Following more than a year of prodding by a hedge fund and a real estate developer eager for change, the father-and-son team that controlled real estate investment trust CommonWealth REIT has been ousted, The New York Times reports.
Hedge fund Corvex Management and Related Fund Management, which own a combined 9.6 percent CommonWealth stake between them—have been calling for a management shakeup at CommonWealth over what they believe are the REIT’s corporate governance failures and excessive fees, the Times reports.
The pair announced Tuesday that shareholders holding more than 81 percent of CommonWealth’s outstanding stock had voted to replace the REIT’s entire board of trustees in a move that paves the way for billionaire real estate mogul Sam Zell to become chairman, Forbes reports. David Helfand, the co-president of Zell’s Equity Group Investments, is expected join Zell in the running of the Newtown, Mass., company as the CEO.
Barry Portnoy and his son, Adam Portnoy, control CommonWealth through an external management company, RMR, that receives lucrative fees. The Times reports that the Portnoys collected $77.3 million in compesation in 2012, a significant increase over the $59.7 million they received in 2007. According to a presentation by Corvex and Related that was shown to investors on March 12, CommonWealth’s stock declined 68 percent over the same period.
The activist pair have argued for the past year that the Portnoys are more interested in collecting fees for their management firm, REIT Management & ResearchLLC, than they in operating CommonWealth for the benefit of stockholders, Bloomberg reports.