CommonWealth REIT (NYSE: CWH) (“CommonWealth” or “the Company”) today announced that it has filed preliminary consent revocation materials with the Securities and Exchange Commission (the "SEC") in response to the preliminary consent solicitation statement filed on March 13, 2013 by Corvex Management LP ("Corvex") and Related Fund Management, LLC ("Related").
Shareholders are urged to take no action at this time with respect to the possible consent solicitation. Under federal securities laws, no written consent may be solicited by Corvex and Related until after the SEC’s review of their preliminary consent solicitation materials is completed and definitive materials are filed and mailed to all CommonWealth shareholders.
The CommonWealth Board believes that a wholesale removal of the Company’s Trustees without cause is not in the best interest of the Company and would bring material harm and disruption to the business and operations of the Company. The Board notes that Corvex and Related are asking CommonWealth shareholders to relinquish control of the Company without committing to pay a control premium, or even any amount, for the outstanding CommonWealth common shares.
Furthermore, CommonWealth notes that its experienced and seasoned Board and management team have been instrumental in building the Company’s current asset portfolio and have critical knowledge of the Company’s operations and properties. This team is successfully executing on CommonWealth’s business plan, including:
- Positioning the Company to best capitalize on a rebound in the office building real estate market by repositioning the portfolio more towards large Class A office properties in urban, or central business district (“CBD”), locations and away from suburban office and industrial properties;
- Strengthening the portfolio by selling $1.5 billion worth of properties, consisting largely of suburban office properties, since December 31, 2007 and principally buying CBD office buildings with the sale proceeds;
- Enhancing CommonWealth’s financial strength by taking actions to pay down indebtedness, including using the aggregate net proceeds of $867.7 million from the recently completed public offering of common shares and sale of the Company’s minority interest in Government Properties Income Trust to reduce its outstanding indebtedness; and
- Protecting the Company’s strong balance sheet and maintaining an investment grade credit rating, which the Board believes is important to the Company’s continued business success because it provides greater financial flexibility to access capital, enables the Company to carry out its business plan and provides it with an advantage when competing for tenants for its properties.
CommonWealth also notes that its management structure provides shareholders with numerous advantages as compared to self-managed REITs, including:
- Reit Management & Research LLC (“RMR”) provides high quality management services to CommonWealth at or below industry average costs and fees paid to CommonWealth’s Trustees are at or below industry averages;
- CommonWealth’s general and administrative (“G&A”) expenses have historically been equal to or lower than the average G&A expenses for comparable office REITs as measured both as a percentage of gross revenues and as a percentage of gross assets; and
- Management fees charged to CommonWealth by RMR are less than the fees paid by other REITs with similar management contracts.
CommonWealth’s Board and management team are committed to enhancing value for all CommonWealth shareholders. Corvex and Related have announced that they intend to solicit consents in order to remove all five of CommonWealth’s experienced Trustees without cause. If successful, the removal of the Board would leave the Company without any oversight of its business until a special meeting is held and an unidentified replacement Board is elected. CommonWealth is confident that it is in the best interests of all shareholders for the current Board to continue overseeing the successful execution of its business plan to enhance value for all CommonWealth shareholders.