Barry and Adam Portnoy Make $705 Million Purchase from Company that Ousted Them

The recently ousted chairman of CommonWealth REIT and his son are still doing business that real estate firm.


Jeff-Blau-Keith-Meister-Sam Zell -Adam-Portnoy


Two Massachusetts based real estate companies operated by CommonWealth REIT’s founder Barry Portnoy and his son Adam have acquired CommonWealth’s share in Select Income REIT, the largest owner of industrial land in Hawaii, for $705 million, including approximately $11.3 million of accrued dividends. The share of Select Income was sold to Government Properties Income Trust and Reit Management & Research LLC.

The two Portnoys were ousted from the leadership of Commonwealth this spring in a hostile takeover led by Chicago billionaire Sam Zell, who became the firm’s new Chairman of the Board.

Barry Michael Portnoy serves as a Founder and Trustee of all of the public real estate companies managed by Reit Management & Research LLC and RMR Advisors.

In the transaction, Commonwealth divested itself of 22 million shares in Select Income, for $31.51 a share. Government Properties Income Trust purchased 21.5 million shares and Reit Management & Research took the other 500, 000 shares. The Hawaiian firm owns more than 400 acres of industrial land on Oahu in Mapunapuna, Sand Island, Kalihi and Kapolei.

CommonWealth will evaluate options for the use of proceeds from the sale, including potential debt repayments and other corporate purposes. The Agreement will be filed with the Securities and Exchange Commission.

The deal will be filed with the Securities and Exchange Commission.

The firm’s stock rose 6.1% in after-hours trading after the deal was announced yesterday.

Government Properties issued the following statement about the acquisition: “We believe that this acquisition of SIR shares is a compelling investment opportunity for GOV and that it will add to the security and growth of GOV’s cash flows in the future. Based on SIR’s Normalized Funds From Operations and its dividend rate, GOV expects the acquisition of the SIR shares to be immediately accretive to GOV and to remain so after this acquisition is long term financed with an appropriate mix of debt and equity depending upon market conditions.”

Barry and Adam Portnoy serve as the managing trustees of Government Properties Income Trust, which focuses on properties that are leased to U.S. federal and state government agencies. As of March 31, 2014, it owned approximately $1.8 billion of office properties with more than 10 million square feet located in 31 states and Washington, D.C.

Founded by its chairman Barry Portnoy, REIT Management & Research (RMR) is a private company that primarily manages publicly traded companies. Since its founding in 1986, RMR has grown from managing one public company with less than $100 million in assets to eight public companies with approximately $23.0 billion in assets as of December 31, 2013. RMR oversees a large portfolio of publicly owned real estate, including approximately 1, 200 properties throughout North America and Australia.

Adam Portnoy is the firm’s President and CEO.

CommonWealth REIT is a real estate investment trust, which primarily owns office buildings located throughout the United States. The majority of its portfolio consists of office buildings located in central business districts, or CBDs, of major metropolitan markets.

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