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Industry Discussions / Real Estate Inv. Trusts: REITs
|Subject: Re: CWH Earnings and much more..||Date: 2/26/2013 2:38 PM|
|Author: Anysimplefool||Number: 73753 of 78005|
It is obvious what these guys think of management:
UPDATE: Corvex, Related Offer $25/Share for Commonwealth REIT
2:17p ET February 26, 2013 (Benzinga) NEW YORK, February 26, 2013—Corvex Management, LP and Related Fund Management, LLC, whoseseparately managed investment funds collectively own approximately 9.8% of the outstanding common sharesof CommonWealth REIT, released the following open letter to the Company's Board of Trustees:
CommonWealth REITTwo Newton Place255 Washington StreetNewton, MA 02458-1634
February 26, 2013
Dear Members of the Board of Trustees:
As you already know, Corvex Management, LP (“Corvex”) and Related Fund Management, LLC (“Related”)separately manage investment funds that collectively own approximately 9.8% of the outstanding commonshares of CommonWealth REIT (“CWH” or the “Company”).
We have been shocked to learn that, notwithstanding our open letter from this morning, the Company hasnot yet cancelled its previously announced underwritten public offering of up to 31,050,000 common shares(including the anticipated over-allotment option). As we noted in our previous letter, we believe the proposalto raise equity when the stock trades at such a large discount to its intrinsic value – which we believe isapproximately $40 per share – is preposterous, and more than anything speaks to the incredible disconnectbetween the goals of CWH shareholders and the Board and REIT Management & Research LLC. Moreover,the Company has yet to respond to our request to review our detailed presentation that outlines a clear path forvalue creation at CWH.
As such, we again demand that the Board of Trustees immediately cease this ill-advised offering, which webelieve would represent a blatant destruction of shareholder value and a dereliction of your fiduciary duties. Ifyou do not publicly announce your intent to cancel the transaction by the end of business today, we are preparedto file litigation immediately seeking to enjoin the transaction or provide for its rescission in the event that it iscompleted.
The Company has mentioned in its marketing meetings and calls that our first interaction with the Companywas our 13D filing and we have not yet spoken with management. We reiterate our desire (outlined in ourinitial letter) to immediately meet with management and address the many opportunities that exist for valuecreation. Furthermore, management has stated that the purpose of the announced equity offering is to deleverits balance sheet and improve its coverage ratios in order to appease the rating agencies and entice futuretenants. We question the truthfulness of this reasoning. The Company could, for example, sell certain assets orclusters of assets that would achieve the stated objective to delever and would not be dilutive to shareholders.
As we stated in our earlier letter, Corvex and Related would also be prepared to acquire all the outstandingshares at a significant premium to even the current market value. To provide further specificity on this offer,
we are initially prepared to acquire the outstanding shares at a price of $25 per share (which is a 58% premiumto yesterday's closing price of $15.85 per share), with the opportunity to meaningfully increase this offer aftercompleting due diligence. We are also open minded to pursuing structures that enable existing like-mindedshareholders to participate. However, we note that if the Company proceeds with the proposed equity offeringour proposed valuation would be significantly negatively impacted. We are bewildered how the Board ofTrustees could proceed down a path of a dilutive share issuance in light of these facts.
We await your response.
Keith MeisterCorvex Management LP712 Fifth Avenue, 23rd FloorNew York, New York 10019(212) 474-6700
Jeff T. BlauRelated Fund Management, LLC60 Columbus
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