NEW YORK (The Deal) -- Activists pushing for change at CommonWealth REIT (CWH) on Thursday rejected a peace offering from the company, instead pushing forward with their plan to try to replace the Newton, Mass.-based REIT's board of trustees.
Corvex Management and Related Fund Management, who combined own about 9.6% of CommonWealth, in a statement said they were nominating private equity executive James Corl, Edward Glickman, a professor at New York University, one-time University of Pennsylvania professor Peter Linneman, real estate executive Jim Lozier and Kenneth Shea, a resort developer, to the company's board.
Shea has in the past worked with Carl Icahn. Corvex is run by one-time Icahn protege Keith Meister.
Corvex and Related last April kicked off a campaign to remove CommonWealth's board of trustees, claiming in June that they had support of more than 70% of shares. But CommonWealth countered that the campaign was invalid under the REIT's bylaws.
An arbitration panel in November ruled that the consent solicitation initiated by the investors "was not properly conducted and cannot be validated," but mapped out specific procedures the investors could follow in a second attempt.
CommonWealth earlier this month had attempted to stave off that second attempt, offering Meister a board seat in return for the activist ceasing all "hostile activities" against the REIT and its board.
Meister and Related Fund CEO Jeff T. Blau in a statement said they believed their board nominees are a step toward their goal of "ceasing the value destruction" caused by existing CommonWealth management and trustees.
"After consulting with fellow shareholders, we are excited to propose a strong slate of nominees with significant, relevant real estate industry expertise," Meister and Blau said. "The holders of more than 70% of the outstanding shares previously supported our proposal to remove the entire CommonWealth board of trustees and we expect the same level of support for our consent solicitation."
CommonWealth's board issued a statement saying it was "disappointed" Meister had declined its invitation to join the board, and said its trustees were in the process of working with Korn/Ferry International to identify independent trustee candidates.
"Corvex's response is further evidence that Corvex and the Related companies are pursuing a hostile takeover of [CommonWealth] for their own benefit and are not committed to advancing the best interests of and creating value for all CWH shareholders," the trustees said.