Hedge Fund Bets $10 Million It Knows Location Of Amazon's HQ2

New York asset manager Third Avenue is betting $10 million of its nearly $2 billion Real Estate Value Fund that Amazon's new HQ2 will be located in Arlington, Virginia's Crystal City neighborhood.

Incidentally, that is the same Arlington that we first noted may have been "unwittingly revealed" in mid-February by Amazon's own employees, when a local website observed a surprising spike in traffic emerging from an internal Amazon.com webpage.

Third Avenue has taken a $10 million position in JBG Smith Properties - an Arlington, VA REIT which was spun off from Vornado Realty Trust last summer, and which has significant holdings that would benefit from the choice of HQ2, which "will likely be worth a lot more than our current estimates," say Third Ave. managers Jason Wolf and Ryan Dobratz. 

JBG is currently the top performer in the Bloomberg office REIT index, with a return of 7.1% since it began trading last July - currently trading at around $34.00 per share. Bloomberg notes that the index has fallen 10 percent over the same period. 

Here is the kicker: according to a Bloomberg source, Third Avenue predicts the shares will be worth more than $40 apiece if Amazon picks Arlington’s Crystal City neighborhood, where JBG has significant holdings.

Third Ave. accumulated JBG shares at $30.50 and $31 and says it's still a good investment even if Amazon doesn't select the D.C. region, according to a recent letter. The fund mentions that they have options to purchase JBG shares at "a meaningful discount to NAV should an additional 50,000 jobs be added to D.C. in the next five years," in reference to net asset value. 

Bloomberg shows those contracts would be priced at $36.50 and $37. 

In a letter published in November, Chief Executive Officer Matthew Kelly wrote that the company was working with regional authorities on the HQ2 submission and cited the region’s high concentration of millennials, and appropriate housing for them, as a lure to Amazon.

Kelly highlighted Crystal City, partly for its proximity to three Metro stations, commuter-rail access and the Reagan National airport, which operates direct flights to U.S. cities including Amazon’s hometown of Seattle. -Bloomberg

Kelly added that JBG intends "to put our best foot forward, expect nothing and hope for the best."  

Incidentally, the odds of the Third Avenue's bet being successful are quite high. As we observed previously, both an analysis by PR consultancy Hamilton Place...

AMZN

... and a report from Bank of America...

... place Washington DC/Arlington either as the winner of Amazon's HQ2 venue contest, or among the top 5 city finalists.

Comments

DillyDilly DeadFred Thu, 04/12/2018 - 20:06 Permalink

How the fuck hard is it?

 

MONTGOMERY COUNTY, MD. is exactly between Ft. Meade & Langley... It triangulates DC... (I-270 corridor from Frederick, MD to DC)... They even spent gobs of money recently to construct an ICC between I-270 & I-95... There are more fucking cameras on that thing than at CAESARS PALACE/MIRAGE/& all the rest of the Las Vegas casinos combined... Unless I wore a TEXAS CHAINSAW MASSACRE leather mask, they probably have 100,000 pictures of my mug already & could spot me if I walked in to any ad hoc 7-11 on the planet...

 

& the underground tunnels are already built... I know

 

I've been saying this for months (even with the 2-3 usernames that I was kicked off of ZH for, you know, for TELLING THE TRUTH about things)...

In reply to by DeadFred

Laowei Gweilo Déjà view Thu, 04/12/2018 - 22:29 Permalink

>>> re: "cited the region’s high concentration of millennials" <<<

 

at this point, millenials are anyone between the ages 37 and 20...

you could just say 'prime working force' or 'most of the people that would likely have the education required for Amazon' at this point =p

In reply to by Déjà view

DillyDilly hongdo Thu, 04/12/2018 - 21:22 Permalink

& that's why it's MONKEY COUNTY...

 

Trust me ~ the underground tunnels are already built...

 

About 2x ago when I was kicked off of ZH ~ I also spoke about MAE EAST... But nobody has ever listened to me here anyway ever about anything... Until it became a reality... Then they just down voted me for the yuks because their name was mosley...

 

The fact that I get down voted for ANY comments of this sort is a testimony to the ignorant ballsy-ness of a number of FAMOUS comment yukkers on this forum...

In reply to by hongdo

Faeriedust hongdo Fri, 04/13/2018 - 05:49 Permalink

It's Bezos.  From California.  I believe it.

Californians regularly come to DC expecting to take over.  They get eaten alive, chewed up and spit out.  Intellect in California is measured against Hollywood.  I've yet to meet a Californian mentally tough enough to handle the everyday competition of DC.  They think they're smart, but they can't keep up with the triple-entendres on the cocktail circuit, let alone the backstabbing in the back corridors of Foggy Bottom.

In reply to by hongdo

Kyddyl Thu, 04/12/2018 - 20:07 Permalink

TYLERS - FIX THE SORT FUNCTION; IT DEFAULTS CONTINUOUSLY TO "OLDEST", THUS ALLOWING THE OLDER COMMENTS TO BE HIJACKED BY THE BOTS AND SUCH WITH FEW EXCEPTIONS - POSTING ON THIS SITE HAS BECOME AN EXERCISE IN FUTILITY AND HINDERS THE DIALOG...PLAIN STUPID!!!

Barnacles Thu, 04/12/2018 - 20:17 Permalink

CC looks bad imho. Way too crowded as it is with government contractors (so no space to build or expand), housing costs in NoVa are already insane, and NoVa traffic is horrible.  I would look into Rockville/White Flint/MoCo as its grouped in with Arlington.

idontcare Thu, 04/12/2018 - 20:43 Permalink

Wouldn't Dallas make more sense? A major air hub (DFW), close to major other cities with plenty of millenials, fantastic tax situation for both the company & employees, employees won't have to be paid as much as they would have to be in VA, etc.