What changed in this filing

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Item 1. Financial Statements

2020-11-03 compared with 2020-08-04 · 217 added, 208 removed, 643 unchanged (40% of the section changed)

3 unchanged sentences

(In thousands, except par value amounts)

June 30, 2020

September 30, 2020

December 31, 2019

10 unchanged sentences

Tenant and other receivables, net

Deferred rent receivable, net

Deferred rent receivable

Investments in unconsolidated real estate ventures

13 unchanged sentences

Common shares, $ 0.01 par value - 500,000 shares authorized;

133,708 and 134,148 shares issued and outstanding as of June 30, 2020 and December 31, 2019

132,438 and 134,148 shares issued and outstanding as of September 30, 2020 and December 31, 2019

Additional paid-in capital

8 unchanged sentences

(In thousands, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Property rental

13 unchanged sentences

Income (loss) from unconsolidated real estate ventures, net

Interest and other income, net

Interest and other income (loss), net

Interest expense

11 unchanged sentences

JBG SMITH PROPERTIES

Condensed Consolidated Statements of Comprehensive Loss

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

NET INCOME (LOSS)

OTHER COMPREHENSIVE LOSS:

OTHER COMPREHENSIVE INCOME (LOSS):

Change in fair value of derivative financial instruments

Reclassification of net (income) loss on derivative financial instruments from accumulated other comprehensive loss into interest expense

Other comprehensive loss

COMPREHENSIVE LOSS

Other comprehensive income (loss)

COMPREHENSIVE INCOME (LOSS)

Net (income) loss attributable to redeemable noncontrolling interests

Other comprehensive loss attributable to redeemable noncontrolling interests

COMPREHENSIVE LOSS ATTRIBUTABLE TO JBG SMITH PROPERTIES

Other comprehensive (income) loss attributable to redeemable noncontrolling interests

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO JBG SMITH PROPERTIES

See accompanying notes to the condensed consolidated financial statements (unaudited).

5 unchanged sentences

Comprehensive

BALANCE AS OF APRIL 1, 2020

BALANCE AS OF JULY 1, 2020

Net loss attributable to common shareholders and noncontrolling interests

5 unchanged sentences

Contributions from (distributions to) noncontrolling interests

Redeemable noncontrolling interests redemption value adjustment and other comprehensive loss allocation

Other comprehensive loss

BALANCE AS OF JUNE 30, 2020

BALANCE AS OF APRIL 1, 2019

Net loss attributable to common shareholders and noncontrolling interests

Common shares issued

Conversion of common limited partnership units to common shares

Redeemable noncontrolling interests redemption value adjustment and other comprehensive income allocation

Other comprehensive income

BALANCE AS OF SEPTEMBER 30, 2020

BALANCE AS OF JULY 1, 2019

Net income attributable to common shareholders and noncontrolling interests

Common shares issued pursuant to ESPP

4 unchanged sentences

Other comprehensive loss

BALANCE AS OF JUNE 30, 2019

BALANCE AS OF SEPTEMBER 30, 2019

See accompanying notes to the condensed consolidated financial statements (unaudited).

3 unchanged sentences

Noncontrolling

Comprehensive

Common Shares

Comprehensive

BALANCE AS OF JANUARY 1, 2020

Net income attributable to common shareholders and noncontrolling interests

Net loss attributable to common shareholders and noncontrolling interests

Conversion of common limited partnership units to common shares

6 unchanged sentences

Other comprehensive loss

BALANCE AS OF JUNE 30, 2020

BALANCE AS OF SEPTEMBER 30, 2020

BALANCE AS OF JANUARY 1, 2019

8 unchanged sentences

Other comprehensive loss

BALANCE AS OF JUNE 30, 2019

BALANCE AS OF SEPTEMBER 30, 2019

See accompanying notes to the condensed consolidated financial statements (unaudited).

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

OPERATING ACTIVITIES:

Net income (loss)

Adjustments to reconcile net income to net cash provided by operating activities:

7 unchanged sentences

Gain on sale of real estate

Net unrealized loss (gain) on ineffective derivative financial instruments

Losses on operating lease and other receivables

9 unchanged sentences

Development costs, construction in progress and real estate additions

Deposits for real estate acquisitions

Deposits for real estate and other acquisitions

Proceeds from sale of real estate

1 unchanged sentence

Investments in unconsolidated real estate ventures

Net cash provided by (used in) investing activities

Net cash used in investing activities

FINANCING ACTIVITIES:

37 unchanged sentences

JBG SMITH's portfolio reflects its longstanding strategy of owning and operating assets within Metro-served submarkets in the Washington, D.C.

metropolitan area that have high barriers to entry and key urban amenities, including being within walking distance of a Metro station.

metropolitan area that have high barriers to entry and key urban amenities, including National Landing where it serves as the exclusive developer for Amazon’s new headquarters.

Substantially all of JBG SMITH's assets are held by, and its operations are conducted through, JBG SMITH Properties LP ("JBG SMITH LP"), its operating partnership.

As of June 30, 2020, JBG SMITH, as its sole general partner, controlled JBG SMITH LP and owned 90.4 % of its common limited partnership units ("OP Units").

As of September 30, 2020, JBG SMITH, as its sole general partner, controlled JBG SMITH LP and owned 90.4 % of its common limited partnership units ("OP Units").

JBG SMITH is hereinafter referred to as "we,"

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The Separation and the Combination are collectively referred to as the "Formation Transaction."

As of June 30, 2020, our Operating Portfolio consisted of 63 operating assets comprising 43 commercial assets totaling 13.3 million square feet ( 11.2 million square feet at our share) and 20 multifamily assets totaling 7,367 units ( 5,583 units at our share).

Additionally, we have (i) three assets under construction comprising one wholly owned commercial asset totaling 274,000 square feet and two multifamily assets totaling 755 units ( 577 units at our share);

and (ii) 35 future development assets totaling approximately 19.4 million square feet ( 16.6 million square feet at our share) of estimated potential development density.

Our revenues are derived primarily from leases with commercial and multifamily tenants, which include fixed rents and reimbursements from tenants for certain expenses such as real estate taxes, property operating expenses, and repairs and maintenance.

In addition, our third-party asset management and real estate services business provides fee-based real estate services to third parties, the Washington Housing Initiative ("WHI"), Amazon.com ("Amazon") and the legacy funds formerly organized by JBG (the "JBG Legacy Funds").

As of September 30, 2020, our Operating Portfolio consisted of 64 operating assets comprising 43 commercial assets totaling 13.3 million square feet ( 11.2 million square feet at our share) and 21 multifamily assets totaling 7,800 units ( 5,999 units at our share).

Additionally, we have (i) two under-construction assets comprising one wholly owned commercial asset totaling 274,000 square feet and one multifamily asset totaling 322 units ( 161 units at our share);

(ii) 10 wholly owned near-term development assets totaling 5.6 million square feet of estimated potential development density;

and (iii) 28 future development assets totaling 14.2 million square feet ( 11.5 million square feet at our share) of estimated potential development density.

We derive our revenues primarily from leases with commercial and multifamily tenants, which include fixed and percentage rents, and reimbursements from tenants for certain expenses such as real estate taxes, property operating expenses, and repairs and maintenance.

In addition, our third-party asset management and real estate services business provides fee-based real estate services to third parties, the Washington Housing Initiative ("WHI"), Amazon.com, Inc.

("Amazon") and the legacy funds formerly organized by JBG (the "JBG Legacy Funds").

Basis of Presentation

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All intercompany transactions and balances have been eliminated.

The results of operations for the three and six months ended June 30, 2020 and 2019 are not necessarily indicative of the results that may be expected for a full year.

The results of operations for the three and nine months ended September 30, 2020 and 2019 are not necessarily indicative of the results that may be expected for a full year.

These condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission.

The accompanying condensed consolidated financial statements include the accounts of JBG SMITH and our wholly owned subsidiaries and those other entities, including JBG SMITH LP, in which we have a controlling financial interest, including where we have been determined to be the primary beneficiary of a variable interest entity ("VIE").

See Note 5 for additional information on our VIEs.

The portions of the equity and net income (loss) of consolidated subsidiaries that are not

attributable to JBG SMITH are presented separately as amounts attributable to noncontrolling interests in our condensed consolidated financial statements.

References to our financial statements refer to our condensed consolidated financial statements as of June 30, 2020 and December 31, 2019, and for the three and six months ended June 30, 2020 and 2019.

References to our balance sheets refer to our condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019.

References to our statements of operations refer to our condensed consolidated statements of operations for the three and six months ended June 30, 2020 and 2019.

References to our statements of comprehensive loss refer to our condensed consolidated statements of comprehensive loss for the three and six months ended June 30, 2020 and 2019.

References to our statements of cash flows refer to our condensed consolidated statements of cash flows for the six months ended June 30, 2020 and 2019.

The accompanying condensed consolidated financial statements include our accounts and those of our wholly owned subsidiaries and other entities, including JBG SMITH LP, in which we have a controlling financial interest.

See Note 5 for additional information on our variable interest entities ("VIEs").

The portions of the equity and net income (loss) of

consolidated subsidiaries that are not attributable to JBG SMITH are presented separately as amounts attributable to noncontrolling interests in our condensed consolidated financial statements.

References to our financial statements refer to our condensed consolidated financial statements as of September 30, 2020 and December 31, 2019, and for the three and nine months ended September 30, 2020 and 2019.

References to our balance sheets refer to our condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019.

References to our statements of operations refer to our condensed consolidated statements of operations for the three and nine months ended September 30, 2020 and 2019.

References to our statements of comprehensive income (loss) refer to our condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2020 and 2019.

References to our statements of cash flows refer to our condensed consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019.

We have elected to be taxed as a REIT under sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code").

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As such, we are subject to federal, state and local taxes on the income from these activities.

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) (P.L.

116-136) that was enacted on March 27, 2020 includes several significant tax provisions that could impact us and our taxable REIT subsidiaries ("TRSs").

The Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") that was enacted on March 27, 2020 includes several significant tax provisions that could impact us and our taxable REIT subsidiaries ("TRSs").

These changes include:

2 unchanged sentences

● an increase of the business interest limitation under Section 163(j) of the Code from 30% to 50% for taxable years beginning in 2019 and 2020, and the addition of an election by taxpayers to use their 2019 adjusted taxable income as their adjusted taxable income in 2020 for purposes of applying the limitation;

● a “technical correction” amending Section 168(e)(3)(E) of the Code to add “qualified improvement property” to “15-year property” and assigning a class life of 20-years under Section 168(g)(3)(B) of the Code to qualified improvement property under Section 168(e)(3)(E)(vii) of the Code .

During the six months ended June 30, 2020, as a result of the CARES Act, we made adjustments to the net deferred tax liability amounts, which relate to “qualified improvement property” owned by our TRSs.

technical correction "

amending Section 168(e)(3)(E) of the Code to add "qualified improvement property"

to "15-year property"

and assigning a class life of 20-years under Section 168(g)(3)(B) of the Code to qualified improvement property under Section 168(e)(3)(E)(vii) of the Code .

During the nine months ended September 30, 2020, as a result of the CARES Act, we made adjustments to the net deferred tax liability amounts, which relate to "qualified improvement property"

owned by our TRSs.

Summary of Significant Accounting Policies

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Due to the current pandemic of the novel coronavirus, or COVID-19, commencing in March 2020, authorities in jurisdictions where our properties are located issued stay-at-home orders and restrictions on travel and permitted businesses operations.

The effects of COVID-19 have most significantly impacted the operations of many of our retail tenants, which generated approximately 7 % of our revenue for the year ended December 31, 2019, our commercial parking revenue and our interest in the operations of the Crystal City Marriott and The Marriott Wardman Park hotels.

The extent to which the COVID-19 pandemic impacts us and our tenants will depend on future developments, which are highly uncertain.

The extent and duration of the stay-at-home orders and other effects of COVID-19 on us and our tenants will affect estimates used in the preparation of the underlying cash flows used in assessing our long-lived assets for impairment and the assessment of the collectability of receivables from tenants, including deferred rent receivables.

The effects of COVID-19 have most significantly impacted the operations of many of our retail tenants, which generated approximately 7 % of our revenue for the year ended December 31, 2019, revenue from our multifamily assets, our commercial parking revenue and our interest in the operations of the Crystal City Marriott and The Marriott Wardman Park hotels.

The extent to which COVID-19 impacts us and our tenants will depend on future developments, which are highly uncertain.

At this time, there are no outstanding stay-at-home orders in jurisdictions where our properties are located;

however, the extent and duration of restrictions on travel and permitted businesses operations and other effects of COVID-19 on us and our tenants have affected estimates used in the preparation of the underlying cash flows used in assessing our long-lived assets for impairment and the assessment of the collectability of receivables from tenants, including deferred rent receivables.

We have made what we believe to be appropriate accounting estimates based on the facts and circumstances available as of the reporting date.

2 unchanged sentences

Reference Rate Reform

In March 2020, the FASB issued Accounting Standards Update 2020-04, Reference Rate Reform ("Topic 848").

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2020-04, Reference Rate Reform ("Topic 848").

Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

The guidance in Topic 848 is optional and may be elected over the period March 12, 2020 through December 31, 2022 as reference rate reform activities occur.

During the six months ended June 30, 2020, we elected to apply the hedge accounting expedients related to (i) the assertion that our hedged forecasted transactions remain probable and (ii) the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

During the nine months ended September 30, 2020, we elected to apply the hedge accounting expedients related to (i) the assertion that our hedged forecasted transactions remain probable and (ii) the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

Application of these expedients preserves the presentation of our derivatives, which will be consistent with our past presentation.

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COVID-19 Lease Modification Accounting Relief

Due to the business disruptions and challenges severely affecting the global economy caused by the COVID-19 pandemic, we have provided rent deferrals and other lease concessions to certain of our tenants.

In April 2020, the Financial Accounting Standards Board ("FASB") issued a Staff Q&A that allows lessors to elect not to evaluate whether lease-related relief provided to mitigate the economic effects of COVID-19 is a lease modification under Accounting Standards Codification Topic 842, Leases ("Topic 842") if certain criteria are met.

This election allows us to bypass a lease-by-lease analysis, and instead choose to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances.

Due to the business disruptions and challenges severely affecting the global economy caused by COVID-19, we have provided rent deferrals and other lease concessions to certain tenants.

In April 2020, the FASB issued a Staff Q&A that allows lessors to elect not to evaluate whether lease-related relief provided to mitigate the economic effects of COVID-19 is a lease modification under Accounting Standards Codification Topic 842, Leases ("Topic 842") if certain criteria are met.

This election allows us to bypass a lease-by-lease analysis, and instead choose whether to apply the lease modification accounting framework, with such election applied consistently to leases with similar characteristics and circumstances.

We have elected to apply the lease modification policy relief and have accounted for lease-related relief provided to mitigate the economic effects of COVID-19 as lease modifications under Topic 842, regardless of whether the right to such relief was embedded within the terms of the lessee’s lease.

During the three months ended June 30, 2020, we entered into rent deferral agreements with certain of our tenants, many of which were placed on the cash basis of accounting, resulting in the deferral to future periods of $ 1.2 million of rent that had been contractually due in the second quarter.

We are in the process of negotiating additional rent deferrals and other lease concessions with some of our tenants.

During the three and six months ended June 30, 2020, we recorded $ 3.6 million and $ 4.7 million of credit losses against billed rent receivables and $ 2.0 million and $ 3.6 million against deferred (straight-line) rent receivables due to the effects of COVID-19 related to certain of our tenants, primarily our retail tenants, that are unable to pay rent while businesses are closed or not operating at full capacity.

During the three months ended June 30, 2020, we also recorded $ 2.4 million of reserves against receivables from one of our parking operators that filed for bankruptcy protection.

Additionally, in connection with the preparation and review of our second quarter 2020 financial statements, we determined that our investment in the venture that owns The Marriott Wardman Park hotel was impaired due to a decline in the fair value of the underlying asset and recorded an impairment charge of $ 6.5 million, reducing the net book value of our investment to zero (see Note 4 for additional information).

During the three and nine months ended September 30, 2020, we entered into rent deferral agreements with certain tenants, many of which were placed on the cash basis of accounting, resulting in the deferral to future periods of $ 1.2 million and $ 2.4 million of rent that had been contractually due in the second and third quarters.

We are in the process of negotiating additional rent deferrals and other lease concessions with some of our tenants, which have been considered when establishing credit losses against billed and deferred rent receivables.

During the three and nine months ended September 30, 2020, we recorded $ 3.2 million and $ 7.9 million of credit losses against billed rent receivables and $ 935,000 and $ 4.5 million against deferred (straight-line) rent receivables.

These losses are due to the effects of COVID-19 primarily on retail tenants, that are unable to pay rent while businesses are closed or not operating at full capacity.

During the second quarter of 2020, we also recorded $ 2.4 million of reserves against receivables from a parking operator that filed for bankruptcy protection.

Additionally, during the second quarter of 2020, we determined that our investment in the venture that owns The Marriott Wardman Park hotel was impaired due to a decline in the fair value of the underlying asset and recorded an impairment charge of $ 6.5 million (see Note 4 for additional information).

Disposition and Assets Held for Sale

The following is a summary of disposition activity for the six months ended June 30, 2020:

The following is a summary of disposition activity for the nine months ended September 30, 2020:

Date Disposed

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Total square feet represents potential development density approved by Arlington County.

In June 2020, we recognized a loss of $ 3.0 million from the sale of 11333 Woodglen Drive/NoBe II Land/Woodglen ("Woodglen") by our unconsolidated real estate venture with Landmark.

In June 2020, we recognized a loss of $ 3.0 million from the sale of 11333 Woodglen Drive/NoBe II Land/Woodglen ("Woodglen") by our unconsolidated real estate venture with Landmark Partners (“Landmark”).

See Note 4 for additional information.

Assets Held for Sale

As of June 30, 2020 and December 31, 2019, we had certain real estate properties that were classified as held for sale.

As of September 30, 2020 and December 31, 2019, certain real estate properties were classified as held for sale.

The amounts included in "Assets held for sale"

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(In thousands)

June 30, 2020

September 30, 2020

Pen Place (2)

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(2) In March 2019, we entered into an agreement for the sale of Pen Place for $ 149.9 million, subject to customary closing conditions.

The sale of Pen Place to Amazon is expected to close in 2021.

We expect the sale of Pen Place to Amazon to close in 2021.

(3) As noted above, we sold Metropolitan Park to Amazon in January 2020 .

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Real Estate Venture Partners

June 30, 2020

September 30, 2020

December 31, 2019

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5.0 % - 64.0 %

Canadian Pension Plan Investment Board ("CPPIB") (2)

Berkshire Group

Brandywine Realty Trust

Pacific Life Insurance Company (3)

Total investments in unconsolidated real estate ventures

(1) Ownership interests as of June 30, 2020.

(1) Ownership interests as of September 30, 2020.

We have multiple investments with certain venture partners with varying ownership interests.

(2) In April 2020, our real estate venture with CPPIB entered into a mortgage loan with a maximum principal balance of $ 160.0 million collateralized by 1900 N Street.

The venture initially received proceeds from the mortgage loan of $ 134.5 million, with an additional $ 25.5 million available in the future.

During the three months ended June 30, 2020, we received a distribution of $ 70.8 million from the venture.

(3) In connection with the preparation and review of our second quarter 2020 financial statements, we determined that our investment in the venture that owns The Marriott Wardman Park hotel was impaired due to a decline in the fair value of the underlying asset and recorded an impairment charge of $ 6.5 million, reducing the net book value of our investment to zero .

The venture initially received proceeds of $ 134.5 million from the mortgage loan, with an additional $ 25.5 million available in the future.

During the second quarter of 2020, we received a distribution of $ 70.8 million from the venture.

(3) During the second quarter of 2020 , we determined that our investment in the venture that owns The Marriott Wardman Park hotel was impaired due to a decline in the fair value of the underlying asset and recorded an impairment charge of $ 6.5 million, which reduced the net book value of our investment to zero , and we suspended equity loss recognition for the venture after June 30, 2020.

On October 1, 2020, we transferred our interest in this venture to our venture partner.

In June 2020, our unconsolidated real estate venture with Landmark sold Woodglen, commercial and future development assets located in Rockville, Maryland, for $ 17.8 million.

In connection with the sale, we recognized our proportionate share of the loss from the sale of $ 3.0 million, which is included in "Income (loss) from unconsolidated real estate ventures, net"

in our statements of operations for the three and six months ended June 30, 2020.

We recognized our proportionate share of the loss from the sale of $ 3.0 million, which is included in "Income (loss) from unconsolidated real estate ventures, net"

in our statements of operations for the nine months ended September 30, 2020.

Additionally, in connection with the sale, our unconsolidated real estate venture repaid the related mortgage payable of $ 12.2 million.

We provide leasing, property management and other real estate services to our unconsolidated real estate ventures.

We recognized revenue, including expense reimbursements, of $ 6.3 million and $ 13.0 million for the three and six months ended June 30, 2020, and $ 7.8 million and $ 13.7 million for the three and six months ended June 30, 2019 for such services.

We recognized revenue, including expense reimbursements, of $ 6.3 million and $ 19.3 million for the three and nine months ended September 30, 2020, and $ 7.2 million and $ 21.0 million for the three and nine months ended September 30, 2019 for such services.

Reconsideration events could cause us to consolidate these unconsolidated real estate ventures in the future or deconsolidate a consolidated entity.

We evaluate reconsideration events as we become aware of them.

Reconsideration events include additional contributions being required by each partner and each partner's ability to make those contributions.

Reconsideration events include amendments to real estate venture agreements and changes in our partner's ability to make contributions to the venture.

Under certain circumstances, we may purchase our partner's interest.

Our unconsolidated real estate ventures are held in entities which appear sufficiently stable to meet their capital requirements;

however, if market conditions worsen and our partners are unable to meet their commitments, we may have to consolidate these entities

The following is a summary of the debt of our unconsolidated real estate ventures:

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Interest Rate (1)

June 30, 2020

September 30, 2020

December 31, 2019

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Unconsolidated real estate ventures - mortgages payable, net (4) (5)

(1) Weighted average effective interest rate as of June 30, 2020.

(1) Weighted average effective interest rate as of September 30, 2020.

(2) Includes variable rate mortgages payable with interest rate cap agreements.

(3) Includes variable rate mortgages payable with interest rates fixed by interest rate swap agreements.

(4) Excludes a $ 129.0 million mortgage loan collateralized by The Marriott Wardman Park hotel as of September 30, 2020.

On October 1, 2020, we transferred our interest in the related venture to our venture partner.

(5) See Note 17 for additional information on guarantees of the debt of certain of our unconsolidated real estate ventures.

The following is a summary of the financial information for our unconsolidated real estate ventures:

June 30, 2020

September 30, 2020

December 31, 2019

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Total liabilities and equity

Three Months Ended June 30,

Six Months Ended June 30,

(1) Excludes all assets and liabilities related to The Marriott Wardman Park hotel as of September 30, 2020.

On October 1, 2020, we transferred our interest in the related venture to our venture partner.

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

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Operating income (loss) (2)

(1) Includes the loss from the sale of Woodglen of $ 16.4 million recognized by our unconsolidated real estate venture with Landmark during the three and six months ended June 30, 2020.

(1) Excludes information related to the venture that owns The Marriott Wardman Park hotel for the three months ended September 30, 2020 as we suspended equity loss recognition for the venture after June 30, 2020.

On October 1, 2020, we transferred our interest in the related venture to our venture partner.

(2) Includes the loss from the sale of Woodglen of $ 16.4 million recognized by our unconsolidated real estate venture with Landmark during the nine months ended September 30, 2020.

Variable Interest Entities

We hold various interests in entities deemed to be VIEs, which we evaluate at acquisition, formation, after a change in the ownership agreement or after a change in the real estate venture's economics to determine if the VIEs should be consolidated in our financial statements or should no longer be considered a VIE.

Certain criteria we assess in determining whether the VIEs should be consolidated relate to our control over significant business activities, our voting rights and the noncontrolling interest kick-out rights, which ultimately dictate whether we are the primary beneficiary of the VIE.

Certain criteria we assess in determining whether we are the primary beneficiary of the VIE and, therefore, should consolidate the VIE include our control over significant business activities, our voting rights and the noncontrolling interest kick-out rights.

Unconsolidated VIEs

As of June 30, 2020 and December 31, 2019, we had interests in entities deemed to be VIEs that are in the development stage and do not hold sufficient equity at risk or conduct substantially all their operations on behalf of an investor with disproportionately few voting rights.

As of September 30, 2020 and December 31, 2019, we had interests in entities deemed to be VIEs that are in the development stage and do not hold sufficient equity at risk, or conduct substantially all their operations on behalf of an investor with disproportionately few voting rights.

Although we are engaged to act as the managing partner in charge of day-to-day operations of these investees, we are not the primary beneficiary of these VIEs, as we do not hold unilateral power over activities that, when taken together, most significantly impact the respective VIE's performance.

We account for our investment in these entities under the equity method.

As of June 30, 2020 and December 31, 2019, the net carrying amounts of our investment in these entities were $ 164.6 million and $ 242.9 million, which are included in "Investments in unconsolidated real estate ventures"

As of September 30, 2020 and December 31, 2019, the net carrying amounts of our investment in these entities were $ 116.0 million and $ 242.9 million, which are included in "Investments in unconsolidated real estate ventures"

in our balance sheets.

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Consolidated VIEs

We consolidate a VIE when we control the significant business activities of an entity.

An entity is a VIE because it is in the development stage and/or does not hold sufficient equity at risk.

We are the primary beneficiary of a VIE because the noncontrolling interest holder does not have substantive kick-out or participating rights, and we control the significant business activities.

JBG SMITH LP is our sole consolidated VIE.

We hold 90.4 % of the limited partnership interest in JBG SMITH LP, act as the general partner and exercise full responsibility, discretion and control over its day-to-day management.

We consolidate VIEs in which we control the significant business activities.

These entities are VIEs because they are in the development stage and/or do not hold sufficient equity at risk.

We are the primary beneficiaries of these VIEs because the noncontrolling interest holders do not have substantive kick-out or participating rights, and we control the significant business activities.

The noncontrolling interests of JBG SMITH LP do not have substantive liquidation rights, substantive kick-out rights without cause, or substantive participating rights that could be exercised by a simple majority of noncontrolling interest limited partners (including by such a limited partner unilaterally).

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Legal ownership of this entity was transferred to us by the third-party intermediary when the like-kind exchange agreement was completed with the sale of Metropolitan Park in January 2020.

During the three months ended June 30, 2020, an under construction multifamily asset at 965 Florida Avenue in Washington, D.C.

that we own through a consolidated real estate venture, which we deemed to be a VIE, began placing units into service.

As of June 30, 2020, we no longer deemed the venture to be a VIE since it was determined to have sufficient equity to finance its activities without additional support.

During the second quarter of 2020, an under-construction multifamily asset at The Wren (formerly referred to as 965 Florida Avenue) in Washington, D.C.

that we own through a consolidated real estate venture, which we had deemed to be a VIE, began placing units into service and commenced operations.

We no longer deemed the real estate venture to be a VIE because it was determined to have sufficient equity to finance its activities without additional support.

See Note 9 for additional information.

As of June 30, 2020, we had no VIEs other than JBG SMITH LP.

As of December 31, 2019, excluding JBG SMITH LP, the two VIEs described above:

(i) had aggregate total assets and liabilities of $ 136.8 million and $ 11.8 million;

and (ii) only the assets of the respective VIE can be used to settle obligations of that VIE, and their creditors have no recourse to our wholly owned assets.

Other Assets, Net

The following is a summary of other assets, net:

June 30, 2020

September 30, 2020

December 31, 2019

2 unchanged sentences

Lease intangible assets, net

Management and leasing contracts, net

Other identified intangible assets, net

Operating lease right-of-use assets, net

Finance lease right-of-use assets (1)

Finance lease right-of-use assets, net (1)

Prepaid expenses

Deferred financing costs on credit facility, net

Derivative agreements, at fair value

Total other assets, net

(1) Related to an amendment of the ground lease for 1730 M Street executed during the six months ended June 30, 2020.

(1) Related to an amendment of the ground lease for 1730 M Street executed during the nine months ended September 30, 2020.

The amendment extended the expiration date of the lease from April 2061 to December 2118, and resulted in its reclassification from an operating to a finance lease.

(2) Includes deposits totaling $ 25.3 million with the Federal Communications Commission in connection with the acquisition of wireless spectrum licenses.

Mortgages Payable

2 unchanged sentences

Interest Rate (1)

June 30, 2020

September 30, 2020

December 31, 2019

5 unchanged sentences

Mortgages payable, net

(1) Weighted average effective interest rate as of June 30, 2020.

(1) Weighted average effective interest rate as of September 30, 2020.

(2) Includes variable rate mortgages payable with interest rate cap agreements.

(3) Includes variable rate mortgages payable with interest rates fixed by interest rate swap agreements.

As of June 30, 2020 and December 31, 2019, the net carrying value of real estate collateralizing our mortgages payable totaled $ 1.6 billion and $ 1.4 billion.

As of September 30, 2020 and December 31, 2019, the net carrying value of real estate collateralizing our mortgages payable totaled $ 2.0 billion and $ 1.4 billion.

Our mortgages payable 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.

Certain of our mortgages payable are recourse to us.

Certain mortgages payable are recourse to us.

See Note 17 for additional information.

During the six months ended June 30, 2020, we entered into a mortgage loan with a principal balance of $ 175.0 million collateralized by 4747 Bethesda Avenue, and refinanced the mortgage loan collateralized by RTC-West, increasing the principal balance by $ 20.2 million.

In July 2020, we entered into three separate mortgage loans with an aggregate principal balance of $ 385.0 million, collateralized by The Bartlett, 1221 Van Street and 220 20th Street.

As of June 30, 2020 and December 31, 2019, we had various interest rate swap and cap agreements on certain of our mortgages payable with an aggregate notional value of $ 945.4 million and $ 867.6 million.

During the nine months ended September 30, 2020, we entered into four separate mortgage loans with an aggregate principal balance of $ 560.0 million, collateralized by 4747 Bethesda Avenue, The Bartlett, 1221 Van Street and 220 20th Street, and refinanced the mortgage loan collateralized by RTC-West, increasing the principal balance by $ 20.2 million.

As of September 30, 2020 and December 31, 2019, we had various interest rate swap and cap agreements on certain mortgages payable with an aggregate notional value of $ 1.3 billion and $ 867.6 million.

See Note 15 for additional information.

Credit Facility

As of June 30, 2020, our $ 1.4 billion credit facility consisted of a $ 1.0 billion revolving credit facility maturing in January 2025, a $ 200.0 million unsecured term loan ("Tranche A-1 Term Loan") maturing in January 2023, and a $ 200.0 million unsecured term loan ("Tranche A-2 Term Loan") maturing in July 2024.

As of September 30, 2020, our $ 1.4 billion credit facility consisted of a $ 1.0 billion revolving credit facility maturing in January 2025, a $ 200.0 million unsecured term loan ("Tranche A-1 Term Loan") maturing in January 2023 and a $ 200.0 million unsecured term loan ("Tranche A-2 Term Loan") maturing in July 2024.

The following is a summary of amounts outstanding under the credit facility:

Interest Rate (1)

June 30, 2020

September 30, 2020

December 31, 2019

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Unsecured term loans, net

(1) Effective interest rate as of June 30, 2020.

(2) As of both June 30, 2020 and December 31, 2019, letters of credit with an aggregate face amount of $ 1.5 million were outstanding under our revolving credit facility.

(3) As of June 30, 2020 and December 31, 2019, net deferred financing costs related to our revolving credit facility totaling $ 7.5 million and $ 3.1 million were included in "Other assets, net."

(1) Effective interest rate as of September 30, 2020.

(2) As of both September 30, 2020 and December 31, 2019, letters of credit with an aggregate face amount of $ 1.5 million were outstanding under our revolving credit facility.

(3) As of September 30, 2020 and December 31, 2019, net deferred financing costs related to our revolving credit facility totaling $ 7.1 million and $ 3.1 million were included in "Other assets, net."

(4) The interest rate for our revolving credit facility excludes a 0.15 % facility fee.

In July 2020, we repaid the $ 500.0 million outstanding on our revolving credit facility.

(5) As of both June 30, 2020 and December 31, 2019, $ 100.0 million of the outstanding balance was fixed by interest rate swap agreements.

As of June 30, 2020, the interest rate swaps mature concurrently with the term loan and provide a weighted average interest rate of 1.14 % .

As of June 30, 2020, we had a forward-starting swap that became effective on July 20, 2020 with a notional value of $ 100.0 million, which effectively converted the variable interest rate applicable to the remaining $ 100.0 million drawn in April 2020 under our Tranche A-1 Loan to a fixed interest rate upon the effective date of the swap.

(6) As of June 30, 2020 and December 31, 2019, $ 200.0 million and $ 137.6 million of the outstanding balance was fixed by interest rate swap agreements.

As of June 30, 2020, the interest rate swaps mature concurrently with the term loan and provide a weighted average interest rate of 1.34 % .

(5) As of September 30, 2020 and December 31, 2019, $ 200.0 million and $ 100.0 million of the outstanding balance was fixed by interest rate swap agreements.

The interest rate swaps mature concurrently with the term loan and provide a weighted average interest rate of 1.39 % .

(6) As of September 30, 2020 and December 31, 2019, $ 200.0 million and $ 137.6 million of the outstanding balance was fixed by interest rate swap agreements.

As of September 30, 2020, the interest rate swaps mature concurrently with the term loan and provide a weighted average interest rate of 1.34 % .

Other Liabilities, Net

The following is a summary of other liabilities, net:

June 30, 2020

September 30, 2020

December 31, 2019

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Total other liabilities, net

(1) Related to an amendment of the ground lease for 1730 M Street executed during the six months ended June 30, 2020.

(1) Related to an amendment of the ground lease for 1730 M Street executed during the nine months ended September 30, 2020.

The amendment extended the expiration date of the lease from April 2061 to December 2118, and resulted in its reclassification from an operating to a finance lease.

Redeemable Noncontrolling Interests

A portion of the OP Units held by persons other than JBG SMITH are redeemable for cash or, at our election, our common shares, subject to certain limitations.

During the six months ended June 30, 2020 and 2019, unitholders redeemed 942,940 and 1.7 million OP Units, which we elected to redeem for an equivalent number of our common shares.

As of June 30, 2020, outstanding OP Units totaled 14.2 million, representing a 9.6 % ownership interest in JBG SMITH LP.

On our balance sheets, our OP Units and certain vested LTIPs are presented at the higher of their redemption value or their carrying value, with such adjustments recognized in "Additional paid-in capital."

OP Units held by persons other than JBG SMITH are redeemable for cash or, at our election, our common shares, subject to certain limitations.

During the nine months ended September 30, 2020 and 2019, unitholders redeemed 1.1 million and 1.7 million OP Units, which we elected to redeem for an equivalent number of our common shares.

As of September 30, 2020, outstanding OP Units totaled 14.0 million, representing a 9.6 % ownership interest in JBG SMITH LP.

On our balance sheets, our OP Units and certain vested long-term incentive partnership units ("LTIP Units") are presented at the higher of their redemption value or their carrying value, with such adjustments recognized in "Additional paid-in capital."

Redemption value per OP Unit is equivalent to the market value of one of our common shares at the end of the period.

In July 2020, unitholders redeemed 81,069 OP Units, which we elected to redeem for an equivalent number of our common shares.

In October 2020, unitholders redeemed 26,538 OP Units, which we elected to redeem for an equivalent number of our common shares.

Consolidated Real Estate Venture

We are a partner in a real estate venture that owns an under construction multifamily asset located at 965 Florida Avenue in Washington, D.C.

Pursuant to the terms of the real estate venture agreement, we will fund all capital contributions until our ownership interest reaches a maximum of 97.0 %.

Our partner can redeem its interest for cash two , but no later than

seven years , after delivery.

As of June 30, 2020, we held a 95.7 % ownership interest in the real estate venture, and approximately 40 % of the units had been placed in service.

We are a partner in a consolidated real estate venture that owns a multifamily asset located in Washington, D.C.

Pursuant to the terms of the real estate venture agreement, we will fund all capital contributions until our ownership interest reaches

a maximum of 97.0 %.

Our partner can redeem its interest for cash under certain conditions.

As of September 30, 2020, we held a 95.9 % ownership interest in the real estate venture.

The following is a summary of the activity of redeemable noncontrolling interests:

Three Months Ended June 30,

Three Months Ended September 30,

(In thousands)

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OP Unit redemptions

Long-term incentive partnership units ("LTIP Units") issued in lieu of cash bonuses (1)

Net income (loss) attributable to redeemable noncontrolling interests

Other comprehensive loss

Contributions (distributions)

Other comprehensive income (loss)

Distributions

Share-based compensation expense

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Balance as of the end of the period

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands)

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Net income (loss) attributable to redeemable noncontrolling interests

Other comprehensive loss

Contributions (distributions)

Other comprehensive income (loss)

Distributions

Share-based compensation expense

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The following is a summary of property rental revenue from our non-cancellable leases:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

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Share-Based Payments

LTIP and Time-Based LTIP Units

During the six months ended June 30, 2020, we granted 381,504 LTIP Units with time-based vesting requirements ("Time-Based LTIP Units") to management and other employees with a weighted average grant-date fair value of $ 38.52 per unit that vest over four years , 25.0 % per year, subject to continued employment.

LTIP Units and Time-Based LTIP Units

During the nine months ended September 30, 2020, we granted 381,504 LTIP Units with time-based vesting requirements ("Time-Based LTIP Units") to management and other employees with a weighted average grant-date fair value of $ 38.52

per unit that vest over four years , 25.0 % per year, subject to continued employment.

Compensation expense for these units is being recognized over a four-year period.

The aggregate grant-date fair value of these Time-Based LTIP Units granted during the six months ended June 30, 2020 was $ 14.7 million, valued using Monte Carlo simulations.

During the six months ended June 30, 2020, we granted 90,094 fully vested LTIP Units, with a grant-date fair value of $ 40.13 per unit, to certain executives who elected to receive all or a portion of their cash bonus paid in 2020, related to 2019 service, as LTIP Units.

The aggregate grant-date fair value of these Time-Based LTIP Units granted during the nine months ended September 30, 2020 was $ 14.7 million, valued using Monte Carlo simulations.

During the nine months ended September 30, 2020, we granted 90,094 fully vested LTIP Units, with a grant-date fair value of $ 40.13 per unit, to certain executives who elected to receive all or a portion of their cash bonus paid in 2020, related to 2019 service, as LTIP Units.

Compensation expense totaling $ 3.6 million for these LTIP Units was recognized in 2019.

In April 2020, as part of their annual compensation, we granted a total of 54,607 fully vested LTIP Units to certain of our trustees with an aggregate grant-date fair value of $ 1.5 million.

The following is a summary of the significant assumptions used to value the LTIP and Time-Based LTIP Units:

The following is a summary of the significant assumptions used to value the LTIP Units and Time-Based LTIP Units:

Expected volatility

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Post-grant restriction periods

Performance-Based LTIP

During the six months ended June 30, 2020, we granted 593,100 LTIP Units with performance-based vesting requirements ("Performance-Based LTIP Units") to management and other employees with a weighted average grant-date fair value of $ 18.67 per unit.

Performance-Based LTIP Units

During the nine months ended September 30, 2020, we granted 593,100 LTIP Units with performance-based vesting requirements ("Performance-Based LTIP Units") to management and other employees with a weighted average grant-date fair value of $ 18.67 per unit.

Our Performance-Based LTIP Units have a three-year performance period.

50 % of any Performance-Based LTIP Units that are earned vest at the end of the three-year performance period and the remaining 50 % on the fourth anniversary of the date of grant, subject to continued employment.

If, however, the Performance-Based LTIP Units do not achieve a positive absolute total shareholder return (“TSR”) at the end of the three-year performance period, but satisfy the relative performance criteria thereof, 50 % of the units that otherwise would have been retained will be forfeited, and the remaining 50 % will be earned and vest if and when we achieve a positive TSR during the succeeding seven years , measured at the end of each quarter.

The aggregate grant-date fair value of the Performance-Based LTIP Units granted during the six months ended June 30, 2020, was $ 11.1 million, valued using Monte Carlo simulations.

50 % of any Performance-Based LTIP Units that are earned vest at the end of the three-year performance period and the remaining 50 % vest on the fourth anniversary of the date of grant, subject to continued employment.

If, however, the Performance-Based LTIP Units do not achieve a positive absolute total shareholder return ("TSR") at the end of the three-year performance period, but satisfy the relative performance criteria thereof, 50 % of the units that otherwise could have been earned will be forfeited, and the remaining 50 % will be earned and vest if and when we achieve a positive TSR during the succeeding seven years , measured at the end of each quarter.

The aggregate grant-date fair value of the Performance-Based LTIP Units granted during the nine months ended September 30, 2020 was $ 11.1 million, valued using Monte Carlo simulations.

Compensation expense for the Performance-Based LTIP Units is being recognized over a four-year period.

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Risk-free interest rate

Pursuant to the ESPP, employees purchased 35,307 common shares for $ 887,000 during the six months ended June 30, 2020.

During the three months ended September 30, 2020, the three-year performance period ended for the Performance-Based LTIP Units granted on August 1, 2017.

While our relative TSR over the three-year performance period would have allowed these grants to be fully earned, because our TSR over the three-year performance period was negative, 50 % of the units ( 289,765 units) were forfeited, and the remaining 50 % will be earned and vest if and when we achieve a positive TSR during the succeeding seven years .

Pursuant to the ESPP, employees purchased 35,307 common shares for $ 887,000 during the nine months ended September 30, 2020.

The following is a summary of the significant assumptions used to value the ESPP common shares using the Black-Scholes model:

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The following is a summary of share-based compensation expense:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

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(1) Primarily comprising compensation expense for certain executives who have elected to receive all or a portion of any cash bonus that may be paid in the subsequent year related to past service in the form of fully vested LTIP Units and related to our ESPP.

(2) Represents share-based compensation expense for LTIP Units and OP Units subject to post-Combination employment obligations.

(2) Represents share-based compensation expense for LTIP Units and OP Units issued in the Formation Transaction, which are subject to post-Combination employment obligations.

(3) Represents equity awards issued related to our successful pursuit of Amazon's additional headquarters in National Landing.

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in the accompanying statements of operations.

As of June 30, 2020, we had $ 74.0 million of total unrecognized compensation expense related to unvested share-based payment arrangements, which is expected to be recognized over a weighted average period of 2.0 years.

As of September 30, 2020, we had $ 59.7 million of total unrecognized compensation expense related to unvested share-based payment arrangements, which is expected to be recognized over a weighted average period of 1.9 years.

Transaction and Other Costs

The following is a summary of transaction and other costs:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

Demolition costs (1)

Formation Transaction and integration costs (2)

Integration and severance costs

Completed, potential and pursued transaction expenses

Transaction and other costs

(1) Related to 1900 Crystal Drive.

(2) Includes integration and severance costs.

(1) Related to 223 23 rd Street and 2300 Crystal Drive for the three and nine months ended September 30, 2020.

Related to 1900 Crystal Drive for the three and nine months ended September 30, 2019.

(2) Represents a charitable commitment to the Washington Housing Conservancy, a non-profit that acquires and owns affordable workforce housing in the Washington D.C.

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The following is a summary of interest expense:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

1 unchanged sentence

Amortization of deferred financing costs

Net unrealized (gain) loss on derivative financial

Interest expense related to finance lease right-of-use assets

Net unrealized loss on derivative financial

instruments not designated as cash flow hedges

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In March 2020, our Board of Trustees authorized the repurchase of up to $ 500 million of our outstanding common shares.

During the six months ended June 30, 2020, we repurchased and retired 1.4 million common shares for $ 41.2 million, an average purchase price of $ 29.01 per share.

During the three and nine months ended September 30, 2020, we repurchased and retired 1.4 million and 2.9 million common shares for $ 38.4 million and $ 79.6 million, an average purchase price of $ 26.64 and $ 27.82 per share.

Earnings Per Common Share

The following is a summary of the calculation of basic and diluted earnings per common share and a reconciliation of the amounts of net income (loss) available to common shareholders used in calculating basic and diluted earnings per common share to net income (loss):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands, except per share amounts)

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Earnings (loss) per common share:

The effect of the redemption of OP Units and Time-Based LTIP Units that were outstanding as of June 30, 2020 and 2019 is excluded in the computation of diluted earnings per common share as the assumed exchange of such units for common shares on a one-for-one basis was antidilutive (the assumed redemption of these units would have no impact on the determination of diluted earnings per share).

Since OP Units and Time-Based LTIP Units, which are held by noncontrolling interests, are attributed gains at an identical proportion to the common shareholders, the gains attributable and their equivalent weighted average OP Unit and Time-Based LTIP Unit impact are excluded from net income (loss) available to common shareholders and from the weighted average number of common shares outstanding in calculating diluted earnings per common share.

Performance-Based LTIP Units, Special Performance-Based LTIP Units and Formation Awards, which totaled 5.2 million and 5.1 million for the three and six months ended June 30, 2020, and 4.7 million for the three and six

months ended June 30, 2019, were excluded from the calculation of diluted earnings per common share as they were antidilutive, but potentially could be dilutive in the future.

The effect of the redemption of OP Units and Time-Based LTIP Units that were outstanding as of September 30, 2020 and 2019 is excluded in the computation of diluted earnings per common share as the assumed exchange of such units for common shares on a one-for-one basis was antidilutive (the assumed redemption of these units would have no impact on the determination of diluted earnings per share).

available to common shareholders and from the weighted average number of common shares outstanding in calculating diluted earnings per common share.

Performance-Based LTIP Units, Special Performance-Based LTIP Units and Formation Awards, which totaled 4.4 million and 4.9 million for the three and nine months ended September 30, 2020, and 4.7 million for the three and nine months ended September 30, 2019, were excluded from the calculation of diluted earnings per common share as they were antidilutive, but potentially could be dilutive in the future.

Fair Value Measurements

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We do not enter into derivative financial instruments for speculative purposes.

As of June 30, 2020 and December 31, 2019, we had various derivative financial instruments consisting of interest rate swap and cap agreements that are measured at fair value on a recurring basis.

The net unrealized loss on our derivative financial instruments designated as cash flow hedges was $ 52.6 million and $ 17.7 million as of June 30, 2020 and December 31, 2019 and was recorded in "Accumulated other comprehensive loss"

As of September 30, 2020 and December 31, 2019, we had various derivative financial instruments consisting of interest rate swap and cap agreements that are measured at fair value on a recurring basis.

The net unrealized loss on our derivative financial instruments designated as cash flow hedges was $ 49.1 million and $ 17.7 million as of September 30, 2020 and December 31, 2019 and was recorded in "Accumulated other comprehensive loss"

in our balance sheets, of which a portion was reclassified to "Redeemable noncontrolling interests."

11 unchanged sentences

(In thousands)

June 30, 2020

September 30, 2020

Derivative financial instruments designated as cash flow hedges:

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current credit spreads to evaluate the likelihood of default.

However, as of June 30, 2020 and December 31, 2019, the significance of the impact of the credit valuation adjustments on the overall valuation of the derivative financial instruments was assessed, and it was determined that these adjustments were not significant to the overall valuation of the derivative financial instruments.

However, as of September 30, 2020 and December 31, 2019, the significance of the impact of the credit valuation adjustments on the overall valuation of the derivative financial instruments was assessed, and it was determined that these adjustments were not significant to the overall valuation of the derivative financial instruments.

As a result, it was determined that the derivative financial instruments in their entirety should be classified in Level 2 of the fair value hierarchy.

The net unrealized gains and losses included in "Other comprehensive loss"

in our statements of comprehensive loss for the three and six months ended June 30, 2020 and 2019 were attributable to the net change in unrealized gains or losses related to the interest rate swaps that were outstanding during those periods, none of which were reported in our statements of operations as the interest rate swaps were documented and qualified as hedging instruments.

in our statements of comprehensive income (loss) for the three and nine months ended September 30, 2020 and 2019 were attributable to the net change in unrealized gains or losses related to the interest rate swaps that were outstanding during those periods, none of which were reported in our statements of operations as the interest rate swaps were documented and qualified as hedging instruments.

Financial Assets and Liabilities Not Measured at Fair Value

As of June 30, 2020 and December 31, 2019, all financial instruments and liabilities were reflected in our balance sheets at amounts which, in our estimation, reasonably approximated their fair values, except for the following:

June 30, 2020

As of September 30, 2020 and December 31, 2019, all financial instruments and liabilities were reflected in our balance sheets at amounts which, in our estimation, reasonably approximated their fair values, except for the following:

September 30, 2020

December 31, 2019

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therefore, each of our individual properties is a separate operating segment.

We defined our reportable segments to be aligned with our method of internal reporting and the way our Chief Executive Officer, who is also our Chief Operating Decision Maker ("CODM"), makes key operating decisions, evaluates financial results, allocates resources and manages our business.

We define our reportable segments to be aligned with our method of internal reporting and the way our Chief Executive Officer, who is also our Chief Operating Decision Maker ("CODM"), makes key operating decisions, evaluates financial results, allocates resources and manages our business.

Accordingly, we aggregate our operating segments into three reportable segments (commercial, multifamily, and third-party asset management and real estate services) based on the economic characteristics and nature of our assets and services.

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The following represents the components of revenue from our third-party real estate services business:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

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Management company assets primarily consist of management and leasing contracts with a net book value of $ 27.0 million and $ 31.5 million and are classified in "Other assets, net"

in our balance sheets as of June 30, 2020 and December 31, 2019.

in our balance sheets as of September 30, 2020 and December 31, 2019.

Consistent with internal reporting presented to our CODM and our definition of NOI, the third-party asset management and real estate services operating results are excluded from the NOI data below.

The following is the reconciliation of net income (loss) attributable to common shareholders to consolidated NOI:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

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Net income (loss) attributable to redeemable noncontrolling interests

Third-party real estate services, including reimbursements

Third-party real estate services, including reimbursements revenue

Other revenue (1)

Income (loss) from unconsolidated real estate ventures, net

Interest and other income, net

Interest and other income (loss), net

Gain on sale of real estate

Consolidated NOI

(1) Excludes parking revenue of $ 810,000 and $ 7.2 million for the three and six months ended June 30, 2020, and $ 6.7 million and $ 13.1 million for the three and six months ended June 30, 2019.

(1) Excludes parking revenue of $ 3.1 million and $ 10.3 million for the three and nine months ended September 30, 2020, and $ 6.3 million and $ 19.5 million for the three and nine months ended September 30, 2019.

The following is a summary of NOI by segment.

Items classified in the Other column include future development assets, corporate entities and the elimination of intersegment activity.

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

(In thousands)

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Consolidated NOI

Three Months Ended June 30, 2019

Three Months Ended September 30, 2019

(In thousands)

7 unchanged sentences

Consolidated NOI

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

(In thousands)

7 unchanged sentences

Consolidated NOI

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2019

(In thousands)

9 unchanged sentences

(In thousands)

June 30, 2020

September 30, 2020

Real estate, at cost

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Construction Commitments

As of June 30, 2020, we had construction in progress that will require an additional $ 52.6 million to complete ($ 35.3 million related to our consolidated entities and $ 17.3 million related to our unconsolidated real estate ventures at our share), based on our current plans and estimates, which we anticipate will be primarily expended over the next one to two years .

As of September 30, 2020, we had construction in progress that will require an additional $ 34.0 million to complete ($ 20.2 million related to our consolidated entities and $ 13.8 million related to our unconsolidated real estate ventures at our share), based on our current plans and estimates, which we anticipate will be primarily expended over the next one to two years .

These capital expenditures are generally due as the work is performed, and we expect to finance them with debt proceeds, proceeds from asset recapitalizations and sales, issuance and sale of equity securities, and available cash.

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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.

Environmental liabilities totaled $ 17.9 million as of both June 30, 2020 and December 31, 2019 and are included in "Other liabilities, net"

Environmental liabilities totaled $ 17.9 million as of both September 30, 2020 and December 31, 2019 and are included in "Other liabilities, net"

in our balance sheets.

1 unchanged sentence

In our opinion, the outcome of such matters will not have a material adverse effect on our financial condition, results of operations or cash flows.

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 (1) guarantee portions of the principal, interest and other amounts in connection with borrowings, (2) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) in connection with borrowings or (3) provide guarantees to lenders and other third parties for the completion of development projects.

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 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.

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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 June 30, 2020, we had additional capital commitments and certain recorded guarantees to our unconsolidated real estate ventures totaling $ 57.2 million.

As of June 30, 2020, we had no principal payment guarantees related to our unconsolidated real estate ventures.

Additionally, with respect to borrowings of our consolidated entities, we have agreed, and may in the future agree, to (1) guarantee portions of the principal, interest and other amounts, (2) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) or (3) provide guarantees to lenders, tenants and other third parties for the completion of development projects.

As of June 30, 2020, the aggregate amount of principal payment guarantees was $ 8.3 million for our consolidated entities.

As of September 30, 2020, we had additional capital commitments and certain recorded guarantees to our unconsolidated real estate ventures totaling $ 56.9 million.

As of September 30, 2020, we had no principal payment guarantees related to our unconsolidated real estate ventures.

Additionally, with respect to borrowings of our consolidated entities, we have agreed, and may in the future 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 of development projects.

As of September 30, 2020, the aggregate amount of principal payment guarantees was $ 8.3 million for our consolidated entities.

In connection with the Formation Transaction, we have an agreement with Vornado regarding tax matters (the "Tax Matters Agreement") that provides special rules that allocate tax liabilities if the distribution of JBG SMITH shares by Vornado, together with certain related transactions, is determined not to be tax-free.

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We are the manager for the WHI Impact Pool, which is the social impact investment vehicle of the WHI.

As of June 30, 2020, the WHI Impact Pool had completed closings of capital commitments totaling $ 106.5 million, which included a commitment from us of $ 10.4 million.

The third-party real estate services revenue, including expense reimbursements, from the JBG Legacy Funds and the WHI Impact Pool was $ 4.7 million and $ 12.7 million for the three and six months ended June 30, 2020, and $ 10.0 million and

$ 18.4 million for the three and six months ended June 30, 2019.

As of June 30, 2020 and December 31, 2019, we had receivables from the JBG Legacy Funds and the WHI Impact Pool totaling $ 8.4 million and $ 6.2 million for such services.

We rented our former corporate offices from an unconsolidated real estate venture and made payments totaling $ 2.4 million and $ 3.7 million for the three and six months ended June 30, 2020, and $ 1.3 million and $ 2.5 million for the three and six months ended June 30, 2019.

As of September 30, 2020, the WHI Impact Pool had completed closings of capital commitments totaling $ 112.0 million, which included a commitment from us of $ 10.9 million.

The third-party real estate services revenue, including expense reimbursements, from the JBG Legacy Funds and the WHI Impact Pool was $ 4.6 million and $ 17.3 million for the three and nine months ended September 30, 2020, and $ 10.2 million and $ 28.6 million for the three and nine months ended September 30, 2019.

As of September 30, 2020 and

December 31, 2019, we had receivables from the JBG Legacy Funds and the WHI Impact Pool totaling $ 8.1 million and $ 6.2 million for such services.

We rented our former corporate offices from an unconsolidated real estate venture and made payments totaling $ 403,000 and $ 4.1 million for the three and nine months ended September 30, 2020, and $ 867,000 and $ 3.4 million for the three and nine months ended September 30, 2019.

In November 2019, we relocated our corporate headquarters.

1 unchanged sentence

We have agreements with Building Maintenance Services ("BMS"), an entity in which we have a minor preferred interest, to supervise cleaning, engineering and security services at our properties.

We paid BMS $ 3.3 million and $ 8.6 million during the three and six months ended June 30, 2020, and $ 5.4 million and $ 10.6 million during the three and six months ended June 30, 2019 which is included in "Property operating expenses"

We paid BMS $ 4.0 million and $ 12.6 million during the three and nine months ended September 30, 2020, and $ 5.5 million and $ 16.1 million during the three and nine months ended September 30, 2019 which is included in "Property operating expenses"

in our statements of operations.

Subsequent Events

On July 30, 2020, our Board of Trustees declared a quarterly dividend of $ 0.225 per common share, payable on August 27, 2020 to shareholders of record as of August 13, 2020.

On October 29, 2020, our Board of Trustees declared a quarterly dividend of $ 0.225 per common share, payable on November 30, 2020 to shareholders of record as of November 13, 2020.

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 1. Financial Statements