PREIT (OTCQB: PRET) today issued a statement and letter in response to the July 11, 2023 letter from John R. Saunders.
Statement from PREIT:
PREIT remains focused on advancing the goals of the Company and its various stakeholders. Over the past several years, in addition to exploring options for the expiration of its Credit Facilities maturing on December 10, 2023, the Company has focused on recovering occupancy following the COVID-19 pandemic, bringing diverse uses to the portfolio to enhance the business model, garnering approvals for multifamily development to allow for land sales and raising capital through asset sales, among other initiatives.
The results of these efforts included:
- Core mall total occupancy improved from 89.2% as of March 31, 2021 to 93.5% as of March 31, 2023.
- Executed leases with diverse, non-traditional mall tenants: Burlington and Lego Discovery Center at Springfield Town Center, ULTA at Dartmouth Mall, Meritus Health at Valley Mall and more.
- Secured municipal approvals for apartments and a hotel at Moorestown Mall and Springfield Town Center, setting the stage for the sale of non-income producing land.
- In 2022 alone, the Company sold assets generating over $113 million in gross proceeds and has applied these proceeds and excess cash from operations to pay down debt by over $157 million.
As noted during the Company’s Q1 2023 Earnings Call, work continues to address the upcoming maturity by pursuing all available alternatives, including refinancing, selling assets and engaging in discussions with lenders.
The entire letter can be found below:
July 12, 2023
Mr. John R. Saunders
Saunders Property Company
4040 MacArthur Boulevard, Suite 300
Newport Beach, CA 92660
Re: July 11, 2023 Letter to the Board of Trustees
Dear Mr. Saunders:
We respect the views of all of our shareholders and recognize that you hold a significant stake in the Company. You have been in frequent contact with the Company and its financial advisor, PJT Partners, who have been receptive to any suggestions or alternatives you might provide. In fact, several months ago we presented a nondisclosure agreement for your review and signature to which you did not respond. However, we believe that for the Common Shareholder Trustees to submit to your request to resign en masse would not be in the Company’s best interests, and will likely result in disruption and an erosion of value. Thus, while we do not disagree with your statement that the power to elect Trustees resides in the shareholders, we have concluded that a mass resignation would be a dereliction of the Trustees’ responsibilities to the Company and its shareholders. The Common Shareholder Trustees were duly elected by a plurality of the Common Shareholders at the Annual Meeting in accordance with the provisions of the Trust Agreement and the Bylaws of the Company and have complied with all of the requirements of the Company’s governance documents. Further, the Trustees do not believe that it would be in the best interests of the Company to hold a new election with an entirely new slate of nominees at this time.
The record will show that the Board has not let the Company drift as you assert, but has taken responsible action to maximize value for shareholders and all other stakeholders in the face of very difficult circumstances. You are familiar with the challenges faced by the Company over the past years due to the Covid-19 pandemic, upcoming debt maturities and the frozen state of the real estate and financing markets. The Company has been actively pursuing all strategic alternatives in conjunction with PJT, an investment banking firm that was selected because of its substantial expertise in real estate and restructuring matters.
While we are sympathetic to your concerns, complaints about circumstances that are largely outside of the Company’s control, given the uncertain market conditions for the real estate and mall industry, are not helpful.
The Board, together with management and its consultants and experts, will continue its work to explore all strategic alternatives consistent with its fiduciary duties and prudent business judgment for the benefit of all stakeholders.
Joseph F. Coradino, Chairman and CEO & Michael J. DeMarco, Lead Independent Trustee
cc: PREIT Board of Trustees:
George J. Alburger, Jr.
JoAnne A. Epps
Kenneth B. Hart
Mark E. Pasquerilla
Charles P. Pizzi
John J. Roberts