CommonWealth REIT CWH today issued an open letter to its shareholders
urging them to take no action on Corvex Management LP and Related Fund
Management, LLC (together, “Corvex/Related”)'s purported consent solicitation.
The company noted that there is no valid consent solicitation at this time,
and no record date has been set by the CommonWealth Board of Trustees. The
full text of the letter is below:
June 17, 2013
Dear Shareholder,
You may have received materials from Corvex Management LP and Related Fund
Management, LLC (together, “Corvex/Related”) purportedly seeking your written
consent to remove without cause all of the duly elected members of your Board
of Trustees.
THE BOARD OF TRUSTEES OF COMMONWEALTH URGES YOU NOT TO TAKE ANY ACTION AT THIS
TIME.
THE BOARD HAS NOT SET A RECORD DATE AND THE CORVEX/RELATED CONSENT
SOLICITATION IS NOT VALID AT THIS TIME.
The validity of the Corvex/Related consent solicitation depends upon a court
or an arbitration panel making a number of findings, including that certain of
CommonWealth's bylaws are invalid and that CommonWealth's Board may be removed
without cause.
WE BELIEVE CORVEX/RELATED ARE MASKING THEIR INTENT TO SEIZE CONTROL OF
COMMONWEALTH WITHOUT PAYING A CONTROL PREMIUM.
Corvex/Related first started accumulating shares of CommonWealth in January
2013. Since then, Corvex/Related announced several highly conditional,
unfinanced purported “offers” to acquire the Company. In their latest such
“offer,” Corvex/Related offered to acquire the Company for $24.50 per share,
despite that they had previously estimated the Company's net asset value at
between $35.00 and $44.00 per share. Your Board, after consultation with its
legal and financial advisors and after meeting with Corvex/Related, carefully
considered this purported “offer” and determined that it was illusory and that
the interests of CommonWealth and its shareholders would best be served by the
Company continuing to implement its business plan. Many weeks have passed
since Corvex/Related first publicly announced their purported desire to
purchase CommonWealth and they have still not provided a concrete, fully
financed offer, let alone an offer at an appropriate premium.
Conveniently, Corvex/Related now claim that they “are not attempting a hostile
takeover.” Yet, they made an ultimatum to the CommonWealth Board:
(1) negotiate to sell CommonWealth to Corvex/Related;
(2) sell CommonWealth to a third party willing to pay more than
Corvex/Related; or
(3) face a consent solicitation to remove the entire CommonWealth Board.
In fact, when representatives of CommonWealth and Corvex/Related met,
Corvex/Related advised that no amount of corporate governance changes would be
an acceptable alternative to the three “alternatives” described above. Given
Corvex/Related's actions, CommonWealth's Board continues to believe that
Corvex/Related's primary motivation is to gain control of the CommonWealth
Board without paying a control premium and without disclosing to shareholders
their future plans for CommonWealth.
THE PRINCIPALS OF RELATED AND CORVEX HAVE A POOR TRACK RECORD OF GOVERNING
PUBLIC REAL ESTATE COMPANIES.
Jeff Blau, the principal of Related and CEO of the Related Companies,
previously served as Chairman, CEO and a Trustee of American Mortgage
Acceptance Company ("AMAC"). During Mr. Blau's tenure at AMAC, AMAC funded
loans to affiliates of the Related Companies which subsequently defaulted and
became worthless. Shortly thereafter, AMAC ceased operations and filed for
bankruptcy. Additionally, Mr. Blau and Stephen Ross, the Chairman of the
Related Companies, served as Managing Trustees on the board of Centerline
Holding Company (f/k/a Charter Municipal Mortgage Acceptance Company, or
"CharterMac"); during which time, Centerline/CharterMac provided financing to
affiliates of the Related Companies. During Jeff Blau's and Stephen Ross's
combined tenure on the Centerline/CharterMac board between 2003 and 2009, the
total returns realized by public shareholders were a LOSS of 97.7%.
Corvex has limited real estate industry experience. Corvex's Managing Partner,
Keith Meister, and his former employer first made a tender offer for WCI
Communities, Inc., which they later withdrew. Mr. Meister was then elected to
the board of WCI in 2007 following a proxy contest; and within approximately
one year of his joining the WCI board, WCI was forced into bankruptcy and
essentially all WCI shareholder value was lost.
COMMONWEALTH REMAINS COMMITTED TO EXECUTING ON ITS STRATEGIC PLAN TO ENHANCE
VALUE FOR ALL COMMONWEALTH SHAREHOLDERS.
CommonWealth has made substantial progress in executing its business plan to
focus on the ownership and operation of high quality central business district
(“CBD”) office properties, to divest its suburban office and industrial
properties and other assets, and to repay debt. Since January 1, 2008,
CommonWealth has increased its portfolio concentration of CBD office
properties by acquiring $3.7 billion of primarily Class A, CBD office
properties, principally from distressed sellers, and selling $1.5 billion of
primarily suburban office properties for significant gains.
Despite Corvex/Related's claims regarding the Company's performance,
CommonWealth's operating results have been competitive with its peer group. In
fact, CommonWealth has been more effective in leasing its portfolio than many
of its peer group, and CommonWealth's total return per year has outperformed
its peer group and the S&P 500 Index.
If you would like more information about CommonWealth's historical
performance, activities and business plan, please visit www.cwhreit.com to
view our investor presentations.
Thank you,
THE BOARD OF TRUSTEES OF COMMONWEALTH REIT
If you have any questions, please call Innisfree M&A Incorporated, which is
assisting us, toll-free at 1-877-750-5836.
Additional Information Regarding the Consent Solicitation
CommonWealth REIT (the “Company”), its trustees and certain of its executive
officers and Reit Management & Research LLC 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 consent
solicitation conducted by Corvex/Related and certain of their affiliates. On
April 1, 2013, the Company filed a revised preliminary consent revocation
statement with the Securities and Exchange Commission (the “SEC”) in response
to the consent solicitation. The Company will furnish a definitive consent
revocation statement to its shareholders, together with a BLUE consent
revocation card, when they become available. SHAREHOLDERS ARE URGED TO READ
THE CONSENT REVOCATION STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS
THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT THE COMPANY WILL FILE WITH THE
SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Additional information regarding the identity of these potential
participants and their direct or indirect interests, by share holdings or
otherwise, is set forth in the revised preliminary consent revocation
statement filed with the SEC and other materials to be filed with the SEC.
Shareholders will be able to obtain, free of charge, copies of the consent
revocation statement and any other documents to be filed by the Company with
the SEC in connection with these matters at the SEC's website
(http://www.sec.gov), at the Company's website (http://www.cwhreit.com) or by
requesting materials from the firm assisting the Company in the solicitation
of consent revocations, Innisfree M&A Incorporated, toll-free at 877-750-5836.
Contact:
INVESTORS
CommonWealth REIT
Carlynn Finn, 617-796-8222
Senior Manager, Investor Relations
or
Innisfree M & A Incorporated
Larry Miller /Jennifer Shotwell/Arthur Crozier
212-750-5833
or
MEDIA
CommonWealth REIT
Timothy A. Bonang, 617-796-8222
Vice President, Investor Relations
or
Joele Frank, Wilkinson Brimmer Katcher
Andrew Siegel / Jonathan Keehner
212-355-4449
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