The upgrades Pennsylvania REIT (PEI)

Pennsylvania Real Estate Investment Trust (NYSE: PEI)

Pennsylvania Real Estate Investment Trust (NYSE: PEI) was founded in 1960 and is one of the first equity REITs in the United States. PEI has a primary investment focus on retail shopping malls. Currently, the Company's portfolio of 49 properties comprises 38 shopping malls, eight community and power centers, and three development properties. The Company’s properties are located in 13 states in the eastern half of the United States, primarily in the Mid-Atlantic region. The operating retail properties have approximately 33 million total square feet of space. PREIT, headquartered in Philadelphia, Pennsylvania, is publicly traded on the NYSE under the symbol PEI. The Company's website can be found at

Today, PEI has been upgraded by The Street Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including generally poor debt management, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

• The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 30.2% when compared to the same quarter one year prior, rising from -$14.32 million to -$10.00 million.
• Net operating cash flow has significantly increased by 60.47% to $32.58 million when compared to the same quarter last year. In addition, PEI has also vastly surpassed the industry average cash flow growth rate of -37.51%.
• PEI has improved earnings per share by 33.3% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, PEI reported poor results of -$1.67 versus -$1.45 in the prior year.
• The debt-to-equity ratio is very high at 4.09 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.
• Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, PENNSYLVANIA RE INVS TRUST's return on equity significantly trails that of both the industry average and the S&P 500.