What happened

PREIT (NYSE:PEI), a real estate investment trust, or REIT, that operates shopping malls primarily located in the mid-Atlantic region, is under pressure on Wednesday. As of 2:30 p.m. EDT, the company's stock price had fallen by more than 10% for the day.

So what

PREIT released its second quarter earnings report, and it's not difficult to see why investors might be disappointed. Adjusted funds from operations (FFO), the REIT version of "earnings," fell to $0.22 per share from $0.39 in the second quarter of last year.

Family shopping at a mall.

Image source: Getty Images.

In addition, same-store net operating income declined by 3% year over year, and the company's results were significantly impacted by the wave of retail bankruptcies and store closures. The company says that it lost $1.6 million of rent due to these events in the second quarter alone, and non-anchor occupancy declined by 180 basis points compared with a year ago.

What's more, the company reduced its full-year adjusted FFO guidance range to $1.20-$1.30 from a previous range of $1.20 to $1.34, a two-cent reduction at the midpoint. As most stock market followers can tell you, there's no more reliable way to cause a stock's price to drop than to lower your future expectations.

Now what

To be sure, the quarter wasn't all bad. At PREIT's top properties, comparable sales increased more than 5%. However, there was clearly more bad news than good, and until the retail closures and bankruptcies subside, it's tough to envision a major turnaround in the company's performance anytime soon.