Recommends Shareholders Vote WHITE Consent Revocation Card to Support the Board
and the Company’s Strategic Plan to Enhance Value for All Shareholders and Reject Related/Corvex’s
Attempt to Take Control of CommonWealth for Their Own
Benefit
CommonWealth REIT (NYSE: CWH) (“CWH” or the “Company”) today
announced that it has filed definitive consent revocation materials
with the Securities and Exchange Commission (the “SEC”) in
connection with the consent solicitation initiated by Related Fund
Management, LLC and Corvex Management LP (“Related/Corvex”) to
remove the entire CWH Board of Trustees without cause.
CWH is disappointed that Related/Corvex have ignored CWH’s
offers to settle by adding Keith Meister of Corvex to the Company's
Board of Trustees, and instead Related/Corvex have decided to move
forward with a written consent solicitation to remove the entire
existing Board without cause. Mr. Meister's participation on the
Board would allow him to work collaboratively with other Board
members to create value for all shareholders and would allow
shareholders to avoid the disruption and expense caused by moving
forward with a contested consent solicitation.
CWH recommends that shareholders disregard any Related/Corvex
consent solicitation materials they may receive and protect their
investment in CWH by signing, dating and returning the Company’s
WHITE consent revocation card,
which they will soon receive by mail.
The definitive consent revocation materials being mailed to
shareholders include the following letter:
PROTECT THE VALUE OF YOUR INVESTMENT BY
SUPPORTING THE BOARD.
Please sign, date and return the enclosed
WHITE CONSENT REVOCATION CARD
today!
Please DO NOT sign or return any materials
sent to you by Related/Corvex to facilitate their attempt to take
control of CommonWealth without paying you a premium.
We understand that you may have received or soon will receive
materials from Related Fund Management, LLC (“Related”), Corvex
Management LP (“Corvex”) and certain of their affiliates
(collectively, “Related/Corvex”) seeking your written consent to
remove, without cause, the entire Board of Trustees (the
“Board”) of CommonWealth REIT (the “Company”). We believe this is
yet another attempt by Related, with the assistance of Corvex, to
take control of the Company for their own benefit without paying
you any control premium.
We believe the Related/Corvex effort to
remove the entire Board without
cause is a disruptive and value
destructive exercise. The Board and the Company’s management team
are focused on delivering value to all
shareholders. We believe that Related/Corvex are pursuing their own
agenda and will not act in your best interests.
Your Board has evaluated the limited information that
Related/Corvex have made available about their plan for the Company
and concluded that it is not in the Company's or our shareholders’
best interests. Since Related/Corvex first
approached the Company, the Board has worked diligently to
understand the views of all of our shareholders, advanced the
Company’s value-enhancing business plan and made meaningful
governance and management compensation changes directly in response
to shareholder suggestions.
Under the current Board and management
team, the Company continues to make significant progress in the
implementation of its business plan to reposition the Company’s
portfolio towards higher quality central business district office
properties in order to increase shareholder value.
During 2013, the Board and management:
- improved the Company’s balance
sheet;
- continued to implement the Company’s
business plan to reposition our portfolio into higher value office
properties in central business district (“CBD”) locations and sell
non-core industrial and suburban properties, which we believe will
increase value for all shareholders in the future;
- implemented changes to our business
management agreement to further align management’s financial
incentives with returns realized by shareholders; and
- announced many governance
enhancements.
Related/Corvex claim to be champions of
good governance, yet they failed to disclose to CommonWealth
shareholders that their claims regarding the financial benefits of
removing the Board are based on unrealistic financial
projections.
Related/Corvex told shareholders they estimated that, “after
removal of current trustees,” the Company’s net operating income
would increase by almost $70 million annually within just 18 months
and the Company’s net asset value would be $35 per Common Share,
with a target price of $44 per Common Share or higher by the end of
2014. Related/Corvex neglected to disclose
that their estimates and targets would be unlikely, if not
impossible, to achieve, without unrealistic increases in our
revenues and decreases in our expenses. Related/Corvex
publicly announced and distributed their projections, estimates and
targets without any accompanying disclosure of the material
assumptions underlying them and the limitations of those
assumptions. We believe Related/Corvex failed to provide this
information to you because they did not want to subject their
assumptions to independent review.
Consistent with their investment mandate,
Related and its trustee nominees may seek to run the Company like a
distressed real estate fund, not a stable portfolio of high-quality
Class A, CBD assets. Related’s Common Shares are held through its
affiliate, Related Real Estate Recovery Fund, L.P., a fund that
Related has publicly described as a “distressed real estate fund”
which aims to invest in “properties that require significant
repositioning.” Based on this investment mandate, and
Related/Corvex’s previous investor presentations, we believe
Related’s business plan for the Company contemplates: (1) the sale
of some of our best performing Class A, CBD assets that produce
stable returns for our investors; and (2) significant investment in
underperforming properties that we have designated as discontinued
operations and believe to be riskier investments. In our view, this
plan would fundamentally change the Company’s risk profile and
adversely impact the Company’s ability to pay dividends.
The Board recently announced the
restructuring of our business management agreement with our manager
and significant governance changes that directly address
shareholder feedback.
In response to shareholder suggestions, the
Board is making meaningful governance changes, including:
- adding additional Independent
Trustees;
- appointing a Lead Independent
Trustee;
- declassifying the Board; and
- streamlining the shareholder Trustee
nomination and proposal process for our annual meetings, including
our meeting this June.
The Board has also recently restructured the compensation
payable to our manager to further align management’s financial
incentives with the returns realized by our shareholders.
Related/Corvex are asking you to remove
experienced Trustees who are acting in the best interest of the
Company and its shareholders.
The current Board includes new members who provide fresh
perspectives as well as longer serving Trustees with significant
experience managing the Company and a unique knowledge of our
portfolio, our tenants, our business partners and the markets in
which we operate. Under their stewardship,
the Company has acquired a valuable portfolio of properties that
Related now seeks to control.
Related/Corvex’s attempt to remove not only the current Board,
but also any new trustees the Board may appoint, demonstrates that
Related/Corvex only want control of the Company and do not care
about the quality of the Board, in our view.
Your Board and management team has taken – and is committed to
taking – substantial steps to enhance performance and increase
stockholder value. Don’t give up your right to share in, what in
our view, is the superior value that the current Board and
management team is poised to deliver.
We believe that Related/Corvex’s consent solicitation is part of
an effort to seize control of your Company for their own benefit or
force a sale of the Company, perhaps to themselves, before the full
benefits of the Company’s current business plan are realized. In
contrast, your Board is strongly committed to protecting and
enhancing the value of your investment.
SUPPORT THE BOARD TO PROTECT THE VALUE OF
YOUR INVESTMENT IN COMMONWEALTH!
The Board urges you to:
1. Throw away the Related/Corvex
materials;
2. Not sign Related/Corvex’s gold consent
card;
3. If you have signed Related/Corvex’s gold
consent card, revoke that consent by signing, dating and mailing
the enclosed WHITE consent
revocation card immediately; and
4. Even if you have not signed
Related/Corvex’s gold consent card, show your support for the Board
and fellow shareholders by signing, dating and mailing the enclosed
WHITE consent revocation card
today.
Thank you for your support,
THE BOARD OF TRUSTEES OF COMMONWEALTH REIT
Your Vote Is Important, No Matter How
Many Shares You Own.
If you have questions about how to vote
your shares on the WHITE
CONSENT
REVOCATION CARD,
or need additional assistance, please
contact the firm assisting us in the solicitation of
consent revocations:
Morrow & Co., LLC
470 West Avenue
Stamford, CT 06902
Shareholders Call Toll Free: (800)
276-3011
(Banks and brokers call collect at
(203) 658-9400)
WARNING REGARDING
FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE INCLUDES FORWARD LOOKING STATEMENTS WITHIN
THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
AND OTHER SECURITIES LAWS. THESE FORWARD LOOKING STATEMENTS ARE
BASED UPON THE COMPANY'S PRESENT BELIEFS AND EXPECTATIONS, BUT THEY
ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR FOR VARIOUS REASONS,
INCLUDING SOME REASONS BEYOND THE COMPANY’S CONTROL. FOR THESE
REASONS, AMONG OTHERS, INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE UPON FORWARD LOOKING STATEMENTS IN THIS PRESS RELEASE OR
THEIR IMPLICATIONS.
ADDITIONAL INFORMATION
REGARDING THE CONSENT SOLICITATION
The Company, its Trustees and certain of its executive officers,
and RMR and certain of its directors, officers and employees may be
deemed to be participants in the solicitation of consent
revocations from shareholders in connection with the solicitation
being conducted by Related/Corvex. On January 29, 2014, the Company
filed a definitive consent revocation statement with the Securities
and Exchange Commission, or SEC, in response to the Related/Corvex
solicitation. SHAREHOLDERS ARE URGED TO READ THE CONSENT REVOCATION
STATEMENT AND ANY AMENDMENTS OR SUPPLEMENTS THERETO AND ANY OTHER
RELEVANT DOCUMENTS THAT THE COMPANY WILL FILE WITH THE SEC WHEN
THEY BECOME AVAILABLE BECAUSE THEY CONTAIN IMPORTANT INFORMATION.
Additional information regarding the identity of the potential
participants and their direct or indirect interests, by share
holdings or otherwise, is set forth in the consent revocation
statement and other materials to be filed by the Company with the
SEC in connection with the solicitation of revocations of
consents.
Shareholders may obtain free of charge copies of the consent
revocation statement and any other documents (when available) filed
by the Company with the SEC in connection with the Related/Corvex
solicitation at the SEC’s website (http://sec.gov), at the
Company’s website (http://cwhreit.com) or by requesting these
materials from Timothy Bonang, by phone at (617) 796-8222, or by
mail at Two Newton Place, 255 Washington Street, Newton, MA 02458
or by requesting materials from the firm assisting the Company in
the solicitation of consent revocations, Morrow & Co., LLC,
toll free at (800) 276-3011 (banks and brokers call collect at
(203) 658-9400).
Media Contacts:Joele Frank Wilkinson Brimmer KatcherAndrew
Siegel/Jonathan Keehner, 212-355-4449orInvestor
Contacts:CommonWealth REITTimothy Bonang, Vice President, Investor
RelationsJason Fredette, Director, Investor
Relations617-796-8222www.cwhreit.com
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