The New York Times: Amazon’s HQ2 in Virginia Leaves a Real Estate Firm Poised to Cash In
According to The New York Times:
Two years ago, Matt Kelly couldn’t have known that a failed merger involving his real estate firm would propel him toward a central role in Amazon’s expansion plans.
In May 2016, Mr. Kelly and his firm, then known as the JBG Companies, had an agreement to merge with a large real estate investment trust based in New York. But shareholders of the New York fund balked, and the deal collapsed.
A few months later, JBG, based in Chevy Chase, Md., had a new partner. In a deal valued at $8.4 billion, JBG merged with a Washington unit spun off from the real estate behemoth Vornado Realty Trust.
Analysts warn that Amazon most likely flexed its muscles to negotiate a deal with highly favorable terms, possibly pushing for below-market leases in an area that already trends well below national and Washington averages.
For JBG Smith, the HQ2 deal may pay off in an uptick in occupancy and rents for residential, retail and other properties it owns adjacent to Amazon’s new offices. But it could take five to seven years for this bonanza to arrive, said Danny Ismail, an analyst and lead of office coverage for the real estate research firm Green Street Advisors.
“This isn’t going to be an overnight thing,” Mr. Ismail said.
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