One of the D.C. area’s largest commercial real estate players sees opportunity in buying office properties as it continues to sell apartments.

JBG Smith, which has been on a multifamily selling spree for months, is now pivoting that capital into office acquisitions — taking advantage of discounted prices — and into stock buybacks.

“With office values at historically low levels and multifamily assets still commanding attractive pricing, we are executing a deliberate pivot,” JBG Smith CEO Matt Kelly said in his letter to shareholders included in the REIT's second-quarter earnings report Tuesday.

The company executed on that strategy last quarter with the acquisition of a trio of Tysons office buildings totaling 492K SF for $42.3M. It plans to turn one into a 300-unit apartment building.

“We believe the current market distress is creating some of the most attractive office investment opportunities in nearly two decades,” Kelly said in the letter.

“We are actively evaluating additional investments with similar profiles — particularly where we can apply our proven mixed-use and development expertise to unlock long-term value.”

The REIT also said it purchased 23.6 million of its own shares for $376.9M so far this year, including 11.2 million shares in Q2 for $184.9M.

Kelly’s letter says that given that its “share price implied little to no value for our office portfolio, repurchasing our own discounted shares became the most accretive use of capital.”

To fund these investment efforts, the REIT is doubling down on selling multifamily properties. The letter revealed it offloaded $452M of assets during the second quarter.

Those included a 283-unit apartment building in the West End for $186M. And it sold a 40% stake in the 465-unit West Half property across from Nationals Park for $100M, a deal that wasn't previously reported.

It also sold a NoMa development site that it had been sitting on for more than a decade, where it had planned to build a 475-unit apartment building, for $11M, as Bisnow first reported.

After the second quarter ended, JBG Smith sold a 432-unit apartment building in NoMa for $155M.

These moves come as the REIT has experienced declining occupancy in both of its major property types.

JBG’s multifamily portfolio was 94.8% leased and 92.9% occupied at the end of Q2, down 0.9% and 1.4%, respectively, from the prior quarter.

Kelly said the area's multifamily market has “demonstrated resilience during a period of tremendous federal uncertainty that characterized the first half of the year.”

Its office portfolio was 76.5% leased and 74.8% occupied, down 1.8% and 1.6%, respectively, from the prior quarter. JBG signed 208K SF of office leases in Q2, and it said second-generation leases experienced a rent decline of 6.1%.

The company has removed 1M SF of obsolete office stock from its National Landing portfolio, Kelly said, as it redevelops properties to multifamily, hospitality and other uses.

“Our leasing efforts continue to focus on buildings with long-term potential, concentrating occupancy in areas of National Landing that we have enhanced through our placemaking initiatives and that are accessible via multi-modal transportation,” he said.