DFAN14A

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ¨                              Filed by a Party other than the Registrant  x

Check the appropriate box:

 

¨   Preliminary Proxy Statement
¨   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
¨   Definitive Proxy Statement
x   Definitive Additional Materials
¨   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

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

Payment of Filing Fee (Check the appropriate box):

x   No fee required.
¨   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

     

  (2)  

Aggregate number of securities to which transaction applies:

 

     

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

     

  (4)  

Proposed maximum aggregate value of transaction:

 

     

  (5)  

Total fee paid:

 

     

¨   Fee paid previously with preliminary materials.
¨   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount Previously Paid:

 

     

  (2)  

Form, Schedule or Registration Statement No.:

 

     

  (3)  

Filing Party:

 

     

  (4)  

Date Filed:

 

     

 

 

 

The Case for Change Now at CWH
Presentation to ISS
May 7, 2013

2
Disclaimer
Additional Information Regarding the Consent Solicitation
In connection with their solicitation of written consents, Corvex and Related have filed a definitive written consent solicitation statement with the U.S.
Securities
and
Exchange
Commission
(the
“SEC”)
to
solicit
written
consents
from
shareholders
of
the
Company.
Investors
and
security
holders
are
urged to read the definitive written consent solicitation statement and other relevant documents when they become available, because they
contain
important
information
regarding
the
consent
solicitation.
The
definitive
written
consent
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 written consent solicitation of the Company’s 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 and David R. Johnson.  Information regarding the participants in the
consent solicitation and a description of their direct and indirect interests, by security holdings or otherwise, to the extent applicable, is available in the
definitive written consent solicitation statement filed with the SEC on April 10, 2013 and Supplement No. 1 thereto filed on April 12, 2013.
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 (“EDGAR”) 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
been neither sought nor obtained.

3
Introduction
Immediate Change is Needed
CWH’s corporate governance practices are “worst-in-class,”
in our view
–
In
fact,
in
response
to
our
efforts
at
reform,
CWH
is
conducting
an
accelerating
scorched
earth
campaign,
building
on
a
longstanding
tradition
of
disregarding
shareholder
rights
CWH’s corporate governance practices have yielded:
–
A Deeply Conflicted Management Structure;
–
Severe Financial and Operating Underperformance; and, most alarmingly,
–
We
are
pleased
to
present
to
ISS
our
case
for
change
at
Commonwealth
REIT
(1)
(1)
A
more
detailed
presentation,
“The
Case
for
Change
Now
at
CWH,”
was
filed
with
the
SEC
on
April
18,
2013.
CWH
stock
will
always
trade
at
a
substantial
discount
under
the
current
regime,
in
our
view
Trapped
inside
the
current
structure
and
under
the
supervision
of
the
current
trustees,
we
firmly
believe
the
capital
markets
will
never
credit
shareholders
for
the
true
fair
value
of
their
real
estate
assets,
whether
they
be
“CBD”,
“suburban”
or
otherwise 
Disenfranchised
Shareholders
On behalf of shareholders, Corvex and Related are soliciting consents to remove all
members of the board of trustees of Commonwealth REIT (“CWH” or the “Company”) in a
desperately needed referendum on CWH’s corporate governance and performance

4
Introduction
Immediate Change is Needed
We propose to effect Change
through Accountability:
Corvex/Related
propose
a
clear
plan
and
will
work
collaboratively
with
other
shareholders
to
restore
CWH
to
health
after
removal
of
the
current
board
We
have
already
identified
a
potential
interim
CEO
and
premier
property
management
company
to
oversee
the
transition,
and
have
also
engaged
Deutsche
Bank
to
provide
financial
advisory
services
including
with
respect
to
any
potential
financing
needs
We
believe
in
a
significantly
higher
NAV
per
share
after
removal
of
current
trustees,
but
this
will
never
be
achieved
without
eliminating
the
valuation
discount
currently
ascribed to the disenfranchising
corporate governance practices
in
place
today
Action
by
written
consent;
a
2/3
vote
will
remove
the
entire
board
of
trustees
and
hold
them
accountable
Path
for Shareholders:
Value
for Shareholders:
Plan
for Shareholders: 

5
Poor Corporate Governance
CWH’s Corporate Governance Policies Destined to Fail Shareholders
CWH’s corporate governance framework is “worst-in-class,”
in our view:
Managing
Trustees/President
of
CWH
own
<1%
of
CWH
stock,
but
own
100%
of
RMR
All executive officers of CWH are also officers of RMR
CWH’s so-called “independent”
trustees are severely conflicted, in our view
“Super-charged”
classified board: bylaws purport to require the board include two “managing
trustees”, such that it would take three years to replace a simple majority
Poison pill with slow hand provision
If less than the entire board is removed, vacancies will be filled by the remaining trustees
How
could
the
underpinnings
of
CWH’s
governance
framework
yield
anything
but
a
fundamental
misalignment
in
incentives
and
severe
underperformance?
“I’m
on
both
boards
and
I
can
say
there’s
no
conflict
of
interest.”
(1)
-
Adam Portnoy,
President/Managing Trustee, CWH; and
President/CEO/Part-Owner, REIT Management & Research (“RMR”),
External Adviser to CWH
(1)
“Whose
CommonWealth
Is
It
Anyway?”
Barron’s,
April
20,
2013

6
Poor Corporate Governance
Conflicted Board of Trustees
Significant overlap of board members across RMR entities, including so-called
“independent”
trustees 
In our view, the Portnoys and CWH’s “independent”
trustees are conflicted by any common
sense definition
2
of
3
“independent”
trustees
serve
on
other
Portnoy
boards
3 
“independent”
trustee
retired
from
RBC
capital
markets
division
in
2012,
a
division
which
regularly receives lucrative business from CWH (including the recent dilutive equity offering
for which RBC received over $2 million in fees) and RMR’s other entities
rd
Same Job, Different Company?
Travel Centers
Five Star
RMR Real Estate
Name
Title
CWH
HPT
SNH
GOV
SIR
of America
Senior Living
Income Fund
Senior
Management:
Adam D. Portnoy
President & Managing Trustee
Vern D. Larkin
Director of Internal Audit
Jennifer B. Clark
Secretary
Board
of
Directors:
Adam D. Portnoy
President & Managing Trustee
Barry D. Portnoy
Managing Trustee
William A. Lamkin
Partner at Ackrell Capital
Frederick N. Zeytoonjian
Founder & CEO of Turf Products
Joseph Morea
Retired RBC Banker

7
Poor Corporate Governance
Fundamental Misalignment of Incentives
$2.7
billion
of
net
acquisitions
and
capex
since
2007
(over
2x
CWH’s
recent
market
cap
(1)
),
while CWH book value per share essentially flat
Fees paid to RMR continue to grow, while CWH shareholder value continues to decline
RMR extracted nearly 30% of CWH’s market cap during 2007-2012, as CWH stock continued to
plummet
Over $2 billion of related party transactions in the last 5 years, to seed new platforms for RMR
(1)
Market
cap
of
$1.3
billion
based
on
a
closing
price
of
$15.85
on
February
25,
2013,
the
day
prior
to
Related
and
Corvex’s
first
public
filing.
RMR receives fees based on gross historical cost basis, gross collected rents
and construction costs, incentivizing growth through acquisitions regardless of
returns to CWH shareholders
'07-'12
2007
2008
2009
2010
2011
2012
Total
Fees Paid Out to RMR
$59.7
$63.2
$62.6
$62.2
$69.5
$77.3
$394.6
RMR Fees % Growth
--
5.9%
(1.0%)
(0.5%)
11.7%
11.2%
29.5%
RMR Fees as % of:
CWH Market Cap
4.5%
4.8%
4.7%
4.7%
5.2%
5.8%
29.7%
CWH Market Cap, Cumulative
4.5%
9.3%
14.0%
18.6%
23.9%
29.7%
29.7%
CWH Cumulative Stock Price Return
(37.4%)
(74.7%)
(46.0%)
(48.4%)
(66.3%)
(67.9%)
(67.9%)

8
Poor Corporate Governance
Actions Speak Louder Than Words
A massively dilutive equity offering executed at 48% below book value to repay debt trading
above par
A failed attempt to secretly change Maryland law to make it impossible to remove trustees
without cause
A March
1
bylaw
amendment
that
attempts
to
eliminate
shareholders’
right
to
action
by
written
consent to remove trustees
A contemplated sale of CWH’s 56% controlling interest in SIR at a potential discount rather
than at a control premium, which would also have the effect of preserving RMR’s fee stream
from SIR
An April 12 bylaw amendment that conflicts with 14 years of CWH’s own public disclosure
If
there
had
previously
been
any
doubt
as
to
where
the
trustees’
alleigances
lie,
these
actions
have
made
clear
it
is
with
the
Portnoys
and
not
shareholders
Value destructive actions and attempts by the trustees to disenfranchise CWH
shareholders, all undertaken after Corvex/Related attempts at reform, are
appalling:

9
Poor Corporate Governance
Dilutive Equity Offering
On March 5, 2013, CWH sold 34.5 million shares at $19.00 despite
protests from some of its
largest shareholders, a bona fide offer at substantial premium, and in our view no need to
issue equity
–
Increased CWH’s share count by 41% and diluted CWH’s NAV by over $6 per share
CWH’s use of proceeds for the equity offering was to repay debt trading at prices ranging
from 102% to 111% of par
–
Remarkably, CWH did not have any upcoming maturities or liquidity issues associated
with this debt or any debt
–
However,
equity
offering
increases
Company’s
equity
base,
creating
additional
capacity
to
do
acquisitions
and
thereby
pay
more
management
fees
to
RMR
We believe the recently completed equity offering serves as a clear example of
poor management, fundamentally misaligned incentives, and terrible capital
allocation

10
Poor Corporate Governance
March 1 Bylaw Amendment
On March 1, 2013, CWH announced its bylaws had been amended to “clarify that a
shareholder
seeking
to
take
action
to
remove
one
or
more
Trustees
must
comply”
with
the
3%
/ 3 year requirement
–
Far from a ‘clarification,’
this is an attempt to effectively eliminate a shareholder right
(action by written consent to remove trustees) granted in CWH’s Declaration of Trust
since 1986
–
But the Declaration of Trust supersedes the bylaws and can only be changed through a
shareholder vote
–
In our view, the trustees are clearly terrified of facing their own shareholders
We are litigating this matter in Maryland Court
–
We
and
our
legal
team
believe
the
board’s
attempted
‘clarification’
is
inconsistent
with
CWH’s
own
Declaration
of
Trust
and
thus
null
and
void
as
a
matter
of
law
Related
and
Corvex
believe
CWH’s
March
1   bylaw
amendment
is
invalid
and
a
desperate attempt to disenfranchise shareholders
st

11
Poor Corporate Governance
Failed Maryland House Bill Amendment
CWH used deceptive letters (which were later withdrawn) from a conflicted attorney in an
attempt to mislead Maryland senators into believing amendment had broad legal support and
was
ministerial,
when
in
fact
it
had
not
even
been
discussed
by
key
Maryland
bar
committee
(1)
Proposed amendment would have opened the door to make it impossible to remove trustees
without cause in many Maryland companies, even if shareholders had the explicit right to do so
in a company’s charter
CWH
again
couched
the
proposed
amendment
as
a
“clarification,”
which
we
believe
to
be
absurd
Existing Maryland law expressly contemplates the supposedly unclear situation the Portnoys
allege, and clearly provides for the removal of a staggered board without cause when
provided
for
in
a
company’s
charter
–
as
is
unequivocally
done
in
CWH’s
Declaration
of
Trust
The amendment quickly died once legislators became aware of CWH’s manipulative behavior
and
the
clear
fact
that
the
amendment
was
substantive
and
not
at
all
a
“clarification”
Current
trustees
would
rather
manipulate
the
Maryland
legislative
process
and
change
the
law
than
face
their
own
shareholders
One
of
the
Portnoys’
latest
legal
maneuvers
was
a
secret
attempt
(likely
using
CWH
money)
to
insert
an
11
th
hour
amendment
into
a
Maryland
House
Bill
(1)
The
proposed
amendment
was
not
even
discussed
by
the
Corporation
Law
Committee
of
the
Business
Law
Section
of
the
Maryland
State
Bar
Association,
a
group
which
typically
reviews
and
comments,
often
for
weeks
or
months
at
a
time,
on
all
changes
to
Maryland
corporate
and
REIT
law
before
changes
are
heard
by
the
General Assembly.

12
Poor Corporate Governance
April 12 Bylaw Amendment
On
April
12,
2013,
CWH
purported
to
“opt-in”
to
Section
3-803
of
the
Maryland
General
Corporation Law, which allows Maryland companies to adopt a classified board (something
CWH has had in place since 1986)
CWH
has
taken
the
view
that
“opting
in”
to
Section
3-803
enables
them
to
unilaterally
eliminate shareholders’
right to remove trustees without cause
–
We
and
our
lawyers
firmly
believe
that
they
are
wrong
In fact, CWH  recently sought to amend Section 3-803 to “clarify”
that a company opting-in to
Section 3-803 could eliminate shareholders right to remove trustees without cause. The
Maryland legislature did not approve the proposed amendment. Various senators noted
during hearing that CWH’s proposed amendment represented a substantive change in the
law, not a “clarification”
CWH’s erroneous interpretation of Section 3-803 conflicts with 14 years of public filings by
CWH,
which
not
once
mention
the
potential
effects
of
opting
into
Section
3-803,
notwithstanding extensive disclosure of Maryland law applicable to shareholder rights, and
CWH ’s continuous reminder to shareholders that trustees can be removed without cause by
a two-thirds vote
CWH’s latest bylaw amendment conflicts with 14 years of their own public
disclosure

13
History of Underperformance
Summary
CWH has in our view performed poorly in absolute terms and underperformed
its peers
(1)
on almost any metric over any relevant time period
Stock price performance:  -17%, -45%, -43%, -45%, and -53% return over the last 1 year, 2
years,
3
years,
5
years,
and
10
years,
respectively
(2)
Valuation:
Recent valuation nearly 40% below peers on an unlevered cap
rate basis
(3)
and
53%
and
41%
discount
on
a
price
/
forward
FFO
multiple
basis
for
the
last
year and 3 years, respectively
As
detailed
on
pp.
24-26
in
our
presentation,
“A
Case
for
Change
Now
at
CWH,”
April
18,
2013, CWH also underperforms on:
–
Cost structure
–
Acquisitions and return on investment
–
FFO / share growth
In
our
view,
there
is
absolutely
no
way
to
slice
and
dice
the
data
in
favor
of
the
Portnoys
–
their
performance
has
been
horrible
(1)
Select
peers
include
the
following
suburban
office
REITs:
Piedmont
Office
Realty
(PDM),
Highwoods
Properties
(HIW),
Mack-Cali
Realty
(CLI),
Brandywine
Realty
(BDN), and Parkway Properties (PKY).
(2)
Returns
data
calculated
through
February
25,
2013,
the
day
prior
to
Related
and
Corvex’s
first
public
filing.
(3)
Based
on
a
closing
price
of
$15.85
on
February
25,
2013,
the
day
prior
to
Corvex
and
Related’s
first
public
filing.

14
History of Underperformance
Total Returns –
3 years
CWH has underperformed its peers over the last 3 years
•
Like
CWH,
selected
peers
are
also
suburban
office
REITs
•
CWH has even underperformed CLI, ~80% of whose office markets
are either struggling or in
secular decline
HIW: 42.1%
PDM: 39.1%
CWH: (26.6%)
PKY: 6.9%
CLI: (2.7%)
BDN: 35.8%
RMZ: 52.5%
Note: Total returns include dividends
Source: SNL
1 year
3 year
PKY
65.5%
6.9%
BDN
25.2%
35.8%
HIW
15.5%
42.1%
PDM
15.3%
39.1%
CLI
1.5%
(2.7%)
Average
24.6%
24.2%
RMZ
10.6%
52.5%
CWH
(9.4%)
(26.6%)
: CWH –
Avg.
34.0%
50.8%
(60.0%)
(40.0%)
(20.0%)
0.0%
20.0%
40.0%
60.0%
80.0%
2/25/2010
7/12/2010
11/26/2010
4/12/2011
8/27/2011
1/11/2012
5/27/2012
10/11/2012
2/25/2013
PKY
BDN
HIW
PDM
CLI
CWH
RMZ

($ in millions, except per share values and TEV / sq. ft.)
Enterprise
Implied
G&A /
Current
Equity
value
nominal
TEV /
equity
Net debt /
P / FFO
TEV / EBITDA
Div
Ticker
Company
price
mkt cap
(TEV)
cap rate
Sq. Ft.
mkt cap
TEV
2013E
2014E
2013E
2014E
yield
CWH
CommonWealth REIT
$15.85
$1,338
$4,914
11.1%
$89
3.9%
76%
5.4x
5.5x
12.0x
12.3x
6.3%
HIW
Highwoods Properties Inc.
$35.35
$2,983
$4,999
6.6%
$144
1.3%
40%
13.1x
12.7x
15.6x
14.8x
4.8%
BDN
Brandywine Realty Trust
$12.96
$1,885
$4,689
7.1%
$176
1.3%
58%
9.0x
8.6x
14.1x
13.8x
4.6%
CLI
Mack-Cali Realty Corp.
$27.15
$2,715
$4,983
8.2%
$158
1.8%
44%
10.6x
10.5x
13.4x
13.3x
6.6%
PDM
Piedmont Office Realty Trust Inc.
$19.66
$3,294
$4,699
6.9%
$229
0.6%
30%
14.0x
13.5x
15.8x
15.1x
4.1%
PKY
Parkway Properties Inc.
$16.39
$920
$2,096
6.0%
$177
1.8%
37%
13.3x
12.4x
14.2x
13.7x
2.7%
High
$3,294
$4,999
8.2%
$229
1.8%
58%
14.0x
13.5x
15.8x
15.1x
6.6%
Mean
2,359
4,293
7.0%
177
1.4%
42%
12.0x
11.5x
14.6x
14.1x
4.6%
Median
2,715
4,699
6.9%
176
1.3%
40%
13.1x
12.4x
14.2x
13.8x
4.6%
Low
920
2,096
6.0%
144
0.6%
30%
9.0x
8.6x
13.4x
13.3x
2.7%
15
History of Underperformance
Summary Public Comparables
CWH trades at a significant discount to its peers on all key measures
(1)
Note:  Share price and estimates updated as of 2/25/2013, the day before Related and Corvex’s 13D filing.   Financial information as of Q4 2012.  Implied nominal cap rate is
calculated as GAAP LTM NOI / TEV.
(1)   CWH
implied
cap
rate
based
on
CWH
standalone
TEV
of
$4,914
million
(based
upon
CWH’s
enterprise
value
excluding
the
market
value
of
CWH’s
public
equity
stake
in
SIR
and
indebtedness
of
SIR)
and
estimate
of
comparable,
stabilized
NOI
of
$547
million
(derived
from
a
bottom-up
property-by-
analysis
conducted
by
Related,
Corvex and their advisors.)
(2)   CWH “Net debt / TEV”
includes CWH’s Series D and Series E Preferred Shares.  These preferred instruments have fixed cash coupons and fixed redemption amounts.
The
Series
E
is
not
convertible
to
common
stock.
The
Series
D
is
convertible
to
common
stock
at
a
conversion
price
of
$52.00
or
approximately
133%
greater
than
CWH’s recent stock price.  As such, we believe these preferred instruments are more similar to subordinated debt securities than common equity.
Source:  Company filings and FactSet.
(2)

16
Change Through Accountability
Path
for Shareholders
Given
entrenching
devices
in
CWH’s
documents,
shareholders
must
act
now
to
remove
the
board
or
face
at
least
three
more
years
of
mismanagement.
“All or None”: If less than the entire board is removed, vacancies will be filled by the
remaining trustees.
Path: action by written consent requires 2/3 vote to remove the entire board of trustees
–
Record
date
is
April
22,
in
our
and
our
attorneys’
view,
in
light
of
the
board’s
lack
of
response to our request for a record date
–
We and our lawyers believe CWH’s recent bylaw amendments, which would effectively
eliminate shareholder rights to remove trustees without cause, are invalid and a
desperate attempt to disenfranchise shareholders
We believe removing CWH’s entire board of trustees immediately is in the best
long-term interests of all shareholders, and the only near-term means for
shareholders to effect change

17
Change Through Accountability
Value
for Shareholders
Value: $35 per share potential NAV at 4/17/13 after removal of current trustees, and target stock
price of $44+ per share at 12/31/14
–
In our view, NAV represents current fair market value (if current trustees are removed)
based on bottom-up property-by-property valuation analysis led by Related, one of the
most
prominent
privately-owned
real
estate
firms
in
the
U.S.
(1)
–
We believe CWH could trade at a stock price of $44 or higher at 12/31/14 through
internalization of management, operational turnaround, improved capital allocation, and
multiple expansion
–
In
our
view,
potential
downside
of
-40%
or
greater
to
current
price
should
existing
trustees
remain
in
place,
due
to
market
overhangs
from
external
management,
poor
corporate
governance,
and
likelihood
of
continued
underperformance
(1)
See Appendix.
We believe our path will unlock significant value for all shareholders, whereas
the
status
quo
will
lead
to
continued
value
destruction
and
self
dealing
for
the
benefit of the Portnoys

18
Change Through Accountability
Plan
for Shareholders:  Strategy
Internalize management and adopt a market cost structure
Align management compensation with shareholder returns
–
While corporate management will be replaced, we anticipate current property level
employees will be hired to work at the new CWH
Amend
existing
Declaration
of
Trust
and
bylaws
to
conform
to
ISS
and
Glass
Lewis
best
practices
Cease all related party transactions
Cease all acquisition activity until CWH’s stock price exceeds its NAV
Use excess cash flow to buy back CWH stock until the Company’s stock price exceeds its
NAV
In
short,
manage
the
Company
to
maximize
long-term
CWH
shareholder
value,
not fees paid to RMR
We propose the following key elements as a starting point for the Company’s
new direction, subject to the approval of the new board elected by shareholders

19
Change Through Accountability
Plan
for Shareholders:  Board Transition
Once the current trustees are removed, CWH is required to promptly call a special meeting
during which all shareholders will elect new trustees
At that time, we hope and expect all CWH shareholders will collectively identify an
independent slate of highly qualified nominees –
including real estate industry veterans with
pristine credentials –
that are prepared to work for the best interests of all shareholders
Corvex/Related
are
committed
to
collaborating
with
fellow
shareholders
to
elect
an
independent
board
that
will
implement
ISS
and
Glass
Lewis
corporate
governance
best practices
In
particular,
Corvex/Related
are
committed
to
supporting
the
implementation
of
a
strict
policy
with
respect
to
related
party
transactions
–
With respect to material transactions with significant shareholders, we would demand
that any such transactions be approved by a majority of the shares not owned by any
such shareholder
–
Note that Related will not be managing the properties or incorporating them in any way
into its own portfolio
The
Declaration
of
Trust
contemplates
the
removal
of
the
entire
board
of
trustees and provides a roadmap for the transition

20
Change Through Accountability
Plan
for Shareholders:  New Corporate Governance Framework
Terminate CWH’s poison pill, and impose a strict policy of non-implementation of poison pills without
shareholder approval
Opt-out of every provision of the Maryland Unsolicited Takeovers Act
Annually elected board of trustees, with a majority being independent (based on ISS’s definition of
independence)
Majority vote for the removal of trustees with or without cause
Directors elected by majority of votes cast, with strict resignation policy; plurality voting to apply in contested
elections
Shareholders to fill trustee vacancies and permit them to both expand the size of the board and fill newly
created vacancies
Eliminate ownership / holding period requirements for the nomination of directors or making of other
shareholder proposals at the annual meeting
Eliminate ownership / holding period requirements for requesting
a record date
Shareholders to have the power to amend bylaws
No mandatory arbitration of shareholder disputes
Strict policy on related party transactions
We will only support trustees who commit to immediately upon their election
take steps to amend CWH’s charter and bylaws to conform to ISS and Glass
Lewis best practices:

21
Change Through Accountability
Plan
for Shareholders:  Corporate Management Transition
Mr. Lozier is a 30+ year real estate industry veteran:
–
Former CEO and co-founder of the Archon Group L.P., a subsidiary of Goldman Sachs,
During
Mr.
Lozier’s
tenure
at
Archon,
the
company
grew
from
320
employees
to
8,500
employees
managing
36,000
assets with a gross value of approximately $59 billion
–
Prior to Archon, Mr. Lozier was an employee of the J.E. Robert Company (“JER”)
managing the Goldman Sachs / JER joint venture for two years.  Mr. Lozier directed the
acquisition
efforts
of
the
joint
venture
between
GS
and
JER
from
1991-1995
Related/Corvex have identified a potential interim CEO, Jim Lozier, to help
transition CWH to internal management 

22
Change Through Accountability
Plan
for Shareholders:  Property Operations Transition
CBRE, the world’s largest commercial real estate services firm, has agreed to
provide interim property management services and leasing services to the CWH 
portfolio as necessary
CBRE
(1)
employs 42,000+ people in 430+ offices and manages more than 3.3 billion square feet of
commercial property and corporate facilities across the globe
Successfully
managed
transition
of
leasing
/
management
services
for
1.2
billion
square
feet
of
commercial properties in the U.S. over the previous nine years, including transitions done under
significant time pressure
(1)
Employees,
offices,
and
square
footage
under
management
includes
CBRE
affiliate
offices.

23
Change Through Accountability
Plan
for Shareholders:  Financial Transition
In connection with their scare tactics, current trustees have also emphasized
risk that a termination of RMR’s agreements could lead to a “change of
control”
under CWH’s credit agreements and other agreements
We, along with our financial advisor Deutsche Bank, have analyzed the Company’s credit
agreements
Deutsche
Bank
has
already
given
us
a
highly
confident
letter
for
any
necessary
refinancing
which may arise under CWH financing agreements as a result of the change of control,
positioning CWH for a smooth transition

24
Conclusions
Change Through Accountability
The
board
of
trustees
of
CWH
must
be
held
accountable,
and
removed
in
its
entirety
“Worst-in-class”
corporate governance, in our view, has produced a fundamental
misalignment
of
incentives,
destroyed
value,
and
disenfranchised
shareholders
CWH
has,
in
our
view,
performed
poorly
in
absolute
terms
and
underperformed
its
peers
on
almost
any
metric
over
any
relevant
time
period
Corvex/Related
have
proposed
a
clear
Path
and
Plan
to
unlocking
significant
Value

Stock Price
Related / Corvex
@ 2/25
NAV @ 4/17
Stock Price
$15.85
$34.92
% Change
--
120.3%
Diluted shares outstanding
84.4
118.3
Equity value
$1,338
$4,131
TEV
4,914
7,137
Cap Rate of Stabilized NOI
(3)
11.12%
7.66%
Cap Rate of LQA NOI
(4)
9.92%
6.83%
Price / LQA Normalized FFO
5.9x
13.0x
Price / GAAP Book Value per Share
0.43x
0.95x
Price / Square Foot
(5)
$89
$135
Dividend Yield @ Current $0.25 / Qtr
6.31%
2.86%
We believe NAV can be thought of as fair market value of the current portfolio, before benefit
from any other value enhancing actions (which we believe are plentiful)
Valuation was led by Related, one of the most well respected real estate developers,
operators, and investors in the U.S. with a 40 year history and a portfolio of over $15 billion of
real estate operating assets today
We believe CWH could trade at a stock price of $44 or higher at 12/31/14 through
internalization of management, operational turnaround, improved capital allocation, and
multiple expansion
Appendix
Valuation Summary
(1)
Includes value of SIR stake as of April 17, 2013.
(2)
Derived based on the sum of a bottom-up, property-by-property analysis conducted by Related, Corvex and their advisors.
(3)
Stabilized NOI of $547 million.
(4)
Wholly-owned LQA GAAP NOI of $487.3 million per CWH 4Q12 Supplemental.
(5)
Wholly-owned square feet per Company filings and Related / Corvex analysis.
(1)
With the removal of current trustees, we estimate an NAV per share of $35
today (4/17/13) based on bottom-up property-by-property analysis, and a target
stock price of $44 or higher at 12/31/14
(2)
25

Appendix
Share Repurchase Analysis
We believe accretive capital allocation could lead to a stock price of $44 by
12/31/14
26
Stabilized Cash NOI (after Non-Core Asset Sales)
$511.4
Cap Rate Assumed
7.50%
Implied CWH TEV
$6,818.7
PF Net Debt
2,331.2
Preferred Equity
655.0
Implied CWH Equity Value
$3,832.5
Implied CWH Share Price
$44.33
% Change to Current
96.5%
Memo: Shares Outstanding
86.5
Implied CWH Share Price
Non-Core Asset Sales
$44.33
$0.0
$150.0
$300.0
$450.0
$600.0
7.00%
$43.52
$46.34
$49.96
$54.78
$61.52
Cap
7.25%
41.10
43.70
47.05
51.51
57.74
Rate
7.50%
38.83
41.24
44.33
48.45
54.20
7.75%
36.71
38.93
41.78
45.58
50.90
8.00%
34.72
36.77
39.40
42.90
47.80
% Change to Current
Non-Core Asset Sales
$0.0
$150.0
$300.0
$450.0
$600.0
7.00%
92.9%
105.4%
121.5%
142.8%
172.7%
Cap
7.25%
82.2%
93.7%
108.5%
128.3%
155.9%
Rate
7.50%
72.1%
82.8%
96.5%
114.7%
140.3%
7.75%
62.7%
72.6%
85.2%
102.1%
125.6%
8.00%
53.9%
63.0%
74.6%
90.2%
111.9%
2012
2013E
2014E
Reported CAD
$131.4
Run-Rate
Target
Savings
Business Mgmt. Fees
$46.2
$35.0
$11.2
Property Mgmt Fees
36.8
25.8
11.0
Incremental CAD
$83.1
$60.8
$22.3
$22.3
$22.3
Reduction in Interest
43.2
43.2
43.2
Adjusted CAD
$196.9
$196.9
$206.7
Current Quarterly Dividend
$0.25
$0.25
Avg. Shares Outstanding
110.1
94.2
Annual Dividends Paid
$110.1
$94.2
2013E
2014E
CAD after Dividends Paid
$86.8
$112.6
Non-Core Asset Sales
300.0
300.0
Divested NOI
(9.0)
(27.0)
Share Repurchases
$377.8
$385.6
Share Repurchase Price Assumed
$23.00
$25.00
% Premium to Current Price
2.0%
10.8%
Shares Repurchased
16.4
15.4
% of Shares Outstanding (Current)
13.9%
13.0%
Beginning Shares
118.3
101.9
Ending Shares
101.9
86.5
Avg. Shares Outstanding
110.1
94.2
Note: Other upside drivers not modeled here include stronger end market growth, SIR appreciation, further multiple expansion, and additional cost efficiencies.

27
Appendix
Questions All CWH Shareholders Should be Asking
Have
current
trustees
created
value
for
CWH
shareholders?
Is it possible for existing trustees to fairly represent shareholders given their conflicts of interest?
Why have RMR’s fees gone up 30% since 2007 while CWH’s stock has declined 68%?
Why are the Portnoy REITs some of the last remaining externally managed equity REITs in the
public markets?
Will
CWH
ever
trade
at
a
peer
valuation
with
RMR
as
its
external
manager?
How
much
of
the
Portnoy
fortune
has
been
extracted
from
the
savings
of
retail
investors?
Why does CWH lag peers on nearly every relevant operational metric?
Why did CWH seek to sell equity at a 48% discount to book value to repay debt trading above
par with no maturities or liquidity needs?
Why did CWH sell its $240 million minority stake in GOV only after massively diluting
shareholders by issuing $650 million in new CWH equity at $19.00?
How can existing trustees defend selling equity at $19.00, a massive discount, at the same time
they ignored an offer at $27.00, a significant premium?
How
can
CWH
call
its
hand-picked
trustees
“independent?”

28
Appendix
Questions All CWH Shareholders Should be Asking (cont’d)
Why
haven’t
CWH’s
“independent”
trustees
formed
an
independent
committee
and
hired independent advisors?
How have CWH shareholders been compensated for the multiple new RMR platforms launched
with CWH’s assets?
Does
CWH
even
have
a
strategy,
or
is
it
simply
recycling
capital
to
create
the
appearance
of
doing
something?
Why does CWH refuse to hold Q&A on its conference calls and roadshows?
Why
are
the
Portnoys
trying
to
change
Maryland
law
rather
than
face
a
shareholder
vote?
Why
haven’t
current
trustees
prepared
a
detailed
presentation
of
their
own
demonstrating
how
much value they have created for CWH shareholders?
Why isn’t anyone in the REIT industry speaking up to defend the Portnoys?
How much CWH shareholder money have existing trustees already wasted in the last seven weeks
trying to further entrench themselves?
How
much
more
damage
will
be
inflicted
on
CWH
shareholders
in
the
next
3
years
if
current
trustees
are
not
removed
immediately?

29
Appendix
“Structural Change is Much Needed”
Citi
Research
has
stated
that
the
Company
has
a
flawed
structure
and
history
of
value destruction

30
Appendix
“External Manager RMR Causes Concern”
(1) For the 9 month period ended September 30, 2012, CWH reported a NOI margin of 57.7%.  CWH excluded 94 underperforming properties as discontinued properties in
its same store financials ending 12/31/2012, making the 9 months ended 9/30/2012 a more representative reflection of company performance.  CWH’s 57.7% NOI margin,
the lowest of its peers, compares to a peer average of 64.7% over the same time period, despite CWH’s greater scale.  The 7.0% difference between CWH margins and its
peers implies over $70 million of potential excess costs at CWH, a difference which has attracted the attention of market participants.

31
Appendix
“Acting in the best interest of RMR rather than as a fiduciary”

32
Appendix
Related & Corvex Overview
Related and Corvex collectively own 10.9 million shares of CWH (9.2% of
shares outstanding)
Related Companies
–
Related Fund Management, LLC is an affiliate of Related Companies (“Related”), one of
the most prominent privately-owned real estate firms in the United States
–
Formed 40 years ago, Related is a fully-integrated, highly diversified industry leader with
experience in virtually every aspect of development, acquisitions, management, finance,
marketing and sales
–
Related’s existing portfolio of real estate assets, valued at over $15 billion, is made up of
best-in-class mixed-use, residential, retail, office and affordable properties
Corvex Management
–
Value-based
investing
across
the
capital
structure
in
situations
with
clearly
identifiable
catalysts
–
Active investing to create asymmetric risk/reward opportunities
–
13D investments since inception include AboveNet (acquired by Zayo in March 2012),
Corrections Corporation of America (elected REIT status in February 2013), Ralcorp
(acquired by ConAgra in November 2012), and ADT (Keith Meister joined Board in
December 2012)