As first reported by the Philadelphia Inquirer, Mall owner PREIT, which has been selling off shopping centers as part of its debt reduction plan, is having some trouble at the top of the organization. Earlier this week, the REIT’s nine-member board of directors refused to accept the resignations of seven of its members. Those seven resignations were voluntarily tendered on June 1, during the company’s annual shareholder meeting when PREIT CEO Joseph F. Coradino and six other directors on the board failed to receive a majority of votes. The resignations were not precisely voluntary. Per PREIT’s rules, any board member who fails to win a vote majority are obligated to offer to resign. The board of directors now remains intact, but PREIT’s problems continue. The company declared bankruptcy in 2020, and in late 2022, it was delisted from the New York Stock Exchange.
The retail real estate sector continues to be bifurcated, with grocery-anchored shopping centers seeing positive numbers and shopping malls experiencing great decline. The issues of PREIT, the top mall owner in the Mid-Atlantic, are a sign of the times. Shopping malls haven’t regained the steam they had pre-pandemic, when they were already in decline. While the mall isn’t dead, it is facing a crossroads and many of these properties are transforming into mixed-use destinations to survive. To revive many struggling malls owners like PREIT will need capital, which means they need to appease their investors. But, as we are seeing play out, many of those investors are starting to lose patience and that is making the situation even harder for retail owners who are now faced with the hard decisions.