JBG SMITH Releases Statement on Potomac Yard Entertainment District Proposal
JBG SMITH (JBGS) announced the termination of discussions for the Potomac Yard Entertainment District due to political influences and special interests, hindering the development of a world-class arena and entertainment hub.
Negative
Termination of discussions impacting the development of the entertainment district
Influence of special interests and partisan politics affecting the project
Lost opportunity to create a dense, mixed-use neighborhood at Potomac Yard
The termination of the Potomac Yard Entertainment District project has immediate ramifications for JBG SMITH, a real estate investment trust specializing in urban, mixed-use properties. The project's cessation, influenced by political and special interest factors, suggests a potential volatility in the company's future development pipeline. This could affect investor confidence, as large-scale projects like these often contribute significantly to a company's growth trajectory and revenue generation.
Furthermore, the loss of such a development could impact the broader economic ecosystem of the area, including construction jobs, future retail opportunities and increased property values. Stakeholders might now be watchful for JBG SMITH's strategic response, such as seeking alternative projects or reassessing current land use to mitigate the economic impact of this stalled development.
The reference to 'partisan politics' and 'pay-to-play influences' within the Virginia legislature underscores the complex relationship between business development and political dynamics. For investors, this highlights the non-market risks associated with real estate development. Such political entanglements can abruptly alter the investment landscape and companies heavily reliant on large-scale developments may be particularly susceptible to these shifts.
Investors may now scrutinize the company's ability to navigate political hurdles and reassess the risk profile of their investments in regions where political unpredictability is high. This incident could prompt a closer examination of JBG SMITH's governmental relations strategies and their contingency planning for political interference.
The envisioned transformation of Potomac Yard into a dense, mixed-use neighborhood aligns with contemporary urban development trends that favor walkability and multi-functional spaces. The cancellation of this project represents a missed opportunity for urban revitalization and sustainable development. It also raises questions about the future of urban planning initiatives in politically contentious environments.
For stakeholders, this development—or lack thereof—could signal a need to reassess the viability of similar projects in the pipeline. It also suggests a potential shift in focus towards less politically sensitive projects or regions where the urban planning vision aligns more closely with political and public sentiment.
03/27/2024 - 06:15 PM
BETHESDA, Md. --(BUSINESS WIRE)--
JBG SMITH (NYSE: JBGS) today issued a statement on the Potomac Yard Entertainment District.
Statement from Matt Kelly, CEO, JBG SMITH to stakeholders:
Dear JBG SMITH Stakeholders:
In December, we announced plans to develop an entertainment district in Potomac Yard, anchored by the Washington Capitals, Washington Wizards and the Monumental Sports & Entertainment corporate headquarters. Today it was announced that discussions between Monumental, Alexandria and the Commonwealth of Virginia have been terminated. While we had made great strides in advancing the project’s transportation plan, overall design and financing structure, the opportunity was derailed largely due to partisan politics and, most troubling, the influence of special interests and potential pay-to-play influences within the Virginia legislature.
This was a once-in-a-generation opportunity to build a world-class arena and entertainment district at Potomac Yard and to realize the vision of that community as a dense, mixed-use neighborhood. We are thankful to those who made the opportunity possible in the first place, especially Monumental Sports. We are also thankful to our local partners, specifically the City of Alexandria and its City Council, Alexandria Economic Development Partnership, and the Governor’s office, and the many public supporters along the way who engaged in thoughtful dialogue about how to move this important opportunity forward.
Despite our best efforts, this project was unable to get a fair hearing on its merits with the Virginia Senate. It is now clear that our efforts may have been complicated and ultimately blocked, in part, by special interests seeking to move the Monumental arena to Tysons Corner and to combine it with a casino. The Washington Post and other outlets have reported on this scheme and the hundreds of thousands of dollars, enormous sums in Virginia politics, of political contributions associated with it – a large portion of which were directed to key senate leaders. When one follows the money, the implications are deeply troubling for Virginia and for the future of transparency in economic development pursuits, especially those that seek certainty through the now damaged MEI legislative process.
Beyond the arena, state and local governments will lose needed tax revenue, economic development credibility, and what could have been Virginia’s last best chance to land a professional sports franchise for at least a generation. Economic development and growth thrive on transparency and predictability. The scheming and special interests that plagued this opportunity in the Virginia legislature will no doubt cause future employers and the next Monumental to question whether their opportunity will get a fair hearing.
This opportunity also brought with it the potential to add tens of thousands of jobs and needed housing units, including 1,000 units of affordable housing preservation in Alexandria which we had pledged as part of the arena proposal. Traffic and transportation investments, including possible Metro funding, are also likely gone. Instead, the existing surface-parked, single story shopping center on the site will remain through the remaining 20-year term of the Target lease and development on the remaining land will likely be far less dense. To say we are disappointed is an understatement; we are disgusted with the back-room-dealing and opaque scheming that took place as this played out.
With this chapter now closed, we will continue to pursue alternate uses and amenities to further develop our sites adjacent to the Virginia Tech Innovation Campus. We will also continue to work tirelessly to attract business and customers to the Commonwealth of Virginia and the local communities in which we invest, and most importantly we will always conduct ourselves in a manner in which we and our stakeholders can be proud. We thank you for your continued trust and confidence.
About JBG SMITH
JBG SMITH owns, operates, invests in, and develops mixed-use properties in high growth and high barrier-to-entry submarkets in and around Washington, DC , most notably National Landing. Through an intense focus on placemaking, JBG SMITH cultivates vibrant, amenity-rich, walkable neighborhoods throughout the Washington, DC metropolitan area. Approximately 75.0% of JBG SMITH's holdings are in the National Landing submarket in Northern Virginia , which is anchored by four key demand drivers: Amazon's new headquarters; Virginia Tech's under-construction $1 billion 99% of which are Metro-served. It also maintains a development pipeline encompassing 8.8 million square feet of mixed-use, primarily multifamily, development opportunities. JBG SMITH is committed to the operation and development of green, smart, and healthy buildings and plans to maintain carbon neutral operations annually. For more information on JBG SMITH please visit www.jbgsmith.com .
Forward-Looking Statements
Certain statements contained herein may constitute “forward-looking statements” as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations, and beliefs and are subject to numerous assumptions, risks, and uncertainties. Consequently, the future results of JBG SMITH Properties (“JBG SMITH” or the “Company”) may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximate”, “believes”, “expects”, “anticipates”, “intends”, “plans”, “would”, “may”, or similar expressions in this press release. We also note the following forward-looking statements: lease terms for Target and the surrounding shopping center; future development plans in Potomac Yard adjacent to Virginia Tech Innovation Campus; future transportation investments in the region; lost tax revenue. Many of the factors that will determine the outcome of these and our other forward-looking statements, entitlements, and plans are beyond our ability to control or predict. These factors include, among others: adverse economic conditions and the political climate in the Washington, DC metropolitan area, the timing of and costs associated with development and property improvements, financing commitments, and general competitive factors. For further discussion of factors that could materially affect the outcome of our forward-looking statements and other risks and uncertainties, see “Risk Factors” and the Cautionary Statement Concerning Forward-Looking Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 and other periodic reports the Company files with the Securities and Exchange Commission. For these statements, we claim the protection of the safe harbor for forward looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements after the date hereof.
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Media
mrooney@rubenstein.com
Samantha Schmieder
sschmieder@jbgsmith.com
Source: JBG SMITH
Why did JBG SMITH issue a statement regarding the Potomac Yard Entertainment District?
JBG SMITH issued a statement regarding the Potomac Yard Entertainment District to inform stakeholders about the termination of discussions for the development of the entertainment district.
What factors led to the termination of discussions for the Potomac Yard Entertainment District?
The termination of discussions for the Potomac Yard Entertainment District was primarily due to partisan politics, special interests, and potential pay-to-play influences within the Virginia legislature.
Which entities were involved in the discussions for the Potomac Yard Entertainment District?
Monumental Sports, Alexandria, and the Commonwealth of Virginia were involved in the discussions for the Potomac Yard Entertainment District.
What was the vision for the Potomac Yard Entertainment District?
The vision for the Potomac Yard Entertainment District was to create a world-class arena and entertainment hub in a dense, mixed-use neighborhood.
Who is the CEO of JBG SMITH?
Matt Kelly is the CEO of JBG SMITH.
