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Item 1. Business

2021-02-23 compared with 2020-02-25 · 221 added, 161 removed, 84 unchanged (82% of the section changed)

JBG SMITH Properties ("JBG SMITH") is a real estate investment trust ("REIT") that owns, operates, invests in, and develops a dynamic portfolio of high-growth mixed-use properties in and around Washington, D.C.

Through an intense focus on placemaking, JBG SMITH cultivates vibrant, amenity-rich, walkable neighborhoods throughout the Capital region, including National Landing where it now serves as the exclusive developer for Amazon.com’s ("Amazon") new headquarters.

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

References to "our share" refer to our ownership percentage of consolidated and unconsolidated assets in real estate ventures.

As of December 31, 2019 , our Operating Portfolio consists of 62 operating assets comprising 44 commercial assets totaling 12.7 million square feet ( 10.7 million square feet at our share) and 18 multifamily assets totaling 7,111 units ( 5,327 units at our share).

Additionally, we have (i) seven assets under construction comprising four commercial assets totaling 943,000 square feet ( 821,000 square feet at our share) and three multifamily assets totaling 1,011 units ( 833 units at our share);

and (ii) 40 future development assets totaling 21.9 million square feet ( 18.7 million square feet at our share) of estimated potential development density.

We present combined portfolio operating data that aggregates assets that we consolidate in our financial statements and assets in which we own an interest, but do not consolidate in our financial results.

For more information regarding our assets, see Item 2 "Properties."

We define "square feet" or "SF" as the amount of rentable square feet of a property that can be rented to tenants, defined as (i) for commercial assets, rentable square footage defined in the current lease and for vacant space the rentable square footage defined in the previous lease for that space, (ii) for multifamily assets, management’s estimate of approximate rentable square feet, (iii) for assets under construction and near-term development assets, management’s estimate of approximate rentable square feet based on current design plans as of December 31, 2019 , and (iv) for future development assets, management’s estimate of developable gross square feet based on its current business plans with respect to real estate owned or controlled as of December 31, 2019 .

"Metro" is the public transportation network serving the Washington, D.C.

metropolitan area operated by the Washington Metropolitan Area Transit Authority, and we consider "Metro-served" to be locations, submarkets or assets that are generally within walking distance of a Metro station, defined as being within 0.5 miles of an existing or planned Metro station.

"Annualized rent" is defined as (i) for commercial assets, or the retail component of a mixed-use asset, the in-place monthly base rent before free rent, plus tenant reimbursements as of December 31, 2019 , multiplied by 12, with triple net leases converted to a gross basis by adding estimated tenant reimbursements to monthly base rent, and (ii) for multifamily assets, or the multifamily component of a mixed-use asset, the in-place monthly base rent before free rent as of December 31, 2019 , multiplied by 12.

Annualized rent excludes rent from signed but not yet commenced leases.

Corporate Structure and Formation Transaction

JBG SMITH was organized as a Maryland REIT on October 27, 2016 for the purpose of receiving, via the spin-off on July 17, 2017 (the "Separation"), substantially all of the assets and liabilities of Vornado Realty Trust's ("Vornado") Washington, D.C.

segment, which operated as Vornado / Charles E.

Smith, (the "Vornado Included Assets").

On July 18, 2017, JBG SMITH acquired the management business and certain assets and liabilities (the "JBG Assets") of JBG (the "Combination").

The Separation and the Combination are collectively referred to as the "Formation Transaction." Unless the context otherwise requires, all references to "we," "us," "our" or other similar terms refer to the Vornado Included Assets (our predecessor and accounting acquirer) for periods prior to the Separation and to JBG SMITH for periods after the Separation.

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

As of December 31, 2019 , we, as its sole general partner, controlled JBG SMITH LP and owned 89.9% of its common limited partnership units ("OP Units").

Our mission is to own and operate a high-growth portfolio of Metro-served, urban-infill office, multifamily and retail assets concentrated in leading urban infill submarkets or with proximity to downtown Washington, D.C.

and to grow this portfolio through value-added development and acquisitions.

We have significant expertise in office, multifamily and retail product types, our core asset classes.

We believe we are known for our creative deal-making and capital allocation skills and for our development and value creation expertise across our core product types.

One of our approaches to value creation uses a series of complementary disciplines through a process we call "Placemaking." Placemaking involves strategically mixing high-quality multifamily and commercial buildings with anchor, specialty and neighborhood retail in a high density, thoughtfully planned and designed public space.

Through this process, we create synergies,

and thus value, across those varied uses and create unique, amenity-rich, walkable neighborhoods that are desirable and enhance significant tenant and investor demand.

We believe that our Placemaking approach will increase occupancy and rental rates in our portfolio, particularly with respect to our concentrated and extensive land and building holdings in National Landing, the newly defined interconnected and walkable neighborhood that encompasses Crystal City, the eastern portion of Pentagon City and the northern portion of Potomac Yard.

National Landing is situated across the Potomac River from Washington, D.C., and we believe it is one of the region’s best-located urban mixed-use communities.

It is defined by its central and easily accessible location, its adjacency to Reagan National Airport, and its base of existing offices, apartments and hotels.

Since mid-2017, we have been focused on a comprehensive plan to reposition our holdings in National Landing through a broad array of Placemaking strategies.

Our Placemaking strategies include the delivery of new multifamily and office developments, locally sourced amenity retail and thoughtful improvements to the streetscape, sidewalks, parks and other outdoor gathering spaces.

In keeping with our dedication to Placemaking, each new project is intended to contribute to authentic and distinct neighborhoods by creating a vibrant street environment with a robust offering of amenity retail and improved public spaces.

In November 2018, Amazon announced it had selected sites that we own in National Landing in Northern Virginia as the location of an additional headquarters.

To date, Amazon has executed leases totaling approximately 857,000 square feet at five office buildings in our National Landing portfolio.

In March 2019, we executed three initial leases with Amazon totaling approximately 537,000 square feet at three of our office buildings in National Landing.

These three initial leases encompass approximately 88,000 square feet at 241 18th Street South, approximately 191,000 square feet at 1800 South Bell Street, and approximately 258,000 square feet at 1770 Crystal Drive.

Amazon began moving into 241 18th Street South and 1800 South Bell in 2019, and we expect Amazon to begin moving into 1770 Crystal Drive by the end of 2020.

In April 2019, we executed a lease with Amazon for an additional approximately 48,000 square feet of office space at 2345 Crystal Drive in National Landing.

Amazon moved its first employees into 2345 Crystal Drive during the second quarter of 2019.

In December 2019, we executed a lease with Amazon for an additional approximately 272,000 square feet of office space at 2100 Crystal Drive in National Landing.

We expect Amazon to begin occupying space at 2100 Crystal Drive in late 2020.

In March 2019, we also executed purchase and sale agreements with Amazon for two of our National Landing development sites, Metropolitan Park and Pen Place, which will serve as the initial phase of new construction associated with Amazon’s new headquarters at National Landing.

Subject to customary closing conditions, Amazon contracted to acquire these two development sites for an estimated aggregate $293.9 million , or $72.00 per square foot based on their combined estimated potential development density of up to approximately 4.1 million square feet.

In May 2019, Amazon submitted its plans to Arlington County for approval of two new office buildings, totaling 2.1 million square feet, inclusive of over 50,000 square feet of street-level retail with new shops and restaurants, on the Metropolitan Park land sites.

In January 2020, we sold the Metropolitan Park land sites to Amazon for $155.0 million , which represents an $11.0 million increase over the previously estimated contract value resulting from an increase in the approved development density on the sites.

We expect the sale of the Pen Place land site to Amazon to be completed in 2021.

JBG SMITH, a Maryland REIT, owns and operates a portfolio of high-growth commercial and multifamily assets amenitized with ancillary retail.

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 vibrant urban amenities.

Over half of our portfolio is in National Landing, where we serve as the exclusive developer for Amazon's new headquarters, and where Virginia Tech's new $1 billion Innovation Campus will be located.

In addition, our third-party asset management and real estate services business provides fee-based real estate services to the WHI, Amazon, the JBG Legacy Funds and other third parties.

Substantially all our assets are held by, and our operations are conducted through, JBG SMITH LP.

As of December 31, 2020, JBG SMITH, as its sole general partner, controlled JBG SMITH LP and owned 90.5% of its OP Units.

JBG SMITH is referred to herein as "we,"

"us,"

"our"

or other similar terms.

As of December 31, 2020, our Operating Portfolio consisted of 62 operating assets comprising 41 commercial assets totaling 13.0 million square feet (11.1 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 pipeline assets totaling 5.6 million square feet of estimated potential development density;

and (iii) 29 future development pipeline assets totaling 14.8 million square feet (12.0 million square feet at our share) of estimated potential development density.

We present combined portfolio operating data that aggregates assets we consolidate in our financial statements and assets in which we own an interest, but do not consolidate in our financial results.

For additional information regarding our assets, see Item 2 "Properties."

Certain terms used throughout this Annual Report on Form 10-K are defined under "Definitions"

starting on page 3.

We own and operate assets in high-growth, Metro-served submarkets in the Washington, D.C.

metropolitan area, including National Landing, that have significant barriers to entry and key urban amenities and plan to grow through value-added development and acquisitions.

We have significant expertise with multifamily, office and retail assets, our core asset classes.

We believe that we are known for our creative deal-making and capital allocation skills and for our development and value creation expertise.

In addition to our sale, recapitalization and ground lease of approximately $1.6 billion of primarily office assets since 2017, we intend to opportunistically sell at least another approximately $1.5 billion of non-core office assets and land.

Recycling the proceeds from these sales will not only fund our planned extensive growth, but it will also further advance the strategic shift in the composition of our portfolio to majority multifamily.

One of our approaches to value creation uses a series of complementary disciplines through a process we call "Placemaking."

Placemaking involves strategically mixing high-quality multifamily and commercial buildings with anchor, specialty and neighborhood retail in a high density, thoughtfully planned and designed public space.

Through this process, we create synergies, and thus value, across those varied uses leading to unique, amenity-rich, walkable neighborhoods that are desirable and enhance tenant and investor demand.

We believe our Placemaking approach will increase occupancy and rental rates in our portfolio, in particular with respect to our concentrated and extensive land and operating asset holdings in National Landing, the location of Amazon's new headquarters and the planned $1 billion Virginia Tech Innovation Campus.

National Landing, situated in Northern Virginia directly across the Potomac River from Washington, D.C., is the interconnected and walkable neighborhood that encompasses Crystal City, the eastern portion of Pentagon City and the northern portion of Potomac Yard.

We believe National Landing is one of the region's best-located urban mixed-use communities due to its central and easily accessible location, its adjacency to Reagan National Airport, and its large base of existing offices, apartments and hotels.

We are repositioning our holdings in National Landing by executing a broad array of Placemaking strategies, including the delivery of new multifamily and office developments, locally sourced amenity retail, and thoughtful improvements to

the streetscape, sidewalks, parks and other outdoor gathering spaces.

In keeping with our dedication to Placemaking, each new project is intended to contribute to authentic and distinct neighborhoods by creating a vibrant street environment with robust retail offerings and other amenities including improved public spaces.

We have also invested in CBRS wireless spectrum in National Landing as part of our efforts to make National Landing among the first 5G-operable submarkets in the nation, as discussed below.

In November 2018, Amazon announced it had selected sites that we own in National Landing as the location of its new headquarters.

We currently have leases with Amazon totaling approximately 857,000 square feet at five office buildings in National Landing.

In March 2019, we executed purchase and sale agreements with Amazon for two of our National Landing development sites, Metropolitan Park and Pen Place, which will serve as the initial phase of construction associated with Amazon's new headquarters at National Landing.

In January 2020, we sold Metropolitan Park to Amazon for $155.0 million and began constructing two new office buildings thereon, totaling 2.1 million square feet, inclusive of over 50,000 square feet of street-level retail with new shops and restaurants.

The sale of Pen Place to Amazon for approximately $149.9 million is expected to close, subject to customary closing conditions, in 2021.

We are the developer, property manager and retail leasing agent for Amazon's new headquarters at National Landing.

In February 2019, the Commonwealth of Virginia enacted an incentives bill, which provides tax incentives to Amazon if it creates up to 37,850 full-time jobs with average salaries of $150,000 or higher in National Landing.

As part of the incentive package, we expect $1.8 billion in infrastructure and education investments led by state and local governments.

Our primary business objectives are to maximize cash flow and generate strong risk-adjusted returns for our shareholders.

We intend to pursue these objectives through the following strategies:

In connection with Amazon's new headquarters in National Landing, in February 2019 the Commonwealth of Virginia enacted an incentives bill, which provides tax incentives to Amazon to create a minimum of 25,000 new full-time jobs and potentially 37,850 full-time jobs with average annual wage targets for each calendar year, starting with $150,000 in 2019, and escalating 1.5% per year, in National Landing.

Led by state and local governments, we expect more than $5.5 billion of infrastructure and education investments directly benefitting National Landing.

These investments include:

two new Metro entrances (Crystal Drive and Potomac Yard);

a pedestrian bridge to Reagan National Airport;

a new commuter rail station located between two of our Crystal Drive office assets;

lowering of elevated sections of U.S.

Route 1 that currently divide parts of National Landing to create better multimodal access and walkability;

and funding for an innovation campus anchored by Virginia Tech.

In addition to government infrastructure investments, we expect at least an additional $5.5 billion of investments, including investments by Amazon, JBG SMITH, and Virginia Tech .

Virginia Tech virtually launched in the fall of 2020 the inaugural academic year of its planned $1 billion Innovation Campus in National Landing.

This expected powerful demand driver sits adjacent to approximately 1.9 million square feet of development density we own in National Landing and a new, under-construction Potomac Yard Metro station, all approximately one mile south of Amazon's new headquarters.

The campus is part of a 20-acre innovation district, of which the fully entitled first phase encompasses approximately 1.7 million square feet of space, including four office towers and two residential buildings, with ground-level retail.

On this campus, Virginia Tech intends to create an innovation ecosystem by co-locating academic and private sector uses to accelerate research and development spending, as well as the commercialization of technology.

When the Innovation Campus is fully operational, Virginia Tech plans to annually graduate approximately 750 master students and 150 PhD students in STEM fields.

The Innovation Campus is contemplated to include 675,000 square feet occupied by Virginia Tech, and construction of the fully entitled initial phase is expected to commence in 2021.

The following are key components of our strategy:

Focus on High-Growth Mixed-Use Assets in Metro-Served Submarkets in the Washington, D.C.

Metropolitan Area.

We intend to continue our longstanding strategy of owning and operating assets within urban-infill, Metro-served submarkets in the Washington, D.C.

metropolitan area with high barriers to entry and key urban amenities, including being within walking distance of the Metro.

These submarkets, which include the District of Columbia;

National Landing, the Rosslyn-Ballston Corridor, Reston and Alexandria in Virginia;

and Bethesda, Silver Spring and the Rockville Pike Corridor in Maryland, generally feature strong economic and demographic attributes, as well as superior transportation infrastructure that caters to the preferences of our office, multifamily and retail tenants.

We believe these positive attributes will allow our assets located in these submarkets to outperform the Washington, D.C.

We intend to continue our longstanding strategy of owning and operating assets within high-growth urban-infill, Metro-served submarkets in the Washington, D.C.

metropolitan area with high barriers to entry and vibrant urban amenities.

These submarkets include National Landing, the Rosslyn-Ballston Corridor, and Reston in Northern Virginia;

the Ballpark, U Street/Shaw, and Union Market, in the District of Columbia;

and Bethesda in Maryland.

These submarkets generally feature strong economic and demographic attributes, as well as superior transportation infrastructure that caters to the preferences of multifamily, office and retail tenants.

We believe these positive attributes will enable our assets located in these high-growth submarkets to outperform the Washington, D.C.

metropolitan area as a whole.

Realize Contractual Embedded Growth.

We believe there are substantial near-term growth opportunities embedded in our existing Operating Portfolio, many of which are contractual in nature, including the burn-off of free rent, contractual rent escalators in our non-GSA office and retail leases based on increases in the Consumer Price Index or a fixed percentage, and the commencement of signed but not yet commenced leases.

"GSA" refers to the General Services Administration, which is the independent federal government agency that manages real estate procurement for the federal government and federal agencies.

Drive Incremental Growth Through Lease-up of Our Assets.

We believe that we are well-positioned to achieve significant internal growth through lease-up of the vacant space in our Operating Portfolio, including certain recently developed assets, given our leasing capabilities and the tenant demand for high-quality space in our submarkets.

As of December 31, 2019 , we had 44 operating commercial assets totaling 12.7 million square feet ( 10.7 million square feet at our share), which were 91.4% leased at our share, resulting in 893,000 square feet available for lease.

Deliver Our Assets Under Construction.

As of December 31, 2019 , we had seven high-quality assets under construction in which we expect to make an estimated incremental investment of $196.9 million at our share.

Our assets under construction consist of four commercial assets totaling 943,000 square feet ( 821,000 square feet at our share) and three multifamily assets totaling 1,011 units ( 833 units at our share), all of which are Metro-served.

We believe these projects provide significant potential for value creation.

As of December 31, 2019 , 85.1% ( 86.8% at our share) of our commercial assets under construction were pre-leased.

We define "estimated incremental investment" to mean management’s estimate of the remaining cost to be incurred in connection with the development of an asset as of December 31, 2019 , including all remaining acquisition costs, hard costs, soft costs, tenant improvements (excluding free rent converted to tenant improvement allowances), leasing costs and other similar costs to develop and stabilize the asset but excluding any financing costs and ground rent expenses.

Develop Our Significant Future Development Pipeline.

We have a significant pipeline of opportunities for value creation through ground-up development, with the goal of producing favorable risk-adjusted returns on invested capital.

We expect to be active in developing these opportunities while maintaining prudent leverage levels.

Our future development pipeline consists of 40 assets.

We estimate our future development pipeline can support over 21.9 million square feet ( 18.7 million square feet at our share), including the approximately 4.1 million square feet under contract for sale to Amazon as of December 31, 2019, of estimated potential development density, with 96.7% of this potential development density being Metro-served based on our share of estimated potential development density.

Grow NOI from Significant Demand Catalysts in National Landing.

We believe the strong technology sector tailwinds created by Amazon, the Virginia Tech Innovation Campus, and our National Landing Smart City initiative will contribute to substantial NOI growth from our Operating Portfolio and our 7.8 million square foot development pipeline in National Landing.

Over half our holdings are located in National Landing, and over 80% are located within a 20-minute commute

of the submarket, where Amazon's new headquarters will house a minimum of 25,000 new full-time jobs and potentially 37,850 planned employees, and Virginia Tech's new $1 billion Innovation Campus will be located.

Amazon's growth in National Landing is expected to increase the daytime population in the submarket from approximately 50,000 people today to nearly 90,000 people in the future, representing dramatic growth of about 70%, according to estimates from Amazon and the National Landing Business Improvement District.

We believe our investment in next-generation connectivity infrastructure such as dense, redundant, and secure fiber networks, data center access, and world-class 5G connectivity, will be a key advantage in continuing to attract companies to National Landing.

In September 2020, we took our first step in implementing that strategy by investing $25.3 million to secure access to multiple blocks for between 30 and 40 megahertz of licensed CBRS wireless spectrum to support 5G broadband communications for the geographic license areas stretching across National Landing.

In addition to other investments that we are making in the submarket, we believe this investment in CBRS spectrum will allow us to control the process of attracting and partnering with best-in-class service providers, making National Landing among the first 5G-operable submarkets in the nation.

It will also provide us with valuable tenant inducement tools, such as the ability to offer ubiquitous and redundant fiber connectivity and 5G private cellular networks.

These features are increasingly important to technology companies, especially innovators in cybersecurity, internet of things, artificial intelligence and cloud computing.

Drive Incremental Growth Through Lease-up and Stabilization of Our Operating Assets.

While COVID-19 has negatively impacted our operating results, we expect many of the affected income streams will respond favorably to a recovery in demand as the pandemic abates.

During the fourth quarter of 2020, we believe the impact of COVID-19 reduced our NOI by $15.1 million, comprising $3.7 million of reserves and rent deferrals for office and retail tenants, a $5.8 million decline in NOI in our same store multifamily assets, a $3.9 million decline in parking revenue, and a $1.7 million decline in NOI from the Crystal City Marriott.

In addition to the expected recovery from COVID-19, we believe that, given our leasing capabilities and the tenant demand for high-quality space in our submarkets, we are well-positioned to achieve significant internal growth from the lease-up of vacant space in our in-service Operating Portfolio.

As of December 31, 2020, we had 39 in-service operating commercial assets totaling 12.4 million square feet (10.7 million square feet at our share), which were 88.2% leased at our share, resulting in 1.3 million square feet available for lease.

As of December 31, 2020, we had 18 in-service multifamily assets totaling 7,111 units (5,327 units at our share), which were 91.3% leased at our share.

Further, we expect increases in property rental revenue from:

(i) the commencement of signed but not yet commenced leases ($33.0 million total annualized estimated rent as of December 31, 2020) and (ii) contractual rent escalators in our non-GSA office and retail leases, which are based on increases in the Consumer Price Index or a fixed percentage.

Deliver Our Under-Construction Assets and Stabilize Our Recently Delivered Assets.

As of December 31, 2020, we expected to make an estimated incremental investment of $18.9 million at our share to two under-construction assets:

(i) 1770 Crystal Drive, a commercial asset with 273,897 square feet located in National Landing and completed in the fourth quarter of 2020, the office portion of which is 100.0% leased to Amazon, and (ii) 7900 Wisconsin Avenue, a multifamily asset with 322 units (161 units at our share) in Bethesda owned by an unconsolidated real estate venture in which we own a 50.0% interest.

Since the fourth quarter of 2019, we completed construction and placed into service three multifamily assets with 689 units (672 units at our share) and two commercial assets with 569,399 square feet (448,333 square feet at our share).

As of December 31, 2020, the multifamily assets were 46.2% leased and the office assets were 85.4% leased.

Construct or Monetize Our Significant Development Pipeline.

We expect to create value from our significant pipeline of ground-up development opportunities, which we expect will produce favorable risk-adjusted returns on invested capital.

We divide our 18.3 million (15.6 million at our share) square foot land portfolio into our near-term development pipeline and our future development pipeline, the latter of which comprises potentially longer-term opportunities.

The development pipeline excludes the 2.1 million square feet of land (Pen Place) held for sale to Amazon, which we expect to close in 2021, and exchange into an income-producing multifamily asset.

As of December 31, 2020, our near-term development pipeline consists of 10 wholly owned assets, and we estimate that it can support over 5.6 million square feet of estimated potential development density, 75% of which are multifamily projects located in high-growth submarkets of National Landing, the Ballpark, and Union Market/NoMa/H Street.

expect five of these multifamily projects to deliver approximately 3,100 units within a half mile of Amazon's new headquarters, including approximately 800 units at 1900 Crystal Drive.

We intend to invest in multifamily development as market demand evolves, matching delivery dates with Amazon's expected job growth in National Landing, and new office development subject to preleasing.

While these opportunities have the potential to commence construction over the next 36 months, subject to receipt of full entitlements, completion of design and market conditions, these potential investment opportunities will be subject to our rigorous return requirements and our ability to maintain prudent leverage and liquidity levels.

As of December 31, 2020, our future development pipeline consisted of 29 assets, and we estimate it can support over 14.8 million square feet (12.0 million square feet at our share), including the approximately 2.1 million square feet under contract for sale to Amazon, of estimated potential development density, with 94.9% of this potential development density being Metro-served.

The estimated potential development densities and uses reflect our current business plans as of December 31, 2020 and are subject to change based on market conditions.

We characterize our future development pipeline as our assets that are development opportunities on which we do not intend to commence construction within 18 months of December 31, 2019 where we (i) own land or control the land through a ground lease or (ii) are under a long-term conditional contract to purchase or enter into a leasehold interest with respect to land.

Our future development pipeline includes six parcels attached to assets in our Operating Portfolio that would require a redevelopment of 413,000 office and/or retail square feet ( 315,000 square feet at our share) and 324 multifamily units ( 185 units at our share), which generated $5.1 million of annualized net operating income ("NOI") at our share for the year ended December 31, 2019 , to access 3.7 million square feet ( 2.5 million square feet at our share) of total estimated potential development density.

Redevelop and Reposition Our Assets.

We evaluate our portfolio on an ongoing basis to identify value-creating redevelopment and renovation opportunities, including the addition of amenities, unit renovations and building and landscaping enhancements.

We intend to seek to increase occupancy and rents, improve tenant quality and enhance cash flow and value by completing the redevelopment and repositioning of certain of our assets, including the use of our Placemaking process.

This approach is facilitated by our extensive proprietary research platform and deep understanding of submarket dynamics.

We believe there are significant opportunities to apply our Placemaking process across our portfolio.

Rigorous Approach to Capital Allocation.

An important component of maximizing long-term net asset value ("NAV") per share is prudent capital allocation.

We evaluate development, acquisition and disposition decisions based on how they impact long-term NAV per share.

Because distinct segments of our market present substantial downside risk while others offer attractive upside, our pursuit of long-term NAV growth takes many forms, some of which sit on opposite ends of the risk-taking spectrum.

Where we see elevated asset pricing, potential excess supply, and/or limited prospects for future growth, we will likely sell assets.

Given the attractive pricing of office assets and our long-term objective of shifting our portfolio toward a 50:50 mix of office and multifamily, we are currently targeting dispositions primarily of office assets in submarkets where we have less concentration and where we anticipate lower growth rates going forward relative to other opportunities within our portfolio.

In addition to developing select assets in these pipelines, we will consider opportunities to unlock value through opportunistic asset sales, ground leases and recapitalizations.

Actively Allocate our Capital and Reposition Our Portfolio to Majority Multifamily.

A fundamental component of our strategy to maximizing long-term NAV per share is active capital allocation.

We evaluate development, acquisition, disposition, share repurchase and other investment decisions based on how they may impact long-term NAV per share.

Since our inception, we have completed the sale, recapitalization and ground lease of $1.6 billion of primarily office assets, and we intend to opportunistically sell at least another $1.5 billion of non-core office assets and land.

Redeploying the proceeds from these sales will not only help fund our planned growth, but it will also further advance the strategic shift of our portfolio to majority multifamily.

When we see elevated asset pricing, potential excess supply, and/or limited prospects for future growth, we will likely sell those assets.

We are currently targeting dispositions primarily of office assets in submarkets where we have less concentration and where we anticipate lower growth rates going forward relative to other opportunities within our portfolio.

We are also focused on opportunities to turn land assets into income streams or retained capital.

The acquisitions market in the Washington, D.C.

area continues to be competitive, and we remain cautious.

We expect near-term acquisition activity to be focused on assets with redevelopment potential in emerging growth neighborhoods, as well as assets adjacent to our existing holdings where the combination of sites can add unique value to any new investment.

Where there are opportunities to trade out of higher risk assets with extensive capital needs or those outside of our geographic footprint, we will consider like-kind exchanges under Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code").

Subject to customary closing conditions, we expect to close the sale of Pen Place to Amazon in 2021 for approximately $149.9 million, and we intend to invest the proceeds from the sale into a like-kind exchange acquisition of a multifamily asset.

Third-Party Services Business

Our third-party asset management and real estate services platform provides fee-based real estate services to third parties, the JBG Legacy Funds and the Washington Housing Initiative ("WHI"), which intends to pursue a transformational approach to producing affordable workforce housing and creating sustainable, mixed-income communities in the Washington, D.C.

Although a significant portion of the assets and interests in assets formerly owned by certain of the JBG Legacy Funds were contributed to us in the Combination, the JBG Legacy Funds retained certain assets that are not consistent with our long-term business strategy.

With respect to the JBG Legacy Funds and for most assets that we hold through real estate ventures, we continue to provide the same asset management, property management, construction management, leasing and other services that were provided prior to the Combination by the management business that we acquired in the Combination.

Other than the WHI, we do not intend to raise any future investment funds, and the JBG Legacy Funds will be managed and liquidated over time.

We expect to continue to earn fees from these funds as they are wound down, as well as from any real estate venture arrangements currently in place and any new real estate venture and/or development arrangements entered into in the future, including with Amazon.

We expect the fees from retaining management and leasing of sold assets, Amazon-related fees that we expect to receive and other third-party fee income streams to offset the wind down of the JBG Legacy Fund business over time.

Certain individual members of our management team own direct equity co-investment and promote interests in the JBG Legacy Funds that were not contributed to us.

As the JBG Legacy Funds are wound down over time, these economic interests will decrease and will be eventually eliminated.

We believe that the fees we earn in connection with providing these services will enhance our overall returns, provide additional scale and efficiency in our operating, development and acquisition businesses and generate capital which we can use to absorb overhead and other administrative costs of the platform.

Our third-party asset management and real estate services business provides fee-based real estate services to the WHI, Amazon, the JBG Legacy Funds and other third parties.

The WHI pursues a transformational approach to producing affordable workforce housing and creating sustainable, mixed-income communities in the Washington, D.C.

Although a significant portion of the assets and interests in assets formerly owned by certain of the JBG Legacy Funds were contributed to us in the Combination, the JBG Legacy Funds retained certain assets that were not consistent with our long-term business strategy.

With respect to the remaining investments of the JBG Legacy Funds, we provide substantially the same asset management, property management, development, construction management, leasing and other services that were provided prior to the Combination.

Other than those related to the WHI, we do not intend to raise any future investment funds, and we expect to continue to earn fees for the management of the JBG Legacy Funds until their investments are liquidated.

Certain individual members of our management team own direct equity co-investment and promote interests in the JBG Legacy Funds and certain of the funds' investments that were not contributed to us.

These economic interests will be eliminated as the JBG Legacy Funds are wound down over time.

We believe that the fees we earn in connection with providing these services enhance our overall returns, provide additional scale and efficiency in our operating, development and acquisition businesses and absorb a portion of the overhead and

other administrative costs of our platform.

This scale provides competitive advantages, including market knowledge, buying power and operating efficiencies across all product types.

We also believe that our existing relationships arising out of our third-party asset management and real estate services business will continue to provide potential capital and new investment opportunities.

We also believe that our existing relationships arising out of our third-party asset management and real estate services business will continue to provide potential access to capital and new investment opportunities.

The commercial real estate markets in which we operate are highly competitive.

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The principal means of competition in leasing are lease terms (including rent charged and tenant improvement allowances), location, services provided and the nature and condition of the asset to be leased.

If our competitors offer space at rental rates below current market rates, below the rental rates we currently charge our tenants, in better locations within our markets, in higher quality assets or offer better services, we may lose potential tenants and we may be pressured to reduce our rental rates below those we currently charge to retain tenants when our tenants’ leases expire.

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 that affects the sequential comparison of our results in individual quarters over time.

We have historically experienced higher utility costs in the first and third quarters of the year.

If our competitors offer space at rental rates below current market rates, below the rental rates we currently charge our tenants, in better locations within our markets, in higher quality assets or offer better services, we may lose existing and potential tenants and we may be pressured to reduce our rental rates below those we currently charge to retain tenants when our tenants' leases expire.

We operate in the following business segments:

commercial, multifamily and third-party asset management and real estate services.

Financial information related to these business segments for each of the three years in the period ended December 31, 2019 is set forth in Note 18 to our consolidated and combined financial statements included herein.

Financial information related to these business segments for each of the three years in the period ended December 31, 2020 is set forth in Note 19 to the financial statements.

We have elected to be taxed as a REIT under Sections 856-860 of the Code.

Under those sections, a REIT which distributes at least 90% of its REIT taxable income as dividends to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders.

Prior to the Separation, Vornado operated as a REIT and distributed 100% of its REIT taxable income to its shareholders;

accordingly, no provision for federal income taxes has been made in the accompanying financial statements for the periods prior to the Separation.

We currently adhere and intend to continue to adhere to these requirements and to maintain our REIT status in future periods.

As a REIT, we can reduce our taxable income by distributing all or a portion of such taxable income to shareholders.

Future distributions will be declared and paid at the discretion of our Board of Trustees and will depend upon cash generated by operating activities, our financial condition, capital requirements, annual dividend requirements under the REIT provisions of the Code and such other factors as our Board of Trustees deems relevant.

We also participate in the activities conducted by our subsidiary entities that have elected to be treated as taxable REIT subsidiaries ("TRS") under the Code.

We also participate in the activities conducted by our subsidiary entities that have elected to be treated as TRSs under the Code.

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

Income taxes attributable to our TRSs are accounted for under the asset and liability method.

Under the asset and liability method, deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future.

For additional information regarding our REIT status, see Item 9B "Other Information."

Significant Tenants

Only the U.S.

federal government accounted for 10% or more of our rental revenue, which consists of property rentals and other property revenue, as follows:

federal government accounted for 10% or more of our rental revenue, which consists of property rental and other property revenue, as follows:

Year Ended December 31,

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Sustainable Business Strategy

Our business values integrate environmental sustainability, social responsibility and strong governance practices throughout our organization, which includes the design and construction of our new developments and the operation of our existing buildings.

Our business values integrate environmental sustainability, social responsibility and strong governance practices throughout our organization, which include the design and construction of our new developments and the operation of our existing buildings.

We believe that by understanding the social and environmental impacts of our business, we are better able to protect asset value, reduce risk and advance initiatives that result in positive social and environmental outcomes creating shared value.

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By investing in urban infill and transit-oriented development and strategically mixing high-quality multifamily and commercial buildings with public areas, retail spaces, and walkable streets, we are working to define neighborhoods that deliver benefits to the environment and our community, as well as long-term value to our shareholders.

We remain committed to transparent reporting of environmental, social and governance ("ESG") financial and non-financial indicators.

We publish an annual sustainability report that is aligned with the Global Reporting Initiative ("GRI") reporting framework, Sustainable Development Goals, Sustainability Accounting Standards Board (SASB) standards and recommendations set forth by the Task Force on Climate-related Financial Disclosures.

More detailed sustainability information, including our strategy, key performance indicators, annual absolute and like-for-like comparisons, achievements and historical environmental, social, governance reports are available on our website at https://www.JBGSMITH.com/About/Sustainability.

We remain committed to transparent reporting of ESG financial and non-financial indicators.

We intend to continue publishing an annual ESG report that is aligned with the Global Reporting Initiative reporting framework, Sustainable Development Goals, Sustainability Accounting Standards Board standards and recommendations set forth by the Task Force on Climate-related Financial Disclosures.

Additionally, we have developed a strategic plan that progresses toward a carbon neutral portfolio over a ten-year horizon.

More detailed sustainability information, including our strategy, key performance targets and indicators, annual absolute and like-for-like comparisons, achievements and historical ESG reports are available on our website at https://www.JBGSMITH.com/About/Sustainability .

Our Internet website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.

We focus on operating efficiency, responding to evolving environmental and social trends, and delivering on the needs of our tenants and communities.

We have demonstrated the results of this focus by:

Achieving a 4-star rating in the Global Real Estate Sustainability Benchmark (GRESB) Real Estate Assessment and 2019 Global Sector Leader - Diversified - Office/Residential Sector

● Achieving a 5-star rating in the Global Real Estate Sustainability Benchmark Real Estate Assessment and being recognized as a 2020 Global Sector Leader - Diversified - Office/Residential Sector

● Maintaining oversight of environmental and social matters by the Board of Trustees' Corporate Governance & Nominating Committee

Surpassing $104 million in investor commitments to the WHI Impact Pool, which is the social impact investment vehicle of the WHI (the "Impact Pool"), and closing its first investment, a $15.1 million mezzanine loan for the purchase of a residential community in Alexandria, Virginia.

We launched the WHI in partnership with the Federal City Council to preserve or build between 2,000 and 3,000 units of affordable workforce housing in the Washington, D.C.

region over the next decade.

Our sustainability team works directly with our business units to integrate our ESG principles throughout our operations and investment process.

The sustainability team includes our Vice President of Sustainability and a Sustainability Associate.

The Vice President reports directly to our Chief Operating Officer.

The team is responsible for annual ESG reporting, maintaining building certifications, betterment program design and implementation and coordinating with industry and community partners.

● Surpassing $114 million in investor commitments to the JBG SMITH-managed WHI Impact Pool, which raises funds from third parties and, through year end 2020, closed $21.8 million in loans related to the non-profit Washington Housing Conservancy’s purchase of residential communities that contain 1,151 units.

We launched the WHI in 2018 in partnership with the Federal City Council to preserve or build between 2,000 and 3,000 units of affordable workforce housing in the Washington, D.C.

Our ESG team works directly with our business units to integrate our ESG principles throughout our operations and investment process.

The team is responsible for annual ESG reporting, maintaining building certifications, ESG improvement programs and implementation and coordinating with industry and community partners.

To ensure that our ESG principles are fully integrated into our business practices, Steering Committees, including members of our management team, provide top-down support for the implementation of ESG initiatives.

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Energy and Water Management

We believe that the efficient use of resources will result in sustainable long-term growth.

We believe that the efficient use of natural resources will result in sustainable long-term value.

We have committed to:

reduce energy consumption 25%, predicted energy consumption 25%, water consumption 20%, embodied carbon 20%, and greenhouse gas emissions (scope one and two) 25%;

increase waste diversion to 60%, and verify all assets across our operating portfolio and development pipeline by 2030.

In addition to our 2030 targets, we have a legacy commitment to improve the energy efficiency of our commercial Operating Portfolio by at least 20% over the 10-year period ending in 2024 through the Department of Energy Better Buildings Challenge.

We have improved energy performance by an average of approximately 3.0% each year since 2014, which is a cumulative improvement of 15%, and are on track to meet or exceed the improvement goal by 2024.

We achieve this improvement through real time energy use monitoring.

We plan to report progress on these commitments annually in our ESG report.

We use green building certifications as a verification tool across our portfolio.

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● 69% of all operating assets, based on square footage, have earned at least one green certification:

7.3 million square feet of LEED Certified Commercial Space (69%)

1.6 million square feet of LEED Certified Multifamily Space (37%)

4.4 million square feet of ENERGY STAR Certified Commercial Space (41%)

1.9 million square feet of ENERGY STAR Certified Multi-family Space (42%)

o 6.7 million square feet of LEED Certified Commercial Space (61%)

o 2.0 million square feet of LEED Certified Multifamily Space (40%)

o 4.1 million square feet of ENERGY STAR Certified Commercial Space (37%)

o 1.8 million square feet of ENERGY STAR Certified Multifamily Space (37%)

● 97% of our operational assets' energy and water use are benchmarked

Our long-term strategy to reduce energy and water consumption includes operational and capital improvements that align with our business plan and contribute to our sustainability goals.

Our long-term strategy to reduce energy and water consumption includes operational and capital improvements that align with our business plan and contribute to our sustainability targets.

Asset teams review historical performance, conduct energy audits and regularly assess opportunities to achieve efficiency targets.

Capital investment planning considers the useful life of equipment, energy and water efficiency, occupant health impacts and maintenance requirements.

We have committed to improve the energy efficiency of our commercial Operating Portfolio by at least 20% over the next 10 years through the Department of Energy Better Buildings Challenge.

Our data demonstrates improved energy performance by an average of 2.9% each year since 2014, which is consistent with a cumulative improvement of 10%, and is on track to meet or exceed the improvement goal by 2024.

We achieve this through real time energy use monitoring.

Our development strategy focuses on reducing predicted energy and water consumption and embodied carbon, contributing to our sustainability targets.

Development teams use energy, water, and embodied carbon modeling to inform design decisions that best fit each individual building program, adapt to identified climate change conditions for our region, and promote healthy buildings.

Tenant Sustainability Impacts

Customer service is an integral component of real estate management.

Our mission includes creating a unique experience at all of our properties where our tenants’ needs are our highest priority.

We believe in sustainability as a service — by integrating efficiency and conservation into standard operating practices, we engage on topics that are most impactful to our tenants.

Our mission includes creating a unique experience at all our properties where our tenants' needs are our highest priority.

We believe in sustainability as a service — by integrating efficiency and conservation into standard operating practices, we engage on topics that are most impactful to our tenants and residents.

We are committed to providing a healthy living and working environment for building occupants.

We accomplish this goal through monitoring and improving indoor air quality, eliminating toxic chemicals, providing access to nature and daylight, and encouraging nutrition and fitness.

We are a Green Lease Leader established by the Institute for Market Transformation (IMT) and the U.S.

Department of Energy’s (DOE) Better Buildings Alliance.

Green Lease Leaders recognizes companies who utilize the leasing process to achieve better collaboration between landlords and tenants with the goal of reducing building energy consumption and operating costs.

We accomplish this goal through monitoring and improving indoor air quality, eliminating toxic chemicals, providing access to nature and daylight, nutritious fresh foods in our common areas and fitness.

We are a Green Lease Leader established by the Institute for Market Transformation and the U.S.

Department of Energy's Better Buildings Alliance.

Green Lease Leaders recognizes companies who use the leasing process to achieve better collaboration between landlords and tenants with the goal of reducing building energy consumption and operating costs.

Our standard lease contains a cost recovery clause for resource efficiency-related capital improvements and requires tenants to provide data for measuring, managing, and reporting sustainability performance.

This language covers 100% of our new leases.

This language is included in 100% of our new leases and renewals.

Climate Change Adaptation

We take climate change, and the risks associated with climate change, seriously, and we are committed to aligning our investment strategy with science.

We stand with our communities, tenants, and fellow shareholders in supporting meaningful solutions that address this global challenge.

To develop a more informed view of future climate conditions and further our understanding of the direct physical risks to our properties, we have conducted a climate risk assessment, which includes our operating assets and land holdings in our future development pipeline.

The results of this assessment will be presented to senior management, and we expect it will inform our asset management planning and design of our new developments moving forward.

We take seriously climate change and the risks associated with climate change, and we are committed to aligning our investment strategy with science.

We stand with our communities, tenants, and shareholders in supporting meaningful solutions that address this global challenge.

Management intends to use the results of this assessment to inform our asset management planning and design of our new developments.

Social Responsibility

We believe the strength of our entire community is central to sustaining the long-term value of our portfolio.

We are committed to the economic development of the Washington region through continued investment in our projects and local communities.

We recognize, however that new development also fosters challenging growth dynamics, with issues of social equity at the forefront.

We believe the economic strength of our region is central to sustaining the long-term value of our portfolio.

We are committed to the economic development of the Washington D.C.

metropolitan region through continued investment in our

projects and local communities.

We recognize, however, that new development can foster challenging growth dynamics, with issues of social equity at the forefront.

We strive to work alongside community members, leaders, and local and federal governments to appropriately respond to these challenges.

The most recent example of our commitment is the WHI, which we launched in partnership with the Federal City Council.

To date, we have committed to invest $10.2 million in the Impact Pool component of the WHI and our Executive Vice President of Social Impact Investing manages this effort.

The most recent example of our efforts is the WHI, which we launched in 2018 in partnership with the Federal City Council.

The WHI is a transformational market-driven approach to producing affordable workforce housing and creating sustainable, mixed-income communities.

The WHI is a scalable, market-driven model funded by a unique relationship between philanthropy and private investment.

The WHI’s Impact Pool has surpassed $104 million in investor commitments and closed its first investment, a $15.1 million mezzanine loan for the purchase of a residential community in Alexandria, Virginia.

As of December 31, 2020, we have committed to invest $11.2 million in the WHI Impact Pool, and our Executive Vice President of Social Impact Investing manages this effort.

The WHI's Impact Pool has completed closings of capital commitments totaling $114.4 million, and closed $21.8 million in loans related to the non-profit Washington Housing Conservancy’s purchase of residential communities that contain 1,151 units.

The initiatives' goals include:

● Preserving or building between 2,000 and 3,000 units of affordable workforce housing in the Washington, D.C.

region over the next decade;

● Delivering triple bottom line results consisting of environmental and social objectives in addition to financial returns.

We recognize that diversity in our workforce brings valuable perspectives, views and ideas to our organization.

We pride ourselves on our strong, collaborative culture, and we strive to create an inclusive and healthy work environment for our employees, which allows us to continue to attract innovative thinkers to our organization.

We pride ourselves on our strong, collaborative culture, and we strive to create an inclusive and healthy work environment for our employees, which helps us continue to attract innovators to our organization.

Our workforce comprises 38% females and 56% minorities, and our senior leadership has 41% female representation.

Our Board of Trustees comprises 17% females.

Our Board of Trustees currently comprises 27% females which will increase to 33.3% when Phyllis Caldwell joins our Board effective March 1, 2021.

Our Board of Trustees has made a long-term commitment to evolve in a direction that reflects the strength and diversity of our national labor force and establish an equal balance between men and women and one that reflects the diversity of our country.

To learn more about our ESG initiatives, please visit JBGSMITH.com/about/sustainability and download our Sustainability Report.

To learn more about our ESG initiatives and performance, please visit https://www.JBGSMITH.com/About/Sustainability and download our ESG Report.

Our Internet website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.

Regulatory Matters

Environmental Matters

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The release of such hazardous materials and wastes could result in us incurring liabilities to remediate any resulting contamination.

The presence of contamination or the failure to remediate contamination at our properties may (1) expose us to third-party liability (e.g., for cleanup costs, natural resource damages, bodily injury or property damage), (2) subject our properties to liens in favor of the government for damages and costs the government incurs in connection with the contamination, (3) impose restrictions on the manner in which a property may be used or businesses may be operated, or (4) materially adversely affect our ability to sell, lease or develop the real estate or to borrow using the real estate as collateral.

The presence of contamination or the failure to remediate contamination at our properties may (i) expose us to third-party liability (e.g., for cleanup costs, natural resource damages, bodily injury or property damage), (ii) subject our properties to liens in favor of the government for damages and costs the government incurs in connection with the contamination, (iii) impose restrictions on the manner in which a property may be used or businesses may be operated, or (iv) materially adversely affect our ability to sell, lease or develop the real estate or to borrow using the real estate as collateral.

In addition, our assets are exposed to the risk of contamination originating from other sources.

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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.

Affordable Housing and Tenant Protection Regulations

Certain states and municipalities have adopted laws and regulations imposing restrictions on the timing or amount of rent increases and other tenant protections.

As of December 31, 2020, approximately 7% of the multifamily units in our Operating Portfolio were designated as affordable housing.

In addition, Washington, D.C.

and Montgomery County, Maryland have laws that require, in certain circumstances, an owner of a multifamily rental property to allow tenant organizations the option to purchase the building at a market price if the owner attempts to sell the property.

We expect to continue operating and acquiring assets in areas that either are subject to these types of laws or regulations or where such laws or regulations may be enacted in the future.

Such laws and regulations limit our ability to charge market rents, increase rents, evict tenants or recover increases in our operating expenses and could make it more difficult for us to dispose of assets in certain circumstances.

The Americans with Disabilities Act and other Federal, State and Local Regulations

The ADA generally requires that public buildings, including our assets, meet certain federal requirements related to access and use by disabled persons.

Noncompliance could result in the imposition of fines by the federal government or the award of damages to private litigants and/or legal fees to their counsel.

If, under the ADA, we are required to make substantial alterations and capital expenditures in one or more of our assets, including the removal of access barriers, it could have a material adverse effect on us.

Additionally, our assets are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements.

If we fail to comply with these requirements, we could incur fines or private damage awards.

We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that will affect our cash flow and results of operations.

Regulation Related to Government Tenants

As discussed above, the U.S.

federal government is a significant tenant.

Lease agreements with federal government agencies contain provisions required by federal law, which require, among other things, that the lessor of the property agree to comply with certain rules and regulations, including rules and regulations related to anti-kickback procedures, examination of records, audits and records, equal opportunity provisions, prohibition against segregated facilities, certain executive orders, subcontractor cost or pricing data, and certain provisions intending to assist small businesses.

We directly manage assets with federal government agency tenants, which subjects us to additional risks associated with compliance with applicable federal rules and regulations.

In addition, there are additional requirements relating to the potential application of equal opportunity provisions and related requirements to prepare written affirmative action plans applicable to government contractors and subcontractors.

Some of the factors used to determine whether these requirements apply to a company that is affiliated with the actual government contractor (the legal entity that is the lessor under a lease with a federal government agency) include whether such company and the government contractor are under common ownership, have common management, and are under common control.

We own the entity that is the government contractor and the

property manager, increasing the risk that requirements of the Employment Standards Administration's Office of Federal Contract Compliance Programs and requirements to prepare affirmative action plans pursuant to the applicable executive order may be determined to be applicable to us.

Compliance with these regulations is costly and any increase in regulation could increase our costs, which could have a material adverse effect on us.

Human Capital

Our headquarters are located at 4747 Bethesda Avenue, Suite 200, Bethesda, MD 20814.

As of December 31, 2020, we had 1,050 employees.

We believe that our talent is our competitive advantage.

To that end, we focus on talent development and succession planning, pay-for-performance and diversity and inclusion.

We use talent management practices in the broadest sense to create a holistic, engaging work experience for our employees.

The upshot of these practices includes accolades such as placing third on The Washington Post's list of Great Places to Work for large employers.

The sentiments that led to this award were reiterated by our employees throughout the year in the frequent pulse surveys conducted to ensure we were supporting our population during the pandemic.

Commensurate with our high levels of engagement, we also saw a decline in turnover for the second consecutive year.

Given our continued desire to remain an employer of choice, we continue to monitor the effectiveness of our engagement and the engagement survey we launched in January 2021 reflected positive results and higher levels of engagement than previous such surveys.

A key to engagement for us is ensuring we are prioritizing our employees' needs and creating a workplace experience where employees thrive.

We are proud of what we offer in the area of talent management and the investment we are making in our employee population – especially in a year where many companies were not able to do the same due to COVID-19.

2020 also marked a transformative year in our corporate diversity and inclusion effort, as we continued to execute our comprehensive, multi-year strategy.

With an ongoing focus on our five strategic pillars – (i) workforce and talent, (ii) workplace culture, (iii) business integration, (iv) industry and branding and (v) metrics and accountability – we have made notable progress in our journey to cultural and behavioral change.

From developing a multifaceted D&I communications strategy to launching our JBG SMITH Inclusion Community, our commitment to D&I was a priority throughout 2020.

To help build D&I competency throughout the organization, our executive team and senior leaders took part in D&I training and participated in related sessions focused on educating and raising awareness.

In response to the external climate, specifically the well-publicized instances of racial injustice that took center stage in 2020, we created platforms for our employees to have a voice and engage in important dialogue.

Through the launch of our JBG SMITH D&I Employee Roundtable Series, which included over 100 people, to various facilitated team discussions, we created opportunities to leverage the collective voices of our employees and impact real change.

We also focused on embedding D&I even further into our business, with a focus on implementing more inclusive and equitable systems, practices and processes.

We assessed our talent and recruitment function to establish more inclusive, equitable processes and practices.

From being intentional about how and where we recruit diverse talent, to ensuring diverse candidate slates for all open positions, the changes implemented resulted in our 2020 internship class being 54% diverse, with 30% of our interns coming from new partnerships with diverse colleges, universities and professional organizations.

Available Information

Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports are available free of charge through our website (www.JBGSMITH.com) as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission ("SEC").

Also available on our website are copies of our Audit Committee Charter, Compensation Committee Charter, Corporate Governance and Nominating Committee Charter, Code of Business Conduct and Ethics and Corporate Governance Guidelines.

Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports are available free of charge through our website ( https://www.JBGSMITH.com ) as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC.

Also available on our website are copies of our Audit Committee Charter, Compensation Committee Charter, Corporate Governance and Nominating

Committee Charter, Code of Business Conduct and Ethics and Corporate Governance Guidelines.

In the event of any changes to these charters or the code or guidelines, changed copies will also be made available on our website.

Copies of these documents are also available directly from us free of charge.

Our website also includes other financial information, including certain financial measures not in compliance with accounting principles generally accepted in the United States ("GAAP"), none of which is a part of this Annual Report on Form 10-K.

Copies of our filings under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are also available free of charge from us, upon request.

Our website also includes other financial information, including certain financial measures not in compliance with GAAP, none of which is a part of this Annual Report on Form 10-K.

Copies of our filings under the Exchange Act are also available free of charge from us, upon request.

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-K

Item 1. Business