Vornado Said to Weigh Selling Washington Unit to JBG Via Spinoff

  • Deal would allow JBG to become publicly listed company
  • Chairman Roth mulled spinoff in investor letter last year

Vornado Realty Trust, the landlord led by Steven Roth, has held talks to spin off and sell its Washington, D.C., business to closely held rival JBG Cos., according to people familiar with the matter.

Under a plan that has been discussed, the Washington portfolio, which includes more than 16 million square feet (1.5 million square meters) of office space, would be spun off into a new company, the people said, asking not to be identified as the details aren’t public. JBG would then acquire the new entity, gaining a public market listing, they said.

The business could be valued at about $4 billion to $6 billion depending on exactly which assets are included, one of the people said. No final decision has been made and there’s no guarantee a deal will be reached, they said.

A spokeswoman for Vornado declined to comment. A spokesman for JBG didn’t respond to a call and e-mail seeking comment.

JBG, based in Chevy Chase, Maryland, ended a merger agreement with New York REIT Inc. in August that would have created a publicly traded landlord with holdings in New York and the Washington area. Dissident shareholders of New York REIT opposed that deal, leaving the company to instead sell individual properties and return proceeds to its investors.

Vornado has been mulling a spinoff of its Washington office since early at least last year, when Roth wrote in an April investor letter that the company has considered “options with respect to our Washington business, such as inviting in a new investor(s) or even separating the business in a spin or in a spin-merge.”

The company’s Washington-area offices have been hurt by departures of U.S. Department of Defense tenants under an initiative to move operations onto military bases.

— With assistance by David M Levitt

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