COMMONWEALTH REIT FILES (8-K) Disclosing Entry into a Material Definitive Agreement, Completion of Acquisition or Disposition of Assets, Change in Directors or Principal Officers, Other Events, Financial Statements and Exhibits
(Edgar Glimpses Via Acquire Media NewsEdge) Item 1.01. Entry into a Material Definitive Agreement.
On July 8, 2014, CommonWealth REIT (the "Company") entered into a Stock Purchase
Agreement (the "Agreement") with Government Properties Income Trust ("GOV") and
Reit Management & Research LLC ("RMR" and together with GOV, the "Purchasers")
for the sale by the Company to the Purchasers of 22,000,000 shares (the
"Shares") of common shares of beneficial interest, par value $0.01 per share
(the "Common Shares"), of Select Income REIT ("SIR") in a private,
Under the terms of the Agreement, GOV and RMR have agreed to purchase 21,500,000
and 500,000 Common Shares, respectively, for a purchase price per Common Share
(the "Per Share Price") equal to the greater of (i) the closing sale price per
Common Share as reported by the New York Stock Exchange on July 8, 2014 plus
$1.50 and (ii) $31.00 per Common Share. In addition, each of the Purchasers has
agreed to deliver to the Company at closing an amount equal to SIR's accrued
dividends since the beginning of the second quarter of 2014 through the closing
date based on SIR's current quarterly dividend rate of $0.48 per share.
In the event that GOV or RMR consummates any sale of Common Shares within one
year of the closing date and the price per Common Share paid by the purchaser in
such sale transaction is greater than the Per Share Price, GOV or RMR, whichever
is the seller in such sale transaction, is required to pay to the Company an
amount equal to 50% of the product of (i) the number of Common Shares sold in
such transaction times (ii) the excess of (x) the price per Common Share paid in
such sale transaction and (y) the Per Share Price. The foregoing requirement
applies to any Common Shares owned by GOV or RMR.
The Agreement includes customary representations and warranties and conditions
to closing. The Purchasers have agreed to indemnify the Company pursuant to
customary indemnity provisions.
The Company and RMR are parties to a business management agreement, which
relates to the operation of the Company's business generally, and a property
management agreement, which relates to the Company's property level operations.
The foregoing description of the Agreement is not complete and is subject to and
qualified in its entirety by reference to the Agreement, a copy of which is
attached hereto as Exhibit 10.1 and is incorporated in this Item 1.01 by
Item 2.01 Completion of Acquisition or Disposition of Assets.
The information set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated into this Item 2.01 by reference.
On July 9, 2014, the Company closed the sale of the Shares to GOV and RMR. The
Per Share Price was $31.51 resulting in aggregate proceeds to us of
approximately $705 million in cash.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On July 8, 2014, the Board appointed Mr. Adam S. Markman, age 49, as the
Company's Executive Vice President, Chief Financial Officer and Treasurer. Prior
to joining the Company, Mr. Markman served as Managing Director of Green Street
Advisors, Inc., a real estate research firm ("Green Street"), where he worked
from 1994 to 2014. While at Green Street, Mr. Markman was in charge of the
firm's consulting and advisory practice, played a key role in the firm's
investment arm for real estate investment trusts and previously led the firm's
retail and lodging research efforts. Mr. Markman has also served as a real
estate consultant at Kenneth Leventhal & Co. Mr. Markman was a member of Green
Street's Board of Directors, and currently sits on Mark IV Capital's Board of
Directors and the Executive Committee of UC Irvine's Center for Real Estate. He
is also a member of the National Association of Real Estate Investment Trusts
(NAREIT) and the Urban Land Institute (ULI). Mr. Markman earned his M.B.A. in
Finance/Real Estate from Columbia University and a B.A. from U.C. Berkeley.
Also on July 8, 2014, the Company's Compensation Committee approved an interim
annual base salary for Mr. Markman of $400,000. As previously disclosed, the
Compensation Committee is currently evaluating the Company's executive
compensation program, and with the assistance of an executive compensation
consultant, will propose a new program to the Board, which may include a revised
annual base salary for Mr. Markman.
As a result of the appointment of Mr. Markman as the Company's Executive Vice
President, Chief Financial Officer and Treasurer, Mr. David A. Helfand will no
longer serve as interim Chief Financial Officer and interim Treasurer of the
Company. Mr. Helfand will continue to serve as the Company's President and Chief
--------------------------------------------------------------------------------On July 8, 2014, Mr. Jeffrey D. Brown, age 48, was appointed as the Company's
Senior Vice President and Chief Accounting Officer. Prior to joining the
Company, Mr. Brown served as Chief Accounting Officer and Corporate Controller
of Phillips Edison & Company, a private and public retail real estate owner
("Phillips Edison"), from 2008 to 2014. While at Phillips Edison, Mr. Brown was
responsible for SEC reporting and accounting functions. Prior to joining
Phillips Edison, Mr. Brown served as Chief Accounting Officer of Eagle
Hospitality Trust, a publicly-traded hospitality REIT. Mr. Brown is a Certified
Public Accountant, has an M.B.A. from Xavier University and a B.B.A. from
Eastern Kentucky University.
As a result of the appointment of Mr. Brown as the Company's Senior Vice
President and Chief Accounting Officer, Mr. Allen B. Samuel will no longer serve
as interim principal accounting officer, but will remain an employee, of the
Item 8.01 Other Events.
On June 27, 2014, the Company completed the portfolio sale of 14 properties with
a combined approximate 2.8 million square feet for a gross purchase price of
$215.9 million. In connection with the sale, the Company repaid $19.7 million of
mortgage debt along with $2.8 million of prepayment costs.
Item 9.01. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) The following exhibits are filed as part of this report:
10.1 Stock Purchase Agreement, dated as of July 8, 2014, by and among
CommonWealth REIT, Government Properties Income Trust and Reit
Management & Research LLC
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