JBG SMITH Properties 10-Q for FY2024 Q1

JBG SMITH Properties (JBGS)

10-Q 2024-04-30 For: 2024-03-31

Added on April 08, 2026

About this 10-Q

JBG SMITH Properties filed this 10-Q on April 30, 2024, covering the quarter ended March 31, 2024 (FY2024 Q1).

Headline figures

Quarter ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $145.18M; down 5.1% from $152.96M a year earlier
Net loss: $32.28M; compared with net income of $21.17M a year earlier
Diluted EPS: -$0.36; compared with $0.19 a year earlier

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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, 2024 and December 31, 2023	3
	Condensed Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2024 and 2023	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three months ended March 31, 2024 and 2023	5
	Condensed Consolidated Statements of Equity (unaudited) for the three months ended March 31, 2024 and 2023	6
	Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2024 and 2023	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	43
Item 4.	Controls and Procedures	44

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3.	Defaults Upon Senior Securities	45
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	46
Item 6.	Exhibits	48
	Signatures	50


	March 31, 2024		December 31, 2023
ASSETS
Real estate, at cost:
Land and improvements	$	1,187,685	$	1,194,737
Buildings and improvements		4,283,889		4,021,322
Construction in progress, including land		427,524		659,103
		5,899,098		5,875,162
Less: accumulated depreciation		(1,379,090)		(1,338,403)
Real estate, net		4,520,008		4,536,759
Cash and cash equivalents		220,514		164,773
Restricted cash		39,752		35,668
Tenant and other receivables		40,223		44,231
Deferred rent receivable		178,111		171,229
Investments in unconsolidated real estate ventures		104,782		264,281
Deferred leasing costs, net		79,538		81,477
Intangible assets, net		54,401		56,616
Other assets, net		168,021		163,481
TOTAL ASSETS	$	5,405,350	$	5,518,515

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgage loans, net	$	1,816,508	$	1,783,014
Revolving credit facility		—		62,000
Term loans, net		717,391		717,172
Accounts payable and accrued expenses		133,084		124,874
Other liabilities, net		129,489		138,869
Total liabilities		2,796,472		2,825,929
Commitments and contingencies
Redeemable noncontrolling interests		435,529		440,737
Shareholders' equity:
Preferred shares, $0.01 par value - 200,000 shares authorized; none issued		—		—
Common shares, $0.01 par value - 500,000 shares authorized; 91,819 and 94,309 shares issued and outstanding as of March 31, 2024 and December 31, 2023		919		944
Additional paid-in capital		2,941,724		2,978,852
Accumulated deficit		(825,304)		(776,962)
Accumulated other comprehensive income		31,352		20,042
Total shareholders' equity of JBG SMITH Properties		2,148,691		2,222,876
Noncontrolling interests		24,658		28,973
Total equity		2,173,349		2,251,849
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	5,405,350	$	5,518,515


	Three Months Ended March 31,
	2024		2023
REVENUE
Property rental	$	122,636	$	124,033
Third-party real estate services, including reimbursements		17,868		22,784
Other revenue		4,680		6,145
Total revenue		145,184		152,962
EXPENSES
Depreciation and amortization		56,855		53,431
Property operating		35,279		35,612
Real estate taxes		13,795		15,224
General and administrative:
Corporate and other		14,973		16,123
Third-party real estate services		22,327		23,823
Share-based compensation related to Formation Transaction and special equity awards		—		351
Transaction and other costs		1,514		2,472
Total expenses		144,743		147,036
OTHER INCOME (EXPENSE)
Income from unconsolidated real estate ventures, net		975		433
Interest and other income, net		2,100		4,077
Interest expense		(30,160)		(26,842)
Gain on the sale of real estate, net		197		40,700
Impairment loss		(17,211)		—
Total other income (expense)		(44,099)		18,368
INCOME (LOSS) BEFORE INCOME TAX BENEFIT		(43,658)		24,294
Income tax benefit		1,468		16
NET INCOME (LOSS)		(42,190)		24,310
Net (income) loss attributable to redeemable noncontrolling interests		4,534		(3,363)
Net loss attributable to noncontrolling interests		5,380		224
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(32,276)	$	21,171
EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED	$	(0.36)	$	0.19
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED		92,635		114,052



								Accumulated
				Additional				Other
	Common Shares			Paid-In		Accumulated		Comprehensive		Noncontrolling		Total
	Shares	Amount		Capital		Deficit		Income		Interests		Equity
BALANCE AS OF DECEMBER 31, 2023	94,309	$	944	$	2,978,852	$	(776,962)	$	20,042	$	28,973	$	2,251,849
Net loss attributable to common shareholders and noncontrolling interests	—		—		—		(32,276)		—		(5,380)		(37,656)
Redemption of common limited partnership units ("OP Units") for common shares	468		5		7,870		—		—		—		7,875
Common shares repurchased	(2,993)		(30)		(49,414)		—		—		—		(49,444)
Common shares issued pursuant to employee incentive compensation plan and employee share purchase plan ("ESPP")	35		—		589		—		—		—		589
Dividends declared on common shares ($0.175 per common share)	—		—		—		(16,066)		—		—		(16,066)
Distributions to noncontrolling interests, net	—		—		—		—		—		(18)		(18)
Redeemable noncontrolling interests redemption value adjustment and total other comprehensive income allocation	—		—		3,827		—		(2,026)		—		1,801
Total other comprehensive income	—		—		—		—		14,419		—		14,419
Other comprehensive income attributable to noncontrolling interests	—		—		—		—		(1,083)		1,083		—
BALANCE AS OF MARCH 31, 2024	91,819	$	919	$	2,941,724	$	(825,304)	$	31,352	$	24,658	$	2,173,349

BALANCE AS OF DECEMBER 31, 2022	114,013	$	1,141	$	3,263,738	$	(628,636)	$	45,644	$	32,225	$	2,714,112
Net income (loss) attributable to common shareholders and noncontrolling interests	—		—		—		21,171		—		(224)		20,947
Redemption of OP Units for common shares	756		8		13,774		—		—		—		13,782
Common shares repurchased	(1,205)		(12)		(20,086)		—		—		—		(20,098)
Common shares issued pursuant to employee incentive compensation plan and ESPP	19		—		624		—		—		—		624
Distributions to noncontrolling interests, net	—		—		—		—		—		(7)		(7)
Redeemable noncontrolling interests redemption value adjustment and total other comprehensive loss allocation	—		—		24,240		—		2,225		—		26,465
Total other comprehensive loss	—		—		—		—		(16,785)		—		(16,785)
Other comprehensive loss attributable to noncontrolling interests	—		—		—		—		952		(952)		—
BALANCE AS OF MARCH 31, 2023	113,583	$	1,137	$	3,282,290	$	(607,465)	$	32,036	$	31,042	$	2,739,040


	Effective
	Ownership
Real Estate Venture	Interest ⁽¹⁾	March 31, 2024		December 31, 2023

		(In thousands)
Prudential Global Investment Management ("PGIM") ⁽²⁾	50.0%	$	4,358	$	163,375
J.P. Morgan Global Alternatives ("J.P. Morgan") ⁽³⁾	50.0%		73,592		72,742
4747 Bethesda Venture	20.0%		12,141		13,118
Brandywine Realty Trust	30.0%		13,625		13,681
CBREI Venture ⁽⁴⁾	10.0%		169		180
Landmark Partners ⁽⁵⁾	18.0%		585		605
Other			312		580
Total investments in unconsolidated real estate ventures ⁽⁶⁾ ⁽⁷⁾		$	104,782	$	264,281


	Weighted
	Average Effective
	Interest Rate ⁽¹⁾	March 31, 2024		December 31, 2023

		(In thousands)
Variable rate ⁽²⁾	5.73%	$	175,000	$	175,000
Fixed rate ⁽³⁾	4.13%		60,000		60,000
Mortgage loans ⁽⁴⁾			235,000		235,000
Unamortized deferred financing costs and premium / discount, net			(7,847)		(8,531)
Mortgage loans, net ^{(4) (5)}		$	227,153	$	226,469


	Weighted Average
	Effective
	Interest Rate ⁽¹⁾	March 31, 2024		December 31, 2023

		(In thousands)
Variable rate ⁽²⁾	6.31%	$	641,382	$	608,582
Fixed rate ⁽³⁾	4.78%		1,189,484		1,189,643
Mortgage loans			1,830,866		1,798,225
Unamortized deferred financing costs and premium / discount, net			(14,358)		(15,211)
Mortgage loans, net		$	1,816,508	$	1,783,014


Expected volatility		35.0%
Risk-free interest rate		4.4% to 4.6%
Post-grant restriction periods		2 years


Expected volatility		32.0%
Dividend yield		3.2%
Risk-free interest rate		4.1%


Expected volatility		48.0%
Dividend yield		4.2%
Risk-free interest rate		5.3%
Expected life		3 months


	Fair Value Measurements
	Total		Level 1		Level 2		Level 3

	(In thousands)
March 31, 2024
Derivative financial instruments designated as effective hedges:
Classified as assets in "Other assets, net"	$	40,590		—	$	40,590		—
Classified as liabilities in "Other liabilities, net"		16		—		16		—
Non-designated derivatives:
Classified as assets in "Other assets, net"		6,526		—		6,526		—
Classified as liabilities in "Other liabilities, net"		6,406		—		6,406		—

December 31, 2023
Derivative financial instruments designated as effective hedges:
Classified as assets in "Other assets, net"	$	35,632		—	$	35,632		—
Classified as liabilities in "Other liabilities, net"		7,936		—		7,936		—
Non-designated derivatives:
Classified as assets in "Other assets, net"		6,709		—		6,709		—
Classified as liabilities in "Other liabilities, net"		6,508		—		6,508		—


	March 31, 2024				December 31, 2023
	Carrying				Carrying
	Amount ⁽¹⁾		Fair Value		Amount ⁽¹⁾		Fair Value

	(In thousands)
Financial liabilities:
Mortgage loans	$	1,830,866	$	1,790,066	$	1,798,225	$	1,753,251
Revolving credit facility		—		—		62,000		62,000
Term loans		720,000		715,502		720,000		715,950


	Three Months Ended March 31, 2024
	Multifamily		Commercial		Other		Total

	(In thousands)
Property rental revenue ⁽¹⁾	$	51,446	$	57,579	$	3,279	$	112,304
Parking revenue		181		3,600		(32)		3,749
Total property revenue		51,627		61,179		3,247		116,053
Property expense:
Property operating		17,406		17,077		796		35,279
Real estate taxes		5,957		7,401		437		13,795
Total property expense		23,363		24,478		1,233		49,074
Consolidated NOI	$	28,264	$	36,701	$	2,014	$	66,979

	Three Months Ended March 31, 2023
	Multifamily		Commercial		Other		Total

	(In thousands)
Property rental revenue	$	49,910	$	71,917	$	2,206	$	124,033
Parking revenue		224		4,138		57		4,419
Total property revenue		50,134		76,055		2,263		128,452
Property expense:
Property operating		17,455		19,371		(1,214)		35,612
Real estate taxes		5,608		9,001		615		15,224
Total property expense		23,063		28,372		(599)		50,836
Consolidated NOI	$	27,071	$	47,683	$	2,862	$	77,616


	Three Months Ended March 31,
	2024		2023
Net increase in cash and cash equivalents, and restricted cash	$	59,825	$	47,819
Cash and cash equivalents, and restricted cash, beginning of period		200,441		274,073
Cash and cash equivalents, and restricted cash, end of period	$	260,266	$	321,892

CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD:
Cash and cash equivalents	$	220,514	$	279,553
Restricted cash		39,752		42,339
Cash and cash equivalents, and restricted cash	$	260,266	$	321,892

SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION:
Cash paid for interest (net of capitalized interest of $3,008 and $5,175 in 2024 and 2023)	$	25,623	$	22,705
Accrued capital expenditures included in accounts payable and accrued expenses		77,358		72,375
Write-off of fully depreciated assets		10,574		192
Redemption of OP Units for common shares		7,875		13,782
Recognition of operating lease right-of-use asset		—		61,443
Recognition of liabilities related to operating lease right-of-use asset		—		61,443
Cash paid for amounts included in the measurement of lease liabilities for operating leases		1,616		398


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, 2024 - January 31, 2024	1,231,419	$	16.77	1,231,419	$	508,168,718
February 1, 2024 - February 29, 2024	1,759,441		16.31	1,759,441		479,438,393
March 1, 2024 - March 31, 2024	-		-	-		479,438,393
Total for the three months ended March 31, 2024	2,990,860		16.50	2,990,860
Program total since inception in March 2020	48,864,863		20.61	48,864,863


Nominee	Votes For	Votes Against	Abstentions	Broker Non-Votes
Phyllis R. Caldwell	73,059,149	879,318	12,357	4,383,782
Scott A. Estes	73,491,985	415,992	42,847	4,383,782
Alan S. Forman	70,126,986	3,780,842	42,996	4,383,782
Michael J. Glosserman	73,466,250	471,502	13,072	4,383,782
W. Matthew Kelly	73,513,331	425,477	12,016	4,383,782
Alisa M. Mall	69,294,636	4,643,780	12,408	4,383,782
Carol A. Melton	73,299,313	639,029	12,482	4,383,782
William J. Mulrow	72,007,090	1,930,815	12,919	4,383,782
D. Ellen Shuman	70,074,935	3,861,634	14,255	4,383,782
Robert A. Stewart	73,294,574	641,665	14,585	4,383,782


One Year	Two Years	Three Years	Abstentions
72,154,780	23,038	1,722,890	50,116


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	Second Amended and Restated Bylaws of JBG SMITH Properties, effective August 3, 2023 (incorporated by reference to Exhibit 3.4 in our Current Report on Form 10-Q, filed on August 8, 2023).
10.1†	Form of 2024 AO LTIP Unit Agreement (incorporated by reference to Exhibit 10.52 to our Annual Report on Form 10-K, filed on February 20, 2024).
10.2†	Form of Agreement Equity Award in Lieu of Annual Cash Bonus (incorporated by reference to Exhibit 10.53 to our Annual Report on Form 10-K, filed on February 20, 2024).
10.3†	First Amendment to Second Amended and Restated Employment Agreement, dated as of February 14, 2024, by and between JBG SMITH Properties and Kevin P. Reynolds (incorporated by reference to Exhibit 10.54 to our Annual Report on Form 10-K, filed on February 20, 2024).
10.4†	Employment Agreement, dated as of February 14, 2024, by and between JBG SMITH Properties and Evan Regan-Levine (incorporated by reference to Exhibit 10.55 to our Annual Report on Form 10-K, filed on February 20, 2024).
10.5†	Employment Agreement, dated as of February 14, 2024, by and between JBG SMITH Properties and David Ritchey (incorporated by reference to Exhibit 10.56 to our Annual Report on Form 10-K, filed on February 20, 2024).
10.6†	First Amendment to Amended and Restated Employment Agreement, dated as of February 14, 2024, by and between JBG SMITH Properties and Madhumita Moina Banerjee (incorporated by reference to Exhibit 10.57 to our Annual Report on Form 10-K, filed on February 20, 2024).
10.7†	First Amendment to Amended and Restated Employment Agreement, dated as of February 14, 2024, by and between JBG SMITH Properties and Steven A. Museles (incorporated by reference to Exhibit 10.58 to our Annual Report on Form 10-K, filed on February 20, 2024).
10.8†	First Amendment to Employment Agreement, dated as of February 14, 2024, by and between JBG SMITH Properties and George Xanders (incorporated by reference to Exhibit 10.59 to our Annual Report on Form 10-K, filed on February 20, 2024).
10.9†**	Amendment No. 4 to the JBG SMITH Properties 2017 Omnibus Share Plan, effective April 25, 2024.
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.


Exhibits	Description
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:	April 30, 2024	/s/ M. Moina Banerjee
		M. Moina Banerjee
		Chief Financial Officer
		(Principal Financial Officer)


April 30, 2024	/s/ W. Matthew Kelly
	W. Matthew Kelly
		Chief Executive Officer
	(Principal Executive Officer)