- Posted at 11:01, November 26, 2013
- By Russ Bleemer
New York investment fund Corvex Management LP and, Related Fund Management LLC, a unit of big NYC development and management company Related Cos., are pressing their hostile takeover over of Commonwealth REIT, based in Newton, Mass., but organized under Maryland law.
Corvex and Related on Nov. 18 got the go-ahead from an arbitration panel to proceed with a new consent solicitation against Commonwealth. The New York firms have been pursuing Commonwealth throughout 2013, charging that the firm's s management--specifically, Barry Portnoy and son Adam Portnoy, here--are enriching themselves with fees and mismanaging its assets. Commonwealth has countered that it is repositioning its assets and delivering value to its shareholders.
Commonwealth owns properties nationwide. It is NYSE-traded; you can see its portfolio map here.
The Portnoys are managing trustees of the Commonwealth REIT, and own REIT Management and Research LLC, which runs Commonwealth.
The unusual structure and its management is the target of Corvex and Related. The consent solicitation seeks the support of shareholders to remove Commonwealth REIT's board, all trustees under the Maryland organization.
Corvex and Related have set up a website, here, linking to the arbitration award, which sets out the rules for the new consent solicitation.
Keith Meister, managing partner of hedge fund Corvex, and Jeff T. Blau, chief executive office of Related Cos., released a joint statement:
These actions represent the important first step towards removing the board of trustees and empowering shareholders to take back CommonWealth. No amount of rhetoric around inadequate, "to-be-proposed" governance enhancements changes the fact that CommonWealth's board is run by the same trustees and management team responsible for what we believe is an abysmal track record of underperformance and value destruction.
Commonwealth blasted the new solicitation and the takeover moves:
We are disappointed, but not surprised, that Corvex/Related are undertaking a new consent solicitation to remove our Trustees without cause and we intend to vigorously oppose their effort. For almost ten months, Corvex/Related have caused disruption to [Commonwealth's] business while they relentlessly pursue a hostile takeover of the company. While it is likely that this new effort by Corvex/Related also will be disruptive to [Commonwealth], the Board and management remain focused on conducting [Commonwealth's] business in the best interest of all shareholders.