LBX Investments Pays $87M for D.C. Mixed-Use Property

Atlanta-based LBX Investments has paid $86.8 million for a 345-unit, mixed-use building on the northeastern edge of Washington, D.C.

Seller JBG Smith (JBGS) developed the property 5661 Third Street NE, dubbed Fort Totten Square, with Lowe Enterprises in 2015, according to the Business Journals, which first reported the news. Greystone provided LBX a $60.8 million loan toward the purchase of the nearly 385,000-square-foot property. Lowe sold its stake in the property to JBG Smith in 2015, per Bisnow. 

The building’s residential units were 93.3 percent leased as of late June, while its roughly 131,000 square feet of retail — anchored by Walmart — was fully leased, per a second-quarter investor package from JBG Smith. Other tenants include Wingstop, Five Guys and Subway.

“The property serves an important need in the market and we intend to be great stewards for the community,” Phillip Block, managing partner for LBX, told Commercial Observer in an email. “We’re value investors and have a lot of conviction about the DC metro … in our experience, the best opportunities have often come in turbulent markets, and we expect this acquisition to be emblematic of that.” Block said that the purchase was made in partnership with investor Martin Koch.

A spokesperson for JBG Smith declined to comment. 

Bethesda, Md.-based JBG Smith, a real estate investment trust, has experienced quite a big shift within the past year as it transitions to a mostly multifamily portfolio and shirks non-core assets. 

The company’s deal fell through earlier this year to develop a massive mixed-use entertainment district for the Washington, D.C. Capitals and Wizards professional sports teams on several million square feet it owns in the Northern Virginian neighborhood of Potomac Yard.

Then in May, the REIT closed three office properties totaling 743,000 square feet in Northern Virginia’s National Landing, which CEO Matt Kelly called “obsolete” in a letter to shareholders at the time. The company is largely responsible for the redevelopment over the past few years of National Landing, which houses Amazon’s HQ2. 

The focus of the trust “will be on the continued transformation of our portfolio and positioning of our business to capitalize on the many strong and building demand tailwinds blowing behind us,” Kelly said in his second-quarter letter to investors in late July. 

Nick Trombola can be reached at ntrombola@commercialobserver.com.