What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-10 compared with 2026-05-05 · 231 added, 143 removed, 304 unchanged (55% of the section changed)

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Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements.

Forward-looking statements include but are not limited to our current expectations regarding the performance of our business, our financial results, our liquidity and capital resources, including the impacts and ultimate outcome of the Wardman Park litigation and our potential need to post bonds or other forms of surety to support our legal remedies in connection with such litigation.

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.

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, 2025 filed with the Securities and Exchange Commission on February 17, 2026 ("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 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, 2025 filed with the Securities and Exchange Commission ("SEC") on February 17, 2026 ("Annual Report"), as such factors may be updated from time to time in our periodic filings with the SEC, 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.

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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.

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.

Organization and Basis of Presentation

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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, 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 March 31, 2026 and December 31, 2025, and for the three months ended March 31, 2026 and 2025.

References to our balance sheets refer to our condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025.

References to our statements of operations refer to our condensed consolidated statements of operations for the three months ended March 31, 2026 and 2025.

References to our statements of cash flows refer to our condensed consolidated statements of cash flows for the three months ended March 31, 2026 and 2025.

References to "our share" refer to our ownership percentage of consolidated and unconsolidated assets in real estate ventures, but exclude our 33.5% subordinated interest in four commercial buildings, as well as the associated non-recourse mortgage loans, held through an unconsolidated real estate venture;

the interest and debt are excluded because our investment in the real estate venture is zero, we do not anticipate receiving any near-term cash flow distributions from the real estate venture, and we have not guaranteed its obligations or otherwise committed to providing financial support.

References to our financial statements refer to our unaudited condensed consolidated financial statements as of June 30, 2026 and December 31, 2025, and for the three and six months ended June 30, 2026 and 2025.

References to our balance sheets refer to our condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025.

References to our statements of operations refer to our condensed consolidated statements of operations for the three and six months ended June 30, 2026 and 2025.

References to our statements of cash flows refer to our condensed consolidated statements of cash flows for the six months ended June 30, 2026 and 2025.

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.

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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;

Our revenue 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.

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Our success is also subject to our ability to refinance existing debt with acceptable terms as it comes due.

As of March 31, 2026, our Operating Portfolio consisted of 38 operating assets comprising 15 multifamily assets totaling 6,519 units (6,333 units at our share), 22 commercial assets totaling 7.3 million square feet (6.9 million square feet at our share) and one wholly owned land asset for which we are the ground lessor.

Additionally, our development pipeline, which consists of owned and entitled land on which we have the potential to commence construction subject to completion of design and/or market conditions, totaled 4.6 million square feet (3.3 million square feet at our share) of estimated potential development density.

As of June 30, 2026, our Operating Portfolio consisted of 38 operating assets comprising 15 multifamily assets totaling 6,519 units (6,333 units at our share), 22 commercial assets totaling 7.3 million square feet (6.7 million square feet at our

share) and one wholly owned land asset for which we are the ground lessor.

Additionally, we had one under-construction multifamily asset with 195 units (59 units at our share), and our development pipeline, which consists of owned and entitled land on which we have the potential to commence construction subject to completion of design and/or market conditions, totaled 4.8 million square feet (3.5 million square feet at our share) of estimated potential development density.

Our development pipeline excludes unentitled land parcels and land parcels controlled through an option agreement.

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The repositioned asset brings to National Landing a large-scale externally managed meeting and conference facility, a coffee shop and all-day restaurant, an elevated wine bar and Italian restaurant, and an activated public lobby.

Our capital allocation strategy remains anchored in our core objective of maximizing long-term net asset value ("NAV") per share growth.

Our capital allocation strategy remains focused on enhancing long-term shareholder value and positioning our portfolio for sustained long-term net asset value ("NAV") per share growth.

Drawing on our deep expertise in mixed-use, urban infill real estate, we have consistently rotated across asset classes based on relative value, cost of capital and risk-adjusted return potential.

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We expect to fund growth opportunities through a combination of asset sales and private equity joint ventures.

During the three months ended March 31, 2026, we sold a development parcel for gross sales proceeds of $50.7 million.

In April 2026, we recapitalized Tysons Dulles Plaza, which follows through on our plan to attract private capital

partners to scale and diversify our distressed office investment strategy while also enhancing the efficiency of our platform with incremental fee revenue and potential carried interest income.

During the six months ended June 30, 2026, we sold a development parcel, and we sold a 70.0% interest in 2200 Crystal Drive to an unconsolidated real estate venture for total gross sales proceeds of $60.6 million, and we recapitalized Tysons Dulles Plaza by selling a 50.0% noncontrolling interest in a consolidated real estate venture.

These real estate ventures further our goal of attracting private capital partners to scale and diversify our distressed office investment strategy and fund the construction of multifamily assets in our development pipeline while also enhancing the efficiency of our platform with incremental fee revenue and potential carried interest income.

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 first quarter of 2026, we began to see improvements in our multifamily portfolio occupancy, which had experienced softness largely as a result of job losses primarily in the District of Columbia in 2025 due to federal government spending cuts and a hiring freeze.

Our same store multifamily portfolio occupancy was 92.0% as of March 31, 2026, an increase of 160 basis points as compared to December 31, 2025.

During the first quarter of 2026, effective rents, which represent the average change in rental rates versus expiring rental rates net of concessions, decreased by 10.5% for new leases and increased by 1.9% upon renewal while achieving a 62.4% renewal rate across our portfolio.

Our recently delivered assets, The Zoe and Valen, which were placed into service in 2025, were 47.4% leased as of March 31, 2026.

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 75.2% as of March 31, 2026, an increase of 10 basis points as compared to December 31, 2025.

In 2026, we began to see some modest improvement in our multifamily portfolio leasing, which had experienced softness largely as a result of job losses primarily in the District of Columbia in 2025 due to federal government spending cuts and a hiring freeze.

Our same store multifamily portfolio was 94.3% leased as of June 30, 2026, up 80 basis points as compared to March 31, 2026.

Our same store multifamily portfolio was 92.0% occupied as of June 30, 2026, flat as compared to March 31, 2026.

During the second quarter of 2026, effective rents, which represent the average change in rental rates versus expiring rental rates net of concessions, decreased by 9.5% for new leases and increased by 2.8% upon renewal while achieving a 55.9% renewal rate across our portfolio.

We continue to make progress leasing our recently completed assets — The Grace and Reva were 90.4% leased, and The Zoe and Valen were 58.8% leased as of June 30, 2026.

Our office portfolio was 75.4% occupied as of June 30, 2026, an increase of 20 basis points as compared to March 31, 2026.

During the three months ended June 30, 2026, we executed 151,000 square feet of office leases at our share.

Leasing activity in our National Landing portfolio continues to be driven primarily by office users who fall into three categories (i) tenants who require secure facility space;

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and (iii) defense-related tenants who have long resided in this submarket.

Our leasing efforts continue to focus on buildings with long-term potential, concentrating occupancy in areas of National Landing that are accessible via multi-modal transportation and that we have enhanced through our placemaking interventions, including the delivery of our new office amenity hub at 2011 Crystal Drive.

We expect to help foster a healthier long-term office market by repurposing older, underutilized office buildings for redevelopment or conversion to multifamily housing, hospitality and other complimentary uses that will support a vibrant mixed-use environment.

We have already executed on this strategy at 1900 Crystal Drive and 2001 Richmond Highway, two obsolete office buildings we demolished and redeveloped into our new multifamily assets currently in lease up — The Grace, Reva, The Zoe and Valen.

We have broadened this approach to four additional assets through adaptive reuse and conversion:

2100 Crystal Drive, which we entitled for conversion into a 345-key, dual-branded hotel and subsequently sold to a hotel developer;

2200 Crystal Drive, which we plan to convert into a 195-unit multifamily asset;

and 1800 and 1901 South Bell Street, which we are in the process of entitling for conversion into multifamily.

To support a healthier long-term office market in National Landing, we have reduced our office inventory by more than 25% since our formation by repurposing older, underutilized office buildings for redevelopment or conversion to multifamily housing, hospitality and other complementary uses that create a vibrant mixed-use environment.

At 1900 Crystal Drive and 2001 Richmond Highway, we demolished two obsolete office buildings and developed the sites into four new multifamily assets currently in lease up — The Grace, Reva, The Zoe, and Valen.

We redeveloped 1770 Crystal Drive, an aging office property, into a best-in-class office building that was 100.0% pre-leased to Amazon and remains fully leased to Amazon today.

More recently, we expanded this strategy through adaptive reuse and conversion of four obsolete office

We entitled 2100 Crystal Drive for conversion into a 345-key, dual-branded hotel before selling the asset to a hotel developer.

We recapitalized and commenced construction on the conversion of 2200 Crystal Drive into a 195-unit multifamily asset.

During the second quarter we received entitlement approval to convert 1800 and 1901 South Bell Street into multifamily, advancing the next phase of inventory reduction and repositioning within the submarket.

Our leasing efforts continue to focus on buildings with long-term potential, concentrating occupancy in areas of National Landing that are accessible via multi-modal transportation and that we have enhanced through our placemaking interventions, including the recent delivery of our new office amenity hub at 2011 Crystal Drive.

We have 4.8 million square feet (3.5 million square feet at our share) of estimated potential development density in our development pipeline and intend to seek joint venture capital to fund these developments as market conditions permit.

Operating Results

Key highlights for the three months ended March 31, 2026 included:

● net loss attributable to common shareholders of $18.7 million, or $0.32 per diluted common share, for the three months ended March 31, 2026 compared to $45.7 million, or $0.56 per diluted common share, for the three months ended March 31, 2025;

● third-party real estate services revenue, including reimbursements, of $17.2 million and $14.9 million for the three months ended March 31, 2026 and 2025;

● same store multifamily portfolio leased and occupied percentages (1) at our share of 93.5% and 92.0% as of March 31, 2026, compared to 91.8% and 90.4% as of December 31, 2025, and 95.4% and 94.0% as of March 31, 2025;

● operating commercial portfolio leased and occupied percentages at our share of 76.9% and 75.2% as of March 31, 2026 compared to 77.5% and 75.1% as of December 31, 2025, and 78.3% and 76.4% as of March 31, 2025;

● the leasing of 332,000 square feet of office leases at our share, at an initial rent (2) of $46.36 per square foot and a GAAP-basis weighted average rent per square foot (3) of $45.64;

● a decrease in same store (4) net operating income ("NOI") of 4.8% to $54.3 million for the three months ended March 31, 2026 compared to $57.1 million for the three months ended March 31, 2025.

Key highlights for the three and six months ended June 30, 2026 included:

● net loss attributable to common shareholders of $59.2 million, or $1.03 per diluted common share, for the three months ended June 30, 2026 compared to $19.2 million, or $0.29 per diluted common share, for the three months ended June 30, 2025.

Net loss attributable to common shareholders of $77.9 million, or $1.34 per diluted common share, for the six months ended June 30, 2026 compared to $65.0 million, or $0.87 per diluted common share, for the six months ended June 30, 2025;

● third-party real estate services revenue, including reimbursements, of $17.0 million and $34.2 million for the three and six months ended June 30, 2026, compared to $14.8 million and $29.7 million for the three and six months ended June 30, 2025;

● same store multifamily portfolio leased and occupied percentages (1) at our share of 94.3% and 92.0% as of June 30, 2026, compared to 93.5% and 92.0% as of March 31, 2026, and 94.7% and 92.8% as of June 30, 2025;

● operating commercial portfolio leased and occupied percentages at our share of 78.0% and 75.4% as of June 30, 2026 compared to 76.9% and 75.2% as of March 31, 2026, and 76.5% and 74.8% as of June 30, 2025;

● the leasing of 151,000 square feet of office leases at our share, at an initial rent (2) of $47.94 per square foot and a GAAP-basis weighted average rent per square foot (3) of $46.85 for the three months ended June 30, 2026, and the leasing of 483,000 square feet of office leases at our share, at an initial rent (2) of $46.85 per square foot and a GAAP-basis weighted average rent per square foot (3) of $46.02 for the six months ended June 30, 2026;

● a decrease in same store (4) net operating income ("NOI") of 4.0% to $54.8 million for the three months ended June 30, 2026 compared to $57.0 million for the three months ended June 30, 2025, and a decrease in same store (4) NOI of 4.4% to $109.1 million for the six months ended June 30, 2026 compared to $114.1 million for the six months ended June 30, 2025.

Clark Street - Residential and 900 W Street are excluded from leased and occupied percentages as they are operated as short-term rental properties.

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(4) Includes the results of the properties that are owned, operated and in-service for the entirety of both periods being compared, excluding assets for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared.

Additionally, investing and financing activity during the three months ended March 31, 2026 included:

● the sale of a development parcel.

Additionally, investing and financing activity during the six months ended June 30, 2026 included:

● the sale of a development parcel and an interest in 2200 Crystal Drive.

See Notes 3 and 4 to the financial statements for additional information;

● the formation of a consolidated real estate venture to recapitalize Tysons Dulles Plaza.

See Note 3 to the financial statements for additional information;

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● the investment of $43.1 million in development costs, construction in progress and real estate additions.

Activity subsequent to March 31, 2026 included:

● the formation of a consolidated real estate venture to recapitalize Tysons Dulles Plaza.

See Note 3 to the financial statements for additional information;

● the declaration of a quarterly dividend of $0.175 per common share, payable on May 28, 2026 to shareholders of record as of May 14, 2026;

● the repurchase and retirement of 182,184 common shares for $2.6 million, a weighted average purchase price per share of $14.36, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.

Activity subsequent to June 30, 2026 included:

● the declaration of a quarterly dividend of $0.175 per common share, payable on August 27, 2026 to shareholders of record as of August 13, 2026.

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 three months ended March 31, 2026.

In April 2026, we withheld payment under a ground lease option at a pre-development project with $44.0 million of capitalized costs, of which $17.1 million was recorded as part of the formation transaction in 2017, as the parties attempt to negotiate new ground lease terms.

As of March 31, 2026, we believe the project remains probable of future development.

Should our efforts to negotiate new ground lease terms prove unsuccessful or market conditions deteriorate, we may need to reassess the probability of future development and recoverability of the asset, which could result in impairment charges in future periods.

There have been no significant changes to our policies during the six months ended June 30, 2026.

Recent Accounting Pronouncements

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Results of Operations

In 2026, we sold an interest in 2200 Crystal Drive to an unconsolidated real estate venture.

In 2025, we sold 8001 Woodmont, WestEnd25 and The Batley.

We collectively refer to these assets as the "Disposed Properties" in the discussion below.

In 2025, we acquired Tysons Dulles Plaza and the remaining 45.0% interest in an unconsolidated real estate venture that owned 1101 17th Street.

In 2025, we acquired Tysons Dulles Plaza, which was recapitalized in April 2026 through the formation of a consolidated real estate venture, and the remaining 45.0% interest in an unconsolidated real estate venture that owned 1101 17th Street.

In 2025, we began leasing The Zoe and Valen, and in 2024, we began leasing The Grace and Reva.

Comparison of the Three Months Ended March 31, 2026 to 2025

The following table 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 March 31, 2026 compared to the same period in 2025:

Three Months Ended March 31,

Comparison of the Three Months Ended June 30, 2026 to 2025

Three Months Ended June 30,

(Dollars in thousands)

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Third-party real estate services

Interest expense

Gain (loss) on the sale of real estate, net

Impairment loss

Property rental revenue increased by approximately $123,000, or 0.1%, to $106.6 million in 2026 from $106.5 million in 2025.

The increase was primarily due to a $2.9 million increase in revenue from our commercial assets and a $1.1 million increase in other revenue, partially offset by a $3.9 million decrease in revenue from our multifamily assets.

The increase in revenue from our commercial assets was primarily due to a $3.5 million increase related to the acquisition of Tysons Dulles Plaza and the consolidation of 1101 17th Street.

The decrease in revenue from our multifamily assets was primarily

due to a $6.8 million decrease related to the Disposed Properties and higher concessions across the portfolio, partially offset by a $3.9 million increase related to the continued lease up of The Grace, Reva, The Zoe and Valen.

Third-party real estate services revenue, including reimbursements, increased by approximately $2.2 million, or 14.8%, to $17.0 million in 2026 from $14.8 million in 2025.

The increase was primarily due to a $2.1 million increase in reimbursement revenue.

Depreciation and amortization expense decreased by approximately $2.8 million, or 5.8%, to $44.8 million in 2026 from $47.6 million in 2025.

The decrease was primarily due to (i) a $2.6 million decrease related to the Disposed Properties, (ii) a $1.4 million decrease related to 2011 Crystal Drive primarily due to the acceleration of depreciation for certain assets associated with an early termination in 2025 and (iii) a $1.4 million decrease related to certain assets being either fully depreciated or written off in 2025.

The decrease in depreciation and amortization expense was partially offset by (iv) a $2.1 million increase as Valen was placed into service and (v) a $683,000 increase related to the acquisition of Tysons Dulles Plaza and the consolidation of 1101 17th Street.

Property operating expense increased by approximately $1.1 million, or 3.1%, to $36.0 million in 2026 from $34.9 million in 2025.

The increase was primarily due to a $1.3 million increase in other property operating expense and a $130,000 increase in property operating expense from our commercial assets, partially offset by a $351,000 decrease from our multifamily assets.

The increase in other property operating expense was primarily due to a $2.3 million increase associated with tenant-related construction management projects, partially offset by a $442,000 decrease related to sold development parcels.

The increase in property operating expense from our commercial assets was primarily due to a $1.6 million increase related to the acquisition of Tysons Dulles Plaza and the consolidation of 1101 17th Street, partially offset by a decrease associated with tenant-related construction management projects.

The decrease in property operating expense from our multifamily assets was primarily due to a $2.1 million decrease related to the Disposed Properties, partially offset by a $1.2 million increase related to the continued lease up of The Grace, Reva, The Zoe and Valen, and higher operating expenses primarily due to utilities.

Real estate taxes expense decreased by approximately $342,000, or 2.7%, to $12.3 million in 2026 from $12.7 million in 2025.

The decrease was primarily due to a $782,000 decrease related to the Disposed Properties and lower property tax assessments for certain assets, partially offset by a $553,000 increase related to The Zoe and Valen, which were placed into service, and a $279,000 increase related to the acquisition of Tysons Dulles Plaza and the consolidation of 1101 17th Street.

General and administrative expense:

corporate and other decreased by approximately $1.3 million, or 7.9%, to $15.4 million in 2026 from $16.7 million in 2025.

The decrease was primarily due to a decrease in professional fees and other overhead expenses, partially offset by a decrease in capitalized payroll and higher compensation expenses.

General and administrative expense:

third-party real estate services increased by approximately $2.8 million, or 20.7%, to $16.4 million in 2026 from $13.6 million in 2025.

The increase was primarily due to higher third-party reimbursable expenses of $2.1 million and higher compensation expenses.

Interest expense increased by approximately $458,000, or 1.3%, to $36.0 million in 2026 from $35.6 million in 2025.

The increase was primarily due to (i) a $2.0 million decrease in capitalized interest primarily related to Valen, which was placed into service, (ii) a $496,000 increase related to the consolidation of 1101 17th Street, (iii) a $367,000 increase due to draws on the mortgage loan related to The Zoe and Valen, and (iv) a $248,000 increase due to a new mortgage loan related to Tysons Dulles Plaza.

The increase in interest expense was partially offset by (v) a $978,000 decrease related to mortgage loans on the Disposed Properties, (vi) an $865,000 decrease related to variable rate mortgage loans and (vii) a $748,000 decrease due to lower interest expense primarily on our revolving credit facility.

Loss on the sale of real estate of $285,000 in 2026 was due to the sale of an interest in 2200 Crystal Drive.

Gain on the sale of real estate of $41.8 million in 2025 was primarily due to the sale of WestEnd25.

Impairment loss of $44.1 million in 2026 was related to the impairment of capitalized costs associated with a pre-development project whose future development was determined to no longer be probable as of June 30, 2026.

Impairment loss of $31.8 million in 2025 was related to The Batley, which was written down to its estimated fair value.

Comparison of the Six Months Ended June 30, 2026 to 2025

The following table 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 six months ended June 30, 2026 compared to the same period in 2025:

Six Months Ended June 30,

(Dollars in thousands)

Property rental revenue

Third-party real estate services revenue, including reimbursements

Depreciation and amortization expense

Property operating expense

Real estate taxes expense

General and administrative expense:

Corporate and other

Third-party real estate services

Transaction and other costs

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Gain on the sale of real estate, net

Loss on the extinguishment of debt, net

Impairment loss

* Not meaningful.

Property rental revenue increased by approximately $4.5 million, or 2.2%, to $212.5 million in 2026 from $208.0 million in 2025.

The increase was primarily due to a $15.6 million increase in revenue from our commercial assets, partially offset by a $9.2 million decrease in revenue from our multifamily assets and a $1.9 million decrease in other revenue.

The increase in revenue from our commercial assets was primarily due to a $5.7 million increase related to the acquisition of Tysons Dulles Plaza and the consolidation of 1101 17th Street, a $3.6 million increase related to 2011 Crystal Drive due to the acceleration of lease incentives and deferred rent associated with an early termination in 2025 and a $1.5 million increase in lease termination revenue.

The decrease in revenue from our multifamily assets was primarily due to a $9.1 million decrease related to the Disposed Properties and lower occupancy across the portfolio, partially offset by a $4.3 million increase related to the continued lease up of The Grace, Reva, The Zoe and Valen.

The increase in revenue from our commercial assets was primarily due to a $9.2 million increase related to the acquisition of Tysons Dulles Plaza and the consolidation of 1101 17th Street, and a $6.9 million increase related to 2011 Crystal Drive and 1550 Crystal Drive due to the acceleration of lease incentives and deferred rent, as well as the recognition of lease termination revenue, associated with early terminations.

The decrease in revenue from our multifamily assets was primarily due to a $16.0 million decrease related to the Disposed Properties and lower occupancy primarily at RiverHouse Apartments, partially offset by an $8.2 million increase related to the continued lease up of The Grace, Reva, The Zoe and Valen.

Third-party real estate services revenue, including reimbursements, increased by approximately $4.5 million, or 15.1%, to $34.2 million in 2026 from $29.7 million in 2025.

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The decrease was primarily due to (i) a $5.4 million decrease related to the Disposed Properties, (ii) a $3.5 million decrease related to certain assets being either fully depreciated or written off in 2025 and (iii) a $2.9 million decrease related to 2011 Crystal Drive primarily due to the acceleration of depreciation for certain assets associated with an early termination in 2025.

The decrease in depreciation and amortization expense was partially offset by (iv) a $2.3 million increase as The Zoe and Valen were placed into service and (v) a $1.5 million increase related to the acquisition of Tysons Dulles Plaza and the consolidation of 1101 17th Street.

The decrease in depreciation and amortization expense was partially offset by (iv) a $4.3 million increase related to The Zoe and Valen, which were placed into service, and (v) a $2.2 million increase related to the acquisition of Tysons Dulles Plaza and the consolidation of 1101 17th Street.

Property operating expense increased by approximately $3.9 million, or 5.7%, to $72.2 million in 2026 from $68.3 million in 2025.

The increase was primarily due to a $5.0 million increase in property operating expense from our commercial assets, partially offset by a $2.0 million decrease in other property operating expense and a $153,000 decrease from our multifamily assets.

The increase was primarily due to a $5.1 million increase in property operating expense from our commercial assets, partially offset by a $720,000 decrease in other property operating expense and a $505,000 decrease from our multifamily assets.

The increase in property operating expense from our commercial assets was primarily due to a $3.8 million increase related to the acquisition of Tysons Dulles Plaza and the consolidation of 1101 17th Street, and higher operating expenses primarily due to utilities.

The decrease in property operating expense from our multifamily assets was primarily due to a $2.6 million decrease related to the Disposed Properties, partially offset by a $1.3 million increase related to the continued lease up of The Grace, Reva, The Zoe and Valen, and higher utilities across the portfolio.

The decrease in other property operating expense was primarily due to a $688,000 decrease related to sold development parcels and a $388,000 decrease related to operating expenses for properties under development, partially offset by a $507,000 increase associated with tenant-related construction management projects.

The decrease in property operating expense from our multifamily assets was primarily due to a $4.7 million decrease related to the Disposed Properties, partially offset by a $3.1 million increase related to the continued lease up of The Grace, Reva, The Zoe and Valen, and higher operating expenses primarily due to utilities.

Real estate taxes expense decreased by approximately $468,000, or 1.9%, to $24.4 million in 2026 from $24.8 million in 2025.

The decrease was primarily due to an $896,000 decrease related to the Disposed Properties and lower property tax assessments for certain assets, partially offset by a $534,000 increase related to the acquisition of Tysons Dulles Plaza and the consolidation of 1101 17th Street, and a $524,000 increase related to The Zoe and Valen, which were placed into service.

The decrease was primarily due to a $1.6 million decrease related to the Disposed Properties and lower property tax assessments for certain assets, partially offset by a $1.1 million increase related to The Zoe and Valen, which were placed into service, and an $814,000 increase related to the acquisition of Tysons Dulles Plaza and the consolidation of 1101 17th Street.

General and administrative expense:

corporate and other decreased by approximately $270,000, or 1.7%, to $15.3 million in 2026 from $15.6 million in 2025.

The decrease was primarily due to lower compensation expenses.

corporate and other decreased by approximately $1.6 million, or 4.9%, to $30.7 million in 2026 from $32.3 million in 2025.

The decrease was primarily due to a decrease in professional fees and other overhead expenses and lower compensation expenses, partially offset by a decrease in capitalized payroll.

General and administrative expense:

third-party real estate services increased by approximately $927,000, or 5.8%, to $17.0 million in 2026 from $16.1 million in 2025.

The increase was primarily due to higher third-party reimbursable expenses, partially offset by lower overhead expenses and lower compensation expenses.

Transaction and other costs increased by approximately $7.9 million to $9.8 million in 2026 from $1.9 million in 2025.

The increase was primarily due to a charge of $9.5 million, net of expected insurance recoveries, related to a criminal fraud scheme involving AI-enabled employee impersonation, which led to fraudulently induced wire transfers.

third-party real estate services increased by approximately $3.7 million, or 12.6%, to $33.4 million in 2026 from $29.6 million in 2025.

The increase was primarily due to higher third-party reimbursable expenses of $4.4 million, partially offset by lower overhead expenses.

Transaction and other costs increased by approximately $5.8 million, or 121.3%, to $10.5 million in 2026 from $4.8 million in 2025.

The increase was primarily due to (i) a $9.5 million charge, net of insurance recoveries, related to a criminal fraud scheme involving AI-enabled employee impersonation, which led to fraudulently induced wire transfers, partially offset by (ii) a $2.0 million decrease in completed, potential and pursued transaction expenses, and (iii) a $1.4 million decrease in severance and other costs.

See Note 12 to the financial statements for additional information.

Interest expense increased by approximately $806,000, or 1.1%, to $71.6 million in 2026 from $70.8 million in 2025.

The increase was primarily due to (i) a $2.0 million decrease in capitalized interest primarily related to Valen, which was placed into service, (ii) a $1.8 million increase due to higher interest expense on our term loans and a higher outstanding balance on our revolving credit facility, (iii) a $509,000 increase related to the consolidation of 1101 17th Street and (iv) a $205,000 increase due to draws on the mortgage loan related to The Zoe and Valen.

The increase in interest expense was partially offset by (v) a $1.7 million decrease related to mortgage loans on the Disposed Properties, (vi) a $1.4 million decrease related to the RiverHouse Apartments refinancing in March 2025 and (vii) a $1.1 million decrease related to variable rate mortgage loans.

Gain on the sale of real estate of $21.1 million in 2026 was due to the sale of a development parcel.

Gain on the sale of real estate of $537,000 in 2025 was due to a gain related to prior year dispositions, partially offset by the loss on the sale of 8001 Woodmont.

Loss on the extinguishment of debt of $4.6 million in 2025 was due to the refinancing of the RiverHouse Apartments mortgage loan.

Impairment loss of $1.5 million in 2026 was related to a land asset, which was written down to its estimated fair value.

Impairment loss of $8.5 million in 2025 was related to a development parcel, which was written down to its estimated fair value.

The increase was primarily due to (i) a $4.0 million decrease in capitalized interest primarily related to Valen, which was placed into service, (ii) a $1.1 million increase due to higher interest expense on our term loans and revolving credit facility, (iii) a $1.0 million increase related to the consolidation of 1101 17th Street, (iv) a $572,000 increase due to draws on the mortgage loan related to The Zoe and Valen and (v) a $248,000 increase due to a new mortgage loan related to Tysons Dulles Plaza.

The increase in interest expense was partially offset by (vi) a $2.7 million decrease related to mortgage loans on the Disposed Properties, (vii) a $2.0 million decrease related to variable rate mortgage loans and (viii) a $1.4 million decrease related to the RiverHouse Apartments refinancing in March 2025.

Gain on the sale of real estate of $20.8 million in 2026 was primarily due to the sale of a development parcel.

Gain on the sale of real estate of $42.4 million in 2025 was primarily due to the sale of WestEnd25.

Impairment loss of $45.6 million in 2026 was primarily related to the impairment of capitalized costs associated with a pre-development project whose future development was determined to no longer be probable as of June 30, 2026.

Impairment loss of $40.3 million in 2025 was related to The Batley and a development parcel, which were written down to their estimated fair value.

Funds from Operations ("FFO")

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The following table reconciles net loss attributable to common shareholders, the most directly comparable GAAP measure, to FFO:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

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Net loss attributable to redeemable noncontrolling interests

Gain on the sale of real estate, net

Pro rata share of loss on the sale of unconsolidated real estate assets

Net income attributable to noncontrolling interests

(Gain) loss on the sale of real estate, net

Pro rata share of (gain) loss on the sale of unconsolidated real estate assets

Real estate depreciation and amortization

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Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures

FFO attributable to redeemable noncontrolling interests in consolidated real estate ventures

FFO attributable to noncontrolling interests in consolidated real estate ventures

FFO attributable to common limited partnership units ("OP Units")

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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 March 31, 2026, our same store pool decreased to 32 properties from 33 properties due to 1831/1861 Wiehle Avenue being taken out of service.

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.

During the three months ended June 30, 2026, our same store pool was unchanged at 32 properties.

During the six months ended June 30, 2026, our same store pool decreased to 32 properties from 33 properties due to 1831/1861 Wiehle Avenue being taken out of service.

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 $2.7 million, or 4.8%, to $54.3 million for the three months ended March 31, 2026 from $57.1 million for the same period in 2025.

The decrease was substantially attributable to (i) lower occupancy and higher utilities expense in our multifamily portfolio and (ii) higher utilities expense and increased rent abatement, partially offset by lower real estate tax expense in our commercial portfolio.

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 $2.3 million, or 4.0%, to $54.8 million for the three months ended June 30, 2026 from $57.0 million for the same period in 2025.

Same store NOI decreased $5.0 million, or 4.4%, to $109.1 million for the six months ended June 30, 2026 from $114.1 million for the same period in 2025.

The decreases were substantially attributable to (i) lower rental revenue and higher real estate taxes and utilities expense in our multifamily portfolio;

and (ii) lower rental revenue, partially offset by lower real estate taxes in our commercial portfolio.

The following table reconciles net loss attributable to common shareholders to NOI at our share and same store NOI at our share:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in thousands)

Net loss attributable to common shareholders

Net loss attributable to redeemable noncontrolling interests

Net income attributable to noncontrolling interests

Depreciation and amortization expense

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Interest expense

Loss on the extinguishment of debt, net

(Gain) loss on the extinguishment of debt, net

Impairment loss

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Third-party real estate services, including reimbursements revenue

Loss from unconsolidated real estate ventures, net

Income (loss) from unconsolidated real estate ventures, net

Interest and other income, net

Gain on the sale of real estate, net

Gain (loss) on the sale of real estate, net

NOI attributable to unconsolidated real estate ventures at our share

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The following table summarizes NOI at our share for our multifamily and commercial segments:

Three Months Ended March 31,

Three Months Ended June 30,

(Dollars in thousands, at our share)

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NOI from reportable segments

Comparison of the Three Months Ended March 31, 2026 to 2025

Six Months Ended June 30,

(Dollars in thousands, at our share)

Property rental revenue

Other property revenue

Total property revenue

Property expense:

Real estate taxes

Repairs and maintenance

Other property operating

Total property expense

NOI from reportable segments

Comparison of the Three Months Ended June 30, 2026 to 2025

Property revenue at our share decreased by $4.7 million, or 8.6%, to $49.6 million in 2026 from $54.2 million in 2025.

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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.

Property revenue at our share decreased by $1.8 million, or 3.1%, to $54.5 million in 2026 from $56.3 million in 2025.

The decrease in property revenue at our share was primarily due to a reduction in tenant-related construction management projects, partially offset by the acquisitions of Tysons Dulles Plaza and Dulles View, and the consolidation of 1101 17th Street.

NOI at our share decreased by $486,000, or 1.4%, to $34.5 million in 2026 from $35.0 million in 2025.

The decrease in NOI at our share was primarily due to higher utilities across the portfolio, partially offset by the acquisitions of Tysons Dulles Plaza and Dulles View, and the consolidation of 1101 17th Street.

Comparison of the Six Months Ended June 30, 2026 to 2025

Property revenue at our share decreased by $11.6 million, or 10.6%, to $97.9 million in 2026 from $109.4 million in 2025.

NOI at our share decreased by $11.5 million, or 17.9%, to $52.9 million in 2026 from $64.5 million in 2025.

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.

Property revenue at our share increased by $4.5 million, or 4.1%, to $114.2 million in 2026 from $109.7 million in 2025.

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The following table summarizes our third-party real estate services business at our share:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands, at our share)

Property management fees

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Net third-party real estate services, excluding reimbursements

Comparison of the Three Months Ended June 30, 2026 to 2025

Third-party real estate services revenue, excluding reimbursements, increased by $302,000, or 4.4%, to $7.2 million in 2026 from $6.9 million in 2025.

The increase was primarily due to a $497,000 increase in asset management fees, partially offset by a $286,000 decrease in leasing fees.

Third-party real estate services expenses, excluding reimbursements, decreased by $1.2 million, or 16.5%, to $6.0 million in 2026 from $7.2 million in 2025.

The decrease was primarily due to lower overhead expenses and lower compensation expenses.

The increase was primarily due to a $443,000 increase in asset management fees, a $326,000 increase in other service revenue and a $230,000 increase in property management fees, partially offset by a $761,000 decrease in leasing fees.

Third-party real estate services expenses, excluding reimbursements, increased by $849,000, or 15.7%, to $6.2 million in 2026 from $5.4 million in 2025.

The increase was primarily due to higher compensation expenses.

Comparison of the Six Months Ended June 30, 2026 to 2025

Third-party real estate services revenue, excluding reimbursements, increased by $426,000, or 3.2%, to $13.7 million in 2026 from $13.2 million in 2025.

The increase was primarily due to a $940,000 increase in asset management fees, a $410,000 increase in other service revenue and a $225,000 increase in property management fees, partially offset by a $1.0 million decrease in leasing fees.

Third-party real estate services expenses, excluding reimbursements, decreased by $348,000, or 2.8%, to $12.3 million in 2026 from $12.6 million in 2025.

The decrease was primarily due to lower overhead expenses, partially offset by higher compensation expenses.

Liquidity and Capital Resources

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We anticipate that cash flows from continuing operations and proceeds from financings, asset sales and recapitalizations, together with existing cash balances, will be adequate to fund our business operations, debt amortization, capital expenditures, any dividends to shareholders, and distributions to holders of OP Units and LTIP Units.

We anticipate that one or more bonds will be posted by the defendants in connection with the litigation discussed in Note 17 to the financial statements to stay enforcement of the judgment pending the expected appeal, and to the extent we are required to collateralize any portion of the bonds, it may impact our liquidity.

Mortgage Loans

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Interest Rate (1)

March 31, 2026

June 30, 2026

December 31, 2025

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Mortgage loans, net

(1) Weighted average effective interest rate as of March 31, 2026.

(1) Weighted average effective interest rate as of June 30, 2026.

(2) Includes variable rate mortgage loans with interest rate cap agreements.

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The interest rate cap strike is exclusive of the credit spreads associated with the mortgage loans.

As of March 31, 2026, one-month term Secured Overnight Financing Rate ("SOFR") was 3.66%.

As of June 30, 2026, one-month term Secured Overnight Financing Rate ("SOFR") was 3.65%.

(3) Includes variable rate mortgage loans with interest rates fixed by interest rate swap agreements.

(4) As of March 31, 2026 and December 31, 2025, includes a discount of $29.6 million related to the 1101 17 th Street mortgage loan.

As of March 31, 2026 and December 31, 2025, the net carrying value of real estate collateralizing our mortgage loans totaled $1.7 billion.

(4) As of June 30, 2026 and December 31, 2025, includes a discount of $29.6 million related to the 1101 17 th Street mortgage loan.

As of June 30, 2026 and December 31, 2025, the net carrying value of real estate collateralizing our mortgage loans totaled $1.7 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.

As of March 31, 2026 and December 31, 2025, we had various interest rate swap and cap agreements on certain mortgage loans with an aggregate notional value of $756.0 million.

As of June 30, 2026 and December 31, 2025, we had various interest rate swap and cap agreements on certain mortgage loans with an aggregate notional value of $756.0 million.

See Note 15 to the financial statements for additional information.

Revolving Credit Facility and Term Loans

As of March 31, 2026 and December 31, 2025, 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 2027, as extended 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.

As of June 30, 2026 and December 31, 2025, 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 2027, 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.

We have the option to increase the $750.0 million revolving credit facility or add term loans up to $500.0 million.

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Interest Rate (1)

March 31, 2026

June 30, 2026

December 31, 2025

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Term loans, net

(1) Effective interest rate as of March 31, 2026.

(1) Effective interest rate as of June 30, 2026.

The interest rate for our revolving credit facility excludes a 0.20% facility fee.

(2) As of March 31, 2026, daily SOFR was 3.68%.

As of March 31, 2026 and December 31, 2025, letters of credit totaling $4.8 million were outstanding under our revolving credit facility.

(3) As of March 31, 2026 and December 31, 2025, excludes $3.6 million and $4.4 million of net deferred financing costs related to our revolving credit facility that were included in "Other assets, net" in our balance sheets.

(2) As of June 30, 2026, daily SOFR was 3.68%.

As of June 30, 2026 and December 31, 2025, letters of credit totaling $13.8 million and $4.8 million were outstanding under our revolving credit facility.

(3) As of June 30, 2026 and December 31, 2025, excludes $2.9 million and $4.4 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 maturity date.

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Our Board of Trustees has authorized the repurchase of up to $2.0 billion of our outstanding common shares.

During the three months ended March 31, 2026, we repurchased and retired 1.6 million common shares for $25.4 million, a weighted average purchase price per share of $15.47.

During the three months ended March 31, 2025, we repurchased and retired 12.2 million common shares for $187.5 million, a weighted average purchase price per share of $15.43.

Since we began the

share repurchase program through March 31, 2026, we have repurchased and retired 85.3 million common shares for $1.6 billion, a weighted average purchase price per share of $18.73.

During the second quarter of 2026, through May 1, 2026, we repurchased and retired 182,184 common shares for $2.6 million, a weighted average purchase price per share of $14.36, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.

During the three and six months ended June 30, 2026, we repurchased and retired 208,565 and 1.8 million common shares for $3.0 million and $28.4 million, a weighted average purchase price per share of $14.37 and $15.35.

During the three and six months ended June 30, 2025, we repurchased and retired 11.2 million and 23.3 million common shares for $184.9 million and $372.4 million, a weighted average purchase price per share of $16.54 and $15.96.

Since we began the share repurchase program through June 30, 2026, we have repurchased and retired 85.5 million common shares for $1.6 billion, a weighted average purchase price per share of $18.72.

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 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.

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● normal recurring expenses;

● debt service and principal repayment obligations, including balloon payments on maturing mortgage loans — As of March 31, 2026, we had maturities totaling $863.8 million related to our consolidated entities and $35.0 million related to our unconsolidated real estate ventures at our share scheduled to mature in 2026 and 2027;

● capital expenditures, including major renovations, tenant improvements and leasing costs — As of March 31, 2026, we had committed tenant-related obligations totaling $37.6 million ($34.4 million related to our consolidated entities and $3.2 million related to our unconsolidated real estate ventures at our share);

● development expenditures — As of March 31, 2026, we have remaining commitments related to Valen, a recently completed multifamily asset, and an office amenity hub at 2011 Crystal Drive that together, based on our current plans and estimates, require an additional $3.8 million to complete, which we anticipate will be primarily expended in the second quarter of 2026;

● dividends to shareholders and distributions to holders of OP Units and LTIP Units — On April 30, 2026, our Board of Trustees declared a quarterly dividend of $0.175 per common share;

● possible common share repurchases — During the second quarter of 2026, through May 1, 2026, we repurchased and retired 182,184 common shares for $2.6 million;

● debt service and principal repayment obligations, including balloon payments on maturing mortgage loans — As of June 30, 2026, we had maturities totaling $846.1 million related to our consolidated entities and $35.0 million related to our unconsolidated real estate ventures at our share scheduled to mature in 2026 and 2027;

● capital expenditures, including major renovations, tenant improvements and leasing costs — As of June 30, 2026, we had committed tenant-related obligations totaling $39.8 million ($36.6 million related to our consolidated entities and $3.2 million related to our unconsolidated real estate ventures at our share);

● development expenditures — As of June 30, 2026, we have construction commitments related to 2200 Crystal Drive, an unconsolidated multifamily asset under construction, that, based on our current plans and estimates, require an additional $18.0 million at our share to complete over the next three years, which the real estate venture expects to finance with debt proceeds;

● dividends to shareholders and distributions to holders of OP Units and LTIP Units — On July 30, 2026, our Board of Trustees declared a quarterly dividend of $0.175 per common share;

● possible common share repurchases;

● 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 March 31, 2026, we had cash and cash equivalents of $79.8 million ;

● cash and cash equivalents — As of June 30, 2026, we had cash and cash equivalents of $74.8 million ;

● cash flows from operations;

● distributions from real estate ventures;

● borrowing capacity under our revolving credit facility — As of March 31, 2026, we had $515.2 million of undrawn capacity under our revolving credit facility;

● borrowing capacity under our revolving credit facility — As of June 30, 2026, we had $526.2 million of undrawn capacity under our revolving credit facility;

● proceeds from financings, joint venture capital, asset sales and recapitalizations;

● proceeds from the issuance of securities.

During the three months ended March 31, 2026, there were no significant changes to the material cash requirements information presented in Item 7 of Part II of our Annual Report.

During the six months ended June 30, 2026, 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."

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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:

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands)

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Net cash used in financing activities

Cash Flows for the Three Months Ended March 31, 2026

Cash and cash equivalents, and restricted cash increased $11.6 million to $114.9 million as of March 31, 2026, compared to $103.3 million as of December 31, 2025.

This increase resulted from $24.0 million of net cash provided by investing activities and $3.4 million of net cash provided by operating activities, partially offset by $15.8 million of net cash used in financing activities.

Cash Flows for the Six Months Ended June 30, 2026

Cash and cash equivalents, and restricted cash increased $4.8 million to $108.1 million as of June 30, 2026, compared to $103.3 million as of December 31, 2025.

This increase resulted from $19.2 million of net cash provided by operating

activities and $6.9 million of net cash provided by investing activities, partially offset by $21.4 million of net cash used in financing activities.

Net cash provided by operating activities of $19.2 million comprised:

(i) $33.7 million of net income (before $150.0 million of non-cash items and a $20.8 million gain on the sale of real estate) and (ii) $881,000 of return on capital from unconsolidated real estate ventures, partially offset by (iii) $15.3 million of net change in operating assets and liabilities.

Non-cash income adjustments of $56.8 million primarily include depreciation and amortization expense and share-based compensation expense.

Non-cash income adjustments of $150.0 million primarily include depreciation and amortization expense, impairment loss and share-based compensation expense.

Net cash provided by investing activities of $6.9 million primarily comprised:

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Net cash used in financing activities of $21.4 million primarily comprised:

(i) $35.0 million of repayments on the revolving credit facility, (ii) $25.4 million of common shares repurchased, (iii) $10.4 million of dividends paid to common shareholders and (iv) $3.4 million of distributions to redeemable noncontrolling interests, partially offset by (v) $60.0 million of borrowings under the revolving credit facility.

(i) $80.0 million of repayments on the revolving credit facility, (ii) $28.4 million of common shares repurchased, (iii) $20.7 million of dividends paid to common shareholders and (iv) $7.0 million of distributions to redeemable noncontrolling interests, partially offset by (v) $85.0 million of borrowings under the revolving credit facility, (vi) $24.4 million of borrowings under mortgage loans and (vii) $11.8 million of proceeds from the sale of a noncontrolling interest in Tysons Dulles Plaza.

Unconsolidated Real Estate Ventures

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From time to time, we may have off-balance-sheet unconsolidated real estate ventures and other unconsolidated arrangements with varying structures.

As of March 31, 2026, we had investments in unconsolidated real estate ventures totaling $105.3 million.

As of June 30, 2026, we had investments in unconsolidated real estate ventures totaling $115.6 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.

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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 March 31, 2026, we had no principal payment guarantees related to our unconsolidated real estate ventures.

As of June 30, 2026, we had no principal payment guarantees related to our unconsolidated real estate ventures.

Commitments and Contingencies

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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.

We maintain entity-level insurance with a coverage limit of $70.0 million and other insurance policies with specific coverages totaling over $50.0 million.

These policies are partially reinsured by third-party insurance providers.

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Construction Commitments

As of March 31, 2026, we have remaining commitments related to Valen, a recently completed multifamily asset, and an office amenity hub at 2011 Crystal Drive that together, based on our current plans and estimates, require an additional $3.8 million to complete, which we anticipate will be primarily expended in the second quarter of 2026.

As of June 30, 2026, we have construction commitments related to 2200 Crystal Drive, an unconsolidated multifamily asset under construction, that, based on our current plans and estimates, require an additional $18.0 million at our share to complete over the next three years, which the real estate venture expects to finance with debt proceeds.

Legal Proceedings

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The District of Columbia is seeking monetary damages, equitable relief, attorneys’ fees, interest and costs.

While we intend to vigorously defend against this lawsuit, we are unable to predict the outcome or estimate the amount of loss, if any, that may result from the lawsuit.

While we continue to vigorously defend against this 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.

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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.

The lawsuit seeks damages resulting primarily from alleged construction and design deficiencies, and alleged misrepresentations and omissions, including claims 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 attorneys' fees and costs.

The bench trial began on November 10, 2025 and concluded on March 5, 2026.

The court has not issued a ruling as of the date of this filing.

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 was recently made a defendant in the litigation, had previously entered into a project management agreement with the project owner.

We deny liability for the claims asserted and have vigorously defended ourselves against the claims alleged in the litigation.

However, no assurance can be given that the matter will be resolved favorably.

The Wardman Tower project was designed and constructed by other parties and was substantially complete prior to our formation.

We have never had any ownership interest in the project.

One of our subsidiary entities, which was only made a defendant in the litigation during the trial, had acted under a project management agreement with the project owner.

The lawsuit sought compensatory damages and asked that those damages be trebled under the CPPA, plus attorneys' fees.

The bench trial began on November 10, 2025, and the last witness testified on March 5, 2026.

On July 31, 2026, the Court entered judgment in favor of Wardman Tower Residential Condominium Unit Owners Association, found damages in the amount of $118.7 million, and ordered the defendants, which include us, to pay treble that amount, or approximately $356.1 million in damages, plus attorneys’ fees in an amount to be determined.

We believe the judgment against us, including its conclusion that we are liable for acts of employees of a subsidiary providing services under a project management agreement between the project owner and another subsidiary, is not supported by the facts of the case or applicable law regarding corporate separateness.

We believe there are substantial grounds to challenge both the liability findings against us and the size and trebling of the award, and intend to appeal the judgment promptly, and continue to defend ourselves vigorously in this matter.

The timing and success of any appeal is uncertain, and we cannot be certain of the ultimate outcome of the case.

In assessing whether we should accrue a liability in our financial statements as a result of the judgment, we considered various factors, including the legal and factual circumstances of the case, the trial record, applicable law, the views of legal counsel and the likelihood of successful appeals.

As a result of this review, we concluded that a loss attributable to us from this case is not probable at this time and, therefore, a liability has not been recorded with respect to this case as of June 30, 2026.

While we believe it is not probable a loss will occur, the existence of the judgement indicates that it is reasonably possible that a loss could occur.

The estimate of the possible range of loss is $0 to the $356.1 million judgment, plus

attorneys’ fees in an amount to be determined and post-judgment interest that will accrue during the appeal.

Additional developments in the lawsuit could affect these assumptions, and therefore, the amount of any accrual.

We anticipate that one or more bonds will be posted by the defendants to stay enforcement of the judgment pending the expected appeal, and to the extent we are required to collateralize any portion of the bonds, it may impact our liquidity.

There are various other legal actions arising in the ordinary course of business.

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Actual losses may differ materially from amounts recorded and the ultimate outcome of these legal proceedings is generally not yet determinable.

As of March 31, 2026, we had committed tenant-related obligations totaling $37.6 million ($34.4 million related to our consolidated entities and $3.2 million related to our unconsolidated real estate ventures at our share).

As of June 30, 2026, we had committed tenant-related obligations totaling $39.8 million ($36.6 million related to our consolidated entities and $3.2 million related to our unconsolidated real estate ventures at our share).

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 March 31, 2026, we had unfunded capital commitments totaling $5.8 million related to our investments in real estate-focused technology companies and $1.5 million related to our investments in the WHI Impact Pool and the LEO Impact Housing Fund.

As of June 30, 2026, we had unfunded capital commitments totaling $4.6 million related to our investments in real estate-focused technology companies and $3.1 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 March 31, 2026, we had no debt principal payment guarantees related to our consolidated real estate assets.

As of June 30, 2026, we had principal payment guarantees related to our consolidated real estate assets of $9.9 million.

Environmental Matters

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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.

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 $5.7 million and $17.5 million as of March 31, 2026 and December 31, 2025, and are included in "Other liabilities, net" in our balance sheets.

As disclosed in Note 17 to the financial statements, environmental liabilities totaled $5.8 million and $17.5 million as of June 30, 2026 and December 31, 2025, and were included in "Other liabilities, net" in our balance sheets.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis