NEWTON, Mass. (AP) — CommonWealth REIT said Wednesday that it is moving forward with its planned stock offering and debt repurchase, one day after a pair of shareholders said the stock was undervalued and that they're willing to buy the rest of the company.
Its shares tumbled more than 5 percent in premarket trading after hitting a 52-week high on Tuesday.
The Newton, Mass.-based real estate investment trust invests in office and industrial buildings and in leased industrial land in the United States.
On Monday, CommonWealth announced that it started a tender offer to buy up to $450 million of some senior notes due in 2014, 2015 and 2016. It also announced a public offering of up to approximately 31.1 million shares, with the proceeds being used to buy back the notes.
The next day, Corvex Management LP and Related Fund Management LLC said that they feel CommonWealth REIT's portfolio of real estate assets is undervalued. Corvex and Related own a combined stake of about 9.8 percent of CommonWealth's stock.
Corvex and Related said that if they didn't receive a response, they would look to have CommonWealth's board removed and would want to replace them with five independent trustees.
The companies also said that they would be ready to buy all of CommonWealth's outstanding stock at a "significant premium" to its current market value.
But CommonWealth REIT said Wednesday that it decided to move forward with the planned stock offering and debt repurchase after its board considered Corvex and Related Fund's position.
Its shares tumbled $1.26, or 5.2 percent, to $23.14 in premarket trading Wednesday after briefly hitting a 52-week high of $24.55 on Tuesday.