DFAN14A

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

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Securities Exchange Act of 1934

 

 

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COMMONWEALTH REIT

(Name of the Registrant as Specified In Its Charter)

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

DAVID R. JOHNSON

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Corvex Management LP (“Corvex”) and Related Fund Management, LLC (“Related”) previously filed certain investor presentation slides on April 18, 2013 (the “April 18 Slides”) with the U.S. Securities and Exchange Commission. Page 32 from the April 18 Slides has been revised by Corvex and Related and is attached hereto.

32
Flawed RMR Structure and Poor Corporate Governance
Flawed RMR Structure
We believe CWH’s externally managed structure skews incentives, reduces
cash flow through excessive fees, destroys investor confidence, and impairs
valuation multiple (off already depressed earnings)
RMR receives fees based on gross historical cost basis, incentivizing growth through
acquisitions regardless of returns to CWH shareholders or strategic rationale
–
$2.7 billion of net acquisitions and capex since 2007 (over 2x CWH’s recent market
cap
(1)
), while CWH book value per share essentially flat
Trustees
own
less
than
1%
of
CWH
stock,
but
certain
trustees
own
100%
of
RMR,
skewing
their incentives in favor of the external manager
–
RMR, a private company, is owned by Barry Portnoy and his son Adam Portnoy
–
All executive officers of CWH are also officers of RMR
–
Barry Portnoy’s son-in-law is also an officer of RMR
Given
these
inherent
and
widely
recognized
problems,
CWH
and
the
other
Portnoy
REITs
are
some of the last remaining externally managed publicly traded equity REITs today
(1)
Market cap of $1.3 billion based on a closing price of $15.85 on February 25, 2013, the day prior to Related and Corvex’s first public filing.