Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission file number 001-37994 JBG SMITH PROPERTIES ___________________________________________________________________ ...

PART I – FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for JBG SMITH Properties as of June 30, 2022, and for the three and six-month periods then ended, including the Balance Sheets, Statements of Operations, Statements of Comprehensive Income (Loss), Statements of Equity, and Statements of Cash Flows, along with detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a decrease in total assets from $6.39 billion at year-end 2021 to $5.58 billion as of June 30, 2022, primarily due to a reduction in real estate assets, while total liabilities also decreased significantly from $2.93 billion to $2.24 billion, largely driven by repayments of the revolving credit facility and mortgages Condensed Consolidated Balance Sheets (in thousands) | | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$5,579,902** | **$6,386,206** | | Real estate, net | $4,348,716 | $4,868,473 | | Cash and cash equivalents | $162,270 | $264,356 | | **Total Liabilities** | **$2,235,305** | **$2,925,064** | | Mortgages payable, net | $1,612,169 | $1,777,699 | | Revolving credit facility | $— | $300,000 | | **Total Equity** | **$2,823,205** | **$2,938,417** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2022, the company reported a net income of $141.5 million, a significant turnaround from a $3.3 million loss in Q2 2021, primarily due to a $158.8 million gain on real estate sales, while total revenue slightly declined year-over-year Key Operating Results (in thousands, except per share data) | | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $145,505 | $154,644 | $307,470 | $319,933 | | **Gain on the sale of real estate, net** | $158,767 | $11,290 | $158,631 | $11,290 | | **Net Income (Loss)** | $141,494 | $(3,318) | $141,417 | $(27,387) | | **Net Income (Loss) Attributable to Common Shareholders** | $123,275 | $(2,973) | $123,243 | $(23,704) | | **Earnings (Loss) Per Common Share - Basic and Diluted** | $1.02 | $(0.03) | $0.99 | $(0.19) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Comprehensive income reached $151.5 million for Q2 2022, a positive shift from a $0.9 million loss in Q2 2021, driven by net income and a $10.0 million gain from derivative financial instruments Comprehensive Income (Loss) (in thousands) | | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Net Income (Loss)** | $141,494 | $(3,318) | $141,417 | $(27,387) | | **Total Other Comprehensive Income** | $10,016 | $2,430 | $38,867 | $12,582 | | **Comprehensive Income (Loss)** | $151,510 | $(888) | $180,284 | $(14,805) | [Condensed Consolidated Statements of Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Total equity decreased from $2.94 billion at year-end 2021 to $2.82 billion as of June 30, 2022, primarily due to $307.0 million in common share repurchases, partially offset by $123.2 million in net income attributable to common shareholders - For the six months ended June 30, 2022, the company repurchased **11.84 million common shares** for **$307.0 million**[18](index=18&type=chunk) - Dividends declared on common shares were **$0.225 per share** for the quarter, totaling **$27.7 million**[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2022, net cash from operating activities was $107.6 million, while investing activities provided $785.3 million, largely from real estate sales, and financing activities used $819.9 million, resulting in a net cash increase of $73.0 million Summary of Cash Flows (in thousands) | | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $107,649 | $123,556 | | **Net cash provided by (used in) investing activities** | $785,304 | $(70,445) | | **Net cash used in financing activities** | $(819,930) | $(77,754) | | **Net increase (decrease) in cash** | $73,023 | $(24,643) | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section details accounting policies and financial figures, covering the company's organization, dispositions, unconsolidated ventures, debt, share-based compensation, segment information, and commitments [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's Q2 and H1 2022 financial performance, strategic portfolio repositioning, capital recycling, strong multifamily segment, slower office recovery, non-GAAP measures, financing, and liquidity - The company's strategy focuses on maximizing long-term net asset value (NAV) per share through active capital allocation, including opportunistically selling non-core office assets and reinvesting proceeds into higher-yield acquisitions and development projects[143](index=143&type=chunk) - The multifamily portfolio occupancy improved to **92.3%** (at our share) as of June 30, 2022, with asking rents above pre-pandemic levels and renewal rates increasing by approximately **8.6%** for Q2 expirations[145](index=145&type=chunk) - The office portfolio occupancy improved to **86.1%** (at our share) as of June 30, 2022, but new leasing has been slow to recover from the pandemic, which is expected to impact occupancy levels for the foreseeable future[144](index=144&type=chunk) Key Operating Highlights - Q2 2022 | Metric | Q2 2022 | Q2 2021 | | :--- | :--- | :--- | | Net Income (Loss) Attributable to Common Shareholders | $123.3M | $(3.0)M | | Diluted EPS | $1.02 | $(0.03) | | Same Store NOI Increase | 13.8% | N/A | [Results of Operations](index=50&type=section&id=Results%20of%20Operations) This subsection compares Q2 and H1 2022 operating results to prior periods, highlighting a significant net income increase driven by a $158.8 million gain on real estate sales, while property rental revenue slightly decreased and third-party services declined Comparison of Operations (Three Months Ended June 30) | (in thousands) | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Property rental revenue | $117,036 | $122,819 | (4.7)% | | Third-party real estate services revenue | $22,157 | $26,745 | (17.2)% | | Gain on the sale of real estate, net | $158,767 | $11,290 | * | | Income (loss) from unconsolidated ventures | $(2,107) | $3,953 | (153.3)% | Comparison of Operations (Six Months Ended June 30) | (in thousands) | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Property rental revenue | $248,634 | $245,060 | 1.5% | | Third-party real estate services revenue | $46,127 | $64,852 | (28.9)% | | Interest and other income (loss), net | $15,918 | $(29) | * | | Gain on the sale of real estate, net | $158,631 | $11,290 | * | [FFO and Same Store NOI](index=56&type=section&id=FFO%20and%20Same%20Store%20NOI) This section details non-GAAP performance, showing FFO attributable to common shareholders at $33.6 million for Q2 2022 and $84.9 million for the six-month period, with Same Store NOI growing by 13.8% in Q2 and 13.9% in H1, driven by multifamily and hotel performance FFO Attributable to Common Shareholders (in thousands) | | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **FFO** | $33,561 | $37,860 | $84,861 | $80,188 | Same Store NOI (in thousands) | | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Same Store NOI** | $79,328 | $69,721 | $155,416 | $136,478 | | **Change in Same Store NOI** | 13.8% | | 13.9% | | [Liquidity and Capital Resources](index=66&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains liquidity through operating cash flow, asset sales, and its credit facility, with $162.3 million in cash and $999.5 million available as of June 30, 2022, funding debt repayment, share repurchases, and development expenditures - As of June 30, 2022, the company had **$162.3 million** in cash and cash equivalents and **$999.5 million** of availability under its credit facility[222](index=222&type=chunk) - In H1 2022, the company repurchased **11.8 million common shares** for **$307.0 million**. The Board increased the repurchase authorization by **$500.0 million** in June 2022 to a total of **$1.0 billion**[219](index=219&type=chunk) - Future material cash requirements include **$528.5 million** for assets under construction, **$74.3 million** in committed tenant-related obligations, and ongoing dividends[222](index=222&type=chunk) - Subsequent to quarter-end, in July 2022, the company amended its Tranche A-2 Term Loan, increasing its borrowing capacity by **$200.0 million** and extending the maturity to January 2028[216](index=216&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the company's interest rate risk exposure from variable-rate debt, where a 1% rate change would impact consolidated debt by $8.7 million annually, with derivative instruments used for hedging and consolidated debt fair value estimated at $2.0 billion Interest Rate Risk Exposure (as of June 30, 2022) | Debt Category | Balance (in thousands) | Annual Effect of 1% Rate Change (in thousands) | | :--- | :--- | :--- | | **Consolidated Debt** | | | | Mortgages payable - Variable rate | $857,446 | $8,694 | | **Pro Rata Share of Unconsolidated Debt** | | | | Variable rate | $189,136 | $1,918 | - The company utilizes interest rate swap and cap agreements to manage interest rate risk. As of June 30, 2022, it had agreements with an aggregate notional value of **$930.2 million** designated as effective hedges and **$692.7 million** designated as ineffective hedges[255](index=255&type=chunk)[256](index=256&type=chunk) [Controls and Procedures](index=50&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes in internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2022, the company's disclosure controls and procedures were effective[257](index=257&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, internal controls[258](index=258&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions in the ordinary course of business but does not expect the outcomes to have a material adverse effect on its financial position, results, or cash flows - The company states that the outcome of ordinary course legal actions is not expected to have a material adverse effect on its financial condition[259](index=259&type=chunk) [Risk Factors](index=50&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 on Form 10-K - No material changes to risk factors were reported since the last Annual Report[260](index=260&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=51&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's common share repurchases, with approximately 8.5 million shares bought back for $213.9 million in Q2 2022, and the Board increasing the total repurchase authorization to $1.0 billion in June 2022 Issuer Purchases of Equity Securities (Q2 2022) | Period | Total Common Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2022 | 706,598 | $27.39 | | May 2022 | 3,465,029 | $25.31 | | June 2022 | 4,326,740 | $24.66 | | **Total Q2** | **8,498,367** | **$25.15** | - In June 2022, the Board of Trustees increased the authorized share repurchase amount by **$500.0 million** to an aggregate of **$1.0 billion**[263](index=263&type=chunk) [Other Information](index=51&type=section&id=Item%205.%20Other%20Information) This section discloses significant post-quarter events, including a new $400.0 million delayed draw term loan facility on July 29, 2022, increasing borrowing capacity by $200.0 million, and the retirement announcement of President and COO David P. Paul effective December 31, 2022 - On July 29, 2022, JBG SMITH LP entered into a new **$400.0 million** Delayed Draw Term Credit Agreement, maturing in January 2028. This increased overall borrowing capacity by **$200.0 million**[266](index=266&type=chunk)[269](index=269&type=chunk) - David P. Paul, President and Chief Operating Officer, announced his retirement effective December 31, 2022. He will continue as a Senior Advisor for a transition period[277](index=277&type=chunk)[278](index=278&type=chunk) [Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including new credit agreements, an executive retirement agreement, and CEO/CFO certifications

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents JBG SMITH's unaudited condensed consolidated financial statements and notes for Q1 2022 and 2021 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)%20as%20of%20March%2031%2C%202022%20and%20December%2031%2C%202021) Presents JBG SMITH's unaudited condensed consolidated balance sheets as of March 31, 2022, and December 31, 2021 Condensed Consolidated Balance Sheets Summary | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | :-------------------- | | Total Assets | $6,315,880 | $6,386,206 | $(70,326) | | Real estate, net | $4,313,223 | $4,868,473 | $(555,250) | | Assets held for sale | $891,750 | $73,876 | $817,874 | | Total Liabilities | $2,894,785 | $2,925,064 | $(30,279) | | Total Equity | $2,875,046 | $2,938,417 | $(63,371) | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(unaudited)%20for%20the%20three%20months%20ended%20March%2031%2C%202022%20and%202021) Details JBG SMITH's unaudited condensed consolidated statements of operations for the three months ended March 31, 2022 and 2021 Condensed Consolidated Statements of Operations Summary | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | :-------------------- | :------- | | Total Revenue | $161,965 | $165,289 | $(3,324) | (2.0)% | | Property rental | $131,598 | $122,241 | $9,357 | 7.7% | | Third-party real estate services, including reimbursements | $23,970 | $38,107 | $(14,137) | (37.1)% | | Total Expenses | $162,899 | $167,813 | $(4,914) | (2.9)% | | Income (loss) from unconsolidated real estate ventures, net | $3,145 | $(943) | $4,088 | 433.5% | | Interest and other income, net | $14,246 | $9 | $14,237 | * | | NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $(32) | $(20,731) | $20,699 | (99.8)% | | LOSS PER COMMON SHARE - BASIC AND DILUTED | $0.00 | $(0.16) | $0.16 | (100.0)% | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20(unaudited)%20for%20the%20three%20months%20ended%20March%2031%2C%202022%20and%202021) Outlines JBG SMITH's unaudited condensed consolidated statements of comprehensive income (loss) for Q1 2022 and 2021 Condensed Consolidated Statements of Comprehensive Income (Loss) Summary | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | Change (in thousands) | | :------------------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | :-------------------- | | NET LOSS | $(77) | $(24,069) | $23,992 | | Change in fair value of derivative financial instruments | $25,095 | $6,411 | $18,684 | | Other comprehensive income | $28,851 | $10,152 | $18,699 | | COMPREHENSIVE INCOME (LOSS) | $28,774 | $(13,917) | $42,691 | [Condensed Consolidated Statements of Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity%20(unaudited)%20for%20the%20three%20months%20ended%20March%2031%2C%202022%20and%202021) Presents JBG SMITH's unaudited condensed consolidated statements of equity for the three months ended March 31, 2022 and 2021 Condensed Consolidated Statements of Equity Summary | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | :-------------------- | | Total Equity | $2,875,046 | $2,938,417 | $(63,371) | | Common shares repurchased | $(93,148) | N/A | $(93,148) | | Other comprehensive income | $28,851 | N/A | $28,851 | | Contributions from noncontrolling interests, net | $5,986 | N/A | $5,986 | | Redeemable noncontrolling interests redemption value adjustment and other comprehensive income allocation | $(11,273) | N/A | $(11,273) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)%20for%20the%20three%20months%20ended%20March%2031%2C%202022%20and%202021) Details JBG SMITH's unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2022 and 2021 Condensed Consolidated Statements of Cash Flows Summary | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | Change (in thousands) | | :-------------------------------- | :------------------------------------------------ | :------------------------------------------------ | :-------------------- | | Net cash provided by operating activities | $69,598 | $66,502 | $3,096 | | Net cash used in investing activities | $(32,951) | $(29,515) | $(3,436) | | Net cash used in financing activities | $(119,529) | $(51,776) | $(67,753) | | Net decrease in cash and cash equivalents, and restricted cash | $(82,882) | $(14,789) | $(68,093) | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) Detailed notes to JBG SMITH's unaudited condensed consolidated financial statements, covering policies, dispositions, and debt [1. Organization and Basis of Presentation](index=10&type=section&id=1.%20Organization%20and%20Basis%20of%20Presentation) Describes JBG SMITH's organizational structure, REIT status, and basis of financial statement presentation - JBG SMITH is a Maryland REIT owning and operating commercial and multifamily assets in Metro-served submarkets of the Washington, D.C. metropolitan area[22](index=22&type=chunk) - Over half of the portfolio is in National Landing, Northern Virginia, where JBG SMITH is the developer for Amazon's new over five million square foot headquarters and Virginia Tech's $1 billion Innovation Campus[22](index=22&type=chunk) - As of March 31, 2022, the Operating Portfolio included **62 operating assets** (41 commercial, 20 multifamily, 1 land asset), **2 under-construction multifamily assets**, **9 near-term development assets**, and **20 future development assets**[23](index=23&type=chunk) [2. Summary of Significant Accounting Policies](index=12&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Summarizes JBG SMITH's significant accounting policies, including updates related to reference rate reform - Financial statements are prepared in accordance with GAAP for interim financial information, with no material changes to significant accounting policies from the Annual Report[25](index=25&type=chunk)[31](index=31&type=chunk) - The company elected to apply hedge accounting expedients under Topic 848 for reference rate reform, allowing continued assessment of hedged forecasted transactions and effectiveness for future LIBOR-indexed cash flows[33](index=33&type=chunk)[35](index=35&type=chunk) [3. Dispositions and Assets Held for Sale](index=14&type=section&id=3.%20Dispositions%20and%20Assets%20Held%20for%20Sale) Details JBG SMITH's asset dispositions and reclassifications to assets held for sale during the period - A development parcel was disposed of for a gross sales price of **$3.25 million** on March 28, 2022, resulting in a loss of **$(136) thousand**[36](index=36&type=chunk) - On April 1, 2022, the Universal Buildings (commercial assets in Washington D.C.) were sold for **$228.0 million**, having been classified as assets held for sale as of March 31, 2022[37](index=37&type=chunk) - On April 13, 2022, an unconsolidated real estate venture was formed with Fortress Investment Group LLC to recapitalize a **1.6 million square foot office portfolio** and land parcels for **$580.0 million**, including four wholly-owned commercial assets classified as held for sale[38](index=38&type=chunk) [4. Investments in Unconsolidated Real Estate Ventures](index=16&type=section&id=4.%20Investments%20in%20Unconsolidated%20Real%20Estate%20Ventures) Outlines JBG SMITH's investments in unconsolidated real estate ventures and related transactions Investments in Unconsolidated Real Estate Ventures Summary | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------ | | Total investments in unconsolidated real estate ventures | $461,444 | $462,885 | - Unconsolidated real estate ventures disposed of assets (The Alaire, The Terano, and 12511 Parklawn Drive) for a gross sales price of **$137.5 million**, resulting in JBG SMITH's proportionate share of aggregate gain of **$5.2 million** for the three months ended March 31, 2022[46](index=46&type=chunk) - JBG SMITH provides leasing, property management, and other real estate services to these ventures, recognizing revenue of **$5.5 million** in Q1 2022 (vs. **$5.9 million** in Q1 2021)[44](index=44&type=chunk) [5. Variable Interest Entities](index=20&type=section&id=5.%20Variable%20Interest%20Entities) Identifies JBG SMITH's consolidated and unconsolidated variable interest entities and associated risks - JBG SMITH LP is the most significant consolidated VIE, with JBG SMITH holding an **89.0% ownership interest** and acting as the general partner, thus being the primary beneficiary[55](index=55&type=chunk) - As of March 31, 2022, excluding JBG SMITH LP, the company consolidated three other VIEs with total assets of **$300.2 million** and liabilities of **$21.8 million**[56](index=56&type=chunk) - The company also has interests in unconsolidated VIEs, where its maximum loss exposure is limited to investments, construction commitments, and debt guarantees[54](index=54&type=chunk) [6. Other Assets, Net](index=20&type=section&id=6.%20Other%20Assets%2C%20Net) Presents changes in JBG SMITH's other assets, net, including reclassifications and derivative fair values Other Assets, Net Summary | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | :-------------------- | | Total other assets, net | $71,385 | $240,160 | $(168,775) | | Finance lease right-of-use assets | $0 | $180,956 | $(180,956) | | Derivative agreements, at fair value | $15,478 | $951 | $14,527 | - The decrease in other assets, net, was largely due to finance ground leases at 1730 M Street and Courthouse Plaza 1 and 2 being reclassified as "Assets held for sale"[57](index=57&type=chunk) - The company recorded a realized gain of **$13.9 million** from the sale of equity investments in Q1 2022, included in "Interest and other income, net"[59](index=59&type=chunk) [7. Debt](index=22&type=section&id=7.%20Debt) Details JBG SMITH's debt structure, including mortgages, term loans, and revolving credit facility Debt Summary | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | :-------------------- | | Mortgages payable, net | $1,613,082 | $1,777,699 | $(164,617) | | Mortgages payable, net, related to assets held for sale | $163,897 | $0 | $163,897 | | Revolving credit facility | $300,000 | $300,000 | $0 | | Unsecured term loans, net | $398,332 | $398,664 | $(332) | - The Tranche A-1 Term Loan was amended in January 2022 to extend its maturity to January 2025 and change its interest rate to SOFR plus **1.15% to 1.75%**[64](index=64&type=chunk) - As of March 31, 2022, the company had **$1.7 billion** in floating rate debt and **$1.4 billion** in hedging arrangements using LIBOR as a reference rate, with uncertainties regarding LIBOR's future[196](index=196&type=chunk) [8. Other Liabilities, Net](index=25&type=section&id=8.%20Other%20Liabilities%2C%20Net) Summarizes changes in JBG SMITH's other liabilities, net, primarily due to asset reclassifications Other Liabilities, Net Summary | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | :-------------------- | | Total other liabilities, net | $106,929 | $342,565 | $(235,636) | | Liabilities related to finance lease right-of-use assets | $0 | $162,510 | $(162,510) | | Derivative agreements, at fair value | $658 | $18,361 | $(17,703) | | Dividends payable | $0 | $32,603 | $(32,603) | - The decrease was mainly due to the reclassification of finance ground leases at 1730 M Street and Courthouse Plaza 1 and 2 to "Liabilities related to assets held for sale"[66](index=66&type=chunk) [9. Redeemable Noncontrolling Interests](index=25&type=section&id=9.%20Redeemable%20Noncontrolling%20Interests) Discusses JBG SMITH's redeemable noncontrolling interests, including OP and LTIP unit redemptions - As of March 31, 2022, outstanding OP Units and redeemable LTIP Units totaled **15.3 million**, representing an **11.0% ownership interest** in JBG SMITH LP[67](index=67&type=chunk) - During Q1 2022, **207,882 OP Units** were redeemed for an equivalent number of common shares[67](index=67&type=chunk) - The balance of redeemable noncontrolling interests increased from **$522.7 million** at the beginning of the period to **$546.0 million** at the end of Q1 2022[69](index=69&type=chunk) [10. Property Rental Revenue](index=25&type=section&id=10.%20Property%20Rental%20Revenue) Analyzes JBG SMITH's property rental revenue, distinguishing between fixed and variable rent components Property Rental Revenue Summary | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | % Change | | :---------------------- | :------------------------------------------------ | :------------------------------------------------ | :------- | | Property rental revenue | $131,598 | $122,241 | 7.7% | | Fixed rent | $120,637 | $112,249 | 7.5% | | Variable rent | $10,961 | $9,992 | 9.7% | [11. Share-Based Payments](index=27&type=section&id=11.%20Share-Based%20Payments) Details JBG SMITH's share-based compensation expense and equity awards granted during the period Share-Based Payments Summary | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | % Change | | :------------------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | :------- | | Total share-based compensation expense | $13,954 | $14,027 | (0.5)% | | Share-based compensation related to Formation Transaction and special equity awards | $2,244 | $4,945 | (54.6)% | - In January 2022, **660,785 Time-Based LTIP Units** were granted with a weighted average grant-date fair value of **$27.41 per unit**, vesting ratably over four years[73](index=73&type=chunk) - In January 2022, **1.5 million performance-based AO LTIP Units** were granted with a weighted average grant-date fair value of **$4.44 per unit**, subject to a TSR modifier and a three-year performance period[76](index=76&type=chunk) [12. Transaction and Other Costs](index=28&type=section&id=12.%20Transaction%20and%20Other%20Costs) Reports JBG SMITH's transaction and other costs, including demolition and deal-related expenses Transaction and Other Costs Summary | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | % Change | | :-------------------------- | :------------------------------------------------ | :------------------------------------------------ | :------- | | Transaction and other costs | $899 | $3,690 | (75.6)% | | Demolition costs | $22 | $1,008 | (97.8)% | | Completed, potential and pursued transaction expenses | $732 | $2,442 | (70.0)% | [13. Interest Expense](index=29&type=section&id=13.%20Interest%20Expense) Analyzes JBG SMITH's interest expense, highlighting factors influencing changes during the period Interest Expense Summary | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | % Change | | :------------- | :------------------------------------------------ | :------------------------------------------------ | :------- | | Interest expense | $16,278 | $16,296 | (0.1)% | - The decrease in interest expense was due to a **$3.2 million** change in the fair value of interest rate caps due to rising interest rates[166](index=166&type=chunk) - This was partially offset by a **$1.4 million** increase at Courthouse Plaza 1 and 2 due to a ground lease amendment and an **$894,000** increase related to the revolving credit facility[166](index=166&type=chunk) [14. Shareholders' Equity and Loss Per Common Share](index=29&type=section&id=14.%20Shareholders'%20Equity%20and%20Loss%20Per%20Common%20Share) Details JBG SMITH's shareholders' equity, common share repurchases, and loss per common share Shareholders' Equity and Loss Per Common Share Summary | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | Change (in thousands) | | :------------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | :-------------------- | | Net loss attributable to common shareholders | $(32) | $(20,731) | $20,699 | | Loss per common share - basic and diluted | $0.00 | $(0.16) | $0.16 | | Weighted average number of common shares outstanding - basic and diluted | 126,682 | 131,540 | (4,858) | - During Q1 2022, the company repurchased and retired **3.3 million common shares** for **$93.1 million** at a weighted average price of **$27.86 per share**[83](index=83&type=chunk) - On April 29, 2022, a quarterly dividend of **$0.225 per common share** was declared[88](index=88&type=chunk) [15. Fair Value Measurements](index=31&type=section&id=15.%20Fair%20Value%20Measurements) Explains JBG SMITH's fair value measurements for derivative financial instruments and hedging activities - Derivative financial instruments (interest rate swap and cap agreements) are used to manage interest rate risk and are measured at fair value on a recurring basis[89](index=89&type=chunk)[90](index=90&type=chunk) - As of March 31, 2022, derivative financial instruments designated as effective hedges had a net unrealized gain of **$11.6 million** (vs. **$(17.2) million** as of December 31, 2021), recorded in "Accumulated other comprehensive income (loss)"[90](index=90&type=chunk) - The fair values of these derivatives are classified within Level 2 of the valuation hierarchy, based on interest rate pricing models and observable inputs[91](index=91&type=chunk)[95](index=95&type=chunk) [16. Segment Information](index=33&type=section&id=16.%20Segment%20Information) Provides JBG SMITH's segment information, detailing performance across Commercial, Multifamily, and Third-party services - Reportable segments are Commercial, Multifamily, and Third-party asset management and real estate services[99](index=99&type=chunk)[135](index=135&type=chunk) - Consolidated NOI increased by **7.0%** to **$76.97 million** in Q1 2022 from **$71.96 million** in Q1 2021[106](index=106&type=chunk) - Multifamily NOI increased by **53.0%** to **$23.3 million** in Q1 2022, while Commercial NOI slightly decreased by **0.9%** to **$53.7 million**[108](index=108&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk) [17. Commitments and Contingencies](index=38&type=section&id=17.%20Commitments%20and%20Contingencies) Outlines JBG SMITH's construction commitments, tenant obligations, and environmental liabilities - Construction commitments for assets under construction totaled **$569.0 million** as of March 31, 2022, expected to be expended over the next two to three years[113](index=113&type=chunk)[220](index=220&type=chunk) - Committed tenant-related obligations were **$78.6 million** as of March 31, 2022[115](index=115&type=chunk)[221](index=221&type=chunk) - Environmental liabilities totaled **$18.2 million** as of March 31, 2022 and December 31, 2021[114](index=114&type=chunk)[227](index=227&type=chunk) [18. Transactions with Related Parties](index=40&type=section&id=18.%20Transactions%20with%20Related%20Parties) Details JBG SMITH's transactions with related parties, including fee-based services and receivables - The company provides fee-based real estate services to the WHI Impact Pool and JBG Legacy Funds, among other third parties[121](index=121&type=chunk) - Revenue from these related parties was **$5.5 million** for Q1 2022 (vs. **$5.8 million** in Q1 2021)[125](index=125&type=chunk) - Receivables from JBG Legacy Funds and WHI Impact Pool totaled **$2.7 million** as of March 31, 2022[125](index=125&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion of JBG SMITH's Q1 2022 financial condition, operating results, strategy, and liquidity [Organization and Basis of Presentation](index=42&type=section&id=Organization%20and%20Basis%20of%20Presentation) Describes JBG SMITH's organizational structure, REIT status, and basis of financial statement presentation - JBG SMITH is a Maryland REIT focused on commercial and multifamily assets in the Washington, D.C. metropolitan area, particularly National Landing[130](index=130&type=chunk) - The company serves as the developer for Amazon's new headquarters and Virginia Tech's Innovation Campus in National Landing[130](index=130&type=chunk) - The financial statements are prepared in accordance with GAAP, and the company intends to maintain its REIT status[133](index=133&type=chunk)[134](index=134&type=chunk) [Overview](index=44&type=section&id=Overview) Provides an overview of JBG SMITH's operating portfolio, development pipeline, and strategic placemaking initiatives - As of March 31, 2022, the Operating Portfolio consisted of **62 operating assets** (**13.0 million sq ft commercial**, **7,715 multifamily units**) and significant development pipelines[138](index=138&type=chunk) - The company is executing a Placemaking strategy in National Landing, including new multifamily and office developments, retail, and digital infrastructure investments like 5G[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) - JBG SMITH has leases with Amazon totaling **1.0 million square feet** in National Landing and is constructing two new office buildings for Amazon (**2.1 million sq ft**) at Metropolitan Park[142](index=142&type=chunk) [2022 Outlook](index=46&type=section&id=2022%20Outlook) Outlines JBG SMITH's 2022 strategy, focusing on capital allocation, portfolio shift, and segment performance expectations - Strategy involves active capital allocation, including opportunistic sales of non-core office assets and land sites to fund new acquisitions and development projects, aiming to shift the portfolio to majority multifamily[143](index=143&type=chunk) - Office portfolio performance remained stable in Q1, but new leasing is expected to lag through 2022 due to delayed return-to-office plans[144](index=144&type=chunk) - Multifamily portfolio shows improved occupancy and asking rents above pre-pandemic levels, with expected incremental NOI growth as leases roll[145](index=145&type=chunk) [Operating Results](index=46&type=section&id=Operating%20Results) Summarizes JBG SMITH's key operating results for Q1 2022, including net loss, revenue, and occupancy rates Operating Results Summary | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | % Change | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :------- | | Net loss attributable to common shareholders | $(32,000) | $(20,700,000) | (99.8)% | | Third-party real estate services revenue, including reimbursements | $24.0 million | $38.1 million | (37.1)% | | Same store NOI | $88.5 million | $79.0 million | 12.0% | - Operating commercial portfolio leased and occupied percentages were **85.2%** and **83.3%** as of March 31, 2022[146](index=146&type=chunk) - Operating multifamily portfolio leased and occupied percentages were **94.1%** and **91.6%** as of March 31, 2022[146](index=146&type=chunk) [Critical Accounting Estimates](index=48&type=section&id=Critical%20Accounting%20Estimates) Confirms no significant changes to JBG SMITH's critical accounting estimates during Q1 2022 - No significant changes to critical accounting estimates (asset acquisitions, real estate, investments in real estate ventures, revenue recognition) during Q1 2022[150](index=150&type=chunk) [Recent Accounting Pronouncements](index=50&type=section&id=Recent%20Accounting%20Pronouncements) Refers to Note 2 for details on recent accounting pronouncements, including reference rate reform application - Refer to Note 2 for details on recent accounting pronouncements, including the application of Topic 848 for Reference Rate Reform[153](index=153&type=chunk) [Results of Operations](index=50&type=section&id=Results%20of%20Operations) Detailed analysis of JBG SMITH's Q1 2022 operating results, including revenue, expenses, and venture income Results of Operations Summary | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | % Change | | :------------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | :------- | | Property rental revenue | $131,598 | $122,241 | 7.7% | | Third-party real estate services revenue, including reimbursements | $23,970 | $38,107 | (37.1)% | | Depreciation and amortization expense | $58,062 | $64,726 | (10.3)% | | Property operating expense | $40,644 | $34,731 | 17.0% | | Income (loss) from unconsolidated real estate ventures, net | $3,145 | $(943) | 433.5% | | Interest and other income, net | $14,246 | $9 | * | - Property rental revenue increase was driven by higher occupancy at 4747 Bethesda Avenue, West Half, The Wren, 900 W Street, 901 W Street, and a new Amazon lease at 2100 Crystal Drive[155](index=155&type=chunk) - Third-party real estate services revenue decrease was primarily due to a **$10.7 million** decrease in development fees and a **$2.9 million** decrease in reimbursement revenue[156](index=156&type=chunk) [FFO](index=52&type=section&id=FFO) Presents Funds From Operations (FFO) as a non-GAAP measure for JBG SMITH's levered operating performance FFO Summary | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | % Change | | :-------------------------------- | :------------------------------------------------ | :------------------------------------------------ | :------- | | Net loss attributable to common shareholders | $(32) | $(20,731) | (99.8)% | | Real estate depreciation and amortization | $55,517 | $62,500 | (11.1)% | | FFO attributable to common shareholders | $51,300 | $42,328 | 21.2% | - FFO is a non-GAAP measure used to compare levered operating performance, excluding real estate depreciation and amortization, and gains/losses from real estate sales[167](index=167&type=chunk) [NOI and Same Store NOI](index=54&type=section&id=NOI%20and%20Same%20Store%20NOI) Analyzes JBG SMITH's Consolidated NOI and Same Store NOI, highlighting factors contributing to changes NOI and Same Store NOI Summary | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | % Change | | :---------------- | :------------------------------------------------ | :------------------------------------------------ | :------- | | Consolidated NOI | $76,969 | $71,955 | 7.0% | | Same store NOI | $88,539 | $79,034 | 12.0% | | Number of properties in same store pool | 59 | 55 | 7.3% | - Same store NOI increase was attributable to higher occupancy and rents, lower concessions in multifamily, and cash basis tenants paying deferred rent and increased parking revenue in commercial[174](index=174&type=chunk) - The same store pool increased to **59 properties** from **55**, including West Half, 901 W Street, 900 W Street, 1770 Crystal Drive, 1900 N Street, and 4747 Bethesda Avenue, while excluding The Alaire and The Terano due to sales[172](index=172&type=chunk) [Reportable Segments](index=56&type=section&id=Reportable%20Segments) Details JBG SMITH's segment performance for Commercial, Multifamily, and Third-party services Reportable Segments Summary | Segment | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | % Change (Revenue) | % Change (NOI) | | :------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | :----------------- | :------------- | | Commercial Property Revenue | $91,633 | $89,871 | 2.0% | N/A | | Commercial Consolidated NOI | $53,654 | $54,135 | N/A | (0.9)% | | Multifamily Property Revenue | $42,242 | $32,651 | 29.4% | N/A | | Multifamily Consolidated NOI | $23,266 | $15,211 | N/A | 53.0% | - Multifamily growth was due to the acquisition of The Batley in November 2021 and higher occupancy and rental rates across the portfolio[185](index=185&type=chunk) - Commercial NOI decrease was due to higher cleaning expenses and lower occupancy at Universal Buildings and 2221 South Clark – Office[184](index=184&type=chunk) [Liquidity and Capital Resources](index=59&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses JBG SMITH's liquidity and capital resources, including operating cash flow and funding strategies - Primary sources of operating cash flow are property rental income and fee-based real estate services[186](index=186&type=chunk) - Anticipates adequate liquidity from cash flows from operations, financings, recapitalizations, asset sales, and existing cash balances to fund requirements for the next 12 months[187](index=187&type=chunk) [Financing Activities](index=61&type=section&id=Financing%20Activities) Summarizes JBG SMITH's financing activities, including debt structure, amendments, and repayments Financing Activities Summary | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------------------------ | :----------------------------- | :------------------------------ | | Mortgages payable, net, including assets held for sale | $1,776,979 | $1,777,699 | | Revolving credit facility | $300,000 | $300,000 | | Unsecured term loans | $400,000 | $400,000 | - The Tranche A-1 Term Loan was amended in January 2022 to extend its maturity to January 2025 and change its interest rate to SOFR plus **1.15% to 1.75%**[191](index=191&type=chunk) - In April 2022, the company repaid **$210.0 million** on its revolving credit facility[200](index=200&type=chunk) [Common Shares Repurchased](index=63&type=section&id=Common%20Shares%20Repurchased) Details JBG SMITH's common share repurchase program, including shares bought and total value Common Shares Repurchased Summary | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Common shares repurchased and retired | 3.3 million | 619,749 | | Value of common shares repurchased | $93.1 million | $19.2 million | | Weighted average purchase price per share | $27.86 | $30.96 | - Since the program's inception in March 2020, **12.5 million common shares** have been repurchased for **$355.6 million**[197](index=197&type=chunk) - In April 2022, an additional **707,000 common shares** were repurchased for **$19.4 million**[198](index=198&type=chunk) [Material Cash Requirements](index=63&type=section&id=Material%20Cash%20Requirements) Outlines JBG SMITH's material cash requirements for debt maturities, tenant obligations, and development - Mortgages payable totaling **$107.5 million** (consolidated) and **$194.1 million** (our share) are scheduled to mature in 2022[201](index=201&type=chunk) - Committed tenant-related obligations totaled **$78.6 million** as of March 31, 2022[201](index=201&type=chunk) - Development expenditures for assets under construction require an additional **$569.0 million** over the next two to three years[202](index=202&type=chunk) - Funding sources include cash, cash flows from operations, distributions from ventures, credit facility borrowing capacity (**$699.5 million** available), and proceeds from financings/asset sales[209](index=209&type=chunk) [Summary of Cash Flows](index=65&type=section&id=Summary%20of%20Cash%20Flows) Summarizes JBG SMITH's cash flow activities from operations, investing, and financing for Q1 2022 Summary of Cash Flows Table | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :-------------------------------- | :------------------------------------------------ | :------------------------------------------------ | | Net cash provided by operating activities | $69,598 | $66,502 | | Net cash used in investing activities | $(32,951) | $(29,515) | | Net cash used in financing activities | $(119,529) | $(51,776) | | Net decrease in cash and cash equivalents, and restricted cash | $(82,882) | $(14,789) | - The decrease in cash was primarily due to **$119.5 million** used in financing activities (common share repurchases, dividends) and **$33.0 million** used in investing activities (development costs), partially offset by **$69.6 million** from operating activities[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk)[211](index=211&type=chunk) [Unconsolidated Real Estate Ventures](index=67&type=section&id=Unconsolidated%20Real%20Estate%20Ventures) Details JBG SMITH's investments, capital commitments, and guarantees related to unconsolidated real estate ventures - Investments in unconsolidated real estate ventures totaled **$461.4 million** as of March 31, 2022[213](index=213&type=chunk) - Additional capital commitments and recorded guarantees to unconsolidated real estate ventures totaled **$68.6 million** as of March 31, 2022, with no principal payment guarantees[215](index=215&type=chunk) [Commitments and Contingencies](index=67&type=section&id=Commitments%20and%20Contingencies) Outlines JBG SMITH's construction commitments, tenant obligations, environmental liabilities, and guarantees - Construction commitments for assets under construction totaled **$569.0 million** as of March 31, 2022[220](index=220&type=chunk) - Committed tenant-related obligations totaled **$78.6 million** as of March 31, 2022[221](index=221&type=chunk) - Environmental liabilities totaled **$18.2 million** as of March 31, 2022[227](index=227&type=chunk) - Aggregate principal payment guarantees for consolidated entities were **$8.3 million** as of March 31, 2022[223](index=223&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=71&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Details JBG SMITH's exposure to market risks, primarily interest rate risk, and its hedging strategies using derivatives [Interest Rate Risk](index=71&type=section&id=Interest%20Rate%20Risk) Analyzes JBG SMITH's interest rate risk exposure, including variable rate debt and potential financial impact Interest Rate Risk Summary | Debt Type | March 31, 2022 Balance (in thousands) | Weighted Average Effective Interest Rate | Annual Effect of 1% Change in Base Rates (in thousands) | | :------------------------------------------------ | :------------------------------------ | :--------------------------------------- | :------------------------------------------------------ | | Variable rate mortgages payable | $749,946 | 2.38% | $7,604 | | Revolving credit facility | $300,000 | 1.50% | $3,042 | | Pro rata share of variable rate debt of unconsolidated real estate ventures | $274,276 | 3.05% | $2,781 | - The fair value of consolidated debt was estimated at **$2.5 billion** as of March 31, 2022[232](index=232&type=chunk) [Hedging Activities](index=73&type=section&id=Hedging%20Activities) Describes JBG SMITH's use of derivative financial instruments for cash flow hedging to manage interest rate risk - Derivative financial instruments (interest rate swap and cap agreements) are used as cash flow hedges to manage interest rate risk[233](index=233&type=chunk)[234](index=234&type=chunk) - As of March 31, 2022, effective hedges had an aggregate notional value of **$1.0 billion** and a fair value asset of **$11.6 million**[235](index=235&type=chunk) - Ineffective hedges had an aggregate notional value of **$692.7 million** and a fair value asset of **$3.9 million** as of March 31, 2022[236](index=236&type=chunk) [Item 4. Controls and Procedures](index=73&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms JBG SMITH's disclosure controls effectiveness and no material changes to internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=73&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Reports on the evaluation and effectiveness of JBG SMITH's disclosure controls and procedures as of March 31, 2022 - Disclosure controls and procedures were evaluated and deemed effective as of March 31, 2022[237](index=237&type=chunk) [Changes in Internal Control over Financial Reporting](index=75&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) States no material changes in JBG SMITH's internal control over financial reporting during Q1 2022 - No material changes in internal control over financial reporting during Q1 2022[238](index=238&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=75&type=section&id=Item%201.%20Legal%20Proceedings) JBG SMITH is involved in routine legal actions, with no anticipated material adverse effects on financial position or operations - Ongoing legal actions are in the ordinary course of business[239](index=239&type=chunk) - Management does not expect these legal matters to have a material adverse effect on financial condition, results of operations, or cash flows[239](index=239&type=chunk) [Item 1A. Risk Factors](index=75&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in JBG SMITH's Annual Report - No material changes to previously disclosed risk factors in the Annual Report[240](index=240&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) JBG SMITH repurchased 3.3 million common shares for $93.1 million in Q1 2022 under its $500.0 million repurchase program Unregistered Sales of Equity Securities and Use of Proceeds Summary | Period | Total Number Of Common Shares Purchased | Average Price Paid Per Common Share | | :------------------------------------ | :-------------------------------------- | :---------------------------------- | | January 1, 2022 - January 31, 2022 | 32,304 | $25.99 | | February 1, 2022 - February 28, 2022 | 679,479 | $26.50 | | March 1, 2022 - March 31, 2022 | 2,629,364 | $28.23 | | Total for the three months ended March 31, 2022 | 3,341,147 | $27.86 | | Program total since inception in March 2020 | 12,487,968 | $28.45 | - The Board authorized a **$500.0 million** share repurchase program in March 2020[242](index=242&type=chunk) - In April 2022, an additional **707,000 common shares** were repurchased for **$19.4 million**[241](index=241&type=chunk) [Item 3. Defaults Upon Senior Securities](index=75&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities reported by JBG SMITH during the reporting period - No defaults upon senior securities[243](index=243&type=chunk) [Item 4. Mine Safety Disclosures](index=77&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to JBG SMITH Properties - Not applicable[246](index=246&type=chunk) [Item 5. Other Information](index=77&type=section&id=Item%205.%20Other%20Information) Shareholders elected trustees and ratified auditors, but did not approve executive compensation on an advisory basis - Shareholders elected **11 trustees** to the Board[248](index=248&type=chunk) - Shareholders ratified the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for fiscal year 2022[249](index=249&type=chunk) - Shareholders did not approve, on a non-binding advisory basis, the compensation of named executive officers[249](index=249&type=chunk) [Item 6. Exhibits](index=79&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with Form 10-Q, including organizational documents, credit agreements, and certifications - Includes Declaration of Trust, Bylaws, Credit Agreements, and Form of AO LTIP Unit Agreement[251](index=251&type=chunk) - Certifications of CEO and CFO (Rule 13a-14(a) and 18 U.S.C 1350) are filed[251](index=251&type=chunk) [Signatures](index=80&type=section&id=Signatures) Report signed by M. Moina Banerjee, CFO, and Angela Valdes, CAO, on May 3, 2022, confirming submission - Signed by M. Moina Banerjee, Chief Financial Officer, and Angela Valdes, Chief Accounting Officer[255](index=255&type=chunk)[256](index=256&type=chunk) - Date of signing: May 3, 2022[255](index=255&type=chunk)[256](index=256&type=chunk)

Part I [Business](index=11&type=section&id=Item%201.%20Business) JBG SMITH is a REIT specializing in commercial and multifamily properties in the Washington, D.C. metropolitan area, focusing on "Placemaking" in National Landing Portfolio Overview as of December 31, 2021 | Portfolio Segment | Count | Square Feet (SF) / Units | At JBG SMITH Share (SF / Units) | | :--- | :--- | :--- | :--- | | **Operating Commercial** | 42 assets | 13.1 million SF | 11.3 million SF | | **Operating Multifamily** | 22 assets | 8,208 units | 6,557 units | | **Under-Construction** | 1 asset | 808 units | 808 units | | **Near-Term Development** | 11 assets | 5.3 million SF | 5.0 million SF | | **Future Development** | 25 assets | 14.3 million SF | 11.6 million SF | - The company's core strategy is "Placemaking," which involves developing high-quality, mixed-use properties in dense, walkable, Metro-served neighborhoods to create synergistic value, particularly focused on National Landing[67](index=67&type=chunk) - JBG SMITH serves as the developer, property manager, and retail leasing agent for Amazon's new headquarters in National Landing, constructing **2.1 million sq. ft.** of office space and finalizing the sale of the Pen Place site for **$198.0 million**, an increase of **$48.1 million**[70](index=70&type=chunk) - The company is actively reallocating capital by opportunistically selling non-core office assets and land sites to fund growth and strategically shift its portfolio to be majority multifamily[66](index=66&type=chunk)[85](index=85&type=chunk) - A third-party services business generates fee income from managing assets for Amazon, the Washington Housing Initiative (WHI) Impact Pool, and JBG Legacy Funds[87](index=87&type=chunk) Rental Revenue from U.S. Federal Government | Year | Revenue (in thousands) | % of Total Rental Revenue | | :--- | :--- | :--- | | 2021 | $83,256 | 16.2% | | 2020 | $84,086 | 17.8% | | 2019 | $86,644 | 16.7% | - The company achieved **carbon neutrality** across its operating portfolio in 2021 through the purchase of **carbon offsets and RECs**, and has surpassed **$114 million** in investor commitments for its managed WHI Impact Pool to address affordable workforce housing[99](index=99&type=chunk)[100](index=100&type=chunk) - As of December 31, 2021, the company had **997 employees**, with its workforce comprising **38% females** and **56% minorities**, and senior leadership having **43% female representation**[126](index=126&type=chunk)[134](index=134&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from the COVID-19 pandemic, geographic concentration, federal government dependence, and substantial indebtedness - The COVID-19 pandemic has negatively impacted the business through decreased office demand, rent deferrals, and credit losses, with **$11.2 million** in credit losses against billed rent and **$19.6 million** against deferred rent recorded in 2020[138](index=138&type=chunk)[141](index=141&type=chunk) - The portfolio is **highly concentrated** in the Washington D.C. metropolitan area, with **over half of its assets** located in National Landing, making the company susceptible to adverse local economic conditions[145](index=145&type=chunk) - The business is dependent on federal government spending, with the GSA as the **largest single tenant**, accounting for **20.3%** of total annualized rent at share as of year-end 2021[146](index=146&type=chunk)[151](index=151&type=chunk) - The company faces risks if the anticipated benefits from Amazon's headquarters in National Landing are less than expected or materialize over a longer period, and Amazon may vacate leased space upon completion of new buildings[147](index=147&type=chunk)[150](index=150&type=chunk) - As of December 31, 2021, the company had a substantial amount of debt, with **$2.5 billion** in consolidated debt and a total of **$2.9 billion** at its share, including restrictive covenants[175](index=175&type=chunk) - Failure to maintain REIT qualification would subject the company to corporate income tax, reducing funds available for distribution, which requires distributing at least **90%** of REIT taxable income annually[201](index=201&type=chunk)[202](index=202&type=chunk) [Unresolved Staff Comments](index=64&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) As of the report date, there are no unresolved comments from the SEC staff - There are no unresolved comments from the SEC staff as of the filing date of this report[218](index=218&type=chunk) [Properties](index=66&type=section&id=Item%202.%20Properties) JBG SMITH's portfolio as of December 31, 2021, includes 13.1 million square feet of commercial space and 8,208 multifamily units, with significant development pipelines Portfolio Summary (At 100%) | Asset Type | Total Square Feet / Units | % Leased | % Occupied | | :--- | :--- | :--- | :--- | | **Commercial** | 13,083,094 SF | 85.1% | 82.8% (Office) | | **Multifamily (Operating)** | 8,208 Units | 92.4% | 90.6% | Development Pipeline Summary | Pipeline | Number of Assets | Estimated Potential Density (SF) | Estimated Units | | :--- | :--- | :--- | :--- | | **Near-Term** | 11 | 5,259,300 | 4,225 | | **Future** | 25 | 11,597,600 (at share) | N/A | Top 2 Tenants by Annualized Rent (At JBG SMITH Share) | Tenant | Number of Leases | Square Feet | % of Total Annualized Rent | | :--- | :--- | :--- | :--- | | GSA | 57 | 2,197,989 | 20.3% | | Amazon | 7 | 1,025,463 | 10.1% | - Scheduled lease expirations for office and retail space show that **8.7%** of square footage (at share) will expire in 2022, and another **10.7%** will expire in 2023, assuming no renewals[239](index=239&type=chunk) [Legal Proceedings](index=73&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ordinary course legal actions not expected to materially affect its financial position or results - The company states that ongoing legal actions from the ordinary course of business are not expected to have a **material adverse effect** on its financial results[241](index=241&type=chunk) [Mine Safety Disclosures](index=73&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[242](index=242&type=chunk) Part II [Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=73&type=section&id=Item%205.%20Market%20For%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) JBG SMITH's common shares trade on the NYSE, with $0.90 per share dividends declared in 2021 and $157.7 million in share repurchases - Dividends declared for the year ended December 31, 2021, totaled **$0.90 per common share**, paid via regular quarterly dividends of **$0.225**[244](index=244&type=chunk) 2021 Share Repurchases | Period | Total Shares Purchased | Average Price Paid | Total Cost (approx.) | | :--- | :--- | :--- | :--- | | **Year Ended 2021** | 5,370,469 | $29.34 | $157.7 million | | **Q4 2021** | 2,433,636 | $28.56 | $69.5 million | - As of December 31, 2021, approximately **$237.6 million** remained available for repurchase under the **$500.0 million** program authorized in March 2020[255](index=255&type=chunk) [Reserved](index=77&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=77&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2021, JBG SMITH reported a net loss attributable to common shareholders of $79.3 million, with property rental revenue increasing 8.9% and FFO rising to $159.4 million [Overview and Outlook](index=79&type=section&id=7.1%20Overview%20and%20Outlook) The company continues its "Placemaking" strategy in National Landing, shifting its portfolio towards multifamily while navigating pandemic impacts on office leasing - The company's capital allocation strategy involves selling low-yield assets to reinvest in higher-growth opportunities, particularly multifamily development, to maximize long-term NAV per share, completing **$1.7 billion** in such transactions since 2017[270](index=270&type=chunk) - Commercial portfolio occupancy at share declined by **480 basis points** from year-end 2020, and parking revenue was at **65%** of pre-pandemic levels due to delayed return-to-office plans[271](index=271&type=chunk) - The multifamily portfolio has seen improved occupancy and leasing, with asking rents above pre-pandemic levels, though average in-place rents were approximately **9% lower** at year-end[272](index=272&type=chunk) COVID-19 Related Financial Impacts | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Credit Losses (Billed Rent) | $1.1 million | $11.2 million | | Credit Losses (Deferred Rent) | - | $19.6 million | | Business Interruption Insurance Proceeds | $4.5 million | - | [Results of Operations](index=89&type=section&id=7.2%20Results%20of%20Operations) Property rental revenue increased by 8.9% to $499.6 million in 2021, driven by reduced COVID-related write-offs and new lease-ups, despite higher impairment losses Comparison of Operating Results (2021 vs. 2020) | Line Item (in thousands) | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Property rental revenue | $499,586 | $458,958 | 8.9% | | Depreciation and amortization | $236,303 | $221,756 | 6.6% | | Loss from unconsolidated ventures | $2,070 | $20,336 | (89.8)% | | Gain on sale of real estate | $11,290 | $59,477 | (81.0)% | | Impairment loss | $25,144 | $10,232 | 145.7% | - The **$40.6 million** increase in property rental revenue was primarily driven by a **$25.0 million** positive variance from reduced rent deferrals and write-offs compared to 2020, and contributions from newly stabilized assets[302](index=302&type=chunk) - Loss from unconsolidated real estate ventures decreased by **$18.3 million**, mainly due to recognizing a proportionate share of gains from asset sales totaling **$28.3 million** in 2021[310](index=310&type=chunk) [FFO (Funds From Operations)](index=94&type=section&id=7.3%20FFO) FFO attributable to common shareholders significantly increased to $159.4 million in 2021, reflecting improved operating results and gains from unconsolidated ventures FFO Reconciliation Summary (in thousands) | | 2021 | 2020 | | :--- | :--- | :--- | | Net income (loss) attributable to common shareholders | $(79,257) | $(62,303) | | Adjustments (Depreciation, Impairments, Gains, etc.) | $238,608 | $178,250 | | **FFO attributable to common shareholders** | **$159,351** | **$115,947** | [NOI and Same Store NOI](index=96&type=section&id=7.4%20NOI%20and%20Same%20Store%20NOI) Same Store NOI decreased by 0.9% to $299.7 million in 2021 due to pandemic-related impacts on multifamily concessions and commercial occupancy - Same store NOI decreased by **0.9%** (**$2.6 million**) for the year ended December 31, 2021, compared to 2020, primarily due to pandemic-related impacts on multifamily concessions and commercial occupancy and parking revenue[323](index=323&type=chunk) NOI and Same Store NOI (in thousands) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Consolidated NOI | $291,227 | $256,829 | | Total NOI | $325,652 | $296,115 | | **Same Store NOI** | **$299,708** | **$302,331** | [Reportable Segments](index=98&type=section&id=7.5%20Reportable%20Segments) In 2021, Commercial segment NOI increased 11.3% and Multifamily NOI grew 22.6%, while Third-Party Services revenue remained flat with shifting composition Consolidated NOI by Segment (in thousands) | Segment | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Commercial | $229,587 | $206,195 | 11.3% | | Multifamily | $67,599 | $55,145 | 22.6% | Third-Party Services Revenue Components (in thousands) | Fee Type | 2021 | 2020 | | :--- | :--- | :--- | | Development fees | $25,493 | $11,496 | | Reimbursement revenue | $48,124 | $56,659 | | **Total Revenue** | **$114,003** | **$113,939** | [Liquidity and Capital Resources](index=101&type=section&id=7.6%20Liquidity%20and%20Capital%20Resources) As of December 31, 2021, the company had $264.4 million in cash and $699.1 million available on its credit facility, with total consolidated debt at $2.5 billion - As of December 31, 2021, the company had **$699.1 million** of availability under its **$1.0 billion** revolving credit facility[354](index=354&type=chunk) Debt Summary (Consolidated, in thousands) | Debt Type | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Mortgages payable, net | $1,777,699 | $1,593,738 | | Revolving credit facility | $300,000 | $0 | | Unsecured term loans, net | $398,664 | $397,979 | | **Total Debt (net)** | **$2,476,363** | **$1,991,717** | Summary of Cash Flows (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $217,622 | $169,021 | | Net cash used in investing activities | $(368,741) | $(167,690) | | Net cash provided by financing activities | $189,878 | $119,489 | - The company has material cash requirements of **$4.1 billion** for future periods, primarily for debt obligations (**$2.7 billion**) and finance leases (**$1.4 billion**)[355](index=355&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=114&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate risk, with a 1% rate increase potentially raising annual interest expense by $11.8 million, managed through derivative instruments Interest Rate Risk Exposure (as of Dec 31, 2021) | Debt Category | Balance (in thousands) | Type | Annual Effect of 1% Rate Change (in thousands) | | :--- | :--- | :--- | :--- | | **Consolidated Debt** | | | | | Mortgages Payable | $867,246 | Variable | $8,793 | | Revolving Credit Facility | $300,000 | Variable | $3,042 | | **Unconsolidated Ventures (at share)** | | | | | Mortgages Payable | $281,608 | Variable | $2,855 | - The company uses derivative instruments to hedge interest rate risk, with an aggregate notional value of **$862.7 million** designated as cash flow hedges and another **$867.7 million** not designated as accounting hedges as of December 31, 2021[392](index=392&type=chunk)[393](index=393&type=chunk) - The company is exposed to risks from the planned cessation of **USD-LIBOR** after **June 30, 2023**, as **$2.0 billion** of its debt and **$1.7 billion** of its hedging arrangements use LIBOR as a reference rate[182](index=182&type=chunk)[348](index=348&type=chunk) [Financial Statements and Supplementary Data](index=117&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2021, including balance sheets, statements of operations, and detailed notes [Report of Independent Registered Public Accounting Firm](index=118&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP issued an unqualified opinion on JBG SMITH's 2021 financial statements and internal controls, identifying real estate impairment as a critical audit matter - The auditor, Deloitte & Touche LLP, issued an **unqualified (clean) opinion** on both the financial statements and the company's internal control over financial reporting[397](index=397&type=chunk)[398](index=398&type=chunk) - The **critical audit matter** identified was the evaluation of real estate assets for possible indications of impairment, which required a high degree of auditor judgment to assess management's judgments[401](index=401&type=chunk)[405](index=405&type=chunk) [Consolidated Financial Statements](index=121&type=section&id=Consolidated%20Financial%20Statements) As of December 31, 2021, total assets were $6.4 billion, total liabilities $2.9 billion, and the company reported a net loss of $89.7 million Key Financial Statement Data (as of and for the year ended Dec 31, 2021) | Metric (in thousands) | Amount | | :--- | :--- | | **Balance Sheet** | | | Total Assets | $6,386,206 | | Total Liabilities | $2,925,064 | | Total Equity | $2,938,417 | | **Statement of Operations** | | | Total Revenue | $634,362 | | Net Loss | $(89,725) | | Net Loss Attributable to Common Shareholders | $(79,257) | | **Statement of Cash Flows** | | | Net Cash from Operating Activities | $217,622 | [Notes to Consolidated Financial Statements](index=128&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, the $205.3 million acquisition of The Batley, debt, and $291.4 million in construction commitments - In November 2021, the company acquired The Batley, a 432-unit multifamily asset, for **$205.3 million**, which it intends to use in a like-kind exchange for the sale of Pen Place to Amazon[487](index=487&type=chunk) - The company's proportionate share of an impairment loss on the L'Enfant Plaza assets, held in an unconsolidated venture with Landmark, was **$23.9 million** for 2021[508](index=508&type=chunk) - The company has various share-based compensation plans, including time-based and performance-based LTIPs, RSUs, and Formation Awards, with **$62.6 million** of total unrecognized compensation expense as of December 31, 2021[588](index=588&type=chunk) - As of December 31, 2021, the company had construction commitments of **$291.4 million** to complete assets under construction and committed tenant-related obligations of **$76.0 million** (at share)[624](index=624&type=chunk)[628](index=628&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=192&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There were no changes in or disagreements with accountants on accounting and financial disclosures - None reported[640](index=640&type=chunk) [Controls and Procedures](index=192&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and the independent auditor concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2021 - Management and the independent auditor concluded that the company's disclosure controls and procedures, as well as internal control over financial reporting, were effective as of December 31, 2021[641](index=641&type=chunk)[643](index=643&type=chunk)[644](index=644&type=chunk) [Other Information](index=195&type=section&id=Item%209B.%20Other%20Information) This section details U.S. federal income tax consequences for the company and shareholders, including REIT status requirements and taxation of distributions - To maintain its REIT status, the company must distribute at least **90%** of its REIT taxable income and meet several ongoing income and asset tests[664](index=664&type=chunk)[703](index=703&type=chunk) - For taxable years before January 1, 2026, individual, trust, and estate shareholders may be entitled to a **20%** deduction on ordinary REIT dividends under **Section 199A** of the Code[665](index=665&type=chunk)[721](index=721&type=chunk) - Distributions to non-U.S. shareholders are generally subject to a **30%** withholding tax, unless reduced by a treaty, and dispositions of shares are subject to **FIRPTA** rules, with exceptions for **domestically controlled REITs** or small stakes in publicly traded stock[751](index=751&type=chunk)[760](index=760&type=chunk) - The company is subject to **FATCA** rules, which may impose a **30%** withholding tax on certain payments to foreign financial institutions and other foreign entities that fail to comply with information reporting requirements[785](index=785&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=239&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable - Not Applicable[797](index=797&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=240&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information concerning directors, executive officers, and corporate governance is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference from the 2022 Proxy Statement[799](index=799&type=chunk) [Executive Compensation](index=240&type=section&id=Item%2011.%20Executive%20Compensation) Information concerning executive compensation is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference from the 2022 Proxy Statement[800](index=800&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=240&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information concerning security ownership and equity compensation plans is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference from the 2022 Proxy Statement[801](index=801&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=240&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information concerning related party transactions and director independence is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference from the 2022 Proxy Statement[802](index=802&type=chunk) [Principal Accounting Fees and Services](index=240&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information concerning principal accountant fees and services is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference from the 2022 Proxy Statement[803](index=803&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=241&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, financial statement schedules, and exhibits filed as part of the Form 10-K - The filing includes the **Consolidated Financial Statements (Item 8)** and **Financial Statement Schedule III - Real Estate Investments and Accumulated Depreciation**[805](index=805&type=chunk)[806](index=806&type=chunk) - A detailed index of exhibits is provided, including key agreements such as the **Credit Agreement**, the **Second Amended and Restated Limited Partnership Agreement**, and various employment and compensation plan documents[814](index=814&type=chunk)[815](index=815&type=chunk)[816](index=816&type=chunk) [Form 10-K Summary](index=256&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is noted as "None," indicating no summary is provided under this item in the report - None[822](index=822&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission file number 001-37994 JBG SMITH PROPERTIES ___________________________________________________________________ ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission file number 001-37994 JBG SMITH PROPERTIES ________________________________________________________________________ ...

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 for JBG SMITH Properties as of March 31, 2021, and for the three-month periods ended March 31, 2021 and 2020. It includes the Balance Sheets, Statements of Operations, Comprehensive Income (Loss), Equity, and Cash Flows, along with accompanying notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a slight decrease in total assets from $6.08 billion at year-end 2020 to $6.02 billion as of March 31, 2021. Total liabilities also decreased from $2.34 billion to $2.29 billion, while total equity saw a minor reduction Condensed Consolidated Balance Sheets (in thousands) | | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$6,019,317** | **$6,079,547** | | Real estate, net | $4,729,356 | $4,767,941 | | Cash and cash equivalents | $208,708 | $225,600 | | **Total Liabilities** | **$2,289,544** | **$2,342,593** | | Mortgages payable, net | $1,591,883 | $1,593,738 | | Unsecured term loans, net | $398,151 | $397,979 | | **Total Equity** | **$3,176,846** | **$3,206,206** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2021, the company reported a net loss of $24.1 million, a significant shift from the $48.2 million net income in the same period of 2020. This was primarily due to the absence of a large gain on sale of real estate that occurred in Q1 2020. Total revenue increased to $165.3 million from $158.1 million year-over-year Condensed Consolidated Statements of Operations (in thousands, except per share data) | | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | **Total revenue** | **$165,289** | **$158,107** | | Property rental | $122,241 | $120,380 | | Third-party real estate services | $38,107 | $29,716 | | **Total expenses** | **$167,813** | **$157,931** | | Depreciation and amortization | $64,726 | $48,489 | | Gain on sale of real estate | $— | $59,477 | | **NET INCOME (LOSS)** | **($24,069)** | **$48,175** | | **NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS** | **($20,731)** | **$42,925** | | **EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED** | **($0.16)** | **$0.32** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities increased to $66.5 million in Q1 2021 from $41.9 million in Q1 2020. Investing activities used $29.5 million, a reversal from providing $43.9 million in the prior year, mainly due to proceeds from a real estate sale in 2020. Financing activities used $51.8 million, primarily for dividends and share repurchases Summary of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $66,502 | $41,916 | | Net cash (used in) provided by investing activities | ($29,515) | $43,917 | | Net cash (used in) provided by financing activities | ($51,776) | $85,670 | | **Net (decrease) increase in cash** | **($14,789)** | **$171,503** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed disclosure on the company's organization, accounting policies, portfolio composition, debt structure, share-based compensation, segment performance, and various commitments and contingencies. Key highlights include the strategic focus on National Landing, the impact of COVID-19 on estimates, and details on financial instruments and related party transactions - JBG SMITH is a REIT focused on the Washington, D.C. area, with over half of its portfolio in National Landing, where it is the exclusive developer for Amazon's new headquarters[22](index=22&type=chunk) - As of March 31, 2021, the Operating Portfolio consisted of **63 assets**: **42 commercial** (**13.3 million sq. ft.**) and **21 multifamily** (**7,800 units**)[23](index=23&type=chunk) - The COVID-19 pandemic has affected accounting estimates, particularly for assessing long-lived assets for impairment and the collectability of tenant receivables[32](index=32&type=chunk) - As of March 31, 2021, the company had construction in progress requiring an additional **$351.3 million** to complete, primarily over the next four years[108](index=108&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and operating results, emphasizing the ongoing impacts of the COVID-19 pandemic on revenue, leasing, and expenses. The report highlights the strategic importance of the National Landing development, including the Amazon headquarters project. It provides analysis of segment performance, non-GAAP measures like FFO and NOI, liquidity, and capital resources, noting a **9.2% decrease in Same Store NOI** year-over-year [Overview and 2021 Outlook](index=44&type=section&id=Overview%20and%202021%20Outlook) The company's focus remains on its National Landing portfolio and its role as the developer for Amazon's new headquarters. Management expects COVID-19 to continue negatively impacting operations in 2021, affecting retail revenue, parking income, and leasing activity. Despite near-term headwinds, the company believes its concentration in the D.C. market and relationship with Amazon will provide resilience and long-term growth opportunities - Key negative impacts from COVID-19 include decreased retail revenue, a decline in parking revenue (**$3.7 million** or **46.5% YoY**), depressed leasing activity, and lower income from the Crystal City Marriott hotel[145](index=145&type=chunk) Q1 2021 Rent Collections | Tenant Type | Consolidated Basis | At Our Share | | :--- | :--- | :--- | | Commercial Office | 99.5% | 99.6% | | Multifamily | 98.9% | 98.9% | | Commercial Retail | 76.4% | 74.7% | - Management expects increased government spending and Amazon's accelerated hiring in National Landing to mitigate the effects of the economic downturn and provide stimulus for future growth[148](index=148&type=chunk) [Results of Operations](index=48&type=section&id=Results%20of%20Operations) The company reported a net loss of **$20.7 million** (**$0.16 per share**) for Q1 2021, compared to a net income of **$42.9 million** (**$0.32 per share**) in Q1 2020. The change was primarily driven by a **$59.5 million gain on sale of real estate** in the prior-year period. Third-party real estate services revenue grew **28.2%** to **$38.1 million**, while property rental revenue increased **1.5%** to **$122.2 million** Comparison of Key Operating Results (in thousands) | Line Item | Q1 2021 | Q1 2020 | % Change | | :--- | :--- | :--- | :--- | | Property rental revenue | $122,241 | $120,380 | 1.5% | | Third-party real estate services revenue | $38,107 | $29,716 | 28.2% | | Depreciation and amortization expense | $64,726 | $48,489 | 33.5% | | Interest expense | $16,296 | $12,005 | 35.7% | | Gain on sale of real estate | $— | $59,477 | (100.0)% | - The increase in third-party services revenue was primarily due to an **$11.4 million** increase in development fees related to the timing of development projects[157](index=157&type=chunk) - Interest expense increased by **$4.3 million**, mainly due to a **$3.6 million** decrease in capitalized interest as several development properties were placed into service[167](index=167&type=chunk) [FFO and Same Store NOI](index=53&type=section&id=FFO%20and%20Same%20Store%20NOI) This section provides reconciliations for the non-GAAP measures of Funds from Operations (FFO) and Net Operating Income (NOI). FFO attributable to common shareholders for Q1 2021 was **$42.3 million**, up from **$36.7 million** in Q1 2020. Same Store NOI decreased by **9.2%** to **$75.9 million**, primarily attributed to the impacts of COVID-19 on both the commercial and multifamily portfolios FFO Reconciliation (in thousands) | | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net income (loss) attributable to common shareholders | ($20,731) | $42,925 | | Adjustments (Depreciation, Gain on Sale, etc.) | $63,059 | ($8,678) | | **FFO attributable to common shareholders** | **$42,328** | **$36,748** | - Same Store NOI decreased by **$7.7 million** (**9.2%**) in Q1 2021 compared to Q1 2020. The decrease was substantially attributable to COVID-19 impacts, including lower occupancy and higher concessions in multifamily, and lower parking revenue in commercial[175](index=175&type=chunk) [Reportable Segments](index=57&type=section&id=Reportable%20Segments) The company's performance is analyzed across its three reportable segments: Commercial, Multifamily, and Third-Party Asset Management and Real Estate Services. In Q1 2021, Commercial segment NOI saw a slight increase of **0.7%** to **$57.5 million**, while Multifamily NOI decreased by **15.0%** to **$15.2 million** due to COVID-19 pressures. Third-party services revenue less expenses grew significantly to **$9.2 million** from **$0.9 million** in the prior year Consolidated NOI by Segment (in thousands) | Segment | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Commercial | $57,546 | $57,127 | | Multifamily | $15,211 | $17,895 | | **Total Consolidated NOI** | **$71,955** | **$74,059** | - The Commercial segment's property revenue decrease was driven by a **$4.0 million** decline in parking revenue, but NOI increased slightly due to properties being placed in service and higher occupancy at certain locations[189](index=189&type=chunk) - The Multifamily segment's NOI decrease was due to lower occupancy, higher concessions, lower rents, and higher operating costs in same-store assets, attributed to COVID-19[190](index=190&type=chunk) [Liquidity and Capital Resources](index=60&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources are property rental income and third-party service fees. As of March 31, 2021, the company had **$248.5 million** in cash and restricted cash, and **$998.5 million** available under its credit facility. During the quarter, the company repurchased **$19.2 million** of its common shares. Management believes existing cash, operating cash flows, and financing availability are adequate to fund operations and commitments for the next 12 months - As of March 31, 2021, the company had **$998.5 million** of availability under its credit facility[210](index=210&type=chunk) - During Q1 2021, the company repurchased and retired **619,749 common shares** for **$19.2 million** at an average price of **$30.96 per share**[202](index=202&type=chunk) - Principal liquidity needs include recurring expenses, debt service, capital expenditures, development costs, dividends, and potential acquisitions[206](index=206&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=74&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the company's exposure to market risk, primarily interest rate risk associated with its variable-rate debt. The company uses derivative financial instruments, such as interest rate swaps and caps, to manage this exposure. As of March 31, 2021, a **1%** change in base rates would have an annual effect of approximately **$6.9 million** on its consolidated variable-rate mortgages and **$3.2 million** on its pro rata share of unconsolidated venture debt Annual Exposure to 1% Change in Interest Rates (in thousands) | Debt Category | Balance (Mar 31, 2021) | Annual Effect of 1% Change | | :--- | :--- | :--- | | Mortgages payable: Variable rate | $677,246 | $6,867 | | Pro rata share of unconsolidated debt: Variable rate | $320,122 | $3,246 | - The company uses interest rate swap and cap agreements to hedge interest rate risk. As of March 31, 2021, it had agreements with an aggregate notional value of **$862.7 million** designated as cash flow hedges and **$867.7 million** not designated as hedges[250](index=250&type=chunk)[251](index=251&type=chunk) [Item 4. Controls and Procedures](index=76&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the Chief Executive Officer and Chief Financial Officer, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2021. There were no material changes in internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2021, the company's disclosure controls and procedures were effective[252](index=252&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[253](index=253&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=76&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions that arise in the ordinary course of business. Management does not expect the outcome of these matters to have a material adverse effect on the company's financial position, results, or cash flows - In management's opinion, the outcome of ordinary course legal actions is not expected to have a material adverse effect on the company's financial condition[254](index=254&type=chunk) [Item 1A. Risk Factors](index=76&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors that were previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes to the risk factors disclosed in the 2020 Annual Report have occurred[255](index=255&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=76&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's repurchases of its own equity securities. During the three months ended March 31, 2021, the company repurchased a total of **619,749 common shares** at an average price of **$30.96 per share** under its publicly announced **$500 million** repurchase program Purchases of Equity Securities by the Issuer (Q1 2021) | Period | Total Common Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | January 2021 | 261,311 | $29.93 | | February 2021 | 57,789 | $31.59 | | March 2021 | 300,649 | $31.74 | | **Total** | **619,749** | **$30.96** | - The share repurchase program was authorized by the Board of Trustees in March 2020 for up to **$500 million** of outstanding common shares[258](index=258&type=chunk) [Item 3. Defaults Upon Senior Securities](index=78&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[259](index=259&type=chunk) [Item 4. Mine Safety Disclosures](index=78&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[260](index=260&type=chunk) [Item 5. Other Information](index=78&type=section&id=Item%205.%20Other%20Information) The company reports no other information for this period - None[261](index=261&type=chunk) [Item 6. Exhibits](index=78&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including employment agreements, share plan amendments, and certifications by the CEO and CFO as required by the Sarbanes-Oxley Act - Exhibits include various amended and restated employment agreements for key executives[263](index=263&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sarbanes-Oxley Sections 302 and 906 are included as exhibits[263](index=263&type=chunk)

Debt and Interest Rate Risk - As of December 31, 2020, approximately $678.3 million of the outstanding consolidated debt was subject to variable interest rates without hedging arrangements, exposing the company to increased interest expense risks [183]. - A hypothetical increase of 100 basis points in interest rates would result in an annual increase of approximately $6.9 million in interest expense based on the variable rate debt outstanding as of December 31, 2020 [183]. - The company has interest rate swap agreements covering $862.7 million of its outstanding consolidated debt, which may reduce overall returns during periods of rising interest rates [184]. - The transition from USD-LIBOR to an alternative reference rate, such as SOFR, is uncertain and could lead to increased interest payments and market volatility [185]. - The company is subject to interest rate risk, which could adversely affect cash flow and the ability to service indebtedness, impacting the market price of common shares [183]. - The company’s fixed rate debt balance was $925.5 million with a weighted average effective interest rate of 4.32% as of December 31, 2020 [421]. - The company’s variable rate mortgages payable included a mortgage with an interest rate cap agreement as of December 31, 2020 [421]. - The weighted average effective interest rate for variable rate mortgages was 2.52% as of December 31, 2020, with total mortgages payable of $1.2 billion [556]. - The company had various interest rate swap and cap agreements on mortgages payable with an aggregate notional value of $1.3 billion as of December 31, 2020 [576]. Financial Performance - Total revenue for 2020 was $602.7 million, a decrease of 6.9% from $647.8 million in 2019 [448]. - Net loss attributable to common shareholders for 2020 was $62.3 million, compared to a net income of $65.6 million in 2019 [448]. - Comprehensive loss for 2020 was $93.5 million, compared to a comprehensive income of $48.1 million in 2019 [450]. - The company’s accumulated deficit grew to $412.9 million in 2020, compared to $231.2 million in 2019, reflecting an increase of 78.5% [446]. - Net income for 2020 was a loss of $67,261 thousand, compared to a profit of $74,144 thousand in 2019, indicating a significant decline in profitability [455]. - Total cash provided by operating activities in 2020 was $169,021 thousand, slightly down from $173,986 thousand in 2019 [455]. - The company reported cash paid for interest of $56,961,000 in 2020, an increase from $49,437,000 in 2019 [457]. - The company declared dividends of $120,011 thousand to common shareholders in 2020, compared to $129,834 thousand in 2019 [455]. Assets and Liabilities - Total assets increased to $6.08 billion in 2020, up from $5.99 billion in 2019, reflecting a growth of 1.6% [446]. - Total liabilities rose to $2.34 billion in 2020, an increase of 18% from $1.99 billion in 2019 [446]. - Cash and cash equivalents increased to $225.6 million in 2020, up from $126.4 million in 2019, representing a growth of 78.5% [446]. - The company’s pro rata share of debt from unconsolidated real estate ventures was $399.0 million as of December 31, 2020 [421]. - As of December 31, 2020, the carrying value of the company's real estate assets was approximately $4.77 billion, with an impairment loss of $7.8 million for the year [440]. - The estimated fair value of the company's consolidated debt was $2.0 billion as of December 31, 2020, compared to $1.7 billion as of December 31, 2019 [424]. - The net carrying value of real estate collateralizing mortgages payable totaled $1.8 billion as of December 31, 2020 [573]. Development and Future Plans - Future development plans are capital intensive and will require significant debt financing, which may involve asset sales and public or private securities offerings [182]. - The total estimated potential development density for future development pipeline assets was 14.8 million square feet as of December 31, 2020 [461]. - The company plans to leverage its role as the exclusive developer for Amazon's new headquarters, which may positively impact its revenue and growth prospects [217]. - In December 2020, the company acquired a 1.4-acre future development parcel for $65.0 million, with $47.3 million allocated to the former Americana Hotel site [532]. COVID-19 Impact - The ongoing COVID-19 pandemic poses significant risks to the company's financial condition, including impacts on occupancy rates and operating income [217]. - The company incurred $11.2 million in credit losses against billed rent receivables and $19.6 million against deferred rent receivables due to COVID-19 impacts [530]. - The company has provided rent deferrals totaling $4.3 million to tenants affected by COVID-19, with ongoing negotiations for additional concessions [528]. - Revenue from management services provided to unconsolidated real estate ventures is recognized in "Third-party real estate services, including reimbursements" when earned [488]. Shareholder Considerations - The limited partnership agreement requires partnership approval for extraordinary transactions, which may reduce the likelihood of such transactions being consummated even if they are in the best interests of shareholders [200]. - The declaration of trust contains ownership limits that may delay or prevent change of control transactions that could involve a premium price for common shares [194]. - Certain conflicts of interest may arise due to the ownership interests of trustees and executive officers in related entities, potentially impacting management's focus on the company's business plan [188]. - The company has elected to maintain its REIT status by distributing at least 90% of its taxable income as dividends to shareholders [516]. Real Estate Ventures - The company uses the equity method for investments in unconsolidated real estate ventures when it has significant influence, typically indicated by ownership of 20% or more of voting interests [488]. - The company's investments in unconsolidated real estate ventures totaled $461.4 million as of December 31, 2020, down from $543.0 million in 2019 [543]. - The combined total revenue for unconsolidated real estate ventures was $203.5 million in 2020, a decrease from $266.7 million in 2019 [558]. - The net loss for unconsolidated real estate ventures was $65.8 million in 2020, compared to a loss of $32.5 million in 2019 [558].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission file number 001-37994 JBG SMITH PROPERTIES ___________________________________________________________________ ...

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 for JBG SMITH Properties as of June 30, 2020, and for the three and six-month periods ended June 30, 2020 and 2019, including balance sheets, statements of operations, comprehensive loss, equity, and cash flows, along with accompanying notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2020, shows total assets of **$6.5 billion**, an increase from **$6.0 billion** at year-end 2019, driven by a significant increase in cash and cash equivalents to **$710.7 million**, while total liabilities also rose to **$2.56 billion** from **$1.99 billion**, primarily due to increased borrowings Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Real estate, net | $4,719,348 | $4,655,948 | | Cash and cash equivalents | $710,677 | $126,413 | | Investments in unconsolidated real estate ventures | $464,437 | $543,026 | | **TOTAL ASSETS** | **$6,495,777** | **$5,986,251** | | **Liabilities & Equity** | | | | Mortgages payable, net | $1,312,524 | $1,125,777 | | Revolving credit facility | $500,000 | $200,000 | | Unsecured term loans, net | $397,637 | $297,295 | | **Total liabilities** | **$2,556,008** | **$1,986,816** | | **Total equity** | **$3,440,686** | **$3,386,677** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the second quarter of 2020, the company reported a net loss attributable to common shareholders of **$36.8 million**, a significant increase from the **$3.0 million** loss in Q2 2019, with total revenue decreasing to **$145.0 million** from **$160.6 million** year-over-year, while for the six-month period, net income was **$6.1 million**, down from **$21.8 million** in the prior year, despite a **$59.5 million** gain on the sale of real estate Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2020 | Q2 2019 | Six Months 2020 | Six Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $144,952 | $160,617 | $303,059 | $315,816 | | Total expenses | $156,962 | $149,140 | $314,893 | $303,674 | | Gain on sale of real estate | $0 | $0 | $59,477 | $39,033 | | Net Income (Loss) | $(40,263) | $(3,328) | $7,912 | $24,920 | | Net Income (Loss) Attributable to Common Shareholders | $(36,780) | $(3,040) | $6,145 | $21,821 | | Diluted EPS | $(0.28) | $(0.03) | $0.04 | $0.16 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2020, net cash provided by operating activities increased to **$85.5 million** from **$52.8 million** in the prior-year period, investing activities provided **$33.3 million** in cash, a reversal from a **$68.7 million** use of cash in 2019, driven by **$154.5 million** in proceeds from real estate sales, and financing activities provided a substantial **$469.7 million**, mainly from borrowings, compared to an **$86.8 million** use of cash in 2019 Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $85,519 | $52,783 | | Net cash provided by (used in) investing activities | $33,346 | $(68,708) | | Net cash provided by (used in) financing activities | $469,652 | $(86,829) | | **Net increase (decrease) in cash** | **$588,517** | **$(102,754)** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed information on the company's organization, accounting policies, and financial activities, including the impact of COVID-19, the sale of Metropolitan Park to Amazon for **$155.0 million**, a **$6.5 million** impairment charge on The Marriott Wardman Park hotel investment, details on debt and credit facilities, and the repurchase of **1.4 million** common shares for **$41.2 million** - As of June 30, 2020, the company's operating portfolio consisted of **63 assets**, including **43 commercial properties** (**13.3 million sq. ft.**) and **20 multifamily properties** (**7,367 units**)[25](index=25&type=chunk) - The company sold the Metropolitan Park development site to Amazon for **$155.0 million** in January 2020, resulting in a gain of **$59.5 million**[43](index=43&type=chunk)[46](index=46&type=chunk) - A **$6.5 million** impairment charge was recorded on the investment in the venture owning The Marriott Wardman Park hotel, reducing its book value to zero due to a decline in fair value[50](index=50&type=chunk) - In response to COVID-19, the company recorded credit losses of **$4.7 million** against billed rent and **$3.6 million** against deferred rent for the six months ended June 30, 2020, primarily from retail tenants[41](index=41&type=chunk) - The company repurchased and retired **1.4 million** common shares for **$41.2 million** at an average price of **$29.01 per share** during the first six months of 2020[93](index=93&type=chunk) [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) This section details management's perspective on the company's financial performance and condition, heavily emphasizing the adverse effects of the COVID-19 pandemic, including decreased retail and parking revenue, increased credit losses, and operational challenges, while highlighting the resilience of the D.C. market and the strategic importance of its relationship with Amazon in National Landing, covering operating results, segment performance, liquidity measures, and cash flow analysis [Overview and 2020 Outlook](index=30&type=section&id=Overview%20and%202020%20Outlook) Management discusses the significant negative impact of the COVID-19 pandemic on operations, particularly on retail tenants, parking revenue, and hotel income, with rent collections for Q2 2020 strong for office (**98.5%**) and multifamily (**98.5%**) but weak for retail (**61.8%**), while despite near-term headwinds, the company expects the D.C. market to be recession-resilient, bolstered by government and Amazon-related activity, having executed leases totaling **857,000 sq. ft.** with Amazon - The COVID-19 pandemic has negatively impacted retail revenue, parking income, and near-term leasing activity, leading the company to record significant credit losses and reserves against receivables[156](index=156&type=chunk)[158](index=158&type=chunk) Q2 2020 Rent Collections (Consolidated) | Tenant Type | Rent Collected | 2019 Historical Average | | :--- | :--- | :--- | | Commercial Office | 98.5% | 99.7% | | Multifamily | 98.5% | 99.9% | | Commercial Retail | 61.8% | 98.4% | - Management believes the D.C. metropolitan area will prove more recession-resilient than other markets, with potential for countercyclical growth driven by government spending and accelerated hiring by Amazon[154](index=154&type=chunk)[161](index=161&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) This sub-section provides a detailed comparison of operating results for the three and six months ended June 30, 2020, versus 2019, where key drivers for the decline in revenue and increase in net loss were the sale of several properties, reduced rental income due to COVID-19 impacts, and a **$6.5 million** impairment charge on an unconsolidated hotel venture, partially offset by income from newly service-placed assets like 4747 Bethesda Avenue and West Half, with FFO per share decreasing to **$0.18** in Q2 2020 from **$0.30** in Q2 2019 - Q2 2020 property rental revenue decreased by **5.6%** YoY to **$115.5 million**, primarily due to disposed properties and COVID-19 impacts on rent collection[173](index=173&type=chunk) - Loss from unconsolidated real estate ventures increased significantly to **$13.5 million** in Q2 2020 from **$1.8 million** in Q2 2019, driven by a **$6.5 million** impairment charge on The Marriott Wardman Park hotel and a **$3.0 million** loss on the sale of Woodglen[184](index=184&type=chunk) Funds from Operations (FFO) per Share | Period | FFO per Share (Diluted) | YoY Change | | :--- | :--- | :--- | | Q2 2020 | $0.18 | -40.0% | | Q2 2019 | $0.30 | N/A | | Six Months 2020 | $0.45 | -23.7% | | Six Months 2019 | $0.59 | N/A | - Same Store NOI decreased by **3.0%** for Q2 2020 compared to Q2 2019, driven by lower multifamily occupancy and reduced commercial revenue due to the COVID-19 pandemic[211](index=211&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity source is property rental income, and in response to COVID-19 uncertainty, it took steps to enhance liquidity, including drawing **$500 million** on its revolving credit facility (repaid in July 2020) and deferring approximately **$69 million** in planned discretionary capital expenditures, with total debt standing at **$2.2 billion** as of June 30, 2020, and **$41.2 million** of common shares repurchased in H1 2020 - To mitigate the impact of COVID-19, the company deferred approximately **$69 million** of planned discretionary capital expenditures for 2020 and 2021[244](index=244&type=chunk) - The company increased its cash balance by drawing **$500 million** from its revolving credit facility and **$100 million** from its Tranche A-1 Term Loan during H1 2020, with the revolver balance repaid in July 2020[244](index=244&type=chunk) - As of June 30, 2020, the company had **$52.6 million** in remaining construction commitments, which it expects to fund with debt proceeds, asset sales, and available cash[120](index=120&type=chunk)[268](index=268&type=chunk) - A quarterly dividend of **$0.225 per common share** was declared on July 30, 2020[134](index=134&type=chunk)[248](index=248&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section outlines the company's exposure to market risks, primarily interest rate risk, with significant variable-rate debt as of June 30, 2020, including **$500 million** on its revolving credit facility and **$294.5 million** in mortgages, and the company uses derivative instruments like interest rate swaps and caps to hedge this exposure, with a total notional value of **$1.34 billion** in hedging agreements Debt Exposure to Interest Rate Risk (as of June 30, 2020, in thousands) | Debt Category | Balance | Type | Effect of 1% Rate Change | | :--- | :--- | :--- | :--- | | Mortgages payable | $294,500 | Variable | $2,986 | | Revolving credit facility | $500,000 | Variable | $5,069 | | Unsecured term loans | $200,000 | Variable (unhedged portion) | $0 (fully hedged) | | Pro rata share of unconsolidated debt | $303,918 | Variable | $3,081 | - The company utilizes interest rate swaps and caps to manage interest rate risk, having agreements designated as cash flow hedges with a notional value of **$862.7 million** and non-designated hedges with a notional value of **$482.7 million** as of June 30, 2020[284](index=284&type=chunk)[285](index=285&type=chunk) [Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2020, with no material changes to internal control over financial reporting during the quarter, despite many employees working remotely due to the COVID-19 pandemic - The CEO and CFO concluded that as of June 30, 2020, the company's disclosure controls and procedures were effective[286](index=286&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2020[287](index=287&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions in the ordinary course of business but does not expect the outcomes to have a material adverse effect on its financial position, results of operations, or cash flows - The company states that the outcome of ordinary course legal actions is not expected to have a material adverse effect on its financial condition[288](index=288&type=chunk) [Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) This section adds a significant new risk factor detailing the impacts of the COVID-19 pandemic, warning that the outbreak has already disrupted business and is expected to continue to have a significant, and possibly materially adverse, impact, with key risks highlighted including reduced rental income, declining demand for office and retail space, potential deterioration of the 'Placemaking' model, difficulty accessing capital, and increased operational costs and litigation risks - A new, extensive risk factor has been added regarding the significant and ongoing adverse impact of the COVID-19 pandemic on the company's business, financial performance, and cash flows[290](index=290&type=chunk) - Specific risks include tenants' inability to pay rent, with retail tenants being particularly affected (**38.2%** of consolidated retail tenants had not paid Q2 rent)[291](index=291&type=chunk) - Demand for office space is likely to decline due to the economic downturn and increased teleworking, which could negatively impact occupancy and rental rates[291](index=291&type=chunk) - The company's 'Placemaking' model, which relies on amenity-rich, walkable, Metro-served neighborhoods, may become less appealing due to changes in work habits and perceptions of public transportation[293](index=293&type=chunk) - Increased indebtedness, which rose by **$590.7 million** since year-end 2019, combined with decreased revenues, could heighten the risk of default on debt covenants[295](index=295&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is marked as 'Not applicable' in the report, indicating no unregistered sales of equity securities or specific use of proceeds to report for the period - The report indicates 'Not applicable' for this item[302](index=302&type=chunk) [Defaults Upon Senior Securities](index=56&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports 'None,' indicating there were no defaults upon senior securities during the reporting period - The company reported no defaults upon senior securities[299](index=299&type=chunk) [Mine Safety Disclosures](index=56&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is marked as 'Not applicable,' as the company's operations do not involve mine safety - The report indicates 'Not applicable' for this item[300](index=300&type=chunk) [Other Information](index=57&type=section&id=Item%205.%20Other%20Information) The company reports 'None,' indicating no other material information was required to be disclosed in this section for the period - The company reported no other information under this item[304](index=304&type=chunk) [Exhibits](index=58&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, compensatory plan agreements, and certifications by the CEO and CFO as required by the Sarbanes-Oxley Act - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1) and XBRL data files[306](index=306&type=chunk)