Pennsylvania Real Estate Investment Trust Q3 2009 Earnings Call Transcript

Oct.28.09 | About: Pennsylvania Real (PEI)

Pennsylvania Real Estate Investment Trust (NYSE:PEI)

Q3 2009 Earnings Call

October 28, 2009 3:00 pm ET

Executives

Garth Russell – KCFA Strategic Communications

Ronald Rubin – Chairman and Chief Executive Officer

Edward A. Glickman – President

Robert F. McCadden – Chief Financial Officer

Joseph F. Coradino – President of Management and Head of Retail Operations

Analysts

David Wigginton – Macquarie Research Equities

Quentin Velleley – Citi

Michael J. Bilerman – Citi

Michael W. Mueller – JP Morgan

Nathan Isbee – Stifel, Nicolaus & Company

Eric Rothman - Urdang Securities

Operator

Welcome to the Pennsylvania Real Estate Investment Trust Third Quarter 2009 Earnings conference call. (Operator Instructions). I would now like to turn the conference over to Mr. Garth Russell, KCFA Strategic Communications.

Garth Russell

Before turning the call over to management for their prepared remarks, I must state that this conference call will contain certain forward-looking statements within the meaning of federal securities laws. Forward-looking statements relate to our expectations, beliefs, projections, future plans, strategies and to explain events, trends and other matters that are not historical facts.

These forward-looking statements reflect PREIT's current views about future events and are subject to risks, uncertainties and changes in circumstances that might cause future events, achievements or results to differ materially from those expressed or implied by these forward-looking statements.

PREIT's business might be affected by uncertainties affecting real estate businesses generally, as well as specific factors discussed in PREIT's press releases, documents PREIT has filed with the Securities and Exchange Commission, and in particular PREIT's annual report on Form 10-K for the year ended December 31, 2008. PREIT does not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.

It is now my pleasure to turn the call over to Ron Rubin, Chairman and CEO of PREIT.

Ronald Rubin

Welcome to the Pennsylvania Real Estate Investment Trust 2009 Third Quarter conference call. Joining me on the call today are Ed Glickman, President, Bob McCadden, CFO and Joe Coradino, president of our management company and head of our retail operations. Among the others in the room today are Vice Chairman George Rubin and General Counsel Bruce Goldman.

Today we will discuss our third quarter results, the status of our current projects and our expectations for the remainder of 2009. After we conclude our remarks, the call will be open for your questions. As discussed on prior calls, the company is experiencing the effects of the current economic downturn and its corresponding impact on consumer spending.

While there appears to be more stability in the marketplace, many retailers in our portfolio are experiencing challenging times and have taken a step back to assess market conditions. They, like us, are being disciplined in their use of capital and we expect this trend to continue.

With the company's redevelopment program largely complete, we are pleased with the look and the feel of our properties, yet as we enter the holiday season, we are not anticipating significant changes in market conditions. We believe that consumers will be shopping carefully with a focus on value, yet we also believe that shoppers are and will continue to be attracted to our properties.

As Joe Coradino will discuss in greater detail, we believe that the transformation of our properties has energized shoppers and retailers in their respective regions. At each of these and other redeveloped properties, we are expecting to capture a larger share of regional consumer spending when the economy improves.

As Ed Glickman will discuss in greater detail, the company continues to address its debt maturities and liquidity needs. We have agreed upon a new credit facility term sheet with Wells Fargo Bank, our lead bank on our line of credit, have sold non-core assets, reduced capital outlays, placed secured debt on a number of properties and repurchased a portion of the exchangeable notes. The terms sheet will be reviewed by the other members of our bank group, and we look forward to announcing its terms at an appropriate time.

As I have noted in previous calls, while the economic environment has changed, the fundamentals of our business have not. Our management team is focused, working to meet company capital needs, advance our redevelopment and development projects, place stores in service, increase NOI and occupancy and generate positive leasing spreads. As always, we continue to remain focused on creating long-term value for our shareholders.

And with that, I will turn the call over to Ed Glickman.

Edward Glickman

PREIT results in the third quarter continue to attract general retail industry trends with our [inaudible] stores performing in line with chain-wide results. Comparable sales for the quarter are at $335 per square foot down from $351 per square foot in 2008, and down 8.2% from their peak in the second quarter of 2007. These trends are being felt across the company's portfolio without regard to geography or market position.

In keeping with this environment, we had experienced a 3.5% quarter-to-quarter decline in same store NOI. This decline was caused by lower expense recovery eroding a gain in base rents. For our closed mall portfolio, average base rents per square foot rose 4.7% quarter-to-quarter reflecting a 0.8% rise in occupancy costs to 13.5%.

This gain in base rents took place against a small increase in overall occupancy. This was achieved by increasing our anchor occupancy making up for a decline in our inline occupancy. Re-leasing spreads in the third quarter declined 19.8% due in part to the re-leasing of several Big Box stores to hhgregg, an electronics retailer. Renewal leasing was also slightly down off 1.8%.

Other metrics related to retailer health remained stable during the period. Bad debt expense for the quarter remained level with 2008 at $2.2 million. Only three stores were impacted by bankruptcy this quarter and lease termination revenue was also flat at $300,000. While the third quarter does not typically reflect significant tenant defaults, we are nevertheless pleased with the stability of our merchants and hope that they are appropriately prepared for the upcoming holiday season.

During our last call, we talked about the steps we are taking to preserve liquidity. Our program has included a cutback in development activities, cuts in G&A, reductions in a dividend payout, additional mortgage financing, sales of non-strategic properties and accessing remaining liquidity in our bank lot.

In today's release, we announced the sale of Crest Plaza and the October sale of the Northeast Tower Center. Combined with a number of previous past sales, year-to-date we have raised $56.6 million from the sale of non-strategic assets. This quarter, we also completed a $20 million mortgage against Northeast Tower Center. Following the quarter, we completed an additional $5 million of financing against Lycoming Mall.

In total, year-to-date we have raised over $75 million in secured financing. The liquidity from these transactions, along with line of credit draws of $85 million and the issuance of 4.3 million shares of common stock, have provided the funds that we have used to continue or convert repurchases and to work on our remaining construction activity.

The next step in our capital plan is the refinancing of our credit agreements, which mature this coming March. We are pleased to announce that we have agreed upon terms sheet with Wells Fargo and that we are optimistic that this transaction will be well received by the other members of our bank groups.

While facing considerable challenges in both the operational and financial aspects of our business, we believe we will close 2009 having achieved many positive results for our shareholders. We have made remarkable progress on our construction projects and in providing the liquidity required to complete these projects.

We have taken important steps to right size our company and our activities and expect this work will result in a restructured bank facility in the first quarter. We appreciate your continued interest in PREIT and wish you the best during the upcoming holidays. We want to remind you to do your part for the recovery by shopping early and often at your local PREIT mall.

Bob McCadden will now give you more details on our financial performance.

Robert McCadden

Net loss for the third quarter attributable to the company was $9.6 million or $0.24 per diluted share. FFO for the quarter was $29.8 million or $0.67 per share. During the quarter, we repurchased $12 million of our exchangeable notes and recorded a $4.2 million or $0.10 per share gain. That transaction was not included previously in our 2009 earnings guidance.

In October, we purchased an additional $35 million of notes in exchange for 1.3 million common shares and $13.3 million in cash. Since December 2008, we've purchased a total of $120.1 million of our notes at an average discount of 48%. After our most recent purchase, 167.4 million of our exchangeable notes remained outstanding.

Same store NOI was down $2.5 million or 3.5% when compared to the prior year's quarter. Average inline occupancy levels for the 2009 quarter were down approximately 300 basis points from 87% in the prior year period, primarily due to store closings by bankrupt tenants. The negative impact on NOI from bankrupt tenants was partially mitigated by inline tenant and anchor openings at certain of our redevelopment properties.

Of the 627,000 square feet of space impacted by bankruptcy filings in 2008, we have commitments for approximately 51% of this space and are negotiating leases for another 11%. Eleven retailer bankruptcies have impacted an additional 111,000 square feet of space thus far in 2009. Of this amount, 41,000 square feet of space has closed and remains vacant. The balance of the space has not yet been adjudicated and it's too early to determine what the outcome will be for the remaining areas.

Total occupancy for our enclosed malls was 88.9%, an increase of 10 basis points from one year ago. When we include our specialty leasing and temporary tenants, total occupancy at the end of the quarter was 90.6%, an increase of 170 basis points.

Recoverable expenses, which include CAM real estate taxes and redistributed utilities for same store properties increased by $1.1 million over the same period last year. Overall expense recovery rates fell from 89.9% to 83.3% due to a combination of higher inline vacancy levels, more tenants paying percentage sales rent, gross leases and CAM expense caps.

As Ed mentioned, bad debt expense was approximately $2.2 million or 1.8% of real estate revenues in the quarter, which was inline with last year's amount. G&A expenses and other expenses were down by about $0.8 million for the quarter reflecting lower incentive compensation costs, reduced headcount and general cost-cutting measures.

Interest expense increased by $3.8 million over last year's quarter. A significant portion of the increase is due to placing completed redevelopment and development assets into service. During the quarter, we commissioned approximately $91 million of such assets. Since the beginning of 2008, we have commissioned $420 million.

We've used the effective interest rate on our line of credit as compared to the average cost of debt to capitalize interest, so we capitalized less interest during periods of falling short-term rates. At the end of the quarter, we had outstanding debt of $2.8 billion, an increase of $84 million from December 31 of last year. We benefited from lower interest rates on our debt, which decreased by 38 basis points from 5.10% to 4.72% on a GAAP basis.

On a cash basis, our interest rate declined by 46 basis points to 4.77% at the end of the third quarter as compared to 5.23% a year ago. At the end of September, 77.8% of our total indebtedness, including the debt of our partnerships, was fixed. At the end of the quarter, our leverage ratio was 66.1%. We remained in compliance with all the required financial covenants through the end of September.

Depreciation and amortization expense is higher due to construction, progress assets and recurring capital expenditures that were placed in service over the past year. We are updating our 2009 net income and FFO guidance to reflect the purchase of exchangeable notes completed in the third and fourth quarters and related issuance of common shares and the dispositions of Crest Plaza and Northeast Power Center.

As a result of these changes, we expect our GAAP earnings per diluted share, attributable to the company, to be a net loss between $0.46 and $0.54. We expect FFO per share to be in the range of $3.20 to $3.28. Our guidance range assumes same store NOIs, excluding lease terminations, will decline from 3.5% to 4.5%. Our guidance does not contemplate the impact of any other potential acquisitions, dispositions or changes in our capital structure.

With that, I'll turn the call over to Joe Coradino.

Joseph Coradino

We are recognizing preliminary indicators of stabilization in the fundamentals of our business. During the quarter we saw only three additional retailer bankruptcies that impacted our portfolio. A handful of retailers are moving forward with expansion plans and have opened stores and signed transactions for several of our assets.

We have approximately 240,000 square feet of transactions in our pipeline that we expect to open in advance of the 2009 holiday shopping season. Our same store sales for the month of September '09 registered a 1.4% increase over last September.

At Cherry Hill Mall we opened during the quarter Urban Outfitters, which is among the highest performing stores in their region. We also opened during the quarter an expanded [Aerospatiale] and a new California Pizza Kitchen. To date, PS from [Aerospatiale], Tilly's, Les Richards, [Tivana], [Shuwartzki] and Pandora have opened.

During the quarter, we executed four new leases for approximately 35,000 square feet for Cherry Hill. American Apparel was signed for 3,000 square feet. We've also secured a new transaction for the [Vada]. [Arco] for 5,000 square feet and Forever 21 who will relocate into an expanded two-level store of approximately 26,000 square feet.

At Plymouth Meeting Mall, Olly Shoes opened and Whole Foods [fit out] is complete and their opening is scheduled for early January 2010. At this time, 86% of the planned expansion portion of this project is either leased or in active negotiation.

At Voorhees Town Center, the first residential building opened for occupancy in June. The second building is scheduled to be complete within the next two weeks. The first building is 87% occupied. The four buildings fronting the boulevard will be complete by the end of the year with a balance of the four rent residential scheduled for completion during 2010.

Construction continues on the 13,000 square foot [Intox] Fitness which is expected to open in December of this year. The residential occupancy and the leasing of the retail combined with the transactions in progress, including two signature restaurants, a coffee shop and an additional major office user, will continue to enhance the vibrancy of this award winning project.

We have also made significant progress at several of our other assets. Most noteworthy was the October 6 opening of a 200,000 square foot Target who joined Macy's as an anchor at Springfield Mall. On October 20, the new 40,000 square foot two-level Barnes and Noble at Woodland Mall opened for business. We opened a new Burlington Coat location at Wiregrass Commons.

And in August at 801 market Street a property we own contiguous to the Gallery, the 223,000 square foot Commonwealth of Pennsylvania opened to on floors 4, 5 and 6. And we are beginning to experience an uplift in customer traffic at the Gallery as a result of this addition.

We've utilized the recent economic downturn as an opportunity to focus on enhancing operational proficiency. We produced solid results from our general managers leasing program and are initiative to introduce non-traditional tenants to the regional mall environment. The general management program has already produced 12 new leases and at this time the initiative has nearly 200 deals in the proposal stage.

The non-traditional use initiative has also resulted in the addition of several traffic generating non-retail tenants to the portfolio. As an example, the Census Bureau will open a temporary office at Crossroads Mall. Apply a model that has served us well at North Hanover Mall, this coming November will open a Black Rose Antique center in the former Steve and Barry store at South Mall.

We are also pleased to add the new Foundations Family Fellowship, a teen and young adult center to Gadsden Mall. We will continue to introduce office and medical uses as a way to both drive occupancy and add incremental revenue.

While these initiatives are producing results, it's important to maintain existing national tenant relationships and continue to build new ones. During the quarter, four leases were signed with the electronics retailer hhgregg to back sale vacancies created by the bankruptcies of Linens N Things, Circuit City and Kids R Us.

The transactions total approximately 123,000 square feet with occupancy slated for the second quarter of next year, at Christiana Power Center, Paxton Town Center, Red Rose Commons and Wyoming Valley Mall. We also executed a lease with PetSmart for 18,000 square feet at the Commons in Magnolia. PetSmart is currently under construction with an expected opening in late first quarter of 2010.

We obviously acknowledge that the current economic environment remains challenging. We will continue to utilize our centralized leasing personnel to cultivate our national tenant relationships and engage our property management teams to source and assist in closing local and regional merchants. We've also engaged local brokers selectively to source tenants for three of our properties. We believe that our holistic approach to maintaining occupancy is having an impact.

With that, we're now ready for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question is from David Wigginton – Macquarie.

David Wigginton – Macquarie Research Equities

It sounds like from your commentary that you expect the line of credit to be completed in the first quarter. Do you have any sense at this point in time with respect to capacity and whether or not the debt covenants are going to be more restrictive this time around?

Edward Glickman

At this point we're not prepared to make any further comments on the line of credit except for the fact that we've agreed to a term sheet with Wells Fargo and that the term sheet is being circulated through the balance of the bank group.

David Wigginton – Macquarie Research Equities

Have your discussions I guess with Lowe's or any of the other members been affected by the breach of your gross asset value or debt yield covenants at this point or is that a non-factor since it's coming to the end of the –

Robert McCadden

There's no breach of any covenants at the end of September where both the debt yield and leverage covenants are within the ratios permitted by our existing credit facility in term loans.

David Wigginton – Macquarie Research Equities

I'm sorry, I misspoke there. But you are in excess of the 65% on the asset ratio and you're below the 9.75 on the debt yield and I recognize you can be that way for two quarters. But does that create any problems in your conversations with the lenders?

Robert McCadden

No.

David Wigginton – Macquarie Research Equities

With respect to the retirement of your exchangeable notes, are those transactions solicited or are they unsolicited and are you anticipating future exchanges?

Robert McCadden

More often than not we're getting approached by the holders of the notes looking for some type of liquidity and between now and the maturity date of the notes in 2012, we would expect to continue to have opportunities to repurchase notes on a periodic basis.

David Wigginton – Macquarie Research Equities

Just the pricing on that, I mean is this just a negotiation since there's not really an active market for the notes or?

Robert McCadden

Yes, it's not an active market so each deal is negotiated on a case-by-case basis.

David Wigginton – Macquarie Research Equities

Just my final question comes back to Bob, your comments about expense recovery and the reduction as a result of higher vacancy and increased tenants paying percentage rents. Should we expect to see recovery ratios to continue at the levels is was at this quarter or is it going to continue to deteriorate?

Robert McCadden

Yes, I think at least for the balance of that year we would expect if you were to look at the ratio on a year-to-date basis, I mean some part of what happened in third quarter was a true-up adjustment based on our now knowledge that the occupancy that we had forecasted early in the year won't be achieved. So we think that at least for the near-term, the year-to-date run rate should hold for the foreseeable future.

David Wigginton – Macquarie Research Equities

With respect to the percentage rent, I assume those are you're rent release request that you had been granted. Is that just purely based on a sales number that would trigger that back to regular minimum rent? Or is it set in stone for –

Robert McCadden

Typically, there's no sort of formulaic approach to it. Typically we look at each request on a case-by-case basis and make a decision dependent upon the sales performance and sometimes its percentage rent and sometimes we take other forms as well. But the key point I think right now is that we're focused on maintaining occupancy and keeping retailers in the space. Hopefully as the market begins to turn, and these are typically short-term deals, it will provide us with an opportunity to gain some upside.

David Wigginton – Macquarie Research Equities

So there is no provision that would trigger a percentage rent back to regular contractual rent then.

Robert McCadden

It's usually a stipulated period of time. So we offer relief for six months, a year, 18 months. And after that point it would be revert back to the original lease terms.

Operator

Your next question comes from Quentin Velleley – Citi.

[Manny] with Quentin Velleley – Citi

It's [Manny] here with Quentin and Michael. I had a question for you on the non-core asset sales. Could you just walk us through the metrics on those sales both, if you don't mind that, the amount of the sales and especially cap rates.

Robert McCadden

Our cap rate was probably roughly in the mid-8s on a combined basis. And these are strip center, power center and a bunch of tenants. So there's really not a lot of sales metrics that we can give you in terms of the benchmark of these tenants typically aren't reporting sales to us.

[Manny] with Quentin Velleley – Citi

Again in terms of the non-core sales, what are your thoughts on any other sales going forward? Also potentially selling the developments that you haven't gotten far on like Spring Hills or White Clay?

Robert McCadden

We'll always look opportunistically for – I think right now there's not a big market for assets sales so typically the [pad] sales go to 1031 exchange bars and we abstained some interest in the part of the local real estate owners who have been interested in some of the smaller shopping centers given the availability or lack of availability of debt financing. I don't think we're really in a position to say today whether we would look at selling either Spring Hills or New Garden at this point.

[Manny] with Quentin Velleley – Citi

On your balance sheet it looks like there's a pretty big dip in CIP but nothing changed on the development pipeline itself significantly. Could you just walk me through that, Bob?

Robert McCadden

Yes, essentially we just took about $90 million and put into service so as we open stores the cost to transfer from CIP into operating real estate. So it's really all over the portfolio. Its opening Lowe's at Pittney Road, its opening stores at Cherry Hill, Plymouth Meetings, Voorhees Town Center.

[Manny] with Quentin Velleley – Citi

So just a bunch of kind of small pieces of projects delivered at once.

Robert McCadden

Yes, as stores open and we deliver stores to the tenants. We decommission that space and put into service.

Michael J. Bilerman – Citi

Michael has a question for you. On the credit facility, and I understand that you have a term sheet out and you got to go to other banks and some things can change, but can you just give us at least some goalposts to think about relative to changing that from an unsecured facility to a secured facility. Is that a component of it or will it stay unsecured just at a smaller size.

Robert McCadden

I think the things that we've talked about in the past we can kind of reiterated is that we expect the facilities that move from unsecured to secure and we expect to see an increase in our interest rate. But that's about the extent of what we can talk given where we are in this stage of negotiation.

Michael J. Bilerman – Citi

Is there a certain amount from a size perspective at least a range whether that be is it a 3 to 350 facility. Is it a 350 to 4, 4 to 450, or it is 200 just to give us some sense of some range about where –

Edward Glickman

Michael, we've told you what we can tell you at this point.

Michael J. Bilerman – Citi

Then the other piece of it is what we've seen, specifically at least in the mall sector and some of the other companies that have redone their lines has been in conjunction with an equity offering. I'm just trying to figure out you're thinking about it from –

Edward Glickman

We've told you what we can tell you at this point.

Michael J. Bilerman – Citi

Well the equity offering is separate from the line of credit discussion.

Edward Glickman

I understand but in terms of our position on the recapitalization of the company, we've gone stage-by-stage. We've discussed, on this call and prior calls, exactly what we were doing. At this stage we're now renegotiating the line of credit. We just issued the term sheet and Bob has given you as much color as we are permitted to based on our agreement with Wells Fargo during this call.

Michael J. Bilerman – Citi

Is there anything on senior unsecured term loan upon which you can't extend that through 2011?

Edward Glickman

We've told you as much as we can tell you about the term loan on this call.

Michael J. Bilerman – Citi

In addition to the – separate from the line of credit.

Robert McCadden

We expect that the two facilities will be part of these overall negotiations that we have with the banks.

There would be a restructuring of both the credit facility as well as the term loan.

Michael J. Bilerman – Citi

Can you just remind us, what is the unencumbered asset base of the company today?

Robert McCadden

It's about a quarter of our NOI.

Michael J. Bilerman – Citi

Sorry?

Robert F. McCadden

It's about a quarter of our NOI, a little bit less. It's at 23% of our NOI and its 27 properties.

Michael J. Bilerman – Citi

And is there any other sort of non-producing assets that could be pledged?

Edward Glickman

The company published a supplemental a schedule that shows which assets are currently the subject of mortgage financing and which are unsecured, and that's the most detail that we can give you on any discussions we're having about security or what's going where in the future.

Michael J. Bilerman – Citi

Right, I think from a development perspective that some of the unsecured assets if you don't have a loan out on them obviously from a value perspective are greater than just tapping in an NOI figure, so I'm just trying to get comfort with the level of asset base.

Edward Glickman

Well as I said, we published a schedule that shows the security that's available each property in the company whether it's secured or unsecured, it's listed on the schedule and you can throw whatever conclusions you want from that. But at the moment, we've told you all about the term loan that we can tell you on the call.

Operator

Your next question comes from Michael W. Mueller – JP Morgan.

Michael W. Mueller – JP Morgan

I have a few questions here. First of all, for the Q3 and Q4 asset sales, what was the combined – I know you said it was $56 million of proceeds year-to-date, but what was the gross amount for Q3 and Q4 and then the net amount after debt?

Robert McCadden

The only debt that we had was, as I mentioned we've borrowed $20 million on Northeast Tower and that was repaid when we sold the asset.

Michael W. Mueller – JP Morgan

So the two combined for Q3 and Q4 was $56 million?

Robert McCadden

There was actually a small amount in the first quarter we had sold. It was a couple million dollars. It was probably actually – we had sold a Kohl's at Woodland Mall early in the year and another [pad]. So I don't know the numbers off the top of my head, but it's probably I'd say combined about $3 million or $4 million.

Michael W. Mueller – JP Morgan

Not sure if we missed this or not, but what about the yield on it?

Robert McCadden

We said the combined cap rat was about in mid-8s.

Michael W. Mueller – JP Morgan

Looking at the development disclosure for Cherry Hill, it mentioned this quarter, I think, that you opened 31,000 square feet of inline retail space and last quarter, I think, it said you opened 45,000. Did some space that was supposed to open not open or what happened there?

Robert McCadden

[Inaudible] maybe cover that with you offline, I don't have an answer for you right now. We typically would disclose only what was opened and maybe the way we're counting our space.

Michael W. Mueller – JP Morgan

And then last question, I know the sensitivity around the credit line and everything else, but not thinking about that today. But can you just talk about some bigger picture when you look at the balance sheet, leverage targets, I mean, how you look at the leverage today and ideally where you would like to have it, say in a couple year time period?

Edward Glickman

Well, in a couple year time period, we would expect one of two things to happen. Either values to come back and the company would be naturally [level] or we'll have to reduce the leverage in some other way. But we're not happy with where the leverage is today.

Michael W. Mueller – JP Morgan

I mean, where would you be happy with it?

Edward Glickman

Well, we've always wanted to run the company at a leverage level between 50% and 60%.

Michael W. Mueller – JP Morgan

I mean, do you think that's feasible to get there in a couple of years, a few years?

Edward Glickman

What's feasible in a few years from now is I think beyond any of our qualifications to guess, [even hazard] to guess at this point. But again values have changed and obviously we'll have to respond to that over time. We're not going to do it immediately. There's not going to be any immediate ability to reduce the leverage of this company to those historic levels.

Michael W. Mueller – JP Morgan

Just going back to the asset sales, is anything else teed up at this point, which could hit the next few quarters or so.

Edward Glickman

Just a few [pad] sales.

Operator

Your next question comes from Nathan Isbee – Stifel, Nicolaus & Company.

Nathan Isbee – Stifel, Nicolaus & Company

Ed, You had previously communicated the desire/insistence that any potential credit line term loan redo a solution would have to include a solution for the outstanding converts as well. Just curious where you stand on that now and has your success buying back changed your thinking on that at all?

Edward Glickman

It's the same answer that I given previously, Nate, which is we can't discuss anything more about the term loan that we've already told you so far on the call.

Operator

Your next question comes from Eric Rothman - Urdang Securities.

Eric Rothman - Urdang Securities

As it pertains to the Plymouth Meeting redevelopment, I was curious why the additional opening delay of the Whole Foods?

Edward Glickman

It's really based on Whole Foods schedule. We turn the premises over to them on or about May 15. And their plan was initially to open up in November, then rescheduled to January. There is still a firm rent commencement date, which is not impacted by their opening. It will occur prior to their opening. But the good news is the tenant fit outs are complete. The contractors work is done.

All of the trade fixtures have been installed and management on site management has been hired. So we'd love them to open up sooner, but we're excited that the store is nearing completion from a stocking perspective and hiring perspective. And, again, our rent commencement is not impacted.

Eric Rothman - Urdang Securities

And when is that rent commencement date?

Unidentified Corporate Participant

November 1.

Eric Rothman - Urdang Securities

Lastly, if I recall correctly, last quarter at Plymouth Meeting you had 92% of expansion space either leased or spoken for you mentioned a few minutes ago it was only 85% today. Is that fallout a result of the delay of the opening of the Whole Foods or is it entirely something else or why is that?

Unidentified Corporate Participant

I think I would probably be guessing at that the answer to that question right now. Let us take a look at it and get back to you.

Operator

Mr. Rubin, there are no further questions at this time. Please continue with any closing remarks you may have.

Ronald Rubin

Thank you very much. Thanks to all of you for joining with us this afternoon and for your continued interest. We look forward to providing our next update on our fourth quarter earnings conference call in February. So thank you again. Have a good evening and we hope that Phillies win.

Operator

Ladies and gentlemen, this concludes the Pennsylvania Real Estate Investment Trust third quarter 2009 conference call. If you would like to listen to a replay of today's conference, please dial 800-406-7325 or 303-590-3030 using the access code of 4167249 followed by the pound key. Thank you for your participation. You may now disconnect.

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