UPDATED August 2, 2016.
New York REIT, JGB Terminate Merger Deal
New York REIT will sell off its individual assets and distribute the proceeds to shareholders. “It is in the best interests of the company and its stockholders to terminate the combination agreement effective immediately,” New York REIT chairman Randolph Read said.
New York REIT Inc. (NYSE: NYRT) agreed to merge with The JGB Companies to create an $8.4 billion New York City and Washington, DC REIT. At closing, NYRT stockholders will own 34.8% of the combined company and JBG equityholders will own 65.2%.
NYRT will acquire substantially all of the properties and the management business of JBG, with the combined company to be renamed JBG Realty Trust. As part of the transaction, NYRT’s external management contract will be terminated and the combined company will be managed by JBG’s current management team. The combined company will be headquartered in Chevy Chase, Maryland with a regional office in New York City.
“This combination creates a substantial REIT in New York City and Washington, D.C. We believe that the expertise of the JBG management team is recognized throughout the industry and that this combination will provide the NYRT stockholders with a unique opportunity to participate in the value creation potential that this combination will bring,” said Randolph C. Read, chairman of NYRT.
“This combination creates a stabilized real estate platform focused on two of the world’s gateway markets,” said W. Matt Kelly, CEO of JGB.
James L. Nelson, an independent director of NYRT, commented, “I am extremely pleased with the thorough and robust strategic review process that the board of NYRT conducted in analyzing a wide range of scenarios to create long-term stockholder value.”
The transaction will be tax-free to NYRT shareholders. The Yale University Investments Office and JBG employees, the two largest stakeholders in JBG, will own approximately 10% and 15%, respectively, of the combined company.
The transaction is subject to certain conditions, including obtaining approval by the NYRT stockholders. The board of directors of NYRT has approved the combination agreement and recommends that its stockholders approve the transaction. JBG has received all required approvals.
The Eastdil Secured group of Wells Fargo Securities, LLC acted as exclusive financial advisor to NYRT. Proskauer Rose LLP acted as legal advisor to NYRT and Venable acted as Maryland counsel to NYRT. BofA Merrill Lynch and Morgan Stanley acted as financial advisors to JBG. The Advisory and Consulting Group of Green Street Advisors acted as a strategic advisor to JBG. Hogan Lovells US LLP served as legal advisor to JBG.
The combined company’s portfolio will span over 14.5 million square feet of office, residential and retail properties across the gateway markets of New York City and Washington, DC, concentrated in transportation served, urban-infill submarkets. Approximately 22% of the portfolio, by rentable square feet (RSF), will be located in New York City, with the balance of approximately 78% located in premier submarkets within the Washington, DC Metro area.
The combined portfolio includes over 9.7 million RSF of high quality office assets, approximately 1.0 million RSF of retail assets, and approximately 4,500 residential units. In addition, a meaningful portion of the company’s assets are in mixed-use districts involving a high density mix of commercial and residential buildings with anchor, specialty and neighborhood retail.