Author Topic: JBGS - JBG Smith  (Read 9436 times)

thepupil

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Re: JBGS - JBG Smith
« Reply #10 on: September 15, 2020, 08:38:06 AM »
Info, unless we went to college together and you work in political polling analytics, no you are not that friend lol.

BG, I was referring to JBG’s office side of things but yes DC offers a better value proposition, from a “niceness of space/ service” on the multi-family side and offers NYC/SF level pay in a lot of fields. For example I think a first year big law associate makes $180-$200k in both NYC and DC. I imagine it’s better to be in NYC for some fields and better to be in DC for others.

Of course DC does not offer quite the same “culture” diversity of restaurants, sheer size / density, but I think it’s hard to dislike DC and NoVa in particular long term. I mean AMZN ran a nationwide beauty contest where they got a massive amount of free data and incentives and chose where they chose for a reason.You can definitely have a very nice urban lifestyle here, particularly if you have 2 incomes Or 1 in a very good field. , and the suburbs are close to the city (and in some cases within it).

That’s all very soft. On a more data based approach, I forgot to mention that run rate NOI is down a lot because of their retail which is collecting at about 60% and the near term covid disruption in multi family.

Stabilized NOI was $330mm at the beginning of the year. 400K of commercial and 250 units have been added but NOI has fallen to $307mm then there’s about $25mm in the near term construction pipeline, so 2 years out you’re probably in the mid to high $300’s on NOI plus AMZN land sale and your getting into the low to mid 6’s cap rate, with plenty of more developments/ recycles in the hopper.

Given all the uncertainty in office that probably doesn’t seem super cheap, but I think all the non earning cash, land, long term development pipeline will cheapen your basis with time. And I actually don’t think being Lockheed Martin’s landlord next to Reagan National or AMZN’s or the federal governement’s landlord is all that scary.

Basically I see the effective cap rate of purchase steadily going up as assets come on line (with no additional shares required).



Gregmal

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Re: JBGS - JBG Smith
« Reply #11 on: September 16, 2020, 02:11:10 PM »
Form 4 City over here lately.

Been buying a good bit of this and will continue to recycle capital/add into it. Thanks for bringing this one up. It is a gem.

CorpRaider

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Re: JBGS - JBG Smith
« Reply #12 on: September 16, 2020, 03:26:26 PM »
Form 4 City over here lately.

Been buying a good bit of this and will continue to recycle capital/add into it. Thanks for bringing this one up. It is a gem.

Man these guys are directors writing actual checks too. Right?  You love to see it. 

I was looking at ICE and bunch of other stonks last night and there's not one damn purchase in 2 years.  Even SLG...THE SLG sold a bunch in June in the mid 50s...no buys (other than company buybacks...which is good but directors writing checks is another level). 
« Last Edit: September 16, 2020, 03:35:20 PM by CorpRaider »

thepupil

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Re: JBGS - JBG Smith
« Reply #13 on: September 17, 2020, 06:04:25 AM »
BB article today, talking multifamily rent trends

Summary: NYC bad, Boston better than NYC, DC better than Boston, Northern Virginia best within DC.

It's not like the market doesn't know this, and JBGS trades tighter than most office REITs and it is still an office REIT with multifamily rather than multifamily with office.

I know I make this point too often, but I took the time to go over JBGS's balance sheet and it really is pristine and I would say a problem is that they should have a lot more leverage, but that pesky debt to EBITDA metric would be out of wack with what folks want. I think they'll be able to take on a lot more debt on these builidngs as they are redeveloped. I think they are way underselling the amount of capital they can pull out as these assets come online/AMZN moves to town. If AMZN fails to revitalize Crystal City, it's not like you're going to lose a bunch of properties and there's huge downside risk. 

6.5mm square feet of office have no debt and 2200 units apartment have no debt. For perspective, on the low end, JBGS could easily put on $150K / unit of debt, and their higher end $300K

the unencumbered buildings include basically all of National Landing and the very nice and fresh brand new 4747 Bethesda Avenue (pre-leased by Booz Allen, Host Hotels, JBG itself) which is located adjacent to FRT's Bethesda Row which is one of the better mixed use developments owned by FRT which owns like the best retail/mixed use developments). this is a super high quality building that i see a lot, Host is paying $68/foot for example.

Corona bedamned, owning this with (mostly) no debt is low risk.
 
https://nationallanding.org/our-downtown/national-landing

unencumbered Office
Universal Buildings
2345 Crystal Drive
2231 Crystal Drive
1550 Crystal Drive
2011 Crystal Drive
2451 Crystal Drive
241 18th Street S.
1215 S. Clark Street
4747 Bethesda Avenue
2200 Crystal Drive
1225 S. Clark Street
1901 South Bell Street
1770 Crystal Drive
7200 Wisconsin Avenue
Crystal City Marriott (345 Rooms)
2100 Crystal Drive
1800 South Bell Street
One Democracy Plaza* (4)
Central District Retail
2001 Richmond Highway (6)
Crystal City Shops at 2100
Crystal Drive Retail
1700 M Street (5)
4749 Bethesda Avenue Retail

Unencumbered Multifamily
West Half (7)
965 Florida Avenue
Fort Totten Square
F1RST Residences (4)
Atlantic Plumbing C
2221 S. Clark Street
Falkland Chase-North

NYC Apartments Feel Most Rent Pain From Plunging Urban Demand               

New York metro apartment rents could fall more than twice as much as the East Coast average in 2020, as work-from-home trends and mandated shutdowns have led residents to relocate to more affordable and less-densely populated areas in the suburbs, at least temporarily. Landlords are being forced to offer discounts and concessions to keep occupancy from falling....the Mid-Atlantic region's exposure to federal government jobs has helped keep unemployment below New York and Massachusetts, resulting in better apartment fundamentals in 2020. Washington rent is expected to drop 2.9% in 2020, based on Moody's Analytics REIS forecasts, a smaller decline than expected for the New York metro area and below the average Northeast decrease. The Northern Virginia suburbs, where many REITs own assets in the region, are holding up even better, with rents on pace to fall just 1.3%.
« Last Edit: September 17, 2020, 06:24:06 AM by thepupil »

BG2008

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Re: JBGS - JBG Smith
« Reply #14 on: September 17, 2020, 07:29:58 AM »
BB article today, talking multifamily rent trends

Summary: NYC bad, Boston better than NYC, DC better than Boston, Northern Virginia best within DC.

It's not like the market doesn't know this, and JBGS trades tighter than most office REITs and it is still an office REIT with multifamily rather than multifamily with office.

I know I make this point too often, but I took the time to go over JBGS's balance sheet and it really is pristine and I would say a problem is that they should have a lot more leverage, but that pesky debt to EBITDA metric would be out of wack with what folks want. I think they'll be able to take on a lot more debt on these builidngs as they are redeveloped. I think they are way underselling the amount of capital they can pull out as these assets come online/AMZN moves to town. If AMZN fails to revitalize Crystal City, it's not like you're going to lose a bunch of properties and there's huge downside risk. 

6.5mm square feet of office have no debt and 2200 units apartment have no debt. For perspective, on the low end, JBGS could easily put on $150K / unit of debt, and their higher end $300K

the unencumbered buildings include basically all of National Landing and the very nice and fresh brand new 4747 Bethesda Avenue (pre-leased by Booz Allen, Host Hotels, JBG itself) which is located adjacent to FRT's Bethesda Row which is one of the better mixed use developments owned by FRT which owns like the best retail/mixed use developments). this is a super high quality building that i see a lot, Host is paying $68/foot for example.

Corona bedamned, owning this with (mostly) no debt is low risk.
 
https://nationallanding.org/our-downtown/national-landing

unencumbered Office
Universal Buildings
2345 Crystal Drive
2231 Crystal Drive
1550 Crystal Drive
2011 Crystal Drive
2451 Crystal Drive
241 18th Street S.
1215 S. Clark Street
4747 Bethesda Avenue
2200 Crystal Drive
1225 S. Clark Street
1901 South Bell Street
1770 Crystal Drive
7200 Wisconsin Avenue
Crystal City Marriott (345 Rooms)
2100 Crystal Drive
1800 South Bell Street
One Democracy Plaza* (4)
Central District Retail
2001 Richmond Highway (6)
Crystal City Shops at 2100
Crystal Drive Retail
1700 M Street (5)
4749 Bethesda Avenue Retail

Unencumbered Multifamily
West Half (7)
965 Florida Avenue
Fort Totten Square
F1RST Residences (4)
Atlantic Plumbing C
2221 S. Clark Street
Falkland Chase-North

NYC Apartments Feel Most Rent Pain From Plunging Urban Demand               

New York metro apartment rents could fall more than twice as much as the East Coast average in 2020, as work-from-home trends and mandated shutdowns have led residents to relocate to more affordable and less-densely populated areas in the suburbs, at least temporarily. Landlords are being forced to offer discounts and concessions to keep occupancy from falling....the Mid-Atlantic region's exposure to federal government jobs has helped keep unemployment below New York and Massachusetts, resulting in better apartment fundamentals in 2020. Washington rent is expected to drop 2.9% in 2020, based on Moody's Analytics REIS forecasts, a smaller decline than expected for the New York metro area and below the average Northeast decrease. The Northern Virginia suburbs, where many REITs own assets in the region, are holding up even better, with rents on pace to fall just 1.3%.

The thesis boils down to bet on "bigger government and Amazon" over "capitalism"

Pupil, you never answer my request to get matching tattoos that says "Bricks over Chicks".  Are you in? 

thepupil

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Re: JBGS - JBG Smith
« Reply #15 on: September 17, 2020, 07:39:02 AM »
yes, I am most definitely in.

considering the federal government is 24% of rent and government contractors are 16% of commercial rent, I'd agree!

what a wonderful way to ride out the death of office: own a bunch of 1980s unlevered buildings rented to the feds and lockheed while $5B+ billion of private (some of which is yours) and public infrastructure spending pour into National Landing.
« Last Edit: September 17, 2020, 07:47:24 AM by thepupil »

CorpRaider

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Re: JBGS - JBG Smith
« Reply #16 on: September 17, 2020, 08:38:47 AM »
I really like the letters (even the fact that they do one), particularly the way they walk through their thoughts concerning capital allocation.  They are definitely capitalists with an eye on the horizon (or at least they write like it).

I find it amusing that Yale owns it.  It's like, "We own index funds + private RE, VC, PE, etc., Slack and Zoom and.......JGBS."

Pupil it sounds like Dr. Malone would recommend correcting this lack of appropriate leverage via some reg. u loans (haha).

thepupil

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Re: JBGS - JBG Smith
« Reply #17 on: September 17, 2020, 09:14:02 AM »
I really like the letters (even the fact that they do one), particularly the way they walk through their thoughts concerning capital allocation.  They are definitely capitalists with an eye on the horizon (or at least they write like it).

I find it amusing that Yale owns it.  It's like, "We own index funds + private RE, VC, PE, etc., Slack and Zoom and.......JGBS."

Pupil it sounds like Dr. Malone would recommend correcting this lack of appropriate leverage via some reg. u loans (haha).

Yale owns it because they were JBG's largest LP. Note that Yale Investment Office RE guy is on the board of JBGS and Ellen Shuman is as well (Yale Investment office alum who then ran Carnegie Foundation who then started an outsourced CIO).

I believe most of the endowment types sold after the spin-off/going public, including the bulk of Yale's stake.

See Page 141 of the 2017 document where all the JBG LP's registered to sell their shares. It gives you a sense for how "blue-chip" these guys were in intstitional investment world.

https://www.sec.gov/Archives/edgar/data/1689796/000110465917057460/a17-21556_1s11.htm#SELLINGSHAREHOLDERS22_100426

EDIT: it looks like Princeton still owns $50mm of it, not very material, given their $26B endowment. 


« Last Edit: September 17, 2020, 09:45:43 AM by thepupil »

Spekulatius

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Re: JBGS - JBG Smith
« Reply #18 on: September 19, 2020, 09:43:28 AM »
I like it better than VNO quite frankly, despite the discount to fair value being smaller and I think the thesis that DC real estate beats NY real estate in the next decade is correct. I bought a few shares this Friday.
Life is too short for cheap beer and wine.

thepupil

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Re: JBGS - JBG Smith
« Reply #19 on: September 21, 2020, 06:23:47 AM »
Buying spectrum to make National Landing the "first 5G city".

I don't know how unique this is, but seems like a smart move.

I had not heard or thought of a developer doing this.


JBG SMITH Awarded CBRS Spectrum in National Landing Through FCC Auction
Spectrum acquisition is part of a broader initiative to establish National Landing as one of the Nation’s first 5G cities
Business Wire
BETHESDA, Md. -- September 21, 2020
JBG SMITH, a leading owner and developer of high-quality, mixed-use properties in the Washington, DC market, announced today that it has acquired seven blocks of Citizens Broadband Radio Service (CBRS) spectrum stretching across Arlington County and the City of Alexandria through a national FCC auction that concluded in late August.
JBG SMITH’s investment in CBRS spectrum is part of a broader effort to develop National Landing into a world-class innovation district. The acquisition of spectrum accelerates JBG SMITH’s ability to partner with leading service providers to bring 5G and other technology infrastructure to National Landing. JBG SMITH envisions the area as a canvas for innovation in industry clusters such as defense and cybersecurity, cloud/edge computing, internet of things (IoT), and artificial intelligence (AI). This robust technology infrastructure will allow enterprises to connect everything and everyone in real time and transform customer engagement and experiences in National Landing.
JBG SMITH acquired four Priority Access Licenses (PAL) totaling 40 MHz in Arlington (the maximum allowed in one jurisdiction for a single entity) and three PALs (30 MHz) in Alexandria. A JBG SMITH subsidiary, SEAD LLC, purchased the seven licenses for $25.3 million. The licenses will span over 16.2 million square feet in National Landing and Potomac Yard, where JBG SMITH is the largest holder of existing and developable real estate. The submarket is also home to Amazon HQ2, the Virginia Tech Innovation Campus, and a diverse array of offices, apartments, retail, and open space.
“JBG SMITH recognized that the FCC’s CBRS spectrum auction was an opportunity to align National Landing with the needs of cutting-edge tenants, while significantly enhancing our broader smart city and digital placemaking plans throughout the neighborhood,” said Evan Regan-Levine, EVP Strategic Innovation and Research. “Our investment in next-generation connectivity infrastructure will further cement National Landing as a premier global destination for entrepreneurs, universities, and global technology companies to ideate, innovate, and scale globally.”
Matt Kelly, CEO, added, “We pursued ownership in spectrum to accelerate the roll-out of a ubiquitous 5G network in National Landing. We are eager to attract best-in-class service providers, so that our customers – the people that live, work, and play in National Landing – have the connectivity tools needed to innovate in an increasingly digital and flexible post-COVID economy.”