What happened

Shares of Pennsylvania Real Estate Investment Trust (NYSE:PEI) popped 16.3% higher on Friday, following the release of the company's first-quarter results.

So what

The mall owner generated adjusted funds from operations (FFO) -- a key profitability metric for REITs -- of $20.7 million, or $0.26 per share. That came in above Wall Street's expectations for FFO of $0.25. 

PREIT continues to make progress with its portfolio optimization strategy, which includes selling off lower-tier malls and replacing struggling department stores with stronger tenants. The occupancy rate for its core properties increased by 1 percentage point, to 94.7%. Core mall sales per square foot reached a record high of $517. And same-store net operating income rose 2.2% in the first quarter. 

PREIT is also using asset sales to strengthen its balance sheet, with $43 million raised from property sales so far in 2019. 

A dollar bill folded into the shape of an arrow-tipped line that rises, then falls, then rises again

Image source: Getty Images.

Now what

Even after today's gains, Pennsylvania Real Estate Investment Trust's stock price is still down 27% over the past year. But the company's turnaround is already underway, and investors are beginning to take a more optimistic view of its future prospects.

Moreover, at $7.05 per share, PREIT's stock currently yields a hefty 11.9%. Pennsylvania REIT's dividend is likely to draw attention from income-seeking investors, particularly if the company can continue to upgrade its property portfolio -- and by extension, its operating profits -- in the months ahead.