-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GeKLQpnxjU006CU3npDqXqe1Jm6o3f4ZD2k5WXE/KP6o0DgOgKgUZMuL+zfj6X8C fKm++sOP+Ega8Ufgi67NWw== 0000902664-07-000023.txt : 20070109 0000902664-07-000023.hdr.sgml : 20070109 20070109160640 ACCESSION NUMBER: 0000902664-07-000023 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20070109 DATE AS OF CHANGE: 20070109 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Columbia Equity Trust, Inc. CENTRAL INDEX KEY: 0001316710 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 201978579 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-80911 FILM NUMBER: 07520699 BUSINESS ADDRESS: STREET 1: 1750 H STREET, N.W. STREET 2: SUITE 500 CITY: WASHINGTON STATE: DC ZIP: 20006 BUSINESS PHONE: (202) 303-3060 MAIL ADDRESS: STREET 1: 1750 H STREET, N.W. STREET 2: SUITE 500 CITY: WASHINGTON STATE: DC ZIP: 20006 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Arnhold & S. Bleichroeder Advisers, LLC CENTRAL INDEX KEY: 0001325447 IRS NUMBER: 571156902 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 BUSINESS PHONE: 212-698-3241 MAIL ADDRESS: STREET 1: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 SC 13D 1 sc13d.txt COLUMBIA EQUITY TRUST, INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------- SCHEDULE 13D* (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) Under the Securities Exchange Act of 1934 (Amendment No. )* Columbia Equity Trust, Inc. - ------------------------------------------------------------------------------- (Name of Issuer) Common Shares, Par Value $0.001 per share - ------------------------------------------------------------------------------- (Title of Class of Securities) 197627102 - ------------------------------------------------------------------------------- (CUSIP Number) Mark Goldstein Arnhold and S. Bleichroeder Advisers, LLC 1345 Avenue of the Americas New York, New York 10105 (212) 698-3101 - ------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) January 8, 2007 - ------------------------------------------------------------------------------- (Date of Event which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. [X] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 7 Pages) - -------------------------- * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - ------------------------- -------------------- CUSIP NO. 197627102 SCHEDULE 13D PAGE 2 OF 7 PAGES - ------------------------- -------------------- - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Arnhold and S. Bleichroeder Advisers, LLC - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF, OO - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER 1,300,000 --------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY -0- OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON WITH 1,300,000 --------------------------------------------------------- 10 SHARED DISPOSITIVE POWER -0- - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 1,300,000 - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.4% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IA - ------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT! - ------------------------- -------------------- CUSIP NO. 197627102 SCHEDULE 13D PAGE 3 OF 7 PAGES - ------------------------- -------------------- Item 1. Security and Issuer. This statement on Schedule 13D relates to the common shares, no par value (the "Shares"), of Columbia Equity Trust, Inc. (the "Issuer"). The principal executive office of the Issuer is located at 1750 H Street, N.W., Suite 500, Washington, D.C. 20006. This statement supersedes the statement with respect to the Shares previously filed on Schedule 13G on December 11, 2006. Item 2. Identity and Background. (a) This statement is filed by Arnhold and S. Bleichroeder Advisers, LLC, a Delaware limited liability company and an investment adviser registered under the Investment Advisers Act of 1940 (the "Reporting Person"). The Shares reported herein are held by various clients in accounts under the Reporting Person's management and control, including an account for Arnhold and S. Bleichroeder Holdings, Inc., the parent company of the Reporting Person. Messrs. Jason Dahl and Jonathan Spitzer (together, the "Portfolio Managers") are co-portfolio managers for these client accounts and, as such, have the authority to make decisions regarding the voting and disposition of the Shares. Mr. John P. Arnhold (the "Principal") is the Chairman and Chief Executive Officer of the Reporting Person. (b) The principal business address of the Reporting Person, the Principal and the Portfolio Managers is 1345 Avenue of the Americas, New York, New York 10105. (c) The principal business of the Reporting Person, the Principal and the Portfolio Managers is investing for client accounts under their management. (d) None of the Reporting Person, the Principal or either of the Portfolio Managers has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) None of the Reporting Person, the Principal or either of the Portfolio Managers has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) The Principal and the Portfolio Managers are citizens of the United States of America. Item 3. Source and Amount of Funds or Other Consideration. The Shares reported herein were acquired at an aggregate purchase price of approximately $24,475,744. Such Shares were acquired with investment funds in client accounts under the Reporting Person's management and, in certain cases, were purchased on margin. - ------------------------- -------------------- CUSIP NO. 197627102 SCHEDULE 13D PAGE 4 OF 7 PAGES - ------------------------- -------------------- Item 4 Purpose of Transaction. The Reporting Person originally acquired Shares for investment purposes in the ordinary course of business, subsequent to the announcement on November 6, 2006 of the planned merger between the Issuer and JPMorgan Asset Management's Special Situation Property Fund. The Reporting Person acquired the Shares to capture the expected appreciation in the value of the Shares and to receive the scheduled dividend payments if the transaction closed as planned. Additionally, the Reporting Person believed the potential existed for additional value if the Board of Directors of the Issuer were to receive a superior acquisition proposal from another party. On December 22, 2006, the Issuer filed a preliminary proxy statement in connection with the pending merger. The Reporting Person believes that certain disclosures contained in the proxy statement raise significant questions as to whether the Issuer's independent directors fulfilled their fiduciary duties and achieved maximum value for the Issuer's shareholders. On January 8, 2007, the Reporting Person sent a letter to the issuer, a copy of which is attached hereto as Exhibit A, setting forth its aims and suggesting that, to rectify this situation, the parties to the pending merger should provide for a "go-shop" period, during which time other bidders are solicited to submit competing bids. The Reporting Person notes that it currently intend to withhold its support for the proposed merger until it is satisfied that the Issuer is being sold for the highest possible price that any market participant is willing to pay for its Shares and may encourage other shareholders to do the same. Except as set forth herein, or as would occur upon completion of any of the actions discussed herein, the Reporting Person has no present plan or proposal that would relate to or result in any of the matters set forth in subparagraphs (a)-(j) of Item 4 of Schedule 13D. The Reporting Person intends to review its investment in the Issuer on a continuing basis and may engage in discussions with management, the Board of Directors, other shareholders of the Issuer and other relevant parties concerning the proposed JPMorgan transaction and alternatives thereto and potentially concerning other matters with respect to the Reporting Person's investment in the Shares, including, without limitation, the business, operations, governance, management, strategy and future plans of the Issuer. Depending on various factors, including, without limitation, the status of the proposed JPMorgan transaction and the apparent level of shareholder support therefor, the terms of any alternative transactions that may be proposed, the Issuer's financial position and strategic direction, the outcome of any discussions referenced above, actions taken by the Board of Directors, price levels of the Shares, other investment opportunities available to the Reporting Person, conditions in the securities market and general economic and industry conditions, the Reporting Person may in the future take such actions with respect to its investment in the Issuer as it deems appropriate, including, without limitation, purchasing additional Shares or selling some or all of its Shares, engaging in short selling of or any hedging or similar transactions with respect to the Shares and/or otherwise changing its intention with respect to any and all matters referred to in Item 4 of Schedule 13D. Item 5. Interest in Securities of the Company. (a) As of the close of business on January 8, 2007, the Reporting Person is deemed to be the beneficial owner of 1,300,000 Shares, constituting approximately 9.4% of the Shares outstanding. The aggregate percentage of Shares reported herein is based upon 13,863,334 Shares outstanding, which is the total number of Shares outstanding as of November 14, 2006 as reported in the Issuer's Quarterly Report on Form 10-Q filed on November 14, 2006. - ------------------------- -------------------- CUSIP NO. 197627102 SCHEDULE 13D PAGE 5 OF 7 PAGES - ------------------------- -------------------- (b) By virtue of investment management agreements with its clients, the Reporting Person has sole voting and dispositive powers over the 1,300,000 Shares reported herein, which powers are exercised by the Principal and the Portfolio Managers. (c) Information concerning transactions in the Shares effected by the Reporting Person during the past sixty days is set forth in Schedule A hereto and is incorporated herein by reference. All of the transactions in Shares listed on Schedule A hereto were effected in the open market. (d) Clients of the Reporting Person have the right to receive and the ultimate power to direct the receipt of dividends from, or the proceeds of the sale of, the Shares reported herein. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Company. Except as otherwise set forth herein, the Reporting Person does not have any contract, arrangement, understanding or relationship with any person with respect to any securities of the Issuer. Item 7. Material to be Filed as Exhibits. A. Letter from the Reporting Person to the Issuer, dated January 8, 2007. - ------------------------- -------------------- CUSIP NO. 197627102 SCHEDULE 13D PAGE 6 OF 7 PAGES - ------------------------- -------------------- SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: January 9, 2007 ARNHOLD AND S. BLEICHROEDER ADVISERS, LLC By: /s/ Mark Goldstein ---------------------- Name: Mark Goldstein Title: Senior Vice President - ------------------------- -------------------- CUSIP NO. 197627102 SCHEDULE 13D PAGE 7 OF 7 PAGES - ------------------------- -------------------- SCHEDULE A TRANSACTIONS IN THE SHARES BY THE REPORTING PERSON DURING THE PAST 60 DAYS Date of Transaction Shares Purchased (Sold) Price Per Share ($) - ------------------- ----------------------- ------------------- 11/30/06 5,000 18.82 11/30/06 6,875 18.82 11/30/06 55,625 18.82 11/30/06 140,000 18.82 11/30/06 42,500 18.82 12/01/06 4,000 18.85 12/01/06 5,500 18.85 12/01/06 51,000 18.85 12/01/06 102,251 18.85 12/01/06 37,249 18.85 EX-99 2 exhibit-a.txt EXHIBIT A January 8, 2007 The Board of Directors Columbia Equity Trust, Inc. 1750 H Street, N.W. Suite 500 Washington, D.C. 20006 Members of the Board: After reviewing the preliminary proxy statement filed on December 22, 2006, we have come to the conclusion that the sale of Columbia Equity Trust to JPMorgan Asset Management is another example of a REIT transaction that delivers very attractive financial benefits to the REIT's managers but does not necessarily achieve maximum value for its shareholders. As you know, our firm and funds that we advise are holders of 1.3 million shares of Columbia common stock, which represents approximately 9.4% of all shares outstanding. We are writing to express a number of serious concerns we have around the process that led to the proposed transaction. Additionally, given the complete absence of a bidding process, we urge the Board of Directors of Columbia to seek a modification of the merger agreement in order to schedule a "go-shop" period prior to the February 26, 2007 special meeting for stockholders of record as of the close of business January 16, 2007 to vote to approve the merger. As disclosed in the proxy, Columbia management received unsolicited expressions of interest from no fewer than four parties between October, 2005 and October, 2006, yet at no point did the company engage in substantive negotiations with any party other than JPMorgan, Columbia's most significant joint venture partner. Apparently, on August 11, 2006, the independent directors did contemplate opening up the process and "'shopping' our company to other potential bidders," but instead decided to move forward with exclusive negotiations with JPMorgan. We are not persuaded by the reasons given for this decision, such as the "complex nature" of Columbia's business and the "significant time demands already placed on our senior management team." In our experience, we have seen much larger and more complicated companies, including REITs with significant joint ventures, undertake a sale process that involved negotiations with more than one party. Furthermore, it appears that management ended up devoting a significant amount of time in August and September to negotiating "the terms and conditions of the post-transaction employment and compensation arrangements." Certainly, if management could find the time to design and negotiate their multi-dimensional and, in our view, rather creative compensation arrangements (which, as detailed on pages 31 to 36 of the proxy, would ultimately include employment contracts, signing bonuses, performance-based bonuses, and equity and profit participation in a newly created investment vehicle, among other items), management could have also helped the Board conduct a fair bidding process for the company. To accommodate management's time constraints, the Board could have at least orchestrated a bidding process that was limited to the four parties who had approached management with expressions of interest, but for reasons not explained in the proxy, never entered into any kind of serious negotiations with the company. We think the most (and perhaps only) plausible justification that was given in the proxy as to why the Board entered into a transaction without seeking bids from other parties is the relatively low termination fee of $4 million (plus up to $750,000 in merger expenses), or approximately 1.5% of the equity value. We agree that this termination fee would not, in and of itself, "constitute a significant barrier to receiving offers from other interested parties if a transaction was announced." We are not persuaded, however, that, as a result of the low termination fee, Board members or shareholders should feel assured that another party that wishes to acquire the company at a higher price will simply step forward. As a general matter, there are risks and uncertainties associated with any effort to interfere with a definitive transaction involving a public company, especially when management has a vested interest in the success of that transaction. In the case of Columbia, we are concerned that certain ambiguities with respect to the company's various joint venture agreements, specifically, how these joint ventures might be unwound or otherwise affected by a change of control, add another layer of risk and uncertainty that might deter an interested third party from moving forward with an unsolicited bid. In particular, we are concerned that JPMorgan's contractual rights as both the acquirer and a major joint venture partner of Columbia would raise a number of questions for any potential third party bidder evaluating the level of resistance it might face and its chances of winning Board support. Underlying our belief that Columbia shareholders could potentially derive materially greater value for their shares if the company were shopped to other parties is our view that other buyers might have synergy opportunities that do not exist in the current transaction. A third party that was already familiar with and had an operating platform in Columbia's markets would likely have no need to retain management and could also realize various cost savings at the property level. The opportunity to eliminate such costs could have a meaningful impact on the implied cap rate a synergistic buyer would ultimately be paying for the assets, even if the buyer offered Columbia materially more than $19 per share. By acquiring Columbia, a synergistic buyer might have the opportunity to acquire these D.C. area office assets at a valuation that actually represents a discount to what it might have to pay to acquire similar assets on a property by property basis. In our view, the independent directors erred in their decision not to insist on a broader shopping of the company. To rectify the situation, we believe the parties to the merger should permit a limited "go-shop" period, prior to asking shareholders for their approval. Such "go-shop" periods have emerged recently as a common feature of private equity transactions in which members of management have had a conflict of interest with shareholders. While we acknowledge "go-shop" periods have had a poor track record as far as generating better outcomes for shareholders, we think a "go-shop" period in this context is more likely to work as we believe potential bidders may be more interested in the underlying real estate assets of the company and less interested in preserving the company as a going concern. Given the combination we have here of lucrative management compensation agreements, an acquirer that was already affiliated with the company, and the complete absence of a competitive bidding process, we are hopeful that the parties to the transaction will agree that implementing a "go-shop" period is the appropriate course of action from a fiduciary point of view. As holders of approximately 9.4% of the outstanding shares of Columbia, we currently intend to withhold our support for the proposed merger until we are satisfied that company is being sold for the highest possible price that any market participant is willing to pay for our shares. Please feel free to contact us at any time to discuss these matters further. Yours truly, Robert J. Hordon Jason B. Dahl Jonathan R. Spitzer Arnhold and S. Bleichroeder Advisers, LLC -----END PRIVACY-ENHANCED MESSAGE-----