Notes from the past week or so
http://online.wsj.com/article/SB10001424052702304834704579405190503483658.htmlNot 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