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Despite a positive track record of operating its malls, PREIT's leadership is on the hot seat.
Seven of the Philadelphia-based mall REIT's nine board members submitted letters of resignation after not receiving sufficient support in the latest shareholder vote, the Philadelphia Business Journal reports. PREIT CEO Joe Coradino, who has led the company since 2012, was among the seven who tendered their resignations.
PREIT's board next will vote on whether to accept each member's resignation individually, but the risk of a leadership vacuum will likely prevent all seven members from resigning, the PBJ reports. The two members who received enough shareholder votes in support were Hart Capital Management principal Kenneth Hart and Atlanta-based Cygnus Capital CEO Christopher Swann, both of whom joined the board late last year.
Since the pandemic decimated mall traffic in 2020, PREIT's leasing and per SF sales numbers have recovered, leaving the bulk of the company's properties in solid financial shape, per its first-quarter earnings report.
But its corporate debt has threatened the company since at least 2021, driving its stock value low enough to be delisted from the New York Stock Exchange and continuing to throttle its options today.
Almost half of the debt PREIT owes is floating-rate, meaning it has grown more expensive with each of the 10 interest rate hikes by the Federal Reserve in the past year. Despite core mall occupancy rising to over 93% and 1.2% quarterly growth in sales per SF, PREIT reported a net loss of $45M in the first quarter, a 36% increase compared to Q1 2022.
PREIT has a credit facility maturing Dec. 10 with no more extension options and a balance that's a hair under $1B. Attempts to raise cash by selling some of its underperforming assets and landing development deals for land around malls it wants to hold have been slowed and stymied by issues with local governments in the Philly suburbs, the Philadelphia Inquirer reports.
Aside from Coradino, the board members who tendered resignations after they didn't receive enough shareholder votes to remain are: Temple University interim President JoAnne Epps, former Mack-Cali Realty Corp. CEO Michael DeMarco, former Liberty Property Trust Chief Financial Officer George Alburger, former Tasty Baking Co. President and CEO Charles Pizzi, former PwC Global Managing Partner John Roberts and Crown American Associates officer and director Mark Pasquerilla.
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