[SECTION ONE: Letter to Shareholders](index=4&type=section&id=LETTER%20TO%20SHAREHOLDERS%20SECTION%20ONE) This section presents the management's letter to shareholders, covering macroeconomic trends, operational highlights, capital allocation, financial performance, and debt position [Management Letter](index=4&type=section&id=Management%20Letter) The management letter highlights an improved real estate capital market sentiment following the first rate cut in four years. The company reported strong multifamily performance, successful capital recycling, and significant share repurchases, while also outlining its capital allocation strategy and current financial position [Macroeconomic & Real Estate Market Sentiment](index=4&type=section&id=Macroeconomic%20%26%20Real%20Estate%20Market%20Sentiment) This section discusses the improved real estate capital market sentiment and strengthening apartment and office market fundamentals - The **first Federal Reserve rate cut in four years** has improved real estate capital market sentiment among lenders and equity investors[4](index=4&type=chunk) - Apartment fundamentals have strengthened due to limited supply, and the office market has cleared its bottom with improved leasing fundamentals[4](index=4&type=chunk) - The five-day in-office workweek is making a comeback, with major employers like Amazon mandating it, at a time when office supply is diminishing due to conversions and teardowns[4](index=4&type=chunk) [Q3 2024 Key Operational Highlights](index=4&type=section&id=Q3%202024%20Key%20Operational%20Highlights) This section outlines the company's key operational achievements for Q3 2024, including successful asset sales, strong multifamily performance, and sustainability awards - Closed on the sale of Fort Totten Square for **$86.8 million**, contributing to **$263.6 million** in year-to-date capital recycling transactions at an average **4.8% capitalization rate**[5](index=5&type=chunk) - Multifamily In-Service portfolio occupancy increased by **140 basis points** to **95.7%** and was **97.0% leased**[6](index=6&type=chunk) - Same Store multifamily portfolio effective rents increased by **4.5%** for new leases and **6.1%** upon renewal, with a **60.0% renewal rate** and **3.5% Same Store NOI growth**[6](index=6&type=chunk) - The Grace and Reva, two new towers in National Landing, were **63.2% leased** as of October 27th, exceeding the leasing performance of all five prior multifamily deliveries since 2017[7](index=7&type=chunk) - Received Nareit's Impact at Scale Award and maintained a **5-star GRESB ranking**, recognized as Global Listed Sector Leader and Americas Regional Sector Leader for Diversified (Office and Residential) REITs[8](index=8&type=chunk) [Capital Allocation Strategy](index=5&type=section&id=Capital%20Allocation%20Strategy) This section details the company's approach to capital allocation, focusing on development opportunities, non-core asset dispositions, and share repurchases - Expects development opportunities to become more economically viable in a positive macroeconomic landscape, with **9.3 million square feet** of Development Pipeline expected to be entitled by the **end of 2025**[9](index=9&type=chunk) - Continues to dispose of non-core assets, marketing over **$200 million** in combined value for sale, following **$263.6 million** in capital recycling year-to-date[11](index=11&type=chunk) - New investments, including developments, acquisitions, and share buybacks, will primarily be financed through asset recycling[12](index=12&type=chunk) - Repurchased **10.8 million shares** for **$168.3 million** year-to-date at an average price of **$15.61**, totaling **$1.1 billion** since 2020 (**56.6 million shares**, **~38% of outstanding shares**)[12](index=12&type=chunk) [Financial and Operating Metrics Overview](index=5&type=section&id=Financial%20and%20Operating%20Metrics%20Overview) This section provides a summary of the company's key financial and operating metrics for Q3 2024, including FFO, NOI, and portfolio occupancy rates Q3 2024 Key Financial and Operating Metrics | Metric | Value | | :---------------------------------- | :------------------- | | Core FFO attributable to common shares | $19.3 million | | Core FFO per diluted share | $0.23 | | Annualized NOI (excluding sold/out-of-service assets) | In line with last quarter | | Multifamily portfolio leased | 92.7% | | Multifamily portfolio occupied | 90.6% | | In-Service multifamily portfolio leased | 97.0% | | In-Service multifamily portfolio occupied | 95.7% | | Office portfolio leased | 80.7% | | Office portfolio occupied | 79.1% | | Same Store NOI growth (QoQ) | 0.5% | [Debt and Liquidity Position](index=5&type=section&id=Debt%20and%20Liquidity%20Position) This section outlines the company's debt and liquidity profile, including leverage ratios, debt maturity, and anticipated earnings pressures - Net Debt to Annualized Adjusted EBITDA was **10.6x** as of **September 30, 2024**[14](index=14&type=chunk) - Floating rate exposure remains low, with **91.4%** of debt fixed or hedged, and a weighted average debt maturity of **3.1 years**[15](index=15&type=chunk) - Repaid an **$83.3 million** mortgage loan and executed a **one-year extension** of the **Tranche A-1 Term Loan**[15](index=15&type=chunk) - Anticipates continued **downward pressure** on earnings and office Same Store NOI through 2025, and **upward pressure** on **Net Debt to Annualized Adjusted EBITDA** due to tenant vacates and construction spend[14](index=14&type=chunk) - Expected pressures will be lessened by income from new deliveries (The Grace, Reva, Valen, The Zoe), multifamily rent growth, and office demand in National Landing[14](index=14&type=chunk) [Operating Portfolio Performance](index=6&type=section&id=Operating%20Portfolio%20Performance) The operating portfolio showed strong multifamily performance with increased occupancy and rent growth, driven by new developments and limited market-wide supply. The office portfolio experienced a slight decrease in occupancy but saw improved leasing sentiment and activity, particularly in defense and technology sectors, with strategic repurposing of older assets [Multifamily Portfolio Trends](index=6&type=section&id=Multifamily%20Portfolio%20Trends) This section details the positive trends in the multifamily portfolio, including increased occupancy, rent growth, and strong leasing performance of new developments Multifamily Portfolio Performance (QoQ) | Metric | Q3 2024 | Change QoQ | | :---------------------------------- | :------ | :--------- | | In-Service Portfolio Leased | 97.0% | +0.1% | | In-Service Portfolio Occupied | 95.7% | +1.4% | | Same Store New Lease Effective Rents | +4.5% | N/A | | Same Store Renewal Lease Effective Rents | +6.1% | N/A | | Same Store Renewal Rate | 60.0% | N/A | | Same Store NOI Growth | +3.5% | N/A | - The Grace and Reva (808 units) were **60.7% leased** by quarter-end and **63.2% leased** by October 27th, exceeding the leasing pace of all five prior multifamily deliveries since 2017[17](index=17&type=chunk) - Market-wide (DC Metro) new multifamily starts are stalled (**3,103 units under construction**), pushing occupancy to **94.1%** and rents to grow at **3.5%**[18](index=18&type=chunk) - The DC metro region's **3.5% rent growth** compares favorably to **0.6%** in other Gateway markets, with a favorable supply picture[19](index=19&type=chunk) [Office Portfolio Trends](index=7&type=section&id=Office%20Portfolio%20Trends) This section analyzes the office portfolio trends, noting a slight occupancy decrease, improved tenant sentiment, strategic asset repurposing, and a shift towards five-day in-office work Office Portfolio Performance (QoQ) | Metric | Q3 2024 | Change QoQ | | :---------------------------------- | :------ | :--------- | | Portfolio Leased | 80.7% | -1.5% | | Portfolio Occupied | 79.1% | -1.5% | | Square Feet Leased (Q3) | 150,000 SF | N/A | | Weighted Average Lease Term | 6.3 years | N/A | | Second-Generation Lease Rental Rate Mark-to-Market (Cash) | +1.2% | N/A | - Tenant surveys indicate higher engagement and a **25% YoY increase** in intent to renew, with National Landing renewals averaging under **$5 per square foot per annum** in leasing costs[21](index=21&type=chunk) - Leasing in National Landing is primarily driven by government contractors, secure facility needs, and technology-related tenants, accounting for approximately **80%** of leasing activity this year[21](index=21&type=chunk) - Approximately **600,000 square feet** were taken out of service this year, with an additional **143,000 square feet** planned, to repurpose older buildings for redevelopment or conversion[22](index=22&type=chunk) - Anticipates approximately **475,000 square feet** (**$21.5 million annualized rent**) of tenant vacates in National Landing by **H1 2025**, resulting in a pro forma occupancy of **~69%** (excluding highly levered assets)[23](index=23&type=chunk) - Market-wide, there's a significant attitudinal shift towards five-day in-office work, with **79% of U.S. CEOs** expecting this by **2027** (up from **34%** earlier this year)[24](index=24&type=chunk) - Northern Virginia office market shows an uptick in leasing activity, with **60-80%** of transactions being renewals, and **55%** of quarterly leasing in defense, engineering, and technology sectors[26](index=26&type=chunk) - Limited new supply (**210,000 SF under construction**) and potential repurposing of over **10 million square feet** of obsolete office buildings could significantly reduce the **23.5% vacancy rate**[26](index=26&type=chunk) [Conclusion and Outlook](index=8&type=section&id=Conclusion%20and%20Outlook) The company is encouraged by recent Federal Reserve actions, the apparent bottoming of the office market, and the return to five-day in-office work. Having largely completed its portfolio transformation to majority multifamily, JBG SMITH is well-positioned to capitalize on the next phase of the real estate cycle, with an active office leasing pipeline and shrinking office inventory - Encouraged by recent **Federal Reserve action** on interest rates, the **apparent bottom in the office market**, and the return of the **five-day in-office workweek**[27](index=27&type=chunk) - The company has largely completed its portfolio transformation, now being almost **majority multifamily**, and has successfully repositioned the **National Landing submarket**[27](index=27&type=chunk) - The office leasing pipeline is **more active than at any time since 2020**, and the office denominator continues to shrink[27](index=27&type=chunk) [Personnel Update](index=8&type=section&id=Personnel%20Update) Kai Reynolds, Chief Development Officer, will be retiring at the end of the year, with gratitude expressed for his contributions - **Chief Development Officer, Kai Reynolds**, will be **retiring at the end of this year**[28](index=28&type=chunk) [SECTION TWO: Q3 2024 Earnings Release](index=11&type=section&id=Q3%202024%20EARNINGS%20RELEASE%20SECTION%20TWO) This section provides a summary of JBG SMITH's third-quarter 2024 financial results, including net loss, FFO, NOI, operating portfolio performance, and balance sheet highlights [Third Quarter 2024 Results Summary](index=11&type=section&id=Third%20Quarter%202024%20Results%20Summary) JBG SMITH reported a net loss for Q3 2024, with FFO and Core FFO also decreasing compared to the prior year. Annualized NOI saw a slight decrease, primarily due to tenant vacates, while Same Store NOI increased marginally, driven by multifamily performance [Financial Performance (Net Loss, FFO, Core FFO)](index=11&type=section&id=Financial%20Performance%20(Net%20Loss%2C%20FFO%2C%20Core%20FFO)) This section details the company's net loss, FFO, and Core FFO for Q3 2024, comparing performance against the prior year Q3 2024 vs. Q3 2023 Financial Performance | Metric | Q3 2024 (in millions) | Q3 2023 (in millions) | Change | | :---------------------------------- | :-------------------- | :-------------------- | :----- | | Net loss attributable to common shareholders | $(27.0) | $(58.0) | +$31.0 | | Net loss per diluted share | $(0.32) | $(0.58) | +$0.26 | | FFO attributable to common shareholders | $19.5 | $40.1 | $(20.6) | | FFO per diluted share | $0.23 | $0.40 | $(0.17) | | Core FFO attributable to common shareholders | $19.3 | $41.0 | $(21.7) | | Core FFO per diluted share | $0.23 | $0.40 | $(0.17) | - The net loss for Q3 2024 improved compared to Q3 2023, which included a significant impairment loss of **$59.3 million** related to real estate assets[30](index=30&type=chunk) [Annualized & Same Store NOI](index=11&type=section&id=Annualized%20%26%20Same%20Store%20NOI) This section presents the Annualized and Same Store Net Operating Income (NOI) for Q3 2024, highlighting drivers of change Annualized NOI (at JBG SMITH Share) | Metric | Q3 2024 (in millions) | Q2 2024 (in millions) | Change | | :---------------------------------- | :-------------------- | :-------------------- | :----- | | Annualized NOI | $282.4 | $286.4 | $(4.0) | | Annualized NOI (excluding sold/out-of-service assets) | $278.1 | $278.4 | $(0.3) | - The decrease in Annualized NOI (excluding sold/out-of-service assets) was primarily due to tenant vacates and higher concessions at certain multifamily assets, partially offset by lower real estate tax expense[30](index=30&type=chunk)[31](index=31&type=chunk) Same Store NOI (SSNOI) (at JBG SMITH Share) | Metric | Q3 2024 (in millions) | Change QoQ | | :---------------------------------- | :-------------------- | :--------- | | SSNOI | $68.6 | +0.5% | | SSNOI increase drivers | Higher rents and occupancy, lower concessions in multifamily; lower real estate taxes in commercial. | | SSNOI decrease drivers | Higher operating expenses in multifamily; lower occupancy and recovery revenue in commercial. | [Operating Portfolio Highlights](index=12&type=section&id=Operating%20Portfolio%20Highlights) The operating multifamily portfolio saw a slight decrease in overall occupancy but the In-Service segment remained strong. The commercial portfolio experienced a modest decline in both leased and occupied rates, while office leasing activity included a mix of new and renewal leases with positive rental rate increases Operating Portfolio Occupancy & Leasing (QoQ) | Metric | As of Sep 30, 2024 | As of Jun 30, 2024 | Change | | :---------------------------------- | :----------------- | :----------------- | :----- | | Operating Multifamily Leased | 92.7% | 96.9% | -4.2% | | Operating Multifamily Occupied | 90.6% | 94.3% | -3.7% | | In-Service Multifamily Leased | 97.0% | 96.9% | +0.1% | | In-Service Multifamily Occupied | 95.7% | 94.3% | +1.4% | | Same Store Multifamily New Lease Effective Rents | +4.5% | N/A | N/A | | Same Store Multifamily Renewal Lease Effective Rents | +6.1% | N/A | N/A | | Same Store Multifamily Renewal Rate | 60.0% | N/A | N/A | | Operating Commercial Leased | 80.7% | 82.3% | -1.6% | | Operating Commercial Occupied | 79.1% | 80.6% | -1.5% | - Executed approximately **150,000 square feet** of office leases in Q3 2024 (**46,000 SF new leases**) and **496,000 square feet year-to-date** (**241,000 SF new leases**)[32](index=32&type=chunk) - Second-generation office leases generated a **1.2% rental rate increase** on a cash basis for Q3 and a **1.5% increase year-to-date**[32](index=32&type=chunk) [Development Portfolio Overview](index=12&type=section&id=Development%20Portfolio%20Overview) The company has one multifamily asset with 775 units under construction. The Grace and Reva were recently placed into the operating portfolio. The development pipeline consists of 18 assets with 9.3 million square feet of estimated potential development density - **One multifamily asset** consisting of **775 units** is currently under construction[33](index=33&type=chunk) - **The Grace and Reva** (formerly 1900 Crystal Drive) were placed into the operating multifamily portfolio in Q2 2024[33](index=33&type=chunk) - The development pipeline includes **18 assets** with an estimated potential development density of **9.3 million square feet**[33](index=33&type=chunk) [Third-Party Asset Management and Real Estate Services Business](index=12&type=section&id=Third-Party%20Asset%20Management%20and%20Real%20Estate%20Services%20Business) Revenue from third-party real estate services, including reimbursements, was $17.1 million for Q3 2024. Excluding reimbursements and service revenue from real estate ventures, the business generated $8.3 million, primarily from property and asset management fees Q3 2024 Third-Party Real Estate Services Revenue | Revenue Type | Amount (in millions) | | :---------------------------------- | :------------------- | | Total revenue (including reimbursements) | $17.1 | | Revenue (excluding reimbursements and venture service revenue) | $8.3 | | Property and asset management fees | $5.0 | | Other service revenue | $1.6 | | Leasing fees | $1.0 | [Balance Sheet & Capital Activities](index=13&type=section&id=Balance%20Sheet%20%26%20Capital%20Activities) As of September 30, 2024, JBG SMITH's total enterprise value was approximately $4.3 billion, with Net Debt to annualized Adjusted EBITDA at 10.6x. The company engaged in asset dispositions, debt repayment, and share repurchases during the quarter Balance Sheet Metrics (as of Sep 30, 2024) | Metric | Value | | :---------------------------------- | :------------------- | | Total enterprise value | ~$4.3 billion | | Common shares and units outstanding | 98.4 million | | Common shares and units value | $1.7 billion | | Debt (net) at JBG SMITH share | $2.7 billion | | Cash and cash equivalents at JBG SMITH share | $141.7 million | | Net Debt to annualized Adjusted EBITDA | 10.6x | | Net Debt / total enterprise value | 59.6% | | Cash and cash equivalents | $137.0 million | | Availability under revolving credit facility | $644.3 million | - Sold Fort Totten Square for **$86.8 million** in **September 2024**[37](index=37&type=chunk) - Repaid an **$83.3 million** mortgage loan and extended the **$200.0 million Tranche A-1 Term Loan** by **one year to January 2026**[37](index=37&type=chunk) - Repurchased and retired **3.1 million common shares** for **$50.2 million** at a weighted average price of **$16.23 per share**[37](index=37&type=chunk) [Dividends](index=13&type=section&id=Dividends) The Board of Trustees declared a quarterly dividend of $0.175 per common share, payable in November 2024 - A quarterly dividend of **$0.175 per common share** was declared on **October 24, 2024**, payable on **November 22, 2024**[38](index=38&type=chunk) [About JBG SMITH](index=13&type=section&id=About%20JBG%20SMITH) JBG SMITH is a leading owner, operator, investor, and developer of mixed-use properties in the Washington, DC market, with a significant concentration in National Landing. The company focuses on placemaking, green building, and maintaining carbon-neutral operations - JBG SMITH owns, operates, invests in, and develops mixed-use properties in high-growth, high-barrier-to-entry submarkets in and around **Washington, DC**, primarily **National Landing**[39](index=39&type=chunk) - Approximately **75.0%** of JBG SMITH's holdings are in **National Landing**, anchored by **Amazon's new headquarters**, **Virginia Tech's Innovation Campus**, proximity to the Pentagon, and placemaking initiatives[39](index=39&type=chunk) - The portfolio comprises **13.1 million square feet** of multifamily, office, and retail assets (at share), **98%** of which are Metro-served, and a development pipeline of **9.3 million square feet**, primarily multifamily[39](index=39&type=chunk) - Committed to green, smart, and healthy buildings, with plans to maintain **carbon-neutral operations** annually[39](index=39&type=chunk) [Forward-Looking Statements](index=13&type=section&id=Forward-Looking%20Statements) This section provides a cautionary statement regarding forward-looking statements, highlighting that future results may differ materially due to numerous assumptions, risks, and uncertainties, and advises against undue reliance on these statements - Statements in the release may constitute '**forward-looking statements**' subject to **numerous assumptions, risks, and uncertainties**, and future results may **differ materially**[40](index=40&type=chunk) - Factors influencing outcomes include **adverse economic conditions**, timing and costs of development, financing commitments, and competitive factors[40](index=40&type=chunk) - Investors are cautioned not to place **undue reliance** on forward-looking statements, and the company does not undertake to publicly release revisions[40](index=40&type=chunk) [Pro Rata Information](index=14&type=section&id=Pro%20Rata%20Information) The company presents financial information 'at JBG SMITH Share' to reflect its economic interests in consolidated and unconsolidated real estate ventures, emphasizing that this non-GAAP presentation provides valuable insights into its portfolio's composition and performance, despite not representing GAAP-compliant control or legal claims to co-venturers' shares - Financial information is presented '**at JBG SMITH Share**' (pro rata share) to reflect ownership percentage in consolidated and unconsolidated real estate ventures[41](index=41&type=chunk) - This **non-GAAP presentation** provides **valuable information** on the **portfolio's composition, performance, and capitalization**, as a significant portion of assets are held through real estate ventures[41](index=41&type=chunk)[42](index=42&type=chunk) - The company does **not control unconsolidated ventures** and does **not have legal claim** to co-venturers' shares; this information should **not be considered a substitute for GAAP financial statements**[42](index=42&type=chunk) - Certain **subordinated interests** in commercial buildings and associated non-recourse mortgage loans are excluded from occupancy and non-GAAP metrics due to **zero investment** and **no anticipated near-term cash flow distributions**[42](index=42&type=chunk) [Non-GAAP Financial Measures Explanation](index=15&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) This section explains the calculation and utility of various non-GAAP financial measures, including EBITDA, EBITDAre, Adjusted EBITDA, FFO, Core FFO, FAD, Net Debt, and NOI. These measures are used by management to assess operating performance, financial flexibility, and dividend funding ability, providing supplemental insights beyond GAAP, but are not substitutes for GAAP measures - **EBITDA, EBITDAre, and Adjusted EBITDA** are non-GAAP measures used to evaluate **operating performance** by removing the impact of capital structure and certain non-cash expenses[43](index=43&type=chunk)[44](index=44&type=chunk) - **FFO, Core FFO, and FAD** are non-GAAP measures useful for comparing **levered operating performance** and assessing the ability to **fund dividends**, by excluding real estate depreciation and other non-comparable items[44](index=44&type=chunk)[45](index=45&type=chunk) - **Net Debt** is a non-GAAP measure representing **total consolidated and unconsolidated indebtedness less cash and cash equivalents**, used to manage financial flexibility and leverage[45](index=45&type=chunk) - **NOI and Annualized NOI** are non-GAAP measures used to assess **asset performance** by reflecting property-related revenue less operating expenses, excluding non-cash items and financing costs[45](index=45&type=chunk) - These non-GAAP measures are **supplemental** and should be considered in conjunction with GAAP financial statements, as they have limitations and may **not be comparable** to measures used by other companies[44](index=44&type=chunk)[45](index=45&type=chunk) [Definitions (Earnings Release)](index=18&type=section&id=Definitions%20(Earnings%20Release)) This section provides key definitions for terms used in the earnings release, including Development Pipeline, Estimated Potential Development Density, First-generation, Formation Transaction, Free Rent, GAAP, In-Service, Non-Same Store, and Same Store - Key terms defined include '**Development Pipeline**' (assets with potential for construction), '**Estimated Potential Development Density**' (management's estimate of developable square feet), and '**In-Service**' (multifamily/commercial assets at or above 90% leased or operating for >12 months)[47](index=47&type=chunk) - Definitions also cover '**First-generation**' (newly vacant or delivered space leases), '**Formation Transaction**' (spin-off and acquisition events), '**Free Rent**' (abated rent), '**GAAP**' (accounting principles), '**Non-Same Store**' (excluded from Same Store pool), and '**Same Store**' (assets in-service for both comparison periods, excluding significant redevelopment)[47](index=47&type=chunk) [Condensed Consolidated Financial Statements (Summary)](index=19&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20(Summary)) This section provides a summary of the company's condensed consolidated financial statements, including balance sheets, statements of operations, and reconciliations for non-GAAP measures like EBITDA, FFO, and NOI. For detailed financial tables and comprehensive reconciliations, refer to the 'Detailed Financial Information' section in the Supplemental Information [Condensed Consolidated Balance Sheets (Summary)](index=19&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Summary)) This section summarizes the company's condensed consolidated balance sheets, presenting key assets, liabilities, and equity as of September 30, 2024, and December 31, 2023 Condensed Consolidated Balance Sheets (in thousands) | Asset/Liability | Sep 30, 2024 | Dec 31, 2023 | | :---------------------------------- | :----------- | :----------- | | **ASSETS:** | | | | Real estate, net | $4,429,977 | $4,536,759 | | Cash and cash equivalents | $136,983 | $164,773 | | Investments in unconsolidated real estate ventures | $100,682 | $264,281 | | Total Assets | $5,182,477 | $5,518,515 | | **LIABILITIES & EQUITY:** | | | | Mortgage loans, net | $1,816,156 | $1,783,014 | | Revolving credit facility | $90,000 | $62,000 | | Term loans, net | $717,578 | $717,172 | | Total liabilities | $2,841,880 | $2,825,929 | | Total equity | $1,895,652 | $2,251,849 | | Total Liabilities, Redeemable Noncontrolling Interests and Equity | $5,182,477 | $5,518,515 | [Condensed Consolidated Statements of Operations (Summary)](index=20&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Summary)) This section provides a summary of the company's condensed consolidated statements of operations, detailing revenues, expenses, and net loss for Q3 2024 and Q3 2023 Condensed Consolidated Statements of Operations (in thousands, Q3 2024 vs. Q3 2023) | Item | Q3 2024 | Q3 2023 | | :---------------------------------- | :------ | :------ | | Total revenue | $136,026 | $151,562 | | Total expenses | $129,756 | $136,793 | | Total other income (expense) | $(36,748) | $(80,793) | | Net loss | $(31,309) | $(66,101) | | Net loss attributable to common shareholders | $(26,980) | $(58,007) | | Loss per common share - diluted | $(0.32) | $(0.58) | [EBITDA, EBITDAre and Adjusted EBITDA Reconciliations (Summary)](index=22&type=section&id=EBITDA%2C%20EBITDAre%20and%20Adjusted%20EBITDA%20Reconciliations%20(Summary)) This section summarizes the reconciliations for EBITDA, EBITDAre, and Adjusted EBITDA, along with the Net Debt to Annualized Adjusted EBITDA ratio for Q3 2024 and Q3 2023 EBITDA, EBITDAre and Adjusted EBITDA (in thousands, Q3 2024 vs. Q3 2023) | Metric | Q3 2024 | Q3 2023 | | :---------------------------------- | :------ | :------ | | Net loss | $(31,309) | $(66,101) | | EBITDA | $56,676 | $16,641 | | EBITDAre | $62,028 | $77,720 | | Adjusted EBITDA | $60,010 | $76,313 | | Net Debt to Annualized Adjusted EBITDA | 10.6x | 8.1x | [FFO, Core FFO and FAD Reconciliations (Summary)](index=23&type=section&id=FFO%2C%20Core%20FFO%20and%20FAD%20Reconciliations%20(Summary)) This section summarizes the reconciliations for FFO, Core FFO, and FAD, including per share amounts and the FAD payout ratio for Q3 2024 and Q3 2023 FFO, Core FFO and FAD (in thousands, Q3 2024 vs. Q3 2023) | Metric | Q3 2024 | Q3 2023 | | :---------------------------------- | :------ | :------ | | FFO Attributable to Common Shareholders | $19,499 | $40,098 | | Core FFO Attributable to Common Shareholders | $19,292 | $41,040 | | FFO per common share - diluted | $0.23 | $0.40 | | Core FFO per common share - diluted | $0.23 | $0.40 | | FAD available to OP Units (A) | $18,450 | $43,909 | | Distributions to common shareholders and unitholders (B) | $17,891 | $26,801 | | FAD Payout Ratio (B÷A) | 97.0% | 61.0% | [NOI Reconciliations (Summary)](index=25&type=section&id=NOI%20Reconciliations%20(Summary)) This section summarizes the reconciliations for Net Operating Income (NOI), including consolidated, unconsolidated, and Same Store NOI for Q3 2024 and Q3 2023 NOI Reconciliations (in thousands, Q3 2024 vs. Q3 2023) | Metric | Q3 2024 | Q3 2023 | | :---------------------------------- | :------ | :------ | | Consolidated NOI | $65,068 | $72,915 | | NOI attributable to unconsolidated real estate ventures at our share | $1,292 | $5,374 | | NOI | $68,336 | $78,866 | | Operating Portfolio NOI | $70,597 | $79,861 | | Same Store NOI | $68,585 | $68,254 | | Change in Same Store NOI | 0.5% | N/A | [SECTION THREE: Q3 2024 Supplemental Information](index=28&type=section&id=Q3%202024%20SUPPLEMENTAL%20INFORMATION%20SECTION%20THREE) This section provides detailed supplemental information for Q3 2024, including overview disclosures, company profile, financial highlights, portfolio data, leasing activity, debt details, and comprehensive non-GAAP reconciliations [Overview Disclosures](index=29&type=section&id=Overview%20Disclosures) This section provides essential disclosures, including detailed forward-looking statements, the company's organizational structure and basis of presentation, an explanation of pro rata financial reporting, and a list of all non-GAAP measures used in the investor package, along with a reference to comprehensive definitions [Forward-Looking Statements](index=29&type=section&id=Forward-Looking%20Statements) This section provides detailed cautionary statements regarding forward-looking information, outlining potential impacts of market disruptions, NOI growth, and development timelines - Detailed cautionary statements regarding forward-looking information, including potential impacts of **market disruptions**, **NOI growth**, leverage profile, **Amazon's headquarters**, **office market trends**, and **development timelines**[62](index=62&type=chunk) - Highlights numerous factors beyond control that could affect outcomes, such as **economic conditions**, **development costs**, and **financing**[62](index=62&type=chunk) [Organization and Basis of Presentation](index=30&type=section&id=Organization%20and%20Basis%20of%20Presentation) This section describes JBG SMITH's organizational structure as a Maryland REIT, its focus on mixed-use properties, and the unaudited nature of the Investor Package information - JBG SMITH is a **Maryland real estate investment trust** focused on **mixed-use properties** in the **Washington, DC market**, particularly **National Landing**[63](index=63&type=chunk) - The company also operates a **third-party asset management and real estate services business** for **JBG Legacy Funds** and other parties[63](index=63&type=chunk) - Information in the Investor Package is **unaudited** unless otherwise indicated and does not purport to disclose all GAAP-required items[63](index=63&type=chunk) [Pro Rata Information](index=30&type=section&id=Pro%20Rata%20Information) This section explains the 'at JBG SMITH Share' financial presentation, a non-GAAP measure reflecting economic interests in real estate ventures, and its utility for investors - Financial information '**at JBG SMITH Share**' is a **non-GAAP presentation** reflecting the company's **economic interest** in consolidated and unconsolidated real estate ventures[63](index=63&type=chunk) - This presentation provides **valuable information** on **portfolio composition, performance, and capitalization**, but is **not a substitute for GAAP financial statements**[63](index=63&type=chunk) - Certain **subordinated interests** and associated **non-recourse mortgage loans** in unconsolidated ventures are excluded from occupancy and non-GAAP measures due to **zero investment** and **no anticipated cash flow**[63](index=63&type=chunk) [Definitions (Supplemental Information)](index=31&type=section&id=Definitions%20(Supplemental%20Information)) This section directs readers to pages 39-43 for a comprehensive list of definitions pertinent to the Investor Package - Refers to **pages 39-43** for a **comprehensive list of definitions** of terms used in the Investor Package[64](index=64&type=chunk) [Non-GAAP Measures](index=31&type=section&id=Non-GAAP%20Measures) This section lists all non-GAAP financial measures used in the Investor Package, emphasizing their role as supplemental information for assessing financial condition and operations - Lists all non-GAAP financial measures included in the Investor Package, such as **EBITDA, FFO, FAD, NOI**, and their various **adjusted forms**[65](index=65&type=chunk) - These measures are explained as **useful supplemental information** for investors regarding financial condition and results of operations, with reconciliations provided[65](index=65&type=chunk) [Company Profile](index=32&type=section&id=Company%20Profile) As of September 30, 2024, JBG SMITH's company snapshot shows a total enterprise value of $4.26 billion, with Net Debt at $2.54 billion, representing 59.6% of total enterprise value. The indicated annual dividend per share is $0.70, yielding 4.0% Company Snapshot as of September 30, 2024 | Metric | Value | | :---------------------------------- | :------------------- | | Exchange/ticker | NYSE: JBGS | | Indicated annual dividend per share | $0.70 | | Dividend yield | 4.0% | | Common share price | $17.48 | | Common shares and OP Units outstanding (in millions) | 98.37 | | Total market capitalization (in billions) | $1.72 | | Total consolidated and unconsolidated indebtedness at JBG SMITH Share (in billions) | $2.68 | | Less: cash and cash equivalents at JBG SMITH Share (in billions) | $(0.14) | | Net Debt (in billions) | $2.54 | | Total Enterprise Value (in billions) | $4.26 | | Net Debt / Total Enterprise Value | 59.6% | [Financial Highlights](index=33&type=section&id=Financial%20Highlights) The financial highlights for Q3 2024 show total revenue of $136.0 million and a net loss attributable to common shareholders of $(27.0) million. Key non-GAAP metrics include Operating Portfolio NOI of $70.6 million, Core FFO of $23.0 million, and an FAD payout ratio of 97.0%. The Net Debt to annualized Adjusted EBITDA stood at 10.6x Summary Financial Results (Q3 2024) | Metric | Three Months Ended Sep 30, 2024 | | :---------------------------------- | :------------------------------ | | Total revenue | $136,026 | | Net loss attributable to common shareholders | $(26,980) | | Per diluted common share | $(0.32) | | Operating portfolio NOI | $70,597 | | FFO (attributable to OP Units) | $23,224 | | Core FFO (attributable to OP Units) | $22,977 | | FAD (attributable to OP Units) | $18,450 | | FAD payout ratio | 97.0% | | EBITDA (attributable to OP Units) | $56,676 | | EBITDAre (attributable to OP Units) | $62,028 | | Adjusted EBITDA (attributable to OP Units) | $60,010 | | Net Debt / total enterprise value | 59.6% | | Net Debt to annualized Adjusted EBITDA | 10.6x | Debt Summary (at JBG SMITH Share, as of Sep 30, 2024) | Metric | Value | | :---------------------------------- | :------------------- | | Total consolidated indebtedness | $2,615,724 | | Total consolidated and unconsolidated indebtedness | $2,682,417 | | Weighted average interest rates (Variable) | 6.07% | | Weighted average interest rates (Fixed) | 4.63% | | Weighted average interest rates (Total) | 5.08% | | Cash and cash equivalents | $141,669 | [Portfolio Overview](index=34&type=section&id=Portfolio%20Overview) As of September 30, 2024, JBG SMITH's operating portfolio comprises 41 assets, with 6,781 multifamily units and 7.2 million commercial square feet. The total operating portfolio was 86.0% leased and 84.2% occupied, generating $282.4 million in annualized NOI. The development pipeline includes 18 assets with 9.3 million square feet of potential density Operating Portfolio Summary (at JBG SMITH Share, as of Sep 30, 2024) | Asset Type | Number of Assets | Units / Square Feet | % Leased | % Occupied | Annualized Rent (in thousands) | Annualized NOI (in thousands) | | :---------------------------------- | :--------------- | :------------------ | :------- | :--------- | :----------------------------- | :---------------------------- | | Multifamily (In-Service) | 14 | 5,973 Units | 97.0% | 95.7% | $180,530 | $125,288 | | Multifamily (Recently Delivered) | 2 | 808 Units | 60.7% | 55.1% | $17,499 | $3,740 | | Multifamily (Total) | 16 | 6,781 Units | 92.7% | 90.6% | $198,029 | $129,028 | | Commercial (Total) | 23 | 6,895,964 SF | 80.7% | 79.1% | $249,466 | $150,124 | | Ground Leases | 2 | — | — | — | — | $3,236 | | Operating (Total) | 41 | 6,781 Units / 6,895,964 SF | 86.0% | 84.2% | $447,495 | $282,388 | - The company has **one multifamily asset with 775 units** under construction and a development pipeline of **18 assets with 9.3 million square feet** of estimated potential development density[70](index=70&type=chunk) [Detailed Financial Information](index=35&type=section&id=Detailed%20Financial%20Information) This section provides detailed financial statements and reconciliations, including consolidated balance sheets, statements of operations, and specific non-GAAP metrics for unconsolidated ventures, tangible assets/liabilities, EBITDA, FFO, FAD, third-party services, G&A expenses, and various NOI summaries, offering a comprehensive view of the company's financial position and performance [Condensed Consolidated Balance Sheets](index=35&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the detailed condensed consolidated balance sheets, outlining the company's assets, liabilities, and equity as of September 30, 2024, and December 31, 2023 Condensed Consolidated Balance Sheets (in thousands) | Asset/Liability | Sep 30, 2024 | Dec 31, 2023 | | :---------------------------------- | :----------- | :----------- | | **ASSETS:** | | | | Real estate, net | $4,429,977 | $4,536,759 | | Cash and cash equivalents | $136,983 | $164,773 | | Investments in unconsolidated real estate ventures | $100,682 | $264,281 | | Total Assets | $5,182,477 | $5,518,515 | | **LIABILITIES & EQUITY:** | | | | Mortgage loans, net | $1,816,156 | $1,783,014 | | Revolving credit facility | $90,000 | $62,000 | | Term loans, net | $717,578 | $717,172 | | Total liabilities | $2,841,880 | $2,825,929 | | Total equity | $1,895,652 | $2,251,849 | | Total Liabilities, Redeemable Noncontrolling Interests and Equity | $5,182,477 | $5,518,515 | [Condensed Consolidated Statements of Operations](index=36&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section provides the detailed condensed consolidated statements of operations, showing revenues, expenses, and net loss for Q3 2024 and Q3 2023 Condensed Consolidated Statements of Operations (in thousands, Q3 2024 vs. Q3 2023) | Item | Q3 2024 | Q3 2023 | | :---------------------------------- | :------ | :------ | | Total revenue | $136,026 | $151,562 | | Total expenses | $129,756 | $136,793 | | Total other income (expense) | $(36,748) | $(80,793) | | Net loss | $(31,309) | $(66,101) | | Net loss attributable to common shareholders | $(26,980) | $(58,007) | | Loss per common share - diluted | $(0.32) | $(0.58) | [Unconsolidated Real Estate Ventures - Balance Sheet and Operating Information](index=37&type=section&id=Unconsolidated%20Real%20Estate%20Ventures%20-%20Balance%20Sheet%20and%20Operating%20Information) This section details the balance sheet and operating information for unconsolidated real estate ventures, reflecting JBG SMITH's share of assets, liabilities, revenues, and expenses Unconsolidated Real Estate Ventures (in thousands, at JBG SMITH Share) | Item | Sep 30, 2024 | | :---------------------------------- | :----------- | | **BALANCE SHEET INFORMATION:** | | | Total real estate, at cost | $167,752 | | Real estate, net | $151,774 | | Total assets | $168,902 | | Borrowings, net | $66,693 | | Total liabilities | $78,551 | | **OPERATING INFORMATION (Q3 2024):** | | | Total revenue | $2,286 | | Total expenses | $2,377 | | Interest expense | $(1,041) | | Net loss | $(1,108) | | Income (loss) from unconsolidated real estate ventures, net | $(745) | [Other Tangible Assets and Liabilities](index=38&type=section&id=Other%20Tangible%20Assets%20and%20Liabilities) This section outlines other tangible assets and liabilities at JBG SMITH's share, including restricted cash, receivables, payables, and other liabilities as of September 30, 2024 Other Tangible Assets and Liabilities (in thousands, at JBG SMITH Share, as of Sep 30, 2024) | Item | Amount | | :---------------------------------- | :----- | | **Other Tangible Assets, Net:** | | | Restricted cash | $34,117 | | Tenant and other receivables, net | $31,339 | | Other assets, net | $108,147 | | Total Other Tangible Assets, Net | $173,603 | | **Other Tangible Liabilities, Net:** | | | Accounts payable and accrued liabilities | $100,643 | | Other liabilities, net | $82,686 | [EBITDA, EBITDAre and Adjusted EBITDA Reconciliations (Non-GAAP)](index=39&type=section&id=EBITDA%2C%20EBITDAre%20and%20Adjusted%20EBITDA%20Reconciliations%20(Non-GAAP)) This section provides detailed non-GAAP reconciliations for EBITDA, EBITDAre, and Adjusted EBITDA, along with the Net Debt to Annualized Adjusted EBITDA ratio for Q3 2024 and Q3 2023 EBITDA, EBITDAre and Adjusted EBITDA (in thousands, Q3 2024 vs. Q3 2023) | Metric | Q3 2024 | Q3 2023 | | :---------------------------------- | :------ | :------ | | Net loss | $(31,309) | $(66,101) | | EBITDA | $56,676 | $16,641 | | EBITDAre | $62,028 | $77,720 | | Adjusted EBITDA | $60,010 | $76,313 | | Net Debt to Annualized Adjusted EBITDA | 10.6x | 8.1x | | Total consolidated and unconsolidated indebtedness | $2,682,417 | $2,603,346 | [FFO, Core FFO and FAD Reconciliations (Non-GAAP)](index=40&type=section&id=FFO%2C%20Core%20FFO%20and%20FAD%20Reconciliations%20(Non-GAAP)) This section presents detailed non-GAAP reconciliations for FFO, Core FFO, and FAD, including per share amounts and the FAD payout ratio for Q3 2024 and Q3 2023 FFO, Core FFO and FAD (in thousands, Q3 2024 vs. Q3 2023) | Metric | Q3 2024 | Q3 2023 | | :---------------------------------- | :------ | :------ | | FFO Attributable to Common Shareholders | $19,499 | $40,098 | | Core FFO Attributable to Common Shareholders | $19,292 | $41,040 | | FFO per common share - diluted | $0.23 | $0.40 | | Core FFO per common share - diluted | $0.23 | $0.40 | | FAD available to OP Units (A) | $18,450 | $43,909 | | Distributions to common shareholders and unitholders (B) | $17,891 | $26,801 | | FAD Payout Ratio (B÷A) | 97.0% | 61.0% | [Third-Party Asset Management and Real Estate Services Business (Non-GAAP)](index=42&type=section&id=Third-Party%20Asset%20Management%20and%20Real%20Estate%20Services%20Business%20(Non-GAAP)) This section details the non-GAAP financial performance of the third-party asset management and real estate services business, including revenue breakdown and adjusted general and administrative expenses for Q3 2024 Third-Party Asset Management and Real Estate Services Business (in thousands, Q3 2024) | Service Revenue Type | Amount | | :---------------------------------- | :----- | | Property management fees | $3,903 | | Asset management fees | $1,139 | | Development fees | $323 | | Leasing fees | $998 | | Construction management fees | $342 | | Other service revenue | $1,551 | | Total Revenue | $8,256 | | Pro rata adjusted general and administrative expense: third-party real estate services | $(7,166) | | Total Services Revenue Less Allocated General and Administrative Expenses | $1,090 | [Pro Rata Adjusted General and Administrative Expenses (Non-GAAP)](index=43&type=section&id=Pro%20Rata%20Adjusted%20General%20and%20Administrative%20Expenses%20(Non-GAAP)) This section provides a non-GAAP reconciliation of pro rata adjusted general and administrative expenses, detailing corporate and third-party service allocations for Q3 2024 Pro Rata Adjusted General and Administrative Expenses (in thousands, Q3 2024) | Item | Statement of Operations | Adjustments (A) | Adjustments (B) | Pro Rata Adjusted | | :---------------------------------- | :---------------------- | :-------------- | :-------------- | :---------------- | | Corporate and other | $11,881 | — | $334 | $12,215 | | Third-party real estate services | $16,088 | $(8,588) | $(334) | $7,166 | | Total | $27,969 | $(8,588) | — | $19,381 | [Same Store NOI (Non-GAAP)](index=44&type=section&id=Same%20Store%20NOI%20(Non-GAAP)) This section presents the non-GAAP Same Store NOI for multifamily, commercial, and ground leases, detailing revenue, expenses, and percentage change for Q3 2024 versus Q3 2023 Same Store NOI (in thousands, at JBG SMITH share, Q3 2024 vs. Q3 2023) | Metric | Q3 2024 | Q3 2023 | % Change | | :---------------------------------- | :------ | :------ | :------- | | **Multifamily:** | | | | | Revenue | $50,668 | $49,016 | 3.4% | | Expenses | $(20,430) | $(19,790) | 3.2% | | Same Store NOI | $30,238 | $29,226 | 3.5% | | **Commercial:** | | | | | Revenue | $60,311 | $63,266 | (4.7%) | | Expenses | $(22,773) | $(24,831) | (8.3%) | | Same Store NOI | $37,538 | $38,435 | (2.3%) | | **Ground Leases:** | | | | | Same Store NOI | $809 | $593 | 36.4% | | **Total Same Store NOI** | $68,585 | $68,254 | 0.5% | | Non-Same Store NOI | $2,012 | $11,607 | (82.7%) | | Total Operating Portfolio NOI | $70,597 | $79,861 | (11.6%) | [Summary NOI (Non-GAAP)](index=45&type=section&id=Summary%20NOI%20(Non-GAAP)) This section provides a non-GAAP summary of Net Operating Income (NOI) across consolidated, unconsolidated, multifamily, commercial, and ground lease segments for Q3 2024 Summary NOI (in thousands, Q3 2024) | Item | Consolidated | Unconsolidated | Multifamily | Commercial | Ground Leases | Total at JBG SMITH Share | | :---------------------------------- | :----------- | :------------- | :---------- | :--------- | :------------ | :----------------------- | | Number of operating assets | 39 | 2 | 16 | 23 | 2 | 41 | | Total revenue | $115,191 | $2,420 | $56,479 | $60,311 | $821 | $117,611 | | Total expenses | $(46,094) | $(920) | $(24,222) | $(22,780) | $(12) | $(47,014) | | Operating Portfolio NOI | $69,097 | $1,500 | $32,257 | $37,531 | $809 | $70,597 | | Annualized NOI | $276,388 | $6,000 | $129,028 | $150,124 | $3,236 | $282,388 | | Annualized Free Rent (at JBG SMITH Share) | $37,196 | $128 | $8,156 | $27,500 | $1,668 | $37,324 | | % occupied (at JBG SMITH Share) | 84.2% | 86.0% | 90.6% | 79.1% | — | 84.2% | [Summary NOI - Multifamily (Non-GAAP)](index=46&type=section&id=Summary%20NOI%20-%20Multifamily%20(Non-GAAP)) This section details the non-GAAP Summary NOI for the multifamily portfolio, broken down by submarket (National Landing, DC, MD) for Q3 2024 Summary NOI – Multifamily (in thousands, Q3 2024, at JBG SMITH Share) | Item | Total | National Landing | DC | MD | | :---------------------------------- | :---- | :--------------- | :-- | :-- | | Number of operating assets | 16 | 6 | 9 | 1 | | Total revenue | $56,479 | $25,484 | $27,332 | $3,663 | | Total expenses | $(24,222) | $(11,339) | $(12,120) | $(763) | | Operating Portfolio NOI | $32,257 | $14,145 | $15,212 | $2,900 | | Annualized NOI | $129,028 | $56,580 | $60,848 | $11,600 | | % occupied | 90.6% | 86.7% | 95.1% | 94.1% | [Summary NOI - Commercial (Non-GAAP)](index=47&type=section&id=Summary%20NOI%20-%20Commercial%20(Non-GAAP)) This section provides the non-GAAP Summary NOI for the commercial portfolio, categorized by consolidated, unconsolidated, National Landing, and other segments for Q3 2024 Summary NOI – Commercial (in thousands, Q3 2024, at JBG SMITH Share) | Item | Consolidated | Unconsolidated | National Landing | Other | Total | | :---------------------------------- | :----------- | :------------- | :--------------- | :---- | :---- | | Number of operating assets | 21 | 2 | 18 | 5 | 23 | | Total revenue | $57,891 | $2,420 | $51,547 | $8,764 | $60,311 | | Total expenses | $(21,860) | $(920) | $(19,331) | $(3,449) | $(22,780) | | Operating Portfolio NOI | $36,031 | $1,500 | $32,216 | $5,315 | $37,531 | | Annualized NOI | $144,124 | $6,000 | $128,864 | $21,260 | $150,124 | | % occupied | 78.9% | 86.0% | 78.3% | 83.4% | 79.1% | [Leasing Activity Details](index=48&type=section&id=Leasing%20Activity%20Details) This section provides detailed insights into leasing activities, including signed but not yet commenced leases for multifamily and commercial properties, effective lease rates and renewal rates for multifamily, and comprehensive office leasing statistics. It also covers lease expiration schedules and the concentration and diversity of tenants across the portfolio [Signed But Not Yet Commenced Leases](index=48&type=section&id=Signed%20But%20Not%20Yet%20Commenced%20Leases) This section details the annualized total estimated rent for signed but not yet commenced leases across multifamily and commercial properties as of September 30, 2024 Signed But Not Yet Commenced Leases (in thousands, at JBG SMITH Share, as of Sep 30, 2024) | Asset Type | Annualized Total Estimated Rent | | :---------------------------------- | :------------------------------ | | Multifamily (Operating) | $1,588 | | Commercial (Operating, Consolidated) | $2,440 | | Commercial (Operating, Unconsolidated) | $80 | | Total | $4,108 | [Leasing Activity - Multifamily](index=49&type=section&id=Leasing%20Activity%20-%20Multifamily) This section presents multifamily leasing activity, including effective new and renewal lease rates, blended rates, and renewal rates for Q3 2024 versus Q3 2023 Multifamily Leasing Activity (Q3 2024 vs. Q3 2023) | Metric | Q3 2024 | Q3 2023 | | :---------------------------------- | :------ | :------ | | Effective new lease rates | 4.5% | 3.2% | | Effective renewal lease rates | 6.1% | 5.0% | | Effective blended lease rates | 5.4% | 4.1% | | Renewal rate | 60.0% | 56.3% | [Leasing Activity - Office](index=49&type=section&id=Leasing%20Activity%20-%20Office) This section details office leasing activity, including square footage leased, breakdown by new and renewal leases, weighted average lease terms, and rental rate changes for Q3 2024 and YTD 2024 Office Leasing Activity (Q3 2024 vs. YTD 2024) | Metric | Q3 2024 | YTD 2024 | | :---------------------------------- | :------ | :------- | | Square feet leased (at JBG SMITH Share) | 150,000 | 496,000 | | First-generation space: New | 5,000 | 51,000 | | Second-generation space: New | 41,000 | 190,000 | | Second-generation space: Renewal | 104,000 | 255,000 | | Weighted average lease term | 6.3 years | 6.0 years | | Weighted average Free Rent period | 4.0 months | 4.6 months | | Second-generation space cash basis % change | 1.2% | 1.5% | | Second-generation space GAAP basis % change | 8.4% | 9.6% | [Lease Expirations](index=51&type=section&id=Lease%20Expirations) This section provides a schedule of lease expirations, detailing the number of leases, square footage, and annualized rent by year, along with the weighted average remaining lease term Lease Expirations (as of Sep 30, 2024, at JBG SMITH Share) | Year of Lease Expiration | Number of Leases | Square Feet | % of Total Square Feet | Annualized Rent (in thousands) | % of Total Annualized Rent | | :---------------------------------- | :--------------- | :---------- | :--------------------- | :----------------------------- | :------------------------- | | Month-to-Month | 35 | 184,317 | 3.2% | $6,239 | 2.4% | | 2024 | 31 | 413,200 | 7.2% | $18,707 | 7.1% | | 2025 | 62 | 502,192 | 8.7% | $23,500 | 9.0% | | 2026 | 43 | 225,446 | 3.9% | $11,146 | 4.2% | | 2027 | 39 | 594,998 | 10.3% | $28,756 | 11.0% | | 2028 | 32 | 389,858 | 6.8% | $17,991 | 6.9% | | 2029 | 31 | 249,274 | 4.3% | $11,774 | 4.5% | | 2030 | 23 | 621,682 | 10.8% | $30,619 | 11.7% | | 2031 | 26 | 560,031 | 9.7% | $21,546 | 8.2% | | 2032 | 18 | 630,083 | 10.9% | $25,499 | 9.7% | | Thereafter | 75 | 1,400,343 | 24.2% | $66,520 | 25.3% | | Total / Weighted Average | 415 | 5,771,424 | 100.0% | $262,297 | 100.0% | - The weighted average remaining lease term for the entire portfolio (office and retail) is **5.6 years**[94](index=94&type=chunk) [Tenant Concentration](index=52&type=section&id=Tenant%20Concentration) This section identifies the top five tenant concentrations, detailing their number of leases, square footage, and contribution to total annualized rent as of September 30, 2024 Top 5 Tenant Concentration (as of Sep 30, 2024, at JBG SMITH Share) | Rank | Tenant | Number of Leases | Square Feet | % of Total Square Feet | Annualized Rent (in thousands) | % of Total Annualized Rent | | :--- | :---------------------------------- | :--------------- | :---------- | :--------------------- | :----------------------------- | :------------------------- | | 1 | U.S. Government (GSA) | 35 | 1,697,058 | 29.4% | $67,577 | 25.8% | | 2 | Amazon | 3 | 357,339 | 6.2% | $16,317 | 6.2% | | 3 | Lockheed Martin Corporation | 2 | 207,095 | 3.6% | $10,275 | 3.9% | | 4 | Public Broadcasting Service | 1 | 120,328 | 2.1% | $4,962 | 1.9% | | 5 | Accenture LLP | 2 | 102,756 | 1.8% | $4,942 | 1.9% | [Industry Diversity](index=53&type=section&id=Industry%20Diversity) This section outlines the top five industry diversity segments, detailing their number of leases, square footage, and contribution to total annualized rent as of September 30, 2024 Top 5 Industry Diversity (as of Sep 30, 2024, at JBG SMITH Share) | Rank | Industry | Number of Leases | Square Feet | % of Total Square Feet | Annualized Rent (in thousands) | % of Total Annualized Rent | | :--- | :---------------------------------- | :--------------- | :---------- | :--------------------- | :----------------------------- | :------------------------- | | 1 | Government | 39 | 1,706,415 | 29.6% | $68,051 | 25.9% | | 2 | Government Contractors | 89 | 1,364,599 | 23.6% | $65,510 | 25.0% | | 3 | Business Services | 26 | 693,959 | 12.0% | $33,107 | 12.6% | | 4 | Member Organizations | 35 | 489,105 | 8.5% | $24,533 | 9.4% | | 5 | Health Services | 26 | 244,267 | 4.2% | $10,991 | 4.2% | [Property Data Tables](index=54&type=section&id=Property%20Data%20Tables) This section provides detailed property tables for multifamily, commercial, under-construction, and development pipeline assets. It includes information on ownership, square footage, units, leasing and occupancy rates, annualized rent, and development schedules, offering a granular view of the company's real estate portfolio [Property Table - Multifamily](index=54&type=section&id=Property%20Table%20-%20Multifamily) This section presents detailed data for multifamily assets, including in-service, recently delivered, and under-construction properties, with units, leasing/occupancy rates, and annualized rent by submarket Multifamily Assets (at JBG SMITH Share, as of Sep 30, 2024) | Submarket | Number of Units | Multifamily % Leased | Multifamily % Occupied | Annualized Rent (in thousands) | | :---------------------------------- | :-------------- | :------------------- | :--------------------- | :----------------------------- | | **In-Service assets:** | | | | | | National Landing | 2,856 | 97.5% | 96.4% | $75,837 | | DC | 2,795 | 96.8% | 95.1% | $90,971 | | MD | 322 | 95.0% | 94.1% | $13,722 | | Total In-Service | 5,973 | 97.0% | 95.7% | $180,530 | | **Recently Delivered assets:** | | | | | | Total Recently Delivered | 808 | 60.7% | 55.1% | $17,499 | | **Operating - Total/Weighted Average** | 6,781 | 92.7% | 90.6% | $198,029 | | **Under-Construction assets:** | | | | | | Total Under-Construction | 775 | N/A | N/A | N/A | [Property Table - Commercial](index=56&type=section&id=Property%20Table%20-%20Commercial) This section provides detailed data for commercial assets, including office and retail properties, with leasing/occupancy rates and annualized rent by submarket Commercial Assets (at JBG SMITH Share, as of Sep 30, 2024) | Submarket | Office % Leased | Office % Occupied | Retail % Occupied | Annualized Rent (in thousands) | | :---------------------------------- | :-------------- | :---------------- | :---------------- | :----------------------------- | | National Landing | 80.2% | 78.3% | 95.3% | $203,225 | | Other | 83.6% | 83.4% | 85.7% | $46,241 | | Total at JBG SMITH Share | 80.7% | 79.1% | 94.8% | $249,466 | - Reconciliation of operating assets shows **23 commercial assets** totaling **7,230,808 SF** at **100% share** and **6,895,964 SF** at **JBG SMITH Share** as of **Q3 2024**[104](index=104&type=chunk) - Certain commercial assets contain **space held for development** or **not available for lease**, which is excluded from square footage, leased, and occupancy metrics[105](index=105&type=chunk)[106](index=106&type=chunk) [Property Table - Under-Construction](index=58&type=section&id=Property%20Table%20-%20Under-Construction) This section details the under-construction property, 2000/2001 South Bell Street, including its estimated construction schedule, units, square footage, and stabilized NOI Under-Construction Property (at JBG SMITH Share, as of Sep 30, 2024) | Asset | Submarket | Square Feet | Number of Units | Estimated Construction Start Date | Estimated Completion Date | Estimated Stabilization Date | Estimated Stabilized NOI (in millions) | | :---------------------------------- | :---------- | :---------- | :-------------- | :------------------------------ | :------------------------ | :--------------------------- | :------------------------------------- | | 2000/2001 South Bell Street | National Landing | 580,966 | 775 | Q1 2022 | Q1 2025 - Q3 2025 | Q4 2026 | $21.1 | - JBG SMITH is the **development manager** and **master lessee** for **2000/2001 South Bell Street**, which is consolidated as a **variable interest entity (VIE)**[108](index=108&type=chunk) [Property Table - Development Pipeline](index=59&type=section&id=Property%20Table%20-%20Development%20Pipeline) This section outlines the development pipeline, listing 18 assets with estimated potential development density and units, along with earliest potential construction start dates Development Pipeline (at JBG SMITH Share, as of Sep 30, 2024) | Location | Estimated Potential Development Density (SF) | Estimated Number of Units | | :---------------------------------- | :----------------------------------------- | :------------------------ | | National Landing | 7,224,100 | 5,565 | | DC | 2,107,000 | 1,935 | | Total | 9,331,100 | 7,500 | | Fully Entitled | 4,734,200 | 4,145 | - The pipeline includes **18 assets**, with earliest potential construction start dates ranging from **2024 to 2026**, subject to entitlements, design, and market conditions[109](index=109&type=chunk)[110](index=110&type=chunk) - Office developments are pre-lease dependent, and some assets are controlled through options to acquire leasehold interests[110](index=110&type=chunk) [Disposition Activity](index=61&type=section&id=Disposition%20Activity) JBG SMITH completed $263.6 million in disposition activity year-to-date 2024. This includes the sale of North End Retail for $14.3 million and Central Place Tower for $162.5 million in Q1, and Fort Totten Square for $86.8 million in Q3 Disposition Activity (in thousands, at JBG SMITH Share, YTD 2024) | Asset | Asset Type | Location | Date Disposed | Total Square Feet / Units | Gross Sales Price | | :---------------------------------- | :--------- | :--------- | :------------ | :------------------------ | :---------------- | | North End Retail | Multifamily | Washington, DC | Jan 22, 2024 | 27,355 SF | $14,250 | | Central Place Tower | Commercial | Arlington, VA | Feb 13, 2024 | 275,797 SF | $162,500 | | Fort Totten Square | Multifamily | Washington, DC | Sep 17, 2024 | 345 Units / 130,664 Retail SF | $86,800 | | Total | | | | | $263,550 | [Debt Details](index=62&type=section&id=Debt%20Details) As of September 30, 2024, JBG SMITH's total consolidated and unconsolidated principal balance was $2.71 billion. The debt portfolio is 68.6% fixed rate and 31.4% floating rate, with a weighted average interest rate of 5.08%. The company has $644.3 million in undrawn capacity under its revolving credit facility [Debt Summary](index=62&type=section&id=Debt%20Summary) This section summarizes the company's debt profile by type and maturity, including principal balances, interest rates, and fixed/floating rate percentages as of September 30, 2024 Debt Summary (in thousands, at JBG SMITH Share, as of Sep 30, 2024) | Debt Type | 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | | :---------------------------------- | :--- | :--- | :--- | :--- | :--- | :--------- | :---------- | | Unsecured Debt | — | — | $200,000 | $90,000 | $520,000 | — | $810,000 | | Secured Debt | $120,933 | $340,710 | $321,976 | $358,301 | $85,000 | $670,003 | $1,896,923 | | Total Principal Balance | $120,933 | $340,710 | $521,976 | $448,301 | $605,000 | $670,003 | $2,706,923 | | % of total debt maturing | 4.5% | 12.6% | 19.3% | 16.6% | 22.4% | 24.6% | 100.0% | | % floating rate | — | — | 52.6% | 60.8% | 14.0% | 32.5% | 31.4% | | % fixed rate | 100.0% | 100.0% | 47.4% | 39.2% | 86.0% | 67.5% | 68.6% | | Total Weighted Average Interest Rates | 3.97% | 3.61% | 6.05% | 5.71% | 4.77% | 5.15% | 5.08% | Revolving Credit Facility and Term Loans (in thousands) | Facility | Credit Limit | Outstanding Principal Balance | Undrawn Capacity | All-In Interest Rate | | :---------------------------------- | :----------- | :---------------------------- | :--------------- | :------------------- | | Revolving Credit Facility | $750,000 | $90,000 | $644,333 | 6.46% | | Tranche A-1 Term Loan | $200,000 | $200,000 | — | 5.34% | | Tranche A-2 Term Loan | $400,000 | $400,000 | — | 4.20% | | 2023 Term Loan | $120,000 | $120,000 | — | 5.41% | | Total / Weighted Average | $1,470,000 | $810,000 | $644,333 | 4.91% | [Debt by Instrument](index=63&type=section&id=Debt%20by%20Instrument) This section provides a detailed breakdown of consolidated and unconsolidated debt by individual instrument, including principal balance, interest rates, and maturity dates as of September 30, 2024 Consolidated Debt by Instrument (in thousands, as of Sep 30, 2024) | Asset | Principal Balance | Stated Interest Rate | Interest Rate Hedge | Current Annual Interest Rate | Initial Maturity Date | Extended Maturity Date | | :---------------------------------- | :---------------- | :------------------- | :------------------ | :--------------------------- | :-------------------- | :--------------------- | | 2101 L Street | $120,933 | 3.97% | Fixed | 3.97% | 11/15/24 | 11/15/24 | | RiverHouse Apartments | $307,710 | S + 1.39% | Swap | 3.55% | 04/01/25 | 04/01/25 | | The Grace and Reva | $216,976 | S + 2.61% | Cap | 7.11% | 04/25/26 | 04/25/26 | | 1215 S. Clark Street | $105,000 | S + 1.35% | Swap | 5.17% | 12/22/26 | 12/22/26 | | Tranche A-1 Term Loan | $200,000 | S + 1.34% | Swap | 5.34% | 01/14/26 | 01/14/27 | | 8001 Woodmont | $100,414 | 4.82% | Fixed | 4.82% | 01/15/27 | 01/15/27 | | 2000/2001 South Bell Street | $147,388 | S + 2.25% | Cap | 6.77% | 01/22/27 | 01/22/27 | | 1235 S. Clark Street | $75,499 | 3.94% | Fixed | 3.94% | 11/01/27 | 11/01/27 | | Tranche A-2 Term Loan | $400,000 | S + 1.39% | Swap | 4.20% | 01/13/28 | 01/13/28 | | Revolving Credit Facility | $90,000 | S + 1.50% | — | 6.46% | 06/29/27 | 06/29/28 | | 2023 Term Loan | $120,000 | S + 1.40% | Swap | 5.41% | 06/29/28 | 06/29/28 | | 1225 S. Clark Street | $85,000 | S + 1.70% | — | 6.55% | 07/27/28 | 07/27/28 | | WestEnd25 | $97,500 | S + 1.45% | Swap | 4.16% | 08/05/29 | 08/05/29 | | Multifamily Credit Facility | $187,557 | 5.13% | Fixed | 5.13% | 02/01/30 | 02/01/30 | | 1221 Van Street | $87,253 | S + 2.62% | Swap | 6.59% | 08/01/30 | 08/01/30 | | 220 20th Street | $80,240 | S + 2.62% | Swap | 6.60% | 08/01/30 | 08/01/30

Core Viewpoint - JBG SMITH Properties has underperformed the Vanguard Real Estate Index Fund ETF in 2024, with a loss of nearly 6% compared to a 2% return in the benchmark ETF, but is expected to outperform due to a focus on multifamily properties and potential benefits from Fed rate cuts [2] Company Overview - JBG SMITH Properties is an office REIT with significant multifamily exposure, primarily in the DC metro area, where the commercial portfolio contributes 55% of adjusted net operating income (NOI) and the multifamily portfolio contributes 45% [3] - The commercial portfolio has a heavy reliance on government tenants, accounting for 25.6% of annualized rent, and government contractors at 25.5% [3] - A major multifamily development project is set to be completed by Q3 2025, with $667 million already invested and an expected 5.8% NOI yield [3] Operational Overview - The company reported a Core FFO of $0.18/share in Q2 2024, a 50% year-over-year decline, attributed to lower occupancy in the commercial portfolio (80.6%, down 3.4% Y/Y) and increased interest expenses [4] - Occupancy in the multifamily portfolio improved to 94.3%, up 0.6% Y/Y, while annualized NOI for the stable portfolio was $284 million, down 3% Y/Y [4] Capital Structure - As of Q2 2024, JBG SMITH had a net debt of $2.52 billion, representing 61% of the company's $4.13 billion enterprise value, which is high given the NOI performance but positions the company to benefit from anticipated Fed rate cuts [5] - The weighted average interest rate was 4.88%, with 29% of the debt at a floating rate and 71% fixed [5] Market-implied Cap Rate - The market-implied cap rate is calculated at 7.94% based on an annualized NOI of $284 million and an incremental contribution of $44 million from the development portfolio, which will lower to 7.75% after accounting for additional investments [6] Valuation - Adjusting for the incremental earnings from the development project, the run-rate core FFO could reach approximately $0.28/share, leading to an annualized core FFO of $1.12/share, which would be reasonable if the commercial portfolio stabilizes [7] - Post-completion of the multifamily project, the commercial portfolio's share of NOI is expected to decrease to 49%, while multifamily will account for 51% [7] Conclusion - Despite poor operating results in Q2 2024, JBG SMITH is positioned to benefit from upcoming Fed rate cuts, with a significant portion of its enterprise value funded by debt, and the multifamily portfolio's importance is set to increase as new projects are finalized [10]

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements and detailed notes for periods ended June 30, 2024, and December 31, 2023 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (In thousands) | ASSETS / LIABILITIES, REDEEMABLE NONCONTROLLING EQUITY INTERESTS AND SHAREHOLDERS' EQUITY | June 30, 2024 | December 31, 2023 | | :--------------------------------------------------------------------------------------- | :------------ | :---------------- | | **ASSETS** | | | | Real estate, net | $4,526,415 | $4,536,759 | | Cash and cash equivalents | $163,536 | $164,773 | | Restricted cash | $42,366 | $35,668 | | Investments in unconsolidated real estate ventures | $101,043 | $264,281 | | Total assets | $5,325,116 | $5,518,515 | | **LIABILITIES** | | | | Mortgage loans, net | $1,876,459 | $1,783,014 | | Revolving credit facility | $40,000 | $62,000 | | Term loans, net | $717,610 | $717,172 | | Total liabilities | $2,853,861 | $2,825,929 | | Redeemable noncontrolling interests | $436,673 | $440,737 | | Total shareholders' equity of JBG SMITH Properties | $2,019,646 | $2,222,876 | | Total equity | $2,034,582 | $2,251,849 | | TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | $5,325,116 | $5,518,515 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (In thousands, except per share data) | REVENUE / EXPENSES / OTHER INCOME (EXPENSE) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | **REVENUE** | | | | | | Property rental | $112,536 | $120,592 | $235,172 | $244,625 | | Third-party real estate services | $17,397 | $22,862 | $35,265 | $45,646 | | Total revenue | $135,320 | $152,095 | $280,504 | $305,057 | | **EXPENSES** | | | | | | Depreciation and amortization | $51,306 | $49,218 | $108,161 | $102,649 | | Property operating | $36,254 | $35,912 | $71,533 | $71,524 | | Real estate taxes | $14,399 | $14,424 | $28,194 | $29,648 | | Total expenses | $138,434 | $140,244 | $283,177 | $287,280 | | **OTHER INCOME (EXPENSE)** | | | | | | Net income (loss) attributable to common shareholders | $(24,373) | $(10,545) | $(56,649) | $10,626 | | Earnings (loss) per common share - Basic and Diluted | $(0.27) | $(0.10) | $(0.63) | $0.09 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Condensed Consolidated Statements of Comprehensive Income (Loss) (In thousands) | Item | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------------------------------------------------------------------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | NET INCOME (LOSS) | $(33,414) | $(12,254) | $(75,604) | $12,056 | | Change in fair value of derivative financial instruments | $8,020 | $21,789 | $32,860 | $12,820 | | Reclassification of net income on derivative financial instruments from accumulated other comprehensive income into interest expense | $(10,471) | $(7,534) | $(20,892) | $(15,350) | | Total other comprehensive income (loss) | $(2,451) | $14,255 | $11,968 | $(2,530) | | COMPREHENSIVE INCOME (LOSS) | $(35,865) | $2,001 | $(63,636) | $9,526 | | COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO JBG SMITH PROPERTIES | $(26,895) | $910 | $(47,861) | $8,473 | [Condensed Consolidated Statements of Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Condensed Consolidated Statements of Equity (In thousands) | Item | June 30, 2024 | December 31, 2023 | | :------------------------------------------------------------------------------------------------------------------------------------------------------------- | :------------ | :---------------- | | Common Shares (Shares) | 87,306 | 94,309 | | Common Shares (Amount) | $874 | $944 | | Additional Paid-In Capital | $2,855,724 | $2,978,852 | | Accumulated Deficit | $(865,782) | $(776,962) | | Accumulated Other Comprehensive Income | $28,830 | $20,042 | | Noncontrolling Interests | $14,936 | $28,973 | | Total Equity | $2,034,582 | $2,251,849 | | Net loss attributable to common shareholders and noncontrolling interests (Six Months Ended June 30, 2024) | $(67,616) | | | Common shares repurchased (Six Months Ended June 30, 2024) | $(118,158) | | | Dividends declared on common shares ($0.35 per common share) (Six Months Ended June 30, 2024) | $(32,171) | | | Acquisition of noncontrolling interests (Six Months Ended June 30, 2024) | $(26,586) | | | Total other comprehensive income (Six Months Ended June 30, 2024) | $11,968 | | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (In thousands) | Cash Flow Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :-------------------------------------------------------------------------------------------------------------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $60,813 | $89,431 | | Net cash provided by (used in) investing activities | $61,992 | $(135,500) | | Net cash used in financing activities | $(117,344) | $(25,160) | | Net increase (decrease) in cash and cash equivalents, and restricted cash | $5,461 | $(71,229) | | Cash and cash equivalents, and restricted cash, end of period | $205,902 | $202,844 | | Cash paid for interest (net of capitalized interest of $4,211 and $7,221 in 2024 and 2023) | $52,747 | $44,379 | | Accrued capital expenditures included in accounts payable and accrued expenses | $64,521 | $75,565 | | Common shares repurchased | $116,358 | $155,845 | | Dividends paid to common shareholders | $32,171 | $49,455 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Organization and Basis of Presentation](index=12&type=section&id=1.%20Organization%20and%20Basis%20of%20Presentation) - JBG SMITH Properties is a Maryland REIT focused on mixed-use properties in high-growth Washington, D.C. submarkets, primarily National Landing (**75% of holdings**)[170](index=170&type=chunk) - The company operates through JBG SMITH Properties LP, its operating partnership, in which JBG SMITH holds an **86.4% ownership interest** as of June 30, 2024[171](index=171&type=chunk) - As of June 30, 2024, the operating portfolio included **40 assets** (15 multifamily, 23 commercial, 2 land assets) and a development pipeline of **two under-construction multifamily assets** (**1,583 units**) and **18 assets** (**11.4 million sq ft**) in the development pipeline[172](index=172&type=chunk) [2. Summary of Significant Accounting Policies](index=14&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) - The financial statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions, with no material changes to significant accounting policies disclosed in the Annual Report[174](index=174&type=chunk)[180](index=180&type=chunk) - The company has elected to be taxed as a REIT, distributing at least **90% of its taxable income** as dividends to shareholders, and intends to maintain this status, also subject to federal, state, and local taxes on income from taxable REIT subsidiaries[179](index=179&type=chunk) - New accounting guidance includes ASU 2023-09 (Income Taxes) and ASU 2023-07 (Segment Reporting), effective for fiscal years beginning after December 15, 2024, and December 15, 2023, respectively, while the SEC's climate-related disclosure rules (March 2024) are currently stayed pending judicial review[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) [3. Dispositions](index=16&type=section&id=3.%20Dispositions) Disposition Activity (Six Months Ended June 30, 2024) | Date Disposed | Assets | Segment | Sales Price (In thousands) | Proceeds from Sale (In thousands) | Gain on Sale of Real Estate (In thousands) | | :-------------- | :-------------- | :---------- | :------------------------- | :-------------------------------- | :----------------------------------------- | | January 22, 2024 | North End Retail | Multifamily | $14,250 | $12,410 | $(1,200) | | Other | | | | | $1,486 | | **Total** | | | | | **$286** | - The company is under contract to sell a multifamily asset in Washington D.C. for **$86.8 million**, anticipated to close in 2024[187](index=187&type=chunk) [4. Investments in Unconsolidated Real Estate Ventures](index=17&type=section&id=4.%20Investments%20in%20Unconsolidated%20Real%20Estate%20Ventures) Investments in Unconsolidated Real Estate Ventures (In thousands) | Real Estate Venture | Effective Ownership Interest (June 30, 2024) | June 30, 2024 | December 31, 2023 | | :------------------ | :------------------------------------------- | :------------ | :---------------- | | PGIM | 50.0% | $724 | $163,375 | | J.P. Morgan | 50.0% | $73,892 | $72,742 | | 4747 Bethesda Venture | 20.0% | $11,672 | $13,118 | | Brandywine Realty Trust | 30.0% | $13,701 | $13,681 | | CBREI Venture | 10.0% | $174 | $180 | | Landmark Partners | 18.0% | $575 | $605 | | Other | | $305 | $580 | | **Total** | | **$101,043** | **$264,281** | - In February 2024, the PGIM venture sold its interest in Central Place Tower for **$325.0 million**, resulting in a proportionate share of aggregate gain of **$480,000** for JBG SMITH[205](index=205&type=chunk)[207](index=207&type=chunk) - The company provides leasing, property management, and other real estate services to its unconsolidated ventures, recognizing revenue of **$4.1 million** and **$8.7 million** for the three and six months ended June 30, 2024, respectively[206](index=206&type=chunk) [5. Variable Interest Entities](index=18&type=section&id=5.%20Variable%20Interest%20Entities) - JBG SMITH LP is the most significant consolidated VIE, with JBG SMITH holding an **86.4% limited partnership interest** and acting as the general partner, exercising full control[234](index=234&type=chunk) - In June 2024, JBG SMITH acquired the ground lessee's interest in 1900 Crystal Drive for **$26.6 million**, resulting in 1900 Crystal Drive no longer being a VIE[235](index=235&type=chunk) - As of June 30, 2024, excluding JBG SMITH LP, the company consolidated one VIE (2000/2001 South Bell Street) with total assets of **$256.1 million** and liabilities of **$157.9 million**[236](index=236&type=chunk) [6. Other Assets, Net](index=21&type=section&id=6.%20Other%20Assets%2C%20Net) Summary of Other Assets, Net (In thousands) | Item | June 30, 2024 | December 31, 2023 | | :-------------------------------------- | :------------ | :---------------- | | Prepaid expenses | $10,188 | $13,215 | | Derivative financial instruments, at fair value | $42,116 | $42,341 | | Deferred financing costs, net | $8,740 | $10,199 | | Operating lease right-of-use assets | $45,238 | $60,329 | | Investments in funds | $24,119 | $21,785 | | Other investments | $3,487 | $3,487 | | Other | $12,546 | $12,125 | | **Total other assets, net** | **$146,434** | **$163,481** | - Unrealized gains related to investments in real estate-focused technology companies were **$797,000** and **$1.3 million** for the three and six months ended June 30, 2024, respectively[238](index=238&type=chunk) [7. Debt](index=21&type=section&id=7.%20Debt) Summary of Mortgage Loans (In thousands) | Item | Weighted Average Effective Interest Rate (June 30, 2024) | June 30, 2024 | December 31, 2023 | | :------------------------------------------ | :------------------------------------------------------- | :------------ | :---------------- | | Variable rate | 6.23% | $701,283 | $608,582 | | Fixed rate | 4.78% | $1,188,709 | $1,189,643 | | Mortgage loans | | $1,889,992 | $1,798,225 | | Unamortized deferred financing costs and premium / discount, net | | $(13,533) | $(15,211) | | **Mortgage loans, net** | | **$1,876,459**| **$1,783,014** | Summary of Revolving Credit Facility and Term Loans (In thousands) | Item | Effective Interest Rate (June 30, 2024) | June 30, 2024 | December 31, 2023 | | :------------------------------------------ | :-------------------------------------- | :------------ | :---------------- | | Revolving credit facility | 6.78% | $40,000 | $62,000 | | Tranche A-1 Term Loan | 2.70% | $200,000 | $200,000 | | Tranche A-2 Term Loan | 3.58% | $400,000 | $400,000 | | 2023 Term Loan | 5.31% | $120,000 | $120,000 | | Term loans | | $720,000 | $720,000 | | Unamortized deferred financing costs, net | | $(2,390) | $(2,828) | | **Term loans, net** | | **$717,610** | **$717,172** | - As of June 30, 2024, the net carrying value of real estate collateralizing mortgage loans totaled **$2.2 billion** and the company had interest rate swap and cap agreements on certain mortgage loans with an aggregate notional value of **$1.6 billion**[240](index=240&type=chunk)[241](index=241&type=chunk) [8. Other Liabilities, Net](index=23&type=section&id=8.%20Other%20Liabilities%2C%20Net) Summary of Other Liabilities, Net (In thousands) | Item | June 30, 2024 | December 31, 2023 | | :------------------------------------------ | :------------ | :---------------- | | Lease intangible liabilities, net | $3,268 | $3,496 | | Lease incentive liabilities | $7,710 | $7,546 | | Liabilities related to operating lease right-of-use assets | $46,172 | $64,501 | | Prepaid rent | $12,864 | $11,881 | | Security deposits | $12,474 | $12,133 | | Environmental liabilities | $17,468 | $17,568 | | Deferred tax liability, net | $2,445 | $3,326 | | Derivative financial instruments, at fair value | $5,458 | $14,444 | | Other | $4,123 | $3,974 | | **Total other liabilities, net** | **$111,982** | **$138,869** | [9. Redeemable Noncontrolling Interests](index=25&type=section&id=9.%20Redeemable%20Noncontrolling%20Interests) - As of June 30, 2024, outstanding OP Units and redeemable LTIP Units totaled **13.8 million**, representing a **13.6% ownership interest** in JBG SMITH LP[249](index=249&type=chunk) - During the six months ended June 30, 2024, unitholders redeemed **625,166 OP Units**, which were exchanged for an equivalent number of common shares[249](index=249&type=chunk) [10. Property Rental Revenue](index=26&type=section&id=10.%20Property%20Rental%20Revenue) Summary of Property Rental Revenue (In thousands) | Revenue Type | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :-------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Fixed | $103,602 | $108,124 | $216,579 | $221,195 | | Variable | $8,934 | $12,468 | $18,593 | $23,430 | | **Total Property Rental Revenue** | **$112,536** | **$120,592** | **$235,172** | **$244,625** | [11. Share-Based Payments](index=26&type=section&id=11.%20Share-Based%20Payments) - In January 2024, the company granted **974,140 Time-Based LTIP Units** with a weighted average grant-date fair value of **$15.93 per unit**, primarily vesting over four years[256](index=256&type=chunk) - Also in January 2024, **1.9 million performance-based AO LTIP Units** were granted with a grant-date fair value of **$3.79 per unit**, subject to a TSR modifier and a three-year performance period[258](index=258&type=chunk) Summary of Share-Based Compensation Expense (In thousands) | Item | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Time-Based LTIP Units | $5,885 | $5,324 | $11,357 | $10,856 | | AO LTIP Units and Performance-Based LTIP Units | $3,476 | $3,282 | $6,954 | $6,942 | | LTIP Units | $1,552 | $1,000 | $1,552 | $1,000 | | Other equity awards | $1,168 | $1,262 | $2,212 | $2,798 | | Share-based compensation expense - other | $12,081 | $10,868 | $22,075 | $21,596 | | Share-based compensation related to Formation Transaction and special equity awards | $0 | $0 | $0 | $351 | | Total share-based compensation expense | $12,081 | $10,868 | $22,075 | $21,947 | | Less: amount capitalized | $(590) | $(782) | $(1,046) | $(1,433) | | **Share-based compensation expense** | **$11,491** | **$10,086** | **$21,029** | **$20,514** | [12. Transaction and Other Costs](index=30&type=section&id=12.%20Transaction%20and%20Other%20Costs) Summary of Transaction and Other Costs (In thousands) | Item | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Completed, potential and pursued transaction expenses | $34 | $227 | $1,541 | $274 | | Severance and other costs | $505 | $1,799 | $512 | $3,247 | | Demolition costs | $285 | $1,466 | $285 | $2,443 | | **Transaction and other costs** | **$824** | **$3,492** | **$2,338** | **$5,964** | [13. Interest Expense](index=30&type=section&id=13.%20Interest%20Expense) Summary of Interest Expense (In thousands) | Item | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest expense before capitalized interest | $31,234 | $27,805 | $62,074 | $55,713 | | Amortization of deferred financing costs | $4,179 | $1,351 | $8,082 | $2,630 | | Net loss on non-designated derivatives: | | | | | | Net unrealized loss | $27 | $2,944 | $69 | $5,641 | | Net realized loss | $0 | $97 | $0 | $230 | | Capitalized interest | $(3,467) | $(6,362) | $(8,092) | $(11,537) | | **Interest expense** | **$31,973** | **$25,835** | **$62,133** | **$52,677** | [14. Shareholders' Equity and Earnings (Loss) Per Common Share](index=30&type=section&id=14.%20Shareholders%27%20Equity%20and%20Earnings%20%28Loss%29%20Per%20Common%20Share) - The Board of Trustees authorized the repurchase of up to **$1.5 billion** of common shares, with **$1.1 billion** repurchased and retired since the program began in March 2020[269](index=269&type=chunk) Common Shares Repurchased (In millions, except per share data) | Period | Common Shares Repurchased | Weighted Average Purchase Price Per Share | | :-------------------------------------- | :------------------------ | :---------------------------------------- | | Three months ended June 30, 2024 | 4.7 | $14.62 | | Three months ended June 30, 2023 | 9.3 | $14.54 | | Six months ended June 30, 2024 | 7.7 | $15.35 | | Six months ended June 30, 2023 | 10.5 | $14.79 | | Program total through June 30, 2024 | 53.6 | $20.09 | Earnings (Loss) Per Common Share (In thousands, except per share amounts) | Item | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to common shareholders | $(24,373) | $(10,545) | $(56,649) | $10,626 | | Net income (loss) available to common shareholders - basic and diluted | $(24,876) | $(11,262) | $(57,806) | $9,909 | | Weighted average number of common shares outstanding - basic and diluted | 91,030 | 109,695 | 91,832 | 111,862 | | **Earnings (loss) per common share - basic and diluted** | **$(0.27)** | **$(0.10)** | **$(0.63)** | **$0.09** | - On July 24, 2024, a quarterly dividend of **$0.175 per common share** was declared, payable on August 21, 2024[274](index=274&type=chunk) [15. Fair Value Measurements](index=32&type=section&id=15.%20Fair%20Value%20Measurements) - The company uses derivative financial instruments (interest rate swaps and caps) to manage interest rate risk, with a net unrealized gain of **$33.1 million** on effective hedges as of June 30, 2024[275](index=275&type=chunk)[276](index=276&type=chunk) Assets and Liabilities Measured at Fair Value on a Recurring Basis (In thousands) | Item | June 30, 2024 (Total) | June 30, 2024 (Level 2) | December 31, 2023 (Total) | December 31, 2023 (Level 2) | | :---------------------------------------------------------------- | :-------------------- | :---------------------- | :------------------------ | :-------------------------- | | Derivative financial instruments designated as effective hedges: | | | | | | Classified as assets in "Other assets, net" | $36,606 | $36,606 | $35,632 | $35,632 | | Classified as liabilities in "Other liabilities, net" | $0 | $0 | $7,936 | $7,936 | | Non-designated derivatives: | | | | | | Classified as assets in "Other assets, net" | $5,510 | $5,510 | $6,709 | $6,709 | | Classified as liabilities in "Other liabilities, net" | $5,458 | $5,458 | $6,508 | $6,508 | - An impairment loss of **$18.2 million** was recognized for two development parcels during the six months ended June 30, 2024, writing them down to their estimated fair value of **$24.7 million**[286](index=286&type=chunk) [16. Segment Information](index=36&type=section&id=16.%20Segment%20Information) - The company aggregates its operating segments into three reportable segments: multifamily, commercial, and third-party asset management and real estate services[289](index=289&type=chunk) - The Chief Operating Decision Maker (CODM) evaluates multifamily and commercial segments based on Net Operating Income (NOI), which includes property rental and parking revenue, less operating expenses and real estate taxes[290](index=290&type=chunk) Consolidated NOI by Segment (In thousands) | Segment | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :---------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Multifamily | $28,190 | $28,696 | $56,454 | $55,767 | | Commercial | $34,559 | $42,300 | $71,260 | $89,983 | | Other | $2,395 | $4,055 | $4,409 | $6,917 | | **Total Consolidated NOI** | **$65,144** | **$75,051** | **$132,123** | **$152,667** | [17. Commitments and Contingencies](index=40&type=section&id=17.%20Commitments%20and%20Contingencies) - The company maintains general liability insurance (**$150.0 million per occurrence**) and property/rental value insurance (**$1.0 billion per occurrence**), with additional coverage for terrorist acts through a captive insurance subsidiary[299](index=299&type=chunk) - As of June 30, 2024, assets under construction require an additional **$98.5 million** to complete, primarily over the next two years, to be financed by debt, asset sales, and available cash[302](index=302&type=chunk) - Environmental liabilities totaled **$17.5 million** as of June 30, 2024, included in 'Other liabilities, net' on the balance sheet[305](index=305&type=chunk) - The company had committed tenant-related obligations of **$44.4 million** and additional capital commitments and guarantees to unconsolidated real estate ventures totaling **$58.0 million** as of June 30, 2024[306](index=306&type=chunk)[309](index=309&type=chunk) [18. Transactions with Related Parties](index=42&type=section&id=18.%20Transactions%20with%20Related%20Parties) - Third-party real estate services revenue from JBG Legacy Funds and WHI Impact Pool affiliates decreased to **$3.2 million** for the three months ended June 30, 2024, from **$5.9 million** in the prior year[316](index=316&type=chunk) - The company incurred **$1.3 million** and **$2.8 million** in rent expense for its corporate offices from an unconsolidated real estate venture for the three and six months ended June 30, 2024, respectively[317](index=317&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operating results, portfolio overview, strategic outlook, and liquidity for Q2 2024 [Overview and Outlook](index=48&type=section&id=Overview%20and%20Outlook) - As of June 30, 2024, the operating portfolio consisted of **40 assets** (15 multifamily, 23 commercial, 2 land assets) and a development pipeline of **two under-construction multifamily assets** (**1,583 units**) and **18 assets** (**11.4 million sq ft**) in the development pipeline[214](index=214&type=chunk) - The company's strategy focuses on repositioning holdings in National Landing through placemaking initiatives, including new multifamily and office developments, retail amenities, and public infrastructure improvements, with 1900 Crystal Drive (The Grace and Reva) delivered in Q2 2024[215](index=215&type=chunk) - Multifamily portfolio occupancy was **94.3%** as of June 30, 2024, with effective rents increasing by **4.6%** blended across new and renewal leases, and 1900 Crystal Drive began leasing in January 2024 and was **38.5% leased** by June 30, 2024[217](index=217&type=chunk) - Office portfolio occupancy decreased to **80.6%** as of June 30, 2024, down **250 basis points** from March 31, 2024, due to hybrid work trends, with plans to repurpose older, obsolete office buildings for redevelopment or conversion[218](index=218&type=chunk)[219](index=219&type=chunk) [Operating Results](index=50&type=section&id=Operating%20Results) [Key Highlights](index=50&type=section&id=Key%20Highlights) Key Operating Results Highlights (In millions, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to common shareholders | $(24.4) | $(10.5) | $(56.6) | $10.6 | | Diluted common share (loss) / earnings | $(0.27) | $(0.10) | $(0.63) | $0.09 | | Third-party real estate services revenue (incl. reimbursements) | $17.4 | $22.9 | $35.3 | $45.6 | | Same store NOI increase | 3.2% | | 5.2% | | Portfolio Occupancy and Leasing Highlights (at our share) | Metric | June 30, 2024 | March 31, 2024 | June 30, 2023 | | :------------------------------------------------------------------ | :------------ | :------------- | :------------ | | Operating multifamily portfolio leased percentage | 96.9% | 95.9% | 96.8% | | Operating multifamily portfolio occupied percentage | 94.3% | 94.3% | 93.7% | | Operating commercial portfolio leased percentage | 82.3% | 84.6% | 86.3% | | Operating commercial portfolio occupied percentage | 80.6% | 83.1% | 84.0% | | Square feet leased (3 months ended June 30, 2024) | 248,000 | | | | Initial rent per square foot (3 months ended June 30, 2024) | $46.61 | | | | GAAP-basis weighted average rent per square foot (3 months ended June 30, 2024) | $47.34 | | | - Subsequent to June 30, 2024, the company declared a quarterly dividend of **$0.175 per common share**, repurchased **897,531 common shares** for **$14.0 million**, and entered a contract to sell a multifamily asset for **$86.8 million**[53](index=53&type=chunk)[224](index=224&type=chunk) [Comparison of the Three Months Ended June 30, 2024 to 2023](index=52&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202024%20to%202023) Three Months Ended June 30, 2024 vs. 2023 (In thousands, % Change) | Item | 2024 | 2023 | % Change | | :---------------------------------------------------------------- | :-------- | :-------- | :------- | | Property rental revenue | $112,536 | $120,592 | (6.7)% | | Third-party real estate services revenue, including reimbursements | $17,397 | $22,862 | (23.9)% | | Depreciation and amortization expense | $51,306 | $49,218 | 4.2% | | Property operating expense | $36,254 | $35,912 | 1.0% | | Real estate taxes expense | $14,399 | $14,424 | (0.2)% | | General and administrative expense: Corporate and other | $17,001 | $15,093 | 12.6% | | General and administrative expense: Third-party real estate services | $18,650 | $22,105 | (15.6)% | | Income (loss) from unconsolidated real estate ventures, net | $(226) | $510 | (144.3)% |\n| Interest expense | $31,973 | $25,835 | 23.8% | - Property rental revenue decreased by **$8.1 million**, primarily due to commercial assets taken out of service (1800 South Bell Street, 2100 Crystal Drive) and disposed properties, partially offset by 1900 Crystal Drive and lease termination revenue[56](index=56&type=chunk)[57](index=57&type=chunk) - Interest expense increased by **$6.1 million**, driven by higher outstanding debt and rising interest rates on variable rate mortgage loans, partially offset by a decrease in capitalized interest[190](index=190&type=chunk) [Comparison of the Six Months Ended June 30, 2024 to 2023](index=56&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202024%20to%202023) Six Months Ended June 30, 2024 vs. 2023 (In thousands, % Change) | Item | 2024 | 2023 | % Change | | :---------------------------------------------------------------- | :-------- | :-------- | :------- | | Property rental revenue | $235,172 | $244,625 | (3.9)% | | Third-party real estate services revenue, including reimbursements | $35,265 | $45,646 | (22.7)% | | Depreciation and amortization expense | $108,161 | $102,649 | 5.4% | | Property operating expense | $71,533 | $71,524 | — | | Real estate taxes expense | $28,194 | $29,648 | (4.9)% | | General and administrative expense: Corporate and other | $31,974 | $31,216 | 2.4% | | General and administrative expense: Third-party real estate services | $40,977 | $45,928 | (10.8)% | | Income from unconsolidated real estate ventures, net | $749 | $943 | (20.6)% | | Interest expense | $62,133 | $52,677 | 18.0% | | Gain on the sale of real estate, net | $286 | $40,700 | (99.3)% | - Property rental revenue decreased by **$9.5 million**, primarily due to a **$23.0 million** decrease from commercial assets (Disposed Properties, 1800 South Bell Street, 2100 Crystal Drive), partially offset by lease termination revenue and multifamily asset increases[192](index=192&type=chunk) - Interest expense increased by **$9.5 million**, mainly due to higher outstanding debt and rising interest rates, partially offset by decreases from derivative expirations and repaid mortgage loans[39](index=39&type=chunk) [Liquidity and Capital Resources](index=68&type=section&id=Liquidity%20and%20Capital%20Resources) - Primary sources of operating cash flow are property rental income and fee-based real estate services, with other liquidity sources including financings, asset sales, and securities issuance[49](index=49&type=chunk) - The company anticipates that cash flows from operations, financings, asset sales, and existing cash will be adequate to fund business operations, debt service, capital expenditures, and dividends over the next **12 months**[49](index=49&type=chunk) [Mortgage Loans](index=68&type=section&id=Mortgage%20Loans) Summary of Mortgage Loans (In thousands) | Item | Effective Interest Rate (June 30, 2024) | June 30, 2024 | December 31, 2023 | | :------------------------------------------ | :-------------------------------------- | :------------ | :---------------- | | Variable rate | 6.23% | $701,283 | $608,582 | | Fixed rate | 4.78% | $1,188,709 | $1,189,643 | | Mortgage loans | | $1,889,992 | $1,798,225 | | Unamortized deferred financing costs and premium/discount, net | | $(13,533) | $(15,211) | | **Mortgage loans, net** | | **$1,876,459**| **$1,783,014** | - As of June 30, 2024, the net carrying value of real estate collateralizing mortgage loans totaled **$2.2 billion** and the company had interest rate swap and cap agreements on certain mortgage loans with an aggregate notional value of **$1.6 billion**[64](index=64&type=chunk)[65](index=65&type=chunk) [Revolving Credit Facility and Term Loans](index=68&type=section&id=Revolving%20Credit%20Facility%20and%20Term%20Loans) - As of June 30, 2024, the unsecured revolving credit facility and term loans totaled **$1.5 billion**, consisting of a **$750.0 million** revolving credit facility, a **$200.0 million** Tranche A-1 Term Loan, a **$400.0 million** Tranche A-2 Term Loan, and a **$120.0 million** 2023 Term Loan[66](index=66&type=chunk) Summary of Revolving Credit Facility and Term Loans (In thousands) | Item | Effective Interest Rate (June 30, 2024) | June 30, 2024 | December 31, 2023 | | :------------------------------------------ | :-------------------------------------- | :------------ | :---------------- | | Revolving credit facility | 6.78% | $40,000 | $62,000 | | Tranche A-1 Term Loan | 2.70% | $200,000 | $200,000 | | Tranche A-2 Term Loan | 3.58% | $400,000 | $400,000 | | 2023 Term Loan | 5.31% | $120,000 | $120,000 | | Term loans | | $720,000 | $720,000 | | Unamortized deferred financing costs, net | | $(2,390) | $(2,828) | | **Term loans, net** | | **$717,610** | **$717,172** | - Interest rate swaps fix SOFR at weighted average rates of **1.46%** for Tranche A-1, **2.29%** for Tranche A-2, and **4.01%** for the 2023 Term Loan as of June 30, 2024[70](index=70&type=chunk) [Common Shares Repurchased](index=70&type=section&id=Common%20Shares%20Repurchased) - The Board of Trustees authorized the repurchase of up to **$1.5 billion** of common shares, with **$1.1 billion** repurchased and retired since the program began in March 2020[71](index=71&type=chunk) Common Shares Repurchased (In millions, except per share data) | Period | Common Shares Repurchased | Weighted Average Purchase Price Per Share | | :-------------------------------------- | :------------------------ | :---------------------------------------- | | Three months ended June 30, 2024 | 4.7 | $14.62 | | Three months ended June 30, 2023 | 9.3 | $14.54 | | Six months ended June 30, 2024 | 7.7 | $15.35 | | Six months ended June 30, 2023 | 10.5 | $14.79 | | Program total through June 30, 2024 | 53.6 | $20.09 | - In July 2024, an additional **897,531 common shares** were repurchased for **$14.0 million** at **$15.55 per share**[72](index=72&type=chunk) [Material Cash Requirements](index=70&type=section&id=Material%20Cash%20Requirements) - Material cash requirements include normal recurring expenses, debt service (**$120.9 million mortgage loan maturing in August 2024**, **$424.0 million in 2025**), capital expenditures (**$44.4 million committed tenant-related obligations**), and development expenditures (**$98.5 million** for assets under construction)[79](index=79&type=chunk)[81](index=81&type=chunk) - Other cash requirements include dividends to shareholders (**$0.175 per common share** declared July 2024), possible common share repurchases, and potential property acquisitions[81](index=81&type=chunk) - These needs are expected to be met by cash and cash equivalents (**$163.5 million** as of June 30, 2024), cash flows from operations, distributions from real estate ventures, borrowing capacity (**$694.3 million** available under revolving credit facility), and proceeds from financings, asset sales, or securities issuance[82](index=82&type=chunk) [Summary of Cash Flows](index=72&type=section&id=Summary%20of%20Cash%20Flows) Summary of Cash Flows (Six Months Ended June 30, In thousands) | Cash Flow Activity | 2024 | 2023 | | :------------------------------------------------ | :----------- | :----------- | | Net cash provided by operating activities | $60,813 | $89,431 | | Net cash provided by (used in) investing activities | $61,992 | $(135,500) |\n| Net cash used in financing activities | $(117,344) | $(25,160) | | Cash and cash equivalents, and restricted cash, end of period | $205,902 | $202,844 | - Net cash from operating activities was **$60.8 million**, driven by net income (before non-cash items), return on capital from unconsolidated ventures, and changes in operating assets/liabilities[84](index=84&type=chunk) - Net cash from investing activities was **$62.0 million**, primarily from distributions of capital from unconsolidated ventures (**$163.9 million**) and proceeds from real estate sales (**$12.4 million**), partially offset by development costs (**$113.4 million**)[86](index=86&type=chunk) - Net cash used in financing activities was **$117.3 million**, mainly due to repayments on the revolving credit facility (**$195.0 million**), common share repurchases (**$116.4 million**), and dividends paid (**$32.2 million**), partially offset by borrowings[87](index=87&type=chunk) [Unconsolidated Real Estate Ventures](index=74&type=section&id=Unconsolidated%20Real%20Estate%20Ventures) - As of June 30, 2024, investments in unconsolidated real estate ventures totaled **$101.0 million**, accounted for using the equity method[89](index=89&type=chunk) - The company may guarantee portions of borrowings, provide environmental indemnifications, and completion guarantees for unconsolidated ventures, with agreements for partners to reimburse their share of payments[90](index=90&type=chunk) - Additional capital commitments and recorded guarantees to unconsolidated real estate ventures totaled **$58.0 million** as of June 30, 2024, with no debt principal payment guarantees[91](index=91&type=chunk) [Commitments and Contingencies](index=74&type=section&id=Commitments%20and%20Contingencies) - The company maintains general liability insurance (**$150.0 million per occurrence**) and property/rental value insurance (**$1.0 billion per occurrence**), with additional coverage for terrorist acts through a captive insurance subsidiary[92](index=92&type=chunk) - As of June 30, 2024, assets under construction require an additional **$98.5 million** to complete, primarily over the next two years, to be financed by debt, asset sales, and available cash[97](index=97&type=chunk) - Environmental liabilities totaled **$17.5 million** as of June 30, 2024. The company is potentially liable for investigation and remediation costs of hazardous substances on its real estate[106](index=106&type=chunk) - Committed tenant-related obligations totaled **$44.4 million** as of June 30, 2024. The aggregate amount of debt principal payment guarantees for consolidated entities was **$8.3 million**[98](index=98&type=chunk)[100](index=100&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=78&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Details market risk exposure, primarily interest rate risk, and management strategies through hedging activities [Interest Rate Risk](index=78&type=section&id=Interest%20Rate%20Risk) Debt (Contractual Balances) and Effect of 1% Change in Rates (In thousands) | Debt Type | June 30, 2024 Balance | Weighted Average Effective Interest Rate (June 30, 2024) | Annual Effect of 1% Change in Base Rates | | :---------------------------------------- | :-------------------- | :------------------------------------------------------- | :--------------------------------------- | | **Mortgage loans:** | | | | | Variable rate | $701,283 | 6.23% | $1,445 | | Fixed rate | $1,188,709 | 4.78% | — | | **Total Mortgage loans** | **$1,889,992** | | **$1,445** | | **Revolving credit facility and term loans:** | | | | | Revolving credit facility | $40,000 | 6.78% | $406 | | Tranche A-1 Term Loan | $200,000 | 2.70% | — | | Tranche A-2 Term Loan | $400,000 | 3.58% | — | | 2023 Term Loan | $120,000 | 5.31% | — | | **Total Revolving credit facility and term loans** | **$760,000** | | **$406** | | **Pro rata share of debt of unconsolidated real estate ventures:** | | | | | Variable rate | $35,000 | 5.73% | $— | | Fixed rate | $33,000 | 4.13% | — | | **Total Unconsolidated Real Estate Ventures Debt** | **$68,000** | | **$—** | - As of June 30, 2024, the one-month term Secured Overnight Financing Rate (SOFR) was **5.34%**, with the weighted average interest rate cap strike for mortgage loans at **3.52%** and a weighted average maturity date of June 2025 (extended to October 2025 in July 2024)[108](index=108&type=chunk) - The estimated fair value of consolidated debt was **$2.6 billion** as of June 30, 2024, compared to **$2.5 billion** as of December 31, 2023[114](index=114&type=chunk) [Hedging Activities](index=80&type=section&id=Hedging%20Activities) - As of June 30, 2024, the company had interest rate swap and cap agreements with an aggregate notional value of **$2.3 billion** designated as effective hedges, primarily consisting of assets totaling **$36.6 million**[111](index=111&type=chunk) - Within the next **12 months**, **$20.7 million** of net unrealized gain from effective hedges is expected to be reclassified as a decrease to interest expense[276](index=276&type=chunk) - Non-designated derivative financial instruments, primarily interest rate cap agreements, had an aggregate notional value of **$475.2 million** as of June 30, 2024, with their fair value changes recorded in 'Interest expense'[112](index=112&type=chunk) [Item 4. Controls and Procedures](index=82&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures effective as of June 30, 2024, with no material internal control changes - As of June 30, 2024, the company's disclosure controls and procedures were deemed **effective** by the Chief Executive Officer and Chief Financial Officer[119](index=119&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2024[120](index=120&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=82&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal actions, not expected to materially affect financial position or results - The company is involved in ordinary course legal actions, but their outcome is not expected to materially affect financial condition, results of operations, or cash flows[121](index=121&type=chunk) [Item 1A. Risk Factors](index=82&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the Annual Report on Form 10-K - No material changes to the risk factors previously disclosed in the Annual Report[122](index=122&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=82&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details common share repurchase activities, including shares purchased, average price, and remaining authorized amount Purchases of Equity Securities by the Issuer (Common Shares) | Period | Total Number Of Common Shares Purchased | Average Price Paid Per Common Share | Shares Purchased As Part Of Publicly Announced Plans Or Programs | Approximate Dollar Value Of Common Shares That May Yet Be Purchased Under the Plan Or Programs | | :-------------------------------------- | :-------------------------------------- | :---------------------------------- | :--------------------------------------------------------------- | :--------------------------------------------------------------------------------------------- | | May 1, 2024 - May 31, 2024 | 494,539 | $14.02 | 494,539 | $484,844,099 | | June 1, 2024 - June 30, 2024 | 4,198,777 | $14.69 | 4,198,777 | $423,075,016 | | Total for the three months ended June 30, 2024 | 4,693,316 | $14.62 | 4,693,316 | | | Total for the six months ended June 30, 2024 | 7,684,176 | $15.35 | 7,684,176 | | | Program total since inception in March 2020 | 53,558,179

[Letter to Shareholders](index=4&type=section&id=LETTER%20TO%20SHAREHOLDERS%20SECTION%20ONE) [Management's Strategic Overview and Q2 Highlights](index=4&type=section&id=Management%20Letter) JBG SMITH's management highlights a macroeconomic landscape poised for recovery, with a continued strategic shift towards a majority multifamily portfolio. The company reported strong multifamily performance, significant progress on public infrastructure in National Landing, and active capital allocation through asset dispositions and share repurchases, despite a slow investment sales market - Multifamily portfolio exhibited strong performance with climbing occupancy, **4.6%** blended effective rent increase (**8.6%** upon renewal), and a **50.9%** renewal rate. Multifamily Same Store NOI increased **3.4%**[5](index=5&type=chunk) - National Landing public infrastructure projects achieved key milestones, including groundbreaking on the new Crystal City Metro entrance (expected completion **2027**) and capital allocation for the pedestrian bridge to Reagan National Airport (design-build in **2025**)[6](index=6&type=chunk) - Investment sales activity remains slow across all asset types, but a modest pick-up in multifamily transactions is observed in Northern Virginia. The company continues to seek opportunities to dispose of an additional **$200 – $300 million** of assets[7](index=7&type=chunk) - The **9.3 million square foot** Development Pipeline is expected to be entitled by the end of **2025**, preparing for land sales, ground leases, or joint ventures when construction costs and interest rates normalize[8](index=8&type=chunk) Key Financial Leverage Metrics (as of June 30, 2024) | Metric | Value | | :-------------------------------- | :------ | | Net Debt / Total Enterprise Value | 62.1% | | Net Debt to Annualized Adjusted EBITDA | 11.9x | Share Repurchase Program Highlights | Period | Shares Repurchased (millions) | Total Value (millions) | Weighted Average Price per Share | | :---------------- | :---------------------------- | :--------------------- | :------------------------------- | | Year-to-date | 8.6 | $132.1 | $15.37 | | Since inception (2020) | 54.5 | $1,100 | $20.01 | [Operating Portfolio Performance and Market Trends](index=6&type=section&id=Operating%20Portfolio) JBG SMITH's operating portfolio shows strong lease-up for new multifamily deliveries like 1900 Crystal Drive, outperforming other projects. The DC-area multifamily market is robust, ranking high for rent growth. Conversely, the broader DC metro office market faces challenges with high vacancy and reduced demand, though National Landing's office sector demonstrates resilience due to strategic positioning and amenity-rich environments - 1900 Crystal Drive, delivered in **Q2 2024**, was **38.5% leased** at quarter-end and **49.5% leased** by **July 28th**, exceeding the leasing pace of all five other multifamily deliveries since 2017[11](index=11&type=chunk) - The DC-area multifamily market is performing strongly, ranked as the **top large market** in the nation for year-over-year rent growth by CoStar. Apartment List data shows **3.3% rent growth** in DC metro versus **0.5%** in other Gateway markets, with comparable occupancy[11](index=11&type=chunk) - Executed **166,000 square feet** of new office leases in **Q2 2024**, marking the **strongest quarter** for new office leasing in **three years**. Defense and technology tenants drove **88%** of total leasing activity in National Landing[32](index=32&type=chunk) - Anticipate approximately **485,000 square feet** (approximately **$22 million** of annualized rent) in National Landing to be vacated in the second half of **2024** and **2025**[14](index=14&type=chunk) - The broader DC metro office market faces challenges with a **22.1% total vacancy rate** and nearly net-zero demand. Northern Virginia's overall leasing activity has stabilized at **1.7 million square feet** per quarter, down from a pre-pandemic average of **2.7 million square feet**[15](index=15&type=chunk) - National Landing remains a focal point for future office demand in Northern Virginia, driven by proximity to the Pentagon, local tech talent, and placemaking attractions. The area also benefits from the lowest new construction pipeline ever reported by JLL (**539,000 square feet**)[17](index=17&type=chunk) - The company is taking 1800 South Bell and 2100 Crystal Drive out of service and phasing out 2200 Crystal Drive, reducing office stock by approximately **743,000 square feet** (**12%**) to repurpose older buildings for redevelopment, multifamily conversion, hospitality, or other specialty uses[40](index=40&type=chunk) [Q2 2024 Earnings Release](index=9&type=section&id=Q2%202024%20EARNINGS%20RELEASE%20SECTION%20TWO) [Financial Performance Summary](index=10&type=section&id=Financial%20Performance%20Summary) JBG SMITH reported a net loss for Q2 2024 and year-to-date, with FFO and Core FFO also decreasing compared to the prior year. However, Same Store NOI increased, driven by strong multifamily performance, while the commercial portfolio experienced a slight decline in occupancy Net Income (Loss), FFO, and Core FFO Attributable to Common Shareholders | Metric (in millions, except per share amounts) | Three Months Ended June 30, 2024 Amount | Three Months Ended June 30, 2024 Per Diluted Share | Three Months Ended June 30, 2023 Amount | Three Months Ended June 30, 2023 Per Diluted Share | | :--------------------------------------------- | :-------------------------------------- | :------------------------------------------------- | :-------------------------------------- | :------------------------------------------------- | | Net income (loss) | $(24.4) | $(0.27) | $(10.5) | $(0.10) | | FFO | $14.3 | $0.16 | $33.4 | $0.30 | | Core FFO | $16.1 | $0.18 | $39.8 | $0.36 | - Annualized Net Operating Income (NOI) for **Q2 2024** was **$286.4 million**, down from **$307.5 million** in **Q1 2024**. Excluding sold or out-of-service assets, Annualized NOI was **$283.9 million**, down from **$292.6 million** in **Q1 2024**[73](index=73&type=chunk) - Same Store NOI (SSNOI) increased **3.2%** quarter-over-quarter to **$71.4 million** for **Q2 2024**, primarily due to higher rents and occupancy in the multifamily portfolio, and lower real estate taxes and operating expenses in the commercial portfolio (partially offset by lower occupancy)[23](index=23&type=chunk) Operating Portfolio Occupancy and Rent Growth (as of June 30, 2024) | Portfolio | Leased % (Q2 2024) | Leased % (Q1 2024) | Occupied % (Q2 2024) | Occupied % (Q1 2024) | Effective Blended Rent Growth | Effective Renewal Rent Growth | | :---------------- | :----------------- | :----------------- | :------------------- | :------------------- | :---------------------------- | :---------------------------- | | Multifamily | 96.9% | 95.9% | 94.3% | 94.3% | 4.6% | 8.6% | | Commercial | 82.3% | 84.6% | 80.6% | 83.1% | N/A | N/A | - Executed approximately **248,000 square feet** of office leases in **Q2 2024**, including **166,000 square feet** of new leases. Second-generation leases generated a **2.0%** rental rate increase on a cash basis and a **12.7%** rental rate increase on a GAAP basis[47](index=47&type=chunk) [Portfolio Development and Capital Structure](index=11&type=section&id=Development%20Portfolio) JBG SMITH is actively developing multifamily assets, with 1900 Crystal Drive recently delivered and leasing ahead of expectations. The company maintains a strong balance sheet with a total enterprise value of $4.1 billion, a significant portion of debt fixed or hedged, and a focus on managing near-term maturities - As of **June 30, 2024**, **two** multifamily assets totaling **1,583 units** were under construction, including 1900 Crystal Drive, which delivered in **Q2** and was **49.5% leased** by **July 28, 2024**[48](index=48&type=chunk) - The development pipeline includes **18 assets** with an estimated **9.3 million square feet** of potential development density at the company's share[48](index=48&type=chunk) Key Capital Structure Metrics (as of June 30, 2024) | Metric | Value | | :-------------------------------- | :------------ | | Total Enterprise Value | $4.1 billion | | Common Shares and Units Value | $1.5 billion | | Debt (net of premium/discount) | $2.7 billion | | Cash and Cash Equivalents (at share) | $169.3 million | | Net Debt to Annualized Adjusted EBITDA | 11.9x | | Net Debt / Total Enterprise Value | 62.1% | - As of **June 30, 2024**, the company had **$163.5 million** of cash and cash equivalents (**$169.3 million** at its share) and **$694.3 million** of availability under its revolving credit facility[26](index=26&type=chunk) - **93.3%** of the company's debt was fixed or hedged as of the end of **Q2 2024**, with a weighted average debt maturity of **3.2 years**[35](index=35&type=chunk) - Near-term debt maturities include **$121 million** (**4.4%** of total debt) next month, related to a non-core office asset, and **$424 million** (**15.6%** of total debt) in **2025**, with the majority secured by readily financeable multifamily assets[35](index=35&type=chunk)[36](index=36&type=chunk) [Dividends and Forward-Looking Statements](index=12&type=section&id=Dividends) The Board of Trustees declared a quarterly dividend of $0.175 per common share. The company also provides extensive forward-looking statements, cautioning investors about inherent risks and uncertainties in its projections and strategic plans, emphasizing that actual outcomes may differ materially from expectations - On **July 24, 2024**, the Board of Trustees declared a quarterly dividend of **$0.175 per common share**, payable on **August 21, 2024**, to shareholders of record as of **August 7, 2024**[76](index=76&type=chunk) - Forward-looking statements represent intentions, plans, expectations, and beliefs, but are subject to numerous assumptions, risks, and uncertainties, meaning future results, financial condition, and business may differ materially from those expressed[52](index=52&type=chunk)[78](index=78&type=chunk) [Non-GAAP Financial Measures and Definitions](index=13&type=section&id=Pro%20Rata%20Information) This section provides detailed explanations and reconciliations for various non-GAAP financial measures used by JBG SMITH, such as 'at JBG SMITH Share,' EBITDA, FFO, Core FFO, FAD, Net Debt, and NOI. These measures are presented to offer valuable insights into the company's performance and financial condition, supplementing GAAP reporting - The company presents financial information 'at JBG SMITH Share' to reflect its economic interests in partially owned entities, calculated by applying its ownership percentage to each asset's financial information. This is a non-GAAP presentation intended to provide valuable investor information[79](index=79&type=chunk) - Key non-GAAP measures defined and reconciled include Earnings Before Interest, Taxes, Depreciation and Amortization (**EBITDA**), EBITDA for Real Estate (**EBITDAre**), **Adjusted EBITDA**, Funds from Operations (**FFO**), **Core FFO**, Funds Available for Distribution (**FAD**), **Net Debt**, Net Operating Income (**NOI**), and **Annualized NOI**[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk)[193](index=193&type=chunk)[121](index=121&type=chunk)[157](index=157&type=chunk) Condensed Consolidated Balance Sheets (in thousands) | ASSETS | June 30, 2024 | December 31, 2023 | | :------------------------------------------- | :------------ | :---------------- | | Real estate, net | $4,526,415 | $4,536,759 | | Cash and cash equivalents | $163,536 | $164,773 | | Investments in unconsolidated real estate ventures | $101,043 | $264,281 | | **TOTAL ASSETS** | **$5,325,116**| **$5,518,515** | | LIABILITIES | June 30, 2024 | December 31, 2023 | | Mortgage loans, net | $1,876,459 | $1,783,014 | | Revolving credit facility | $40,000 | $62,000 | | Term loans, net | $717,610 | $717,172 | | **Total liabilities** | **$2,853,861**| **$2,825,929** | Condensed Consolidated Statements of Operations (in thousands) | REVENUE | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Property rental | $112,536 | $120,592 | $235,172 | $244,625 | | Third-party real estate services, including reimbursements | $17,397 | $22,862 | $35,265 | $45,646 | | Other revenue | $5,387 | $8,641 | $10,067 | $14,786 | | **Total revenue** | **$135,320** | **$152,095** | **$280,504** | **$305,057** | | **NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS** | **$(24,373)** | **$(10,545)** | **$(56,649)** | **$10,626** | | **EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED** | **$(0.27)** | **$(0.10)** | **$(0.63)** | **$0.09** | [Q2 2024 Supplemental Information](index=24&type=section&id=Q2%202024%20SUPPLEMENTAL%20INFORMATION%20SECTION%20THREE) [Overview and Company Profile](index=27&type=section&id=Overview%20Disclosures) JBG SMITH is a Maryland REIT focused on mixed-use properties in the Washington, DC market, particularly National Landing, with a strategic emphasis on placemaking. The company's portfolio is heavily concentrated in National Landing, anchored by key demand drivers, and it also provides third-party asset management services. The section provides a snapshot of the company's executive leadership and key financial metrics as of June 30, 2024 - 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. Approximately **75.0%** of its holdings are in National Landing, anchored by Amazon's new headquarters, Virginia Tech's Innovation Campus, proximity to the Pentagon, and placemaking initiatives[77](index=77&type=chunk)[103](index=103&type=chunk) - The company's dynamic portfolio comprises **13.4 million square feet** of high-growth multifamily, office, and retail assets at share, with **98%** being Metro-served. It also maintains a development pipeline encompassing **9.3 million square feet** of mixed-use, primarily multifamily, development opportunities[77](index=77&type=chunk) - JBG SMITH's executive officers include **W. Matthew Kelly (CEO)**, **M. Moina Banerjee (CFO)**, **Kevin P. Reynolds (Chief Development Officer)**, **George L. Xanders (Chief Investment Officer)**, **Steven A. Museles (Chief Legal Officer)**, **David Ritchey (Chief Commercial Officer)**, and **Evan Regan-Levine (Chief Strategy Officer)**[72](index=72&type=chunk) Company Snapshot (as of June 30, 2024) | Metric | Value | | :------------------------------------------ | :------------ | | Exchange/ticker | NYSE: JBGS | | Indicated annual dividend per share | $0.70 | | Dividend yield | 4.6% | | Common share price | $15.23 | | Common shares and OP Units outstanding (in millions) | 101.10 | | Total market capitalization | $1.54 billion | | Net Debt | $2.52 billion | | Total Enterprise Value | $4.06 billion | | Net Debt / Total Enterprise Value | 62.1% | [Financial Highlights](index=31&type=section&id=Financial%20Highlights) JBG SMITH's Q2 2024 financial highlights show a net loss attributable to common shareholders, but positive operating portfolio NOI. Key non-GAAP metrics like FFO, Core FFO, and Adjusted EBITDA are presented, along with leverage ratios, indicating the company's financial position and operational performance Summary Financial Results (in thousands, except per share data) | Metric | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :----------------------------- | | Total revenue | $135,320 | $280,504 | | Net loss attributable to common shareholders | $(24,373) | $(56,649) | | Per diluted common share | $(0.27) | $(0.63) | | Operating portfolio NOI | $71,594 | $148,457 | | FFO | $16,927 | $29,526 | | Core FFO | $18,962 | $50,755 | | FAD | $19,728 | $55,090 | | FAD payout ratio | 96.4% | 69.0% | | EBITDA | $52,292 | $98,201 | | EBITDAre | $52,203 | $97,435 | | Adjusted EBITDA | $52,980 | $116,666 | | Net Debt / total enterprise value | 62.1% | 62.1% | | Net Debt to annualized Adjusted EBITDA | 11.9x | 10.8x | [Portfolio Overview](index=32&type=section&id=Portfolio%20Overview) JBG SMITH's operating portfolio consists of 15 multifamily assets and 23 commercial assets, with a significant concentration in National Landing. The portfolio demonstrates high occupancy rates and substantial annualized rent and NOI, reflecting the company's strategic focus on multifamily development and strong market positioning Operating Portfolio Summary (at JBG SMITH Share, as of June 30, 2024) | Operating Portfolio | Number of Assets | Units / Square Feet | % Leased | % Occupied | Annualized Rent (in thousands) | Annualized NOI (in thousands) | | :--------------------------------------- | :--------------- | :-------------------------- | :------- | :--------- | :----------------------------- | :---------------------------- | | Multifamily - National Landing | 4 | 2,856 Units | 97.3% | 94.9% | $73,597 | $52,076 | | Multifamily - DC | 10 | 3,140 Units | 96.6% | 93.6% | $98,321 | $66,504 | | Multifamily - MD | 1 | 322 Units | 97.4% | 96.6% | $14,021 | $9,492 | | **Multifamily – total / weighted average** | **15** | **6,318 Units** | **96.9%**| **94.3%** | **$185,939** | **$128,072** | | Commercial - National Landing | 18 | 5,828,015 SF | 81.5% | 79.5% | $206,076 | $135,760 | | Commercial - Other | 5 | 1,069,047 SF | 86.3% | 86.1% | $47,732 | $18,752 | | **Commercial - total / weighted average** | **23** | **6,897,062 SF** | **82.3%**| **80.6%** | **$253,808** | **$154,512** | | Ground Leases | 2 | — | — | — | — | $3,792 | | **Operating - Total / Weighted Average** | **40** | **6,318 Units/ 6,897,062 SF** | **88.5%**| **86.4%** | **$439,747** | **$286,376** | - Adjusted Annualized NOI, which includes annualized base rent of signed but not yet commenced leases, totaled **$294,256 thousand**[245](index=245&type=chunk) [Financial Information](index=33&type=section&id=Financial%20Information%20Condensed%20Consolidated%20Balance%20Sheets) This section provides a detailed overview of JBG SMITH's financial position, including condensed consolidated balance sheets, statements of operations, and information on unconsolidated real estate ventures and other tangible assets and liabilities. It highlights a slight decrease in total assets driven by reduced investments in unconsolidated ventures, alongside a modest increase in total liabilities [Condensed Consolidated Balance Sheets](index=33&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | ASSETS | June 30, 2024 | December 31, 2023 | Change | | :------------------------------------------- | :------------ | :---------------- | :----- | | Real estate, net | $4,526,415 | $4,536,759 | $(10,344) | | Cash and cash equivalents | $163,536 | $164,773 | $(1,237) | | Investments in unconsolidated real estate ventures | $101,043 | $264,281 | $(163,238) | | **TOTAL ASSETS** | **$5,325,116**| **$5,518,515** | **$(193,399)** | | LIABILITIES | June 30, 2024 | December 31, 2023 | Change | | Mortgage loans, net | $1,876,459 | $1,783,014 | $93,445 | | Revolving credit facility | $40,000 | $62,000 | $(22,000) | | Term loans, net | $717,610 | $717,172 | $438 | | **Total liabilities** | **$2,853,861**| **$2,825,929** | **$27,932** | [Condensed Consolidated Statements of Operations](index=34&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (in thousands, except per share data) | REVENUE | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Property rental | $112,536 | $120,592 | $235,172 | $244,625 | | Third-party real estate services, including reimbursements | $17,397 | $22,862 | $35,265 | $45,646 | | Other revenue | $5,387 | $8,641 | $10,067 | $14,786 | | **Total revenue** | **$135,320** | **$152,095** | **$280,504** | **$305,057** | | **NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS** | **$(24,373)** | **$(10,545)** | **$(56,649)** | **$10,626** | | **EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED** | **$(0.27)** | **$(0.10)** | **$(0.63)** | **$0.09** | [Unconsolidated Real Estate Ventures](index=35&type=section&id=Unconsolidated%20Real%20Estate%20Ventures%20-%20Balance%20Sheet%20and%20Operating%20Information) Unconsolidated Real Estate Ventures (in thousands, at JBG SMITH Share) | Metric | June 30, 2024 | | :---------------------------------------- | :------------ | | Total assets | $170,351 | | Borrowings, net | $66,553 | | Total liabilities | $78,914 | | Total revenue (Three Months Ended June 30, 2024) | $2,278 | | Net loss (Three Months Ended June 30, 2024) | $(714) | [Other Tangible Assets and Liabilities](index=36&type=section&id=Other%20Tangible%20Assets%20and%20Liabilities) Other Tangible Assets and Liabilities (in thousands, at JBG SMITH Share) | Metric | June 30, 2024 | | :---------------------------------------- | :------------ | | Restricted cash | $42,504 | | Tenant and other receivables, net | $32,055 | | Other assets, net | $115,007 | | **Total Other Tangible Assets, Net** | **$189,566** | | Accounts payable and accrued liabilities | $109,133 | | Other liabilities, net | $73,571 | | **Total Other Tangible Liabilities, Net** | **$182,704** | [Non-GAAP Reconciliations](index=37&type=section&id=EBITDA%2C%20EBITDAre%20and%20Adjusted%20EBITDA%20Reconciliations%20%28Non-GAAP%29) This section provides detailed reconciliations for key non-GAAP financial measures, including EBITDA, EBITDAre, Adjusted EBITDA, FFO, Core FFO, and FAD, along with an analysis of the Third-Party Asset Management and Real Estate Services Business and Pro Rata Adjusted General and Administrative Expenses. These reconciliations offer a clearer view of the company's operational performance and profitability, adjusted for non-recurring or non-cash items [EBITDA, EBITDAre and Adjusted EBITDA Reconciliations](index=37&type=section&id=EBITDA%2C%20EBITDAre%20and%20Adjusted%20EBITDA%20Reconciliations) EBITDA, EBITDAre and Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | EBITDA | $52,292 | $67,996 | $98,201 | $176,257 | | EBITDAre | $52,203 | $67,996 | $97,435 | $135,557 | | Adjusted EBITDA | $52,980 | $71,969 | $116,666 | $140,327 | | Net Debt to Annualized Adjusted EBITDA | 11.9x | 8.3x | 10.8x | 8.5x | | Net Debt (at JBG SMITH Share) | $2,522,604 | $2,376,363 | $2,522,604 | $2,376,363 | [FFO, Core FFO and FAD Reconciliations](index=38&type=section&id=FFO%2C%20Core%20FFO%20and%20FAD%20Reconciliations) FFO, Core FFO and FAD (in thousands, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | FFO Attributable to Common Shareholders | $14,335 | $33,423 | $25,013 | $66,425 | | FFO per common share - diluted | $0.16 | $0.30 | $0.27 | $0.59 | | Core FFO Attributable to Common Shareholders | $16,058 | $39,755 | $43,002 | $76,933 | | Core FFO per common share - diluted | $0.18 | $0.36 | $0.47 | $0.69 | | FAD available to OP Units | $19,728 | $39,520 | $55,090 | $77,896 | | FAD Payout Ratio | 96.4% | 70.1% | 69.0% | 73.6% | [Third-Party Asset Management and Real Estate Services Business](index=40&type=section&id=Third-Party%20Asset%20Management%20and%20Real%20Estate%20Services%20Business%20%28Non-GAAP%29) Third-Party Asset Management and Real Estate Services Business (in thousands, at JBG SMITH Share) | Service Revenue | Three Months Ended June 30, 2024 | | :------------------------------------------------- | :------------------------------- | | Property management fees | $3,874 | | Asset management fees | $1,242 | | Development fees | $421 | | Leasing fees | $1,128 | | Construction management fees | $177 | | Other service revenue | $1,260 | | **Total Revenue** | **$8,102** | | Pro rata adjusted general and administrative expense: third-party real estate services | $(9,126) | | **Total Services Revenue Less Allocated General and Administrative Expenses** | **$(1,024)** | [Pro Rata Adjusted General and Administrative Expenses](index=41&type=section&id=Pro%20Rata%20Adjusted%20General%20and%20Administrative%20Expenses%20%28Non-GAAP%29) Pro Rata Adjusted General and Administrative Expenses (in thousands) | General and Administrative Expenses | Three Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | | Corporate and other | $17,001 | | Third-party real estate services | $18,650 | | **Total** | **$35,651** | | Adjustments | $(9,082) | | **Pro Rata Adjusted** | **$26,569** | [Net Operating Income (NOI) Analysis](index=42&type=section&id=Same%20Store%20NOI%20%28Non-GAAP%29) This section provides a detailed breakdown of Net Operating Income (NOI), including Same Store NOI, Summary NOI, and specific analyses for multifamily and commercial portfolios. It highlights the overall increase in Same Store NOI, driven by strong performance in both multifamily and commercial segments, and provides granular data on revenue, expenses, and occupancy rates across different property types and submarkets [Same Store NOI](index=42&type=section&id=Same%20Store%20NOI) Same Store NOI (in thousands, at JBG SMITH share) | Same Store NOI | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | % Change | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | % Change | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Multifamily | $32,026 | $30,967 | 3.4% | $64,695 | $60,385 | 7.1% | | Commercial | $38,395 | $37,563 | 2.2% | $78,097 | $76,285 | 2.4% | | Ground Leases | $948 | $597 | 58.8% | $2,276 | $1,215 | 87.3% | | **Total Same Store NOI** | **$71,369** | **$69,127** | **3.2%** | **$145,068** | **$137,885** | **5.2%** | | Non-Same Store NOI | $225 | $10,853 | (97.9%) | $3,389 | $23,317 | (85.5%) | | **Total Operating Portfolio NOI** | **$71,594** | **$79,980** | **(10.5%)**| **$148,457** | **$161,202** | **(7.9%)** | [Summary NOI](index=43&type=section&id=Summary%20NOI%20%28Non-GAAP%29) Summary NOI (in thousands, at JBG SMITH Share) | Summary NOI | Three Months Ended June 30, 2024 | Annualized NOI | | :--------------------------------------------- | :------------------------------- | :------------- | | Multifamily Operating Portfolio NOI | $32,018 | $128,072 | | Commercial Operating Portfolio NOI | $38,628 | $154,512 | | Ground Leases Operating Portfolio NOI | $948 | $3,792 | | **Total Operating Portfolio NOI** | **$71,594** | **$286,376** | | % occupied (at JBG SMITH Share) | 86.4% | | [Summary NOI - Multifamily](index=44&type=section&id=Summary%20NOI%20-%20Multifamily%20%28Non-GAAP%29) Summary NOI - Multifamily (in thousands, at JBG SMITH Share) | Multifamily NOI | Three Months Ended June 30, 2024 | Annualized NOI | | :------------------------------------------------- | :------------------------------- | :------------- | | National Landing Operating Portfolio NOI | $13,019 | $52,076 | | DC Operating Portfolio NOI | $16,626 | $66,504 | | MD Operating Portfolio NOI | $2,373 | $9,492 | | **Total Operating Portfolio NOI** | **$32,018** | **$128,072** | | % occupied (at JBG SMITH Share) | 94.3% | | [Summary NOI - Commercial](index=45&type=section&id=Summary%20NOI%20-%20Commercial%20%28Non-GAAP%29) Summary NOI - Commercial (in thousands, at JBG SMITH Share) | Commercial NOI | Three Months Ended June 30, 2024 | Annualized NOI | | :------------------------------------------------ | :------------------------------- | :------------- | | National Landing Operating Portfolio NOI | $33,940 | $135,760 | | Other Operating Portfolio NOI | $4,688 | $18,752 | | **Total Operating Portfolio NOI** | **$38,628** | **$154,512** | | % occupied (at JBG SMITH Share) | 80.6% | | [Leasing Activity](index=46&type=section&id=Leasing%20Activity) This section details JBG SMITH's leasing performance across multifamily and office portfolios, including signed but not yet commenced leases, rent rate changes, lease expirations, and tenant diversification. It highlights strong multifamily rent growth and significant office leasing activity, while also outlining future lease expirations and the concentration of key tenants and industries [Signed But Not Yet Commenced Leases](index=46&type=section&id=Signed%20But%20Not%20Yet%20Commenced%20Leases) Annualized Estimated Rent from Signed But Not Yet Commenced Leases (in thousands, at JBG SMITH Share) | Asset Type | Total Annualized Estimated Rent | September 30, 2024 | December 31, 2024 | March 31, 2025 | June 30, 2025 | September 30, 2025 | December 31, 2025 | | :----------------------------------------- | :------------------------------ | :----------------- | :---------------- | :------------- | :------------ | :----------------- | :---------------- | | Multifamily (Operating & Under Construction) | $2,268 | $138 | $463 | $498 | $513 | $532 | $557 | | Commercial (Operating) | $6,936 | $1,153 | $1,664 | $1,684 | $1,684 | $1,684 | $1,684 | | **Total** | **$9,204** | **$1,291** | **$2,127** | **$2,182** | **$2,197** | **$2,216** | **$2,241** | [Leasing Activity - Multifamily](index=47&type=section&id=Leasing%20Activity%20-%20Multifamily) Multifamily Leasing Activity (Three Months Ended June 30) | Metric | 2024 | 2023 | | :-------------------------- | :---- | :---- | | Effective new lease rates | 0.4% | 2.0% | | Effective renewal lease rates | 8.6% | 7.0% | | Effective blended lease rates | 4.6% | 4.5% | | Renewal rate | 50.9% | 47.4% | [Leasing Activity - Office](index=48&type=section&id=Leasing%20Activity%20-%20Office) Office Leasing Activity (in thousands of square feet, at JBG SMITH Share) | Metric | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :------------------------------------------- | :------------------------------- | :----------------------------- | | Square feet leased | 248 | 347 | | First-generation space: New | 16 | 46 | | Second-generation space: New | 150 | 151 | | Second-generation space: Renewal | 82 | 150 | | Weighted average lease term (years) | 7.3 | 5.8 | | Weighted average Free Rent period (months) | 6.1 | 4.8 | | Second-generation space: Cash basis % change | 2.0% | 1.6% | | Second-generation space: GAAP basis % change | 12.7% | 10.0% | [Lease Expirations](index=49&type=section&id=Lease%20Expirations) Lease Expirations (at JBG SMITH Share, as of June 30, 2024) | Year of Lease Expiration | Number of Leases | Square Feet | % of Total Square Feet | Annualized Rent (in thousands) | % of Total Annualized Rent | | :----------------------- | :--------------- | :---------- | :--------------------- | :----------------------------- | :------------------------- | | Month-to-Month | 36 | 195,268 | 3.3% | $6,821 | 2.5% | | 2024 | 48 | 582,497 | 9.7% | $26,745 | 10.0% | | 2025 | 58 | 514,100 | 8.6% | $23,862 | 8.9% | | 2026 | 44 | 227,703 | 3.8% | $11,221 | 4.2% | | 2027 | 39 | 621,682 | 10.4% | $29,772 | 11.1% | | 2028 | 29 | 366,479 | 6.1% | $16,916 | 6.3% | | 2029 | 32 | 255,057 | 4.3% | $12,124 | 4.5% | | 2030 | 23 | 624,204 | 10.4% | $30,641 | 11.4% | | 2031 | 24 | 542,724 | 9.1% | $20,691 | 7.7% | | 2032 | 19 | 651,033 | 10.9% | $26,697 | 10.0% | | Thereafter | 65 | 1,393,895 | 23.4% | $62,239 | 23.4% | | **Total / Weighted Average** | **417** | **5,974,642** | **100.0%** | **$267,729** | **100.0%** | - The weighted average remaining lease term for the entire portfolio is **5.7 years**[204](index=204&type=chunk) [Tenant Concentration](index=50&type=section&id=Tenant%20Concentration) Top Tenant Concentration (in thousands, at JBG SMITH Share, as of June 30, 2024) | Tenant | Number of Leases | Square Feet | % of Total Square Feet | Annualized Rent | % of Total Annualized Rent | | :---------------------------- | :--------------- | :---------- | :--------------------- | :-------------- | :------------------------- | | U.S. Government (GSA) | 36 | 1,712,823 | 28.7% | $68,038 | 25.4% | | Amazon | 3 | 357,339 | 6.0% | $16,317 | 6.1% | | Lockheed Martin Corporation | 2 | 207,095 | 3.5% | $10,056 | 3.8% | | Public Broadcasting Service | 1 | 120,328 | 2.0% | $4,962 | 1.9% | | Accenture LLP | 2 | 102,756 | 1.7% | $4,942 | 1.8% | [Industry Diversity](index=51&type=section&id=Industry%20Diversity) Industry Diversity (in thousands, at JBG SMITH Share, as of June 30, 2024) | Industry | Number of Leases | Square Feet | % of Total Square Feet | Annualized Rent | % of Total Annualized Rent | | :---------------------------- | :--------------- | :---------- | :--------------------- | :-------------- | :------------------------- | | Government | 40 | 1,722,180 | 28.8% | $68,512 | 25.6% | | Government Contractors | 94 | 1,416,484 | 23.7% | $68,156 | 25.5% | | Business Services | 25 | 721,831 | 12.1% | $34,526 | 12.9% | | Member Organizations | 36 | 493,335 | 8.3% | $24,512 | 9.2% | | Health Services | 26 | 244,267 | 4.1% | $10,947 | 4.1% | | Food and Beverage | 51 | 161,829 | 2.7% | $9,179 | 3.4% | | Real Estate | 24 | 191,477 | 3.2% | $7,981 | 3.0% | | Communications | 3 | 160,690 | 2.7% | $6,844 | 2.6% | | Legal Services | 11 | 97,545 | 1.6% | $6,293 | 2.4% | | Educational Services | 6 | 62,506 | 1.0% | $2,980 | 1.1% | | Other | 101 | 702,498 | 11.8% | $27,799 | 10.2% | | **Total** | **417** | **5,974,642** | **100.0%** | **$267,729** | **100.0%** | [Property Data](index=52&type=section&id=Property%20Data%20Property%20Tables%3A) This section provides detailed property tables for JBG SMITH's multifamily, commercial, under-construction, and development pipeline assets, along with disposition activity. It offers granular insights into the portfolio's composition, occupancy, rent metrics, and future development potential, highlighting the company's strategic focus on National Landing and multifamily growth [Property Tables - Multifamily](index=52&type=section&id=Property%20Tables%3A%20Multifamily) Multifamily Assets (at JBG SMITH Share, as of June 30, 2024) | Submarket | Number of Units | Total Square Feet | % Leased | % Occupied | Annualized Rent (in thousands) | Monthly Rent Per Unit | Monthly Rent Per Square Foot | | :---------------- | :-------------- | :---------------- | :------- | :--------- | :----------------------------- | :-------------------- | :--------------------------- | | National Landing | 2,856 | 2,315,347 | 97.3% | 94.9% | $73,597 | $2,389 | $2.89 | | DC | 3,140 | 2,643,750 | 96.6% | 93.6% | $98,321 | $2,551 | $3.43 | | MD | 322 | 363,947 | 97.4% | 96.6% | $14,021 | $3,473 | $3.25 | | **Operating - Total / Weighted Average** | **6,318** | **5,323,044** | **96.9%**| **94.3%** | **$185,939** | **$2,530** | **$3.17** | [Property Tables - Commercial](index=54&type=section&id=Property%20Tables%3A%20Commercial) Commercial Assets (at JBG SMITH Share, as of June 30, 2024) | Submarket | Total Square Feet | % Leased | % Occupied | Annualized Rent (in thousands) | Office Annualized Rent Per Square Foot | Retail Annualized Rent Per Square Foot | | :---------------- | :---------------- | :------- | :--------- | :----------------------------- | :------------------------------------- | :------------------------------------- | | National Landing | 5,828,015 | 81.5% | 79.5% | $206,076 | $44.79 | $38.03 | | Other | 1,069,047 | 86.3% | 86.1% | $47,732 | $51.54 | $56.38 | | **Total at JBG SMITH Share** | **6,897,062** | **82.3%**| **80.6%** | **$253,808** | **$45.99** | **$40.00** | - In **Q2 2024**, 2100 Crystal Drive, **18,789 SF** of office space at 2200 Crystal Drive, and **2,480 SF** of retail space at various National Landing assets were taken out of service[128](index=128&type=chunk) [Property Tables - Under-Construction](index=56&type=section&id=Property%20Tables%3A%20Under-Construction) Under-Construction Assets (at JBG SMITH Share, as of June 30, 2024) | Asset | Submarket | % Ownership | Estimated Square Feet | Estimated Number of Units | Estimated Completion Date | Estimated Stabilization Date | Estimated Stabilized NOI (in millions) | | :------------------ | :---------------- | :---------- | :-------------------- | :------------------------ | :------------------------ | :--------------------------- | :------------------------------------- | | 1900 Crystal Drive | National Landing | 100.0% | 633,985 | 808 | Q1 2024 - Q3 2024 | Q1 2026 | $44.2 | [Property Tables - Development Pipeline](index=57&type=section&id=Property%20Tables%3A%20Development%20Pipeline) Development Pipeline (at JBG SMITH Share, as of June 30, 2024) | Location | Estimated Total Potential Development Density (SF) | Multifamily (SF) | Office (SF) | Retail (SF) | Estimated Number of Units | | :---------------- | :------------------------------------------------- | :--------------- | :---------- | :---------- | :------------------------ | | National Landing | 7,224,100 | 5,713,600 | 1,375,900 | 134,600 | 5,565 | | DC | 2,107,000 | 1,840,200 | 149,600 | 117,200 | 1,935 | | **Total** | **9,331,100** | **7,553,800** | **1,525,500** | **251,800** | **7,500** | | Fully Entitled | 4,734,200 | 3,729,800 | 806,000 | 198,400 | 4,145 | [Disposition Activity](index=59&type=section&id=Disposition%20Activity) Disposition Activity (Q1 2024, in thousands, at JBG SMITH Share) | Asset | % Ownership | Asset Type | Location | Date Disposed | Total Square Feet | Gross Sales Price | | :-------------------- | :---------- | :--------- | :--------------- | :------------ | :---------------- | :---------------- | | North End Retail | 100.0% | Multifamily| Washington, DC | January 22, 2024 | 27,355 SF | $14,250 | | Central Place Tower | 50.0% | Commercial | Arlington, VA | February 13, 2024 | 275,797 SF | $162,500 | | **Subtotal** | | | | | | **$176,750** | | Q2 2024 | None | | | | | | [Debt Information](index=60&type=section&id=Debt%20Debt%20Summary) This section provides a comprehensive overview of JBG SMITH's debt structure, including a summary of principal balances, maturity profiles, and interest rates, as well as a detailed breakdown by instrument. It highlights the company's significant portion of fixed or hedged debt and its liquidity position, while outlining near-term debt maturities [Debt Summary](index=60&type=section&id=Debt%20Summary) Debt Summary (in thousands, at JBG SMITH Share, as of June 30, 2024) | Debt Type | Total Principal Balance | % of Total Debt Maturing | % Floating Rate | % Fixed Rate | Weighted Average Interest Rate | | :---------------------------------------------- | :---------------------- | :----------------------- | :-------------- | :----------- | :----------------------------- | | Unsecured Debt | $760,000 | 27.9% | 0% | 100% | 3.79% | | Secured Debt | $1,957,992 | 72.1% | 39.8% | 60.2% | 5.30% | | **Total Consolidated and Unconsolidated Principal Balance** | **$2,717,992** | **100.0%** | **28.6%** | **71.4%** | **4.88%** | - Debt maturing in **2024** totals **$120.9 million** (**4.4%** of total debt), and in **2025** totals **$624.0 million** (**23.0%** of total debt)[113](index=113&type=chunk) - The company has an undrawn capacity of **$694.3 million** under its revolving credit facility[113](index=113&type=chunk) [Debt by Instrument](index=61&type=section&id=Debt%20by%20Instrument) Consolidated Debt by Instrument (in thousands, as of June 30, 2024) | Asset | Principal Balance | Stated Interest Rate | Interest Rate Hedge | Current Annual Interest Rate | Initial Maturity Date | | :------------------------------------ | :---------------- | :------------------- | :------------------ | :--------------------------- | :-------------------- | | 2101 L Street | $120,933 | 3.97% | Fixed | 3.97% | 08/15/24 | | RiverHouse Apartments | $307,710 | S + 1.39% | Swap | 3.55% | 04/01/25 | | 1900 Crystal Drive | $206,980 | S + 2.61% | Cap | 7.11% | 04/25/26 | | Tranche A-1 Term Loan | $200,000 | S + 1.24% | Swap | 2.70% | 01/14/25 | | Revolving Credit Facility | $40,000 | S + 1.45% | — | 6.78% | 06/29/27 | | **Total Consolidated Principal Balance** | **$2,649,992** | | | | | | **Total Consolidated Indebtedness** | **$2,625,329** | | | | | Unconsolidated Debt by Instrument (in thousands, as of June 30, 2024) | Asset | Principal Balance | Stated Interest Rate | Interest Rate Hedge | Current Annual Interest Rate | Initial Maturity Date | | :-------------------- | :---------------- | :------------------- | :------------------ | :--------------------------- | :-------------------- | | 1101 17th Street | $60,000 | S + 1.31% | Swap | 4.13% | 06/13/25 | | 4747 Bethesda Avenue | $175,000 | S + 1.35% | Cap | 5.73% | 02/20/27 | | **Total Unconsolidated Principal Balance** | **$235,000** | | | | | | **Total Unconsolidated Indebtedness** | **$227,837** | | | | | [Definitions](index=63&type=section&id=Definitions) This section provides a comprehensive glossary of key terms and non-GAAP financial measures used throughout the investor package. It defines various financial, operational, and property-related metrics, ensuring clarity and consistency in understanding JBG SMITH's reporting and strategic communications - The section defines key terms such as '**Annualized Rent**,' '**Development Pipeline**,' '**EBITDA**,' '**EBITDAre**,' '**Adjusted EBITDA**,' '**FFO**,' '**Core FFO**,' '**FAD**,' '**Net Debt**,' '**NOI**,' '**Annualized NOI**,' '**Same Store**,' '**Percent Leased**,' '**Percent Occupied**,' and '**Under-Construction**,' among others, to provide a clear understanding of the company's financial and operational metrics[193](index=193&type=chunk)[121](index=121&type=chunk)[157](index=157&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk)[217](index=217&type=chunk)[228](index=228&type=chunk) [Appendix](index=68&type=section&id=Appendix%20%E2%80%93%20Interest%20Expense%2C%20Transaction%20and%20Other%20Costs%2C%20and%20NOI%20Reconciliations%20%28Non-GAAP%29) The appendix provides detailed reconciliations for interest expense, transaction and other costs, and Net Operating Income (NOI). These reconciliations offer transparency into the components of these financial figures, highlighting specific adjustments and changes over time, and supporting the non-GAAP measures presented in the main report [Interest Expense Reconciliation](index=68&type=section&id=APPENDIX%20%E2%80%93%20INTEREST%20EXPENSE) Interest Expense (in thousands) | Metric | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :------------------------------------------- | :------------------------------- | :----------------------------- | | Interest expense before capitalized interest | $32,090 | $63,724 | | Amortization of deferred financing costs | $4,354 | $8,485 | | Capitalized interest | $(3,467) | $(8,092) | | **Total** | **$33,004** | **$64,225** | [Transaction and Other Costs Reconciliation](index=69&type=section&id=APPENDIX%20%E2%80%93%20TRANSACTION%20AND%20OTHER%20COSTS) Transaction and Other Costs (in thousands) | Cost Type | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Completed, potential and pursued transaction expenses | $34 | $227 | $1,541 | $274 | | Severance and other costs | $505 | $1,799 | $512 | $3,247 | | Demolition costs | $285 | $1,466 | $285 | $2,443 | | **Total** | **$824** | **$3,492** | **$2,338** | **$5,964** | [NOI Reconciliations](index=70&type=section&id=APPENDIX%20%E2%80%93%20NOI%20RECONCILIATIONS) NOI Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to common shareholders | $(24,373) | $(10,545) | $(56,649) | $10,626 | | Consolidated NOI | $65,144 | $75,051 | $132,123 | $152,667 | | NOI attributable to unconsolidated real estate ventures at our share | $1,168 | $5,175 | $4,215 | $9,604 | | Total adjustments | $4,109 | $4,027 | $10,960 | $6,924 | | NOI | $69,253 | $79,078 | $143,083 | $159,591 | | Operating Portfolio NOI | $71,594 | $79,980 | $148,457 | $161,202 | | Same Store NOI | $71,369 | $69,127 | $145,068 | $137,885 | | Change in Same Store NOI | 3.2% | | 5.2% | |

Financial Performance - The net loss attributable to common shareholders for Q1 2024 was $32.3 million, or $0.36 per diluted common share, compared to a net income of $21.2 million, or $0.19 per diluted common share in Q1 2023 [152]. - Property rental revenue decreased by approximately $1.4 million, or 1.1%, to $122.6 million in Q1 2024 from $124.0 million in Q1 2023 [160]. - Third-party real estate services revenue was $17.9 million for Q1 2024, down from $22.8 million in Q1 2023 [152]. - Consolidated NOI decreased by $10.6 million, or 13.6%, to $66.979 million for the three months ended March 31, 2024, from $77.616 million in 2023 [189]. - Total property revenue decreased by $12.4 million, or 9.7%, to $116.1 million in 2024 from $128.5 million in 2023 [189]. - Net cash provided by operating activities was $37.0 million for the three months ended March 31, 2024, compared to $42.6 million for the same period in 2023 [211]. - Net cash provided by investing activities was $123.6 million for the three months ended March 31, 2024, primarily from distributions of capital from unconsolidated real estate ventures [214]. Portfolio Overview - As of March 31, 2024, the operating portfolio consisted of 41 assets, including 15 multifamily assets totaling 6,318 units and 24 commercial assets totaling 7.5 million square feet [145]. - The multifamily portfolio occupancy was 94.3% as of March 31, 2024, a decrease of 40 basis points from December 31, 2023, while the commercial portfolio occupancy was 83.1%, down 180 basis points [149][150]. - The number of properties in the same store pool remained at 41 [180]. Revenue and Expenses - Third-party real estate services revenue decreased by approximately $4.9 million, or 21.5%, to $17.9 million in 2024 from $22.8 million in 2023 [187]. - Depreciation and amortization expense increased by approximately $3.4 million, or 6.4%, to $56.9 million in Q1 2024 from $53.4 million in Q1 2023 [162]. - Interest expense increased by approximately $3.3 million, or 12.4%, to $30.2 million in Q1 2024 from $26.8 million in Q1 2023 [169]. - Gain on the sale of real estate decreased significantly to $197,000 in Q1 2024 from $40.7 million in Q1 2023 [170]. - Impairment loss of $17.2 million in Q1 2024 is related to a development parcel, which was written down to its estimated fair value [171]. Development and Investment - The development pipeline includes 11.3 million square feet of estimated potential development density, with plans to source joint venture capital for funding [151]. - The company invested $48.0 million in development costs, construction in progress, and real estate additions [1]. - The company expects to require an additional $134.4 million to complete assets under construction, primarily to be expended over the next two years [225]. Shareholder Returns - A quarterly dividend of $0.175 per common share was declared, payable on May 24, 2024 [155]. - The company repurchased and retired 3.0 million common shares for $49.4 million, at a weighted average purchase price per share of $16.50 [1]. - The company has authorized the repurchase of up to $1.5 billion of its outstanding common shares [205]. Debt and Liquidity - As of March 31, 2024, the company had mortgage loans totaling $1.83 billion, with a weighted average effective interest rate of 6.31% for variable rate loans and 4.78% for fixed rate loans [194]. - The company had outstanding debt of $2.6 billion as of March 31, 2024, unchanged from December 31, 2023 [212]. - The company had $749.5 million of availability under its revolving credit facility as of March 31, 2024 [208]. - The estimated fair value of consolidated debt was $2.5 billion as of March 31, 2024, and December 31, 2023 [235]. Market Conditions - Current market conditions have slowed the pace of asset sales, which is expected to continue into 2024 [148]. - The company plans to repurpose older office buildings for redevelopment or conversion to multifamily or other uses to reduce competitive inventory in National Landing [150]. Environmental and Other Liabilities - As of March 31, 2024, environmental liabilities totaled $17.6 million, included in "Other liabilities, net" on the balance sheet [232]. - The company had additional capital commitments and recorded guarantees to unconsolidated real estate ventures totaling $58.7 million as of March 31, 2024 [221].

Financial Performance - JBG SMITH reported Core FFO attributable to common shareholders of $26.9 million, or $0.29 per diluted share for Q1 2024[14]. - For the first quarter of 2024, JBG SMITH reported a net loss of $32.3 million, compared to a net income of $21.2 million in the same period of 2023[35]. - Funds From Operations (FFO) for the first quarter of 2024 was $10.7 million, down from $33.0 million year-over-year, while Core FFO decreased to $26.9 million from $37.2 million[35]. - Total revenue for Q1 2024 was $145.184 million, a decrease of 5.8% from $152.962 million in Q1 2023[80]. - Net income (loss) attributable to common shareholders for Q1 2024 was $(32.276) million, compared to $21.171 million in Q1 2023, reflecting a significant decline[80]. - Adjusted EBITDA for Q1 2024 was $63,686, down from $68,358 in Q1 2023, reflecting a decrease of approximately 6.5%[84]. - Total consolidated and unconsolidated indebtedness increased to $2,590,843 in Q1 2024 from $2,432,136 in Q1 2023, marking an increase of about 6.5%[84]. - The company reported a net debt to annualized adjusted EBITDA ratio of 9.3x, up from 7.8x in the previous year[130]. Portfolio Performance - Multifamily Same Store NOI grew 11.1% in Q1 2024, driven by higher market rents and occupancy, with effective rents increasing by 9.4% upon renewal[6]. - As of March 31, 2024, the multifamily portfolio was 95.9% leased and 94.3% occupied, while the office portfolio was 84.6% leased and 83.1% occupied[14][19]. - Same Store NOI (SSNOI) increased by 6.5% quarter-over-quarter to $75.7 million for the three months ended March 31, 2024[44]. - The operating multifamily portfolio was 95.9% leased and 94.3% occupied as of March 31, 2024, compared to 96.0% and 94.7% as of December 31, 2023[44]. - Total operating portfolio NOI decreased by 5.4% to $76,867 thousand in Q1 2024 from $81,223 thousand in Q1 2023[144]. - The overall occupancy rate for multifamily assets was 95.9%, with a 97.3% occupancy rate for same-store properties[184]. Development and Future Outlook - The company expects to deliver and stabilize 1,583 apartment units in National Landing, expanding its multifamily portfolio by 25% over the next two years[26]. - JBG SMITH has 18 assets in the development pipeline, representing an estimated potential development density of 9.3 million square feet[40]. - The company plans to take 2100 Crystal Drive out of service following Amazon's lease expiration, impacting future NOI[148]. - The company is engaged as the development manager for both the 1900 Crystal Drive and 2000/2001 South Bell Street projects, which are classified as variable interest entities (VIEs)[197][198]. Tenant and Lease Information - The U.S. Government (GSA) is the largest tenant, occupying 1,810,310 square feet (28.5% of total) and contributing $72,124,000 (25.3% of total annualized rent)[177]. - Amazon follows as the second-largest tenant with 677,077 square feet (10.7% of total) and an annualized rent of $30,075,000 (10.6% of total)[177]. - The total number of leases expiring by 2030 is 20, covering 601,378 square feet, with an estimated annualized rent of $29,503 thousand[174]. - The weighted average remaining lease term for the entire portfolio is 5.1 years as of March 31, 2024[175]. Cash and Debt Management - The company had $220.5 million in cash and cash equivalents and $749.5 million available under its revolving credit facility as of March 31, 2024[48]. - Net Debt at JBG SMITH Share rose to $2,363,711 in Q1 2024, compared to $2,140,337 in Q1 2023, indicating an increase of approximately 10.4%[84]. - The company incurred an impairment loss of $17.211 million in Q1 2024, indicating potential challenges in asset valuation[80]. Dividend and Shareholder Returns - On April 25, 2024, the Board of Trustees declared a quarterly dividend of $0.175 per common share, payable on May 24, 2024[45]. - The company’s dividend yield was reported at 4.4% with an indicated annual dividend per share of $0.70[110].

Debt and Interest Rates - Variable rate mortgage loans as of December 31, 2023, had a balance of $608.6 million with a weighted average interest rate of 6.25%, and a 1% change in base rates would impact annual interest expense by $1.4 million[383] - Fixed rate mortgage loans as of December 31, 2023, had a balance of $1.19 billion with a weighted average interest rate of 4.78%[383] - The revolving credit facility as of December 31, 2023, had a balance of $62.0 million with a weighted average interest rate of 6.83%, and a 1% change in base rates would impact annual interest expense by $629,000[383] - The Tranche A-1 Term Loan as of December 31, 2023, had a balance of $200.0 million with a weighted average interest rate of 2.70%[383] - The Tranche A-2 Term Loan as of December 31, 2023, had a balance of $400.0 million with a weighted average interest rate of 3.58%[383] - The 2023 Term Loan as of December 31, 2023, had a balance of $120.0 million with a weighted average interest rate of 5.31%[383] - The pro rata share of debt of unconsolidated real estate ventures as of December 31, 2023, had a balance of $68.0 million, with $35.0 million in variable rate loans at a weighted average interest rate of 5.00% and $33.0 million in fixed rate loans at a weighted average interest rate of 4.13%[383] - The estimated fair value of consolidated debt as of December 31, 2023, was $2.5 billion[386] - Interest rate swap and cap agreements designated as effective hedges had an aggregate notional value of $2.2 billion as of December 31, 2023, with assets totaling $35.6 million and liabilities totaling $7.9 million[389] - Non-designated interest rate cap agreements had an aggregate notional value of $642.7 million as of December 31, 2023, with assets totaling $6.7 million and liabilities totaling $6.5 million[390] - In January 2023, the company entered into a $187.6 million loan facility with a fixed interest rate of 5.13%[529] - In June 2023, the company repaid $142.4 million in mortgage loans[530] - As of December 31, 2023, the company had interest rate swap and cap agreements with an aggregate notional value of $1.7 billion[532] - The company's unsecured revolving credit facility and term loans totaled $1.5 billion as of December 31, 2023[533] - In July 2023, the company amended covenants related to the Tranche A-1 and Tranche A-2 Term Loans to align with the revolving credit facility and 2023 Term Loan covenants[538] Financial Performance - Total revenue for 2023 decreased slightly to $604.2 million from $605.8 million in 2022, with property rental revenue declining to $483.2 million from $491.7 million[410] - Net loss attributable to common shareholders in 2023 was $79.98 million, compared to a net income of $85.37 million in 2022[410] - Depreciation and amortization expenses decreased to $210.2 million in 2023 from $213.8 million in 2022[410] - Interest expense increased significantly to $108.7 million in 2023 from $75.9 million in 2022[410] - The company recorded a substantial impairment loss of $90.2 million in 2023, compared to no impairment loss in 2022[410] - Comprehensive loss attributable to JBG SMITH PROPERTIES was $105.6 million in 2023, a significant decline from the $147.0 million comprehensive income in 2022[411] - Net income (loss) for 2023 was $(91.7 million), compared to $99.0 million in 2022 and $(89.7 million) in 2021[416] - Net cash provided by operating activities in 2023 was $183.4 million, slightly higher than $178.0 million in 2022 but lower than $217.6 million in 2021[416] - Development costs and real estate additions in 2023 totaled $(333.7 million), compared to $(326.7 million) in 2022 and $(173.2 million) in 2021[416] - Proceeds from the sale of real estate in 2023 were $281.5 million, significantly lower than $928.9 million in 2022 and $14.4 million in 2021[416] - Total other comprehensive loss was $32.2 million in 2023, compared to a $70.2 million gain in 2022[411] - The company repurchased 22,576 common shares in 2023, reducing total shares outstanding to 94,309[414] - Dividends declared on common shares decreased to $0.675 per share in 2023 from $0.90 per share in 2022[414] - Weighted average number of common shares outstanding decreased to 105,095 in 2023 from 119,005 in 2022[410] - Combined income statement information for unconsolidated real estate ventures reported a net loss of $85.6 million for the year ended December 31, 2023[515] Real Estate Portfolio and Development - The company's Operating Portfolio as of December 31, 2023, included 44 operating assets with 6,318 multifamily units and 8.3 million square feet of commercial space[424] - Approximately 75.0% of the company's holdings are in the National Landing submarket in Northern Virginia, anchored by Amazon's new headquarters and Virginia Tech's $1 billion Innovation Campus[422] - The company's development pipeline includes 17 assets with an estimated potential development density of 10.8 million square feet[424] - Construction in progress increased from $544.7 million in 2022 to $659.1 million in 2023, an increase of 21.0%[408] - Investments in unconsolidated real estate ventures decreased from $299.9 million in 2022 to $264.3 million in 2023, a decline of 11.9%[408] - In October 2022, the company acquired the remaining 50.0% ownership interest in 8001 Woodmont for $115.0 million, including the assumption of a $51.9 million mortgage loan[494] - In August 2022, the company acquired the remaining 36.0% ownership interest in Atlantic Plumbing for $19.7 million, including the repayment of a $100.0 million mortgage loan[495] - In November 2021, the company acquired The Batley for $205.3 million, exclusive of $3.1 million in transaction costs[496] - In January 2024, the company sold North End Retail for a gross sales price of $14.3 million[499] - In March 2023, the company sold an 80.0% interest in 4747 Bethesda Avenue for a gross sales price of $196.0 million, representing a gross valuation of $245.0 million[508] - The company recorded an impairment loss of $25.3 million related to Central Place Tower in 2023, which was sold in February 2024 for a gross sales price of $325.0 million[504] - Formed a real estate venture with Fortress in April 2022, contributing $66.1 million for a 33.5% interest, with a total gross sales price of $580.0 million for a 1.6 million square foot office portfolio[509] - Entered into two real estate ventures with J.P. Morgan in April 2021, contributing cash and land for a 50% ownership interest in 2.0 million square feet of mixed-use development in Potomac Yard[511] Balance Sheet and Asset Valuation - Total assets decreased from $5,903.4 million in 2022 to $5,518.5 million in 2023, a decline of 6.5%[408] - Real estate, net decreased from $4,823.1 million in 2022 to $4,536.8 million in 2023, a decline of 5.9%[408] - Cash and cash equivalents decreased from $241.1 million in 2022 to $164.8 million in 2023, a decline of 31.7%[408] - Total liabilities increased from $2,708.0 million in 2022 to $2,825.9 million in 2023, an increase of 4.4%[408] - Shareholders' equity decreased from $2,681.9 million in 2022 to $2,222.9 million in 2023, a decline of 17.1%[408] - Accumulated deficit increased from $(628.6) million in 2022 to $(777.0) million in 2023, a deterioration of 23.6%[408] - Revolving credit facility increased from $0 in 2022 to $62.0 million in 2023[408] - Term loans, net increased from $547.1 million in 2022 to $717.2 million in 2023, an increase of 31.1%[408] - Cash and cash equivalents, and restricted cash, decreased to $200.4 million at the end of 2023 from $274.1 million at the end of 2022[419] - Total tenant and other receivables decreased from $56.3 million in 2022 to $44.2 million in 2023[500] - Total investments in unconsolidated real estate ventures decreased from $299.9 million in 2022 to $264.3 million in 2023[503] - Combined balance sheet information for unconsolidated real estate ventures showed total assets of $867.6 million and total liabilities of $273.7 million as of December 31, 2023[514] - Consolidated VIEs, including JBG SMITH LP, had total assets of $503.2 million and liabilities of $293.3 million as of December 31, 2023[518] - Deferred leasing costs, net, decreased to $81.5 million as of December 31, 2023, from $94.1 million in 2022[519] - Total intangible assets, net, decreased to $56.6 million as of December 31, 2023, from $68.2 million in 2022[520] - Estimated amortization related to lease and other identified intangible assets for 2024 is $7.6 million[521] - Mortgage loans as of December 31, 2023, totaled $1.798 billion, with variable rate loans at $608.6 million and fixed rate loans at $1.190 billion[526] - The net carrying value of real estate collateralizing mortgage loans totaled $2.2 billion as of December 31, 2023 and 2022[528] Revenue and Leasing - Rental revenue from the U.S. federal government in 2023 was $64.4 million, accounting for 12.9% of total rental revenue, down from 14.8% in 2022[426] - The company recognized revenue of $21.7 million, $24.0 million, and $23.7 million for leasing, property management, and other real estate services provided to unconsolidated real estate ventures for the years ended December 31, 2023, 2022, and 2021, respectively[505] - Property rental revenue is recognized on a straight-line basis over the lease term, including tenant reimbursements for operating expenses and real estate taxes[470] - Variable lease payments based on a percentage of sales are recorded as variable lease income when earned[472] - Third-party real estate services revenue includes property and asset management fees, recognized as services are performed, with development fees recognized over the project duration[474] - Lease payments for renewal periods reasonably certain to be exercised are included in lease liability and right-of-use asset measurements[476] Accounting and Valuation Methods - The fair values of buildings are determined using the "as-if vacant" approach with discounted cash flow models, considering exit capitalization rates, discount rates, estimated market rents, and hypothetical lease-up periods[432] - Real estate is carried at cost, net of accumulated depreciation and amortization, with maintenance and repair expenses included in property operating expenses[434] - Construction in progress, including land, is carried at cost, with direct and indirect development costs capitalized, and depreciation not recorded until the property is ready for use[435] - Depreciation and amortization expense is recognized on a straight-line basis over estimated useful lives ranging from 3 to 40 years, with tenant improvements amortized over the lease term[436] - The company evaluates real estate and related intangible assets for impairment when indicators such as declining performance, below-average occupancy, or cost overruns suggest the carrying amount may not be recoverable[437] - Above- and below-market lease components are valued based on the present value of the difference between contractual lease payments and estimated market rates, with amortization over the remaining lease term[438] - Investments in unconsolidated real estate ventures are accounted for using the equity method when the company has significant influence but not control, with proportionate earnings or losses recognized in consolidated statements[445] - The company earns revenue from management services provided to unconsolidated real estate ventures, including property management, leasing, and development fees, recognized gross of ownership interest[446] - Intangible assets, such as in-place leases and wireless spectrum licenses, are amortized or accreted over their useful lives, with indefinite-lived licenses considered for renewal at minimal cost[452][453] - Assets held for sale are carried at the lower of carrying amounts or estimated fair value less disposal costs, with depreciation and amortization expense not recognized during the holding period[456] - Derivative financial instruments are used to manage exposure to variable interest rate risk and are measured at fair value, with changes in fair value affecting operating cash flows unless they contain a significant financing element[462] - Interest rate swap and cap agreements designated as effective hedges are carried at fair value and assessed for effectiveness, with fair value recorded in "Accumulated other comprehensive income" and reclassified into "Interest expense" when hedged transactions affect earnings[463] - Non-designated derivatives, such as interest rate cap agreements, are carried at fair value with gains or losses recorded in "Interest expense"[467] - Fair value measurement follows ASC 820, prioritizing Level 1 inputs (quoted prices in active markets) over Level 3 inputs (unobservable inputs)[468] - The company has elected to be taxed as a REIT, distributing at least 90% of its taxable income to shareholders to avoid federal income taxes[480] - Share-based compensation expense is recognized ratably over the vesting period, with fair value determined using the Monte Carlo or Black-Scholes methods[486] - The company paid a deferred purchase price of $19.6 million related to the 2020 acquisition of a development parcel[493] Investments and Ventures - Unconsolidated real estate ventures' mortgage loans totaled $235.0 million as of December 31, 2023, with a weighted average effective interest rate of 5.00% for variable rate loans[512] - Net carrying amounts of investments in unconsolidated VIEs were $87.3 million as of December 31, 2023, included in "Investments in unconsolidated real estate ventures"[516] - Unrealized gains from real estate-focused technology investments totaled $1.3 million, $2.1 million, and $4.6 million for the years ended December 31, 2021, 2022, and 2023, respectively[523] - Realized losses from real estate-focused technology investments totaled $758,000 and $1.2 million for the years ended December 31, 2023 and 2022, respectively[523] - Realized gains (losses) from equity investments totaled $436,000, $13.5 million, and ($1.0) million for the years ended December 31, 2021, 2022, and 2023, respectively[524]

real at Dining in the Park H B JBG SMITH QUARTERLY INVESTOR PACKAGE | Q4 2023 TABLE OF CONTENTS LETTER TO SHAREHOLDERS SECTION ONE Q4 2023 EARNINGS RELEASE SECTION TWO Q4 2023 SUPPLEMENTAL INFORMATION SECTION THREE Management Letter February 20, 2024 To Our Fellow Shareholders: On December 13 th we, along with Monumental Sports & Entertainment, the Commonwealth of Virginia, and the City of Alexandria announced our plan to build a new sports and entertainment anchor in National Landing. This 1.2 million squa ...

```markdown PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), equity, and cash flows, along with detailed notes explaining the company's organization, accounting policies, acquisitions, dispositions, investments, debt, and other financial details for the periods ended September 30, 2023, and December 31, 2022 [Condensed Consolidated Balance Sheets (unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) The balance sheet shows a decrease in total assets and total equity from December 31, 2022, to September 30, 2023, primarily driven by a reduction in real estate net and cash, while liabilities saw a slight increase | Metric | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | Change | | :----------------------------- | :-------------------------- | :-------------------------- | :------- | | Total Assets | $5,666,168 | $5,903,438 | (4.0%) | | Real estate, net | $4,599,676 | $4,823,082 | (4.6%) | | Cash and cash equivalents | $130,522 | $241,098 | (45.8%) | | Total Liabilities | $2,816,721 | $2,708,016 | 4.0% | | Mortgage loans, net | $1,727,133 | $1,890,174 | (8.6%) | | Revolving credit facility | $92,000 | $0 | N/A | | Term loans, net | $716,953 | $547,072 | 31.1% | | Total Equity | $2,405,086 | $2,714,112 | (11.4%) | [Condensed Consolidated Statements of Operations (unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(unaudited)) The company reported a significant net loss for both the three and nine months ended September 30, 2023, compared to a smaller loss and net income, respectively, in the prior year, primarily due to a substantial impairment loss and increased interest expense | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total revenue | $151,562 | $147,614 | $456,619 | $455,084 | | Total expenses | $136,793 | $136,770 | $424,073 | $442,028 | | Impairment loss | $(59,307) | $0 | $(59,307) | $0 | | Interest expense | $(27,903) | $(17,932) | $(80,580) | $(50,251) | | Net Income (Loss) | $(66,101) | $(21,581) | $(54,045) | $119,836 | | EPS - Basic & Diluted | $(0.58) | $(0.17) | $(0.45) | $0.86 | [Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20(unaudited)) The company reported a comprehensive loss for both the three and nine months ended September 30, 2023, a significant decline from comprehensive income in the prior year, despite positive changes in the fair value of derivative financial instruments | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Income (Loss) | $(66,101) | $(21,581) | $(54,045) | $119,836 | | Total other comprehensive income | $10,209 | $32,606 | $7,679 | $71,473 | | Comprehensive Income (Loss) | $(55,892) | $11,025 | $(46,366) | $191,309 | [Condensed Consolidated Statements of Equity (unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity%20(unaudited)) Total equity decreased from December 31, 2022, to September 30, 2023, primarily due to net losses, common shares repurchased, and dividends declared, partially offset by redemptions of OP Units for common shares | Metric (in thousands) | As of Sep 30, 2023 | As of Dec 31, 2022 | Change | | :-------------------- | :----------------- | :----------------- | :----- | | Total Equity | $2,405,086 | $2,714,112 | (11.4%)| | Common Shares (count) | 97,717 | 114,013 | (14.3%)| | Common Shares (amount)| $978 | $1,141 | (14.3%)| | Additional Paid-In Capital | $3,043,036 | $3,263,738 | (6.8%) | | Accumulated Deficit | $(722,847) | $(628,636) | (15.0%)| | Common shares repurchased (9 months ended Sep 30, 2023) | $276,684 | N/A | N/A | | Dividends declared on common shares (9 months ended Sep 30, 2023) | $46,830 | N/A | N/A | [Condensed Consolidated Statements of Cash Flows (unaudited)](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) For the nine months ended September 30, 2023, net cash provided by operating activities decreased, while investing activities shifted from a net cash provider to a net cash user, and financing activities continued to be a net cash user, resulting in an overall decrease in cash and cash equivalents | Cash Flow Activity (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :------- | | Net cash provided by operating activities | $114,893 | $130,366 | (11.9%) | | Net cash (used in) provided by investing activities | $(123,240) | $674,402 | (118.3%) | | Net cash used in financing activities | $(96,947) | $(634,994) | 84.7% | | Net (decrease) increase in cash and restricted cash | $(105,294) | $169,774 | (162.0%) | | Cash and restricted cash, end of period | $168,779 | $471,869 | (64.2%) | [Notes to Condensed Consolidated Financial Statements (unaudited)](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section provides detailed disclosures for the condensed consolidated financial statements, covering the company's organizational structure, significant accounting policies, recent acquisitions and dispositions, investments in unconsolidated real estate ventures, variable interest entities, debt, equity, and other financial commitments and contingencies [1. Organization and Basis of Presentation](index=13&type=section&id=1.%20Organization%20and%20Basis%20of%20Presentation) JBG SMITH Properties is a Maryland REIT focused on mixed-use properties in the Washington, D.C. metropolitan area, with a significant presence in National Landing. The company operates primarily through JBG SMITH LP, where it holds an 87.7% ownership interest - JBG SMITH Properties is a Maryland REIT that owns, operates, invests in, and develops mixed-use properties in high-growth submarkets around Washington, D.C., with approximately two-thirds of its holdings in National Landing[25](index=25&type=chunk) - The company's portfolio includes **48 operating assets** (30 commercial, 16 multifamily, 2 land assets), **2 under-construction multifamily assets** (1,583 units), and **20 assets in the development pipeline** (12.5 million sq ft estimated density)[27](index=27&type=chunk) - JBG SMITH, as the sole general partner, controls JBG SMITH LP and owned **87.7%** of its OP Units as of September 30, 2023[26](index=26&type=chunk) [2. Summary of Significant Accounting Policies](index=15&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) The financial statements are prepared in accordance with GAAP for interim financial information, with no material changes to significant accounting policies from the Annual Report. The company has completed the conversion of all LIBOR-indexed debt and derivatives to SOFR-based indexes - No material changes to significant accounting policies disclosed in the Annual Report[35](index=35&type=chunk) - All London Interbank Offered Rate (LIBOR)-indexed debt and derivative financial instruments have been converted to Secured Overnight Financing Rate (SOFR)-based indexes as of September 30, 2023[37](index=37&type=chunk) [3. Acquisition, Dispositions and Assets Held for Sale](index=17&type=section&id=3.%20Acquisition,%20Dispositions%20and%20Assets%20Held%20for%20Sale) During the nine months ended September 30, 2023, the company paid a deferred purchase price for a 2020 acquisition and completed several dispositions, including a development parcel and multifamily assets, and held one commercial asset for sale which was subsequently sold in October 2023 - Paid **$19.6 million** deferred purchase price related to the 2020 acquisition of a development parcel during the nine months ended September 30, 2023[39](index=39&type=chunk) | Disposition Date | Asset | Segment | Location | Units/Sq Ft | Gross Sales Price (in thousands) | Gain on Sale (in thousands) | | :--------------- | :---- | :------ | :------- | :---------- | :------------------------------- | :-------------------------- | | Mar 17, 2023 | Development Parcel | Other | Arlington, VA | — | $5,500 | $(53) | | Mar 23, 2023 | 4747 Bethesda Avenue (80% interest) | Commercial | Bethesda, MD | 40,053 sq ft | $196,000 (gross valuation $245,000) | N/A | | Sep 20, 2023 | Falkland Chase-South & West and Falkland Chase-North | Multifamily | Silver Spring, MD | 438 units | $95,000 | $1,208 | - As of September 30, 2023, 5 M Street Southwest (665 sq ft estimated potential development density) was held for sale at **$28.3 million** and was sold on October 4, 2023, for **$29.5 million**[41](index=41&type=chunk)[42](index=42&type=chunk) [4. Investments in Unconsolidated Real Estate Ventures](index=18&type=section&id=4.%20Investments%20in%20Unconsolidated%20Real%20Estate%20Ventures) The company holds investments in unconsolidated real estate ventures, primarily with Prudential Global Investment Management and J.P. Morgan Global Alternatives. Total investments slightly decreased, and an impairment loss was recognized for a commercial asset. One venture disposed of an asset, Stonebridge at Potomac Town Center, generating a gain | Real Estate Venture Partner | Effective Ownership Interest | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :-------------------------- | :--------------------------- | :-------------------------- | :-------------------------- | | Prudential Global Investment Management | 50.0% | $196,389 | $203,529 | | J.P. Morgan Global Alternatives | 50.0% | $69,860 | $64,803 | | 4747 Bethesda Venture | 20.0% | $13,349 | $0 | | Total investments in unconsolidated real estate ventures | N/A | $296,397 | $299,881 | - An impairment loss of **$3.3 million** associated with a commercial asset in Washington, D.C. (CBREI Venture) was included in 'Loss from unconsolidated real estate ventures, net' for the three and nine months ended September 30, 2023[46](index=46&type=chunk) - Unconsolidated real estate ventures disposed of Stonebridge at Potomac Town Center on August 24, 2023, for a gross sales price of **$172.5 million**, resulting in a proportionate share of aggregate gain of **$641,000**[51](index=51&type=chunk) [5. Variable Interest Entities](index=20&type=section&id=5.%20Variable%20Interest%20Entities) The company evaluates entities for consolidation as Variable Interest Entities (VIEs). JBG SMITH LP is the most significant consolidated VIE, with JBG SMITH holding 87.7% interest and acting as the general partner. Two other VIEs (1900 Crystal Drive and 2000/2001 South Bell Street) were also consolidated - JBG SMITH LP is the most significant consolidated VIE, with JBG SMITH holding an **87.7%** limited partnership interest and exercising full responsibility, discretion, and control as the general partner[58](index=58&type=chunk) - As of September 30, 2023, two other VIEs (1900 Crystal Drive and 2000/2001 South Bell Street) were consolidated, with total assets of **$456.1 million** and liabilities of **$245.1 million**[59](index=59&type=chunk) - The company also has interests in unconsolidated VIEs, where its maximum loss exposure is limited to investments, construction commitments, and debt guarantees, with net carrying amounts of **$85.9 million** as of September 30, 2023[57](index=57&type=chunk) [6. Other Assets, Net](index=21&type=section&id=6.%20Other%20Assets,%20Net) Total other assets, net, significantly increased from December 31, 2022, to September 30, 2023, primarily due to increases in derivative financial instruments at fair value, deferred financing costs, and operating lease right-of-use assets | Other Assets, Net (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change | | :------------------------------- | :----------- | :----------- | :----- | | Total other assets, net | $217,903 | $117,028 | 86.2% | | Derivative financial instruments, at fair value | $79,421 | $61,622 | 28.9% | | Deferred financing costs, net | $12,732 | $5,516 | 130.8% | | Operating lease right-of-use assets | $61,122 | $1,383 | 4320.9%| [7. Debt](index=21&type=section&id=7.%20Debt) Total mortgage loans decreased, while term loans increased, reflecting a shift in the company's debt structure. The company entered into a new loan facility and repaid existing mortgage loans, and amended its revolving credit facility to reduce capacity and extend maturity | Debt Type (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change | Weighted Average Effective Interest Rate (Sep 30, 2023) | | :----------------------- | :----------- | :----------- | :----- | :------------------------------------------------------ | | Mortgage loans | $1,741,410 | $1,901,875 | (8.5%) | 5.16% (variable: 6.16%, fixed: 4.78%) | | Revolving credit facility| $92,000 | $0 | N/A | 6.71% | | Term loans | $720,000 | $550,000 | 30.9% | 2.60% (Tranche A-1), 3.53% (Tranche A-2), 5.26% (2023) | - Entered into a **$187.6 million** loan facility in January 2023, collateralized by The Wren and F1RST Residences, with a fixed interest rate of **5.13%**, partially used to repay the **$131.5 million** mortgage loan collateralized by 2121 Crystal Drive[66](index=66&type=chunk) - Revolving credit facility amended in June 2023 to reduce borrowing capacity from **$1.0 billion** to **$750.0 million** and extend the maturity date from January 2025 to June 2027[69](index=69&type=chunk) [8. Other Liabilities, Net](index=25&type=section&id=8.%20Other%20Liabilities,%20Net) Total other liabilities, net, increased from December 31, 2022, to September 30, 2023, primarily due to a significant increase in liabilities related to operating lease right-of-use assets and derivative financial instruments, while deferred purchase price was fully paid | Other Liabilities, Net (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change | | :------------------------------------ | :----------- | :----------- | :----- | | Total other liabilities, net | $145,550 | $132,710 | 9.7% | | Liabilities related to operating lease right-of-use assets | $65,198 | $5,308 | 1128.4%| | Derivative financial instruments, at fair value | $9,242 | $0 | N/A | | Deferred purchase price related to the acquisition of a development parcel | $0 | $19,447 | (100%) | [9. Redeemable Noncontrolling Interests](index=25&type=section&id=9.%20Redeemable%20Noncontrolling%20Interests) Redeemable noncontrolling interests decreased, primarily due to redemptions of OP Units for common shares and adjustments to redemption value, partially offset by share-based compensation expense - As of September 30, 2023, outstanding OP Units and redeemable LTIP Units totaled **13.7 million**, representing a **12.3%** ownership interest in JBG SMITH LP[77](index=77&type=chunk) - During the nine months ended September 30, 2023, unitholders redeemed **2.1 million** OP Units, which the company elected to redeem for an equivalent number of common shares[77](index=77&type=chunk) | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | | Balance, beginning of period | $481,310 | $522,725 | | Redemptions | $(33,757) | $(12,667) | | Share-based compensation expense | $25,152 | $31,107 | | Adjustment to redemption value | $(20,844) | $(72,175) | | Balance, end of period | $444,361 | $491,479 | [10. Property Rental Revenue](index=27&type=section&id=10.%20Property%20Rental%20Revenue) Property rental revenue remained relatively stable for the three months ended September 30, 2023, compared to the prior year, but saw a slight decrease for the nine-month period | Property Rental Revenue (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Fixed | $110,333 | $109,193 | $331,528 | $335,328 | | Variable | $9,961 | $10,618 | $33,391 | $33,117 | | Total Property rental revenue | $120,294 | $119,811 | $364,919 | $368,445 | [11. Share-Based Payments](index=27&type=section&id=11.%20Share-Based%20Payments) The company granted various share-based awards, including Time-Based LTIP Units, fully vested LTIP Units, performance-based AO LTIP Units, and Time-Based RSUs, during the nine months ended September 30, 2023. Total share-based compensation expense decreased for both the three and nine-month periods compared to the prior year - Granted **979,138** Time-Based LTIP Units (weighted average fair value **$17.56**/unit) and **280,342** fully vested LTIP Units (fair value **$15.90**/unit) to employees during the nine months ended September 30, 2023[81](index=81&type=chunk)[82](index=82&type=chunk) - Granted **1.7 million** performance-based AO LTIP Units (fair value **$3.73**/unit) and **78,681** Time-Based RSUs (fair value **$18.94**/unit) to employees in January 2023[85](index=85&type=chunk)[88](index=88&type=chunk) | Share-Based Compensation Expense (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :---------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total share-based compensation expense | $6,915 | $7,624 | $28,862 | $35,346 | | Less: amount capitalized | $(418) | $(675) | $(1,851) | $(3,022) | | Share-based compensation expense | $6,497 | $6,949 | $27,011 | $32,324 | [12. Transaction and Other Costs](index=31&type=section&id=12.%20Transaction%20and%20Other%20Costs) Transaction and other costs increased for both the three and nine months ended September 30, 2023, primarily driven by higher severance and demolition costs for the nine-month period | Transaction and Other Costs (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Completed, potential and pursued transaction expenses | $622 | $600 | $896 | $2,186 | | Severance and other costs | $1,033 | $1,146 | $4,280 | $2,018 | | Demolition costs | $175 | $0 | $2,618 | $428 | | Total Transaction and other costs | $1,830 | $1,746 | $7,794 | $4,632 | [13. Interest Expense](index=31&type=section&id=13.%20Interest%20Expense) Interest expense significantly increased for both the three and nine months ended September 30, 2023, primarily due to higher outstanding debt, rising interest rates on variable rate mortgage loans, and a decrease related to mark-to-market adjustments on ineffective interest rate caps | Interest Expense (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Interest expense before capitalized interest | $30,229 | $22,801 | $85,942 | $60,100 | | Amortization of deferred financing costs | $3,381 | $1,118 | $6,011 | $3,369 | | Net (gain) loss on derivative financial instruments designated as ineffective hedges | $1,742 (loss) | $(3,099) (gain) | $7,383 (loss) | $(8,493) (gain) | | Capitalized interest | $(7,219) | $(2,888) | $(18,756) | $(6,816) | | Total Interest expense | $27,903 | $17,932 | $80,580 | $50,251 | [14. Shareholders' Equity and Earnings (Loss) Per Common Share](index=31&type=section&id=14.%20Shareholders'%20Equity%20and%20Earnings%20(Loss)%20Per%20Common%20Share) The Board of Trustees increased the common share repurchase authorization to **$1.5 billion** in May 2023. The company repurchased a significant number of common shares during the period. Basic and diluted earnings per common share showed a loss for both periods in 2023, worsening from the prior year - The Board of Trustees increased the common share repurchase authorization to **$1.5 billion** in May 2023[95](index=95&type=chunk) | Common Shares Repurchased | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Shares Repurchased (millions) | 7.9 | 2.3 | 18.4 | 14.2 | | Cost (millions) | $120.8 | $54.0 | $276.7 | $361.0 | | Weighted Average Price Per Share | $15.24 | $23.35 | $14.98 | $25.49 | | Earnings (Loss) Per Common Share | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) attributable to common shareholders | $(58,007) | $(19,293) | $(47,381) | $103,950 | | EPS - Basic and Diluted | $(0.58) | $(0.17) | $(0.45) | $0.86 | [15. Fair Value Measurements](index=33&type=section&id=15.%20Fair%20Value%20Measurements) The company uses derivative financial instruments (interest rate swaps and caps) to manage interest rate risk, measured at fair value on a recurring basis, primarily classified as Level 2. An impairment loss of **$59.3 million** was recognized on certain real estate assets, classified as Level 3, due to a write-down to estimated fair value - Derivative financial instruments (interest rate swaps and caps) are measured at fair value on a recurring basis, with a net unrealized gain of **$59.7 million** as of September 30, 2023, designated as effective hedges and classified within Level 2 of the valuation hierarchy[101](index=101&type=chunk)[103](index=103&type=chunk) - An impairment loss of **$59.3 million** was recognized for 2101 L Street, 2100 Crystal Drive, and a development parcel, written down to an estimated aggregate fair value of **$148.9 million** (Level 3) and **$11.3 million** (Level 2) respectively, for the three and nine months ended September 30, 2023[107](index=107&type=chunk) - The estimated fair value of consolidated debt (mortgage loans, revolving credit facility, and term loans) was **$2.5 billion** as of September 30, 2023, determined using Level 2 inputs[109](index=109&type=chunk)[110](index=110&type=chunk) [16. Segment Information](index=35&type=section&id=16.%20Segment%20Information) The company operates in three reportable segments: multifamily, commercial, and third-party asset management and real estate services. Consolidated NOI remained stable for the three months ended September 30, 2023, but increased for the nine-month period, with multifamily showing growth and commercial experiencing declines - JBG SMITH operates in three reportable segments: multifamily, commercial, and third-party asset management and real estate services[111](index=111&type=chunk) | Consolidated NOI (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Commercial | $41,174 | $46,362 | $131,157 | $147,464 | | Multifamily | $27,749 | $24,468 | $83,516 | $70,999 | | Other | $3,992 | $2,057 | $10,909 | $2,552 | | Total Consolidated NOI | $72,915 | $72,887 | $225,582 | $221,015 | - Commercial segment NOI decreased by **11.2%** for the three months and **11.1%** for the nine months ended September 30, 2023, primarily due to disposed properties and lower occupancy/rents[215](index=215&type=chunk)[217](index=217&type=chunk) - Multifamily segment NOI increased by **13.4%** for the three months and **17.6%** for the nine months ended September 30, 2023, driven by the consolidation of Atlantic Plumbing and 8001 Woodmont, and higher occupancy/rents[216](index=216&type=chunk)[218](index=218&type=chunk) [17. Commitments and Contingencies](index=40&type=section&id=17.%20Commitments%20and%20Contingencies) The company has various commitments including **$230.5 million** for assets under construction, **$47.7 million** in tenant-related obligations, and **$63.0 million** in capital commitments and guarantees to unconsolidated real estate ventures. Environmental liabilities remain at **$18.0 million** - As of September 30, 2023, **$230.5 million** is required to complete assets under construction, anticipated over the next two years[124](index=124&type=chunk) - Committed tenant-related obligations totaled **$47.7 million** as of September 30, 2023 (**$46.3 million** related to consolidated entities and **$1.4 million** related to unconsolidated real estate ventures at the company's share)[126](index=126&type=chunk) - Additional capital commitments and recorded guarantees to unconsolidated real estate ventures and other investments totaled **$63.0 million** as of September 30, 2023[129](index=129&type=chunk) - Environmental liabilities totaled **$18.0 million** as of September 30, 2023 and December 31, 2022[125](index=125&type=chunk) [18. Transactions with Related Parties](index=42&type=section&id=18.%20Transactions%20with%20Related%20Parties) The company provides fee-based real estate services to related parties, including the Washington Housing Initiative (WHI) Impact Pool and JBG Legacy Funds, generating **$4.8 million** and **$15.7 million** in revenue for the three and nine months ended September 30, 2023, respectively - Third-party real estate services revenue, including expense reimbursements, from the JBG Legacy Funds and the WHI Impact Pool and its affiliates was **$4.8 million** for the three months and **$15.7 million** for the nine months ended September 30, 2023[136](index=136&type=chunk) - Incurred **$1.6 million** and **$3.4 million** of rent expense for corporate offices leased from an unconsolidated real estate venture for the three and nine months ended September 30, 2023[137](index=137&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, including an overview of its business, strategic outlook, detailed analysis of operating results by segment, and a discussion of liquidity and capital resources. It highlights key financial performance metrics, recent transactions, and future plans [Organization and Basis of Presentation](index=44&type=section&id=Organization%20and%20Basis%20of%20Presentation) JBG SMITH is a Maryland REIT focused on mixed-use properties in the Washington, D.C. area, particularly National Landing, operating primarily through JBG SMITH LP. The financial statements are prepared under GAAP, and the company maintains REIT status - JBG SMITH Properties is a Maryland real estate investment trust (REIT) that owns, operates, invests in, and develops mixed-use properties in high growth and high barrier-to-entry submarkets in and around Washington, D.C., with approximately two-thirds of its holdings in the National Landing submarket[141](index=141&type=chunk) - The company has elected to be taxed as a REIT and intends to adhere to requirements, including distributing at least **90%** of its REIT taxable income as dividends to shareholders each year[147](index=147&type=chunk) - Operating segments are aggregated into multifamily, commercial, and third-party asset management and real estate services based on economic characteristics and nature of assets/services[148](index=148&type=chunk) [Overview](index=48&type=section&id=Overview) As of September 30, 2023, the company's operating portfolio consisted of **48 assets**, with two multifamily assets under construction and **20 assets** in the development pipeline. The company continues its Placemaking strategies in National Landing, including the delivery of new Amazon office buildings and digital infrastructure investments - As of September 30, 2023, the Operating Portfolio consisted of **48 operating assets** (30 commercial, 16 multifamily, 2 wholly owned land assets), **2 under-construction multifamily assets** (1,583 units), and **20 assets in the development pipeline** (12.5 million sq ft estimated potential development density)[152](index=152&type=chunk) - Completed construction of two new office buildings for Amazon in National Landing (**2.1 million sq ft**) in Q2 2023, with Amazon taking occupancy in June 2023[154](index=154&type=chunk) - Advancing efforts to make National Landing among the first 5G-operable submarkets in the nation through digital infrastructure investments[153](index=153&type=chunk) [Outlook](index=48&type=section&id=Outlook) The company's strategy focuses on active capital allocation to maximize long-term NAV per share, including opportunistic asset sales, recapitalizations, and investments in share repurchases and development projects. The goal is to shift the portfolio to majority multifamily, though curbed lending activity has slowed asset sales - Strategy focuses on active capital allocation to maximize long-term net asset value (NAV) per share through development, acquisition, disposition, share repurchases, and other investment decisions[155](index=155&type=chunk) - Intends to opportunistically sell or recapitalize assets and land sites to redeploy proceeds into share repurchases, new acquisitions with higher cash yields, and development projects, aiming to further advance the strategic shift of the portfolio to majority multifamily[155](index=155&type=chunk) - Office portfolio occupancy as of September 30, 2023, increased by **40 basis points** to **84.4%** compared to June 30, 2023, with **434,000 square feet** of office leases executed in Q3 2023, approximately **88%** in National Landing[156](index=156&type=chunk) - Multifamily portfolio occupancy as of September 30, 2023, increased by **190 basis points** to **95.6%** compared to June 30, 2023, with gross rents increasing by **4.8%** upon renewal and a **55.2%** renewal rate[157](index=157&type=chunk) [Operating Results](index=50&type=section&id=Operating%20Results) The company experienced a net loss attributable to common shareholders for both the three and nine months ended September 30, 2023, primarily due to a significant impairment loss. Third-party real estate services revenue increased, and same-store NOI showed modest growth | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :---------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss attributable to common shareholders | $(58.0) million | $(19.3) million | $(47.4) million | $104.0 million | | EPS - diluted common share | $(0.58) | $(0.17) | $(0.45) | $0.86 | | Third-party real estate services revenue, including reimbursements | $23.9 million | $21.8 million | $69.6 million | $68.0 million | | Same store NOI increase | 3.7% | N/A | 0.5% | N/A | - Investing and financing activities during the nine months ended September 30, 2023, included the sale of Falkland Chase-South & West/North, the sale of an **80.0%** interest in 4747 Bethesda Avenue, a new **$187.6 million** loan facility, and the repurchase and retirement of **18.4 million** common shares for **$276.7 million**[160](index=160&type=chunk)[167](index=167&type=chunk) [Comparison of the Three Months Ended September 30, 2023 to 2022](index=53&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20September%2030,%202023%20to%202022) For the three months ended September 30, 2023, property rental revenue slightly increased due to multifamily growth offsetting commercial declines. Third-party real estate services revenue increased, but interest expense and an impairment loss significantly impacted net results | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :------- | | Property rental revenue | $120,294 | $119,811 | 0.4% | | Third-party real estate services revenue, including reimbursements | $23,942 | $21,845 | 9.6% | | Interest expense | $27,903 | $17,932 | 55.6% | | Impairment loss | $59,307 | $0 | * | | Loss from unconsolidated real estate ventures, net | $2,263 | $13,867 | (83.7%) | | Interest and other income, net | $7,774 | $984 | 690.0% | - Property rental revenue increased primarily due to a **$6.8 million** increase from multifamily assets (consolidation of Atlantic Plumbing and 8001 Woodmont, higher occupancy and rents), partially offset by a **$7.3 million** decrease from commercial assets (Disposed Properties, lower occupancy and rents)[169](index=169&type=chunk) - Interest and other income increased significantly due to a **$6.0 million** gain from litigation settlement in 2023 and a **$1.4 million** increase in interest income from outstanding cash balances[179](index=179&type=chunk) [Comparison of the Nine Months Ended September 30, 2023 to 2022](index=56&type=section&id=Comparison%20of%20the%20Nine%20Months%20Ended%20September%2030,%202023%20to%202022) For the nine months ended September 30, 2023, property rental revenue slightly decreased due to commercial asset dispositions, despite multifamily growth. Third-party real estate services revenue increased, but a substantial impairment loss and higher interest expense led to a net loss | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :------- | | Property rental revenue | $364,919 | $368,445 | (1.0%) | | Third-party real estate services revenue, including reimbursements | $69,588 | $67,972 | 2.4% | | Interest expense | $80,580 | $50,251 | 60.4% | | Gain on the sale of real estate, net | $41,606 | $158,631 | (73.8%) | | Impairment loss | $59,307 | $0 | * | | Loss from unconsolidated real estate ventures, net | $1,320 | $12,829 | (89.7%) | - Property rental revenue decreased primarily due to a **$30.6 million** decrease from commercial assets (Disposed Properties, lower occupancy and rents), partially offset by a **$24.1 million** increase from multifamily assets (consolidation of Atlantic Plumbing and 8001 Woodmont, higher occupancy and rents)[184](index=184&type=chunk) - Interest expense increased by approximately **$30.3 million**, primarily due to higher outstanding debt, a **$15.9 million** decrease related to mark-to-market associated with ineffective interest rate caps, and a **$10.8 million** increase related to rising interest rates on variable rate mortgage loans[194](index=194&type=chunk) [FFO](index=58&type=section&id=FFO) Funds From Operations (FFO) attributable to common shareholders decreased for both the three and nine months ended September 30, 2023, compared to the prior year, reflecting the impact of net losses and impairment - FFO is a non-GAAP financial measure computed in accordance with Nareit's definition, excluding real estate depreciation and amortization, gains/losses from asset sales, and impairment write-downs of certain real estate assets[196](index=196&type=chunk)[198](index=198&type=chunk) | FFO (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :----------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) attributable to common shareholders | $(58,007) | $(19,293) | $(47,381) | $103,950 | | Real estate depreciation and amortization | $48,568 | $47,840 | $147,681 | $150,599 | | Real estate impairment loss | $59,307 | $0 | $59,307 | $0 | | FFO attributable to common shareholders | $40,098 | $40,096 | $106,523 | $124,957 | [NOI and Same Store NOI](index=60&type=section&id=NOI%20and%20Same%20Store%20NOI) Consolidated Net Operating Income (NOI) remained stable for the three months ended September 30, 2023, and increased for the nine-month period. Same Store NOI showed a **3.7%** increase for the three months and a **0.5%** increase for the nine months, driven by multifamily performance and parking revenue - NOI is a non-GAAP financial measure reflecting property-related revenue (base rent, tenant reimbursements, other operating revenue, net of free rent and assumed lease liabilities) less operating expenses and ground rent[200](index=200&type=chunk) | NOI (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :----------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Consolidated NOI | $72,915 | $72,887 | $225,582 | $221,015 | | Same store NOI | $76,858 | $74,128 | $225,890 | $224,819 | | Change in same store NOI | 3.7% | N/A | 0.5% | N/A | - The increase in same store NOI for the three months ended September 30, 2023, was substantially attributable to higher occupancy and rents in the multifamily portfolio and higher parking revenue in the commercial portfolio, partially offset by higher concessions and operating expenses[203](index=203&type=chunk) [Reportable Segments](index=63&type=section&id=Reportable%20Segments) The commercial segment experienced decreases in property revenue and consolidated NOI for both periods, while the multifamily segment showed significant increases in both metrics, driven by acquisitions and higher occupancy/rents | Segment Consolidated NOI (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Commercial | $41,174 | $46,362 | $131,157 | $147,464 | | Multifamily | $27,749 | $24,468 | $83,516 | $70,999 | - Commercial property revenue decreased by **9.1%** (three months) and **12.3%** (nine months), and consolidated NOI decreased by **11.2%** (three months) and **11.1%** (nine months), primarily due to Disposed Properties and lower occupancy and rents[215](index=215&type=chunk)[217](index=217&type=chunk) - Multifamily property revenue increased by **14.9%** (three months) and **18.5%** (nine months), and consolidated NOI increased by **13.4%** (three months) and **17.6%** (nine months), primarily due to the consolidation of Atlantic Plumbing and 8001 Woodmont, and higher occupancy and rents[216](index=216&type=chunk)[218](index=218&type=chunk) [Liquidity and Capital Resources](index=68&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily from property rental income, third-party real estate services, and financing activities. Cash and cash equivalents decreased significantly, with net cash used in investing and financing activities. The company expects to fund future cash requirements through operations, financings, asset sales, and existing cash - Property rental income is the primary source of operating cash flow, supplemented by third-party asset management and real estate services[220](index=220&type=chunk) - Cash and cash equivalents, and restricted cash decreased **$105.3 million** to **$168.8 million** as of September 30, 2023, compared to **$274.1 million** as of December 31, 2022[243](index=243&type=chunk) - The company anticipates that cash flows from continuing operations, proceeds from financings, asset sales, recapitalizations, and existing cash balances will be adequate to fund business operations, debt amortization, capital expenditures, dividends, and distributions over the next 12 months[220](index=220&type=chunk) [Mortgage Loans](index=68&type=section&id=Mortgage%20Loans) Mortgage loans decreased by **8.5%** to **$1.74 billion** as of September 30, 2023. The company entered into a new **$187.6 million** loan facility and repaid **$142.4 million** in mortgage loans during the nine months ended September 30, 2023 | Mortgage Loans (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change | | :---------------------------- | :----------- | :----------- | :----- | | Mortgage loans | $1,741,410 | $1,901,875 | (8.5%) | | Weighted Average Effective Interest Rate (Sep 30, 2023) | 5.16% | 4.78% | N/A | - In January 2023, the company entered into a **$187.6 million** loan facility, collateralized by The Wren and F1RST Residences, with a fixed interest rate of **5.13%**[224](index=224&type=chunk) - In June 2023, the company repaid **$142.4 million** in mortgage loans collateralized by Falkland Chase-South & West and 800 North Glebe Road[225](index=225&type=chunk) [Revolving Credit Facility and Term Loans](index=70&type=section&id=Revolving%20Credit%20Facility%20and%20Term%20Loans) The company's unsecured revolving credit facility and term loans totaled **$1.5 billion** as of September 30, 2023. The revolving credit facility was amended to reduce capacity and extend maturity, and a new **$120.0 million** term loan was entered into - As of September 30, 2023, unsecured revolving credit facility and term loans totaled **$1.5 billion**, comprising a **$750.0 million** revolving credit facility, a **$200.0 million** Tranche A-1 Term Loan, a **$400.0 million** Tranche A-2 Term Loan, and a **$120.0 million** 2023 Term Loan[226](index=226&type=chunk) - Effective June 29, 2023, the revolving credit facility was amended to reduce borrowing capacity from **$1.0 billion** to **$750.0 million** and extend the maturity date from January 2025 to June 2027[227](index=227&type=chunk) - On June 29, 2023, the company entered into a **$120.0 million** term loan maturing in June 2028, with an interest rate fixed at **4.01%** through an interest rate swap[228](index=228&type=chunk) [Common Shares Repurchased](index=70&type=section&id=Common%20Shares%20Repurchased) The Board of Trustees increased the common share repurchase authorization to **$1.5 billion** in May 2023. The company repurchased **18.4 million** common shares for **$276.7 million** during the nine months ended September 30, 2023, and an additional **2.0 million** shares for **$28.0 million** in Q4 2023 - The Board of Trustees increased the common share repurchase authorization to **$1.5 billion** in May 2023[233](index=233&type=chunk) | Common Shares Repurchased | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------ | :-------------------------- | :-------------------------- | | Shares Repurchased (millions) | 18.4 | 14.2 | | Cost (millions) | $276.7 | $361.0 | | Weighted Average Price Per Share | $14.98 | $25.49 | - During the fourth quarter of 2023, through the date of filing, the company repurchased and retired an additional **2.0 million** common shares for **$28.0 million**[237](index=237&type=chunk) [Material Cash Requirements](index=72&type=section&id=Material%20Cash%20Requirements) Material cash requirements include normal operating expenses, debt service, capital expenditures (**$47.7 million** in tenant-related obligations), and development expenditures (**$230.5 million** for assets under construction). These are expected to be funded by cash, operations, financings, and asset sales - Material cash requirements include **$121.3 million** in consolidated debt maturing through 2024, **$47.7 million** in committed tenant-related obligations, and **$230.5 million** for assets under construction[239](index=239&type=chunk) - Expected funding sources include **$130.5 million** in cash and cash equivalents, cash flows from operations, distributions from real estate ventures, **$657.5 million** of availability under the revolving credit facility, and proceeds from financings, asset sales, and recapitalizations[240](index=240&type=chunk) [Summary of Cash Flows](index=74&type=section&id=Summary%20of%20Cash%20Flows) For the nine months ended September 30, 2023, net cash provided by operating activities decreased, while investing activities shifted to a net cash outflow, and financing activities remained a net cash outflow, leading to an overall decrease in cash and restricted cash | Cash Flow Activity (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net cash provided by operating activities | $114,893 | $130,366 | | Net cash (used in) provided by investing activities | $(123,240) | $674,402 | | Net cash used in financing activities | $(96,947) | $(634,994) | | Net (decrease) increase in cash and restricted cash | $(105,294) | $169,774 | - Net cash used in investing activities primarily comprised **$241.3 million** of development costs, construction in progress, and real estate additions, and **$24.3 million** of investments, partially offset by **$162.1 million** of proceeds from real estate sales[245](index=245&type=chunk) - Net cash used in financing activities primarily comprised **$280.1 million** of mortgage loan repayments, **$273.9 million** of common shares repurchased, and **$155.0 million** of revolving credit facility repayments, partially offset by **$287.6 million** of mortgage loan borrowings and **$247.0 million** of revolving credit facility borrowings[246](index=246&type=chunk) [Unconsolidated Real Estate Ventures](index=74&type=section&id=Unconsolidated%20Real%20Estate%20Ventures) The company holds **$296.4 million** in investments in unconsolidated real estate ventures, for which it exercises significant influence but not control. The company may provide guarantees for borrowings or development projects, with **$63.0 million** in capital commitments and guarantees as of September 30, 2023 - As of September 30, 2023, investments in unconsolidated real estate ventures totaled **$296.4 million**, accounted for using the equity method[248](index=248&type=chunk) - The company may agree to guarantee portions of principal, interest, and other amounts in connection with borrowings, provide environmental indemnifications, and nonrecourse carve-outs for unconsolidated real estate ventures[249](index=249&type=chunk) - As of September 30, 2023, additional capital commitments and certain recorded guarantees to unconsolidated real estate ventures and other investments totaled **$63.0 million**, with no debt principal payment guarantees[252](index=252&type=chunk) [Commitments and Contingencies](index=76&type=section&id=Commitments%20and%20Contingencies) The company has various commitments, including **$230.5 million** for construction, **$47.7 million** in tenant-related obligations, and **$8.3 million** in debt principal payment guarantees for consolidated entities. Legal actions are in the ordinary course of business and not expected to have a material adverse effect - As of September 30, 2023, assets under construction require an additional **$230.5 million** to complete, anticipated to be primarily expended over the next two years[256](index=256&type=chunk) - Committed tenant-related obligations totaled **$47.7 million** as of September 30, 2023 (**$46.3 million** related to consolidated entities and **$1.4 million** related to unconsolidated real estate ventures at the company's share)[257](index=257&type=chunk) - As of September 30, 2023, the aggregate amount of debt principal payment guarantees was **$8.3 million** for consolidated entities[259](index=259&type=chunk) - During the three months ended September 30, 2023, the company recognized a **$6.0 million** gain from the settlement of litigation[258](index=258&type=chunk) [Environmental Matters](index=78&type=section&id=Environmental%20Matters) The company is potentially liable for environmental remediation costs on its real estate assets under various laws. Environmental assessments have not revealed material contamination expected to have a material adverse effect, with environmental liabilities totaling **$18.0 million** - An owner of real estate is liable for the costs of removal or remediation of certain hazardous or toxic substances on that real estate, often without regard to knowledge or responsibility[262](index=262&type=chunk) - Environmental assessments did not reveal any material environmental contamination that is believed to have a material adverse effect on the overall business, financial condition, or results of operations[263](index=263&type=chunk) - Environmental liabilities totaled **$18.0 million** as of September 30, 2023 and December 31, 2022[263](index=263&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=79&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the company's exposure to market risks, primarily interest rate risk, and its strategies for managing these risks through hedging activities using derivative financial instruments [Interest Rate Risk](index=79&type=section&id=Interest%20Rate%20Risk) The company is exposed to interest rate fluctuations. As of September 30, 2023, variable rate mortgage loans and the revolving credit facility had an annual effect of **$1.445 million** and **$0.933 million**, respectively, for a **1%** change in base rates | Debt Type (contractual balances) | Sep 30, 2023 Balance (in thousands) | Weighted Average Effective Interest Rate (Sep 30, 2023) | Annual Effect of 1% Change in Base Rates (in thousands) | | :------------------------------- | :---------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | | Variable rate mortgage loans | $550,048 | 6.16% | $1,445 | | Revolving credit facility | $92,000 | 6.71% | $933 | | Variable rate debt of unconsolidated real estate ventures | $48,867 | 5.88% | $82 | - The estimated fair value of consolidated debt was **$2.5 billion** as of September 30, 2023, and **$2.4 billion** as of December 31, 2022[267](index=267&type=chunk) [Hedging Activities](index=79&type=section&id=Hedging%20Activities) The company uses derivative financial instruments, primarily interest rate swaps and caps, to manage interest rate risk. These are designated as either effective or ineffective hedges, with fair values recorded in accumulated other comprehensive income or interest expense, respectively - The company uses derivative financial instruments, consisting of interest rate swap and cap agreements, to manage or hedge its exposure to interest rate risk[270](index=270&type=chunk) - As of September 30, 2023, derivative financial instruments designated as effective hedges had an aggregate notional value of **$1.9 billion** and a fair value of **$69.5 million** (assets)[272](index=272&type=chunk) - As of September 30, 2023, derivative financial instruments designated as ineffective hedges had an aggregate notional value of **$642.7 million**, with fair values of **$9.9 million** (assets) and **$9.2 million** (liabilities)[273](index=273&type=chunk) [Item 4. Controls and Procedures](index=81&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and states that there have been no material changes in internal control over financial reporting during the quarter [Evaluation of Disclosure Controls and Procedures](index=81&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2023 - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[274](index=274&type=chunk) [Changes in Internal Control over Financial Reporting](index=81&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) There have been no material changes in the company's internal control over financial reporting during the quarter ended September 30, 2023 - There have been no changes in the company's internal control over financial reporting during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting[275](index=275&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=81&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions in the ordinary course of business, but the outcome is not expected to have a material adverse effect on its financial position, results of operations, or cash flows - The outcome of legal actions arising in the ordinary course of business is not expected to have a material adverse effect on the company's financial position, results of operations, or cash flows[276](index=276&type=chunk) [Item 1A. Risk Factors](index=81&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report - There have been no material changes to the risk factors previously disclosed in the company's Annual Report[277](index=277&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=83&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **7.9 million** common shares for **$120.8 million** during the three months ended September 30, 2023, and **18.4 million** shares for **$276.7 million** during the nine months, under a program authorized up to **$1.5 billion** | Period | Total Number Of Common Shares Purchased | Average Price Paid Per Common Share | | :-------------------------------------- | :------------------------------------ | :---------------------------------- | | July 1, 2023 - July 31, 2023 | 1,718,829 | $15.96 | | August 1, 2023 - August 31, 2023 | 5,144,097 | $15.08 | | September 1, 2023 - September 30, 2023 | 1,056,791 | $14.83 | | Total for the three months ended Sep 30, 2023 | 7,919,717 | $15.24 | | Total for the nine months ended Sep 30, 2023 | 18,445,875 | $14.98 | | Program total since inception in March 2020 | 41,743,284 | $21.54 | - The Board of Trustees increased the common share repurchase authorization to **$1.5 billion** in May 2023[280](index=280&type=chunk) [Item 3. Defaults Upon Senior Securities](index=83&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities - No defaults upon senior securities[281](index=281&type=chunk) [Item 4. Mine Safety Disclosures](index=83&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[282](index=282&type=chunk) [Item 5. Other Information](index=83&type=section&id=Item%205.%20Other%20Information) No officers or trustees adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended September 30, 2023 - None of the officers or trustees adopted or terminated any contract, instruction, or written plan for the purchase or sale of securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any 'non-Rule 10b5-1 trading arrangement' during the three months ended September 30, 2023[283](index=283&type=chunk) [Item 6. Exhibits](index=85&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Declaration of Trust, Bylaws, Credit Agreement amendments, and certifications - Includes Declaration of Trust, Bylaws, Credit Agreement amendments, and certifications (CEO/CFO) as exhibits[284](index=284&type=chunk)[285](index=285&type=chunk) [Signatures](index=86&type=section&id=Signatures) The report was signed on November 7, 2023, by M. Moina Banerjee, Chief Financial Officer, and Angela Valdes, Chief Accounting Officer - The report was signed on November 7, 2023, by M. Moina Banerjee, Chief Financial Officer, and Angela Valdes, Chief Accounting Officer[289](index=289&type=chunk)[290](index=290&type=chunk) ```

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements detail the company's financial position and performance [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and equity decreased from year-end 2022, driven by lower cash and real estate values Condensed Consolidated Balance Sheet Highlights (In thousands) | Metric | June 30, 2023 | December 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $5,783,602 | $5,903,438 | $(119,836) | | Real estate, net | $4,740,894 | $4,823,082 | $(82,188) | | Cash and cash equivalents | $156,639 | $241,098 | $(84,459) | | Mortgage loans, net | $1,689,207 | $1,890,174 | $(200,967) | | Term loans, net | $716,757 | $547,072 | $169,685 | | Total Liabilities | $2,736,734 | $2,708,016 | $28,718 | | Total Equity | $2,590,982 | $2,714,112 | $(123,130) | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net income and EPS declined significantly year-over-year due to lower real estate sale gains and higher interest expense Condensed Consolidated Statements of Operations Highlights (In thousands, except per share data) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | % Change (YoY) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total revenue | $152,095 | $145,505 | 4.5% | $305,057 | $307,470 | (0.8%) | | Total expenses | $140,244 | $142,359 | (1.5%) | $287,280 | $305,258 | (5.9%) | | Interest expense | $25,835 | $16,041 | 61.1% | $52,677 | $32,319 | 63.0% | | Gain on the sale of real estate, net | $0 | $158,767 | (100.0%) | $40,700 | $158,631 | (74.3%) | | Net income (loss) | $(12,254) | $141,494 | (108.7%) | $12,056 | $141,417 | (91.5%) | | Net income (loss) attributable to common shareholders | $(10,545) | $123,275 | (108.6%) | $10,626 | $123,243 | (91.4%) | | Earnings (loss) per common share - basic and diluted | $(0.10) | $1.02 | (109.8%) | $0.09 | $0.99 | (90.9%) | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income decreased significantly year-over-year, reflecting lower net income Condensed Consolidated Statements of Comprehensive Income Highlights (In thousands) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $(12,254) | $141,494 | $12,056 | $141,417 | | Change in fair value of derivative financial instruments | $21,789 | $7,225 | $12,820 | $32,320 | | Total other comprehensive income (loss) | $14,255 | $10,016 | $(2,530) | $38,867 | | Comprehensive income attributable to JBG SMITH Properties | $910 | $131,980 | $8,473 | $157,833 | [Condensed Consolidated Statements of Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Total equity declined due to net losses, share repurchases, and dividends Condensed Consolidated Statements of Equity Highlights (In thousands) | Metric | June 30, 2023 | December 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Total equity | $2,590,982 | $2,714,112 | $(123,130) | Key Activities Affecting Equity (Six Months Ended June 30) | Activity | 2023 (In thousands) | 2022 (In thousands) | | :--- | :--- | :--- | | Net income (loss) attributable to common shareholders | $10,626 | $123,243 | | Common shares repurchased | $(155,845) | $(307,039) | | Dividends declared on common shares | $(23,803) | $(27,658) | | Total other comprehensive income (loss) | $(2,530) | $38,867 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased while investing activities became a net cash user due to lower asset sales Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, In thousands) | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $89,431 | $107,649 | $(18,218) | | Net cash (used in) provided by investing activities | $(135,500) | $785,304 | $(920,804) | | Net cash used in financing activities | $(25,160) | $(819,930) | $794,770 | | Net (decrease) increase in cash and cash equivalents, and restricted cash | $(71,229) | $73,023 | $(144,252) | | Cash and cash equivalents, and restricted cash, end of period | $202,844 | $375,118 | $(172,274) | - Investing activities shifted from a net cash provider in 2022 to a net cash user in 2023, primarily due to a significant decrease in proceeds from the sale of real estate (**$69.0 million** in 2023 vs **$923.1 million** in 2022) and increased development costs, construction in progress, and real estate additions (**$164.8 million** in 2023 vs **$128.1 million** in 2022)[20](index=20&type=chunk)[233](index=233&type=chunk) - Financing activities saw a substantial reduction in net cash used, from **$(819.9) million** in 2022 to **$(25.2) million** in 2023, driven by lower common share repurchases and increased borrowings under mortgage loans and term loans[20](index=20&type=chunk)[234](index=234&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, asset sales, debt structure, and commitments - JBG SMITH is a Maryland real estate investment trust (REIT) focused on mixed-use properties in the Washington, D.C. metropolitan area, with approximately **two-thirds of its holdings in the National Landing submarket**, anchored by Amazon's new headquarters and Virginia Tech's Innovation Campus[24](index=24&type=chunk)[130](index=130&type=chunk) - During the six months ended June 30, 2023, the company sold an **80.0% interest in 4747 Bethesda Avenue** for a gross sales price of **$196.0 million**, recognizing a gain of **$40.05 million**[39](index=39&type=chunk) - The company entered into a new **$187.6 million loan facility** collateralized by The Wren and F1RST Residences, which was used to repay a **$131.5 million** mortgage loan[61](index=61&type=chunk)[62](index=62&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) - The revolving credit facility was amended to reduce borrowing capacity from **$1.0 billion to $750.0 million**, extend maturity to June 2027, and adjust interest rates[64](index=64&type=chunk)[65](index=65&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk) - As of June 30, 2023, all debt and hedging arrangements use **SOFR as a reference rate**, transitioning from LIBOR[222](index=222&type=chunk) - The company repurchased and retired **10.5 million common shares for $155.8 million** during the six months ended June 30, 2023, with the Board increasing the repurchase authorization to **$1.5 billion**[90](index=90&type=chunk)[223](index=223&type=chunk) - As of June 30, 2023, the company had **$284.7 million in construction commitments** for assets under construction and **$53.1 million in committed tenant-related obligations**[113](index=113&type=chunk)[115](index=115&type=chunk)[244](index=244&type=chunk)[245](index=245&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operating results, and strategic initiatives [Organization and Basis of Presentation](index=43&type=section&id=Organization%20and%20Basis%20of%20Presentation) JBG SMITH is a Maryland REIT focused on mixed-use properties in the Washington, D.C. area - JBG SMITH operates as a Maryland REIT, owning, operating, investing in, and developing mixed-use properties in high-growth submarkets around Washington, D.C., with approximately **two-thirds of its holdings in National Landing**[130](index=130&type=chunk) - The company's business is conducted primarily through JBG SMITH Properties LP, its operating partnership, where JBG SMITH holds an **88.1% ownership interest** as of June 30, 2023[24](index=24&type=chunk)[132](index=132&type=chunk) - Revenue is primarily derived from **multifamily and commercial leases**, and fee-based third-party asset management and real estate services[26](index=26&type=chunk)[131](index=131&type=chunk) - The company has elected to be taxed as a REIT and intends to maintain this status, distributing at least **90% of its REIT taxable income** as dividends[32](index=32&type=chunk)[135](index=135&type=chunk) [Overview](index=45&type=section&id=Overview) The company's operating portfolio includes 51 assets with a significant development pipeline in National Landing - As of June 30, 2023, the Operating Portfolio consisted of 51 operating assets: **31 commercial assets** (9.7 million sq ft), **18 multifamily assets** (6,756 units), and two wholly owned land assets[25](index=25&type=chunk)[140](index=140&type=chunk) - The company has **two under-construction multifamily assets** (1,583 units) and **20 assets in the development pipeline** (12.5 million sq ft of estimated potential development density)[25](index=25&type=chunk)[141](index=141&type=chunk) - JBG SMITH is implementing a **Placemaking strategy in National Landing**, including new developments, retail, public spaces, and deployment of next-generation public and private 5G digital infrastructure[142](index=142&type=chunk) - During Q2 2023, construction of **two new office buildings for Amazon** in National Landing (2.1 million sq ft) was completed, and Amazon took occupancy in June 2023[143](index=143&type=chunk) [Outlook](index=47&type=section&id=Outlook) The strategy focuses on capital allocation to maximize NAV, though asset sales have slowed and office occupancy has decreased - The company's strategy is to **maximize long-term net asset value (NAV) per share** through active capital allocation, including opportunistic sales or recapitalizations of assets and land sites[144](index=144&type=chunk) - Proceeds from asset sales are intended to fund **share repurchases, new acquisitions, and development projects**, advancing a strategic shift towards a majority multifamily portfolio[144](index=144&type=chunk) - **Curbed lending activity has significantly slowed the pace of asset sales**, a trend expected to continue through 2023[144](index=144&type=chunk) - **Office portfolio occupancy decreased by 120 basis points to 84.0%** as of June 30, 2023, compared to March 31, 2023[145](index=145&type=chunk) - The company anticipates **1.2 million square feet of office leases in National Landing expiring through 2024 will vacate**, with over half (678,000 sq ft) from Amazon[145](index=145&type=chunk) - **Multifamily portfolio occupancy increased by 80 basis points to 93.7%** as of June 30, 2023, with gross rents increasing by **7.5% on renewals**[147](index=147&type=chunk)[148](index=148&type=chunk) [Operating Results](index=48&type=section&id=Operating%20Results) Net income and EPS decreased significantly due to the absence of large real estate sale gains Operating Results Summary (In thousands, except per share data) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | % Change (YoY) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net income (loss) attributable to common shareholders | $(10,545) | $123,275 | (108.6%) | $10,626 | $123,243 | (91.4%) | | EPS - Basic and Diluted | $(0.10) | $1.02 | (109.8%) | $0.09 | $0.99 | (90.9%) | | Property rental revenue | $120,592 | $117,036 | 3.0% | $244,625 | $248,634 | (1.6%) | | Third-party real estate services revenue, including reimbursements | $22,862 | $22,157 | 3.2% | $45,646 | $46,127 | (1.0%) | | Interest expense | $25,835 | $16,041 | 61.1% | $52,677 | $32,319 | 63.0% | | Gain on the sale of real estate, net | $0 | $158,767 | (100.0%) | $40,700 | $158,631 | (74.3%) | - Property rental revenue increased by **$3.6 million (3.0%) in Q2 2023**, driven by a **$9.5 million increase from multifamily assets**, partially offset by a **$7.6 million decrease from commercial assets**[159](index=159&type=chunk) - Property rental revenue decreased by **$4.0 million (1.6%) in H1 2023**, primarily due to a **$23.3 million decrease from commercial assets**, partially offset by a **$17.3 million increase from multifamily assets**[171](index=171&type=chunk) - **Interest expense increased significantly by 61.1% in Q2 2023 and 63.0% in H1 2023**, mainly due to new mortgage loans and rising variable interest rates[167](index=167&type=chunk)[181](index=181&type=chunk) [FFO (Funds From Operations)](index=56&type=section&id=FFO%20(Funds%20From%20Operations)) Funds From Operations decreased year-over-year, primarily due to lower net income - **FFO is a non-GAAP financial measure** used to assess operating performance, excluding real estate depreciation and amortization, and gains/losses from real estate sales[183](index=183&type=chunk)[185](index=185&type=chunk) FFO Attributable to Common Shareholders (In thousands) | Period | 2023 | 2022 | % Change (YoY) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $33,423 | $33,561 | (0.4%) | | Six Months Ended June 30 | $66,425 | $84,861 | (21.7%) | [NOI and Same Store NOI](index=58&type=section&id=NOI%20and%20Same%20Store%20NOI) Consolidated NOI increased, but Same Store NOI for the six-month period decreased due to commercial portfolio vacancy - **NOI is a non-GAAP measure** reflecting property-related revenue less operating expenses and ground rent, used to assess asset-level performance[187](index=187&type=chunk) Consolidated NOI (In thousands) | Period | 2023 | 2022 | % Change (YoY) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $75,051 | $71,159 | 5.5% | | Six Months Ended June 30 | $152,667 | $148,128 | 3.1% | Same Store NOI (In thousands) | Period | 2023 | 2022 | % Change (YoY) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $78,340 | $78,236 | 0.1% | | Six Months Ended June 30 | $153,535 | $154,650 | (0.7%) | - The decrease in **Same Store NOI for the six months ended June 30, 2023**, was primarily due to increased abatement and higher vacancy in the commercial portfolio, partially offset by higher occupancy and rents in the multifamily portfolio[191](index=191&type=chunk) - The same store pool increased to **50 properties** for the three months ended June 30, 2023, and to **49 properties** for the six months ended June 30, 2023[189](index=189&type=chunk)[190](index=190&type=chunk) [Reportable Segments](index=62&type=section&id=Reportable%20Segments) Multifamily NOI grew significantly while commercial NOI declined due to disposed properties - The company aggregates its operating segments into three reportable segments: **multifamily, commercial, and third-party asset management and real estate services**[100](index=100&type=chunk)[195](index=195&type=chunk) Consolidated NOI by Segment (In thousands) | Segment | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | % Change (YoY) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Commercial | $42,300 | $47,448 | (10.8%) | $89,983 | $101,102 | (11.0%) | | Multifamily | $28,696 | $23,265 | 23.3% | $55,767 | $46,531 | 19.8% | | Other | $4,055 | $446 | 809.2% | $6,917 | $495 | 1297.4% | | **Total Consolidated NOI** | **$75,051** | **$71,159** | **5.5%** | **$152,667** | **$148,128** | **3.1%** | Third-Party Real Estate Services Revenue Less Expenses (In thousands) | Period | 2023 | 2022 | | :--- | :--- | :--- | | Three Months Ended June 30 | $757 | $(1,986) | | Six Months Ended June 30 | $(282) | $(5,065) | - **Commercial NOI decreased** primarily due to the impact of Disposed Properties, partially offset by increased occupancy at 800 North Glebe and 2121 Crystal Drive[203](index=203&type=chunk)[205](index=205&type=chunk) - **Multifamily NOI increased significantly** due to the consolidation of Atlantic Plumbing and 8001 Woodmont, and higher occupancy and rents across the portfolio[204](index=204&type=chunk)[206](index=206&type=chunk) [Liquidity and Capital Resources](index=64&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is sourced from property income, services, and financing, and is expected to be adequate for the next 12 months - Primary sources of operating cash flow include **property rental income and fee-based real estate services**, with other sources from financings, asset sales, and securities issuance[207](index=207&type=chunk)[209](index=209&type=chunk) - The company anticipates **adequate cash flows** to fund business operations, debt amortization, capital expenditures, and dividends over the next 12 months[209](index=209&type=chunk) - Material cash requirements include debt service, capital expenditures (**$53.1 million** in tenant-related obligations), and development expenditures (**$284.7 million** over three years)[228](index=228&type=chunk) - As of June 30, 2023, the company had **$156.6 million in cash and cash equivalents** and **$687.5 million of availability** under its revolving credit facility[229](index=229&type=chunk) - The Board of Trustees increased the common share repurchase authorization to **$1.5 billion** in May 2023; during H1 2023, **10.5 million common shares were repurchased for $155.8 million**[223](index=223&type=chunk) [Summary of Cash Flows](index=72&type=section&id=Summary%20of%20Cash%20Flows) Cash and cash equivalents decreased by $71.2 million, driven by net cash used in investing and financing activities Summary of Cash Flows (Six Months Ended June 30, In thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $89,431 | $107,649 | | Net cash (used in) provided by investing activities | $(135,500) | $785,304 | | Net cash used in financing activities | $(25,160) | $(819,930) | | Net (decrease) increase in cash and cash equivalents, and restricted cash | $(71,229) | $73,023 | - **Net cash used in investing activities was $135.5 million**, driven by **$164.8 million in development costs** and real estate additions, partially offset by **$69.0 million from real estate sales**[233](index=233&type=chunk) - **Net cash used in financing activities was $25.2 million**, primarily due to **$278.5 million in mortgage loan repayments** and **$155.8 million in common share repurchases**, partially offset by new borrowings[234](index=234&type=chunk) [Unconsolidated Real Estate Ventures](index=72&type=section&id=Unconsolidated%20Real%20Estate%20Ventures) The company holds $309.2 million in investments in unconsolidated real estate ventures accounted for via the equity method - As of June 30, 2023, investments in unconsolidated real estate ventures totaled **$309.2 million**, accounted for using the equity method[236](index=236&type=chunk) - The company is **not the primary beneficiary** of these unconsolidated VIEs, despite managing day-to-day operations[51](index=51&type=chunk) - As of June 30, 2023, the company had additional capital commitments and certain recorded guarantees to its unconsolidated real estate ventures totaling **$62.0 million**[118](index=118&type=chunk)[240](index=240&type=chunk) [Commitments and Contingencies](index=74&type=section&id=Commitments%20and%20Contingencies) The company has significant construction commitments, tenant-related obligations, and various guarantees - The company maintains general liability insurance (**$150.0 million** per occurrence) and property/rental value insurance (**$1.0 billion** per occurrence), with coverage for terrorist acts up to **$2.0 billion**[110](index=110&type=chunk)[241](index=241&type=chunk) - As of June 30, 2023, the company had assets under construction requiring an additional **$284.7 million** to complete over the next three years[113](index=113&type=chunk)[244](index=244&type=chunk) - Committed tenant-related obligations totaled **$53.1 million** as of June 30, 2023[115](index=115&type=chunk)[245](index=245&type=chunk) - The aggregate amount of debt principal payment guarantees for consolidated entities was **$8.3 million** as of June 30, 2023[119](index=119&type=chunk)[247](index=247&type=chunk) - The company has an agreement with Vornado regarding tax matters, which may require indemnification for certain tax liabilities[120](index=120&type=chunk)[248](index=248&type=chunk) [Environmental Matters](index=76&type=section&id=Environmental%20Matters) The company is subject to environmental laws and regulations, with recorded liabilities of $18.0 million - Owners of real estate are liable for remediation costs of hazardous substances, potentially without regard to fault[250](index=250&type=chunk) - Environmental assessments have not revealed material environmental contamination that would have a material adverse effect on the business[114](index=114&type=chunk)[251](index=251&type=chunk) - Environmental liabilities totaled **$18.0 million** as of June 30, 2023, and December 31, 2022[114](index=114&type=chunk)[251](index=251&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=77&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to interest rate risk, which is managed through derivative financial instruments [Interest Rate Risk](index=77&type=section&id=Interest%20Rate%20Risk) The company is exposed to fluctuations in interest rates, with all debt and hedging arrangements now using SOFR - The company has exposure to fluctuations in interest rates, which are sensitive to many factors beyond its control[252](index=252&type=chunk) Annual Effect of 1% Change in Base Rates (In thousands) | Debt Type | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Mortgage loans: Variable rate | $1,445 | $1,445 | | Revolving credit facility and term loans: Revolving credit facility | $629 | $0 | | Pro rata share of debt of unconsolidated real estate ventures: Variable rate | $164 | $164 | - As of June 30, 2023, one-month LIBOR was **5.22%** and one-month term SOFR was **5.14%**; all debt and hedging arrangements now use **SOFR** as a reference rate[211](index=211&type=chunk)[222](index=222&type=chunk)[252](index=252&type=chunk) [Hedging Activities](index=77&type=section&id=Hedging%20Activities) The company uses interest rate swap and cap agreements to manage interest rate risk - The company uses derivative financial instruments (interest rate swap and cap agreements) to manage or hedge exposure to interest rate risk[94](index=94&type=chunk)[258](index=258&type=chunk) - As of June 30, 2023, the company had interest rate swap and cap agreements with an aggregate notional value of **$1.4 billion** designated as effective hedges[95](index=95&type=chunk)[260](index=260&type=chunk) - As of June 30, 2023, the company had various interest rate cap agreements with an aggregate notional value of **$711.8 million** designated as ineffective hedges[261](index=261&type=chunk) [Item 4. Controls and Procedures](index=79&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes in internal control [Evaluation of Disclosure Controls and Procedures](index=79&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2023 - As of June 30, 2023, the Chief Executive Officer and Chief Financial Officer concluded that the company's **disclosure controls and procedures were effective**[262](index=262&type=chunk) [Changes in Internal Control over Financial Reporting](index=79&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred during the quarter - **No material changes** in internal control over financial reporting occurred during the quarter ended June 30, 2023[263](index=263&type=chunk) [PART II – OTHER INFORMATION](index=79&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=79&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing legal actions are not expected to have a material adverse effect on the company's financial condition - The company is involved in various legal actions in the ordinary course of business; management believes the outcome of such matters **will not have a material adverse effect** on its financial condition, results of operations or cash flows[116](index=116&type=chunk)[246](index=246&type=chunk)[264](index=264&type=chunk) [Item 1A. Risk Factors](index=79&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to previously disclosed risk factors - There have been **no material changes** to the risk factors previously disclosed in the company's Annual Report[265](index=265&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=81&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 10.5 million shares in H1 2023 and increased its repurchase authorization to $1.5 billion Purchases of Equity Securities by the Issuer | Period | Total Number Of Common Shares Purchased | Average Price Paid Per Common Share | Approximate Dollar Value Of Common Shares That May Yet Be Purchased Under the Plan Or Programs | | :--- | :--- | :--- | :--- | | April 1, 2023 - April 30, 2023 | 2,399,238 | $14.17 | $322,367,801 | | May 1, 2023 - May 31, 2023 | 4,065,637 | $14.54 | $763,155,096 | | June 1, 2023 - June 30, 2023 | 2,856,095 | $14.86 | $720,668,410 | | **Total for the three months ended June 30, 2023** | **9,320,970** | **$14.54** | | | **Total for the six months ended June 30, 2023** | **10,526,158** | **$14.79** | | | **Program total since inception in March 2020** | **33,823,567** | **$23.02** | | - In May 2023, the Board of Trustees increased the common share repurchase authorization to **$1.5 billion**[268](index=268&type=chunk) - Subsequent to June 30, 2023, the company repurchased and retired an additional **2.0 million common shares for $31.5 million** at a weighted average price of **$16.03 per share**[267](index=267&type=chunk) [Item 3. Defaults Upon Senior Securities](index=81&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - **No defaults** upon senior securities were reported[269](index=269&type=chunk) [Item 4. Mine Safety Disclosures](index=81&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - This item is **not applicable**[270](index=270&type=chunk) [Item 5. Other Information](index=81&type=section&id=Item%205.%20Other%20Information) No officers adopted Rule 10b5-1 plans in Q2, and the company's Bylaws were amended and restated [Trading Arrangements](index=81&type=section&id=Trading%20Arrangements) No officers or trustees adopted or terminated Rule 10b5-1 trading arrangements during Q2 2023 - None of the company's officers or trustees adopted or terminated any **Rule 10b5-1 trading arrangements** during the three months ended June 30, 2023[271](index=271&type=chunk) [Second Amended and Restated Bylaws](index=83&type=section&id=Second%20Amended%20and%20Restated%20Bylaws) The Board amended and restated the Bylaws to allow electronic stockholder participation and update nomination procedures - On August 3, 2023, the Board amended and restated the Bylaws to: (i) expressly provide for the ability of stockholders to participate in meetings by **electronic transmission**, (ii) require any shareholder soliciting proxies to use a **proxy card color other than white**, and (iii) update the procedure and information requirements for the nominations of persons for election to the Board[272](index=272&type=chunk) [Item 6. Exhibits](index=84&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q - Key exhibits include the **Second Amended and Restated Bylaws**, the **Amended and Restated Credit Agreement**, and certifications from the Chief Executive Officer and Chief Financial Officer[276](index=276&type=chunk) [Signatures](index=85&type=section&id=Signatures) The report is duly signed by the Chief Financial Officer and Chief Accounting Officer - The report was signed by **M. Moina Banerjee, Chief Financial Officer**, and **Angela Valdes, Chief Accounting Officer**, on August 8, 2023[280](index=280&type=chunk)[281](index=281&type=chunk)