Stockholder unrest at PREIT, South Jersey mall operator hit by big losses, heavy debt

PHILADELPHIA – The financially ailing owner of two South Jersey malls is facing discontent from some of its stockholders.

In a June 7 regulatory filing, Philadelphia-based PREIT said seven members of its board of trustees have offered letters of resignation after a sizable number of shareholders withheld support at the firm's annual meeting.

And in an advisory vote, stockholders strongly opposed a compensation package for PREIT executives. They cast 1.1 million votes against the package, with about 388,000 in favor.

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The compensation package in 2022 included $5.8 million, with $900,000 in base salary, for Chairman and CEO Joseph Coradino. A proxy statement also noted an annual incentive plan worth $1.96 million to Coradino.

Two other PREIT executives made more than $1 million last year and a third had compensation of about $2.4 million.

Board setbacks follow big losses at PREIT

PREIT's board had recommended votes in favor of both the trustees' return and the executive compensation package.

PREIT's stock closed Thursday at 68 cents per share. The share price rose by 12 cents for the day but remained well below its 52-week high of $7.96..

PREIT, with properties that include Cherry Hill Mall and Moorestown Mall, in May reported a first-quarter net loss of $51.9 million.

That followed a deficit of $175.7 million for 2002, for a cumulative net loss exceeding $800 million over the past years.

PREIT operates 19 malls and three other retail properties, mostly in the mid-Atlantic region. It recently sold off ownership of the Cumberland Mall in Vineland.

The company has been hit hard by the rise of e-commerce, tenant bankruptcies and the impact of COVID restrictions.

PREIT is seeking to reduce a heavy debt burden and to diversify its tenant mix as part of a turnaround effort.

At Moorestown Mall, for instance, workers are converting a former Sears store to a medical center for Cooper University Health Care. Plans also call for an apartment complex with up to 1,065 units and a 125-room hotel.

Shareholders give a win to trustees, but with a complication

At the June 1 annual meeting, shareholders cast more than 655,000 votes for Coradino's re-election and somewhat smaller totals for the other trustees.

But the number of withheld votes was significantly higher, at around 927,000 for Coradino and roughly 1 million for the other trustees.

With those results, the trustees won re-election to the board, PREIT spokeswoman Heather Crowell said.

But because the trustees did not receive a majority of the available votes at the virtual meeting, PREIT’s guidelines required each to offer a letter of resignation.

“The board will consider the resignation offers and make a determination as to whether to accept or reject (within 90 days),” PREIT said in a filing with the U.S. Securities and Exchange Commission.

It noted trustees cannot vote on their own resignation offers.

At PREIT’s 2021 annual meeting, all of the directors received far more votes in their favor than were withheld.

Coradino, for instance, received 18.5 million votes to return to the board. About 4 million votes were withheld.

Coradino’s resignation offer does not apply to his executive positions at PREIT, said Crowell.

Coradino, 71, has served on PREIT's board for 17 years. He has been the firm’s CEO since 2012 and its chairman since 2017.

"PREIT does not wish to comment further until a final determination has been made,” Crowell said.

PREIT's preferred shareholders re-elected two independent trustees who joined the board last year.

One of the trustees, Atlanta investor Christopher Swann, at that time said the newcomers would help "find new ways to improve (PREIT's) balance sheet and market valuation."

The preferred shareholders had the right to propose two members to PREIT’s seven-person board because the firm had not paid dividends on outstanding preferred shares for six quarters.

PREIT has continued to be unable to pay those dividends.

Jim Walsh is a senior reporter with the Courier-Post, Burlington County Times and The Daily Journal. Email him at jwalsh@cpsj.com.

This article originally appeared on Cherry Hill Courier-Post: Shareholders vote against executive compensation package at mall firm