Pennsylvania Real Estate Investment Trust has signed agreements for the sale of its interests in up to seven power centres to Cedar Shopping Centers.

Under the agreements, Pennsylvania Reit will sell five wholly-owned power centers to Cedar for approximately USD134m.

A portion of the proceeds will be used to repay approximately USD40m of mortgage debt secured by three of the properties and to pay approximately USD57m to release two properties securing Pennsylvania Reit's 2010 credit facility.

The transaction is expected to close by the end of 2010.

The five wholly-owned properties are Creekview Center in Warrington, Pennsylvania; Monroe Marketplace in Selinsgrove, Pennsylvania; New River Valley Center in Christiansburg, Virginia; Pitney Road Plaza in Lancaster, Pennsylvania; and Sunrise Plaza in Forked River, New Jersey. These five properties contain 936,000 total owned square feet.

Pennsylvania Reit has also signed agreements to sell to Cedar its 50 per cent interest in each of two additional power centres. The two properties, Red Rose Commons in Lancaster, Pennsylvania and Whitehall Mall in Allentown, Pennsylvania, contain 821,000 total owned square feet.

Pennsylvania Reit's share of the sales prices for the two properties is approximately USD34m, and its proportionate share of the mortgage debt on these properties is approximately USD18m. The sale of each of these properties is expected to close during the fourth quarter of 2010 or the first quarter of 2011; however, the sale of Red Rose Commons is subject to the terms and conditions of the partnership agreement with Pennsylvania Reit's partner in the property and the joinder by that partner, and the sale of Whitehall Mall is subject to agreement with, and joinder by, Pennsylvania Reit's co-owner in that property.

In addition, it is proposed that Cedar assume the current mortgage on Whitehall Mall, the terms of which do not include any provision for assumption (which would require the consent of the lender) and do include a prepayment premium. These conditions may delay or prevent the closing of the sale of either or both of these properties. Cedar is not obligated to close on either property unless it acquires 100 per cent ownership of that property.

After the repayment of mortgages secured by these properties and the payment of the applicable release prices under the credit facility, Pennsylvania Reit will use the net proceeds to repay borrowings under its credit facility, in accordance with its terms, and for general corporate purposes.

The sale agreements provide that Pennsylvania Reit will retain certain undeveloped parcels at the wholly-owned properties which Cedar may acquire at a formulated price. The agreements with Cedar provide that Pennsylvania Reit will serve as management and leasing agent for the properties for a period of three years, subject to certain termination provisions and to the terms of the final agreements with Pennsylvania Reit's partner in Red Rose Commons and its co-owner in Whitehall Mall.

Pennsylvania Reit also will earn additional sales consideration for leasing currently vacant space, if such leasing occurs during the two years following the closing of the sale.