JBG Smith Buys Herndon Complex After Foreclosure
JBG Smith has — for the second time this year — purchased a distressed office complex in Fairfax County.
The Bethesda-based REIT purchased Dulles View, a 360K SF property near Dulles International Airport, a spokesperson confirmed to Bisnow.
The 2008-era buildings at 2551 and 2553 Dulles View Drive in Herndon were controlled by special servicer Greystone after it foreclosed on the buildings in early 2024 on behalf of CMBS bondholders.
Their previous owner, Gemini Rosemont Realty, was unable to pay back the balance of its CMBS loan when it matured in April 2023.
In an emailed statement, JBG's spokesperson said the acquisition “aligns with our ongoing pursuit of well-located yet undervalued assets and reflects our belief that the current market dislocation is creating some of the most compelling office investment opportunities in nearly two decades.”
“As we continue to pursue new growth opportunities, our team remains focused on identifying assets where we can apply our competitive advantages as a mixed-use owner, operator, and developer to drive value for our investors and tenants,” the spokesperson added.
JBG didn't disclose the price, and the sale hasn't been recorded in Fairfax property records.
JPMorgan Chase originated the loan for $60M in 2013, and its latest balance was just over $41M, according to Morningstar Credit’s database.
Occupancy had fallen from 94% at origination to 80% as of the end of June, while its net operating income fell from $7M to $4.7M during that period, according to Morningstar.
Time Warner vacated its 94K SF office at the property in 2018 when its lease expired, according to special servicer commentary for the property.
After Greystone foreclosed on the building in January 2024, it enlisted Cushman & Wakefield to market it that summer, servicer commentary says. That attempt garnered a purchase and sale agreement, which was subsequently terminated.
JBG's acquisition comes after the REIT in May purchased a three-building, 1980s-era office campus in Tysons called Tysons Dulles Plaza. The REIT paid $42.3M for the buildings at 1410 and 1430 Spring Hill Road that total 500K SF.
This year, JBG executives have said they are executing a “deliberate pivot” as they look to offload multifamily properties that can garner strong pricing in order to fund opportunistic office acquisitions.
