EQC - Equity Commonwealth

[matts]

Whats the record date for shareholders eligible to vote? I'm having trouble finding it.

[thepupil]

I'm not sure about the record date or how it works exactly. I know that I have received the materials and will mail them in ASAP, as have a few friends. I have not opened mine yet but I am told that you cannot vote online and that you have to mail it in by taking it to a UPS drop off point. I hope this doesn't hinder people from voting. We need 70% to get rid of the board entirely and non-votes are effectively votes to keep the Portnoys in power.


Edit: One thing that does worry me a little bit is if the Portnoys can use the RMR empire to have REITs they control buy shares of CWH to try to swing the balance in their favor. I'm not sure how/if that would be disclosed, but I just fear these guys are going to do everything in their power to keep the fee gravy train rolling.

[matts]

Well if you already received the proxy then the record date was set earlier. So anyone buying shares now will not have a vote. The seller will, as they were the owner on the record date.

I don't believe other rmr reits hold material amounts of CWH, Corvex would have surely pointed that out, and I haven't seen it anywhere.

The thing I like about activism, is that even if it's "unsuccessful" it usually scares management enough to make some positive changes. The fee agreement is already more fair than in the past. Still not fair, but an improvement.

[matts]

http://www.bloomberg.com/news/2014-02-11/billionaire-zell-joins-commonwealth-reit-dissident-board-slate.html

"CommonWealth yesterday set Feb. 18 as the record date for shareholders entitled to vote to remove the board."

I was wrong, you can still by the shares and vote. And I think Sam Zell being on board is a very positive sign. He is a veteran of real estate turnarounds.

[thepupil]

Stock up about 20% since posting. While I think everything will work out, the risk/reward is incrementally worse as people have started to price in a win for the activist and preemptively close the valuation gap.

 I've mailed in my gold card and impatiently await the Defenestration of Portnoy.

Recent developments
-aforementioned setting of record date
-Sam Zell will be chairman should activists win
-this wonderful bit of activist advertising

http://www.shareholdersforcommonwealth.com/wp-content/uploads/2014/02/ZellvsCWHPerformance.pdf

Now we sit and wait and hope this thing trades to the activists' estimate of NAV upon a win. I've hedged the disaster scenario that the portnoy's win as it is somewhat cheap to do so with the stock up a fair bit.

Edit: Sidenote, the Portnoy's are running out of time to do something with SIR. If the activists are successful in gaining control of CWH, they'll effectively control SIR as well and can once again create value by kicking out the parasites. It may be interesting (assuming it doesn't rally too much) to buy SIR if/when CWH board is thrown out as Myth alluded to earlier in the thread.

[thepupil]

Notes from the past week or so

http://online.wsj.com/article/SB10001424052702304834704579405190503483658.html

Not much new in the below WSJ article but it does have a quote from
Delaware (big LO insititutional money manager owns 8%) saying he's
siding with Corvex/Related and it says that Vanguard (largest
shareholder) sided with the Corvex Related last time and Blackrock
abstained  The Delaware news is good news!

 The passive index guys have the capacity to screw up the campaign. Also a recent
VIC pitch on the preferred theorized that Vanguard was more
pro-portnoy since the portnoys waived their poison pill to allow
Vanguard to buy more.

So the way i see it, we have 35% (1/2 of the 70% we need) in the bag
(definites +actives), 19% passives whose vote is critical (get those
and you're almost 80% there), and then i think we'll easily get the
vast majority of smaller shareholders since we got 70% last time and
they are highly unlikely to be convinced the changes are sufficient.
Also I haven't ever seen a single positive thing written about the
Portnoys in media or on message boards/seeking alpha. Longtime retail
shareholders hate these guys and I think they will take the effort to
mail in their cards.


Definitely on our side (17.5%)
Corvex/related                 9.5%
Delaware/Macquarie        8.1%

Hedge Funds/Active MF's incredibly likely to be on our side (17% ish)
Perry                             5.0%
Owl Creek                      3.7%
AQR                              2.9%
Marcato                         2.4%
Highfields                       2.4%

The passives that need to put us over the hump
Vanguard 12.3%
Blackrock 6.7%


Quotes from WSJ:

"Clearly these changes were reactionary to the pressure they were
under," said Ian Ferry, a portfolio manager at Delaware Investments, a
mutual-fund manager that owns 8.13% of CommonWealth's stock and is
siding with the dissidents.

The outcome of the vote hinges largely on a few shareholders. The
Vanguard Group Inc., owns more than 12% of CommonWealth's stock, while
affiliates of BlackRock Inc., own about 7%. Vanguard sided with the
dissidents in last year's vote; BlackRock abstained. Both firms
declined to comment.


Also Earnings yesterday:

arnings out today, conference call later....only thing that is important is that the Portnoys diluted shareholders and destroyed value in 2013. FFO / share down significantly.

Normalized FFO available for CommonWealth REIT common shareholders for the year ended December 31, 2013 was $300.6 million, or $2.67 per share basic and diluted, compared to Normalized FFO available for CommonWealth REIT common shareholders for the year ended December 31, 2012 of $283.8 million, or $3.39 per share basic and diluted.

Sam Zell CNBC interview this morning
first of all, this particular situation, the commonwealth situation, is a situation where a structural impediment results in shareholders having almost no voice. by virtue of an externally managed structure of which there are very few equity reits. all of the rest of them are self-managed and avoid conflicts that exist when an outside manager manages assets he doesn't own. and as far as our backing is concerned, this started badly a year ago. they felt strongly that this was both an undervalued situation and a situation where shareholders were being deprived of their right to vote and be represented. they came to me and said our interests are economic. we want to build out of this a great new company. are you interested? i said, if you are successful, we would be prepared to take over the company and set up management operation very similar to what we did with the lp. so looking back at the last ten years or whatever, sam, you sold -- you didn't know why you were selling. it just seemed like a good time because of what people were offering you. we've had you on since then and things have come back down to where they are attractive again in your view. where are we right now with an improving economy? you're interested in this deal. is there inhe is there inherent value in real estate everywhere? the stuff that you sold, is it back to where it was when you sold it at this point? no. i don't think that the office market is even close to where it was in '07. in this particular situation, i believe that you have roughly a $7 billion collection of assets. that have been misaligned or misstrategically run, because effectively, the incentive to the manager was keep buying assets because you get paid on number of assets under your control, not on the performance. all you have to do is look at the chart of eqr, eop and, over the last 15 years, they're in a serious uptrend. commonwealth is dead as a dead

[thepupil]

http://finance.yahoo.com/news/holders-over-81-outstanding-shares-210100474.html

Holders of Over 81% of the Outstanding Shares of CommonWealth REIT Approve Removal of Entire Board of Trustees

Now the hard part: installing new management and restructuring the assets and company to maximize value. It's not a slam dunk from here, but so far so good.

[Myth465]

Really annoyed I waited.
Those leaps would have been very profitable....

[thepupil]

How hilarious is this?

0.02% of shares voted against removal of  Portnoys. I bet those 25 odd thousand are the two Portnoys themselves.

25,000/118.4MM



                             Consent to Remove    Against Removal        Abstain
    Ronald J. Artinian            96,519,999           2,616,865           183,567
     William A. Lamkin            99,073,207            63,657             183,567
         Ann Logan                96,517,303           2,619,561           183,567
      Joseph L. Morea             96,534,228           2,602,636           183,567
      Adam D. Portnoy             99,111,573            25,291             183,567
     Barry M. Portnoy             99,111,802            25,187             183,442
Frederick N. Zeytoonjian         99,076,194            60,670             183,567
Any other person or persons
elected or appointed to the
    Board prior to the
   effective time of the
         proposal                 99,121,487            15,502             183,442

[thepupil]

CWH just monetized their stake in SIR (a shame for shareholders of SIR) but it gives CWH 20% of market cap in cash. REIT with NAV in low to mid 30's with 20% of market cap in cash chaired by Sam Zell and run by a new blue chip managment team. Not a 50 cent dollar, but not a terrible place to be in my opinion.



CommonWealth sells Select Income stake to Government Properties

    Now under new management, CommonWealth REIT (CWH) sells its 22M shares of Select Income REIT (SIR) to Government Properties Income Trust (GOV) and Reit Management & Research (the Portnoys' management company) for $705M.    GOV made the bulk of the purchase with 21.5M shares and RMR purchased the other 500K. Both GOV and SIR continue to be managed by RMR.
    Source: Press Release
    CWH +6.1%, SIR -1.6% AH