Ashner and Witkoff blast proposed NY REIT, JBG merger

NYRT shareholders to explore running slate of new directors “to replace the current board”

TRD New York /
Jun.June 06, 2016 01:30 PM

Michael Ashner and Steve Witkoff fired off their latest shareholder letter to the board of New York REIT on Monday, expressing “numerous substantial and serious concerns” over the company’s proposed merger with private real estate investment firm JBG Companies.

Ashner and Witkoff’s WW Investors described the deal – which would see the two companies combine to form an $8.4 billion publicly traded new entity, JBG Realty Trust, as “materially detrimental to the interests of all NYRT stockholders.”

“We believe that the announced all-stock combination with JBG is one of the worst strategic transactions proposed to stockholders by a REIT board in recent memory,” Ashner wrote, citing New York REIT’s “precipitous stock price decline” after last month’s news of the merger.

They said they would exploring replacing New York REIT’s board, and brainstorm alternatives to the merger, including a cash sale of the company or a liquidation of New York REIT’s assets.

The letter added that Ashner and Witkoff would “actively encourage” fellow New York REIT stockholders “to reject the proposed JBG transaction and put an end to this ongoing lunacy,” and are not seeking to acquire the company or its assets themselves.

Ashner and Witkoff previously penned a letter to the New York REIT board last month, criticizing the company – which at the time was in merger talks with Maryland-based JBG — for ignoring overtures from an unnamed public company that Ashner said was “enthusiastic” about a possible acquisition of the REIT.

If the proposed merger receives approval from New York REIT shareholders, JBG Realty Trust would be comprised mostly of JBG assets – which are predominately located in and around the Washington, D.C. metro area. Only 22 percent of the combined company’s portfolio, by rentable square feet, would be located in New York.

JBG is also withholding around $1.8 billion in assets – nearly three dozen properties — from the combined entity, according to regulatory filings detailing the deal.

The merger would also terminate New York REIT’s external management contract with Nicholas Schorsch’s AR Global, which shareholders and analysts have cited as one of the causes for New York REIT’s underperforming stock price since the company went public in April 2014.

Representatives for both New York REIT and JBG declined to comment.

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