This Week's D.C. Deal Sheet: JBG Smith Sells 603-Unit Northeast D.C. Complex

The largest multifamily sale in D.C. this year has just closed in the final month, and the new owners plan to preserve hundreds of its units as affordable.

JBG Smith sold The Gale Eckington to a partnership of Washington Housing Initiative — the developer’s affordable housing affiliate — and Jonathan Rose Cos. 

The property sold for $215.5M, a spokesperson for Jonathan Rose confirmed. The new owners received $100M from Fannie Mae’s Sponsor Initiated Affordability program and $35M from Amazon’s Housing Equity Fund, per a press release.

As part of the deal, the new owners said they will phase in rent and income restrictions: 48 units will be held affordable at 60% of the area median income and 302 units at 80% AMI. They will also institute a 3% rent increase cap across all units, including the affordable ones.

Mill Creek Residential originally developed the property, which celebrated its grand opening in November 2012. The developer then sold the property, at the time one of the largest single-phase multifamily projects in D.C., to JBG Smith in 2015 for $213M, property records show. 

JBG Smith will remain on as property manager as part of this week’s deal. CBRE’s Martha Hastings and William S. Roohan arranged the sale. JLL and HR&A arranged debt financing.

FINANCING

D.C. Housing Finance Agency issued $51.2M in tax-exempt bonds and underwrote $31.5M in federal LIHTC equity for the first phase of the Park Morton project, led by The Community Builder and Dantes Partners. The redevelopment of the Park Morton public housing project first kicked off in 2007, but in the years since it has been stalled by financing issues and legal challenges. Earlier this year, Mayor Muriel Bowser set aside a portion of her budget for redevelopment of Park Morton as well as the Northwest One, Barry Farm and Bruce Monroe public housing complexes.

The $105.3M first phase of Park Morton’s redevelopment is slated to include 142 units, including 40 replacement public housing units that will be affordable for those making between 30% and 50% AMI. The rest will be reserved for residents earning up to 80% AMI.

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The Meridian Group has secured $80.5M in construction financing from Bank OZK and ACORE to kick off construction on the first asset it expects to deliver at its One Logistics Park development. The 1M SF distribution warehouse, located on more than 76 acres at 1486 Millwood Pike in Winchester, Virginia, is slated to feature 40-foot heights, 100 dock doors and more. JLL’s Robert Carey and Drake Greer arranged the financing on behalf of the borrower. TMG and joint venture partner Wickshire Industrial announced in July they were planning to break ground on the first phase of the 2.7M SF industrial park.

MILESTONES

A College Park development anchored by Trader Joe’s celebrated its grand opening on Monday. The 393-unit Aster College Park, developed by partners Bozzuto, Terrapin Development Co. and Willard Retail features 61K SF of retail, including the nearly 15K SF Trader Joe’s.

The development, located at 7150 Baltimore Ave., is less than a mile from the University of Maryland’s main campus and the College Park Metro station, per a press release. Attendees at the grand opening included Bozzuto Group Chairman and co-founder Tom Bozzuto and President and CEO Toby Bozzuto, Prince George’s County Economic Development Corp. President and CEO David Iannucci and University of Maryland President Darryll Pines.

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After years of negotiations, developers Landmark Commercial Real Estate and L4 Capital Partners broke ground on a mixed-use development in Downtown Leesburg. Church & Market is a redevelopment of the former Loudoun Times-Mirror office, and it will incorporate the historic building into a 1.69-acre mixed-use development. When complete, Church & Market is slated to include 116 apartment units, 12K SF of office and more than 5K SF of retail. The developer expects to complete construction in late 2024.

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Fairfax County this week approved a move by PREIT to sell two Springfield Town Center parcels for hotel and multifamily uses. The sale is expected to net the shopping center-focused REIT $20M, according to a press release, a much-needed cash infusion considering the Philadephia-based trust was delisted Friday. The parcels are expected to deliver 460 apartments and a 165-room hotel. 

LEASES

IWG is slated to open two new flex workspaces in the D.C. area, the firm announced Thursday. The hybrid workspace operator said it is opening Regus centers at 211 North Union St. in Alexandria and 2025 M St. NW in D.C. The centers are slated to include a mix of private offices and public coworking and collaborative spaces, including meeting rooms. Florida-based Mikeone EK M Street Holdings LLC owns the office building at 2025 M St. NW. An affiliate of Virginia-based Capital Investment Advisors owns 211 North Union St.

PERSONNEL

JBG Smith President and Chief Operating Officer David Paul is planning to step down at the end of the year after a 35-year career in commercial real estate, he announced on his LinkedIn page Monday. Paul joined The JBG Cos. in 2007, and he ascended to his current position after the firm’s merger with Vornado Realty Trust was complete in July 2017. Paul is planning to serve as a senior adviser to the firm until Feb. 3 and continue to consult for six months after to assist with the transfer of his responsibilities, the Washington Business Journal reported. JBG Smith declined to name a successor to WBJ.

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JLL has hired hospitality veteran Ketan Patel as managing director of the firm’s JLL Hotels & Hospitality Group, working out of its D.C. office. In his new role, Patel will report to Americas CEO Kevin Davis. Patel joins JLL from HREC Investment Advisors, where he worked since April 2010, per his LinkedIn profile. Patel has completed more than 250 hotel transactions in the U.S., and he will use his experience to grow JLL’s select service investment sales business, the firm said in a press release.

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Bernstein Management Corp. has selected Peter Larson as its senior vice president of residential property management, the firm announced Wednesday. Larson joins Bernstein from Horning Brothers, where he worked for 10 years, most recently as vice president of property management. Prior to that, Larson spent 10 years as a regional property manager at firms like Greystar, Waterton Residential and Kettler, according to a press release. In his new role, Larson will lead operational strategy for the firm's 5,000-plus unit portfolio.