JBGS 10-Q

JBG SMITH Properties (JBGS)

10-Q 2022-05-03 For: 2022-03-31

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Added on April 08, 2026

Maryland	81-4307010
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4747 Bethesda Avenue Suite 200 Bethesda MD	20814
(Address of Principal Executive Offices)	(Zip Code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, par value $0.01 per share	JBGS	New York Stock Exchange

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	Page
	Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2022 and December 31, 2021	3
	Condensed Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2022 and 2021	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three months ended March 31, 2022 and 2021	5
	Condensed Consolidated Statements of Equity (unaudited) for the three months ended March 31, 2022 and 2021	6
	Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2022 and 2021	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	42
Item 4.	Controls and Procedures	43

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	46
	Signatures	47


	March 31, 2022		December 31, 2021
ASSETS
Real estate, at cost:
Land and improvements	$	1,212,501	$	1,378,218
Buildings and improvements		3,968,601		4,513,606
Construction in progress, including land		348,523		344,652
		5,529,625		6,236,476
Less: accumulated depreciation		(1,216,402)		(1,368,003)
Real estate, net		4,313,223		4,868,473
Cash and cash equivalents		189,140		264,356
Restricted cash		30,073		37,739
Tenant and other receivables		45,702		44,496
Deferred rent receivable		151,024		192,265
Investments in unconsolidated real estate ventures		461,444		462,885
Intangible assets, net		162,139		201,956
Other assets, net		71,385		240,160
Assets held for sale		891,750		73,876
TOTAL ASSETS	$	6,315,880	$	6,386,206

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgages payable, net	$	1,613,082	$	1,777,699
Revolving credit facility		300,000		300,000
Unsecured term loans, net		398,332		398,664
Accounts payable and accrued expenses		108,436		106,136
Other liabilities, net		106,929		342,565
Liabilities related to assets held for sale		368,006		—
Total liabilities		2,894,785		2,925,064
Commitments and contingencies
Redeemable noncontrolling interests		546,049		522,725
Shareholders' equity:
Preferred shares, $0.01 par value - 200,000 shares authorized; none issued		—		—
Common shares, $0.01 par value - 500,000 shares authorized; 124,248 and 127,378 shares issued and outstanding as of March 31, 2022 and December 31, 2021		1,243		1,275
Additional paid-in capital		3,444,793		3,539,916
Accumulated deficit		(609,363)		(609,331)
Accumulated other comprehensive income (loss)		9,935		(15,950)
Total shareholders' equity of JBG SMITH Properties		2,846,608		2,915,910
Noncontrolling interests		28,438		22,507
Total equity		2,875,046		2,938,417
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	6,315,880	$	6,386,206


	Three Months Ended March 31,
	2022		2021
REVENUE
Property rental	$	131,598	$	122,241
Third-party real estate services, including reimbursements		23,970		38,107
Other revenue		6,397		4,941
Total revenue		161,965		165,289
EXPENSES
Depreciation and amortization		58,062		64,726
Property operating		40,644		34,731
Real estate taxes		18,186		18,310
General and administrative:
Corporate and other		15,815		12,475
Third-party real estate services		27,049		28,936
Share-based compensation related to Formation Transaction and special equity awards		2,244		4,945
Transaction and other costs		899		3,690
Total expenses		162,899		167,813
OTHER INCOME (EXPENSE)
Income (loss) from unconsolidated real estate ventures, net		3,145		(943)
Interest and other income, net		14,246		9
Interest expense		(16,278)		(16,296)
Loss on the sale of real estate		(136)		—
Loss on the extinguishment of debt		(591)		—
Total other income (expense)		386		(17,230)
LOSS BEFORE INCOME TAX (EXPENSE) BENEFIT		(548)		(19,754)
Income tax (expense) benefit		471		(4,315)
NET LOSS		(77)		(24,069)
Net (income) loss attributable to redeemable noncontrolling interests		(10)		2,230
Net loss attributable to noncontrolling interests		55		1,108
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(32)	$	(20,731)
LOSS PER COMMON SHARE - BASIC AND DILUTED	$	—	$	(0.16)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED		126,682		131,540


								Accumulated
								Other
				Additional				Comprehensive
	Common Shares			Paid-In		Accumulated		Income		Noncontrolling		Total
	Shares	Amount		Capital		Deficit		(Loss)		Interests		Equity
BALANCE AS OF DECEMBER 31, 2021	127,378	$	1,275	$	3,539,916	$	(609,331)	$	(15,950)	$	22,507	$	2,938,417
Net loss attributable to common shareholders and noncontrolling interests	—		—		—		(32)		—		(55)		(87)
Conversion of common limited partnership units ("OP Units") to common shares	208		2		6,012		—		—		—		6,014
Common shares repurchased	(3,341)		(34)		(93,114)		—		—		—		(93,148)
Common shares issued pursuant to employee incentive compensation plan and Employee Share Purchase Plan ("ESPP")	3		—		286		—		—		—		286
Contributions from noncontrolling interests, net	—		—		—		—		—		5,986		5,986
Redeemable noncontrolling interests redemption value adjustment and other comprehensive income allocation	—		—		(8,307)		—		(2,966)		—		(11,273)
Other comprehensive income	—		—		—		—		28,851		—		28,851
BALANCE AS OF MARCH 31, 2022	124,248	$	1,243	$	3,444,793	$	(609,363)	$	9,935	$	28,438	$	2,875,046

BALANCE AS OF DECEMBER 31, 2020	131,778	$	1,319	$	3,657,643	$	(412,944)	$	(39,979)	$	167	$	3,206,206
Net loss attributable to common shareholders and noncontrolling interests	—		—		—		(20,731)		—		(1,108)		(21,839)
Conversion of OP Units to common shares	119		1		3,918		—		—		—		3,919
Common shares repurchased	(620)		(6)		(19,197)		—		—		—		(19,203)
Common shares issued pursuant to employee incentive compensation plan and ESPP	—		—		249		—		—		—		249
Contributions from noncontrolling interests, net	—		—		—		—		—		9,671		9,671
Redeemable noncontrolling interests redemption value adjustment and other comprehensive income allocation	—		—		(11,336)		—		(973)		—		(12,309)
Other comprehensive income	—		—		—		—		10,152		—		10,152
BALANCE AS OF MARCH 31, 2021	131,277	$	1,314	$	3,631,277	$	(433,675)	$	(30,800)	$	8,730	$	3,176,846


						Liabilities Related
			Total	Assets Held		to Assets Held
Assets	Segment	Location	Square Feet	for Sale ⁽¹⁾		for Sale ⁽²⁾

			(In thousands)
March 31, 2022
Pen Place ⁽³⁾	Other	Arlington, Virginia	2,082	$	73,876	$	298
Universal Buildings ⁽⁴⁾	Commercial	Washington, D.C.	659		168,599		15,854
7200 Wisconsin Avenue ⁽⁴⁾	Commercial	Bethesda, Maryland	271		113,471		1,471
1730 M Street ⁽⁴⁾	Commercial	Washington, D.C.	205		77,284		89,515
RTC-West ^{(4) (5)}	Commercial / Other	Reston, Virginia	1,835		191,774		121,206
Courthouse Plaza 1 and 2 ⁽⁴⁾	Commercial	Arlington, Virginia	633		266,746		139,662
			5,685	$	891,750	$	368,006
December 31, 2021
Pen Place ⁽³⁾	Other	Arlington, Virginia	2,082	$	73,876	$	—


	Effective
	Ownership
Real Estate Venture Partners	Interest ⁽¹⁾	March 31, 2022		December 31, 2021

		(In thousands)
Prudential Global Investment Management	50.0%	$	207,221	$	208,421
Landmark Partners ("Landmark")	1.8% - 49.0%		26,369		28,298
CBREI Venture	5.0% - 64.0%		57,051		57,812
Canadian Pension Plan Investment Board ("CPPIB")	55.0%		48,179		48,498
J.P. Morgan Global Alternatives ("J.P. Morgan") ⁽²⁾	50.0%		56,220		52,769
Berkshire Group	50.0%		52,030		52,770
Brandywine Realty Trust	30.0%		13,756		13,693
Other			618		624
Total investments in unconsolidated real estate ventures ⁽³⁾		$	461,444	$	462,885


	Weighted
	Average Effective
	Interest Rate ⁽¹⁾	March 31, 2022		December 31, 2021

		(In thousands)
Variable rate ⁽²⁾	2.97%	$	740,782	$	785,369
Fixed rate ⁽³⁾	4.16%		275,403		309,813
Mortgages payable			1,016,185		1,095,182
Unamortized deferred financing costs			(4,431)		(5,239)
Mortgages payable, net ⁽⁴⁾		$	1,011,754	$	1,089,943


	Weighted Average
	Effective
	Interest Rate ⁽¹⁾	March 31, 2022		December 31, 2021

		(In thousands)
Variable rate ⁽²⁾	2.38%	$	749,946	$	867,246
Fixed rate ⁽³⁾	4.35%		872,335		921,013
Mortgages payable			1,622,281		1,788,259
Unamortized deferred financing costs and premium / discount, net ⁽⁴⁾			(9,199)		(10,560)
Mortgages payable, net			1,613,082		1,777,699
Mortgages payable, net, related to assets held for sale	2.45%		163,897		—
Mortgages payable, net, including mortgages payable related to assets held for sale		$	1,776,979	$	1,777,699


Expected volatility		41.0%
Risk-free interest rate		0.4% to 1.5%
Post-grant restriction periods		2 years


Expected volatility		27.0%
Dividend yield		2.7%
Risk-free interest rate		1.6%


	Fair Value Measurements
	Total		Level 1		Level 2		Level 3

	(In thousands)
March 31, 2022
Derivative financial instruments designated as effective hedges:
Classified as assets in "Other assets, net"	$	11,553		—	$	11,553		—
Classified as liabilities in "Other liabilities, net"		658		—		658		—
Derivative financial instruments designated as ineffective hedges:
Classified as assets in "Other assets, net"		3,925		—		3,925		—

December 31, 2021
Derivative financial instruments designated as effective hedges:
Classified as assets in "Other assets, net"	$	393		—	$	393		—
Classified as liabilities in "Other liabilities, net"		18,361		—		18,361		—
Derivative financial instruments designated as ineffective hedges:
Classified as assets in "Other assets, net"		558		—		558		—


	March 31, 2022				December 31, 2021
	Carrying				Carrying
	Amount ⁽¹⁾		Fair Value		Amount ⁽¹⁾		Fair Value

	(In thousands)
Financial liabilities:
Mortgages payable ⁽²⁾	$	1,787,081	$	1,795,938	$	1,788,259	$	1,814,780
Revolving credit facility		300,000		300,376		300,000		300,363
Unsecured term loans		400,000		400,415		400,000		400,519


	Three Months Ended March 31, 2022
	Commercial		Multifamily		Other		Total

	(In thousands)
Property rental revenue	$	87,621	$	42,108	$	1,869	$	131,598
Parking revenue		4,012		134		55		4,201
Total property revenue		91,633		42,242		1,924		135,799
Property expense:
Property operating		26,202		13,755		687		40,644
Real estate taxes		11,777		5,221		1,188		18,186
Total property expense		37,979		18,976		1,875		58,830
Consolidated NOI	$	53,654	$	23,266	$	49	$	76,969

	Three Months Ended March 31, 2021
	Commercial		Multifamily		Other		Total

	(In thousands)
Property rental revenue	$	87,181	$	32,586	$	2,474	$	122,241
Parking revenue		2,690		65		—		2,755
Total property revenue		89,871		32,651		2,474		124,996
Property expense:
Property operating		23,964		12,195		(1,428)		34,731
Real estate taxes		11,772		5,245		1,293		18,310
Total property expense		35,736		17,440		(135)		53,041
Consolidated NOI	$	54,135	$	15,211	$	2,609	$	71,955


Period	Total Number Of Common Shares Purchased		Average Price Paid Per Common Share	Total Number Of Common Shares Purchased As Part Of Publicly Announced Plans Or Programs		Approximate Dollar Value Of Common Shares That May Yet Be Purchased Under the Plan Or Programs
January 1, 2022 - January 31, 2022	32,304	$	25.99	32,304	$	236,715,349
February 1, 2022 - February 28, 2022	679,479		26.50	679,479		218,696,286
March 1, 2022 - March 31, 2022	2,629,364		28.23	2,629,364		144,408,487
Total for the three months ended March 31, 2022	3,341,147		27.86	3,341,147
Program total since inception in March 2020 ⁽¹⁾	12,487,968		28.45	12,487,968


Nominee	Votes For		Votes Against		Abstentions		Broker Non-Votes
Phyllis R. Caldwell		102,870,592		7,597,227		26,274		4,735,771
Scott A. Estes		108,333,419		2,130,614		30,060		4,735,771
Alan S. Forman		104,618,574		5,847,550		27,969		4,735,771
Michael J. Glosserman		104,193,298		6,273,694		27,101		4,735,771
Charles E. Haldeman Jr.		108,592,581		1,874,130		27,382		4,735,771
W. Matthew Kelly		109,693,910		772,218		27,965		4,735,771
Alisa M. Mall		108,641,916		1,825,885		26,292		4,735,771
Carol A. Melton		106,079,393		4,388,424		26,276		4,735,771
William J. Mulrow		108,400,748		2,065,502		27,843		4,735,771
D. Ellen Shuman		108,648,799		1,818,942		26,352		4,735,771
Robert A. Stewart		108,483,937		1,981,280		28,876		4,735,771


Exhibits	Description
3.1	Declaration of Trust of JBG SMITH Properties, as amended and restated (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed on July 21, 2017).
3.2	Articles Supplementary to Declaration of Trust of JBG SMITH Properties (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed on March 6, 2018).
3.3	Articles of Amendment to Declaration of Trust of JBG SMITH Properties (incorporated by reference to Exhibit 3.1 to our current report on Form 8-K, filed on May 3, 2018).
3.4	Amended and Restated Bylaws of JBG SMITH Properties (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed on February 21, 2020).
10.1	Third Amendment to Credit Agreement, dated as of January 14, 2022, by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K, filed on January 14, 2022.)
10.2	Credit Agreement, dated as of January 14, 2022 by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on January 14, 2022.)
10.3†	Form of AO LTIP Unit Agreement (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on January 5, 2022).
31.1**	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002.
31.2**	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended and 18 U.S.C 1350, as created by Section 906 of the Sarbanes- Oxley Act of 2002.
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Extension Calculation Linkbase
101.LAB	Inline XBRL Extension Labels Linkbase
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


**	Filed herewith.
†	Denotes a management contract or compensatory plan, contract or arrangement.


		JBG SMITH Properties

Date:	May 3, 2022	/s/ M. Moina Banerjee
		M. Moina Banerjee
		Chief Financial Officer
		(Principal Financial Officer)