Concerned PREIT Shareholders Urge Failing Trustees to Resign

David Steinberg, Scott Bishins, and Michael Meyer ("Concerned Shareholders" or "we"), collectively substantial holders of the outstanding common shares of beneficial interest and cumulative redeemable preferred shares of beneficial interest, in Pennsylvania Real Estate Investment Trust (“PREIT”) (OTCMKTS: PRET), today sent a letter to the Board of Trustees of PREIT (“the Board”) urging they to respect shareholders’ desire for change as expressed at the Annual Meeting of Shareholders held on June 1, 2023 (“Annual Meeting”).

In the letter to the Board the Concerned Shareholders detailed how the “Failing Trustees” and the incumbent management team have ignored the will of shareholders, shown total disregard for the results of shareholder vote at the Annual Meeting, and that they are motivated by personal self-preservation rather than the best interests of PREIT and its shareholders. As a result, the Concerned Shareholders are calling for the Failing Trustees to resign so that new independent directors committed to maximizing value for all PREIT shareholders could be appointed to the Board.

The results of the Annual Meeting demonstrated an overwhelmingly clear message from shareholders that they are very unhappy and lack confidence in all Trustees other than Christopher Swann and Kenneth Hart.

The full text of the letter to the Board is below:

Board of Trustees

Pennsylvania Real Estate Investment Trust

One Commerce Square

2005 Market Street, Suite 1000

Philadelphia, Pennsylvania 19103

Re: Trustee Resignations

Members of the Board,

We write to you as substantial holders of the outstanding common shares of beneficial interest and cumulative redeemable preferred shares of beneficial interest, in Pennsylvania Real Estate Investment Trust (“PREIT”). We urge the seven trustees (the “Failing Trustees”) who did not receive a majority of the votes cast by common shareholders at PREIT’s 2023 annual meeting of shareholders held on June 1, 2023 (the “2023 Annual Meeting”) to resign from the board of trustees (the “Board,” and each member, a “Trustee”), and for the Board to accept these resignations so that new independent directors that can better represent the shareholder base and seek to maximize value for all PREIT shareholders may be selected.

The Failing Trustees and the incumbent management team have stood by idly while shareholder value has been destroyed and any sense of good corporate stewardship has been ignored. The results of the 2023 Annual Meeting demonstrated an overwhelmingly clear message from shareholders that they are very unhappy and lack confidence in all Trustees other than Christopher Swann and Kenneth Hart.

Further, the Failing Trustees and management have virtually no skin in the game, owning less than 5% of PREIT in the aggregate and none of the preferred shares. Clearly the interests of shareholders and the Failing Trustees are not aligned.

The message of the 2023 Annual Meeting is clear – it is time for new leadership!

The Board’s highly conflicted refusal to accept the resignations tendered by the Failing Trustees is unconscionable in light of the circumstances:

First, it would be one thing for the Board to ignore a shareholder vote against one Trustee. However, the common shareholders here overwhelmingly withheld their support for all of the Trustees they voted on. None of the Failing Trustees received voting support greater than 41.4%. This blanket vote of no-confidence is an unambiguous sign of shareholders’ will, which has been inexplicably ignored by the Board’s decision not to accept the Failing Trustees’ resignations.

Second, as additional evidence that common shareholders are fed up with PREIT’s direction and leadership, they voted even more resoundingly against PREIT’s executive compensation – excluding broker non-votes, 72.7% of votes were cast against PREIT’s executive compensation, 2.7% abstained, and only 24.6% of votes were cast in favor. That is more than 2 of every 3 common shareholders! Further, this vote was with respect to compensation for 2022 and did not even take into account the generous retention bonuses senior management has received for running PREIT into the ground.

The Board’s conflicted decision to allow the Failing Trustees to vote on each other’s resignations rather than to delegate that determination to an independent committee of Trustees who had not been required to tender their resignations, is a blatant act of self-preservation and self-dealing at the expense of PREIT and its shareholders. Undoubtedly, the Failing Trustees understood that the two independent Trustees would have accepted their resignations. In the meantime, neither the Board nor management has made any attempt to address any of the shareholders’ concerns and has not presented any substantive plan of action to remedy shareholder disapproval or to address the many problems PREIT is facing. This is yet one more instance of their disengagement and inaction.

This weak process further highlights that the Failing Trustees are not the Board that PREIT needs to preserve its assets and net asset value, and reverse its fortunes. Since Mr. Coradino was appointed chief executive officer (“CEO”) on June 7, 2012, PREIT’s common stock price has fallen by 99.7% (on a split-adjusted basis). Failing Trustees Pasquerilla, Pizzi, and Roberts have been on the Board for the duration of Mr. Coradino’s reign of value destruction. Lest the current stock price and PREIT’s performance be attributed solely to the effects of the COVID-19 pandemic, the Board should be reminded that PREIT’s common stock price when Mr. Coradino was appointed CEO had halved by December 2018, and nearly halved again by February 2020, before the pandemic’s impacts were felt. The common stock’s recent trading price is down approximately 88% relative to the lows when PREIT filed for bankruptcy in the fall of 2020. The shortest Board tenure of the Failing Trustees is Ms. Epps’ five years, sufficient to witness much of PREIT’s decline under Mr. Coradino. Messrs. Alburger and DeMarco have had six and eight years, respectively, to take action to arrest PREIT’s precipitous slide yet have failed to do so.

The undersigned have reason to believe that the Board, motivated by instincts of personal self-preservation rather than the best interests of PREIT and its shareholders, has insufficiently pursued the strategic options available to the company. Namely, it appears the company has failed to robustly market its properties, seek a strategic alternative or infuse the company with needed additional capital to refinance its properties and grow the business. In light of the approaching maturity later this year of PREIT’s bank loans, the Board’s failure to fully exhaust strategic alternatives could result in the transfer of value to creditors or additional third parties rather than shareholders.

Again, we call for the Failing Trustees to tender their resignations to the Board, for an independent committee of Trustees to accept such resignations and for a special meeting of shareholders to be convened as quickly as possible in which we would present a slate of replacement directors (who have more experience in retail real estate restructurings and management) for a vote of the shareholders.

If the Trustees do not take the actions discussed herein, it is the intent of the undersigned to explore all potential further actions and remedies for the maximization of the value of PREIT and the best interests of shareholders.

We will be watching closely the Board’s actions, and evaluating whether to take additional action of our own.

Sincerely,

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