* Investors lower offer to $24.50 per share from $27
* Ask CommonWealth to cancel stake sale in Select Income
* Say can negotiate a deal in 3 weeks if company agrees to
By A. Ananthalakshmi
March 28 Activist investor Keith Meister and
real estate major Related Cos lowered their offer price for
CommonWealth REIT to $24.50 per share from $27, citing
the office building operator's recently completed equity
Related and Meister's Corvex Management LP, which together
own about 9 percent of CommonWealth shares, also said they would
continue to pursue the removal of the company's board if it was
not open to being acquired by them or another buyer.
"If you are prepared to enter into good faith negotiations
with us, we could negotiate and announce a transaction in less
than three weeks," Related and Corvex said in a letter to the
The activist investors oppose CommonWealth's externally
managed structure under which its management is compensated
based on the assets under management, not profitability.
Related and Corvex proposed to buy CommonWealth last month,
subject to the company cancelling its share offering that they
said was "value destroying."
The company, however, went ahead with the public offering at
$19 per share, raising $627.6 million. It also sold its stake in
Government Properties Income Trust for $240.1 million.
CommonWealth's outstanding shares increased to 118.3 million
after the offering, according to Thomson Reuters data. Based on
that, the new offer would value the company at $2.9 billion.
Related and Corvex on Thursday also urged the company not to
proceed with its planned stake sale in Select Income REIT
as they believed the shares would be sold at a discount.
"Our offer is subject to further downward adjustment if you
move forward with a sale of all or a portion of CommonWealth's
controlling stake in Select Income," the investors said.
Corvex and Related would be prepared to buy a controlling
stake in Select Income at a premium value if the REIT's current
trustees resign and its management agreement with its external
adviser, REIT Management & Research LLC (RMR), is terminated.
RMR also owns interests in other publicly traded REITs.
The investors, which have the support of other large
shareholders Luxor Capital Group and Perry Capital, said they
had met Barry and Adam Portnoy from the Commonwealth management
team earlier this week, following a request made by the two
firms on Feb. 25.
CommonWealth's shares were trading at $22.31 on Thursday on
the New York Stock Exchange. Select Income shares were up 2
percent at $54.10.