NEW YORK, June 17, 2013 /PRNewswire/ -- Corvex Management
LP ("Corvex") and Related Fund Management, LLC ("Related"), whose
separately managed investment funds collectively own approximately
9.6% of the outstanding common shares of CommonWealth REIT
(NYSE:CWH), today sent a letter to CWH shareholders, urging them to
vote the WHITE consent card and remove the entire Board of
CommonWealth before it can take any additional action to destroy
shareholder value. Corvex and Related believe that the
removal of ALL CommonWealth REIT directors is the only way to
effect meaningful change.
Shareholders are urged to sign, date and return the WHITE
consent card today. You may also be able to vote online by
following the instructions on the voting materials you will be
receiving. If you have any questions or require any
assistance in executing your consent, you can call D.F. King & Co., Inc., at
1-800-714-3313.
The text of the letter to CWH shareholders is as follows:
IT IS TIME FOR COMMONWEALTH REIT SHAREHOLDERS
TO SEND A CLEAR MESSAGE: CONTINUED VALUE DESTRUCTION
UNACCEPTABLE
ISS RECOMMENDS REMOVAL OF ENTIRE BOARD
SIGN, DATE AND RETURN THE WHITE CONSENT CARD
TODAY
June 17, 2013
Dear Fellow Shareholders:
An outdated management structure, abysmal corporate governance,
and mismanagement of operations have in our view been a significant
driver in the 45% decline in CommonWealth REIT's stock price over
the last five years.[1] We believe this continued value
destruction is by design – the direct result of self-interested
actions taken by CommonWealth's current Board of Trustees and its
external manager, REIT Management and Research, LLC ("RMR") which
is owned by Barry Portnoy and his
son, Adam.
Our consent solicitation will serve as a referendum on the
current board and management team and is the only way to effect
change.
LEADING PROXY ADVISORY FIRM ISS AGREES THAT
COMMONWEALTH'S UNDERPERFORMANCE AND
POOR CORPORATE GOVERNANCE SHOULD NOT BE TOLERATED
In recommending the removal of ALL trustees, ISS, a leading
independent proxy advisory and corporate governance advisory firm,
strongly supports our campaign to effect change at CommonWealth in
order stop the value destruction and free the Company from its
abysmal corporate governance practices and continued mismanagement
by the Portnoys.
In its report, ISS noted that:
"Votes FOR removal of all existing directors are warranted given
that the dismal returns to shareholders over an extended period
prior to the dissidents' arrival, the links between
underperformance on key drivers of shareholder value and the
inherent conflicts of interest in the external management structure
the company maintains, and the current board's use of corporate
governance provisions to entrench itself, in aggregate form a
compelling case that change at the board level is
necessary."[2]
TAKE ACTION NOW:
COMMONWEALTH'S FUTURE IS IN YOUR HANDS
Without immediate change we believe the Portnoys will continue
on their path of value destruction. As CommonWealth
shareholders, you will continue to suffer as a result of the
relentless self-dealings for the benefit of RMR, CommonWealth's
mismanagement of its assets, and the series of underhanded tactics
the Company has employed in an effort to undermine shareholder
rights.
The series of actions by RMR and the Portnoys in the last six
months, including attempted bylaw changes designed to further
entrench management and an attempt to change Maryland law to prevent removal of
trustees, make it clear that RMR is not operating CommonWealth
for the benefit of shareholders, but, rather, for the benefit of
the Portnoys. Not only has the Company repeatedly taken
action to eliminate shareholder rights, in March they enacted a
highly dilutive equity offering in a purported attempt to maintain
"investment grade ratings"[3] – only to be downgraded to junk
status by Standard & Poor's as a result of "weak" management
and corporate governance.[4] These value destructive
efforts must stop immediately. It is time for RMR and the
Portnoys to relinquish control of CommonWealth, and for ALL
shareholders to take back YOUR company.
We must act now to stop the Portnoys from continuing their
complete and utter disregard for the will of shareholders, which
they did so blatantly by re-appointing Joseph Morea to the Board following a nearly 4-1
vote against his re-election at the 2013 annual meeting. Mr. Morea
received only 22% of the votes cast for his re-election. If
shareholders don't act now, change will take at least three years
-- the minimum time needed to replace a simple majority of
CommonWealth's staggered Board. We cannot afford any more value
destruction.
OUR CONSENT SOLICITATION SERVES AS A
REFERENDUM ON THIS BOARD AND MANAGEMENT AND IS THE ONLY PATH TO
CHANGE
Once shareholders vote to remove the Board of Trustees,
CommonWealth is required to promptly call a special meeting for
shareholders to elect new trustees. We will work with our
fellow shareholders to identify a truly independent and accountable
slate of highly qualified nominees who are prepared to work for the
interests of ALL shareholders, not just the Portnoys. During
the interim period, we plan to leverage our substantial resources
and real estate expertise including CBRE, to assist with property
management and Jim Lozier, a
well-respected real estate executive, to serve as potential interim
CEO until a new board is appointed.
The arbitration process is already well underway and we
anticipate a prompt resolution on matters related to our efforts to
effect change at CommonWealth. As CommonWealth itself noted,
the arbitration process 'provides for an expedited process for
resolving disputes.'
To be clear, our only agenda is to effect change and remove
CommonWealth's trustees and we are confident that our consent
solicitation is the best path forward. The status quo will only
lead to continued value destruction and self-dealing for the
benefit of the Portnoys.
THE TIME TO ACT IS NOW – PLEASE SIGN, DATE AND
RETURN
THE WHITE CONSENT CARD TODAY. SHAREHOLDERS MAY ALSO BE ABLE TO VOTE
ONLINE BY FOLLOWING THE INSTRUCTIONS ON THEIR VOTING
MATERIALS
We thank you for your continuing support.
Keith
Meister
|
|
Jeff T.
Blau
|
Corvex Management
LP
|
|
Related Fund
Management, LLC
|
If you have any questions or require any assistance in executing
your consent, please contact:
D.F. King &
Co., Inc.
Shareholders call toll-free: (800)
714-3313
Banks and brokers call: (212) 269-5550
About Corvex Management LP
Corvex Management LP is an investment firm headquartered in
New York, New York that engages in
value-based investing across the capital structure in situations
with identifiable catalysts. Corvex was founded in March 2011 and follows an opportunistic approach
to investing with a specific focus on equity investments, special
situations and distressed securities largely in North America.
About Related Fund Management LLC
Related Fund Management, LLC is an affiliate of Related Companies,
one of the most prominent privately-owned real estate firms in
the United States. Formed 40 years
ago, Related is a fully-integrated, highly diversified industry
leader with experience in virtually every aspect of development,
acquisitions, management, finance, marketing and sales. Related's
existing portfolio of real estate assets, valued at over
$15 billion, is made up of
best-in-class mixed-use, residential, retail, office and affordable
properties. For more information about Related Companies please
visit www.related.com.
Important Additional Information
In connection with their solicitation of written consents,
Corvex and Related have filed a definitive written consent
solicitation statement with the U.S. Securities and Exchange
Commission (the "SEC") to solicit written consents from
shareholders of CommonWealth REIT. Investors and security
holders are urged to read the definitive written consent
solicitation statement and other relevant documents when they
become available, because they contain important information
regarding the consent solicitation. The definitive written
consent solicitation statement and all other relevant documents are
available, free of charge, on the SEC's website at www.sec.gov.
The following persons are participants in connection with the
written consent solicitation of CommonWealth's shareholders: Corvex
Management LP, Keith Meister,
Related Fund Management, LLC, Related Real Estate Recovery Fund
GP-A, LLC, Related Real Estate Recovery Fund GP, L.P., Related Real
Estate Recovery Fund, L.P., RRERF Acquisition, LLC, Jeff T. Blau, Richard
O'Toole and David R.
Johnson. Information regarding the participants in the
consent solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, to the extent
applicable, is available in the definitive written consent
solicitation statement filed with the SEC on April 10, 2013
and Supplement No. 1 thereto filed on April 12,
2013. Permission to quote third party reports and analyses
was neither sought nor obtained.
[1] Five year period ending February 25,
2013.
[2] ISS Proxy Advisory Services Report June
14, 2013.
[3] CommonWealth REIT Investor Presentation April 2013.
[4] Standard & Poor's Ratings Services Press Release:
"CommonWealth REIT Rating Is Lowered To 'BB+'; Outlook Stable; '2'
Recovery Rating Is Assigned To Senior Unsecured Debt" June 10, 2013.
SOURCE Related Fund Management, LLC