Battle between PREIT board and shareholders rages on
A group of preferred shareholders is continuing to demand that seven PREIT board members resign after their demand was thwarted in a shareholder meeting in June.
PREIT, the owner-operator of super-regional centers including the Cherry Hill Mall in New Jersey and the Plymouth Meeting Mall in Pennsylvania, yesterday received a letter from the discontented shareholders urging the seven to step down and make way for new management.
“The Failing Trustees and the incumbent management team have stood by idly while shareholder value has been destroyed and any sense of good corporate stewardship has been ignored,” wrote Scott Bishins, Michael Meyer, and David Steinberg. “None of the Failing Trustees received voting support greater than 41.4%. This blanket vote of no-confidence is an unambiguous sign of shareholders’ will.”
At the June meeting, each of the seven trustees tendered resignations then voted to reject all seven motions.
“The Board’s conflicted decision to allow the Failing Trustees to vote on each other’s resignations rather than to delegate that determination to an independent committee of Trustees who had not been required to tender their resignations, is a blatant act of self-preservation and self-dealing at the expense of PREIT and its shareholders,” wrote the trio.
On July 7, PREIT CEO Joseph Coradino and lead independent trustee Michael DeMarco responded with a letter holding that actions taken by the board with respect to the tendered resignations fully comported with the company’s governance documents and that the actions proposed by the complainants would destabilize and cause harm to the company.
“Indeed,” said the Coradino-DeMarco letter, “the notion that anyone is ‘standing idly by’ is utterly false and offensive. PJT Partners, a premier global advisory-focused investment bank, with particular expertise in both real estate and restructuring, was retained in January 2022 to engage in a strategic and financial process to explore all opportunities to maximize shareholder value."
The letter continued to hold that all of the assertions made by the dissenters in their letter were false.
“PJT has in fact been robustly marketing the Company's properties, vigorously pursuing strategic alternatives, seeking additional capital infusion for the Company, and otherwise exploring any available options,” wrote Coradino and DeMarco.
An accompanying statement from PREIT noted that, in 2022, the company sold assets generating more than $113 million in gross proceeds and applied that amount and excess cash from operations to pay down debt by more than $157 million. It also noted that, earlier this year, a property sale to Whole Foods at Plymouth Meeting Mall enabled PREIT to pay down debt by $29 million through the end of March.
“While your letter engages in name-calling and blame-casting as if there were some magic solution that everyone is ignoring,” concluded Coradino and DeMarco, “the reality is that, in order to manage the Company's impending debt maturities and the difficult state of the real estate and financing markets, management, the Board and PJT have been vigorously exploring all strategic alternative.”
The battle promises to rage on, however. The disapproving shareholders’ letter concluded by stating their intention to explore further actions should the seven trustees not step aside.