Upon PREIT’s acquisition of the Property (whether upon exercise of the Options or from the Partnership), PREIT and the Partnership will enter into a long-term ground lease for the Property (the “Lease”). The Lease will obligate the Partnership, as lessee, to pay all costs associated with the ownership and operation of the Property, including, without limitation, taxes, insurance, utilities, repair and maintenance and all costs associated with the construction of the improvements on the Property. PREIT will pay as a tenant allowance an amount equal to 20% of the costs of such improvements subject to certain limitations, including the limitation that the total of all payments by PREIT to the Partnership and in respect of Acquisition Costs will not exceed $10 million. Until three months following the commencement of Alternative Gaming operations at the Property (the “Payment Commencement Date”), rent will accrue at 10% per year on the aggregate payments made by PREIT to the Partnership and in respect of Acquisition Costs. Beginning at the Payment Commencement Date, rental payments to PREIT will be $3 million per year for each of the first two years following the Payment Commencement Date, $4 million for the third year thereafter, $5 million for the fourth year thereafter, and for the remainder of the term of the Lease, as the term may be extended, $5 million per year, subject to annual adjustments for the fifth and subsequent years based upon increases in the consumer price index. A pro rata portion of the rent accrued prior to the Payment Commencement Date will be paid in monthly installments over the 117 months following the Payment Commencement Date. The initial term of the Lease will be 29 years and 11 months. The Partnership will have the option to extend the term in ten year increments, subject to a maximum aggregate term of 99 years.

     Beginning ten years following the Payment Commencement Date, the Partnership will have the right under the lease to purchase at any time all of PREIT’s interest in the Property for an amount equal to ten times the average rent paid or accrued for the two calendar years preceding the calendar year of exercise, but excluding for such purposes 50% of the amount by which the average rent exceeds $5 million (the “Buyout Amount”). PREIT will have the right under the lease, during the 90-day periods immediately following the tenth and each successive fifth year anniversary of the Commencement Payment Date, to put the Property to the Partnership for the Buyout Amount. The Buyout Amount will be paid in cash if it is payable due to the exercise by the Partnership of its call right and will be paid in installments with interest over a two year period if it is payable due to the exercise by PREIT of its put right.

     The Partnership will also pay PREIT a development fee of $3 million for customary development management services in connection with the development and construction of the racetrack, casino and related improvements. The fee will be payable in installments during the construction period commencing upon closing under the financing arrangements which will be required by the Partnership for the development and operation of the racetrack and casino.

     This report contains certain “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or 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, assumptions and changes in circumstances that may prevent PREIT from consummating the proposed transactions on the terms described above, or at all, including, without limitation, determinations by regulatory authorities as to whether and when to issue the Racing and Alternative Gaming licenses to the Partnership. PREIT’s business is subject to uncertainties regarding the revenues, operating expenses, leasing activities, occupancy rates, and other competitive factors relating to PREIT’s portfolio and changes in local market conditions as well as general economic, financial and political conditions, including the possibility of outbreak or escalation of war or terrorist attacks, any of which may cause future events, achievements or results to differ materially from those expressed by the forward-looking statements. PREIT does not intend to and disclaims any duty or obligation to update or revise any forward-looking statements or industry information set forth in this Current Report on Form 8-K to reflect new information, future events or otherwise. Investors are also directed to consider the risks and uncertainties discussed in 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, 2003.

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