Vornado, which currently owns 34% of Smith Commercial, will acquire the remaining 66% of the company for $599 million in stock and $985 million in debt. In return, Vornado will take over ownership and management of Smith Commercial's 12.4 million sf of office space in the District, as well as the management of 5.8 million sf of office and other commercial space in the Washington, DC region.
The transaction is expected to close in the first quarter of 2002, at which point the company will increase the size of its board of trustees from seven members to nine. Officially, Smith Commercial will become Charles E. Smith Commercial Realty, a division of Vornado Realty Trust.
Company executives and industry analysts say the acquisition will not adversely effect Smith Commercial's 225 employees. "It's going to be run as a separate division," said Salomon Smith Barney analyst Gary Boston. "There will be, over time, some cost savings but there shouldn't be much of a change in the day-to-day operations."
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