- CWH’s business strategy continues to deliver value for shareholders. The Board and management have made significant progress implementing CWH’s business plan to reposition the Company’s portfolio to high value office properties in central business district (CBD) locations. Because of the successful execution of this plan, the Company’s portfolio repositioning is largely complete and CWH is better positioned than many of its peers to benefit from improvements to the economy and the office market in 2014 and 2015.
- Reit Management & Research LLC (“RMR”) is managing CWH for the benefit of all shareholders. While being managed by RMR, CWH’s stock performance has outperformed the market over the long term. RMR provides CWH with a nationwide, fully integrated real estate management platform with approximately 850 real estate professionals working in offices throughout the U.S. RMR is able to leverage its large scale to lower costs for CWH, and without the benefits of RMR’s economies of scale, the Company’s G&A and operating costs would likely increase substantially.
- Related/Corvex’s business plan for CWH is short term oriented, reckless and not credible. It appears that Related/Corvex's business plan for CWH is to sell the Company’s best performing, stabilized assets and increase debt leverage. This business plan would put at risk CWH’s dividend and investment grade debt ratings, two criteria that REIT investors typically value highly. Related/Corvex also base their valuation of CWH on faulty financial analysis and unrealistic projections. In fact, Sam Zell recently refused to endorse Related/Corvex’s valuation of CWH and he sold his entire investment in CWH at $25.50 per share only two business days prior to joining the Related/Corvex campaign to take control of CWH. Related/Corvex’s business plan is also not credible because of Related’s track record of shareholder value destruction every time it has controlled publicly traded real estate companies in the past.
- Related/Corvex are trying to take control of CWH without paying shareholders anything for that control. Ever since Related identified CWH as a potential takeover target in 2012, Related/Corvex have engaged in a relentless pursuit to take control of CWH. In February and March 2013, Related/Corvex made several purported “offers” to acquire CWH, but they never presented CWH with a real, fully financed offer that was actionable by CWH or its shareholders. Now they plan to take control of CWH through their handpicked slate of replacement trustees for CWH. The majority of these replacement trustees are not “truly independent” or well qualified. Recently, Related/Corvex have added two qualified candidates to their slate, but had to offer them excessive special compensation arrangements equivalent to a “signing bonus” of approximately $17 million to get them to join their campaign.
- Removing the entire CWH Board by written consent may destroy shareholder value. The removal of the entire board of a publicly traded company by written consent without cause and without concurrently electing a replacement board is unprecedented in the history of U.S. publicly traded companies. If Related/Corvex succeed in removing the entire CWH Board, CWH would be in limbo for an extended period of time until a new Board is elected at a subsequent special meeting of shareholders. The Board and management will try to minimize damage to CWH, but shareholders could still face unavoidable risks if the consent solicitation is successful, including possible: accelerated debts; SEC sanctions and NYSE delisting; dilution from preferred shareholder conversion rights; rating agency debt downgrades; and business operations suffering.
- CWH’s Board and management are committed to enhanced corporate governance. The Board has implemented real and significant changes in the last several months in response to shareholder suggestions, including: increasing the Board’s independence and size; strengthening the Board’s leadership; enhancing the Board’s structure and guidelines; simplifying the path for shareholder action; agreeing to terminate the shareholder rights plan; requiring minimum Trustee stock ownership; and further aligning management compensation with shareholders. These recent changes have moved CWH to “best in class” in corporate governance and the Board continues to engage with shareholders on governance and other matters.
- CWH has made good faith and meaningful efforts to resolve matters with Related/Corvex. Last month, CWH’s Nominating and Governance Committee invited Keith Meister of Corvex to join the CWH Board as an Independent Trustee. To date, Related/Corvex have ignored CWH’s offer to have Meister join the Board. Minutes before the news was publicly announced that Sam Zell was joining Related/Corvex’s campaign, Zell notified CWH of his intentions; CWH immediately asked for the opportunity to meet with him to discuss the Company’s business and the Board’s commitment to governance enhancements. Zell refused, indicating that he was too “busy” to meet, and he has not responded to CWH’s open offer to engage in a discussion. CWH has also addressed each of Related/Corvex’s five original recommendations for change. Based on this, the CWH Board believes there is likely nothing it can do to satisfy Related/Corvex in their relentless pursuit to take control of CWH without paying shareholders anything for that control.
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