Luxor Capital Group LP, the owner of an 8 percent stake in CommonWealth REIT (CWH:US), asked the company’s board to form an independent committee to explore “strategic alternatives” after the landlord planned a stock sale over the objections of investors interested in buying the company.
“We find it unconscionable that the board of trustees would vote to issue shares significantly below market in light of the offer on the table from a credible buyer at a significant premium,” Luxor, a New York-based investment manager, said today in a letter to the board.
CommonWealth priced 30 million shares on Feb. 27 at $19 each, with the offering settlement scheduled for March 5. Investors Corvex Management LP and Related Cos., who together own 9.8 percent of the Newton, Massachusetts-based real estate investment trust, had an offer to acquire CommonWealth for $27 a share before the pricing.
Luxor, in today’s letter, asked CommonWealth to stop purchases and sales of properties and equity sales until a strategic review of the company is complete.
Keith Meister’s Corvex and Related, led by Chief Executive Officer Jeff Blau, project that CommonWealth’s real estate assets are worth about $40 a share, according to a Feb. 26 regulatory filing, and assert that poor management has driven down the value of the stock.
The Luxor letter was distributed after the close of regular U.S. trading. CommonWealth fell 5.9 percent to $23.77 at the close today in New York. The shares rose 54 percent on Feb. 26, when Related and Corvex said they were prepared to bid for the company.
Tim Bonang, director of investor relations at CommonWealth, didn’t return a telephone call seeking comment today.
Delaware County Employees Retirement Fund, a Pennsylvania pension, asked a federal court to halt completion of the equity offering, according to the fund’s complaint. The pension is a CommonWealth shareholder, according to its lawsuit filed yesterday in federal court in Boston.
CommonWealth owns downtown and suburban office buildings and industrial properties in U.S. cities including Chicago, Denver and Philadelphia.
The case is Delaware County Employees Retirement Fund v. Portnoy, 13-cv-10405, U.S. District Court, District of Massachusetts (Boston).
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