood Walker, Incorporated, Merrill Lynch, Pierce,     
Fenner & Smith Incorporated, Smith Barney Inc. and Wheat, First Securities,     
Inc. are acting as representatives (the "Representatives"), have severally      
agreed, subject to the conditions contained in the Underwriting Agreement (the  
form of which is incorporated by reference as an exhibit to the Registration    
Statement of which the accompanying Prospectus forms a part), to purchase from  
the Company, and the Company has agreed to sell to each Underwriter, the        
aggregate number of Shares set forth below opposite the name of each such       
Underwriter.                                                                    

                                                       Number of
              Underwriters                            Shares
-------------------------------------------------------------  ----------       
Lehman Brothers Inc.  ....................................     800,000    
Legg Mason Wood Walker, Incorporated .....................     800,000    
Merrill Lynch, Pierce, Fenner & Smith Incorporated  ......     800,000    
Smith Barney Inc.  .......................................     800,000    
Wheat, First Securities, Inc.  ...........................     800,000    
Total  ................................................   4,000,000 
                                                         =========

The Underwriting Agreement provides that the obligations of the       
Underwriters to purchase the Shares are subject to certain conditions, and that 
if any of the Shares are purchased by the Underwriters, all such Shares must be 
so purchased.                                                                   

The Company has been advised by the Underwriters that they propose to 
offer the Shares directly to the public initially at the public offering price  
set forth on the cover page of this Prospectus Supplement, and to certain       
dealers at such public offering price less a selling concession not in excess   
of $.75 per share. The selected dealers may reallow a concession not in excess  
of $.10 per share to certain brokers or dealers. After the Offering, the public 
offering price, the concession to selected dealers, and the reallowance may be  
changed by the Representatives.                                                 

The Company has agreed to indemnify the Underwriters against certain  
liabilities, including liabilities under the Securities Act of 1933, as         
amended, or to contribute to the payments the Underwriters may be required to   
make in respect thereof.                                                        

    The Company has granted to the Underwriters an option to purchase up to an
additional 600,000 Shares at the public offering price, less underwriting       
discounts and commissions, solely to cover over-allotments, if any. The         
Underwriters may exercise this option at any time within 30 days after the date 
of this Prospectus Supplement. To the extent that the Underwriters exercise     
this option, each Underwriter will be obligated, subject to certain conditions, 
to purchase a number of additional Shares proportionate to such Underwriter's   
initial commitment as indicated in the preceding table.                         

  The Company, certain executive officers and trustees who own OP Units or
Shares and the holders of the outstanding Class B OP Units have agreed, for a   
period of 90 days from the date of this Prospectus Supplement, not to, directly 
or indirectly, offer for sale, sell or otherwise dispose of (or enter into any  
transaction or device which is designed to, or could be expected to, result in  
the disposition by any person at any time in the future of) Shares (other than  
the Shares offered hereby and Shares issued pursuant to the stock options       
outstanding on the date hereof and any OP Units or Shares that may be issued in 
connection with any acquisition of a property or in connection with the         
redemption of OP Units) or sell or grant options, rights or warrants with       
respect to any Shares (other than the grant of options pursuant to the stock    
option plans existing on the date hereof), without the prior written consent of 
Lehman Brothers Inc.                                                            

    At the request of the Company, the Underwriters have reserved up to 40,000
Shares for sale at the public offering price to certain trustees of the         
Company. The number of Shares available to the general public will be reduced   
to the extent these persons purchase the reserved Shares. Any reserved Shares   
that are not so purchased by such persons at the closing of the Offering will   
be offered by the Underwriters to the general public on the same terms as the   
other Shares offered by this Prospectus Supplement.                             

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    Until the distribution of the Shares is completed, rules of the Securities
and Exchange Commission may limit the ability of the Underwriters and certain   
selling group members to bid for and purchase Shares. As an exception to these  
rules, the Representatives are permitted to engage in certain transactions that 
stabilize the price of the Shares. Such transactions may consist of bids or     
purchases for the purpose of pegging, fixing or maintaining the price of the    
Shares.                                                                         

 If the Underwriters create a short position in the Shares in connection
with the Offering (i.e., if they sell more Shares than are set forth on the     
cover page of this Prospectus Supplement), the Representatives may reduce that  
short position by purchasing Shares in the open market. The Representatives     
also may elect to reduce any short position by exercising all or part of the    
over-allotment option described herein.                                         

   The Representatives also may impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase      
Shares in the open market to reduce the Underwriters' short position or to      
stabilize the price of the Shares, they may reclaim the amount of the selling   
concession from the Underwriters and selling group members who sold those       
Shares as part of the Offering.                                                 

    In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be   
higher than it might otherwise be in the absence of such purchases. The         
imposition of a penalty bid might have an effect on the price of a security to  
the extent that it were to discourage resales of the security by purchasers in  
the Offering.                                                                   

  Neither the Company nor any of the Underwriters makes any representation
or prediction as to the direction or magnitude of any effect that the           
transactions described above may have on the price of the Shares. In addition,  
neither the Company nor any of the Underwriters makes any representation that   
the Representatives will engage in such transactions or that such transactions, 
once commenced, will not be discontinued without notice.                        

The Company retained Lehman Brothers Inc. as its exclusive financial  
advisor in connection with the TRO Transaction, and the Company paid Lehman     
Brothers Inc. a fee of $1,750,000 for such services.                            

EXPERTS 

The financial statements and financial statement schedules included or
incorporated by reference in this Prospectus Supplement, to the extent and for  
the periods indicated in their reports, have been audited by Arthur Andersen    
LLP, independent public accountants, and are included herein in reliance upon   
the authority of said firm as experts in giving said reports.                   

LEGAL MATTERS 

The validity of the Shares offered hereby and the statements in the   
accompanying Prospectus under "Federal Income Tax Considerations" will be       
passed upon for the Company by Drinker Biddle & Reath LLP. Sylvan M. Cohen,     
Chairman of the Board of the Company and a principal shareholder of the         
Company, is of counsel to Drinker Biddle & Reath LLP. Certain legal matters     
will be passed upon for the Underwriters by Hogan & Hartson L.L.P.              

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 
INDEX TO FINANCIAL STATEMENTS 

                                                        [Enlarge/Download Table]
                                                                                               
UNAUDITED PRO FORMA CONSOLIDATING FINANCIAL STATEMENTS                                         
Pro Forma Consolidating Balance Sheet as of August 31, 1997 ..............................  F-3
Pro Forma Consolidating Income Statement for the Year Ended August 31, 1997   ............  F-4
Notes and Management's Assumptions to Unaudited Pro Forma Consolidating Financial              
  Statements .............................................................................  F-5
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST                                                      
Report of Independent Public Accountants  ................................................  F-9
Consolidated Balance Sheets as of August 31, 1997 and 1996  .............................. F-10
Consolidated Statements of Income for the Years Ended August 31, 1997, 1996 and 1995   ... F-11
Consolidated Statements of Shareholders' Equity for the Years Ended August 31, 1997, 1996      
  and 1995 ............................................................................... F-12
Consolidated Statements of Cash Flows for the Years Ended August 31, 1997, 1996 and 1995   F-13
Notes to Consolidated Financial Statements   ............................................. F-14
THE RUBIN ORGANIZATION, INC. AND SUBSIDIARY                                                    
Report of Independent Public Accountants  ................................................ F-23
Consolidated Balance Sheets as of September 30, 1997 (unaudited), December 31, 1996 and        
December 31, 1995 (unaudited) ............................................................ F-24
Consolidated Statements of Operations for the Years Ended December 31, 1996, 1995              
  (unaudited) and 1994 (unaudited) and for the Nine Months Ended September 30, 1997            
  and 1996 (unaudited) ................................................................... F-26
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 1996,         
  1995 (unaudited) and 1994 (unaudited) and for the Nine Months Ended September 30, 1997       
  (unaudited) ............................................................................ F-27
Consolidated Statements of Cash Flows for the Years Ended December 31, 1996, 1995              
  (unaudited) and 1994 (unaudited) and for the Nine Months Ended September 30, 1997            
  and 1996 (unaudited) ................................................................... F-28
Notes to Consolidated Financial Statements   ............................................. F-30
FINANCIAL STATEMENTS OF OXFORD VALLEY ROAD ASSOCIATES                                          
Report of Independent Public Accountants  ................................................ F-41
Balance Sheet as of September 30, 1997 ................................................... F-42
Statement of Operations for the Nine Months Ended September 30, 1997 ..................... F-43
Statement of Partners' Capital for the Nine Months Ended September 30, 1997   ............ F-44
Statement of Cash Flows for the Nine Months Ended September 30, 1997 ..................... F-45
Notes to Financial Statements ............................................................ F-46
FINANCIAL STATEMENTS OF NORTH DARTMOUTH MALL                                                   
Report of Independent Public Accountants  ................................................ F-50
Statements of Revenues and Certain Expenses for the Nine Months Ended September 30, 1997       
  and the Year Ended December 31, 1996  .................................................. F-51
Notes to Statements of Revenues and Certain Expenses  .................................... F-52
FINANCIAL STATEMENTS OF MAGNOLIA MALL                                                          
Report of Independent Public Accountants  ................................................ F-53
Statements of Revenues and Certain Expenses for the Nine Months Ended September 30, 1997       
  and the Year Ended December 31, 1996  .................................................. F-54
Notes to Statements of Revenues and Certain Expenses  .................................... F-55

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

PRO FORMA CONSOLIDATING FINANCIAL INFORMATION 

The following sets forth the pro forma consolidating balance sheet of 
Pennsylvania Real Estate Investment Trust (the "Company") as of August 31, 1997 
and the pro forma consolidating statement of operations for the year ended      
August 31, 1997 to give effect to the following transactions:                   

The Offering                                                                    

The Company consummated the Offering and applied the net proceeds     
therefrom as described under "Use of Proceeds," including:                      

o The Company issued 4,000,000 Shares at $22 3/8 per Share.               

o The $8.8 million Cobblestone Mortgage was prepaid in full.              

o The remaining net proceeds of the Offering were used to repay amounts   
outstanding under the Credit Facility.                                

The TRO Transaction                                                             

On September 30, 1997, PREIT and TRO completed the TRO Transaction,   
pursuant to which:                                                              

o PREIT capitalized the Operating Partnership by transferring to it       
substantially all of its assets or the beneficial interests therein,  
subject to its liabilities.                                           

o The Operating Partnership acquired all of the non-voting common shares, 
    constituting 95% of the economic interests of PREIT-RUBIN, in exchange for
200,000 Class A OP Units and the obligation to issue up to 800,000    
additional Class A OP Units over the next five years according to a   
  formula based upon the Company's per share growth in adjusted funds from
operations.                                                           

 o The Operating Partnership acquired the interests of certain affiliates of
    TRO ("TRO Affiliates") in The Court at Oxford Valley, Magnolia Mall, North
Dartmouth Mall and Springfield Park.                                  

o The Operating Partnership agreed to acquire the interests of certain TRO
    Affiliates in Hillview Shopping Center and Northeast Tower Center, both of
which are currently under construction, at prices based upon a        
pre-determined formula.                                               

o The Operating Partnership acquired the development rights of certain TRO
Affiliates, subject to related obligations, in Christiana Power Center
(Phases I & II), Red Rose Commons and Blue Route Metroplex.           

 As the acquisitions of Hillview Shopping Center, Northeast Tower Center
and the Development Properties are expected to occur in the future at 
   amounts that are not currently determinable, the financial impact of such
future events has not been reflected in the accompanying pro forma    
financial statements.                                                 

   All of the acquisitions described above have been recorded by the Company
using the purchase method of accounting.                                        

The accompanying pro forma consolidating financial information is     
presented as if the transactions described above had been consummated on August 
31, 1997 for balance sheet purposes and September 1, 1996 for purposes of the   
statement of operations. This unaudited pro forma consolidating financial       
information should be read in conjunction with the historical financial         
statements of the Company, The Rubin Organization, Inc., Magnolia Mall, North   
Dartmouth Mall and Oxford Valley Road Associates and the related notes thereto  
all included elsewhere herein. In management's opinion, all adjustments         
necessary to reflect the effects of the transactions have been made.            

   The pro forma consolidating financial information is unaudited and is not
necessarily indicative of what the actual financial position or results of      
operations of the Company would have been had the transactions described above  
been consummated as of the dates indicated, nor does it purport to represent    
the future financial position and the results of operations of the Company.     

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

PRO FORMA CONSOLIDATING BALANCE SHEET 
AS OF AUGUST 31, 1997 
(Unaudited) 
(in thousands)  

                                                        [Enlarge/Download Table]

                                                                                                           The Company 
                                                     PREIT          The TRO                 The             Pro Forma, 
                                                   Historical     Transaction            Offering          as Adjusted 
                                                   ------------  --------------------  ------------------  ------------
                                                                                                                       
Assets                                                                                                                 
Investments in real estate, at cost                                                                                    
 Retail properties  ..............................  $  37,398       $   82,322 (A)        $       --        $ 119,720  
 Multifamily properties   ........................    159,967               --                    --          159,967  
 Industrial properties ...........................      5,078               --                    --            5,078  
                                                    ---------       ----------            ----------        ---------  
   Total investments in real estate   ............    202,443           82,322                    --          284,765  
    Less accumulated depreciation  ...............     50,711               --                    --           50,711  
                                                    ---------       ----------            ----------        ---------  
                                                      151,732           82,322                    --          234,054  
Property under development   .....................         --            1,950 (B)                --            1,950  
Investment in PREIT-RUBIN ........................         --            4,595 (C)                --            4,595  
Investments in partnerships and joint                                                                                  
 ventures, at equity   ...........................      1,039           13,269 (D)                --           14,308  
Advances to PREIT-RUBIN   ........................         --            1,613 (E)                --            1,613  
                                                    ---------       ----------            ----------        ---------  
                                                      152,771          103,749                    --          256,520  
    Less allowance for possible losses ...........      1,831               --                    --            1,831  
                                                    ---------       ----------            ----------        ---------  
                                                      150,940          103,749                    --          254,689  
Other Assets:                                                                                                          
 Cash and cash equivalents   .....................      1,399               --                    --            1,399  
 Rents and sundry receivables   ..................        590               --                    --              590  
 Deferred costs, prepaid real estate taxes                                                                             
   and expenses, net   ...........................      7,393           (1,770) (F)               --            5,623  
 Deposits on properties   ........................      5,335           (5,000)(G)                --              335  
                                                    ---------       ----------            ----------        ---------  
Total Assets  ....................................  $ 165,657       $   96,979            $       --        $ 262,636  
                                                    =========       ==========            ==========        =========  
Liabilities and Shareholders' Equity                                                                                   
Mortgage notes payable ...........................  $  83,528       $   25,200 (H)        $   (8,847)(K)    $  99,881  
Bank and other loans payable .....................     33,884           56,647 (I)           (74,343)(L)       16,188  
Tenants' deposits and deferred rents  ............      1,346               --                    --            1,346  
Accrued pension and other benefits ...............      1,091               --                    --            1,091  
Accrued expenses and other liabilities   .........      4,369               --                    --            4,369  
                                                    ---------       ----------            ----------        ---------  
Total Liabilities   ..............................    124,218           81,847               (83,190)         122,875  
                                                    ---------       ----------            ----------        ---------  
Minority interest   ..............................        540           15,132 (J)                --           15,672  
                                                    ---------       ----------            ----------        ---------  
Shareholders' Equity                                                                                                   
Shares of beneficial interest   ..................      8,685               --                 4,000 (M)       12,685  
Additional paid in capital   .....................     53,599               --                79,190 (M)      132,789  
Distributions in excess of net income ............    (21,385)              --                    --          (21,385) 
                                                    ---------       ----------            ----------        ---------  
Total Shareholders' Equity   .....................     40,899               --                83,190          124,089  
                                                    ---------       ----------            ----------        ---------  
Total Liabilities and Shareholders' Equity  ......  $ 165,657       $   96,979            $       --        $ 262,636  
                                                    =========       ==========            ==========        =========  

The accompanying notes and management's assumptions are an integral part of     
this statement. 

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

PRO FORMA CONSOLIDATING INCOME STATEMENT  
FOR THE YEAR ENDED AUGUST 31, 1997  
(Unaudited) 
(In thousands, except share and per share data) 

                                                        [Enlarge/Download Table]

                                                                                                              The     
                                                                                                            Company   
                                                     PREIT         The TRO                The              Pro Forma  
                                                   Historical    Transaction           Offering           as Adjusted 
                                                   ------------  ------------------  -------------------  ------------
                                                                                                                      
Revenues                                                                                                              
Gross revenues from real estate ..................  $ 40,231        $ 12,490(a)         $       --         $ 52,721   
Interest and other income ........................       254             234(b)                 --              488   
                                                    --------        --------            ----------         --------   
Total revenues   .................................    40,485          12,724                    --           53,209   
                                                    --------        --------            ----------         --------   
Expenses                                                                                                              
Property operating expenses  .....................    16,289           3,964(a)                 --           20,253   
Depreciation and amortization   ..................     6,259           2,557(c)                 --            8,816   
General and administrative expenses   ............     3,324              --                    --            3,324   
Interest expense .................................     9,086           6,183(d)             (6,102) (h)       9,167   
Provisions for losses on investments  ............       500              --                    --              500   
                                                    --------        --------            ----------         --------   
Total expenses   .................................    35,458          12,704                (6,102)          42,060   
                                                    --------        --------            ----------         --------   
Income before gains on sales of interests in                                                                          
 real estate, equity in unconsolidated                                                                                
 entities and minority interest ..................     5,027              20                 6,102           11,149   
Equity in loss of PREIT-RUBIN   ..................        --             (80) (e)               --              (80)  
Equity in income of partnerships and joint                                                                            
 ventures  .......................................     4,337             420(f)                 --            4,757   
Gains on sales of interests in real estate  ......     1,069              --                    --            1,069   
                                                    --------        --------            ----------         --------   
Income before minority interest ..................    10,433             360                 6,102           16,895   
Minority interest   ..............................      (198)           (731) (g)              (70) (i)        (999)  
                                                    --------        --------            ----------         --------   
Net income .......................................  $ 10,235        $   (371)           $    6,032         $ 15,896   
                                                    ========        ========            ==========         ========   
Net income per Share   ...........................  $   1.18                                               $   1.25   
Weighted average number of Shares                                                                                     
 outstanding  ....................................     8,679                                                 12,679   

The accompanying notes and management's assumptions are an integral part of     
this statement. 

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

NOTES TO MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA  
CONSOLIDATING BALANCE SHEET 

                                                        [Enlarge/Download Table]
                                                                                                    
(A)  To record the acquisition of wholly owned retail properties as follows:                        
      o Purchase price of Magnolia Mall, including $998 of allocated transaction costs... $  46,363 
      o Purchase price of North Dartmouth Mall, including $959 of allocated transaction             
        costs ...........................................................................    35,959 
                                                                                          --------- 
      Total investment in wholly owned retail properties   .............................. $  82,322 
                                                                                          ========= 
(B)  To record the Operating Partnership's acquisition of development assets, including             
     transactions costs   ............................................................... $   1,950 
                                                                                          ========= 
(C)  To record the acquisition of 95% of the common stock of PREIT-RUBIN for 200,000                
     Class A OP Units at $23.40 per unit and $793 of allocated transaction costs, net of            
     cash acquired of $878............................................................... $   4,595 
                                                                                          ========= 
(D)  To record the Operating Partnership's investments in joint ventures:                           
      o Investment in The Court at Oxford Valley for approximately 233,000 Class A OP               
        Units at $23.40 per unit and $688 of allocated transaction costs  ............... $   6,140 
      o TRO's and TRO Affiliates' rights under Goldenberg Letter Agreement   ............     6,442 
      o Development costs related to Christiana Power Center Phase I   ..................       687 
                                                                                          --------- 
      Net investment in partnerships and joint ventures ................................. $  13,269 
                                                                                          ========= 
(E)  To advance PREIT-RUBIN funds for the reimbursement of EPDLP management                         
     contract start-up costs and pre-development expenses  .............................. $   1,613 
                                                                                          ========= 
(F)  To adjust deferred costs:                                                                      
      o Reclassify previously capitalized transaction costs   ........................... $  (2,545)
      o Financing costs incurred relating to the $150.0 million Credit Facility .........       775 
                                                                                          --------- 
                                                                                          $  (1,770)
                                                                                          ========= 
(G)  To reclassify the deposit on purchase of Magnolia Mall to retail properties   ...... $  (5,000)
                                                                                          ========= 
(H)  To record the mortgage note payable assumed in connection with the purchase of                 
     Magnolia Mall  ..................................................................... $  25,200 
                                                                                          ========= 
(I)  To record borrowings under the Credit Facility:                                                
      o Purchase of Magnolia Mall and North Dartmouth Mall .............................. $  45,165 
      o Fund the remaining cash portion of the TRO Transaction, including transaction               
        costs ...........................................................................    11,482 
                                                                                          --------- 
      Total borrowings under the Credit Facility  ....................................... $  56,647 
                                                                                          ========= 
(J)  To record minority interest as follows:                                                        
      o OP Units issued to acquire PREIT-RUBIN .......................................... $   4,680 
      o OP Units issued in connection with Magnolia Mall acquisition   ..................     5,000 
      o OP Units issued to acquire interest in the Court at Oxford Valley ...............     5,452 
                                                                                          --------- 
      Total minority interest   ......................................................... $  15,132 
                                                                                          ========= 
(K)  Repayment of the outstanding Cobblestone Mortgage  ................................. $   8,847 
                                                                                          ========= 
(L)  Repayment of outstanding borrowings under the Credit Facility  ..................... $  74,343 
                                                                                          ========= 
(M)  Net proceeds of Offering calculated as follows:                                                
     Gross proceeds of Offering ......................................................... $  89,500 
     Less: Underwriting discounts and commissions .......................................    (5,360)
           Other transaction costs ......................................................      (950)
                                                                                          --------- 
           Net proceeds of Offering   ................................................... $  83,190 
                                                                                          ========= 
           Shares issued at $1 par value ................................................ $   4,000 
                                                                                          ========= 
           Additional paid in capital ................................................... $  79,190 
                                                                                          ========= 

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

NOTES TO MANAGEMENT'S ASSUMPTIONS TO UNAUDITED  
PRO FORMA CONSOLIDATING INCOME STATEMENT  

(a) To record the income and expenses associated with the acquisition of wholly 
owned retail properties as follows:                                     

                                                                [Download Table]

                                                          North                 
                                           Magnolia      Dartmouth     Shopping 
                                             Mall          Mall        Centers  
                                          Historical    Historical    Pro Forma 
                                          ------------  ------------  ----------
                                                                                
Revenues                                                                        
  Gross revenues from real estate  ......   $ 6,222         6,268      $ 12,490 
  Interest and other income  ............        17            15            32 
                                            -------         -----      -------- 
                                              6,239         6,283        12,522 
Expenses                                                                        
  Property operating expenses   .........     1,728         2,236         3,964 
                                            -------         -----      -------- 
  EBITDA   ..............................   $ 4,511       $ 4,047      $  8,558 
                                            =======       =======      ======== 

                                                        [Enlarge/Download Table]
                                                                                                  
(b)  To record additional interest and other income as follows:                                   
     Interest and other income of Magnolia Mall and North Dartmouth Mall  ............... $    32 
     Accrual of interest income on note receivable from PREIT-RUBIN .....................     202 
                                                                                          ------- 
                                                                                          $   234 
                                                                                          ======= 
(c)  To record additional depreciation expense as follows:                                        
     Magnolia Mall -- depreciable basis of $45,998 over 30-year useful life  ............ $ 1,533 
     North Dartmouth Mall -- depreciable basis of $30,709 over 30-year useful life ......   1,024 
                                                                                          ------- 
                                                                                          $ 2,557 
                                                                                          ======= 
(d)  To record additional interest expense as follows:                                            
     Magnolia Mall $25,200 mortgage note payable assumed at 8.20%........................ $ 2,066 
     Magnolia Mall bank borrowings of $10,165 at 7.25% to fund remaining purchase price       737 
     North Dartmouth Mall bank borrowings of $35,000 at 7.25% to fund purchase price  ...   2,538 
     Deposit of $5,000 at 7.25% .........................................................     363 
     Bank borrowings of $11,482 at 7.25% to fund the cash portion of transaction costs...     832 
     Less capitalized interest on bank borrowings for property under development   ......    (605)
     Net increase in amortization of financing costs related to Credit Facility .........     252 
                                                                                          ------- 
                                                                                          $ 6,183 
                                                                                          ======= 

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

NOTES TO MANAGEMENT'S ASSUMPTIONS TO UNAUDITED  
PRO FORMA CONSOLIDATING INCOME STATEMENT  

(e) To record equity in income (loss) of PREIT-RUBIN as follows:                

                                                        [Enlarge/Download Table]

                                                          TRO         Pro Forma                    
                                                       Historical    Adjustments     Pro Forma     
                                                       ------------  -------------  ---------------
                                                                                                   
Revenues                                                                                           
  Management fees   .................................    $ 6,171       $   --          $ 6,171     
  Leasing commissions  ..............................      9,605           --            9,605     
  Consulting fees   .................................      1,763           --            1,763     
  Development fees  .................................        581           --              581     
  Publication income   ..............................      2,201           --            2,201     
  Other income   ....................................        147           --              147     
                                                         -------       ------          -------     
   Total revenues   .................................     20,468           --           20,468     
                                                         -------       ------          -------     
Operating Expenses                                                                                 
  Salaries, commissions, temporary services, payroll                                               
    taxes and employee benefits .....................     11,781          300(1)        12,081     
  Rent expense   ....................................        784           --              784     
  Other operating expenses   ........................      3,744           --            3,744     
  Depreciation and amortization .....................        961           --              961     
  Non-recurring expenses associated with the TRO                                                   
    Transaction  ....................................        890           --              890     
  Expenses for start-up of EPDLP management                                                        
    contracts .......................................        951           --              951     
                                                         -------       --------        -------     
   Total operating expenses  ........................     19,111          300           19,411     
                                                         -------       --------        -------     
  Income from operations  ...........................      1,357         (300)           1,057     
  Interest expense  .................................       (891)         362(2)          (529)    
  Equity in loss from partnership investments  ......       (131)         131(3)             0     
                                                         -------       --------        -------     
  Income before income taxes ........................        335          193              528     
  Provision for income taxes ........................         --         (211)            (211)(4) 
                                                         -------       --------        -------     
Net income ..........................................    $   335       $  (18)             317     
                                                         =======       ========        =======     
 Amortization of excess purchase price over net assets                                             
   acquired recorded in consolidation ..........................................          (401)(5) 
 Net loss after intangible amortization  .......................................       $   (84)    
                                                                                       =======     
 Operating Partnership's interest (95%) in loss of PREIT-RUBIN   ...............       $   (80)(6) 
                                                                                       =======     

------------                                                                    

                                                        [Enlarge/Download Table]
                                                                                               
(1) To record additional compensation expense in accordance with existing employment           
    contracts                                                                                  
(2) To adjust interest expense as follows:                                                     
    o Elimination of interest on debt not assumed  .................................... $  564 
    o Accrual of interest on note payable to PREIT ....................................   (202)
                                                                                        ------ 
                                                                                        $  362 
                                                                                        ====== 
(3) To eliminate equity in loss of partnerships and joint ventures not being acquired.         
(4) Estimated tax provision calculated using 40% effective tax rate.                           
(5) To record amortization of excess purchase price over net assets acquired over a            
    ten-year amortization period.                                                              
(6) Represents 95% of PREIT-RUBIN's net loss after intangible amortization.                    

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

NOTES TO MANAGEMENT'S ASSUMPTIONS TO UNAUDITED  
PRO FORMA CONSOLIDATING INCOME STATEMENT  

                                                        [Enlarge/Download Table]
                                                                                                   
(f) To record the Company 50% share of income from The Court at Oxford Valley:                     
    o Equity in the net income of The Court at Oxford Valley      ........................ $   605 
    o Less amortization of the excess purchase price over the net book value of assets             
      acquired  ..........................................................................    (185)
                                                                                           ------- 
                                                                                           $   420 
                                                                                           ======= 
(g) To adjust the minority interest's share of the income in the Operating Partnership             
    (6.9% prior to the consummation of the Offering).   .................................. $  (731)
                                                                                           ======= 
(h) To record the interest expense savings associated with the repayment of the following          
    debt amounts:                                                                                  
    o Payment of the Cobblestone Mortgage ................................................ $   690 
    o Payment of bank borrowings incurred in connection with the TRO Transaction .........   4,469 
    o Payment of other bank borrowings ...................................................     943 
                                                                                           ------- 
                                                                                           $ 6,102 
                                                                                           ======= 
(i) To adjust the minority interest's share of income in the Operating Partnership (4.8%           
    following the consummation of the Offering)                                            $   (70)
                                                                                           ======= 

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS  

To Pennsylvania Real Estate Investment Trust:                                   

We have audited the accompanying consolidated balance sheets of       
Pennsylvania Real Estate Investment Trust (a Pennsylvania Trust) and            
Subsidiaries as of August 31, 1997 and 1996, and the related consolidated       
statements of income, shareholders' equity and cash flows for each of the three 
years in the period ended August 31, 1997. These financial statements are the   
responsibility of the Trust's management. Our responsibility is to express an   
opinion on these financial statements based on our audits. We did not audit the 
1997, 1996 and 1995 financial statements of Lehigh Valley Mall Associates, a    
partnership in which the Trust has a 50 percent interest which is reflected in  
the accompanying financial statements using the equity method of accounting.    
The equity in net income of Lehigh Valley Mall Associates represents 23         
percent, 31 percent and 32 percent of net income in 1997, 1996 and 1995,        
respectively. The financial statements of Lehigh Valley Mall Associates were    
audited by other auditors whose report has been furnished to us and our         
opinion, insofar as it relates to the amounts included for Lehigh Valley Mall   
Associates, is based solely on the report of the other auditors.                

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of         
material misstatement. An audit includes examining, on a test basis, evidence   
supporting the amounts and disclosures in the financial statements. An audit    
also includes assessing the accounting principles used and significant          
estimates made by management as well as evaluating the overall financial        
statement presentation. We believe that our audits provide a reasonable basis   
for our opinion.                                                                

    In our opinion, based upon our audit and the report of other auditors, the
financial statements referred to above present fairly, in all material          
respects, the financial position of Pennsylvania Real Estate Investment Trust   
and Subsidiaries as of August 31, 1997 and 1996, and the results of their       
operations and their cash flows for each of the three years in the period ended 
August 31, 1997 in conformity with generally accepted accounting principles.    

ARTHUR ANDERSEN LLP                 

Philadelphia, Pa.,                                                              
October 17, 1997                                                              

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

CONSOLIDATED BALANCE SHEETS 
AT AUGUST 31  

                                                        [Enlarge/Download Table]

                                                                               1997              1996        
                                                                           ----------------  ----------------
                                                                                                             
Assets                                                                                                       
Investments in real estate, at cost (Notes 1 and 3):                                                         
Retail properties   ......................................................  $  37,398,000     $  37,362,000  
Multifamily properties ...................................................    159,967,000       156,102,000  
Industrial properties  ...................................................      5,078,000         5,078,000  
                                                                            -------------     -------------  
Total investments in real estate   .......................................    202,443,000       198,542,000  
   Less accumulated depreciation   .......................................     50,711,000        44,693,000  
                                                                            -------------     -------------  
                                                                              151,732,000       153,849,000  
Investments in partnerships and joint ventures, at equity (Notes 1 and 2)       1,039,000        16,995,000  
Notes receivable .........................................................             --         1,649,000  
                                                                            -------------     -------------  
                                                                              152,771,000       172,493,000  
   Less allowance for possible losses (Note 1) ...........................      1,831,000         2,042,000  
                                                                            -------------     -------------  
                                                                              150,940,000       170,451,000  
Other Assets:                                                                                                
   Cash and cash equivalents .............................................      1,399,000         1,030,000  
   Rents and sundry receivables ..........................................        590,000           608,000  
   Deferred costs, prepaid real estate taxes and expenses, net (Note 1)         7,393,000         5,636,000  
   Deposits on properties (Notes 1 and 10)  ..............................      5,335,000                --  
                                                                            -------------     -------------  
Total assets  ............................................................  $ 165,657,000     $ 177,725,000  
                                                                            =============     =============  
Liabilities and Shareholders' Equity                                                                         
Mortgage notes payable (Note 3) ..........................................  $  83,528,000     $  84,833,000  
Bank loans payable (Note 3)  .............................................     33,884,000        39,315,000  
Tenants' deposits and deferred rents  ....................................      1,346,000         1,422,000  
Accrued pension and retirement benefits (Notes 1 and 4) ..................      1,091,000         1,207,000  
Accrued expenses and other liabilities   .................................      4,369,000         3,901,000  
                                                                            -------------     -------------  
Total liabilities   ......................................................    124,218,000       130,678,000  
Minority interest in consolidated partnership (Note 1)  ..................        540,000           542,000  
Commitments and contingencies (Note 7)   .................................             --                --  
Shareholders' equity:                                                                                        
($4.71 and $5.36 per share at August 31, 1997 and 1996) (Notes 1 and 5):                                     
Shares of Beneficial Interest, $1 par; authorized, unlimited; issued and                                     
 outstanding 8,685,098 Shares in 1997 and 8,676,098 in 1996   ............      8,685,000         8,676,000  
Additional paid in capital   .............................................     53,599,000        53,133,000  
Distributions in excess of net income ....................................    (21,385,000)      (15,304,000) 
Total shareholders' equity   .............................................     40,899,000        46,505,000  
                                                                            -------------     -------------  
Total liabilities and shareholders' equity  ..............................  $ 165,657,000     $ 177,725,000  
                                                                            =============     =============  

The accompanying notes are an integral part of these statements.

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

CONSOLIDATED STATEMENTS OF INCOME 
FOR THE YEARS ENDED AUGUST 31 

                                                        [Enlarge/Download Table]

                                                                1997              1996              1995        
                                                            ----------------  ----------------  ----------------
                                                                                                                
Revenues                                                                                                        
Gross revenues from real estate (Note 6) ..................  $ 40,231,000      $ 38,985,000      $ 36,978,000   
Interest and other income .................................       254,000           171,000           176,000   
                                                             ------------      ------------      ------------   
Total revenues   ..........................................    40,485,000        39,156,000        37,154,000   
                                                             ------------      ------------      ------------   
Expenses                                                                                                        
Property operating expenses  ..............................    16,289,000        16,102,000        14,859,000   
Depreciation and amortization (Note 1)   ..................     6,259,000         5,908,000         5,286,000   
General and administrative expenses (Notes 1 and 4)  ......     3,324,000         3,119,000         3,091,000   
Mortgage and bank loan interest ...........................     9,086,000         9,831,000         8,908,000   
Provisions for losses on investments (Note 1)  ............       500,000                --                --   
                                                             ------------      ------------      ------------   
Total expenses   ..........................................    35,458,000        34,960,000        32,144,000   
                                                             ------------      ------------      ------------   
Income before minority interest, equity in income of                                                            
 partnerships and joint ventures and gains on sales of                                                          
 interests in real estate .................................     5,027,000         4,196,000         5,010,000   
Minority interest   .......................................      (198,000)         (275,000)         (285,000)  
Equity in income of partnerships and joint ventures                                                             
 (Notes 1 and 2) ..........................................     4,337,000         6,258,000         6,381,000   
Gains on sales of interests in real estate  ...............     1,069,000           865,000           119,000   
                                                             ------------      ------------      ------------   
Net income ................................................  $ 10,235,000      $ 11,044,000      $ 11,225,000   
                                                             ============      ============      ============   
Net income per Share (Note 1)   ...........................  $       1.18      $       1.27      $       1.29   
                                                             ============      ============      ============   

The accompanying notes are an integral part of these statements.

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY 
FOR THE THREE YEARS ENDED AUGUST 31, 1997 

                                                        [Enlarge/Download Table]

                                                               Shares                                       
                                                            of beneficial     Additional    Distributions   
                                                              interest         paid in       in excess of   
                                                               $1 par          capital       net income     
                                                            ---------------  -------------  ----------------
                                                                                                            
Balance, September 1, 1994   ..............................   $8,670,000      $53,039,000    $  (4,961,000) 
   Net income .............................................           --               --       11,225,000  
   Shares issued upon exercise of options (Note 5)   ......        6,000           94,000               --  
   Distributions paid to shareholders ($1.88 per share)   .           --               --      (16,302,000) 
                                                              ----------      -----------    -------------  
Balance, August 31, 1995  .................................    8,676,000       53,133,000      (10,038,000) 
   Net income .............................................           --               --       11,044,000  
   Distributions paid to shareholders ($1.88 per share)   .           --               --      (16,310,000) 
                                                              ----------      -----------    -------------  
Balance, August 31, 1996  .................................    8,676,000       53,133,000      (15,304,000) 
   Net income .............................................           --               --       10,235,000  
   Shares issued upon exercise of options (Note 5)   ......        9,000          166,000               --  
   Issuance of compensatory stock options (Note 5)   ......           --          300,000               --  
   Distributions paid to shareholders ($1.88 per share)   .           --               --      (16,316,000) 
                                                              ----------      -----------    -------------  
Balance, August 31, 1997  .................................   $8,685,000      $53,599,000    $ (21,385,000) 
                                                              ==========      ===========    =============  

The accompanying notes are an integral part of these statements.

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
FOR THE YEARS ENDED AUGUST 31 

                                                        [Enlarge/Download Table]

                                                                       1997             1996             1995       
                                                                   ---------------  ---------------  ---------------
                                                                                                                    
Cash Flows From Operating Activities                                                                                
Net income  ...................................................... $10,235,000      $11,044,000      $11,225,000    
Adjustments to reconcile net income to net cash provided by                                                         
 operating activities:                                                                                              
   Minority interest in income of consolidated partnership  ......     198,000          275,000          285,000    
   Depreciation and amortization .................................   6,259,000        5,908,000        5,286,000    
   Gains on sales of interests in real estate   ..................  (1,069,000)        (865,000)        (119,000)   
   Provision for losses on investments ...........................     500,000               --               --    
   Issuance of compensatory stock options ........................     300,000               --               --    
   Decrease in allowance for possible losses .....................    (710,000)        (734,000)        (460,000)   
Change in assets and liabilities:                                                                                   
   Rents and sundry receivables  .................................      18,000         (192,000)         (18,000)   
   Deferred costs, prepaid real estate taxes and expenses, net         (10,000)        (356,000)        (837,000)   
   Accrued pension and retirement benefits   .....................    (116,000)          (6,000)         130,000    
   Accrued expenses and other liabilities ........................    (310,000)         (54,000)       1,042,000    
   Tenants' deposits and deferred rents   ........................     (76,000)          70,000          138,000    
                                                                   -----------      -----------      -----------    
Net cash provided by operating activities ........................  15,219,000       15,090,000       16,672,000    
                                                                   -----------      -----------      -----------    
Cash Flows From Investing Activities                                                                                
Investments in wholly owned real estate   ........................  (3,901,000)      (3,685,000)     (38,058,000)   
Investments in partnerships and joint ventures  ..................  (2,326,000)        (517,000)        (983,000)   
Cash proceeds from sales of real estate investments   ............          --        5,163,000               --    
Cash proceeds from sales of interests in partnerships ............   2,069,000               --               --    
Increase in advances to partnerships and joint ventures  .........    (323,000)        (380,000)        (749,000)   
Cash distributions from partnerships and joint ventures in                                                          
 excess of (less than) equity in income   ........................  17,605,000          889,000         (127,000)   
Cash distributions to minority partners   ........................    (200,000)        (261,000)        (165,000)   
Decrease in notes receivable  ....................................   1,649,000               --               --    
Deposits on agreement to purchase   ..............................  (5,336,000)              --               --    
Deferred acquisition costs .......................................  (1,488,000)        (276,000)              --    
                                                                   -----------      -----------      -----------    
Net cash provided by (used in) investing activities   ............   7,749,000          933,000      (40,082,000)   
                                                                   -----------      -----------      -----------    
Cash Flows From Financing Activities                                                                                
Principal installments on mortgage notes payable   ...............  (1,305,000)      (1,123,000)        (821,000)   
Increase in mortgage notes payable  ..............................          --        8,800,000       35,000,000    
Prepayment of mortgage notes payable   ...........................          --       (1,749,000)              --    
Proceeds from bank loan payable  .................................          --               --       39,379,000    
Decrease in bank loan payable ....................................  (5,431,000)      (5,005,000)     (35,000,000)   
Decrease (increase) in deferred financing costs ..................     278,000         (704,000)              --    
Shares of beneficial interest issued   ...........................     175,000               --          100,000    
Distributions paid to shareholders  .............................. (16,316,000)     (16,310,000)     (16,302,000)   
                                                                   -----------      -----------      -----------    
Net cash (used in) provided by financing activities   ............ (22,599,000)     (16,091,000)      22,356,000    
                                                                   -----------      -----------      -----------    
Net increase (decrease) in cash and cash equivalents  ............     369,000          (68,000)      (1,054,000)   
Cash and cash equivalents, beginning of year .....................   1,030,000        1,098,000        2,152,000    
                                                                   -----------      -----------      -----------    
Cash and cash equivalents, end of year ........................... $ 1,399,000      $ 1,030,000      $ 1,098,000    
                                                                   ===========      ===========      ===========    
Supplemental disclosure of non-cash investing activities:                                                           
Net assets acquired  ............................................. $        --      $        --      $ 3,590,000    
Liabilities assumed (primarily bank loans payable) ...............          --               --       (3,804,000)   
                                                                   -----------      -----------      -----------    
                                                                   $        --      $        --      $  (214,000)   
                                                                   ===========      ===========      ===========    
Accrual of acquisition costs  .................................... $   778,000      $        --      $        --    
                                                                   ===========      ===========      ===========    

The accompanying notes are an integral part of these statements.

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  

YEARS ENDED AUGUST 31, 1997, 1996 AND 1995  

1. Summary of significant accounting policies                                   

Nature of Operations                                                            

Pennsylvania Real Estate Investment Trust (the "Company") is a        
self-administered equity real estate investment trust engaged, directly and     
through subsidiaries and joint ventures, in owning and managing income          
producing real estate, with an emphasis on shopping centers and apartment       
complexes. The Company primarily operates in the mid-Atlantic region from       
Pennsylvania to Virginia and in selected areas of Florida.                      

Consolidation                                                                   

   The consolidated financial statements of the Company include the accounts
of thirteen wholly owned subsidiaries, two are Delaware corporations, one is a  
Nebraska corporation, one is a Virginia corporation, one is a Maryland          
corporation and eight are Florida corporations. One partnership in which the    
Company is a 65% general partner, and has control as provided in the            
partnership agreement, has been consolidated for financial statement            
presentation. The minority partner's interest is 35%. All significant           
intercompany accounts and transactions have been eliminated in consolidation.   

Partnership and joint venture investments                                       

    In accordance with the American Institute of Certified Public Accountants'
Statement of Position 78-9, "Accounting for Investments in Real Estate          
Ventures," the Company accounts for its investment in partnerships and joint    
ventures which it does not control using the equity method of accounting. These 
investments, which represent 25-to-70% non-controlling ownership interests, are 
recorded initially at the Trust's cost and subsequently adjusted for the        
Company's net equity in income and cash contributions and distributions.        

Statements of cash flows                                                        

The Company considers all highly liquid short-term investments with an
original maturity of three months or less to be cash equivalents. Cash paid for 
interest was $8,963,000, $9,962,000, and $8,619,000, for the years ended August 
31, 1997, 1996 and 1995, respectively.                                          

Capitalization of costs                                                         

 It is the Company's policy to capitalize interest and real estate taxes
related to construction in progress and to depreciate these costs over the life 
of the related assets in order to more properly match revenues and expenses.    
These items are capitalized for income tax purposes and amortized or            
depreciated in accordance with the provisions of the Internal Revenue Code. For 
fiscal years 1997, 1996 and 1995 the Company did not capitalize any interest or 
real estate taxes.                                                              

    The Company has capitalized as deferred costs certain expenditures related
to the financing and leasing of certain properties. Capitalized loan fees are   
being amortized over the terms of the related loans and leasing commissions are 
being amortized over the term of the related leases.                            

   During 1997, the Company capitalized certain deposits associated with the
planned future purchase of two regional malls. These deposits were applied to   
the respective properties upon consummation of the transaction described in     
Note 10.                                                                        

Depreciation                                                                    

   The Company, for financial reporting purposes, depreciates its buildings,
equipment and leasehold improvements over their estimated useful lives of 10 to 
45 years, using the straight-line method of depreciation. For Federal income    
tax purposes, the Company currently uses the straight-line method of            
depreciation and the useful lives prescribed by the Internal Revenue Code.      

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  -- (Continued)

YEARS ENDED AUGUST 31, 1997, 1996 AND 1995  

1. Summary of significant accounting policies  -- (Continued)                   

Allowance for possible losses                                                   

  On September 1, 1996, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of       
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ("SFAS No.       
121"). SFAS No. 121 requires long-lived assets to be held and used by the       
Company to be reviewed for impairment whenever events or changes in             
circumstances indicate that the carrying amount of an asset may not be          
recoverable. If the sum of the expected future cash flows (undiscounted and     
without interest charges) is less than the carrying amount of the asset, an     
impairment loss should be recognized. Measurement of an impairment loss for     
these assets should be based on the fair market value of the assets. Adoption   
of this statement had no impact on the Company's financial position or results  
of operations.                                                                  

During 1997, an impairment loss of approximately $500,000 was recorded
following the expiration of an option to sell certain land parcels held by a    
partnership in which the Company holds an equity interest.                      

Benefit plans                                                                   

 The Company has provided pension benefits since 1970 for all employees,
excluding the Chairman, for whom retirement benefits are provided in an         
employment contract. With regard to the Chairman's employment contract, no      
provision was required for fiscal years ended August 31, 1997, 1996 and 1995,   
respectively.                                                                   

Derivative Financial Instruments                                                

In managing interest rate exposure on certain floating rate debt, the 
Company at times enters into interest rate swap and cap agreements. When        
interest rates change, the differential to be paid or received is accrued as    
interest expense and is recognized over the life of the swap agreements. The    
costs of cap transactions are deferred and amortized over the contract period.  
The amortized costs of cap transactions and interest income and interest        
expense on swap transactions are included in mortgage and bank loan interest.   

Income taxes                                                                    

    The Company has elected to qualify as a real estate investment trust under
Sections 856-860 of the Internal Revenue Code and intends to remain so          
qualified. Accordingly, no provision has been made for Federal income taxes on  
income resulting from those sales of real estate investments which have or will 
be distributed to shareholders within the prescribed time limits. However,      
taxes are provided for those gains which are not anticipated to be distributed  
to shareholders.                                                                

The Company is subject to a Federal excise tax computed on a calendar 
year. The excise tax equals 4% of the excess, if any, of 85% of the Company's   
ordinary income plus 95% of the Company's capital gain net income for the       
calendar year over cash distributions during the calendar year, as defined. The 
Company has in the past distributed a substantial portion of its taxable income 
in the subsequent fiscal year and may also follow this policy in the future.    

   No provision for excise tax was made for fiscal years 1997, 1996 and 1995
as no tax was due.                                                              

  The tax status of distributions paid to shareholders was composed of the
following for the calendar years ended December 31, 1996 and 1995.              

   1996       1995
   --------   ------
Ordinary income  ......   $1.72      $1.88                        
Capital gains .........     .16         --                        
  -----      -----
  $1.88      $1.88
  =====      =====

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  -- (Continued)

YEARS ENDED AUGUST 31, 1997, 1996 AND 1995  

1. Summary of significant accounting policies  -- (Continued)                   

    The tax status of distributions paid to shareholders for the calendar year
ending December 31, 1997 will be determined upon preparation of the Company's   
federal income tax return. Management expects such distributions to consist of  
ordinary income and capital gains.                                              

Net income per share                                                            

Earnings per share are based on the weighted average number of shares 
outstanding which were 8,678,560 in 1997, 8,676,098 in 1996, and 8,670,810 in   
1995.                                                                           

Use of Estimates                                                                

The preparation of financial statements in conformity with generally  
accepted accounting principles requires management to make estimates and        
assumptions that affect the reported amount of assets and liabilities and       
disclosure of contingent assets and liabilities at the date of the financial    
statements and the reported amounts of revenue and expenses during the          
reporting period. Actual results could differ from those estimates.             

Reclassifications                                                               

Certain prior year amounts have been reclassified to conform with the 
current year presentation.                                                      

2. Investments in partnerships and joint ventures                               

   The following presents summarized financial information for the Company's
investments in 22 and 26 partnerships and joint ventures at August 31, 1997 and 
1996, respectively, and the Company's equity in income for the years ended      
August 31, 1997, 1996 and 1995.                                                 

                                                        [Enlarge/Download Table]

                                                                     At August 31            
                                                          -----------------------------------
                                                              1997               1996        
                                                          ----------------   ----------------
                                                                                             
Assets                                                                                       
Investments in Real Estate at Cost:                                                          
   Retail properties ....................................  $120,660,000       $ 128,936,000  
   Multifamily properties  ..............................   107,604,000         105,480,000  
   Industrial property  .................................     1,264,000           1,264,000  
   Land  ................................................     4,446,000           4,446,000  
                                                           ------------       -------------  
   Total investments in real estate .....................   233,974,000         240,126,000  
   Less accumulated depreciation ........................    71,838,000          73,989,000  
                                                           ------------       -------------  
                                                            162,136,000         166,137,000  
Cash and cash equivalents  ..............................     6,031,000           5,589,000  
Other assets   ..........................................     5,728,000           6,020,000  
                                                           ------------       -------------  
Total assets   ..........................................   173,895,000         177,746,000  
                                                           ------------       -------------  
Liabilities and Partners' Equity                                                             
Mortgage notes payable  .................................   162,097,000         133,578,000  
Bank loans payable   ....................................     8,770,000           9,124,000  
Due to the Company   ....................................     3,118,000           2,795,000  
Other liabilities .......................................     4,341,000           4,436,000  
                                                           ------------       -------------  
   Total liabilities ....................................   178,326,000         149,933,000  
                                                           ------------       -------------  
   Net equity (deficit) .................................    (4,431,000)         27,813,000  
   Partners' share   ....................................    (5,470,000)        (10,818,000) 
                                                           ------------       -------------  
   Investments in partnerships and joint ventures  ......  $  1,039,000       $  16,995,000  
                                                           ============       =============  

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  -- (Continued)

YEARS ENDED AUGUST 31, 1997, 1996 AND 1995  

2. Investments in partnerships and joint ventures  -- (Continued)               

                                                        [Enlarge/Download Table]

                                                                 For the years ended August 31           
                                                         1997              1996              1995        
                                                      ---------------   ---------------   ---------------
                                                                                                         
Gross revenues from real estate .....................  $ 52,446,000      $ 53,209,000      $ 52,339,000  
                                                       ------------      ------------      ------------  
Expenses:                                                                                                
   Property operating expenses  .....................    20,774,000        21,724,000        20,477,000  
   Mortgage and bank loan interest ..................    14,908,000        11,984,000        12,463,000  
   Depreciation and amortization   ..................     6,978,000         6,833,000         6,502,000  
                                                       ------------      ------------      ------------  
     Total expenses .................................    42,660,000        40,541,000        39,442,000  
                                                       ------------      ------------      ------------  
Net income ..........................................     9,786,000        12,668,000        12,897,000  
   Partners' share  .................................    (5,449,000)       (6,410,000)       (6,516,000) 
                                                       ------------      ------------      ------------  
Equity in income of partnerships and joint ventures .  $  4,337,000      $  6,258,000      $  6,381,000  
                                                       ============      ============      ============  

    Mortgage notes payable which are secured by the related properties are due
in installments over various terms extending to the year 2013 with interest     
rates ranging from 6.6% to 10.4% with an average interest rate of 7.9%.         
Principal payments are due as follows:                                          

Fiscal year ending                                                              
-------------------------------------------                                     
1998   ....................................    $  6,062,000                     
1999   ....................................       8,268,000                     
2000   ....................................       9,147,000                     
2001   ....................................      18,705,000                     
2002   ....................................       3,913,000                     
2003 and thereafter   .....................     116,002,000                     
                          ------------
                          $162,097,000
                          ============

The liability under each mortgage note is limited to the particular   
property except for two loans in the amount of $7,234,000 which are guaranteed  
by the partners of the respective partnerships, including the Company. In       
addition, one bank loan in the amount of $2,911,000 has been guaranteed by the  
partners of the partnership including the Company.                              

The Company's investments in certain partnerships and joint ventures  
reflect cash distributions in excess of the Company's net investments totaling  
$5,999,000 and $5,876,000 at August 31, 1997 and 1996, respectively. The        
Company is generally entitled to a priority return on these investments.        

The Company has a 50% partnership interest in Lehigh Valley Mall      
Associates which is included in the amounts above. Summarized financial         
information for this investment which is accounted for by the equity method     
follows:                                                                        

                                                        [Enlarge/Download Table]

                                                            For the years ended             
                                                --------------------------------------------
                                                  8/31/97         8/31/96         8/31/95   
                                                -------------   -------------   ------------
                                                                                            
Total assets  .................................  $24,645,000     $23,552,000     $20,858,000
Mortgages payable and construction loan  ......   53,406,000      22,489,000      22,227,000
Revenues   ....................................   14,840,000      13,823,000      13,667,000
Property operating expenses  ..................    4,657,000       4,198,000       3,412,000
Interest expense ..............................    4,638,000       1,998,000       2,040,000
Net income ....................................    4,660,000       6,915,000       7,548,000
Equity in income of partnership ...............    2,330,000       3,458,000       3,774,000

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  -- (Continued)

YEARS ENDED AUGUST 31, 1997, 1996 AND 1995  

3. Mortgage notes and bank loans payable                                        

    Mortgage notes payable which are secured by the related properties are due
in installments over various terms extending to the year 2008 with interest at  
rates ranging from 5.90% to 9.50% with an average interest rate of 7.94%.       
Principal payments are due as follows:                                          

Fiscal year ending                                                              
-------------------------------------------                                     
1998   ....................................    $ 1,408,000                      
1999   ....................................      1,504,000                      
2000   ....................................     33,969,000                      
2001   ....................................      1,129,000                      
2002   ....................................      1,217,000                      
2003 and thereafter   .....................     44,301,000                      
                         -----------
                         $83,528,000
                         ===========

   In August 1996, the Company modified its existing $75.0 million unsecured
revolving line of credit to a $20.0 million revolving line of credit and a      
$55.0 million unsecured term loan. The term loan is divided into two tranches,  
a $30.0 million ten year term and a $25.0 million seven year term. The Company  
has the option of selecting fixed or floating rates on the term loan.           

 As of August 31, 1997, $13.0 million of the unsecured revolving line of
credit was outstanding ($7.3 million directly by the Trust and $5.7 million     
through partnerships and joint ventures) and $26.7 million of the term loan     
($20.0 million for ten years due August 2006 and $7 million for seven years due 
August 2003). The line of credit and term loans bear interest at LIBOR plus 185 
basis points. Under the credit facility, the Company must maintain minimum net  
worth and operating income levels as defined in the loan documents.             

   The weighted average interest rates based on amounts borrowed were 7.43%,
7.51% and 7.98% for fiscal years ended August 31, 1997, 1996 and 1995,          
respectively. Subsequent to year end, the Company entered into a new $150       
million credit facility (see Note 10).                                          

  During 1995, the Company purchased interest rate protection at a cost of
$250,000 on $15,000,000 of outstanding debt limiting the 30-day LIBOR rate to   
7.5% for three years. The Company also limited its exposure to increases in     
LIBOR on $20,000,000 of its floating rate debt by entering into a swap          
agreement which fixes a rate of 6.12% versus 30-day LIBOR through June 2001.    

  The Company is exposed to credit loss in the event of non-performance by
counterparties to the interest rate protection agreements; however, the Company 
does not anticipate non-performance by the counterparties.                      

    At August 31, 1997, the Company was in compliance with all debt covenants.

    The carrying values of the mortgage notes and bank loans payable at August
31, 1997 and 1996 were approximately equal to their respective fair values, as  
determined by using year-end interest rates and market conditions. At August    
31, 1997, the fair values of the interest rate protection and swap agreements   
referred to above were approximately $0 and $85,000, respectively.              

4. Benefit Plans                                                                

During 1995 the Company adopted a 401(k) Plan (the "Plan") in which   
substantially all of the officers and employees are eligible to participate.    
The Plan permits eligible participants, as defined in the Plan agreement, to    
defer up to 15% of their compensation, and the Trust, at its discretion, may    
match a percentage of the employees' contributions. The employees'              
contributions are fully vested and contributions from the Trust vest in         
accordance with an employee's years of service as defined in the plan           
agreement. The Company's contributions to the Plan for the years ended August   
31, 1997, 1996 and 1995 were $41,000, $39,000 and $1,000, respectively.         

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  -- (Continued)

YEARS ENDED AUGUST 31, 1997, 1996 AND 1995  

4. Benefit Plans  -- (Continued)                                                

   During 1995, the Company also adopted a Supplemental Retirement Plan (the
"Supplemental Plan") covering certain senior management employees. The          
Supplemental Plan provides eligible employees through normal retirement date,   
as defined in the plan agreement, a benefit amount similar to that which would  
have been received under the provisions of a pension plan which was terminated  
in 1994. The Company has recorded $92,000, $160,000 and $168,000 of             
contributions due under the provisions of this plan for the years ended August  
31, 1997, 1996 and 1995, respectively,                                          

5. Stock Option Plans                                                           

    In December 1990, the shareholders approved an incentive stock option plan
for key employees and a stock option plan for non-employee trustees, covering   
200,000 and 100,000 shares of beneficial interest, respectively. Under the      
terms of the plan, the purchase price of shares subject to each option granted  
will be at least equal to the fair market value of the shares on the date of    
grant. Options under the incentive stock option plan may be exercised as        
determined by the Company, but in no event later than 10 years from the date of 
grant. In December 1993, the Board of Trustees amended the incentive stock      
option plan for key employees, to increase the number of shares subject to      
option to 400,000 shares, to change the name of the plan to "1990 Incentive and 
Non Qualifying Stock Option Plan" and to expand some provisions of the plan.    
The stock option plan for non-employee trustees provides for annual grants of   
1,000 options (becoming exercisable in four equal installments). The options    
expire 10 years after the date of grant.                                        

In December 1993, the Board of Trustees adopted a non-qualifying stock
option plan covering 100,000 shares. The Company granted options on February 1, 
1994 having a term of 10 years and subject to the other terms and conditions    
set forth in the plan. All 100,000 shares are outstanding at August 31, 1997.   

Changes in options outstanding are as follows:                        

                                                        Plan For
                                          Employees     Non-Employee
                                          Plan          Trustees
                                           -----------   -------------
Options outstanding at 8/31/95  ......     244,625        35,250  
Options granted  .....................      50,500         6,000  
Options exercised   ..................           0             0  
                                         -------        ------
Options outstanding at 8/31/96  ......     295,125        41,250  
Options granted  .....................      45,000         6,000  
Options exercised   ..................           0        (9,000) 
                                         -------        ------
Options outstanding at 8/31/97  ......     340,125        38,250  
                                         -------        ------

As of August 31, 1997, options for 377,500 shares had been granted    
pursuant to the incentive stock option plan of which 340,125 remain outstanding 
at $16.00 to $24.625 per share and options for 48,000 shares had been granted,  
pursuant to the stock option plan for non-employee trustees of which 38,250     
shares remain outstanding at $15.75 to $25.375 per share. At August 31, 1997,   
options for 223,286 shares of beneficial interest with an aggregate purchase    
price of $4,853,000 (average of $21.73 per share) were exercisable.             

During the fourth quarter of 1997, the Board of Trustees extended the 
exercise dates for 62,500 options previously granted to an officer of the       
Company and two retiring trustees. As a result, the Company recorded            
compensation expense of $300,000 relating to this change in terms.              

  During 1997, the Company adopted an accounting standard, "Accounting for
Stock-Based Compensation" ("SFAS No. 123"). SFAS No 123 encourages a fair value 
method of accounting for employee stock options and similar equity instruments. 
The statement also allows an entity to continue to account for stock-based      
compensation using the intrinsic value method in APB Opinion No. 25. As         
provided for in the statement, the                                              

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  -- (Continued)

YEARS ENDED AUGUST 31, 1997, 1996 AND 1995  

5. Stock Option Plans  -- (Continued)                                           

Company elected to continue the intrinsic value method of expense recognition.  
If compensation cost for these plans had been determined using the fair value   
method prescribed by SFAS No. 123, the Company's net income would have          
reflected the pro forma amounts indicated below.                                

                       1997           1996
                     -------------  ------------
Net income   ...............   $10,212,000    $11,033,000         
Net income per share  ......   $      1.18    $      1.27         

The pro forma effect on the results may not be representative of the  
impact in future years because the fair value method was not applied to options 
granted before 1996.                                                            

 The fair value of each option was estimated on the grant date using the
Black-Scholes option pricing model and the assumptions presented below.         

                         1997         1996
                         ----------   ----------
Expected life in years   ......         5            5            
Risk-free interest rate  ......      6.10%        5.58%           
Volatility   ..................     17.31%       18.12%           
Dividend yield  ...............      7.28%        8.90%           

    The weighted average fair value of options granted was $2.05 per option in
1997 and $1.29 per option in 1996.                                              

  In March 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share". The new statement is effective for fiscal years  
ending after December 15, 1997. When adopted, the statement will require        
implementing a new definition of earnings per share including restatement of    
prior year amounts. Management has determined there will be no significant      
impact upon adoption of the statement.                                          

6. Operating Leases                                                             

The Company's multifamily properties are typically leased to residents
under operating leases for a period of one year. The Company's shopping centers 
are leased to tenants under operating leases with expiration dates extending to 
the year 2008.                                                                  

    Future minimum rentals under non-cancelable operating leases at August 31,
1997 are as follows:                                                            

1998   ...........................    $ 4,911,000                               
1999   ...........................      4,574,000                               
2000   ...........................      4,340,000                               
2001   ...........................      4,005,000                               
2002   ...........................      3,438,000                               
Thereafter   .....................     12,189,000                               
       -----------
       $33,457,000
       ===========

7. Commitments and Contingencies                                                

  During 1995 certain environmental matters arose at certain properties in
which the Company has an interest. The Company retained environmental           
consultants in order to investigate these matters. At one property, in which    
the Trust has a 50% ownership interest, groundwater contamination exists which  
the Trust alleges was caused by the former tenant. Estimates to remediate this  
property, which are subject to the length of monitoring and the extent of       
remediation required, range in total from $100,000 to $1,000,000. In addition,  
above normal radon levels have been detected at two wholly owned properties.    
The estimated remaining cost to remediate these properties is approximately     
$115,000, which costs were received as a credit from the sellers as part of the 
initial acquisitions.                                                           

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  -- (Continued)

YEARS ENDED AUGUST 31, 1997, 1996 AND 1995  

7. Commitments and Contingencies  -- (Continued)                                

   The Company has recorded its share of these liabilities totaling $366,000
related to the consultants' evaluation of these matters which, in certain       
instances, are subject to applicable state approvals of the remediation plans.  
In Management's opinion, no material incremental cost will be incurred on these 
properties. The Company will pursue recovery of remediation costs from all of   
the responsible parties, including its tenants and partners.                    

    The Company has been named as a defendant in a suit brought by persons and
their affiliates who are partners of the Company in three partnerships. The     
Company is vigorously defending the suit and has denied the plaintiffs'         
allegations. The Company also believes that it has viable claims against        
certain of the same partners (or their affiliates) which it is asserting. As    
the pleadings are not yet closed and discovery is still continuing, it is not   
possible to judge the ultimate outcome of these suits at this time. However,    
Management does not believe that resolution of these matters will have a        
material effect on the Company's financial condition or results of operations.  

8. Acquisitions                                                                 

 The Company acquired one property during the year ended August 31, 1995
for approximately $34,000,000 (including improvements) which was accounted for  
by the purchase method. The results of the property were included in the        
Trust's financial statements from the acquisition date. The pro forma financial 
information may not be indicative of results that would have been reported if   
the acquisition had occurred on September 1, 1994. Also, amounts presented      
below may not be indicative of future results.                                  

Year ended August 31, 1995 (unaudited)                                          

   Pro forma total revenues   .........    $37,815,000
   Pro forma net income ...............    $11,103,000
   Pro forma earnings per share  ......          $1.28

9. Summary of quarterly results (unaudited)                                     
The following presents a summary of the unaudited quarterly financial 
information for the years ended August 31, 1997 and 1996 (thousands of dollars, 
except per share data).                                                         

                                                        [Enlarge/Download Table]

                                                                                        1997                               
                                                          -----------------------------------------------------------------
                                                              1st          2nd           3rd           4th          Total  
                                                          ----------  --------------  ----------  --------------  ---------
                                                                                                                           
Revenues ................................................  $ 10,063     $ 10,186       $ 10,085     $ 10,151      $ 40,485 
Income before gains (loss) on sales of interests in                                                                        
 real estate   ..........................................     2,639        1,520(1)       2,785        2,222(2)      9,166 
Gains (loss) on sales of interests in real estate  ......        --        1,461             --         (392)        1,069 
Net income  .............................................     2,639        2,981          2,785        1,830        10,235 
Net income per share:                                                                                                      
   Income before gains (loss) on sales of interests                                                                        
    in real estate   ....................................  $    .30     $    .17       $    .32     $    .26      $   1.06 
   Gains (loss) on sales of interests in real estate   .         --          .17             --        ( .05)          .12 
                                                           --------     ----------     --------     ----------    -------- 
   Total ................................................  $    .30     $    .34       $    .32     $    .21      $   1.18 
                                                           ========     ==========     ========     ==========    ======== 

------------                                                                    
(1) Reflects the recording of a provision for asset impairment (see Note 1) and 
the share of prepayment fees relating to the refinancing of certain debt
at partnerships accounted for under the equity method.                  

(2) Includes additional compensation expense (see Note 5) relating to a change  
in the terms of certain stock options previously granted.               

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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  -- (Continued)

YEARS ENDED AUGUST 31, 1997, 1996 AND 1995  

9. Summary of quarterly results (unaudited)  -- (Continued)                     

                                                        [Enlarge/Download Table]

                                                                                1996                           
                                                      ---------------------------------------------------------
                                                        1st         2nd         3rd         4th        Total   
                                                      ---------   ---------   ---------   ---------   ---------
                                                                                                               
Revenues   ..........................................  $ 9,696     $ 9,667     $ 9,968     $ 9,925    $ 39,156 
Income before gains on sales of interests in real                                                              
 estate .............................................    2,845       2,336       2,625       2,373      10,179 
Gains on sales of interests in real estate  .........       --          --         411         454         865 
Net income ..........................................    2,845       2,336       3,036       2,827      11,044 
Net income per share:                                                                                          
   Income before gains on sales of interests in real                                                           
    estate ..........................................  $   .33     $   .27     $   .30     $   .27    $   1.17 
   Gains on sales of interests in real estate  ......       --          --         .05         .05         .10 
                                                       -------     -------     -------     -------    -------- 
Total   .............................................  $   .33     $   .27     $   .35     $   .32    $   1.27 
                                                       -------     -------     -------     -------    -------- 

10. Subsequent Events                                                           

On September 30, 1997 the Company completed a series of related       
transactions pursuant to which the Company: (i) transferred substantially all   
of its real estate interests to a newly formed operating partnership (the       
"Operating Partnership"), of which the Company is the sole general partner,     
(ii) the Operating Partnership acquired all of the non-voting common shares of  
The Rubin Organization, Inc. ("TRO"), a commercial development and management   
firm, constituting 95% of the total equity of TRO in exchange for the issuance  
of 200,000 Operating Partnership units and a provision to issue up to 800,000   
additional Operating Partnership units over the next five years, upon           
achievement of certain specified levels of adjusted funds from operations per   
share, as defined, over that period; (iii) acquired the interests of certain    
affiliates of TRO in The Court at Oxford Valley for total consideration of $6.4 
million plus a share of debt in the amount of $24.7 million, of which $684,000  
was paid in cash and the balance paid in 233,248 Operating Partnership units    
valued at approximately $5.5 million; (iv) committed to acquire the interests   
of certain affiliates of TRO in two retail properties nearing completion        
(Northeast Tower Center and Hillview Shopping Center); and (v) acquired the     
interests of certain affiliates of TRO in four development properties.          
 In connection with the above transaction, the Company also acquired two
malls located in Florence, South Carolina and North Dartmouth, Massachusetts    
for an aggregate purchase price of approximately $80.4 million consisting of    
$15.1 million in cash, $25.2 million of assumed mortgage debt, $35.1 million of 
borrowings under the new revolving credit facility and the balance paid in      
213,038 Operating Partnership units valued at approximately $5.0 million.       
Coincident with the closing of the TRO Transaction, the Operating     
Partnership entered into a $150.0 million revolving credit facility (the        
"Credit Facility"). The obligations of the Operating Partnership under the      
Credit Facility have been guaranteed by the Company.                            
The Credit Facility is for an initial term of two years and bears     
interest, at the borrower's election, at (i) the higher of prime rate, or the   
Federal Funds lending rate plus .5%, or (ii) the London Interbank Offered Rate  
plus margins ranging from 1.1% to 1.7%, depending on the Company's consolidated 
Leverage Ratio, as defined.                                                     
 The Credit Facility contains various financial covenants with which the
Company must comply. Until the Company reduces its Leverage Ratio below 50%,    
the lending banks will hold unrecorded mortgages on 11 unencumbered properties  
which the Operating Partnership owns, directly or indirectly, and would be      
entitled to record such mortgages upon any event of default.                    
   As of September 30, 1997, the Operating Partnership had drawn $95 million
on the Credit Facility which was used to repay amounts outstanding on the       
Company's prior line of credit and for cash payments in the TRO Transaction     
referred to above.                                                              
    On September 29, 1997, the Company changed its fiscal year end from August
31 to December 31.                                                              

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS  

To the Shareholders of                                                          
The Rubin Organization, Inc.:                                                   

  We have audited the accompanying consolidated balance sheet of The Rubin
Organization, Inc. (a Pennsylvania Subchapter S Corporation) and subsidiary     
("TRO") as of December 31, 1996, and the related consolidated statements of     
operations, stockholders' equity, and cash flows for the year then ended. These 
financial statements are the responsibility of TRO's management. Our            
responsibility is to express an opinion on these financial statements based on  
our audit.                                                                      

We conducted our audit in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of         
material misstatement. An audit includes examining, on a test basis, evidence   
supporting the amounts and disclosures in the financial statements. An audit    
also includes assessing the accounting principles used and significant          
estimates made by management, as well as evaluating the overall financial       
statement presentation. We believe that our audit provides a reasonable basis   
for our opinion.                                                                

 In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position   
of TRO as of December 31, 1996, and the results of their operations and their   
cash flows for the year then ended in conformity with generally accepted        
accounting principles.                                                          

ARTHUR ANDERSEN LLP                 

Philadelphia, Pa.,                                                              
June 23, 1997                                                                 

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THE RUBIN ORGANIZATION, INC. AND SUBSIDIARY 

CONSOLIDATED BALANCE SHEETS 

ASSETS  

                                                        [Enlarge/Download Table]

                                                                                   December 31         
                                                          September 30,    ----------------------------
                                                              1997            1996            1995     
                                                          ---------------  -------------   ------------
                                                           (unaudited)                     (unaudited) 
                                                                                                       
CURRENT ASSETS:                                                                                        
 Cash and cash equivalents   ...........................    $   347,966     $   861,163     $   869,498
 Restricted cash .......................................        425,945         463,280         410,550
 Fees and commissions receivable, net of allowance for                                                 
   uncollectible accounts of $0, $869,469 and $921,358,                                                
   respectively  .......................................      2,981,508       2,623,104       2,431,063
 Fees and commissions receivable from affiliates, net of                                               
   allowance for uncollectible accounts of $0, $46,161                                                 
   and $68,976, respectively ...........................      1,074,220       1,408,649       1,508,400
 Real estate held for sale   ...........................             --         114,000         114,000
 Prepaid expenses and other assets .....................         32,952          65,747          87,290
                                                            -----------     -----------     -----------
      Total current assets   ...........................      4,862,591       5,535,943       5,420,801
                                                            -----------     -----------     -----------
PROPERTY AND EQUIPMENT:                                                                                
 Furniture, fixtures and equipment .....................      4,060,096       3,827,110       3,719,138
 Leasehold improvements   ..............................        108,062          80,452          80,452
                                                            -----------     -----------     -----------
                                                              4,168,158       3,907,562       3,799,590
 Less- Accumulated depreciation and amortization  ......      3,231,386       2,952,564       2,518,297
                                                            -----------     -----------     -----------
      Net property and equipment   .....................        936,772         954,998       1,281,293
                                                            -----------     -----------     -----------
FEES AND COMMISSIONS RECEIVABLE,                                                                       
 LONG-TERM, net  .......................................        146,562         333,546       1,709,969
ADVANCES TO AFFILIATED PARTNERSHIPS   ..................             --       2,793,912         247,147
INTANGIBLE ASSETS--MANAGEMENT                                                                          
 CONTRACTS, net of accumulated amortization of                                                         
 $427,670 at September 30, 1997 ........................      6,681,307       7,108,977              --
DEFERRED FINANCING COSTS, net of accumulated                                                           
 amortization of $26,240 in 1995   .....................             --              --           5,467
INVESTMENTS IN LIMITED PARTNERSHIPS   ..................             --              --          44,915
                                                            -----------     -----------     -----------
                                                              6,827,869      10,236,435       2,007,498
                                                            -----------     -----------     -----------
      Total assets  ....................................    $12,627,232     $16,727,376     $ 8,709,592
                                                            ===========     ===========     ===========

The accompanying notes are an integral part of these statements.

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THE RUBIN ORGANIZATION, INC. AND SUBSIDIARY 

CONSOLIDATED BALANCE SHEETS 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)  

                                                        [Enlarge/Download Table]

                                                                                               December 31           
                                                                   September 30,    ---------------------------------
                                                                       1997             1996             1995        
                                                                   ---------------  ---------------   ---------------
                                                                    (unaudited)                       (unaudited)    
                                                                                                                     
CURRENT LIABILITIES:                                                                                                 
 Current portion of long-term debt, including $0, $1,262,468                                                         
   and $1,357,820 to affiliates  .................................  $    424,215     $  2,650,245      $  3,743,683  
 Accounts payable, trade and accrued expenses   ..................     3,072,196        2,977,571         4,055,266  
 Due to affiliates   .............................................        28,020          175,526           535,671  
 Deferred compensation payable   .................................       325,544          185,500           162,000  
                                                                    ------------     ------------      ------------  
      Total current liabilities  .................................     3,849,975        5,988,842         8,496,620  
                                                                    ------------     ------------      ------------  
LONG-TERM DEBT, including $1,613,288, $3,423,158 and                                                                 
 $4,299,416 to affiliates  .......................................     8,065,258       10,073,427         3,193,777  
DEFERRED COMPENSATION PAYABLE,                                                                                       
 LONG-TERM  ......................................................       123,500          278,500           327,250  
                                                                    ------------     ------------      ------------  
      Total liabilities ..........................................    12,038,733       16,340,769        12,017,647  
                                                                    ------------     ------------      ------------  
MINORITY INTEREST IN SUBSIDIARY  .................................            --            4,492             3,487  
                                                                    ------------     ------------      ------------  
COMMITMENTS AND CONTINGENCIES                                                                                        
STOCKHOLDERS' EQUITY (DEFICIT):                                                                                      
 Capital stock, $.10 par value; 280,000, 250,000 and                                                                 
   250,000 shares authorized; 279,005, 249,005 and 80,005                                                            
   shares issued and outstanding .................................        27,901           24,901             8,001  
 Additional paid-in capital   ....................................     2,562,980        4,329,250           662,456  
 Treasury stock, at cost, 19,411 shares   ........................        (1,008)          (1,008)         (601,956) 
 Accumulated deficit .............................................    (2,001,374)      (3,971,028)       (3,380,043) 
                                                                    ------------     ------------      ------------  
      Total stockholders' equity (deficit)   .....................       588,499          382,115        (3,311,542) 
                                                                    ------------     ------------      ------------  
      Total liabilities and stockholders' equity (deficit)  ......  $ 12,627,232     $ 16,727,376      $  8,709,592  
                                                                    ============     ============      ============  

The accompanying notes are an integral part of these statements.

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THE RUBIN ORGANIZATION, INC. AND SUBSIDIARY 

CONSOLIDATED STATEMENTS OF OPERATIONS 

                                                                [Download Table]

                                               For the Nine Months Ended     
                                                      September 30           
                                           ----------------------------------
                                              1997              1996         
                                           ---------------  -----------------
                                           (unaudited)       (unaudited)     
                                                                             
REVENUES:                                                                    
 Management fees ........................   $ 5,079,646      $   3,433,201   
 Leasing commissions   ..................    10,257,379          3,818,889   
 Consulting fees ........................     1,164,262            487,454   
 Development fees   .....................     1,076,630            959,094   
 Publication  ...........................     2,021,854          1,813,920   
 Other income ...........................       152,345             50,218   
 Interest income ........................        25,828             23,129   
                                            -----------      -------------   
     Total revenues .....................    19,777,944         10,585,905   
                                            -----------      -------------   
OPERATING EXPENSES:                                                          
 Salaries, commissions, payroll taxes                                        
   and employee benefits  ...............    10,349,033          7,035,917   
 Cost of goods sold - publication  ......     1,387,208          1,083,181   
 Rent expense ...........................       625,958            597,803   
 Other operating expenses ...............     3,076,892          1,361,664   
 Expenses for start-up of EPDLP                                              
   management contracts .................       686,430            280,046   
 Expense from abandonment of public                                          
   offering   ...........................            --                 --   
 Depreciation and amortization  .........       807,569            296,887   
 Write-down of investment in 1626                                            
   Locust Associates   ..................            --            330,837   
                                            -----------      -------------   
     Total operating expenses   .........    16,933,090         10,986,335   
                                            -----------      -------------   
INCOME (LOSS) FROM                                                           
 OPERATIONS   ...........................     2,844,854           (400,430)  
INTEREST EXPENSE ........................      (710,366)          (484,315)  
EQUITY IN LOSS FROM INVESTMENTS IN                                           
 LIMITED PARTNERSHIPS ...................      (164,834)          (271,973)  
                                            -----------      -------------   
NET INCOME (LOSS)   .....................   $ 1,969,654      $  (1,156,718)  
                                            ===========      =============   


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                                                          For the Year Ended                 
                                                              December 31                    
                                          ---------------------------------------------------
                                             1996             1995              1994         
                                          ---------------  ---------------  -----------------
                                                           (unaudited)       (unaudited)     
                                                                                             
REVENUES:                                                                                    
 Management fees ........................  $ 4,608,058      $ 6,273,015      $   5,769,027   
 Leasing commissions   ..................    6,186,407        5,914,555          5,293,143   
 Consulting fees ........................    1,105,000          859,681            895,331   
 Development fees   .....................    1,341,475        1,057,624          1,027,591   
 Publication  ...........................    2,346,760        2,451,722          2,303,495   
 Other income ...........................       19,889           29,696             49,135   
 Interest income ........................       35,410           67,751              1,081   
                                           -----------      -----------      -------------   
     Total revenues .....................   15,642,999       16,654,044         15,338,803   
                                           -----------      -----------      -------------   
OPERATING EXPENSES:                                                                          
 Salaries, commissions, payroll taxes                                                        
   and employee benefits  ...............    9,785,660        9,831,075          9,779,739   
 Cost of goods sold - publication  ......    1,458,423        1,656,674          1,583,000   
 Rent expense ...........................      766,708          787,319            848,951   
 Other operating expenses ...............    2,225,599        2,835,113          2,265,596   
 Expenses for start-up of EPDLP                                                              
   management contracts .................      280,046               --                 --   
 Expense from abandonment of public                                                          
   offering   ...........................           --               --          2,103,296   
 Depreciation and amortization  .........      439,734          384,068            400,318   
 Write-down of investment in 1626                                                            
   Locust Associates   ..................      319,823               --                 --   
                                           -----------      -----------      -------------   
     Total operating expenses   .........   15,275,993       15,494,249         16,980,900   
                                           -----------      -----------      -------------   
INCOME (LOSS) FROM                                                                           
 OPERATIONS   ...........................      367,006        1,159,795         (1,642,097)  
INTEREST EXPENSE ........................     (603,249)        (813,357)          (629,242)  
EQUITY IN LOSS FROM INVESTMENTS IN                                                           
 LIMITED PARTNERSHIPS ...................     (354,742)        (398,572)                --   
                                           -----------      -----------      -------------   
NET INCOME (LOSS)   .....................  $  (590,985)     $   (52,134)     $  (2,271,339)  
                                           ===========      ===========      =============   

The accompanying notes are an integral part of these statements.

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THE RUBIN ORGANIZATION, INC. AND SUBSIDIARY 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 

                                                        [Enlarge/Download Table]


                                           Capital Stock       Additional                                                        
                                       ---------------------    Paid-in         Treasury         Accumulated                     
                                        Shares     Amount       Capital           Stock           Deficit            Total       
                                       ---------  ----------  ---------------  ---------------  ----------------  ---------------
                                                                                                                                 
BALANCE, JANUARY 1, 1994 ............    80,005    $  8,001    $    662,456     $  (601,956)     $ (1,056,570)     $   (988,069) 
 Net loss (unaudited) ...............        --          --              --              --        (2,271,339)       (2,271,339) 
                                         ------    --------    ------------     -----------      ------------      ------------  
BALANCE, DECEMBER 31, 1994  .........    80,005       8,001         662,456        (601,956)       (3,327,909)       (3,259,408) 
 Net loss, (unaudited)   ............        --          --              --              --           (52,134)          (52,134) 
                                         ------    --------    ------------     -----------      ------------      ------------  
BALANCE, DECEMBER 31, 1995  .........    80,005       8,001         662,456        (601,956)       (3,380,043)       (3,311,542) 
 Net loss ...........................        --          --              --              --          (590,985)         (590,985) 
 Issuance of common stock   .........   169,000      16,900       3,666,794         600,948                --         4,284,642  
                                        -------    --------    ------------     -----------      ------------      ------------  
BALANCE, DECEMBER 31, 1996  .........   249,005      24,901       4,329,250          (1,008)       (3,971,028)          382,115  
 Net income (unaudited)  ............        --          --              --              --         1,969,654         1,969,654  
 Dividends (unaudited)   ............        --          --      (2,481,593)             --                --        (2,481,593) 
 Issuance of common stock (unaudited)    30,000       3,000         715,323              --                --           718,323  
                                        -------    --------    ------------     -----------      ------------      ------------  
BALANCE, SEPTEMBER 30, 1997                                                                                                      
 (unaudited) ........................   279,005    $ 27,901    $  2,562,980     $    (1,008)     $ (2,001,374)     $    588,499  
                                        =======    ========    ============     ===========      ============      ============  

The accompanying notes are an integral part of these statements.

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THE RUBIN ORGANIZATION, INC. AND SUBSIDIARY 

CONSOLIDATED STATEMENTS OF CASH FLOWS 

                                                                [Download Table]

                                                  For the Nine Months Ended    
                                                        September 30           
                                              ---------------------------------
                                                 1997              1996        
                                              ---------------  ----------------
                                              (unaudited)       (unaudited)    
                                                                               
CASH FLOWS FROM OPERATING                                                      
 ACTIVITIES:                                                                   
 Net income (loss)  ........................   $ 1,969,654      $ (1,156,718)  
 Adjustments to reconcile net income                                           
   (loss) to net cash provided by operating                                    
   activities-                                                                 
   Depreciation and amortization   .........       807,569           296,887   
   Equity in loss on investments in limited                                    
    partnerships ...........................       164,834           271,973   
   Provision for doubtful fees and                                             
    commissions receivable .................      (237,469)          103,757   
   Abandonment of public offering  .........            --                --   
   Write-down of investment in 1626                                            
    Locust Associates  .....................            --           330,837   
   Minority interest income (loss) .........        (4,492)               --   
   Changes in assets and liabilities-                                          
    Decrease (increase) in-                                                    
      Restricted cash  .....................        37,335            (5,024)  
      Fees and leasing commissions                                             
       receivable   ........................        66,049           339,226   
      Fees and leasing commissions                                             
       receivable from affiliates  .........       334,429           (31,932)  
      Prepaid expenses and other assets.            32,795          (164,073)  
    Increase (decrease) in-                                                    
      Accounts payable and accrued                                             
       expenses  ...........................        94,625           788,894   
      Deferred compensation payable   ......       (14,956)          (81,002)  
                                               -----------      ------------   
       Net cash provided by operating                                          
         activities ........................   $ 3,250,373      $    692,825   
                                               ===========      ============   


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                                                             For the Year Ended                
                                                                December 31                    
                                             --------------------------------------------------
                                                1996             1995              1994        
                                             ---------------  ---------------  ----------------
                                                              (unaudited)       (unaudited)    
                                                                                               
CASH FLOWS FROM OPERATING                                                                      
 ACTIVITIES:                                                                                   
 Net income (loss)  ........................  $   (590,985)   $    (52,134)     $ (2,271,339)  
 Adjustments to reconcile net income                                                           
   (loss) to net cash provided by operating                                                    
   activities-                                                                                 
   Depreciation and amortization   .........       439,734         384,068           400,318   
   Equity in loss on investments in limited                                                    
    partnerships ...........................       354,742         398,572                --   
   Provision for doubtful fees and                                                             
    commissions receivable .................       207,513         364,057           309,884   
   Abandonment of public offering  .........            --              --         2,103,296   
   Write-down of investment in 1626                                                            
    Locust Associates  .....................       319,823              --                --   
   Minority interest income (loss) .........         1,005           2,164             2,230   
   Changes in assets and liabilities-                                                          
    Decrease (increase) in-                                                                    
      Restricted cash  .....................       (52,730)       (208,024)          (28,131)  
      Fees and leasing commissions                                                             
       receivable   ........................       976,869         597,993        (1,106,907)  
      Fees and leasing commissions                                                             
       receivable from affiliates  .........        99,751      (1,316,545)         (301,141)  
      Prepaid expenses and other assets.            21,543         (39,580)           61,171   
    Increase (decrease) in-                                                                    
      Accounts payable and accrued                                                             
       expenses  ...........................    (1,077,695)        208,517           858,184   
      Deferred compensation payable   ......       (25,250)       (130,750)          310,000   
                                              ------------    ------------      ------------   
       Net cash provided by operating                                                          
         activities ........................  $    674,320    $    208,338      $    337,565   
                                              ============    ============      ============   

(Continued) 

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THE RUBIN ORGANIZATION, INC. AND SUBSIDIARY 

CONSOLIDATED STATEMENTS OF CASH FLOWS -- (Continued)  

                                                        [Enlarge/Download Table]

                                               For the Nine Months Ended                    For the Year Ended                
                                                      September 30                              December 31                   
                                             ------------------------------  -------------------------------------------------
                                                1997             1996           1996             1995              1994       
                                             ---------------  -------------  ---------------  ---------------  ---------------
                                             (unaudited)      (unaudited)                     (unaudited)       (unaudited)   
                                                                                                                              
CASH FLOWS FROM INVESTING                                                                                                     
 ACTIVITIES:                                                                                                                  
 Capital expenditures for property and                                                                                        
   equipment and deferred costs ............  $   (260,596)    $  (75,747)    $   (107,972)    $  (266,531)     $  (262,952)  
 Acquisition costs for management                                                                                             
   contracts  ..............................      (101,078)        (5,468)        (108,977)             --               --   
 (Increase) decrease in advances to                                                                                           
   affiliated partnerships   ...............     2,793,912       (272,782)      (2,546,765)       (247,147)              --   
 Proceeds from sale of real estate .........       114,000             --               --              --               --   
 (Contributions) distributions to/from                                                                                        
   equity investees ........................      (164,834)      (283,466)        (319,613)       (396,281)              --   
                                              ------------     ----------     ------------     -----------      -----------   
      Net cash provided by (used in)                                                                                          
       investing activities  ...............     2,381,404       (637,463)      (3,083,327)       (909,959)        (262,952)  
                                              ------------     ----------     ------------     -----------      -----------   
CASH FLOWS FROM FINANCING                                                                                                     
 ACTIVITIES:                                                                                                                  
 Increase (decrease) in due to affiliates         (147,505)         3,277         (360,145)         13,549         (217,725)  
 Repayments on long-term debt   ............    (5,847,487)      (172,236)      (1,689,225)       (765,370)        (546,085)  
 Proceeds from long-term debt   ............     1,613,288             --          165,400       1,252,593          920,645   
 Dividends Paid  ...........................    (2,481,593)            --               --              --               --   
 Proceeds from issuance of common stock            718,323             --        4,284,642              --               --   
                                              ------------     ----------     ------------     -----------      -----------   
      Net cash provided by (used in)                                                                                          
       financing activities  ...............    (6,144,974)      (168,959)       2,400,672         500,772          156,835   
                                              ------------     ----------     ------------     -----------      -----------   
NET INCREASE (DECREASE) IN CASH                                                                                               
 AND CASH EQUIVALENTS  .....................      (513,197)      (113,597)          (8,335)       (200,849)         231,448   
CASH AND CASH EQUIVALENTS,                                                                                                    
 BEGINNING OF PERIOD   .....................       861,163        869,498          869,498       1,070,347          838,899   
                                              ------------     ----------     ------------     -----------      -----------   
CASH AND CASH EQUIVALENTS, END                                                                                                
 OF PERIOD .................................  $    347,966     $  755,901     $    861,163     $   869,498      $ 1,070,347   
                                              ============     ==========     ============     ===========      ===========   
SUPPLEMENTAL DISCLOSURE OF                                                                                                    
 NONCASH ACTIVITIES:                                                                                                          
 Cash paid for interest   ..................  $    166,430     $  193,455     $    306,202     $   395,347      $   235,964   
                                              ============     ==========     ============     ===========      ===========   

  Noncash investing and financing activities are discussed in Notes 3, 4 and 7

The accompanying notes are an integral part of these statements.

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THE RUBIN ORGANIZATION, INC. AND SUBSIDIARY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1996, 1995 AND 1994

1. Organization and operations                                                  

The Rubin Organization, Inc. ("TRO") is a Pennsylvania Sub-chapter S  
Corporation engaged in the leasing, development and management of retail,       
commercial office and residential real estate properties, located primarily in  
the northeastern region of the United States, which, in many cases, are wholly  
or partially owned by certain of the shareholders of TRO. TRO also provides     
advertising services to the tenants of retail properties including those        
properties managed by TRO.                                                      

The consolidated financial statements as of September 30, 1997 and    
December 31, 1995 and 1994, and for the nine month periods ended September 30,  
1997 and 1996, and for the year ended December 31, 1995 and 1994 are unaudited; 
however, in the opinion of management, all adjustments (consisting solely of    
normal recurring adjustments) necessary for a fair presentation of the          
consolidated financial statements for the interim periods and the fiscal years  
ended December 31, 1995 and 1994 have been included. The results for the        
interim periods are not necessarily indicative of the results for the full      
year.                                                                           

2. Summary of significant accounting policies                                   

Principles of Consolidation                                                     

   The consolidated financial statements include the accounts of TRO and its
75% owned subsidiary, Strouse Greenberg Realty Investment, Inc. TRO has limited 
partnership interests in a real estate partnership and another limited          
partnership which are accounted for under the equity method of accounting. All  
significant intercompany balances and transactions have been eliminated.        

Use of Estimates in the Preparation of Financial Statements                     

The preparation of financial statements in conformity with generally  
accepted accounting principles requires management to make estimates and        
assumptions that affect the reported amounts of assets and liabilities and      
disclosure of contingent assets and liabilities at the date of the financial    
statements and the reported amounts of revenues and expenses during the         
reporting period. Actual results could differ from these estimates.             

Cash and Cash Equivalents                                                       

 TRO considers all highly liquid investments with original maturities of
three months or less when purchased to be cash equivalents for purposes of the  
consolidated statements of cash flow.                                           

Restricted Cash                                                                 

TRO controls certain cash amounts as agents for their clients and for 
funds on deposit to secure the future payments of insurance for various managed 
properties.                                                                     

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THE RUBIN ORGANIZATION, INC. AND SUBSIDIARY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1996, 1995 AND 1994

2. Summary of significant accounting policies -- (Continued)                    

Property and Equipment                                                          

A summary of property and equipment, less accumulated depreciation and
amortization at September 30, 1997 and December 31, 1996 and 1995 follows:      

                                                        [Enlarge/Download Table]

                                                        September 30,    December 31,    December 31, 
                                                            1997             1996            1995     
                                                        ---------------  --------------  -------------
                                                         (unaudited)                      (unaudited) 
                                                                                                      
Furniture and fixtures   ..............................   $2,165,759       $2,231,052    $2,189,794   
Computer equipment ....................................    1,775,962        1,430,683     1,363,969   
Telephone equipment   .................................      118,375          118,375       118,375   
Transportation equipment ..............................           --           47,000        47,000   
Leasehold improvements   ..............................      108,062           80,452        80,452   
                                                          ----------       ----------    ----------   
                                                           4,168,158        3,907,562     3,799,590   
Less- Accumulated depreciation and amortization  ......    3,231,386        2,952,564     2,518,297   
                                                          ----------       ----------    ----------   
                                                          $  936,772       $  954,998    $1,281,293   
                                                          ==========       ==========    ==========   

   Furniture, fixtures, equipment and leasehold improvements are recorded at
cost. Major renewals and betterments are capitalized while replacements,        
maintenance and repairs which do not improve or extend the life of the asset    
are expensed. As assets are retired or otherwise disposed of, the cost and      
related accumulated depreciation are removed from the accounts and any gain or  
loss is reflected. Depreciation and amortization are computed using the         
straight-line method over the estimated useful lives of the assets as follows:  

Furniture and Fixtures      10 years              
Computer Equipment          5 years               
Telephone Equipment         5 years               
Transportation equipment    5 years               
Leasehold improvements      Life of lease         

Deferred Financing Costs                                                        

 Deferred financing costs are amortized by the straight-line method over
the term of the related credit arrangement.                                     

Revenue Recognition                                                             

Advisory and management fees are recognized in the period in which the
services are performed unless significant future contingencies exist.           
Transaction and lease commissions are recorded as income upon the closing of    
the related sale or upon the signing of lease or occupancy by the respective    
tenant under the lease. Other commissions and fees are recorded as revenue at   
the time the related services have been performed unless significant future     
contingencies exist. Related expenses representing the employee's or co-brokers 
share of transaction commissions are recorded concurrently with the recording   
of the related revenue.                                                         

Income Taxes                                                                    

TRO has elected Sub-chapter S Corporation status under the Internal   
Revenue Code and is therefore not subject to federal and state income taxes.    
Accordingly, no provision for income taxes has been provided by the             
accompanying financial statements. The shareholders include their respective    
share of TRO's profits or losses in their individual tax returns.               

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THE RUBIN ORGANIZATION, INC. AND SUBSIDIARY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1996, 1995 AND 1994

2. Summary of significant accounting policies -- (Continued)                    

TRO's net assets at December 31, 1996 and 1995 for federal income tax 
purposes are approximately $100,000 and $(3,600,000) (unaudited), respectively. 
TRO's net losses for tax reporting purposes for the years ended December 31,    
1996, 1995 and 1994, were approximately $456,000, $836,000 (unaudited) and      
$1,655,000 (unaudited). The differences between losses for financial reporting  
purposes and tax reporting purposes are as a result of TRO being a cash basis   
tax payer and using accelerated depreciation for tax reporting purposes.        

Reclassifications                                                               

Certain prior year amounts have been reclassified to conform with the 
current year presentation.                                                      

3. Fees and commissions receivable                                              

 Fees and commissions receivable include amounts due from properties for
management, leasing, marketing and development services and amounts related to  
reimbursements for payroll and other operating expense reimbursements due to    
TRO.                                                                            

   These receivables include leasing commissions receivable acquired from an
affiliate of TRO on January 31, 1994 for a purchase price of $2,205,424. The    
purchase was funded by a note payable, which matures in 1999 (Note 7). These    
non- interest bearing receivables were related to commissions which are payable 
over the terms of the related retail leases.                                    

   TRO recorded these amounts at their fair value as of the acquisition date
which reflected a discount of 12%. The discount is amortized over the term of   
the receivable as amounts are collected under the terms of the leasing          
arrangements. The outstanding balances at September 30, 1997 and December 31,   
1996 and 1995 are as follows:                                                   

                                                        [Enlarge/Download Table]

                                        September 30,    December 31,    December 31,   
                                            1997             1996            1995       
                                        ---------------  --------------  ---------------
                                         (unaudited)                      (unaudited)   
                                                                                        
Gross leasing commissions  ............   $ 343,709       $ 1,688,380     $ 2,328,946   
Unamortized discount ..................     (86,108)         (360,649)       (530,610)  
Allowance for doubtful accounts  ......     (63,039)         (196,373)       (216,647)  
                                          ---------       -----------     -----------   
                                            194,502         1,131,358       1,581,689   
Less: current portion   ...............     (48,000)         (797,812)       (561,587)  
                                          ---------       -----------     -----------   
Long-term portion .....................   $ 146,562       $   333,546     $ 1,020,102   
                                          =========       ===========     ===========   

The carrying amount of the long-term portion of fees and commissions  
receivable approximates fair value as the discount rate used to determine the   
carrying amount approximates a current market rate.                             

 TRO is subject to a concentration of credit risk as the majority of the
fees and commissions receivable are due from commercial properties located in   
the northeastern region of the United States.                                   

4. Acquisition of Equity Properties and Development Limited Partnership         
management agreements                                                   

On December 31, 1996, TRO acquired the rights under various management
agreements from Equity Properties and Development Limited Partnership ("EPDLP") 
related to retail properties that EPDLP had previously managed. The transfer of 
these management agreements have been approved by a majority of the property    
owners. These agreements are initially for ten-year terms; however, they are    
generally cancelable with 30 days notice by the respective owners of the        
property in the event of a default by TRO, as defined, or in the event of a     
sale or transfer of the ownership of any of the respective properties by the    
owners.                                                                         

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1996, 1995 AND 1994

4. Acquisition of Equity Properties and Development Limited Partnership         
management agreements -- (Continued)                                      

 These agreements give TRO the rights to various management, leasing and
other fee revenue generated from the respective properties in return for TRO's  
performance of the related management and leasing services. The $7,000,000      
purchase price for this transaction was satisfied by a 7% note payable to EPDLP 
(Note 7) and was accounted for under the purchase method of accounting.         
Accordingly, at December 31, 1996, TRO has recorded $7,108,977 as an intangible 
asset, which includes $108,977 of transaction costs. This intangible asset,     
which represents contract rights, is being amortized on a straight-line basis   
over a ten-year period. Amortization expense of $427,670 (unaudited) is         
reflected in the accompanying financial statements for the nine-month period    
ended September 30, 1997.                                                       

    Amortization of the $7,000,000 note payable is based on a formula which is
based on fixed percentages of a specific level of fee revenue earned by TRO     
from the management agreements, as defined in the purchase agreement. Payments  
have been initially set at a minimum monthly amount of $82,000 for the first    
quarter of 1997 and are subject to adjustment on a quarterly and annual basis   
based on the fee revenue generated from the agreements. In the event the        
$7,000,000 note payable and accrued interest is repaid prior to December 31,    
2006, an additional purchase price, as defined, is due annually to EPDLP until  
the fiscal year ending December 31, 2006, based on a formula which is based on  
fixed percentages of a specified level of fee revenue earned by TRO for the     
applicable fiscal year. Any unpaid balance and accrued interest on the note is  
due and payable on December 31, 2006.                                           

   Under the terms of the purchase agreement, the $7,000,000 note payable is
reduced to the amount actually payable to EPDLP with respect to fee revenue     
earned by TRO before the maturity of the note in December 2006 in accordance    
with the above formula, for any management agreements which are terminated or   
canceled for any reason other than the default by TRO in the event that EPDLP   
has not assigned another management agreement to TRO as a replacement for the   
terminated agreement.                                                           

Under the terms of the purchase agreement, TRO did not earn leasing   
commissions revenue for the three-month period ending on March 31, 1997.        
Leasing commissions earned in the three-month period beginning April 1, 1997    
and ending June 30, 1997 were shared equally between TRO and EPDLP. All leasing 
commissions earned subsequent to June 30, 1997 are due to TRO.                  

5. Real estate held for sale                                                    

TRO purchased a residential property from one of its officers and     
shareholders as a condition of his employment agreement. This property was sold 
in April 1997 for an amount which realized its carrying amount as of December   
31, 1996.                                                                       

6. Investments in limited partnerships                                          

A summary of TRO's investments in limited partnerships is as follows: 

                                                                [Download Table]

                                        Ownership Interest        Investment    
                                        -------------------   ------------------
                                           December 31,          December 31,   
        Limited Partnerships              1996       1995      1996       1995  
-------------------------------------   --------   --------   ------   ---------
                                                                                
APEX Site Management, L.P.  .........    29.30%     32.00%     $ --    $ 44,915 
1626 Locust Street Associates  ......    55.64%     26.90%       --          -- 
                                                              ------   -------- 
                                                              $ --     $ 44,915 
                                                              ======   ======== 

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THE RUBIN ORGANIZATION, INC. AND SUBSIDIARY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1996, 1995 AND 1994

6. Investments in limited partnerships -- (Continued)                           

 The equity in net loss related to these investments for the years ended
December 31, 1996, 1995 and 1994 was as follows:                                

                                                                [Download Table]

                                           1996             1995           1994     
                                      ---------------  ---------------  ------------
                                                       (unaudited)      (unaudited) 
                                                                                    
APEX Site Management, L.P.  .........  $  (328,381)     $  (219,619)        $ --    
1626 Locust Street Associates  ......      (26,361)        (178,953)          --    
                                       -----------      -----------         --------
                                       $  (354,742)     $  (398,572)        $ --    
                                       ===========      ===========         ========

Summary financial information for these investments is as follows:    

                                                        [Enlarge/Download Table]

                      1626 Locust Street Associates        APEX Site Management, L.P.     
                         Years Ended December 31             Years Ended December 31      
                    ---------------------------------  -----------------------------------
                         1996              1995              1996               1995      
                    ---------------   ---------------  -----------------   ---------------
                                       (unaudited)                          (unaudited)   
                                                                                          
Assets ............  $   528,114       $   544,498      $   1,456,754       $   187,875   
Liabilities  ......    1,479,104         1,513,272          2,201,033            98,045   
                     -----------       -----------      -------------       -----------   
Equity ............  $  (950,990)      $  (968,774)     $     744,279       $    89,830   
                     ===========       ===========      =============       ===========   
Net loss  .........  $   (47,378)      $  (665,253)     $  (1,552,541)      $  (491,738)  
                     ===========       ===========      =============       ===========   

At December 31, 1996, TRO had a 55.64% limited partnership interest in
1626 Locust Associates. TRO does not consolidate the financial statements of    
this partnership as it does not control its operations. In 1996, under the      
terms of the partnership agreement, TRO was required to acquire the 28.74%      
partnership interest of a deceased partner. The $433,847 purchase price was     
funded by a non-interest bearing note which was recorded at $310,037, net of    
discount of $123,810, which is due to the estate of the former partner (Note    
7). As TRO concluded this investment was not realizable from future operations, 
the investment of $319,823 was written off in 1996. At December 31, 1996, TRO   
is obligated to fund operating deficits of the partnership and has guaranteed   
certain debt obligations of 1626 Locust Associates. The building owned by the   
partnership is currently under agreement of sale (Note 9).                      

    During 1995, TRO entered into a limited partnership, APEX Site Management,
L.P., which is engaged in providing site management to owners of real estate    
related to the establishment of telecommunications transmission sites on their  
respective properties. Under the terms of the partnership agreement, TRO was    
obligated to contribute up to $548,000 to the partnership. In 1996 and 1995,    
TRO contributed $283,466 and $264,534 (unaudited), respectively, to the         
partnership. As TRO has a limited partnership interest in this venture, and has 
no additional financial commitments to the venture, it has not recorded losses  
in excess of its investment as of December 31, 1996.                            

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1996, 1995 AND 1994

7. Long-term debt                                                               
Long-term debt consists of the following:                             

                                                                [Download Table]

                                                              1996        1995    
                                                            ----------  ----------
                                                                                  
Line of Credit                                                                    
--------------                                                                    
On December 28, 1993 a $2,300,000 line of credit with                             
interest at the prime rate was available until June 30,                           
1994. This line was obtained for working capital purposes                         
and to repay costs associated with the abandoned public                           
offering. This line of credit required repayment beginning                        
on July 1, 1994 at $50,000 per month until July 1, 1995                           
when payments increased to $60,000 per month until June                           
30, 1996 when the remaining balance was due. The line                             
of credit is secured by certain fees and commissions                              
receivable, and a partial guarantee, equal to 50% of the                          
credit line, by a stockholder of TRO. Under the terms of                          
the line, TRO was required to maintain certain annual                             
levels of revenues and net income among other restric-                            
tions. TRO was not in compliance with these covenants                             
until the debt was repaid in full in May 1997. The                                
weighted average interest rates for the years ended                               
December 31, 1996, 1995 and 1994 were 8.27%, 8.72%                                
(unaudited), and 7.40% (unaudited). The weighted aver-                            
age borrowing for the years ended December 31, 1996                               
and 1995 were $630,950 and $1,172,617 (unaudited).                                
Weighted average interest rates for the nine months ended                         
September 30, 1997 and 1996 were 8.3% (unaudited) and                             
8.3% (unaudited), respectively.                             $610,950    $ 850,950 

Loan Payable                                                                      
------------                                                                      
Loan represents amounts borrowed from a bank for the                              
purpose of financing certain improvements. Interest only                          
is payable at the rate of 9% and this loan matures on                             
April 1, 1998.                                               309,394      309,394 

Mortgage Note                                                                     
-------------                                                                     
This mortgage note is secured by real estate held for sale                        
with an adjustable rate mortgage. Interest is payable at a                        
fixed rate of 8.625%. Monthly principal and interest pay-                         
ments are $1,051 with a final payment due November 1,                             
2015. The property was sold in April 1997 and the debt                            
was repaid from the proceeds of the sale.                    117,702      119,880 

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THE RUBIN ORGANIZATION, INC. AND SUBSIDIARY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1996, 1995 AND 1994

7. Long-term debt -- (Continued)                                                

                                                        [Enlarge/Download Table]

                                                                1996         1995    
                                                              -----------  ----------
                                                                                     
Note Payable, EPDLP                                                                  
-------------------                                                                  
TRO has a $7,000,000 note payable related to its pur-                                
chase of certain management contract rights on December                              
31, 1996 (Note 4). The note bears interest at 7%, matures                            
on December 31, 2006 and requires initial minimum                                    
monthly principal and interest payments of $82,000 for                               
the first quarter of 1997 adjusted prospectively based                               
upon fee revenue generated by the acquired management                                
contracts.                                                    7,000,000            --

Loan Payable, Affiliate                                                              
-----------------------                                                              
On January 31, 1994, TRO purchased for $2,205,424                                    
leasing commissions receivable from R.R. Loanco Associ-                              
ates (Note 3) an affiliate, and financed the purchase price                          
through a note. This note bears interest only at 2% above                            
prime and matures on January 31, 1999. This debt is                                  
unsecured and is subordinate to the line of credit. The                              
weighted average interest rates for the years ended                                  
December 31, 1996, 1995 and 1994 were 10.27%,                                        
10.72% (unaudited), and 9.40% (unaudited). Weighted                                  
average interest rates for the nine months ended Septem-                             
ber 30, 1997 and 1996 were 10.44% (unaudited) and                                    
10.27% (unaudited) respectively.                              2,180,424     2,205,424

Loan Payable, Affiliate                                                              
-----------------------                                                              
Represents amounts due to an affiliated partnership (Dela-                           
ware Associates) for cash advances to TRO. This debt is                              
unsecured and is due on demand. Interest is payable at                               
the rate of 1% above prime. The weighted average inter-                              
est rates for the years ended December 31, 1996, 1995                                
and 1994 were 9.27%, 9.72% (unaudited), and 8.40%                                    
(unaudited), respectively. Weighted average interest rates                           
for the nine months ended September 30, 1997 and 1996                                
were 9.44% (unaudited) and 9.27%, (unaudited) respec-                                
tively.                                                         877,068     1,502,593

Loan Payable, Affiliate                                                              
-----------------------                                                              
Represents an amount due to Richard I. Rubin & Co.,                                  
Inc., an affiliate, for the purchase of its operating assets                         
on December 31, 1992. Principal and interest are due in                              
monthly installments of $18,370. This note bears interest                            
at the rate of 12%. Final payment is due on August 1,                                
1999. Principal and interest payments have been deferred                             
by Richard I. Rubin & Co., Inc. since 1993, however,                                 
TRO has accrued all unpaid interest. TRO made partial                                
interest payments of $100,000 and $120,000 in 1996 and                               
1995, respectively.                                           1,000,000     1,000,000

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THE RUBIN ORGANIZATION, INC. AND SUBSIDIARY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1996, 1995 AND 1994

7. Long-term debt -- (Continued)                                                

                                                        [Enlarge/Download Table]

                                                                1996            1995        
                                                            ---------------  ---------------
                                                                                            
Notes Payable, Former Stockholders                                                          
----------------------------------                                                          
TRO is obligated under notes payable to former stock-                                       
holders related to the repurchase of their shares of TRO's                                  
stock. These notes are payable in monthly installments                                      
through the year 1999 and bear interest at rates ranging                                    
from 7.7% to 9.0 %.                                                77,627          236,790  

Loans Payable to Affiliate                                                                  
--------------------------                                                                  
TRO has a 55.64% ownership interest in a partnership,                                       
1626 Locust Street Associates, which was purchased at                                       
various times from former partners of this partnership                                      
(Note 6). The aggregate purchase price is payable in                                        
annual installments through the year 2007 without stated                                    
interest. Interest has been imputed at rates ranging from                                   
9% to 10%.                                                        385,107          262,429  

Loan Payable to Affiliate                                                                   
-------------------------                                                                   
Pan American Associates, an affiliated partnership,                                         
advanced amounts to the company to finance operating                                        
activities. The loan is due on demand with interest at                                      
prime plus 1%. The weighted average interest rates for                                      
the years ended December 31, 1996, 1995 and 1994 were                                       
9.27%, 9.72% (unaudited) and 8.4% (unaudited).                                              
Weighted average interest rates for the nine months ended                                   
September 30, 1997 and 1996 were 9.44% (unaudited)                                          
and 9.27% (unaudited), respectively.                              165,400          200,000  

Loan Payable, Shareholder                                                                   
-------------------------                                                                   
A shareholder advanced $250,000 to TRO during 1995 at                                       
prime plus 1% to finance the purchase of certain com-                                       
puter equipment. The loan plus accrued interest was                                         
repaid in full during 1996.                                            --          250,000  
                                                             ------------     ------------  
                                                               12,723,672        6,937,460  
Less: Current portion                                          (2,650,245)      (3,743,683) 
                                                             ------------     ------------  
   Long-term debt                                            $ 10,073,427     $  3,193,777  
                                                             ============     ============  

    The carrying amount of TRO's long term debt approximates fair value as the
interest rates on a portion of the debt are variable and adjust to the market,  
and the remaining fixed rate debt amounts are at rates which approximate market 
interest rates for similar instruments.                                         

At December 31, 1996, annual maturities of the long-term debt are as  
follows:                                                                        

1997                     $ 2,650,245    
1998                       1,142,689    
1999                       3,300,010    
2000                         687,929    
2001 and thereafter        4,942,799    

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THE RUBIN ORGANIZATION, INC. AND SUBSIDIARY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1996, 1995 AND 1994

8. Transactions with affiliaties                                                

Business Operations                                                             

    TRO performs management, leasing, development and marketing activities for
partnerships and other ventures which are affiliates of the stockholders of     
TRO. As certain stockholders either directly or indirectly have ownership       
interest in these partnerships and ventures, revenue recognized for these       
activities is as follows:                                                       

                                                        [Enlarge/Download Table]

                                  Nine Months Ended                                                  
                                    September 30,                    Year Ended December 31          
                            -----------------------------  ------------------------------------------
                               1997            1996           1996            1995           1994    
                            -------------   -------------  -------------   ------------   -----------
                                     (unaudited)                                  (unaudited)        
                                                                                                     
Management fees   ......... $ 1,723,780     $ 1,583,331    $ 2,266,397      $1,987,818     $3,582,489
Leasing commissions  ......   2,625,652       1,556,289      3,156,010       1,796,416      2,415,902
Consulting fees   .........     253,642         220,730        347,951         406,065             --
Development fees  .........     511,648         148,498        181,533              --        644,598
                            -----------     -----------    -----------      ----------     ----------
   Totals   ............... $ 5,114,722     $ 3,508,848    $ 5,951,891      $4,190,299     $6,642,989
                            ===========     ===========    ===========      ==========     ==========

Operating Lease                                                                 

  TRO leases office space from Richard I. Rubin & Co., Inc., an affiliate,
under a sublease agreement. The term of the sublease agreement began on January 
1, 1994 and expires on July 31, 1999. The original terms of the sublease called 
for a monthly base rental of $49,112 plus TRO's share of the increase in office 
maintenance costs real estate taxes and storage space rental. Effective August  
1, 1996, the monthly base rent was decreased to $36,535. Effective December 1,  
1993, TRO leased additional office space in the same building from Bellevue     
Associates, an affiliate, for a minimum rental of $10,524 per year plus         
additional rent based on TRO's share of increases in office maintenance and     
other costs. This lease is scheduled to expire on July 31, 1999. TRO incurred   
$690,987, $743,032 (unaudited) and $818,437 (unaudited) for the years ended     
December 31, 1996, 1995 and 1994, respectively, related to these leases with    
affiliates.                                                                     

Employment Agreements                                                           

    TRO entered into employment agreements, effective on January 1, 1993, with
certain key employees who are or were stockholders of TRO. These agreements     
were effective for a two-year term and provided for fixed aggregate annual base 
salaries of approximately $400,000 plus other benefits. Commencing in 1995 upon 
the lapse of the two-year term of these agreements, deferred compensation       
totaling $620,000 was payable to these individuals over a five-year period.     
Payments of $25,250 and $130,750 (unaudited) were made in 1996 and 1995,        
respectively, leaving a balance due of $464,000 at December 31, 1996.           

Advances to Affiliates                                                          

 During 1996 and 1995, TRO advanced $2,546,764 and $247,148 (unaudited),
respectively, to various affiliated partnerships involved in the development of 
real estate. As a result, $2,793,912 was outstanding from these partnership at  
December 31, 1996. These funds are non-interest bearing, are due on demand and  
will be repaid when the respective partnership secures construction financing.  
In management's opinion, based upon the current status of these development     
projects, advances as of September 30, 1997 and December 31, 1996 are           
realizable through the future activities of the related partnerships. The       
ability of TRO to realize these amounts is subject to the risks inherent in the 
real estate development process.                                                

Due To Affiliates                                                               

   During 1995 and 1994, an affiliate of certain shareholders advanced funds
to TRO. These advances are due on demand and bear interest at the rate of 7%.   
At September 30, 1997 and December 31, 1996 and 1995, these amounts were $0     
(unaudited), $175,526 and $535,671 (unaudited), respectively.                   

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THE RUBIN ORGANIZATION, INC. AND SUBSIDIARY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1996, 1995 AND 1994

9. Commitments and contingencies                                                

Operating Leases                                                                

  TRO leases office space from affiliates (Note 8) and from other parties.
These lease payments include charges for base rent and additional rent for      
TRO's share of increases in operating costs. At December 31, 1996, the future   
minimum rental payments under these leases are as follows:                      

1997          $   671,808               
1998              653,958               
1999              329,413               
----------- 
Total      $ 1,655,179            
=========== 

Profit Sharing Plan                                                             

All full time employees are eligible to participate in the plan. TRO  
contributes to the plan at its own discretion. In 1996, 1995 and 1994, no       
discretionary contributions were made to the plan.                              

Stockholders Agreement                                                          

Under their current stockholders agreements, the stockholders are     
restricted on the transfer of their stock. If an individual stockholder wishes  
to sell his or her stock to an outside party, TRO has the first option to       
purchase the stock before the remaining stockholders. Upon the termination of   
employment or the death of a stockholder, TRO and the other stockholders will   
be obligated to purchase the stockholder's stock at a price calculated as       
provided in the agreement.                                                      

Other                                                                           

TRO has guaranteed $800,000 of certain debt obligations of 1626 Locust
Associates and has provided a $100,000 letter of credit related to these        
obligations. In May 1997, an agreement of sale was executed for the sale of     
building owned by this partnership, which is scheduled to close in February     
1998. As a result, in the event this transaction is consummated the proceeds of 
the sale will allow the partnership to repay substantially all of the existing  
indebtedness of the partnership. There can be no assurance that the transaction 
will be consummated or that the current value of the property will continue to  
approximate or exceed the aggregate indebtedness of the partnership.            

  TRO has a $1,000,000 joint and several guarantee related to indebtedness
of another affiliated partnership. This partnership's debt matures on June 1,   
1999. Certain shareholders' of TRO intend to provide TRO with indemnifications  
related to this guarantee.                                                      

TRO has an employment agreement with an individual who is also a      
shareholder of TRO. This agreement continues until terminated by TRO and        
provides for salary continuation for a specified number of months under certain 
circumstances. The aggregate commitment at December 31, 1996 under this         
contract is approximately $300,000.                                             

Litigation                                                                      

   In the normal course of business there are various claims which have been
brought or asserted against TRO. After consultation with counsel, in            
management's opinion such actions or claims will not be material to TRO's       
consolidated financial position or results of operations.                       

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THE RUBIN ORGANIZATION, INC. AND SUBSIDIARY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1996, 1995 AND 1994

10. Subsequent event (Unaudited)                                                

On September 30, 1997 all of the nonvoting common shares of TRO were  
acquired by an operating partnership ("OP") formed by Pennsylvania Real Estate  
Investment Trust ("PREIT") in exchange for the issuance of 200,000 OP units and 
a provision to issue up to an additional 800,000 OP units over the next five    
years, upon the achievement of certain specified levels of adjusted funds from  
operations per share, as defined, over that period.                             

Prior to the consummation of the transaction described above, TRO     
distributed to its shareholders certain assets and liabilities as required by   
the purchase agreement. The accompanying unaudited balance sheet as of          
September 30, 1997 reflects the assets and liabilities of TRO which were        
acquired.                                                                       

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS  

To Pennsylvania Real Estate Investment Trust:                                   

We have audited the accompanying balance sheet of Oxford Valley Road Associates 
(a Pennsylvania limited partnership) as of September 30, 1997, and the related  
statement of operations, partners' capital, and cash flows for the nine-month   
period then ended. These financial statements are the responsibility of the     
management of Oxford Valley Road Associates. Our responsibility is to express   
an opinion on these financial statements based on our audit.                    

We conducted our audit in accordance with generally accepted auditing           
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of         
material misstatement. An audit includes examining, on test basis, evidence     
supporting the amounts and disclosures in the financial statements. An audit    
also includes assessing the accounting principles used and significant          
estimates made by management as well as evaluating the overall financial        
statement presentation. We believe that our audit provides a reasonable basis   
for our opinion.                                                                

In our opinion, the financial statements referred to above fairly, in all       
material respects, the financial position of Oxford Valley Road Associates as   
of September 30, 1997, and the results of their operations and their cash flows 
for the nine-month period then ended, in conformity with generally accepted     
accounting principles.                                                          

ARTHUR ANDERSEN LLP                 
Philadelphia, Pa.,                                                              
November 28, 1997                                                             

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OXFORD VALLEY ROAD ASSOCIATES 

BALANCE SHEET 

AS OF SEPTEMBER 30, 1997  

                                                        [Enlarge/Download Table]
                                                                                                  
                                    ASSETS                                                        
Property on operating leases, at cost less accumulated depreciation (Notes 2 and 5)    $43,075,248
Cash (Note 2) ........................................................................   1,360,902
Accounts receivable ..................................................................      52,054
Notes receivable from tenants (Note 4)   .............................................     780,684
Due from condominium association (Note 8)   ..........................................      23,006
Escrowed cash (Note 3) ...............................................................      62,211
Intangible assets, net of accumulated amortization (Notes 2 and 6)  ..................   5,936,387
Accrued rental income (Notes 2 and 4) ................................................     788,028
Prepaid expenses and other assets  ...................................................     539,589
                                                                                       -----------
Total assets  ........................................................................ $52,618,109
                                                                                       ===========
                       LIABILITIES AND PARTNERS' CAPITAL                                          
Liabilities:                                                                                      
   Mortgage note payable (Note 7)  ................................................... $49,233,600
   Accounts payable ..................................................................     712,777
   Accrued expenses and other liabilities   ..........................................     811,498
   Due to affiliates (Note 8)   ......................................................     774,946
                                                                                       -----------
Total liabilities   ..................................................................  51,532,821
Commitments and contingencies (Notes 5 and 9)                                                     
Partners' capital (Note 1)   .........................................................   1,085,288
                                                                                       -----------
Total liabilities and partners' capital  ............................................. $52,618,109
                                                                                       ===========

The accompanying notes are an integral part of this financial statement.

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OXFORD VALLEY ROAD ASSOCIATES 

STATEMENT OF OPERATIONS 

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997  

                                                                [Download Table]
                                                                               
REVENUES:                                                                      
   Rental income ................................................    $5,286,073
   Common area maintenance fees .................................       262,756
   Real estate taxes   ..........................................       494,892
   Water and sewer reimbursements  ..............................        49,735
                                                                     ----------
Total revenue ...................................................     6,093,456
                                                                     ----------
OPERATING EXPENSES:                                                            
   General and administrative   .................................       101,933
   Condominium assessment .......................................       353,574
   Property tax  ................................................       517,879
   Development expenses   .......................................        93,991
   Management fees (Note 8)  ....................................       251,152
   Depreciation and amortization   ..............................     1,108,725
                                                                     ----------
Total operating expenses  .......................................     2,427,254
                                                                     ----------
INCOME FROM OPERATIONS BEFORE GAIN ON SALE OF PARCELS OF LAND AND              
 INTEREST EXPENSE, NET ..........................................     3,666,202
                                                                     ----------
INTEREST EXPENSE, NET OF INTEREST INCOME OF $93,871  ............     2,871,272
GAIN ON SALE OF PARCELS OF LAND .................................       478,031
                                                                     ----------
NET INCOME ......................................................    $1,272,961
                                                                     ==========

The accompanying notes are an integral part of this financial statement.

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OXFORD VALLEY ROAD ASSOCIATES 

STATEMENT OF PARTNERS' CAPITAL  

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997  

BALANCE, DECEMBER 31, 1996 .........    $   577,686                             
Net income  .....................      1,272,961                          
Distributions to partners  ......       (765,359)                         
           -----------
BALANCE, SEPTEMBER 30, 1997   ......    $ 1,085,288                             
           ===========

The accompanying notes are an integral part of this statement.

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OXFORD VALLEY ROAD ASSOCIATES 

STATEMENT OF CASH FLOWS 

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997  

                                                        [Enlarge/Download Table]
                                                                                                   
CASH FLOWS FROM OPERATING ACTIVITIES:                                                              
   Net income  .....................................................................  $  1,272,961 
   Adjustments to reconcile net income to net cash provided by operating activities-               
      Depreciation   ...............................................................       736,044 
      Amortization   ...............................................................       372,681 
      (Increase) decrease in assets-                                                               
         Escrowed cash  ............................................................       790,454 
         Accounts receivable  ......................................................       236,535 
         Accrued rental income   ...................................................      (337,266)
         Prepaid expenses and other assets   .......................................      (244,363)
      Increase (decrease) in liabilities-                                                          
         Accounts payable  .........................................................    (1,476,220)
         Accrued expenses and other liabilities ....................................       165,891 
         Due from/to affiliates, net   .............................................      (174,798)
                                                                                      ------------ 
            Net cash provided by operating activities ..............................     1,341,919 
                                                                                      ------------ 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                              
   Capital expenditures ............................................................      (402,441)
   Increase in intangible assets ...................................................       (95,031)
   Repayment on tenant notes receivable   ..........................................        34,832 
                                                                                      ------------ 
            Net cash used in investing activities  .................................      (462,640)
                                                                                      ------------ 
CASH FLOWS FROM FINANCING ACTIVITIES:                                                              
   Repayments on mortgage note payable .............................................      (500,852)
   Distributions to partners  ......................................................      (765,359)
                                                                                      ------------ 
            Net cash used in financing activities  .................................    (1,266,211)
                                                                                      ------------ 
NET DECREASE IN CASH AND CASH EQUIVALENTS ..........................................      (386,932)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD  ....................................     1,747,834 
                                                                                      ------------ 
CASH AND CASH EQUIVALENTS, END OF PERIOD  ..........................................  $  1,360,902 
                                                                                      ============ 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                                  
CASH PAID FOR INTEREST  ............................................................  $  2,978,454 
                                                                                      ============ 

The accompanying notes are an integral part of this financial statement.

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OXFORD VALLEY ROAD ASSOCIATES 

NOTES TO FINANCIAL STATEMENT

SEPTEMBER 30, 1997  

1. Nature of operations                                                         

On April 13, 1995, Oxford Valley Road Associates (the "Partnership")  
purchased commercial real estate in Falls Township, Pennsylvania to develop and 
lease The Court at Oxford Valley. Concurrent with this transaction, two         
national chain store companies purchased adjacent real estate and entered into  
development agreements with the Partnership. The project was fully leased as of 
December 31, 1995 and collection of rents began on February 1, 1996.            

2. Summary of significant accounting policies                                   

Use of Estimates in the Preparation of Financial Statements                     

The preparation of financial statements in conformity with generally  
accepted accounting principles requires management to make estimates and        
assumptions that affect the reported amounts of assets and liabilities and      
disclosure of contingent assets and liabilities at the date of the financial    
statements and the reported amounts of revenues and expenses during the         
reporting period. Actual results could differ from these estimates.             

Statement of Cash Flows                                                         

 For purposes of reporting cash flows, cash and cash equivalents include
cash on hand and short-term investments with an original maturity of three      
months or less.                                                                 

Property on operating leases                                                    

    Rental property is stated at cost. For the nine months ended September 30,
1997, depreciation is calculated using straight line and accelerated methods    
over the following useful lives:                                                

            Land Improvements........................ 15 Years
            Buildings................................ 30 Years
            Equipment................................  7 Years

    The cost of assets sold, retired or otherwise disposed of, and the related
accumulated depreciation will be estimated from the accounts and any resulting  
gain or loss will be included in operations at the time of such occurrence.     

   Expenditures for maintenance and minor renovations are charged to expense
when paid. Additions and major renovations are capitalized.                     

Revenue recognition                                                             

    Rental income from tenants is recognized on a straight-line basis over the
term of the lease agreements regardless of when payments are due. Accrued       
rental income represents rental income recognized in excess of payments         
currently due (see Note 5).                                                     

Revenues from site development contracts are recognized on the        
completed-contract method. This method is used because the financial position   
and results of operations do not vary significantly from those which would      
result from use of the percentage-of-completion method. A contract is           
considered complete when all costs except insignificant items have been         
incurred and the project is fully operational. Contract costs include all       
direct and indirect costs associated with construction of the project.          

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OXFORD VALLEY ROAD ASSOCIATES 

NOTES TO FINANCIAL STATEMENT

SEPTEMBER 30, 1997  

2. Summary of significant accounting policies  -- (Continued)                   

Intangible assets                                                               

 Intangible assets are stated at cost. Amortization is calculated on the
straight-line basis over the following periods:                                 

                                                                [Download Table]
                                                                             
Start-up Costs ..................   5 Years                                  
Tenant Fit-out Allowances  ......   Term of the Related Lease (10 - 15 Years)
Financing Costs   ...............   Term of the Related Financing (15 Years) 
Capitalized Lease Fees  .........   Term of the Related Lease (10 - 15 Years)
Prepaid Lease Commissions  ......   Term of the Related Lease (10 - 15 Years)

Income taxes                                                                    

   No federal or state income taxes are payable by the Partnership, and none
have been provided for in the accompanying financial statements. The partners   
are to include their respective share of the Partnership's profits or losses in 
their tax returns. The Partnership's tax returns and the amount of allocable    
Partnership profits and losses are subject to examination by federal and state  
taxing authorities. If such examinations result in changes to Partnership       
profits or losses, the tax liability of the partners would be changed           
accordingly.                                                                    

Partnership earnings and distribution allocations                               

  The General and Limited Partners have an agreement as to the allocations
of net earnings and distributions subject to extensive provisions as agreed to  
by the partners.                                                                

3. Escrowed cash                                                                

    As of September 30, 1997, the Partnership has $62,211 being held in escrow
by New York Life Insurance Company, the holder of the mortgage note payable on  
the Partnership (see Note 7), which will be released upon completion of         
additional construction costs associated with the project.                      

4. Notes receivable from tenants                                                

The Partnership has the following notes receivable due from tenants:  

                                                        [Enlarge/Download Table]

                                                                                           September 30, 
                                                                                               1997      
                                                                                           --------------
                                                                                                         
Notes receivable from tenants for excess construction costs, which will be repaid in                     
  monthly installments ranging from $1,424 to $9,426 including interest at 10%                           
  maturing through January, 2012 .........................................................   $ 780,684   
                                                                                             =========   

  At September 30, 1997, aggregate maturities of the notes are as follows:

1998   .....................    $ 62,041                                        
1999   .....................      62,183                                        
2000   .....................      68,666                                        
2001   .....................      75,899                                        
2002   .....................      83,856                                        
Thereafter   ...............     428,039                                        
--------        
$780,684        
========        

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OXFORD VALLEY ROAD ASSOCIATES 

NOTES TO FINANCIAL STATEMENT

SEPTEMBER 30, 1997  

5. Commitments and contingencies                                                

Operating Leases                                                                

The Partnership is the lessor of real property under various operating
leases expiring through 2012.                                                   

The following is a summary of property on operating leases:           

             September 30,
            1997
                ----------------
Land   ..............................    $ 17,667,995                           
Land Improvements  ..................       1,715,852                           
Buildings ...........................      24,876,271                           
Equipment ...........................         224,915                           
              ------------
                44,485,033
Less Accumulated Depreciation  ......      (1,409,785)                          
              ------------
              $ 43,075,248
              ============
Depreciation Expense  ...............    $    736,044                           
              ============

 The Partnership leases shopping center space to tenants under operating
leases requiring fixed and contingent rentals based on real estate taxes and    
tenants' share of other expenses.                                               

   Future minimum rentals under noncancellable leases at September 30, 1997,
exclusive of renewal option increases and re-leasings are as follows:           

1998   .....................    $  6,590,285                                    
1999   .....................       6,597,505                                    
2000   .....................       6,597,505                                    
2001   .....................       6,889,884                                    
2002   .....................       7,042,616                                    
Thereafter   ...............      57,912,635                                    
------------    
$ 91,630,430    
============    

6. Intangible assets                                                            

A summary of intangible assets less accumulated amortization as of    
September 30, 1997 are as follows:                                              

             September 30,
            1997
              --------------
Start-up Costs  .....................    $   630,911                            
Tenant Fit-out Allowances   .........      3,173,680                            
Financing Costs .....................        420,508                            
Capitalized Lease Fees   ............      1,388,091                            
Prepaid Lease Commissions   .........        987,461                            
             -----------
               6,600,651
Less Accumulated Amortization  ......       (664,264)                           
             -----------
Net intangible assets ...............    $ 5,936,387                            
             ===========
Amortization Expense  ...............    $   372,681                            
             ===========

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OXFORD VALLEY ROAD ASSOCIATES 

NOTES TO FINANCIAL STATEMENT

SEPTEMBER 30, 1997  

7. Mortgage note payable                                                        

                                                        [Enlarge/Download Table]

                                                                                      September 30, 
                                                                                          1997      
                                                                                      --------------
                                                                                                    
Mortgage note payable to New York Life Insurance Company. Principal and interest,                   
  calculated based upon a twenty-five year amortization period, is payable monthly                  
  at 8.02% per annum through July 10, 2011, when a balloon payment of $31,833,931                   
  plus all unpaid interest is due. The loan is secured by a mortgage, assignment                    
  of leases and rents and security agreement encumbering the premises and all                       
  improvements thereon, along with all other tangible personal property and fixtures                
  owned by the Partnership and all of the Partnership's interest an all intangible                  
  personal property related to operation of the center. .................             $ 49,233,600  
                                                                                      ============  

At September 30, 1997, principal payments are due as follows:         

1998   .....................    $   730,723                                     
1999   .....................        791,530                                     
2000   .....................        857,397                                     
2001   .....................        928,745                                     
2002   .....................      1,006,031                                     
Thereafter   ...............     44,919,174                                     
-----------     
$49,233,600     
===========     

8. Related party transactions                                                   

Due From Condominium Association                                                

Represents an amount due from The Court at Oxford Valley Condominium  
Association (the "Association") for expenses of the Association paid for by the 
Partnership, which is a member of the Association. No formal repayment terms    
exist, however, repayment is expected within the next twelve months.            

Due to affiliates                                                               

 The balance consists of various non-interest bearing amounts to related
affiliates. The general and limited partners of Oxford Valley Road Associates   
are the general and limited partners and/or stockholders and officers of the    
affiliates.                                                                     

Management fees                                                                 

The Partnership pays management fees to Goldenberg Management Company,
Inc., an affiliate of a general partner, for administration of its day-to-day   
operations. Management fees are based on 4% of imputed rents and gross cash     
received from tenants. Management fee expense for the nine months ended         
September 30, 1997 was $251,152.                                                

9. Outstanding letters of credit                                                

At September 30, 1997, the Partnership had $1,278,133 of outstanding  
letters of credit related to completion of certain project construction.        

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS  

To Pennsylvania Real Estate Investment Trust:                                   

We have audited the statements of revenues and certain expenses of North        
Dartmouth Mall (the "Property") described in Note 1, for the nine months ended  
September 30, 1997 and the year ended December 31, 1996. These financial        
statements are the responsibility of management. Our responsibility is to       
express an opinion on this financial statement based on our audits.             

We conducted our audits in accordance with generally accepted auditing          
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of         
material misstatement. An audit includes examining, on a test basis, evidence   
supporting the amounts and disclosures in the financial statements. An audit    
also includes assessing the accounting principles used and significant          
estimates made by management, as well as evaluating the overall financial       
statement presentation. We believe that our audits provide a reasonable basis   
for our opinion.                                                                

The accompanying financial statements were prepared in accordance with the      
basis of accounting described in Note 1 and is not intended to be a complete    
presentation of the Property's revenues and expenses in accordance with         
generally accepted accounting principles.                                       

In our opinion, the financial statements referred to above presents fairly, in  
all material respects, the revenues and certain expenses of the Property for    
the nine months ended September 30, 1997 and the year ended December 31, 1996,  
in conformity with generally accepted accounting principles.                    

ARTHUR ANDERSEN LLP                 
Philadelphia, Pa.,                                                              
October 31, 1997                                                              

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NORTH DARTMOUTH MALL  

STATEMENTS OF REVENUES AND CERTAIN EXPENSES 

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND  
FOR THE YEAR ENDED DECEMBER 31, 1996  

                                                        [Enlarge/Download Table]

                                                              For the Nine         For the Year    
                                                              Months Ended             Ended       
                                                           September 30, 1997    December 31, 1996 
                                                           --------------------  ------------------
                                                                                                   
REVENUES:                                                                                          
 Minimum and percentage rent (Note 2)   ..................      $3,644,877           $4,496,380    
 Operating reimbursements   ..............................       1,064,646            1,437,767    
 Interest and other income (Note 2)  .....................          21,888              165,883    
                                                                ----------           ----------    
   Total revenues  .......................................       4,731,411            6,100,030    
                                                                ----------           ----------    
CERTAIN EXPENSES:                                                                                  
 Maintenance and other operating expenses (Note 3)  ......       1,229,491            1,692,757    
 Utilities   .............................................         172,980              214,143    
 Real estate taxes .......................................         258,160              351,161    
                                                                ----------           ----------    
  Total certain expenses .................................       1,660,631            2,258,061    
                                                                ----------           ----------    
REVENUES IN EXCESS OF CERTAIN EXPENSES  ..................      $3,070,780           $3,841,969    
                                                                ==========           ==========    

The accompanying notes are an integral part of these financial statements.

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NORTH DARTMOUTH MALL  

NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES  

SEPTEMBER 30, 1997 AND DECEMBER 31, 1996  

1. Basis of Presentation                                                        

   The statements of revenues and certain expenses reflect the operations of
North Dartmouth Mall (the "Property"), located in North Dartmouth,              
Massachusetts. The Property was acquired (in addition to an unaffiliated        
business and a separate affiliated property) by Pennsylvania Real Estate        
Investment Trust (the "Company") from an affiliate of Equity Properties and     
Development Limited Partnership ("EPDLP") on September 30, 1997. The Property   
has aggregate net rentable area of approximately 640,000 square feet and is     
approximately 83% leased as of September 30, 1997.                              

  The accounting records of the Property are maintained on a modified cash
basis. Adjusting entries have been made to present the accompanying financial   
statements in accordance with generally accepted accounting principles. The     
accompanying financial statements exclude certain expenses such as interest,    
depreciation and amortization, professional fees, and other costs not directly  
related to the future operations of the Property.                               

The preparation of financial statements in conformity with generally  
accepted accounting principles requires management to make estimates and        
assumptions that affect the reported amounts of revenues and expenses during    
the reporting period. The ultimate results could differ from those estimates.   

2. Operating Leases                                                             

    Base rents presented for the nine months ended September 30, 1997 and year
ended December 31, 1996, include straight-line adjustments for rental revenue   
increases in accordance with generally accepted accounting principles. The      
aggregate rental revenue increase resulting from the straight-line adjustment   
were $126,565 and $225,805 for the nine months ended September 30, 1997, and    
the year ended December 31, 1996, respectively.                                 

 No tenant represented greater than 10% of total base rents for the nine
months ended September 30, 1997. J.C. Penney had minimum rental payments equal  
to 11.50% of total base rents for the year ended December 31, 1996.             

   Interest and other income includes lease termination fees of $125,000 for
the year ended December 31, 1996.                                               

  The Property is leased to tenants under operating leases with expiration
dates extending to the year 2012. Future minimum rentals under noncancellable   
operating leases, excluding tenant reimbursements of operating expenses as of   
September 30, 1997, are as follows:                                             

1998 ........................   $ 3,496,438                                     
1999 ........................     3,408,060                                     
2000 ........................     3,266,247                                     
2001 ........................     2,928,709                                     
2002 ........................     2,252,009                                     
Thereafter ..................    11,440,436                                     

   Certain leases also include provisions requiring tenants to reimburse the
Property for management costs and other operating expenses up to stipulated     
amounts.                                                                        

3. Related Party Transactions                                                   

 The Property paid management fees of $118,579 for the nine months ended
September 30, 1997 to PREIT-RUBIN, Inc., an affiliate of the Company, and       
$153,260 for the year ended December 31, 1996 to an affiliate of EPDLP, a       
related party, based on percentages as defined in the management agreement.     
These management fees are included within maintenance and other operating       
expenses in the accompanying statements of revenues and certain expenses.       

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS  

To Pennsylvania Real Estate Investment Trust:                                   

We have audited the statements of revenues and certain expenses of Magnolia     
Mall (the "Property") described in Note 1, for the nine months ended September  
30, 1997 and the year ended December 31, 1996. These financial statements are   
the responsibility of management. Our responsibility is to express an opinion   
on this financial statement based on our audits.                                

We conducted our audits in accordance with generally accepted auditing          
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of         
material misstatement. An audit includes examining, on a test basis, evidence   
supporting the amounts and disclosures in the financial statements. An audit    
also includes assessing the accounting principles used and significant          
estimates made by management, as well as evaluating the overall financial       
statement presentation. We believe that our audits provide a reasonable basis   
for our opinion.                                                                

The accompanying financial statements were prepared in accordance with the      
basis of accounting described in Note 1 and is not intended to be a complete    
presentation of the Property's revenues and expenses in accordance with         
generally accepted accounting principles.                                       

In our opinion, the financial statements referred to above presents fairly, in  
all material respects, the revenues and certain expenses of the Property for    
the nine months ended September 30, 1997 and the year ended December 31, 1996,  
in conformity with generally accepted accounting principles.                    

ARTHUR ANDERSEN LLP                 
Philadelphia, Pa.,                                                              
October 31, 1997                                                              

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MAGNOLIA MALL 

STATEMENTS OF REVENUES AND CERTAIN EXPENSES 

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND  
FOR THE YEAR ENDED DECEMBER 31, 1996  

                                                        [Enlarge/Download Table]

                                                                For the Nine         For the Year    
                                                                Months Ended             Ended       
                                                             September 30, 1997    December 31, 1996 
                                                             --------------------  ------------------
                                                                                                     
REVENUES:                                                                                            
   Minimum and percentage rent (Note 2)   ..................      $3,588,365           $4,583,720    
   Operating reimbursements   ..............................       1,129,176            1,370,977    
   Interest and other income (Note 2)  .....................          10,704                   --    
                                                                  ----------           ----------    
      Total revenues .......................................       4,728,245            5,954,687    
                                                                  ----------           ----------    
CERTAIN EXPENSES:                                                                                    
   Maintenance and other operating expenses (Note 3)  ......       1,104,905            1,507,552    
   Utilities   .............................................          79,125              101,225    
   Real estate taxes .......................................         192,375              233,565    
                                                                  ----------           ----------    
      Total certain expenses  ..............................       1,376,405            1,842,342    
                                                                  ----------           ----------    
REVENUES IN EXCESS OF CERTAIN EXPENSES .....................      $3,351,840           $4,112,355    
                                                                  ==========           ==========    

The accompanying notes are an integral part of these financial statements.

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MAGNOLIA MALL 

NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES

SEPTEMBER 30, 1997 AND DECEMBER 31, 1996  

1. Basis of Presentation                                                        

   The statements of revenues and certain expenses reflect the operations of
Magnolia Mall (the "Property"), located in Florence, South Carolina. The        
Property was acquired (in addition to an unaffiliated business and a separate   
affiliated property) by Pennsylvania Real Estate Investment Trust (the          
"Company") from an affiliate of Equity Properties and Development Limited       
Partnership ("EPDLP") on September 30, 1997. The Property has aggregate net     
rentable area of approximately 570,000 square feet and is approximately 98%     
leased as of September 30, 1997.                                                

  The accounting records of the Property are maintained on a modified cash
basis. Adjusting entries have been made to present the accompanying financial   
statements in accordance with generally accepted accounting principles. The     
accompanying financial statements exclude certain expenses such as interest,    
depreciation and amortization, professional fees, and other costs not directly  
related to the future operations of the Property.                               

The preparation of financial statements in conformity with generally  
accepted accounting principles requires management to make estimates and        
assumptions that affect the reported amounts of revenues and expenses during    
the reporting period. The ultimate results could differ from those estimates.   

2. Operating Leases                                                             

    Base rents presented for the nine months ended September 30, 1997 and year
ended December 31, 1996, include straight-line adjustments for rental revenue   
increases in accordance with generally accepted accounting principles. The      
aggregate rental revenue increase resulting from the straight-line adjustment   
were $146,077 and $104,939 for the nine months ended September 30, 1997, and    
year ended December 31, 1996, respectively.                                     

No single tenant represented more than 10% of total base rents for the
nine months ended September 30, 1997. J.C. Penney had percentage rent in lieu   
of minimum rent of $439,000 which was greater than 10% of total base rents for  
the year ended December 31, 1996.                                               

  The Property is leased to tenants under operating leases with expiration
dates extending to the year 2008. Future minimum rentals under noncancellable   
operating leases, excluding tenant reimbursements of operating expenses as of   
September 30, 1997, are as follows:                                             

1998   .....................    $3,641,072                                      
1999   .....................     3,474,205                                      
2000   .....................     3,232,645                                      
2001   .....................     2,685,994                                      
2002   .....................     2,256,956                                      
Thereafter   ...............     5,907,765                                      

   Certain leases also include provisions requiring tenants to reimburse the
Property for management costs and other operating expenses up to stipulated     
amounts.                                                                        

3. Related Party Transactions                                                   

 The Property paid management fees of $133,159 for the nine months ended
September 30, 1997 to PREIT-RUBIN, Inc., an affiliate of the Company, and       
$198,364 for the year ended December 31, 1996 to an affiliate of EPDLP, a       
related party, based on percentages as defined in the management agreement.     
These management fees are included within maintenance and other operating       
expenses in the accompanying statements of revenues and certain expenses.       

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MAGNOLIA MALL 

NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES

SEPTEMBER 30, 1997 AND DECEMBER 31, 1996  

4. Commitments                                                                  

  The Property is obligated under a ground lease agreement on the shopping
center requiring minimum annual payments as of September 30, 1997 as follows:   

1998   .....................    $  175,000                                      
1999   .....................       189,583                                      
2000   .....................       200,000                                      
2001   .....................       200,000                                      
2002   .....................       200,000                                      
Thereafter   ...............     4,458,334                                      

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PROSPECTUS                                                                      

$200,000,000  

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 
DEBT SECURITIES, PREFERRED SHARES, SHARES,  
SHARE WARRANTS AND SHAREHOLDER RIGHTS 

    Pennsylvania Real Estate Investment Trust (the "Company") may from time to
time offer in one or more series of: (i) unsecured debt securities ("Debt       
Securities"); (ii) preferred shares of beneficial interest ("Preferred          
Shares"); (iii) shares of beneficial interest, $1.00 par value per share        
("Shares"); (iv) warrants exercisable for Shares ("Share Warrants") and (v)     
shareholder rights exercisable for Shares ("Rights"), with an aggregate public  
offering price of up to $200,000,000 (or its equivalent based on the exchange   
rate at the time of sale) in amounts, at prices and on terms to be determined   
at the time of offering. The Debt Securities, Preferred Shares, Shares, Share   
Warrants and Shareholder Rights (collectively, the "Securities") may be         
offered, separately or together, in separate series in amounts, at prices and   
on terms to be described in one or more supplements in this Prospectus (each a  
"Prospectus Supplement").                                                       

  The specific terms of the Securities in respect of which this Prospectus
is being delivered will be set forth in the applicable Prospectus Supplement    
and will include, where applicable: (i) in the case of Debt Securities, the     
specific title, aggregate principal amount, currency, form (which may be        
registered or bearer, or certificated or global) authorized denominations,      
maturity, rate (or manner of calculation thereof) and time of payment of        
interest, any terms for redemption at the option of the Company or repayment at 
the option of the holder, any terms for any sinking fund payments, any terms    
for conversion into Preferred Shares or Shares of the Company, covenants and    
any initial public offering price; (ii) in the case of Preferred Shares, the    
specific title and stated value, any dividend, liquidation, redemption,         
conversion, voting and other rights, and any initial public offering price;     
(iii) in the case of Shares, any initial public offering price; (iv) in the     
case of Share Warrants, the specific title and aggregate number, and the issue  
price and the exercise price; and (v) in the case of Shareholder Rights, the    
date for determining the shareholders entitled to the distribution, aggregate   
number of Shares purchasable, exercise price and date of expiration. In         
addition, such specific terms may include limitations on direct or beneficial   
ownership and restrictions on transfer of the Securities, in each case as may   
be appropriate to preserve the status of the Company as a real estate           
investment trust for federal income tax purposes.                               

   The applicable Prospectus Supplement also will contain information, where
applicable, about certain U.S. federal income tax considerations relating to,   
and any listing on a securities exchange of, the Securities covered by such     
Prospectus Supplement.                                                          

The Securities may be offered directly, through agents designated from
time to time by the Company, or to or through underwriters or dealers. If any   
agents or underwriters are involved in the sale of any of the Securities, their 
names, and any applicable purchase price, fee, commission or discount           
arrangement with, between or among them, will be set forth, or will be          
calculable from the information set forth, in an accompanying Prospectus        
Supplement. See "Plan of Distribution." No Securities may be sold without       
delivery of a Prospectus Supplement describing the method and terms of the      
offering of such Securities.                                                    

See "Risk Factors" beginning on Page 4 for certain factors  
relating to an investment in the Securities.  

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 December 17, 1997. 

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AVAILABLE INFORMATION 

    The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance       
therewith, files reports, proxy statements and other information with the       
Securities and Exchange Commission (the "Commission"). Such reports, proxy      
statements and other information filed by the Company may be copied and         
inspected at the Public Reference Facilities maintained by the Commission at    
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and the following     
regional offices of the Commission: 500 West Madison Street, Suite 1400,        
Chicago, Illinois 60661-2511 and Seven World Trade Center, 13th Floor, New      
York, New York 10048. Copies of such material can be obtained from the Public   
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.   
20549, at prescribed rates. The Commission also maintains an Internet web site  
at http://www.sec.gov that contains reports, proxy statements and other         
information. In addition, the Company's Shares are listed on the New York Stock 
Exchange and such reports, proxy statements and other information concerning    
the Company can be inspected at the offices of the New York Stock Exchange, 20  
Broad Street, New York, New York 10005.                                         

    The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement"), of which this Prospectus is a part, under   
the Securities Act of 1933, as amended (the "Securities Act"), with respect to  
the Securities offered hereby. This Prospectus does not contain all of the      
information set forth in the Registration Statement, certain portions of which  
have been omitted as permitted by the rules and regulations of the Commission.  
Statements contained in this Prospectus as to the contents of any contract or   
other documents are not necessarily complete, and in each instance, reference   
is made to the copy of such contract or documents filed as an exhibit to the    
Registration Statement, each such statement being qualified in all respects by  
such reference and the exhibits and schedules thereto. For further information  
regarding the Company and the Securities, reference is hereby made to the       
Registration Statement and such exhibits and schedules which may be obtained    
from the Commission at its principal office in Washington, D.C. upon payment of 
the fees prescribed by the Commission.                                          

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 

The documents listed below have been filed by the Company under the   
Exchange Act with the Commission and are incorporated herein by reference:      

1. The Company's Annual Report on Form 10-K for the fiscal year ended August
       31, 1997, filed on November 28, 1997, as amended by Form 10-K/A-1 filed
on December 15, 1997.                                           

2. The description of the Company's Shares of Beneficial Interest contained 
  in the Registration Statement on Form 8-A/12(b)/A-1 filed with the
   Commission on December 17, 1997, including any amendment or reports
filed for the purpose of updating such description.             

3. The Company's definitive proxy statement for the Annual Meeting of       
Shareholders on December 16, 1997, filed on November 18, 1997.  

4. The Company's definitive proxy statement for its Special Meeting of      
  Shareholders held on September 29, 1997, filed on August 28, 1997.

5. The Company's Reports on Form 8-K filed on October 14, 1997, December 2, 
1997 and December 17, 1997.                                     

   All documents filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to termination  
of the offering of all Securities to which this Prospectus relates shall be     
deemed to be incorporated by reference in this Prospectus and shall be part     
hereof from the date of filing of such document.                                

   Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or           
superseded for purposes of this Prospectus to the extent that a statement       
contained in this Prospectus (in the case of a statement in a previously filed  
document incorporated or deemed to be incorporated by reference herein), in any 
accompanying Prospectus Supplement relating to a specific offering of           
Securities or in any other subsequently filed document that is also             
incorporated or deemed to be incorporated by reference herein, modifies or      
supersedes such statement. Any such statement so modified                       

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or superseded shall not be deemed, except as so modified or superseded, to      
constitute a part of this Prospectus or any accompanying Prospectus Supplement. 
Subject to the foregoing, all information appearing in this Prospectus and each 
accompanying Prospectus Supplement is qualified in its entirety by the          
information appearing in the documents incorporated by reference.               

The Company will provide without charge to each person, including any 
beneficial owner, to whom a copy of this Prospectus is delivered, upon their    
written or oral request, a copy of any or all of the documents incorporated     
herein by reference (other than exhibits to such documents, unless such         
exhibits are specifically incorporated by reference in such documents). Written 
requests for such copies should be addressed to Pennsylvania Real Estate        
Investment Trust, 455 Pennsylvania Avenue, Suite 135, Ft. Washington,           
Pennsylvania 19034, Attention: Dante J. Massimini, Senior Vice                  
President-Finance and Treasurer. Telephone: (215)542-9250.                      

CAUTIONARY STATEMENT  

INFORMATION CONTAINED IN THIS PROSPECTUS AND ANY SUPPLEMENT HERETO    
CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE  
SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21D OF THE SECURITIES EXCHANGE  
ACT OF 1934, AS AMENDED, RELATING TO, WITHOUT LIMITATION, FUTURE ECONOMIC       
PERFORMANCE, PLANS AND OBJECTIVES OF MANAGEMENT FOR FUTURE OPERATIONS AND       
PROJECTIONS OF REVENUE ND OTHER FINANCIAL ITEMS, WHICH CAN BE IDENTIFIED BY THE 
USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "MAY," "WILL," "SHOULD," "EXPECT,"   
"ANTICIPATE," "ESTIMATE," "PLAN," OR "CONTINUE" OR THE NEGATIVE THEREOF OR      
OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY. THE CAUTIONARY STATEMENTS   
SET FORTH UNDER THE CAPTION "RISK FACTORS" AND ELSEWHERE IN THE PROSPECTUS      
IDENTIFY IMPORTANT FACTORS WITH RESPECT TO SUCH FORWARD-LOOKING STATEMENTS,     
INCLUDING CERTAIN RISKS AND UNCERTAINTIES, THAT COULD CAUSE ACTUAL RESULTS TO   
DIFFER MATERIALLY FROM THOSE IN SUCH FORWARD-LOOKING STATEMENTS.                

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THE COMPANY 

The term "Properties" herein means all of the Company's real estate   
assets. As used herein, unless the context indicates otherwise, the term        
"Company" includes Pennsylvania Real Estate Investment Trust, PREIT Associates, 
L.P., a Delaware limited partnership (the "Operating Partnership") of which the 
Company is the sole general partner and a wholly owned subsidiary of the        
Company is the majority limited partner, and their subsidiaries and affiliates, 
including PREIT-RUBIN, Inc. (formerly The Rubin Organization, Inc.), a real     
estate management company in which the Company owns 95% of the economic         
interests in the form of non-voting common shares (together with its            
predecessors, "PREIT-RUBIN").                                                   

    The Company is a fully integrated, self-administered and self-managed real
estate investment trust which acquires, rehabilitates, develops and operates    
shopping centers and multifamily Properties. Founded in 1960, the Company is    
one of the 15 largest publicly held operators of retail Properties in the       
United States (in terms of square feet owned and/or managed). On September 30,  
1997, the Company acquired The Rubin Organization, Inc., a commercial property  
development and management firm, and certain related real estate interests.     

The Company conducts substantially all of its operations through the  
Operating Partnership and has elected and conducts its operations in a manner   
intended to comply with the requirements for qualification as a real estate     
investment trust under the Real Estate Investment Trust Act of 1960, Sections   
856-60 of the Internal Revenue Code of 1986, as amended (the "Code"). Under the 
Code, a real estate investment trust which meets certain requirements is not    
subject to Federal income tax on the portion of its taxable income which is     
distributed to its shareholders, if, inter alia, at least 95% of its real       
estate investment trust taxable income, excluding any net capital gain, is so   
distributed.                                                                    

The Company is an unincorporated association in business trust form   
created in Pennsylvania pursuant to a Trust Agreement dated December 17, 1960,  
as amended. Since its inception it has been self-administered by its trustees.  
The Company's principal executive offices are located at 455 Pennsylvania       
Avenue, Suite 135, Fort Washington, PA 19034. Telephone: (215) 542-9250. The    
Company has regional offices in Philadelphia, Pennsylvania; Boca Raton,         
Florida; Chicago, Illinois; and Atlanta, Georgia.                               

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RISK FACTORS  

   Prospective investors should carefully consider, among other factors, the
risks and other matters described below.                                        

Real Estate Investment Risks                                                    

    General. Real property investments are subject to varying degrees of risk.
The returns available from equity investments in real estate as well as the     
Company's ability to service debt will depend in large part on the amount of    
income generated, expenses incurred and capital expenditures required. The      
Company's income from the Properties may be adversely affected by a number of   
factors, including the general economic climate and local real estate           
conditions, such as an oversupply of, or a reduction in demand for, retail      
space or apartments in the area and the attractiveness of the Properties to     
shoppers, residents and tenants. In addition, income from properties and real   
estate values generally also are affected by such factors as the cost of        
compliance with government regulation, including zoning and tax laws, the       
potential for liability under applicable laws, interest rate levels and the     
availability of financing. Certain significant expenditures associated with     
each equity investment by the Company in a Property (such as mortgage payments, 
if any, real estate taxes and maintenance costs) also are generally not reduced 
when circumstances cause a reduction in income from the Property.               

The success of the Company depends, among other factors, upon general 
economic conditions, population trends, real estate fluctuations, income tax    
laws, governmental regulations, availability and costs of financing,            
construction costs, increases or decreases in operating expenses, zoning laws   
and the ability of the Company to keep the Properties leased at profitable      
levels.                                                                         

  Competition. The real estate business is highly competitive. The Company
competes for tenants with other property owners. Competition from single family 
housing increases when lower interest rates make mortgages more affordable.     
Increased building of new multifamily communities and renovation of older       
properties provide competition for the Company's multifamily properties. The    
Company also competes in acquiring interests in Properties with investors and   
purchasers of real estate of all types, many of which have greater financial    
resources, revenues and geographical diversity than those of the Company,       
including institutional, private and foreign investors. All of the Company's    
shopping center and apartment Properties are subject to significant local       
competition.                                                                    

  Shopping Centers. The Company's shopping centers usually are anchored by
department stores and/or supermarket and drug store chains. Its shopping        
centers are located in eight states, but are principally concentrated in        
Pennsylvania (eight centers) and Florida (six centers). As of August 31, 1997,  
the Company's shopping centers (both wholly owned and those in which the        
Company has an interest through a partnership or joint venture) were            
approximately 87% leased. The Company computes occupancy percentage for         
shopping centers as the percentage of total net leasable area for which leases  
are in effect and, therefore, includes store areas leased where occupancy has   
not commenced, leases for which some or all payments are delinquent and stores  
where tenants have vacated but pay rent.                                        

   A substantial portion of the Company's shopping center income consists of
rents received under long-term leases. Most of the shopping center leases       
provide for payment by tenants of an annual minimum rent and additional rent    
calculated generally as a percentage of gross sales in excess of a specified    
amount ("percentage rent"). The shopping center leases usually contain: (i)     
provisions for a contribution by tenants to the cost of maintaining common      
areas; and (ii) real estate tax escalation clauses under which the tenant bears 
its proportionate share of increases in or total real estate taxes. While       
tenant contributions historically have not covered all costs required to        
maintain common areas, the Company seeks to have new leases provide for full    
recovery of these costs from tenants. In difficult economic times or in         
strongly competitive environments, the Company may have to offer concessions or 
negotiate leases in which the tenant pays a lower rental or less than its pro   
rata share of operating costs and taxes. Modifications of lease terms may be    
necessary where tenants are unable to comply fully with their lease             
obligations. When interest rates are high it is more difficult for retail       
tenants to afford financing for inventory, store fixtures, renovations and      
additional store locations.                                                     

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Multifamily Properties. The Company has an interest in 19 multifamily 
communities containing 7,236 residential apartment units. These apartment       
communities are in seven states. As of August 31, 1997, the average occupancy   
rate for apartment units was approximately 97%. The Company computes occupancy  
rate as the number of occupied apartments and, therefore, includes models,      
employee-occupied units and units for which payments are delinquent. The        
multifamily units are generally rented for terms of one year.                   

 Renewal of Leases and Reletting of Space. The Company is subject to the
risks that upon expiration of leases for space located at the Properties, the   
leases may not be renewed, the space may not be relet or the terms of the       
renewal or reletting (including the cost of required renovations or concessions 
to tenants) may be less favorable than current lease terms. Although the        
Company has established an annual budget for renovation and reletting expenses  
that it believes is reasonable in light of each Property's operating history    
and local market characteristics, no assurance can be given that this budget    
will be sufficient to cover these expenses. If the Company is unable to         
promptly relet or renew leases for all or substantially all of the space at the 
Properties, if the rental rates upon such renewal or reletting are              
significantly lower than expected, or if the Company's reserves for these       
purposes prove inadequate, then the Company's cash provided by operating        
activities and ability to make expected distributions to shareholders or debt   
service payments could be adversely affected.                                   

At any time, a tenant of the Properties (including an anchor tenant or
other tenant which is not an anchor tenant but nonetheless leases space in more 
than one of the Properties) may seek the protection of the bankruptcy laws,     
which could result in the rejection and termination of such tenant's lease and  
thereby adversely affect the Company's results of operation and ability to make 
distributions to its shareholders. Although the Company has not experienced     
material losses from tenant bankruptcies, no assurance can be given that        
tenants will not file for bankruptcy protection in the future, or if any        
tenants file, that they will affirm their leases and continue to make rental    
payments in a timely manner. In addition, a tenant from time to time may        
experience a downturn in its business which may weaken its financial condition  
and result in the failure to make rental payments when due. If tenant leases    
are not affirmed following bankruptcy or if a tenant's financial condition      
weakens, the Company's results of operations and ability to make distributions  
to its shareholders may be adversely affected.                                  

Financing                                                                       

   The Trust Agreement of the Company places no limitations on borrowings by
the Company. The Company is subject to the risks associated with debt           
financing, including the risk that the Company's cash provided by operating     
activities will be insufficient to meet required payments of principal and      
interest, the risks of rising interest rates on the Company's floating rate     
debt, the risk that the Company will not be able to prepay or refinance         
existing indebtedness on encumbered Properties (which generally will not have   
been fully amortized at maturity) or that the terms of such refinancing will    
not be as favorable as the terms of existing indebtedness. If the Company is    
unable to secure refinancing of such indebtedness on acceptable terms, the      
Company might be forced to dispose of Properties or interests therein upon      
disadvantageous terms, which might result in losses to the Company and might    
adversely affect the cash flow available for distribution to equity holders or  
debt service. In addition, if a Property is mortgaged to secure payment of      
indebtedness and the Company (or the operating entity) is unable to meet        
mortgage payments, the mortgage securing such property could be foreclosed upon 
or the property could be otherwise transferred to the mortgagee with a          
consequent loss of income and asset value to the Company.                       

   A significant reduction in or withdrawal of its credit facility could, if
not replaced by a similar credit facility, have a material effect on the        
Company's operations. The Company expects to continue open-account borrowing    
for acquisitions, renovations and capital improvements to the Properties and    
has used its general credit to guarantee obligations of partnerships or joint   
ventures in which it has an interest. If the credit markets tighten, the        
Company may encounter resistance from lenders when it seeks financing or        
refinancing for some of its Properties. No assurance can be given as to the     
availability of financing for any particular Property or the terms upon which   
it may be obtained.                                                             

The Company's $150.0 million unsecured credit facility (the "Credit   
Facility") contains affirmative and negative covenants normally found in        
facilities of this type, as well as requirements that the Operating             

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Partnership maintain, on a consolidated basis: (i) a maximum Leverage Ratio (as 
defined) of 65%; (ii) a maximum ratio of Senior Liabilities (as defined) to     
Unencumbered Asset Value (as defined) of 73%; (iii) minimum tangible net worth  
of $115.0 million plus 75% of the net proceeds of sales of equity securities by 
the Operating Partnership or the Company; (iv) a minimum ratio of annualized    
consolidated property net operating income to total annual debt service of      
1.40:1; (v) a minimum ratio of annualized consolidated property net operating   
income to pro forma debt service of 1.30:1; and (vi) consolidated net operating 
income of at least $40,000,000. The Company's current Leverage Ratio, computed  
as provided in the Credit Facility, is approximately 59%. Until the Company     
reduces its leverage ratio to 50%, the lending banks will hold unrecorded       
mortgages on 13 unencumbered Properties which the Company owns, directly or     
indirectly, and would be entitled to record such mortgages upon any event of    
default. After the Leverage Ratio is reduced to 50% and the ratio of Senior     
Liabilities to Unencumbered Asset Value to 60%, the lending banks are to        
release the unrecorded mortgages, whereupon the ratios in clauses (i), (ii),    
(iv) and (v) above become, respectively, 50%, 60%, 1.70 : 1 and 1.65 : 1.       

To the extent that the Company fails to meet any one or more of these 
financial covenants or other covenants respecting the Credit Facility, the      
Company would be in default unless the lenders, in their sole discretion, were  
to waive such defaults or the Company were able to secure alternative or        
substitute financing. Because there can be no assurance that such waivers or    
alternative financing can be obtained by the Company, any default may have a    
materially adverse effect on the Company's operations and financial condition.  

The profitability of each partnership or joint venture subject to     
short-term financing or debt requiring a balloon payment will be affected by    
its ability to secure long-term financing on satisfactory terms. If             
satisfactory financing is not made available, the Company may be required to    
rely upon its credit lines and other sources of short term financing, equity    
contributions or the proceeds of refinancing of existing Properties (if the     
same can be arranged on satisfactory terms) in order to satisfy debt            
obligations. Although the Company does not own the entire interest in           
connection with many of the Properties held by a partnership or joint venture,  
the Company may be required to pay the full amount of any obligation of such    
partnership or joint venture which has been guaranteed in whole or in part by   
the Company in order to protect its equity interest in such Property.           
Additionally, the Company may determine to pay obligations of a partnership or  
joint venture in order to protect its equity interest in its assets.            

The Company has entered into agreements limiting the interest rate on 
portions of its Credit Facility. The Company is exposed to credit loss in the   
event of non-performance by counterparties to these agreements.                 

Dependence on Primary Markets and Economic Factors                              

All but one of the Company's 45 Properties are located in the Eastern 
United States, with 16 of the Properties located in Pennsylvania and 13 in      
Florida. The Company's performance and its ability to make distributions to     
shareholders or debt service payments could be adversely affected by economic   
conditions in such geographic regions, including changes which could result in  
the ability of some existing tenants of the Properties to meet their lease      
obligations.                                                                    

The success of the Company depends, among other factors, upon general 
economic conditions and on the conditions in those areas where the Properties   
are located, population trends, real estate fluctuations, income tax laws,      
governmental regulations, availability and costs of financing, construction     
costs, increases or decreases in operating expenses, zoning laws and the        
ability of the Company to keep the Properties leased at profitable levels.      

Many of the Properties in which the Company has an interest were      
constructed more than 15 years ago. Such Properties usually involve greater     
maintenance costs. Ultimately, the Properties may generate lower rentals        
because of obsolescence and may require significant capital expense for         
renovations. Some apartments may lack certain amenities which are customarily   
included in modern construction, such as dishwashers, central air conditioning, 
microwave ovens and the like. Some facilities may be too large or be            
constructed in inappropriate proportions for today's market or be too small     
based on current industry requirements and, thus, more difficult to lease. The  
Company customarily renovates Properties when renovation will enhance or        
maintain their long-term value.                                                 

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The effects of inflation upon the Company's operations and investment 
portfolio are varied. From the standpoint of revenues, inflation has the dual   
effect of both increasing the tenant revenues upon which percentage rentals are 
based and allowing increased fixed rentals to rise generally to reflect higher  
construction costs on new Properties and on renovations and rehabilitation of   
older Properties. This positive effect may be offset by higher operating        
expenses.                                                                       

Casualty and Liability Insurance                                                

The protection of the Company's assets from natural or other insurable
risks requires the maintenance of casualty insurance at sufficient levels.      
There has been a significant increase in the cost of casualty insurance because 
of substantial losses sustained by insurance carriers in recent years. While    
the Company believes that it has adequate insurance on the Company's assets,    
there can be no assurance that the Company can obtain insurance in the future   
at acceptable levels and reasonable cost. The Company would be required to bear 
the effects of all losses to the Properties that are not adequately covered by  
insurance.                                                                      

Possible Environmental Liabilities                                              

  Under various Federal, state and local laws and regulations, the current
or a previous owner or operator of real estate may be required to investigate   
and clean up certain hazardous substances released at the property, and may be  
held liable to a governmental entity or to third parties for property damage    
and for investigation and cleanup costs incurred by such parties in connection  
with asserted contamination. In addition, some environmental laws create a lien 
on the contaminated site in favor of the government for damages and costs it    
incurs in connection with the contamination. The presence of contamination or   
the failure to remediate contamination may adversely affect the owner's ability 
to sell or lease real estate or to borrow with the real estate as collateral.   
The owner or operator of a site may be liable under statutory or common law to  
third parties for damages and injuries resulting from environmental             
contamination emanating from the site.                                          

Since 1987, the Company has conducted a Phase I environmental study on
each property it seeks to acquire and has recently performed a Phase I          
environmental study on each of the Properties.                                  

 The Company has no way of determining at this time the magnitude of any
potential liability to which it may be subject arising out of unknown           
environmental conditions or violations with respect to the Properties formerly  
owned by the Company. Environmental laws today can impose liability on a        
previous owner or operator of a property that owned or operated such property   
at a time when hazardous or toxic substances were disposed of, or released      
from, the property. Therefore, a conveyance of the property does not relieve    
the owner or operator from liability.                                           

As to five Properties, two of which the Company no longer owns, the   
Company or a partnership in which the Company has an interest has responded to  
inquiries from environmental authorities. In one of these Properties, the       
Company believes that the contamination was caused by a former tenant and has   
sought indemnification from the tenant. The estimated cost to remediate this    
property ranges from $0.4 million to $1.2 million. In another instance, the     
Company will only be liable for remediation costs in excess of $1.0 million,    
and the Company does not currently anticipate that remediation costs will       
exceed $1.0 million. If remediation costs for this property exceed $1.0         
million, the Company's liability is not expected to exceed $0.6 million.        

  As to six Properties in which the Company currently has an interest, the
environmental conditions continue to be investigated and have not been fully    
remediated. At these Properties, ground water contamination has been found. At  
four of the Properties, the contamination is associated with dry cleaning       
operations. The Company has submitted assessment reports to the state           
authorities for approval. While all of the Properties with contamination        
arising from dry cleaning operations may be eligible under a state law for      
remediation with state funds, there can be no assurance that sufficient funds   
will be available under the legislation to pay the full costs of any such       
remediation.                                                                    

There are asbestos-containing materials in a number of the Properties,
primarily in the form of floor tiles and adhesives. The floor tiles and         
adhesives are generally in good condition. Fire-proofing material containing    
asbestos is present at some of the Properties in limited concentrations or in   
limited areas. At Properties where                                              

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radon has been identified as a potential concern, the Company has remediated or 
is performing additional testing. Lead-based paint has been identified at       
certain of the Company's Multi-family Properties and the Company has notified   
tenants pursuant to applicable disclosure requirements. Based on its current    
knowledge, the Company does not believe that the future liabilities associated  
with asbestos, radon and lead-based paint at the foregoing Properties will be   
material.                                                                       

The Company has no insurance coverage for the types of environmental  
liabilities described above. At August 31, 1997 an aggregate reserve of         
$366,000 existed on the Company's books in respect of certain of these matters; 
there can be no assurance that this amount will be sufficient to cover the cost 
of known liabilities respecting environmental issues at the Properties, or      
matters which may be identified in the future.                                  

  Management is aware of environmental concerns at four of its development
Properties. It is management's present view that the Company's share of any     
remediation costs necessary in connection with the development of these         
Properties will be within the budgets for development of these Properties, but  
the final costs and such necessary remediation are not known and may cause the  
Company to decide not to develop one or more such Properties.                   

Certain Considerations Relating to Partnerships and Joint Ventures              

  Of the 21 Properties in which the Company has a partial interest, 16 are
owned by partnerships in which the Company is a general partner and five are    
owned by joint ventures in which the Company has substantially the same powers  
as a general partner. Under the terms of the partnership or joint venture       
agreements, major decisions, such as a sale, refinancing or expansion or        
rehabilitation of the Property, and all leasing decisions, require the consent  
of all venture partners. There are restrictions on the ability of any venturer  
to borrow against or dispose of its interest in the venture. Because of the     
requirement for unanimity, the taking of any action or the making of any        
decision respecting a joint venture could be significantly delayed. Under the   
terms of many of the partnership or joint venture agreements to which the       
Company is a party, the concurrence of all partners is required to change the   
property manager. Where the other partner or co-venturer is providing           
management, effecting such a change could be difficult or even unfeasible, even 
if the Company believed the management services were unsatisfactory. Under the  
terms of some agreements, the Company has a unilateral right to change          
management if it has not received its priority distributions for a stated       
period of time.                                                                 

Many of the partnerships in which the Company has an interest are     
controlled by one or more partners other than the Company who oversee the       
day-to-day development, construction, leasing and management of Properties. The 
Company's wholly owned apartments are managed by its own staff.                 

    While the Company endeavors to maintain good relationships with all of its
partners, there have been a few instances in which the Company has experienced  
business disagreements with partners on a variety of issues that have not as    
yet been resolved. Such disagreements have included the failure of a partner to 
meet a call by the joint venture for the contribution of additional capital,    
differences in the interpretation of the relative rights and duties of the      
partners under the joint venture agreement and the commencement of litigation   
or arbitration to assert its rights by one or more of the partners. The Company 
may incur substantial expenses in instituting or defending litigation or        
achieving a resolution of disputes in an alternative manner. The Company may    
also be required to advance funds or make other commitments or arrangements to  
or on behalf of the venture during the pendency of a dispute in order to        
preserve its investment. Moreover, there can be no assurance that the           
resolution by the Company of a dispute with a partner will be on terms that are 
favorable to the Company. See "--Legal Proceedings."                            

   Other risks of investments in joint ventures include the possibility that
the Company's partners might become bankrupt or otherwise fail to fund their    
share of required capital contributions, that such partners might at any time   
have economic or other business interests or goals which are consistent with    
the business interest or goals of the Company, and that such partners may be in 
a position to take action contrary to the instructions or the request of the    
Company and contrary to the Company's policies or objectives. Such investments  
may also have the potential risk of impasses on decisions, such as sale,        
because neither the Company nor the partner would have full control over the    
joint venture. Consequently, actions by such partner might result in subjecting 
Properties owned by the partnership to additional risk. In addition, the        
Company may in certain circumstances be liable for the actions of its           
third-party partners.                                                           

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Legal Proceedings                                                               

Daniel Berman and Robert Berman and/or entities owned or controlled by
them (collectively, the "Bermans") are partners of wholly owned subsidiaries of 
Company in the ownership of Fox Run Apartments, Bear, Delaware, Eagle's Nest    
Apartments, Coral Springs, Florida, and 14 undeveloped acres in Coral Springs,  
Florida. Berman Real Estate Management, Inc., a corporation owned by the        
Bermans, currently manages the two apartment complexes.                         

On May 1994, the Bermans commenced an action against the Company and  
certain of its wholly owned subsidiaries in the Montgomery County Court of      
Common Pleas of Pennsylvania (the "Pennsylvania Litigation"). In the            
Pennsylvania Litigation, the Bermans, seeking damages and a declaratory         
judgment, asserted that the Company interfered with a contract to develop the   
parcel in Coral Springs, Florida and violated the partnership agreement         
relating to Eagle's Nest Apartments in Coral Springs, Florida. The Bermans      
later amended their complaint to add new parties and to allege that the         
defendants had no right to terminate the leasing and management agreement at    
Fox Run Apartments, had violated the Fox Run partnership agreement and that the 
Bermans had no liability for certain partnership expenses.                      

 In June 1994, two wholly owned subsidiaries of the Company commenced an
action in Delaware Chancery Court against the Bermans (the "Delaware            
Litigation"). The action seeks, among other things, a declaratory judgment and  
an injunction preventing the defendants from continuing to manage Fox Run and   
damages resulting from the payment by plaintiffs of defendants' share of the    
investigation and remediation of the environmental condition at Fox Run         
Apartments.                                                                     

    The Company intends to continue to vigorously resist plaintiffs' claims in
the Pennsylvania Litigation and to pursue the claims asserted in the Delaware   
Litigation. Management does not believe that resolution of these matters will   
have a material adverse effect on the Company's financial condition or results  
of operations.                                                                  

   The Company is also a plaintiff or defendant in various cases arising out
of its usual and customary business of owning and investing in real estate,     
both individually and through joint ventures and partnerships. None of these    
cases is expected to have a material adverse effect on the Company.             

Certain Regulatory Matters                                                      

 The ability of the Company or a partnership or joint venture to expand,
rehabilitate or reconstruct a property in the event of a casualty loss or       
condemnation is affected by local zoning and use laws, environmental statutes   
and regulations and a variety of other local, state and federal requirements.   
The Company may be precluded from taking advantage of economic opportunities    
presented to it because of the inability to achieve compliance with these       
requirements in a timely manner. Under the Americans With Disabilities Act (the 
"ADA") and other similar legislation, the Company's Properties may require      
modification to provide access to persons with disabilities. The Company        
believes it is in substantial compliance with the ADA.                          

Expansion and Acquisition Risks                                                 

The Company intends to continue expanding and acquiring interests in  
retail and multifamily Properties where it believes that such expansion or      
acquisition will be profitable or enhance the value of the Company's portfolio. 
Expansion of existing Properties is subject to a number of risks, including     
financing risks as described above, the failure to meet anticipated occupancy   
or rent levels, failure to receive required zoning, occupancy and other         
governmental permits and authorizations and changes in applicable zoning and    
land use laws, which may result in the incurrence of expansion costs in         
connection with projects that are not pursued to completion. The Company        
anticipates that new property expansions and acquisitions will be financed      
primarily through lines of credit or other forms of secured or unsecured        
construction financing. If permanent debt or equity financing is not available  
on acceptable terms to refinance such new developments or acquisitions are      
undertaken without permanent financing, further expansion or acquisition        
activities may be curtailed or there may be an adverse effect on cash available 
for distributions and to meet debt service obligations. Acquisitions entail     
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that judgments with respect to the costs of improvements to bring an acquired   
property up to standards established for the market position intended for that  
property will prove inaccurate, as well as general investment risks associated  
with any new real estate investment.                                            

Risks of Development                                                            

    Retail development is extremely competitive and entails substantial risks,
both in respect to the ultimate recapture of pre-development expenditures and   
the viability and profitability of any resulting project. Development projects  
require the availability of suitable, high traffic sites at costs consistent    
with the overall economics of the project. There is no assurance that such      
sites can be contracted for within the geographic markets in which the Company  
operates. Development projects generally require various governmental and other 
approvals, the receipt of which cannot be assured. The grant of such approvals  
is often opposed by local residents and businesses who perceive that they will  
be adversely affected by the project.                                           

The Company will incur certain risks in connection with development   
activities in addition to those involved in the ownership and operation of      
established shopping centers and multi-family Properties. These risks include   
the expenditure of funds on and devotion of management's time to projects which 
may not come to fruition, the risk that construction costs of a project may     
exceed original estimates, possibly making the project uneconomical, the risk   
that a project may not be completed on schedule (because of inability to obtain 
zoning changes or other land use approvals on a timely basis or construction    
delays or other factors outside of the control of the Company) which may affect 
its profitability, the risk that occupancy rates and rents at a completed       
project will not be sufficient to make the project profitable, financing risks  
and the failure to obtain required or desirable zoning, occupancy or other      
governmental permits or authorizations. There can be no assurance that any      
development Property will ultimately be constructed or that the Company will    
not have to expense substantial costs associated with the abandonment of a      
proposed development project.                                                   

    In addition, because the Company must distribute 95% of its taxable income
in order to maintain its qualification as a REIT, the Company anticipates that  
new developments (including expansions) and acquisition will be financed        
primarily through lines of credit or other forms of secured or unsecured        
construction financing. In the case of an unsuccessful development project, the 
Company's loss could exceed its investment in the project. If any of the above  
occurs, the Company's ability to repay such borrowings or make expected         
distributions to shareholders could be adversely affected.                      

Risks Associated with Recently Acquired Properties                              

The Company is currently experiencing a period of growth. Recently    
acquired Properties may have characteristics or deficiencies unknown to the     
Company affecting their valuation or revenue potential, and it is also possible 
that the operating performance of such Properties may decline in the future.    
The Company's ability to manage its growth effectively will require it to       
successfully integrate these new acquisitions into its existing management      
structure. No assurances can be given that the Company will be able to succeed  
with such integration or effectively manage additional Properties or that the   
newly acquired Properties will perform as expected.                             

Risks of Third-Party Management Business                                        

   Risks associated with the management of Properties owned by third parties
include the risk that the management contracts (which are generally cancelable  
upon 30 days' notice or upon certain events, including sale of the applicable   
property) will be terminated by the property owner or will be lost in           
connection with a sale of such property, that contracts may not be renewed upon 
expiration or may not be renewed on terms consistent with current terms and     
that the rental revenues upon which management fees are based will decline as a 
result of general real estate market conditions or specific market factors      
affecting Properties managed by PREIT-RUBIN, resulting in decreased management  
fee income. Substantially all of the Properties subject to the management       
agreements acquired from EDPLP are expected to be marketed for sale in the near 
term and are terminable in connection with any such sale. The Company's         
management agreement for the 1.2 million square foot South Park Mall in         
Charlotte, North Carolina, has been terminated by the owner, effective in       
January, 1998.                                                                  

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Certain Tax Risks                                                               

   Tax Liabilities as a Consequence of the Failure to Qualify as a REIT. The
Company (i) believes that it has operated so as to qualify as a REIT under the  
Code since its inception and (ii) intends to continue to so operate. No         
assurance, however, can be given that the Company has so qualified or will be   
able to remain so qualified. Qualification as a REIT involves the application   
of highly technical and complex Code provisions as to which there are only      
limited judicial and administrative interpretations. Certain facts and          
circumstances that may be wholly beyond the Company's control may affect its    
ability to qualify or to continue to qualify as a REIT. In addition, no         
assurance can be given that new legislation, Treasury Regulations,              
administrative interpretations or court decisions will not significantly change 
the tax laws with respect to the qualification as a REIT or the Federal income  
tax consequences of such qualification to the Company. If the Company fails to  
qualify as a REIT, it will be subject to Federal income tax (including any      
applicable alternative minimum tax) on its taxable income at regular corporate  
rates. In addition, unless entitled to relief under certain statutory           
provisions, the Company would be disqualified from treatment as a REIT for the  
four taxable years following the year during which qualification is lost. The   
additional tax incurred in such event would significantly reduce the cash flow  
available for distribution to shareholders and to meet debt service             
obligations. See "Federal Income Tax Considerations -- Taxation."               

REIT Distribution Requirements and Potential Impact of Borrowings. To 
obtain the favorable tax treatment associated with qualifying as a REIT under   
the Code, the Company generally is required each year to distribute to its      
shareholders at least 95% of its net taxable income. See "Federal Income Tax    
Considerations-Taxation -- Annual Distribution Requirements". The Company could 
be required 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 management believed that then prevailing market   
conditions were not generally favorable for such borrowings.                    

    Other Tax Liabilities. Even if the Company qualifies as a REIT, it will be
subject to certain Federal, state and local taxes on its income and property.   
In addition, the net taxable income of PREIT-RUBIN will be subject to Federal   
and state income tax. See "Federal Income Tax Considerations -- Taxation of the 
Company" and "Federal Income Tax Considerations -- Other Tax Considerations".   

Factors Affecting Share Price                                                   

A number of factors may adversely influence the price of the Company's
Shares in the public markets, many of which are beyond the control of the       
Company. These factors include possible increases in market interest rates,     
which may lead purchasers of Shares to demand a higher annual yield from        
distributions by the Company in relation to the price paid for Shares, the      
relatively low daily trading volume of REITs in general, including the Shares,  
and any inability of the Company to invest the proceeds of a future offering of 
Securities in a manner that will increase earnings or funds from operations on  
a per share basis. Sales of a substantial number of Shares, or the perception   
that such sales could occur, could adversely affect prevailing market prices    
for shares.                                                                     

The Company is authorized to issue up to 100,000,000 Shares and up to 
25,000,000 Preferred Shares. There are 1,260,000 Shares reserved for issuance   
pursuant to share option plans, and these Shares will be available for sale in  
the public markets from time to time pursuant to exemptions from registration   
requirements or upon registration. The Company has filed or plans to file       
Registration Statements on Form S-8 with the Commission respecting the offer    
and sale of Shares under its current share option and restricted share plans.   
No prediction can be made about the effect that future sales of Shares or other 
Securities will have on the market prices of the Shares or the extent, if any,  
to which there may be a dilutive effect on the value of the Shares as the       
result of issuances of Shares pursuant to share option and restricted share     
plans or other issuances of Securities.                                         

    The Operating Partnership has outstanding an aggregate of 646,286 Units of
Limited Partner Interest ("OP Units") redeemable by the holder for cash or, at  
the election of the Company, for Shares. The Operating Partnership also has the 
obligation to issue a substantial number of additional OP Units, the number of  
which is dependent on future events, but could approximate 1.3 million          
additional OP Units redeemable by the holder for cash or, at the election of    
the Company, for Shares. Approximately 213,000 OP Units are                     

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immediately redeemable with the remaining outstanding OP Units becoming         
redeemable after certain specified dates in the future. The Company is          
obligated to maintain a registration statement to enable any such Shares so     
issued upon redemption of the OP Units to be resold from time to time in market 
transactions.                                                                   

Possible Adverse Consequences of Limits on Ownership of Shares                  

   For the Company to qualify as a REIT under the Code, not more than 50% in
value of its outstanding Shares may be owned, directly or indirectly, by five   
or fewer individuals (as defined in the Code to include certain entities)       
during the last half of a taxable year (the "Ownership Limit"). To assist the   
Company in meeting this requirement, the Company may take certain actions to    
limit the beneficial ownership, directly or indirectly, of the Company's        
outstanding equity securities. While the Trust Agreement allows the Board of    
Trustees (the "Trustees") to take appropriate action to maintain the Company's  
qualification as a REIT under the Code, there can be no assurance that          
appropriate action can be taken to avoid or ameliorate a violation of the       
Ownership Limitation. See "Description of Shares of Beneficial                  
Interest -- Restrictions on Transfer" for additional information regarding the  
Ownership Limit.                                                                

Restrictions on Acquisition and Change in Control                               

Various provisions of the Company's Trust Agreement (the "Trust       
Agreement") restrict the possibility for acquisition or change in control of    
the Company, even if such acquisition or change in control were in the          
shareholders' interest, including the Ownership Limit, the staggered terms of   
the Company's Trustees and the ability of the Company to issue Preferred        
Shares.                                                                         

Lack of Control of PREIT-RUBIN                                                  

Although the Operating Partnership owns 95% of the aggregate equity   
interests in PREIT-RUBIN, all of the voting stock of PREIT-RUBIN is owned by a  
stock bonus plan created for the benefit of PREIT RUBIN's employees (the "Stock 
Bonus Plan"). PREIT-RUBIN employees are entitled to vote the common shares      
vested in their accounts in the Stock Bonus Plan on fundamental transactions    
(merger, sale of assets, etc.). Voting on the shares in the Stock Bonus Plan on 
all other matters will be at the direction of the Stock Bonus Plan Committee,   
the members of which will be appointed by the Board of Directors of             
PREIT-RUBIN. Thus, the Company does not control the day-to-day operations of    
PREIT-RUBIN and is not able, from a legal perspective, to influence the manner  
in which it performs its management obligations, seeks and accepts new business 
or otherwise determines its business strategy.                                  

Conflicts of Interest                                                           

  The employment agreements between the Company or PREIT-RUBIN and each of
the employees of PREIT-RUBIN who will be parties to such agreements provide     
that they will devote their full business time and effort to the business of    
the Company. However, PREIT-RUBIN will continue to render management,           
development, leasing and related services to over 25 properties in which        
certain affiliates ("TRO Affiliates") of PREIT-RUBIN, retain equity interests.  
The Company believes that the existing management arrangements with these       
entities are on terms at least as favorable to PREIT-RUBIN as the average of    
PREIT-RUBIN's third-party management arrangements with unrelated parties. In    
addition, PREIT-RUBIN leases substantial office space from entities in which    
affiliates of the Company have an interest. Finally, there will be numerous     
issues requiring resolution over the next several years relating to the         
implementation of various important elements of; (i) the transaction in which   
the Company acquired PREIT-RUBIN; and (ii) the various related transactions     
closed on the same date as the acquisition of PREIT-RUBIN (collectively, the    
"TRO Transaction"). In the resolution of these issues, the interest of those    
members of the Company's management who are TRO Affiliates may diverge from the 
interests of the Company and the holders of the Shares (the "Shareholders").    

Management Integration                                                          

Substantially all of the strategies to be employed by the Company to  
enhance future growth are dependent upon the successful integration of efforts  
of the former management of TRO with the Company's existing management. Any     
difficulties or delay encountered in that integration would adversely impact    
the implementation of the strategies for growth.                                

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Changes in Policies Without Shareholder Approval                                

The investment, financing, borrowing and distribution policies of the 
Company, and its policies with respect to all other activities, including its   
growth, debt, capitalization, distributions, REIT status and operating          
policies, are determined by the Board of Trustees. Although the Board of        
Trustees has no present intention to amend or revise any of these policies,     
these policies may be amended or revised from time to time at the discretion of 
the Board of Trustees without notice to or a vote of the shareholders of the    
Company. Accordingly, shareholders may not have control over changes in         
policies of the Company and changes in the Company's policies may not fully     
serve the interests of all shareholders. A change in these policies could       
adversely affect the Company's distributions, financial condition, results of   
operations or the market price of Shares.                                       

Dependence on Ronald Rubin                                                      

The Company is dependent on the efforts of Ronald Rubin, its Chief    
Executive Officer. While the Company believes that it could find a replacement  
for Mr. Rubin, the loss of his services could have an adverse effect on the     
operations of the Company. Mr. Rubin is party to an employment agreement with   
the Company. However, this agreement generally does not restrict his ability to 
become employed by a competitor of the Company after expiration of one year     
following the termination of his employment with the Company.                   

Effect on Holders of Shares of an Issuance of Preferred Shares                  

The Board of Trustees is empowered by the Company's Trust Agreement to
designate and issue from time to time, without limitation as to amount, up to   
25,000,000 shares in one or more classes or series of Preferred Shares without  
shareholder approval. The Board of Trustees may determine the relative rights,  
preferences and privileges of each class or series of Preferred Shares so       
issued. Because the Board of Trustees has the power to establish the            
preferences and rights of each class or series of Special Shares, it may afford 
the holders in any series or class of Preferred Shares preferences,             
distributions, powers and rights, voting or otherwise, senior to the rights of  
holders of Shares.                                                              

Limitation Upon Sale or Refinancing of Certain Properties                       

  Due to the potential adverse consequences to certain limited partners of
the Operating Partnership which may result from a sale of certain Properties    
acquired by the Operating Partnership, the Operating Partnership has agreed     
that, for a specified period of years, any sale, other than in connection with  
the sale of all or substantially all of the assets of the Operating Partnership 
or a merger of the Company or a like kind exchange, would require the consent   
of the holders of a majority of the Units issued by the Operating Partnership   
as consideration for the property, which may result in the Company being unable 
to sell such a property in circumstances in which it would be advantageous to   
do so. See "Summary of the Operating Partnership Agreement -- Other Rights."    

Required Vote of Limited Partners of Operating Partnership In Connection with   
Fundamental Changes by the Company                                              

Holders of OP Units generally will have no right to vote on any matter
voted on by holders of Shares except that prior to the date on which at least   
half of the OP Units issued on September 30, 1997 (other than to the Company or 
an affiliate of the Company) have been redeemed, the holders of OP Units issued 
on September 30, 1997 (other than the Company or an affiliate of the Company)   
shall be entitled to vote, as a single class, on any proposal to merge,         
consolidate, or sell substantially all of the assets of the Company if the      
holders of Shares vote thereon and, in such event, holders of OP Units will be  
entitled to one vote for each Share issuable by the Company upon the redemption 
of one OP Unit and the necessary vote to effect such action shall be the sum of 
an absolute majority of the outstanding OP Units and the applicable vote of the 
holders of the Shares, which such vote may be met by any combination of holders 
of the OP Units and Shares.                                                     

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USE OF PROCEEDS 

  Unless otherwise specified in the applicable Prospectus Supplement which
accompanies this Prospectus, the Company intends to use the net proceeds of any 
sale of Securities for general business purposes, including the development and 
acquisition of additional Properties and other acquisition transactions as      
suitable opportunities arise, the payment of certain outstanding secured or     
other indebtedness and improvements to certain Properties in the Company's      
portfolio.                                                                      

RATIO OF EARNINGS TO FIXED CHARGES  

    The Company's ratio of earnings to fixed charges for each of the last five
full fiscal years for the Company are presented below:                          

Fiscal Years Ended August 31,         
-----------------------------------------------       
1997     1996      1995      1994      1993       
-------  -------   -------   -------    ------        
1.55     1.66      1.75      1.86      1.97       

    The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings consist of income before gains     
from sales of property, fixed charges less capitalized interest, income         
associated with the minority interest of one consolidated subsidiary and the    
outside partners' minority interests in the losses of majority owned            
unconsolidated partnerships and joint ventures. Fixed charges consist of        
interest expense (including interest costs capitalized), amortization of debt   
issuance costs and interest expense associated with the Company's guarantee of  
certain debt of an unconsolidated partnership. Earnings and fixed charges are   
based on both wholly owned Properties and the Company's share of partnership    
and joint venture Properties. To date, the Company is not authorized to issue   
any Preferred Shares; therefore, the ratios of earnings to combined fixed       
charges and preferred share dividends are not presented.                        

DESCRIPTION OF DEBT SECURITIES  

   The following description sets forth certain general terms and provisions
of the Debt Securities to which this Prospectus and any applicable Prospectus   
Supplement may relate. The particular terms of the Debt Securities being        
offered and the extent to which such general provisions may apply will be set   
forth in the applicable Indenture or in one or more indentures supplemental     
thereto and described in a Prospectus Supplement relating to such Debt          
Securities. The Forms of the Senior Indenture (as defined herein) and the       
Subordinated Indenture (as defined herein) have been filed as exhibits to the   
Registration Statement of which this Prospectus is a part.                      

General                                                                         

  The Debt Securities will be direct, unsecured obligations of the Company
and may be either senior Debt Securities ("Senior Securities") or subordinated  
Debt Securities ("Subordinated Securities"). The Debt Securities will be issued 
under one or more indentures (the "Indentures"). Senior Securities and          
Subordinated Securities will be issued pursuant to separate indentures          
(respectively, a "Senior Indenture" and a "Subordinated Indenture"), in each    
case between the Company and a trustee (a "Trustee"). The Indentures will be    
subject to and governed by the Trust Indenture Act of 1939, as amended (the     
"TIA"). The statements made under this heading relating to the Debt Securities  
and the Indentures are summaries of the anticipated provisions thereof, do not  
purport to be complete and are qualified in their entirety by reference to the  
Indentures and such Debt Securities. All section references appearing herein    
are to sections of each Indenture unless otherwise indicated, and capitalized   
terms used but not defined below shall have the respective meanings set forth   
in each Indenture.                                                              

The indebtedness represented by Subordinated Securities will be       
subordinated in right of payment to the prior payment in full of the Senior     
Debt (as defined below) of the Company as described under "--Subordination."    

Except as set forth in the applicable Indenture or in one or more     
indentures supplemental thereto and described in a Prospectus Supplement        
relating thereto, the Debt Securities may be issued without limit as to         

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aggregate principal amount, in one or more series, in each case as established  
from time to time in or pursuant to authority granted by a resolution of the    
Board of Trustees of the Company or as established in the applicable Indenture  
or in one or more indentures supplemental to such Indenture. All Debt           
Securities of one series need not be issued at the same time and, unless        
otherwise provided, a series may be reopened, without the consent of the        
Holders of the Debt Securities of such series, for issuances of additional Debt 
Securities of such series.                                                      

   It is anticipated that each Indenture will provide that there may be more
than one Trustee thereunder, each with respect to one or more series of Debt    
Securities. Any Trustee under an Indenture may resign or be removed with        
respect to one or more series of Debt Securities, and a successor Trustee may   
be appointed to act with respect to such series. In the event that two or more  
persons are acting as Trustee with respect to different series of Debt          
Securities, each such Trustee shall be a trustee of a trust under the           
applicable Indenture separate and apart from the trust administered by any      
other Trustee, and, except as otherwise indicated herein, any action described  
herein to be taken by each Trustee may be taken by each such Trustee with       
respect to, and only with respect to, the one or more series of Debt Securities 
for which it is Trustee under the applicable Indenture.                         

   The Prospectus Supplement relating to any series of Debt Securities being
offered will contain the specific terms thereof, including, without limitation: 

(1)  The title of such Debt Securities and whether such Debt Securities are 
Senior Securities or Subordinated Securities;                     

(2)  The aggregate principal amount of such Debt Securities and any limit on
such aggregate principal amount;                                  

(3)  The percentage of the principal amount at which such Debt Securities   
 will be issued and, if other than the principal amount thereof, the
 portion of the principal amount thereof payable upon declaration of
acceleration of the maturity thereof;                             

(4)  If convertible in whole or in part into Shares or Preferred Shares, the
terms on which such Debt Securities are convertible, including the
initial conversion price or rate (or method for determining the   
same), the portion that is convertible and the conversion period, 
and any applicable limitations on the ownership or transferability
of the Shares or Preferred Shares receivable on conversion;       

(5)  The date or dates, or the method for determining such date or dates, on
which the principal of such Debt Securities will be payable;      

(6)  The rate or rates (which may be fixed or variable), or the method by   
which such rate or rates shall be determined, at which such Debt  
Securities will bear interest, if any;                            

(7)  The date or dates, or the method for determining such date or dates,   
from which any such interest will accrue, the dates on which any  
such interest will be payable, the regular record dates for such  
interest payment dates, or the method by which such dates shall be
 determined, the persons to whom such interest shall be payable, and
  the basis upon which interest shall be calculated if other than that
of a 360-day year of twelve 30-day months;                        

(8)  The place or places where the principal of (and premium, if any) and   
interest, if any, on such Debt Securities will be payable, where  
such Debt Securities may be surrendered for conversion or         
  registration of transfer or exchange and where notices or demands to
or upon the Company in respect of such Debt Securities and the    
applicable Indenture may be served;                               

 (9)  The period or periods within which, the price or prices at which and the
other terms and conditions upon which such Debt Securities may be 
 redeemed, in whole or in part, at the option of the Company, if the
Company is to have such an option;                                

 (10) The obligation, if any, of the Company to redeem, repay or purchase such
 Debt Securities pursuant to any sinking fund or analogous provision
or at the option of a Holder thereof, and the period or periods   
 within which or the date and dates on which, the price or prices at
which and the other terms and conditions upon which such Debt     
Securities will be redeemed, repaid or purchased, in whole or in  
part, pursuant to such obligation;                                

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(11) If other than U.S. dollars, the currency or currencies in which such   
 Debt Securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite
currency or currencies, and the terms and conditions relating     
thereto;                                                          

(12) Whether the amount of payments of principal of (and premium, if any) or
interest, if any, on such Debt Securities may be determined with  
  reference to an index, formula or other method (which index, formula
or method may, but need not be, based on a currency, currencies,  
 currency unit or units or composite currency or currencies) and the
manner in which such amounts shall be determined;                 

(13) Any additions to, modifications of or deletions from the terms of such 
Debt Securities with respect to Events of Default or covenants set
forth in the applicable Indenture:                                

 (14) Whether such Debt Securities will be issued in certificate or book-entry
form;                                                             

(15) Whether such Debt Securities will be in registered or bearer form and, 
   if in registered form, the denominations thereof if other than $1,000
and any integral multiple thereof and, if in bearer form, the     
denominations thereof and terms and conditions relating thereto;  

(16) The applicability, if any, of the defeasance and covenant defeasance   
provisions of Article Fourteen of the applicable Indenture;       

 (17) Whether and under what circumstances the Company will pay any additional
  amounts on such Debt Securities in respect of any tax, assessment or
governmental charge and, if so, whether the Company will have the 
   option to redeem such Debt Securities in lieu of making such payment;
and                                                               

(18) Any other terms of such Debt Securities not inconsistent with the      
provisions of the applicable Indenture (Section 301).             

   The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof  
or bear interest at a rate which at the time of issuance is below market rates  
("Original Issue Discount Securities"). All material federal income tax,        
accounting and other considerations applicable to Original Issue Discount       
Securities will be described in the applicable Prospectus Supplement.           

Except as set forth in the applicable Indenture or in one or more     
indentures supplemental thereto, the applicable Indenture will not contain any  
provisions that would limit the ability of the Company to incur indebtedness or 
that would afford Holders of Debt Securities protection in the event of a       
highly leveraged or similar transaction involving the Company or in the event   
of a change of control. However, restrictions on ownership and transfers of the 
Company's Shares and Preferred Shares are designed to preserve its status as a  
REIT and, therefore, may act to prevent or hinder a change of control. See      
"Description of Preferred Shares of Beneficial Interest -- Restrictions on      
Ownership" and "Description of Shares of Beneficial Interest -- Restrictions on 
Transfer". Reference is made to the applicable Prospectus Supplement for        
information with respect to any deletions from, modifications of or additions   
to the Events of Default or covenants of the Company that are described below,  
including any addition of a covenant or other provision providing event risk or 
similar protection.                                                             

Denominations, Interest, Registration and Transfer                              

 Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series will be issuable in denominations of $1,000 and   
integral multiples thereof (Section 302).                                       

 Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium, if any) and interest on any series of     
Debt Securities will be payable at the corporate trust office of the Trustee,   
the address of which will be stated in the applicable Prospectus Supplement;    
provided that, at the option of the Company, payment of interest may be made by 
check mailed to the address of the person entitled thereto as it appears in the 
applicable register for such Debt Securities or by wire transfer of funds to    
such person at an account maintained within the United States (Sections 301,    
305, 306, 307 and 1002).                                                        

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Any interest not punctually paid or duly provided for on any Interest 
Payment Date with respect to a Debt Security ("Defaulted Interest") will        
forthwith cease to be payable to the Holder on the applicable regular record    
date and may either be paid to the person in whose name such Debt Security is   
registered at the close of business on a special record date (the "Special      
Record Date") for the payment of such Defaulted Interest to be fixed by the     
Company, notice whereof shall be given to the Holder of such Debt Security not  
less than ten days prior to such Special Record Date, or may be paid at any     
time in any other lawful manner, all as more completely described in the        
Indenture (Section 307).                                                        

Subject to certain limitations imposed upon Debt Securities issued in 
book-entry form, the Debt Securities of any series will be exchangeable for     
other Debt Securities of the same series and of a like aggregate principal      
amount and tenor of different authorized denominations upon surrender of such   
Debt Securities at the corporate trust office of the applicable Trustee         
referred to above. In addition, subject to certain limitations imposed upon     
Debt Securities issued in book-entry form, the Debt Securities of any series    
may be surrendered for conversion or registration of transfer or exchange       
thereof at the corporate trust office of the applicable Trustee. Every Debt     
Security surrendered for conversion, registration of transfer or exchange must  
be duly endorsed or accompanied by a written instrument of transfer. No service 
charge will be made for any registration of transfer or exchange of any Debt    
Securities, but the Company may require payment of a sum sufficient to cover    
any tax or other governmental charge payable in connection therewith. If the    
applicable Prospectus Supplement refers to any transfer agent (in addition to   
the applicable Trustee) initially designated by the Company with respect to any 
series of Debt Securities, the Company may at any time rescind the designation  
of any such transfer agent or approve a change in the location through which    
any such transfer agent acts, except that the Company will be required to       
maintain a transfer agent in each place of payment for such series. The Company 
may at any time designate additional transfer agents with respect to any series 
of Debt Securities (Section 1002).                                              

Neither the Company nor any Trustee shall be required to: (i) issue,  
register the transfer of or exchange Debt Securities of any series during a     
period beginning at the opening of business 15 days before any selection of     
Debt Securities of that series to be redeemed and ending at the close of        
business on the day of mailing of the relevant notice of redemption; (ii)       
register the transfer of or exchange any Debt Security, or portion thereof,     
called for redemption, except the unredeemed portion of any Debt Security being 
redeemed in part; or (iii) issue, register the transfer of or exchange any Debt 
Security that has been surrendered for repayment at the option of the Holder,   
except the portion, if any, of such Debt Security not to be so repaid (Section  
305).                                                                           

Merger, Consolidation or Sale                                                   

The Company will be permitted to consolidate with, or sell, lease or  
convey all or substantially all of its assets to, or merge with or into, any    
other entity provided that (a) either the Company shall be the continuing       
entity, or the successor entity (if other than the Company) formed by or        
resulting from any such consolidation or merger or which shall have received    
the transfer of such assets shall expressly assume payment of the principal of  
(and premium, if any) and interest on all of the Debt Securities and the due    
and punctual performance and observance of all of the covenants and conditions  
contained in each Indenture; (b) immediately after giving effect to such        
transaction and treating any indebtedness that becomes an obligation of the     
Company or any Subsidiary as a result thereof as having been incurred by the    
Company or Subsidiary at the time of such transaction, no Event of Default      
under the Indentures, and no event which, after notice by the lapse of time, or 
both, would become such an Event of Default, shall have occurred and be         
continuing; and (c) an officer's certificate and legal opinion covering such    
conditions shall be delivered to each Company (Sections 801 and 803).           

Certain Covenants                                                               

Existence. Except as described above under "Merger, Consolidation or  
Sale," the Company will be required to do or cause to be done all things        
necessary to preserve and keep in full force and effect its existence, rights   
(by declaration of trust, by-laws and statute) and franchises; provided,        
however, that the Company shall not be required to preserve any right or        
franchise if it determines that the preservation thereof is no longer desirable 
in the conduct of its business and that the loss thereof is not disadvantageous 
in any material respect to the Holders of the Debt Securities.                  

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 Maintenance of Properties. The Company will be required to cause all of
its material Properties used or useful in the conduct of its business or the    
business of any Subsidiary to be maintained and kept in good condition, repair  
and working order and supplied with all necessary equipment and will cause to   
be made all necessary repairs, renewals, replacements, betterments and          
improvements thereof, all as in the judgment of the Company may be necessary so 
that the business carried on in connection therewith may be properly and        
advantageously conducted at all times (Section 1007).                           

   Insurance. The Company will be required to, and will be required to cause
each of its Subsidiaries to, keep all of its insurable Properties insured       
against loss or damage at least equal to their then full insurable value with   
insurers of recognized responsibility and, if described in the applicable       
Prospectus Supplement, having a specified rating from a recognized insurance    
rating service (Section 1008).                                                  

   Payment of Taxes and Other Claims. The Company will be required to pay or
discharge or cause to be paid or discharged, before the same shall become       
delinquent, (i) all taxes, assessments and governmental charges levied or       
imposed upon it or any Subsidiary or upon the income, profits or property of    
the Company or any Subsidiary, and (ii) all lawful claims for labor, materials  
and supplies which, if unpaid, might by law become a lien upon the property of  
the Company or any Subsidiary; provided, however, that the Company shall not be 
required to pay or discharge or cause to be paid or discharged any such tax,    
assessment, charge or claim whose amount, applicability or validity is being    
contested in good faith by appropriate proceedings (Section 1009).              

   Provision of Financial Information. Whether or not the Company is subject
to Section 13 or 15(d) of the Exchange Act, the Company will, to the extent     
permitted under the Exchange Act, file with the Commission the annual reports,  
quarterly reports and other documents which the Company would have been         
required to file with the Commission pursuant to such Sections 13 or 15(d) if   
the Company were so subject (the "Financial Information"), such documents to be 
filed with the Commission on or prior to the respective dates (the "Required    
Filing Dates") by which the Company would have been required so to file such    
documents if the Company were so subject. The Company will also in any event    
(x) within 15 days of each Required Filing Date (i) transmit by mail to all     
Holders of Debt Securities, as their names and addresses appear in the Security 
Register, without cost to such Holders, copies of the Financial Information and 
(ii) file with the Trustee copies of the Financial Information, and (y) if      
filing such documents by the Company with the Commission is not permitted under 
the Exchange Act, promptly upon written request and payment of the reasonable   
cost of duplication and delivery, supply copies of such documents to any        
prospective Holder (Section 1010).                                              

Additional Covenants and/or Modifications to the Covenants Described Above      

Any additional covenants of the Company and/or modifications to the   
covenants described above with respect to any Debt Securities or series         
thereof, including any covenants relating to limitations on incurrence of       
indebtedness or other financial covenants, will be set forth in the applicable  
Indenture or an indenture supplemental thereto and described in the Prospectus  
Supplement relating thereto.                                                    

Events of Default, Notice and Waiver                                            

Each Indenture will provide that the following events are "Events of  
Default" with respect to any series of Debt Securities issued thereunder: (i)   
default for 30 days in the payment of any installment of interest on any Debt   
Security of such series; (ii) default in the payment of principal of (or        
premium, if any, on) any Debt Security of such series at its maturity; (iii)    
default in making any sinking fund payment as required for any Debt Security of 
such series; (iv) default in the performance or breach of any other covenant or 
warranty of the Company contained in the applicable Indenture (other than a     
covenant added to the Indenture solely for the benefit of a series of Debt      
Securities issued thereunder other than such series), continued for 60 days     
after written notice as provided in the applicable Indenture; (v) default in    
the payment of an aggregate principal amount exceeding $10,000,000 of any       
indebtedness of the Company or any mortgage, indenture or other instrument      
under which such indebtedness is issued or by which such indebtedness is        
secured, such default having occurred after the expiration of any applicable    
grace period and having resulted in the acceleration of the maturity of such    
indebtedness, but only if such indebtedness is not discharged or such           
acceleration is not                                                             

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rescinded or annulled; (vi) certain events of bankruptcy, insolvency or         
reorganization, or court appointment of a receiver, liquidator or trustee of    
the Company or any Significant Subsidiary or either of its property; and (vii)  
any other Event of Default provided with respect to a particular series of Debt 
Securities (Section 501 ). The term "Significant Subsidiary" means each         
significant subsidiary (as defined in Regulation S-X promulgated under the      
Securities Act) of the Company.                                                 

    If an Event of Default under any Indenture with respect to Debt Securities
of any series at the time outstanding occurs and is continuing, then in every   
such case the applicable Trustee or the Holders of not less than 25% of the     
principal amount of the Outstanding Debt Securities of that series will have    
the right to declare the principal amount (or, if the Debt Securities of that   
series are Original Issue Discount Securities or indexed securities, such       
portion of the principal amount as may be specified in the terms thereof) of    
all the Debt Securities of that series to be due and payable immediately by     
written notice thereof to the Company (and to the applicable Trustee if given   
by the Holders). However, at any time after such a declaration of acceleration  
with respect to Debt Securities of such series (or of all Debt Securities then  
Outstanding under any Indenture, as the case may be) has been made, but before  
a judgment or decree for payment of the money due has been obtained by the      
applicable Trustee, the Holders of not less than a majority in principal amount 
of Outstanding Debt Securities of such series (or of all Debt Securities then   
Outstanding under the applicable Indenture, as the case may be) may rescind and 
annul such declaration and its consequences if (a) the Company shall have       
deposited with the applicable Trustee all required payments of the principal of 
(and premium, if any) and interest on the Debt Securities of such series (or of 
all Debt Securities then Outstanding under the applicable Indenture, as the     
case may be), plus certain fees, expenses, disbursements and advances of the    
applicable Trustee and (b) all events of default, other than the non-payment of 
accelerated principal (or specified portion thereof), with respect to Debt      
Securities of such series (or of all Debt Securities then Outstanding under the 
applicable Indenture, as the case may be) have been cured or waived as provided 
in such Indenture (Section 502 ). Each Indenture also will provide that the     
Holders of not less than a majority in principal amount of the Outstanding Debt 
Securities of any series (or of all Debt Securities then Outstanding under the  
applicable Indenture, as the case may be) may waive any past default with       
respect to such series and its consequences, except a default (x) in the        
payment of the principal of (or premium, if any) or interest on any Debt        
Security of such series or (y) in respect of a covenant or provision contained  
in the applicable Indenture that cannot be modified or amended without the      
consent of the Holder of each Outstanding Debt Security affected thereby        
(Section 513 ).                                                                 

Each Trustee will be required to give notice to the Holders of Debt   
Securities within 90 days of a default under the applicable Indenture unless    
such default shall have been cured or waived; provided, however, that such      
Trustee may withhold notice to the Holders of any series of Debt Securities of  
any default with respect to such series (except a default in the payment of the 
principal of (or premium, if any) or interest on any Debt Security of such      
series or in the payment of any sinking fund installment in respect of any Debt 
Security of such series) if specified responsible officers of such Trustee      
consider such withholding to be in the interest of such Holders (Section 601).  

Each Indenture will provide that no Holders of Debt Securities of any 
series may institute any proceedings, judicial or otherwise, with respect to    
such Indenture or for any remedy thereunder, except in the cases of failure of  
the applicable Trustee, for 60 days, to act after it has received a written     
request to institute proceedings in respect of an Event of Default from the     
Holders of not less than 25% in principal amount of the Outstanding Debt        
Securities of such series, as well as an offer of indemnity reasonably          
satisfactory to it (Section 507). This provision will not prevent, however, any 
Holder of Debt Securities from instituting suit for the enforcement of payment  
of the principal of (and premium, if any) and interest on such Debt Securities  
at the respective due dates thereof (Section 508).                              

   Subject to provisions in each Indenture relating to its duties in case of
default, no Trustee will be under any obligation to exercise any of its rights  
or powers under an Indenture at the request or direction of any Holders of any  
series of Debt Securities then Outstanding under such Indenture, unless such    
Holders shall have offered to the Trustee thereunder reasonable security or     
indemnity (Section 602). The Holders of not less than a majority in principal   
amount of the Outstanding Debt Securities of any series (or of all Debt         
Securities then Outstanding under an Indenture, as the case may be) shall have  
the right to direct the time, method and                                        

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place of conducting any proceeding for any remedy available to the applicable   
Trustee, or of exercising any trust or power conferred upon such Trustee.       
However, a Trustee may refuse to follow any direction which is in conflict with 
any law or the applicable Indenture, which may involve such Trustee in personal 
liability or which may be unduly prejudicial to the Holders of Debt Securities  
of such series not joining therein (Section 512).                               

  Within 120 days after the close of each fiscal year, the Company will be
required to deliver to each Trustee a certificate, signed by one of several     
specified officers, stating whether or not such officer has knowledge of any    
default under the applicable Indenture and, if so, specifying each such default 
and the nature and status thereof (Section 1011).                               

Modification of the Indentures                                                  

   Modifications and amendments of an Indenture will be permitted to be made
only with the consent of the Holders of not less than a majority in principal   
amount of all Outstanding Debt Securities issued under such Indenture which are 
affected by such modification or amendment; provided, however, that no such     
modification or amendment may, without the consent of the Holder of each such   
Debt Security affected thereby, (a) change the stated maturity of the principal 
of, or any installment of interest (or premium, if any) on, any such Debt       
Security; (b) reduce the principal amount of, or the rate or amount of interest 
on, or any premium payable on redemption of, any such Debt Security, or reduce  
the amount of principal of an Original Issue Discount Security that would be    
due and payable upon declaration of acceleration of the maturity thereof or     
would be provable in bankruptcy, or adversely affect any right of repayment of  
the Holder of any such Debt Security; (c) change the place of payment, or the   
coin or currency, for payment of principal or premium, if any, or interest on   
any such Debt Security; (d) impair the right to institute suit for the          
enforcement of any payment on or with respect to any such Debt Security; (e)    
reduce the above-stated percentage of Outstanding Debt Securities of any series 
necessary to modify or amend the applicable Indenture, to waive compliance with 
certain provisions thereof or certain defaults and consequences thereunder or   
to reduce the quorum or voting requirements set forth in the applicable         
Indenture; or (f) modify any of the foregoing provisions or any of the          
provisions relating to the waiver of certain past defaults or certain           
covenants, except to increase the required percentage to effect such action or  
to provide that certain other provisions may not be modified or waived without  
the consent of the Holder of such Debt Security (Section 902).                  

    The Holders of not less than a majority in principal amount of Outstanding
Debt Securities of each series affected thereby will have the right to waive    
compliance by the Company with certain covenants in such Indenture (Section     
1013).                                                                          

   Modifications and amendments of an Indenture will be permitted to be made
by the Company and the respective Trustee thereunder without the consent of any 
Holder of Debt Securities for any of the following purposes: (i) to evidence    
the succession of another person to the Company as obligor under such           
Indenture; (ii) to add to the covenants of the Company for the benefit of the   
Holders of all or any series of Debt Securities or to surrender any right or    
power conferred upon the Company in the Indenture; (iii) to add Events of       
Default for the benefit of the Holders of all or any series of Debt Securities; 
(iv) to add or change any provisions of an Indenture to facilitate the issuance 
of, or to liberalize certain terms of, Debt Securities in bearer form, or to    
permit or facilitate the issuance of Debt Securities in uncertificated form,    
provided that such action shall not adversely affect the interests of the       
Holders of the Debt Securities of any series in any material respect; (v) to    
change or eliminate any provisions of an Indenture, provided that any such      
change or elimination shall become effective only when there are no Debt        
Securities Outstanding of any series created prior thereto which are entitled   
to the benefit of such provision; (vi) to secure the Debt Securities; (vii) to  
establish the form or terms of Debt Securities of any series, including the     
provisions and procedures, if applicable, for the conversion of such Debt       
Securities into Shares or Preferred Shares of the Company; (viii) to provide    
for the acceptance of appointment by a successor Trustee or facilitate the      
administration of the trusts under an Indenture by more than one Trustee; (ix)  
to cure any ambiguity, defect or inconsistency in an Indenture, provided that   
such action shall not adversely affect the interests of Holders of Debt         
Securities of any series issued under such Indenture in any material respect;   
or (x) to supplement any of the provisions of                                   

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an Indenture to the extent necessary to permit or facilitate defeasance and     
discharge of any series of such Debt Securities, provided that such action      
shall not adversely affect the interests of the Holders of the Debt Securities  
of any series in any material respect (Section 901).                            

    Each Indenture will provide that in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series have      
given any request, demand, authorization, direction, notice, consent or waiver  
thereunder or whether a quorum is present at a meeting of Holders of Debt       
Securities, (i) the principal amount of an Original Issue Discount Security     
that shall be deemed to be Outstanding shall be the amount of the principal     
thereof that would be due and payable as of the date of such determination upon 
declaration of acceleration of the maturity thereof, (ii) the principal amount  
of any Debt Security denominated in a foreign currency that shall be deemed     
Outstanding shall be the U.S. dollar equivalent, determined on the issue date   
for such Debt Security, of the principal amount (or, in the case of Original    
Issue Discount Security, the U.S. dollar equivalent on the issue date of such   
Debt Security of the amount determined as provided in (i) above), (iii) the     
principal amount of an indexed security that shall be deemed Outstanding shall  
be the principal face amount of such indexed security at original issuance,     
unless otherwise provided with respect to such indexed security pursuant to the 
applicable Indenture, and (iv) Debt Securities owned by the Company or any      
other obligor upon the Debt Securities or any affiliate of the Company or of    
such other obligor shall be disregarded.                                        

Each Indenture will contain provisions for convening meetings of the  
Holders of Debt Securities of a series (Section 1501). A meeting will be        
permitted to be called at any time by the applicable Trustee, and also, upon    
request, by the Company or the Holders of at least 10% in principal amount of   
the Outstanding Debt Securities of such series, in any such case upon notice    
given as provided in the Indenture. Except for any consent that must be given   
by the Holder of each Debt Security affected by certain modifications and       
amendments of an Indenture, any resolution presented at a meeting or adjourned  
meeting duly reconvened at which a quorum is present may be adopted by the      
affirmative vote of the Holders of a majority in principal amount of the        
Outstanding Debt Securities of that series; provided, however, that, except as  
referred to above, any resolution with respect to any request, demand,          
authorization, direction, notice, consent, waiver or other action that may be   
made, given or taken by the Holders of a specified percentage, which is less    
than a majority, in principal amount of the Outstanding Debt Securities of a    
series may be adopted at a meeting or adjourned meeting or adjourned meeting    
duly reconvened at which a quorum is present by the affirmative vote of the     
Holders of such specified percentage in principal amount of the Outstanding     
Debt Securities of that series. Any resolution passed or decision taken at any  
meeting of Holders of Debt Securities of any series duly held in accordance     
with an Indenture will be binding on all Holders of Debt Securities of that     
series. The quorum at any meeting called to adopt a resolution, and at any      
reconvened meeting, will be persons holding or representing a majority in       
principal amount of the Outstanding Debt Securities of a series; provided,      
however, that if any action is to be taken at such meeting with respect to a    
consent or waiver which may be given by the Holders of not less than a          
specified percentage in principal amount of the Outstanding Debt Securities of  
a series, the persons holding or representing such specified percentage in      
principal amount of the Outstanding Debt Securities of such series will         
constitute a quorum.                                                            

    Notwithstanding the foregoing provisions, each Indenture will provide that
if any action is to be taken at a meeting of Holders of Debt Securities of any  
series with respect to any request, demand, authorization, direction, notice,   
consent, waiver and other action that such Indenture expressly provides may be  
made, given or taken by the Holders of a specified percentage in principal      
amount of all Outstanding Debt Securities affected thereby, or the Holders of   
such series and one or more additional series: (i) there shall be no minimum    
quorum requirement for such meeting, and (ii) the principal amount of the       
Outstanding Debt Securities of such series that vote in favor of such request,  
demand, authorization, direction, notice, consent, waiver or other action shall 
be taken into account in determining whether such request, demand,              
authorization, direction, notice, consent, waiver or other action has been      
made, given or taken under such Indenture.                                      

Subordination                                                                   

Upon any distribution to creditors of the Company in a liquidation,   
dissolution or reorganization, the payment of the principal of and interest on  
any Subordinated Securities will be subordinated to the extent                  

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provided in the applicable Indenture in right of payment to the prior payment   
in full of all Senior Debt (Sections 1601 and 1602 of the Subordinated          
Indenture), but the obligation of the Company to make payment of the principal  
and interest on such Subordinated Securities will not otherwise be affected     
(Section 1608 of the Subordinated Indenture). No payment of principal or        
interest will be permitted to be made on Subordinated Securities at any time if 
a default on Senior Debt exists that permits the Holders of such Senior Debt to 
accelerate its maturity and the default is the subject of judicial proceedings  
or the Company receives notice of the default (Section 1602 of the Subordinated 
Indenture). After all Senior Debt is paid in full and until the Subordinated    
Securities are paid in full, Holders will be subrogated to the right of Holders 
of Senior Debt to the extent that distributions otherwise payable to Holders    
have been applied to the payment of Senior Debt (Section 1607 of the            
Subordinated Indenture). By reason of such subordination, in the event of a     
distribution of assets upon insolvency, certain general creditors of the        
Company may recover more, ratably, than Holders of Subordinated Securities.     

    Senior Debt will be defined in the Subordinated Indenture as the principal
of and interest on, or substantially similar payments to be made by the Company 
in respect of, the following, whether outstanding at the date of execution of   
the applicable Indenture or thereafter incurred, created or assumed: (i)        
indebtedness of the Company for money borrowed or represented by purchase-money 
obligations, (ii) indebtedness of the Company evidenced by notes, debentures,   
or bonds or other securities issued under the provisions of an indenture,       
fiscal agency agreement or other agreement, (iii) obligations of the Company as 
lessee under leases of property either made as part of any sale and leaseback   
transaction to which the Company is a party or otherwise, (iv) indebtedness of  
partnerships and joint ventures which is included in the consolidated financial 
statements of the Company, (v) indebtedness, obligations and liabilities of     
others in respect of which the Company is liable contingently or otherwise to   
pay or advance money or property or as guarantor, endorser or otherwise or      
which the Company has agreed to purchase or otherwise acquire, and (vi) any     
binding commitment of the Company to fund any real estate investment or to fund 
any investment in any entity making such real estate investment, in each case   
other than (1) any such indebtedness, obligation or liability referred to in    
clauses (i) through (vi) above as to which, in the instrument creating or       
evidencing the same pursuant to which the same is outstanding, it is provided   
that such indebtedness, obligation or liability is not superior in right of     
payment to the Subordinated Securities or ranks pari passu with the             
Subordinated Securities, (2) any such indebtedness, obligation or liability     
which is subordinated to indebtedness of the Company to substantially the same  
extent as or to a greater extent than the Subordinated Securities are           
subordinated, and (3) the Subordinated Securities. There will not be any        
restrictions in an Indenture relating to Subordinated Securities upon the       
creation of additional Senior Debt.                                             

If this Prospectus is being delivered in connection with a series of  
Subordinated Securities, the accompanying Prospectus Supplement or the          
information incorporated herein by reference will contain the approximate       
amount of Senior Debt outstanding as of the end of the Company's most recent    
fiscal quarter.                                                                 

Discharge, Defeasance and Covenant Defeasance                                   

  The Company may be permitted under the applicable Indenture to discharge
certain obligations to Holders of any series of Debt Securities issued          
thereunder that have not already been delivered to the applicable Trustee for   
cancellation and that either have become due and payable or will become due and 
payable within one year (or scheduled for redemption within one year) by        
irrevocably depositing with the applicable Trustee, in trust, funds in such     
currency or currencies, currency unit or units or composite currency or         
currencies in which such Debt Securities are payable in an amount sufficient to 
pay the entire indebtedness on such Debt Securities in respect of principal     
(and premium, if any) and interest to the date of such deposit (if such Debt    
Securities have become due and payable) or to the stated maturity or redemption 
date, as the case may be.                                                       

 Each Indenture will provide that, if the provisions of Article Fourteen
are made applicable to the Debt Securities of or within any series pursuant to  
Section 301 of such Indenture, the Company may elect either (a) to defease and  
be discharged from any and all obligations with respect to such Debt Securities 
(except for the obligation to pay additional amounts, if any, upon the          
occurrence of certain events of tax, assessment or governmental charge with     
respect to payments on such Debt Securities, and the obligations to register    
the                                                                             

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transfer or exchange of such Debt Securities, to replace temporary or           
mutilated, destroyed, lost or stolen Debt Securities, to maintain an office or  
agency in respect of such Debt Securities and to hold moneys for payment in     
trust) ("defeasance") (Section 1402) or (b) to be released from its obligations 
with respect to such Debt Securities under certain specified sections of        
Article Ten of such Indenture as specified in the applicable Prospectus         
Supplement and any omission to comply with such obligations shall not           
constitute an Event of Default with respect to such Debt Securities ("covenant  
defeasance") (Section 1403), in either case upon the irrevocable deposit by the 
Company with the applicable Trustee, in trust, of an amount, in such currency   
or currencies, currency unit or units or composite currency or currencies in    
which such Debt Securities are payable at stated maturity, or Government        
Obligations (as defined below), or both, applicable to such Debt Securities     
which through the scheduled payment of principal and interest in accordance     
with their terms will provide money in an amount sufficient without             
reinvestment to pay the principal of (and premium, if any) and interest on such 
Debt Securities, and any mandatory sinking fund or analogous payments thereon,  
on the scheduled due dates therefor.                                            

Such a trust will only be permitted to be established if, among other 
things, the Company has delivered to the applicable Trustee an opinion of       
counsel (as specified in the applicable Indenture) to the effect that the       
Holders of such Debt Securities will not recognize income, gain or loss for     
federal income tax purposes as a result of such defeasance or covenant          
defeasance and will be subject to federal income tax on the same amounts, in    
the same manner and at the same times as would have been the case if such       
defeasance or covenant defeasance had not occurred, and such opinion of         
counsel, in the case of defeasance, will be required to refer to and be based   
upon a ruling of the Internal Revenue Service or a change in applicable U.S.    
federal income tax law occurring after the date of the Indenture (Section       
1404).                                                                          

    "Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the foreign      
currency in which the Debt Securities of a particular series are payable, for   
the payment of which its full faith and credit is pledged or (ii) obligations   
of a person controlled or supervised by and acting as an agency or              
instrumentality of the United States of America or such government which issued 
the foreign currency in which the Debt Securities of such series are payable,   
the timely payment of which is unconditionally guaranteed as a full faith and   
credit obligation of the United States of America or such government, which, in 
either case, are not callable or redeemable at the option of the issuer         
thereof, and shall also include a depository receipt issued by a bank or trust  
company as custodian with respect to any such Government Obligation or a        
specific payment of interest on or principal of any such Government Obligation  
held by such custodian for the account of the Holder of a depository receipt,   
provided that (except as required by law) such custodian is not authorized to   
make any deduction from the amount payable to the Holder of such depository     
receipt from any amount received by the custodian in respect of the Government  
Obligation or the specific payment of interest on or principal of the           
Government Obligation evidenced by such depository receipt (Section 101 of each 
Indenture).                                                                     

Unless otherwise provided in the applicable Prospectus Supplement, if 
after the Company has deposited funds and/or Government Obligations to effect   
defeasance or covenant defeasance with respect to Debt Securities of any        
series, (a) the Holder of a Debt Security of such series is entitled to, and    
does, elect pursuant to the applicable Indenture or the terms of such Debt      
Security to receive payment in a currency, currency unit or composite currency  
other than that in which such deposit has been made in respect of such Debt     
Security, or (b) a Conversion Event (as defined below) occurs in respect of the 
currency, currency unit or composite currency in which such deposit has been    
made, the indebtedness represented by such Debt Security will be deemed to have 
been, and will be, fully discharged and satisfied through the payment of the    
principal of (and premium, if any) and interest on such Debt Security as they   
become due out of the proceeds yielded by converting the amount so deposited in 
respect of such Debt Security into the currency, currency unit or composite     
currency in which such Debt Security becomes payable as a result of such        
election or such cessation of usage based on the applicable market exchange     
rate. "Conversion Event" means the cessation of use of (i) a currency, currency 
unit or composite currency both by the government of the country which issued   
such currency and for the settlement of transactions by a central bank or other 
public institutions of or within the international banking community, (ii) the  
ECU both within the European Monetary System and for the settlement of          
transactions by public institutions of or within the European Communities or    
(iii) any currency unit or composite currency other than the ECU for the        
purposes for which it was established. Unless                                   

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otherwise provided in the applicable Prospectus Supplement, all payments of     
principal of (and premium, if any) and interest on any Debt Security that is    
payable in a foreign currency that ceases to be used by its government of       
issuance shall be made in U.S. dollars.                                         

  In the event the Company effects covenant defeasance with respect to any
Debt Securities and such Debt Securities are declared due and payable because   
of the occurrence of any Event of Default other than the Event of Default       
described in clause (iv) under "Events of Default, Notice and Waiver" with      
respect to certain specified sections of Article Ten of each Indenture (which   
sections would no longer be applicable to such Debt Securities as a result of   
such covenant defeasance) or described in clause (vii) under "Events of         
Default, Notice and Waiver" with respect to any other covenant as to which      
there has been covenant defeasance, the amount in such currency, currency unit  
or composite currency in which such Debt Securities are payable, and Government 
Obligations on deposit with the applicable Trustee, will be sufficient to pay   
amounts due on such Debt Securities at the time of their stated maturity but    
may not be sufficient to pay amounts due on such Debt Securities at the time of 
the acceleration resulting from such Default. However, the Company would remain 
liable to make payment of such amounts due at the time of acceleration.         

   The applicable Prospectus Supplement may further describe the provisions,
if any, permitting such defeasance or covenant defeasance, including any        
modifications to the provisions described above, with respect to the Debt       
Securities of or within a particular series.                                    

Conversion Rights                                                               

The terms and conditions, if any, upon which the Debt Securities are  
convertible into Shares or Preferred Shares will be set forth in the applicable 
Prospectus Supplement relating thereto. Such terms will include whether such    
Debt Securities are convertible into Shares or Preferred Shares, the conversion 
price (or manner of calculation thereof), the conversion period, provisions as  
to whether conversion will be at the option of the Holders or the Company, the  
events requiring an adjustment of the conversion price and provisions affecting 
conversion in the event of the redemption of such Debt Securities and any       
restrictions on conversion, including restrictions directed at maintaining the  
Company's REIT status and the listing of the Shares on the New York Stock       
Exchange.                                                                       

Redemption of Securities                                                        

The Indenture provides that the Debt Securities may be redeemed at any
time at the option of the Company, in whole or in part, at the Redemption       
Price, except as may otherwise be provided in connection with any Debt          
Securities or series thereof.                                                   

From and after notice has been given as provided in the Indenture, if 
funds for the redemption of any Debt Securities called for redemption shall     
have been made available on such redemption date, such Debt Securities will     
cease to bear interest on the date fixed for such redemption specified in such  
notice, and the only right of the Holders of the Debt Securities will be to     
receive payment of the Redemption Price.                                        

   Notice of any optional redemption of any Debt Securities will be given to
Holders at their addresses, as shown in the Security Register, not more than 60 
nor less than 30 days prior to the date fixed for redemption. The notice of     
redemption will specify, among other items, the Redemption Price and the        
principal amount of the Debt Securities held by such Holder to be redeemed.     

If the Company elects to redeem Debt Securities, it will notify the   
Trustee at least 45 days prior to the redemption date (or such shorter period   
as satisfactory to the Trustee) of the aggregate principal amount of Debt       
Securities to be redeemed and the redemption date. If less than all the Debt    
Securities are to be redeemed, the Trustee shall select the Debt Securities to  
be redeemed pro rata, by lot or in such manner as it shall deem fair and        
appropriate.                                                                    

Global Securities                                                               

  The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (the "Global Securities") that will be    
deposited with, or on behalf of, a depository identified in the                 

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applicable Prospectus Supplement relating to such series. Global Securities may 
be issued in either registered or bearer form and in either temporary or        
permanent form. The specific terms of the depository arrangement with respect   
to a series of Debt Securities will be described in the applicable Prospectus   
Supplement relating to such series. The laws of some jurisdictions require that 
certain purchasers of securities take physical delivery of such securities in   
definitive form. Such laws may impair the ability to transfer beneficial        
interests in Debt Securities represented by Global Securities.                  

DESCRIPTION OF PREFERRED SHARES OF BENEFICIAL INTEREST  

  The Company's Trust Agreement authorizes the Board of Trustees from time
to time to establish and issue, in one or more classes or series, up to         
25,000,000 Preferred Shares (the "Preferred Shares"). The Trustees are          
authorized to classify or reclassify any unissued Preferred Shares by setting   
or changing the number, designation, preference, conversion or other rights,    
voting powers, restrictions, limitations as to dividends, qualifications and    
terms or conditions of redemption of such series.                               

The Board of Trustees                                                           

The following description of the Preferred Shares sets forth certain  
general terms and provisions of the Preferred Shares to which any Prospectus    
Supplement may relate. The statements below describing the Preferred Shares are 
in all respects subject to and qualified in their entirety by reference to the  
applicable provisions of the Company's Trust Agreement.                         

General                                                                         

    The Board of Trustees is empowered by the Trust Agreement to designate and
issue from time to time one or more series of Preferred Shares without          
shareholder approval. The Board of Trustees may determine the relative rights,  
preferences and privileges of each series of Preferred Shares so issued.        
Because the Board of Trustees has the power to establish the preferences and    
rights of each series of Preferred Shares, it may afford the holders of any     
series of Preferred Shares preferences, powers and rights, voting or otherwise, 
senior to the rights of holders of Shares. The Preferred Shares will, when      
issued, be fully paid and nonassessable.                                        

    The Prospectus Supplement relating to any Preferred Shares offered thereby
will contain the specific terms, including:                                     

(1)  The title and stated value of such Preferred Shares;                   

(2)  The number of such Preferred Shares offered, the liquidation preference
per share and the offering price of such Preferred Shares;        

(3)  The dividend rate(s), period(s) and/or payment date(s) or method(s) of 
calculation thereof applicable to such Preferred Shares;          

 (4)  The date from which dividends on such Preferred Shares shall accumulate,
if applicable;                                                    

(5)  The procedures for any auction and remarketing, if any, for such       
Preferred Shares;                                                 

(6)  The provision for a sinking fund, if any, for such Preferred Shares;   

(7)  The provision for redemption, if applicable, of such Preferred Shares; 

(8)  Any listing of such Preferred Shares on any securities exchange;       

(9)  The terms and conditions, if applicable, upon which such Preferred     
  Shares will be convertible into Shares of the Company, including the
conversion price (or manner of calculation thereof);              

(10) Any other specific terms, preferences, rights, limitations or          
restrictions of such Preferred Shares;                            

(11) A discussion of federal income tax considerations applicable to such   
Preferred Shares;                                                 

(12) The relative ranking and preferences of such Preferred Shares as to    
 dividend rights and rights upon liquidation, dissolution or winding
up of the affairs of the Company;                                 

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(13) Any limitations on issuance of any series of Preferred Shares ranking  
 senior to or on a parity with such series of Preferred Shares as to
 dividend rights and rights upon liquidation, dissolution or winding
up of the affairs of the Company; and                             

(14) Any limitations on direct or beneficial ownership and restrictions on  
 transfer, in each case as may be appropriate to preserve the status
of the Company as a REIT.                                         

Rank                                                                            

Unless otherwise specified in the Prospectus Supplement, the Preferred
Shares will, with respect to dividend rights and rights upon liquidation,       
dissolution or winding up of the Company, rank (i) senior to all classes or     
series of Shares of the Company, and to all equity securities ranking junior to 
such Preferred Shares; (ii) on a parity with all equity securities issued by    
the Company the terms of which specifically provide that such equity securities 
rank on a parity with the Preferred Shares; and (iii) junior to all equity      
securities issued by the Company the terms of which specifically provide that   
such equity securities rank senior to the Preferred Shares. The term "equity    
securities" does not include convertible debt securities.                       

Dividends                                                                       

Holders of the Preferred Shares of each series will be entitled to    
receive, when, as and if declared by the Board of Trustees of the Company, out  
of assets of the Company legally available for payment, cash dividends at such  
rates and on such dates as will be set forth in the applicable Prospectus       
Supplement. Each such dividend shall be payable to holders of record as they    
appear on the share transfer books of the Company on such record dates as shall 
be fixed by the Board of Trustees of the Company.                               

Dividends on any series of Preferred Shares may be cumulative or      
non-cumulative, as provided in the applicable Prospectus Supplement. Dividends, 
if cumulative, will be cumulative from and after the date set forth in the      
applicable Prospectus Supplement. If the Board of Trustees of the Company fails 
to declare a dividend payable on a dividend payment date on any series of the   
Preferred Shares for which dividends are non-cumulative, then the holders of    
such series of the Preferred Shares will have no right to receive a dividend in 
respect of the dividend period ending on such dividend payment date, and the    
Company will have no obligation to pay the dividend accrued for such period,    
whether or not dividends on such series are declared payable on any future      
dividend payment date.                                                          

  If any Preferred Shares of any series are outstanding, no full dividends
shall be declared or paid or set apart for payment on any capital shares of the 
Company of any other series ranking, as to dividends, on a parity with or       
junior to the Preferred Shares of such series for any period unless (i) if such 
series of Preferred Shares has a cumulative dividend, full cumulative 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 Preferred  
Shares of such series for all past dividend periods and the then current        
dividend period or (ii) if such series of Preferred Shares does not have a      
cumulative dividend, full dividends for the then current dividend period 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 Preferred  
Shares of such series. When dividends are not paid in full (or a sum sufficient 
for such full payment is not so set apart) upon Preferred Shares of any series  
and the shares of any other series of Preferred Shares ranking on a parity as   
to dividends with the Preferred Shares of such series, all dividends declared   
upon Preferred Shares of such series and any other series of Preferred Shares   
ranking on a parity as to dividends with such Preferred Shares shall be         
declared pro rata so that the amount of dividends declared per share of         
Preferred Shares of such series and such other series of Preferred Shares shall 
in all cases bear to each other the same ratio that accrued dividends per share 
on the Preferred Shares of such series (which shall not include any             
accumulation in respect of unpaid dividends for prior dividend periods if such  
Preferred Shares do not have a cumulative dividend) and such other series of    
Preferred Shares bear to each other. No interest, or sum of money in lieu of    
interest, shall be payable in respect of any dividend payment or payments on    
Preferred Shares of such series which may be in arrears.                        

  Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Shares has a cumulative dividend, full cumulative      
dividends on the Preferred Shares of such series have been or                   

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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, and (ii) if such series of Preferred Shares does  
not have a cumulative dividend, full dividends on the Preferred Shares of such  
series have been or contemporaneously are declared and paid or declared and a   
sum sufficient for the payment thereof set apart for payment for the then       
current dividend period, no dividends (other than in Shares or other capital    
shares ranking junior to the Preferred Shares of such series as to dividends    
and upon liquidation) shall be declared or paid or set aside for payment or     
other distribution upon the Shares, or any other capital shares of the Company  
ranking junior to or on a parity with the Preferred Shares of such series as to 
dividends or upon liquidation, nor shall any Shares, or any other capital       
shares of the Company ranking junior to or on a parity with the Preferred       
Shares of such series as to dividends or upon liquidation 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  
the Company (except by conversion into or exchange for other capital shares of  
the Company ranking junior to the Preferred Shares of such series as to         
dividends and upon liquidation).                                                

Redemption                                                                      

If so provided in the applicable Prospectus Supplement, the Preferred 
Shares will be subject to mandatory redemption or redemption at the option of   
the Company, in whole or in part, in each case upon the terms, at the times and 
at the redemption prices set forth in such Prospectus Supplement.               

    The Prospectus Supplement relating to a series of Preferred Shares that is
subject to mandatory redemption will specify the number of such Preferred       
Shares that shall be redeemed by the Company in each year commencing after a    
date to be specified, at a redemption price per share to be specified, together 
with an amount equal to all accrued and unpaid dividends thereon (which shall   
not, if such Preferred Shares do not have a cumulative dividend, include any    
accumulation in respect of unpaid dividends for prior dividend periods) to the  
date of redemption. The redemption price may be payable in cash or other        
property, as specified in the applicable Prospectus Supplement. If the          
redemption price for Preferred Shares of any series is payable only from the    
net proceeds of the issuance of capital shares of the Company, the terms of     
such Preferred Shares may provide that, if no such capital shares shall have    
been issued or to the extent the net proceeds from any issuance are             
insufficient to pay in full the aggregate redemption price then due, such       
Preferred Shares shall automatically and mandatorily be converted into the      
applicable capital shares of the Company pursuant to conversion provisions      
specified in the applicable Prospectus Supplement.                              

Notwithstanding the foregoing, unless (i) if such series of Preferred 
Shares has a cumulative dividend, full cumulative dividends on all Preferred    
Shares of any series shall 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 current dividend period and (ii) if such  
series of Preferred Shares does not have a cumulative dividend, full dividends  
of the Preferred Shares of any series have been or contemporaneously are        
declared and paid or declared and a sum sufficient for the payment thereof set  
apart for payment for the then current dividend period, no Preferred Shares of  
any series shall be redeemed unless all outstanding Preferred Shares of such    
series are simultaneously redeemed; provided, however, that the foregoing shall 
not prevent the purchase or acquisition of Preferred Shares of such series to   
preserve the REIT status of the Company or pursuant to a purchase or exchange   
offer made on the same terms to holders of all outstanding Preferred Shares of  
such series. In addition, unless (i) if such series of Preferred Shares has a   
cumulative dividend, full cumulative dividends on all outstanding shares of any 
series of 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 dividends periods and the then current dividend period, and (ii)   
if such series of Preferred Shares does not have a cumulative dividend, full    
dividends on the Preferred Shares of any series have been or contemporaneously  
are declared and paid or declared and a sum sufficient for the payment thereof  
set apart for payment for the then current dividend period, the Company shall   
not purchase or otherwise acquire directly or indirectly any Preferred Shares   
of such series (except by conversion into or exchange for capital shares of the 
Company ranking junior to the Preferred Shares of such series as to dividends   
and upon liquidation); provided, however, that the foregoing shall not prevent  
the purchase or acquisition of Preferred Shares of such series to preserve the  
REIT status of the Company or pursuant to a                                     

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purchase or exchange offer made on the same terms to holders of all outstanding 
Preferred Shares of such series.                                                

    If fewer than all of the outstanding Preferred Shares of any series are to
be redeemed, the number of shares to be redeemed will be determined by the      
Company 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 or for which        
redemption is requested by such holder (with adjustments to avoid redemption of 
fractional shares) or by lot in a manner determined by the Company.             

   Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Preferred Shares of 
any series to be redeemed at the address shown on the share transfer books of   
the Company. Each notice shall state: (i) the redemption date; (ii) the number  
and series of Preferred Shares to be redeemed; (iii) the address where          
Preferred Shares are to be surrendered for payment of the redemption price;     
(iv) that dividends on the shares to be redeemed will cease to accrue on such   
redemption date; and (v) the date upon which the holder's conversion rights, if 
any, as to such shares shall terminate. If fewer than all of the Preferred      
Shares of any series are to be redeemed, the notice mailed to each such holder  
thereof shall also specify the number of Preferred Shares to be redeemed from   
each such holder. If notice of redemption of any Preferred Shares has been      
given and if the funds necessary for such redemption have been set aside by the 
Company in trust for the benefit of the holders of any Preferred Shares so      
called for redemption, then from and after the redemption date dividends will   
cease to accrue on such Preferred Shares, and all rights of the holders of such 
shares will terminate, except the right to receive the redemption price.        

Liquidation Preference                                                          

  Upon any voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Company, then, before any distribution or payment shall   
be made to the holders of any Shares or any other class or series of capital    
shares of the Company ranking junior to the Preferred Shares in the             
distribution of assets upon any liquidation, dissolution or winding up of the   
Company, the holders of each series of Preferred Shares shall be entitled to    
receive out of assets of the Company legally available for distribution to      
shareholders liquidating distributions in the amount of the liquidation         
preference per share (set forth in the applicable Prospectus Supplement), plus  
an amount equal to all dividends accrued and unpaid thereon (which shall not    
include any accumulation in respect of unpaid dividends for prior dividend      
periods if such Preferred Shares do not have a cumulative dividend). After      
payment of the full amount of the liquidating distributions to which they are   
entitled, the holders of Preferred Shares will have no right or claim to any of 
the remaining assets of the Company. In the event that, upon any such voluntary 
or involuntary liquidation, dissolution or winding up, the available assets of  
the Company are insufficient to pay the amount of the liquidating distributions 
on all outstanding Preferred Shares and the corresponding amounts payable on    
all shares of other classes or series of capital shares of the Company ranking  
on a parity with the Preferred Shares in the distribution of assets, then the   
holders of the Preferred Shares and all other such classes or series of capital 
shares shall share ratably in any such distribution of assets in proportion to  
the full liquidating distributions to which they would otherwise be             
respectively entitled.                                                          

  If liquidating distributions shall have been made in full to all holders
of Preferred Shares, the remaining assets of the Company shall be distributed   
among the holders of any other classes or series of capital shares ranking      
junior to the Preferred Shares upon liquidation, dissolution or winding up,     
according to their respective rights and preferences and in each case according 
to their respective number of shares. For such purposes, the consolidation or   
merger of the Company with or into any other corporation, trust or entity, or   
the sale, lease or conveyance of all or substantially all of the property or    
business of the Company, shall not be deemed to constitute a liquidation,       
dissolution or winding up of the Company.                                       

Voting Rights                                                                   

    Holders of Preferred Shares will not have any voting rights, except as set
forth below or as otherwise from time to time required by law or as indicated   
in the applicable Prospectus Supplement.                                        

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   Whenever dividends on any Preferred Shares shall be in arrears for six or
more consecutive quarterly periods, the holders of such Preferred Shares        
(voting separately as a class with all other series of Preferred Shares upon    
which like voting rights have been conferred and are exercisable) will be       
entitled to vote for the election of two additional Trustees of the Company at  
a special meeting called by the holders of record of at least ten percent (10%) 
of any series of Preferred Shares so in arrears (unless such 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 (i) if such series of Preferred Shares  
has a cumulative dividend, all dividends accumulated on such shares of          
Preferred Shares for the past dividend periods and the then current dividend    
period shall have been fully paid or declared and a sum sufficient for the      
payment thereof set aside for payment or (ii) if such series of Preferred       
Shares do not have a cumulative dividend, four consecutive quarterly dividends  
shall have been fully paid or declared and a sum sufficient for the payment     
thereof set aside for payment. In such case, the entire Board of Trustees of    
the Company will be increased by two Trustees.                                  

  Unless provided otherwise for any series of Preferred Shares, so long as
any Preferred Shares remain outstanding, the Company will not, without the      
affirmative vote or consent of the holders of at least two-thirds of each       
series of Preferred Shares outstanding at the time, given in person or by       
proxy, either in writing or at a meeting (such series voting separately as a    
class), (i) authorize or create, or increase the authorized or issued amount    
of, any class or series of capital shares ranking prior to such series of       
Preferred Shares with respect to the payment of dividends or the distribution   
of assets upon liquidation, dissolution or winding up or reclassify any         
authorized capital shares of the Company into such shares, or create, authorize 
or issue any obligation or security convertible into or evidencing the right to 
purchase any such shares; or (ii) amend, alter or repeal the provisions of the  
Company's Declaration of Company or the Designating Amendment for such series   
of Preferred Shares, whether by merger, consolidation or otherwise (an          
"Event"), so as to materially and adversely affect any right, preference,       
privilege or voting power of such series of Preferred Shares or the holders     
thereof, provided, however, with respect to the occurrence of any of the Events 
set forth in (ii) above, so long as the Preferred Shares remain outstanding     
with the terms thereof materially unchanged, taking into account that upon the  
occurrence of an Event, the Company may not be the surviving entity, the        
occurrence of any such Event shall not be deemed to materially and adversely    
affect such rights, preferences, privileges or voting power of holders of       
Preferred Shares and provided further that (x) any increase in the amount of    
the authorized Preferred Shares or the creation or issuance of any other series 
of Preferred Shares, or (y) any increase in the amount of authorized shares of  
such series or any other series of Preferred Shares, in each case ranking on a  
parity with or junior to the Preferred Shares of such series with respect to    
payment of dividends or the distribution of assets upon liquidation,            
dissolution or winding up, shall 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 shall  
be effected, all outstanding Preferred Shares of such series shall have been    
redeemed or called for redemption and sufficient funds shall have been          
deposited in trust to effect such redemption.                                   

Conversion Rights                                                               

The terms and conditions, if any, upon which any series of Preferred  
Shares is convertible into Shares will be set forth in the applicable           
Prospectus Supplement relating thereto. Such terms will include the number of   
Shares into which the Preferred Shares are convertible, the conversion price    
(or manner of calculation thereof), the conversion period, provisions as to     
whether conversion will be at the option of the holders of the Preferred Shares 
or the Company, the events requiring an adjustment of the conversion price and  
provisions affecting conversion in the event of the redemption of such series   
of Preferred Shares and the listing on the New York Stock Exchange of the       
Shares into which the Preferred Shares are convertible.                         

Limited Liability of Shareholders                                               

   As discussed below under "Description of Shares of Beneficial Interest --
Limited Liability of Shareholders," the Trust Agreement provides that           
Shareholders are not liable for assessment by the Company                       

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and that the Trustees have no general power to bind them personally. In the     
opinion of Drinker Biddle & Reath LLP, general counsel to the Company, under    
Pennsylvania law no personal liability will attach to any shareholder under any 
undertaking or obligation of the Company. However, there may be liability in    
some jurisdictions which 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, contract claims where the required provision is    
omitted, 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 the Company does not satisfy     
such claims. The Company carries insurance in amounts which the Trustees deem   
adequate to cover foreseeable tort claims.                                      

Restrictions on Ownership                                                       

   As discussed below under "Description of Shares of Beneficial Interest --
Restrictions on Transfers," for the Company to qualify as a REIT under the      
Code, not more than 50% in value of its outstanding Shares may be owned,        
directly or indirectly, by five or fewer individuals (as defined in the Code to 
include certain entities) during the last half of a taxable year. To assist the 
Company in meeting this requirement, the Company may take certain actions to    
limit the beneficial ownership, directly or indirectly, by a single person of   
the Company's outstanding equity securities, including any Preferred Shares of  
the Company. Therefore, the Designating Amendment for each series of Preferred  
Shares may contain provisions restricting the ownership and transfer of         
Preferred Shares.                                                               

Registrar and Transfer Agent                                                    

The Registrar and Transfer Agent for the Preferred Shares will be set 
forth in the applicable Prospectus Supplement.                                  

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DESCRIPTION OF SHARES OF BENEFICIAL INTEREST  

 Under the Trust Agreement, the Company has the authority to issue up to
100,000,000 Shares and up to 25,000,000 Preferred Shares. As used herein, the   
term "Shares" means shares of beneficial interest other than Preferred Shares.  

General Provisions                                                              

   Voting, Dividend and Other Rights. Subject to the provisions of the Trust
Agreement regarding "Excess Shares" (See " -- Restrictions on Transfer"), (i)   
the holders of the Shares are entitled to one vote per Share on all matters     
voted on by the Shareholders, including elections of the Trustees, and (ii),    
subject to the rights of holders of any Preferred Shares, if any ("Preferred    
Shareholders") the holders of the 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 assets of the Company available for distribution to such holders. The       
majority of Shares voting on a matter at a meeting at which at least a majority 
of the Shares are present in person or by proxy constitutes the act of the      
Shareholders, except with respect to the election of Trustees (see below).      
While the Shareholders generally possess all of the voting power, the Trust     
Agreement permits the Trustees to (a) issue, classify or reclassify up to       
25,000,000 Preferred Shares, which may have voting rights equal to or superior  
to the Shares, and (b) authorize the holders of securities of affiliates of the 
Company to vote with the Shareholders on certain matters, and the Trustees have 
exercised that right as to holders of currently outstanding OP Units with       
respect to fundamental changes in the Company (i.e. mergers, consolidations and 
sales of substantially all of the Company's assets). See "Summary of the        
Operating Partnership Agreement -- Authorization of OP Units and Voting         
Rights." All Shares are fully paid and nonassessable. Shareholders do not have  
any pre-emptive rights to purchase Company securities.                          

   The Trust Agreement provides that the Trustees may (a) issue, classify or
reclassify shares of beneficial interest as Preferred Shares having preferences 
to the Shares in any matter, including rights in liquidation or to dividends;   
(b) issue options, rights (including Shareholder rights plans), and other       
securities having conversion or option rights; and (c) authorize the creation   
and issuance by subsidiaries and affiliates of the Company of securities having 
conversion and option rights in respect of Shares. Thus, the rights of holders  
of existing Shares are subject to preferred rights as to dividends and in       
liquidation (and other such matters) 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 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 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, subject to the rights of        
Preferred Shareholders, by petition in writing delivered to the Secretary of    
the Company not fewer than thirty-five (35) days prior to such meeting signed   
by the holders of at least two percent (2%) of the Shares outstanding on the    
date of such petition. Unless nominations shall have been made as aforesaid,    
they shall not be considered at such meeting unless the number of persons       
nominated as aforesaid shall be fewer than the number of persons to be elected  
to the office of Trustee at such meeting, in which such event nominations for   
the Trustee positions which would not otherwise be filled may be made at the    
meeting by any person entitled to vote in the election of Trustees.             

Transfer Agent.  The transfer agent for the Shares is American Stock  
Transfer and Trust Company.                                                     

Limited Liability of Shareholders                                               

The Trust Agreement provides that Shareholders, to the fullest extent 
permitted by applicable law, as amended or supplemented, are not liable for any 
act, omission or liability of a Trustee or the Company and that the Trustees    
have no general power to bind them personally. Notwithstanding the foregoing,   
there may be liability in some jurisdictions which 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, contract claims where the  
required provision is omitted, and possible tax claims in jurisdictions where   
the business trust is treated as a                                              

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partnership for certain purposes, Shareholders may be personally liable for     
such obligations to the extent that the Company does not satisfy such claims.   
The Company 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. The Company carries       
insurance in amounts which the Trustees deem adequate to cover foreseeable tort 
claims.                                                                         

Restrictions on Transfer                                                        

 Among the requirements for qualification of the Company as a REIT under
the Code are, (i) not more than 50% in value of its outstanding shares of       
beneficial interest (after taking into account options to acquire shares) may   
be owned, directly or indirectly, by five or fewer individuals (as defined in   
the 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 the Company's gross    
income must be from particular activities. In order to continue to qualify as a 
REIT under the Code, provisions of the Trust Agreement 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 Code,   
more than 9.9% in value of the Shares. A comparable restriction applies to the  
ownership of any Preferred Shares. The Trustees may waive the Ownership Limit   
Provisions if evidence satisfactory to the Trustees and tax counsel to the      
Company is presented that such ownership will not jeopardize the Company's      
status as a REIT.                                                               

Issuance or transfers of Shares in violation of the Ownership Limit   
Provisions or which would cause the Shares 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   
Provisions automatically are exchanged for Excess Shares (the "Excess Shares"), 
authorized by the 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 the Company 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 the Company. The      
beneficiary of such trust shall be designated by the purported holder of        
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  
for Excess Shares and prior to the discovery by the Company 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 the Company upon demand. Subject to the rights of the Preferred       
Shareholders, if any, Excess Shares participate ratably (based on the total     
number of Shares and Excess Shares) in any liquidation, dissolution or winding  
up of the Company. Except as required by law, holders of Excess Shares are not  
entitled to vote with respect to 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 for which the Excess Shares were originally           
exchanged. The Trust Agreement contains provisions that are designed to insure  
that the purported transferee or other purported holder of Excess Shares may    
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 the Company. 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 the option of the Company, to have acted as an agent on behalf of    
the Company in acquiring such Excess Shares and to hold such Excess Shares on   
behalf of the Company.                                                          

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    The Trust Agreement further provides that Excess Shares shall be deemed to
have been offered for sale to the Company at the lesser of 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 the market price for the Shares on the date the  
Company or its designee exercises its option to purchase. The Company 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   
the Company of the transfer or, if no notice is given, the date the Board of    
Trustees determines that a violative transfer has been made.                    

Each Shareholder upon demand is required to disclose to the Company 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 Trust Agreement or the 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.      

Change-in-Control Provisions                                                    

Ownership Limit. In order to protect its status as a REIT, the Company
must satisfy certain conditions, including the conditions that: (i) no more     
than 50% in value of the outstanding Shares may be owned, directly or           
indirectly, by five or fewer individuals; and (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. To  
this end, the Trust Agreement, among other things, prohibits: (a) any holder    
from owning more than 9.9% of its outstanding Shares without the consent of the 
Board of Trustees after evidence satisfactory to the Trustees and tax counsel   
to the Company is presented evidencing that such ownership will not jeopardize  
the Company's tax status as a REIT, and (b) transfers of Shares which would     
cause the Company to be beneficially owned by fewer than 100 persons. These     
limitations may have the effect of precluding acquisition of control of the     
Company by a third party.                                                       

Staggered Board. The Company'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 respective    
class' term. Trustees may only be removed by the Shareholders during their term 
in office for "cause," as that term is defined in the Trust Agreement. The      
staggered terms for trustees may affect the Shareholders' ability to take       
control of the Company, even if a change in control were in the Shareholders'   
interest.                                                                       

 Multiple Classes and Series of Shares of Beneficial Interest. The Trust
Agreement provides that the Trustees may issue, classify or reclassify up to    
25,000,000 Preferred Shares (including classes and series of Preferred Shares   
having preferences to the Shares in any matter, including rights in liquidation 
or to dividends) and options, rights (including Shareholder rights plans), and  
other securities having conversion or option rights and may authorize the       
creation and issuance by subsidiaries and affiliates of the Company of          
securities having conversion and option rights in respect of Shares. The 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 of control of   
the Company, even if a change in control were in the Shareholders' interest. No 
such rights or Preferred Shares are currently issued or outstanding.            

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SUMMARY OF THE TRUST AGREEMENT  

   The following summary of the Trust Agreement is qualified in its entirety
by reference to the Trust Agreement, which is incorporated by reference as an   
exhibit to the Registration Statement of which this Prospectus is a part.       

The Trustees                                                                    

  The Trustees are divided into three classes, with each member of a class
elected for a term of three years or until his successor is duly elected and    
qualified. Of the nine Trustees currently in office, six have been elected by   
the shareholders and three were appointed to fill the unexpired terms of the    
trustees who resigned as contemplated by the provisions of the agreement in     
which the Company acquired PREIT-RUBIN. The Trust Agreement provides that there 
will be not fewer than five nor more than 15 Trustees. The Trustees are not     
required to furnish a bond. Trustees may resign at any time, but no resignation 
is effective until a successor is elected if its effect would be to reduce the  
number of Trustees below five. The Trustees may fill vacancies that shall have  
occurred as a result of an increase in the number of Trustees or by reason of   
the death, resignation or incapacity of any of the Trustees. A Trustee chosen   
by the other Trustees to fill a vacancy that has occurred as a result of an     
increase in the number of Trustees will serve until the next annual or special  
meeting of shareholders and until his successor is elected and qualified. A     
Trustee chosen by other trustees to fill a vacancy created by reason of the     
death, resignation or incapacity of a Trustee will hold office for the full     
remaining term of the former Trustee and until his successor is elected and     
qualified. At such meetings to elect Trustees, the holders of a majority of     
shares represented will elect Trustees for the term of the class of Trustees    
being elected. The shareholders may also elect Trustees to fill a vacancy which 
the other Trustees have not filled. Two-thirds of the serving Trustees have the 
right at any time to remove any of their number, including a Trustee elected by 
the shareholders, for any cause deemed by them to be sufficient. Any Trustee    
may be removed for cause by the holders of a majority of the outstanding Shares 
then outstanding and entitled to vote. A vacancy created by the removal of a    
Trustee by the other Trustees may be filled only by the shareholders at their   
next annual meeting or a special meeting called for that purpose unless there   
are fewer than five Trustees, in which event the remaining Trustees are         
required to elect a sufficient number of persons so that at least five will be  
serving. Regular meetings of the shareholders are held annually, and special    
meetings of the shareholders may be called upon proper notice.                  

    The concurrence of a majority of the Trustees present at any meeting where
there is a quorum, or the written consent of a majority of the Trustees then    
serving, is necessary for the validity of any action taken. In no event may     
action be taken without the concurrence, at a meeting or by consent in writing, 
of at least four Trustees. A majority of the Trustees, provided that the        
majority consists of at least four Trustees, constitutes a quorum. However, if  
there are fewer than five Trustees, the remainder must act to fill vacancies to 
bring the total number of Trustees to at least five.                            

The Trustees may hold legal title to the Company's Properties on its  
behalf or designate persons to so hold on behalf of the Company. The Trustees   
have complete control of the conduct of the Company's business, including       
investments, sales, leasing, issuance of additional shares, borrowing and       
distributions to shareholders without the necessity of securing shareholder     
approval.                                                                       

Indemnification                                                                 

The Trustees are not liable for errors of judgment or any loss to the 
Company in the absence of self-dealing, willful misconduct or recklessness. The 
Trustees are indemnified from all claims or liabilities asserted against them   
by reason of their positions, if the Trustee acted in good faith and in a       
manner which the Trustee reasonably believed to be in, or not opposed to, the   
best interests of the Company and, with respect to any criminal proceeding, had 
no reason to believe that the Trustee's conduct was unlawful.                   

Transactions with Trustees                                                      

The Trustees may deal with the Company by rendering services for      
reasonable compensation, buying property from or selling property to the        
Company or otherwise. No Trustee shall have any liability for such              

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transactions approved by a majority of the other Trustees, except for his bad   
faith or gross negligence, and any such Trustee may be counted in determining   
the existence of a quorum at any meeting of the Board of Trustees which         
authorizes any such transaction and may vote thereat to authorize any such      
transaction.                                                                    

Term                                                                            

The Company's term is perpetual. The Company's existence does not     
terminate automatically in the event the Company fails to maintain its          
qualification as a real estate investment trust for tax purposes.               

Fundamental Transactions; Amendments                                            

 Any merger to which the Company is a party (other than a merger with an
entity in which the Company owned, directly or indirectly, at least 80% of the  
voting power of all ownership interests prior to the merger or a merger where   
the persons that were the Shareholders of the Company immediately prior to the  
merger will own, directly or indirectly, immediately following the merger all   
of the ownership interests in the surviving entity) and any sale or transfer of 
all or substantially all of the assets of the Company (other than to an entity  
directly or indirectly controlled by the Company) must be approved by the       
affirmative vote of the holders of a majority of the votes cast by all          
Shareholders entitled to vote thereon (excluding holders of any Preferred       
Shares that are entitled to vote thereon exclusively as a class) and by the     
affirmative vote of a majority of the votes cast by holders of any class or     
series of Preferred Shares entitled to vote thereon as a class.                 

    Amendments to the Trust Agreement can be made by the consent of two-thirds
of the Trustees, but not fewer than four. However: (i) no amendment to increase 
the liability of Shareholders shall be effected; (ii) no amendment may require  
additional contributions from or assessments against Shareholders; (iii) no     
amendment (A) increasing the authorized shares of beneficial interest of the    
Company, or (B), except for an amendment designating a class or series of       
Preferred Shares, having the purpose or reasonably foreseeable effect of        
impeding or preventing a "control transaction" shall be effective without the   
affirmative vote of the holders of a majority of votes cast by (1) all          
Shareholders entitled to vote thereon (excluding holders of any Preferred       
Shares that are entitled to vote thereon exclusively as a class) and (2) the    
holders of any class or series of Preferred Shares entitled to vote thereon as  
a class; and (iv) no amendment to the provisions regarding the amendment of the 
Trust Agreement, the dissolution of the Company or fundamental changes to the   
Company (i.e., mergers, sales of all or substantially all of the Company's      
assets) shall be effected without the affirmative vote of the Shareholders      
whose votes are at the time of such amendment necessary to effect the pertinent 
action. As used in the Trust Agreement, the term "control transaction" means    
the acquisition by a person or a group of persons acting in concert of voting   
control over voting Shares of the Company that would entitle the holders        
thereof to cast at least 20% of the votes that all Shareholders would be        
entitled to cast in the election of Trustees.                                   

Applicable Law                                                                  

    The Trust Agreement provides that it shall be construed in accordance with
Pennsylvania law.                                                               

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DESCRIPTION OF SHARE WARRANTS 

The Company may issue Share Warrants for the purchase of Shares. Share
Warrants may be issued independently or together with any other Securities      
offered by any Prospectus Supplement and may be attached to or separate from    
such Securities. Each series of Share Warrants will be issued under a separate  
warrant agreement (each, a "Warrant Agreement") to be entered into between the  
Company and a bank or trust company, as warrant agent specified in the          
applicable Prospectus Supplement relating to the particular issue of Warrants   
(the "Warrant Agent"). The Warrant Agent will act solely as an agent of the     
Company in connection with the Share Warrants of such series and will not       
assume any obligation or relationship of agency or trust for or with any        
holders or beneficial owners of Share Warrants. The following sets forth        
certain general terms and provisions of the Share Warrants offered hereby.      
Further terms of the Share Warrants and the applicable Warrant Agreements will  
be set forth in the applicable Prospectus Supplement to be filed with the       
Commission and incorporated by reference as an exhibit to the Registration      
Statement of which this Prospectus is a part at or prior to the time of the     
issuance of such series of Share Warrants.                                      

   The applicable Prospectus Supplement will describe the terms of the Share
Warrants to be issued, including, where applicable, the following: (i) the      
title of such Share Warrants; (ii) the aggregate number of such Share Warrants; 
(iii) the price or prices at which such Share Warrants will be issued; (iv) the 
designation, number and terms of the Shares purchasable upon exercise of such   
Share Warrants; (v) the designation and terms of the other Securities offered   
thereby with which such Share Warrants are issued and the number of such Share  
Warrants issued with each such Security offered thereby; (vi) the date, if any, 
on and after which such Common Share Warrants and the related Shares will be    
separately transferable; (vii) the price at which each of the Shares            
purchasable upon exercise of such Share Warrants may be purchased; (viii) the   
date on which the right to exercise such Share Warrants shall commence and the  
date on which such right shall expire; (ix) the minimum or maximum number of    
such Share Warrants which may be exercised at any one time; (x) information     
with respect to book entry procedures, if any; (xi) a discussion of certain     
federal income tax considerations; and (xii) any other terms of such Share      
Warrants, including terms, procedures and limitations relating to the exchange  
and exercise of such Share Warrants.                                            

DESCRIPTION OF SHAREHOLDER RIGHTS 

 The Company may issue Shareholder Rights ("Rights") to its shareholders
for the purchase of Shares. Rights may be issued independently or together with 
any other Securities offered by any Prospectus Supplement and may be attached   
to or separate from such Securities. Each series of Rights will be issued under 
a separate rights agreement (each, a "Rights Agreement") to be entered into     
between the Company and a bank or trust company, as rights agent specified in   
the applicable Prospectus Supplement relating to the particular issue of Rights 
(the "Rights Agent"). The Rights Agent will act solely as an agent of the       
Company in connection with the Rights and will not assume any obligation or     
relationship of agency or trust for or with any holders or beneficial owners of 
Rights. The following sets forth certain general terms and provisions of the    
Rights offered hereby. Further terms of the Rights and the applicable Rights    
Agreements will be set forth in the applicable Prospectus Supplement to be      
filed with the Commission and incorporated by reference as an exhibit to the    
Registration Statement of which this Prospectus is a part at or prior to the    
time of the issuance of such series of Rights.                                  

    The applicable Prospectus Supplement will describe the terms of the Rights
to be issued, including, where applicable, the following: (i) the date for      
determining the shareholders entitled to the Rights distribution; (ii) the      
aggregate number of Shares purchasable upon exercise of such Rights and the     
exercise price; (iii) the aggregate number of Rights being issued; (iv) the     
date, if any, on and after which such Rights may be separately transferable;    
(v) the date on which the right to exercise such Rights shall commence and the  
date on which such Rights shall expire; (vi) the minimum or maximum number of   
such Rights which may be exercised at any one time; (vii) a discussion of       
certain federal income tax considerations; and (viii) any other terms of such   
Rights, including terms, procedures and limitations relating to the             
distribution, exchange and exercise of such Rights. Rights will be exercisable  
for United States dollars only and will be in registered form only.             

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SUMMARY OF THE OPERATING PARTNERSHIP AGREEMENT  

The following summary of the First Amended and Restated Agreement of  
Limited Partnership of PREIT Associates, L.P. (the "Operating Partnership       
Agreement") is qualified in its entirety by reference to the Operating          
Partnership Agreement, which is incorporated by reference as an exhibit to the  
Registration Statement to which this Prospectus is a part.                      

General                                                                         

   The Company is the sole general partner of the Operating Partnership, and
PREIT Property Trust, a business trust wholly owned by the Company, is a        
limited partner of the Operating Partnership. The Company contributed to the    
Operating Partnership, or to entities wholly owned by the Operating             
Partnership, the real estate interests owned, directly or indirectly, by the    
Company, or the economic benefits thereof, in exchange for a general            
partnership interest in the Operating Partnership and a number of Class A OP    
Units issued to PREIT Property Trust which equalled, in the aggregate, the      
number of shares of beneficial interest of the Company issued and outstanding   
on September 30, 1997.                                                          

Management                                                                      

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

Authorization of OP Units and Voting Rights                                     

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

Holders of OP Units generally will have no right to vote on any matter
voted on by holders of Shares except that prior to the date on which at least   
half of the OP Units issued on September 30, 1997 (other than to the Company or 
an affiliate of the Company) have been redeemed, the holders of OP Units issued 
on September 30, 1997 (other than the Company or an affiliate of the Company)   
shall be entitled to vote, as a single class, on any proposal to merge,         
consolidate, or sell substantially all of the assets of the Company if the      
holders of Shares vote thereon and, in such event, holders of OP Units will be  
entitled to one vote for each Share issuable by the Company upon the redemption 
of one OP Unit and the necessary vote to effect such action shall be the sum of 
an absolute majority of the outstanding OP Units and the applicable vote of the 
holders of the Shares, which such vote may be met by any combination of holders 
of the OP Units and the Shares.                                                 

    The Operating Partnership Agreement also provides that the Company may not
engage in a fundamental transaction (e.g., a merger) unless, by the terms of    
such transaction, the OP Units are treated in the same manner as that number of 
Shares for which they are exchangeable by the Company upon notice of redemption 
are treated and that holders of OP Units will have the right to vote on certain 
amendments to the Operating Partnership Agreement.                              

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Redemption Rights                                                               

As of the date of this Prospectus, the Operating Partnership had      
outstanding 433,248 Class A OP Units (in addition to those held by the Company) 
and 213,038 Class B OP Units. Class A and Class B OP Units are redeemable by    
the Operating Partnership 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 limited partnership units (other than the Company and   
its 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 OP Units so received and then held by such party. Class B OP Units are  
redeemable at the option of the holder at any time after issuance.              

   If a notice of redemption is given, the Company has the right to elect to
acquire the 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 payment equal   
to the average closing price of the Shares over the ten consecutive trading     
days immediately prior to receipt by the Company, in its capacity as general    
partner of the Operating Partnership, of the notice of redemption. If the       
Company declines to exercise such right, then on the tenth day following tender 
for redemption the Operating Partnership will pay a cash amount equal to the    
number of OP Units so tendered multiplied by such average closing price.        

Registration Rights                                                             

At the TRO Closing, the Company entered into Registration Rights      
Agreements with those persons receiving or entitled to receive (i) Class A OP   
Units in respect of shares of TRO and/or their interests in certain Properties  
acquired by the Operating Partnership in the TRO Transaction and (ii) the Class 
B OP Units issued in the TRO Transaction. In general, the Registration Rights   
Agreement for the holders of Class A OP Units provides that those parties       
receiving and entitled to receive Class A OP Units in the TRO Transaction will  
be entitled to cause the Company, subject to exclusions and limitations         
commonly found in agreements of this type, to register Shares issuable upon     
redemption of such OP Units for resale by them in connection with other         
registration statements filed by the Company. This Registration Rights          
Agreement contains provisions dealing with registration procedures, holdbacks,  
responsibility for expenses, indemnification, and other customary provisions.   

    If the former TRO shareholders having piggyback registration rights do not
have an opportunity to exercise those rights before a specified period          
following the last issuance of Class A OP Units pursuant to the TRO             
Transaction, these former TRO shareholders will have the right to cause the     
Company to file a registration statement covering the resale of the Shares      
issuable upon redemption of such OP Units. In such event, the Company will be   
obligated to use its commercially reasonable efforts to cause the registration  
statement to become effective within 60 days after filing and to remain         
effective for not less than two years (or until the date on which Shares may be 
sold without registration, if earlier).                                         

The Company also entered into a Registration Rights Agreement with the
party receiving Class B OP Units pursuant to which the Company has agreed to    
file and maintain a registration statement covering resales from time to time   
by such party of Shares obtained by it in connection with the redemption of     
Class B OP Units. The Company has agreed to use its reasonable best efforts to  
include in such registration statement resales of Shares issued upon redemption 
of Class A Units issued in connection with TRO Transaction.                     

Other Rights                                                                    

If the Operating Partnership determines to sell, before the fifth     
anniversary of the date on which a property is acquired by the Operating        
Partnership, certain specified Properties for which Class A Units were issued   
in the TRO Transaction, and the holders of a majority of the then outstanding   
Class A OP Units issued to the TRO Affiliates object to such sale, the sale     
will not be consummated unless (i) the sale constitutes an exchange under       
Section 1031 of the Code or (ii) the sale is in connection with the proposed    
sale of all or substantially all of the assets of the Operating Partnership.    

Pursuant to a separate agreement by and between the Company and an    
affiliate of the holder of Class B OP Units, before September 30, 2001, the     
Operating Partnership may not sell or otherwise dispose of                      

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Magnolia Mall in a transaction in which taxable gain is recognized unless (i)   
the sale constitutes an exchange under Section 1031 of the Code and no gain is  
recognized on such sale or (ii) the sale is in connection with a program to     
sell substantially all of the Operating Partnership's (and its affiliates)      
retail assets to an entity not affiliated with the Operating Partnership and at 
least 80% of the retail Properties owned by the Operating Partnership have been 
sold or are under binding contracts of sale with unaffiliated third parties and 
are scheduled to close within six months of the date of the closing of the sale 
of Magnolia Mall.                                                               

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FEDERAL INCOME TAX CONSIDERATIONS 

General                                                                         

   The following discussion summarizes the Federal income tax considerations
that may be material to a prospective holder of Shares. Drinker Biddle & Reath  
LLP, general counsel for the Company, provided an opinion letter to the Company 
respecting this discussion under "Federal Income Tax Considerations," which is  
incorporated by reference as an Exhibit to the Registration Statement. 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         
(including insurance companies, tax-exempt entities, financial institutions or  
broker-dealers, foreign corporations and persons who are not citizens or        
residents of the United States) who are subject to special treatment under the  
Federal income tax laws.                                                        

  EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT WITH HIS OR HER OWN TAX
ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE PURCHASE,  
OWNERSHIP AND SALE OF SHARES IN AN ENTITY ELECTING TO BE TAXED AS A REIT,       
INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH 
PURCHASE, OWNERSHIP, SALE AND ELECTION AND OF POTENTIAL CHANGES IN APPLICABLE   
TAX LAWS.                                                                       

Taxation of the Company                                                         

   General. The Company is designed to qualify and has elected to qualify as
a "real estate investment trust" under Sections 856-60 of the Code. The Company 
believes that it has been organized and has operated in such a manner as to     
qualify for taxation as a REIT under the Code, and the Company intends to       
continue to operate in such a manner. No assurance, however, can be given that  
the Company has operated in a manner so as to qualify as a REIT or that it will 
continue to operate in such a manner in the future. Qualification and taxation  
as a REIT depends upon the Company's ability to meet on a continuing basis,     
through actual annual operating results, distribution levels and diversity of   
share ownership, the various qualification tests imposed under the Code on      
REITs, some of which are summarized below. While the Company intends to operate 
so that it qualifies as a REIT, given the highly complex nature of the rules    
governing REITs, the ongoing importance of factual determinations, and the      
possibility of future changes in circumstances of the Company, no assurance can 
be given that the Company satisfies such tests or will continue to do so. See   
"Failure to Qualify" below.                                                     

   The following is a general summary of the Code provisions that govern the
Federal income tax treatment of a REIT and its shareholders. These provisions   
of the Code are highly technical and complex. This summary is qualified in its  
entirety by the applicable Code provisions, Treasury Regulations and            
administrative and judicial interpretations thereof. If the Company 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.       
However, the Company will be subject to Federal income tax on any income that   
it does not distribute and will be subject to Federal income tax in certain     
circumstances on certain types of income even though that income is             
distributed.                                                                    

   Requirements for Qualification. The Code defines a REIT as a corporation,
trust or association (i) that is managed by one or more trustees or directors;  
(ii) the beneficial ownership of which is evidenced by transferable shares of   
stock, or by transferable certificates of beneficial interest; (iii) that would 
be taxable as a domestic corporation, but for Sections 856 through 859 of the   
Code; (iv) that is neither a financial institution nor an insurance company     
subject to certain provisions of the Code; (v) the beneficial ownership of      
which is held by 100 or more persons; (vi) that during the last half of each    
taxable year not more than 50% in value of the outstanding stock of which is    
owned, directly or indirectly, by five or fewer individuals (as defined in the  
Code to include certain entities); and (vii) that meets certain other tests,    
described below, regarding the nature of its income and assets. The Code        
provides that conditions (i) through (iv), inclusive, must be met during the    
entire taxable year and that condition (v) must be met during at least 335 days 
of a taxable year of 12 months,                                                 

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or during a proportionate part of a taxable year of less than 12 months. The    
Company's Trust Agreement provides certain disclosure requirements for 1% or    
greater shareholders and certain restrictions regarding the transfers of        
Company shares that are intended to assist the Company in continuing to satisfy 
the share ownership requirements described in (v) and (vi) above.               

    A REIT is permitted to have a wholly owned subsidiary (also referred to as
a "qualified 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 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, the Company's proportionate share 
of the assets, liabilities and items of income of the Operating Partnership and 
each of the real estate partnerships or other pass-through entities in which    
the Operating Partnership holds an interest (the "Title Holding Partnerships")  
will be treated as assets, liabilities and items of income of the Company for   
purposes of applying the requirements described herein, provided that the       
Operating Partnership and the Title Holding Partnerships are treated as         
partnerships for Federal income tax purposes.                                   

   Income Tests. In order to maintain qualification as a REIT, there are two
gross income requirements that must be satisfied annually. First, at least 75%  
of the REIT's gross income (excluding gross income from prohibited              
transactions) for each taxable year must be derived directly or indirectly from 
investments relating to 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 the REIT's      
gross income (excluding gross income from prohibited transactions) for each     
taxable year must be derived from the same items which qualify under the 75%    
income test, and from dividends, interest and gain from the sale or disposition 
of stock or securities, or from any combination of the foregoing.               

  Rents received by the Company will qualify as "rents from real property"
in satisfying the gross income requirements for a REIT described above only if  
several conditions (related to the identity of the tenant, the computation of   
the rent payable, and the nature of the property leased) are met. The Company   
does not anticipate receiving rents in excess of five (5%) percent of gross     
revenue that fail to meet these conditions. In addition, for rents received to  
qualify as "rents from real property," the Company generally must not operate   
or manage the property or furnish or render more than a de minimis amount of    
services to tenants, other than through an "independent contractor" from whom   
the Company derives no revenue. The "independent contractor" requirement,       
however, does not apply to the extent the services provided by the Company are  
"usually or customarily rendered" in connection with the rental of space for    
occupancy only and are not otherwise considered "rendered to the occupant."     
Although PREIT-RUBIN renders services with respect to rental properties of the  
Operating Partnership and the Title Holding Partnerships, and PREIT-RUBIN does  
not constitute an "independent contractor" for this purpose, the Company        
believes that the services being provided by PREIT-RUBIN with respect to such   
properties are usual or customary or should not otherwise be considered         
"rendered to the occupant."                                                     

   The Company believes, however, that the aggregate amount of any such fees
and other non-qualifying income in any taxable year earned by the Operating     
Partnership and the Title Holding Partnerships will not cause the Company to    
exceed the limits on nonqualifying income under the 75% and 95% gross income    
tests.                                                                          

The Operating Partnership owns all of the nonvoting common stock of   
PREIT-RUBIN, a corporation that is taxable as a regular corporation.            
PREIT-RUBIN performs management, development and leasing services for the       
Operating Partnership 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 the Company. 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 the Company only indirectly as dividends      
(after reduction by such taxes). Although dividends generally qualify under the 
95% test, the IRS refuses to rule on this issue when the dividends are earned   
in this manner.                                                                 

 If the Company fails to satisfy one or both of the 75% or the 95% gross
income tests for any taxable year, it may nevertheless qualify as a REIT for    
such year if it is entitled to relief under certain provisions of               

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the Code. It is not possible, however, to state whether in all circumstances    
the Company 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. The Company, at the close of each quarter of its taxable 
year, must also satisfy three tests relating to the nature of its assets: (i)   
at least 75% of the value of the Company's total assets must be represented by  
"real estate assets," cash, cash items and government securities; (ii) not more 
than 25% of the Company's total assets may be represented by securities other   
than those in the 75% asset class; and (iii) of the investments included in the 
25% asset class, the value of any one issuer's securities (other than an        
interest in a partnership, shares of a "qualified REIT subsidiary" or another   
REIT) owned by the Company may not exceed 5% of the value of the Company's      
total assets, and the Company may not own more than 10% of any one issuer's     
outstanding voting securities (other than an interest in a partnership, shares  
of a qualified REIT subsidiary or another REIT).                                

 The Company anticipates that it will be able to comply with these asset
tests. The Company is deemed to hold directly its proportionate share of all    
real estate and other assets of the Operating Partnership and should be         
considered to hold its proportionate share of all assets deemed owned by the    
Operating Partnership through its ownership of partnership interests in other   
partnerships. As a result, the Company plans to hold more than 75% of its       
assets as real estate assets. In addition, the Company does not plan to hold    
any securities representing more than 10% of any one issuer's voting            
securities, other than any qualified REIT subsidiary of the Company, nor        
securities of any one issuer exceeding 5% of the value of the Company's gross   
assets. As previously discussed, the Company 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.                                                                           

The Operating Partnership owns all of the nonvoting common stock of   
PREIT-RUBIN. The Operating Partnership will not own more than 10% of the voting 
securities of PREIT-RUBIN. The Company believes that its indirect interest in   
the securities of PREIT-RUBIN will not exceed 5% of the total value of the      
Company's assets. However, no independent appraisals have been obtained.        

No assurance can be given that the Company's indirect ownership of    
PREIT-RUBIN will meet the 10% voting securities test. Prior to June 1994, the   
Internal Revenue Service (the "IRS") routinely issued rulings that the 10%      
voting securities test was met in any case where the REIT did not have more     
than 10% of the management company's voting stock. However, in September 1994,  
the IRS reevaluated its position on this issue and now refuses to issue a       
ruling on whether the 10% voting securities test is met.                        

  After initially meeting the asset tests at the close of any quarter, the
Company 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. The Company intends to maintain adequate records of the value  
of its assets to ensure compliance with the asset tests, and to take such other 
action within 30 days after the close of any quarter as may be required to cure 
any noncompliance. However, there can be no assurance that such other action    
will always be successful.                                                      

Annual Distribution Requirements. To qualify as a REIT, the Company   
generally must distribute to its shareholders at least 95% of its income each   
year. In addition, the Company will be subject to tax on the undistributed      
amount at regular capital gains and ordinary corporate tax rates and also may   
be subject to a 4% excise tax on undistributed income in certain events.        

 The Company believes that it has made, and expects to continue to make,
timely distributions sufficient to satisfy the annual distribution              
requirements. It is possible, however, that the Company, from time to time, may 
not have sufficient cash or other liquid assets to meet the distribution        
requirements. In that event, the Company may arrange for short-term, or         
possibly long-term, borrowing (by itself or by the Operating Partnership) to    
permit the payments of required dividends.                                      

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    Failure to Qualify. If the Company fails to qualify for taxation as a REIT
in any taxable year, the Company will be subject to tax (including any          
applicable alternative minimum tax) on its taxable income at regular corporate  
rates. Unless entitled to relief under specific statutory provisions, the       
Company 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 the Company would be entitled to 
such statutory relief.                                                          

 Short Taxable Year. Each of the foregoing REIT requirements must be met
for each taxable year of the Company, including the short year ending December  
31, 1997 which will result from the contemplated change in the Company's        
taxable year from an August 31 year to a calendar year. The Company believes    
that these requirements will be met for such short year.                        

Income Taxation of the Operating Partnership, the Title Holding       
Partnerships and Their Partners. The following discussion summarizes certain    
Federal income tax considerations applicable to the Company's investment in the 
Operating Partnership and the Title Holding Partnerships:                       

    Classification of the Operating Partnership and Title Holding Partnerships
as Partnerships. The Company will be entitled to include in its income its      
distributive share of the income and to deduct its distributive share of the    
losses of the Operating Partnership (including the Operating Partnership's      
share of the income or losses of the Title Holding Partnerships) only if the    
Operating Partnership 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 recently promulgated               
"check-the-box" regulations, they should be classified as partnerships for      
Federal income tax purposes.                                                    

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

 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 such item. The Operating Partnership's          
allocations of taxable income and loss are intended to comply with the          
requirements of Section 704(b) of the Code and the Treasury Regulations         
promulgated thereunder.                                                         

Tax Allocations With Respect to Contributed Properties. The Properties
contributed directly or indirectly to the Operating Partnership will generally  
be appreciated. Pursuant to Section 704(c) of the Code, items of income, gain,  
loss, and deduction attributable to 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 such 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 such 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 such property at the time of         
contribution. The partnership agreements of the Partnerships will require       
allocations of income, gain, loss and deduction attributable to such            
contributed property to be made in a manner that is consistent with Section     
704(c) of the Code. Thus, if the Partnerships sell contributed property at a    
gain or loss, such 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 will 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, the Operating Partnership's 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                                                                

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Partnerships will be depreciated over at least 39 years. 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 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 the Operating Partnership 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 such gain that   
is treated as depreciation or cost recovery recapture. However, under the REIT  
requirements, the Company'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. Such prohibited transaction income will also     
have an adverse effect upon the Company'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 in a property's net sales price. The       
Partnerships intend to hold the 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 such occasional sales  
of the Properties as are consistent with the Company's and the Operating        
Partnership's investment objectives. No assurance can be given, however, that   
every property sale by the Partnerships will constitute a sale of property held 
for investment.                                                                 

Taxation of Shareholders                                                        

Taxation of Taxable Domestic Shareholders. As long as the Company     
qualifies as a REIT, distributions made to the Company's taxable domestic       
shareholders out of current or accumulated earnings and profits (and not        
designated as capital gain dividends) will be taken into account by them as     
ordinary income, and corporate shareholders will not be eligible for the        
dividends received deduction as to such amounts. Distributions that are         
designated as capital gain dividends will be taxed as long-term capital gains   
or mid-term capital gains (to the extent they are attributable to the Company's 
long-term and mid-term portions of net capital gain for the taxable year)       
without regard to the period for which the shareholder has held its Shares.     
However, corporate shareholders may be required to treat up to 20% of certain   
capital gain dividends as ordinary income. Distributions in excess of current   
or accumulated earnings and profits will not be taxable to a 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 such Shares. To the extent that    
such distributions exceed the adjusted basis of a shareholder's Shares, they    
will be included in income as long-term capital gain (or short-term capital     
gain if the Shares have been held for one year or less or mid-term capital      
gains if the Shares have been held for more than one year but not more than 18  
months), assuming the Shares are a capital asset in the hands of the            
shareholder.                                                                    

  In addition, to the extent, if any, that the Company does not distribute
all its net capital gain in a year, the Company may elect to designate (in a    
written notice to shareholders) that such undistributed capital gain shall      
nonetheless be treated for Federal income tax purposes as if it had been        
distributed proportionately to the Company's shareholders as of the end of the  
year and recontributed to the Company's capital. In that case, the shareholders 
will be taxable on such gain, but will receive a tax credit for the tax paid by 
the Company on the gain, and each shareholder's basis in Shares of the Company  
will be increased by the excess of the amount of such gain over the amount of   
such tax credit.                                                                

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 In general, a domestic shareholder will realize capital gain or loss on
the disposition of Shares equal to the difference between (i) the amount of     
cash and the fair market value of any property received on such disposition and 
(ii) the shareholder's adjusted basis of such Shares. Such gain or loss         
generally will constitute long-term capital gain or loss if the shareholder has 
held such shares for more than eighteen months and mid-term capital gain or     
loss if the shareholder has held such Shares for more than one year but not     
more than eighteen months. Loss upon a sale or exchange of Shares by a          
shareholder who has held such 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 the Company required to be treated by such     
shareholder as long-term capital gain.                                          

Under certain circumstances, domestic shareholders may be subject to  
backup withholding at the rate of 31% with respect to dividends paid.           

Taxation of Tax-Exempt Shareholders. The Company does not expect that 
distributions by the Company 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 Code and the Shares are    
not otherwise used in an unrelated trade or business of the tax-exempt entity.  

    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 such rules. Prospective Non-U.S. Shareholders should  
consult with their own tax advisors 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 that 
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
the Company of U.S. real property interests and not designated by the Company   
as capital gain dividends will be treated as dividends of ordinary income to    
the extent that they are made out of current or accumulated earnings and        
profits of the Company. Such 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. Distributions in excess of current and  
accumulated earnings and profits of the Company 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 such  
Shares. To the extent that such 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 such 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 such amounts from the IRS if it is subsequently determined that such  
distribution was, in fact, in excess of current or accumulated earnings and     
profits of the Company.                                                         

   For any year in which the Company qualifies as a REIT, distributions that
are attributable to gain from sales or exchanges by the Company of U.S. real    
property interests will be taxed to a Non-U.S. Shareholder under the provisions 
of the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA") at the    
normal capital gain rates applicable to U.S. shareholders (subject to           
applicable alternative minimum tax and a special alternative minimum tax in the 
case of nonresident alien individuals). Also, distributions subject to FIRPTA   
may be subject to a 30% branch profits tax in the hands of a corporate Non-U.S. 
Shareholder not entitled to treaty relief or exemption. The Company is required 
by applicable Treasury Regulations to withhold 35% of any distribution that is  
or could be designated by the Company as a capital gain dividend. The amount    
withheld is creditable against the Non-U.S. Shareholder's FIRPTA tax liability. 

Although the law is not entirely clear on the matter, it appears that 
amounts of undistributed capital gain that are designated by the Company as     
deemed distributions (as discussed under "Taxation of Taxable                   

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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 the Company 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 the Company on such undistributed        
capital gains (and to receive from the IRS a refund to the extent their         
proportionate share of such tax paid by the Company were to exceed their actual 
United States Federal income tax liability).                                    

   Gain recognized by a Non-U.S. Shareholder upon a sale of Shares generally
will not be taxed under FIRPTA if the Company is a "domestically controlled     
REIT," defined generally as a REIT in which at all times during a specified     
testing period less than 50% in value of the stock was held directly or         
indirectly by foreign persons. The Company believes that it is a "domestically  
controlled REIT," and, therefore, that the sale of Shares will not be subject   
to taxation under FIRPTA. 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 such gain (subject to applicable  
alternative minimum tax and a special alternative minimum tax in the case of    
nonresident alien individuals), and the purchaser of the Shares would be        
required to withhold and remit to the IRS 10% of the purchase price.            

Other Tax Considerations                                                        

   State and Local Taxes. The Company 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 the Company and its shareholders may not conform to the Federal    
income tax consequences discussed above. Consequently, prospective shareholders 
should consult their own tax advisors regarding the effect of state and local   
tax laws on an investment in the Shares of the Company.                         

PLAN OF DISTRIBUTION  

The Company may sell Securities in or through underwriters for public 
offer and sale by them, and also may sell Securities offered hereby to          
investors directly or through agents. Any such underwriter or agent involved in 
the offer and sale of the Securities will be named in the applicable Prospectus 
Supplement.                                                                     

    Underwriters may offer and sell the Securities at a fixed price or prices,
which may be changed, at prices related to the prevailing market prices at the  
time of sale or at negotiated prices. The Company also may, from time to time,  
authorize underwriters acting as the Company's agents to offer and sell         
Securities upon terms and conditions set forth in the applicable Prospectus     
Supplement. In connection with the sale of the Securities, underwriters may be  
deemed to have received compensation from the Company in the form of            
underwriting discounts or commissions and may also receive commissions from     
purchasers of the Securities for whom they may act as agent. Underwriters may   
sell Securities to or through dealers, and such dealers may receive             
compensation in the form of discounts, concessions or commissions from the      
underwriters and/or commissions from the purchasers for whom they may act as    
agent. Any underwriting compensation paid by the Company to underwriters or     
agents in connection with the offering of the Securities, and any discounts,    
concessions or commissions allowed by underwriters to participating dealers,    
will be set forth in the applicable Prospectus Supplement. Underwriters,        
dealers and agents participating in the distribution of the Securities may be   
deemed to be underwriters, and any discounts and commissions received by them   
and any profit realized by them on resale of the Securities may be deemed to be 
underwriting discounts and commissions under the Securities Act. Underwriters,  
dealers and agents may be entitled, under agreements entered into with the      
Company, to indemnification against and contribution toward certain civil       
liabilities, including liabilities under the Securities Act.                    

   If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to       
solicit offers by certain institutions to purchase Securities from the Company  
at the public offering price set forth in such Prospectus Supplement pursuant   
to Delayed Delivery contracts ("Contracts") providing for payment and delivery  
on the date or dates stated in such Prospectus Supplement. Each of the          
Contracts will be for an amount not less than, and the aggregate principal      
amount of Securities sold pursuant to Contracts shall be not less nor more      
than, the respective amounts stated in the applicable Prospectus Supplement.    
Institutions with whom Contracts, when authorized, may be made                  

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include commercial and savings banks, insurance companies, pension funds,       
investment companies, educational and charitable institutions, and other        
institutions but will in all cases be subject to the approval of the Company.   
Contracts will not be subject to any conditions except (i) the purchase by an   
institution of the Securities covered by its Contracts shall not at the time of 
delivery be prohibited under the laws of any jurisdiction in the United States  
to which such institution is subject, and (ii) if the Securities are being sold 
to underwriters, the Company shall have sold to such underwriters the total     
principal amount of the Securities less the principal amount thereof covered by 
Contracts.                                                                      

Certain of the underwriters and their affiliates may be customers of, 
engage in transactions with and perform services for the Company and its        
Subsidiaries in the ordinary course of business.                                

LEGAL MATTERS 

    The legality of the Debt Securities, the Preferred Shares, the Shares, the
Share Warrants and the Rights offered hereby will be passed upon for the        
Company by Drinker Biddle & Reath LLP, general counsel to the Company. Drinker  
Biddle & Reath LLP will also pass on certain aspects of limited liability of    
shareholders of the Company and certain federal income tax matters respecting   
the Company. Sylvan M. Cohen, Chairman of the Board of the Company, is of       
counsel to Drinker Biddle & Reath LLP. Mr. Cohen is the beneficial owner of     
650,291 shares of beneficial interest.                                          

EXPERTS 

The financial statements and financial statement schedule included or 
incorporated by reference in this Prospectus and elsewhere in the Registration  
Statement, to the extent and for the periods indicated in their reports, have   
been audited by Arthur Andersen LLP, independent public accountants, and are    
included herein in reliance upon the authority of said firm as experts in       
giving said reports.                                                            

    The consolidated financial statements of Lehigh Valley Associates included
in the Company' Annual Report (Form 10-K) for the years ended August 31, 1996   
and 1995 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 are incorporated herein by    
reference in reliance upon such report given the authority of such firm as      
experts of such firm as experts in accounting and auditing.                     

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    No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained in this Prospectus     
Supplement or the Prospectus, and if given or made, such information or         
representations must not be relied upon as having been authorized by the        
Company or any of the Underwriters. Neither this Prospectus Supplement nor the  
Prospectus constitutes an offer of any securities other than those to which it  
relates or an offer to sell, or a solicitation of an offer to buy, to any       
person in any jurisdiction where such an offer or solicitation would be         
unlawful. Neither the delivery of this Prospectus Supplement and the Prospectus 
nor any offer or sale made hereunder shall, under any circumstances, create any 
implication that the information contained herein is correct as of any time     
subsequent to the date hereof.                                                  

--------------------------------------------  
TABLE OF CONTENTS   

Prospectus Supplement   

                                  Page
                                   -----
Summary   ..........................................    S-1                     
The Company  .......................................    S-8                     
Business and Growth Strategies .....................    S-15                    
Use of Proceeds ....................................    S-21                    
Price Range of Shares and Distributions ............    S-21                    
Capitalization  ....................................    S-22                    
Selected Financial and Operating Data   ............    S-23                    
Management's Discussion and Analysis of                                         
Financial Condition and Results of                                        
Operations   ....................................    S-25                 
The Properties  ....................................    S-31                    
Management   .......................................    S-44                    
Principal Securityholders   ........................    S-52                    
Underwriting .......................................    S-54                    
Experts   ..........................................    S-55                    
Legal Matters   ....................................    S-55                    
Index to Financial Statements  .....................    F-1                     
Prospectus            
Available Information ..............................      1                     
Incorporation of Certain Documents by                                           
Reference .......................................      1                  
Cautionary Statement  ..............................      2                     
The Company  .......................................      3                     
Risk Factors .......................................      4                     
Use of Proceeds ....................................     14                     
Ratio of Earnings to Fixed Charges   ...............     14                     
Description of Debt Securities .....................     14                     
Description of Preferred Shares of Beneficial                                   
Interest  .......................................     25                  
Description of Shares of Beneficial Interest  ......     31                     
Summary of the Trust Agreement .....................     34                     
Description of Share Warrants  .....................     36                     
Description of Shareholder Rights ..................     36                     
Summary of the Operating Partnership                                            
Agreement .......................................     37                  
Federal Income Tax Considerations ..................     40                     
Plan of Distribution  ..............................     46                     
Legal Matters   ....................................     47                     
Experts   ..........................................     47                     

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4,000,000 Shares  

[GRAPHIC OMITTED]                                                               

PENNSYLVANIA REAL ESTATE  
INVESTMENT TRUST  

Shares of Beneficial Interest 

--------------------------------------------  
PROSPECTUS SUPPLEMENT 
December 17, 1997 
--------------------------------------------  
LEHMAN BROTHERS 

LEGG MASON WOOD WALKER  
INCORPORATED  

MERRILL LYNCH & CO. 

SALOMON SMITH BARNEY  

WHEAT FIRST BUTCHER SINGER  

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B5’ Filing		Date		First		Last			Other Filings
		11/1/15		96
		7/10/11		110
		12/31/06		94		97			10-K,  4
		12/1/02		23
		9/30/01		156					10-Q
		12/31/00		53		54			10-K
		9/30/99		23		54			10-Q
		8/1/99		97
		7/31/99		99
		6/1/99		100
		1/31/99		97
		1/1/99		52		53
		9/30/98		56		57			10-Q
		4/1/98		96					SC 13D/A
		1/1/98		8		54
		12/31/97		51		161			10-Q,  10-Q/A,  10-QT,  8-K/A
		12/23/97		1
Filed on:		12/19/97
		12/17/97		1		167			8-A12B/A,  8-K
		12/16/97		119					8-K,  DEF 14A
		12/15/97		79		119			10-K/A
		12/2/97		119					8-K
		12/1/97		31
		11/28/97		12		119			10-K
		11/18/97		119					DEF 14A
		11/14/97		5		23
		11/10/97		43
		11/1/97		56
		10/31/97		111		114
		10/17/97		68
		10/14/97		119					8-K
		9/30/97		1		155
		9/29/97		81		151			8-K,  DEF 14A,  DEFS14A
		8/31/97		8		126			10-K,  10-K/A
		8/28/97		119					DEF 14A,  DEFS14A
		7/30/97		40
		6/30/97		94
		6/23/97		82
		4/1/97		94
		3/31/97		94
		1/31/97		53
		12/31/96		60		117
		9/30/96		60		98
		9/1/96		8		74
		8/31/96		11		165			10-K,  10-K/A
		8/1/96		99
		6/30/96		96
		2/1/96		107
		1/31/96		53
		12/31/95		27		107
		8/31/95		51		165			10-K,  S-3/A
		7/1/95		96
		4/13/95		107					10-Q
		12/31/94		87		101
		9/1/94		71		80
		7/1/94		96
		6/30/94		96
		2/1/94		78
		1/31/94		53		97
		1/1/94		87		99
		12/28/93		96
		12/14/93		53
		12/1/93		99
		1/1/93		99
		12/31/92		97
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