JBG Smith Starts Pursuing Joint Ventures To Capitalize Projects

Bethesda-based REIT JBG Smith is seeking partners to help it in its acquisition and development efforts.

For the past year, JBG has been looking to take advantage of distressed office valuations, buying office properties for steep discounts and using liquidity from multifamily sales to do so. 

Now, the company is also planning to use private equity joint venture partners to help it fund those new opportunities and launch redevelopment programs. 

“We expect to fund growth opportunities through a combination of asset sales and private equity joint ventures — choosing among these sources based on their relative cost of capital and availability at the time,” CEO Matt Kelly said in a letter to shareholders released Tuesday along with JBG's earnings report. 

That strategy is already off to the races.

In April, JBG sold a 50% stake in its nearly half-a-million-square-foot Tysons Dulles Plaza, it revealed in the earnings report. The REIT, which purchased the office complex last May for $42.3M, did not disclose the joint venture partner. 

“This strategic joint venture follows through on our plan to attract private capital partners to scale and diversify our distressed office investment strategy while also enhancing the efficiency of our platform with incremental fee revenue and potential carried interest income,” Kelly said in his letter.

On Monday, it filed plans with Fairfax County to demolish one of the three buildings and transform it into 375 multifamily units and retail.

Meanwhile, JBG’s other recent office acquisition, Dulles View, also had a joint venture partner. The REIT said in its fourth-quarter earnings report it purchased the asset in December for $31.5M in partnership with an unnamed “defense tech tenant.”

JBG’s property list shows it owns 60% of the 360K SF Dulles View. 

It’s not uncommon for REITs to take on joint venture partners, but it’s not a practice that JBG typically pursues.

Except for these new office acquisitions, its Bethesda headquarters building and one multifamily building in Navy Yard, its nearly 40 multifamily and commercial properties are 100% owned by JBG, according to its first-quarter report. 

JBG reported a net loss of $18.7M for the first quarter of the year, down from its $45.7M loss during the same quarter last year. 

Its same-store multifamily portfolio was 93.5% leased and 92% occupied as of the end of the quarter, up from 91.8% leased and 90.4% occupied at the end of the year. Though, its effective rental rate for new leases was down by 10.5%, steeper than its 8.1% fourth-quarter drop. 

Its operating commercial portfolio was 76.9% leased and 75.2% occupied as of the end of the first quarter, compared to 77.5% leased and 75.1% occupied at the end of the year. 

Kelly began his investor letter by detailing the hurdles that commercial real estate is facing, from elevated interest rates to the conflict in the Middle East. 

“While … macro-economic factors as well as the major employment disruption the region experienced in 2025 due to federal government spending cuts and a hiring freeze negatively impacted the multifamily market, we believe the worst is now behind us,” Kelly said.