CommonWealth REIT Comments On Newly Discovered And Previously Undisclosed Sam Zell Conflict Of Interest
CommonWealth REIT (NYSE: CWH) today issued the following statement
regarding Sam Zell’s newly discovered and previously undisclosed
conflict of interest in connection with his participation in the consent
CommonWealth REIT (NYSE: CWH) today issued the following statement regarding Sam Zell’s newly discovered and previously undisclosed conflict of interest in connection with his participation in the consent solicitation to remove the entire CWH Board, without cause, which is being conducted by Related Fund Management, LLC and Corvex Management LP (together “Related/Corvex”). During a television interview on Monday, March 10, 2014, Jeff Blau, CEO of the Related Companies, disclosed for the first time that Sam Zell was motivated to join the Related/Corvex hostile takeover effort because of a dispute concerning property in Hawaii. Upon investigation, CWH discovered that Zell is the lead investor in a large tenant of Select Income REIT (NYSE: SIR), a publicly traded company that owns property in Hawaii and is 44% owned by CWH. CWH believes the dispute to which Blau apparently made reference is that Zell has proposed to lower the rent paid by his company despite the fact that market rents are increasing. Adam Portnoy, President and Managing Trustee of CWH, made the following statement after learning of Zell’s newly discovered and previously undisclosed conflict of interest: “We did not know until Jeff Blau’s disclosure during a television interview earlier this week that Zell had any current dealings with CWH or SIR. We now know that Zell is the lead investor in a company, Par Petroleum Corporation (OTCQB Marketplace: PARR), which recently acquired one of the largest tenants of SIR, a subsidiary of CWH. “Some of the rent paid by Zell’s company is scheduled to be reset to fair market value effective April 1; if the parties cannot agree, the rent will be set by arbitration. We are concerned that Zell is joining the Related/Corvex hostile takeover effort so he may influence these lease negotiations to the benefit of his company and the detriment of SIR shareholders, including CWH. In this circumstance, Zell’s interests are not aligned with CWH shareholders. It is particularly disturbing that Related/Corvex represented Zell was truly independent and neither Zell nor the Related/Corvex group disclosed Zell’s obvious conflict of interest when they announced that Zell intends to be a candidate for chairman of CWH on the Related/Corvex handpicked slate of trustee nominees.