As Jacobs steps aside, JBG aggressively repositions itself again

By Jonathan O'Connell
Monday, January 10, 2011

Benjamin R. Jacobs was a young man in a hurry. While still in law school at American University, he was hired as a clerk at a small Washington legal practice in 1962 and engaged to be married the next year. The firm's real estate work interested him most, which came in handy when two 30-something attorneys from the firm suggested he join them in a newly created real estate company.

So keen were Donald A. Brown and Joseph B. Gildenhorn on the 23-year-old that they soon offered to add Jacobs's "J" to the fledgling company's name, making it JBG.

Five decades later, the JBG Cos. has grown into one of the region's most successful real estate firms, an owner or manager of $10 billion in assets, and Jacobs is ready to turn the company over to a new generation of young leaders. Last week, the co-founder traded his position as a managing member of the firm for a senior advisory role, the last of the three early partners to back away from day-to-day responsibilities, meaning there is no longer a "J," "B" or "G" at the helm of the JBG Cos. for the first time in its history.

Jacobs said he is not worried. He and his partners have long run the company like a law firm, hiring new managers in their 20s and 30s and grooming them into ownership positions much like the way law firms develop associates into partners. JBG is a unique entity -- it is private, focused exclusively on Washington, and, though not owned by a family, it has passed the mantle along over 50 years as though from one generation of a family to another.

The new leadership team led by Michael J. Glosserman is now busy positioning the firm for the next real estate boom. With 450 employees and gleaming offices off Wisconsin Avenue NW, the company is moving aggressively to accumulate properties for development, buying some outright and taking control of others by acquiring debt, filling in for fleeing investors and forming joint ventures.

Jacobs said he is proud of the fact that young people at JBG are given a seat at the negotiating table early. Rarely are executives hired from other firms. The company's culture, Jacobs said, has been "one in which everyone's individual contribution is respected and appropriately and fairly rewarded."

That consensus-driven environment started early. Jacobs still remembers the days when all that was necessary to complete a deal was the needed capital and an agreement between the three partners. He says the three never had an argument.

"It was the minority rules," Jacobs said of the original team. "If one person didn't want to do something, we just didn't do it. Period."

Jacobs recalls blocking a suggested expansion into nursing home development. Whether or not it turned out to be the right choice, he said, he wasn't about to invest other people's money into something he didn't feel 100 percent about.

"I don't think that we would have the respect of the investment community today that we've been able to develop had our investors not felt that we treat their capital in the same manner as we treat our own," he said.

A gift for good timing

JBG and its investors for the most part aren't interested in being long-term property owners. They want to acquire properties, improve them and sell them when they feel the time is right.

After the original partners found initial success raising money from wealthy individuals and doing deals, they hired the next generation of leaders in the 1970s: Lewis Rumford, Robert H. Braunohler and Glosserman. JBG built the Four Seasons Hotel in Georgetown while developing projects for other property owners, such the World Bank and Geico.

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