JBG SMITH Properties 10-Q for FY2021 Q1

JBG SMITH Properties (JBGS)

10-Q 2021-05-04 For: 2021-03-31

Added on April 08, 2026

About this 10-Q

JBG SMITH Properties filed this 10-Q on May 4, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $165.29M; up 4.5% from $158.11M a year earlier
Net loss: $20.73M; compared with net income of $42.93M 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, 2021 and December 31, 2020	3
	Condensed Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2021 and 2020	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three months ended March 31, 2021 and 2020	5
	Condensed Consolidated Statements of Equity (unaudited) for the three months ended March 31, 2021 and 2020	6
	Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2021 and 2020	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	45
Item 4.	Controls and Procedures	46

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults Upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	47
Item 6.	Exhibits	47
	Signatures	50


	March 31, 2021		December 31, 2020
ASSETS
Real estate, at cost:
Land and improvements	$	1,384,157	$	1,391,472
Buildings and improvements		4,309,606		4,341,103
Construction in progress, including land		285,206		268,056
		5,978,969		6,000,631
Less accumulated depreciation		(1,249,613)		(1,232,690)
Real estate, net		4,729,356		4,767,941
Cash and cash equivalents		208,708		225,600
Restricted cash		39,839		37,736
Tenant and other receivables		45,567		55,903
Deferred rent receivable		177,043		170,547
Investments in unconsolidated real estate ventures		455,476		461,369
Other assets, net		289,452		286,575
Assets held for sale		73,876		73,876
TOTAL ASSETS	$	6,019,317	$	6,079,547

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgages payable, net	$	1,591,883	$	1,593,738
Revolving credit facility		—		—
Unsecured term loans, net		398,151		397,979
Accounts payable and accrued expenses		95,813		103,102
Other liabilities, net		203,484		247,774
Liabilities related to assets held for sale		213		—
Total liabilities		2,289,544		2,342,593
Commitments and contingencies
Redeemable noncontrolling interests		552,927		530,748
Shareholders' equity:
Preferred shares, $0.01 par value - 200,000 shares authorized; none issued		—		—
Common shares, $0.01 par value - 500,000 shares authorized; 131,277 and 131,778 shares issued and outstanding as of March 31, 2021 and December 31, 2020		1,314		1,319
Additional paid-in capital		3,631,277		3,657,643
Accumulated deficit		(433,675)		(412,944)
Accumulated other comprehensive loss		(30,800)		(39,979)
Total shareholders' equity of JBG SMITH Properties		3,168,116		3,206,039
Noncontrolling interests		8,730		167
Total equity		3,176,846		3,206,206
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	6,019,317	$	6,079,547


	Three Months Ended March 31,
	2021		2020
REVENUE
Property rental	$	122,241	$	120,380
Third-party real estate services, including reimbursements		38,107		29,716
Other revenue		4,941		8,011
Total revenue		165,289		158,107
EXPENSES
Depreciation and amortization		64,726		48,489
Property operating		34,731		34,503
Real estate taxes		18,310		18,199
General and administrative:
Corporate and other		12,475		13,176
Third-party real estate services		28,936		28,814
Share-based compensation related to Formation Transaction and special equity awards		4,945		9,441
Transaction and other costs		3,690		5,309
Total expenses		167,813		157,931
OTHER INCOME (EXPENSE)
Loss from unconsolidated real estate ventures, net		(943)		(2,692)
Interest and other income, net		9		907
Interest expense		(16,296)		(12,005)
Gain on sale of real estate		—		59,477
Loss on extinguishment of debt		—		(33)
Total other income (expense)		(17,230)		45,654
INCOME (LOSS) BEFORE INCOME TAX (EXPENSE) BENEFIT		(19,754)		45,830
Income tax (expense) benefit		(4,315)		2,345
NET INCOME (LOSS)		(24,069)		48,175
Net (income) loss attributable to redeemable noncontrolling interests		2,230		(5,250)
Net loss attributable to noncontrolling interests		1,108		—
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(20,731)	$	42,925
EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED	$	(0.16)	$	0.32
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic		131,540		134,542
Diluted		131,540		135,429



								Accumulated
				Additional				Other
	Common Shares			Paid-In		Accumulated		Comprehensive		Noncontrolling		Total
	Shares	Amount		Capital		Deficit		Loss		Interests		Equity
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 common limited partnership 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 Employee Share Purchase Plan ("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

BALANCE AS OF DECEMBER 31, 2019	134,148	$	1,342	$	3,633,042	$	(231,164)	$	(16,744)	$	201	$	3,386,677
Net income attributable to common shareholders and noncontrolling interests	—		—		—		42,925		—		—		42,925
Conversion of common limited partnership units to common shares	787		8		31,118		—		—		—		31,126
Common shares repurchased	(1,418)		(14)		(41,163)		—		—		—		(41,177)
Common shares issued pursuant to ESPP	—		—		132		—		—		—		132
Contributions from noncontrolling interests	—		—		—		—		—		2		2
Redeemable noncontrolling interests redemption value adjustment and other comprehensive loss allocation	—		—		100,666		—		3,573		—		104,239
Other comprehensive loss	—		—		—		—		(32,770)		—		(32,770)
BALANCE AS OF MARCH 31, 2020	133,517	$	1,336	$	3,723,795	$	(188,239)	$	(45,941)	$	203	$	3,491,154


	Effective
	Ownership
Real Estate Venture Partners	Interest ⁽¹⁾	March 31, 2021		December 31, 2020

		(In thousands)
Prudential Global Investment Management	50.0%	$	212,796	$	216,939
Landmark	1.8% - 49.0%		65,313		66,724
CBREI Venture	5.0% - 64.0%		64,251		65,190
Canadian Pension Plan Investment Board ("CPPIB")	55.0%		47,072		47,522
Berkshire Group	50.0%		51,662		50,649
Brandywine Realty Trust	30.0%		13,751		13,710
Other			631		635
Total investments in unconsolidated real estate ventures ⁽²⁾		$	455,476	$	461,369


	Weighted
	Average Effective
	Interest Rate ⁽¹⁾	March 31, 2021		December 31, 2020

		(In thousands)
Variable rate ⁽²⁾	2.49%	$	865,653	$	863,617
Fixed rate ⁽³⁾ ⁽⁴⁾	4.03%		331,768		323,050
Mortgages payable			1,197,421		1,186,667
Unamortized deferred financing costs			(6,766)		(7,479)
Mortgages payable, net ⁽⁴⁾		$	1,190,655	$	1,179,188


	Weighted Average
	Effective
	Interest Rate ⁽¹⁾	March 31, 2021		December 31, 2020

		(In thousands)
Variable rate ⁽²⁾	2.15%	$	677,246	$	678,346
Fixed rate ⁽³⁾	4.32%		924,389		925,523
Mortgages payable			1,601,635		1,603,869
Unamortized deferred financing costs and premium/ discount, net ⁽⁴⁾			(9,752)		(10,131)
Mortgages payable, net		$	1,591,883	$	1,593,738


Expected volatility		39.0%
Risk-free interest rate		0.1%
Post-grant restriction periods		2 years


Expected volatility		34.0%
Dividend yield		2.6%
Risk-free interest rate		0.2%


	Fair Value Measurements
	Total		Level 1		Level 2		Level 3

	(In thousands)
March 31, 2021
Derivative financial instruments designated as cash flow hedges:
Classified as liabilities in "Other liabilities, net"	$	34,181		—	$	34,181		—
Derivative financial instruments not designated as cash flow hedges:
Classified as assets in "Other assets, net"		167		—		167		—

December 31, 2020
Derivative financial instruments designated as cash flow hedges:
Classified as liabilities in "Other liabilities, net"	$	44,222		—	$	44,222		—
Derivative financial instruments not designated as cash flow hedges:
Classified as assets in "Other assets, net"		35		—		35		—


	March 31, 2021				December 31, 2020
	Carrying				Carrying
	Amount ⁽¹⁾		Fair Value		Amount ⁽¹⁾		Fair Value

	(In thousands)
Financial liabilities:
Mortgages payable	$	1,601,635	$	1,614,367	$	1,603,869	$	1,606,470
Unsecured term loans		400,000		400,354		400,000		399,678


	Three Months Ended March 31, 2021
	Commercial		Multifamily		Other		Total

	(In thousands)
Property rental revenue	$	90,603	$	32,586	$	(948)	$	122,241
Parking revenue		2,690		65		—		2,755
Total property revenue		93,293		32,651		(948)		124,996
Property expense:
Property operating		23,975		12,195		(1,439)		34,731
Real estate taxes		11,772		5,245		1,293		18,310
Total property expense		35,747		17,440		(146)		53,041
Consolidated NOI	$	57,546	$	15,211	$	(802)	$	71,955

	Three Months Ended March 31, 2020
	Commercial		Multifamily		Other		Total

	(In thousands)
Property rental revenue	$	91,198	$	32,803	$	(3,621)	$	120,380
Parking revenue		6,244		137		—		6,381
Total property revenue		97,442		32,940		(3,621)		126,761
Property expense:
Property operating		27,943		10,307		(3,747)		34,503
Real estate taxes		12,372		4,738		1,089		18,199
Total property expense		40,315		15,045		(2,658)		52,702
Consolidated NOI	$	57,127	$	17,895	$	(963)	$	74,059


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, 2021 - January 31, 2021	261,311	$	29.93	261,311	$	387,414,510
February 1, 2021 - February 28, 2021	57,789		31.59	57,789		385,587,659
March 1, 2021 - March 31, 2021	300,649		31.74	300,649		376,038,752
Total for the three months ended March 31, 2021	619,749		30.96	619,749
Program total since inception in March 2020	4,396,101		28.18	4,396,101


	Three Months Ended March 31,
	2021		2020
SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION:
Cash paid for interest (net of capitalized interest of $1,710 and $5,268 in 2021 and 2020)	$	14,929	$	10,927
Accrued capital expenditures included in accounts payable and accrued expenses		38,668		76,418
Write-off of fully depreciated assets		39,920		7,111
Conversion of common limited partnership units to common shares		3,919		31,126
Recognition (derecognition) of operating lease right-of-use assets		—		(13,151)
Recognition (derecognition) of liabilities related to operating lease right-of-use assets		—		(13,151)
Recognition of finance lease right-of-use assets		—		42,354
Recognition of liabilities related to finance lease right-of-use assets		—		40,684
Cash paid for amounts included in the measurement of lease liabilities for operating leases		610		1,396


	March 31, 2021		December 31, 2020

	(In thousands)
Deferred leasing costs, net	$	121,817	$	117,141
Lease intangible assets, net		13,037		15,565
Management and leasing contracts, net		24,036		25,512
Other identified intangible assets		17,500		17,500
Wireless spectrum licenses ⁽¹⁾		25,275		—
Operating lease right-of-use assets		3,470		3,542
Finance lease right-of-use assets		41,889		41,996
Prepaid expenses		12,210		14,000
Deferred financing costs, net		10,826		6,656
Deposits ⁽¹⁾		3,488		28,560
Other		15,904		16,103
Total other assets, net	$	289,452	$	286,575


	March 31, 2021		December 31, 2020

	(In thousands)
Lease intangible liabilities, net		9,526		10,300
Lease assumption liabilities		8,746		10,126
Lease incentive liabilities		15,369		13,913
Liabilities related to operating lease right-of-use assets		9,801		10,752
Liabilities related to finance lease right-of-use assets		40,390		40,221
Prepaid rent		20,293		19,809
Security deposits		13,386		13,654
Environmental liabilities		18,242		18,242
Deferred tax liability, net		5,995		2,509
Dividends payable		—		34,075
Derivative agreements, at fair value		34,181		44,222
Deferred purchase price ⁽¹⁾		19,479		19,479
Other		8,076		10,472
Total other liabilities, net	$	203,484	$	247,774


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).


Exhibits	Description
10.1†	Second Amended and Restated Employment Agreement, dated as of February 18, 2021, by and between JBG SMITH Properties and W. Matthew Kelly (incorporated by reference to Exhibit 10.32 to our Annual Report on Form 10-K, filed on February 23, 2021).
10.2†	Second Amended and Restated Employment Agreement, dated as of February 18, 2021, by and between JBG SMITH Properties and David P. Paul (incorporated by reference to Exhibit 10.33 to our Annual Report on Form 10-K, filed on February 23, 2021).
10.3†	Second Amended and Restated Employment Agreement, dated as of February 18, 2021, by and between JBG SMITH Properties and Kevin P. Reynolds (incorporated by reference to Exhibit 10.34 to our Annual Report on Form 10-K, filed on February 23, 2021).
10.4†	Amended and Restated Employment Agreement, dated as of February 18, 2021, by and between JBG SMITH Properties and Madhumita Moina Banerjee (incorporated by reference to Exhibit 10.35 to our Annual Report on Form 10-K, filed on February 23, 2021).
10.5†	Amended and Restated Employment Agreement, dated as of February 18, 2021, by and between JBG SMITH Properties and Stephen W. Theriot (incorporated by reference to Exhibit 10.36 to our Annual Report on Form 10-K, filed on February 23, 2021).
10.6†	Amended and Restated Employment Agreement, dated as of February 18, 2021, by and between JBG SMITH Properties and Steven A. Museles (incorporated by reference to Exhibit 10.37 to our Annual Report on Form 10-K, filed on February 23, 2021).
10.7†	Employment Agreement, dated as of February 18, 2021, by and between JBG SMITH Properties and George Xanders (incorporated by reference to Exhibit 10.38 to our Annual Report on Form 10-K, filed on February 23, 2021).
10.8†	Form of JBG SMITH Properties Restricted Share Unit Award Agreement for Employees (incorporated by reference to Exhibit 10.40 to our Annual Report on Form 10-K, filed on February 23, 2021).
10.9†	Form of JBG SMITH Properties Restricted Share Unit Award Agreement for Consultants (incorporated by reference to Exhibit 10.41 to our Annual Report on Form 10-K, filed on February 23, 2021).
10.10†	Form of JBG SMITH Properties Performance Share Unit Award Agreement (incorporated by reference to Exhibit 10.42 to our Annual Report on Form 10-K, filed on February 23, 2021).
10.11†	Form of 2021 JBG SMITH Properties Performance LTIP Unit Agreement (incorporated by reference to Exhibit 10.43 to our Annual Report on Form 10-K, filed on February 23, 2021).
10.12†	Amendment No. 3 to the JBG SMITH Properties 2017 Omnibus Share Plan, effective April 29, 2021 (incorporated by reference to Exhibit 4.8 to our Registration Statement on Form S-8, filed on April 29, 2021).
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


Exhibits	Description
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 4, 2021	/s/ M. Moina Banerjee
		M. Moina Banerjee
		Chief Financial Officer
		(Principal Financial Officer)