Shareholders of Pennsylvania Real Estate Investment Trust Issue Open Letter to Board of Trustees
PREIT shareholders John Saunders and David Steinberg are members of an ad hoc group of shareholders who have sent a letter to PREIT's Board of Trustees asserting that the Board's decision to ignore the results of the recent election to entrench themselves was a flagrant violation of their fiduciary duties.
There is now a vacancy on the Board that must be filled. The group demands that the vacancy be filled by a nominee of the group instead of someone chosen by the current unlawfully-constituted Board. PREIT shareholders are entitled to have their votes respected, and not ignored, particularly given incumbent management's unacceptable performance and conflicting interests.
For more information, contact John Saunders [email protected], James Stockard [email protected] or David Steinberg [email protected].
The text of the letter is below.
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October 2, 2023
Board of Trustees
Pennsylvania Real Estate Investment Trust 2005 Market Street, Suite 1000 Philadelphia, PA
19103
Re: Pennsylvania Real Estate Investment Trust
Dear Sirs/Madams:
We are counsel to a group of holders (collectively, the "Ad Hoc Group") of outstanding common shares of beneficial interest (the "Common Shares") in Pennsylvania Real Estate Investment Trust (the "Company").
The Ad Hoc Group is deeply disturbed by the decision of the Board of Trustees (the "Board") to reject the offers of resignation delivered by Trustees George J. Alburger, Jr., Joseph F. Coradino, Michael J. DeMarco, JoAnne A. Epps, Mark E. Pasquerilla, Charles P. Pizzi and John J. Roberts (collectively, the "Failing Trustees"), who did not receive a majority of the votes cast by common shareholders at the annual meeting of shareholders held on June 1, 2023 (the "2023 Annual Meeting").
The right to appoint the Board resides exclusively with shareholders. At the 2023 Annual Meeting, holders of the Common Shares withheld their support for all the Trustees they voted on. This blanket vote of no-confidence sent an unequivocal message that shareholders are dissatisfied with the Company's performance and wish to replace each of the Failing Trustees. Pursuant to the Company's Corporate Governance Guidelines, where, as here, "each member of the Nominating Committee received a majority Withheld Vote at the same election, then the independent trustees who did not receive a Majority Withheld Vote are to appoint a committee amongst themselves...to consider the resignation offers and recommend to the Board whether to accept them." The Board ignored these guidelines and rushed to reject all resignation letters within one week of the 2023 Annual Meeting without appointing an independent committee.
The Board's conflicted decision to disregard the will of the Company's owners, ignore the Company's Corporate Governance Guidelines, and reinstate the Failing Trustees within one week of shareholders' blanket vote of no-confidence exposes the Board to personal liability for breach of the duties of loyalty and good faith. Several of the Company's largest shareholders and the two independent Trustees ? Christopher Swann and Kenneth Hart ? have urged the Board to abide by the results of the 2023 Annual Meeting and install a new slate of Trustees. The Board has ignored these requests and continues to pay itself and management handsomely while the Company barrels towards insolvency. With this factual backdrop, it is now clear that the Board is motivated by self-preservation rather than the best interests of the Company's shareholders.
The Ad Hoc Group will not tolerate this complete disregard of the shareholder vote. To avoid litigation, the Ad Hoc Group demands that, no later than October 9, 2023, the Company name shareholders' nominee to fill the open seat on the Board. The Board's failure to name shareholders' nominee to fill a vacant seat would be another flagrant breach of duty that exposes the Board to further liability.
The choice for the Board is clear: it can respect shareholders' right to determine the Board's composition or continue to ignore shareholders at its peril. Because litigation now appears to be imminent, the Company and the Board must also preserve, and not delete or destroy, any and all documents related to (i) the 2023 Annual Meeting, (ii) the Board's decision to reject the offers of resignation delivered by the Failing Trustees, (iii) management and Board compensation, and (iv) the Company's financial condition, asset sales, and strategic alternatives.
Please contact me at [email protected] or 212-970-1601 to discuss next steps.
Sincerely,
Andrew K. Glenn
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