CommonWealth Considers Sale of Its 56% Stake in Select Income

CommonWealth REIT may sell some or all of its 22 million shares, or 56 percent holding, in Select Income REIT to cut its debt and buy properties.

Select Income, which has a market value of about $1 billion, applied to the Securities and Exchange Commission to allow CommonWealth to sell “all, some or none” of its shares, according to a statement today. CommonWealth will use any money raised from the share sale to repay debt and buy new buildings in city-center business districts, the statement showed.

Corvex Management LP and Related Cos. are trying to oust CommonWealth’s board and have said they are prepared to buy the Newton, Massachusetts-based company, which they claim is undervalued because of “misalignment of incentives” between the real estate investment trust and its external management. A Maryland court ruled last week that they had “failed to provide sufficient facts” to halt the arbitration of a governance dispute with the company over bylaws that make it harder for investors to replace board members.

Select Income was a unit of CommonWealth before the company’s shares were listed on the New York stock exchange last year. Bank of America Merrill Lynch is book runner for CommonWealth.

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