The Real Deal New York

New York REIT, JBG announce merger

Combined company, JBG Realty Trust, will hold $8.4B in assets

May 25, 2016 05:34PM
By Rey Mashayekhi

New York REIT JBG

1440 Broadway in Midtown (inset, from left: Michael Happel and Matt Kelly)

UPDATED, 6:30 p.m., May 25: New York REIT is merging with the Maryland-based JBG Companies, in a deal that will form a new real estate investment trust with roughly $8.4 billion in assets, both sides announced Wednesday.

The transaction will see private real estate investment firm JBG and its various funds “contribute substantially all of their properties” to publicly traded New York REIT.

The combined company, to be known as JBG Realty Trust, will hold more than 14.5 million square feet of office, residential and retail assets concentrated in New York City and Washington, D.C., according to a news release.

Around 22 percent of JBG Realty Trust’s portfolio, by rentable square feet, will be located in New York, with the remainder located in the D.C. metro area. The company will be headquartered in Chevy Chase, Md., where JBG is based, with a regional office in New York.

There were reports earlier this month that New York REIT and JBG were in merger talks, and the deal ends a tumultuous chapter for New York REIT that has seen the company plagued by shareholder discontent, an underperforming stock price and questions over its ties to Nicholas Schorsch’s AR Global — the REIT’s external advisor.

The deal with JBG will see New York REIT’s management contract with AR Global terminated, the release said, with JBG’s management team taking the reins. JBG executives Matt Kelly and David Paul will serve as the JBG Realty Trust’s CEO and president/COO, respectively, while New York REIT CEO Michael Happel will “serve as a consultant to the combined company for a transition period.”

JBG will receive nearly 320 million shares of New York REIT common stock and operating partnership units in exchange for contributing its properties and management company to the combined entity. The transaction is subject to approval by New York REIT shareholders, and will see those shareholders own 34.8 percent of the JBG Realty Trust, while JBG equityholders will hold 65.2 percent of the company.

The merger will be a boost to New York REIT stockholders who have clamored for changes at the company over the past year. New York REIT responded to the mounting shareholder criticism last fall by tapping Eastdil Secured to advise on “potential strategic transactions,” including a possible sale of the company.

MENU