JBG SMITH(US:JBGS)2023-11-07 21:17markdown PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), equity, and cash flows, along with detailed notes explaining the company's organization, accounting policies, acquisitions, dispositions, investments, debt, and other financial details for the periods ended September 30, 2023, and December 31, 2022 [Condensed Consolidated Balance Sheets (unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) The balance sheet shows a decrease in total assets and total equity from December 31, 2022, to September 30, 2023, primarily driven by a reduction in real estate net and cash, while liabilities saw a slight increase | Metric | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | Change | | :----------------------------- | :-------------------------- | :-------------------------- | :------- | | Total Assets | $5,666,168 | $5,903,438 | (4.0%) | | Real estate, net | $4,599,676 | $4,823,082 | (4.6%) | | Cash and cash equivalents | $130,522 | $241,098 | (45.8%) | | Total Liabilities | $2,816,721 | $2,708,016 | 4.0% | | Mortgage loans, net | $1,727,133 | $1,890,174 | (8.6%) | | Revolving credit facility | $92,000 | $0 | N/A | | Term loans, net | $716,953 | $547,072 | 31.1% | | Total Equity | $2,405,086 | $2,714,112 | (11.4%) | [Condensed Consolidated Statements of Operations (unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(unaudited)) The company reported a significant net loss for both the three and nine months ended September 30, 2023, compared to a smaller loss and net income, respectively, in the prior year, primarily due to a substantial impairment loss and increased interest expense | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total revenue | $151,562 | $147,614 | $456,619 | $455,084 | | Total expenses | $136,793 | $136,770 | $424,073 | $442,028 | | Impairment loss | $(59,307) | $0 | $(59,307) | $0 | | Interest expense | $(27,903) | $(17,932) | $(80,580) | $(50,251) | | Net Income (Loss) | $(66,101) | $(21,581) | $(54,045) | $119,836 | | EPS - Basic & Diluted | $(0.58) | $(0.17) | $(0.45) | $0.86 | [Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20(unaudited)) The company reported a comprehensive loss for both the three and nine months ended September 30, 2023, a significant decline from comprehensive income in the prior year, despite positive changes in the fair value of derivative financial instruments | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Income (Loss) | $(66,101) | $(21,581) | $(54,045) | $119,836 | | Total other comprehensive income | $10,209 | $32,606 | $7,679 | $71,473 | | Comprehensive Income (Loss) | $(55,892) | $11,025 | $(46,366) | $191,309 | [Condensed Consolidated Statements of Equity (unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity%20(unaudited)) Total equity decreased from December 31, 2022, to September 30, 2023, primarily due to net losses, common shares repurchased, and dividends declared, partially offset by redemptions of OP Units for common shares | Metric (in thousands) | As of Sep 30, 2023 | As of Dec 31, 2022 | Change | | :-------------------- | :----------------- | :----------------- | :----- | | Total Equity | $2,405,086 | $2,714,112 | (11.4%)| | Common Shares (count) | 97,717 | 114,013 | (14.3%)| | Common Shares (amount)| $978 | $1,141 | (14.3%)| | Additional Paid-In Capital | $3,043,036 | $3,263,738 | (6.8%) | | Accumulated Deficit | $(722,847) | $(628,636) | (15.0%)| | Common shares repurchased (9 months ended Sep 30, 2023) | $276,684 | N/A | N/A | | Dividends declared on common shares (9 months ended Sep 30, 2023) | $46,830 | N/A | N/A | [Condensed Consolidated Statements of Cash Flows (unaudited)](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) For the nine months ended September 30, 2023, net cash provided by operating activities decreased, while investing activities shifted from a net cash provider to a net cash user, and financing activities continued to be a net cash user, resulting in an overall decrease in cash and cash equivalents | Cash Flow Activity (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :------- | | Net cash provided by operating activities | $114,893 | $130,366 | (11.9%) | | Net cash (used in) provided by investing activities | $(123,240) | $674,402 | (118.3%) | | Net cash used in financing activities | $(96,947) | $(634,994) | 84.7% | | Net (decrease) increase in cash and restricted cash | $(105,294) | $169,774 | (162.0%) | | Cash and restricted cash, end of period | $168,779 | $471,869 | (64.2%) | [Notes to Condensed Consolidated Financial Statements (unaudited)](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section provides detailed disclosures for the condensed consolidated financial statements, covering the company's organizational structure, significant accounting policies, recent acquisitions and dispositions, investments in unconsolidated real estate ventures, variable interest entities, debt, equity, and other financial commitments and contingencies [1. Organization and Basis of Presentation](index=13&type=section&id=1.%20Organization%20and%20Basis%20of%20Presentation) JBG SMITH Properties is a Maryland REIT focused on mixed-use properties in the Washington, D.C. metropolitan area, with a significant presence in National Landing. The company operates primarily through JBG SMITH LP, where it holds an 87.7% ownership interest - JBG SMITH Properties is a Maryland REIT that owns, operates, invests in, and develops mixed-use properties in high-growth submarkets around Washington, D.C., with approximately two-thirds of its holdings in National Landing[25](index=25&type=chunk) - The company's portfolio includes **48 operating assets** (30 commercial, 16 multifamily, 2 land assets), **2 under-construction multifamily assets** (1,583 units), and **20 assets in the development pipeline** (12.5 million sq ft estimated density)[27](index=27&type=chunk) - JBG SMITH, as the sole general partner, controls JBG SMITH LP and owned **87.7%** of its OP Units as of September 30, 2023[26](index=26&type=chunk) [2. Summary of Significant Accounting Policies](index=15&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) The financial statements are prepared in accordance with GAAP for interim financial information, with no material changes to significant accounting policies from the Annual Report. The company has completed the conversion of all LIBOR-indexed debt and derivatives to SOFR-based indexes - No material changes to significant accounting policies disclosed in the Annual Report[35](index=35&type=chunk) - All London Interbank Offered Rate (LIBOR)-indexed debt and derivative financial instruments have been converted to Secured Overnight Financing Rate (SOFR)-based indexes as of September 30, 2023[37](index=37&type=chunk) [3. Acquisition, Dispositions and Assets Held for Sale](index=17&type=section&id=3.%20Acquisition,%20Dispositions%20and%20Assets%20Held%20for%20Sale) During the nine months ended September 30, 2023, the company paid a deferred purchase price for a 2020 acquisition and completed several dispositions, including a development parcel and multifamily assets, and held one commercial asset for sale which was subsequently sold in October 2023 - Paid **$19.6 million** deferred purchase price related to the 2020 acquisition of a development parcel during the nine months ended September 30, 2023[39](index=39&type=chunk) | Disposition Date | Asset | Segment | Location | Units/Sq Ft | Gross Sales Price (in thousands) | Gain on Sale (in thousands) | | :--------------- | :---- | :------ | :------- | :---------- | :------------------------------- | :-------------------------- | | Mar 17, 2023 | Development Parcel | Other | Arlington, VA | — | $5,500 | $(53) | | Mar 23, 2023 | 4747 Bethesda Avenue (80% interest) | Commercial | Bethesda, MD | 40,053 sq ft | $196,000 (gross valuation $245,000) | N/A | | Sep 20, 2023 | Falkland Chase-South & West and Falkland Chase-North | Multifamily | Silver Spring, MD | 438 units | $95,000 | $1,208 | - As of September 30, 2023, 5 M Street Southwest (665 sq ft estimated potential development density) was held for sale at **$28.3 million** and was sold on October 4, 2023, for **$29.5 million**[41](index=41&type=chunk)[42](index=42&type=chunk) [4. Investments in Unconsolidated Real Estate Ventures](index=18&type=section&id=4.%20Investments%20in%20Unconsolidated%20Real%20Estate%20Ventures) The company holds investments in unconsolidated real estate ventures, primarily with Prudential Global Investment Management and J.P. Morgan Global Alternatives. Total investments slightly decreased, and an impairment loss was recognized for a commercial asset. One venture disposed of an asset, Stonebridge at Potomac Town Center, generating a gain | Real Estate Venture Partner | Effective Ownership Interest | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :-------------------------- | :--------------------------- | :-------------------------- | :-------------------------- | | Prudential Global Investment Management | 50.0% | $196,389 | $203,529 | | J.P. Morgan Global Alternatives | 50.0% | $69,860 | $64,803 | | 4747 Bethesda Venture | 20.0% | $13,349 | $0 | | Total investments in unconsolidated real estate ventures | N/A | $296,397 | $299,881 | - An impairment loss of **$3.3 million** associated with a commercial asset in Washington, D.C. (CBREI Venture) was included in 'Loss from unconsolidated real estate ventures, net' for the three and nine months ended September 30, 2023[46](index=46&type=chunk) - Unconsolidated real estate ventures disposed of Stonebridge at Potomac Town Center on August 24, 2023, for a gross sales price of **$172.5 million**, resulting in a proportionate share of aggregate gain of **$641,000**[51](index=51&type=chunk) [5. Variable Interest Entities](index=20&type=section&id=5.%20Variable%20Interest%20Entities) The company evaluates entities for consolidation as Variable Interest Entities (VIEs). JBG SMITH LP is the most significant consolidated VIE, with JBG SMITH holding 87.7% interest and acting as the general partner. Two other VIEs (1900 Crystal Drive and 2000/2001 South Bell Street) were also consolidated - JBG SMITH LP is the most significant consolidated VIE, with JBG SMITH holding an **87.7%** limited partnership interest and exercising full responsibility, discretion, and control as the general partner[58](index=58&type=chunk) - As of September 30, 2023, two other VIEs (1900 Crystal Drive and 2000/2001 South Bell Street) were consolidated, with total assets of **$456.1 million** and liabilities of **$245.1 million**[59](index=59&type=chunk) - The company also has interests in unconsolidated VIEs, where its maximum loss exposure is limited to investments, construction commitments, and debt guarantees, with net carrying amounts of **$85.9 million** as of September 30, 2023[57](index=57&type=chunk) [6. Other Assets, Net](index=21&type=section&id=6.%20Other%20Assets,%20Net) Total other assets, net, significantly increased from December 31, 2022, to September 30, 2023, primarily due to increases in derivative financial instruments at fair value, deferred financing costs, and operating lease right-of-use assets | Other Assets, Net (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change | | :------------------------------- | :----------- | :----------- | :----- | | Total other assets, net | $217,903 | $117,028 | 86.2% | | Derivative financial instruments, at fair value | $79,421 | $61,622 | 28.9% | | Deferred financing costs, net | $12,732 | $5,516 | 130.8% | | Operating lease right-of-use assets | $61,122 | $1,383 | 4320.9%| [7. Debt](index=21&type=section&id=7.%20Debt) Total mortgage loans decreased, while term loans increased, reflecting a shift in the company's debt structure. The company entered into a new loan facility and repaid existing mortgage loans, and amended its revolving credit facility to reduce capacity and extend maturity | Debt Type (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change | Weighted Average Effective Interest Rate (Sep 30, 2023) | | :----------------------- | :----------- | :----------- | :----- | :------------------------------------------------------ | | Mortgage loans | $1,741,410 | $1,901,875 | (8.5%) | 5.16% (variable: 6.16%, fixed: 4.78%) | | Revolving credit facility| $92,000 | $0 | N/A | 6.71% | | Term loans | $720,000 | $550,000 | 30.9% | 2.60% (Tranche A-1), 3.53% (Tranche A-2), 5.26% (2023) | - Entered into a **$187.6 million** loan facility in January 2023, collateralized by The Wren and F1RST Residences, with a fixed interest rate of **5.13%**, partially used to repay the **$131.5 million** mortgage loan collateralized by 2121 Crystal Drive[66](index=66&type=chunk) - Revolving credit facility amended in June 2023 to reduce borrowing capacity from **$1.0 billion** to **$750.0 million** and extend the maturity date from January 2025 to June 2027[69](index=69&type=chunk) [8. Other Liabilities, Net](index=25&type=section&id=8.%20Other%20Liabilities,%20Net) Total other liabilities, net, increased from December 31, 2022, to September 30, 2023, primarily due to a significant increase in liabilities related to operating lease right-of-use assets and derivative financial instruments, while deferred purchase price was fully paid | Other Liabilities, Net (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change | | :------------------------------------ | :----------- | :----------- | :----- | | Total other liabilities, net | $145,550 | $132,710 | 9.7% | | Liabilities related to operating lease right-of-use assets | $65,198 | $5,308 | 1128.4%| | Derivative financial instruments, at fair value | $9,242 | $0 | N/A | | Deferred purchase price related to the acquisition of a development parcel | $0 | $19,447 | (100%) | [9. Redeemable Noncontrolling Interests](index=25&type=section&id=9.%20Redeemable%20Noncontrolling%20Interests) Redeemable noncontrolling interests decreased, primarily due to redemptions of OP Units for common shares and adjustments to redemption value, partially offset by share-based compensation expense - As of September 30, 2023, outstanding OP Units and redeemable LTIP Units totaled **13.7 million**, representing a **12.3%** ownership interest in JBG SMITH LP[77](index=77&type=chunk) - During the nine months ended September 30, 2023, unitholders redeemed **2.1 million** OP Units, which the company elected to redeem for an equivalent number of common shares[77](index=77&type=chunk) | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | | Balance, beginning of period | $481,310 | $522,725 | | Redemptions | $(33,757) | $(12,667) | | Share-based compensation expense | $25,152 | $31,107 | | Adjustment to redemption value | $(20,844) | $(72,175) | | Balance, end of period | $444,361 | $491,479 | [10. Property Rental Revenue](index=27&type=section&id=10.%20Property%20Rental%20Revenue) Property rental revenue remained relatively stable for the three months ended September 30, 2023, compared to the prior year, but saw a slight decrease for the nine-month period | Property Rental Revenue (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Fixed | $110,333 | $109,193 | $331,528 | $335,328 | | Variable | $9,961 | $10,618 | $33,391 | $33,117 | | Total Property rental revenue | $120,294 | $119,811 | $364,919 | $368,445 | [11. Share-Based Payments](index=27&type=section&id=11.%20Share-Based%20Payments) The company granted various share-based awards, including Time-Based LTIP Units, fully vested LTIP Units, performance-based AO LTIP Units, and Time-Based RSUs, during the nine months ended September 30, 2023. Total share-based compensation expense decreased for both the three and nine-month periods compared to the prior year - Granted **979,138** Time-Based LTIP Units (weighted average fair value **$17.56**/unit) and **280,342** fully vested LTIP Units (fair value **$15.90**/unit) to employees during the nine months ended September 30, 2023[81](index=81&type=chunk)[82](index=82&type=chunk) - Granted **1.7 million** performance-based AO LTIP Units (fair value **$3.73**/unit) and **78,681** Time-Based RSUs (fair value **$18.94**/unit) to employees in January 2023[85](index=85&type=chunk)[88](index=88&type=chunk) | Share-Based Compensation Expense (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :---------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total share-based compensation expense | $6,915 | $7,624 | $28,862 | $35,346 | | Less: amount capitalized | $(418) | $(675) | $(1,851) | $(3,022) | | Share-based compensation expense | $6,497 | $6,949 | $27,011 | $32,324 | [12. Transaction and Other Costs](index=31&type=section&id=12.%20Transaction%20and%20Other%20Costs) Transaction and other costs increased for both the three and nine months ended September 30, 2023, primarily driven by higher severance and demolition costs for the nine-month period | Transaction and Other Costs (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Completed, potential and pursued transaction expenses | $622 | $600 | $896 | $2,186 | | Severance and other costs | $1,033 | $1,146 | $4,280 | $2,018 | | Demolition costs | $175 | $0 | $2,618 | $428 | | Total Transaction and other costs | $1,830 | $1,746 | $7,794 | $4,632 | [13. Interest Expense](index=31&type=section&id=13.%20Interest%20Expense) Interest expense significantly increased for both the three and nine months ended September 30, 2023, primarily due to higher outstanding debt, rising interest rates on variable rate mortgage loans, and a decrease related to mark-to-market adjustments on ineffective interest rate caps | Interest Expense (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Interest expense before capitalized interest | $30,229 | $22,801 | $85,942 | $60,100 | | Amortization of deferred financing costs | $3,381 | $1,118 | $6,011 | $3,369 | | Net (gain) loss on derivative financial instruments designated as ineffective hedges | $1,742 (loss) | $(3,099) (gain) | $7,383 (loss) | $(8,493) (gain) | | Capitalized interest | $(7,219) | $(2,888) | $(18,756) | $(6,816) | | Total Interest expense | $27,903 | $17,932 | $80,580 | $50,251 | [14. Shareholders' Equity and Earnings (Loss) Per Common Share](index=31&type=section&id=14.%20Shareholders'%20Equity%20and%20Earnings%20(Loss)%20Per%20Common%20Share) The Board of Trustees increased the common share repurchase authorization to **$1.5 billion** in May 2023. The company repurchased a significant number of common shares during the period. Basic and diluted earnings per common share showed a loss for both periods in 2023, worsening from the prior year - The Board of Trustees increased the common share repurchase authorization to **$1.5 billion** in May 2023[95](index=95&type=chunk) | Common Shares Repurchased | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Shares Repurchased (millions) | 7.9 | 2.3 | 18.4 | 14.2 | | Cost (millions) | $120.8 | $54.0 | $276.7 | $361.0 | | Weighted Average Price Per Share | $15.24 | $23.35 | $14.98 | $25.49 | | Earnings (Loss) Per Common Share | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) attributable to common shareholders | $(58,007) | $(19,293) | $(47,381) | $103,950 | | EPS - Basic and Diluted | $(0.58) | $(0.17) | $(0.45) | $0.86 | [15. Fair Value Measurements](index=33&type=section&id=15.%20Fair%20Value%20Measurements) The company uses derivative financial instruments (interest rate swaps and caps) to manage interest rate risk, measured at fair value on a recurring basis, primarily classified as Level 2. An impairment loss of **$59.3 million** was recognized on certain real estate assets, classified as Level 3, due to a write-down to estimated fair value - Derivative financial instruments (interest rate swaps and caps) are measured at fair value on a recurring basis, with a net unrealized gain of **$59.7 million** as of September 30, 2023, designated as effective hedges and classified within Level 2 of the valuation hierarchy[101](index=101&type=chunk)[103](index=103&type=chunk) - An impairment loss of **$59.3 million** was recognized for 2101 L Street, 2100 Crystal Drive, and a development parcel, written down to an estimated aggregate fair value of **$148.9 million** (Level 3) and **$11.3 million** (Level 2) respectively, for the three and nine months ended September 30, 2023[107](index=107&type=chunk) - The estimated fair value of consolidated debt (mortgage loans, revolving credit facility, and term loans) was **$2.5 billion** as of September 30, 2023, determined using Level 2 inputs[109](index=109&type=chunk)[110](index=110&type=chunk) [16. Segment Information](index=35&type=section&id=16.%20Segment%20Information) The company operates in three reportable segments: multifamily, commercial, and third-party asset management and real estate services. Consolidated NOI remained stable for the three months ended September 30, 2023, but increased for the nine-month period, with multifamily showing growth and commercial experiencing declines - JBG SMITH operates in three reportable segments: multifamily, commercial, and third-party asset management and real estate services[111](index=111&type=chunk) | Consolidated NOI (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Commercial | $41,174 | $46,362 | $131,157 | $147,464 | | Multifamily | $27,749 | $24,468 | $83,516 | $70,999 | | Other | $3,992 | $2,057 | $10,909 | $2,552 | | Total Consolidated NOI | $72,915 | $72,887 | $225,582 | $221,015 | - Commercial segment NOI decreased by **11.2%** for the three months and **11.1%** for the nine months ended September 30, 2023, primarily due to disposed properties and lower occupancy/rents[215](index=215&type=chunk)[217](index=217&type=chunk) - Multifamily segment NOI increased by **13.4%** for the three months and **17.6%** for the nine months ended September 30, 2023, driven by the consolidation of Atlantic Plumbing and 8001 Woodmont, and higher occupancy/rents[216](index=216&type=chunk)[218](index=218&type=chunk) [17. Commitments and Contingencies](index=40&type=section&id=17.%20Commitments%20and%20Contingencies) The company has various commitments including **$230.5 million** for assets under construction, **$47.7 million** in tenant-related obligations, and **$63.0 million** in capital commitments and guarantees to unconsolidated real estate ventures. Environmental liabilities remain at **$18.0 million** - As of September 30, 2023, **$230.5 million** is required to complete assets under construction, anticipated over the next two years[124](index=124&type=chunk) - Committed tenant-related obligations totaled **$47.7 million** as of September 30, 2023 (**$46.3 million** related to consolidated entities and **$1.4 million** related to unconsolidated real estate ventures at the company's share)[126](index=126&type=chunk) - Additional capital commitments and recorded guarantees to unconsolidated real estate ventures and other investments totaled **$63.0 million** as of September 30, 2023[129](index=129&type=chunk) - Environmental liabilities totaled **$18.0 million** as of September 30, 2023 and December 31, 2022[125](index=125&type=chunk) [18. Transactions with Related Parties](index=42&type=section&id=18.%20Transactions%20with%20Related%20Parties) The company provides fee-based real estate services to related parties, including the Washington Housing Initiative (WHI) Impact Pool and JBG Legacy Funds, generating **$4.8 million** and **$15.7 million** in revenue for the three and nine months ended September 30, 2023, respectively - Third-party real estate services revenue, including expense reimbursements, from the JBG Legacy Funds and the WHI Impact Pool and its affiliates was **$4.8 million** for the three months and **$15.7 million** for the nine months ended September 30, 2023[136](index=136&type=chunk) - Incurred **$1.6 million** and **$3.4 million** of rent expense for corporate offices leased from an unconsolidated real estate venture for the three and nine months ended September 30, 2023[137](index=137&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, including an overview of its business, strategic outlook, detailed analysis of operating results by segment, and a discussion of liquidity and capital resources. It highlights key financial performance metrics, recent transactions, and future plans [Organization and Basis of Presentation](index=44&type=section&id=Organization%20and%20Basis%20of%20Presentation) JBG SMITH is a Maryland REIT focused on mixed-use properties in the Washington, D.C. area, particularly National Landing, operating primarily through JBG SMITH LP. The financial statements are prepared under GAAP, and the company maintains REIT status - JBG SMITH Properties is a Maryland real estate investment trust (REIT) that owns, operates, invests in, and develops mixed-use properties in high growth and high barrier-to-entry submarkets in and around Washington, D.C., with approximately two-thirds of its holdings in the National Landing submarket[141](index=141&type=chunk) - The company has elected to be taxed as a REIT and intends to adhere to requirements, including distributing at least **90%** of its REIT taxable income as dividends to shareholders each year[147](index=147&type=chunk) - Operating segments are aggregated into multifamily, commercial, and third-party asset management and real estate services based on economic characteristics and nature of assets/services[148](index=148&type=chunk) [Overview](index=48&type=section&id=Overview) As of September 30, 2023, the company's operating portfolio consisted of **48 assets**, with two multifamily assets under construction and **20 assets** in the development pipeline. The company continues its Placemaking strategies in National Landing, including the delivery of new Amazon office buildings and digital infrastructure investments - As of September 30, 2023, the Operating Portfolio consisted of **48 operating assets** (30 commercial, 16 multifamily, 2 wholly owned land assets), **2 under-construction multifamily assets** (1,583 units), and **20 assets in the development pipeline** (12.5 million sq ft estimated potential development density)[152](index=152&type=chunk) - Completed construction of two new office buildings for Amazon in National Landing (**2.1 million sq ft**) in Q2 2023, with Amazon taking occupancy in June 2023[154](index=154&type=chunk) - Advancing efforts to make National Landing among the first 5G-operable submarkets in the nation through digital infrastructure investments[153](index=153&type=chunk) [Outlook](index=48&type=section&id=Outlook) The company's strategy focuses on active capital allocation to maximize long-term NAV per share, including opportunistic asset sales, recapitalizations, and investments in share repurchases and development projects. The goal is to shift the portfolio to majority multifamily, though curbed lending activity has slowed asset sales - Strategy focuses on active capital allocation to maximize long-term net asset value (NAV) per share through development, acquisition, disposition, share repurchases, and other investment decisions[155](index=155&type=chunk) - Intends to opportunistically sell or recapitalize assets and land sites to redeploy proceeds into share repurchases, new acquisitions with higher cash yields, and development projects, aiming to further advance the strategic shift of the portfolio to majority multifamily[155](index=155&type=chunk) - Office portfolio occupancy as of September 30, 2023, increased by **40 basis points** to **84.4%** compared to June 30, 2023, with **434,000 square feet** of office leases executed in Q3 2023, approximately **88%** in National Landing[156](index=156&type=chunk) - Multifamily portfolio occupancy as of September 30, 2023, increased by **190 basis points** to **95.6%** compared to June 30, 2023, with gross rents increasing by **4.8%** upon renewal and a **55.2%** renewal rate[157](index=157&type=chunk) [Operating Results](index=50&type=section&id=Operating%20Results) The company experienced a net loss attributable to common shareholders for both the three and nine months ended September 30, 2023, primarily due to a significant impairment loss. Third-party real estate services revenue increased, and same-store NOI showed modest growth | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :---------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss attributable to common shareholders | $(58.0) million | $(19.3) million | $(47.4) million | $104.0 million | | EPS - diluted common share | $(0.58) | $(0.17) | $(0.45) | $0.86 | | Third-party real estate services revenue, including reimbursements | $23.9 million | $21.8 million | $69.6 million | $68.0 million | | Same store NOI increase | 3.7% | N/A | 0.5% | N/A | - Investing and financing activities during the nine months ended September 30, 2023, included the sale of Falkland Chase-South & West/North, the sale of an **80.0%** interest in 4747 Bethesda Avenue, a new **$187.6 million** loan facility, and the repurchase and retirement of **18.4 million** common shares for **$276.7 million**[160](index=160&type=chunk)[167](index=167&type=chunk) [Comparison of the Three Months Ended September 30, 2023 to 2022](index=53&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20September%2030,%202023%20to%202022) For the three months ended September 30, 2023, property rental revenue slightly increased due to multifamily growth offsetting commercial declines. Third-party real estate services revenue increased, but interest expense and an impairment loss significantly impacted net results | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :------- | | Property rental revenue | $120,294 | $119,811 | 0.4% | | Third-party real estate services revenue, including reimbursements | $23,942 | $21,845 | 9.6% | | Interest expense | $27,903 | $17,932 | 55.6% | | Impairment loss | $59,307 | $0 | * | | Loss from unconsolidated real estate ventures, net | $2,263 | $13,867 | (83.7%) | | Interest and other income, net | $7,774 | $984 | 690.0% | - Property rental revenue increased primarily due to a **$6.8 million** increase from multifamily assets (consolidation of Atlantic Plumbing and 8001 Woodmont, higher occupancy and rents), partially offset by a **$7.3 million** decrease from commercial assets (Disposed Properties, lower occupancy and rents)[169](index=169&type=chunk) - Interest and other income increased significantly due to a **$6.0 million** gain from litigation settlement in 2023 and a **$1.4 million** increase in interest income from outstanding cash balances[179](index=179&type=chunk) [Comparison of the Nine Months Ended September 30, 2023 to 2022](index=56&type=section&id=Comparison%20of%20the%20Nine%20Months%20Ended%20September%2030,%202023%20to%202022) For the nine months ended September 30, 2023, property rental revenue slightly decreased due to commercial asset dispositions, despite multifamily growth. Third-party real estate services revenue increased, but a substantial impairment loss and higher interest expense led to a net loss | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :------- | | Property rental revenue | $364,919 | $368,445 | (1.0%) | | Third-party real estate services revenue, including reimbursements | $69,588 | $67,972 | 2.4% | | Interest expense | $80,580 | $50,251 | 60.4% | | Gain on the sale of real estate, net | $41,606 | $158,631 | (73.8%) | | Impairment loss | $59,307 | $0 | * | | Loss from unconsolidated real estate ventures, net | $1,320 | $12,829 | (89.7%) | - Property rental revenue decreased primarily due to a **$30.6 million** decrease from commercial assets (Disposed Properties, lower occupancy and rents), partially offset by a **$24.1 million** increase from multifamily assets (consolidation of Atlantic Plumbing and 8001 Woodmont, higher occupancy and rents)[184](index=184&type=chunk) - Interest expense increased by approximately **$30.3 million**, primarily due to higher outstanding debt, a **$15.9 million** decrease related to mark-to-market associated with ineffective interest rate caps, and a **$10.8 million** increase related to rising interest rates on variable rate mortgage loans[194](index=194&type=chunk) [FFO](index=58&type=section&id=FFO) Funds From Operations (FFO) attributable to common shareholders decreased for both the three and nine months ended September 30, 2023, compared to the prior year, reflecting the impact of net losses and impairment - FFO is a non-GAAP financial measure computed in accordance with Nareit's definition, excluding real estate depreciation and amortization, gains/losses from asset sales, and impairment write-downs of certain real estate assets[196](index=196&type=chunk)[198](index=198&type=chunk) | FFO (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :----------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) attributable to common shareholders | $(58,007) | $(19,293) | $(47,381) | $103,950 | | Real estate depreciation and amortization | $48,568 | $47,840 | $147,681 | $150,599 | | Real estate impairment loss | $59,307 | $0 | $59,307 | $0 | | FFO attributable to common shareholders | $40,098 | $40,096 | $106,523 | $124,957 | [NOI and Same Store NOI](index=60&type=section&id=NOI%20and%20Same%20Store%20NOI) Consolidated Net Operating Income (NOI) remained stable for the three months ended September 30, 2023, and increased for the nine-month period. Same Store NOI showed a **3.7%** increase for the three months and a **0.5%** increase for the nine months, driven by multifamily performance and parking revenue - NOI is a non-GAAP financial measure reflecting property-related revenue (base rent, tenant reimbursements, other operating revenue, net of free rent and assumed lease liabilities) less operating expenses and ground rent[200](index=200&type=chunk) | NOI (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :----------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Consolidated NOI | $72,915 | $72,887 | $225,582 | $221,015 | | Same store NOI | $76,858 | $74,128 | $225,890 | $224,819 | | Change in same store NOI | 3.7% | N/A | 0.5% | N/A | - The increase in same store NOI for the three months ended September 30, 2023, was substantially attributable to higher occupancy and rents in the multifamily portfolio and higher parking revenue in the commercial portfolio, partially offset by higher concessions and operating expenses[203](index=203&type=chunk) [Reportable Segments](index=63&type=section&id=Reportable%20Segments) The commercial segment experienced decreases in property revenue and consolidated NOI for both periods, while the multifamily segment showed significant increases in both metrics, driven by acquisitions and higher occupancy/rents | Segment Consolidated NOI (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Commercial | $41,174 | $46,362 | $131,157 | $147,464 | | Multifamily | $27,749 | $24,468 | $83,516 | $70,999 | - Commercial property revenue decreased by **9.1%** (three months) and **12.3%** (nine months), and consolidated NOI decreased by **11.2%** (three months) and **11.1%** (nine months), primarily due to Disposed Properties and lower occupancy and rents[215](index=215&type=chunk)[217](index=217&type=chunk) - Multifamily property revenue increased by **14.9%** (three months) and **18.5%** (nine months), and consolidated NOI increased by **13.4%** (three months) and **17.6%** (nine months), primarily due to the consolidation of Atlantic Plumbing and 8001 Woodmont, and higher occupancy and rents[216](index=216&type=chunk)[218](index=218&type=chunk) [Liquidity and Capital Resources](index=68&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily from property rental income, third-party real estate services, and financing activities. Cash and cash equivalents decreased significantly, with net cash used in investing and financing activities. The company expects to fund future cash requirements through operations, financings, asset sales, and existing cash - Property rental income is the primary source of operating cash flow, supplemented by third-party asset management and real estate services[220](index=220&type=chunk) - Cash and cash equivalents, and restricted cash decreased **$105.3 million** to **$168.8 million** as of September 30, 2023, compared to **$274.1 million** as of December 31, 2022[243](index=243&type=chunk) - The company anticipates that cash flows from continuing operations, proceeds from financings, asset sales, recapitalizations, and existing cash balances will be adequate to fund business operations, debt amortization, capital expenditures, dividends, and distributions over the next 12 months[220](index=220&type=chunk) [Mortgage Loans](index=68&type=section&id=Mortgage%20Loans) Mortgage loans decreased by **8.5%** to **$1.74 billion** as of September 30, 2023. The company entered into a new **$187.6 million** loan facility and repaid **$142.4 million** in mortgage loans during the nine months ended September 30, 2023 | Mortgage Loans (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change | | :---------------------------- | :----------- | :----------- | :----- | | Mortgage loans | $1,741,410 | $1,901,875 | (8.5%) | | Weighted Average Effective Interest Rate (Sep 30, 2023) | 5.16% | 4.78% | N/A | - In January 2023, the company entered into a **$187.6 million** loan facility, collateralized by The Wren and F1RST Residences, with a fixed interest rate of **5.13%**[224](index=224&type=chunk) - In June 2023, the company repaid **$142.4 million** in mortgage loans collateralized by Falkland Chase-South & West and 800 North Glebe Road[225](index=225&type=chunk) [Revolving Credit Facility and Term Loans](index=70&type=section&id=Revolving%20Credit%20Facility%20and%20Term%20Loans) The company's unsecured revolving credit facility and term loans totaled **$1.5 billion** as of September 30, 2023. The revolving credit facility was amended to reduce capacity and extend maturity, and a new **$120.0 million** term loan was entered into - As of September 30, 2023, unsecured revolving credit facility and term loans totaled **$1.5 billion**, comprising a **$750.0 million** revolving credit facility, a **$200.0 million** Tranche A-1 Term Loan, a **$400.0 million** Tranche A-2 Term Loan, and a **$120.0 million** 2023 Term Loan[226](index=226&type=chunk) - Effective June 29, 2023, the revolving credit facility was amended to reduce borrowing capacity from **$1.0 billion** to **$750.0 million** and extend the maturity date from January 2025 to June 2027[227](index=227&type=chunk) - On June 29, 2023, the company entered into a **$120.0 million** term loan maturing in June 2028, with an interest rate fixed at **4.01%** through an interest rate swap[228](index=228&type=chunk) [Common Shares Repurchased](index=70&type=section&id=Common%20Shares%20Repurchased) The Board of Trustees increased the common share repurchase authorization to **$1.5 billion** in May 2023. The company repurchased **18.4 million** common shares for **$276.7 million** during the nine months ended September 30, 2023, and an additional **2.0 million** shares for **$28.0 million** in Q4 2023 - The Board of Trustees increased the common share repurchase authorization to **$1.5 billion** in May 2023[233](index=233&type=chunk) | Common Shares Repurchased | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------ | :-------------------------- | :-------------------------- | | Shares Repurchased (millions) | 18.4 | 14.2 | | Cost (millions) | $276.7 | $361.0 | | Weighted Average Price Per Share | $14.98 | $25.49 | - During the fourth quarter of 2023, through the date of filing, the company repurchased and retired an additional **2.0 million** common shares for **$28.0 million**[237](index=237&type=chunk) [Material Cash Requirements](index=72&type=section&id=Material%20Cash%20Requirements) Material cash requirements include normal operating expenses, debt service, capital expenditures (**$47.7 million** in tenant-related obligations), and development expenditures (**$230.5 million** for assets under construction). These are expected to be funded by cash, operations, financings, and asset sales - Material cash requirements include **$121.3 million** in consolidated debt maturing through 2024, **$47.7 million** in committed tenant-related obligations, and **$230.5 million** for assets under construction[239](index=239&type=chunk) - Expected funding sources include **$130.5 million** in cash and cash equivalents, cash flows from operations, distributions from real estate ventures, **$657.5 million** of availability under the revolving credit facility, and proceeds from financings, asset sales, and recapitalizations[240](index=240&type=chunk) [Summary of Cash Flows](index=74&type=section&id=Summary%20of%20Cash%20Flows) For the nine months ended September 30, 2023, net cash provided by operating activities decreased, while investing activities shifted to a net cash outflow, and financing activities remained a net cash outflow, leading to an overall decrease in cash and restricted cash | Cash Flow Activity (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net cash provided by operating activities | $114,893 | $130,366 | | Net cash (used in) provided by investing activities | $(123,240) | $674,402 | | Net cash used in financing activities | $(96,947) | $(634,994) | | Net (decrease) increase in cash and restricted cash | $(105,294) | $169,774 | - Net cash used in investing activities primarily comprised **$241.3 million** of development costs, construction in progress, and real estate additions, and **$24.3 million** of investments, partially offset by **$162.1 million** of proceeds from real estate sales[245](index=245&type=chunk) - Net cash used in financing activities primarily comprised **$280.1 million** of mortgage loan repayments, **$273.9 million** of common shares repurchased, and **$155.0 million** of revolving credit facility repayments, partially offset by **$287.6 million** of mortgage loan borrowings and **$247.0 million** of revolving credit facility borrowings[246](index=246&type=chunk) [Unconsolidated Real Estate Ventures](index=74&type=section&id=Unconsolidated%20Real%20Estate%20Ventures) The company holds **$296.4 million** in investments in unconsolidated real estate ventures, for which it exercises significant influence but not control. The company may provide guarantees for borrowings or development projects, with **$63.0 million** in capital commitments and guarantees as of September 30, 2023 - As of September 30, 2023, investments in unconsolidated real estate ventures totaled **$296.4 million**, accounted for using the equity method[248](index=248&type=chunk) - The company may agree to guarantee portions of principal, interest, and other amounts in connection with borrowings, provide environmental indemnifications, and nonrecourse carve-outs for unconsolidated real estate ventures[249](index=249&type=chunk) - As of September 30, 2023, additional capital commitments and certain recorded guarantees to unconsolidated real estate ventures and other investments totaled **$63.0 million**, with no debt principal payment guarantees[252](index=252&type=chunk) [Commitments and Contingencies](index=76&type=section&id=Commitments%20and%20Contingencies) The company has various commitments, including **$230.5 million** for construction, **$47.7 million** in tenant-related obligations, and **$8.3 million** in debt principal payment guarantees for consolidated entities. Legal actions are in the ordinary course of business and not expected to have a material adverse effect - As of September 30, 2023, assets under construction require an additional **$230.5 million** to complete, anticipated to be primarily expended over the next two years[256](index=256&type=chunk) - Committed tenant-related obligations totaled **$47.7 million** as of September 30, 2023 (**$46.3 million** related to consolidated entities and **$1.4 million** related to unconsolidated real estate ventures at the company's share)[257](index=257&type=chunk) - As of September 30, 2023, the aggregate amount of debt principal payment guarantees was **$8.3 million** for consolidated entities[259](index=259&type=chunk) - During the three months ended September 30, 2023, the company recognized a **$6.0 million** gain from the settlement of litigation[258](index=258&type=chunk) [Environmental Matters](index=78&type=section&id=Environmental%20Matters) The company is potentially liable for environmental remediation costs on its real estate assets under various laws. Environmental assessments have not revealed material contamination expected to have a material adverse effect, with environmental liabilities totaling **$18.0 million** - An owner of real estate is liable for the costs of removal or remediation of certain hazardous or toxic substances on that real estate, often without regard to knowledge or responsibility[262](index=262&type=chunk) - Environmental assessments did not reveal any material environmental contamination that is believed to have a material adverse effect on the overall business, financial condition, or results of operations[263](index=263&type=chunk) - Environmental liabilities totaled **$18.0 million** as of September 30, 2023 and December 31, 2022[263](index=263&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=79&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the company's exposure to market risks, primarily interest rate risk, and its strategies for managing these risks through hedging activities using derivative financial instruments [Interest Rate Risk](index=79&type=section&id=Interest%20Rate%20Risk) The company is exposed to interest rate fluctuations. As of September 30, 2023, variable rate mortgage loans and the revolving credit facility had an annual effect of **$1.445 million** and **$0.933 million**, respectively, for a **1%** change in base rates | Debt Type (contractual balances) | Sep 30, 2023 Balance (in thousands) | Weighted Average Effective Interest Rate (Sep 30, 2023) | Annual Effect of 1% Change in Base Rates (in thousands) | | :------------------------------- | :---------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | | Variable rate mortgage loans | $550,048 | 6.16% | $1,445 | | Revolving credit facility | $92,000 | 6.71% | $933 | | Variable rate debt of unconsolidated real estate ventures | $48,867 | 5.88% | $82 | - The estimated fair value of consolidated debt was **$2.5 billion** as of September 30, 2023, and **$2.4 billion** as of December 31, 2022[267](index=267&type=chunk) [Hedging Activities](index=79&type=section&id=Hedging%20Activities) The company uses derivative financial instruments, primarily interest rate swaps and caps, to manage interest rate risk. These are designated as either effective or ineffective hedges, with fair values recorded in accumulated other comprehensive income or interest expense, respectively - The company uses derivative financial instruments, consisting of interest rate swap and cap agreements, to manage or hedge its exposure to interest rate risk[270](index=270&type=chunk) - As of September 30, 2023, derivative financial instruments designated as effective hedges had an aggregate notional value of **$1.9 billion** and a fair value of **$69.5 million** (assets)[272](index=272&type=chunk) - As of September 30, 2023, derivative financial instruments designated as ineffective hedges had an aggregate notional value of **$642.7 million**, with fair values of **$9.9 million** (assets) and **$9.2 million** (liabilities)[273](index=273&type=chunk) [Item 4. Controls and Procedures](index=81&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and states that there have been no material changes in internal control over financial reporting during the quarter [Evaluation of Disclosure Controls and Procedures](index=81&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2023 - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[274](index=274&type=chunk) [Changes in Internal Control over Financial Reporting](index=81&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) There have been no material changes in the company's internal control over financial reporting during the quarter ended September 30, 2023 - There have been no changes in the company's internal control over financial reporting during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting[275](index=275&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=81&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions in the ordinary course of business, but the outcome is not expected to have a material adverse effect on its financial position, results of operations, or cash flows - The outcome of legal actions arising in the ordinary course of business is not expected to have a material adverse effect on the company's financial position, results of operations, or cash flows[276](index=276&type=chunk) [Item 1A. Risk Factors](index=81&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report - There have been no material changes to the risk factors previously disclosed in the company's Annual Report[277](index=277&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=83&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **7.9 million** common shares for **$120.8 million** during the three months ended September 30, 2023, and **18.4 million** shares for **$276.7 million** during the nine months, under a program authorized up to **$1.5 billion** | Period | Total Number Of Common Shares Purchased | Average Price Paid Per Common Share | | :-------------------------------------- | :------------------------------------ | :---------------------------------- | | July 1, 2023 - July 31, 2023 | 1,718,829 | $15.96 | | August 1, 2023 - August 31, 2023 | 5,144,097 | $15.08 | | September 1, 2023 - September 30, 2023 | 1,056,791 | $14.83 | | Total for the three months ended Sep 30, 2023 | 7,919,717 | $15.24 | | Total for the nine months ended Sep 30, 2023 | 18,445,875 | $14.98 | | Program total since inception in March 2020 | 41,743,284 | $21.54 | - The Board of Trustees increased the common share repurchase authorization to **$1.5 billion** in May 2023[280](index=280&type=chunk) [Item 3. Defaults Upon Senior Securities](index=83&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities - No defaults upon senior securities[281](index=281&type=chunk) [Item 4. Mine Safety Disclosures](index=83&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[282](index=282&type=chunk) [Item 5. Other Information](index=83&type=section&id=Item%205.%20Other%20Information) No officers or trustees adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended September 30, 2023 - None of the officers or trustees adopted or terminated any contract, instruction, or written plan for the purchase or sale of securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any 'non-Rule 10b5-1 trading arrangement' during the three months ended September 30, 2023[283](index=283&type=chunk) [Item 6. Exhibits](index=85&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Declaration of Trust, Bylaws, Credit Agreement amendments, and certifications - Includes Declaration of Trust, Bylaws, Credit Agreement amendments, and certifications (CEO/CFO) as exhibits[284](index=284&type=chunk)[285](index=285&type=chunk) [Signatures](index=86&type=section&id=Signatures) The report was signed on November 7, 2023, by M. Moina Banerjee, Chief Financial Officer, and Angela Valdes, Chief Accounting Officer - The report was signed on November 7, 2023, by M. Moina Banerjee, Chief Financial Officer, and Angela Valdes, Chief Accounting Officer[289](index=289&type=chunk)[290](index=290&type=chunk)