JBG Merging With New York REIT, Forms $8.4B JBG Realty Trust
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The JBG Cos and New York REIT filed paperwork with the SEC Wednesday afternoon, confirming months of speculation: the two companies will merge, turning the Washington, DC, region's biggest developer into a public company to be called JBG Realty Trust.
Under the terms of the merger agreement, the shareholders of JBG and its affiliated companies would control 65% of the company and eight of the company's nine board seats. New York REIT's shareholders would retain a 35% stake in the assets and a single board seat. The company's HQ will remain in Chevy Chase, MD, where JBG is based, and keep New York REIT's office as a satellite.
The combined company would be worth $8.4B, according to a joint press release, and control approximately 14.1M SF of existing assets, not including JBG's massive development pipeline.
According to the filing, JBG owns 72 assets in the DC region (38 office, 19 multifamily and 15 retail), has eight projects under construction, 12 assets in pre-development and 40 parcels for future development. Those assets and projects are among the most prominent and well-positioned in the region, including the mammoth Central Place in Rosslyn, RTC West in Reston and Wardman Park Tower in the Woodley Park neighborhood of DC.
JBG managing principals Michael Glosserman (above) and Robert Stewart will be co-chairmen of the board of JBG Realty Trust. New York REIT CEO Michael Happel will serve as a consultant to the new company for six months, and will be paid more than $3M for his services.
JBG managing principal Matt Kelly (above, snapped in 2014 with Arent Fox's David Martin) will serve as JBG Realty Trust's CEO, David Paul will be president and COO, James Iker will be chief investment officer and Brian Coulter will be the chief development officer.
Yale University's endowment fund—JBG's largest outside shareholder—will control 10% of the company, and JBG's 21 principals will combine to control 15%.
JBG had long been rumored to be making a big change, more than a decade after its last major organizational shakeup. The deal has not yet closed, but if it doesn't close by January 2017, JBG could be eligible for a $55M termination fee for its trouble, per the SEC filing.
"We have been actively evaluating ways to bring our unique capabilities and strategy to the New York City market for some time and believe the portfolio of the combined company will provide tremendous opportunities for value creation," Matt said in the release.
Bank of America/Merrill Lynch will also provide the new company with a new $1.5B credit facility, which should help JBG as it determines where and how to develop in NYC. Todd Rich will lead JBG's efforts in New York.
The deal figures to be the talk of the town in DC, where JBG has already established its dominance. Now, the area's most powerful player is a public company, and curious eyes in the commercial real estate world will now have quarterly views into Camelot's financial dealings.