NEW YORK CITY—Corvex Management LP, which earlier this year succeeded in removing the entire board of what was then known as CommonWealth REIT, has turned its attention from office properties to cellphone towers. In a letter to shareholders in Crown Castle International Corp., the Houston-based wireless infrastructure owner/operator, Corvex's Keith Meister said CCI should put off its possible $6-billion acquisition of Verizon's tower network until it changes its capital allocation plan to improve shareholder value.

"We are optimistic that many of you share our view that Crown Castle is a great business with exceptional growth opportunities in the years ahead,” Meister, managing partner at Corvex, wrote in a letter made public Tuesday. “However, we also believe many of you share our frustration over the company's stock price underperformance relative to peers and the market over the past 18 months, and the company's persistent market discount relative to its peers and its own intrinsic value.” Corvex-managed funds own approximately 12.6 million shares, worth about $1 billion, of the stock in CCI, which converted to REIT status earlier this year.

Meister's letter says the capital allocation plan that Corvex proposes could result in CCI stock trading at more than $100 per share. “Based on our analysis, we see a near-term opportunity for Crown Castle to drive a 27% re-rating in its equity, and the potential for over 60% upside in 15 months,” according to the letter. The letter proposes that CCI should increase either its dividend payout ratio or leverage ratio

Once its equity currency has strengthened, CCI can “aggressively pursue a Verizon towers transaction, creating even greater long-term value for shareholders,” Meister wrote. “However, if the company does not have the right cost of capital, it should not be pursuing acquisitions or issuing equity, whether for Verizon's towers or any other transaction.” He added, however, “Let's be clear, we want Crown Castle to correct its capital allocation plan, reduce its cost of capital and then bid for the Verizon towers.”

CCI on Tuesday acknowledged receipt of the Corvex letter. “We continually review our capital allocation strategy and consider all input from our shareholders as we aim to create long-term shareholder value,” says Ben Moreland, the REIT's president and CEO. CCI plans to address its capital allocation policy, including dividends, on its third-quarter earnings call scheduled for Oct. 31.

Over the course of a year, Corvex, in partnership with fellow CWH shareholder Related Fund Management, waged an ultimately successful campaign to remove the board of the Newton, MA-based REIT on grounds that its policies undermined shareholder value. The REIT is now known as Equity CommonWealth REIT and is based in Chicago, with Sam Zell serving as board chairman.