UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):

(Exact name of Registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) | (Commission file number) | (I.R.S. Employer Identification No.) | ||
(Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code: (
Former name or former address, if changed since last report:
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2.):
Securities registered pursuant to Section 12(b) of the Act:
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Item 2.02Results of Operations and Financial Condition
On November 2, 2021, JBG SMITH Properties (the “Company”) announced its financial results for the three and nine months ended September 30, 2021. The Company also released a Quarterly Investor Package, which contains a letter to shareholders, the earnings press release and supplemental information. A copy of the Quarterly Investor Package is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 7.01Regulation FD Disclosure
On November 2, 2021, the Company posted an investor presentation to its website at www.jbgsmith.com on the “Investor Relations” page. A copy of the investor presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein solely for purposes of this Item 7.01 disclosure.
The information contained in this Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed “filed” with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to liabilities of that section, nor incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01Financial Statements and Exhibits
(d) Exhibits
99.1 Quarterly Investor Package for the quarter ended September 30, 2021.
99.2JBG SMITH Properties Investor Presentation.
104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
JBG SMITH PROPERTIES | ||||
November 2, 2021 | By: | /s/ M. Moina Banerjee | ||
M. Moina Banerjee | ||||
Chief Financial Officer | ||||
(Principal Financial Officer) | ||||
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Quarterly Investor Package

JBGS Divider


Management Letter
November 2, 2021
There will come a time (hopefully soon) when this letter leads with something other than the pandemic. While the recovery that picked up in earnest in the second quarter continues, the Delta variant surge was an unwelcome headwind. Many employers delayed return-to-the-office plans, and some even pushed their target return dates to early 2022. As we make our way past the peak of this latest surge, we expect to see continued improvement of market fundamentals as the virus wanes and rising vaccination counts slow the spread of COVID-19 where we operate. Feedback from employers who have returned to the office is encouraging, with companies describing increased efficiency, creativity and strengthened appreciation of a unified workforce, all of which bode extremely well for the future of office utilization. The headlines for our business from this quarter align well with our focus on maximizing long term net asset value per share.
Amazon nearly doubled its workforce in National Landing in less than one year, with over 3,000 new hires and over 2,500 current open positions. Construction at Phase I of HQ2, Metropolitan Park, remains well underway, with 13 of the planned 22 stories currently above ground and an unchanged planned delivery in 2023.
Virginia Tech broke ground on the first building on its $1 billion Innovation Campus in National Landing, a planned 300,000 square foot, 11-story academic building. The University expects to occupy this first phase of owned space in 2024.
Our placemaking strategy in National Landing continued with an important lease executed at Dining in the Park with the award-winning local Chef from Seven Restaurant Group. Dining in the Park is a critically important element of our ongoing repositioning of National Landing and will be a first-of-its-kind dining experience located adjacent to the planned National Landing Rail Station and pedestrian bridge to Reagan National Airport.
We are under firm contract to acquire a 432-unit multifamily asset for approximately $205 million. We expect The Batley, a newly constructed asset located in DC’s Union Market, to generate stabilized annualized NOI of approximately $8 - $8.5 million, representing a stabilized capitalization rate of approximately 4%. Subject to customary closing conditions, we plan to close the acquisition by year end, and for it to be our like-kind exchange for the sale of Pen Place.
We closed on the sale of 500 L’Enfant Plaza, a 215,000 square foot trophy office asset, of which we owned 49%, for approximately $167 million ($774 PSF), representing a stabilized capitalization rate of approximately 5%. We have generated over $92 million of sale proceeds in 2021, which deleveraged our balance sheet and created capacity for future multifamily investment opportunities. Additionally, we are actively marketing over $500 million of non-core office and land assets.
We achieved carbon neutrality across our operating portfolio, the first step in our strategy of increased and differentiated portfolio sustainability. This is an important step among many that we have taken to improve the sustainable operations of our business, differentiating us from many of our competitors in a marketplace where customers increasingly value climate responsibility.
We provide more detail on each of these growth drivers below.
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We own and operate urban mixed-use properties concentrated in what we believe are the highest growth submarkets of the historically recession-resilient Washington, DC metro area.
Our concentration in these submarkets, our substantial portfolio of operating and development opportunities, and our market-leading platform position us to capitalize on the significant growth we anticipate in our target submarkets.
Over 50% of our holdings are in the National Landing submarket in Northern Virginia, directly across the Potomac River from Washington, DC, where Amazon’s new 5 million+ square foot headquarters and Virginia Tech’s under-construction $1 billion Innovation Campus are located.
The Commonwealth of Virginia has incentivized Amazon to bring up to 38,000 new jobs to National Landing, which, based on data from the National Landing Business Improvement District, would increase the daytime population in the submarket from approximately 50,000 people today to nearly 90,000 people in the future, representing dramatic growth of more than 70%. Amazon recently amended its return-to-the-office plans, authorizing team leaders to establish the number of days their respective groups would be required to be physically present in the office. This revised and more relaxed policy aligns well with Amazon’s aggressive hiring in the current competitive job market. The company reiterated, however, that it expects employees to live locally and within commuting distance of the office for at least 11 months of the year.
At the Seattle headquarters, approximately 20% of Amazon’s employees live within walking or biking distance to work, and Amazon provides a $350 monthly stipend for employees who bike to HQ2. Using Amazon’s Seattle employee patterns and preferences as proxies for behaviors that might be expected at HQ2, 20% of employees, or up to 7,600 Amazon employees, could be expected to live within the National Landing submarket. This potential influx of demand for additional multifamily units aligns well with our plans to deliver new multifamily supply to the submarket. In addition to the 808 units at 1900 Crystal Drive currently under construction, our Near-Term Development Pipeline has the potential to add as many as 2,535 new multifamily units.
While we control 77% of the existing office supply and 79% of the unencumbered development density in National Landing, the balance of our portfolio is concentrated in what we believe are the highest growth submarkets in the Washington, DC metro region, the majority of which are within a 20-minute commute of the growing technology ecosystem in National Landing.
We believe the strong technology sector tailwinds created by Amazon, the Virginia Tech Innovation Campus, and our National Landing Smart City initiative, including our 5G rollout and other connectivity enhancements with best-in-class partners, will drive substantial long-term NAV per share growth.
Our successful track record and well-established platform position us to maximize the value of our Development Pipeline and to access attractively priced capital through opportunistic land sales, ground leases, and/or recapitalizations with private investors.
As of the third quarter, we had one asset under construction – 1900 Crystal Drive, an 808-unit multifamily property located in the heart of National Landing. Upon stabilization, we expect this asset to generate approximately $23 million of annualized NOI, representing a 5.8% yield on cost. Since our formation in 2017, we have successfully delivered 2.8 million square feet of mixed-use development, with an estimated stabilized yield of 6.5% for multifamily assets and 7.0% for commercial assets.
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Over the past year, we advanced the design and entitlement of approximately 77% of our Development Pipeline, 60% of which is in National Landing. Our 14.6 million square foot Development Pipeline, 73% of which is multifamily, includes both a 5.1 million square foot Near-Term Development Pipeline and a 9.5 million square foot Future Development Pipeline. Our Near-Term Development Pipeline comprises what we believe to be the most accretive and strategic development opportunities in our growth pipeline – those which have the potential to commence construction over the next 36 months, subject to receipt of final entitlements, completion of design, and market conditions. Within our Future Development Pipeline, we have fully entitled 3.6 million square feet and are actively advancing design and entitlement on an additional 4.3 million square feet. We believe that advancing entitlement and design of these assets is the best way to maximize optionality and value, either through internal development, land sales, ground lease structures, and/or recapitalizations with third-party capital. The remaining 1.6 million square feet within our Future Development pipeline primarily includes encumbered assets that we are not currently entitling.
Our capital allocation strategy is to shift our portfolio to majority multifamily and concentrate our office portfolio in National Landing.
We expect our portfolio shift to majority multifamily will occur through a combination of investing in multifamily assets and divesting non-core office assets. In addition to the sale of $1.7 billion of non-core, primarily office assets since our formation in 2017, we intend to opportunistically sell at least another $1.4 billion of non-core assets, including office assets outside of National Landing as well as land sites where ground lease or joint venture execution may represent the most attractive path to maximizing value.
Q3 2021 and Recent Highlights
We are under firm contract to acquire The Batley, a 432-unit, 300,000 square foot multifamily asset, for a purchase price of approximately $205 million. We expect to close on this newly constructed asset by year end, subject to customary closing conditions. The Batley is in DC’s Union Market, a vibrant entertainment and nightlife district with more than one million square feet of retail planned at full build-out including current anchors Union Market food hall, Trader Joe’s, Blue Bottle Coffee, La Cosecha Latin Market, and multiple award-winning restaurants including the Michelin-starred Masseria. The Batley is walking distance to the Metro’s red line and is adjacent to both Gallaudet University and our 840-unit Gallaudet Near-Term Development sites. The Batley is also centrally located and easily walkable from significant office tenants such as ByteDance (TikTok’s parent company) as well as the under-construction future home of the Securities and Exchange Commission (expected completion in early 2026). The Batley was 90.7% occupied as of September 30, 2021. Upon stabilization, we expect the asset to generate approximately $8 - $8.5 million of annualized NOI, representing a stabilized capitalization rate of approximately 4%. We intend to use the asset as a replacement property in a like-kind exchange for the proceeds from the sale of Pen Place to Amazon. While customary design changes have pushed the Pen Place entitlement approvals and resulting closing to Q2 2022, we expect to begin receiving income from The Batley this year.
Virginia Tech Innovation Campus
In September, Virginia Tech broke ground on the first of three academic buildings to be developed as part of its $1 billion Innovation Campus. The 11-story, 300,000-square foot building, which is expected to be completed and occupied in 2024, contemplates a gem-shaped education and research center to house instruction, research, office, and support spaces for master’s and doctoral graduate programs focused on computer science and computer engineering. Virginia Tech’s plans call for two additional campus buildings, measuring approximately 150,000
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square feet each, to be built in a later phase. While the University expects to occupy its first phase of owned space in 2024, Virginia Tech is currently leasing interim space adjacent to the under-construction Innovation Campus. JBG SMITH is serving as the master developer on behalf of both Virginia Tech and the entire 20-acre innovation district, adjacent to the currently under-construction Potomac Yard Metro station. Once complete, the innovation district is expected to include 1.9 million square feet of academic, office, retail, and residential development, as well as more than 6.6 acres of public open space.
Near-Term Incremental NOI Update
We believe we will generate significant near-term NOI growth from the following drivers:
| (i) | $27 million of expected incremental annualized NOI by year end 2022 from the stabilization of seven newly delivered assets. This growth comprises five multifamily assets (West Half, 900 and 901 W Street, The Wren and 8001 Woodmont) and two commercial assets (4747 Bethesda Avenue and 1900 N Street) that were completed between Q3 2019 and Q1 2021. These assets remain in various stages of lease-up or free rent burn-off, with the multifamily buildings 79.9% leased and the office buildings 90.1% leased as of the third quarter. |
| (ii) | $8 - $8.5 million of expected annualized NOI upon stabilization of The Batley. As discussed above, we plan to use this asset as a replacement property in a like-kind exchange for the expected proceeds from the sale of Pen Place to Amazon. We expect to close the acquisition of The Batley by year end, subject to customary closing conditions. |
While these factors contribute to near-term NOI growth, our financial results may continue to be negatively impacted in the short-term by the COVID-19 pandemic. Despite improvements we saw in the third quarter, commercial parking income and NOI from our multifamily portfolio remain below pre-pandemic levels. Additionally, we believe the pandemic has delayed our ability to backfill some known 2021 and 2022 office vacates related to tenants’ pre-pandemic leasing decisions. While our office portfolio has exhibited strong leasing with 1.2 million square feet leased year-to-date, most of these leases comprise renewals (846,000 square feet). New leasing has been slow to recover over the past 18 months and will likely lag due to delayed return-to-the-office plans and decision-making related to future office utilization. We expect this lag to continue to impact our occupancy levels through 2022.
In the third quarter, we closed on the sale of 500 L’Enfant Plaza, a 215,000 square foot trophy office asset, of which we owned 49%, for approximately $167 million ($774 PSF), representing a stabilized capitalization rate of approximately 5%. Year-to-date, we have generated over $92 million of sale proceeds which deleveraged our balance sheet and created capacity for future multifamily investment opportunities.
Our capital allocation strategy includes an additional $1.4 billion of dispositions of non-core assets outside of National Landing. These dispositions include income-producing office assets, as well as non-core land holdings that will serve as a source of capital through sale, ground lease or joint venture. This basket of assets generated approximately $76 million of annualized NOI in the third quarter, adjusting for free rent, and, since our formation in 2017, required average annual capital expenditures of approximately $24 million. As we complete these dispositions, we expect to recycle approximately two-thirds of the proceeds into income-producing multifamily acquisitions, yielding stabilized capitalization rates in the 3.5% to 4.5% range, with the remaining one-third earmarked for deleveraging / funding our Near-Term Development Pipeline. For example, in the third quarter, we completed the design of 2000 and 2001 South Bell Street, two multifamily assets located in National Landing comprising 775 units. Construction is expected to commence at the beginning of 2022, subject to execution of a
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guaranteed maximum price contract, which we expect will be in-line with pricing achieved at 1900 Crystal Drive. Successful execution of this strategy will enable us to source funding at NAV from assets generating low cash yields to invest in new acquisitions with higher cash yields and growth, as well as in development projects with significant yield spreads and profit potential.
As the capital markets gradually reopen for office transactions, we are gaining increased visibility on pricing and liquidity. We are encouraged by the activity on the over $500 million of non-core assets that we are currently marketing. Barring any significant changes in market conditions or resurgence of the pandemic, we expect to market at least an additional $500 million of recycling transactions by year end 2022. We intend to pursue these recycling opportunities to accomplish our strategic objectives without delay while also ensuring the continued strength of our balance sheet as we pursue accretive investment opportunities.
We continue to seek investment opportunities with the highest potential risk-adjusted returns, which may include share repurchases. During the third quarter, we repurchased 2.3 million shares at a weighted average price of $29.73, totaling $68.9 million. Since we instituted our share repurchase plan in March 2020, we have repurchased 6.7 million shares at a weighted average price of $28.71, totaling $192.9 million.
Financial and Operating Metrics
For the three months ended September 30, 2021, we reported net income attributable to common shareholders of $0.9 million and Core FFO attributable to common shareholders of $42.5 million or $0.32 per diluted share. Same Store NOI for the quarter remained unchanged year-over-year at $72.7 million, while NOI for our operating portfolio and Adjusted EBITDA increased year-over-year by 12.6% and 6.7%, respectively. Our operating portfolio ended the quarter at 87.5% leased and 85.0% occupied. For second generation leases, the rental rate mark-to-market was negative 0.3%. As we have mentioned before, our mark-to-market will vary from quarter to quarter depending on the leases signed.
As of September 30, 2021, our Net Debt/Total Enterprise Value was 34.3%. Our Net Debt/Annualized Adjusted EBITDA increased to 7.9x in the third quarter and remains higher than historical levels primarily due to the impact of COVID-19 on certain income streams. We believe our leverage levels will continue to be elevated in the short-term given the pandemic’s impact on these income streams. As income streams improve with an economic recovery, and our newly delivered assets lease-up and stabilize, we expect our leverage to decrease, potentially offset by increases during active development. Finally, because our like-kind exchange for the Pen Place land is contemplated as a reverse like-kind exchange, our leverage will increase temporarily as we fund the acquisition of The Batley this year prior to receiving the cash proceeds from the land sale, which we expect in the second quarter of 2022.
Operating Portfolio
Our office portfolio performance remained relatively stable in the third quarter. While we experienced a significant uptick in the early summer, tour activity tapered off through the late summer and early fall and has yet to return to pre-pandemic levels. As a result, our quarterly leasing volume of 126,000 square feet was muted when compared to the strong volume we saw in the prior quarter. We believe this reduced volume is related both to the leasing seasonality we have historically observed in the summer months as well as the rise of COVID-19 Delta cases in July and August. Despite the slowdown, we are encouraged by a sizeable deal pipeline that we believe will lead to strong leasing in the upcoming quarters. Occupancy in our commercial portfolio declined by 180 bps quarter-over-quarter, the majority of which was related to pre-pandemic decision making.
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U.S. Government (GSA) Tenancy
There has been significant discussion regarding the future of the GSA’s office utilization. Representing approximately 21% of our third quarter annualized rent, the GSA is our largest tenant. 84% of this tenancy operates in buildings that are included in our long-term hold (National Landing) portfolio, and we intend to reduce the remaining 16% through our capital recycling initiatives. While the GSA represents our largest tenant concentration, there is a clear dichotomy between the two types of agencies within this group: mission critical agencies, such as the Department of Defense, and civilian agencies, such as the Social Security Administration.
Mission critical agencies represent 89% of our National Landing GSA tenancy, over 99% of which requires Sensitive Compartment Information Facilities (SCIF)/secure space or has high security requirements that cannot be transferred to a home office. The commitment to office-centric work is highlighted through Kastle Systems data, which reported monthly average key swipes by our mission critical National Landing GSA tenants at approximately 65% in the third quarter. We believe this tenant base will remain heavy office users and anticipate minimal reductions to square footage requirements over the long-term. Alternatively, the civilian agencies, which represent 11% of our National Landing GSA tenancy (approximately 218,000 square feet), carry a higher risk of post-pandemic contraction given the nature of their work and the ability to potentially transfer duties to a home office. While this is a risk, the civilian sector of our GSA tenancy in National Landing accounts for only 2% of our annualized office and retail rent (or approximately 1% of total annualized rent).
Market-Wide Trends (based on JLL reports)
Like what we observed in our own portfolio, tour activity across the region remained relatively slow through the third quarter. Nonetheless, the market has shown signs of bottoming with rates of negative absorption slowing, particularly in Northern Virginia. The DC metro region experienced negative net absorption of just 559,000 square feet in the third quarter, which is approximately 1 million square feet less than last quarter’s 1.6 million square feet of losses. Although the 20.8% vacancy rate was relatively unchanged, we believe this is a sign that the market has bottomed, after nearly 6 million square feet of negative absorption reported year-to-date. Northern Virginia saw an even more pronounced slowdown in space givebacks than DC itself, a positive indicator for a return of net growth in the market. It’s uncertain what that recovery will look like, but since JLL has seen disproportionate losses among older assets in the District and non-Metro, non-amenitized locations in the suburbs, the data suggest that the recovery will come first for high-quality buildings in amenity-rich, transit-oriented markets.
Our multifamily portfolio performance continues to improve. We experienced strong leasing during the third quarter due to customers returning to urban environments at a faster pace than we anticipated. Our portfolio ended the quarter at 90.2% occupied, up 390 basis points quarter-over-quarter, and 92.9% leased. Additionally, our portfolio asking rents more than fully rebounded to 2% above pre-pandemic (March 2020) levels, after declining 15% from March 2020 to December 2020. This trend is led by our National Landing and Maryland submarkets, with DC expected to further improve as supply is absorbed. With demand remaining strong and our portfolio in-place rents still approximately 9% below asking rents, our residential portfolio has significant embedded growth. We have also seen a dramatic burn-off in pandemic-driven concession packages, with concessions burning off entirely in some of our key submarkets.
As in our portfolio, multifamily market fundamentals have improved in the region and across other gateway markets from Q3 2020 through Q3 2021. Data from Apartment List show that the DC metro region saw 9.9% asking rent growth during this time while other gateway markets including New York, San Francisco, and Boston saw 11.3%.
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We believe our region saw slower growth from Q3 2020 through Q3 2021 because the DC region’s multifamily market was more resilient throughout the pandemic than in those other regions. Asking rents in the DC metro declined 3.4% from Q1 2020 through Q3 2020, compared to a decline of 6.2% in other gateway markets. As such, asking rents at the end of the third quarter were 6.2% higher than pre-pandemic levels (Q1 2020) in our region compared to just 4.4% in other gateway markets. According to the same Apartment List data set, occupancy across both the DC region and other gateway markets has stabilized around 96%.
According to data compiled from CoStar and UrbanTurf on supply, positive sentiment around the apartment market’s performance has driven approximately 300 units starting construction in the third quarter. Despite the new starts, the data still indicate average projected annual deliveries of 5,900 units from 2021 through 2023 – compared to an average of over 9,000 units from 2010 through 2019. With continued strong demand for multifamily, this level of deliveries should create a favorable environment for continued rent growth.
Retail Trends
Despite the surge in COVID-19 cases through the summer months, retail tenants are back in full force and looking for opportunities to capitalize on pent-up demand. With 15 transactions totaling over 34,000 square feet, our retail portfolio experienced its strongest leasing quarter since the onset of the pandemic. September represented our highest monthly leasing volume since December 2019 and accounted for over 32% of our retail leasing volume year-to-date.
In National Landing, we continue to make progress on the retail placemaking front. As mentioned last quarter, our Crystal Drive retail repositioning, a project largely constructed and leased during the pandemic, is nearly 100% leased or committed with approximately 20% of the tenants open for business and the remainder under construction or in the final building permitting process. Additionally, we recently advanced our Dining in the Park project – a unique, urban indoor/outdoor dining experience located immediately adjacent to the planned National Landing rail station and pedestrian bridge to Reagan National Airport. We signed a lease for a new restaurant concept with the award-winning Chef from Seven Restaurant Group (operator of two critically acclaimed restaurants in DC), which further reinforces National Landing as an outstanding experiential retail destination. We expect construction for Dining in the Park to begin this year with delivery in 2023. Finally, as the retail leasing partner for Amazon’s HQ2, we have made strong progress with several tenants for the ground floor retail space at the under-construction Metropolitan Park. We view all of these projects as important investments in our broader submarket repositioning strategy, serving as a foundation of anchor amenities that will enable future phases of placemaking development across the submarket. When combining JBG SMITH’s and Amazon’s planned retail deliveries in the submarket, the square footage of street-level retail in our National Landing portfolio will triple in just the next few years.
Environmental, Social, and Governance
In October, we received a 5-star rating in the GRESB Assessment for our operating portfolio and development pipeline, ranking second in our sector as a listed U.S. | Diversified Office/Residential company, and ranking first in our sector in the U.S. and Americas under the development assessment. We are proud to have achieved the highest rating available within the 2021 Real Estate Assessment and for being honored as a Global Sector Leader for our operating portfolio and a Global Sector Leader and Overall Regional Sector leader for our development pipeline.
In September, we achieved carbon neutrality across our operating portfolio. Building on this milestone, we intend to maintain carbon neutral operations at our properties going forward, allowing us to reduce our environmental footprint while also supporting the development of renewable energy technologies that prevent carbon from entering
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the atmosphere. Our planned next step toward long-term sustainability includes the development and execution of an offsite renewable energy strategy, which is expected to replace a significant portion of annual renewable energy credit purchases and bring additional renewables to the national electrical grid.
In July, we achieved Fitwel Viral Response Certification for all our office REIT assets, building on our entity level certification earlier this year, and became a Fitwel Champion – a status reached by organizations that have committed to integrate health-promoting designs and operations strategies throughout a portfolio.
Lastly, in August, the Washington Housing Initiative (WHI) Impact Pool provided $9 million in financing to the Washington Housing Conservancy (WHC) and the National Housing Trust (NHT), a non-profit organization engaged in housing preservation, for their acquisition of Hamilton Manor, a 245-unit multifamily building located in Hyattsville, Maryland. With the addition of this asset, the WHI Impact Pool has now financed approximately 1,400 affordable workforce housing units across three jurisdictions, including one with Amazon, all of which are managed by JBG SMITH.
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The late summer surge of the pandemic delayed, but did not alter, our plans and expectations for the future. Recovery in the commercial leasing market and the overall economy is very much tied to certainty and confidence, and ongoing pandemic uncertainty has resulted in what we believe is a short-term plateau along a continued upward trajectory. Even if January or next Spring proves to be the “new September”, we will remain focused on executing our recycling objectives, preparing our rich set of growth opportunities for new investment, and maintaining our strong capital base. We are incredibly energized by the path ahead and our ability to thrive in a post-pandemic environment, and we appreciate your continued trust and confidence.
Thank you and stay healthy,

W. Matthew Kelly
Chief Executive Officer
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Section Two – Earnings Release
FOR IMMEDIATE RELEASE |
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Earnings Release
CONTACT
Barbat Rodgers
Senior Vice President, Investor Relations
(240) 333-3805
brodgers@jbgsmith.com
JBG SMITH ANNOUNCES THIRD QUARTER 2021 RESULTS
Bethesda, MD (November 2, 2021) - JBG SMITH (NYSE: JBGS), a leading owner and developer of high-quality, mixed-use properties in the Washington, DC market, today filed its Form 10-Q for the quarter ended September 30, 2021 and reported its financial results.
Additional information regarding our results of operations, properties and tenants can be found in our Third Quarter 2021 Investor Package and Investor Presentation, which are posted in the Investor Relations section of our website at www.jbgsmith.com. We encourage investors to consider the information presented here with the information in those documents.
Third Quarter 2021 Highlights
| ● | For the three months ended September 30, 2021, net income attributable to common shareholders of $0.00 per diluted share, Funds From Operations ("FFO") attributable to common shareholders of $0.27 per diluted share and Core Funds From Operations ("Core FFO") attributable to common shareholders of $0.32 per diluted share. |
| THIRD QUARTER COMPARISON | | |||||||||
| in millions, except per share amounts | | Three Months Ended | Three Months Ended | | ||||||
| | | September 30, 2021 | September 30, 2020 | | ||||||
| | | Amount | Per Diluted Share | Amount | Per Diluted Share | | ||||
| Net income (loss) | | $ | 0.9 | $ | 0.00 | $ | (22.8) | $ | (0.18) | |
| FFO | | $ | 36.0 | $ | 0.27 | $ | 32.4 | $ | 0.24 | |
| Core FFO | | $ | 42.5 | $ | 0.32 | $ | 40.2 | $ | 0.30 | |
Note: All the above are attributable to common shareholders.
| ● | Annualized Net Operating Income ("NOI") for the three months ended September 30, 2021 was $324.0 million, compared to $330.7 million for the three months ended June 30, 2021, at our share. |
| ● | Same Store Net Operating Income ("SSNOI") at our share remained unchanged year-over-year at $72.7 million for the three months ended September 30, 2021. |
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| o | SSNOI was positively impacted by a decrease in uncollectable operating lease receivables and rent deferrals, which was offset by lower occupancy in our commercial portfolio, and lower rents and higher concessions for certain of our multifamily assets. |
| ● | SSNOI at our share decreased 3.3% year-over-year to $223.3 million for the nine months ended September 30, 2021. |
| o | We believe the decrease in SSNOI for the nine months ended September 30, 2021 was substantially attributable to the COVID-19 pandemic, which commenced at the end of the first quarter of 2020, including (i) higher concessions and lower rents in our multifamily portfolio and (ii) lower occupancy and a decline in parking revenue in our commercial portfolio. These declines were partially offset by a decrease in cleaning expenses across our commercial portfolio. |
| ● | NOI for our operating portfolio increased 12.6% year-over-year to $81.5 million, and Adjusted EBITDA increased 6.7% year-over-year to $69.8 million for the three months ended September 30, 2021. |
| o | We believe our financial results were negatively impacted by the COVID-19 pandemic and will continue to be in the short-term given the pandemic’s impact on certain income streams. |
| ◾ | Although parking revenue increased during the three months ended September 30, 2021 as compared to the prior quarter, parking revenue in our commercial portfolio was approximately 60% of pre-pandemic levels of approximately $30 million annually. |
| ◾ | SSNOI for our multifamily portfolio remained depressed compared to Q3 2020. However, we continued to see an improvement in fundamentals, with the in-service portfolio increasing to 95.1% leased and asking rents fully recovered, ending the quarter 2.0% above March 2020 rents. Though asking rents have recovered, in-place rents remain approximately 9.0% below asking rents. We expect in-place rents to increase as leases roll over the next year. |
Operating Portfolio
| ● | The operating commercial portfolio was 84.9% leased and 82.6% occupied as of September 30, 2021, compared to 85.9% and 84.4% as of June 30, 2021, at our share. |
| ● | The operating multifamily portfolio was 92.9% leased and 90.2% occupied as of September 30, 2021, compared to 91.6% and 86.3% as of June 30, 2021, at our share. |
| ● | Executed approximately 126,000 square feet of office leases at our share during the three months ended September 30, 2021, comprising approximately 33,000 square feet of first-generation leases and approximately 93,000 square feet of second-generation leases, which generated a 3.2% rental rate increase on a GAAP basis and a 0.3% rental rate decrease on a cash basis. |
| ● | Executed approximately 1.2 million square feet of office leases at our share during the nine months ended September 30, 2021, comprising approximately 174,000 square feet of first-generation leases and approximately 1.0 million square feet of second-generation leases, which generated a 3.7% rental rate increase on a GAAP basis and a 0.2% rental rate increase on a cash basis. |
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Development Portfolio
Under-Construction
| ● | As of September 30, 2021, we had one multifamily asset under construction consisting of 808 units at our share. |
Near-Term Development Pipeline
| ● | As of September 30, 2021, we had 11 near-term development pipeline assets consisting of 5.0 million square feet of estimated potential development density at our share. |
Future Development Pipeline
| ● | As of September 30, 2021, we had 25 future development pipeline assets consisting of 11.6 million square feet of estimated potential development density at our share, including the 2.1 million square feet held for sale to Amazon.com, Inc. ("Amazon"). |
Third-Party Asset Management and Real Estate Services Business
| ● | For the three months ended September 30, 2021, revenue from third-party real estate services, including reimbursements, was $25.8 million. Excluding reimbursements and service revenue from our interests in consolidated and unconsolidated real estate ventures, revenue from our third-party asset management and real estate services business was $13.4 million, primarily driven by $6.4 million of property and asset management fees, $4.0 million of development fees, $1.8 million of leasing fees and $1.1 million of other service revenue. |
Balance Sheet
| ● | As of September 30, 2021, our total enterprise value was approximately $6.4 billion, comprising 142.8 million common shares and units valued at $4.2 billion, and debt (net of premium / (discount) and deferred financing costs) at our share of $2.4 billion, less cash and cash equivalents at our share of $213.6 million. |
| ● | As of September 30, 2021, we had $194.3 million of cash and cash equivalents ($213.6 million of cash and cash equivalents at our share), and $998.6 million of capacity under our credit facility. |
| ● | Net debt to annualized Adjusted EBITDA at our share for the three months ended September 30, 2021 was 7.9x and our net debt / total enterprise value was 34.3% as of September 30, 2021. |
Investing and Financing Activities
| ● | As previously announced, in July, we entered into a mortgage loan with a principal balance of $85.0 million, collateralized by 1225 S. Clark Street. The mortgage loan has a seven-year term and an interest rate of LIBOR plus 1.60% per annum. |
| ● | In September 2021, we recognized a gain of $23.1 million from the sale of 500 L'Enfant Plaza by an unconsolidated real estate venture. |
| ● | We have agreed, subject to customary closing conditions, to acquire The Batley, a 432-unit multifamily asset in the Union Market submarket of Washington, DC, for a purchase price of approximately $205 million. We expect the acquisition to close in 2021. The building was 90.7% occupied as of September 30, 2021. We intend to use |
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| The Batley as a replacement property in a like-kind exchange for the expected proceeds from the sale of Pen Place to Amazon, which is expected to close during Q2 2022. |
| ● | In the third quarter we repurchased and retired 2.3 million common shares for $68.9 million, an average purchase price of $29.73 per share. |
Dividends
| ● | On October 27, 2021, our Board of Trustees declared a quarterly dividend of $0.225 per common share, payable on November 24, 2021 to shareholders of record as of November 10, 2021. |
About JBG SMITH
JBG SMITH owns, operates, invests in and develops a dynamic portfolio of mixed-use properties in the high growth and high barrier-to-entry submarkets in and around Washington, DC. Through an intense focus on placemaking, JBG SMITH cultivates vibrant, amenity-rich, walkable neighborhoods throughout the Washington, DC metropolitan area. Over half of JBG SMITH’s holdings are in the National Landing submarket in Northern Virginia, where it serves as the exclusive developer for Amazon’s new headquarters, and where Virginia Tech’s under-construction $1 billion Innovation Campus is located. JBG SMITH's portfolio currently comprises 17.1 million square feet of high-growth office, multifamily and retail assets at share, 98% of which are metro-served. It also maintains a development pipeline encompassing 16.6 million square feet of mixed-use development opportunities. JBG SMITH is committed to the operation and development of green, smart, and healthy buildings and plans to maintain carbon neutral operations annually. For more information on JBG SMITH please visit www.jbgsmith.com.
Forward-Looking Statements
Certain statements contained herein may constitute "forward-looking statements" as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Consequently, the future results of JBG SMITH Properties ("JBG SMITH", the "Company", "we", "us", "our" or similar terms) may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as "approximate", "hypothetical", "potential", "believes", "expects", "anticipates", "estimates", "intends", "plans", "would", "may" or similar expressions in this earnings release. One of the most significant factors that could cause actual outcomes to differ materially from our forward-looking statements is the adverse effect of the current pandemic of the novel coronavirus, or COVID-19, and the ensuing economic turmoil on the Company, our financial condition, results of operations, cash flows, performance, our tenants, the real estate market, and the global economy and financial markets. The extent to which COVID-19 continues to impact us and our tenants depends on future developments, many of which are highly uncertain and cannot be predicted with confidence. These developments include: the continued severity, duration, transmission rate and geographic spread of COVID-19 in the United States, the speed of the vaccine distribution, the effectiveness and willingness of people to take COVID-19 vaccines, the duration of associated immunity and vaccine efficacy against variants of COVID-19, the extent and effectiveness of other containment measures taken, and the response of the overall economy, the financial markets and the population, particularly in areas in which we operate, once the current containment measures are lifted and whether the residential market in the Washington, DC area and any of our properties will be
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materially impacted by the various moratoriums on residential evictions, among others. Moreover, investors are cautioned to interpret many of the risks identified under the section titled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic. We also note the following forward-looking statements: the impact of COVID-19 and the ensuing economic turmoil on our Company, NOI, SSNOI, net asset value, share price, occupancy rates, revenue from our multifamily and commercial portfolios, operating costs, deferrals of rent, uncollectable operating lease receivables, parking revenue, and burn-off of rent abatement; the impact of disruptions to the credit and capital markets on our ability to access capital, including refinancing maturing debt; changes to the amount and manner in which tenants use space; whether we incur additional costs or make additional concessions or offer other incentives to existing or prospective tenants to reconfigure space; whether the Washington, DC area will be more resilient than other parts of the country in any recession resulting from COVID-19; our annual dividend per share and dividend yield; annualized NOI; whether in the case of our under-construction and near-term development pipeline assets, estimated square feet, estimated number of units and in the case of our future development pipeline assets, estimated potential development density are accurate; expected key Amazon transaction terms and timeframes for closing any Amazon transactions not yet closed; planned infrastructure and educational improvements related to Amazon's additional headquarters and the Virginia Tech Innovation Campus; the economic impact, job growth, expansion of public transportation and related demand for multifamily and commercial properties of Amazon's additional headquarters on the DC area and National Landing and the speed with which such impact occurs and Amazon’s plans for accelerated hiring and in-person work requirements; the impact of our role as the exclusive developer, property manager and retail leasing agent in connection with Amazon's new headquarters; our development plans related to Amazon's additional headquarters; whether any of our tenants succeed in obtaining government assistance under the CARES Act and other programs and use any resulting proceeds to make lease payments owed to us; whether we can access agency debt secured by our currently unencumbered multifamily assets timely, on reasonable terms or at all; whether the acquisition of The Batley will close on time or at all and whether our contemplated like-kind exchange for the sale of Pen Place will occur; and whether the allocation of capital to our share repurchase plan has any impact on our share price.
Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. These factors include, among others: adverse economic conditions in the Washington, DC metropolitan area, including in relation to COVID-19, the timing of and costs associated with development and property improvements, financing commitments, and general competitive factors. For further discussion of factors that could materially affect the outcome of our forward-looking statements and other risks and uncertainties, see "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Cautionary Statement Concerning Forward-Looking Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 and other periodic reports the Company files with the Securities and Exchange Commission. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date hereof.
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Pro Rata Information
We present certain financial information and metrics in this release "at JBG SMITH Share," which refers to our ownership percentage of consolidated and unconsolidated assets in real estate ventures (collectively, "real estate ventures") as applied to these financial measures and metrics. Financial information "at JBG SMITH Share" is calculated on an asset-by-asset basis by applying our percentage economic interest to each applicable line item of that asset's financial information. "At JBG SMITH Share" information, which we also refer to as being "at share," "our pro rata share" or "our share," is not, and is not intended to be, a presentation in accordance with GAAP. Given that a substantial portion of our assets are held through real estate ventures, we believe this form of presentation, which presents our economic interests in the partially owned entities, provides investors valuable information regarding a significant component of our portfolio, its composition, performance and capitalization.
We do not control the unconsolidated real estate ventures and do not have a legal claim to our co-venturers' share of assets, liabilities, revenue and expenses. The operating agreements of the unconsolidated real estate ventures generally allow each co-venturer to receive cash distributions to the extent there is available cash from operations. The amount of cash each investor receives is based upon specific provisions of each operating agreement and varies depending on certain factors including the amount of capital contributed by each investor and whether any investors are entitled to preferential distributions.
With respect to any such third-party arrangement, we would not be in a position to exercise sole decision-making authority regarding the property, real estate venture or other entity, and may, under certain circumstances, be exposed to economic risks not present were a third-party not involved. We and our respective co-venturers may each have the right to trigger a buy-sell or forced sale arrangement, which could cause us to sell our interest, or acquire our co-venturers' interests, or to sell the underlying asset, either on unfavorable terms or at a time when we otherwise would not have initiated such a transaction. Our real estate ventures may be subject to debt, and the repayment or refinancing of such debt may require equity capital calls. To the extent our co-venturers do not meet their obligations to us or our real estate ventures or they act inconsistent with the interests of the real estate venture, we may be adversely affected. Because of these limitations, the non-GAAP "at JBG SMITH Share" financial information should not be considered in isolation or as a substitute for our financial statements as reported under GAAP.
Non-GAAP Financial Measures
This release includes non-GAAP financial measures. For these measures, we have provided an explanation of how these non-GAAP measures are calculated and why JBG SMITH's management believes that the presentation of these measures provides useful information to investors regarding JBG SMITH's financial condition and results of operations. Reconciliations of certain non-GAAP measures to the most directly comparable GAAP financial measure are included in this earnings release. Our presentation of non-GAAP financial measures may not be comparable to similar non-GAAP measures used by other companies. In addition to "at share" financial information, the following non-GAAP measures are included in this release:
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), EBITDA for Real Estate ("EBITDAre") and "Adjusted EBITDA" are non-GAAP financial measures. EBITDA and EBITDAre are used by management as supplemental operating performance measures, which we believe help investors and lenders meaningfully evaluate and compare our operating performance from period-to-period by removing from our
7
operating results the impact of our capital structure (primarily interest charges from our outstanding debt and the impact of our interest rate swaps) and certain non-cash expenses (primarily depreciation and amortization on our assets). EBITDAre is computed in accordance with the definition established by the National Association of Real Estate Investment Trusts ("NAREIT"). NAREIT defines EBITDAre as GAAP net income (loss) adjusted to exclude interest expense, income taxes, depreciation and amortization expenses, gains and losses on sales of real estate and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, including our share of such adjustments of unconsolidated real estate ventures. These supplemental measures may help investors and lenders understand our ability to incur and service debt and to make capital expenditures. EBITDA and EBITDAre are not substitutes for net income (loss) (computed in accordance with GAAP) and may not be comparable to similarly titled measures used by other companies.
Adjusted EBITDA represents EBITDAre adjusted for items we believe are not representative of ongoing operating results, such as Transaction and Other Costs, impairment write-downs of right-of-use assets associated with leases in which we are a lessee, gain (loss) on the extinguishment of debt, earnings (losses) and distributions in excess of our investment in unconsolidated real estate ventures, lease liability adjustments and share-based compensation expense related to the Formation Transaction and special equity awards. We believe that adjusting such items not considered part of our comparable operations, provides a meaningful measure to evaluate and compare our performance from period-to-period.
Because EBITDA, EBITDAre and Adjusted EBITDA have limitations as analytical tools, we use EBITDA, EBITDAre and Adjusted EBITDA to supplement GAAP financial measures. Additionally, we believe that users of these measures should consider EBITDA, EBITDAre and Adjusted EBITDA in conjunction with net income (loss) and other GAAP measures in understanding our operating results.
Funds from Operations ("FFO"), "Core FFO" and Funds Available for Distribution ("FAD") are non-GAAP financial measures. FFO is computed in accordance with the definition established by NAREIT in the NAREIT FFO White Paper - 2018 Restatement. NAREIT defines FFO as net income (loss) (computed in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, including our share of such adjustments for unconsolidated real estate ventures.
Core FFO represents FFO adjusted to exclude items (net of tax) which we believe are not representative of ongoing operating results, such as Transaction and Other Costs, impairment write-downs of right-of-use assets associated with leases in which we are a lessee, gains (or losses) on extinguishment of debt, earnings (losses) and distributions in excess of our investment in unconsolidated real estate ventures, share-based compensation expense related to the Formation Transaction and special equity awards, lease liability adjustments, amortization of the management contracts intangible and the mark-to-market of derivative instruments.
FAD represents Core FFO less recurring tenant improvements, leasing commissions and other capital expenditures, net deferred rent activity, third-party lease liability assumption payments, recurring share-based compensation expense, accretion of acquired below-market leases, net of amortization of acquired above-market leases, amortization of debt issuance costs and other non-cash income and charges. FAD is presented solely as a
8
supplemental disclosure that management believes provides useful information as it relates to our ability to fund dividends.
We believe FFO, Core FFO and FAD are meaningful non-GAAP financial measures useful in comparing our levered operating performance from period-to-period and as compared to similar real estate companies because these non-GAAP measures exclude real estate depreciation and amortization expense and other non-comparable income and expenses, which implicitly assumes that the value of real estate diminishes predictably over time rather than fluctuating based on market conditions. FFO, Core FFO and FAD do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as a performance measure or cash flow as a liquidity measure. FFO, Core FFO and FAD may not be comparable to similarly titled measures used by other companies.
"Net Debt" is a non-GAAP financial measurement. Net Debt represents our total consolidated and unconsolidated indebtedness less cash and cash equivalents at our share. Net Debt is an important component in the calculations of Net Debt to Annualized Adjusted EBITDA and Net Debt / total enterprise value. We believe that Net Debt is a meaningful non-GAAP financial measure useful to investors because we review Net Debt as part of the management of our overall financial flexibility, capital structure and leverage. We may utilize a considerable portion of our cash and cash equivalents at any given time for purposes other than debt reduction. In addition, cash and cash equivalents at our share may not be solely controlled by us. The deduction of cash and cash equivalents at our share from consolidated and unconsolidated indebtedness in the calculation of Net Debt, therefore, should not be understood to mean that it is available exclusively for debt reduction at any given time.
Net Operating Income ("NOI") and "Annualized NOI" are non-GAAP financial measures management uses to assess a segment's performance. The most directly comparable GAAP measure is net income (loss) attributable to common shareholders. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only property related revenue (which includes base rent, tenant reimbursements and other operating revenue, net of Free Rent and payments associated with assumed lease liabilities) less operating expenses and ground rent, if applicable. NOI also excludes deferred rent, related party management fees, interest expense, and certain other non-cash adjustments, including the accretion of acquired below-market leases and the amortization of acquired above-market leases and below-market ground lease intangibles. Management uses NOI as a supplemental performance measure of our assets and believes it provides useful information to investors because it reflects only those revenue and expense items that are incurred at the asset level, excluding non-cash items. In addition, NOI is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets. However, because NOI excludes depreciation and amortization and captures neither the changes in the value of our assets that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our assets, all of which have real economic effect and could materially impact the financial performance of our assets, the utility of NOI as a measure of the operating performance of our assets is limited. NOI presented by us may not be comparable to NOI reported by other REITs that define these measures differently. We believe to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) attributable to common shareholders as presented in our financial statements. NOI should not be considered as an alternative to net income (loss) attributable to common shareholders as an indication of our performance or to cash flows as a
9
measure of liquidity or our ability to make distributions. Annualized NOI, for all assets except Crystal City Marriott, represents NOI for the three months ended September 30, 2021 multiplied by four. Due to seasonality in the hospitality business, Annualized NOI for Crystal City Marriott represents the trailing 12-month NOI as of September 30, 2021. Management believes Annualized NOI provides useful information in understanding our financial performance over a 12-month period, however, investors and other users are cautioned against attributing undue certainty to our calculation of Annualized NOI. Actual NOI for any 12-month period will depend on a number of factors beyond our ability to control or predict, including general capital markets and economic conditions, any bankruptcy, insolvency, default or other failure to pay rent by one or more of our tenants and the destruction of one or more of our assets due to terrorist attack, natural disaster or other casualty, among others. We do not undertake any obligation to update our calculation to reflect events or circumstances occurring after the date of this earnings release. There can be no assurance that the Annualized NOI shown will reflect our actual results of operations over any 12-month period.
"Non-Same Store" refers to all operating assets excluded from the same store pool.
"Same Store" refers to the pool of assets that were in-service for the entirety of both periods being compared, which excludes assets for which significant redevelopment, renovation, or repositioning occurred during either of the periods being compared.
Definitions
“First-generation” is a lease on space that had been vacant for at least nine months or a lease on newly delivered space.
"Formation Transaction" refers collectively to the spin-off on July 17, 2017 of substantially all of the assets and liabilities of Vornado Realty Trust's Washington, DC segment, which operated as Vornado / Charles E. Smith, and the acquisition of the management business and certain assets and liabilities of The JBG Companies.
"Future Development Pipeline" refers to assets that are development opportunities on which we do not intend to commence construction within the next three years where we (i) own land or control the land through a ground lease or (ii) are under a long-term conditional contract to purchase, or enter into, a leasehold interest with respect to land.
"GAAP" refers to accounting principles generally accepted in the United States of America.
"In-Service" refers to commercial or multifamily assets that are at or above 90% leased or have been operating and collecting rent for more than 12 months as of September 30, 2021.
"JBG Legacy Funds" refers to the legacy funds formerly organized by The JBG Companies.
"Near-Term Development Pipeline" refers to select assets that have the potential to commence construction over the next three years, subject to receipt of full entitlements, completion of design and market conditions.
"Second-Generation" is a lease on space that had been vacant for less than nine months.
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"Transaction and Other Costs" include demolition costs, integration and severance costs, pursuit costs related to other completed, potential and pursued transactions, as well as other expenses.
"Under-Construction" refers to assets that were under construction during the three months ended September 30, 2021.
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CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| in thousands | | September 30, 2021 | | December 31, 2020 |
| ||
| | | | | | | |
|
| ASSETS | | | | | | |
|
| Real estate, at cost: |
| |
|
| |
| |
| Land and improvements | | $ | 1,358,299 | | $ | 1,391,472 | |
| Buildings and improvements | |
| 4,368,477 | |
| 4,341,103 | |
| Construction in progress, including land | |
| 299,359 | |
| 268,056 | |
| | |
| 6,026,135 | |
| 6,000,631 | |
| Less: accumulated depreciation | |
| (1,346,107) | |
| (1,232,690) | |
| Real estate, net | |
| 4,680,028 | |
| 4,767,941 | |
| Cash and cash equivalents | |
| 194,277 | |
| 225,600 | |
| Restricted cash | |
| 34,900 | |
| 37,736 | |
| Tenant and other receivables | |
| 51,128 | |
| 55,903 | |
| Deferred rent receivable | |
| 187,882 | |
| 170,547 | |
| Investments in unconsolidated real estate ventures | |
| 486,052 | |
| 461,369 | |
| Other assets, net | |
| 300,537 | |
| 286,575 | |
| Assets held for sale | |
| 74,174 | |
| 73,876 | |
| TOTAL ASSETS | | $ | 6,008,978 | | $ | 6,079,547 | |
| | | | | | | | |
| LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | |
|
| |
|
| |
| Liabilities: | |
|
| |
|
| |
| Mortgages payable, net | | $ | 1,674,285 | | $ | 1,593,738 | |
| Revolving credit facility | |
| — | |
| — | |
| Unsecured term loans, net | |
| 398,493 | |
| 397,979 | |
| Accounts payable and accrued expenses | |
| 105,307 | |
| 103,102 | |
| Other liabilities, net | |
| 200,204 | |
| 247,774 | |
| Total liabilities | |
| 2,378,289 | |
| 2,342,593 | |
| Commitments and contingencies | |
|
| |
|
| |
| Redeemable noncontrolling interests | |
| 526,913 | |
| 530,748 | |
| Total equity | |
| 3,103,776 | |
| 3,206,206 | |
| TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | | $ | 6,008,978 | | $ | 6,079,547 | |
Note: For complete financial statements, please refer to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
in thousands, except per share data | | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||||
| | 2021 | | 2020 | | 2021 | | 2020 | ||||
REVENUE | | | | | | | | | | | | |
Property rental |
| $ | 125,900 |
| $ | 118,680 | | $ | 370,960 |
| $ | 354,519 |
Third-party real estate services, including reimbursements | |
| 25,842 | |
| 26,987 | |
| 90,694 | |
| 83,870 |
Other revenue | |
| 5,280 | |
| 5,368 | |
| 15,301 | |
| 15,705 |
Total revenue | |
| 157,022 | |
| 151,035 | |
| 476,955 | |
| 454,094 |
EXPENSES | |
|
| |
|
| |
|
| |
|
|
Depreciation and amortization | |
| 56,726 | |
| 56,481 | |
| 178,130 | |
| 157,586 |
Property operating | |
| 40,198 | |
| 37,572 | |
| 109,929 | |
| 105,867 |
Real estate taxes | |
| 18,259 | |
| 17,354 | |
| 55,127 | |
| 53,422 |
General and administrative: | |
|
| |
|
| |
| | |
|
|
Corporate and other | |
| 12,105 | |
| 11,086 | |
| 38,475 | |
| 37,478 |
Third-party real estate services | |
| 25,542 | |
| 28,207 | |
| 80,035 | |
| 86,260 |
Share-based compensation related to Formation Transaction and special equity awards | |
| 3,480 | |
| 7,133 | |
| 12,866 | |
| 25,432 |
Transaction and other costs | |
| 2,951 | |
| 845 | |
| 8,911 | |
| 7,526 |
Total expenses | |
| 159,261 | |
| 158,678 | |
| 483,473 | |
| 473,571 |
OTHER INCOME (EXPENSE) | |
|
| |
|
| |
|
| |
|
|
Income (loss) from unconsolidated real estate ventures, net | |
| 20,503 | |
| (965) | |
| 23,513 | |
| (17,142) |
Interest and other income, net | |
| 192 | |
| — | |
| 163 | |
| 1,021 |
Interest expense | |
| (17,243) | |
| (16,885) | |
| (50,312) | |
| (44,660) |
Gain on sale of real estate | |
| — | |
| — | |
| 11,290 | |
| 59,477 |
Loss on extinguishment of debt | |
| — | |
| — | |
| — | |
| (33) |
Total other income (expense) | |
| 3,452 | |
| (17,850) | |
| (15,346) | |
| (1,337) |
INCOME (LOSS) BEFORE INCOME TAX (EXPENSE) BENEFIT | |
| 1,213 | |
| (25,493) | |
| (21,864) | |
| (20,814) |
Income tax (expense) benefit | |
| (217) | |
| 488 | |
| (4,527) | |
| 3,721 |
NET INCOME (LOSS) | |
| 996 | |
| (25,005) | |
| (26,391) | |
| (17,093) |
Net (income) loss attributable to redeemable noncontrolling interests | |
| (103) | |
| 2,212 | |
| 2,472 | |
| 445 |
Net loss attributable to noncontrolling interests | | | — | |
| — | | | 1,108 | | | — |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | | $ | 893 | | $ | (22,793) | | $ | (22,811) | | $ | (16,648) |
EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED | | $ | 0.00 | | $ | (0.18) | | $ | (0.18) | | $ | (0.14) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED | |
| 131,351 | |
| 133,620 | |
| 131,456 | |
| 133,924 |
Note: For complete financial statements, please refer to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.
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EBITDA, EBITDAre AND ADJUSTED EBITDA RECONCILIATIONS (NON-GAAP)
(Unaudited)
| dollars in thousands |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| ||||||||
| | | 2021 | | 2020 | | 2021 | | 2020 |
| ||||
| | | | | | | | | | | | | |
|
| EBITDA, EBITDAre and Adjusted EBITDA |
| | | | | | | |
| | |
| |
| Net income (loss) | | $ | 996 | | $ | (25,005) | | $ | (26,391) | | $ | (17,093) | |
| Depreciation and amortization expense | | | 56,726 | | | 56,481 | | | 178,130 | | | 157,586 | |
| Interest expense | | | 17,243 | | | 16,885 | | | 50,312 | | | 44,660 | |
| Income tax expense (benefit) | | | 217 | | | (488) | | | 4,527 | | | (3,721) | |
| Unconsolidated real estate ventures allocated share of above adjustments | | | 10,147 | | | 9,987 | | | 30,892 | | | 31,516 | |
| EBITDA attributable to noncontrolling interests | | | (54) | | | (4) | | | 976 | | | (7) | |
| EBITDA | | $ | 85,275 | | $ | 57,856 | | $ | 238,446 | | $ | 212,941 | |
| Gain on sale of real estate | | | — | | | — | | | (11,290) | | | (59,477) | |
| (Gain) loss on sale of unconsolidated real estate assets | | | (23,137) | | | — | | | (28,326) | | | 2,952 | |
| Impairment of investments in unconsolidated real estate ventures (1) | | | 1,380 | | | — | | | 1,380 | | | 6,522 | |
| | | | | | | | | | | | | | |
| EBITDAre | | $ | 63,518 | | $ | 57,856 | | $ | 200,210 | | $ | 162,938 | |
| Transaction and other costs (2) | | | 2,951 | | | 845 | | | 7,803 | | | 7,526 | |
| Loss on extinguishment of debt | | | — | | | — | | | — | | | 33 | |
| Share-based compensation related to Formation Transaction and special equity awards | | | 3,480 | | | 7,133 | | | 12,866 | | | 25,432 | |
| Losses and distributions in excess of our investment in unconsolidated real estate venture | | | (280) | | | (436) | | | (702) | | | (307) | |
| Unconsolidated real estate ventures allocated share of above adjustments | | | 130 | | | — | | | 170 | | | 1,465 | |
| | | | | | | | | | | | | | |
| Adjusted EBITDA | | $ | 69,799 | | $ | 65,398 | | $ | 220,347 | | $ | 197,087 | |
| | | | | | | | | | | | | | |
| Net Debt to Annualized Adjusted EBITDA (3) | | | 7.9 | x | | 7.7 | x | | 7.5 | x | | 7.6 | x |
| | | | | | | | | | | | | | |
| | | | | | | | | September 30, 2021 | | September 30, 2020 | | ||
| Net Debt (at JBG SMITH Share) | | | | | | | | |
| | |
| |
| Consolidated indebtedness (4) | | | | | | | | $ | 2,063,426 | | $ | 2,081,456 | |
| Unconsolidated indebtedness (4) | | | | | | | | | 362,698 | | | 393,398 | |
| Total consolidated and unconsolidated indebtedness | | | | | | | | | 2,426,124 | | | 2,474,854 | |
| Less: cash and cash equivalents | | | | | | | | | 213,612 | | | 465,532 | |
| Net Debt (at JBG SMITH Share) | | | | | | | | $ | 2,212,512 | | $ | 2,009,322 | |
Note: All EBITDA measures as shown above are attributable to common limited partnership units ("OP Units").
| (1) | Related to decreases in the value of the underlying assets. |
| (2) | Includes demolition costs, integration and severance costs, pursuit costs related to other completed, potential and pursued transactions, as well as other expenses. For the nine months ended September 30, 2021, excludes $1.1 million of transaction costs attributable to noncontrolling interests. For the nine months ended September 30, 2020, includes a charitable commitment of $4.0 million to the Washington Housing Conservancy, a non-profit that acquires and owns affordable workforce housing in the Washington, DC metropolitan area. |
| (3) | Calculated using the Net Debt below. Quarterly Adjusted EBITDA is annualized by multiplying by four. Adjusted EBITDA for the nine months ended September 30, 2021 and 2020 is annualized by multiplying by 1.33. |
| (4) | Net of premium/discount and deferred financing costs. |
14
FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP)
(Unaudited)
| in thousands, except per share data | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| ||||||||
| |
| 2021 |
| 2020 | XX | 2021 |
| 2020 | | ||||
| | | | | | | | | | | | | | |
| FFO and Core FFO | | | | | | | | | | | | | |
| Net income (loss) attributable to common shareholders | | $ | 893 |
| $ | (22,793) | | $ | (22,811) |
| $ | (16,648) | |
| Net income (loss) attributable to redeemable noncontrolling interests | |
| 103 |
| | (2,212) | |
| (2,472) |
| | (445) | |
| Net loss attributable to noncontrolling interests | |
| — |
| | — | |
| (1,108) |
| | — | |
| Net income (loss) | |
| 996 |
| | (25,005) | |
| (26,391) |
| | (17,093) | |
| Gain on sale of real estate | |
| — |
| | — | |
| (11,290) |
| | (59,477) | |
| (Gain) loss on sale of unconsolidated real estate assets | |
| (23,137) |
| | — | |
| (28,326) |
| | 2,952 | |
| Real estate depreciation and amortization | |
| 54,547 |
| | 54,004 | |
| 171,522 |
| | 149,590 | |
| Impairment of investments in unconsolidated real estate ventures (1) | | | 1,380 | | | — | | | 1,380 | | | 6,522 | |
| Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures | |
| 7,002 |
| | 7,350 | |
| 21,590 |
| | 21,730 | |
| FFO attributable to noncontrolling interests | |
| (54) |
| | (4) | |
| 976 |
| | (7) | |
| FFO Attributable to OP Units | | $ | 40,734 |
| $ | 36,345 | | $ | 129,461 |
| $ | 104,217 | |
| FFO attributable to redeemable noncontrolling interests | |
| (4,703) |
| | (3,945) | |
| (13,242) |
| | (11,353) | |
| FFO attributable to common shareholders | | $ | 36,031 |
| $ | 32,400 | | $ | 116,219 |
| $ | 92,864 | |
| | | | | | | | | | | | | | |
| FFO attributable to OP Units | | $ | 40,734 |
| $ | 36,345 | | $ | 129,461 |
| $ | 104,217 | |
| Transaction and other costs, net of tax (2) | |
| 2,928 |
| | 798 | |
| 7,721 |
| | 7,176 | |
| (Gain) loss from mark-to-market on derivative instruments | |
| 37 |
| | 203 | |
| (50) |
| | 173 | |
| Loss on extinguishment of debt | |
| — |
| | — | |
| — |
| | 33 | |
| Losses and distributions in excess of our investment in unconsolidated real estate venture | |
| (280) |
| | (436) | |
| (702) |
| | (307) | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 3,480 |
| | 7,133 | |
| 12,866 |
| | 25,432 | |
| Amortization of management contracts intangible, net of tax | |
| 1,072 |
| | 1,072 | |
| 3,217 |
| | 3,288 | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| 112 |
| | (55) | |
| 108 |
| | 1,848 | |
| Core FFO Attributable to OP Units | | $ | 48,083 |
| $ | 45,060 | | $ | 152,621 |
| $ | 141,860 | |
| Core FFO attributable to redeemable noncontrolling interests | |
| (5,552) |
| | (4,891) | |
| (15,612) |
| | (15,457) | |
| Core FFO attributable to common shareholders | | $ | 42,531 |
| $ | 40,169 | | $ | 137,009 |
| $ | 126,403 | |
| FFO per common share - diluted | | $ | 0.27 |
| $ | 0.24 | | $ | 0.88 |
| $ | 0.69 | |
| Core FFO per common share - diluted | | $ | 0.32 |
| $ | 0.30 | | $ | 1.04 |
| $ | 0.94 | |
| Weighted average shares - diluted (FFO and Core FFO) | |
| 131,351 |
| | 133,880 | |
| 131,456 |
| | 134,224 | |
See footnotes on page 16.
15
FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP)
(Unaudited)
| in thousands, except per share data | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| ||||||||
| |
| 2021 |
| 2020 | | 2021 |
| 2020 | | ||||
| | | | | | | | | | | | | | |
| FAD | | | | | | | | | | | | | |
| Core FFO attributable to OP Units |
| $ | 48,083 |
| $ | 45,060 | | $ | 152,621 |
| $ | 141,860 | |
| Recurring capital expenditures and second-generation tenant improvements and leasing commissions (3) | |
| (12,124) | |
| (11,395) | |
| (34,781) | |
| (34,089) | |
| Straight-line and other rent adjustments (4) | |
| (3,701) | |
| (4,935) | |
| (12,554) | |
| (9,898) | |
| Third-party lease liability assumption payments | |
| (422) | |
| (784) | |
| (1,803) | |
| (3,024) | |
| Share-based compensation expense | |
| 7,805 | |
| 7,642 | |
| 24,920 | |
| 27,129 | |
| Amortization of debt issuance costs | |
| 1,126 | |
| 829 | |
| 3,327 | |
| 2,124 | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| (1,478) | |
| (1,687) | |
| (4,137) | |
| (3,880) | |
| Non-real estate depreciation and amortization | |
| 703 | |
| 1,002 | |
| 2,180 | |
| 3,471 | |
| FAD available to OP Units (A) | | $ | 39,992 | | $ | 35,732 | | $ | 129,773 | | $ | 123,693 | |
| Distributions to common shareholders and unitholders (B) | | $ | 33,688 | | $ | 33,743 | | $ | 102,634 | | $ | 101,724 | |
| FAD Payout Ratio (B÷A) (5) | |
| 84.2 | % |
| 94.4 | % |
| 79.1 | % |
| 82.2 | % |
| | | | | | | | | | | | | | |
| Capital Expenditures | | | | | | | | | | | | | |
| Maintenance and recurring capital expenditures | | $ | 7,404 | | $ | 3,096 | | $ | 15,706 | | $ | 12,195 | |
| Share of maintenance and recurring capital expenditures from unconsolidated real estate ventures | |
| 265 | |
| 327 | |
| 636 | |
| 836 | |
| Second-generation tenant improvements and leasing commissions | |
| 3,762 | |
| 6,779 | |
| 17,280 | |
| 19,335 | |
| Share of second-generation tenant improvements and leasing commissions from unconsolidated real estate ventures | |
| 693 | |
| 1,193 | |
| 1,159 | |
| 1,723 | |
| Recurring capital expenditures and second-generation tenant improvements and leasing commissions | |
| 12,124 | |
| 11,395 | |
| 34,781 | |
| 34,089 | |
| Non-recurring capital expenditures | |
| 5,885 | |
| 4,840 | |
| 13,073 | |
| 17,267 | |
| Share of non-recurring capital expenditures from unconsolidated real estate ventures | |
| 177 | |
| 54 | |
| 284 | |
| 394 | |
| First-generation tenant improvements and leasing commissions | |
| 2,603 | |
| 4,033 | |
| 5,141 | |
| 27,733 | |
| Share of first-generation tenant improvements and leasing commissions from unconsolidated real estate ventures | |
| 93 | |
| 674 | |
| 1,484 | |
| 1,661 | |
| Non-recurring capital expenditures | |
| 8,758 | |
| 9,601 | |
| 19,982 | |
| 47,055 | |
| Total JBG SMITH Share of Capital Expenditures | | $ | 20,882 | | $ | 20,996 | | $ | 54,763 | | $ | 81,144 | |
| (1) | Related to decreases in the value of the underlying assets. |
| (2) | Includes demolition costs, integration and severance costs, pursuit costs related to other completed, potential and pursued transactions, as well as other expenses. For the nine months ended September 30, 2021, excludes $1.1 million of transaction costs attributable to noncontrolling interests. For the nine months ended September 30, 2020, includes a charitable commitment of $4.0 million to the Washington Housing Conservancy, a non-profit that acquires and owns affordable workforce housing in the Washington, DC metropolitan area. |
| (3) | Includes amounts, at JBG SMITH Share, related to unconsolidated real estate ventures. |
| (4) | Includes straight-line rent, above/below market lease amortization and lease incentive amortization. |
| (5) | The quarterly FAD payout ratio is not necessarily indicative of an amount for the full year due to fluctuation in the timing of capital expenditures, the commencement of new leases and the seasonality of our operations. |
16
NOI RECONCILIATIONS (NON-GAAP)
(Unaudited)
| dollars in thousands | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| ||||||||
| | | 2021 | | 2020 | | 2021 | | 2020 | | ||||
| | | | | | | | | | | | | | |
| Net income (loss) attributable to common shareholders |
| $ | 893 |
| $ | (22,793) | | $ | (22,811) |
| $ | (16,648) | |
| Add: | |
|
| |
|
| |
|
| |
|
| |
| Depreciation and amortization expense | |
| 56,726 | |
| 56,481 | |
| 178,130 | |
| 157,586 | |
| General and administrative expense: | |
|
| |
|
| |
|
| |
|
| |
| Corporate and other | |
| 12,105 | |
| 11,086 | |
| 38,475 | |
| 37,478 | |
| Third-party real estate services | |
| 25,542 | |
| 28,207 | |
| 80,035 | |
| 86,260 | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 3,480 | |
| 7,133 | |
| 12,866 | |
| 25,432 | |
| Transaction and other costs | |
| 2,951 | |
| 845 | |
| 8,911 | |
| 7,526 | |
| Interest expense | |
| 17,243 | |
| 16,885 | |
| 50,312 | |
| 44,660 | |
| Loss on extinguishment of debt | |
| — | |
| — | |
| — | |
| 33 | |
| Income tax expense (benefit) | |
| 217 | |
| (488) | |
| 4,527 | |
| (3,721) | |
| Net income (loss) attributable to redeemable noncontrolling interests | |
| 103 | |
| (2,212) | |
| (2,472) | |
| (445) | |
| Net loss attributable to noncontrolling interests | | | — | |
| — | | | (1,108) | | | — | |
| Less: | |
|
| |
|
| |
|
| |
|
| |
| Third-party real estate services, including reimbursements revenue | |
| 25,842 | |
| 26,987 | |
| 90,694 | |
| 83,870 | |
| Other revenue | |
| 1,568 | |
| 2,292 | |
| 5,658 | |
| 5,438 | |
| Income (loss) from unconsolidated real estate ventures, net | |
| 20,503 | |
| (965) | |
| 23,513 | |
| (17,142) | |
| Interest and other income, net | |
| 192 | |
| — | |
| 163 | |
| 1,021 | |
| Gain on sale of real estate | |
| — | |
| — | |
| 11,290 | |
| 59,477 | |
| | | | | | | | | | | | | | |
| Consolidated NOI | |
| 71,155 | |
| 66,830 | |
| 215,547 | |
| 205,497 | |
| NOI attributable to unconsolidated real estate ventures at our share | |
| 7,336 | |
| 7,130 | |
| 22,951 | |
| 23,206 | |
| Non-cash rent adjustments (1) | |
| (3,701) | |
| (4,934) | |
| (12,554) | |
| (9,898) | |
| Other adjustments (2) | |
| 4,683 | |
| 2,881 | |
| 14,608 | |
| 9,236 | |
| Total adjustments | |
| 8,318 | |
| 5,077 | |
| 25,005 | |
| 22,544 | |
| NOI | | $ | 79,473 | | $ | 71,907 | | $ | 240,552 | | $ | 228,041 | |
| Less: out-of-service NOI loss (3) | |
| (2,019) | |
| (442) | |
| (4,638) | |
| (2,774) | |
| Operating Portfolio NOI | | $ | 81,492 | | $ | 72,349 | | $ | 245,190 | | $ | 230,815 | |
| Non-Same Store NOI (4) | |
| 8,777 | |
| (388) | |
| 21,868 | |
| (165) | |
| Same Store NOI (5) | | $ | 72,715 | | $ | 72,737 | | $ | 223,322 | | $ | 230,980 | |
| | | | | | | | | | | | | | |
| Change in Same Store NOI | | | 0.0 | % | | | |
| (3.3) | % |
| | |
| Number of properties in Same Store pool | | | 55 | | | | |
| 55 | |
|
| |
| (1) | Adjustment to exclude straight-line rent, above/below market lease amortization and lease incentive amortization. |
| (2) | Adjustment to include other revenue and payments associated with assumed lease liabilities related to operating properties and to exclude commercial lease termination revenue and allocated corporate general and administrative expenses to operating properties. |
| (3) | Includes the results of our Under-Construction assets, and Near-Term and Future Development Pipelines. |
| (4) | Includes the results of properties that were not In-Service for the entirety of both periods being compared and properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. |
| (5) | Includes the results of the properties that are owned, operated and In-Service for the entirety of both periods being compared. |
17


TABLE OF CONTENTS | SEPTEMBER 30, 2021 |
Table of Contents
| Page |
Overview | |
3-5 | |
6 | |
7 | |
8-9 | |
10 | |
Financial Information | |
11 | |
12 | |
Unconsolidated Real Estate Ventures - Balance Sheet and Operating Information | 13 |
14 | |
EBITDA, EBITDAre and Adjusted EBITDA Reconciliations (Non-GAAP) | 15 |
16-17 | |
Third-Party Asset Management and Real Estate Services Business (Non-GAAP) | 18 |
Pro Rata Adjusted General and Administrative Expenses (Non-GAAP) | 19 |
20 | |
21-22 | |
23 | |
24 | |
25 | |
26 | |
Leasing Activity | |
27 | |
28 | |
29 | |
30 | |
31 | |
32 | |
Property Data | |
33 | |
Property Tables: | |
34-36 | |
37-39 | |
40 | |
41 | |
42 | |
43 | |
Debt | |
44 | |
45-46 | |
Real Estate Ventures | |
47 | |
48-49 | |
50-54 | |
Appendices – Transaction and Other Costs, and Reconciliations of Non-GAAP Financial Measures | 55-59 |
| | Page 2 |
Disclosures
Certain statements contained herein may constitute "forward-looking statements" as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Consequently, the future results of JBG SMITH Properties ("JBG SMITH", the "Company", "we", "us", "our" or similar terms) may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as "approximate", "hypothetical", "potential", "believes", "expects", "anticipates", "estimates", "intends", "plans", "would", "may" or similar expressions in this Investor Package. One of the most significant factors that could cause actual outcomes to differ materially from our forward-looking statements is the adverse effect of the current pandemic of the novel coronavirus, or COVID-19, and the ensuing economic turmoil on the Company, our financial condition, results of operations, cash flows, performance, our tenants, the real estate market, and the global economy and financial markets. The extent to which COVID-19 continues to impact us and our tenants depends on future developments, many of which are highly uncertain and cannot be predicted with confidence. These developments include: the continued severity, duration, transmission rate and geographic spread of COVID-19 in the United States, the speed of the vaccine distribution, the effectiveness and willingness of people to take COVID-19 vaccines, the duration of associated immunity and vaccine efficacy against variants of COVID-19, the extent and effectiveness of other containment measures taken, and the response of the overall economy, the financial markets and the population, particularly in areas in which we operate, once the current containment measures are lifted and whether the residential market in the Washington, DC area and any of our properties will be materially impacted by the various moratoriums on residential evictions, among others. Moreover, investors are cautioned to interpret many of the risks identified under the section titled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic. We also note the following forward-looking statements: the impact of COVID-19 and the ensuing economic turmoil on our Company, Net Operating Income, Same Store Net Operating Income, net asset value, share price, liquidity, occupancy rates, property rental revenue, operating costs, deferrals of rent, uncollectable operating lease receivables, parking revenue, burn-off of rent abatement, construction costs, the timing of disposition of assets in the JBG Legacy Funds, demand for new office space and potential bias of multifamily leasing to renewals; the impact of disruptions to the credit and capital markets on our ability to access capital, including refinancing maturing debt; potential Net Operating Income growth and the assumptions on which such growth is premised, our estimated future leverage (Net Debt/Adjusted EBITDA and Net Debt/Total Enterprise Value) profile, the economic impact, job growth, expansion of public transportation and related demand for multifamily and commercial properties of Amazon.com, Inc.’s ("Amazon") additional headquarters on the Washington, DC metropolitan area and National Landing and the speed with which such impact occurs and Amazon’s plans for accelerated hiring and in-person work requirements; changes to the amount and manner in which tenants use space; whether we incur additional costs or make additional concessions or offer other incentives to existing or prospective tenants to reconfigure space; long-term trends in demand for housing (including multifamily) within major urban employment centers; whether the Washington, DC area will be more resilient than other parts of the country in any recession resulting from COVID-19; potential countercyclical growth caused by the concentration in the Washington, DC area of Amazon, the federal government, government contractors, and the Virginia Tech Innovation campus; the economic impact of DC's diversification into technology; our anticipated acquisitions and dispositions and the ability to identify associated like-kind exchanges; our annual dividend per share and dividend yield; annualized Net Operating Income; adjusted annualized Net Operating Income; expected key Amazon transaction terms and timeframes for closing any Amazon transactions not yet closed; planned infrastructure and educational improvements related to Amazon's additional headquarters; the impact of our role as the exclusive developer, property manager and retail leasing agent in connection with Amazon's new headquarters; our development plans related to Amazon's additional headquarters; the impact on our net asset value of the Amazon transactions; in the case of any further Amazon lease transactions and our new development opportunities in National Landing, the total square feet to be leased to Amazon and the expected net effective rent; the impact of increases in government spending on increases in agency and contractor spending locally; whether we can access agency debt secured by our currently unencumbered multifamily assets timely, on reasonable terms or at all; whether the acquisition of The Batley will close on time or at all and whether our contemplated like-kind exchange for the sale of Pen Place will occur; whether 1900 Crystal Drive will generate the annualized NOI and yield on cost anticipated; whether the Batley and our newly delivered assets will stabilize on the timing anticipated and deliver the expected annualized NOI; whether we will succeed in our contemplated recycling of disposition proceeds into acquisitions yielding the anticipated stabilized capitalization rates; whether the allocation of capital to our share repurchase plan has any impact on our share price; whether in the case of our Under-Construction and Near-Term Development Pipeline assets, estimated square feet, estimated number of units, estimated construction start, occupancy stabilization dates, the estimated completion date, estimated stabilization date, Estimated Incremental Investment, Estimated Total Investment, Projected NOI Yield, weighted average Projected NOI Yield, NOI yield or Estimated Total Project Cost, estimated total NOI weighted average completion date, weighted average stabilization date, intended type of asset use and potential tenants, and Estimated Stabilized NOI are accurate; whether our Under-Construction assets will deliver the Annualized NOI that we anticipate; long-term trends regarding teleworking; whether the federal government will increase local spending when controlled by a single party; and in the case of our Future Development Pipeline opportunities, estimated commercial SF/multifamily units to be replaced, estimated remaining acquisition cost, estimated capitalized cost, Estimated Total Investment, Estimated Potential Development Density and the potential for delays in the entitlement process.
Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. These factors include, among others: adverse economic conditions in the Washington, DC metropolitan area, including in relation to COVID-19, the timing of and costs associated with development and property improvements,
| | Page 3 |
financing commitments, and general competitive factors. For further discussion of factors that could materially affect the outcome of our forward-looking statements and other risks and uncertainties, see "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Cautionary Statement Concerning Forward-Looking Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 and other periodic reports the Company files with the Securities and Exchange Commission. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date hereof.
Organization and Basis of Presentation
JBG SMITH Properties ("JBG SMITH") was organized as a Maryland real estate investment trust ("REIT") for the purpose of receiving, via the spin-off on July 17, 2017 (the "Separation"), substantially all of the assets and liabilities of Vornado Realty Trust's Washington, DC segment. On July 18, 2017, JBG SMITH acquired the management business and certain assets and liabilities of The JBG Companies ("JBG") (the "Combination"). The Separation and the Combination are collectively referred to as the "Formation Transaction."
The information contained in this Investor Package does not purport to disclose all items required by the accounting principles generally accepted in the United States of America ("GAAP") and is unaudited information, unless otherwise indicated.
Pro Rata Information
We present certain financial information and metrics in this Investor Package "at JBG SMITH Share," which refers to our ownership percentage of consolidated and unconsolidated assets in real estate ventures (collectively, "real estate ventures") as applied to these financial measures and metrics. Financial information "at JBG SMITH Share" is calculated on an asset-by-asset basis by applying our percentage economic interest to each applicable line item of that asset's financial information. "At JBG SMITH Share" information, which we also refer to as being "at share," "our pro rata share" or "our share," is not, and is not intended to be, a presentation in accordance with GAAP. Given that a substantial portion of our assets are held through real estate ventures, we believe this form of presentation, which presents our economic interests in the partially owned entities, provides investors valuable information regarding a significant component of our portfolio, its composition, performance and capitalization.
We do not control the unconsolidated real estate ventures and do not have a legal claim to our co-venturers' share of assets, liabilities, revenue and expenses. The operating agreements of the unconsolidated real estate ventures generally allow each co-venturer to receive cash distributions to the extent there is available cash from operations. The amount of cash each investor receives is based upon specific provisions of each operating agreement and varies depending on certain factors including the amount of capital contributed by each investor and whether any investors are entitled to preferential distributions.
With respect to any such third-party arrangement, we would not be in a position to exercise sole decision-making authority regarding the property, real estate venture or other entity, and may, under certain circumstances, be exposed to economic risks not present were a third-party not involved. We and our respective co-venturers may each have the right to trigger a buy-sell or forced sale arrangement, which could cause us to sell our interest, or acquire our co-venturers' interests, or to sell the underlying asset, either on unfavorable terms or at a time when we otherwise would not have initiated such a transaction. Our real estate ventures may be subject to debt, and the repayment or refinancing of such debt may require equity capital calls. To the extent our co-venturers do not meet their obligations to us or our real estate ventures or they act inconsistent with the interests of the real estate venture, we may be adversely affected. Because of these limitations, the non-GAAP "at JBG SMITH Share" financial information should not be considered in isolation or as a substitute for our financial statements as reported under GAAP.
Definitions
See pages 50-54 for definitions of terms used in this Investor Package.
Information herein with respect to the proposed transactions with Amazon is based on executed leases and purchase and sale agreements between us and Amazon. Closing under these agreements is subject to customary closing conditions.
| | Page 4 |
Non-GAAP Measures
This Investor Package includes non-GAAP measures. For these measures, we have provided an explanation of how these non-GAAP measures are calculated and why our management believes that the presentation of these measures provides useful information to investors regarding our financial condition and results of operations. Reconciliations of certain non-GAAP measures to the most directly comparable GAAP financial measure are included in this Investor Package. Our presentation of non-GAAP financial measures may not be comparable to similar non-GAAP measures used by other companies.
In addition to "at share" financial information, the following non-GAAP measures are included in this Investor Package:
| ● | Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") |
| ● | EBITDA for Real Estate ("EBITDAre") |
| ● | Adjusted EBITDA |
| ● | Funds from Operations ("FFO") |
| ● | Core FFO |
| ● | Funds Available for Distribution ("FAD") |
| ● | Third-Party Asset Management and Real Estate Services Business |
| ● | Net Operating Income ("NOI") |
| ● | Annualized NOI |
| ● | Estimated Stabilized NOI |
| ● | Projected NOI Yield |
| ● | Same Store NOI |
| ● | Consolidated and Unconsolidated Indebtedness |
| ● | Net Debt |
| ● | Pro Rata Adjusted General and Administrative Expenses |
| | Page 5 |
COMPANY PROFILE | SEPTEMBER 30, 2021 |
|
Executive Officers | | Company Snapshot as of September 30, 2021 | |||||||
| | | | | | | | | |
W. Matthew Kelly |
| Chief Executive Officer and Trustee |
| | Exchange/ticker |
| | NYSE: JBGS | |
David P. Paul |
| President and Chief Operating Officer |
| | Indicated annual dividend per share | | $ | 0.90 | |
M. Moina Banerjee |
| Chief Financial Officer |
| | Dividend yield | |
| 3.0 | % |
Kevin P. Reynolds |
| Chief Development Officer |
| |
| |
|
| |
George L. Xanders | | Chief Investment Officer |
| | Total Enterprise Value (dollars in billions, except share price) | |
|
| |
Steven A. Museles |
| Chief Legal Officer |
| | Common share price | | $ | 29.61 | |
| | |
| | Common shares and common limited partnership units ("OP Units") outstanding (in millions) | |
| 142.79 | |
| | |
| | Total market capitalization | | $ | 4.23 | |
| | |
| | Total consolidated and unconsolidated indebtedness at JBG SMITH Share | |
| 2.43 | |
| | |
| | Less: cash and cash equivalents at JBG SMITH Share | |
| (0.21) | |
| | |
| | Net debt | | $ | 2.21 | |
| | |
| | Total Enterprise Value | | $ | 6.44 | |
| | | | | | | | | |
|
|
|
| | Net Debt / Total Enterprise Value | |
| 34.3 | % |
| | | | | | | | | |
| | Page 6 |
FINANCIAL HIGHLIGHTS | SEPTEMBER 30, 2021 |
| dollars in thousands, except per share data |
| Three Months Ended | | | Nine Months Ended | | ||
| | | September 30, 2021 | | | September 30, 2021 | | ||
| | | | | | | | | |
| Summary Financial Results | | | | | | | | |
| Total revenue | | $ | 157,022 | | | $ | 476,955 | |
| Net income (loss) attributable to common shareholders | | $ | 893 | | | $ | (22,811) | |
| Per diluted common share | | $ | 0.00 | | | $ | (0.18) | |
| Operating portfolio NOI | | $ | 81,492 | | | $ | 245,190 | |
| FFO (1) | | $ | 40,734 | | | $ | 129,461 | |
| Per OP Unit | | $ | 0.27 | | | $ | 0.88 | |
| Core FFO (1) | | $ | 48,083 | | | $ | 152,621 | |
| Per OP Unit | | $ | 0.32 | | | $ | 1.04 | |
| FAD (1) | | $ | 39,992 | | | $ | 129,773 | |
| FAD payout ratio | |
| 84.2 | % | |
| 79.1 | % |
| EBITDA (1) | | $ | 85,275 | | | $ | 238,446 | |
| EBITDAre (1) | | $ | 63,518 | | | $ | 200,210 | |
| Adjusted EBITDA (1) | | $ | 69,799 | | | $ | 220,347 | |
| Net debt / total enterprise value | |
| 34.3 | % | |
| 34.3 | % |
| Net debt to annualized Adjusted EBITDA | |
| 7.9 | x | |
| 7.5 | x |
| | | | | | | | | |
| | | | | | | September 30, 2021 | | |
| | | | | | | | | |
| Debt Summary and Key Ratios (at JBG SMITH Share) | | | | | |
|
| |
| Total consolidated indebtedness (2) | | | | | | $ | 2,063,426 | |
| Total consolidated and unconsolidated indebtedness (2) | | | | | | $ | 2,426,124 | |
| Weighted average interest rates: | | | | | |
|
| |
| Variable rate debt | | | | | |
| 2.21 | % |
| Fixed rate debt | | | | | |
| 3.82 | % |
| Total debt | | | | | |
| 3.14 | % |
| Cash and cash equivalents | | | | | | $ | 213,612 | |
| (1) | Attributable to OP Units, which include units owned by JBG SMITH. |
| (2) | Net of premium/discount and deferred financing costs. |
| | Page 7 |
FINANCIAL HIGHLIGHTS – TRENDS | SEPTEMBER 30, 2021 |
| | | Three Months Ended |
| |||||||||||||
| dollars in thousands, except per share data, at JBG SMITH Share |
| Q3 2021 |
| Q2 2021 |
| Q1 2021 |
| Q4 2020 |
| Q3 2020 | | |||||
| Commercial NOI | | $ | 62,385 | | $ | 64,334 | | $ | 63,026 | | $ | 57,652 | | $ | 56,897 | |
| Multifamily NOI | |
| 19,107 | |
| 18,644 | |
| 17,775 | |
| 14,151 | |
| 15,452 | |
| Operating portfolio NOI | | $ | 81,492 | | $ | 82,978 | | $ | 80,801 | | $ | 71,803 | | $ | 72,349 | |
| Total Annualized NOI | | $ | 324,001 | | $ | 330,682 | | $ | 322,241 | | $ | 288,230 | | $ | 291,119 | |
| | | | | | | | | | | | | | | | | |
| Net income (loss) attributable to common shareholders | | $ | 893 | | $ | (2,973) | | $ | (20,731) | | $ | (45,655) | | $ | (22,793) | |
| Per diluted common share | | $ | 0.00 | | $ | (0.03) | | $ | (0.16) | | $ | (0.36) | | $ | (0.18) | |
| FFO (1) | | $ | 40,734 | | $ | 41,914 | | $ | 46,813 | | $ | 25,893 | | $ | 36,345 | |
| Per OP Unit | | $ | 0.27 | | $ | 0.29 | | $ | 0.32 | | $ | 0.17 | | $ | 0.24 | |
| Core FFO (1) | | $ | 48,083 | | $ | 49,629 | | $ | 54,909 | | $ | 36,634 | | $ | 45,060 | |
| Per OP Unit | | $ | 0.32 | | $ | 0.34 | | $ | 0.38 | | $ | 0.25 | | $ | 0.30 | |
| FAD (1) | | $ | 39,992 | | $ | 42,147 | | $ | 47,634 | | $ | 45,596 | | $ | 35,732 | |
| FAD payout ratio | |
| 84.2 | % |
| 79.5 | % |
| 74.4 | % |
| 73.2 | % |
| 94.4 | % |
| EBITDA (1) | | $ | 85,275 | | $ | 80,668 | | $ | 72,503 | | $ | 41,189 | | $ | 57,856 | |
| EBITDAre (1) | | $ | 63,518 | | $ | 64,189 | | $ | 72,503 | | $ | 48,168 | | $ | 57,856 | |
| Adjusted EBITDA (1) | | $ | 69,799 | | $ | 70,817 | | $ | 79,731 | | $ | 57,952 | | $ | 65,398 | |
| Net debt / total enterprise value | |
| 34.3 | % |
| 32.1 | % |
| 31.9 | % |
| 32.0 | % |
| 33.9 | % |
| Net debt to annualized Adjusted EBITDA | |
| 7.9 | x |
| 7.6 | x |
| 6.8 | x |
| 9.2 | x |
| 7.7 | x |
| | | | | | | | | | | | | | | | | |
| | | Q3 2021 | | Q2 2021 | | Q1 2021 | | Q4 2020 | | Q3 2020 | | |||||
| | | | | | | | | | | | | | | | | |
| Number of Operating Assets | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Commercial | |
| 42 | |
| 43 | |
| 42 | |
| 41 | |
| 43 | |
| Multifamily | |
| 21 | |
| 21 | |
| 21 | |
| 21 | |
| 21 | |
| Total | |
| 63 | |
| 64 | |
| 63 | |
| 62 | |
| 64 | |
| | | | | | | | | | | | | | | | | |
| Operating Portfolio % Leased | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Commercial (2) | |
| 84.9 | % |
| 85.9 | % |
| 87.3 | % |
| 88.1 | % |
| 88.4 | % |
| Multifamily (3) | |
| 92.9 | % |
| 91.6 | % |
| 91.0 | % |
| 86.5 | % |
| 83.0 | % |
| Weighted Average | |
| 87.5 | % |
| 87.7 | % |
| 88.5 | % |
| 87.6 | % |
| 86.7 | % |
| | | | | | | | | | | | | | | | | |
| Operating Portfolio % Occupied (4) | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Commercial (2) | |
| 82.6 | % |
| 84.4 | % |
| 86.9 | % |
| 87.7 | % |
| 85.3 | % |
| Multifamily (3) | |
| 90.2 | % |
| 86.3 | % |
| 85.9 | % |
| 81.1 | % |
| 76.6 | % |
| Weighted Average | |
| 85.0 | % |
| 85.0 | % |
| 86.6 | % |
| 85.6 | % |
| 82.5 | % |
See footnotes on page 9.
| | Page 8 |
FINANCIAL HIGHLIGHTS – TRENDS | SEPTEMBER 30, 2021 |
Footnotes
Note: See appendices for reconciliations of non-GAAP financial measures to their respective comparable GAAP financial measures.
| (1) | Attributable to OP Units, which include units owned by JBG SMITH. |
| (2) | Crystal City Marriott and 1700 M Street (for which we are the ground lessor) are excluded from the Percent Leased and the Percent Occupied metrics. |
| (3) | Includes Recently Delivered assets. In-Service assets were 95.1% leased and 92.1% occupied as of Q3 2021, 95.0% leased and 89.8% occupied as of Q2 2021, 92.3% leased and 88.4% occupied as of Q1 2021, 91.3% leased and 87.8% occupied as of Q4 2020, and 92.8% leased and 88.1% occupied as of Q3 2020. |
| (4) | Percent Occupied excludes occupied retail SF. |
| | Page 9 |
PORTFOLIO OVERVIEW | SEPTEMBER 30, 2021 |
| | | | | 100% Share | | At JBG SMITH Share |
| |||||||||||||
| | | | | | | | | | | | | | | Annualized | | | |
| ||
| | | | | | | | | | | | | | | Rent per | | | | | ||
| | | | | | | | | | | | | Annualized | | Square Foot/ | | |
| |||
| | | Number of | | Square Feet/ | | Square Feet/ | | % | | | | Rent | | Monthly Rent | | Annualized NOI | | |||
| | | Assets | | Units | | Units | | Leased | | % Occupied (1) | | (in thousands) | | Per Unit (2) | | (in thousands) |
| |||
| | | | | | | | | | | | | | | | | | | | | |
| Operating | | | | | | | | | | | | | | | | | | | | |
| Commercial (3) | | | | | | | | | | | | | | | | | | | | |
| In-Service |
| 42 |
| 13,084,288 |
| 11,316,721 |
| 84.9 | % | 82.6 | % | $ | 420,797 |
| $ | 46.74 |
| $ | 247,573 | |
| Multifamily |
|
|
|
|
|
|
|
|
|
| |
|
| |
|
| |
|
| |
| In-Service |
| 20 |
| 7,454 |
| 5,964 |
| 95.1 | % | 92.1 | % | $ | 152,006 | | $ | 2,125 | | $ | 77,000 | |
| Recently Delivered |
| 1 |
| 322 |
| 161 |
| 31.1 | % | 20.2 | % |
| 1,346 | |
| 2,556 | |
| (572) | |
| Total / weighted average |
| 21 |
| 7,776 |
| 6,125 |
| 92.9 | % | 90.2 | % | $ | 153,352 | | $ | 2,127 | | $ | 76,428 | |
| | | | | | | | | | | | | | | | | | | | | |
| Operating - In-Service |
| 62 |
| 13,084,288 SF/ 7,454 Units |
| 11,316,721 SF/ 5,964 Units |
| 88.1 | % | 85.6 | % | $ | 572,803 | | | $46.74 per SF/ | | $ | 324,573 | |
| |
| | | | | | | | | | | | | | | | | | | |
| Operating - Recently Delivered |
| 1 |
| 322 Units |
| 161 Units |
| 31.1 | % | 20.2 | % | $ | 1,346 | | | $2,556 per unit | | $ | (572) | |
| |
| | | | | | | | | | | | | | | | | | | |
| Operating - Total / Weighted Average |
| 63 |
| 13,084,288 SF/ 7,776 Units |
| 11,316,721 SF/ 6,125 Units |
| 87.5 | % | 85.0 | % | $ | 574,149 | | | $46.74 per SF/ | | $ | 324,001 | |
| | | | | | | | | | | | | | | | | | | | | |
| Development (4) |
|
|
|
|
|
|
|
|
|
| |
|
| |
|
| |
|
| |
| | | | | | | | | | | | | | | | | | | | | |
| Under-Construction |
| 1 |
| 808 Units |
| 808 Units |
| | |
| |
| | |
| | |
|
| |
| | | | | | | | | | | | | | | | | | | | | |
| Near-Term Development |
| 11 |
| 5,259,300 |
| 5,049,700 |
|
|
|
| |
|
| |
| | |
|
| |
| | | | | | | | | | | | | | | | | | | | | |
| Future Development |
| 25 |
| 14,328,100 |
| 11,597,600 |
|
|
|
| |
|
| |
| | |
|
| |
| (1) | Percent Occupied excludes retail SF. |
| (2) | For commercial assets, represents annualized office rent divided by occupied office SF; annualized retail rent and retail SF are excluded from this metric. For multifamily assets, represents monthly multifamily rent divided by occupied units; retail rent is excluded from this metric. Annualized Rent and Annualized Rent per Square Foot exclude percentage rent and the square footage of office tenants that only pay percentage rent. Occupied square footage may differ from leased square footage because leased square footage includes space for leases that have been signed but the tenant has not yet taken occupancy. |
| (3) | Crystal City Marriott and 1700 M Street (for which we are the ground lessor) are excluded from Percent Leased, Percent Occupied, Annualized Rent and Annualized Rent per Square Foot metrics. |
| (4) | Refer to pages 40-42 for detail on Under-Construction assets, and Near-Term and Future Development Pipelines. |
| | Page 10 |
CONDENSED CONSOLIDATED BALANCE SHEETS | SEPTEMBER 30, 2021 |
Condensed Consolidated Balance Sheets
| in thousands | | September 30, 2021 | | December 31, 2020 |
| ||
| | | | | | | |
|
| ASSETS | | | | | | | |
| Real estate, at cost: |
| |
|
| |
| |
| Land and improvements | | $ | 1,358,299 | | $ | 1,391,472 | |
| Buildings and improvements | |
| 4,368,477 | |
| 4,341,103 | |
| Construction in progress, including land | |
| 299,359 | |
| 268,056 | |
| | |
| 6,026,135 | |
| 6,000,631 | |
| Less: accumulated depreciation | |
| (1,346,107) | |
| (1,232,690) | |
| Real estate, net | |
| 4,680,028 | |
| 4,767,941 | |
| Cash and cash equivalents | |
| 194,277 | |
| 225,600 | |
| Restricted cash | |
| 34,900 | |
| 37,736 | |
| Tenant and other receivables | |
| 51,128 | |
| 55,903 | |
| Deferred rent receivable | |
| 187,882 | |
| 170,547 | |
| Investments in unconsolidated real estate ventures | |
| 486,052 | |
| 461,369 | |
| Other assets, net | |
| 300,537 | |
| 286,575 | |
| Assets held for sale | |
| 74,174 | |
| 73,876 | |
| TOTAL ASSETS | | $ | 6,008,978 | | $ | 6,079,547 | |
| | | | | | | | |
| LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | |
|
| |
|
| |
| Liabilities: | |
|
| |
|
| |
| Mortgages payable, net | | $ | 1,674,285 | | $ | 1,593,738 | |
| Revolving credit facility | |
| — | |
| — | |
| Unsecured term loans, net | |
| 398,493 | |
| 397,979 | |
| Accounts payable and accrued expenses | |
| 105,307 | |
| 103,102 | |
| Other liabilities, net | |
| 200,204 | |
| 247,774 | |
| Total liabilities | |
| 2,378,289 | |
| 2,342,593 | |
| Commitments and contingencies | |
|
| |
|
| |
| Redeemable noncontrolling interests | |
| 526,913 | |
| 530,748 | |
| Total equity | |
| 3,103,776 | |
| 3,206,206 | |
| TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | | $ | 6,008,978 | | $ | 6,079,547 | |
Note: For complete financial statements, please refer to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.
| | Page 11 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | SEPTEMBER 30, 2021 |
Condensed Consolidated Statements of Operations
| in thousands, except per share data | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| ||||||||
| | | 2021 | | 2020 | | 2021 | | 2020 |
| ||||
| REVENUE | | | | | | | | | | | | | |
| Property rental |
| $ | 125,900 |
| $ | 118,680 | | $ | 370,960 |
| $ | 354,519 | |
| Third-party real estate services, including reimbursements | |
| 25,842 | |
| 26,987 | |
| 90,694 | |
| 83,870 | |
| Other revenue | |
| 5,280 | |
| 5,368 | |
| 15,301 | |
| 15,705 | |
| Total revenue | |
| 157,022 | |
| 151,035 | |
| 476,955 | |
| 454,094 | |
| EXPENSES | |
|
| |
|
| |
|
| |
|
| |
| Depreciation and amortization | |
| 56,726 | |
| 56,481 | |
| 178,130 | |
| 157,586 | |
| Property operating | |
| 40,198 | |
| 37,572 | |
| 109,929 | |
| 105,867 | |
| Real estate taxes | |
| 18,259 | |
| 17,354 | |
| 55,127 | |
| 53,422 | |
| General and administrative: | |
| | |
| | |
| | |
| | |
| Corporate and other | |
| 12,105 | |
| 11,086 | |
| 38,475 | |
| 37,478 | |
| Third-party real estate services | |
| 25,542 | |
| 28,207 | |
| 80,035 | |
| 86,260 | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 3,480 | |
| 7,133 | |
| 12,866 | |
| 25,432 | |
| Transaction and Other Costs | |
| 2,951 | |
| 845 | |
| 8,911 | |
| 7,526 | |
| Total expenses | |
| 159,261 | |
| 158,678 | |
| 483,473 | |
| 473,571 | |
| OTHER INCOME (EXPENSE) | |
|
| |
|
| |
|
| |
|
| |
| Income (loss) from unconsolidated real estate ventures, net | |
| 20,503 | |
| (965) | |
| 23,513 | |
| (17,142) | |
| Interest and other income, net | |
| 192 | |
| — | |
| 163 | |
| 1,021 | |
| Interest expense | |
| (17,243) | |
| (16,885) | |
| (50,312) | |
| (44,660) | |
| Gain on sale of real estate | |
| — | |
| — | |
| 11,290 | |
| 59,477 | |
| Loss on extinguishment of debt | |
| — | |
| — | |
| — | |
| (33) | |
| Total other income (expense) | |
| 3,452 | |
| (17,850) | |
| (15,346) | |
| (1,337) | |
| INCOME (LOSS) BEFORE INCOME TAX (EXPENSE) BENEFIT | |
| 1,213 | |
| (25,493) | |
| (21,864) | |
| (20,814) | |
| Income tax (expense) benefit | |
| (217) | |
| 488 | |
| (4,527) | |
| 3,721 | |
| NET INCOME (LOSS) | |
| 996 | |
| (25,005) | |
| (26,391) | |
| (17,093) | |
| Net (income) loss attributable to redeemable noncontrolling interests | |
| (103) | |
| 2,212 | |
| 2,472 | |
| 445 | |
| Net loss attributable to noncontrolling interests | | | — | | | — | | | 1,108 | |
| — | |
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | | $ | 893 | | $ | (22,793) | | $ | (22,811) | | $ | (16,648) | |
| EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED | | $ | 0.00 | | $ | (0.18) | | $ | (0.18) | | $ | (0.14) | |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED | |
| 131,351 | |
| 133,620 | |
| 131,456 | |
| 133,924 | |
Note: For complete financial statements, please refer to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.
| | Page 12 |
nconsolidated Real Estate Ventures
| in thousands, at JBG SMITH Share |
| | |
|
| BALANCE SHEET INFORMATION | | September 30, 2021 |
| |
| | | | | |
| Total real estate, at cost | | $ | 849,005 | |
| Less: accumulated depreciation | |
| (67,471) | |
| Real estate, net | |
| 781,534 | |
| Cash and cash equivalents | |
| 19,416 | |
| Other assets, net | |
| 78,319 | |
| Total assets | | $ | 879,269 | |
| Borrowings, net | | $ | 362,698 | |
| Other liabilities, net | |
| 50,755 | |
| Total liabilities | | $ | 413,453 | |
| |
| Three Months Ended | | Nine Months Ended |
| ||
| OPERATING INFORMATION | | September 30, 2021 | | September 30, 2021 |
| ||
| Total revenue | | $ | 15,904 | | $ | 49,470 | |
| Expenses: | |
|
| |
|
| |
| Depreciation and amortization | |
| 6,923 | |
| 21,603 | |
| Property operating | |
| 5,160 | |
| 15,295 | |
| Real estate taxes | |
| 2,189 | |
| 7,726 | |
| Total expenses | |
| 14,272 | |
| 44,624 | |
| Other income (expense): | |
|
| |
|
| |
| Interest expense | |
| (3,148) | |
| (9,300) | |
| Gain on the sale of real estate | |
| 23,201 | |
| 28,390 | |
| Loss on extinguishment of debt | | | (124) | | | (124) | |
| Interest and other income, net | |
| 31 | |
| 215 | |
| | | | | | | | |
| Net income | | $ | 21,592 | | $ | 24,027 | |
| Earnings and distributions in excess of our investment in unconsolidated real estate venture | |
| 280 | |
| 702 | |
| Impairment of investment in unconsolidated real estate venture | | | (1,380) | | | (1,380) | |
| Other | |
| 11 | |
| 164 | |
| Income from unconsolidated real estate ventures, net | | $ | 20,503 | | $ | 23,513 | |
| | Page 13 |
OTHER TANGIBLE ASSETS AND LIABILITIES | SEPTEMBER 30, 2021 |
Other Tangible Assets and Liabilities
| in thousands, at JBG SMITH Share |
| September 30, 2021 |
| |
| | | | | |
| Other Tangible Assets, Net (1) (2) | | | | |
| Restricted cash | | $ | 36,016 | |
| Tenant and other receivables, net | |
| 52,900 | |
| Other assets, net | |
| 78,509 | |
| Total Other Tangible Assets, Net | | $ | 167,425 | |
| | | | | |
| Other Tangible Liabilities, Net (2) (3) | |
|
| |
| Accounts payable and accrued liabilities | | $ | 121,612 | |
| Other liabilities, net | |
| 167,384 | |
| Total Other Tangible Liabilities, Net | | $ | 288,996 | |
| (1) | Excludes cash and cash equivalents. |
| (2) | Excludes assets held for sale. |
| (3) | Excludes debt. |
| | Page 14 |
EBITDA, EBITDAre AND ADJUSTED EBITDA RECONCILIATIONS (NON-GAAP) | SEPTEMBER 30, 2021 |
EBITDA, EBITDAre and Adjusted EBITDA
| dollars in thousands |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| ||||||||
| | | 2021 | | 2020 | | 2021 | | 2020 |
| ||||
| | | | | | | | | | | | | |
|
| EBITDA, EBITDAre and Adjusted EBITDA |
| | | | | | | |
| | |
| |
| Net income (loss) | | $ | 996 | | $ | (25,005) | | $ | (26,391) | | $ | (17,093) | |
| Depreciation and amortization expense | | | 56,726 | | | 56,481 | | | 178,130 | | | 157,586 | |
| Interest expense | | | 17,243 | | | 16,885 | | | 50,312 | | | 44,660 | |
| Income tax expense (benefit) | | | 217 | | | (488) | | | 4,527 | | | (3,721) | |
| Unconsolidated real estate ventures allocated share of above adjustments | | | 10,147 | | | 9,987 | | | 30,892 | | | 31,516 | |
| EBITDA attributable to noncontrolling interests | | | (54) | | | (4) | | | 976 | | | (7) | |
| EBITDA | | $ | 85,275 | | $ | 57,856 | | $ | 238,446 | | $ | 212,941 | |
| Gain on sale of real estate | | | — | | | — | | | (11,290) | | | (59,477) | |
| (Gain) loss on sale of unconsolidated real estate assets | | | (23,137) | | | — | | | (28,326) | | | 2,952 | |
| Impairment of investments in unconsolidated real estate ventures (1) | | | 1,380 | | | — | | | 1,380 | | | 6,522 | |
| | | | | | | | | | | | | | |
| EBITDAre | | $ | 63,518 | | $ | 57,856 | | $ | 200,210 | | $ | 162,938 | |
| Transaction and Other Costs (2) | | | 2,951 | | | 845 | | | 7,803 | | | 7,526 | |
| Loss on extinguishment of debt | | | — | | | — | | | — | | | 33 | |
| Share-based compensation related to Formation Transaction and special equity awards | | | 3,480 | | | 7,133 | | | 12,866 | | | 25,432 | |
| Losses and distributions in excess of our investment in unconsolidated real estate venture | | | (280) | | | (436) | | | (702) | | | (307) | |
| Unconsolidated real estate ventures allocated share of above adjustments | | | 130 | | | — | | | 170 | | | 1,465 | |
| | | | | | | | | | | | | | |
| Adjusted EBITDA | | $ | 69,799 | | $ | 65,398 | | $ | 220,347 | | $ | 197,087 | |
| | | | | | | | | | | | | | |
| Net Debt to Annualized Adjusted EBITDA (3) | | | 7.9 | x | | 7.7 | x | | 7.5 | x | | 7.6 | x |
| | | | | | | | | | | | | | |
| | | | | | | | | September 30, 2021 | | September 30, 2020 | | ||
| Net Debt (at JBG SMITH Share) | | | | | | | | |
| | |
| |
| Consolidated indebtedness (4) | | | | | | | | $ | 2,063,426 | | $ | 2,081,456 | |
| Unconsolidated indebtedness (4) | | | | | | | | | 362,698 | | | 393,398 | |
| Total consolidated and unconsolidated indebtedness | | | | | | | | | 2,426,124 | | | 2,474,854 | |
| Less: cash and cash equivalents | | | | | | | | | 213,612 | | | 465,532 | |
| Net Debt (at JBG SMITH Share) | | | | | | | | $ | 2,212,512 | | $ | 2,009,322 | |
Note: All EBITDA measures as shown above are attributable to OP Units.
| (1) | Related to decreases in the value of the underlying assets. |
| (2) | See page 55 for the components of Transaction and Other Costs. For the nine months ended September 30, 2021, excludes $1.1 million of transaction costs attributable to noncontrolling interests. |
| (3) | Calculated using the Net Debt below. Quarterly Adjusted EBITDA is annualized by multiplying by four. Adjusted EBITDA for the nine months ended September 30, 2021 and 2020 is annualized by multiplying by 1.33. |
| (4) | Net of premium/discount and deferred financing costs. |
| | Page 15 |
FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP) | SEPTEMBER 30, 2021 |
| in thousands, except per share data | | Three Months Ended September 30, | | Nine Months Ended September 30, | | ||||||||
| |
| 2021 |
| 2020 | | 2021 |
| 2020 | | ||||
| | | | | | | | | | | | | |
|
| FFO and Core FFO | | | | | | | | | | | | | |
| Net income (loss) attributable to common shareholders | | $ | 893 |
| $ | (22,793) | | $ | (22,811) |
| $ | (16,648) | |
| Net income (loss) attributable to redeemable noncontrolling interests | |
| 103 |
| | (2,212) | |
| (2,472) |
| | (445) | |
| Net loss attributable to noncontrolling interests | |
| — |
| | — | |
| (1,108) |
| | — | |
| Net income (loss) | |
| 996 |
| | (25,005) | |
| (26,391) |
| | (17,093) | |
| Gain on sale of real estate | |
| — |
| | — | |
| (11,290) |
| | (59,477) | |
| (Gain) loss on sale of unconsolidated real estate assets | |
| (23,137) |
| | — | |
| (28,326) |
| | 2,952 | |
| Real estate depreciation and amortization | |
| 54,547 |
| | 54,004 | |
| 171,522 |
| | 149,590 | |
| Impairment of investments in unconsolidated real estate ventures (1) | | | 1,380 |
| | — | |
| 1,380 |
| | 6,522 | |
| Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures | |
| 7,002 |
| | 7,350 | |
| 21,590 |
| | 21,730 | |
| FFO attributable to noncontrolling interests | |
| (54) |
| | (4) | |
| 976 |
| | (7) | |
| FFO Attributable to OP Units | | $ | 40,734 |
| $ | 36,345 | | $ | 129,461 |
| $ | 104,217 | |
| FFO attributable to redeemable noncontrolling interests | |
| (4,703) |
| | (3,945) | |
| (13,242) |
| | (11,353) | |
| FFO attributable to common shareholders | | $ | 36,031 |
| $ | 32,400 | | $ | 116,219 |
| $ | 92,864 | |
| | | | | | | | | | | | | | |
| FFO attributable to OP Units | | $ | 40,734 |
| $ | 36,345 | | $ | 129,461 |
| $ | 104,217 | |
| Transaction and Other Costs, net of tax (2) | |
| 2,928 |
| | 798 | |
| 7,721 |
| | 7,176 | |
| (Gain) loss from mark-to-market on derivative instruments | |
| 37 |
| | 203 | |
| (50) |
| | 173 | |
| Loss on extinguishment of debt | |
| — |
| | — | |
| — |
| | 33 | |
| Losses and distributions in excess of our investment in unconsolidated real estate venture | |
| (280) |
| | (436) | |
| (702) |
| | (307) | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 3,480 |
| | 7,133 | |
| 12,866 |
| | 25,432 | |
| Amortization of management contracts intangible, net of tax | |
| 1,072 |
| | 1,072 | |
| 3,217 |
| | 3,288 | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| 112 |
| | (55) | |
| 108 |
| | 1,848 | |
| Core FFO Attributable to OP Units | | $ | 48,083 |
| $ | 45,060 | | $ | 152,621 |
| $ | 141,860 | |
| Core FFO attributable to redeemable noncontrolling interests | |
| (5,552) |
| | (4,891) | |
| (15,612) |
| | (15,457) | |
| Core FFO attributable to common shareholders | | $ | 42,531 |
| $ | 40,169 | | $ | 137,009 |
| $ | 126,403 | |
| FFO per common share - diluted | | $ | 0.27 |
| | 0.24 | | $ | 0.88 |
| | 0.69 | |
| Core FFO per common share - diluted | | $ | 0.32 |
| | 0.30 | | $ | 1.04 |
| | 0.94 | |
| Weighted average shares - diluted (FFO and Core FFO) | |
| 131,351 |
| | 133,880 | |
| 131,456 |
| | 134,224 | |
| FAD | | | | | | | | | | | | | |
| Core FFO attributable to OP Units |
| $ | 48,083 |
| $ | 45,060 | | $ | 152,621 |
| $ | 141,860 | |
| Recurring capital expenditures and second-generation tenant improvements and leasing commissions (3) | |
| (12,124) | |
| (11,395) | |
| (34,781) | |
| (34,089) | |
| Straight-line and other rent adjustments (4) | |
| (3,701) | |
| (4,935) | |
| (12,554) | |
| (9,898) | |
| Third-party lease liability assumption payments | |
| (422) | |
| (784) | |
| (1,803) | |
| (3,024) | |
| Share-based compensation expense | |
| 7,805 | |
| 7,642 | |
| 24,920 | |
| 27,129 | |
| Amortization of debt issuance costs | |
| 1,126 | |
| 829 | |
| 3,327 | |
| 2,124 | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| (1,478) | |
| (1,687) | |
| (4,137) | |
| (3,880) | |
| Non-real estate depreciation and amortization | |
| 703 | |
| 1,002 | |
| 2,180 | |
| 3,471 | |
| FAD available to OP Units (A) | | $ | 39,992 | | $ | 35,732 | | $ | 129,773 | | $ | 123,693 | |
| Distributions to common shareholders and unitholders (B) | | $ | 33,688 | | $ | 33,743 | | $ | 102,634 | | $ | 101,724 | |
| FAD Payout Ratio (B÷A) (5) | |
| 84.2 | % |
| 94.4 | % |
| 79.1 | % |
| 82.2 | % |
See footnotes on page 17.
| | Page 16 |
FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP) | SEPTEMBER 30, 2021 |
| in thousands, except per share data | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| ||||||||
| | | 2021 | | 2020 | | 2021 | | 2020 | | ||||
| | | | | | | | | | | | | | |
| Capital Expenditures | | | | | | | | | | | | | |
| Maintenance and recurring capital expenditures | | $ | 7,404 | | $ | 3,096 | | $ | 15,706 | | $ | 12,195 | |
| Share of maintenance and recurring capital expenditures from unconsolidated real estate ventures | |
| 265 | |
| 327 | |
| 636 | |
| 836 | |
| Second-generation tenant improvements and leasing commissions | |
| 3,762 | |
| 6,779 | |
| 17,280 | |
| 19,335 | |
| Share of second-generation tenant improvements and leasing commissions from unconsolidated real estate ventures | |
| 693 | |
| 1,193 | |
| 1,159 | |
| 1,723 | |
| Recurring capital expenditures and second-generation tenant improvements and leasing commissions | |
| 12,124 | |
| 11,395 | |
| 34,781 | |
| 34,089 | |
| Non-recurring capital expenditures | |
| 5,885 | |
| 4,840 | |
| 13,073 | |
| 17,267 | |
| Share of non-recurring capital expenditures from unconsolidated real estate ventures | |
| 177 | |
| 54 | |
| 284 | |
| 394 | |
| First-generation tenant improvements and leasing commissions | |
| 2,603 | |
| 4,033 | |
| 5,141 | |
| 27,733 | |
| Share of first-generation tenant improvements and leasing commissions from unconsolidated real estate ventures | |
| 93 | |
| 674 | |
| 1,484 | |
| 1,661 | |
| Non-recurring capital expenditures | |
| 8,758 | |
| 9,601 | |
| 19,982 | |
| 47,055 | |
| Total JBG SMITH Share of Capital Expenditures | | $ | 20,882 | | $ | 20,996 | | $ | 54,763 | | $ | 81,144 | |
| (1) | Related to decreases in the value of the underlying assets. |
| (2) | See page 55 for the components of Transaction and Other Costs. For the nine months ended September 30, 2021, excludes $1.1 million of transaction costs attributable to noncontrolling interests. |
| (3) | Includes amounts, at JBG SMITH Share, related to unconsolidated real estate ventures. |
| (4) | Includes straight-line rent, above/below market lease amortization and lease incentive amortization. |
| (5) | The quarterly FAD payout ratio is not necessarily indicative of an amount for the full year due to fluctuation in the timing of capital expenditures, the commencement of new leases and the seasonality of our operations. |
| | Page 17 |
THIRD-PARTY ASSET MANAGEMENT AND REAL ESTATE SERVICES BUSINESS (NON-GAAP) | SEPTEMBER 30, 2021 |
Third-Party Asset Mgmt and Real Estate Services Business
| in thousands, at JBG SMITH Share | | Three Months Ended September 30, 2021 |
| ||||||||||
| | | Source of Revenue | | | |
| |||||||
| | | Third-Party | | JBG SMITH | | JBG Legacy | | | |
| |||
| | | Management | | JV Partner (1) | | Funds | | Total |
| ||||
| | | | | | | | | | | | | | |
| Service Revenue | | | | | | | | | | | | | |
| Property management fees |
| $ | 2,681 |
| $ | 1,030 |
| $ | 651 |
| $ | 4,362 | |
| Asset management fees | |
| — | |
| 464 | |
| 1,608 | |
| 2,072 | |
| Development fees | |
| 3,351 | |
| 498 | |
| 148 | |
| 3,997 | |
| Leasing fees | |
| 1,546 | |
| 127 | |
| 148 | |
| 1,821 | |
| Construction management fees | |
| — | |
| 36 | |
| — | |
| 36 | |
| Other service revenue | |
| 543 | |
| 370 | |
| 206 | |
| 1,119 | |
| Total Revenue (2) | | $ | 8,121 | | $ | 2,525 | | $ | 2,761 | | $ | 13,407 | |
| Pro rata adjusted general and administrative expense: third-party real estate services (3) | |
| | |
|
| |
|
| |
| (12,753) | |
| Total Services Revenue Less Allocated General and Administrative Expenses (4) | | | | |
| | |
| | | $ | 654 | |
| (1) | Service revenues from joint ventures are calculated on an asset-by-asset basis by applying our real estate venture partners' respective economic interests to the fees we earned from each consolidated and unconsolidated real estate venture. |
| (2) | Included in "Third-party real estate services, including reimbursements" in our consolidated statement of operations are $11.7 million of reimbursement revenue and $0.7 million of service revenue from our economic interest in consolidated and unconsolidated real estate ventures that are excluded from this table. |
| (3) | Our personnel perform services for wholly owned properties and properties we manage on behalf of third parties, real estate ventures and JBG Legacy Funds. |
We allocate personnel and other costs to wholly owned properties (included in "Property operating expenses" and "General and administrative expense: corporate and other" in our consolidated statement of operations) and to properties owned by the third parties, real estate ventures and JBG Legacy Funds (included in "General and administrative expense: third-party real estate services" in our consolidated statement of operations) using estimates of the time spent performing services related to properties in the respective portfolios and other allocation methodologies.
Allocated general and administrative expenses related to real estate ventures are calculated on an asset-by-asset basis by applying our real estate venture partners' respective economic interests to the total general and administrative expenses allocated to each asset. See "Pro Rata Adjusted General and Administrative Expenses" on the next page for a reconciliation of "General and administrative expenses: third-party real estate services" to "Pro Rata Adjusted General and Administrative Expenses."
| (4) | Services revenue, excluding reimbursement revenue and service revenue from our economic interest in consolidated and unconsolidated real estate ventures, less allocated general and administrative expenses. Management uses this measure as a supplemental performance measure for its third-party asset management and real estate services business and believes it provides useful information to investors because it reflects only those revenue and expense items incurred by us and can be used to assess the profitability of the third-party asset management and real estate services business. |
| | Page 18 |
PRO RATA ADJUSTED GENERAL AND ADMINISTRATIVE EXPENSES | SEPTEMBER 30, 2021 |
| in thousands | | Three Months Ended September 30, 2021 |
| |||||||||||||
| | | | | | Adjustments (1) | | | |
| |||||||
| | | Per Statement | | | | | | | | | | | Pro Rata |
| ||
| | | of Operations | | A | | B | | C | | Adjusted |
| |||||
| | | | | | | | | | | | | | | | | |
| General and Administrative Expenses | | | | | | | | | | | | | | | | |
| Corporate and other |
| $ | 12,105 |
| $ | — |
| $ | — |
| $ | 1,072 |
| $ | 13,177 | |
| Third-party real estate services | |
| 25,542 | |
| — | |
| (11,717) | |
| (1,072) | |
| 12,753 | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 3,480 | |
| (3,480) | |
| — | |
| — | |
| — | |
| | | | | | | | | | | | | | | | | |
| Total | | $ | 41,127 | | $ | (3,480) | | $ | (11,717) | | $ | — | | $ | 25,930 | |
| (1) | Adjustments: |
A - Removes share-based compensation related to the Formation Transaction and special equity awards.
B - Removes $11.7 million of general and administrative expenses reimbursed by third-party owners of real estate we manage related to revenue which has been excluded from Service Revenue on page 18. Revenue from reimbursements is included in "Third-party real estate services, including reimbursements" in our consolidated statement of operations.
C - Reflects an adjustment to allocate our share of general and administrative expenses of unconsolidated real estate ventures from "Third-party real estate services" to "Corporate and other" and our consolidated real estate venture partners' share of general and administrative expenses from "Corporate and other" to "Third-party real estate services."
| | Page 19 |
OPERATING ASSETS | SEPTEMBER 30, 2021 |
| dollars in thousands, at JBG SMITH Share |
| |
| | | |
| | |
| Plus: Signed |
| Plus: Incremental |
| | |
| ||
| | | | | | Q3 2021 | | | | | But Not Yet | | NOI from Assets | | Adjusted |
| ||||
| | | | | | Operating | | Annualized | | Commenced | | in Initial | | Annualized |
| |||||
| | | % Occupied | | | Portfolio NOI | | NOI | | Leases | | Lease-up (1) | | NOI |
| |||||
| | | | | | | | | | | | | | | | | | | | |
| Commercial (2) | | | | | | | | | | | | | | | | | | | |
| DC |
| 70.9 | % | | $ | 8,660 | | $ | 34,640 | | $ | 2,876 | | $ | 3,356 | | $ | 40,872 | |
| VA |
| 85.4 | % | |
| 49,588 | |
| 196,385 | |
| 9,452 | |
| 468 | |
| 206,305 | |
| MD |
| 80.2 | % | |
| 4,137 | |
| 16,548 | |
| 2,152 | |
| 4,924 | |
| 23,624 | |
| Total / weighted average |
| 82.6 | % | | $ | 62,385 | | $ | 247,573 | | $ | 14,480 | | $ | 8,748 | | $ | 270,801 | |
| | | | | | | | | | | | | | | | | | | | |
| Multifamily |
|
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
| DC |
| 91.4 | % | | $ | 10,026 | | $ | 40,104 | | $ | 496 | | $ | 2,436 | | $ | 43,036 | |
| VA |
| 91.9 | % | |
| 7,846 | |
| 31,384 | |
| — | |
| — | |
| 31,384 | |
| MD |
| 78.5 | % | |
| 1,235 | |
| 4,940 | |
| 512 | |
| 3,694 | |
| 9,146 | |
| Total / weighted average |
| 90.2 | % | | $ | 19,107 | | $ | 76,428 | | $ | 1,008 | | $ | 6,130 | | $ | 83,566 | |
| | | | | | | | | | | | | | | | | | | | |
| Total / Weighted Average |
| 85.0 | % | | $ | 81,492 | | $ | 324,001 | | $ | 15,488 | | $ | 14,878 | | $ | 354,367 | |
| (1) | Incremental revenue from commercial assets represents the burn-off of Free Rent and is calculated as Free Rent incurred at assets in their initial lease-up for the three months ended September 30, 2021 multiplied by four. Incremental revenue from multifamily assets in their initial lease-up is calculated as the product of units available for occupancy up to 95.0% occupancy and the weighted average monthly in-place rent per unit as of September 30, 2021, multiplied by 12, and assumes no rent growth. Excludes potential revenue from vacant retail space in multifamily assets in their initial lease-up and 900 W Street. We believe the monthly in-place rents per unit for the In-Service multifamily assets continue to be negatively impacted by the COVID-19 pandemic. See page 38 for more detail. |
| (2) | Crystal City Marriott and 1700 M Street (for which we are the ground lessor) are excluded from the Percent Occupied metric. |
| | Page 20 |
SUMMARY & SAME STORE NOI (NON-GAAP) | SEPTEMBER 30, 2021 |
| dollars in thousands | | | | 100% Share | | At JBG SMITH Share | | ||||||||||||
| | | | | | | | | | | | | NOI for the Three Months Ended September 30, |
| ||||||
| | | Number of | | Square Feet/ | | Square Feet/ | | % | | % | | | | | | | | | |
| | | Assets | | Units | | Units | | Leased (1) | | Occupied (1) | | 2021 | | 2020 | | % Change | | ||
| Same Store (2) | | | | | | | | | | | | | | | | | | | |
| DC |
| 16 |
| 2,527,330 SF/ |
| 1,813,889 SF/ |
| 84.8 | % | 81.3 | % | $ | 14,263 |
| $ | 16,840 |
| (15.3) | % |
| VA |
| 32 |
| 9,232,310 SF/ |
| 8,299,250 SF/ |
| 88.8 | % | 87.0 | % |
| 55,183 | |
| 52,528 |
| 5.1 | % |
| MD |
| 7 |
| 481,455 SF/ |
| 481,455 SF/ |
| 86.0 | % | 83.6 | % |
| 3,269 | |
| 3,369 |
| (3.0) | % |
| Total / weighted average |
| 55 |
| 12,241,095 SF/ |
| 10,594,594 SF/ |
| 87.7 | % | 85.6 | % | $ | 72,715 | | $ | 72,737 |
| 0.0 | % |
| | | | | | | | | | | | | | | | | | | | |
| Non-Same Store |
|
|
| |
| |
|
|
|
| |
|
| |
|
|
|
| |
| DC |
| 5 |
| 269,035 SF/ |
| 147,969 SF/ |
| 87.2 | % | 84.2 | % | $ | 4,423 | | $ | (89) |
| N/A | |
| VA |
| 1 |
| 273,650 SF |
| 273,650 SF |
| 98.4 | % | 100.0 | % |
| 2,251 | |
| 87 |
| N/A | |
| MD |
| 2 |
| 300,508 SF/ |
| 300,508 SF/ |
| 73.0 | % | 66.0 | % |
| 2,103 | |
| (640) |
| 428.6 | % |
| Total / weighted average |
| 8 |
| 843,193 SF/ |
| 722,127 SF/ |
| 85.1 | % | 81.7 | % | $ | 8,777 | | $ | (642) |
| 1,467.1 | % |
| | | | | | | | | | | | | | | | | | | | |
| Total Operating Portfolio |
|
|
| |
| |
|
|
|
| |
|
| |
|
|
|
| |
| DC |
| 21 |
| 2,796,365 SF/ |
| 1,961,858 SF/ |
| 85.4 | % | 82.1 | % | $ | 18,686 | | $ | 16,751 |
| 11.6 | % |
| VA |
| 33 |
| 9,505,960 SF/ |
| 8,572,900 SF/ |
| 89.0 | % | 87.3 | % |
| 57,434 | |
| 52,615 |
| 9.2 | % |
| MD |
| 9 |
| 781,963 SF/ |
| 781,963 SF/ |
| 81.4 | % | 77.5 | % |
| 5,372 | |
| 2,729 |
| 96.8 | % |
| Operating Portfolio - |
| 63 |
| 13,084,288 SF/ |
| 11,316,721 SF/ |
| 87.5 | % | 85.0 | % | $ | 81,492 | | $ | 72,095 |
| 13.0 | % |
| (1) | Crystal City Marriott and 1700 M Street (for which we are the ground lessor) are excluded from the Percent Leased and Percent Occupied metrics. |
| (2) | Same Store refers to the pool of assets that were In-Service for the entirety of both periods being compared, which excludes assets for which significant redevelopment, renovation, or repositioning occurred during either of the periods being compared. The Crystal City Marriott generated $0.2 million of NOI for the three months ended September 30, 2021 compared to a $0.5 million loss for the three months ended September 30, 2020. The Crystal City Marriott generated $3.5 million and $1.8 million of NOI in 2018 and 2019. |
| | Page 21 |
SUMMARY & SAME STORE NOI (NON-GAAP) | SEPTEMBER 30, 2021 |
| dollars in thousands | | | | 100% Share | | At JBG SMITH Share | | ||||||||||||
| | | | | | | | | | | | | NOI for the Nine Months Ended September 30, |
| ||||||
| | | Number of | | Square Feet/ | | Square Feet/ | | % | | % | | | | | | | | | |
| | | Assets | | Units | | Units | | Leased (1) | | Occupied (1) | | 2021 | | 2020 | | % Change | | ||
| Same Store (2) | | | | | | | | | | | | | | | | | | | |
| DC |
| 16 |
| 2,527,330 SF/ |
| 1,813,889 SF/ |
| 84.8 | % | 81.3 | % | $ | 48,393 |
| $ | 56,255 |
| (14.0) | % |
| VA |
| 32 |
| 9,232,310 SF/ |
| 8,299,250 SF/ |
| 88.8 | % | 87.0 | % |
| 164,547 | |
| 163,106 |
| 0.9 | % |
| MD |
| 7 |
| 481,455 SF/ |
| 481,455 SF/ |
| 86.0 | % | 83.6 | % |
| 10,382 | |
| 11,619 |
| (10.6) | % |
| Total / weighted average |
| 55 |
| 12,241,095 SF/ |
| 10,594,594 SF/ |
| 87.7 | % | 85.6 | % | $ | 223,322 | | $ | 230,980 |
| (3.3) | % |
| | | | | | | | | | | | | | | | | | | | |
| Non-Same Store |
|
|
| |
| |
|
|
|
| |
|
| |
|
|
|
| |
| DC |
| 5 |
| 269,035 SF/ |
| 147,969 SF/ |
| 87.2 | % | 84.2 | % | $ | 9,197 | | $ | 336 |
| N/A | |
| VA |
| 1 |
| 273,650 SF |
| 273,650 SF |
| 98.4 | % | 100.0 | % |
| 6,736 | |
| 241 |
| N/A | |
| MD |
| 2 |
| 300,508 SF/ |
| 300,508 SF/ |
| 73.0 | % | 66.0 | % |
| 5,935 | |
| (1,736) |
| 441.9 | % |
| Total / weighted average |
| 8 |
| 843,193 SF/ |
| 722,127 SF/ |
| 85.1 | % | 81.7 | % | $ | 21,868 | | $ | (1,159) |
| 1,986.8 | % |
| | | | | | | | | | | | | | | | | | | | |
| Total Operating Portfolio |
|
|
| |
| |
|
|
|
| |
|
| |
|
|
|
| |
| DC |
| 21 |
| 2,796,365 SF/ |
| 1,961,858 SF/ |
| 85.4 | % | 82.1 | % | $ | 57,590 | | $ | 56,591 |
| 1.8 | % |
| VA |
| 33 |
| 9,505,960 SF/ |
| 8,572,900 SF/ |
| 89.0 | % | 87.3 | % |
| 171,283 | |
| 163,347 |
| 4.9 | % |
| MD |
| 9 |
| 781,963 SF/ |
| 781,963 SF/ |
| 81.4 | % | 77.5 | % |
| 16,317 | |
| 9,883 |
| 65.1 | % |
| Operating Portfolio - |
| 63 |
| 13,084,288 SF/ |
| 11,316,721 SF/ |
| 87.5 | % | 85.0 | % | $ | 245,190 | | $ | 229,821 |
| 6.7 | % |
| | Page 22 |
SUMMARY NOI (NON-GAAP) | SEPTEMBER 30, 2021 |
| dollars in thousands | | NOI for the Three Months Ended September 30, 2021 at JBG SMITH Share |
| |||||||||||||
| | | Consolidated | | Unconsolidated (8) | | Commercial (8) | | Multifamily | | Total |
| |||||
| Number of operating assets |
| | 47 |
| | 16 |
| | 42 |
| | 21 |
| | 63 | |
| Property rental (1) | | $ | 110,770 | | $ | 12,471 | | $ | 90,019 | | $ | 33,222 | | $ | 123,241 | |
| Tenant expense reimbursement |
|
| 8,029 |
|
| 322 |
|
| 7,386 |
|
| 965 |
|
| 8,351 | |
| Other revenue (2) | |
| 9,650 | |
| 1,095 | |
| 6,815 | |
| 3,930 | |
| 10,745 | |
| Total revenue | |
| 128,449 | |
| 13,888 | |
| 104,220 | |
| 38,117 | |
| 142,337 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses | |
| (53,657) | |
| (6,366) | |
| (41,018) | |
| (19,005) | |
| (60,023) | |
| Ground rent expense | |
| (778) | |
| (44) | |
| (817) | |
| (5) | |
| (822) | |
| Total expenses | |
| (54,435) | |
| (6,410) | |
| (41,835) | |
| (19,010) | |
| (60,845) | |
| | | | | | | | | | | | | | | | | |
| Operating Portfolio NOI (3) | | $ | 74,014 | | $ | 7,478 | | $ | 62,385 | | $ | 19,107 | | $ | 81,492 | |
| | | | | | | | | | | | | | | | | |
| Annualized NOI | | $ | 294,089 | | $ | 29,912 | | $ | 247,573 | | $ | 76,428 | | $ | 324,001 | |
| Additional Information | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Free Rent (at 100% share) | | $ | 9,283 | | $ | 3,382 | | $ | 9,119 | | $ | 3,546 | | $ | 12,665 | |
| Free Rent (at JBG SMITH Share) | | $ | 9,280 | | $ | 1,640 | | $ | 7,617 | | $ | 3,303 | | $ | 10,920 | |
| Annualized Free Rent (at JBG SMITH Share) (4) | | $ | 37,120 | | $ | 6,560 | | $ | 30,468 | | $ | 13,212 | | $ | 43,680 | |
| Payments associated with assumed lease liabilities (at 100% share) | | $ | 422 | | $ | — | | $ | 422 | | $ | — | | $ | 422 | |
| Payments associated with assumed lease liabilities (at JBG SMITH Share) | | $ | 422 | | $ | — | | $ | 422 | | $ | — | | $ | 422 | |
| Annualized payments associated with assumed lease liabilities (at JBG SMITH Share) (5) | | $ | 1,688 | | $ | — | | $ | 1,688 | | $ | — | | $ | 1,688 | |
| % occupied (at JBG SMITH Share) (6) | |
| 85.5 | % |
| 78.9 | % |
| 82.6 | % |
| 90.2 | % |
| 85.0 | % |
| Annualized base rent of signed leases, not commenced (at 100% share) (7) | | $ | 14,832 | | $ | 1,808 | | $ | 15,088 | | $ | 1,552 | | $ | 16,640 | |
| Annualized base rent of signed leases, not commenced (at JBG SMITH Share) (7) | | $ | 14,832 | | $ | 656 | | $ | 14,480 | | $ | 1,008 | | $ | 15,488 | |
| (1) | Property rental revenue excludes straight-line rent adjustments and other GAAP adjustments, and includes payments associated with assumed lease liabilities. |
| (2) | Includes $6.1 million of parking revenue at JBG SMITH Share. |
| (3) | Our National Landing assets generated $46.0 million of NOI for the three months ended September 30, 2021. NOI excludes $4.5 million of related party management fees at JBG SMITH Share. NOI excludes $2.1 million of rent that was reserved or deferred during the quarter. See definition of NOI on page 52. |
| (4) | Represents JBG SMITH's share of Free Rent for the three months ended September 30, 2021 multiplied by four. |
| (5) | Represents JBG SMITH's share of payments associated with assumed lease liabilities for the three months ended September 30, 2021 multiplied by four. |
| (6) | Crystal City Marriott and 1700 M Street (for which we are the ground lessor) are excluded from the Percent Occupied metric. |
| (7) | Represents monthly base rent before Free Rent and straight-line rent adjustments, plus estimated tenant reimbursements for the month in which the lease commences, multiplied by 12. Includes only leases for office and retail spaces for which rent had not yet commenced as of September 30, 2021. |
| (8) | Includes $2.6 million of Annualized NOI from 500 L'Enfant Plaza, which was sold in September 2021. |
| | Page 23 |
SUMMARY NOI - COMMERCIAL (NON-GAAP) | SEPTEMBER 30, 2021 |
| dollars in thousands | | NOI for the Three Months Ended September 30, 2021 at JBG SMITH Share |
| ||||||||||||||||
| |
| Consolidated |
| Unconsolidated (8) |
| DC (8) |
| VA |
| MD |
| Total |
| ||||||
| Number of operating assets |
| | 32 |
| | 10 |
| | 10 |
| | 29 |
| | 3 |
| | 42 | |
| Property rental (1) | | $ | 79,236 | | $ | 10,783 | | $ | 16,122 | | $ | 67,468 | | $ | 6,429 | | $ | 90,019 | |
| Tenant expense reimbursement | |
| 7,052 | |
| 334 | |
| 1,701 | |
| 5,567 | |
| 118 | |
| 7,386 | |
| Other revenue (2) | |
| 6,141 | |
| 674 | |
| 566 | |
| 5,681 | |
| 568 | |
| 6,815 | |
| Total revenue | |
| 92,429 | |
| 11,791 | |
| 18,389 | |
| 78,716 | |
| 7,115 | |
| 104,220 | |
| | | | | | | | | | | | | | | | | | | | |
| Operating expenses | |
| (35,802) | |
| (5,216) | |
| (9,690) | |
| (28,595) | |
| (2,733) | |
| (41,018) | |
| Ground rent expense | |
| (778) | |
| (39) | |
| (39) | |
| (533) | |
| (245) | |
| (817) | |
| Total expenses | |
| (36,580) | |
| (5,255) | |
| (9,729) | |
| (29,128) | |
| (2,978) | |
| (41,835) | |
| | | | | | | | | | | | | | | | | | | | |
| Operating Portfolio NOI (3) | | $ | 55,849 | | $ | 6,536 | | $ | 8,660 | | $ | 49,588 | | $ | 4,137 | | $ | 62,385 | |
| | | | | | | | | | | | | | | | | | | | |
| Annualized NOI | | $ | 221,429 | | $ | 26,144 | | $ | 34,640 | | $ | 196,385 | | $ | 16,548 | | $ | 247,573 | |
| Additional Information | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Free Rent (at 100% share) | | $ | 6,072 | | $ | 3,047 | | $ | 4,080 | | $ | 3,685 | | $ | 1,354 | | $ | 9,119 | |
| Free Rent (at JBG SMITH Share) | | $ | 6,072 | | $ | 1,545 | | $ | 2,696 | | $ | 3,567 | | $ | 1,354 | | $ | 7,617 | |
| Annualized Free Rent (at JBG SMITH Share) (4) | | $ | 24,288 | | $ | 6,180 | | $ | 10,784 | | $ | 14,268 | | $ | 5,416 | | $ | 30,468 | |
| Payments associated with assumed lease liabilities (at 100% share) | | $ | 422 | | $ | — | | $ | — | | $ | 422 | | $ | — | | $ | 422 | |
| Payments associated with assumed lease liabilities (at JBG SMITH Share) | | $ | 422 | | $ | — | | $ | — | | $ | 422 | | $ | — | | $ | 422 | |
| Annualized payments associated with assumed lease liabilities (at JBG SMITH Share) (5) | | $ | 1,688 | | $ | — | | $ | — | | $ | 1,688 | | $ | — | | $ | 1,688 | |
| % occupied (at JBG SMITH Share) (6) | |
| 82.4 | % |
| 83.8 | % |
| 70.9 | % |
| 85.4 | % |
| 80.2 | % |
| 82.6 | % |
| Annualized base rent of signed leases, not commenced (at 100% share) (7) | | $ | 14,336 | | $ | 752 | | $ | 2,948 | | $ | 9,988 | | $ | 2,152 | | $ | 15,088 | |
| Annualized base rent of signed leases, not commenced (at JBG SMITH Share) (7) | | $ | 14,336 | | $ | 144 | | $ | 2,876 | | $ | 9,452 | | $ | 2,152 | | $ | 14,480 | |
| (1) | Property rental revenue excludes straight-line rent adjustments and other GAAP adjustments, and includes payments associated with assumed lease liabilities. |
| (2) | Includes $4.7 million of parking revenue at JBG SMITH Share. |
| (3) | Our National Landing assets generated $38.1 million of NOI for the three months ended September 30, 2021. NOI excludes $3.2 million of related party management fees at JBG SMITH Share. NOI excludes $1.5 million of rent that was reserved or deferred during the quarter. See definition of NOI on page 52. |
| (4) | Represents JBG SMITH's share of Free Rent for the three months ended September 30, 2021 multiplied by four. |
| (5) | Represents JBG SMITH's share of payments associated with assumed lease liabilities for the three months ended September 30, 2021 multiplied by four. |
| (6) | Crystal City Marriott and 1700 M Street (for which we are the ground lessor) are excluded from the Percent Occupied metric. |
| (7) | Represents monthly base rent before Free Rent and straight-line rent adjustments, plus estimated tenant reimbursements for the month in which the lease commences, multiplied by 12. Includes only leases for office and retail spaces for which rent had not yet commenced as of September 30, 2021. |
| (8) | Includes $2.6 million of Annualized NOI from 500 L'Enfant Plaza, which was sold in September 2021. |
| | Page 24 |
SUMMARY NOI - MULTIFAMILY (NON-GAAP) | SEPTEMBER 30, 2021 |
| dollars in thousands | | NOI for the Three Months Ended September 30, 2021 at JBG SMITH Share |
| ||||||||||||||||
| |
| Consolidated |
| Unconsolidated |
| DC |
| VA |
| MD |
| Total |
| ||||||
| Number of operating assets |
| | 15 |
| | 6 |
| | 11 |
| | 4 |
| | 6 |
| | 21 | |
| Property rental (1) | | $ | 31,534 | | $ | 1,688 | | $ | 16,348 | | $ | 14,489 | | $ | 2,385 | | $ | 33,222 | |
| Tenant expense reimbursement | |
| 977 | |
| (12) | |
| 870 | |
| 86 | |
| 9 | |
| 965 | |
| Other revenue (2) | |
| 3,509 | |
| 421 | |
| 2,003 | |
| 1,751 | |
| 176 | |
| 3,930 | |
| Total revenue | |
| 36,020 | |
| 2,097 | |
| 19,221 | |
| 16,326 | |
| 2,570 | |
| 38,117 | |
| | | | | | | | | | | | | | | | | | | | |
| Operating expenses | |
| (17,855) | |
| (1,150) | |
| (9,195) | |
| (8,480) | |
| (1,330) | |
| (19,005) | |
| Ground rent expense | |
| — | |
| (5) | |
| — | |
| — | |
| (5) | |
| (5) | |
| Total expenses | |
| (17,855) | |
| (1,155) | |
| (9,195) | |
| (8,480) | |
| (1,335) | |
| (19,010) | |
| | | | | | | | | | | | | | | | | | | | |
| Operating Portfolio NOI (3) | | $ | 18,165 | | $ | 942 | | $ | 10,026 | | $ | 7,846 | | $ | 1,235 | | $ | 19,107 | |
| | | | | | | | | | | | | | | | | | | | |
| Annualized NOI | | $ | 72,660 | | $ | 3,768 | | $ | 40,104 | | $ | 31,384 | | $ | 4,940 | | $ | 76,428 | |
| Additional Information | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Free Rent (at 100% share) | | $ | 3,211 | | $ | 335 | | $ | 1,788 | | $ | 1,563 | | $ | 195 | | $ | 3,546 | |
| Free Rent (at JBG SMITH Share) | | $ | 3,208 | | $ | 95 | | $ | 1,623 | | $ | 1,563 | | $ | 117 | | $ | 3,303 | |
| Annualized Free Rent (at JBG SMITH Share) (4) | | $ | 12,832 | | $ | 380 | | $ | 6,492 | | $ | 6,252 | | $ | 468 | | $ | 13,212 | |
| % occupied (at JBG SMITH Share) | |
| 92.0 | % |
| 67.2 | % |
| 91.4 | % |
| 91.9 | % |
| 78.5 | % |
| 90.2 | % |
| Annualized base rent of signed leases, not commenced (at 100% share) (5) | | $ | 496 | | $ | 1,056 | | $ | 496 | | $ | — | | $ | 1,056 | | $ | 1,552 | |
| Annualized base rent of signed leases, not commenced (at JBG SMITH Share) (5) | | $ | 496 | | $ | 512 | | $ | 496 | | $ | — | | $ | 512 | | $ | 1,008 | |
| (1) | Property rental revenue excludes straight-line rent adjustments and other GAAP adjustments, and includes payments associated with assumed lease liabilities. |
| (2) | Includes $1.4 million of parking revenue at JBG SMITH Share |
| (3) | NOI excludes $1.3 million of related party management fees at JBG SMITH Share. NOI excludes $0.6 million of rent that was reserved or deferred during the quarter. See definition of NOI on page 52. |
| (4) | Represents JBG SMITH's share of Free Rent for the three months ended September 30, 2021 multiplied by four. |
| (5) | Represents monthly base rent before Free Rent and straight-line rent adjustments, plus estimated tenant reimbursements for the month in which the lease commences, multiplied by 12. Includes only leases for office and retail spaces for which rent had not yet commenced as of September 30, 2021. |
| | Page 25 |
NOI RECONCILIATIONS (NON-GAAP) | SEPTEMBER 30, 2021 |
| dollars in thousands | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| ||||||||
| |
| 2021 |
| 2020 | | 2021 |
| 2020 | | ||||
| Net income (loss) attributable to common shareholders | | $ | 893 | | $ | (22,793) | | $ | (22,811) | | $ | (16,648) | |
| Add: | | |
| | |
| | |
| | |
| |
| Depreciation and amortization expense | | | 56,726 | | | 56,481 | | | 178,130 | | | 157,586 | |
| General and administrative expense: | | |
| | |
| | |
| | |
| |
| Corporate and other | | | 12,105 | | | 11,086 | | | 38,475 | | | 37,478 | |
| Third-party real estate services | | | 25,542 | | | 28,207 | | | 80,035 | | | 86,260 | |
| Share-based compensation related to Formation Transaction and special equity awards | | | 3,480 | | | 7,133 | | | 12,866 | | | 25,432 | |
| Transaction and Other Costs | | | 2,951 | | | 845 | | | 8,911 | | | 7,526 | |
| Interest expense | | | 17,243 | | | 16,885 | | | 50,312 | | | 44,660 | |
| Loss on extinguishment of debt | | | — | | | — | | | — | | | 33 | |
| Income tax expense (benefit) | | | 217 | | | (488) | | | 4,527 | | | (3,721) | |
| Net income (loss) attributable to redeemable noncontrolling interests | | | 103 | | | (2,212) | | | (2,472) | | | (445) | |
| Net loss attributable to noncontrolling interests | | | — | | | — | | | (1,108) | | | — | |
| Less: | | |
| | |
| | |
| | |
| |
| Third-party real estate services, including reimbursements revenue | | | 25,842 | | | 26,987 | | | 90,694 | | | 83,870 | |
| Other revenue | | | 1,568 | | | 2,292 | | | 5,658 | | | 5,438 | |
| Income (loss) from unconsolidated real estate ventures, net | | | 20,503 | | | (965) | | | 23,513 | | | (17,142) | |
| Interest and other income, net | | | 192 | | | — | | | 163 | | | 1,021 | |
| Gain on sale of real estate | | | — | | | — | | | 11,290 | | | 59,477 | |
| Consolidated NOI | | | 71,155 | | | 66,830 | | | 215,547 | | | 205,497 | |
| NOI attributable to unconsolidated real estate ventures at our share | | | 7,336 | | | 7,130 | | | 22,951 | | | 23,206 | |
| Non-cash rent adjustments (1) | | | (3,701) | | | (4,934) | | | (12,554) | | | (9,898) | |
| Other adjustments (2) | | | 4,683 | | | 2,881 | | | 14,608 | | | 9,236 | |
| Total adjustments | | | 8,318 | | | 5,077 | | | 25,005 | | | 22,544 | |
| NOI | | $ | 79,473 | | $ | 71,907 | | $ | 240,552 | | $ | 228,041 | |
| Less: out-of-service NOI loss (3) | | | (2,019) | | | (442) | | | (4,638) | | | (2,774) | |
| Operating Portfolio NOI | | $ | 81,492 | | $ | 72,349 | | $ | 245,190 | | $ | 230,815 | |
| Non-Same Store NOI (4) | | | 8,777 | | | (388) | | | 21,868 | | | (165) | |
| Same Store NOI (5) | | $ | 72,715 | | $ | 72,737 | | $ | 223,322 | | $ | 230,980 | |
| | | | | | | | | | | | | | |
| Change in Same Store NOI | | | 0.0 | % | | | | | (3.3) | % | | | |
| Number of properties in Same Store pool | | | 55 | | | | | | 55 | | | | |
| (1) | Adjustment to exclude straight-line rent, above/below market lease amortization and lease incentive amortization. |
| (2) | Adjustment to include other revenue and payments associated with assumed lease liabilities related to operating properties and to exclude commercial lease termination revenue and allocated corporate general and administrative expenses to operating properties. |
| (3) | Includes the results of our Under-Construction assets, and Near-Term and Future Development Pipelines. |
| (4) | Includes the results of properties that were not In-Service for the entirety of both periods being compared and properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. |
| (5) | Includes the results of the assets that are owned, operated and In-Service for the entirety of both periods being compared. |
| | Page 26 |
LEASING ACTIVITY - OFFICE | SEPTEMBER 30, 2021 |
| square feet in thousands |
| Three Months Ended | | | Nine Months Ended |
| ||
| | | September 30, 2021 | | | September 30, 2021 |
| ||
| Square feet leased: |
| | | | | |
| |
| At 100% share |
| | 159 | | | | 1,247 | |
| At JBG SMITH Share |
| | 126 | | | | 1,184 | |
| First-generation space: New | | | 33 | | | | 174 | |
| Second-generation space: New | | | 11 | | | | 164 | |
| Second-generation space: Renewal | | | 82 | | | | 846 | |
| Initial rent (1) | | $ | 44.82 | | | $ | 46.04 | |
| Straight-line rent (2) | | $ | 45.87 | | | $ | 45.43 | |
| Weighted average lease term (years) | |
| 5.4 | | |
| 4.4 | |
| Weighted average Free Rent period (months) | |
| 5.2 | | |
| 5.4 | |
| Second-generation space: | |
| | | |
| | |
| Square feet | |
| 93 | | |
| 1,010 | |
| Cash basis: | |
|
| | |
|
| |
| Initial rent (1) | | $ | 44.37 | | | $ | 45.68 | |
| Prior escalated rent | | $ | 44.51 | | | $ | 45.59 | |
| % change | |
| (0.3) | % | |
| 0.2 | % |
| GAAP basis: | |
|
| | |
|
| |
| Straight-line rent (2) | | $ | 43.97 | | | $ | 44.69 | |
| Prior straight-line rent | | $ | 42.61 | | | $ | 43.09 | |
| % change | |
| 3.2 | % | |
| 3.7 | % |
| Tenant improvements: | |
|
| | |
|
| |
| Per square foot | | $ | 25.51 | | | $ | 22.30 | |
| Per square foot per annum | | $ | 4.68 | | | $ | 5.09 | |
| % of initial rent | |
| 10.4 | % | |
| 11.1 | % |
| Leasing commissions: | |
|
| | |
|
| |
| Per square foot | | $ | 4.90 | | | $ | 6.45 | |
| Per square foot per annum | | $ | 0.90 | | | $ | 1.47 | |
| % of initial rent | |
| 2.0 | % | |
| 3.2 | % |
Note: At JBG SMITH Share, unless otherwise indicated. The leasing activity and related statistics are based on leases signed during the period and are not intended to coincide with the commencement of property rental revenue in accordance with GAAP. Second-generation space represents square footage that was vacant for less than nine months. Weighted average lease term is weighted by SF and weighted average Free Rent period is weighted by Annualized Rent.
| (1) | Represents the cash basis weighted average starting rent per square foot, which is generally indicative of market rents. Triple net leases are converted to a gross basis by adding estimated tenant reimbursements to monthly base rent. Most leases include Free Rent and periodic step-ups in rent which are not included in the initial cash basis rent per square foot but are included in the GAAP basis rent per square foot. |
| (2) | Represents the GAAP basis weighted average rent per square foot that is recognized over the term of the respective leases, including the effect of Free Rent and fixed step-ups in rent. |
| | Page 27 |
NET EFFECTIVE RENT - OFFICE | SEPTEMBER 30, 2021 |
| square feet in thousands, dollars per square feet, at JBG SMITH Share | | Three Months Ended |
| ||||||||||||||||
| |
| Five Quarter |
| September 30, 2021 |
| June 30, 2021 |
| March 31, 2021 |
| December 31, 2020 |
| September 30, 2020 |
| ||||||
| Square feet |
| | 298 |
| | 126 |
| | 715 |
| | 344 |
| | 209 |
| | 98 | |
| Weighted average lease term (years) |
| | 4.4 |
| | 5.4 |
| | 4.2 |
| | 4.3 |
| | 4.2 |
| | 5.2 | |
| Initial rent (1) | | $ | 46.05 | | $ | 44.82 | | $ | 44.96 | | $ | 48.73 | | $ | 44.50 | | $ | 49.51 | |
| Base rent per annum (2) | | $ | 50.45 | | $ | 45.78 | | $ | 50.38 | | $ | 53.75 | | $ | 45.09 | | $ | 56.78 | |
| Tenant improvements per annum | |
| (5.16) | |
| (4.68) | |
| (5.60) | |
| (4.26) | |
| (4.14) | |
| (7.90) | |
| Leasing commissions per annum | |
| (1.53) | |
| (0.90) | |
| (1.43) | |
| (1.82) | |
| (1.59) | |
| (1.88) | |
| Free Rent per annum | |
| (4.39) | |
| (3.60) | |
| (4.79) | |
| (5.24) | |
| (2.18) | |
| (4.23) | |
| Net Effective Rent | | $ | 39.37 | | $ | 36.60 | | $ | 38.56 | | $ | 42.43 | | $ | 37.18 | | $ | 42.77 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| DC | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Square feet | |
| 23 | |
| 9 | |
| 45 | |
| 22 | |
| 11 | |
| 28 | |
| Initial rent (1) | | $ | 60.13 | | $ | 50.75 | | $ | 62.54 | | $ | 60.21 | | $ | 58.34 | | $ | 60.12 | |
| Net effective rent | | $ | 50.29 | | $ | 43.86 | | $ | 51.57 | | $ | 54.77 | | $ | 52.44 | | $ | 45.97 | |
| | | | | | | | | | | | | | | | | | | | |
| VA | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Square feet | |
| 262 | |
| 105 | |
| 651 | |
| 284 | |
| 198 | |
| 70 | |
| Initial rent (1) | | $ | 44.55 | | $ | 44.56 | | $ | 43.53 | | $ | 47.28 | | $ | 43.72 | | $ | 45.29 | |
| Net effective rent | | $ | 36.90 | | $ | 35.93 | | $ | 35.77 | | $ | 39.60 | | $ | 36.77 | | $ | 38.30 | |
| | | | | | | | | | | | | | | | | | | | |
| MD | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Square feet | |
| 14 | |
| 11 | |
| 19 | |
| 38 | |
| — | |
| — | |
| Initial rent (1) | | $ | 51.08 | | $ | 42.27 | | $ | 52.57 | | $ | 52.96 | | $ | — | | $ | — | |
| Net effective rent | | $ | 43.99 | | $ | 32.33 | | $ | 40.17 | | $ | 49.40 | | $ | — | | $ | — | |
Note: Leasing activity and related statistics are based on leases signed during the period and are not intended to coincide with the recognition of property rental revenue in accordance with GAAP. Weighted average lease term is weighted by SF and weighted average Free Rent period is weighted by Annualized Rent.
| (1) | Represents the cash basis weighted average starting rent per square foot, which is generally indicative of market rents. Triple net leases are converted to a gross basis by adding estimated tenant reimbursements to monthly base rent. Most leases include Free Rent and periodic step-ups in rent which are not included in the initial cash basis rent per square foot. |
| (2) | Represents the weighted average base rent before Free Rent, plus estimated tenant reimbursements recognized over the term of the respective leases, including the effect of fixed step-ups in rent, divided by SF, and divided by years of lease term. Triple net leases are converted to a gross basis by adding estimated tenant reimbursements to base rent. Tenant reimbursements are estimated by escalating tenant reimbursements as of the respective reporting period, or management's estimate thereof, by 2.75% annually through the lease expiration year. |
| | Page 28 |
LEASE EXPIRATIONS | SEPTEMBER 30, 2021 |
| | | | | At JBG SMITH Share | | |||||||||||||
| |
| |
| |
| |
| | |
| |
| | |
| Estimated |
| |
| | | | | | | | | | | | % of | | | | | Annualized |
| |
| | | | | | | % of | | Annualized | | Total | | Annualized | | Rent Per |
| |||
| | | Number | | | | Total | | Rent (1) | | Annualized | | Rent Per | | Square Foot at |
| |||
| Year of Lease Expiration | | of Leases | | Square Feet | | Square Feet | | (in thousands) | | Rent | | Square Foot (1) | | Expiration (1) (2) |
| |||
| Month-to-Month |
| 49 |
| 141,829 |
| 1.5 | % | $ | 2,367 |
| 0.5 | % | $ | 23.60 | | $ | 23.60 | |
| 2021 |
| 35 |
| 199,772 |
| 2.1 | % |
| 8,995 |
| 2.1 | % |
| 45.03 | |
| 45.26 | |
| 2022 |
| 113 |
| 1,043,077 |
| 11.0 | % |
| 46,869 |
| 10.8 | % |
| 44.93 | |
| 45.47 | |
| 2023 |
| 121 |
| 846,155 |
| 8.9 | % |
| 37,167 |
| 8.6 | % |
| 43.92 | |
| 45.73 | |
| 2024 |
| 107 |
| 1,533,128 |
| 16.2 | % |
| 71,826 |
| 16.6 | % |
| 46.85 | |
| 49.07 | |
| 2025 |
| 90 |
| 945,511 |
| 10.0 | % |
| 41,325 |
| 9.5 | % |
| 43.71 | |
| 47.01 | |
| 2026 |
| 77 |
| 413,327 |
| 4.4 | % |
| 19,083 |
| 4.4 | % |
| 46.17 | |
| 51.99 | |
| 2027 |
| 53 |
| 618,172 |
| 6.5 | % |
| 28,641 |
| 6.6 | % |
| 46.33 | |
| 50.39 | |
| 2028 |
| 53 |
| 436,783 |
| 4.6 | % |
| 20,775 |
| 4.8 | % |
| 47.56 | |
| 55.54 | |
| 2029 |
| 38 |
| 433,879 |
| 4.6 | % |
| 22,554 |
| 5.2 | % |
| 51.98 | |
| 60.84 | |
| Thereafter |
| 126 |
| 2,877,523 |
| 30.2 | % |
| 133,475 |
| 30.9 | % |
| 47.02 | |
| 60.28 | |
| Total / Weighted Average |
| 862 |
| 9,489,156 |
| 100.0 | % | $ | 433,077 |
| 100.0 | % | $ | 46.03 | | $ | 52.25 | |
Note: Includes all in-place leases as of September 30, 2021 for office and retail space within our operating portfolio and assuming no exercise of renewal options or early termination rights. The weighted average remaining lease term for the entire portfolio is 5.9 years.
| (1) | Annualized Rent and Annualized Rent per Square Foot exclude percentage rent and the square footage of tenants that only pay percentage rent. |
| (2) | Represents monthly base rent before Free Rent, plus tenant reimbursements, as of lease expiration multiplied by 12 and divided by SF. Triple net leases are converted to a gross basis by adding tenant reimbursements to monthly base rent. Tenant reimbursements at lease expiration are estimated by escalating tenant reimbursements as of September 30, 2021, or management’s estimate thereof, by 2.75% annually through the lease expiration year. |
| | Page 29 |
SIGNED BUT NOT YET COMMENCED LEASES | SEPTEMBER 30, 2021 |
Signed But Not Yet Commenced Leases
| in thousands, at JBG SMITH Share | | Total | | | | | | | | | | | | | | | | | | |
| |||
| | | | | Annualized | | | | | | | | | | | | | | | | | | | | |
| | | | | Estimated | | Estimated Rent (1) for the Quarter Ending | | |||||||||||||||||
| Assets |
| C/U (2) |
| Rent (3) |
| December 31, 2021 |
| March 31, 2022 |
| June 30, 2022 |
| September 30, 2022 |
| December 31, 2022 |
| March 31, 2023 |
| |||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| Commercial |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| |
| Operating |
| C | | $ | 14,336 | | $ | 231 | | $ | 1,358 | | $ | 2,705 | | $ | 3,433 | | $ | 3,466 | | $ | 3,504 | |
| Operating |
| U | |
| 144 | |
| 15 | |
| 22 | |
| 35 | |
| 36 | |
| 36 | |
| 36 | |
| Total | | | | $ | 14,480 | | $ | 246 | | $ | 1,380 | | $ | 2,740 | | $ | 3,469 | | $ | 3,502 | | $ | 3,540 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Multifamily | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Operating | | C | | $ | 496 | | $ | — | | $ | 13 | | $ | 40 | | $ | 123 | | $ | 124 | | $ | 124 | |
| Operating | | U | |
| 512 | |
| — | |
| 77 | |
| 128 | |
| 128 | |
| 128 | |
| 128 | |
| Total | | | | $ | 1,008 | | $ | — | | $ | 90 | | $ | 168 | | $ | 251 | | $ | 252 | | $ | 252 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | | $ | 15,488 | | $ | 246 | | $ | 1,470 | | $ | 2,908 | | $ | 3,720 | | $ | 3,754 | | $ | 3,792 | |
Note: Includes only leases for office and retail spaces for which rent had not yet commenced as of September 30, 2021.
| (1) | Represents contractual monthly base rent before Free Rent, plus estimated tenant reimbursements for the month in which the lease is estimated to commence, multiplied by the applicable number of months for each quarter based on the lease's estimated commencement date. |
| (2) | "C" denotes a consolidated interest. "U" denotes an unconsolidated interest. |
| (3) | Represents contractual monthly base rent before Free Rent, plus estimated tenant reimbursements for the month in which the lease is expected to commence, multiplied by 12. |
| | Page 30 |
TENANT CONCENTRATION | SEPTEMBER 30, 2021 |
dollars in thousands |
|
|
| At JBG SMITH Share |
| |||||||||
| | Tenant | | Number of Leases | | Square Feet | | % of Total Square Feet | | Annualized | | % of Total Annualized Rent |
| |
1 | | U.S. Government (GSA) | | 58 | | 2,201,428 | | 23.2 | % | $ | 88,869 | | 20.5 | % |
2 |
| Amazon | | 5 | | 858,177 |
| 9.0 | % | | 36,635 |
| 8.5 | % |
3 |
| Gartner, Inc | | 1 | | 174,424 |
| 1.8 | % | | 12,331 |
| 2.8 | % |
4 |
| Family Health International | | 3 | | 220,670 |
| 2.3 | % | | 12,142 |
| 2.8 | % |
5 |
| Lockheed Martin Corporation | | 2 | | 232,598 |
| 2.5 | % | | 11,420 |
| 2.6 | % |
6 |
| Arlington County | | 2 | | 235,779 |
| 2.5 | % | | 10,536 |
| 2.4 | % |
7 |
| Booz Allen Hamilton Inc | | 3 | | 159,610 |
| 1.7 | % | | 7,691 |
| 1.8 | % |
8 |
| Greenberg Traurig LLP | | 1 | | 101,602 |
| 1.1 | % | | 7,226 |
| 1.7 | % |
9 |
| Accenture LLP | | 2 | | 116,736 |
| 1.2 | % | | 7,188 |
| 1.7 | % |
10 |
| Evolent Health LLC | | 1 | | 90,905 |
| 1.0 | % | | 4,623 |
| 1.1 | % |
11 |
| Public Broadcasting Service | | 1 | | 120,328 |
| 1.3 | % | | 4,575 |
| 1.1 | % |
12 |
| Goodwin Procter LLP | | 1 | | 51,296 |
| 0.5 | % | | 4,199 |
| 1.0 | % |
13 | | The International Justice Mission | | 1 | | 74,833 | | 0.8 | % | | 4,189 | | 1.0 | % |
14 |
| Conservation International Foundation | | 1 | | 86,981 |
| 0.9 | % | | 4,144 |
| 1.0 | % |
15 |
| Cushman & Wakefield U.S. Inc | | 1 | | 58,641 |
| 0.6 | % | | 4,043 |
| 0.9 | % |
16 |
| Host Hotels & Resorts LP | | 1 | | 55,009 |
| 0.6 | % | | 3,862 |
| 0.9 | % |
17 |
| Chemonics International | | 2 | | 82,330 |
| 0.9 | % | | 3,623 |
| 0.8 | % |
18 |
| American Diabetes Association | | 1 | | 80,998 |
| 0.9 | % | | 3,555 |
| 0.8 | % |
19 |
| Willis Towers Watson US LLC | | 1 | | 61,653 |
| 0.6 | % | | 3,151 |
| 0.7 | % |
20 |
| National Consumer Cooperative | | 1 | | 65,736 |
| 0.7 | % | | 3,044 |
| 0.7 | % |
|
| Other (1) | | 773 | | 4,359,422 |
| 45.9 | % | | 196,031 |
| 45.2 | % |
|
| Total | | 862 | | 9,489,156 |
| 100.0 | % | $ | 433,077 |
| 100.0 | % |
Note: Includes all leases as of September 30, 2021 for which a tenant has taken occupancy for office and retail space within our operating portfolio.
| (1) | Includes JBG SMITH's lease for approximately 84,400 SF at 4747 Bethesda Avenue. |
| | Page 31 |
INDUSTRY DIVERSITY | SEPTEMBER 30, 2021 |
dollars in thousands | | | | At JBG SMITH Share |
| |||||||||
|
| |
| Number of |
| |
| % of Total |
| Annualized |
| % of Total |
| |
| | Industry | | Leases | | Square Feet | | Square Feet | | Rent | | Annualized Rent |
| |
1 |
| Government |
| 69 |
| 2,506,775 |
| 26.4 | % | $ | 102,682 |
| 23.7 | % |
2 |
| Business Services |
| 117 |
| 1,844,929 |
| 19.4 | % |
| 88,770 |
| 20.5 | % |
3 |
| Government Contractors |
| 67 |
| 1,383,162 |
| 14.6 | % |
| 65,673 |
| 15.2 | % |
4 |
| Member Organizations |
| 70 |
| 851,671 |
| 9.0 | % |
| 42,017 |
| 9.7 | % |
5 |
| Real Estate |
| 49 |
| 530,898 |
| 5.6 | % |
| 24,423 |
| 5.6 | % |
6 |
| Legal Services |
| 38 |
| 316,417 |
| 3.3 | % |
| 19,555 |
| 4.5 | % |
7 |
| Health Services |
| 43 |
| 376,787 |
| 4.0 | % |
| 16,146 |
| 3.7 | % |
8 |
| Food and Beverage |
| 116 |
| 255,186 |
| 2.7 | % |
| 14,798 |
| 3.4 | % |
9 |
| Communications |
| 9 |
| 152,502 |
| 1.6 | % |
| 5,971 |
| 1.4 | % |
10 |
| Educational Services |
| 12 |
| 81,562 |
| 0.9 | % |
| 3,676 |
| 0.8 | % |
|
| Other |
| 272 |
| 1,189,267 |
| 12.5 | % |
| 49,366 |
| 11.5 | % |
|
| Total |
| 862 |
| 9,489,156 |
| 100.0 | % | $ | 433,077 |
| 100.0 | % |
Note: Includes all in-place leases as of September 30, 2021 for office and retail space within our operating portfolio.
| | Page 32 |
PORTFOLIO SUMMARY | SEPTEMBER 30, 2021 |
| | | | | | | | | Potential |
|
| | | Number | | Rentable | | Number of | | Development |
|
| | | of Assets | | Square Feet | | Units (1) | | Density (2) |
|
| | | | | | | | | | |
| Wholly Owned |
|
|
|
|
|
|
|
| |
| Operating |
| 46 |
| 14,705,616 |
| 5,259 |
| — | |
| Under-Construction (3) |
| 1 |
| 633,985 |
| 808 |
| — | |
| Near-Term Development | | 9 | | — | | — | | 4,839,900 | |
| Future Development |
| 14 |
| — |
| — |
| 10,278,100 | |
| Total |
| 70 |
| 15,339,601 |
| 6,067 |
| 15,118,000 | |
| | | | | | | | | | |
| Real Estate Ventures |
|
|
|
|
|
|
|
| |
| Operating |
| 17 |
| 5,080,748 |
| 2,517 |
| — | |
| Near-Term Development |
| 2 |
| — |
| — |
| 419,400 | |
| Future Development |
| 11 |
| — |
| — |
| 4,050,000 | |
| Total |
| 30 |
| 5,080,748 |
| 2,517 |
| 4,469,400 | |
| | | | | | | | | | |
| Total Portfolio | | 100 |
| 20,420,349 |
| 8,584 |
| 19,587,400 | |
| | | | | | | | | | |
| Total Portfolio (at JBG SMITH Share) | | 100 |
| 17,133,572 |
| 6,933 |
| 16,647,300 | |
Note: At 100% share, unless otherwise indicated.
| (1) | For Under-Construction assets, represents estimated number of units based on current design plans. |
| (2) | Includes estimated potential office, multifamily and retail development density. |
| (3) | See footnote (3) on page 40. |
| | Page 33 |
PROPERTY TABLE - COMMERCIAL | SEPTEMBER 30, 2021 |
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| | |
| Office |
| | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Annualized | | Retail |
| ||
| | | | | | | | Same Store (2): | | | | | | | | | | | | | | | | Annualized | | Rent Per | | Annualized |
| |||
| | | | % | | | Q3 2020‑2021 / | | Year Built / | | Total | | Office | | Retail | | % | | Office % | | Retail % | | Rent | | Square | | Rent Per |
| ||||
Commercial Assets | | Submarket | | Ownership | | C/U (1) | | YTD 2020 - 2021 | | Renovated | | Square Feet | | Square Feet | | Square Feet | | Leased | | Occupied | | Occupied | | (in thousands) | | Foot (3) | | Square Foot (4) |
| |||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
DC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| |
|
| |
| |
Universal Buildings |
| Uptown |
| 100.0 | % | C |
| Y / Y |
| 1956 / 1999 |
| 659,459 |
| 568,351 | | 91,108 | | 64.1% | | 58.4% | | 99.6% | | $ | 23,268 | | $ | 53.89 | | $ | 59.14 | |
2101 L Street |
| CBD |
| 100.0 | % | C |
| Y / Y |
| 1975 / 2007 |
| 378,685 |
| 347,365 | | 31,320 | | 82.4% | | 70.5% | | 92.6% | |
| 18,323 | |
| 67.97 | |
| 57.81 | |
1730 M Street (5) |
| CBD |
| 100.0 | % | C |
| Y / Y |
| 1964 / 1998 |
| 204,845 |
| 196,827 | | 8,018 | | 89.2% | | 85.5% | | 100.0% | |
| 8,795 | |
| 49.80 | |
| 51.59 | |
1700 M Street |
| CBD |
| 100.0 | % | C |
| Y / Y |
| N/A |
| 34,000 |
| - | | - | | - | | - | | - | |
| - | |
| - | |
| - | |
L’Enfant Plaza Office-East (5) |
| Southwest |
| 49.0 | % | U |
| Y / Y |
| 1972 / 2012 |
| 397,855 |
| 397,855 | | - | | 65.2% | | 65.2% | | - | |
| 13,954 | |
| 53.78 | |
| - | |
L’Enfant Plaza Office-North |
| Southwest |
| 49.0 | % | U |
| Y / Y |
| 1969 / 2014 |
| 298,567 |
| 277,243 | | 21,324 | | 90.5% | | 90.2% | | 87.1% | |
| 12,398 | |
| 47.93 | |
| 22.23 | |
L’Enfant Plaza Retail (5) |
| Southwest |
| 49.0 | % | U |
| Y / Y |
| 1968 / 2014 |
| 119,291 |
| 16,596 | | 102,695 | | 73.9% | | 100.0% | | 69.7% | |
| 5,030 | |
| 48.09 | |
| 59.09 | |
1900 N Street (5) | | CBD | | 55.0 | % | U | | N / N | | 2019 / N/A | | 269,035 | | 260,742 | | 8,293 | | 74.1% | | 76.4% | | - | | | 13,640 | | | 68.44 | | | - | |
The Foundry |
| Georgetown |
| 9.9 | % | U |
| Y / Y |
| 1973 / 2017 |
| 225,683 |
| 218,829 | | 6,854 | | 89.6% | | 89.3% | | 100.0% | |
| 10,106 | |
| 50.26 | |
| 41.29 | |
1101 17th Street |
| CBD |
| 55.0 | % | U |
| Y / Y |
| 1964 / 1999 |
| 208,945 |
| 199,191 | | 9,754 | | 85.1% | | 84.4% | | 100.0% | |
| 9,807 | |
| 54.22 | |
| 71.40 | |
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VA |
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Courthouse Plaza 1 and 2 (5) |
| Clarendon/Courthouse |
| 100.0 | % | C |
| Y / Y |
| 1989 / 2013 |
| 630,135 |
| 572,942 | | 57,193 | | 82.0% | | 80.8% | | 94.3% | | $ | 22,764 | | $ | 45.39 | | $ | 32.66 | |
1550 Crystal Drive (6) | | National Landing |
| 100.0 | % | C |
| Y / Y |
| 1980 / 2020 |
| 547,789 |
| 449,777 | | 98,012 | | 93.1% | | 89.9% | | 85.6% | |
| 20,638 | |
| 41.53 | |
| 45.90 | |
2121 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1985 / 2006 |
| 505,349 |
| 505,349 | | - | | 71.3% | | 71.3% | | - | |
| 17,028 | |
| 47.26 | |
| - | |
2345 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1988 / 2019 |
| 500,256 |
| 492,364 | | 7,892 | | 88.4% | | 77.0% | | 100.0% | |
| 18,289 | |
| 47.88 | |
| 16.17 | |
RTC-West (6) |
| Reston |
| 100.0 | % | C |
| Y / Y |
| 1988 / 2014 |
| 470,072 |
| 430,599 | | 39,473 | | 85.8% | | 84.6% | | 93.3% | |
| 15,781 | |
| 41.37 | |
| 66.13 | |
2231 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1987 / 2009 |
| 468,200 |
| 416,273 | | 51,927 | | 82.2% | | 79.2% | | 97.4% | |
| 17,084 | |
| 46.01 | |
| 37.89 | |
2011 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1984 / 2006 |
| 440,996 |
| 434,234 | | 6,762 | | 69.1% | | 64.5% | | 100.0% | |
| 13,182 | |
| 46.63 | |
| 19.23 | |
2451 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1990 / 2019 |
| 401,902 |
| 389,845 | | 12,057 | | 76.9% | | 76.4% | | 92.6% | |
| 12,625 | |
| 47.12 | |
| 39.17 | |
1235 S. Clark Street |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1981 / 2007 |
| 384,736 |
| 336,390 | | 48,346 | | 97.5% | | 95.5% | | 98.8% | |
| 14,834 | |
| 42.66 | |
| 23.71 | |
241 18th Street S. |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1977 / 2013 |
| 363,107 |
| 333,604 | | 29,503 | | 96.5% | | 88.8% | | 85.1% | |
| 12,413 | |
| 40.32 | |
| 18.91 | |
251 18th Street S. (6) |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1975 / 2013 |
| 337,471 |
| 293,403 | | 44,068 | | 93.9% | | 99.0% | | 60.0% | |
| 13,422 | |
| 43.79 | |
| 26.81 | |
1215 S. Clark Street |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1983 / 2016 |
| 336,159 |
| 333,546 | | 2,613 | | 100.0% | | 100.0% | | 100.0% | |
| 11,154 | |
| 33.17 | |
| 35.11 | |
201 12th Street S. |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1987 / 2014 |
| 329,607 |
| 317,394 | | 12,213 | | 98.5% | | 98.5% | | 100.0% | |
| 11,835 | |
| 36.24 | |
| 41.90 | |
800 North Glebe Road |
| Ballston |
| 100.0 | % | C |
| Y / Y |
| 2012 / N/A |
| 303,644 |
| 277,397 | | 26,247 | | 98.5% | | 100.0% | | 82.3% | |
| 16,261 | |
| 54.95 | |
| 47.21 | |
2200 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1968 / 2006 |
| 283,608 |
| 283,608 | | - | | 57.0% | | 57.0% | | - | |
| 7,344 | |
| 45.43 | |
| - | |
1901 South Bell Street (6) |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1968 / 2008 |
| 275,037 |
| 275,037 | | - | | 92.1% | | 92.1% | | - | |
| 10,325 | |
| 40.74 | |
| - | |
1225 S. Clark Street |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1982 / 2013 |
| 276,594 |
| 263,744 | | 12,850 | | 94.3% | | 94.1% | | 100.0% | |
| 9,906 | |
| 38.76 | |
| 22.53 | |
1770 Crystal Drive | | National Landing | | 100.0 | % | C | | N / N | | 2020 / N/A | | 273,650 | | 259,651 | | 13,999 | | 98.4% | | 100.0% | | 68.5% | | | 11,054 | | | 40.35 | | | 60.36 | |
Crystal City Marriott (345 Rooms) |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1968 / 2013 |
| 266,000 |
| - | | - | | - | | - | | - | |
| - | |
| - | |
| - | |
2100 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1968 / 2006 |
| 253,437 |
| 253,437 | | - | | 100.0% | | 100.0% | | - | |
| 11,404 | |
| 45.00 | |
| - | |
| | Page 34 |
PROPERTY TABLE - COMMERCIAL | SEPTEMBER 30, 2021 |
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| | Office |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | Annualized | | | Retail |
|
| | | | | | | | Same Store (2): | | | | | | | | | | | | | | | | | Annualized | | | Rent Per | | | Annualized |
|
| | | | % | | | | Q3 2020‑2021 / | | Year Built / | | Total | | Office | | Retail | | % | | Office % | | Retail % | | | Rent | | | Square | | | Rent Per |
|
Commercial Assets | | Submarket | | Ownership | | C/U (1) | | YTD 2020 - 2021 | | Renovated | | Square Feet | | Square Feet | | Square Feet | | Leased | | Occupied | | Occupied | | | (in thousands) | | | Foot (3) | | | Square Foot (4) |
|
1800 South Bell Street |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1969 / 2019 |
| 206,186 |
| 190,984 | | 15,202 | | 99.2% | | 100.0% | | 88.8% | | $ | 8,215 | | $ | 42.69 | | $ | 4.51 | |
200 12th Street S. |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1985 / 2013 |
| 202,708 |
| 202,708 | | - | | 79.5% | | 79.5% | | - | |
| 7,571 | |
| 46.96 | |
| - | |
Crystal Drive Retail |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 2003 / 2004 |
| 56,965 |
| - | | 56,965 | | 87.9% | | - | | 87.9% | |
| 3,102 | |
| - | |
| 61.95 | |
Crystal City Shops at 2100 (6) |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1968 / 2006 |
| 53,174 |
| - | | 53,174 | | 82.2% | | - | | 82.2% | |
| 543 | |
| - | |
| 12.42 | |
2221 S. Clark Street-Office | | National Landing | | 100.0 | % | C |
| Y / Y | | 1964 / 2016 | | 35,182 | | 26,238 | | 8,944 | | - | | - | | - | | | - | | | - | | | - | |
Central Place Tower (5) |
| Rosslyn |
| 50.0 | % | U |
| Y / Y |
| 2018 / N/A |
| 551,758 |
| 524,480 | | 27,278 | | 98.4% | | 98.3% | | 100.0% | |
| 36,422 | |
| 69.13 | |
| 29.02 | |
Stonebridge at Potomac Town |
| Prince William County |
| 10.0 | % | U |
| Y / Y |
| 2012 / N/A |
| 504,327 |
| - | | 504,327 | | 97.8% | | - | | 91.5% | |
| 15,511 | |
| - | |
| 33.61 | |
Rosslyn Gateway-North |
| Rosslyn |
| 18.0 | % | U |
| Y / Y |
| 1996 / 2014 |
| 145,120 |
| 132,366 | | 12,754 | | 76.4% | | 76.8% | | 72.3% | |
| 4,773 | |
| 43.88 | |
| 33.80 | |
Rosslyn Gateway-South |
| Rosslyn |
| 18.0 | % | U |
| Y / Y |
| 1961 / N/A |
| 102,791 |
| 95,207 | | 7,584 | | 75.9% | | 78.7% | | 40.4% | |
| 2,058 | |
| 25.59 | |
| 45.63 | |
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MD |
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4747 Bethesda Avenue (8) | | Bethesda CBD | | 100.0 | % | C | | N / N | | 2019 / N/A | | 300,508 | | 286,199 | | 14,309 | | 98.0% | | 93.2% | | 100.0% | | $ | 19,047 | | $ | 64.73 | | $ | 124.94 | |
7200 Wisconsin Avenue |
| Bethesda CBD |
| 100.0 | % | C |
| Y / Y |
| 1986 / 2015 |
| 268,533 |
| 257,567 | | 10,966 | | 65.0% | | 60.1% | | 100.0% | | | 8,231 | | | 48.28 | | | 69.34 | |
One Democracy Plaza (5) (7) |
| Bethesda- Rock Spring |
| 100.0 | % | C |
| Y / Y |
| 1987 / 2013 |
| 212,922 |
| 210,784 | | 2,138 | | 88.4% | | 87.0% | | 100.0% | |
| 6,095 | |
| 32.86 | |
| 31.81 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating - Total / Weighted Average |
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|
| 13,084,288 |
| 11,328,126 |
| 1,456,162 |
| 85.2% | | 82.7% | | 87.9% | | $ | 494,232 | | $ | 47.65 | | $ | 40.35 | | ||
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Totals at JBG SMITH Share |
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Operating assets |
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| 11,316,721 |
| 10,122,322 | | 894,399 | | 84.9% | | 82.6% | | 87.6% | | $ | 420,797 | | $ | 46.74 | | $ | 43.32 | |
| Number of Assets and Total Square Feet Reconciliation | | | | |
| ||
| |
| Number of |
| At 100% Share |
| At JBG SMITH Share |
|
| Operating Assets | | Assets | | Square Feet | | Square Feet |
|
| Q2 2021 |
| 43 |
| 13,295,585 |
| 11,418,696 | |
| Placed into service |
| — |
| — |
| — | |
| Dispositions (9) |
| (1) |
| (215,218) |
| (105,447) | |
| Out-of-service adjustment |
| — |
| — |
| — | |
| Portfolio reclassification | | — | | — | | — | |
| Building re-measurements |
| — |
| 3,921 |
| 3,472 | |
| | | | | | | | |
| Q3 2021 |
| 42 |
| 13,084,288 |
| 11,316,721 | |
See footnotes on page 36.
| | Page 35 |
PROPERTY TABLE - COMMERCIAL | SEPTEMBER 30, 2021 |
Footnotes
Note: At 100% share, unless otherwise noted. Excludes our 10% subordinated interest in one commercial building held through a real estate venture in which we have no economic interest.
| (1) | "C" denotes a consolidated interest. "U" denotes an unconsolidated interest. |
| (2) | "Y" denotes an asset as Same Store and "N" denotes an asset as Non-Same Store. |
| (3) | Represents annualized office rent divided by occupied office SF; annualized retail rent and retail SF are excluded from this metric. Annualized Rent and Annualized Rent per Square Foot exclude percentage rent and the square footage of tenants that only pay percentage rent. Occupied office square footage may differ from leased office square footage because leased office square footage includes space for leases that have been signed but the tenant has not yet taken occupancy. |
| (4) | Represents annualized retail rent divided by occupied retail SF. Occupied retail square footage may differ from leased retail square footage because leased retail square footage includes space for leases that have been signed but the tenant has not yet taken occupancy. |
| (5) | The following assets are subject to ground leases: |
| |
| Ground Lease | |
| Commercial Asset | | Expiration Date |
|
| 1730 M Street (a) |
| 12/31/2118 | |
| L’Enfant Plaza Office - East |
| 11/23/2064 | |
| L’Enfant Plaza Retail |
| 11/23/2064 | |
| 1900 N Street (b) |
| 5/31/2106 | |
| Courthouse Plaza 1 and 2 |
| 1/19/2062 | |
| Central Place Tower (a) (c) |
| 6/2/2102 | |
| One Democracy Plaza |
| 11/17/2084 | |
| | | | |
| (a) | The ground lease is recorded as a financing lease for accounting purposes; therefore, any expense is recorded as interest expense and excluded from NOI. |
| (b) | Only a portion of the asset is subject to a ground lease. |
| (c) | We have an option to purchase the ground lease at a fixed price. |
| (6) | The following assets contain space that is held for development or not otherwise available for lease. This out-of-service square footage is excluded from area, leased and occupancy metrics. |
| | | | | Not Available | |
| Commercial Asset |
| In-Service |
| for Lease |
|
| 1550 Crystal Drive | | 547,789 | | 1,721 | |
| RTC - West | | 470,072 | | 17,988 | |
| 251 18th Street S. | | 337,471 | | 1,480 | |
| 1901 South Bell Street | | 275,037 | | 1,924 | |
| Crystal City Shops at 2100 | | 53,174 | | 19,041 | |
| (7) | Not Metro-Served. |
| (8) | Includes JBG SMITH's lease for approximately 84,400 SF. |
| (9) | In September 2021, an unconsolidated real estate venture sold 500 L'Enfant Plaza for $166.5 million. |
| | Page 36 |
PROPERTY TABLE - MULTIFAMILY | SEPTEMBER 30, 2021 |
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| | | | | | | | Same Store (2): | | | | Number | | Total | | Multifamily | | Retail | | | | Multifamily | | Retail | | | Annualized | | | Rent | | | Rent Per |
| | | | % | | | | Q3 2020‑2021 / | | Year Built / | | of | | Square | | Square | | Square | | | | % | | % | | | Rent | | | Per | | | Square |
Multifamily Assets | | Submarket | | Ownership | | C/U (1) | | YTD 2020 - 2021 | | Renovated | | Units | | Feet | | Feet | | Feet | | % Leased | | Occupied | | Occupied | | | (in thousands) | | | Unit (3) (4) | | | Foot (4) (5) |
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DC | |
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West Half |
| Ballpark |
| 100.0 | % | C |
| N / N |
| 2019 / N/A |
| 465 |
| 385,368 |
| 343,089 |
| 42,279 |
| 91.3% | | 89.7% | | 65.0% | | $ | 13,120 | | $ | 2,305 | | $ | 3.34 |
Fort Totten Square |
| Brookland/Fort Totten |
| 100.0 | % | C |
| Y / Y |
| 2015 / N/A |
| 345 |
| 384,956 |
| 254,292 |
| 130,664 |
| 99.2% | | 97.4% | | 100.0% | | | 8,932 | | | 1,760 | | | 2.39 |
The Wren (6) | | U Street/Shaw | | 96.1 | % | C | | N / N | | 2020 / N/A | | 433 | | 332,682 | | 289,686 | | 42,996 | | 87.5% | | 79.4% | | 100.0% | | | 10,587 | | | 2,255 | | | 3.39 |
WestEnd25 |
| West End |
| 100.0 | % | C |
| Y / Y |
| 2009 / N/A |
| 283 |
| 273,264 |
| 273,264 |
| — |
| 98.6% | | 97.5% | | — | |
| 10,944 | |
| 3,304 | |
| 3.42 |
F1RST Residences |
| Ballpark |
| 100.0 | % | C |
| Y / Y |
| 2017 / N/A |
| 325 |
| 270,928 |
| 249,456 |
| 21,472 |
| 96.4% | | 97.2% | | 72.4% | |
| 9,630 | |
| 2,235 | |
| 2.91 |
1221 Van Street |
| Ballpark |
| 100.0 | % | C |
| Y / Y |
| 2018 / N/A |
| 291 |
| 225,530 |
| 202,715 |
| 22,815 |
| 97.8% | | 95.5% | | 100.0% | |
| 8,322 | |
| 2,126 | |
| 3.06 |
901 W Street | | U Street/Shaw | | 100.0 | % | C | | N / N | | 2019 / N/A | | 161 | | 157,829 | | 135,499 | | 22,330 | | 94.0% | | 98.8% | | 61.4% | | | 5,612 | | | 2,449 | | | 2.94 |
900 W Street | | U Street/Shaw | | 100.0 | % | C | | N / N | | 2019 / N/A | | 95 | | 69,183 | | 69,183 | | — | | 74.7% | | 64.2% | | — | | | 3,119 | | | 4,261 | | | 5.83 |
North End Retail |
| U Street/Shaw |
| 100.0 | % | C |
| Y / Y |
| 2015 / N/A |
| — |
| 27,355 |
| — |
| 27,355 |
| 89.7% | | — | | 89.7% | |
| 1,337 | |
| — | |
| — |
The Gale Eckington |
| Union Market/NoMa/H Street |
| 5.0 | % | U |
| Y / Y |
| 2013/ N/A |
| 603 |
| 466,716 |
| 465,516 |
| 1,200 |
| 91.1% | | 86.7% | | 100.0% | |
| 12,341 | |
| 1,959 | |
| 2.54 |
Atlantic Plumbing |
| U Street/Shaw |
| 64.0 | % | U |
| Y / Y |
| 2015 / N/A |
| 310 |
| 245,527 |
| 221,788 |
| 23,739 |
| 94.8% | | 93.2% | | 97.4% | |
| 9,474 | |
| 2,389 | |
| 3.34 |
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VA |
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RiverHouse Apartments |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1960 / 2014 |
| 1,676 |
| 1,327,551 |
| 1,324,889 |
| 2,662 |
| 97.1% | | 95.9% | | 100.0% | | $ | 32,547 | | $ | 1,684 | | $ | 2.13 |
The Bartlett |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 2016 / N/A |
| 699 |
| 619,372 |
| 577,295 |
| 42,077 |
| 97.7% | | 96.3% | | 100.0% | |
| 22,200 | |
| 2,555 | |
| 3.09 |
220 20th Street |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 2009 / N/A |
| 265 |
| 271,476 |
| 269,913 |
| 1,563 |
| 97.7% | | 95.8% | | 100.0% | |
| 7,766 | |
| 2,530 | |
| 2.47 |
2221 S. Clark Street- |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1964 / 2016 |
| 216 |
| 96,948 |
| 96,948 |
| — |
| 52.3% | | 41.7% | | — | |
| 2,221 | |
| 2,056 | |
| 4.23 |
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MD |
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Falkland Chase-South & West |
| Downtown Silver Spring |
| 100.0 | % | C |
| Y / Y |
| 1938 / 2011 |
| 268 |
| 222,754 |
| 222,754 |
| — |
| 99.3% | | 97.4% | | — | | $ | 5,215 | | $ | 1,665 | | $ | 2.00 |
Falkland Chase-North |
| Downtown Silver Spring |
| 100.0 | % | C |
| Y / Y |
| 1938 / 1986 |
| 170 |
| 112,186 |
| 112,186 |
| — |
| 99.4% | | 97.1% | | — | |
| 2,760 | |
| 1,394 | |
| 2.11 |
Galvan |
| Rockville Pike Corridor |
| 1.8 | % | U |
| Y / Y |
| 2015 / N/A |
| 356 |
| 390,293 |
| 295,033 |
| 95,260 |
| 98.5% | | 96.6% | | 97.1% | |
| 11,125 | |
| 1,795 | |
| 2.16 |
The Alaire (7) |
| Rockville Pike Corridor |
| 18.0 | % | U |
| Y / Y |
| 2010 / N/A |
| 279 |
| 266,673 |
| 251,691 |
| 14,982 |
| 98.0% | | 97.5% | | 90.0% | |
| 6,311 | |
| 1,777 | |
| 1.97 |
The Terano (7) |
| Rockville Pike Corridor |
| 1.8 | % | U |
| Y / Y |
| 2015 / N/A |
| 214 |
| 196,921 |
| 183,496 |
| 13,425 |
| 97.1% | | 97.2% | | 88.8% | |
| 4,701 | |
| 1,727 | |
| 2.03 |
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Total / Weighted Average |
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| 7,454 |
| 6,343,512 |
| 5,838,693 |
| 504,819 |
| 95.2% | | 92.2% | | 92.4% | | $ | 188,264 | | $ | 2,078 | | $ | 2.63 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Recently Delivered |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| |
|
| |
|
| |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
MD | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
8001 Woodmont | | Bethesda CBD | | 50.0 | % | U | | N/N | | 2021 / N/A | | 322 | | 358,564 | | 338,990 | | 19,574 | | 31.1% | | 20.2% | | 74.7% | | $ | 2,693 | | $ | 2,556 | | $ | 2.76 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating - Total / Weighted Average |
|
|
|
|
|
|
|
|
| 7,776 |
| 6,702,076 |
| 6,177,683 |
| 524,393 |
| 91.8% | | 89.2% | | 91.7% | | $ | 190,957 | | $ | 2,082 | | $ | 2.64 | ||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Under-Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| |
|
| |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
VA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | |
1900 Crystal Drive (8) |
| National Landing |
| — | | C |
|
|
|
|
| 808 |
| 633,985 |
| 595,315 |
| 38,670 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total |
|
|
|
|
|
|
|
|
|
|
| 8,584 |
| 7,336,061 |
| 6,772,998 |
| 563,063 |
|
|
|
|
|
|
| |
|
| |
|
| |
|
PROPERTY TABLE - MULTIFAMILY | SEPTEMBER 30, 2021 |
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| | |
| | |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Monthly | | Monthly | ||
| | | | | | | | Same Store (2): | | | | Number | | Total | | Multifamily | | Retail | | | | Multifamily | | Retail | | Annualized | | Rent | | Rent Per | |||
| | | | % | | | | Q3 2020‑2021 / | | Year Built / | | of | | Square | | Square | | Square | | | | % | | % | | Rent | | Per | | Square | |||
Multifamily Assets | | Submarket | | Ownership | | C/U (1) | | YTD 2020 - 2021 | | Renovated | | Units | | Feet | | Feet | | Feet | | % Leased | | Occupied | | Occupied | | (in thousands) | | Unit (3) (4) | | Foot (4) (5) | |||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Totals at JBG SMITH Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| |
|
| |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
New In-Service assets (9) | | | | | | | | | | | | 1,137 | | 932,220 | | 826,275 | | 105,945 | | 89.2% | | 85.1% | | 77.9% | | $ | 32,029 | | $ | 2,435 | | $ | 3.44 |
Other In-Service assets | | | | | | | | | | | | 4,827 | | 4,071,364 | | 3,802,850 | | 268,514 | | 96.5% | | 93.8% | | 96.5% | | | 119,976 | | | 2,058 | | | 2.58 |
In-Service assets |
|
|
|
|
|
|
|
|
|
|
| 5,964 |
| 5,003,584 |
| 4,629,125 |
| 374,459 |
| 95.1% | | 92.1% | | 91.2% | | $ | 152,005 | | $ | 2,125 | | $ | 2.72 |
Recently Delivered assets |
|
|
|
|
|
|
|
|
|
|
| 161 |
| 179,282 |
| 169,495 |
| 9,787 |
| 31.1% | | 20.2% | | 74.7% | |
| 1,346 | |
| 2,556 | |
| 2.76 |
Operating assets |
|
|
|
|
|
|
|
|
|
|
| 6,125 |
| 5,182,866 |
| 4,798,620 |
| 384,246 |
| 92.9% | | 90.2% | | 90.8% | | $ | 153,351 | | $ | 2,127 | | $ | 2.72 |
Under-Construction assets |
|
|
|
|
|
|
|
|
|
|
| 808 |
| 633,985 |
| 595,315 |
| 38,670 |
|
|
|
|
|
| |
|
| |
|
| |
|
|
| Number of Assets and Total Square Feet/Units Reconciliation |
| ||||||
| | | Number of | | At 100% Share | | At JBG SMITH Share |
|
| Operating Assets |
| Assets |
| Square Feet/Units |
| Square Feet/Units |
|
| Q2 2021 |
| 21 |
| 6,701,622 SF/ |
| 5,182,412 SF/ | |
| Acquisitions |
| — |
| — |
| — | |
| Placed into service |
| — |
| — |
| — | |
| Dispositions | | — | | — | | — | |
| Out-of-service adjustment | | — |
| — |
| — | |
| Portfolio reclassification | | — | | — | | — | |
| Building re-measurements | | — |
| 454 SF |
| 454 SF | |
| | | | | | | | |
| Q3 2021 |
| 21 |
| 6,702,076 SF/ |
| 5,182,866 SF/ | |
Quarterly Rental Revenue and Occupancy Changes - Same Store Multifamily Assets | | | | | | | | | | | | | | | | | | |
| ||||||||
|
|
|
|
|
| Monthly Rent Per Unit (3) |
| Multifamily % Occupied |
| Annualized Rent (in thousands) |
| ||||||||||||||||
| | Number of Assets | | Number of Units | | | Q3 2021 | | | Q3 2020 | | % Change | | Q3 2021 | | Q3 2020 | | % Change | | | Q3 2021 | | | Q3 2020 | | % Change |
|
DC | | 6 |
| 1,473 | | $ | 2,324 | | $ | 2,471 |
| (5.9)% | | 96.2% | | 86.6% | | 9.6% | | $ | 39,527 | | $ | 37,808 |
| 4.5% | |
VA |
| 3 |
| 2,640 | |
| 2,000 | |
| 2,102 |
| (4.9)% | | 96.0% | | 86.7% | | 9.3% | |
| 60,823 | |
| 57,730 |
| 5.4% | |
MD |
| 5 |
| 498 | |
| 1,586 | |
| 1,620 |
| (2.1)% | | 97.3% | | 94.7% | | 2.6% | |
| 9,230 | |
| 9,181 |
| 0.5% | |
Total / Weighted Average |
| 14 |
| 4,611 | | $ | 2,059 | | $ | 2,162 |
| (4.8)% | | 96.2% | | 87.5% | | 8.7% | | $ | 109,580 | | $ | 104,719 |
| 4.6% | |
Note: At JBG SMITH Share. Includes assets placed In-Service prior to July 1, 2020. Excludes North End Retail and 2221 S. Clark Street-Residential.
See footnotes on page 39.
PROPERTY TABLE - MULTIFAMILY | SEPTEMBER 30, 2021 |
Footnotes
Note: At 100% share, unless otherwise noted.
| (1) | "C" denotes a consolidated interest. "U" denotes an unconsolidated interest. |
| (2) | "Y" denotes an asset as Same Store and "N" denotes an asset as Non-Same Store. |
| (3) | Represents multifamily rent divided by occupied multifamily units; retail rent is excluded from this metric. Occupied units may differ from leased units because leased units include leases that have been signed but have not yet commenced. |
| (4) | Excludes North End Retail. |
| (5) | Represents multifamily rent divided by occupied multifamily SF; retail rent and retail SF are excluded from this metric. Occupied multifamily square footage may differ from leased multifamily square footage because leased multifamily square footage includes space for leases that have been signed but the tenant has not yet taken occupancy. |
| (6) | Ownership percentage reflects expected dilution of JBG SMITH's real estate venture partner as contributions are funded. As of September 30, 2021, our ownership interest was 96.0%. |
| (7) | The following assets are subject to ground leases: |
|
| Ground Lease |
Multifamily Asset | | Expiration Date |
The Alaire |
| 3/27/2107 |
The Terano |
| 8/5/2112 |
| (8) | See footnote (3) on page 40. |
| (9) | New In-Service assets include West Half, The Wren, 901 W Street and 900 W Street. |
PROPERTY TABLE – UNDER-CONSTRUCTION | SEPTEMBER 30, 2021 |
Property Table – Under Construction
| dollars in thousands, except per square foot data | | | | | | | | | | | | | | | | | | | | |
| ||||
| | | | | | | | | | | Schedule (1) | | At JBG SMITH Share | | ||||||||||||
| | | | | | | Estimated | | Estimated | | | | Estimated | | | | | | | Estimated | | Estimated |
| |||
| | | | | % | | Square | | Number of | | Construction | | Completion | | Estimated | | Historical | | Incremental | | Total |
| ||||
| Asset |
| Submarket |
| Ownership | | Feet | | Units | | Start Date | | Date | | Stabilization Date |
| Cost (2) | | Investment | | Investment | | ||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Multifamily | | | | | | | | | | | | | | | | | | | | | | | | | |
| VA |
|
|
|
|
|
|
|
|
|
|
| |
|
|
| |
|
| |
|
| |
|
| |
| 1900 Crystal Drive (3) |
| National Landing |
| — | | 633,985 |
| 808 |
| Q1 2021 |
| | Q1 2024 - Q3 2024 |
| Q1 2026 | | $ | 101,939 | | $ | 320,252 | | $ | 422,191 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Under-Construction - Total / Weighted Average at JBG SMITH Share | 633,985 |
| 808 |
| Q1 2021 | | | Q1 2024 - Q3 2024 | | Q1 2026 | | $ | 101,939 | | $ | 320,252 | | $ | 422,191 | | |||||
Weighted average Projected NOI Yield at JBG SMITH Share: |
| Multifamily |
| |
Estimated Total Investment (4) |
| | 5.5 | % |
Estimated Incremental Investment |
| | 7.2 | % |
Estimated Stabilized NOI at JBG SMITH Share (dollars in millions) | | $ | 23.1 | |
Note: At 100% share, unless otherwise noted.
| (1) | Average dates are weighted by JBG SMITH Share of estimated SF. |
| (2) | Historical Cost excludes certain GAAP adjustments, interest and ground lease costs. See definition of Historical Cost on page 51. |
| (3) | Through the structuring of the 1900 Crystal Drive transaction, we have the ability to facilitate an exchange out of a non-core asset into 1900 Crystal Drive. We leased the land underlying 1900 Crystal Drive to a lessee, which plans to construct a multifamily asset comprising two towers with ground floor retail. The ground lessee has engaged us to be the development manager for the construction of 1900 Crystal Drive, and separately, we are the lessee in a master lease of the asset. We have an option to acquire the asset until a specified period after completion. In March 2021, the ground lessee entered into a mortgage loan collateralized by the leasehold interest with a maximum principal balance of $227.0 million and an interest rate of LIBOR plus 3.0% per annum. As of September 30, 2021, no proceeds had been received from the mortgage loan. The ground lessee was obligated to invest $17.5 million of equity funding, all of which was funded, and JBG SMITH is obligated to provide the additional project funding through a mezzanine loan to the ground lessee. We determined that 1900 Crystal Drive is a variable interest entity ("VIE") and that we are the primary beneficiary of the VIE. Accordingly, we consolidated the VIE with the lessee's ownership interest shown as "Noncontrolling interests" in our balance sheet. The ground lease, the mezzanine loan and the master lease described above are eliminated in consolidation. 1900 Crystal Drive’s full cost, debt balance and other metrics are included at 100% in the at JBG SMITH Share metrics presented within this Investor Package. |
| (4) | Historical Cost of 1900 Crystal Drive includes $22.6 million of design costs, the majority of which were incurred prior to the Formation Transaction, that are not related to the current planned development. Excluding these costs, 1900 Crystal Drive’s Projected NOI Yield on Estimated Total Investment would be 5.8%. |
Property Table – Near-Term Development
| dollars in thousands, except per square foot data | | | | | | | | | |
| ||||||||||
| | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | Earliest | | | | | | | | | | | | | |
|
| | | | | | | Potential | | | | | | | | | | Estimated | | At JBG SMITH Share | | |
| | | | | % | | Construction | | Estimated Potential Development Density (SF) | | Number of | | Historical | | |||||||
| Asset |
| Submarket | | Ownership | | Start Date | | Total |
| Office |
| Multifamily |
| Retail | | Units | | Cost (1) |
| |
| | | | | | | | | | | | | | | | | | | | | |
| DC |
|
|
| | | | |
|
|
|
|
|
|
|
| | |
|
| |
| 5 M Street Southwest |
| Ballpark | | 100.0% | | 2022 | | 705,400 | | — | | 675,400 | | 30,000 | | 615 | | $ | 24,802 | |
| Gallaudet Parcel 1-3 (2) | | Union Market/NoMa/H Street |
| 100.0% | | 2022 | | 818,000 |
| — |
| 756,400 |
| 61,600 |
| 840 | | | 16,265 | |
| VA |
|
|
| | | | | |
|
|
|
|
|
|
| | |
|
| |
| 2000 South Bell Street |
| National Landing |
| 100.0% | | 2022 | | 389,600 |
| — |
| 374,400 |
| 15,200 |
| 355 | |
| 14,896 | |
| 2001 South Bell Street | | National Landing | | 100.0% | | 2022 | | 351,400 | | — | | 339,800 | | 11,600 | | 420 | | | 13,332 | |
| Potomac Yard Landbay F - Block 15 | | National Landing | | 50.0% | | 2022 | | 181,300 | | — | | 164,300 | | 17,000 | | 210 | | | 5,679 | |
| Potomac Yard Landbay F - Block 19 | | National Landing | | 50.0% | | 2022 | | 238,100 | | — | | 214,800 | | 23,300 | | 260 | | | 7,052 | |
| 2250 Crystal Drive | | National Landing | | 100.0% | | 2023 | | 677,100 | | — | | 677,100 | | — | | 825 | | | 19,345 | |
| 223 23rd Street | | National Landing | | 100.0% | | 2023 | | 512,800 | | — | | 512,800 | | — | | 700 | | | 15,942 | |
| 2525 Crystal Drive (3) | | National Landing | | 100.0% | | Pre-lease Dependent | | 750,000 | | 750,000 | | — | | — | | — | | | 11,727 | |
| 101 12th Street | | National Landing | | 100.0% | | Pre-lease Dependent | | 239,600 | | 234,400 | | — | | 5,200 | | — | | | 10,647 | |
| RTC - West Trophy Office | | Reston | | 100.0% | | Pre-lease Dependent | | 396,000 | | 380,000 | | — | | 16,000 | | — | | | 11,626 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total |
| |
| | | | | 5,259,300 |
| 1,364,400 |
| 3,715,000 |
| 179,900 |
| 4,225 | | | | |
| Total at JBG SMITH Share | | | | | | 5,049,700 | | 1,364,400 | | 3,525,500 | | 159,800 | | 3,990 | | $ | 151,313 | | ||
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Note: Represents select assets that have the potential to commence construction over the next three years, subject to receipt of full entitlements, completion of design and market conditions.
| (1) | Historical Cost includes certain intangible assets, such as option and transferable density rights values recorded as part of the Formation Transaction; and excludes certain GAAP adjustments, such as capitalized interest and ground lease costs. See definition of Historical Cost on page 51. |
| (2) | Controlled through an option to acquire a leasehold interest. As of September 30, 2021, the weighted average remaining term for the option is 2.3 years. |
| (3) | Estimated Potential Development Density (SF) use is subject to change based on market demand and entitlement. |
PROPERTY TABLE - FUTURE DEVELOPMENT | SEPTEMBER 30, 2021 |
Property Table – Future Development
| dollars in thousands, except per square foot data, at JBG SMITH Share | | | | | | Estimated | | | | | | | | Estimated | | Estimated | | | | | | |
| ||||||||
| | | | | | | | | | | | | Commercial | | | | | Estimated | | Capitalized | | Capitalized | | | | | Estimated |
| ||||
| | | | | | | | | | | | | SF / Multifamily | | | | | Remaining | | Cost of SF / | | Cost of | | Estimated | | Total | | |||||
| | | Number of | | Estimated Potential Development Density (SF) | | Units to be | | Historical | | Acquisition | | Units to Be | | Ground Rent | | Total | | Investment | | ||||||||||||
| Region |
| Assets | | Total |
| Office |
| Multifamily |
| Retail | | Replaced (1) | | Cost (2) | | Cost (3) | | Replaced (4) | | Payments (5) | | Investment | | per SF |
| ||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Owned | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| DC | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| DC |
| 6 |
| 1,024,400 |
| 312,100 |
| 703,300 |
| 9,000 |
| — | | $ | 81,780 |
| | N/A | | $ | — | | $ | — | | $ | 81,780 | | $ | 79.83 | |
| VA |
|
|
| |
|
|
|
|
|
|
|
| |
|
|
| |
| |
|
| |
|
| |
|
| |
|
| |
| National Landing |
| 8 |
| 4,141,500 |
| 1,610,800 | | 2,433,000 | | 97,700 |
| 206,186 SF | |
| 176,862 |
| | N/A | |
| 111,400 | |
| — | |
| 288,262 | |
| 69.60 | |
| Reston |
| 3 |
| 2,140,600 |
| 544,800 | | 1,409,800 | | 186,000 |
| — | |
| 67,505 |
| | N/A | |
| — | |
| — | |
| 67,505 | |
| 31.54 | |
| Other VA |
| 3 |
| 148,000 |
| 88,200 | | 54,000 | | 5,800 |
| 21,675 SF | |
| 1,496 |
| | N/A | |
| 3,345 | |
| — | |
| 4,841 | |
| 32.71 | |
| |
| 14 |
| 6,430,100 |
| 2,243,800 |
| 3,896,800 |
| 289,500 |
| 227,861 SF | |
| 245,863 |
| | N/A | |
| 114,745 | |
| — | |
| 360,608 | |
| 56.08 | |
| MD |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| |
| |
|
| |
|
| |
|
| |
|
| |
| Silver Spring |
| 1 |
| 1,276,300 |
| — |
| 1,156,300 |
| 120,000 |
| 170 units | |
| 15,128 |
| | N/A | |
| 26,467 | |
| — | |
| 41,595 | |
| 32.59 | |
| Greater Rockville |
| 1 |
| 1,200 |
| — |
| — |
| 1,200 |
| — | |
| 19 |
| | N/A | |
| — | |
| — | |
| 19 | |
| 15.83 | |
| |
| 2 |
| 1,277,500 |
| — |
| 1,156,300 |
| 121,200 |
| 170 units | |
| 15,147 |
| | N/A | |
| 26,467 | |
| — | |
| 41,614 | |
| 32.57 | |
| Total / weighted average |
| 22 |
| 8,732,000 |
| 2,555,900 |
| 5,756,400 |
| 419,700 |
| 227,861 SF / 170 units | | $ | 342,790 |
| | N/A | | $ | 141,212 | | $ | — | | $ | 484,002 | | $ | 55.43 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Optioned (6) |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| |
| |
|
| |
|
| |
|
| |
|
| |
| DC |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| |
| |
|
| |
|
| |
|
| |
|
| |
| DC |
| 2 |
| 783,600 |
| — |
| 678,900 |
| 104,700 |
| — | | $ | 9,725 | | $ | 8,100 | | $ | — | | $ | 29,434 | | $ | 47,259 | | $ | 60.31 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Held for Sale |
|
|
|
|
|
|
|
|
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| VA |
|
|
|
|
|
|
|
|
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| National Landing (7) |
| 1 |
| 2,082,000 |
| 2,082,000 |
| — |
| — |
| — | | $ | 76,686 | | | N/A | | $ | — | | $ | — | | $ | 76,686 | | $ | 36.83 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total / Weighted Average |
| 25 |
| 11,597,600 |
| 4,637,900 |
| 6,435,300 |
| 524,400 |
| 227,861 SF / 170 units | | $ | 429,201 | | $ | 8,100 | | $ | 141,212 | | $ | 29,434 | | $ | 607,947 | | $ | 52.42 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Represents management's estimate of the total office and/or retail rentable SF and multifamily units that would need to be redeveloped to access some of the Estimated Potential Development Density. |
| (2) | Historical Cost includes certain intangible assets, such as option and transferable density rights values recorded as part of the Formation Transaction; and excludes certain GAAP adjustments, such as capitalized interest and ground lease costs. See definition of Historical Cost on page 51. |
| (3) | Represents management's estimate of remaining deposits, option payments, and option strike prices as of September 30, 2021. |
| (4) | Capitalized value of estimated commercial SF / multifamily units to be replaced, which generated $2.1 million of NOI for the three months ended September 30, 2021 (included in the NOI of the applicable operating segment), at a 6.0% capitalization rate. |
| (5) | Capitalized value of stabilized annual ground rent payments associated with leasehold assets at a 5.0% capitalization rate. One optioned parcel is a leasehold interest with estimated annual stabilized ground rent payments totaling $1.5 million. |
| (6) | As of September 30, 2021, the weighted average remaining term for the optioned Future Development Pipeline assets is 3.6 years. |
| (7) | Represents the Estimated Potential Development Density that we have under contract for sale to Amazon pursuant to an executed purchase and sale agreement. In March 2019, we entered into an agreement for the sale of Pen Place, a land site with an Estimated Potential Development Density of 2.1 million SF. |
DISPOSITION ACTIVITY | SEPTEMBER 30, 2021 |
| dollars in thousands, at JBG SMITH Share | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | Total Square Feet/ | | | | | | | | | |
|
| | | | | | | | | | | | Estimated Potential | | | | | | | | | |
|
| | | | | | | | | | |
| Development | | | | | | | | | | |
| | | Ownership | | | | | | | | | Density | | Gross Sales | | Net Cash | | | | | ||
| Assets | | Percentage | | Asset Type | | Location | | Date Disposed | | (Square Feet) | | Price | | Proceeds | | Book Gain |
| ||||
| | | | | | | | | | | | | | | | | | | | | | |
| Q1 2021 | | | | | | | | | | | | | | | | | | | | | |
| None |
| | | |
| | | | |
| | | $ | — | | $ | — | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| Q2 2021 | | | | | | | | | | | | | | | | | | | | | |
| Fairway Apartments/Fairway Land | | 10.0% | | Multifamily / Future Development | | Reston, VA | | | May 3, 2021 | | 37,085 / 52,620 | | $ | 9,300 | | $ | 4,583 | | $ | 2,094 | |
| Courthouse Metro Land/Courthouse Metro Land – Option | | 18.0% | | Future Development | | Arlington, VA | | | May 19, 2021 | | 62,820 | | | 540 | | | 624 | | | 2,352 | |
| 5615 Fishers Lane | | 18.0% | | Future Development | | Rockville, MD | | | May 27, 2021 | | 19,170 | | | 1,170 | | | 1,099 | | | 743 | |
| Subtotal | | | | | | | | | | | 37,085 / 134,610 | | $ | 11,010 | | $ | 6,306 | | $ | 5,189 | |
| | | | | | | | | | | | | | | | | | | | | | |
| Q3 2021 | | | | | | | | | | | | | | | | | | | | | |
| 500 L'Enfant Plaza | | 49.0% | | Commercial | | Washington, DC | | | September 17, 2021 | | 105,447 | | $ | 81,577 | | $ | 39,220 | | $ | 23,137 | |
| | | | | | | | | | | | | | | | | | | | | | |
| Total |
|
|
|
|
|
| |
|
|
| 142,532 / 134,610 | | $ | 92,587 | | $ | 45,526 | | $ | 28,326 | |
Note: As of September 30, 2021, Pen Place was classified as held for sale in our condensed consolidated balance sheet. In March 2019, we entered into an agreement for the sale of Pen Place, a land site with an Estimated Potential Development Density of 2.1 million SF.
DEBT SUMMARY | SEPTEMBER 30, 2021 |
| dollars in thousands, at JBG SMITH Share |
| 2021 |
| 2022 |
| 2023 |
| 2024 |
| 2025 |
| Thereafter |
| Total |
| |||||||
| | | | | | | | | | | | | | | | | | | | | | | |
| Consolidated and Unconsolidated Principal Balance | | | | | | | | | | | | | | | | | | | | | | |
| Unsecured Debt: | | | | | | | | | | | | | | | | | | | | | | |
| Revolving credit facility ($1 billion commitment) | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| Term loans ($400 million commitment) | |
| — | |
| — | |
| 200,000 | |
| 200,000 | |
| — | |
| — | |
| 400,000 | |
| Total unsecured debt | |
| — | |
| — | |
| 200,000 | |
| 200,000 | |
| — | |
| — | |
| 400,000 | |
| Secured Debt: | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Consolidated principal balance | |
| — | |
| 107,500 | |
| 169,684 | |
| 128,448 | |
| 555,829 | |
| 722,946 | |
| 1,684,407 | |
| Unconsolidated principal balance | |
| — | |
| 86,818 | |
| 109,738 | |
| — | |
| 124,349 | |
| 44,554 | |
| 365,459 | |
| Total secured debt | |
| — | |
| 194,318 | |
| 279,422 | |
| 128,448 | |
| 680,178 | |
| 767,500 | |
| 2,049,866 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Total Consolidated and Unconsolidated Principal Balance | | $ | — | | $ | 194,318 | | $ | 479,422 | | $ | 328,448 | | $ | 680,178 | | $ | 767,500 | | $ | 2,449,866 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| % of total debt maturing | |
| — | |
| 7.9 | % |
| 19.6 | % |
| 13.4 | % |
| 27.8 | % |
| 31.3 | % |
| 100.0 | % |
| % floating rate (1) | |
| — | |
| 41.8 | % |
| 22.9 | % |
| — | |
| 30.6 | % |
| 84.0 | % |
| 42.6 | % |
| % fixed rate (2) | |
| — | |
| 58.2 | % |
| 77.1 | % |
| 100.0 | % |
| 69.4 | % |
| 16.0 | % |
| 57.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Weighted Average Interest Rates | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Variable rate | |
| — | |
| 1.86 | % |
| 3.75 | % |
| — | |
| 1.71 | % |
| 2.16 | % |
| 2.21 | % |
| Fixed rate | |
| — | |
| 3.60 | % |
| 3.75 | % |
| 3.07 | % |
| 4.35 | % |
| 4.26 | % |
| 3.82 | % |
| Total Weighted Average Interest Rates | |
| — | |
| 2.87 | % |
| 3.75 | % |
| 3.07 | % |
| 3.54 | % |
| 2.49 | % |
| 3.14 | % |
| | Credit Facility | |||||||||||
|
| Revolving |
| | |
| | |
| | |
| |
| | Credit | | Tranche A‑1 | | Tranche A‑2 | | Total/Weighted | | ||||
| | Facility | | Term Loan | | Term Loan | | Average | | ||||
Credit limit | | $ | 1,000,000 | | $ | 200,000 | | $ | 200,000 | | $ | 1,400,000 | |
Outstanding principal balance | | $ | — | | $ | 200,000 | | $ | 200,000 | | $ | 400,000 | |
Letters of credit | | $ | 1,411 | | $ | — | | $ | — | | $ | 1,411 | |
Undrawn capacity | | $ | 998,589 | | $ | — | | $ | — | | $ | 998,589 | |
Interest rate spread (3) | |
| 1.05 | % |
| 1.20 | % |
| 1.15 | % |
| 1.18 | % |
All-In interest rate (4) | |
| 1.13 | % |
| 2.59 | % |
| 2.49 | % |
| 2.54 | % |
Initial maturity date | |
| Jan‑25 | |
| Jan‑23 | |
| Jul‑24 | |
| — | |
| (1) | Floating rate debt includes floating rate loans with interest rate caps. |
| (2) | Fixed rate debt includes floating rate loans with interest rate swaps. |
| (3) | The interest rate for the revolving credit facility excludes a 0.15% facility fee. |
| (4) | The all-in interest rate is inclusive of interest rate swaps. As of September 30, 2021, we had interest rates swaps for the Tranche A-1 Term Loan and the Tranche A-2 Term Loan. |
DEBT BY INSTRUMENT | SEPTEMBER 30, 2021 |
| dollars in thousands | | | | | | | Stated | | Interest | | Current | | Initial | | Extended | |
| | | | | Principal | | Interest | | Rate | | Annual | | Maturity | | Maturity |
| |
| Asset | | % Ownership | | Balance | | Rate | | Hedge |
| Interest Rate (1) | | Date | | Date (2) | | |
| | | | | | | | | | | | | | | | |
|
| Consolidated | | | | | | | | | | | | | | | | |
| Credit Facility - Tranche A‑1 Term Loan |
| 100.0 | % | $ | 200,000 |
| L + 1.20 | % | Swap |
| 2.59 | % | 01/18/23 |
| 01/18/23 | |
| 2121 Crystal Drive |
| 100.0 | % |
| 131,535 |
| 5.51 | % | Fixed |
| 5.51 | % | 03/01/23 |
| 03/01/23 | |
| Falkland Chase - South & West |
| 100.0 | % |
| 38,149 |
| 3.78 | % | Fixed |
| 3.78 | % | 06/01/23 |
| 06/01/23 | |
| 800 North Glebe Road |
| 100.0 | % |
| 107,500 |
| L + 1.60 | % | Swap |
| 3.60 | % | 06/30/22 |
| 06/30/24 | |
| Credit Facility - Tranche A‑2 Term Loan |
| 100.0 | % |
| 200,000 |
| L + 1.15 | % | Swap |
| 2.49 | % | 07/18/24 |
| 07/18/24 | |
| 2101 L Street |
| 100.0 | % |
| 128,448 |
| 3.97 | % | Fixed |
| 3.97 | % | 08/15/24 |
| 08/15/24 | |
| 201 12th Street S., 200 12th Street S., and 251 18th Street S. |
| 100.0 | % |
| 83,319 |
| 7.94 | % | Fixed |
| 7.94 | % | 01/01/25 |
| 01/01/25 | |
| Credit Facility - Revolving Credit Facility |
| 100.0 | % |
| — |
| L + 1.05 | % | — |
| 1.13 | % | 01/07/25 |
| 01/07/25 | |
| RiverHouse Apartments |
| 100.0 | % |
| 307,710 |
| L + 1.28 | % | Swap |
| 3.47 | % | 04/01/25 |
| 04/01/25 | |
| 1730 M Street |
| 100.0 | % |
| 47,500 |
| L + 1.25 | % | Swap |
| 3.92 | % | 12/21/25 |
| 12/21/25 | |
| 1900 Crystal Drive (3) (4) | | — | | | — | | L + 3.00 | % | — | | 3.25 | % | 04/25/26 | | 04/25/26 | |
| 4747 Bethesda Avenue | | 100.0 | % | | 175,000 | | L + 1.35 | % | Cap | | 1.43 | % | 02/20/27 | | 02/20/27 | |
| RTC - West (4) | | 100.0 | % | | 117,300 | | L + 1.40 | % | — | | 1.65 | % | 04/22/25 | | 04/22/27 | |
| 1235 S. Clark Street |
| 100.0 | % |
| 78,000 |
| 3.94 | % | Fixed |
| 3.94 | % | 11/01/27 |
| 11/01/27 | |
| 1225 S. Clark Street |
| 100.0 | % |
| 85,000 |
| L + 1.60 | % | — |
| 1.68 | % | 07/27/28 |
| 07/27/28 | |
| 1221 Van Street | | 100.0 | % | | 87,253 | | L + 2.51 | % | Cap | | 2.59 | % | 08/01/30 | | 08/01/30 | |
| 220 20th Street | | 100.0 | % | | 80,240 | | L + 2.51 | % | Cap | | 2.59 | % | 08/01/30 | | 08/01/30 | |
| The Bartlett | | 100.0 | % | | 217,453 | | L + 2.51 | % | Cap | | 2.59 | % | 08/01/30 | | 08/01/30 | |
| Total Consolidated Principal Balance |
| | |
| 2,084,407 |
|
|
|
|
|
|
|
|
|
| |
| Premium / (discount) recognized as a result of the Formation Transaction |
| | |
| 687 |
|
|
|
|
|
|
|
|
|
| |
| Deferred financing costs - mortgage loans (5) |
| | |
| (14,751) | | |
|
|
|
|
|
|
|
| |
| Deferred financing costs - credit facility (5) |
| | |
| (6,917) | | |
|
|
|
|
|
|
|
| |
| Total Consolidated Indebtedness | | | | $ | 2,063,426 | | |
|
|
|
|
|
|
|
| |
| | | | | | | | | | | | | | | | | |
| Total Consolidated Indebtedness (net of premium / (discount) and deferred financing costs) | |
|
|
|
|
|
|
|
|
|
|
|
| | ||
| Mortgages payable | | | | $ | 1,674,285 |
|
|
|
|
|
|
|
|
|
| |
| Revolving credit facility | | | |
| — |
| |
|
|
|
|
|
|
|
| |
| Deferred financing costs, net (included in other assets) (5) | | | |
| (9,352) |
|
|
|
|
|
|
|
|
|
| |
| Unsecured term loan | | | |
| 398,493 |
|
|
|
|
|
|
|
|
|
| |
| Total Consolidated Indebtedness | | | | $ | 2,063,426 |
|
|
|
|
|
|
|
|
|
| |
DEBT BY INSTRUMENT | SEPTEMBER 30, 2021 |
| dollars in thousands | | | | | | | Stated | | Interest | | Current | | Initial | | Extended | |
| | | | | Principal | | Interest | | Rate | | Annual | | Maturity | | Maturity | | |
| Asset | | % Ownership | | Balance | | Rate | | Hedge |
| Interest Rate (1) | | Date | | Date (2) |
| |
| | | | | | | | | | | | | | | | | |
| Unconsolidated | | | | | | | | | | | | | | | | |
| Atlantic Plumbing | | 64.0 | % | $ | 100,000 | | L + 1.50 | % | — |
| 1.58 | % | 11/08/22 | | 11/08/22 | |
| Stonebridge at Potomac Town Center (4) | | 10.0 | % |
| 84,600 | | L + 3.50 | % | — |
| 3.75 | % | 12/10/22 | | 12/10/22 | |
| Galvan | | 1.8 | % |
| 89,500 | | L + 2.20 | % | — |
| 2.28 | % | 03/03/23 | | 03/03/23 | |
| L’Enfant Plaza Office - North, L’Enfant Plaza Office - East, L’Enfant Plaza Retail (4) | | 49.0 | % | | 208,984 | | L + 3.65 | % | Cap |
| 3.90 | % | 05/09/23 | | 05/09/24 | |
| Rosslyn Gateway - North, Rosslyn Gateway - South | | 18.0 | % |
| 48,982 | | L + 2.00 | % | Cap |
| 2.08 | % | 08/29/22 | | 08/29/24 | |
| The Foundry | | 9.9 | % |
| 58,000 | | L + 1.40 | % | Cap |
| 1.48 | % | 12/12/23 | | 12/12/24 | |
| The Alaire | | 18.0 | % |
| 46,268 | | L + 1.82 | % | Cap |
| 1.90 | % | 03/01/25 | | 03/01/25 | |
| 1101 17th Street | | 55.0 | % |
| 60,000 | | L + 1.25 | % | Swap |
| 4.13 | % | 06/13/25 | | 06/13/25 | |
| The Gale Eckington | | 5.0 | % |
| 110,813 | | L + 1.60 | % | Swap |
| 3.56 | % | 07/31/22 | | 07/31/25 | |
| The Terano | | 1.8 | % |
| 34,000 | | L + 1.35 | % | Swap |
| 4.45 | % | 11/09/25 | | 11/09/25 | |
| 8001 Woodmont | | 50.0 | % |
| 89,107 | | 4.82 | % | Fixed |
| 4.82 | % | 01/15/27 | | 01/15/27 | |
| 1900 N Street | | 55.0 | % | | 149,835 | | L + 1.70 | % | Cap | | 1.78 | % | 04/30/25 | | 04/30/27 | |
| Total Unconsolidated Principal Balance | | | |
| 1,080,089 | | |
|
|
|
|
|
|
|
| |
| Deferred financing costs |
| | | | (5,785) | | |
|
|
|
|
|
|
|
| |
| Total Unconsolidated Indebtedness | | | | $ | 1,074,304 | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Principal Balance at JBG SMITH Share | | | |
|
|
|
|
|
|
|
|
|
|
|
| |
| Consolidated principal balance at JBG SMITH Share |
| | | $ | 2,084,407 |
|
|
|
|
|
|
|
|
|
| |
| Unconsolidated principal balance at JBG SMITH Share | | | |
| 365,459 |
| |
|
|
| |
|
|
|
| |
| Total Consolidated and Unconsolidated Principal Balance at JBG SMITH Share | | | | $ | 2,449,866 |
|
|
|
|
|
|
|
|
|
| |
| | | | | | | | | | | | | | | | | |
| Indebtedness at JBG SMITH Share (net of premium / (discount) and deferred financing costs) |
|
|
|
|
|
|
|
|
|
| | |||||
| Consolidated indebtedness at JBG SMITH Share |
| | | $ | 2,063,426 |
|
|
|
|
|
|
|
|
|
| |
| Unconsolidated indebtedness at JBG SMITH Share | | | | | 362,698 | | | | | | | | | | | |
| Total Consolidated and Unconsolidated Indebtedness at JBG SMITH Share | | | | $ | 2,426,124 | | | | | | | | | | | |
| (1) | September 30, 2021 one-month LIBOR of 0.08% applied to loans which are denoted as floating (no swap) or floating with a cap, except as otherwise noted. |
| (2) | Represents the maturity date based on execution of all extension options. Many of these extensions are subject to lender covenant tests. |
| (3) | In March 2021, we leased the land associated with 1900 Crystal Drive to a lessee which will construct the asset. In March 2021, the ground lessee entered into a mortgage loan collateralized by the asset with a maximum principal balance of $227.0 million. See footnote (3) on page 40 for additional information. |
| (4) | The base rate for this loan was 0.25% as of September 30, 2021. |
| (5) | As of September 30, 2021, net deferred financing costs related to an unfunded mortgage loan totaling $4.0 million and the revolving credit facility totaling $5.4 million were included in "Other assets, net" in our condensed consolidated balance sheet. |
CONSOLIDATED REAL ESTATE VENTURES | SEPTEMBER 30, 2021 |
Consolidated Real Estate Ventures
| |
| Asset Type |
| City |
| Submarket |
| % Ownership |
| Total Square Feet |
|
| MRP Realty | | | | | | | | | | | |
| The Wren (1) |
| Multifamily |
| Washington, DC |
| U Street/Shaw |
| 96.1 | % | 332,682 | |
| | | | | | | | | | | | |
| Total Consolidated Real Estate Ventures | | | | | | | | |
| 332,682 | |
Note: Total SF at 100% share.
| (1) | Ownership percentage reflects expected dilution of JBG SMITH's real estate venture partner as contributions are funded. As of September 30, 2021, JBG SMITH's ownership interest was 96.0%. |
UNCONSOLIDATED REAL ESTATE VENTURES | SEPTEMBER 30, 2021 |
Estate Ventures
| |
| Asset Type |
| City |
| Submarket |
| % Ownership |
| Total Square Feet |
|
| Landmark |
|
|
|
|
|
|
|
|
|
| |
| L’Enfant Plaza Office - East |
| Commercial |
| Washington, DC |
| Southwest |
| 49.0 | % | 397,855 | |
| L’Enfant Plaza Office - North |
| Commercial |
| Washington, DC |
| Southwest |
| 49.0 | % | 298,567 | |
| L’Enfant Plaza Retail |
| Commercial |
| Washington, DC |
| Southwest |
| 49.0 | % | 119,291 | |
| Rosslyn Gateway - North |
| Commercial |
| Arlington, VA |
| Rosslyn |
| 18.0 | % | 145,120 | |
| Rosslyn Gateway - South |
| Commercial |
| Arlington, VA |
| Rosslyn |
| 18.0 | % | 102,791 | |
| Galvan |
| Multifamily |
| Rockville, MD |
| Rockville Pike Corridor |
| 1.8 | % | 390,293 | |
| The Alaire |
| Multifamily |
| Rockville, MD |
| Rockville Pike Corridor |
| 18.0 | % | 266,673 | |
| The Terano |
| Multifamily |
| Rockville, MD |
| Rockville Pike Corridor |
| 1.8 | % | 196,921 | |
| Rosslyn Gateway - South Land |
| Future Development |
| Arlington, VA |
| Rosslyn |
| 18.0 | % | 498,500 | |
| Rosslyn Gateway - North Land |
| Future Development |
| Arlington, VA |
| Rosslyn |
| 18.0 | % | 311,000 | |
| L’Enfant Plaza Office - Center |
| Future Development |
| Washington, DC |
| Southwest |
| 49.0 | % | 350,000 | |
| 12511 Parklawn Drive |
| Future Development |
| Rockville, MD |
| Rockville Pike Corridor |
| 18.0 | % | 6,500 | |
| | | | | | | | | | | 3,083,511 | |
| | | | | | | | | | | | |
| J.P. Morgan Global Alternatives (1) | | | | | | | | | | | |
| Potomac Yard Landbay F - Block 15 | | Multifamily | | Alexandria, VA | | National Landing | | 50.0 | % | 181,300 | |
| Potomac Yard Landbay F - Block 19 | | Multifamily | | Alexandria, VA | | National Landing | | 50.0 | % | 238,100 | |
| Potomac Yard Landbay G | | Future Development | | Alexandria, VA | | National Landing | | 50.0 | % | 712,000 | |
| Potomac Yard Landbay F | | Future Development | | Alexandria, VA | | National Landing | | 50.0 | % | 901,000 | |
| |
| | | | | | | | | 2,032,400 | |
| | | | | | | | | | | | |
| CBREI Venture |
|
|
|
|
|
|
|
|
|
| |
| Stonebridge at Potomac Town Center |
| Commercial |
| Woodbridge, VA |
| Prince William County |
| 10.0 | % | 504,327 | |
| The Foundry |
| Commercial |
| Washington, DC |
| Georgetown |
| 9.9 | % | 225,683 | |
| The Gale Eckington |
| Multifamily |
| Washington, DC |
| Union Market / NoMa / H Street |
| 5.0 | % | 466,716 | |
| Atlantic Plumbing |
| Multifamily |
| Washington, DC |
| U Street/Shaw |
| 64.0 | % | 245,527 | |
| Stonebridge at Potomac Town Center - Land |
| Future Development |
| Woodbridge, VA |
| Prince William County |
| 10.0 | % | 22,900 | |
| |
| | | | | | | | | 1,465,153 | |
UNCONSOLIDATED REAL ESTATE VENTURES | SEPTEMBER 30, 2021 |
| | Asset Type |
| City |
| Submarket |
| % Ownership |
| Total Square Feet |
| | | | | | | | | | |
Canadian Pension Plan Investment Board |
|
|
|
|
|
|
|
|
|
|
1900 N Street |
| Commercial |
| Washington, DC |
| CBD |
| 55.0 | % | 269,035 |
1101 17th Street |
| Commercial |
| Washington, DC |
| CBD |
| 55.0 | % | 208,945 |
|
| | | | | | | | | 477,980 |
| | | | | | | | | | |
Bresler / Brookfield |
|
|
|
|
|
|
|
|
|
|
Waterfront Station |
| Future Development |
| Washington, DC |
| Southwest |
| 2.5 | % | 662,600 |
| | | | | | | | | | |
Brandywine |
|
|
|
|
|
|
|
|
|
|
1250 1st Street |
| Future Development |
| Washington, DC |
| Union Market / NoMa / H Street |
| 30.0 | % | 265,800 |
51 N Street |
| Future Development |
| Washington, DC |
| Union Market / NoMa / H Street |
| 30.0 | % | 177,500 |
50 Patterson Street |
| Future Development |
| Washington, DC |
| Union Market / NoMa / H Street |
| 30.0 | % | 142,200 |
|
| | | | | | | | | 585,500 |
| | | | | | | | | | |
Prudential Global Investment Management |
|
|
|
|
|
|
|
|
|
|
Central Place Tower |
| Commercial |
| Arlington, VA |
| Rosslyn |
| 50.0 | % | 551,758 |
| | | | | | | | | | |
Berkshire Group |
|
|
|
|
|
|
|
|
|
|
8001 Woodmont |
| Multifamily |
| Bethesda, MD |
| Bethesda CBD |
| 50.0 | % | 358,564 |
| | | | | | | | | | |
Total Unconsolidated Real Estate Ventures |
| |
|
|
|
|
|
|
| 9,217,466 |
| (1) | J.P. Morgan Global Alternatives is the advisor for an institutional investor. |
DEFINITIONS | SEPTEMBER 30, 2021 |
"Annualized Rent" is defined as (i) for commercial assets, or the retail component of a mixed-use asset, the in-place monthly base rent before Free Rent, plus tenant reimbursements as of September 30, 2021, multiplied by 12, and (ii) for multifamily assets, or the multifamily component of a mixed-use asset, the in-place monthly base rent before Free Rent as of September 30, 2021, multiplied by 12. Annualized Rent excludes rent from leases that have been signed but the tenant has not yet taken occupancy. The in-place monthly base rent does not take into consideration temporary rent relief arrangements.
"Annualized Rent per Square Foot" is defined as (i) for commercial assets, annualized office rent divided by occupied office square feet and annualized retail rent divided by occupied retail square feet; and (ii) for multifamily assets, monthly multifamily rent divided by occupied multifamily square feet; annualized retail rent and retail square feet are excluded from this metric. Occupied square footage may differ from leased square footage because leased square footage includes leases that have been signed but have not yet commenced.
"Development Pipeline" refers to the Near-Term Development and Future Development Pipelines.
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), EBITDA for Real Estate ("EBITDAre") and "Adjusted EBITDA" are non-GAAP financial measures. EBITDA and EBITDAre are used by management as supplemental operating performance measures, which we believe help investors and lenders meaningfully evaluate and compare our operating performance from period-to-period by removing from our operating results the impact of our capital structure (primarily interest charges from our outstanding debt and the impact of our interest rate swaps) and certain non-cash expenses (primarily depreciation and amortization on our assets). EBITDAre is computed in accordance with the definition established by NAREIT. NAREIT defines EBITDAre as GAAP net income (loss) adjusted to exclude interest expense, income taxes, depreciation and amortization expenses, gains and losses on sales of real estate and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, including our share of such adjustments of unconsolidated real estate ventures. These supplemental measures may help investors and lenders understand our ability to incur and service debt and to make capital expenditures. EBITDA and EBITDAre are not substitutes for net income (loss) (computed in accordance with GAAP) and may not be comparable to similarly titled measures used by other companies.
Adjusted EBITDA represents EBITDAre adjusted for items we believe are not representative of ongoing operating results, such as Transaction and Other Costs, impairment write-downs of right-of-use assets associated with leases in which we are a lessee, gain (loss) on the extinguishment of debt, earnings (losses) and distributions in excess of our investment in unconsolidated real estate ventures, lease liability adjustments and share-based compensation expense related to the Formation Transaction and special equity awards. We believe that adjusting such items not considered part of our comparable operations, provides a meaningful measure to evaluate and compare our performance from period-to-period.
Because EBITDA, EBITDAre and Adjusted EBITDA have limitations as analytical tools, we use EBITDA, EBITDAre and Adjusted EBITDA to supplement GAAP financial measures. Additionally, we believe that users of these measures should consider EBITDA, EBITDAre and Adjusted EBITDA in conjunction with net income (loss) and other GAAP measures in understanding our operating results. A reconciliation of net income (loss) to EBITDA, EBITDAre and Adjusted EBITDA is presented on page 15.
"Estimated Incremental Investment" means management's estimate of the remaining cost to be incurred in connection with the development of an asset as of September 30, 2021, including all remaining acquisition costs, hard costs, soft costs, tenant improvements (excluding Free Rent converted to tenant improvement allowances), leasing costs and other similar costs to develop and stabilize the asset but excluding any financing costs and ground rent expenses. Actual incremental investment may differ substantially from our estimates due to numerous factors, including unanticipated expenses, delays in the estimated start and/or completion date, changes in design and other contingencies.
"Estimated Potential Development Density" reflects management's estimate of developable gross square feet based on our current business plans with respect to real estate owned or controlled as of September 30, 2021. Our current business plans may contemplate development of less than the maximum potential development density for individual assets. As market conditions change, our business plans, and therefore, the Estimated Potential Development Density, could change accordingly. Given timing, zoning requirements and other factors, we make no assurance that Estimated Potential Development Density amounts will become actual density to the extent we complete development of assets for which we have made such estimates.
DEFINITIONS | SEPTEMBER 30, 2021 |
"Estimated Total Investment" means, with respect to the development of an asset, the sum of the Historical Cost in such asset and the Estimated Incremental Investment for such asset. Actual total investment may differ substantially from our estimates due to numerous factors, including unanticipated expenses, delays in the estimated start and/or completion date, changes in design and other contingencies.
“First-generation” is a lease on space that had been vacant for at least nine months or a lease on newly delivered space.
"Formation Transaction" refers collectively to the spin-off on July 17, 2017 of substantially all of the assets and liabilities of Vornado Realty Trust's Washington, DC segment, which operated as Vornado / Charles E. Smith, and the acquisition of the management business and certain assets and liabilities of The JBG Companies.
"Free Rent" means the amount of base rent and tenant reimbursements that are abated according to the applicable lease agreement(s).
Funds from Operations ("FFO"), "Core FFO" and Funds Available for Distribution ("FAD") are non-GAAP financial measures. FFO is computed in accordance with the definition established by NAREIT in the NAREIT FFO White Paper - 2018 Restatement. NAREIT defines FFO as net income (loss) (computed in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, including our share of such adjustments for unconsolidated real estate ventures.
Core FFO represents FFO adjusted to exclude items (net of tax) which we believe are not representative of ongoing operating results, such as Transaction and Other Costs, impairment write-downs of right-of-use assets associated with leases in which we are a lessee, gains (or losses) on extinguishment of debt, earnings (losses) and distributions in excess of our investment in unconsolidated real estate ventures, share-based compensation expense related to the Formation Transaction and special equity awards, lease liability adjustments, amortization of the management contracts intangible and the mark-to-market of derivative instruments.
FAD represents Core FFO less recurring tenant improvements, leasing commissions and other capital expenditures, net deferred rent activity, third-party lease liability assumption payments, recurring share-based compensation expense, accretion of acquired below-market leases, net of amortization of acquired above-market leases, amortization of debt issuance costs and other non-cash income and charges. FAD is presented solely as a supplemental disclosure that management believes provides useful information as it relates to our ability to fund dividends.
We believe FFO, Core FFO and FAD are meaningful non-GAAP financial measures useful in comparing our levered operating performance from period-to-period and as compared to similar real estate companies because these non-GAAP measures exclude real estate depreciation and amortization expense and other non-comparable income and expenses, which implicitly assumes that the value of real estate diminishes predictably over time rather than fluctuating based on market conditions. FFO, Core FFO and FAD do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as a performance measure or cash flow as a liquidity measure. FFO, Core FFO and FAD may not be comparable to similarly titled measures used by other companies. A reconciliation of net income (loss) to FFO, Core FFO and FAD is presented on pages 16-17.
"Future Development Pipeline" refers to assets that are development opportunities on which we do not intend to commence construction within the next three years where we (i) own land or control the land through a ground lease or (ii) are under a long-term conditional contract to purchase, or enter into, a leasehold interest with respect to land.
"GAAP" means accounting principles generally accepted in the United States.
"Historical Cost" is a non-GAAP measure which includes the total Historical Cost incurred by JBG SMITH with respect to the development of an asset, including any acquisition costs, hard costs, soft costs, tenant improvements (excluding Free Rent converted to tenant improvement allowances), leasing costs and other similar costs, but excluding any financing costs and ground rent expenses incurred as of September 30, 2021.
DEFINITIONS | SEPTEMBER 30, 2021 |
"In-Service" refers to commercial or multifamily assets that are at or above 90% leased or have been operating and collecting rent for more than 12 months as of September 30, 2021.
"JBG SMITH Share" refers to our ownership percentage of consolidated and unconsolidated assets in real estate ventures.
"Metro-Served" means locations, submarkets or assets that are within 0.5 miles of an existing or planned Metro station.
"Monthly Rent Per Unit" represents multifamily rent for the month ended September 30, 2021 divided by occupied units; retail rent is excluded from this metric.
"Near-Term Development Pipeline" refers to select assets that have the potential to commence construction over the next three years, subject to receipt of full entitlements, completion of design and market conditions.
"Net Debt" is a non-GAAP financial measurement. Net Debt represents our total consolidated and unconsolidated indebtedness less cash and cash equivalents at our share. Net Debt is an important component in the calculations of Net Debt to Annualized Adjusted EBITDA and Net Debt / total enterprise value. We believe that Net Debt is a meaningful non-GAAP financial measure useful to investors because we review Net Debt as part of the management of our overall financial flexibility, capital structure and leverage. We may utilize a considerable portion of our cash and cash equivalents at any given time for purposes other than debt reduction. In addition, cash and cash equivalents at our share may not be solely controlled by us. The deduction of cash and cash equivalents at our share from consolidated and unconsolidated indebtedness in the calculation of Net Debt, therefore, should not be understood to mean that it is available exclusively for debt reduction at any given time.
Net Operating Income ("NOI"), "Annualized NOI", "Estimated Stabilized NOI" and "Projected NOI Yield" are non-GAAP financial measures management uses to assess a segment's performance. The most directly comparable GAAP measure is net income (loss) attributable to common shareholders. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only property related revenue (which includes base rent, tenant reimbursements and other operating revenue, net of Free Rent and payments associated with assumed lease liabilities) less operating expenses and ground rent, if applicable. NOI also excludes deferred rent, related party management fees, interest expense, and certain other non-cash adjustments, including the accretion of acquired below-market leases and the amortization of acquired above-market leases and below-market ground lease intangibles. Management uses NOI as a supplemental performance measure of our assets and believes it provides useful information to investors because it reflects only those revenue and expense items that are incurred at the asset level, excluding non-cash items. In addition, NOI is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets. However, because NOI excludes depreciation and amortization and captures neither the changes in the value of our assets that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our assets, all of which have real economic effect and could materially impact the financial performance of our assets, the utility of NOI as a measure of the operating performance of our assets is limited. NOI presented by us may not be comparable to NOI reported by other REITs that define these measures differently. We believe to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) attributable to common shareholders as presented in our financial statements. NOI should not be considered as an alternative to net income (loss) attributable to common shareholders as an indication of our performance or to cash flows as a measure of liquidity or our ability to make distributions. Annualized NOI, for all assets except Crystal City Marriott, represents NOI for the three months ended September 30, 2021 multiplied by four. Due to seasonality in the hospitality business, Annualized NOI for Crystal City Marriott represents the trailing 12-month NOI as of September 30, 2021. Management believes Annualized NOI provides useful information in understanding our financial performance over a 12-month period, however, investors and other users are cautioned against attributing undue certainty to our calculation of Annualized NOI. Actual NOI for any 12-month period will depend on a number of factors beyond our ability to control or predict, including general capital markets and economic conditions, any bankruptcy, insolvency, default or other failure to pay rent by one or more of our tenants and the destruction of one or more of our assets due to terrorist attack, natural disaster or other casualty, among others. We do not undertake any obligation to update our calculation to reflect events or circumstances occurring after the date of this earnings release. There can be no assurance that the Annualized NOI shown will reflect our actual results of operations over any 12-month period.
DEFINITIONS | SEPTEMBER 30, 2021 |
This Investor Package also contains management's estimate of stabilized NOI and projections of NOI yield for Under-Construction and Near-Term Development Pipeline assets, which are based on management's estimates of property-related revenue and operating expenses for each asset. These estimates are inherently uncertain and represent management's plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. The property-related revenues and operating expenses for our assets may differ materially from the estimates included in this Investor Package. Management's projections of NOI yield are not projections of our overall financial performance or cash flow, and there can be no assurance that the Projected NOI Yield set forth in this Investor Package will be achieved.
Projected NOI Yield means our Estimated Stabilized NOI reported as a percentage of (i) Estimated Total Investment and (ii) Estimated Incremental Investment. Actual initial full year stabilized NOI yield may vary from the Projected NOI Yield based on the actual incremental investment to complete the asset and its actual initial full year stabilized NOI, and there can be no assurance that we will achieve the Projected NOI Yields described in this Investor Package.
We do not provide reconciliations for non-GAAP estimates on a future basis, including Estimated Stabilized NOI because we are unable to provide a meaningful or accurate calculation or estimate of reconciling items and the information is not available without unreasonable effort. This inability is due to the inherent difficulty of forecasting the timing and/or amounts of various items that would impact net income (loss). Additionally, no reconciliation of Projected NOI Yield to the most directly comparable GAAP measure is included in this Investor Package because we are unable to quantify certain amounts that would be required to be included in the comparable GAAP financial measures without unreasonable efforts because such data is not currently available or cannot be currently estimated with confidence. Accordingly, we believe such reconciliations would imply a degree of precision that would be confusing or misleading to investors.
"Non-Same Store" refers to all operating assets excluded from the Same Store pool.
"Percent Leased" is based on leases signed as of September 30, 2021, and is calculated as total rentable square feet less rentable square feet available for lease divided by total rentable square feet expressed as a percentage. Out-of-service square feet are excluded from this calculation.
"Percent Occupied" is based on occupied rentable square feet/units as of September 30, 2021, and is calculated as (i) for office and retail space, total rentable square feet less unoccupied square feet divided by total rentable square feet, (ii) for multifamily space, total units less unoccupied units divided by total units, expressed as a percentage. Out-of-service square feet and units are excluded from this calculation.
"Pro Rata Adjusted General and Administrative Expenses", a non-GAAP financial measure, represents general and administrative expenses adjusted for share-based compensation expense related to the Formation Transaction and special equity awards and the general and administrative expenses of our third-party asset management and real estate services business that are directly reimbursed. We believe that adjusting such items not considered part of our comparable operations provides a meaningful measure to assess our general and administrative expenses as compared to similar real estate companies and in general.
"Recently Delivered" refers to commercial and multifamily assets that are below 90% leased and have been delivered within the 12 months ended September 30, 2021.
"Same Store" refers to the pool of assets that were In-Service for the entirety of both periods being compared, except for assets for which significant redevelopment, renovation, or repositioning occurred during either of the periods being compared.
"Second-Generation" is a lease on space that had been vacant for less than nine months.
"Signed But Not Yet Commenced Leases" means leases that, as of September 30, 2021, have been executed but for which rent has not commenced.
"Square Feet" or "SF" refers to the area that can be rented to tenants, defined as (i) for commercial assets, rentable square footage defined in the current lease and for vacant space the rentable square footage defined in the previous lease for that space, (ii) for multifamily assets, management's estimate of approximate rentable square feet, (iii) for Under-Construction
DEFINITIONS | SEPTEMBER 30, 2021 |
assets, management's estimate of approximate rentable square feet based on current design plans as of September 30, 2021, and (iv) for Near-Term and Future Development Pipeline assets, management's estimate of developable gross square feet based on its current business plans with respect to real estate owned or controlled as of September 30, 2021.
"Transaction and Other Costs" include demolition costs, integration and severance costs, pursuit costs related to other completed, potential and pursued transactions, as well as other expenses.
"Under-Construction" refers to assets that were under construction during the three months ended September 30, 2021.
.
APPENDIX – TRANSACTION AND OTHER COSTS | SEPTEMBER 30, 2021 |
| | | Three Months Ended | | |||||||||||||
| dollars in thousands |
| Q3 2021 |
| Q2 2021 |
| Q1 2021 |
| Q4 2020 |
| Q3 2020 | | |||||
| | | | | | | | | | | | | | | | | |
| Transaction and Other Costs |
| |
|
| |
| | |
| | |
| | |
| |
| Demolition costs | | $ | 1,422 | | $ | 439 | | $ | 1,008 | | $ | 503 | | $ | 179 | |
| Integration and severance costs | |
| 154 | |
| 222 | |
| 240 | |
| 628 | |
| 406 | |
| Completed, potential and pursued transaction expenses (1) | |
| 1,375 | |
| 1,609 | |
| 2,442 | |
| 13 | |
| 260 | |
| Total | | $ | 2,951 | | $ | 2,270 | | $ | 3,690 | | $ | 1,144 | | $ | 845 | |
| (1) | For Q1 2021, includes $1.1 million of transaction costs attributable to noncontrolling interests. |
APPENDIX - EBITDA, EBITDAre AND ADJUSTED EBITDA RECONCILIATIONS (NON-GAAP) | SEPTEMBER 30, 2021 |
Are Appendix – EBITDAAre and Adjusted EBITDA
| | | Three Months Ended | | |||||||||||||
| dollars in thousands |
| Q3 2021 |
| Q2 2021 |
| Q1 2021 |
| Q4 2020 |
| Q3 2020 |
| |||||
| | | | | | | | | | | | | | | | | |
| EBITDA, EBITDAre and Adjusted EBITDA |
| |
|
| |
| | |
| | |
| | |
| |
| Net income (loss) | | $ | 996 | | $ | (3,318) | | $ | (24,069) | | $ | (50,168) | | $ | (25,005) | |
| Depreciation and amortization expense | |
| 56,726 | |
| 56,678 | |
| 64,726 | |
| 64,170 | |
| 56,481 | |
| Interest expense | |
| 17,243 | |
| 16,773 | |
| 16,296 | |
| 17,661 | |
| 16,885 | |
| Income tax expense (benefit) | |
| 217 | |
| (5) | |
| 4,315 | |
| (544) | |
| (488) | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| 10,147 | |
| 10,581 | |
| 10,164 | |
| 10,072 | |
| 9,987 | |
| EBITDA attributable to noncontrolling interests | |
| (54) | |
| (41) | |
| 1,071 | |
| (2) | |
| (4) | |
| EBITDA | | $ | 85,275 | | $ | 80,668 | | $ | 72,503 | | $ | 41,189 | | $ | 57,856 | |
| Gain on sale of real estate | |
| — | |
| (11,290) | |
| — | |
| — | |
| — | |
| (Gain) loss on sale of unconsolidated real estate assets | |
| (23,137) | |
| (5,189) | |
| — | |
| (826) | |
| — | |
| Impairment of investments in unconsolidated real estate ventures | | | 1,380 | | | — | | | — | | | — | | | — | |
| Real estate impairment loss (1) | | | — | | | — | | | — | | | 7,805 | | | — | |
| | | | | | | | | | | | | | | | | |
| EBITDAre | | $ | 63,518 | | $ | 64,189 | | $ | 72,503 | | $ | 48,168 | | $ | 57,856 | |
| Transaction and Other Costs (2) | |
| 2,951 | |
| 2,270 | |
| 2,582 | |
| 1,144 | |
| 845 | |
| Impairment loss (1) | | | — | | | — | | | — | | | 2,427 | | | — | |
| Loss on extinguishment of debt | |
| — | |
| — | |
| — | |
| 29 | |
| — | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 3,480 | |
| 4,441 | |
| 4,945 | |
| 6,246 | |
| 7,133 | |
| Losses and distributions in excess of our investment in unconsolidated real estate venture | |
| (280) | |
| (92) | |
| (330) | |
| (152) | |
| (436) | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| 130 | |
| 9 | |
| 31 | |
| 90 | |
| — | |
| | | | | | | | | | | | | | | | | |
| Adjusted EBITDA | | $ | 69,799 | | $ | 70,817 | | $ | 79,731 | | $ | 57,952 | | $ | 65,398 | |
| | | | | | | | | | | | | | | | | |
| Net Debt to Annualized Adjusted EBITDA (3) | | | 7.9 | x |
| 7.6 | x |
| 6.8 | x |
| 9.2 | x |
| 7.7 | x |
| |
| September 30, 2021 |
| June 30, 2021 |
| March 31, 2021 |
| December 31, 2020 |
| September 30, 2020 |
| |||||
| Net Debt (at JBG SMITH Share) | |
| | |
| | |
| | |
| | |
| |
|
| Consolidated indebtedness (4) | | $ | 2,063,426 | | $ | 1,979,494 | | $ | 1,979,208 | | $ | 1,985,061 | | $ | 2,081,456 | |
| Unconsolidated indebtedness (4) | |
| 362,698 | |
| 399,262 | |
| 401,389 | |
| 395,550 | |
| 393,398 | |
| Total consolidated and unconsolidated indebtedness | |
| 2,426,124 | |
| 2,378,756 | |
| 2,380,597 | |
| 2,380,611 | |
| 2,474,854 | |
| Less: cash and cash equivalents | |
| 213,612 | |
| 217,543 | |
| 223,142 | |
| 241,066 | |
| 465,532 | |
| Net Debt (at JBG SMITH Share) | | $ | 2,212,512 | | $ | 2,161,213 | | $ | 2,157,455 | | $ | 2,139,545 | | $ | 2,009,322 | |
Note: All EBITDA measures as shown above are attributable to OP Units.
| (1) | During Q4 2020, we determined that a commercial asset was impaired due to a decline in the fair value of the asset and recorded an impairment loss of $10.2 million, of which $7.8 million related to real estate. The remaining $2.4 million of the impairment loss was attributable to the right-of-use asset associated with the property’s ground lease. |
| (2) | See page 55 for the components of Transaction and Other Costs. For Q1 2021, excludes $1.1 million of transaction costs attributable to noncontrolling interests. |
| (3) | Calculated using the Net Debt below. Adjusted EBITDA is annualized by multiplying by four. |
| (4) | Net of premium/discount and deferred financing costs. |
APPENDIX - FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP) | SEPTEMBER 30, 2021 |
Appendix – FFO, Core FFO and FAD
| |
| Three Months Ended |
| |||||||||||||
| in thousands, except per share data |
| Q3 2021 |
| Q2 2021 |
| Q1 2021 |
| Q4 2020 |
| Q3 2020 |
| |||||
| | | | | | | | | | | | | | | | | |
| FFO and Core FFO | | |
|
| |
|
| |
|
| |
|
| |
| |
| Net income (loss) attributable to common shareholders | | $ | 893 | | $ | (2,973) | | $ | (20,731) | | $ | (45,655) | | $ | (22,793) | |
| Net income (loss) attributable to redeemable noncontrolling interests | |
| 103 | |
| (345) | |
| (2,230) | |
| (4,513) | |
| (2,212) | |
| Net loss attributable to noncontrolling interests | |
| — | |
| — | |
| (1,108) | |
| — | |
| — | |
| Net income (loss) | |
| 996 | |
| (3,318) | |
| (24,069) | |
| (50,168) | |
| (25,005) | |
| Gain on sale of real estate | |
| — | |
| (11,290) | |
| — | |
| — | |
| — | |
| Gain on sale of unconsolidated real estate assets | |
| (23,137) | |
| (5,189) | |
| — | |
| (826) | |
| — | |
| Real estate depreciation and amortization | |
| 54,547 | |
| 54,475 | |
| 62,500 | |
| 61,865 | |
| 54,004 | |
| Impairment of investments in unconsolidated real estate ventures | | | 1,380 | | | — | | | — | | | — | | | — | |
| Real estate impairment loss (1) | | | — | | | — | | | — | | | 7,805 | | | — | |
| Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures | |
| 7,002 | |
| 7,277 | |
| 7,311 | |
| 7,219 | |
| 7,350 | |
| FFO attributable to noncontrolling interests | |
| (54) | |
| (41) | |
| 1,071 | |
| (2) | |
| (4) | |
| FFO Attributable to OP Units | | $ | 40,734 | | $ | 41,914 | | $ | 46,813 | | $ | 25,893 | | $ | 36,345 | |
| FFO attributable to redeemable noncontrolling interests | |
| (4,703) | |
| (4,054) | |
| (4,485) | |
| (2,810) | |
| (3,945) | |
| FFO attributable to common shareholders | | $ | 36,031 | | $ | 37,860 | | $ | 42,328 | | $ | 23,083 | | $ | 32,400 | |
| | | | | | | | | | | | | | | | | |
| FFO attributable to OP Units | | $ | 40,734 | | $ | 41,914 | | $ | 46,813 | | $ | 25,893 | | $ | 36,345 | |
| Transaction and Other Costs, net of tax (2) | |
| 2,928 | |
| 2,241 | |
| 2,552 | |
| 1,071 | |
| 798 | |
| Impairment loss (1) | | | — | | | — | | | — | | | 2,427 | | | — | |
| (Gain) loss from mark-to-market on derivative instruments | |
| 37 | |
| 46 | |
| (133) | |
| 11 | |
| 203 | |
| Loss on extinguishment of debt | |
| — | |
| — | |
| — | |
| 29 | |
| — | |
| Losses and distributions in excess of our investment in unconsolidated real estate venture | |
| (280) | |
| (92) | |
| (330) | |
| (152) | |
| (436) | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 3,480 | |
| 4,441 | |
| 4,945 | |
| 6,246 | |
| 7,133 | |
| Amortization of management contracts intangible, net of tax | |
| 1,072 | |
| 1,073 | |
| 1,072 | |
| 1,073 | |
| 1,072 | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| 112 | |
| 6 | |
| (10) | |
| 36 | |
| (55) | |
| Core FFO Attributable to OP Units | | $ | 48,083 | | $ | 49,629 | | $ | 54,909 | | $ | 36,634 | | $ | 45,060 | |
| Core FFO attributable to redeemable noncontrolling interests | |
| (5,552) | |
| (4,800) | |
| (5,260) | |
| (3,976) | |
| (4,891) | |
| Core FFO attributable to common shareholders | | $ | 42,531 | | $ | 44,829 | | $ | 49,649 | | $ | 32,658 | | $ | 40,169 | |
| FFO per diluted common share | | $ | 0.27 | | $ | 0.29 | | $ | 0.32 | | $ | 0.17 | | $ | 0.24 | |
| Core FFO per diluted common share | | $ | 0.32 | | $ | 0.34 | | $ | 0.38 | | $ | 0.25 | | $ | 0.30 | |
| Weighted average shares - diluted (FFO and Core FFO) | |
| 131,351 | |
| 131,485 | |
| 131,542 | |
| 132,628 | |
| 133,880 | |
See footnotes on page 58.
APPENDIX - FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP) | SEPTEMBER 30, 2021 |
| in thousands, except per share data |
| Three Months Ended |
| |||||||||||||
| |
| Q3 2021 |
| Q2 2021 |
| Q1 2021 |
| Q4 2020 |
| Q3 2020 |
| |||||
| | | | | | | | | | | | | | | | | |
| FAD | | |
|
| |
|
| |
|
| |
|
| |
| |
| Core FFO attributable to OP Units | | $ | 48,083 | | $ | 49,629 | | $ | 54,909 | | $ | 36,634 | | $ | 45,060 | |
| Recurring capital expenditures and second-generation tenant improvements and leasing commissions (3) | |
| (12,124) | |
| (12,226) | |
| (10,431) | |
| (15,284) | |
| (11,395) | |
| Straight-line and other rent adjustments (4) | |
| (3,701) | |
| (4,088) | |
| (4,765) | |
| 15,433 | |
| (4,935) | |
| Third-party lease liability assumption payments | |
| (422) | |
| (703) | |
| (678) | |
| (836) | |
| (784) | |
| Share-based compensation expense | |
| 7,805 | |
| 9,045 | |
| 8,070 | |
| 6,496 | |
| 7,642 | |
| Amortization of debt issuance costs | |
| 1,126 | |
| 1,096 | |
| 1,105 | |
| 1,059 | |
| 829 | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| (1,478) | |
| (1,333) | |
| (1,326) | |
| 1,265 | |
| (1,687) | |
| Non-real estate depreciation and amortization | |
| 703 | |
| 727 | |
| 750 | |
| 829 | |
| 1,002 | |
| FAD available to OP Units (A) | | $ | 39,992 | | $ | 42,147 | | $ | 47,634 | | $ | 45,596 | | $ | 35,732 | |
| Distributions to common shareholders and unitholders (B) | | $ | 33,688 | | $ | 33,511 | | $ | 35,435 | | $ | 33,362 | | $ | 33,743 | |
| FAD Payout Ratio (B÷A) (5) | | | 84.2 | % |
| 79.5 | % |
| 74.4 | % |
| 73.2 | % |
| 94.4 | % |
| | | | | | | | | | | | | | | | | |
| Capital Expenditures | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Maintenance and recurring capital expenditures | | $ | 7,404 | | $ | 4,376 | | $ | 3,926 | | $ | 6,325 | | $ | 3,096 | |
| Share of maintenance and recurring capital expenditures from unconsolidated real estate ventures | |
| 265 | |
| 324 | |
| 47 | |
| 186 | |
| 327 | |
| Second-generation tenant improvements and leasing commissions | |
| 3,762 | |
| 7,454 | |
| 6,064 | |
| 8,773 | |
| 6,779 | |
| Share of second-generation tenant improvements and leasing commissions from unconsolidated real estate ventures | |
| 693 | |
| 72 | |
| 394 | |
| — | |
| 1,193 | |
| Recurring capital expenditures and second-generation tenant improvements and leasing commissions | |
| 12,124 | |
| 12,226 | |
| 10,431 | |
| 15,284 | |
| 11,395 | |
| Non-recurring capital expenditures | |
| 5,885 | |
| 4,352 | |
| 2,836 | |
| 6,380 | |
| 4,840 | |
| Share of non-recurring capital expenditures from unconsolidated real estate ventures | |
| 177 | |
| 56 | |
| 51 | |
| 160 | |
| 54 | |
| First-generation tenant improvements and leasing commissions | |
| 2,603 | |
| 1,703 | |
| 835 | |
| 8,910 | |
| 4,033 | |
| Share of first-generation tenant improvements and leasing commissions from unconsolidated real estate ventures | |
| 93 | |
| 199 | |
| 1,192 | |
| 747 | |
| 674 | |
| Non-recurring capital expenditures | |
| 8,758 | |
| 6,310 | |
| 4,914 | |
| 16,197 | |
| 9,601 | |
| Total JBG SMITH Share of Capital Expenditures | | $ | 20,882 | | $ | 18,536 | | $ | 15,345 | | $ | 31,481 | | $ | 20,996 | |
| (1) | During Q4 2020, we determined that a commercial asset was impaired due to a decline in the fair value of the asset and recorded an impairment loss of $10.2 million, of which $7.8 million related to real estate. The remaining $2.4 million of the impairment loss was attributable to the right-of-use asset associated with the property’s ground lease. |
| (2) | See page 55 for the components of Transaction and Other Costs. For Q1 2021, excludes $1.1 million of transaction costs attributable to noncontrolling interests. |
| (3) | Includes amounts, at JBG SMITH Share, related to unconsolidated real estate ventures. |
| (4) | Includes straight-line rent, above/below market lease amortization and lease incentive amortization. |
| (5) | The quarterly FAD payout ratio is not necessarily indicative of an amount for the full year due to fluctuation in the timing of capital expenditures, the commencement of new leases and the seasonality of our operations. |
APPENDIX - NOI RECONCILIATIONS (NON-GAAP) | SEPTEMBER 30, 2021 |
Appendix – NOI Reconciliations
| in thousands |
| Three Months Ended |
| |||||||||||||
| |
| Q3 2021 |
| Q2 2021 |
| Q1 2021 |
| Q4 2020 |
| Q3 2020 |
| |||||
| Net income (loss) attributable to common shareholders | | $ | 893 | | $ | (2,973) | | $ | (20,731) | | $ | (45,655) | | $ | (22,793) | |
| Add: | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Depreciation and amortization expense | |
| 56,726 | |
| 56,678 | |
| 64,726 | |
| 64,170 | |
| 56,481 | |
| General and administrative expense: | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Corporate and other | |
| 12,105 | |
| 13,895 | |
| 12,475 | |
| 9,156 | |
| 11,086 | |
| Third-party real estate services | |
| 25,542 | |
| 25,557 | |
| 28,936 | |
| 28,569 | |
| 28,207 | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 3,480 | |
| 4,441 | |
| 4,945 | |
| 6,246 | |
| 7,133 | |
| Transaction and Other Costs | |
| 2,951 | |
| 2,270 | |
| 3,690 | |
| 1,144 | |
| 845 | |
| Interest expense | |
| 17,243 | |
| 16,773 | |
| 16,296 | |
| 17,661 | |
| 16,885 | |
| Loss on extinguishment of debt | |
| — | |
| — | |
| — | |
| 29 | |
| — | |
| Impairment loss | | | — | | | — | | | — | | | 10,232 | | | — | |
| Income tax expense (benefit) | |
| 217 | |
| (5) | |
| 4,315 | |
| (544) | |
| (488) | |
| Net income (loss) attributable to redeemable noncontrolling interests | |
| 103 | |
| (345) | |
| (2,230) | |
| (4,513) | |
| (2,212) | |
| Net loss attributable to noncontrolling interests | | | — | | | — | | | (1,108) | | | — | | | — | |
| Less: | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Third-party real estate services, including reimbursements revenue | |
| 25,842 | |
| 26,745 | |
| 38,107 | |
| 30,069 | |
| 26,987 | |
| Other income | |
| 1,568 | |
| 1,904 | |
| 2,186 | |
| 9,934 | |
| 2,292 | |
| Income (loss) from unconsolidated real estate ventures, net | |
| 20,503 | |
| 3,953 | |
| (943) | |
| (3,194) | |
| (965) | |
| Interest and other income (loss), net | |
| 192 | |
| (38) | |
| 9 | |
| (1,646) | |
| — | |
| Gain on sale of real estate | |
| — | |
| 11,290 | |
| — | |
| — | |
| — | |
| | | | | | | | | | | | | | | | | |
| Consolidated NOI | |
| 71,155 | |
| 72,437 | |
| 71,955 | |
| 51,332 | |
| 66,830 | |
| NOI attributable to unconsolidated real estate ventures at our share | |
| 7,336 | |
| 8,109 | |
| 7,512 | |
| 7,521 | |
| 7,130 | |
| Non-cash rent adjustments (1) | |
| (3,701) | |
| (4,088) | |
| (4,765) | |
| 15,433 | |
| (4,934) | |
| Other adjustments (2) | |
| 4,683 | |
| 5,191 | |
| 4,738 | |
| (3,284) | |
| 2,881 | |
| Total adjustments | |
| 8,318 | |
| 9,212 | |
| 7,485 | |
| 19,670 | |
| 5,077 | |
| NOI | | $ | 79,473 | | $ | 81,649 | | $ | 79,440 | | $ | 71,002 | | $ | 71,907 | |
| Less: out-of-service NOI loss (3) | |
| (2,019) | |
| (1,329) | | | (1,361) | | | (801) | | | (442) | |
| Operating portfolio NOI | | $ | 81,492 | | $ | 82,978 | | $ | 80,801 | | $ | 71,803 | | $ | 72,349 | |
Note: NOI, Non-Same Store NOI and Same Store NOI are presented as originally reported in the respective quarter.
| (1) | Adjustment to exclude straight-line rent, above/below market lease amortization and lease incentive amortization. |
| (2) | Adjustment to include other revenue and payments associated with assumed lease liabilities related to operating properties and to exclude commercial lease termination revenue and allocated corporate general and administrative expenses to operating properties. |
| (3) | Includes the results of our Under-Construction assets and Near-Term and Future Development Pipelines. |

JBGS Divider
Exhibit 99.2
| Waterpark (rendering) Investor Presentation November 2021 |
| DISCLOSURES FORWARD-LOOKING STATEMENTS Certain statements contained herein may constitute “forward-looking statements” as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Consequently, the future results of JBG SMITH Properties (“JBG SMITH”, the “Company”, “we”, “us”, “our” or similar terms) may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximate”, “hypothetical”, “potential”, “believes”, “expects”, “anticipates”, “estimates”, “intends”, “plans”, “would”, “may” or similar expressions in this Investor Presentation. Currently, one of the most significant factors that could cause actual outcomes to differ materially from our forward-looking statements is the adverse effect of the current pandemic of the novel coronavirus, or COVID-19, on our financial condition, results of operations, cash flows, liquidity, performance, tenants, the real estate market and the global economy and financial markets. The extent to which the COVID-19 pandemic continues to impact us and our tenants depends on future developments, many of which are highly uncertain and cannot be predicted with confidence, including the scope, severity, and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, the direct and indirect economic effects of the pandemic and containment measures, and whether the residential market in the Washington, DC region and any of our properties will be materially impacted by the expiration of various moratoriums on residential evictions, among others. Moreover, investors are cautioned to interpret many of the risks identified under the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic. We also note the following may impact our forward-looking statements: the risks associated with the failure to enter into and/or complete contemplated acquisitions or dispositions within the price ranges anticipated and on the terms and timing anticipated, or at all; the impact of COVID-19 and the ensuing economic turmoil on our Company, net operating income, same store net operating income, net asset value, stock price, occupancy rates, revenue from our multifamily and commercial portfolios, operating costs, deferrals of rent, uncollectable operating lease receivables, parking revenue, and burn-off of rent abatement; the impact of disruptions to the credit and capital markets on our ability to access capital, including refinancing maturing debt; changes to the amount and manner in which tenants use space; whether we will harvest the anticipated value of our development pipeline; whether we incur additional costs or make additional concessions or offer other incentives to existing or prospective tenants to reconfigure space; whether the Washington, DC region will be more resilient than other parts of the country in any recession resulting from COVID-19 and whether DC metro asking rents will be more resilient than those in other gateway markets; our annual dividend per share and dividend yield; annualized net operating income; whether our future capital recycling efforts will be successful and will be at or above NAV; whether in the case of our under-construction assets, estimated square feet, estimated number of units and in the case of our near-term and future development assets, estimated potential development density are accurate; expected key Amazon.com, Inc.(“Amazon“) transaction terms and timeframes for closing any Amazon transactions not yet closed; the amount and timing of planned infrastructure and educational improvements related to Amazon’s additional headquarters and the Virginia Tech Innovation Campus; the economic impact, job growth and related demand for multifamily and commercial properties of Amazon’s additional headquarters on the DC region and National Landing and the speed with which such impact occurs and Amazon’s plans for accelerated hiring and in-person work requirements; the impact of our role as the exclusive developer, property manager and retail leasing agent in connection with Amazon’s new headquarters; our development plans related to Amazon’s additional headquarters; whether our plans related to our investment in 5G wireless spectrum across National Landing will be a significant demand catalyst; whether our target markets continue to be fast-growing; whether future supply or construction delays will inhibit our ability to time new multifamily deliveries to meet market demand; whether Amazon will have a similar growth impact on National Landing as in Seattle; whether National Landing will experience the “Major Milestones“ on the timing discussed or at all; whether anticipated near-term net operating income contributions, anticipated resiliency of the DC area and our contemplated shift to multifamily will be realized and, if realized, will have a positive impact on our stock price; whether any of our tenants succeed in obtaining government assistance under the CARES Act and other programs and use any resulting proceeds to make lease payments owed to us; whether we can access agency debt secured by our currently unencumbered multifamily assets in a timely manner, in the amounts we estimate, on reasonable terms or at all; whether the acquisition of The Batley will close on time or at all and whether our contemplated like-kind exchange for the sale of Pen Place will occur; whether The Batley will stabilize on the timing anticipated and achieve the annualized NOI and stabilized capitalization rate anticipated; whether 1900 Crystal Drive will generate the annualized NOI and yield on cost anticipated; whether our newly delivered assets will stabilize on the timing anticipated and deliver the expected annualized NOI; whether we will succeed in our contemplated recycling of disposition proceeds into acquisitions yielding the anticipated stabilized capitalization rates; and whether the allocation of capital to our share repurchase plan has any impact on our share price. 2 |
| DISCLOSURES Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. These factors include, among others: adverse economic conditions in the Washington, DC metropolitan area, including in relation to COVID-19, the timing of and costs associated with development and property improvements, financing commitments, and general competitive factors. For further discussion of factors that could materially affect the outcome of our forward-looking statements and other risks and uncertainties, see “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Cautionary Statement Concerning Forward-Looking Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and other periodic reports the Company files with the Securities and Exchange Commission. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward- looking statements to reflect events or circumstances occurring after the date hereof. PRO RATA INFORMATION We present certain financial information and metrics in this release "at JBG SMITH Share," which refers to our ownership percentage of consolidated and unconsolidated assets in real estate ventures (collectively, "real estate ventures") as applied to these financial measures and metrics. Financial information "at JBG SMITH Share" is calculated on an asset-by-asset basis by applying our percentage economic interest to each applicable line item of that asset's financial information."At JBG SMITH Share" information, which we also refer to as being "at share," "our pro rata share" or "our share," is not, and is not intended to be, a presentation in accordance with GAAP. Given that a substantial portion of our assets are held through real estate ventures, we believe this form of presentation, which presents our economic interests in the partially owned entities, provides investors valuable information regarding a significant component of our portfolio, its composition, performance and capitalization. We do not control the unconsolidated real estate ventures and do not have a legal claim to our co-venturers' share of assets, liabilities, revenue and expenses. The operating agreements of the unconsolidated real estate ventures generally allow each co-venturer to receive cash distributions to the extent there is available cash from operations. The amount of cash each investor receives is based upon specific provisions of each operating agreement and varies depending on certain factors including the amount of capital contributed by each investor and whether any investors are entitled to preferential distributions. With respect to any such third-party arrangement, we would not be in a position to exercise sole decision-making authority regarding the property, real estate venture or other entity, and may, under certain circumstances, be exposed to economic risks not present were a third-party not involved. We and our respective co-venturers may each have the right to trigger a buy-sell or forced sale arrangement, which could cause us to sell our interest, or acquire our co-venturers' interests, or to sell the underlying asset, either on unfavorable terms or at a time when we otherwise would not have initiated such a transaction. Our real estate ventures may be subject to debt, and the repayment or refinancing of such debt may require equity capital calls. To the extent our co-venturers do not meet their obligations to us or our real estate ventures or they act inconsistent with the interests of the real estate venture, we may be adversely affected. Because of these limitations, the non-GAAP "at JBG SMITH Share" financial information should not be considered in isolation or as a substitute for our financial statements as reported under GAAP. MARKET DATA Market data and industry forecasts are used in this Investor Presentation, including data obtained from publicly available sources. These sources generally state that the information they provide has been obtained from sources believed to be reliable, but the accuracy and completeness of the information is not assured. We have not independently verified any such information. 3 |
| DISCLOSURES AMAZON In November 2018, Amazon announced it had selected sites that we own in National Landing as the location of an additional headquarters. In connection with Amazon's new headquarters in National Landing, in February 2019 the Commonwealth of Virginia enacted an incentives bill, which provides tax incentives to Amazon to create a minimum of 25,000 new full-time jobs and potentially 37,850 full-time jobs with average annual wage targets for each calendar year, starting with $150,000 in 2019, and escalating 1.5% per year, in National Landing. Led by state and local governments, we expect more than $5.6 billion of infrastructure and education investments directly benefitting National Landing. These investments include: two new Metro entrances (Crystal Drive and Potomac Yard); a pedestrian bridge to Reagan National Airport; a new commuter rail station located between two of our Crystal Drive office assets; lowering of elevated sections of US Route 1 that currently divide parts of National Landing to create better multimodal access and walkability; and funding for an innovation campus anchored by Virginia Tech. In addition to government infrastructure investments, we expect at least an additional $6.8 billion of investments, including investments by Amazon, JBG SMITH, and Virginia Tech. To date, we have executed leases with Amazon totaling approximately 1.0 million square feet at six office buildings in our National Landing portfolio. In March 2019, we executed purchase and sale agreements with Amazon for two of our National Landing development sites, Metropolitan Park and Pen Place, which will serve as the initial phase of new construction associated with Amazon's new headquarters at National Landing. Subject to customary closing conditions, Amazon contracted to acquire these two development sites for an estimated aggregate $293.9 million, or $72.00 per square foot, based on their combined estimated potential development density of up to approximately 4.1 million square feet. In December 2019, Arlington County approved the plans submitted by Amazon to construct two new office buildings, totaling 2.1 million square feet, inclusive of over 50,000 square feet of street-level retail with new shops and restaurants, on the Metropolitan Park land sites. In January 2020, we sold Metropolitan Park to Amazon for $155.0 million, which represented an $11.0 million increase over our previously estimated contract value resulting from an increase in the approved development density on the site. In February 2021, Amazon submitted for entitlement approvals the second phase of its new headquarters at Pen Place (2.8 million square feet of office, along with an iconic structure, known as The Helix). We are the developer, property manager and retail leasing agent for Amazon's new headquarters at National Landing. In September 2020, Amazon purchased the Residence Inn by Marriott in Pentagon City, immediately adjacent to Pen Place in National Landing from a third party. We include certain statistics in the following slides as outlined in the Memorandum of Understanding (MOU) between Amazon and the Commonwealth of Virginia, executed on November 12, 2018, and that identify the proximity of our portfolio to National Landing: specifically, 81% of our portfolio is within a 20-minute commute of National Landing, as calculated on a pre-COVID-19 Monday morning. Approximately 2.1 million square feet of Estimated Potential Development Density at Pen Place has been excluded from our portfolio statistics included in this presentation. We include references to the percentage of Amazon employees who elected to live within walking or biking distance to Amazon’s headquarters in Seattle. This percentage is based on pre-COVID-19 data. Due to Amazon’s recently announced policies regarding remote work and other factors, we can make no assurance that these data will be comparable for employees who work at Amazon’s HQ2 in National Landing. DEFINITIONS AND RECONCILIATIONS For certain definitions and reconciliations see pages 24–29. 4 |
| JBG SMITH AT A GLANCE (1) Total Enterprise Value is based on the closing price per share of $29.61 as of September 30, 2021. 5 OPERATING PORTFOLIO COMMERCIAL SF MULTIFAMILY UNITS 11.3M 6,125 Q3 2021 ANNUALIZED NOI $324.0M LEASED IN-SERVICE PORTFOLIO 88.1% WEIGHTED AVERAGE LEASE TERM (Portfolio Wide) 5.9 YEARS DEVELOPMENT PIPELINE UNDER-CONSTRUCTION 808 UNITS NEAR-TERM DEVELOPMENT PIPELINE 1.4M FUTURE DEVELOPMENT PIPELINE 9.5M SF BALANCE SHEET TOTAL ENTERPRISE VALUE(1) $6.4B NET DEBT/TOTAL ENTERPRISE VALUE(1) 34.3% NET DEBT/ANNUALIZED ADJUSTED EBITDA 7.9x Dining in the Park (rendering) WEIGHTED AVERAGE LEASE TERM (National Landing) 5.1 YEARS 3,990 COMMERCIAL SF MULTIFAMILY UNITS |
| Q3 2021 AND RECENT UPDATES 6 AMAZON NEARLY DOUBLED WORKFORCE IN NATIONAL LANDING IN LESS THAN ONE YEAR Over 3K new hires to date + over 2.5K open positions Phase I of HQ2 13 stories above ground ADVANCED OUR SUSTAINABILITY GOALS VIRGINIA TECH BROKE GROUND ON $1B INNOVATION CAMPUS CLOSED ON THE SALE OF 500 L’ENFANT PLAZA(1) Metropolitan Park (construction) $167M ($774PSF) sales price ~5% stabilized capitalization rate Virginia Tech Innovation Campus (rendering) 500 L’Enfant Plaza ACHIEVED CARBON NEUTRALITY ACROSS OUR OPERATING PORTFOLIO RECEIVED 5-STAR GRESB SUSTAINABILITY RATING ENTERED FIRM CONTRACT TO ACQUIRE THE BATLEY ~$205M purchase price ~4% stabilized capitalization rate Virginia Tech commenced construction on 300K SF academic building, the first of a 3-building campus (1) Prior to the sale, JBG SMITH owned 49% of 500 L’Enfant Plaza. The Batley |
| WHY JBG SMITH? JBG SMITH IS WELL-POSITIONED TO MAXIMIZE LONG-TERM NAV PER SHARE GROWTH 7 HIGH-GROWTH, AMENITY-RICH SUBMARKETS IN DC METRO MARKET • Our target markets are fast-growing and amenity-rich, representing approximately 18% of the DC metro market SIGNIFICANT DEMAND CATALYSTS IN NATIONAL LANDING • 54% concentrated in National Landing; 81% within a 20-minute commute • Home to Amazon’s 5M+ SF HQ2 and Virginia Tech's $1B Innovation Campus • Amazon incentivized to create up to 38K new jobs, increasing daytime population by 70% • Creating first U.S. 5G-Smart City at scale in National Landing with best-in-class partners SUBSTANTIAL NEAR- TERM NOI GROWTH • Lease-up of In-Service operating portfolio (88.1% leased as of Q3 2021) • $27M of incremental NOI anticipated from seven newly developed assets by end of 2022 • $8 - $8.5M of annualized stabilized NOI anticipated from the acquisition of The Batley EXTENSIVE DEVELOPMENT PIPELINE • 5.1M SF Near-Term and 9.5M SF Future Development Pipelines ◦ Harvest value through development, asset sales, ground leases, or recapitalizations • 2.8M SF of development completed since 2017, with estimated stabilized yields of 6.5% for multifamily assets and 7.0% for commercial assets PROVEN CAPITAL ALLOCATOR WITH ROBUST BALANCE SHEET • Planned portfolio shift to majority multifamily with office portfolio concentrated in National Landing • $1.7B of liquidity to execute on growth pipeline • $1.4B of planned recycling of non-core assets, with plans to pursue recycling transactions of $1B by year end 2022, including over $500M currently being marketed 1 2 3 4 5 |
| Other MD (off map) 6% Bethesda CBD 2% Reston (off map) 10% RB Corridor 4% DC Mature 6% National Landing 54% 20-MINUTE COMMUTE TO NATIONAL LANDING WHO WE ARE: CONCENTRATED IN HIGH-GROWTH SUBMARKETS OUR TARGET MARKETS ARE FAST-GROWING AND AMENITY-RICH, REPRESENTING APPROXIMATELY 18% OF THE DC METRO MARKET Note: Size of sphere based on square footage and includes operating portfolio, Under-Construction, and Development Pipeline square footage. Target submarkets represent the primary focus of new JBGS investment: National Landing, DC Emerging, Reston Town Center, the Rosslyn-Ballston Corridor (RB Corridor), and Bethesda Central Business District (CBD). 8 54% CONCENTRATED IN NATIONAL LANDING IMMEDIATELY PROXIMATE TO AMAZON HQ2 AND THE VIRGINIA TECH INNOVATION CAMPUS 81% WITHIN A 20-MINUTE COMMUTE OF NATIONAL LANDING 99% METRO-SERVED 1 Amazon HQ2 Virginia Tech Innovation Campus DC Emerging 18% |
| 23.6% 31.8% -- 5% 10% 15% 20% 25% 30% 35% Q3 20 Q3 21 Physical Occupancy DC Metro Office Physical Occupancy (Q3 2020 vs Q3 2021) (1.61) (0.56) (2.00) (1.50) (1.00) (0.50) -- Q2 21 Q3 21 Quarterly Net Absorption (SF in M) DC Metro Office Net Absorption (Q2 2021 vs Q3 2021) 92.0% 95.7% 90.0% 91.0% 92.0% 93.0% 94.0% 95.0% 96.0% 97.0% Q3 20 Q3 21 Occupancy DC Metro Multifamily Occupancy (Q3 2020 vs Q3 2021) $1,720 $1,891 $1,500 $1,575 $1,650 $1,725 $1,800 $1,875 $1,950 Q3 20 Q3 21 Asking Rent ($/Unit/Month) DC Metro Multifamily Asking Rents (Q3 2020 vs Q3 2021) DC METRO MARKET FUNDAMENTALS ON PATH TO RECOVERY Source: Apartment List (DC Metro), JLL (DC Metro) and Kastle Systems. (1) Pre-pandemic asking rents are defined as those from Q1 2020 ($1,780 for the DC Metro). 9 1 MULTIFAMILY ASKING RENTS GREW 9.9% YOY, REACHING 6.2% ABOVE PRE-PANDEMIC LEVELS(1)… … AND OCCUPANCY INCREASED 3.7% DURING THE SAME TIME PERIOD YTD OFFICE ABSORPTION REMAINS NEGATIVE, BUT THE PACE OF LOSSES SIGNIFICANTLY ABATED IN Q3… +9.9% +3.7% +1M … AND PHYSICAL OCCUPANCY LEVELS CONTINUE TO INCREASE, UP 8.2% IN Q3 VS. THE PRIOR YEAR +8.2% Q1 2020 asking rents |
| DEMAND CATALYSTS IN NATIONAL LANDING: AMAZON HQ2 AND VIRGINIA TECH AMAZON HIRING INCENTIVES 38K JOBS EXPECTED INCREASE IN DAYTIME POPULATION 70% EXPECTED TOTAL PUBLIC AND PRIVATE INVESTMENT $12B JBGS DEVELOPMENT PIPELINE 7.3M SF 10 AMAZON HQ2 JBGS OPERATING JBGS DEVELOPMENT PIPELINE INFRASTRUCTURE/EDUCATION (STATE- AND LOCAL-FUNDED) WASHINGTON HOUSING CONSERVANCY + AMAZON ARLINGTON Route 1 to Grade ALEXANDRIA Virginia Tech Innovation Campus New Metro Station New Rail Station and Airport Pedestrian Bridge REAGAN NATIONAL AIRPORT New Metro Station NATIONAL LANDING 2 |
| DEMAND CATALYSTS IN NATIONAL LANDING: ANTICIPATED GROWTH TIMELINE POTENTIAL TO START UP TO 2,535 NEW MULTIFAMILY UNITS OVER THE NEXT THREE YEARS TO MEET MARKET DEMAND (1) Dates reflect JBG SMITH’s estimate of third-party investment and JBG SMITH’s actual and expected investment in National Landing. (2) The office component of 1770 Crystal Drive is 100% leased to Amazon. (3) Represents cumulative anticipated job growth. 11 AMAZON JOB GROWTH AND MAJOR MILESTONES(1) 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Construction start of new VRE station and Route 1 to grade Potential development of 2,535 multifamily units Construction start of 1900 Crystal Drive (808 units) Construction start of pedestrian bridge to DCA Construction start of new Metro entrance (Crystal Drive) Construction start Campus opened in temporary space Initial occupancy of leased assets 1st leased new delivery (1770 Crystal Drive)(2) Delivery of Metropolitan Park (2.1M SF of office) Pen Place entitlement submission (2.8M SF of office + The Helix) 9/30/21 Amazon Hiring Ramp (3) Amazon HQ2 Virginia Tech Innovation Campus Infrastructure Investments JBG SMITH Multifamily Development Opportunities 2 |
| DEMAND CATALYSTS IN NATIONAL LANDING: SEATTLE CASE STUDY NATIONAL LANDING POISED TO BENEFIT FROM DRAMATIC OFFICE AND MULTIFAMILY RENT GROWTH, SIMILAR TO SOUTH LAKE UNION Note: Reflects data from Q4 2010 to Q1 2020. (1) Source: JLL; reflects market performance in South Lake Union. (2) Average direct asking rent. (3) Source: CoStar; based on 1.0-mile radius around Amazon HQ in South Lake Union. (4) Includes buildings that are market-rate only. (5) Reflects asking rents of newly delivered buildings throughout the full year in 2010 and Q1 2020. 12 2010 2020 (Pre-Covid) Growth OFFICE MARKET DATA(1) Total Inventory (SF) 5,932,963 10,959,021 5,026,058 Total Occupied Inventory (SF) 4,685,871 10,060,381 5,374,510 Overall Rent ($/SF)(2) $34 $58 71% | 6.0% CAGR MULTIFAMILY MARKET DATA(3) Total Inventory (Units)(4) 18,704 33,512 14,808 Total Existing Supply Built Pre-2010 ($/SF/Month) $1.91 $2.79 46% | 4.2% CAGR New Development(5) Starting Rent ($/SF/Month) $2.67 $3.88 45% | 4.1% CAGR AMAZON ADDED OVER 50,000 JOBS IN SEATTLE AFTER MOVING TO SOUTH LAKE UNION 2 |
| ~6M SF of Amazon owned / leased space(1) + 4M+ SF of estimated follow- on tech demand(2) x 20% of employees walk or bike to work(3) = 7,600 new residents vs. ~3,350 units in JBGS Development Pipeline(4) Average wage of $162K(5) x Affordable rent of 25% of pre- tax income = Affordable rent of $3,375 / month vs. $2,700 /month today(6) (>4% annual growth as seen in South Lake Union) DEMAND CATALYSTS IN NATIONAL LANDING: AMAZON’S POTENTIAL IMPACT IN NATIONAL LANDING AMAZON’S COMMITMENT TO NATIONAL LANDING: A TAILWIND FOR OFFICE AND MULTIFAMILY GROWTH (1) Assumes average space utilization of 160 SF per employee. Amazon’s new HQ2 construction includes 4.9M SF of planned office space at Metropolitan Park and Pen Place. Additionally, as of September 30, 2021, Amazon leased 1.0M SF from JBGS in National Landing. (2) Source: CBRE Research July 2021. Based on 4.1M SF of new tech leasing in South Lake Union and adjacent markets from 2009 – 2019. (3) Based on Seattle trends, where Amazon’s first headquarters is located, ~20% of Amazon’s employees elected to live within walking or biking distance to work. (4) Includes 808 units currently under construction and 2,535 units in our Near-Term Development Pipeline located in National Landing. (5) Per the MOU between Amazon and the Commonwealth of Virginia, executed on November 12, 2018, the average annual wage target for each calendar year started at $150K in 2019, and escalates 1.5% per year. $162K represents the average wage in 2024. (6) Today’s rent based on $3.30/ft for an 825 SF unit. 13 2 OFFICE DEMAND MULTIFAMILY RENT AMAZON INCENTIVIZED TO ADD 38,000 JOBS MULTIFAMILY DEMAND |
| DEMAND CATALYSTS IN NATIONAL LANDING: VIRGINIA TECH INNOVATION CAMPUS FIRST VIRTUAL CLASSES 2020 EXPECTED PHASE I OCCUPANCY 2024 ANTICIPATED VIRGINIA TECH INVESTMENT AT BUILDOUT $1B VIRGINIA TECH PLANNED FOOTPRINT 675K SF EXPECTED ANNUAL STEM MASTER'S DEGREES 750 14 2 VIRGINIA TECH BROKE GROUND ON THE FIRST OF THREE BUILDINGS AT ITS INNOVATION CAMPUS, WITH ITS EXPECTED COMPLETION IN 2024 AMAZON HQ2 JBGS DEVELOPMENT PIPELINE (POTOMAC YARD) Potomac River Potomac Yard Landbay F - East Virginia Tech Innovation Campus Potomac Yard Landbay G and H New Metro Station ARLINGTON ALEXANDRIA REAGAN NATIONAL AIRPORT |
| SUBSTANTIAL GROWTH OPPORTUNITY: OPERATING PORTFOLIO EXISTING OPERATING PORTFOLIO POISED TO BENEFIT FROM NATIONAL LANDING GROWTH CATALYSTS 15 MD 7% DC 23% Other VA 14% National Landing 56% National Landing 56% Commercial 76% Multifamily 24% Q3 2021 NOI BY REGION Q3 2021 NOI BY USE 3 Q3 OPERATING PORTFOLIO HIGHLIGHTS • $324.0M of annualized NOI, up 11.3% YOY and down 2.0% QOQ • 84.9% leased and 82.6% occupied across our commercial portfolio (occupancy down 180 bps QOQ driven primarily by pre-pandemic vacate decisions by certain tenants) ◦ 126K SF of commercial leases executed; negative 0.3% cash mark-to-market • 92.9% leased and 90.2% occupied across our multifamily portfolio (occupancy up 390 bps QOQ) ◦ Asking rents ended the quarter 2% above March 2020 rents; significant growth potential with portfolio in-place rents still 9% below asking rents; dramatic burn-off in pandemic-driven concession packages, with concessions burning off entirely in some of our key submarkets |
| SUBSTANTIAL GROWTH OPPORTUNITY: NEWLY DEVELOPED ASSETS IN LEASE-UP INCREMENTAL NOI OF $27M ANTICIPATED BY YEAR END 2022, DRIVEN BY EXPECTED STABILIZATION OF 7 NEWLY DEVELOPED ASSETS 16 MULTIFAMILY WEIGHTED AVG. % LEASED: 79.9% West Half 900 and 901 W Street The Wren 8001 Woodmont SUBMARKET: Ballpark/ Southeast U Street/ Shaw U Street/ Shaw Bethesda CBD COMPLETION: OWNERSHIP: LEASED %: Q3 2019 100% 91.3% Q4 2019 100% 88.1% Q2 2020 96.1% 87.5% Q1 2021 50.0% 31.1% COMMERCIAL WEIGHTED AVG. % LEASED: 90.1% 4747 Bethesda Avenue 1900 N Street Bethesda CBD DC CBD Q4 2019 100% 98.0% Q4 2019 55.0% 74.1% 3 |
| SUBSTANTIAL GROWTH OPPORTUNITY: ACQUISITION OF THE BATLEY IN DC’S UNION MARKET 17 MULTIFAMILY UNITS PURCHASE PRICE ESTIMATED CLOSING ESTIMATED STABILIZED NOI OCCUPANCY (Q3 2021) 432 $205M Q4 2021 $8-$8.5M 90.7% 3 THE BATLEY IS ANTICIPATED TO BE THE REPLACEMENT PROPERTY IN A LIKE-KIND EXCHANGE FOR THE PEN PLACE SALE (EXPECTED TO CLOSE IN Q2 2022) Expansive rooftop deck Co-working lounge with social bar Penthouse lounge |
| EXTENSIVE DEVELOPMENT PIPELINE: 1900 CRYSTAL DRIVE (UNDER-CONSTRUCTION) 18 MULTIFAMILY UNITS IN TWO BUILDINGS NEW AMENITY RETAIL ESTIMATED INCREMENTAL INVESTMENT ESTIMATED STABILIZED NOI ESTIMATED INITIAL COMPLETION DATE 808 38K+ SF $320M $23M 1H 2024 4 |
| EXTENSIVE DEVELOPMENT PIPELINE EXTENSIVE 14.6M SF DEVELOPMENT PIPELINE — 73% MULTIFAMILY 19 IN ADDITION TO DEVELOPMENT, WE MAY UNLOCK VALUE THROUGH OPPORTUNISTIC ASSET SALES, GROUND LEASES, AND RECAPITALIZATIONS DEVELOPMENT PIPELINE COMPOSITION HOW ARE WE HARVESTING VALUE? 5.1M SF Near-Term Development Pipeline could commence construction in the next three years 100% fully entitled or submitted for final entitlements 2,535 multifamily units in National Landing sequenced to meet Amazon and Virginia Tech driven demand 9.5M SF Future Development Pipeline 3.6M SF fully entitled 4.3M SF entitlement in process 1.6M SF encumbered assets / not currently entitling Near-Term Development 5.1M SF Office 27% Multifamily 73% 4 |
| PROVEN CAPITAL ALLOCATOR: SHIFTING PORTFOLIO MIX OPPORTUNISTICALLY SHIFTING PORTFOLIO TO MAJORITY MULTIFAMILY WITH REMAINING OFFICE PORTFOLIO CONCENTRATED IN NATIONAL LANDING 20 Sell or recapitalize an additional $1.4B of non-core assets, including plans to pursue recycling transactions of $1B by year-end 2022 Proven track record with $1.7B assets sold at or above NAV since inception Embedded growth via our 14.6M SF Development Pipeline, of which 73% is multifamily Acquire new multifamily units or development opportunities in target high-growth submarkets At least 50% <50% 69% 31% 77% 23% Q3 2017 Q3 2021 FUTURE Operating Commercial Operating Multifamily HOW DO WE INTEND TO ACHIEVE THIS GOAL? 1 2 3 PORTFOLIO MIX 5 |
| PROVEN CAPITAL ALLOCATOR: ROBUST BALANCE SHEET $1.7B OF LIQUIDITY TO CAPITALIZE ON INVESTMENT OPPORTUNITIES (1) Total Enterprise Value is based on closing price per share of $29.61 as of September 30, 2021. 21 DEBT MATURITY SCHEDULE Weighted Avg. Cost of Debt: 3.1% Weighted Avg. Debt Maturity: 4.0 years LEVERAGE METRICS Net Debt/Total Enterprise Value: 34.3%(1) Net Debt/Annualized Adjusted EBITDA: 7.9x Fixed Rate Debt: 57.4% Secured Debt: 83.7% TOTAL LIQUIDITY OF $1.7B Cash: $214M Undrawn Credit Facility: $1B Estimated Multifamily Borrowing Capacity: ~$500M $0M $194M $279M $128M $680M $0M $298M $470M $200M $200M 2021 2022 2023 2024 2025 2026 2027 2028+ Drawn Term Loans Secured Debt (Pro Rata Share) 5 |
| APPENDIX |
| JBG SMITH’S MISSION CRITICAL GSA TENANCY ANTICIPATE GSA TENANCY TO REMAIN LONG-TERM OFFICE USERS GIVEN THE CRITICAL NATURE OF WORK THAT CANNOT BE COMPLETED REMOTELY 23 Q3 TENANT CONCENTRATION (based on annualized rent) GSA TENANCY BREAKDOWN (in Long-Term Hold portfolio) 84% of GSA tenancy in Long-Term Hold portfolio GSA 21% Amazon 9% Other 70% Mission Critical 89% Civilian 11% • Ex: Department of Defense, Intelligence Communities • 99%+ require SCIF/secure space or have high security requirements • Ex: Social Security Administration and Department of Labor • Represents 2% of annualized office and retail rent (1% of total annualized rent) (1) Based on Kastle Systems Data. COMMITMENT TO OFFICE-CENTRIC WORK BY OUR MISSION CRITICAL TENANTS EVIDENT THROUGH DAILY PHYSICAL OCCUPANCY LEVELS(1) AVERAGING 65% IN THE THIRD QUARTER |
| DEFINITIONS DEVELOPMENT PIPELINE "Development Pipeline" refers to the Near-Term Development and Future Development Pipelines. EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA"), EBITDA FOR REAL ESTATE ("EBITDAre") AND "ADJUSTED EBITDA" “EBITDA“, "EBITDAre" and "Adjusted EBITDA" are non-GAAP financial measures. EBITDA and EBITDAre are used by management as supplemental operating performance measures, which we believe help investors and lenders meaningfully evaluate and compare our operating performance from period-to-period by removing from our operating results the impact of our capital structure (primarily interest charges from our outstanding debt and the impact of our interest rate swaps) and certain non-cash expenses (primarily depreciation and amortization on our assets). EBITDAre is computed in accordance with the definition established by NAREIT. NAREIT defines EBITDAre as GAAP net income (loss) adjusted to exclude interest expense, income taxes, depreciation and amortization expenses, gains and losses on sales of real estate and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, including our share of such adjustments of unconsolidated real estate ventures. These supplemental measures may help investors and lenders understand our ability to incur and service debt and to make capital expenditures. EBITDA and EBITDAre are not substitutes for net income (loss) (computed in accordance with GAAP) and may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA represents EBITDAre adjusted for items we believe are not representative of ongoing operating results, such as Transaction and Other Costs, impairment write-downs of right-of-use assets associated with leases in which we are a lessee, gain (loss) on the extinguishment of debt, earnings (losses) and distributions in excess of our investment in unconsolidated real estate ventures, lease liability adjustments and share-based compensation expense related to the Formation Transaction and special equity awards. We believe that adjusting such items not considered part of our comparable operations, provides a meaningful measure to evaluate and compare our performance from period-to-period. Because EBITDA, EBITDAre and Adjusted EBITDA have limitations as analytical tools, we use EBITDA, EBITDAre and Adjusted EBITDA to supplement GAAP financial measures. Additionally, we believe that users of these measures should consider EBITDA, EBITDAre and Adjusted EBITDA in conjunction with net income (loss) and other GAAP measures in understanding our operating results.A reconciliation of net income (loss) to EBITDA, EBITDAre and Adjusted EBITDA is presented on page 28. ESTIMATED INCREMENTAL INVESTMENT "Estimated Incremental Investment" means management's estimate of the remaining cost to be incurred in connection with the development of an asset as of September 30, 2021, including all remaining acquisition costs, hard costs, soft costs, tenant improvements (excluding Free Rent converted to tenant improvement allowances), leasing costs and other similar costs to develop and stabilize the asset but excluding any financing costs and ground rent expenses. Actual incremental investment may differ substantially from our estimates due to numerous factors, including unanticipated expenses, delays in the estimated start and/or completion date, changes in design and other contingencies. ESTIMATED POTENTIAL DEVELOPMENT DENSITY "Estimated Potential Development Density" reflects management's estimate of developable gross square feet based on our current business plans with respect to real estate owned or controlled as of September 30, 2021. Our current business plans may contemplate development of less than the maximum potential development density for individual assets. As market conditions change, our business plans, and therefore, the Estimated Potential Development Density, could change accordingly. Given timing, zoning requirements and other factors, we make no assurance that Estimated Potential Development Density amounts will become actual density to the extent we complete development of assets for which we have made such estimates. ESTIMATED TOTAL INVESTMENT "Estimated Total Investment" means, with respect to the development of an asset, the sum of the Historical Cost in such asset and the Estimated Incremental Investment for such asset. Actual total investment may differ substantially from our estimates due to numerous factors, including unanticipated expenses, delays in the estimated start and/or completion date, changes in design and other contingencies. 24 |
| DEFINITIONS FORMATION TRANSACTION "Formation Transaction" refers collectively to the spin-off on July 17, 2017 of substantially all of the assets and liabilities of Vornado Realty Trust's Washington, DC segment, which operated as Vornado / Charles E. Smith, and the acquisition of the management business and certain assets and liabilities of The JBG Companies. FREE RENT "Free rent" means the amount of base rent and tenant reimbursements that are abated according to the applicable lease agreement(s). FUTURE DEVELOPMENT PIPELINE "Future Development Pipeline" refers to assets that are development opportunities on which we do not intend to commence construction within the next three years where we (i) own land or control the land through a ground lease or (ii) are under a long-term conditional contract to purchase, or enter into, a leasehold interest with respect to land. GAAP "GAAP" means accounting principles generally accepted in the United States. HISTORICAL COST "Historical Cost" is a non-GAAP measure which includes the total Historical Cost incurred by JBG SMITH with respect to the development of an asset, including any acquisition costs, hard costs, soft costs, tenant improvements (excluding Free Rent converted to tenant improvement allowances), leasing costs and other similar costs, but excluding any financing costs and ground rent expenses incurred as of September 30, 2021. IN-SERVICE "In-Service" refers to commercial or multifamily assets that are at or above 90% leased or have been operating and collecting rent for more than 12 months as of September 30, 2021. LIQUIDITY "liquidity” refers to the sum of cash, undrawn amounts available under our credit facility and management’s estimated borrowing capacity on our unencumbered multifamily assets. We can provide no assurance that we would be successful in securing the proceeds of such potential borrowing capacity on attractive terms or at all. The way we calculate liquidity is not comparable to the liquidity measures presented by other companies. LONG-TERM HOLD “Long-Term Hold” refers to JBG SMITH’s office assets in National Landing. METRO-SERVED "Metro-served" means locations, submarkets or assets that are within 0.5 miles of an existing or planned Metro station. NEAR-TERM DEVELOPMENT PIPELINE "Near-term Development Pipeline" refers to select assets that have the potential to commence construction over the next three years, subject to receipt of full entitlements, completion of design and market conditions. NET DEBT "Net Debt" is a non-GAAP financial measurement. Net Debt represents our total consolidated and unconsolidated indebtedness less cash and cash equivalents at our share. Net Debt is an important component in the calculations of Net Debt to Annualized Adjusted EBITDA and Net Debt / total enterprise value. We believe that Net Debt is a meaningful non-GAAP financial measure useful to investors because we review Net Debt as part of the management of our overall financial flexibility, capital structure and leverage. We may utilize a considerable portion of our cash and cash equivalents at any given time for purposes other than debt reduction. In addition, cash and cash equivalents at our share may not be solely controlled by us. The deduction of cash and cash equivalents at our share from consolidated and unconsolidated indebtedness in the calculation of Net Debt, therefore, should not be understood to mean that it is available exclusively for debt reduction at any given time. 25 |
| DEFINITIONS NET OPERATING INCOME ("NOI"), "ANNUALIZED NOI", "ESTIMATED STABILIZED NOI" AND "PROJECTED NOI YIELD" Net Operating Income ("NOI"), "Annualized NOI", "Estimated Stabilized NOI" and "Projected NOI Yield" are non-GAAP financial measures management uses to assess a segment's performance. The most directly comparable GAAP measure is net income (loss) attributable to common shareholders. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only property related revenue (which includes base rent, tenant reimbursements and other operating revenue, net of Free Rent and payments associated with assumed lease liabilities) less operating expenses and ground rent, if applicable. NOI also excludes deferred rent, related party management fees, interest expense, and certain other non-cash adjustments, including the accretion of acquired below-market leases and the amortization of acquired above-market leases and below-market ground lease intangibles. Management uses NOI as a supplemental performance measure of our assets and believes it provides useful information to investors because it reflects only those revenue and expense items that are incurred at the asset level, excluding non-cash items. In addition, NOI is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets. However, because NOI excludes depreciation and amortization and captures neither the changes in the value of our assets that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our assets, all of which have real economic effect and could materially impact the financial performance of our assets, the utility of NOI as a measure of the operating performance of our assets is limited. NOI presented by us may not be comparable to NOI reported by other REITs that define these measures differently. We believe to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) attributable to common shareholders as presented in our financial statements. NOI should not be considered as an alternative to net income (loss) attributable to common shareholders as an indication of our performance or to cash flows as a measure of liquidity or our ability to make distributions. Annualized NOI, for all assets except Crystal City Marriott, represents NOI for the three months ended September 30, 2021 multiplied by four. Due to seasonality in the hospitality business, Annualized NOI for Crystal City Marriott represents the trailing 12 month NOI as of September 30, 2021. Management believes Annualized NOI provides useful information in understanding our financial performance over a 12 month period, however, investors and other users are cautioned against attributing undue certainty to our calculation of Annualized NOI. Actual NOI for any 12 month period will depend on a number of factors beyond our ability to control or predict, including general capital markets and economic conditions, any bankruptcy, insolvency, default or other failure to pay rent by one or more of our tenants and the destruction of one or more of our assets due to terrorist attack, natural disaster or other casualty, among others. We do not undertake any obligation to update our calculation to reflect events or circumstances occurring after the date of this earnings release. There can be no assurance that the Annualized NOI shown will reflect our actual results of operations over any 12 month period. This Investor Presentation also contains management's estimate of stabilized NOI and projections of NOI yield for Under-Construction and Near-Term Development Pipeline assets, which are based on management's estimates of property-related revenue and operating expenses for each asset. These estimates are inherently uncertain and represent management's plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. The property-related revenues and operating expenses for our assets may differ materially from the estimates included in this Investor Presentation. Management's projections of NOI yield are not projections of our overall financial performance or cash flow, and there can be no assurance that the Projected NOI Yield set forth in this Investor Presentation will be achieved. Projected NOI Yield means our Estimated Stabilized NOI reported as a percentage of (i) Estimated Total Investment and (ii) Estimated Incremental Investment. Actual initial full year stabilized NOI yield may vary from the Projected NOI Yield based on the actual incremental investment to complete the asset and its actual initial full year stabilized NOI, and there can be no assurance that we will achieve the Projected NOI Yields described in this Investor Presentation. We do not provide reconciliations for non-GAAP estimates on a future basis, including Estimated Stabilized NOI because we are unable to provide a meaningful or accurate calculation or estimate of reconciling items and the information is not available without unreasonable effort. This inability is due to the inherent difficulty of forecasting the timing and/or amounts of various items that would impact net income (loss). Additionally, no reconciliation of Projected NOI Yield to the most directly comparable GAAP measure is included in this Investor Presentation because we are unable to quantify certain amounts that would be required to be included in the comparable GAAP financial measures without unreasonable efforts because such data is not currently available or cannot be currently estimated with confidence. Accordingly, we believe such reconciliations would imply a degree of precision that would be confusing or misleading to investors. 26 |
| DEFINITIONS NON-SAME STORE “Non-same store” refers to all operating assets excluded from the same store pool. PERCENT LEASED "Percent Leased" is based on leases signed as of September 30, 2021, and is calculated as total rentable square feet less rentable square feet available for lease divided by total rentable square feet expressed as a percentage. Out-of-service square feet are excluded from this calculation. PERCENT OCCUPIED "Percent Occupied" is based on occupied rentable square feet/units as of September 30, 2021, and is calculated as (i) for office and retail space, total rentable square feet less unoccupied square feet divided by total rentable square feet, (ii) for multifamily space, total units less unoccupied units divided by total units, expressed as a percentage. Out-of-service square feet and units are excluded from this calculation. RECENTLY DELIVERED "Recently Delivered" refers to commercial and multifamily assets that are below 90% leased and have been delivered within the 12 months ended September 30, 2021. SAME STORE "Same store" refers to the pool of assets that were In-Service for the entirety of both periods being compared, except for assets for which significant redevelopment, renovation, or repositioning occurred during either of the periods being compared. SQUARE FEET OR "SF" "Square Feet" or "SF" refers to the area that can be rented to tenants, defined as (i) for commercial assets, rentable square footage defined in the current lease and for vacant space the rentable square footage defined in the previous lease for that space, (ii) for multifamily assets, management's estimate of approximate rentable square feet, (iii) for Under-Construction assets, management's estimate of approximate rentable square feet based on current design plans as of September 30, 2021, and (iv) for Near-Term and Future Development Pipeline assets, management's estimate of developable gross square feet based on its current business plans with respect to real estate owned or controlled as of September 30, 2021. TRANSACTION AND OTHER COSTS "Transaction and other costs" include demolition costs, integration and severance costs, pursuit costs related to other completed, potential and pursued transactions, as well as other expenses. UNDER-CONSTRUCTION "Under-Construction" refers to assets that were under construction during the three months ended September 30, 2021. 27 |
| EBITDA, EBITDAre AND ADJUSTED EBITDA (NON-GAAP) (UNAUDITED) Note: All EBITDA measures as shown above are attributable to common limited partnership units (“OP Units”). (1) Related to decreases in the value of the underlying assets (2) Includes demolition costs, integration and severance costs, pursuit costs related to other completed, potential and pursued transactions, as well as other expenses. For the nine months ended September 30, 2021, excludes $1.1 million of transaction costs attributable to noncontrolling interests. For the nine months ended September 30, 2020, includes a charitable commitment of $4.0 million to the Washington Housing Conservancy, a non-profit that acquires and owns affordable workforce housing in the Washington DC metropolitan area. (3) Calculated using the Net Debt below. Quarterly Adjusted EBITDA is annualized by multiplying by four. Adjusted EBITDA for the nine months ended September 30, 2021 and 2020 is annualized by multiplying by 1.33. (4) Net of premium/discount and deferred financing costs. 28 dollars in thousands Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 EBITDA, EBITDAre and Adjusted EBITDA Net income (loss) $ 996 $ (25,005) $ (26,391) $ (17,093) Depreciation and amortization expense 56,726 56,481 178,130 157,586 Interest expense 17,243 16,885 50,312 44,660 Income tax expense (benefit) 217 (488) 4,527 (3,721) Unconsolidated real estate ventures allocated share of above adjustments 10,147 9,987 30,892 31,516 EBITDA attributable to noncontrolling interests (54) (4) 976 (7) EBITDA $ 85,275 $ 57,856 $ 238,446 $ 212,941 Gain on sale of real estate ——(11,290) (59,477) (Gain) loss on sale of unconsolidated real estate assets (23,137) —(28,326) 2,952 Impairment of investments in unconsolidated real estate ventures (1) 1,380 — 1,380 6,522 EBITDAre $ 63,518 $ 57,856 $ 200,210 $ 162,938 Transaction and other costs (2) 2,951 845 7,803 7,526 Loss on extinguishment of debt ——— 33 Share-based compensation related to Formation Transaction and special equity awards 3,480 7,133 12,866 25,432 Losses and distributions in excess of our investment in unconsolidated real estate venture (280) (436) (702) (307) Unconsolidated real estate ventures allocated share of above adjustments 130 — 170 1,465 Adjusted EBITDA $ 69,799 $ 65,398 $ 220,347 $ 197,087 Net Debt to Annualized Adjusted EBITDA (3) 7.9 x 7.7 x 7.5 x 7.6 x September 30, 2021 September 30, 2020 Net Debt (at JBG SMITH Share) Consolidated indebtedness (4) $ 2,063,426 $ 2,081,456 Unconsolidated indebtedness (4) 362,698 393,398 Total consolidated and unconsolidated indebtedness 2,426,124 2,474,854 Less: cash and cash equivalents 213,612 465,532 Net Debt (at JBG SMITH Share) $ 2,212,512 $ 2,009,322 |
| NOI RECONCILIATIONS (NON-GAAP) (UNAUDITED) (1) Adjustment to exclude straight-line rent, above/below market lease amortization and lease incentive amortization. (2) Adjustment to include other revenue and payments associated with assumed lease liabilities related to operating properties and to exclude commercial lease termination revenue and allocated corporate general and administrative expenses to operating properties. (3) Includes the results of our Under-Construction assets, and Near-Term and Future Development Pipelines. (4) Includes the results of properties that were not In-Service for the entirety of both periods being compared and properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. (5) Includes the results of the properties that are owned, operated and In-Service for the entirety of both periods being compared. 29 dollars in thousands Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net income (loss) attributable to common shareholders $ 893 $ (22,793) $ (22,811) $ (16,648) Add: Depreciation and amortization expense 56,726 56,481 178,130 157,586 General and administrative expense: Corporate and other 12,105 11,086 38,475 37,478 Third-party real estate services 25,542 28,207 80,035 86,260 Share-based compensation related to Formation Transaction and special equity awards 3,480 7,133 12,866 25,432 Transaction and Other Costs 2,951 845 8,911 7,526 Interest expense 17,243 16,885 50,312 44,660 Loss on extinguishment of debt ——— 33 Income tax expense (benefit) 217 (488) 4,527 (3,721) Net income (loss) attributable to redeemable noncontrolling interests 103 (2,212) (2,472) (445) Net loss attributable to noncontrolling interests ——(1,108) — Less: Third-party real estate services, including reimbursements revenue 25,842 26,987 90,694 83,870 Other revenue 1,568 2,292 5,658 5,438 Income (loss) from unconsolidated real estate ventures, net 20,503 (965) 23,513 (17,142) Interest and other income, net 192 — 163 1,021 Gain on sale of real estate —— 11,290 59,477 Consolidated NOI 71,155 66,830 215,547 205,497 NOI attributable to unconsolidated real estate ventures at our share 7,336 7,130 22,951 23,206 Non-cash rent adjustments (1) (3,701) (4,934) (12,554) (9,898) Other adjustments (2) 4,683 2,881 14,608 9,236 Total adjustments 8,318 5,077 25,005 22,544 NOI $ 79,473 $ 71,907 $ 240,552 $ 228,041 Less: out-of-service NOI loss (3) (2,019) (442) (4,638) (2,774) Operating Portfolio NOI $ 81,492 $ 72,349 $ 245,190 $ 230,815 Non-Same Store NOI (4) 8,777 (388) 21,868 (165) Same Store NOI (5) $ 72,715 $ 72,737 $ 223,322 $ 230,980 Change in same store NOI 0.0%(3.3)% Number of properties in same store pool 55 55 |
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