CommonWealth REIT (NYSE:CWH) does not recognize the result of the consent solicitation proffered by Corvex Management LP and Related Fund Management. According to the real estate investment trust company, the consent solicitation has no legal effect.

CommonWealth REIT

CommonWealth REIT’s Statement

“The Arbitration Panel that is considering the actions by Corvex/Related has not yet ruled. CommonWealth continues to believe that the consent solicitation recently pursued by Corvex/Related has no legal effect,” according to CommonWealth REIT (NYSE:CWH) in a statement.

The real estate investment trust company explained that Corvex and Related’s consent solicitation did not comply with its governing bylaws. Instead of providing additional information and correcting the deficiencies pointed out by CommonWealth REIT (NYSE:CWH) in their request for record date solicitation, the two hedge funds unilaterally declared a record date for shareholders and started soliciting written consents or referendum.

Corvex Management and Related Fund demanded the ouster of the entire board of trustees of CommonWealth REIT (NYSE:CWH). The two hedge funds own a combined stake of 9.6 percent of the outstanding shares of the real estate investment trust company and believe that its board has poor governance and conflict of interest.

Last Friday, Corvex and Related announced that the shareholders of more than 70 percent of the outstanding shares of CommonWealth REIT (NYSE:CWH) approved the proposed removal of the entire board of trustees of the real estate investment trust company. Corvex’s managing partner Keith Meister and Related’s CEO Jeff Blau described the result of their consent solicitation a “tremendous victory” and urged the leadership of the real estate investment trust company to stop disregarding the clear mandate of shareholders.

Arbitration Panel Has No Decision Regarding Corvex Activities

Adam Portnoy, president and managing trustee of CommonWealth REIT (NYSE:CWH) commented that the Arbitration Panel, which was designated by the Maryland courts, has no decision yet regarding the activities of Corvex and Related. He expressed confidence that the Panel will uphold the bylaws of the company and rule that the result of the consent solicitation is invalid.

“The CWH management and Board intend to continue to resist any efforts by Corvex/Related to circumvent the authority of the Arbitration Panel. While the arbitration process is underway, the CommonWealth Board and management also intend to undertake a dialogue with long term CommonWealth shareholders to correct the false and misleading statements published by Corvex/Related in their pursuit of a hostile takeover of CommonWealth and to consider governance changes which may be recommended by those shareholders,” said Portnoy.

Prior to the result of the consent solicitation, Corvex and Related made a commitment to buy 51 percent of the outstanding debt of CommonWealth REIT (NYSE:CWH) under its credit agreements to put an end to the scare tactic campaign of the company and alleviate the concerns of their fellow shareholders.