Vornado's planned apartment building at Metropolitan Park

WASHINGTON, DC–Vornado Realty Trust is moving forward with its $8.4 billion Washington DC property spin off that it announced last year with JBG Cos. In a regulatory filing it reported that it has formed JBG SMITH Properties, a wholly owned direct subsidiary of Vornado, and it also provided more details about the forthcoming new REIT and its main growth drivers — its suburban Crystal City portfolio and a sizeable land bank for development.

The land bank will consist of approximately 23.5 million square feet of potential development density — a pipeline that has the potential to double the size of JBG SMITH and make it the fastest growing real estate company in the nation, it said. “We expect that JBG SMITH will be a major developer of multifamily assets and that over time its mix of assets will become more balanced between office and multifamily.”

As for the Crystal City holdings, they offer “tremendous value creation,” according to the filing. The Crystal City market “currently lacks sufficient residential scale, amenities and a true retail core. Our vast holdings here will allow the JBG SMITH team to flex its placemaking muscles on an unprecedented scale to drive occupancy and rent growth,” it said.

Also from the filing:

Vornado had considered going it alone.

“Although we evaluated a potential stand-alone spin-off of our Washington, DC business and believe that it would have been a satisfactory outcome, it is our firm conviction that the combination of the two premier platforms in the Washington DC metropolitan area, under the leadership of JBG management, is far superior and will create a world-class company,” the filing said.

It is a carefully curated portfolio.

Vornado “carefully selected from JBG's funds a portfolio of assets with the best growth characteristics that would diversify, complement and enhance the strategic concentration of Vornado / Charles E. Smith's existing portfolio” while excluding “assets that did not fit these objectives and were not appropriate for a public REIT: specifically, those which were non-metro-served; highly levered, single tenant flat leases; near-term sale candidates; hotels; condominiums; and townhouses.”

It will be DC's largest publicly-held property owner.

This is not a surprise as JBG Cos. already has that honor as a private sector company. But Vornado clarifies the status of the new company as “the largest, publicly traded, pure-play real estate company focused on the Washington DC market.”

And to recap the portfolio's size: It will hold 52 office properties totaling 14.8 million square feet, 16 multifamily properties totaling 6,432 units, and four other assets totaling 785,000 square feet. There will also be four wholly owned office and multifamily assets currently under construction totaling 821,000 square feet and nine other development projects scheduled to start within 18 months. These new projects include office and multifamily assets totaling over 2.1 million square feet. And as already noted, JBG SMITH will also have a development pipeline of 47 future sites with an estimated 23.5 million square feet of potential development density.

Also from the filing:

Vornado had considered going it alone.

It is a carefully curated portfolio.

It will be DC's largest publicly-held property owner.

Instant Insights /

Crystal City, Land Bank Will Provide JBG SMITH "Tremendous Value Creation"

Related Stories

Recommended For You