NEW YORK CITY- Real estate investment trust Columbia Property Trust has completed its acquisition of development and operations firm Normandy Real Estate Management, reaching an agreement on anticipated investments, business management and leadership appointments.

Columbia acquired Normandy's operating platform and real property interests for aggregate cash and stock consideration of approximately $100 million, exclusive of the transaction and closing costs. This consideration consisted of $13.5 million in cash and approximately $86.5 million in convertible preferred units, issued at $26.50 per share.

"This acquisition supports our strategy to drive financial performance for investors by strengthening our capabilities across key markets while adding a full development arm and expanded pipeline," Nelson Mills, CEO of Columbia, said in a prepared statement. "Our successful leasing and repositioning efforts have produced a well-leased portfolio of exceptional assets in New York, San Francisco, Washington, D.C. and Boston. The addition of this highly capable team's talent, relationships, and market knowledge will fuel additional opportunities for us to build upon our long-term record of value creation for our shareholders."

Related to the acquisition of Normandy, Columbia has reached an agreement-in-principle to commit a $53 million equity investment in the Terminal Warehouse joint venture. Upon completion of this investment, which is subject to continuing negotiations and is anticipated to close within the next 30 days, Columbia would become co-general partner alongside L&L Holding Company, and Normandy Fund IV, among others.

The venture is intended to transform the 125-year old industrial warehouse, located on Eleventh Avenue in the Chelsea submarket, into a 1.2 million-square-foot, Class-A office and retail destination.

In addition to Columbia acquiring Normandy's property and investment management businesses and their related fee streams, the transaction also included the general partnership interests and certain limited partnership interests totaling approximately 2 percent in each of Normandy Real Estate Fund III, Normandy Real Estate Fund IV, and Normandy Opportunity Zone Fund.

The funds combined include approximately 7 million square feet of commercial real estate under management in the North East, including several prominent Manhattan projects. Among these are the Terminal Warehouse project and 888 Broadway in the Flatiron District, as well as the previously announced joint venture partnerships Columbia formed with Normandy at 799 Broadway near Union Square Park and the redevelopment of 101 Franklin, formerly known as 250 Church Street, in TriBeCa.

Columbia expects the net fee streams from these properties and investment management businesses to pair in a modestly accretive fashion alongside its net income and normalized funds from operations for 2020.

Closing the Normandy transaction, Jeff Gronning, who founded Normandy with Finn Wentworth and David Welsh, has been named executive vice president and chief investment officer of Columbia. Wentworth is anticipated to join the board of directors as a non-executive director at the board's next meeting in February.

Instant Insights /

Columbia Property Trust Completes Normandy Real Estate Acquisition

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