One of New Jersey’s most prominent real estate firms is being sold, in a $100 million deal that could alter the landscape of development within the state and beyond.
New York-based Columbia Property Trust Inc. announced this week that it has signed a definitive agreement to acquire Morristown-based Normandy Real Estate Management LLC, run by partners Finn Wentworth, David Welsh and Jeff Gronning.
“The strategic combination of Columbia and Normandy will form a stronger company with an exceptional gateway market portfolio, a world-class team and a robust pipeline,” Wentworth said in a statement on behalf of the founders. “We have tremendous respect for Columbia’s strategy and leadership team and, after launching two projects with them this past year, we’ve seen how well their culture and business model align with ours.”
Wentworth is expected to join Columbia’s board, while Welsh will serve as chairman of the investment committee for Normandy III and IV, while Gronning is expected to become Columbia’s chief investment officer. Fellow Normandy partners Gavin Evans and Paul Teti will also join Columbia’s leadership team.
Under the terms of the deal, New York-based Columbia will acquire Normandy’s operating platform and general partner interests in three active management funds. The deal is valued at approximately $100 million in cash and stock, minus customary costs, Columbia said in a news release. That breaks down to $13.5 million in cash and approximately $86.5 million in convertible preferred units with a strike price of $26.50 per share, the firm noted.
It includes the general partnership interests and certain limited partnership interests in Normandy Real Estate Fund III LP, Normandy Real Estate Fund IV LP and Normandy Opportunity Zone Fund LP. However, Normandy Real Estate Fund LP and Normandy Real Estate Fund II LP are not included in the transaction, nor are a number of mixed-use development projects.
The deal is expected to close by year-end, pending customary approvals and conditions.
“Expanding our platform — both our capabilities and presence in our key markets — is highly supportive of Columbia’s long-term growth objectives,” Nelson Mills, Columbia’s CEO and president, said in a prepared statement. “Combining the Columbia and Normandy teams enhances our mutual talent, resources and relationships, and strengthens our position as a leader in our target markets.”
The transaction has been approved by Columbia’s board of directors and Normandy’s ownership partners.
“We believe that combining our development expertise and deep relationships in New York, Boston and D.C. with Columbia’s platform will create a formidable force in these markets,” Wentworth said. “The combined company will be positioned to expand on our extensive records of success and deliver superior results for all stakeholders.”
Privately-owned Normandy, founded in 2002, has offices in the New York, Boston and Washington, D.C., areas in addition to Morristown and Florham Park. Columbia owns and develops Class A office properties in markets including New York, San Francisco and Washington, D.C.
The two companies have previously created joint venture partnerships that developed 799 Broadway and redeveloped 250 Church St. in New York.
“Beyond Normandy’s proven sourcing, development and management capabilities, we’ve had the opportunity to experience their positive culture firsthand through our joint projects in Manhattan,” Mills said. “By joining forces, we will be able to provide fully integrated construction, development, leasing and property management services, as well as a complementary fund management platform to augment our core portfolio operations. All of this should greatly benefit our shareholders and our respective tenants, employees and partners.”
Since its founding, Normandy has acquired or developed more than 30 million square feet of office space in the Northeast, including multiple headquarters facilities. Normandy currently manages about 14 million square feet of assets in the Northeast.
Moelis & Co. is exclusive financial adviser to Normandy on the deal, while Goodwin Procter is its legal adviser. Morgan Stanley is Columbia’s exclusive financial adviser, while Kelley Drye & Warren and King & Spalding are its legal advisers.