Pennsylvania Real Estate Investment Trust

Good morning. My name is David, and I'll be your conference operator today. At this time, I would like to welcome everyone to the PREET 4Q21 earnings call. Today's conference is being recorded. Thank you, Heather Crowell, EVP of Strategy and Communications. You may begin your conference.

Thanks, David. Good morning, and thank you all for joining us for PREET's fourth quarter 2021 earnings call. During this call, we will make certain forward-looking statements within the meaning of federal securities laws. These statements relate to expectations, beliefs, projections, trends, and other matters that are not historical facts and are subject to risks and uncertainties that might affect future events or results. Descriptions of these risks are set forth in the company's SEC filings. Statements that Preet makes today might be accurate only as of today, March 15, 2022, and Preet makes no undertaking to update any such statements. Also, certain non-GAAP measures will be discussed. Preet has included reconciliations of such measures to the comparable gap measures in its earnings release and other documents filed with the SEC. Last quarter, we announced that we have partnered with Say Technologies to offer an opportunity for any shareholder to ask questions of management. During this call, management will answer questions received over this Q&A platform. We thank those who participated in this process. Members of management on the call today are Joe Corradino, Preet's Chairman and CEO, and Mario Ventresca, CFO. Joe?

thank you heather and good morning everyone we're pleased with our sector leading operating performance and the tenant and customer demand for our properties we've continued our recovery ahead of expectation capitalizing on broad-based momentum and confirming that the work we've done in shaping our portfolio replacing anchors and re-merchandising has positioned the portfolio to perform our expectation is that improving fundamentals is leading to better valuations and opportunities to raise capital. The emphasis now, given the excellence of our operating platforms, is to focus on improving our balance sheet and reducing our debt by continuing to raise capital. Our dedicated team is focused on moving this company forward, continuing to deliver strong results, and executing on balance sheet initiatives. Most importantly, we're confident that we'll be in a position to exercise our credit facility extension later this year. Our plan to raise capital is more realizable than ever in this strong operating environment. We outperformed the top mall REITs in terms of same-store NOI growth, occupancy improvement, and sales growth, which speaks to the quality of our portfolio. We're experiencing unprecedented demand, with many of our properties having emerged as a dominant enclosed retail destination in their respective markets. with exclusive tenancy and the benefit of new anchors. In 2021, the company executed transactions for nearly three times as much space as 2019, 1.2 million square feet. Currently, we have nearly half a million square feet of new leases executed for future occupancy, which will deliver approximately $9 million in annual rent. This includes outstanding, noteworthy additions to our markets. Eddie V's, Warby Parker, and Mark Kane at Cherry Hill. Cherry Hill will now boast one of the best restaurant lineups on the East Coast. HomeGoods opening later this year at Cumberland Mall. Lego Discovery Center at Springfield Town Center, the first of this brand-new prototype in the entire country. This addition helps fulfill the vision for Springfield Town Center, differentiating it among other D.C. area retail properties and becoming a trophy in its own right. Tilted 10 at Willow Grove Park, replacing JCPenney. Tilted 10 will bring a missing element of entertainment to this iconic property that draws from surrounding counties. Phoenix Theaters, opening a new state-of-the-art movie theater next month at Woodland Mall. This theater replaces a second-run theater and matches the quality of the upgrades we've made at the property, including the region's only Apple Cheesecake Factory and Von Mars. Demand for space has been booming from traditional retail, emerging retailers, traditionally online brands, as well as non-retail players. Last week, we signed three new leases with Rosen Remington, an expanding concept for openings later this year, introducing them to new markets. During 2021, over 1.1 million square feet of space opened, including first to portfolio additions. Aldi at Dartmouth Mall, Miniso, Peloton, and Purple at Cherry Hill Mall, Power Warehouse at Cumberland Mall, Turn 7 at Moorestown, Rose and Remington, Lovisa, and Offline by Airy at Woodland Mall. Creating these refreshed environments has continued to drive consumer interest, leading to impressive sales growth for our tenants. So far this year, traffic is up over 14% over last year. now eclipsing 2019 traffic. January reported sales broke our previous record, up to 614 for our portfolio. Cherry Hill leads the way at nearly $1,000 per square foot. Approximately 75% of our portfolio is over $500 per square foot, with half generating sales over 550 per square foot. NOI growth continued to be substantial smashing our internal forecast based on the strength of the consumer and the robust holiday activity. On a same-store basis, NOI excluding lease termination revenue grew by 52.5% for the quarter and 26.4% for the year, bringing us to 92% of 2019 same-store NOI as we continue to charge back towards normalcy. This NOI performance offset the substantial interest expense, generating FFO of 17 cents per share. While all of this is a point of pride for us and indicates improving valuation, we are clear that we need to drive improvement in our balance sheet. The business is in excellent shape. Customers are shopping, new tenants are opening. There's demand from a variety of users, including multifamily and hotels, and we believe we can opportunistically extract value to improve our balance sheet. So, we are underway with executing on a three-part strategy to drive improvement, focused on timing, cost of capital, and liquidity. As it relates to timing, we are focused right now on extending near-term maturities, including exercising the one-year extension of our credit facility. We have completed six refinancing transactions over the last few months, extending those maturities. and we are confident we're in a position to execute the extension of our credit facility. The ultimate goal is to continue to improve the portfolio, taking advantage of robust sales and outsized demand for space while reducing debt so that we can realize appropriate value and refinance the facility at its expiration while investigating our strategic options. From a liquidity perspective, Last quarter we noted over 120 million in transactions we expect to close before the middle of the year. We have made meaningful progress in concluding entitlements, executing agreements of sale, and scheduling closings. We expect to utilize the capital to reduce outstanding debt, increasing our liquidity, and reducing interest expense, resulting in improved earnings. The company made advances in its capital raising efforts with closed transactions or executed agreements of sale for 105 million of assets and is finalizing or is executed letters of intent for $75 million of additional asset sales. With respect to the specifics, prior to the end of Q2, we plan to close on the remaining anchor space at Valley View Mall, Whole Foods at Plymouth Meeting Mall, out parcels located throughout our portfolio and a former Sears TBA at Moorestown Mall. And we're pleased to report that as of late yesterday, we have executed a purchase and sale agreement for the sale of Exton Square Mall. As we have mentioned previously, this property is better suited ultimately as mixed use with one apartment building already occupied and another under contract. The sale will allow the buyer to fulfill that destiny. closing is anticipated in approximately 90 days. On the multifamily side, progress continues, and we are pleased to report that our buyer has received final site plan approval, which allows us to move forward closing on the sale of the multifamily land at Morristown in May. As it relates to land for hotels, we've executed an LOI for Morristown Mall and Springfield Town Center. We expect to close on these on the hotel and multifamily transaction later this year. But before I turn it over to Mario to review our financial results, let me again be clear. We have achieved operational excellence by outperforming our peer group. We fully expect to achieve our credit facility extension through 2023. We're making great progress on improving our balance sheet as we finalize commitments for $180 million in asset sales in the coming weeks. and we look forward to refinancing our credit line in 2023 as the market continues to improve. Mario?