VORNADO REALTY TRUST (NYSE:VNO) Files An 8-K Entry into a Material Definitive Agreement
ME Staff 8-k
VORNADO REALTY TRUST (NYSE:VNO) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement
On July17, 2017, Vornado Realty Trust (“Vornado”) and Vornado Realty L.P. (“VRLP”) entered into Amendment No.1 to the Master Transaction Agreement (the “MTA Amendment”), by and among Vornado, VRLP, JBG Properties,Inc., JBG/Operating Partners, L.P., certain affiliates of JBG Properties,Inc., JBG SMITH (“JBGS”) and JBG SMITH Properties LP (“JBGSLP”). The MTA Amendment amended the Master Transaction Agreement (the “MTA”), dated as of October31, 2016, by and among Vornado, VRLP, JBG Properties,Inc., JBG/Operating Partners, L.P., certain affiliates of JBG Properties,Inc., JBGS and JBGSLP. The MTA Amendment provided for, among other things, certain valuation adjustments to the relative equity values, a change in the closing date, the assumption by JBGS of certain severance costs related to the termination of Vornado employees in connection with the Separation (as defined below) and the Combination (as defined below) and a change so that expenses incurred in connection with obtaining required consents (other than those incurred by a lender or other third party) will be borne by JBGS. The MTA and the MTA Amendment are filed as Exhibits 2.1 and 2.2, respectively, to this Form8-K and are incorporated by reference herein.
Item 2.01Completion of Acquisition or Disposition of Assets
On July17, 2017, Vornado and VRLP entered into a Separation and Distribution agreement (the “Separation Agreement”) with JBGS and JBGSLP, to which Vornado and VRLP agreed to transfer certain of the assets and liabilities of Vornado’s Washington, DC segment (the “Vornado Included Assets”) to JBGS, Vornado agreed to distribute 50% of the outstanding common shares of beneficial interest, par value $0.01 per share, of JBGS to the holders of Vornado common shares and VRLP agreed to distribute 50% of the common limited partnership units of JBGSLP to the holders of VRLP common limited partnership units (the “Separation”).
On July17, 2017, to the Separation Agreement, Vornado completed the Separation through a tax-free distribution to its holders of common shares (the “Distribution”). The Distribution took the form of a distribution by Vornado of one common share of JBGS for every two common shares of Vornado held of record as of the close of business on July7, 2017 (the “Record Date”).
On July17, 2017, prior to the Distribution, VRLP distributed to holders of its common limited partnership units, including Vornado, all of the outstanding common limited partnership units of JBGSLP in the form of a distribution of one common limited partnership unit of JBGSLP for every two common limited partnership units of VRLP held of record as of the close of business on the Record Date. Following such distribution by VRLP and prior to the Distribution, Vornado contributed to JBGS all of the common limited partnership units of JBGSLP it received in the distribution by VRLP in exchange for JBGS common shares.
The Separation Agreement identified the assets to be transferred, the liabilities to be assumed and the contracts to be assigned to and by each of JBGS and Vornado as part of the Separation, and it provides for when and how these transfers, assumptions and assignments occurred. The Separation Agreement also governs the rights and obligations of the parties regarding the distributions following the completion of the Separation. This description is qualified in its entirety by reference to the Separation Agreement, which is filed as Exhibit2.3 to this Form8-K and is incorporated by reference herein.
On July18, 2017, to the MTA (as amended by the MTA Amendment), JBGS was combined (the “Combination”) with the management business and certain Washington, DC metropolitan area assets of JBG. The MTA and the MTA Amendment are filed as Exhibits 2.1 and 2.2, respectively, to this Form8-K and are incorporated by reference herein.
Subsequent to the Distribution, Vornado and VRLP will no longer consolidate the financial results of the Vornado Included Assets for the purpose of their own financial reporting. After the date of the Distribution, the historical financial results of the Vornado Included Assets will be reflected in the consolidated financial statements of Vornado and VRLP as discontinued operations for all periods presented through the Distribution date, beginning with the financial statements to be filed for the quarter ending September30, 2017.
Filed as Exhibit99.1 to this Form8-K are the unaudited pro forma consolidated balance sheets of Vornado and VRLP, dated as of March31, 2017, and the unaudited pro forma consolidated statements of income of Vornado and VRLP for the three months ended March31, 2017 and 2016 and for the years ended December31, 2016, 2015 and 2014, in each case giving effect to the Distribution.
Item 5.02Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Stephen W. Theriot
As previously disclosed, Stephen W. Theriot, previously the Chief Financial Officer of Vornado, was appointed Chief Financial Officer of JBGS effective as of February15, 2017. On July17, 2017, JBGS and Mr.Theriot entered into an employment agreement (the “Employment Agreement”) which provides for Mr.Theriot’s employment to commence on the consummation of the Combination (the “Effective Date”) and which supersedes and terminates Mr.Theriot’s prior employment agreement with Vornado. The initial term of the Employment Agreement extends for three years following the Effective Date, with automatic one-year renewals thereafter unless either party provides the other party at least 180 days’ prior notice of nonrenewal.
The Employment Agreement provides that Mr.Theriot will be entitled to an annual base salary of $550,000 and a target annual bonus opportunity of 50% of annual base salary. Additionally, Mr.Theriot will be entitled to participate in the 401(k)and welfare and benefit plans that are generally offered to JBGS senior-level executives or employees.
On or as soon as reasonably practicable following the Effective Date, JBGS will grant Mr.Theriot a number of equity awards under its 2017 Omnibus Share Plan equal to $1,000,000, divided by the volume-weighted average price of JBGS common shares on the New York Stock Exchange (“NYSE”) for the 10 trading days immediately preceding the grant date, comprised of 50% long-term incentive partnership units (“2017 LTIP Units”) and 50% outperformance plan units (assuming the achievement of target-level performance) (“2017 OPP Units”). The 2017 LTIP Units will vest ratably over four years, and 2017 OPP Units will vest 50% on each of the third and fourth anniversaries of the Effective Date (if earned), in each case subject to continued employment. In addition, on or as soon as reasonably practicable after the Effective Date, Mr.Theriot will receive an award (“Formation Units”) in the form of profits interests that provide for a share of appreciation above the fair market value on the grant date, with a number of units equal to $4,000,000 divided by the volume-weighted average price of a JBGS common share on the NYSE on the grant date. The Formation Units will vest 25% on each of the third and fourth anniversaries, and 50% on the fifth anniversary of the Effective Date, subject to continued employment.
The Employment Agreement provides for certain benefits in the event of termination without “cause” or resignation for “good reason” (each, a “covered termination”), including enhanced benefits upon a covered termination that occurs following the execution of a definitive agreement the consummation of which would result in, or within two years following, a change in control of JBGS.
Mr.Theriot is subject to a perpetual non-disclosure covenant, a non-competition covenant through the later of the third anniversary of the Effective Date and the first anniversary of the date Mr.Theriot’s employment terminates for any reason, and a non-solicitation of employees and consultants covenant through the later of the third anniversary of the Effective Date and the second anniversary of the date Mr.Theriot’s employment terminates for any reason.
If any payments to Mr.Theriot would constitute “parachute payments” within the meaning of Section280G of the Code, and would cause Mr.Theriot to become subject to the excise tax imposed under section4999 of the Code, then such payments will be reduced to the amount that would not cause him to be subject to the excise tax if such a reduction would put him in a better after-tax position than if he were to pay the excise tax.
The foregoing summary is qualified in its entirety by reference to the Employment Agreement, which is attached as Exhibit10.1 to this Current Report on Form8-K and is incorporated herein by reference.
Adjustment of Vornado Outperformance Plan Awards for the Separation
Upon the consummation of the Combination, awards under Vornado’s outperformance plans (which we refer to as the “OPP awards”), including those held by Mr.Theriot and Vornado officers and employees, will be proportionately adjusted in accordance with their terms to maintain the grantee’s rights, so that OPP award performance is measured based on the aggregate value of Vornado and JBG SMITH common shares on the NYSE and service with JBG SMITH or one of its affiliates will be treated as continued service with Vornado or one of its affiliates.
Item 9.01Financial Statements and Exhibits
(b)Pro forma Financial Information.
The unaudited pro forma consolidated balance sheets of Vornado Realty Trust and Vornado Realty L.P., dated as of March31, 2017, and the unaudited pro forma consolidated statements of income of Vornado Realty Trust and Vornado Realty L.P. for the three months ended March31, 2017 and 2016 and for the years ended December31, 2016, 2015 and 2014 are filed as Exhibit99.1 to this Current Report on Form8-K.
(d)Exhibits.
2.1 Master Transaction Agreement, dated as of October31, 2016, by and among Vornado Realty Trust, Vornado Realty L.P., JBG Properties,Inc., JBG/Operating Partners, L.P., certain affiliates of JBG Properties Inc. set forth on Schedule A thereto, JBG SMITH Properties and JBG SMITH Properties LP — Incorporated by reference to Exhibit2.1 to Vornado’s Annual Report on Form10-K for the year ended December31, 2016 (File No.001-11954), filed on February13, 2017.
2.2 Amendment No.1 to Master Transaction Agreement, dated as of July17, 2017, by and among Vornado Realty Trust, Vornado Realty L.P., JBG Properties,Inc., JBG/Operating Partners, L.P., certain affiliates of JBG Properties Inc. set forth on Schedule A of the Master Transaction Agreement dated as of October31, 2016, JBG SMITH Properties and JBG SMITH Properties LP.
2.3 Separation and Distribution Agreement, dated as of July17, 2017, by and among Vornado Realty Trust, Vornado Realty L.P., JBG SMITH Properties and JBG SMITH Properties LP.
10.1 Employment Agreement, dated as of July17, 2017, between JBG SMITH Properties and Stephen W. Theriot.
99.1 Unaudited pro forma consolidated balance sheets of Vornado Realty Trust and Vornado Realty L.P., dated as of March31, 2017, and the unaudited pro forma consolidated statements of income of Vornado Realty Trust and Vornado Realty L.P. for the three months ended March31, 2017 and 2016 and for the years ended December31, 2016, 2015 and 2014.
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
VORNADO REALTY TRUST
(Registrant)
By:
/s/ Matthew Iocco
Name:
Matthew Iocco
Title:
Chief Accounting Officer
(duly authorized officer and principal accounting officer)
Date: July21, 2017
VORNADO REALTY TRUST ExhibitEX-2.2 2 a17-17950_1ex2d2.htm EX-2.2 Exhibit 2.2 EXECUTION VERSION AMENDMENT NO. 1 TO MASTER TRANSACTION AGREEMENT This AMENDMENT NO. 1 TO MASTER TRANSACTION AGREEMENT (hereinafter referred to as this Amendment),…To view the full exhibit click here About VORNADO REALTY TRUST (NYSE:VNO) Vornado Realty Trust is a fully integrated real estate investment trust (REIT). The Company conducts its business through, and its interests in properties are held by, Vornado Realty L.P. (the Operating Partnership). It is the sole general partner of, and owns common limited partnership interest in the Operating Partnership. Its segments include New York and Washington, DC. The New York segment consists of approximately 29.3 million square feet in over 80 properties. The Washington, DC segment consists of over 70 properties aggregating approximately 20 million square feet, which consists of over 15.8 million square feet of office space in over 60 properties, seven residential properties containing over 2,410 units and a hotel property. It also owns approximately 3.6 million square foot Mart (theMart) in Chicago; interest in 555 California Street; interest in Vornado Capital Partners, its real estate fund; interest in Toys “R” Us, Inc., and other real estate and other investments.