JBG's 2010 buying spree

By Jonathan O'Connell
Monday, January 10, 2011

Few firms have been more active during Washington's emergence from the economic downturn than JBG.

"They've come back out of it -- I don't want to use the words with a vengeance, but certainly with great excitement," said Whayne Quinn, a partner and land use lawyer at Holland & Knight.

Using a $576 million fund it closed in January 2010, JBG is pumping hundreds of millions of dollars into local real estate in nearly all of the area's choice markets, from Tysons Corner to Prince George's County. There is urgency to move quickly because of the feeling among partners that the window on good deals may be closing.

"There's a real scarcity of the supply of opportunities in the market relative to the number of folks who are out there trying to invest in those opportunities," said W. Matt Kelly, at 38 one of the firm's newest and youngest owners. "And I think that's driving pricing to levels that certainly were unexpected a year ago."

In just the past year, JBG has assembled an attention-getting portfolio of assets.

On 14th Street NW, one of the hottest areas for housing in the District, JBG bought an administrative building from a nonprofit group in financial straits, Whitman-Walker Clinic, and in August created a 50-50 joint venture with London-based Grosvenor. It now plans 125 condominiums, one of the first new condo projects since the recession.

At 16th and I streets, blocks from the White House, the firm reached an agreement with a smaller developer, ICG Properties, to take the lead on a project to tear down the historic Third Church of Christ, Scientist and replace it with an office building.

There are similar stories in emerging neighborhoods of the District. In October, JBG bought into Lowe Enterprises' nine-acre mixed-use project in Fort Totten and now is co-developer. Near Mount Vernon Square another developer, the Bennett Group, planned for years to build an office building at 801 New Jersey Ave., but after failing to start construction allowed JBG to buy into its position. In November, Wal-Mart announced that it would like to build one of its first D.C. storeson the site, along with 315 apartments.

The company is making similar inroads in the suburbs, choosing transit-accessible sites that are ripe for redevelopment into more mixed-use, urban areas. In Rockville, JBG bought a loan on the Parklawn Building, space that the U.S. Department of Health and Human Services leases but could vacate. JBG then gained control through a joint venture last August.

Most recently, in December, JBG purchased the 443-room Sheraton Premiere Hotel at Tysons Corner in Vienna for $84.5 million. The property gives JBG control of a large swath of property at the intersection of Leesburg Pike and Route 7.

And there appears to be more to come. JBG is also working on a deal to purchase two more choice sites from ICG, on Wisconsin Avenue NW in Glover Park.

Timothy Helmig, a former JBG leasing agent who now works for Monday Properties and competes for commercial leases, said going head-to-head with his former employer pushes his development firm to the top of its game.

"They are the gorilla in Washington, there's no question about it," he said.

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