Vornado to Spin-off DC Properties

NEW YORK – Vornado Realty Trust announced that its Board of Trustees has approved a tax-free spin-off of its Washington, DC business, currently known as Vornado/Charles E. Smith, and that it has entered into a definitive agreement to merge the spinoff with the operating company and certain select assets of The JBG Companies (“JBG”), a leading Washington, DC real estate company.

The combined company will be named JBG SMITH Properties and a pure-play Washington, DC real estate company.

Vornado currently owns 3,300 rental apartments in the Washington DC area along with 16 million square feet of office space. The company owns 26 buildings in the Crystal City neighborhood of Arlington, VA near the Ronald Reagan National Airport.

This newly announced spin-off represents a key milestone in Vornado’s value creation strategy which will have produced three world-class, highly focused REITs — Vornado itself, Urban Edge Properties, and now, JBG SMITH. Each of these companies has a highly focused management team, unique assets, and a clearly defined mission.

Vornado shareholders will own 74% of the combined company, JBG limited partners are expected to own approximately 20%, and JBG management is expected to own approximately 6% (all percentages subject to closing adjustments).

JBG SMITH will be led by JBG’s senior management team which has a track record of superior execution in the Washington, DC market over the long term and through numerous cycles.

The combined company’s portfolio will consist of 50 office properties totaling approximately 11.8 million square feet, 18 multifamily properties with 4,451 residential units, and 11 other properties totaling approximately 0.7 million square feet. These assets are located in premier submarkets within the Washington, DC metropolitan area, concentrated in Downtown District of Columbia, Crystal City and Pentagon City, the Rosslyn-Ballston Corridor, Reston, and Bethesda.

Importantly, JBG SMITH will have a pipeline of projects under construction and land for future development that could add over 20 million square feet to the portfolio, positioning the company for strong growth and attractive shareholder returns.

JBG SMITH will be the largest landlord to the U.S. Government in the nation’s capital.

Following the spin-off, Vornado will focus on its New York office and street retail REIT that will own 18.7 million square feet of Class A Manhattan office properties in the best submarkets; the largest, highest-quality and unique Manhattan high street retail portfolio, encompassing 3.1 million square feet in 72 properties; and prime franchise assets in San Francisco (the 1.8 million square foot 555 California Street) and Chicago (the 3.7 million square foot theMART).

Steven Roth, Chairman and Chief Executive Officer of Vornado, said, “In addition to our irreplaceable portfolio in New York City, Vornado has a fortress balance sheet, significant dividend growth potential driven by recently signed leases, and a unique value creation opportunity from our Penn Plaza holdings.”