First, Washington-based CarrAmerica Realty went private in a $5.6 billion sale to an affiliate of The Blackstone Group. Now another Carr family offshoot, Columbia Equity Trust Inc. (NYSE: COE
), is being taken private.
A JPMorgan Asset Management real estate fund has agreed to buy Columbia Equity for about $502 million, including the assumption of $213 million in debt.
JPMorgan's Special Situation Property Fund agreed to pay $19.00 per share in cash for the outstanding Columbia shares. That represents a 12.4% premium over Columbia's closing share price on Friday, November 3, 2006.
Columbia, the public metamorphosis of Carr Capital -- formed by Oliver T. Carr, III of the Carr family real estate dynasty in Washington, D.C. -- launched its IPO just last year.
It has grown its portfolio to more than 3 million square feet of office space in 21 properties primarily located in the metro D.C. area. Its holdings include the 210,372-square-foot building at 1575 Eye St., NW; the 114,801-square-foot-building at 1025 Vermont Ave., NW and the Barlow Building at 5454 Wisconsin Ave. in Chevy Chase, MD.
As part of the deal, JPMorgan will also get Columbia's top executives. Both Oliver T. Carr, chairman of the board, president and CEO, and John A. Schissel, executive vice president and chief financial officer, of Columbia, have signed employment agreements with the JPMorgan Fund. Carr and Schissel and certain affiliates must reinvest at least 25% of their Columbia equity into the new owner.
"We are thrilled about this unique opportunity to acquire a diversified office portfolio located in one of the country's most desirable and supply-constrained office markets," said Nathaniel R. Daly, vice president at JPMorgan Asset Management, in a release. "We are also very excited about the opportunity to work with Columbia's senior management team in pursuing future value-added transactions in the metro D.C. region."
This isn't the first time Columbia and JPMorgan have done business together. The Special Situation Property Fund has partnered with Columbia on four office assets totaling about 800,000 square feet. Columbia has also partnered with another JPMorgan real estate fund on a fifth office property.
Goldman Sachs acted as financial advisor to JPMorgan and Stroock & Stroock & Lavan LLP served as legal counsel. Wachovia Securities acted as financial advisor to Columbia, and Hunton & Williams LLP served as company counsel.
The merger is subject to the approval stockholders. It is expected to close in the first quarter of 2007.