REIT Prices Controversial Offering

CommonWealth REIT has priced its controversial 30 million share public offering at $19 per share. Meanwhile, a second lawsuit has been filed by another investor seeking to stop the sale.

If completed, the proceeds from the offering will be used to help fund the purchase of up to $450 million of senior notes due between 2014 and 2016.

The joint bookrunning managers for this offering are Citigroup, B of A Merrill Lynch, UBS Investment Bank and Morgan Stanley. The joint lead managers are Jefferies and RBC Capital Markets. The co-managers are BB&T Capital Markets, Janney Montgomery Scott, JMP Securities, MLV & Co. and Oppenheimer & Co.

Meanwhile, public pension fund Delaware County Employees Retirement Fund has filed a shareholder derivative lawsuit in federal court in Boston on what it claims to be behalf of CommonWealth REIT against Barry and Adam Portnoy, the father and son managing trustees of the REIT, their company Reit Management & Research LLC, and others.

Besides seeking to terminate the offering, the suit seeks to “enjoin the company’s management from engaging in further self-dealing, mismanagement and waste of CommonWealth’s assets.”

Previously, Corvex Management LP and Related Fund Management LLC, which collectively own 9.8% of CommonWealth REIT, filed suit in a Maryland state court looking to stop the offering. They have also offered to pay $27 per share for the REIT.

Based on that offer, Stifel Nicolaus has upgraded CommonWealth to “hold” from “sell.” Investors also think the company is in play, as the stock closed on Thursday at $23.45, up 4.18%. Over 29 million shares traded during the day; the three-month average volume according to Yahoo Finance is 1.6 million.