PREIT has petitioned the IRS for discretionary retroactive tax relief and warns that if relief is not granted, it will not have sufficient capital to pay the taxes and penalties.

Wells Fargo, the lead bank in PREIT's credit facility, is maintaining that facility, "giving the company the benefit of the doubt," until the IRS responds to PREIT's petition, but it has not yet agreed to back PREIT up if the as-yet unspecified total of taxes and penalties come due. PREIT management expressed optimism that the IRS would rule favorably and soon--"within hours, days, or in the worst case, months," a view that some analysts regarded as overly optimistic.

These announcements were made in a arranged conference call by PREIT at 8:45 a.m. today, following the discovery of the problem, management says, late Thursday, Feb. 5. During the call, Jonathan Weller, CEO, and Edward Glickman, EVP and CFO, faced sharp questioning from Wall Street analysts, one of which called the news "stunning." The sharpest questions were in regard to how such an oversight could elude auditors and management for so long and what was being done to "scrub" the books now and in the future.