PHILADELPHIA, July 12, 2023 /PRNewswire/ — 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 and
Michael J. DeMarco, Lead Independent Trustee
PREIT Board of Trustees:
George J. Alburger, Jr.
JoAnne A. Epps
Kenneth B. Hart
Mark E. Pasquerilla
Charles P. Pizzi
John J. Roberts
PREIT (OTCQB:PRET) is a publicly traded real estate investment trust that owns and manages innovative properties developed to be thoughtful, community-centric hubs. PREIT’s robust portfolio of carefully curated, ever-evolving properties generates success for its tenants and meaningful impact for the communities it serves by keenly focusing on five core areas of established and emerging opportunity: multi-family & hotel, health & tech, retail, essentials & grocery and experiential. Located primarily in densely-populated regions, PREIT is a top operator of high quality, purposeful places that serve as one-stop destinations for customers to shop, dine, play and stay. Additional information is available at www.preit.com or on Twitter, Instagram or LinkedIn.
Forward Looking Statements
This press release contains certain forward-looking statements that can be identified by the use of words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “project,” and similar expressions. Forward-looking statements relate to expectations, beliefs, projections, future plans, strategies, anticipated events, trends and other matters, including our expectations about the impact of COVID-19 on our business, that are not historical facts. These forward-looking statements reflect our current views about future events, achievements, results, cost reductions, dividend payments and the impact of COVID-19 and are subject to risks, uncertainties and changes in circumstances that might cause future events, achievements or results to differ materially from those expressed or implied by the forward-looking statements. In particular, our business might be materially and adversely affected by the following:
- the effectiveness of our financial restructuring and any additional strategies that we may employ to address our liquidity and capital resources in the future;
- our ability to achieve forecasted revenue and pro forma leverage ratio and generate free cash flow to further reduce indebtedness;
- our substantial debt, and our ability to satisfy our obligations or extend the maturity of or refinance our outstanding debt at or prior to maturity, particularly in light of increasing interest rates, and our ability to remain in compliance with our financial covenants under our debt facilities;
- the COVID-19 global pandemic and the public health and governmental response, which have created periods of significant economic disruptions and also have and may continue to exacerbate many of the risks listed herein;
- changes in the retail and real estate industries, including bankruptcies, consolidation and store closings, particularly among anchor tenants;
- changes in economic conditions, including unemployment rates and its effects on consumer confidence and spending, supply chain challenges, the current inflationary environment, and the corresponding effects on tenant business performance, prospects, solvency and leasing decisions;
- our inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise;
- our ability to sell properties that we seek to dispose of, which may be delayed by, among other things, the failure to obtain zoning, occupancy and other governmental approvals and permits or, to the extent required, approvals of other third parties;
- potential losses on impairment of certain long-lived assets, such as real estate, including losses that we might be required to record in connection with any disposition of assets;
- our ability to raise capital, including through sales of properties or interests in properties, subject to the terms of our Credit Agreements;
- our ability to maintain and increase property occupancy, sales and rental rates;
- increases in operating costs that cannot be passed on to tenants, which may be exacerbated in the current inflationary environment;
- the effects of online shopping and other uses of technology on our retail tenants;
- risks related to our development and redevelopment activities, including delays, cost overruns and our inability to reach projected occupancy or rental rates;
- social unrest and acts of vandalism or violence at malls, including our properties, or at other similar spaces, and the potential effect on traffic and sales; and
- potential dilution from any capital raising transactions or other equity issuances.
Additional factors that might cause future events, achievements or results to differ materially from those expressed or implied by our forward-looking statements include those discussed herein and in the section entitled “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022 and any subsequent reports we file with the SEC. Any forward-looking statements made by us speak only as of the date on which they are made, and we do not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.