Jeff Johnson ‘83, former Chief Investment Officer of Equity Office Properties Trust (“EOP”) and current chairman of Kellogg’s Real Estate Advisory Board, has reunited with five former colleagues to take advantage of value-added opportunities in the office sector.
His new company, Reunion Office Holdings, is based in Chicago and was formed with the goal of aggregating $2-3 billion in real estate assets over the next few years. The company intends to deliver value-added returns by investing in office properties through a variety of potential structures, including direct equity, preferred equity, debt and partial interests in real estate companies. The focus will be on high-quality office properties in core markets across the United States. As Johnson explained, “We plan to concentrate on office markets— and in some cases, individual properties—where our team has prior experience and thus an informational advantage.”
Led by Johnson, the Reunion Office team is bolstered by five experienced EOP alums: Matthew Gworek, Brooke Kenevan, Sandra Deets, Megan McCann Kelleher and Michele Davis. According to Johnson, “In addition to having a long history together, our team has a broad range of skill sets, deep experience and strong office market knowledge.” The most recent addition to the team is Braden Rudolph, a 2010 MBA graduate of the Kellogg full-time program.
Prior to forming Reunion Office, Johnson served two stints as Chief Investment Officer at EOP, from 1997-1999 and from 2003-2007. In the intervening years, he helped launch Lehman Brothers’ real estate private equity group, where he served as Co-Head of U.S. Investments.
At Reunion Office, Johnson plans to follow the same “value investing” approach that he used successfully throughout his earlier career. Conceived by luminaries Ben Graham and David Dodd, value investing is based on the idea that assets have an intrinsic value that is distinct from the current market price. While at EOP, Johnson saw such an opportunity when he determined that private real estate prices were higher than the intrinsic value of the EOP portfolio, whereas EOP’s stock price was trading at a discount to intrinsic value. To capitalize on this mispricing, Johnson initiated $8.3 billion of property dispositions in non-strategic markets, and used $3 billion of the proceeds to buy back EOP shares. This value-investing strategy culminated in the $39 billion sale of EOP to the Blackstone Group in 2007. During this four-year timeframe from 2003-2007, EOP generated an average shareholder return of over 35%.
As Johnson explained, “Even though I have spent most of my career working within large real estate organizations, it has always been my desire to launch and oversee an entrepreneurial investment firm. Reunion Office allows me to accomplish this alongside a group of trusted colleagues.”