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Deals & Dealmakers

Vornado spins off D.C. business in $8.4B merger with JBG Companies

Vornado Realty Trust will spin off its Washington DC business in an $8.4 billion deal that will create a merger with The JBG Companies.

The combined company will be named JBG Smith Properties and will be the largest pure-play Washington, DC real estate company.

In a press release, the Vornado said the deal represents “a key milestone in Vornado’s value creation strategy which will have produced three world-class, highly focused REITs – Vornado itself (RemainCo), Urban Edge Properties, and now, JBG Smith.ˮ

Each of these companies has a highly focused management team, unique assets, and a clearly defined mission.

Vornado shareholders are expected to own approximately 74 percent of the combined new company, JBG limited partners are expected to own approximately 20 percent, and JBG management is expected to own approximately six percent.

JBG Smith will be led by JBG’s senior management team which has a track record of success in the Washington, DC market over the long term and through numerous cycles.

The combined company’s portfolio will consist of 50 office properties totaling approximately 11.8 million square feet, 18 multifamily properties with 4,451 residential units, and 11 other properties totaling approximately 0.7 million square feet.

JBG Smith will have a pipeline of projects under construction and land for future development that could add over 20 million square feet to the portfolio, positioning the company for strong growth and attractive shareholder returns.

JBG SMITH will be the largest landlord to the U.S. Government in the nation’s capital.

JBG Smith’s Board of Trustees will consist of 12 members, a majority of whom will be independent. Vornado and JBG will each designate six trustees and Steven Roth, Vornado’s chairman and CEO, will be chairman of the Board.

Following the spin-off, Vornado will focus on New York, where it owns 18.7 million square feet of Class A office space and a 3.1 million square feet retail portfolio.

Roth said, “In addition to our irreplaceable portfolio in New York City, Vornado has a fortress balance sheet, significant dividend growth potential driven by recently signed leases, and a unique value creation opportunity from our Penn Plaza holdings.ˮ

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