CommonWealth REIT (NYSE: CWH) today made available an investor
presentation detailing the Company's strategic plan and responding to
inaccurate assertions by Corvex Management LP ("Corvex") and Related
Fund Management, LLC ("Related" and together with Corvex,
"Corvex/Related"). The presentation is available on the Company's web
site at www.cwhreit.com and will be
filed with the Securities and Exchange Commission ("SEC") later today.
The presentation includes information regarding CWH and its high-quality
assets, as well as the Company's governance, fee structure, and strategy
to continue creating value for shareholders. In particular, the
presentation provides details of the Company's track record of success
and the ongoing implementation of its strategic plan. Since 2008, CWH
has been repositioning its portfolio by selling suburban office and
industrial properties and re-investing proceeds into high quality urban,
or central business district ("CBD"), office properties with strong long
term growth prospects.
CWH is making progress in executing its strategic plan:
Since January 1, 2008, CWH has increased its portfolio concentration
of CBD office properties from approximately 29% (based on Q4 2007
wholly owned property level net operating income, or "NOI") to
approximately 56% (based on Q4 2012 NOI).
Acquired $3.7 billion of primarily Class A CBD office properties,
principally from distressed sellers.
Sold $1.5 billion of primarily suburban office properties for
The Company is currently marketing for sale 94 properties with low
occupancy and negative cashflow.
18 of these 94 properties have been sold to date.
CWH has unlocked value for the Company by raising equity through
"carve-out" IPOs for Government Properties Income Trust (NYSE: GOV)
and Select Income REIT (NYSE: SIR) at higher multiples than issuing
equity at CWH.
Received $650 million of combined proceeds from "carve-out" IPOs
of GOV and SIR.
Recently, CWH sold its remaining equity position in GOV for $240.1
million, recognizing a gain of $66.3 million.
The presentation filed today also points out the contradictions inherent
in public statements made by Corvex/Related. Corvex/Related presented a
conditional, unfinanced "offer" to purchase CWH for $24.50/share while
arguing that the true value of CWH is at or about $44.00/share.
Corvex/Related are now pursuing a consent solicitation to remove the
entire CWH Board and have proposed a new CEO who presumably they will
appoint if they can obtain control of the Company. The bottom line seems
to be that they want to force a sale to themselves or to seize control
of CWH before the benefits of CWH's business plan can be fully realized
by all shareholders.
CWH also believes that Related and its affiliates have a history of
managing public real estate companies for their private benefit.
Specifically, Jeff Blau, the principal of Related and CEO of the Related
Companies, previously served as Chairman, CEO and a Trustee of American
Mortgage Acceptance Company ("AMAC"); during which time, AMAC funded
loans to affiliates of the Related Companies which subsequently
defaulted and became worthless. Shortly thereafter, AMAC ceased
operations and filed for bankruptcy. Additionally, Mr. Blau and Stephen
Ross, the Chairman of the Related Companies, served as Managing Trustees
on the board of Centerline Holding Company (f/k/a Charter Municipal
Mortgage Acceptance Company, or "CharterMac"); during which time,
Centerline/CharterMac provided financing directly and indirectly to
affiliates of the Related Companies. During Jeff Blau's and Stephen
Ross's combined tenure on the Centerline/CharterMac board between 2003
and 2009, the total returns realized by public shareholders were a loss
Corvex has limited real estate industry experience, but its principal's
history of controlling a publicly owned real estate company also raises
concerns. Corvex's Managing Partner, Keith Meister, and his former
employer first made a tender offer for WCI Communities, Inc., which they
later withdrew. Then, Mr. Meister was elected to the board of WCI in
2007 following a proxy contest; and within about one year of his joining
the WCI board, WCI was forced into bankruptcy and essentially all WCI
shareholder value was lost.
CommonWealth REIT is a real estate investment trust, or REIT, which
primarily owns office properties located throughout the United States.
CWH is headquartered in Newton, MA.
Corvex/Related are soliciting consents to remove the entire CWH Board. No
record date has been set to determine which shareholders may be entitled
to participate in the consent solicitation. Corvex/Related have
commenced litigation which may determine if they are eligible to solicit
such consents, but no court or arbitration panel
has ruled that Corvex/Related are eligible to seek such consents. Shareholders
who may receive consent materials from Corvex/Related are urged to take
no action. If and when it becomes appropriate to do so, CWH will
distribute a consent revocation statement disclosing facts relevant to
WARNING REGARDING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND
OTHER SECURITIES LAWS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON
CWH'S CURRENT EXPECTATIONS BUT THEY ARE NOT GUARANTEED TO OCCUR AND MAY
NOT OCCUR FOR VARIOUS REASONS, INCLUDING SOME REASONS BEYOND CWH'S
CONTROL. FOR EXAMPLE:
? THIS PRESS RELEASE DESCRIBES CWH'S CURRENT BUSINESS PLAN TO FOCUS UPON
OWNING HIGH QUALITY CBD OFFICE PROPERTIES AND STATES THAT THE POSITIVE
RESULTS OF THIS PLAN ARE BEING REALIZED. THE IMPLICATION OF THESE
STATEMENTS IS THAT CWH MAY SUCCESSFULLY COMPLETE ITS BUSINESS PLAN AND,
AS A RESULT, CWH AND CWH SHAREHOLDERS WILL REALIZE INCREASING VALUE.
MANY ELEMENTS OF CWH'S BUSINESS PLAN REQUIRE THE PARTICIPATION OF THIRD
PARTIES WHO ARE BEYOND CWH'S CONTROL: DIVESTING NON-CORE PROPERTIES AND
OTHER ASSETS REQUIRES FINDING BUYERS FOR THESE PROPERTIES AND ASSETS AT
ACCEPTABLE PRICES; CONCENTRATING INVESTMENTS IN CBD OFFICE PROPERTIES
MAY REQUIRE THAT CWH LOCATE ADDITIONAL CBD OFFICE PROPERTIES WHICH ARE
AVAILABLE FOR SALE AT REASONABLE PRICES; ETC. ALSO, MARKET CONDITIONS
BEYOND CWH CONTROL AND UNRELATED TO CWH'S ACTIVITIES MAY ADVERSELY
AFFECT THE VALUE CWH AND ITS SHAREHOLDERS MAY REALIZE IN THE FUTURE. THE
DECISION OF CWH'S BOARD TO CONTINUE ITS BUSINESS PLAN IS BASED UPON THE
BUSINESS JUDGMENT OF CWH'S BOARD, BUT BUSINESS JUDGMENTS MAY BE MISTAKEN.
? THIS PRESS RELEASE STATES THAT NO RECORD DATE HAS BEEN SET TO
DETERMINE WHICH SHAREHOLDERS ARE ENTITLED TO PARTICIPATE IN THE CONSENT
SOLICITATION BY CORVEX/RELATED AND THAT NO COURT OR ARBITRATION PANEL
HAS RULED THAT CORVEX/RELATED ARE ELIGIBLE TO SEEK SUCH CONSENTS. THE
IMPLICATION OF THESE STATEMENTS IS THAT THE CONSENTS BEING SOLICITED BY
CORVEX/RELATED WILL HAVE NO VALIDITY OR EFFECT. HOWEVER, CORVEX/RELATED
HAVE STATED THAT THEY BELIEVE THE RECORD DATE FOR THEIR CONSENT
SOLICITATION IS THE CLOSE OF BUSINESS ON MONDAY, APRIL 22, 2013, AND
THEY HAVE COMMENCED LITIGATION IN THE CIRCUIT COURT FOR BALTIMORE CITY
WHICH QUESTIONS THE VALIDITY OF CERTAIN PROVISIONS OF CWH'S BYLAWS WHICH
PROVIDE THAT THE CWH BOARD OF TRUSTEES SHALL SET THE RECORD DATE FOR A
CONSENT SOLICITATION WITHIN 30 DAYS AFTER THE BOARD RECEIVES A VALID
REQUEST FOR A RECORD DATE. THE RESULTS OF LITIGATION ARE DIFFICULT TO
PREDICT AND CWH CANNOT GUARANTEE THAT ITS LEGAL CONCLUSIONS REGARDING
THE ABSENCE OF A RECORD DATE AT THIS TIME WILL BE UPHELD OR WHAT THE
RESULTS OF THE PENDING LITIGATION MAY BE.
FOR THESE REASONS, AMONG OTHERS, INVESTORS ARE CAUTIONED NOT TO PLACE
UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS IN THIS PRESS RELEASE.
EXCEPT AS MAY BE REQUIRED BY APPLICABLE LAW, CWH DOES NOT INTEND TO
UPDATE THE FORWARD LOOKING STATEMENTS IN THIS PRESS RELEASE AS A RESULT
OF NEW INFORMATION WHICH MAY COME TO ITS ATTENTION.
The Company, its Trustees and certain of its executive officers and Reit
Management & Research LLC and certain of its directors, officers and
employees may be deemed to be participants in the solicitation of
consent revocations from shareholders in connection with the consent
solicitation being conducted by Corvex/Related and certain of their
affiliates. On April 1, 2013, the Company filed a revised preliminary
consent revocation statement with the SEC in response to the consent
solicitation. The Company will furnish a definitive consent revocation
statement to its shareholders, together with a BLUE consent revocation
card, when they become available. SHAREHOLDERS ARE URGED TO READ THE
CONSENT REVOCATION STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS
THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT THE COMPANY WILL FILE
WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. Additional information regarding the identity of
these potential participants and their direct or indirect interests, by
share holdings or otherwise, is set forth in the revised preliminary
consent revocation statement filed with the SEC and other materials to
be filed with the SEC in connection with the Consent Solicitation.
Shareholders will be able to obtain, free of charge, copies of the
consent revocation statement and any other documents to be filed by the
Company with the SEC in at the SEC's website (http://www.sec.gov),
at the Company's website (http://www.cwhreit.com)
or by requesting materials from the firm assisting the Company in the
solicitation of consent revocations, Innisfree M&A Incorporated,
toll-free at 877-750-5836.
A Maryland Real Estate Investment Trust with transferable shares of
beneficial interest listed on the New York Stock Exchange.
shareholder, Trustee or officer is personally liable for any act or
obligation of the Trust.
Manager, Investor Relations
Innisfree M & A
Timothy A. Bonang
President, Investor Relations
Joele Frank, Wilkinson Brimmer Katcher