By Joshua Burd
The leaders of Normandy Real Estate Partners have agreed to sell their operating platform and an interest in three funds to Columbia Property Trust, a New York-based real estate investment trust, in a $100 million transaction that is slated to close by year-end.
Columbia announced last week that it has agreed to acquire an entity known as Normandy Real Estate Management LLC, a developer, operator and investment manager of office and mixed-use properties in the Northeast and Mid-Atlantic. Under the cash and stock deal, the REIT will acquire Normandy’s operating platform and its general partner interests in three active management funds focused on New York, Boston and Washington, D.C.
Finn Wentworth and David Welsh — who founded Morristown-based Normandy Real Estate Partners in 2002 — are among the state’s most influential real estate executives. Wentworth is now slated to join Columbia’s board of directors, while Welsh will serve as chairman of the investment committee for Normandy’s funds III and IV, which are part of the acquisition.
Fellow partners Jeff Gronning, Gavin Evans and Paul Teti, meantime, are slated to take leadership roles with Columbia.
Wentworth, Welsh and Giorgios Vlamis, another Normandy partner, also reportedly plan to form a new company that will focus on properties in New Jersey and other markets that Columbia is not acquiring in the deal.
“Expanding our platform — both our capabilities and presence in our key markets — is highly supportive of Columbia’s long-term growth objectives,” said Nelson Mills, Columbia’s CEO and president. “Combining the Columbia and Normandy teams enhances our mutual talent, resources and relationships, and strengthens our position as a leader in our target markets.”
Normandy has built a substantial portfolio beyond its home state, with a strategy that includes acquiring, developing, repositioning and managing real estate. According to a news release, the company has acquired or developed more than 30 million square feet of office space across New York, New Jersey, Boston and Washington, D.C., including a host of high-profile headquarters facilities for blue-chip companies, along with many value-add repositioning projects.
The firm has developed its pipeline with a series of discretionary real estate funds and joint ventures that it has managed alongside institutional investors, the news release said. Normandy currently manages some 14 million square feet across the Northeast on behalf of its various fund investors and joint venture partners.
What’s more, Normandy and Columbia have partnered on two recent projects in Manhattan, including a ground-up, 182,000-square-foot development project at 799 Broadway and the redevelopment of 250 Church St. in Tribeca.
“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. “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.
“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. The combined company will be positioned to expand on our extensive records of success and deliver superior results for all stakeholders.”
Gronning is now expected to become chief investment officer for Columbia, while Evans and Teti will also join the REIT’s senior leadership team.
Under the transaction, Columbia will acquire the general partnership interests and certain limited partnership interests totaling roughly 2 percent in each of Normandy Real Estate Fund III LP, Normandy Real Estate Fund IV LP and Normandy Opportunity Zone Fund LP, the news release said. Columbia will also take on Normandy’s property and investment management businesses and their related fee streams.
Not included in the transaction are Normandy Real Estate Fund LP and Normandy Real Estate Fund II LP, as well as several mixed-use suburban development projects, the news release said. According to a report last week by The Real Deal, Wentworth, Welsh and Vlamis plan to form a new investment firm that will not compete with Columbia, retaining ownership of some Normandy assets that Columbia is not acquiring in areas including Westchester County, New Jersey and Newton, Massachusetts.
The publication, which cited a source familiar with the deal, also noted that the new firm’s investments will not focus exclusively on real estate.
Columbia’s board of directors and Normandy’s ownership partners have approved the acquisition, which is expected to close before the end of the year. Morgan Stanley is acting as exclusive financial adviser for Columbia, while Kelley Drye & Warren and King & Spalding are acting as legal advisers to Columbia.
Moelis & Co. is acting as exclusive financial adviser and Goodwin Procter as legal adviser to Normandy.
“Beyond Normandy’s proven sourcing, development and management capabilities, we’ve had the opportunity to experience their positive culture first hand 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.”
