A New York-based real estate fund with $2B under management is betting that Amazon will choose the D.C. area, specifically Crystal City, for its second headquarters.

Third Avenue Real Estate Fund has bought $10M of shares in JBG Smith and said the strategy is based on the REIT's holdings in Crystal City, one of the sites Amazon is considering, Bloomberg reports.

JBG Smith, formed in July from the merger of The JBG Cos. and Vornado's D.C. business, owns a significant portfolio of vacant, aging Crystal City office buildings. The REIT has been focused on revitalizing the neighborhood by adding retail and multifamily.

Amazon in January included Northern Virginia, plus D.C. and Montgomery County, in its 20-city shortlist, and the region is widely viewed as a front-runner. Company officials have reportedly toured NoVa's proposed locations, which also include sites in Rosslyn, Alexandria and Herndon.

A local news article about Arlington buildings received thousands of views from an internal Amazon page discussing its HQ2 search months after the story's publication, drawing national attention and increasing speculation that the company has its eye on Arlington.

JBG Smith currently trades around $34/share, but Third Avenue predicts it will be worth more than $40 if Amazon picks Crystal City. The REIT also owns properties throughout the D.C. region, so it stands to benefit if Amazon picks any of the area's sites. In addition to the $10M in JBG Smith stock it owns, Third Avenue has arranged options agreements to buy more shares at a discount to market value should Amazon's 50,000 jobs be added to the D.C. area.

"Washington D.C. seems to rank near the top of the list," Third Avenue said in a letter to investors. "Should it ultimately be selected for its second headquarters, JBG Smith is likely to be a big winner as its Crystal City and Pentagon City locations are natural candidates for Amazon to utilize as it initially relocates employees to the region."