Keith Meister’s Activist Success: CommonWealth REIT (CWH) Dismissed Trustees

Keith Meister and his fund, Corvex Capital, are reaping the fruits of their labor: CommonWealth REIT (NYSE:CWH) has dismissed all of its trustees, after two thirds of the shareholders have voted in favor. Meister and Corvex have been lobbying for the dismissal of the board together with a number of other investors. Corvex and Meister hold approximately 11.3 million CommonWealth REIT shares together with Related Fund Management, run by Jeff T. Blau, a position which accounts for 9.6% of the company’s common stock.

Keith Meister

In a joint statement attached to the filing, Blau and Meister commented:

This is a great day for corporate democracy. We are pleased that the former Trustees of CommonWealth have acknowledged the success of our consent solicitation, in which holders of over 81% of the outstanding shares exercised their rights and issued a resounding mandate for change at CommonWealth. A promising new path of alignment, accountability, and long term value creation awaits CommonWealth shareholders.

However, we are disappointed that, despite our best efforts over the last week, the former Trustees failed to engage with us to arrange for a transition process that could have set CommonWealth on its new path sooner and avoided leaving CommonWealth without a Board for any period of time. In light of the circumstances, we urge the officers of CommonWealth to heed the mandate given by holders of 81% of the outstanding shares and expeditiously call for a special meeting to elect a new board. We believe such meeting can be held well before the outside date communicated by the company. We will seek to work with CommonWealth’s officers and the Arbitration Panel to make sure the special meeting occurs as soon as possible.

According to a report from Bloomberg, the proposed new slate of directors is led by billionaire investor Sam Zell and the co-president of Zell’s Equity Group Investments, David Helfand.

CommonWealth REIT(NYSE:CWH) is a real estate investment trust with a market cap of $3.09 billion. In the previous quarter, the company paid a dividend of $0.25 per share, which represents a yield of 3.83%. So far this year, the stock has advanced approximately 12% to a current price of $26.10 per share and is traded at a trailing Price to Earnings (P/E) ratio of 259.xx. For the three months ending December 31, 2013, the company posted revenues of $186 million and earnings per share (EPS) of $0.00. Analysts expect CommonWealth REIT to register $199 million in revenues and earnings of $0.59 per share for the current quarter.

In another activist move, Meister and Corvex Capital have formed a partnership with Eric W. Mandelblatt‘s Soroban Capital to work together on issues related to Williams Companies, Inc. (NYSE:WMB). Corvex Capital owns 62.6 million shares together with Soroban Capital, the position accounting for 9.17% of the company’s common stock. Mandelblatt is set to join the Board of Directors of Williams Companies, with Meister expected to follow suit, but no earlier than November 20, 2014, when the next shareholder meeting is to take place.

Disclosure: none.

Recommended reading:

Corvex Capital Ups Its Stake in Williams Companies, Inc. (WMB); Soroban’s Eric Mandelblatt To Join Company’s Board

Corvex Signs Agreement with Soroban Capital Partners Regarding Williams Companies, Inc. (WMB)

Corvex Capital Exercises Options and Reiterates Stake in Signet Jewelers Limited (SIG)

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