Skanska Signs Ground Lease to Develop JBG Smith's 1700 M St.
“We continue to make progress on our capital recycling goals with the sale of a leasehold interest in 1700 M Street,” said JBG Smith CEO Matt Kelly.
WASHINGTON, DC—JBG Smith, which has been on a selling spree of late, has sold a 99-year term leasehold interest in its 1700 M St., NW to Skanska.
JBG Smith retains the fee ownership of the land. Last February, JBG Smith announced new plans for the 34,000-square-foot property in the Golden Triangle it acquired through its prior merger with Vornado Realty Trust’s DC branch. At the time, the company also reported it had retained Cushman & Wakefield to market the property for sale.
Earlier this month, JBG Smith closed on the sale of the Warner Building in Washington, DC for $376.5 million and in late December traded The Investment Building at 1501 K St. for $385.4 million.
No financial terms of the ground lease transaction were released. Drew Flood, Bill Collins, and Paul Collins of Cushman and Wakefield represented JBG Smith in the transaction. JBG will collect ground rent on the property.
“We continue to make progress on our capital recycling goals with the sale of a leasehold interest in 1700 M Street,” said JBG Smith CEO Matt Kelly. “The ground lease structure allows us to convert land immediately into an attractive income stream that is accretive to our long-term NAV and creates balance sheet capacity for future investment opportunities.”
Skanska on the other hand has been a buyer in the DC-area market, having recently acquired a site at Scotts Run to develop a high-density, multi-family project in Tysons, VA. However, it made news in December with the sale of its 121 Seaport office tower in Boston for $455 million.
“1700 M will provide one of the few ground-up, new-construction offerings to businesses within the growing and thriving downtown market,” said Skanska EVP Mark Carroll, head of Skanska’s commercial development operations in the Greater Washington, D.C. area. “Our customer-focused, collaborative approach to design and development, and our ability to self-finance our projects, allows us to engage customers early in this process then move quickly to deliver a project that meets their specific needs, as well as the demands of the dynamic Central Business District.”
Skanska’s current real estate developments in the greater Washington, DC area include: 2112 Penn, an 11-story, 230,000-square-foot office building with approximately 10,000 square feet of ground floor retail; 99M, a 234,000-square-foot, Class-A office building, located in the Capitol Riverfront neighborhood and RESA, a new 326-unit luxury residential apartment building located in the NoMa neighborhood.
Skanska also developed the 130,000-square-foot office building 1776 Wilson Blvd., Arlington’s first LEED Platinum building, which Skanska sold in 2014, and 733 10th St., NW, a 171,000-square-foot office, which Skanska sold in 2012.
In the greater DC area, Skanska built the First Street Tunnel and is constructing the headquarters facility for the District of Columbia Water and Sewer Authority. The firm is also responsible for the reconstruction of the 11th Street Bridge and adjacent interchanges, infrastructure that helped spur new development such as 99M in the Capitol Riverfront neighborhood.