DFAN14A 1 d679361ddfan14a.htm DFAN14A 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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¨   Soliciting Material Pursuant to §240.14a-12

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

JAMES CORL

EDWARD GLICKMAN

PETER LINNEMAN

JIM LOZIER

KENNETH SHEA

EGI-CW HOLDINGS, L.L.C.

DAVID HELFAND

SAMUEL ZELL

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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The following presentation was delivered today to Institutional Shareholder Services:


The Choice Is Clear
Presentation to CWH Shareholders
February 18, 2014


2
Introduction
Sam Zell & David Helfand Have Joined Corvex/Related’s Slate of Nominees
Mr. Zell is willing to serve as Chairman of the Board, if so appointed by the new Board
Mr. Zell is the current Chairman of Equity Residential, Equity LifeStyle Properties,
Covanta Holding Corporation and Anixter International Inc. and the former Chairman of
Equity
Office
Properties
Trust
(formerly
the
largest
REIT
in
the
U.S.)
Mr. Helfand is willing to serve as CommonWealth’s CEO, if so appointed by the new Board
Mr. Helfand is Co-President of EGI and has previously served as Executive Vice
President and Chief Investment Officer of Equity Office Properties Trust and President
and CEO of Equity LifeStyle Properties
Mr. Zell and Mr. Helfand bring exceptional investment, real estate and public company
credentials
to
an
already
highly
qualified
slate
of
nominees
(1)
Mr. Zell and Mr. Helfand plan to bring to the Company their highly qualified and experienced
management team to execute on a value-driven strategy and utilize their expertise in turning
around underperforming assets
(1)
Detailed biographies are included in the Appendix
Sam Zell is recognized as a founding father of today’s public real estate
industry after creating three of the most successful REITs in history: Equity
Office Properties Trust (“EOP”), Equity Residential (“EQR”), and Equity
LifeStyle Properties (“ELS”)


3
The Choice Is Clear
CommonWealth Shareholders Have a Choice Between Two Paths
The Portnoys’
path of conflicted external management, value destruction, and
the absence of accountability, with which CWH shareholders are all too familiar
OR
Sam Zell’s path of aligned internal management and accountability that fosters
the
incentives
critical
in
building
a
successful
company
focused
on
the
long-
term creation of shareholder value
CWH has underperformed for years due to a severe misalignment of
interests in an external
management structure through which the Portnoys effectively control CWH despite owning
virtually no stock, with the fees they pay themselves through RMR being their only meaningful
economic interest in the Company
Not surprisingly, CWH's stock generated a cumulative total return of a mere 7% over a nearly
16-year
span
(1)
during
which
time
CWH
paid
RMR
approximately
$800
million
(2)
in
fees
In glaring contrast, Sam Zell's track record speaks for itself: Mr. Zell created 3 of the most
successful REITs in history
As evidenced in the chart on the following page, we believe Mr. Zell's chairmanship of EOP,
EQR, ELS has unquestionably maximized value for shareholders over the same 16-year
period in which CWH generated 7% returns
We believe the choice could not be more clear
(1)
From 7/7/1997 (the earliest date on which the Zell-chaired REITs and CWH were  all public) to  2/25/2013 (the last trading day before Corvex and Related filed their initial 13-D).
(2)
2013 RMR fees reflected annualized YTD 9/30/2013 figures.  Q3 2013 RMR fees include fees paid by SIR to make the figure comparable to historically disclosed figures.


The Choice Is Clear:  Value Creation
Sam Zell’s Unrivaled Track Record for Value Creation
Total Return Performance –
Zell-Chaired REITs vs. CWH vs. RMR Fees
(1)
Total returns through February 25, 2013, the day prior to Related and Corvex’s initial 13-D filing.
(2)
2013 RMR fees reflected annualized YTD 9/30/2013 figures.  Q3 2013 RMR fees include fees paid by SIR to make the figure comparable to historically disclosed figures.
Sources: Company filings, SNL
(1)
(2)
Cumulative total returns
Zell-Chaired REITs
CWH
Variance
Timeframe
EOP
368%
103%
(265%)
7/7/1997 - 2/9/2007
EQR
422%
7%
(415%)
7/7/1997 - 2/25/2013
ELS
574%
7%
(567%)
7/7/1997 - 2/25/2013
4
($100)
$0
$100
$200
$300
$400
$500
$600
$700
$800
(100%)
0%
100%
200%
300%
400%
500%
600%
700%
800%
1997
2000
2003
2006
2009
2012
CWH
EOP
EQR
ELS
Cumulative RMR
Fees
EOP:
368%
CWH: 7%
EQR:
422%
ELS:
574%
Cumulative RMR
fees since
1997: $791 million
(2)


5
The Choice Is Clear:  Alignment of Interests & Accountability
Board & Management Focused on Increasing Shareholder Value
Sam Zell and David Helfand fully support efforts to maximize value at CommonWealth
for
all
shareholders
and
see
an
attractive
opportunity
at
CommonWealth
uniquely
suited
to their expertise in leading public real estate companies and in turning around
underperforming assets.
Their philosophy includes:
A
core
operating
principle
of
aligning
interests
between
company
leadership
and
shareholders
A
conviction
that
an
internal
management
structure
promotes
incentives
to
build
successful
companies
for
the
long-run
creation
of
shareholder
value,
while
external
management
structures are suboptimal given inherent conflicts of interest
A belief
that
shareholders
deserve
good
governance,
transparency
and
accountability
from
company leadership
A belief
that
a
public
company’s
fiduciary
responsibility
to
its
shareholders
is
paramount
Led by Sam Zell, our highly qualified nominees offer shareholders a choice to
elect an accountable and properly aligned board charged with being their
advocate


6
The Choice Is Clear:  Good Governance
With Good Governance Shareholders Will Always Have A Choice
“We are concerned about any attempts to preclude shareholder rights, and our
companies are free of such impediments.”
-Sam Zell, Corvex/Related Press Release, February 11, 2014
With good corporate governance, shareholders will be able to hold their board
and
managers
accountable
without
having
to
spend
exorbitant
sums
litigating
for
the
right
to
do
so
if
shareholders
disapprove
of
our
slate’s
performance,
they
can simply nominate to replace them at the next Annual Meeting
The core governance principles below are necessary underpinnings to  good governance: 
Annual elections for all Trustees beginning at the 2014 Annual Meeting (no staggered board)
Plurality vote for contested elections
A conventional notification process for trustee nominations and other important Company
i.e., elimination of unreasonably burdensome ownership/holding period requirements 
and other procedural roadblocks
No changes to these provisions without a shareholder vote
business


7
The Choice Is Clear:  Highly Qualified Independent Board
There Is No Comparison
Note: SNH: Senior Housing, HPT: Hospitality Properties Trust, SIR: Select Income REIT, GOV: Government Properties Income Trust
The Portnoy Board
Zell-Chaired Slate of Nominees
Barry Portnoy
Sam Zell
Managing
Trustee,
CWH,
SNH,
HPT,
SIR,
GOV
Majority Owner, Chairman, RMR
Managing Director,
Five Star Quality Care, Inc.,
Managing Director,
TravelCenters of America LLC
Chairman, Equity Residential
Chairman, Equity LifeStyle Properties
Founder and Chairman, Equity Group Investments
Chairman, Equity International
Chairman, Covanta Holding Corporation
Chairman, Anixter International
Former Chairman, Equity Office Properties Trust
Adam Portnoy
David Helfand
Managing
Trustee,
CWH,
SNH,
HPT,
SIR,
GOV
Minority Owner, Director, CEO, President, RMR
Co-President, Equity Group Investments
Founder, President, Helix Funds
Former CEO, American Residential Communities
Former CIO, Equity Office Properties Trust
Former Managing Director, Equity International
Former President, CEO, Equity Lifestyle Properties
(all managed by RMR)
(all managed by RMR)


8
The Choice Is Clear:  Highly Qualified Independent Board
There Is No Comparison (cont.)
The Portnoy Board (cont.)
Zell-Chaired Slate of Nominees (cont.)
Ronald Artinian
Jim Corl
Trustee, Reserve Funds
Trustee, First Real Estate investment Trust of New Jersey
Managing Director/Head of Real Estate, Siguler Guff &
Company
Former CIO, Cohen & Steers, Inc.
William Lamkin
Edward Glickman
Partner, Ackrell Capital
Trustee,
HPT,
SIR
Exec. Director, Center for Real Estate Finance Research,
NYU Stern School of Business
Clinical Professor of Finance, NYU Stern School of Business
Executive Chairman, FG Asset Management US
Senior Advisor, Econsult Solutions, Inc.
Ann Logan
Peter Linneman
Former Director, PHH Corporation
Former Chief Credit Officer, Fannie Mae
Emeritus Albert Sussman Professor of Real Estate, Wharton
School of Business
Principal, Linneman Associates
Principal, American Land Funds
Joseph Morea
Jim Lozier
Former Vice Chairman, Managing Director, RBC Capital
Markets-US Equity Markets
Co-founder and former CEO, Archon Group L.P. (wholly
owned subsidiary of Goldman Sachs)
Fred Zeytoonjian
Kenneth Shea
Founder, Former Chairman & CEO, Turf Products, LLC
Trustee
of
SNH
President, Coastal Capital Management LLC
Former Sr. Managing Director, Bear, Stearns Investment
Banking
Note: SNH: Senior Housing, HPT: Hospitality Properties Trust, SIR: Select Income REIT.
(both managed by RMR)
(managed by RMR)


9
The Choice Is Clear
Timeline and Path
The
Panel
set
forth
the
following
procedures
for
the
new
consent
solicitation:
Request for a record date must have been submitted by February 16, 2014
Corvex and Related submitted a formal request for a record date on February 14,
2014
CWH must establish a record date that falls within 10 business days of the record date
request
On February 10, 2014, CWH announced a record date of February 18, 2014,
conditioned on their receipt of the record date request that Corvex and Related have
now delivered
In accordance with the Arbitration Panel’s interim award our consent solicitation will be
completed no later than March 20, 2014
The Company will have 5 business days to certify the results of the solicitation
If the consent solicitation to remove all the Trustees is successful, the officers of CWH
must promptly call a special meeting of shareholders to elect new Trustees to the Board
The
date
of
the
special
meeting
must
be
within
10
to
60
calendar
days
of
the
date
of
notice of such meeting


10
Appendix


11
Highly Qualified Nominees
Truly Independent Slate
Chairman, Founder, Equity Group Investments (EGI)
Chairman, Founder, Equity International
Mr.
Zell
maintains
substantial
interests
in
and
serves
as
Chairman
of
four
public
companies,
two
of
which
are
REITs
-
Equity
Residential (NYSE: EQR), the largest multifamily REIT, and Equity LifeStyle Properties (NYSE: ELS), the largest
manufactured
home
community
REIT.
He
is
also
Chairman
of
Covanta
Holding
Corporation
(NYSE:
CVA),
an
international
leader in converting waste to energy, and Anixter International (NYSE: AXE), a global supplier of communications and
security products.
Mr. Zell also serves as Chairman of two private investment firms, Equity Group Investments, which he founded over 40 years
ago, and Equity International. While EGI’s roots are in real estate, the firm’s investments today span industries and
continents, and include interests in real estate, energy, logistics, transportation, media, and health care, among others.
Equity International, which Mr. Zell founded in 1999, is a private investment firm focused on building real estate-related
businesses in international emerging markets.
Mr. Zell is a member of the President’s Advisory Board at the University of Michigan, and with the combined efforts of the
University of Michigan Business School, established the Zell/Lurie Entrepreneurial Center. He is also a long-standing
supporter of the University of Pennsylvania Wharton Real Estate Center, and has endowed the Samuel Zell/Robert Lurie
Real Estate Center at Wharton. Mr. Zell also endowed the Northwestern University Center for Risk Management. Mr. Zell
holds a BA and a JD from the University of Michigan.
Sam Zell – Candidate for Chairman of CommonWealth
Chairman, Equity Residential, Equity LifeStyle Properties, Covanta Holding Corporation, Anixter International Inc.


12
Highly Qualified Nominees
Truly Independent Slate (cont.)
David Helfand – Candidate for CEO of CommonWealth
Co-President, Equity Group Investments (“EGI”)
Mr. Helfand is currently Co-President of EGI where he oversees all aspects of the firm. He began working with Sam Zell more
than 25 years ago, and has worked with him in a variety of capacities since then. 
Prior to rejoining EGI in 2012, Mr. Helfand was Founder and President of Helix Funds, where he oversaw the acquisition,
management and disposition of more than $2.2 billion of real estate assets. While at Helix, he also served as Chief Executive
Officer for American Residential Communities, a Helix portfolio company. 
Before founding Helix, Mr. Helfand served as Executive Vice President and Chief Investment Officer for Equity Office Properties
Trust, the largest REIT in the U.S. at the time, where he led approximately $12 billion of mergers and acquisitions activity. Prior
to Equity Office, Mr. Helfand served as a Managing Director and participated in the formation of Equity International. He also 
held the role of President and Chief Executive Officer at Equity LifeStyle Properties, and served as Chairman of the board’s 
audit committee. His earlier career included investment activity in a variety of asset classes, including retail, office, parking and
multifamily. 
Mr. Helfand holds an MBA from the University of Chicago Graduate School of Business, and a BA from Northwestern University.
He serves as a member of the Board of Trustees and Executive Committee of National Louis University, as a Director of the  
Ann & Robert H. Lurie Children’s Hospital of Chicago, on the Executive Committee of the Zell/Lurie Real Estate Center at the
Wharton School, and on the Board of Visitors at the Weinberg College of Arts and Sciences at Northwestern University.


13
Highly Qualified Nominees
Truly Independent Slate (cont.)
James Corl
Managing Director and Head of Real Estate, Siguler Guff & Company
James Corl has been a Managing Director at Siguler Guff & Company since 2009, and is the Head of Real Estate. Mr. Corl oversees the
Firm’s real estate investment activities, setting investment strategy, designing and constructing the portfolio, identifying potential
investments, and negotiating investment terms and conditions. Prior to joining Siguler Guff, Mr. Corl spent 13 years in the REIT
investment industry, most recently as Chief Investment Officer for all of the real estate activities of Cohen & Steers, Inc., a leading investor
in
global
real
estate
securities.
While
at
Cohen
&
Steers,
Inc.,
Mr.
Corl
was
directly
responsible
for
over
$30
billion
of
client
assets
invested in mutual funds and institutional separate accounts around the world. As an Associate with the Real Estate Investment Banking
group at Credit Suisse First Boston, Mr. Corl was involved in acquiring portfolios of non-performing loans and distressed real estate
assets for CSFB’s Praedium Real Estate Recovery Fund, as well as restructuring troubled real estate companies as publicly traded
REITs.
Edward Glickman
Executive Director, Center for Real Estate Finance Research, New York University Stern School of Business
Clinical Professor of Finance, New York University Stern School of Business
Executive Chairman, FG Asset Management US
Senior Advisor, Econsult Solutions, Inc.
Edward
Glickman
is
the
Executive
Director
of
the
Center
for
Real
Estate
Finance
Research
and
Clinical
Professor
of
Finance
at
New
York
University
Stern
School
of
Business,
and
has
been
a
Professor
at
the
Stern
School
of
Business
since
2006.
Mr.
Glickman
is
also
currently
the
Executive
Chairman
of
FG
Asset
Management
US,
an
alternative
asset
manager
serving
Korean
investors,
and
is
a
Senior
Advisor
for
Econsult Solutions, Inc., an econometric consulting firm. From 2004 to 2012 Mr. Glickman served as President and Chief Operating
Officer
of
the
Pennsylvania
Real
Estate
Investment
Trust,
where
he
oversaw
all
operating
functions
and
was
a
member
of
its
Board
of
Trustees. Mr. Glickman has more than 30 years of experience in the real estate and financial services industry having been previously
employed by The Rubin Organization, Presidential Realty Corporation, Shearson Lehman Brothers and Smith Barney. Mr. Glickman is a
Fellow of the Royal Institute of Chartered Surveyors, a Certified Treasury Professional and a Registered Securities Principal.


14
Highly Qualified Nominees
Truly Independent Slate (cont.)
Peter Linneman
Emeritus Albert Sussman Professor of Real Estate, University of Pennsylvania, Wharton School of Business
Principal, Linneman Associates
Principal, American Land Funds
From 1979 to 2011, Dr. Linneman was a Professor of Real Estate, Finance and Public Policy at the University of Pennsylvania, Wharton
School of Business and is currently an Emeritus Albert Sussman Professor of Real Estate there. Dr. Linneman is currently a principal of
Linneman Associates, a real estate advisory firm, and a principal of American Land Funds, a private real estate acquisition fund. For more
than
35
years
he
has
advised
leading
corporations
and
served
on
over
20
public
and
private
boards,
including
serving
as
Chairman
of
Rockefeller Center Properties, where he led the successful restructuring and sale of Rockefeller Center in the mid-1990s. Dr. Linneman
has won accolades from around the world, including PREA’s prestigious Graaskamp Award for Real Estate Research, Wharton’s Zell-
Lurie Real Estate Center’s Lifetime Achievement Award, Realty Stock Magazine’s Special Achievement Award, and has been named
“One
of
the
25
Most
Influential
People
in
Real
Estate”
by
Realtor
Magazine
and
was
included
in
The
New
York
Observer’s
“100
Most
Powerful People in New York Real Estate.”
Jim Lozier
Co-founder and former CEO, Archon Group L.P.
Jim Lozier served as co-founder and CEO of Archon Group L.P. from its formation in 1996 until 2012. Archon, a wholly owned subsidiary
of Goldman Sachs, is a diversified international real estate services and advisory company that under Mr. Lozier’s leadership managed
36,000 assets with a gross value of approximately $59 billion and over 8,500 employees in offices located in Washington D.C., Los
Angeles,
Dallas,
Boston,
Asia
and
Europe.
Prior
to
the
formation
of
Archon,
Mr.
Lozier
was
an
employee
of
the
J.E.
Robert
Company
and
was
responsible
for
managing
the
Goldman
Sachs/J.E.
Robert
joint
venture
for
two
years.
Mr.
Lozier
directed
the
acquisition
efforts
of
the
joint venture between GS and JER from 1991-1995. Jim has served on the Board of Directors of Dallas CASA (Court Appointed Special
Advocates for Children) since 1999, and currently is on the Executive Committee and is heading CASA’s capital campaign.


15
Highly Qualified Nominees
Truly Independent Slate (cont.)
Kenneth Shea
President, Coastal Capital Management LLC
Kenneth
Shea
is
the
President
of
Coastal
Capital
Management
LLC,
an
affiliate
of
Coastal
Development,
LLC,
a
New
York-based
privately-held developer of resort destinations, luxury hotels and casino gaming facilities. Prior to joining Coastal in September 2009, from
July 2008 to August 2009, Mr. Shea was a Managing Director for Icahn Capital LP, where Mr. Shea had responsibility for principal
investments in the gaming and leisure industries. From 1996 to 2008, Mr. Shea was employed by Bear, Stearns & Co., Inc., where he was
a Senior Managing Director and global head of the Gaming and Leisure investment banking department. At Bear, Stearns, Mr. Shea
played an active role on over $55 billion of M&A and capital raising transactions for many of the leading public companies in the gaming
and leisure sector including Harrah’s Entertainment, Inc., Station Casinos Inc., Penn National Gaming Inc., Las Vegas Sands Corp., Wynn
Resorts Ltd., and Carnival Corp. Mr. Shea currently serves on the board of directors of CVR Refining, LP.


16
Disclaimer
This presentation does not constitute either an offer to sell or a solicitation of an offer to buy any interest in any fund associated with Corvex Management LP
(“Corvex”) or Related Fund Management, LLC (“Related”).  Any such offer would only be made at the time a qualified offeree receives a confidential offering
memorandum and related subscription documentation.
The information in this presentation is based on publicly available information about CommonWealth REIT (the “Company”). This document includes certain forward-
looking statements, estimates and projections prepared with respect to, among other things, general economic and market conditions, changes in management,
changes in the composition of the Company’s Board of Trustees, actions of the Company and its subsidiaries or competitors, and the ability to implement business
strategies and plans and pursue business opportunities.  Such forward-looking statements, estimates, and projections reflect various assumptions concerning
anticipated results that are inherently subject to significant uncertainties and contingencies and have been included solely for illustrative purposes, including those
risks and uncertainties detailed in the continuous disclosure and other filings of the Company, copies of which are available on the U.S. Securities and Exchange
Commission website at www.sec.gov/edgar.  No representations, express or implied, are made as to the accuracy or completeness of such forward-looking
statements, estimates or projections or with respect to any other materials herein.  Corvex and Related may buy, sell, cover or otherwise change the form of their
investment in the Company for any reason at any time, without notice, and there can be no assurances that they will take any of the actions described in this
document.  Corvex and Related disclaim any duty to provide any updates or changes to the analyses contained in this document, except as may be required by law.
Shareholders and others should conduct their own independent investigation and analysis of the Company.  Except where otherwise indicated, the information in
this document speaks only as of the date set forth on the cover page.  Permission to quote third party reports in this presentation has
Additional Information Regarding the Solicitation
Corvex Management LP and Related Fund Management, LLC have filed a definitive solicitation statement with the Securities and Exchange Commission (the
“SEC”) to (1) solicit consents to remove the entire board of trustees of CommonWealth REIT (the “Removal Proposal”), and (2) elect a slate of new trustees at a
special meeting of shareholders that must be promptly called in the event that the Removal Proposal is successful. Investors and security holders are urged to
read the definitive solicitation statement and other relevant documents because they contain important information regarding the solicitation.
The definitive solicitation statement and all other relevant documents are available, free of charge, on the SEC’s website at www.sec.gov.
The following persons are participants in connection with the solicitation of CommonWealth REIT shareholders: 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, James Corl, Edward Glickman, Peter Linneman, Jim Lozier, Kenneth Shea, EGI-CW
Holdings, L.L.C., David Helfand and Samuel Zell. Information regarding the participants in the solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, to the extent applicable, is available in the definitive solicitation statement filed with the SEC on January 28, 2014 and Supplement
been neither sought nor obtained.
No. 1 thereto filed on February 13, 2014.