An under-the-radar team led by executives with ties to Alex Sapir and activist investor Michael Ashner is behind the $2.4 billion bid to take Columbia Property Trust private.
Arkhouse Partners on Thursday announced it had made an unsolicited offer of $19.50 per share for the REIT through a partnership with the Sapir Organization and 8F Investment Partners.
“We believe our proposal gives the company’s stockholders — many of whom have already suffered through years of value erosion — an attractive opportunity,” the group said in a letter to Columbia’s board, first reported by Bloomberg News.
The company’s founding partners are Gavriel Kahane, previously the director of operations and finance for Sapir, and Paul Acquasanta, who spent time at Ashner’s Winthrop Realty Trust.
The two launched Arkhouse in 2016 with partners Bob Spass and Shay Rubin to invest in opportunistic real estate deals with financing from high net worth individuals.
The company started out investing in structured deals through general partnerships, preferred equity and convertible debt, but pivoted toward the public markets as the coronavirus started driving down real estate stocks, according to a source close to the company. Its largest investment so far is a stake in Brooklyn’s 9 DeKalb Avenue with Micahel Stern’s JDS Development.
The Arkhouse execs believe their investors — high-net-worth individuals and institutional capital from 8F Investment Partners — can take a longer-term view on Columbia Property’s business than public market investors can.
The bid values the firm at about 7 percent below its pre-pandemic share price, following Columbia’s failed attempt to engage the activist investors privately.
“Despite considerable efforts to engage with Arkhouse over the last several months, which [Columbia Property Trust] publicly addressed earlier this week, the company first learned of this proposal of $19.50 per share this morning,” Columbia said in a statement.
Columbia previously disclosed that Arkhouse, the Sapir Organization and 8F Investment Partners sought to control it.
Shares of Columbia rose 12 percent at the news of the bid to $17.56 at midday, creating a market capitalization worth about $2 billion.
The investor group said it has a term sheet for financing with a $50 billion investment firm that has a track record with real estate deals. The Sapir Organization has notable success in the office sector with 11 Madison Avenue, which it purchased for $675 million in 2003 and sold for $2.6 billion in 2015.
Columbia has a portfolio of 19 buildings, with 10 in New York City — including the nearly 500,000-square-foot former New York Times building at 229 West 43rd Street, and the 1.2 million-square-foot Terminal Warehouse in Chelsea — and five buildings in San Francisco.
Working from home remains the norm across much of the United States, which has undercut the pricing of large office properties, although by how much remains uncertain.
Paramount Group, an office REIT with properties in San Francisco and New York, rejected a bid in November that valued the firm at nearly 30 percent below its pre-pandemic price.