Mr. Weller: It is a very interesting time for Pennsylvania Real Estate Investment Trust. We are in the process of changing the company's focus to be exclusively a retail property trust. Over the course of the last six months, we have entered into three important transactions: one in which we elected to sell our multi-family portfolio which represented about a third of our assets; the second transaction of importance was the acquisition of the Rouse Company's Philadelphia-based mall portfolio, which is going to serve as an important anchor to our overall retail strategy going forward. The third important transaction, which is still pending, is the merger of Crown American Realty Trust, another public company, into Pennsylvania Real Estate Investment Trust. At the end of these transactions, we will, as I said, be a retail-focused company with 40 enclosed mall properties and 14 power and strip centers. So, going forward it is our intention to utilize our core skills of development, redevelopment and leasing to maximize the value of the 40 mall properties and to continue to develop properties for big box retailers, many of which will become candidates for occupancy in our mall strategy.
TWST: How strong is that sector when you look across the various real
estate areas today? What has been happening there over the past 12 to 24
months, and what fundamentals are you projecting for that sector as you
look at these plans that you just laid out?
Mr. Weller: We are seeing strong demand by traditional mall tenants to
expand. Some of them are expanding through new formats; others are just
expanding their traditional formats into new markets. They are looking
to expand their relationships with owners who have a track record of
having exciting shopping environments. In our case, we have a record of
having transformed a number of properties and improving their
performance, and these retailers will look at our properties as a way to
expand into new markets with an owner they know is going to continue to
invest in the property. We have also found that the big box tenants
that you traditionally find in strip centers are looking for selective
opportunities to locate in malls, and that could be in line or in anchor
positions, depending on the tenant. We have several instances where we
have been able to complete such transactions and we feel it is a trend
that is going to continue. So we look at our new portfolio with expanded
mall presence as a portfolio into which we can expand retailers with
whom we have strong relationships and have had success in the past, as
well as utilizing our relationships with big box tenants.
Tickers included in this excerpt: PEI
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