Item 2. Management’s Discussion and Analysis
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain statements contained herein 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 future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as "approximates," "believes," "expects," "anticipates," "estimates," "intends," "plans," "would," "may" or other similar expressions in this Quarterly Report on Form 10-Q. 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 such as the impact of the current government shutdown on the economic activity in the Washington, D.C. metropolitan area. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on February 18, 2025 ("Annual Report") and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report on Form 10-Q and our Annual Report.
For these forward-looking 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, which speak only as of the date of this Quarterly Report on Form 10-Q. 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 of this Quarterly Report on Form 10-Q.
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Organization and Basis of Presentation
JBG SMITH Properties ("JBG SMITH"), a Maryland real estate investment trust, owns, operates and develops mixed-use properties concentrated in amenity-rich, Metro-served submarkets in and around Washington, D.C., most notably National Landing, that we believe have long-term growth potential and appeal to residential, office and retail tenants. Through an intense focus on placemaking, JBG SMITH cultivates vibrant, highly amenitized, walkable neighborhoods throughout the Washington, D.C. metropolitan area. Approximately 75.0% of our holdings are in the National Landing submarket in Northern Virginia, which is anchored by four key demand drivers: Amazon.com, Inc.'s headquarters; Virginia Tech's $1 billion Innovation Campus; proximity to the Pentagon; and our placemaking initiatives and public infrastructure improvements. In addition, our third-party real estate services business provides fee-based real estate services to third parties, including the legacy funds formerly organized by The JBG Companies.
Substantially all our assets are held by, and our operations are conducted through JBG SMITH Properties LP, our operating partnership. JBG SMITH is referred to herein as "we," "us," "our" or other similar terms. References to "our share" refer to our ownership percentage of consolidated and unconsolidated assets in real estate ventures, but exclude our 10.0% subordinated interest in one commercial building and our 33.5% subordinated interest in four commercial buildings (the "Fortress Assets"), as well as the associated non-recourse mortgage loans, held through unconsolidated real estate ventures; these interests and debt are excluded because our investment in each real estate venture is zero, we do not anticipate receiving any near-term cash flow distributions from the real estate ventures, and we have not guaranteed their obligations or otherwise committed to providing financial support.
References to our financial statements refer to our unaudited condensed consolidated financial statements as of September 30, 2025 and December 31, 2024, and for the three and nine months ended September 30, 2025 and 2024. References to our balance sheets refer to our condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024. References to our statements of operations refer to our condensed consolidated statements of operations for the three and nine months ended September 30, 2025 and 2024. References to our statements of cash flows refer to our condensed consolidated statements of cash flows for the nine months ended September 30, 2025 and 2024.
The accompanying financial statements and notes are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.
We have elected to be taxed as a real estate investment trust ("REIT") under sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code"). Under those sections, a REIT which distributes at least 90% of its REIT taxable income as dividends to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. We currently adhere and intend to continue to adhere to these requirements and to maintain our REIT status in future periods. We also participate in the activities conducted by our subsidiary entities that have elected to be treated as taxable REIT subsidiaries under the Code. As such, we are subject to federal, state and local taxes on the income from those activities.
Our three operating and reportable segments are multifamily, commercial and third-party real estate services.
Our revenues and expenses are, to some extent, subject to seasonality during the year, which impacts quarterly net earnings, cash flows and funds from operations; this seasonality affects the sequential comparison of our results in individual quarters over time. For instance, we have historically experienced higher utility costs in the first and third quarters of the year.
We compete with many property owners and developers. Our success depends upon, among other factors, trends affecting national and local economies, the financial condition and operating results of current and prospective tenants, the availability and cost of capital, interest rates, construction and renovation costs, taxes, governmental regulations and legislation, population trends, zoning laws, and our ability to lease, sublease or sell our assets at profitable levels. Our success is also subject to our ability to refinance existing debt with acceptable terms as it comes due.
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Overview
As of September 30, 2025, our Operating Portfolio consisted of 37 operating assets comprising 14 multifamily assets totaling 6,164 units (5,978 units at our share), 21 commercial assets totaling 7.0 million square feet (6.7 million square feet at our share) and two wholly owned land assets for which we are the ground lessor. Additionally, we have one under-construction multifamily asset with 355 units (355 units at our share) and 19 assets in the development pipeline totaling 10.7 million square feet (8.7 million square feet at our share) of estimated potential development density.
We continue to implement our comprehensive plan to reposition our holdings in National Landing by executing a broad array of placemaking strategies. Our placemaking includes the delivery of new multifamily assets, the delivery of redeveloped and new office assets subject to demand therefor, amenity retail, and thoughtful improvements to the streetscape, sidewalks, parks and other outdoor gathering spaces. In keeping with our dedication to placemaking, each new project is intended to contribute to an authentic and distinct neighborhood by creating a vibrant street environment with robust retail offerings and other amenities, including improved public spaces. In 2024, we delivered The Grace and Reva with 808 multifamily units and approximately 38,000 square feet of retail space. In the first quarter of 2025, we completed construction on The Zoe, a 420-unit multifamily tower, and we have fully leased the approximately 8,000 square feet of ground floor retail. Valen, a 355-unit multifamily tower adjacent to The Zoe, was completed during the third quarter of 2025. Additionally, in 2024, we started construction on a new office amenity hub at 2011 Crystal Drive that, along with a repositioning of the asset itself, brings to National Landing a large-scale externally managed meeting and conference facility, two elevated food and beverage offerings, and an activated public lobby.
Outlook
The current government shutdown has already impacted the economic activity in the Washington, D.C. metropolitan area and, if prolonged, could begin to hinder tenants' desire to make leasing decisions, and significantly dampen regional economic activity. The uncertainty surrounding federal operations and procurement, particularly in a market as closely tied to government and defense spending as ours, poses real risks to growth and stability. Through all of this uncertainty, we remain focused on the fundamental component of our strategy of maximizing long-term net asst value ("NAV") per share through disciplined capital allocation and intend to continue seeking new investments that offer the most accretive returns and that align with our strategy and competitive advantages. We anticipate that new investments will be financed through a combination of asset sales, private equity joint ventures, and issuances of public equity. These new investments may include share repurchases, distressed office investments and other opportunistic investments in partnership with third-party capital. The latter may allow us to capitalize on distressed pricing in the office market, to monetize our land bank, and to generate additional fee and carried interest revenue. We intend to continue to opportunistically sell or recapitalize assets (which may be multifamily, commercial and/or retail assets) as well as land sites where a ground lease or joint venture execution may represent the most attractive path to maximizing value. In a climate where office valuations are near cyclical lows with limited liquidity, the most efficiently priced source of capital will likely come from our multifamily assets. To that end, we are currently marketing for sale select multifamily and land assets. During the nine months ended September 30, 2025, we sold three multifamily assets and one development parcel for total gross sales proceeds of $546.0 million and sold a 40.0% interest in a real estate venture that owns West Half, a multifamily asset, for $100.0 million. Recycling these assets will also further advance our strategy to concentrate our portfolio in National Landing. As long as we believe our share price does not reflect the underlying, intrinsic value of our business, we expect to continue repurchasing shares through our share repurchase plan (which had a capacity of $436.3 million as of September 30, 2025) and to fund such repurchases through such asset sales or recapitalizations.
Our operating multifamily portfolio occupancy was 87.2% as of September 30, 2025, an increase of 140 basis points as compared to June 30, 2025. During the third quarter of 2025, effective rents, which represent the average change in rental rates versus expiring rental rates net of concessions, decreased by 0.8% for new leases and increased by 4.6% upon renewal while achieving a 56.3% renewal rate across our portfolio. The Grace and Reva, which were placed into service the second quarter of 2024 were 83.8% and 81.2% leased, and The Zoe, which was placed into service the second quarter of 2025, was 50.8% leased as of September 30, 2025. Valen was completed during the third quarter of 2025. As a result of these deliveries, interest expense has increased for these assets as we have ceased capitalizing the related interest expense.
Our office portfolio occupancy was 75.7% as of September 30, 2025, an increase of 90 basis points as compared to June 30, 2025. Our leasing efforts continue to focus on buildings with long-term potential, concentrating occupancy in areas of
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National Landing that we have enhanced through our placemaking initiatives and that are accessible via multi-modal transportation. We took approximately 618,000 office square feet out of service in 2024 at 1800 South Bell Street, 2100 Crystal Drive and 2200 Crystal Drive. Additionally, during the first quarter of 2025, we took 197,124 square feet out of service at 1901 South Bell Street, a commercial asset, and expect to take the remainder of the asset out of service as tenants vacate. With the objective of ultimately reducing our competitive office inventory in National Landing, we expect to help foster a healthier long-term office market while repurposing older, underutilized buildings for redevelopment or conversion to multifamily housing, hospitality or other complimentary uses that will support a vibrant mixed-use environment.
We have 10.7 million square feet (8.7 million square feet at our share) of estimated potential development density in our development pipeline and intend to look to source joint venture capital as a means of funding these developments as market conditions permit.
New Tax Legislation
Effective July 4, 2025, certain changes to U.S. tax law were approved that impact us and our shareholders. Among other changes, this legislation (i) permanently extended the 20% deduction for "qualified REIT dividends" for individuals and other non-corporate taxpayers under Section 199A of the Code, (ii) increased the percentage limit under the REIT asset test applicable to taxable REIT subsidiaries from 20% to 25% for taxable years beginning after December 31, 2025 and (iii) increased the base on which the 30% interest deduction limit under Section 163(j) of the Code applies by excluding depreciation, amortization and depletion from the definition of "adjusted taxable income" for taxable years beginning after December 31, 2024.
Operating Results
Key highlights for the three and nine months ended September 30, 2025 included:
● net loss attributable to common shareholders of $28.6 million, or $0.48 per diluted common share, for the three months ended September 30, 2025 compared to $27.0 million, or $0.32 per diluted common share, for the three months ended September 30, 2024. Net loss attributable to common shareholders of $93.5 million, or $1.35 per diluted common share, for the nine months ended September 30, 2025 compared to $83.6 million, or $0.95 per diluted common share, for the nine months ended September 30, 2024;
● third-party real estate services revenue, including reimbursements, of $14.7 million and $44.4 million for the three and nine months ended September 30, 2025, and $17.1 million and $52.3 million for the three and nine months ended September 30, 2024;
● operating multifamily portfolio leased and occupied percentages (1) at our share of 89.1% and 87.2% as of September 30, 2025 as compared to 89.0% and 85.8% as of June 30, 2025, and 92.7% and 90.6% as of September 30, 2024;
● operating commercial portfolio leased and occupied percentages at our share of 77.6% and 75.7% as of September 30, 2025 compared to 76.5% and 74.8% as of June 30, 2025, and 80.7% and 79.1% as of September 30, 2024;
● the leasing of 182,000 square feet at our share, at an initial rent (2) of $46.97 per square foot and a GAAP-basis weighted average rent per square foot (3) of $47.07 for the three months ended September 30, 2025, and the leasing of 461,000 square feet at our share, at an initial rent (2) of $48.76 per square foot and a GAAP-basis weighted average rent per square foot (3) of $47.91 for the nine months ended September 30, 2025; and
● a decrease in same store (4) net operating income ("NOI") of 6.7% to $54.1 million for the three months ended September 30, 2025 compared to $57.9 million for the three months ended September 30, 2024, and a decrease in same store (4) NOI of 5.4% to $168.7 million for the nine months ended September 30, 2025 compared to $178.4 million for the nine months ended September 30, 2024.
(1) 2221 S. Clark Street - Residential and 900 W Street are excluded from leased and occupied percentages as they are operated as short-term rental properties.
(2) Represents the cash basis weighted average starting rent per square foot at our share, which excludes free rent, fixed escalations and percentage rent .
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(3) Represents the weighted average rent per square foot recognized over the term of the respective leases, including the effect of free rent and fixed escalations, but excluding the effect of percentage rent.
(4) Includes the results of the properties that are owned, operated and in-service for the entirety of both periods being compared except for properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared.
Additionally, investing and financing activity during the nine months ended September 30, 2025 included:
● the acquisition of Tysons Dulles Plaza and the remaining 45.0% interest in an unconsolidated real estate venture that owned 1101 17 th Street . See Note 3 to the financial statements for additional information;
● the sale of The Batley, WestEnd25, 8001 Woodmont and a development parcel. See Note 3 to the financial statements for additional information;
● the sale of a 40.0% noncontrolling interest in a real estate venture that owns West Half. See Note 9 to the financial statements for additional information;
● the refinancing of the RiverHouse Apartments mortgage loan. See Note 7 to the financial statements for additional information;
● the net borrowing of $75.0 million under our revolving credit facility;
● the payment of dividends totaling $38.1 million and distributions to redeemable noncontrolling interests of $9.3 million;
● the repurchase and retirement of 26.4 million of our common shares for $435.3 million, a weighted average purchase price per share of $16.46; and
● the investment of $92.2 million in development costs, construction in progress and real estate additions.
Activity subsequent to September 30, 2025 included:
● the declaration of a quarterly dividend of $0.175 per common share, payable on November 20, 2025 to shareholders of record as of November 6, 2025; and
● the repurchase and retirement of 383,758 common shares for $7.9 million, a weighted average purchase price per share of $20.49, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.
Critical Accounting Estimates
Our Annual Report contains a description of our critical accounting estimates, including asset acquisitions, real estate, investments in real estate ventures and revenue recognition. There have been no significant changes to our policies during the nine months ended September 30, 2025.
Recent Accounting Pronouncements
See Note 2 to the financial statements for a description of recent accounting pronouncements.
Results of Operations
During the nine months ended September 30, 2025, we sold The Batley, WestEnd25 and 8001 Woodmont, and in 2024, we sold North End Retail, Fort Totten Square and 2101 L Street. We collectively refer to these assets as the "Disposed Properties" in the discussion below. In 2024, we took 1800 South Bell Street, 2100 Crystal Drive and 2200 Crystal Drive out of service, and during the first quarter of 2025, we took 197,124 square feet out of service at 1901 South Bell Street. During the nine months ended September 30, 2025, we acquired Tysons Dulles Plaza and the remaining 45.0% interest in an unconsolidated real estate venture that owned 1101 17 th Street. In 2024, we began leasing The Grace and Reva, and in 2025, we began leasing The Zoe and Valen.
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Comparison of the Three Months Ended September 30, 2025 to 2024
The following summarizes certain line items from our statements of operations that we believe are important in understanding our operations and/or those items which significantly changed in the three months ended September 30, 2025 compared to the same period in 2024:
Three Months Ended September 30,
2025
2024
% Change
(Dollars in thousands)
Property rental revenue
$
103,981
$
113,349
(8.3)
%
Third-party real estate services revenue, including reimbursements
14,711
17,061
(13.8)
%
Depreciation and amortization expense
48,164
50,050
(3.8)
%
Property operating expense
36,564
39,258
(6.9)
%
Real estate taxes expense
12,284
11,812
4.0
%
General and administrative expense:
Corporate and other
13,214
11,881
11.2
%
Third-party real estate services
14,058
16,088
(12.6)
%
Interest expense
34,781
35,267
(1.4)
%
Gain (loss) on the sale of real estate, net
4,660
(5,352)
(187.1)
%
Impairment loss
4,771
—
*
* Not meaningful.
Property rental revenue decreased by approximately $9.4 million, or 8.3%, to $104.0 million in 2025 from $113.3 million in 2024. The decrease was primarily due to a $6.1 million decrease in revenue from our multifamily assets and a $4.1 million decrease in revenue from our commercial assets. The decrease in revenue from our multifamily assets was primarily due to a $12.2 million decrease related to the Disposed Properties, partially offset by a $4.9 million increase related to the continued lease up of The Grace, Reva, The Zoe and Valen, and higher rents across the portfolio. The decrease in revenue from our commercial assets was primarily due to a $3.6 million decrease related to the Disposed Properties, a $1.3 million decrease related to taking 2200 Crystal Drive out of service, and lower occupancy across the portfolio, partially offset by a $4.0 million increase in lease termination revenue and a $3.9 million increase related to the acquisition of Tysons Dulles Plaza and the consolidation of 1101 17 th Street.
Third-party real estate services revenue, including reimbursements, decreased by approximately $2.4 million, or 13.8%, to $14.7 million in 2025 from $17.1 million in 2024. The decrease was primarily due to a $704,000 decrease in property management fees, a $517,000 decrease in reimbursement revenue, a $494,000 decrease in other service revenue and a $417,000 decrease in leasing fees.
Depreciation and amortization expense decreased by approximately $1.9 million, or 3.8%, to $48.2 million in 2025 from $50.1 million in 2024. The decrease was primarily due to (i) a $6.1 million decrease related to the Disposed Properties, (ii) a $2.0 million decrease related to certain assets being fully depreciated in 2024 and (iii) a $1.4 million decrease related to certain assets written off in 2024. The decrease in depreciation and amortization expense was partially offset by (iv) a $3.3 million increase related to 2231 Crystal Drive and 2011 Crystal Drive due to the acceleration of depreciation for certain assets in 2025, (v) a $3.1 million increase related to The Zoe and Valen, which were placed into service in 2025, and (vi) a $1.2 million increase related to the acquisition of Tysons Dulles Plaza.
Property operating expense decreased by approximately $2.7 million, or 6.9%, to $36.6 million in 2025 from $39.3 million in 2024. The decrease was primarily due to a $1.4 million decrease in property operating expense from our multifamily assets, a $1.1 million decrease in other property operating expense and a $178,000 decrease in property operating expense from our commercial assets. The decrease in property operating expense from our multifamily assets was primarily due to a $3.6 million decrease related to the Disposed Properties, partially offset by a $1.6 million increase related to the continued lease up of The Grace, Reva, The Zoe and Valen, and higher operating expenses primarily related to repairs and maintenance and utilities expenses across the portfolio. The decrease in other property operating expense was primarily due to a $915,000 decrease in insurance claims covered by our captive insurance subsidiary. The decrease in property operating expense from our commercial assets was primarily due to a $1.2 million decrease related to the Disposed Properties, partially offset by a $1.1 million increase related to the acquisition of Tysons Dulles Plaza.
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Real estate taxes expense increased by approximately $472,000, or 4.0%, to $12.3 million in 2025 from $11.8 million in 2024. The increase was primarily due to a $634,000 increase related to The Grace, Reva, The Zoe and Valen, which were placed into service, and a $298,000 increase related to the acquisition of Tysons Dulles Plaza, partially offset by a $275,000 decrease related to the Disposed Properties.
General and administrative expense: corporate and other increased by approximately $1.3 million, or 11.2%, to $13.2 million in 2025 from $11.9 million in 2024. The increase was primarily due to an increase in professional fees and other overhead expenses, partially offset by lower compensation expenses.
General and administrative expense: third-party real estate services decreased by approximately $2.0 million, or 12.6%, to $14.1 million in 2025 from $16.1 million in 2024. The decrease was primarily due to lower compensation expenses and lower professional fees.
Interest expense decreased by approximately $486,000, or 1.4%, to $34.8 million in 2025 from $35.3 million in 2024. The decrease was primarily due to (i) a $3.5 million decrease related to the Disposed Properties and (ii) a $1.5 million decrease related to mortgage loans collateralized by 201 12th Street S., 200 12th Street S. and 251 18th Street S., which were repaid during 2024. The decrease in interest expense was partially offset by (iii) a $2.7 million decrease in capitalized interest as The Zoe and Valen were placed into service, (iv) a $1.5 million increase due to higher interest expense on our term loans and a higher outstanding balance on our revolving credit facility and (v) a $953,000 increase due to draws on the mortgage loan related to The Zoe and Valen.
Gain on the sale of real estate of $4.7 million in 2025 was primarily due to permanent land easement transactions across various parcels in National Landing. Loss on the sale of real estate of $5.4 million in 2024 was due to the sale of Fort Totten Square.
Impairment loss of $4.8 million in 2025 was related to 2200 Crystal Drive, which was written down to its estimated fair value.
Comparison of the Nine Months Ended September 30, 2025 to 2024
The following summarizes certain line items from our statements of operations that we believe are important in understanding our operations and/or those items which significantly changed in the nine months ended September 30, 2025 compared to the same period in 2024:
Nine Months Ended September 30,
2025
2024
% Change
(Dollars in thousands)
Property rental revenue
$
311,989
$
348,521
(10.5)
%
Third-party real estate services revenue, including reimbursements
44,430
52,326
(15.1)
%
Depreciation and amortization expense
143,311
158,211
(9.4)
%
Property operating expense
104,876
110,791
(5.3)
%
Real estate taxes expense
37,107
40,006
(7.2)
%
General and administrative expense:
Corporate and other
45,491
43,855
3.7
%
Third-party real estate services
43,691
57,065
(23.4)
%
Interest expense
105,552
97,400
8.4
%
Gain (loss) on the sale of real estate, net
47,029
(5,066)
*
Impairment loss
45,067
18,236
147.1
%
* Not meaningful.
Property rental revenue decreased by approximately $36.5 million, or 10.5%, to $312.0 million in 2025 from $348.5 million in 2024. The decrease was primarily due to a $36.3 million decrease in revenue from our commercial assets and a $3.0 million decrease in revenue from our multifamily assets. The decrease in revenue from our commercial assets was primarily due to a $12.2 million decrease related to the Disposed Properties, an $8.4 million decrease related to taking 2100 Crystal Drive, 2200 Crystal Drive and 1901 South Bell Street out of service, a $3.5 million decrease in lease termination revenue,
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and lower occupancy across the portfolio, partially offset by a $6.2 million increase related to the acquisition of Tysons Dulles Plaza and the consolidation of 1101 17 th Street. The decrease in revenue from our multifamily assets was primarily due to a $22.0 million decrease related to the Disposed Properties, partially offset by a $16.4 million increase related to the continued lease up of The Grace, Reva, The Zoe and Valen, and higher rents across the portfolio.
Third-party real estate services revenue, including reimbursements, decreased by approximately $7.9 million, or 15.1%, to $44.4 million in 2025 from $52.3 million in 2024. The decrease was primarily due to a $3.2 million decrease in reimbursement revenue, a $2.2 million decrease in property management fees, a $990,000 decrease in leasing fees and a $971,000 decrease in asset management fees.
Depreciation and amortization expense decreased by approximately $14.9 million, or 9.4%, to $143.3 million in 2025 from $158.2 million in 2024. The decrease was primarily due to (i) a $14.5 million decrease related to the Disposed Properties, (ii) an $11.1 million decrease related to 2100 Crystal Drive and Crystal Drive Retail due to the acceleration of depreciation of certain assets in 2024, (iii) a $4.2 million decrease related to certain assets being fully depreciated in 2024, (iv) a $1.5 million decrease related to 800 North Glebe Road due to the disposal of certain assets in 2024 and (v) a $1.4 million decrease related to certain assets written off in 2024. The decrease in depreciation and amortization expense was partially offset by (vi) a $10.5 million increase as The Grace, Reva, The Zoe and Valen were placed into service, (vii) a $5.9 million increase related to 2011 Crystal Drive and 2231 Crystal Drive due to the acceleration of depreciation for certain assets in 2025 and (viii) a $2.0 million increase related to the acquisition of Tysons Dulles Plaza.
Property operating expense decreased by approximately $5.9 million, or 5.3%, to $104.9 million in 2025 from $110.8 million in 2024. The decrease was primarily due to a $2.7 million decrease in property operating expense from our commercial assets, a $2.3 million decrease in other property operating expense and a $983,000 decrease in property operating expense from our multifamily assets. The decrease in property operating expense from our commercial assets was primarily due to a $3.5 million decrease related to the Disposed Properties, partially offset by a $1.7 million increase related to the acquisition of Tysons Dulles Plaza and higher operating expenses primarily due to marketing and utilities. The decrease in other property operating expense was primarily due to a $2.4 million decrease in insurance claims covered by our captive insurance subsidiary. The decrease in property operating expense from our multifamily assets was primarily due to a $6.8 million decrease related to the Disposed Properties, partially offset by a $4.2 million increase related to the continued lease up of The Grace, Reva, The Zoe and Valen, and higher operating expenses primarily related to repairs and maintenance and utilities.
Real estate taxes expense decreased by approximately $2.9 million, or 7.2%, to $37.1 million in 2025 from $40.0 million in 2024. The decrease was primarily due to a $3.4 million decrease related to the Disposed Properties and lower property value assessments for certain assets, partially offset by a $1.8 million increase related to The Grace, Reva, The Zoe and Valen, which were placed into service.
General and administrative expense: corporate and other increased by approximately $1.6 million, or 3.7%, to $45.5 million in 2025 from $43.9 million in 2024. The increase was primarily due to an increase in professional fees and other overhead expenses, partially offset by lower compensation expenses.
General and administrative expense: third-party real estate services decreased by approximately $13.4 million, or 23.4%, to $43.7 million in 2025 from $57.1 million in 2024. The decrease was primarily due to lower compensation expenses, lower third-party reimbursable expenses and lower professional fees.
Interest expense increased by approximately $8.2 million, or 8.4%, to $105.6 million in 2025 from $97.4 million in 2024. The increase was primarily due to (i) an $11.5 million increase due to higher interest expense on our term loans and a higher outstanding balance on our revolving credit facility, (ii) a $6.0 million decrease in capitalized interest as The Grace, Reva, The Zoe and Valen were placed into service, (iii) a $3.5 million increase due to draws on the mortgage loan related to The Zoe and Valen, and (iv) a $2.9 million increase due to the expiration of interest rate swaps related to the RiverHouse Apartments mortgage loan and refinancing in March 2025 with a fixed interest rate mortgage loan. The increase in interest expense was partially offset by (v) a $7.8 million decrease related to the Disposed Properties, (vi) a $4.8 million decrease related to mortgage loans collateralized by 201 12th Street S., 200 12th Street S. and 251 18th Street S., which were repaid during 2024, (vii) a $1.8 million decrease related to lower rates on variable rate mortgage loans and (viii) a $1.2 million
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decrease related to The Grace and Reva mortgage loan, which was refinanced in December 2024 with a fixed interest rate mortgage loan.
Gain on the sale of real estate of $47.0 million in 2025 was primarily due to the sale of WestEnd25. Loss on the sale of real estate of $5.1 million in 2024 was primarily due to the sale of Fort Totten Square.
Impairment loss of $45.1 million in 2025 was related to The Batley, 2200 Crystal Drive and a development parcel, which were written down to their estimated fair value. Impairment loss of $18.2 million in 2024 was related to two development parcels, which were written down to their estimated fair value.
Funds from Operations ("FFO")
FFO is a non-GAAP financial measure computed in accordance with the definition established by the National Association of Real Estate Investment Trusts ("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 expense related to real estate, gains (losses) from the sale of certain real estate assets, gains (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.
We believe FFO is a meaningful non-GAAP financial measure useful in comparing our levered operating performance from period-to-period and as compared to similar real estate companies because FFO excludes real estate depreciation and amortization expense, which implicitly assumes that the value of real estate diminishes predictably over time rather than fluctuating based on market conditions and other non-comparable income and expenses. FFO does not represent cash generated from operating activities and is 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 may not be comparable to similarly titled measures used by other companies.
The following reconciles net loss attributable to common shareholders, the most directly comparable GAAP measure, to FFO:
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
(In thousands)
Net loss attributable to common shareholders
$
(28,555)
$
(26,980)
$
(93,516)
$
(83,629)
Net loss attributable to redeemable noncontrolling interests
(6,457)
(4,365)
(18,375)
(12,353)
Net income (loss) attributable to noncontrolling interests
—
36
—
(10,931)
Net loss
(35,012)
(31,309)
(111,891)
(106,913)
(Gain) loss on the sale of real estate, net of tax
(4,660)
5,352
(47,029)
3,854
Pro rata share of gain on the sale of unconsolidated real estate assets
—
—
(1,500)
(480)
Real estate depreciation and amortization
47,837
48,385
140,306
153,203
Real estate impairment loss
4,771
—
36,584
—
Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures
777
796
2,342
3,086
FFO attributable to redeemable noncontrolling interests in consolidated real estate ventures
(905)
—
(1,175)
—
FFO attributable to common limited partnership units ("OP Units")
12,808
23,224
17,637
52,750
FFO attributable to redeemable noncontrolling interests
(2,679)
(3,725)
(3,785)
(8,238)
FFO attributable to common shareholders
$
10,129
$
19,499
$
13,852
$
44,512
NOI and Same Store NOI
NOI and same store NOI are non-GAAP financial measures management uses to assess an asset'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 and same store NOI provide 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
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operating expenses and ground rent for operating leases, if applicable. NOI and same store NOI exclude deferred rent, commercial lease termination revenue, 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, which includes our proportionate share of revenue and expenses attributable to real estate ventures, as a supplemental performance measure 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 expense 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.
Information provided on a same store basis includes the results of properties that are owned, operated and in-service for the entirety of both periods being compared, which excludes disposed properties or properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. During the three months ended September 30, 2025, our same store pool decreased to 33 properties from 34 properties due to the sale of The Batley. During the nine months ended September 30, 2025, our same store pool decreased to 33 properties from 36 properties due to the sale of The Batley, WestEnd25 and 8001 Woodmont. While there is judgment surrounding changes in designations, a property is removed from the same store pool when the property is considered to be under-construction because it is undergoing significant redevelopment or renovation pursuant to a formal plan or is being repositioned in the market and such renovation or repositioning is expected to have a significant impact on property NOI. A development property or under-construction property is moved to the same store pool once a substantial portion of the growth expected from the development or redevelopment is reflected in both the current and comparable prior year period. Acquisitions are moved into the same store pool once we have owned the property for the entirety of the comparable periods and the property is not under significant development or redevelopment.
Same store NOI decreased $3.9 million, or 6.7%, to $54.1 million for the three months ended September 30, 2025 from $57.9 million for the same period in 2024. The decrease was substantially attributable to (i) lower occupancy and lower parking revenue in our commercial portfolio and (ii) lower occupancy and higher operating expenses, partially offset by higher rents and lower concessions in our multifamily portfolio. Same store NOI decreased $9.6 million, or 5.4%, to $168.7 million for the nine months ended September 30, 2025 from $178.4 million for the same period in 2024. The decrease was substantially attributable to (i) lower occupancy and recovery revenue, partially offset by lower real estate taxes in our commercial portfolio and (ii) lower occupancy and higher operating expenses, partially offset by higher rents in our multifamily portfolio.
The following reconciles net loss attributable to common shareholders to NOI at our share and same store NOI at our share. To conform to the current period presentation, we have included certain other property revenue in the calculation of NOI for the three and nine months ended September 30, 2024 to align with our internal reporting.
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Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
(Dollars in thousands)
Net loss attributable to common shareholders
$
(28,555)
$
(26,980)
$
(93,516)
$
(83,629)
Net loss attributable to redeemable noncontrolling interests
(6,457)
(4,365)
(18,375)
(12,353)
Net income (loss) attributable to noncontrolling interests
—
36
—
(10,931)
Net loss
(35,012)
(31,309)
(111,891)
(106,913)
Add:
Depreciation and amortization expense
48,164
50,050
143,311
158,211
General and administrative expense:
Corporate and other
13,214
11,881
45,491
43,855
Third-party real estate services
14,058
16,088
43,691
57,065
Transaction and other costs
494
667
5,251
3,005
Interest expense
34,781
35,267
105,552
97,400
(Gain) loss on the extinguishment of debt, net
—
(43)
2,402
(43)
Impairment loss
4,771
—
45,067
18,236
Income tax expense (benefit)
926
831
643
(40)
Less:
Third-party real estate services, including reimbursements revenue
14,711
17,061
44,430
52,326
Income (loss) from unconsolidated real estate ventures, net
(664)
(745)
(165)
4
Interest and other income, net
2,378
4,573
3,601
10,105
Gain (loss) on the sale of real estate, net
4,660
(5,352)
47,029
(5,066)
Adjustments:
NOI attributable to unconsolidated real estate ventures at our share
1,012
1,292
3,289
5,506
Real estate venture partner’s share of NOI attributable to consolidated real estate ventures
(915)
—
(1,187)
—
Non-cash rent adjustments (1)
1,561
(3,817)
4,071
(7,756)
Other adjustments (2)
(3,083)
2,966
(984)
270
Total adjustments
(1,425)
441
5,189
(1,980)
NOI at our share
58,886
68,336
189,811
211,427
Less: out-of-service NOI loss (3) (4)
(1,677)
(2,261)
(5,366)
(7,632)
Operating Portfolio NOI (4)
60,563
70,597
195,177
219,059
Non-same store NOI (4) (5)
6,507
12,672
26,457
40,704
Same store NOI (4) (6)
$
54,056
$
57,925
$
168,720
$
178,355
Change in same store NOI
(6.7%)
(5.4%)
Number of properties in same store pool
33
33
(1) Adjustment to exclude deferred rent, above/below market lease amortization and lease incentive amortization.
(2) Adjustment to exclude commercial lease termination revenue, related party management fees, corporate entity activity and inter-segment activity.
(3) Includes the results of our under-construction assets and assets in the development pipeline.
(4) Represents amounts at our share.
(5) Includes the results of properties that were not in-service for the entirety of both periods being compared, including disposed properties, and properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared.
(6) Includes the results of the properties that are owned, operated and in-service for the entirety of both periods being compared.
Reportable Segments
Our three operating and reportable segments are multifamily, commercial, and third-party real estate services. We measure and evaluate the performance of our operating segments, with the exception of the third-party real estate services business, based on NOI at our share, which includes our proportionate share of revenue and expenses attributable to real estate ventures.
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The following summarizes NOI at our share for our multifamily and commercial segments:
Multifamily
Commercial
Three Months Ended September 30,
2025
2024
% Change
2025
2024
% Change
(Dollars in thousands, at our share)
Property rental revenue
$
47,450
$
55,425
(14.4)
%
$
52,587
$
55,688
(5.6)
%
Other property revenue
845
1,085
(22.1)
%
4,183
4,620
(9.5)
%
Total property revenue
48,295
56,510
(14.5)
%
56,770
60,308
(5.9)
%
Property expense:
Real estate taxes
5,484
5,861
(6.4)
%
5,902
5,031
17.3
%
Payroll
3,553
4,040
(12.1)
%
3,197
3,257
(1.8)
%
Utilities
4,115
4,440
(7.3)
%
4,342
4,518
(3.9)
%
Repairs and maintenance
5,909
6,369
(7.2)
%
5,300
5,464
(3.0)
%
Other property operating
3,054
3,495
(12.6)
%
4,774
4,515
5.7
%
Total property expense
22,115
24,205
(8.6)
%
23,515
22,785
3.2
%
NOI from reportable segments
$
26,180
$
32,305
(19.0)
%
$
33,255
$
37,523
(11.4)
%
Multifamily
Commercial
Nine Months Ended September 30,
2025
2024
% Change
2025
2024
% Change
(Dollars in thousands, at our share)
Property rental revenue
$
155,616
$
159,359
(2.3)
%
$
154,026
$
177,320
(13.1)
%
Other property revenue
2,120
2,738
(22.6)
%
12,487
13,245
(5.7)
%
Total property revenue
157,736
162,097
(2.7)
%
166,513
190,565
(12.6)
%
Property expense:
Real estate taxes
17,220
16,740
2.9
%
17,297
20,705
(16.5)
%
Payroll
11,141
12,444
(10.5)
%
9,306
10,045
(7.4)
%
Utilities
11,809
11,376
3.8
%
10,511
11,389
(7.7)
%
Repairs and maintenance
17,623
16,200
8.8
%
15,005
16,272
(7.8)
%
Other property operating
9,283
8,468
9.6
%
13,306
13,054
1.9
%
Total property expense
67,076
65,228
2.8
%
65,425
71,465
(8.5)
%
NOI from reportable segments
$
90,660
$
96,869
(6.4)
%
$
101,088
$
119,100
(15.1)
%
Comparison of the Three Months Ended September 30, 2025 to 2024
Multifamily: Property revenue decreased by $8.2 million, or 14.5%, to $48.3 million in 2025 from $56.5 million in 2024. NOI decreased by $6.1 million, or 19.0%, to $26.2 million in 2025 from $32.3 million in 2024. The decreases in property revenue at our share and NOI at our share were primarily due to the Disposed Properties, partially offset by the continued lease up of The Grace, Reva, The Zoe and Valen, and higher rents across the portfolio.
Commercial: Property revenue decreased by $3.5 million, or 5.9%, to $56.8 million in 2025 from $60.3 million in 2024. NOI decreased by $4.3 million, or 11.4%, to $33.3 million in 2025 from $37.5 million in 2024. The decreases in property revenue at our share and NOI at our share were primarily due to the Disposed Properties, properties taken out of service and lower occupancy across the portfolio, partially offset by increases from the acquisition of Tysons Dulles Plaza.
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Comparison of the Nine Months Ended September 30, 2025 to 2024
Multifamily: Property revenue decreased by $4.4 million, or 2.7%, to $157.7 million in 2025 from $162.1 million in 2024. NOI decreased by $6.2 million, or 6.4%, to $90.7 million in 2025 from $96.9 million in 2024. The decreases in property revenue at our share and NOI at our share were primarily due to the Disposed Properties, partially offset by the continued lease up of The Grace, Reva, The Zoe and Valen, and higher rents across the portfolio.
Commercial: Property revenue decreased by $24.1 million, or 12.6%, to $166.5 million in 2025 from $190.6 million in 2024. NOI decreased by $18.0 million, or 15.1%, to $101.1 million in 2025 from $119.1 million in 2024. The decreases in property revenue at our share and NOI at our share were primarily due to the Disposed Properties, properties taken out of service and lower occupancy across the portfolio, partially offset by increases from the acquisition of Tysons Dulles Plaza.
With respect to the third-party real estate services business, we review revenue streams generated by this segment, excluding reimbursement revenue, as well as the expenses attributable to this segment at our proportionate share, calculated by excluding real estate services revenue from our interests in real estate ventures. The following summarizes our third-party real estate services business at our share:
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
(In thousands, at our share)
Property management fees
$
3,321
$
3,903
$
9,961
$
11,892
Asset management fees
1,049
1,139
2,335
3,305
Development fees
361
323
1,348
982
Leasing fees
583
998
2,336
3,246
Construction management fees
179
342
677
903
Other service revenue
1,082
1,551
3,152
3,812
Third-party real estate services revenue, excluding reimbursements
6,575
8,256
19,809
24,140
Third-party real estate services expenses, excluding reimbursements
5,725
7,166
18,358
28,428
Net third-party real estate services, excluding reimbursements
$
850
$
1,090
$
1,451
$
(4,288)
Comparison of the Three Months Ended September 30, 2025 to 2024
Third-party real estate services revenue, excluding reimbursements, decreased by $1.7 million, or 20.4%, to $6.6 million in 2025 from $8.3 million in 2024. The decrease was primarily due to a $582,000 decrease in property management fees, a $469,000 decrease in other service revenue and a $415,000 decrease in leasing fees. Third-party real estate services expenses, excluding reimbursements, decreased by $1.4 million, or 20.1%, to $5.7 million in 2025 from $7.2 million in 2024. The decrease was primarily due to lower compensation expenses and lower professional fees.
Comparison of the Nine Months Ended September 30, 2025 to 2024
Third-party real estate services revenue, excluding reimbursements, decreased by $4.3 million, or 17.9%, to $19.8 million in 2025 from $24.1 million in 2024. The decrease was primarily due to a $1.9 million decrease in property management fees, a $970,000 decrease in asset management fees and a $910,000 decrease in leasing fees. Third-party real estate services expenses, excluding reimbursements, decreased by $10.1 million, or 35.4%, to $18.4 million in 2025 from $28.4 million in 2024. The decrease was primarily due to lower compensation expenses and lower professional fees.
Liquidity and Capital Resources
Property rental income is our primary source of operating cash flow and depends on many factors including occupancy levels and rental rates, as well as our tenants' ability to pay rent. In addition, our third-party real estate services business provides fee-based real estate services. Our assets provide cash flow that enables us to pay operating expenses, debt service, recurring capital expenditures, dividends to shareholders, and distributions to holders of OP Units and long-term incentive partnership units ("LTIP Units"). Other sources of liquidity to fund cash requirements include proceeds from financings, recapitalizations, asset sales, and the issuance and sale of securities. We anticipate that cash flows from continuing operations and proceeds from financings, asset sales and recapitalizations, together with existing cash balances, will be
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adequate to fund our business operations, debt amortization, capital expenditures, any dividends to shareholders, and distributions to holders of OP Units and LTIP Units.
Mortgage Loans
The following summarizes mortgage loans:
Weighted Average
Effective
Interest Rate (1)
September 30, 2025
December 31, 2024
(In thousands)
Variable rate (2)
5.46%
$
552,117
$
587,254
Fixed rate (3)
5.12%
1,069,052
1,196,479
Mortgage loans
1,621,169
1,783,733
Unamortized deferred financing costs and premium/discount, net (4)
(43,373)
(16,560)
Mortgage loans, net
$
1,577,796
$
1,767,173
(1) Weighted average effective interest rate as of September 30, 2025.
(2) Includes variable rate mortgage loans with interest rate cap agreements. For mortgage loans with interest rate caps, the weighted average interest rate cap strike was 3.17%, and the weighted average maturity date of the interest rate caps is in the fourth quarter of 2026. The interest rate cap strike is exclusive of the credit spreads associated with the mortgage loans. As of September 30, 2025, one-month term Secured Overnight Financing Rate ("SOFR") was 4.13%.
(3) Includes variable rate mortgage loans with interest rates fixed by interest rate swap agreements.
(4) As of September 30, 2025, includes a discount of $29.6 million related to the mortgage loan assumed in connection with the acquisition of 1101 17 th Street. See Note 3 to the financial statements for additional information.
As of September 30, 2025 and December 31, 2024, the net carrying value of real estate collateralizing our mortgage loans totaled $1.7 billion and $2.1 billion. Our mortgage loans contain covenants that limit our ability to incur additional indebtedness on these properties and, in certain circumstances, require lender approval of tenant leases and/or yield maintenance upon repayment prior to maturity.
In June 2025, in connection with the sale of WestEnd25, we repaid the related $97.5 million mortgage loan. In February 2025, in connection with the sale of 8001 Woodmont, we repaid the related $99.7 million mortgage loan.
In September 2025, in connection with the acquisition of the remaining 45.0% interest in the unconsolidated real estate venture that owned 1101 17 th Street, we assumed the related $60.0 million non-recourse interest-only mortgage loan with a fixed interest rate of 3.40% and a maturity date of July 14, 2026, which was recorded at its estimated fair value of $30.4 million. See Note 3 to the financial statements for additional information. In March 2025, we entered into a five-year interest-only $258.9 million mortgage loan with a fixed interest rate of 5.03% collateralized by the Ashley and Potomac buildings at RiverHouse Apartments and repaid the outstanding $307.7 million mortgage loan that was collateralized by the Ashley, Potomac and James buildings.
As of September 30, 2025 and December 31, 2024, we had various interest rate swap and cap agreements on certain mortgage loans with an aggregate notional value of $802.6 million and $1.4 billion. See Note 15 to the financial statements for additional information.
Revolving Credit Facility and Term Loans
As of September 30, 2025 and December 31, 2024, our unsecured revolving credit facility and term loans totaling $1.5 billion consisted of a $750.0 million revolving credit facility maturing in June 2027, a $200.0 million term loan ("Tranche A-1 Term Loan") maturing in January 2026, a $400.0 million term loan ("Tranche A-2 Term Loan") maturing in January 2028 and a $120.0 million term loan ("2023 Term Loan") maturing in June 2028. The revolving credit facility has two six-month extension options, and the Tranche A-1 Term Loan has one remaining one-year extension option.
The agreements for our unsecured revolving credit facility and term loans include customary restrictive covenants, that, among other things, restrict our ability to incur additional indebtedness, to engage in material asset sales, mergers, consolidations and acquisitions, and to make capital expenditures, and also include requirements to maintain financial ratios.
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Our ability to borrow is subject to compliance with these covenants, and failure to comply with our covenants could cause a default, and we may then be required to repay such debt.
The following summarizes amounts outstanding under the revolving credit facility and term loans:
Effective
Interest Rate (1)
September 30, 2025
December 31, 2024
(In thousands)
Revolving credit facility (2) (3)
5.73%
$
160,000
$
85,000
Tranche A-1 Term Loan (4)
5.34%
$
200,000
$
200,000
Tranche A-2 Term Loan (5)
4.20%
400,000
400,000
2023 Term Loan (6)
5.41%
120,000
120,000
Term loans
720,000
720,000
Unamortized deferred financing costs, net
(1,550)
(2,147)
Term loans, net
$
718,450
$
717,853
(1) Effective interest rate as of September 30, 2025. The interest rate for our revolving credit facility excludes a 0.20% facility fee.
(2) As of September 30, 2025, daily SOFR was 4.24%. As of September 30, 2025 and December 31, 2024, letters of credit totaling $4.8 million and $15.2 million were outstanding under our revolving credit facility.
(3) As of September 30, 2025 and December 31, 2024, excludes $5.1 million and $7.3 million of net deferred financing costs related to our revolving credit facility that were included in "Other assets, net" in our balance sheets.
(4) The interest rate swaps fix SOFR at a weighted average interest rate of 4.00% through the extended maturity date of January 2027.
(5) The interest rate swaps fix SOFR at a weighted average interest rate of 2.81% through the maturity date.
(6) The interest rate swap fixes SOFR at an interest rate of 4.01% through the maturity date.
Common Shares Repurchased
Our Board of Trustees has authorized the repurchase of up to $2.0 billion of our outstanding common shares. During the three and nine months ended September 30, 2025, we repurchased and retired 3.1 million and 26.4 million common shares for $62.9 million and $435.3 million, a weighted average purchase price per share of $20.21 and $16.46. During the three and nine months ended September 30, 2024, we repurchased and retired 3.1 million and 10.8 million common shares for $50.2 million and $168.1 million, a weighted average purchase price per share of $16.23 and $15.61. Since we began the share repurchase program through September 30, 2025, we have repurchased and retired 83.2 million common shares for $1.6 billion, a weighted average purchase price per share of $18.78.
During the fourth quarter of 2025, through October 24, 2025, we repurchased and retired 383,758 common shares for $7.9 million, a weighted average purchase price per share of $20.49, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.
Purchases under the program are made either in the open market or in privately negotiated transactions from time to time as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by us at our discretion and will be subject to economic and market conditions, share price, applicable legal requirements and other factors. The program may be suspended or discontinued at our discretion without prior notice.
Material Cash Requirements
Our material cash requirements for the next 12 months and beyond are to fund:
● normal recurring expenses;
● debt service and principal repayment obligations, including balloon payments on maturing mortgage loans — As of September 30, 2025, we had no debt scheduled to mature in 2025 and maturities totaling $365.0 million related to our consolidated entities scheduled to mature in 2026, of which $200.0 million has a one-year extension option;
● capital expenditures, including major renovations, tenant improvements and leasing costs — As of September 30, 2025, we had committed tenant-related obligations totaling $33.7 million;
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● development expenditures — As of September 30, 2025, we had one asset under construction, Valen, and are building a new amenity hub at 2011 Crystal Drive that together, based on our current plans and estimates, require an additional $26.1 million to complete, which we anticipate will be primarily expended over the next year;
● dividends to shareholders and distributions to holders of OP Units and LTIP Units — On October 23, 2025, our Board of Trustees declared a quarterly dividend of $0.175 per common share;
● possible common share repurchases — During the fourth quarter of 2025, through October 24, 2025, we repurchased and retired 383,758 common shares for $7.9 million; and
● possible acquisitions of properties, either directly or indirectly through the acquisition of equity interests.
We expect to satisfy these needs using one or more of the following:
● cash and cash equivalents — As of September 30, 2025, we had cash and cash equivalents of $64.4 million ;
● cash flows from operations;
● distributions from real estate ventures;
● borrowing capacity under our revolving credit facility — As of September 30, 2025, we had $585.2 million of undrawn capacity under our revolving credit facility;
● proceeds from financings, joint venture capital, asset sales and recapitalizations; and
● proceeds from the issuance of securities.
During the nine months ended September 30, 2025, there were no significant changes to the material cash requirements information presented in Item 7 of Part II of our Annual Report.
See additional information in the following pages under "Commitments and Contingencies."
Summary of Cash Flows
The following summary discussion of our cash flows is based on our statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows:
Nine Months Ended September 30,
2025
2024
(In thousands)
Net cash provided by operating activities
$
40,625
$
87,190
Net cash provided by investing activities
397,122
82,417
Net cash used in financing activities
(533,160)
(199,904)
Cash Flows for the Nine Months Ended September 30, 2025
Cash and cash equivalents, and restricted cash decreased $95.4 million to $87.8 million as of September 30, 2025, compared to $183.2 million as of December 31, 2024. This decrease resulted from $533.2 million of net cash used in financing activities, partially offset by $397.1 million of net cash provided by investing activities and $40.6 million of net cash provided by operating activities. Our outstanding debt was $2.5 billion and $2.6 billion as of September 30, 2025 and December 31, 2024.
Net cash provided by operating activities of $40.6 million comprised: (i) $63.8 million of net income (before $222.8 million of non-cash items and a $47.0 million gain on the sale of real estate) and (ii) $1.3 million of return on capital from unconsolidated real estate ventures, partially offset by (iii) $24.6 million of net change in operating assets and liabilities. Non-cash income adjustments of $222.8 million primarily include depreciation and amortization expense, impairment loss, share-based compensation expense, amortization of lease incentives and deferred rent.
Net cash provided by investing activities of $397.1 million primarily comprised: (i) $537.6 million of proceeds from the sale of real estate, partially offset by (ii) $92.2 million of development costs, construction in progress and real estate additions and (iii) $40.3 million primarily related to the acquisition of Tysons Dulles Plaza in May 2025.
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Net cash used in financing activities of $533.2 million primarily comprised: (i) $691.0 million of repayments on the revolving credit facility, (ii) $506.5 million of repayments of mortgage loans, (iii) $435.8 million of common shares repurchased and (iv) $38.1 million of dividends paid to common shareholders, partially offset by (v) $766.0 million of borrowings under the revolving credit facility, (vi) $281.4 million of borrowings under mortgage loans and (vii) $100.0 million of proceeds from the sale of a 40.0% noncontrolling interest in a real estate venture that owns West Half in May 2025.
Unconsolidated Real Estate Ventures
We consolidate entities in which we have a controlling interest or are the primary beneficiary in a variable interest entity. From time to time, we may have off-balance-sheet unconsolidated real estate ventures and other unconsolidated arrangements with varying structures.
As of September 30, 2025, we had investments in unconsolidated real estate ventures totaling $91.5 million. For these investments, we exercise significant influence over but do not control these entities and, therefore, account for these investments using the equity method of accounting. For a more complete description of our real estate ventures, see Note 4 to the financial statements.
From time to time, we (or ventures in which we have an ownership interest) have agreed, and may in the future agree with respect to unconsolidated real estate ventures, to (i) guarantee portions of the principal, interest and other amounts in connection with borrowings, (ii) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) in connection with borrowings or (iii) provide guarantees to lenders and other third parties for the completion and stabilization of development projects. We customarily have agreements with our outside venture partners whereby the partners agree to reimburse the real estate venture or us for their share of any payments made under certain of these guarantees. At times, we also have agreements with certain of our outside venture partners whereby we agree to either indemnify the partners and/or the associated ventures with respect to certain contingent liabilities associated with operating assets or to reimburse our partner for its share of any payments made by them under certain guarantees. Guarantees (excluding environmental) customarily terminate either upon the satisfaction of specified circumstances or repayment of the underlying debt. Amounts that we may be required to pay in future periods in relation to guarantees associated with budget overruns or operating losses are not estimable. As of September 30, 2025, we had no principal payment guarantees related to our unconsolidated real estate ventures.
Commitments and Contingencies
Insurance
We maintain general liability insurance with limits of $100.0 million per occurrence and in the aggregate, and property and rental value insurance coverage with limits of $1.0 billion per occurrence, with sub-limits for certain perils such as floods and earthquakes on each of our properties. We also maintain coverage, through our wholly owned captive insurance subsidiary, for a portion of the first loss on the above limits and for both conventional terrorist acts and for nuclear, biological, chemical or radiological terrorism events with limits of $2.0 billion per occurrence. These policies are partially reinsured by third-party insurance providers.
We will continue to monitor the state of the insurance market, and the scope and costs of coverage for acts of terrorism. We cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are responsible for deductibles and losses in excess of the insurance coverage, which could be material.
Our debt, consisting of mortgage loans secured by our properties, a revolving credit facility and term loans, contains customary covenants requiring adequate insurance coverage. Although we believe that we currently have adequate insurance coverage, we may not be able to obtain an equivalent amount of coverage at a reasonable cost in the future. If lenders insist on greater coverage than we can obtain, it could adversely affect our ability to finance or refinance our properties.
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Construction Commitments
As of September 30, 2025, we had one asset under construction, Valen, and are building a new amenity hub at 2011 Crystal Drive that together, based on our current plans and estimates, require an additional $26.1 million to complete, which we anticipate will be primarily expended over the next year.
Legal Proceedings
In November 2023, the District of Columbia filed a lawsuit in the Superior Court of the District of Columbia against RealPage, Inc., a provider of revenue management systems, numerous multifamily rental companies, and 14 owners and/or operators of multifamily housing in the District of Columbia, including JBG Associates, L.L.C., one of our subsidiaries, alleging that the defendants violated the District of Columbia Antitrust Act by unlawfully agreeing to use RealPage, Inc. revenue management systems and sharing sensitive data. The District of Columbia is seeking monetary damages, equitable relief, attorneys’ fees, interest and costs. While we intend to vigorously defend against this lawsuit, given the current stage of the District of Columbia’s lawsuit, we are unable to predict the outcome or estimate the amount of loss, if any, that may result from the lawsuit. While we do not believe that these proceedings will have a material adverse effect on our financial condition, we cannot give assurance that the proceedings will not have a material effect on our results of operations or cash flows in the event of a negative outcome.
We, along with multiple other parties, are named defendants in a lawsuit arising out of a condominium development project known as Wardman Tower in Washington, D.C. The lawsuit was filed by the Wardman Tower Residential Condominium Unit Owners Association in the Superior Court of the District of Columbia on November 25, 2020. The lawsuit seeks damages resulting primarily from alleged construction and design deficiencies, alleged misrepresentations and claims alleged under the D.C. Consumer Protection Procedures Act ("CPPA"). The lawsuit seeks $185.0 million in compensatory damages, plus treble damages related to the CPPA claims, and attorney’s fees and costs. The lawsuit has been scheduled for a bench trial, which is currently set to begin on November 10, 2025. The Wardman Tower project was designed and constructed by other parties and achieved substantial completion prior to our formation. We were not involved in any way with the project but one of our subsidiary entities, that is not a defendant in the litigation, served as the fee developer for the project owner. We deny liability for the claims asserted and will vigorously defend ourselves against the claims alleged in the litigation. However, no assurance can be given that the matter will be resolved favorably.
There are various other legal actions arising in the ordinary course of business. In our opinion, the outcome of such matters is not expected to have a material adverse effect on our financial position, results of operations or cash flows. Our accrual for loss contingencies relating to unresolved legal matters was included in "Other liabilities, net" in our balance sheets. Actual losses may differ materially from amounts recorded and the ultimate outcome of these legal proceedings is generally not yet determinable.
Other
As of September 30, 2025, we had committed tenant-related obligations totaling $33.7 million. The timing and amounts of payments for tenant-related obligations are uncertain and may only be due upon satisfactory performance of certain conditions.
As of September 30, 2025, we had unfunded capital commitments totaling $6.4 million related to our investments in real estate-focused technology companies and $3.4 million related to our investments in the WHI Impact Pool and the LEO Impact Housing Fund. See Note 18 to the financial statements for additional information.
With respect to borrowings of our consolidated entities, we may agree to (i) guarantee portions of the principal, interest and other amounts, (ii) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) or (iii) provide guarantees to lenders, tenants and other third parties for the completion and stabilization of development projects. As of September 30, 2025, we had no debt principal payment guarantees related to our consolidated real estate assets.
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Environmental Matters
Under various federal, state and local laws, ordinances and regulations, a current or former owner or operator of real estate may be liable for conducting or paying for the costs of the investigation, removal or remediation of certain hazardous or toxic substances or petroleum products on, under or from that real estate. These laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence or release of hazardous or toxic substances or petroleum products, and the liability may be joint and several. The costs of investigation, remediation or removal of these substances may be substantial and could exceed the value of the property, and the presence of these substances, or the failure to promptly remediate these substances, may adversely affect the owner's ability to sell, operate, or develop the real estate or to borrow using the real estate as collateral. In connection with the ownership and operation of our current and former assets, we may be potentially liable for these costs. The operations of current and former tenants at our assets have involved, or may have involved, the presence or use of hazardous substances or petroleum products or the generation of hazardous wastes, and indemnities in our lease agreements may not fully protect us from liability, if, for example, a tenant responsible for environmental noncompliance or contamination becomes insolvent. The release of these hazardous substances and wastes and petroleum products could result in us incurring liabilities to investigate or remediate any resulting contamination. The presence of contamination or the failure to remediate contamination at our properties may (i) expose us to third-party liability (e.g., for cleanup costs, natural resource damages, bodily injury or property damage), (ii) subject our properties to liens in favor of the government for damages and costs the government incurs in connection with the contamination, (iii) impose restrictions on the manner in which a property may be used or businesses may be operated, or (iv) materially adversely affect our ability to sell, lease or develop the real estate or to borrow using the real estate as collateral. In addition, our assets are exposed to the risk of contamination originating from other sources. While a property owner may not be responsible for remediating contamination that has migrated onsite from an identifiable and viable offsite source, the contaminant's presence can have adverse effects on operations and the redevelopment of our assets. To the extent we arrange for contaminated materials to be sent to other locations for treatment or disposal, we may be liable for the cleanup of those sites if they become contaminated, without regard to whether we complied with environmental laws in doing so.
Most of our assets have been subject, at some point, to environmental assessments that are intended to evaluate the environmental condition of the subject and surrounding assets. These environmental assessments generally have included a historical review, a public records review, a visual inspection of the site and surrounding assets, visual or historical evidence of underground storage tanks and other features, and the preparation and issuance of a written report. Soil, soil vapor and/or groundwater subsurface testing is conducted at our assets, when necessary, to further investigate any conditions identified by the initial assessment that could reasonably be expected to pose a material concern to the property or result in us incurring material environmental liabilities as a result of redevelopment. The tests may not, however, have included extensive sampling or subsurface investigations. In each case where the environmental assessments have identified conditions requiring remedial actions required by law, we have initiated appropriate actions. The environmental assessments have not revealed any material environmental contamination that we believe would have a material adverse effect on our overall business, financial condition or results of operations, or that have not been anticipated and remediated during site redevelopment as required by law. Nevertheless, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites or changes in cleanup requirements would not result in significant cost to us. As disclosed in Note 17 to the financial statements, environmental liabilities totaled $17.5 million as of September 30, 2025 and December 31, 2024, and are included in "Other liabilities, net" in our balance sheets.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.