Rob Stewart is the Executive Vice Chairman of the Board of Trustees for JBG Smith. Rob joined JBG in 1988, his first job out of business school. He served as a Managing Partner and Chair of the Investment Committee, focused on acquisition, financing and disposition of JBG investments, conceiving development plans for JBG assets and the asset management and fundraising processes.
During the recession of the early 1990s, JBG bought lots of property, which they later sold to TrizecHahn, which is now Brookfield Properties. Rob became one of three owners until Brian Coulter rejoined the firm to make four.
As their funds continued to grow, they eventually were able to target high-net-worth investors such as Yale, Princeton, and MIT. From 2005 to 2007, they were able to sell many properties. They did not want to be faced with the challenge of managing a fund’s life cycle and miss an opportunity to sell when they could make a profit. They greatly reduced their funds commitments by 2008 to almost a quarter of their original value. They were able to continue to develop new office buildings partly because of winning GSA pre-lease opportunities.
By 2015, the market was very challenging to invest in. JBG had become vertically integrated with development, management, and leasing. After a failed attempt to acquire New York REIT, they started discussions with the already-publicly traded Vornado, which had purchased Charles E. Smith in the DC Metro area. The Smith portfolio didn’t fit Vornado’s future vision and the two firms merged in 2016.
Today, JBG Smith has more than 600 employees. Having the right board is paramount. Rob noted that it is important to pay attention to the downside to make sure it is protected while you are looking for the upside. Regarding JGB Smith’s Ballpark development, signage income is what makes the project work. So why does Rob think Amazon chose JGB Smith – one owner, and an innovation district was already in process with VA Tech, among other reasons.
Rob Stewart is passionate about affordable housing. He feels it is important to be impactful and innovative. The P3 model is efficient. With an effective use of small amounts of philanthropy, a non-profit owner provides a tax-exempt property in DC. An impact fund is used as the mezzanine debt, which provides a tax exemption for investors. These savings become rent subsidies, which basically equate to $1 in philanthropy becoming $40 in rent subsidies. Right now, there needs to be policy changes to make affordable housing more viable.
In looking at the future of our market, Rob does not feel there is too much supply in multifamily, but the economics don’t work, so we likely will see a slow decline in development with an increase in rents.