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CommonWealth Reit Message Board

  • deanmortensen deanmortensen Feb 26, 2013 3:57 PM Flag

    I wonder if Corvex and Related could really get $50/share out of CWH...

    They say there's as much as $50/share worth of value in CWH shares. The thing is, tho, the share book value is $31.69, according to Yahoo Finance. And, Commonwealth wrote down book value by almost $2 in 4Q to reflect the fact that those 98 properties they put up for sale had to be marked down from their carrying value. I'm guessing that Portnoy's long-term strategy is: After paying off the senior unsecured notes with the proceeds of the secondary offering, he'll put on more debt at the property level. A large number of owned properties are unencumbered, which means Portnoy could mortgage them with low-cost secured debt, with the ultimate goal of reducing debt service costs and increasing cashflow per share. That type of strategy would take a few years to execute.

    With a broad-based recovery in the US economy and employment, CWH shares might be worth $50 in a few years. But, I don't think that is what Corvex and Related are talking about. They are talking about some kind of restructuring of the balance sheet in the short term to unlock "hidden value". It's hard to see how they could unlock a lot of value in the short term.

    Sentiment: Hold

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Portnoys are horrible managers. My hope is that we get new board, internalize management - which is get rid of RMR, do not sell poor properties - lease them out and get some cash flow, this will be better than a fire sale..
      Stock will be $50 in 3 years with good dividend.

    • Those properties were poor performing properties with approx 25% occupany that was why the big writeoff on those properties alone and the firesale as they wanted to get it off the books. The other properties are not. While $50 may be a stretch Related is a real estate company so they should understanding valuation of properties.

    • Cananyone explain why the Portnoys should be trusted to realize value for shareholders. If that had been their goal, they would have changed the REIT's structure from an externally management company to an internalizied managed firm. It has been no mystery why CWH has always traded at a significant discount to its net asset value and even further behind its peers. Whether the value is now above $30 or eventually could be $50 is secondary to ending the Portnoy's strangle hold on this portfolio. Institutional shareholders account for about 60% of the shares. The Portnoys and other insiders control an embarassingly small part of the shares ((I guess they know where their real profit center is!). Individual shareholders represent 40% of shares outstanding. Is there anyone among those outside the Portnoys' circle who would vote to support these gonifs?

      • 1 Reply to huguccio
      • huguccio, I have to agree that Commonwealth has a lapdog board. Adam Portnoy's father in on the board, which seems to rubber stamp whatever Portnoy decides he wants to do. And, what Adam Portnoy decides he wants to do is usually to buy more properties, thereby generating fat fees to RMR. If there's any such thing as fairness, Commonwealth will give RMR the boot, and reform governance. (That's a big "if"...) I just don't see how the Commonwealth BOD could reject a bona fide cash offer of $25 per share or more from Corvel and Related, if they ever put a real offer on the table. The current offer is nothing but talk, as there is no financing backing it. Show us the money!!!!!!!

        -Dean

        Sentiment: Hold

 

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