JBG Cos., a Chevy Chase-based developer, said yesterday that it sold six office buildings in the District, Maryland and Northern Virginia to an affiliate of Morgan Stanley Real Estate for $644 million.
The deal, which includes 1.5 million square feet, shows that the market remains hot for fully leased office buildings and that institutional investors are willing to pay good prices for them, according to some real estate brokers and investors. Others take another view, saying it is a sign that prices may have hit their peak and it is time to sell.
JBG is "taking advantage of the current capital markets environment, which is frothy with money," said John Norjen, a senior vice president at CB Richard Ellis Group Inc. who specializes in office building sales.
Dek Potts Jr., an executive director at Advantis/GVA, a real estate services company that recently sold other office buildings in Reston to JBG, said: "JBG is as savvy as anybody. Are they looking at the market and saying, 'There's a lot of money out there and it's a pretty good time to sell?' Sure."
Among big owners selling property recently was Arlington-based Westfield Realty Inc., which in May sold 10 office buildings in Rosslyn and Crystal City to Beacon Capital Partners LLC, a private real estate investment company in Boston. The sale, for just under $1 billion, included 2.6 million square feet and the 31-story silver tower that had been home to USA Today and the newspaper's parent, Gannett Co.
JBG sold its buildings for roughly $429 per square foot, compared with the average sale price of $339 a foot for the Washington region as of August, according to Cassidy & Pinkard Inc., a real estate service firm.
The buildings are 97 percent leased, mostly to the federal government, and are part of a portfolio of 23 buildings in the region that JBG has had on the market since early summer. The rest of that portfolio is still on the market.
"It's a good time to sell," said Brian P. Coulter, a managing partner at JBG. "There's strong demand for this type of real estate in the market today. It's well-leased property."
The properties include 1601 K St. NW and Potomac Center South at 550 12th St. SW in the District, 1801 N. Lynn St. in Arlington, 1 Choke Cherry Rd. in Rockville, and two buildings that are under construction -- 1602 L St. NW in the District and 950 N. Glebe Rd. in Arlington.
JBG has a portfolio that includes 7,000 residential units, 3,000 hotel rooms and 7 million square feet of office buildings. It will continue to manage and lease the six buildings it sold to Morgan Stanley, and it will retain a small ownership interest in one of the buildings.