JBG SMITH Properties 10-Q

ITEM 1. Financial Statements JBG SMITH PROPERTIES Condensed Consolidated Balance Sheets (Unaudited) (In thousands, except par value amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 December 31, 2020 ASSETS ​ ​ Real estate, at cost: ​ ​ Land and improvements ​ $ 1,358,299 ​ $ 1,391,472 Buildings and improvements ​ 4,368,477 ​ 4,341,103 Construction in progress, including land ​ 299,359 ​ 268,056 ​ ​ 6,026,135 ​ 6,000,631 Less: accumulated depreciation ​ ( 1,346,107 ) ​ ( 1,232,690 ) Real estate, net ​ 4,680,028 ​ 4,767,941 Cash and cash equivalents ​ 194,277 ​ 225,600 Restricted cash ​ 34,900 ​ 37,736 Tenant and other receivables ​ 51,128 ​ 55,903 Deferred rent receivable ​ 187,882 ​ 170,547 Investments in unconsolidated real estate ventures ​ 486,052 ​ 461,369 Other assets, net ​ 300,537 ​ 286,575 Assets held for sale ​ 74,174 ​ 73,876 TOTAL ASSETS ​ $ 6,008,978 ​ $ 6,079,547 ​ ​ ​ ​ ​ ​ ​ LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY ​ Liabilities: ​ ​ Mortgages payable, net ​ $ 1,674,285 ​ $ 1,593,738 Revolving credit facility ​ — ​ — Unsecured term loans, net ​ 398,493 ​ 397,979 Accounts payable and accrued expenses ​ 105,307 ​ 103,102 Other liabilities, net ​ 200,204 ​ 247,774 Total liabilities ​ 2,378,289 ​ 2,342,593 Commitments and contingencies ​ ​ Redeemable noncontrolling interests ​ 526,913 ​ 530,748 Shareholders' equity: ​ ​ Preferred shares, $ 0.01 par value - 200,000 shares authorized; none issued ​ — ​ — Common shares, $ 0.01 par value - 500,000 shares authorized; 129,704 and 131,778 shares issued and outstanding as of September 30, 2021 and December 31, 2020 ​ 1,298 ​ 1,319 Additional paid-in capital ​ 3,606,462 ​ 3,657,643 Accumulated deficit ​ ( 495,033 ) ​ ( 412,944 ) Accumulated other comprehensive loss ​ ( 25,446 ) ​ ( 39,979 ) Total shareholders' equity of JBG SMITH Properties ​ 3,087,281 ​ 3,206,039 Noncontrolling interests ​ 16,495 ​ 167 Total equity ​ 3,103,776 ​ 3,206,206 TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY ​ $ 6,008,978 ​ $ 6,079,547 ​ See accompanying notes to the condensed consolidated financial statements (unaudited). ​ 3 Table of Contents JBG SMITH PROPERTIES Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2021 2020 2021 2020 REVENUE ​ ​ ​ ​ ​ Property rental ​ $ 125,900 ​ $ 118,680 ​ $ 370,960 ​ $ 354,519 Third-party real estate services, including reimbursements ​ 25,842 ​ 26,987 ​ 90,694 ​ 83,870 Other revenue ​ 5,280 ​ 5,368 ​ 15,301 ​ 15,705 Total revenue ​ 157,022 ​ 151,035 ​ 476,955 ​ 454,094 EXPENSES ​ ​ ​ ​ ​ Depreciation and amortization ​ 56,726 ​ 56,481 ​ 178,130 ​ 157,586 Property operating ​ 40,198 ​ 37,572 ​ 109,929 ​ 105,867 Real estate taxes ​ 18,259 ​ 17,354 ​ 55,127 ​ 53,422 General and administrative: ​ ​ ​ ​ ​ Corporate and other ​ 12,105 ​ 11,086 ​ 38,475 ​ 37,478 Third-party real estate services ​ 25,542 ​ 28,207 ​ 80,035 ​ 86,260 Share-based compensation related to Formation Transaction and special equity awards ​ 3,480 ​ 7,133 ​ 12,866 ​ 25,432 Transaction and other costs ​ 2,951 ​ 845 ​ 8,911 ​ 7,526 Total expenses ​ 159,261 ​ 158,678 ​ 483,473 ​ 473,571 OTHER INCOME (EXPENSE) ​ ​ ​ ​ Income (loss) from unconsolidated real estate ventures, net ​ 20,503 ​ ( 965 ) ​ 23,513 ​ ( 17,142 ) Interest and other income, net ​ 192 ​ — ​ 163 ​ 1,021 Interest expense ​ ( 17,243 ) ​ ( 16,885 ) ​ ( 50,312 ) ​ ( 44,660 ) Gain on sale of real estate ​ — ​ — ​ 11,290 ​ 59,477 Loss on extinguishment of debt ​ — ​ — ​ — ​ ( 33 ) Total other income (expense) ​ 3,452 ​ ( 17,850 ) ​ ( 15,346 ) ​ ( 1,337 ) INCOME (LOSS) BEFORE INCOME TAX (EXPENSE) BENEFIT ​ 1,213 ​ ​ ( 25,493 ) ​ ( 21,864 ) ​ ( 20,814 ) Income tax (expense) benefit ​ ( 217 ) ​ 488 ​ ( 4,527 ) ​ 3,721 NET INCOME (LOSS) ​ 996 ​ ( 25,005 ) ​ ( 26,391 ) ​ ( 17,093 ) Net (income) loss attributable to redeemable noncontrolling interests ​ ( 103 ) ​ 2,212 ​ 2,472 ​ 445 Net loss attributable to noncontrolling interests ​ — ​ — ​ 1,108 ​ — NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS ​ $ 893 ​ $ ( 22,793 ) ​ $ ( 22,811 ) ​ $ ( 16,648 ) EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED ​ $ 0.00 ​ $ ( 0.18 ) ​ $ ( 0.18 ) ​ $ ( 0.14 ) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED ​ 131,351 ​ 133,620 ​ 131,456 ​ 133,924 ​ See accompanying notes to the condensed consolidated financial statements (unaudited). ​ 4 Table of Contents JBG SMITH PROPERTIES Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2021 2020 2021 2020 NET INCOME (LOSS) ​ $ 996 ​ $ ( 25,005 ) ​ $ ( 26,391 ) ​ $ ( 17,093 ) OTHER COMPREHENSIVE INCOME (LOSS): ​ ​ ​ ​ Change in fair value of derivative financial instruments ​ ( 329 ) ​ ( 278 ) ​ 4,678 ​ ( 39,489 ) Reclassification of net loss on derivative financial instruments from accumulated other comprehensive loss into interest expense ​ 3,901 ​ 3,823 ​ 11,476 ​ 8,137 Other comprehensive income (loss) ​ 3,572 ​ 3,545 ​ 16,154 ​ ( 31,352 ) COMPREHENSIVE INCOME (LOSS) ​ 4,568 ​ ( 21,460 ) ​ ( 10,237 ) ​ ( 48,445 ) Net (income) loss attributable to redeemable noncontrolling interests ​ ( 103 ) ​ 2,212 ​ 2,472 ​ 445 Net loss attributable to noncontrolling interests ​ ​ — ​ ​ — ​ ​ 1,108 ​ ​ — Other comprehensive (income) loss attributable to redeemable noncontrolling interests ​ ( 413 ) ​ ( 309 ) ​ ( 1,621 ) ​ 3,446 COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO JBG SMITH PROPERTIES ​ $ 4,052 ​ $ ( 19,557 ) ​ $ ( 8,278 ) ​ $ ( 44,554 ) ​ See accompanying notes to the condensed consolidated financial statements (unaudited). ​ 5 Table of Contents JBG SMITH PROPERTIES Condensed Consolidated Statements of Equity (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ Common Shares ​ Paid-In ​ Accumulated Comprehensive ​ Noncontrolling ​ Total ​ ​ Shares ​ Amount ​ Capital ​ Deficit Loss ​ Interests ​ Equity BALANCE AS OF JUNE 30, 2021 131,841 ​ $ 1,319 ​ $ 3,650,217 ​ $ ( 466,230 ) ​ $ ( 28,605 ) ​ $ 16,540 ​ $ 3,173,241 Net income attributable to common shareholders and noncontrolling interests — ​ — ​ — ​ 893 ​ — ​ — ​ 893 Conversion of common limited partnership units to common shares 180 ​ 2 ​ 5,668 ​ — ​ — ​ — ​ 5,670 Common shares repurchased ​ ( 2,317 ) ​ ​ ( 23 ) ​ ​ ( 68,907 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 68,930 ) Common shares issued pursuant to employee incentive compensation plan and Employee Share Purchase Plan ("ESPP") ​ — ​ ​ — ​ ​ 210 ​ ​ — ​ ​ — ​ ​ — ​ ​ 210 Dividends declared on common shares ($ 0.225 per common share) ​ — ​ ​ — ​ ​ — ​ ​ ( 29,696 ) ​ ​ — ​ ​ — ​ ​ ( 29,696 ) Distributions to noncontrolling interests — ​ — ​ — ​ — ​ — ​ ( 45 ) ​ ( 45 ) Redeemable noncontrolling interests redemption value adjustment and other comprehensive income allocation — ​ — ​ 19,274 ​ — ​ ( 413 ) ​ — ​ 18,861 Other comprehensive income — ​ — ​ — ​ — ​ 3,572 ​ — ​ 3,572 BALANCE AS OF SEPTEMBER 30, 2021 129,704 ​ $ 1,298 ​ $ 3,606,462 ​ $ ( 495,033 ) ​ $ ( 25,446 ) ​ $ 16,495 ​ $ 3,103,776 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ BALANCE AS OF JUNE 30, 2020 133,708 ​ $ 1,338 ​ $ 3,742,205 ​ $ ( 255,162 ) ​ $ ( 47,886 ) ​ $ 191 ​ $ 3,440,686 Net loss attributable to common shareholders and noncontrolling interests — ​ — ​ — ​ ( 22,793 ) ​ — ​ — ​ ( 22,793 ) Conversion of common limited partnership units to common shares 169 ​ 2 ​ 4,794 ​ — ​ — ​ — ​ 4,796 Common shares repurchased ​ ( 1,439 ) ​ ​ ( 15 ) ​ ​ ( 38,362 ) ​ ​ — ​ — ​ — ​ ​ ( 38,377 ) Common shares issued pursuant to ESPP ​ — ​ ​ — ​ ​ 186 ​ ​ — ​ ​ — ​ ​ — ​ ​ 186 Dividends declared on common shares ($ 0.225 per common share) ​ — ​ ​ — ​ ​ — ​ ​ ( 30,020 ) ​ ​ — ​ ​ — ​ ​ ( 30,020 ) Distributions to noncontrolling interests — ​ — ​ — ​ — ​ — ​ ( 12 ) ​ ( 12 ) Redeemable noncontrolling interests redemption value adjustment and other comprehensive income allocation — ​ — ​ 12,236 ​ — ​ ( 309 ) ​ — ​ 11,927 Other comprehensive income — ​ — ​ — ​ — ​ 3,545 ​ — ​ 3,545 BALANCE AS OF SEPTEMBER 30, 2020 132,438 ​ $ 1,325 ​ $ 3,721,059 ​ $ ( 307,975 ) ​ $ ( 44,650 ) ​ $ 179 ​ $ 3,369,938 ​ See accompanying notes to the condensed consolidated financial statements (unaudited). ​ 6 Table of Contents JBG SMITH PROPERTIES Condensed Consolidated Statements of Equity (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ Common Shares ​ Paid-In ​ Accumulated Comprehensive ​ Noncontrolling ​ Total ​ ​ Shares ​ Amount ​ Capital ​ Deficit Loss ​ Interests ​ Equity BALANCE AS OF DECEMBER 31, 2020 131,778 ​ $ 1,319 ​ $ 3,657,643 ​ $ ( 412,944 ) ​ $ ( 39,979 ) ​ $ 167 ​ $ 3,206,206 Net loss attributable to common shareholders and noncontrolling interests — ​ — ​ — ​ ( 22,811 ) ​ — ​ ( 1,108 ) ​ ( 23,919 ) Conversion of common limited partnership units to common shares 829 ​ 8 ​ 27,342 ​ — ​ — ​ — ​ 27,350 Common shares repurchased ​ ( 2,937 ) ​ ​ ( 29 ) ​ ​ ( 88,104 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 88,133 ) Common shares issued pursuant to employee incentive compensation plan and ESPP ​ 34 ​ ​ — ​ ​ 1,549 ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,549 Dividends declared on common shares ($ 0.45 per common share) ​ — ​ ​ — ​ ​ — ​ ​ ( 59,278 ) ​ ​ — ​ ​ — ​ ​ ( 59,278 ) Contributions from noncontrolling interests, net — ​ — ​ — ​ — ​ — ​ 17,436 ​ 17,436 Redeemable noncontrolling interests redemption value adjustment and other comprehensive income allocation — ​ — ​ 8,032 ​ — ​ ( 1,621 ) ​ — ​ 6,411 Other comprehensive income — ​ — ​ — ​ — ​ 16,154 ​ — ​ 16,154 BALANCE AS OF SEPTEMBER 30, 2021 129,704 ​ $ 1,298 ​ $ 3,606,462 ​ $ ( 495,033 ) ​ $ ( 25,446 ) ​ $ 16,495 ​ $ 3,103,776 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ BALANCE AS OF DECEMBER 31, 2019 134,148 ​ $ 1,342 ​ $ 3,633,042 ​ $ ( 231,164 ) ​ $ ( 16,744 ) ​ $ 201 ​ $ 3,386,677 Net loss attributable to common shareholders and noncontrolling interests — ​ — ​ — ​ ( 16,648 ) ​ — ​ — ​ ( 16,648 ) Conversion of common limited partnership units to common shares 1,112 ​ 12 ​ 40,662 ​ — ​ — ​ — ​ 40,674 Common shares repurchased ​ ( 2,857 ) ​ ​ ( 29 ) ​ ​ ( 79,540 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 79,569 ) Common shares issued pursuant to ESPP ​ 35 ​ ​ — ​ ​ 1,320 ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,320 Dividends declared on common shares ($ 0.45 per common share) ​ — ​ ​ — ​ ​ — ​ ​ ( 60,163 ) ​ ​ — ​ ​ — ​ ​ ( 60,163 ) Distributions to noncontrolling interests — ​ — ​ — ​ — ​ — ​ ( 22 ) ​ ( 22 ) Redeemable noncontrolling interests redemption value adjustment and other comprehensive loss allocation — ​ — ​ 125,575 ​ — ​ 3,446 ​ — ​ 129,021 Other comprehensive loss — ​ — ​ — ​ — ​ ( 31,352 ) ​ — ​ ( 31,352 ) BALANCE AS OF SEPTEMBER 30, 2020 132,438 ​ $ 1,325 ​ $ 3,721,059 ​ $ ( 307,975 ) ​ $ ( 44,650 ) ​ $ 179 ​ $ 3,369,938 ​ See accompanying notes to the condensed consolidated financial statements (unaudited). ​ 7 Table of Contents JBG SMITH PROPERTIES Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ 2021 2020 OPERATING ACTIVITIES: ​ ​ Net loss ​ $ ( 26,391 ) ​ $ ( 17,093 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: ​ ​ Share-based compensation expense ​ 38,320 ​ 53,183 Depreciation and amortization, including amortization of deferred financing costs ​ 181,217 ​ 160,395 Deferred rent ​ ( 17,463 ) ​ ( 19,124 ) (Income) loss from unconsolidated real estate ventures, net ​ ( 23,513 ) ​ 17,142 Amortization of market lease intangibles, net ​ ( 896 ) ​ ( 356 ) Amortization of lease incentives ​ 6,083 ​ 5,144 Loss on extinguishment of debt ​ — ​ 33 Gain on sale of real estate ​ ( 11,290 ) ​ ( 59,477 ) Loss on operating lease and other receivables ​ 1,071 ​ 14,750 Return on capital from unconsolidated real estate ventures ​ 13,212 ​ 3,697 Other non-cash items ​ 583 ​ 265 Changes in operating assets and liabilities: ​ ​ Tenant and other receivables ​ 3,704 ​ ( 4,757 ) Other assets, net ​ ( 12,059 ) ​ ( 11,566 ) Accounts payable and accrued expenses ​ 5,954 ​ 1,366 Other liabilities, net ​ ( 4,120 ) ​ ( 15,747 ) Net cash provided by operating activities ​ 154,412 ​ 127,855 INVESTING ACTIVITIES: ​ ​ Development costs, construction in progress and real estate additions ​ ( 108,361 ) ​ ( 245,456 ) Deposits for real estate and other acquisitions ​ ( 10,263 ) ​ ( 25,274 ) Proceeds from sale of real estate ​ 14,370 ​ 154,493 Distributions of capital from unconsolidated real estate ventures ​ 40,188 ​ 70,818 Investments in unconsolidated real estate ventures and other ​ ( 32,685 ) ​ ( 12,277 ) Net cash used in investing activities ​ ( 96,751 ) ​ ( 57,696 ) FINANCING ACTIVITIES: ​ ​ Borrowings under mortgages payable ​ 85,000 ​ 580,105 Borrowings under revolving credit facility ​ — ​ 500,000 Borrowings under unsecured term loans ​ — ​ 100,000 Repayments of mortgages payable ​ ( 4,462 ) ​ ( 6,680 ) Repayments of revolving credit facility ​ — ​ ( 700,000 ) Debt issuance costs ​ ( 5,747 ) ​ ( 14,856 ) Finance lease payments ​ — ​ ( 3,281 ) Proceeds from common shares issued pursuant to ESPP ​ 880 ​ 887 Common shares repurchased ​ ​ ( 82,300 ) ​ ​ ( 74,434 ) Dividends paid to common shareholders ​ ( 88,928 ) ​ ( 90,347 ) Distributions to redeemable noncontrolling interests ​ ( 13,705 ) ​ ( 11,333 ) Distributions to noncontrolling interests ​ ​ ( 22 ) ​ ​ ( 23 ) Contributions from noncontrolling interests ​ ​ 17,464 ​ ​ — Net cash (used in) provided by financing activities ​ ( 91,820 ) ​ 280,038 Net (decrease) increase in cash and cash equivalents and restricted cash ​ ( 34,159 ) ​ 350,197 Cash and cash equivalents and restricted cash, beginning of period ​ 263,336 ​ 142,516 Cash and cash equivalents and restricted cash, end of period ​ $ 229,177 ​ $ 492,713 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD: ​ Cash and cash equivalents ​ $ 194,277 ​ $ 455,111 Restricted cash ​ 34,900 ​ 37,602 Cash and cash equivalents and restricted cash ​ $ 229,177 ​ $ 492,713 ​ See accompanying notes to the condensed consolidated financial statements (unaudited). 8 Table of Contents JBG SMITH PROPERTIES Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ 2021 2020 SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION: ​ Cash paid for interest (net of capitalized interest of $ 4,854 and $ 11,545 in 2021 and 2020) ​ $ 46,010 ​ $ 40,744 Accrued capital expenditures included in accounts payable and accrued expenses ​ 41,660 ​ 51,092 Write-off of fully depreciated assets ​ 46,278 ​ 29,393 Deconsolidation of real estate asset ​ 26,476 ​ — Conversion of common limited partnership units to common shares ​ 27,350 ​ 40,674 Derecognition of operating lease right-of-use assets ​ ​ — ​ ​ ( 13,151 ) Derecognition of liabilities related to operating lease right-of-use assets ​ ​ — ​ ​ ( 13,151 ) Recognition of finance lease right-of-use assets ​ — ​ 42,354 Recognition of liabilities related to finance lease right-of-use assets ​ — ​ 40,684 Cash paid for amounts included in the measurement of lease liabilities for operating leases ​ 1,761 ​ 4,603 ​ ​ See accompanying notes to the condensed consolidated financial statements (unaudited) . 9 Table of Contents ​ ​ JBG SMITH PROPERTIES Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Organization and Basis of Presentation Organization JBG SMITH Properties ("JBG SMITH"), a Maryland real estate investment trust ("REIT"), owns and operates a portfolio of 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 in Northern Virginia, where we serve as the exclusive developer for Amazon.com, Inc.'s ("Amazon") new headquarters and where Virginia Tech's under-construction $ 1 billion Innovation Campus is located. In addition, our third-party asset management and real estate services business provides fee-based real estate services to the Washington Housing Initiative ("WHI") Impact Pool, Amazon, the legacy funds formerly organized by The JBG Companies ("JBG") (the "JBG Legacy Funds") and other third parties. Substantially all our assets are held by, and our operations are conducted through, JBG SMITH Properties LP ("JBG SMITH LP"), our operating partnership. As of September 30, 2021, JBG SMITH, as its sole general partner, controlled JBG SMITH LP and owned 90.8 % of its common limited partnership units ("OP Units"). JBG SMITH is hereinafter referred to as "we," "us," "our" or other similar terms. References to "our share" refer to our ownership percentage of consolidated and unconsolidated assets in real estate ventures. We were organized 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. On July 18, 2017, we acquired the management business and certain assets and liabilities of JBG (the "Combination"). The Separation and the Combination are collectively referred to as the "Formation Transaction." As of September 30, 2021, our Operating Portfolio consisted of 63 operating assets comprising 42 commercial assets totaling 13.1 million square feet ( 11.3 million square feet at our share) and 21 multifamily assets totaling 7,776 units ( 6,125 units at our share). Additionally, we have: (i) one under-construction multifamily asset with 808 units ( 808 units at our share); (ii) 11 near-term development assets totaling 5.3 million square feet ( 5.0 million square feet at our share) of estimated potential development density; and (iii) 25 future development assets totaling 14.3 million square feet ( 11.6 million square feet at our share) of estimated potential development density. We derive our revenue 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. Basis of Presentation The accompanying unaudited condensed consolidated financial statements and notes are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not contain certain information required in annual financial statements and notes as required under GAAP. In our opinion, all adjustments considered necessary for a fair presentation have been included, and all such adjustments are of a normal recurring nature. All intercompany transactions and balances have been eliminated. The results of operations for the three and nine months ended September 30, 2021 and 2020 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, 2020, filed with the Securities and Exchange Commission. The accompanying condensed consolidated financial statements include our accounts and those of our wholly owned subsidiaries and consolidated variable interest entities ("VIEs"), including JBG SMITH LP. See Note 5 for additional 10 Table of Contents information on our VIEs. The portions of the equity and net income (loss) of consolidated entities that are not attributable to us 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, 2021 and December 31, 2020, and for the three and nine months ended September 30, 2021 and 2020. References to our balance sheets refer to our condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020. References to our statements of operations refer to our condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020. 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, 2021 and 2020. Income Taxes We have elected to be taxed as a REIT under sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code"). Under those sections, a REIT which distributes at least 90% of its REIT taxable income as dividends to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. We currently adhere and intend to continue to adhere to these requirements and to maintain our REIT status in future periods. We also participate in the activities conducted by our subsidiary entities that have elected to be treated as taxable REIT subsidiaries under the Code. As such, we are subject to federal, state and local taxes on the income from these activities. 2. Summary of Significant Accounting Policies Significant Accounting Policies There were no material changes to our significant accounting policies disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020. Use of Estimates The preparation of the financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. The most significant of these estimates include: (i) the underlying cash flows and holding periods used in assessing impairment of long-lived assets; (ii) the determination of useful lives for tangible and intangible assets; and (iii) the assessment of the collectability of receivables, including deferred rent receivables. Longer estimated holding periods for real estate assets directly reduce the likelihood of recording an impairment loss. If there is a change in the strategy for an asset or if market conditions dictate an earlier sale date, an impairment loss may be recognized, and such loss could be material. In March 2020, the World Health Organization declared a global pandemic related to the novel coronavirus ("COVID-19"). The significance, extent and duration of the impact of COVID-19 on us and our tenants remains largely uncertain and dependent on near-term and future developments that cannot be accurately predicted at this time, such as the continued severity, duration, transmission rate and geographic spread of COVID-19, the distribution, effectiveness and willingness of people to take COVID-19 vaccines, the extent and effectiveness of the containment measures taken, and the response of the overall economy, the financial markets and the population, particularly in the area in which we operate. The ultimate adverse impact of COVID-19 is highly uncertain; however, the 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. To the extent these estimates differ from actual results, our consolidated financial statements may be materially affected. Due to the business disruptions and challenges caused by COVID-19, we have provided rent deferrals and other lease concessions to certain tenants. We have entered into agreements with certain tenants, many of which have been placed on the cash basis of accounting, resulting in the deferral to future periods or abatement of $ 492,000 of rent that had been contractually due in the third quarter of 2021. We are negotiating additional rent deferrals and other lease concessions with 11 Table of Contents some of our tenants, which have been considered when establishing credit losses against billed and deferred rent receivables. During 2020, we began recognizing revenue from substantially all co-working tenants and retailers except for grocers, pharmacies, essential businesses and certain national credit tenants on the cash basis of accounting. Recent Accounting Pronouncements Reference Rate Reform 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 of March 12, 2020 through December 31, 2022 as reference rate reform activities occur. During the nine months ended September 30, 2021, we did not make any elections. During the year ended December 31, 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 London Interbank Offered Rate ("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 our past presentation of our derivatives. We will continue to evaluate the impact of the guidance and may apply other elections, as applicable. 3. Acquisition, Dispositions and Assets Held for Sale Acquisition We have agreed, subject to customary closing conditions, to acquire The Batley, a 432 -unit multifamily asset in the Union Market submarket of Washington, D.C., for a purchase price of approximately $ 205 million. The building was 90.7 % occupied as of September 30, 2021. We expect the acquisition to close in 2021. We intend to use The Batley as a replacement property in a like-kind exchange for the proceeds from the sale of Pen Place to Amazon, which is expected to close during the second quarter of 2022. Dispositions In April 2021, we invested cash in and contributed land to two real estate ventures and recognized an $ 11.3 million gain, which is included in "Gain on sale of real estate" in our statements of operations for the nine months ended September 30, 2021. See Note 4 for additional information. During the three and nine months ended September 30, 2021, we recognized our proportionate share of the gain from the sale of various assets by our unconsolidated real estate ventures, which is included in "Income (loss) from unconsolidated real estate ventures, net" in our statements of operations. See Note 4 for additional information. Assets Held for Sale The amounts included in "Assets held for sale" in our balance sheets primarily represent the carrying value of real estate. The following is a summary of assets held for sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ Assets Held Assets Segment Location Square Feet (1) for Sale ​ ​ ​ ​ ​ ​ (In thousands) September 30, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ Pen Place (2) ​ Other ​ Arlington, Virginia ​ 2,082 ​ $ 74,174 December 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ Pen Place (2) ​ Other ​ Arlington, Virginia ​ 2,082 ​ $ 73,876 (1) Represents estimated or approved potential development density. 12 Table of Contents (2) In March 2019, we entered into an agreement for the sale of Pen Place to Amazon, which we expect to close during the second quarter of 2022. ​ ​ ​ ​ 4. Investments in Unconsolidated Real Estate Ventures The following is a summary of our investments in unconsolidated real estate ventures: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effective ​ ​ ​ ​ Ownership ​ ​ ​ ​ ​ ​ Real Estate Venture Partners Interest (1) September 30, 2021 December 31, 2020 ​ ​ ​ ​ (In thousands) Prudential Global Investment Management 50.0 % ​ $ 209,261 ​ $ 216,939 Landmark 1.8 % - 49.0 % ​ 53,295 ​ 66,724 CBREI Venture 5.0 % - 64.0 % ​ 59,028 ​ 65,190 Canadian Pension Plan Investment Board ("CPPIB") 55.0 % ​ 49,098 ​ 47,522 J.P. Morgan Global Alternatives ("J.P. Morgan") (2) ​ 50.0 % ​ ​ 47,362 ​ ​ — Berkshire Group 50.0 % ​ 53,589 ​ ​ 50,649 Brandywine Realty Trust 30.0 % ​ 13,755 ​ 13,710 Other ​ ​ 664 ​ ​ 635 Total investments in unconsolidated real estate ventures (3) ​ ​ ​ $ 486,052 ​ $ 461,369 (1) Reflects our effective ownership interests in the underlying real estate as of September 30, 2021. We have multiple investments with certain venture partners with varying ownership interests in the underlying real estate. (2) J.P. Morgan is the advisor for an institutional investor. (3) As of September 30, 2021 and December 31, 2020, our total investments in unconsolidated real estate ventures were greater than the net book value of the underlying assets by $ 20.2 million and $ 18.9 million, resulting principally from capitalized interest and our zero investment balance in the real estate venture with CPPIB that owns 1101 17th Street . In April 2021, we entered into two real estate ventures with an institutional investor advised by J.P. Morgan, in which we have 50 % ownership interests, to design, develop, manage and own approximately 2.0 million square feet of new mixed-use development located in Potomac Yard, the southern portion of National Landing. Our venture partner contributed a land site that is entitled for 1.3 million square feet of development at Potomac Yard Landbay F, while we contributed cash and adjacent land with over 700,000 square feet of estimated development capacity at Potomac Yard Landbay G. We will also act as pre-developer, developer, property manager and leasing agent for all future commercial and residential properties on the site. We have determined the ventures are VIEs, but we are not the primary beneficiary of the VIEs and, accordingly, we have not consolidated either venture. We recognized an $ 11.3 million gain on the land contributed to one of the real estate ventures based on the cash received and the remeasurement of our retained interest in the asset, which was included in "Gain on sale of real estate" in our statements of operations for the nine months ended September 30, 2021. As part of the transaction, our venture partner elected to accelerate the monetization of a 2013 promote interest in the land contributed by it to the ventures. During the second quarter of 2021, the total amount of the promote paid was $ 17.5 million, of which $ 4.2 million was paid to certain of our non-employee trustees and certain of our executives. The following is a summary of disposition activity by our unconsolidated real estate ventures for the nine months ended September 30, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Proportionate ​ ​ Real Estate ​ ​ ​ ​ ​ Gross ​ Share of ​ ​ Venture ​ ​ ​ Ownership ​ Sales ​ Aggregate Date Disposed Partners ​ Assets ​ Percentage Price Gain (1) ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) May 3, 2021 CBREI Venture ​ Fairway Apartments/Fairway Land ("Fairway") (2) ​ 10.0 % $ 93,000 ​ $ 2,094 May 19, 2021 ​ Landmark ​ Courthouse Metro Land/Courthouse Metro Land – Option ("Courthouse Metro") ​ 18.0 % ​ ​ 3,000 ​ ​ 2,352 May 27, 2021 ​ Landmark ​ 5615 Fishers Lane ​ 18.0 % ​ ​ 6,500 ​ ​ 743 September 17, 2021 ​ Landmark ​ 500 L'Enfant Plaza (3) ​ 49.0 % ​ ​ 166,500 ​ ​ 23,137 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 28,326 13 Table of Contents (1) Included in "Income (loss) from unconsolidated real estate ventures, net" in our statements of operations. (2) The venture repaid a related mortgage payable of $ 45.3 million. (3) The venture repaid a related mortgage payable of $ 80.0 million. ​ We provide leasing, property management and other real estate services to our unconsolidated real estate ventures. We recognized revenue, including expense reimbursements, of $ 5.9 million and $ 17.8 million for the three and nine months ended September 30, 2021, and $ 6.3 million and $ 19.3 million for the three and nine months ended September 30, 2020, for such services. A reconsideration event could cause us to consolidate an unconsolidated real estate venture in the future or deconsolidate a consolidated entity. We evaluate reconsideration events as we become aware of them. 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. The following is a summary of the debt of our unconsolidated real estate ventures: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ Average Effective ​ ​ ​ Interest Rate (1) September 30, 2021 December 31, 2020 ​ ​ ​ ​ (In thousands) Variable rate (2) 2.59 % ​ $ 786,169 ​ $ 863,617 Fixed rate (3) (4) 4.16 % ​ 293,920 ​ 323,050 Mortgages payable ​ ​ ​ 1,080,089 ​ 1,186,667 Unamortized deferred financing costs ​ ​ ​ ( 5,785 ) ​ ( 7,479 ) Mortgages payable, net (4) ​ ​ ​ $ 1,074,304 ​ $ 1,179,188 (1) Weighted average effective interest rate as of September 30, 2021. (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) 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 financial information for our unconsolidated real estate ventures: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 December 31, 2020 ​ (In thousands) Combined balance sheet information: ​ ​ ​ ​ ​ ​ Real estate, net ​ $ 2,170,039 ​ $ 2,247,384 Other assets, net ​ 257,138 ​ 270,516 Total assets ​ $ 2,427,177 ​ $ 2,517,900 ​ ​ ​ ​ ​ ​ ​ Mortgages payable, net ​ $ 1,074,304 ​ $ 1,179,188 Other liabilities, net ​ 128,554 ​ 140,304 Total liabilities ​ 1,202,858 ​ 1,319,492 Total equity ​ 1,224,319 ​ 1,198,408 Total liabilities and equity ​ $ 2,427,177 ​ $ 2,517,900 ​ 14 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2021 2020 X 2021 2020 ​ (In thousands) Combined income statement information: (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue ​ $ 45,289 ​ $ 47,235 ​ $ 141,370 ​ $ 162,128 Operating income (loss) (2) ​ ​ 51,068 ​ ​ 1,296 ​ 94,275 ​ ( 24,418 ) Net income (loss) (2) ​ ​ 42,261 ​ ​ ( 6,265 ) ​ 69,091 ​ ( 60,331 ) (1) Excludes information related to the venture that owned 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 gain from the sale 500 L'Enfant Plaza of $ 47.4 million during the three months ended September 30, 2021. Includes the gain from the sale of Fairway, Courthouse Metro, 5615 Fishers Lane and 500 L'Enfant Plaza totaling $ 85.5 million during the nine months ended September 30, 2021. Includes the loss from the sale of Woodglen of $ 16.4 million during the nine months ended September 30, 2020. ​ ​ ​ 5. 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, after a change in the entity's economics or after any other reconsideration event to determine if the VIE should be consolidated in our financial statements or should no longer be considered a VIE. An entity is a VIE because it is in the development stage and/or does not hold sufficient equity at risk, or conducts substantially all its operations on behalf of an investor with disproportionately few voting rights. We will consolidate a VIE if we are the primary beneficiary of the VIE, which entails having the power to direct the activities that most significantly impact the VIE’s economic performance. Certain criteria we assess in determining whether we are the primary beneficiary of the VIE include our influence over significant business activities, our voting rights, and any noncontrolling interest kick-out or participating rights. Unconsolidated VIEs As of September 30, 2021 and December 31, 2020, we had interests in entities deemed to be VIEs. 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 economic performance. We account for our investment in these entities under the equity method. As of September 30, 2021 and December 31, 2020, the net carrying amount of our investment in these entities was $ 165.4 million and $ 116.2 million, which is included in "Investments in unconsolidated real estate ventures" in our balance sheets. Our equity in the income of unconsolidated VIEs is included in "Income (loss) from unconsolidated real estate ventures, net" in our statements of operations. Our maximum loss exposure in these entities is limited to our investments, construction commitments and debt guarantees. See Note 17 for additional information. Consolidated VIEs JBG SMITH LP is our most significant consolidated VIE. We hold 90.8 % 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. 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). Because the noncontrolling interest holders do not have these rights, JBG SMITH LP is a VIE. As general partner, we have the power to direct the activities of JBG SMITH LP that most significantly affect its economic performance, and through our majority interest, we have both the right to receive benefits from and the obligation to absorb losses of JBG SMITH LP. Accordingly, we are the primary beneficiary of JBG SMITH LP and consolidate it in our financial statements. Because we conduct our business and hold our assets and liabilities through JBG SMITH LP, its total assets and liabilities comprise substantially all of our consolidated assets and liabilities. Through the structure of the 1900 Crystal Drive transaction we executed in March 2021, we have the ability to facilitate an exchange out of an asset into 1900 Crystal Drive . We leased the land underlying 1900 Crystal Drive located in National 15 Table of Contents Landing to a lessee, which plans to construct an 808 -unit multifamily asset comprising two towers with ground floor retail. The ground lessee has engaged us to be the development manager for the construction of 1900 Crystal Drive, and separately, we are the lessee in a master lease of the asset. We have an option to acquire the asset until a specified period after completion. In March 2021, the ground lessee entered into a mortgage loan collateralized by the leasehold interest with a maximum principal balance of $ 227.0 million and an interest rate of LIBOR plus 3.0 % per annum. As of September 30, 2021, no proceeds had been received from the mortgage loan. In connection with the mortgage loan, we have guaranteed the completion of the asset and provided certain carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy). The ground lessee was obligated to invest $ 17.5 million of equity funding, all of which has been funded, and we are obligated to provide additional project funding through a mezzanine loan to the ground lessee, of which we have funded $ 11.7 million as of September 30, 2021. We determined that 1900 Crystal Drive is a VIE and that we are the primary beneficiary of the VIE. Accordingly, we consolidate the VIE with the lessee's ownership interest shown as "Noncontrolling interests" in our balance sheet. The ground lease, the mezzanine loan and the master lease described above are eliminated in consolidation. As of September 30, 2021, the VIE had total assets and liabilities of $ 29.7 million and $ 4.5 million. The assets of the VIE can only be used to settle the obligations of the VIE, and the liabilities include third-party liabilities of the VIE for which the creditors or beneficial interest holders do not have recourse against us. 6. Other Assets, Net The following is a summary of other assets, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 December 31, 2020 ​ ​ (In thousands) Deferred leasing costs, net ​ $ 116,544 ​ $ 117,141 Lease intangible assets, net ​ 11,055 ​ 15,565 Management and leasing contracts, net ​ ​ 21,084 ​ ​ 25,512 Other identified intangible assets ​ ​ 17,360 ​ ​ 17,500 Wireless spectrum licenses (1) ​ ​ 25,730 ​ ​ — Operating lease right-of-use assets ​ 3,326 ​ 3,542 Finance lease right-of-use assets ​ ​ 41,675 ​ ​ 41,996 Prepaid expenses ​ 20,171 ​ 14,000 Deferred financing costs, net ​ 9,352 ​ 6,656 Deposits (1) ​ 12,026 ​ 28,560 Other ​ 22,214 ​ 16,103 Total other assets, net ​ $ 300,537 ​ $ 286,575 (1) During 2020, we deposited $ 25.3 million with the Federal Communications Commission in connection with the acquisition of wireless spectrum licenses. In March 2021, we received the licenses. While the licenses are issued for ten years , as long as we act within the requirements and constraints of the regulatory authorities, the renewal and extension of these licenses is reasonably certain at minimal cost. Accordingly, we have concluded that the licenses are indefinite-lived intangible assets . ​ ​ ​ 7. Debt Mortgages Payable The following is a summary of mortgages payable: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ ​ ​ ​ ​ ​ Effective ​ ​ ​ ​ Interest Rate (1) ​ September 30, 2021 December 31, 2020 ​ ​ ​ ​ ​ (In thousands) Variable rate (2) 2.08 % ​ ​ $ 762,246 ​ $ 678,346 Fixed rate (3) 4.32 % ​ ​ 922,161 ​ 925,523 Mortgages payable ​ ​ ​ ​ 1,684,407 ​ 1,603,869 Unamortized deferred financing costs and premium / discount, net (4) ​ ​ ​ ( 10,122 ) ​ ( 10,131 ) Mortgages payable, net ​ ​ ​ ​ $ 1,674,285 ​ $ 1,593,738 16 Table of Contents (1) Weighted average effective interest rate as of September 30, 2021. (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) As of September 30, 2021, net deferred financing costs related to an unfunded mortgage loan totaling $ 4.0 million were included in "Other assets, net." As of September 30, 2021 and December 31, 2020, the net carrying value of real estate collateralizing our mortgages payable totaled $ 1.8 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 mortgages payable are recourse to us. See Note 17 for additional information. In July 2021, we entered into a mortgage loan with a principal balance of $ 85.0 million, collateralized by 1225 S. Clark Street. The mortgage loan has a seven-year term and an interest rate of LIBOR plus 1.60 % per annum. As of September 30, 2021 and December 31, 2020, we had various interest rate swap and cap agreements on certain mortgages payable with an aggregate notional value of $ 1.3 billion. See Note 15 for additional information. Credit Facility As of September 30, 2021 and December 31, 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effective ​ ​ ​ ​ Interest Rate (1) ​ September 30, 2021 December 31, 2020 ​ ​ ​ ​ ​ (In thousands) Revolving credit facility (2) (3) (4) 1.13 % ​ ​ $ — ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tranche A-1 Term Loan (5) 2.59 % ​ ​ $ 200,000 ​ $ 200,000 Tranche A-2 Term Loan (5) 2.49 % ​ ​ 200,000 ​ 200,000 Unsecured term loans ​ ​ 400,000 ​ 400,000 Unamortized deferred financing costs, net ​ ​ ( 1,507 ) ​ ( 2,021 ) Unsecured term loans, net ​ ​ $ 398,493 ​ $ 397,979 (1) Effective interest rate as of September 30, 2021. (2) As of September 30, 2021 and December 31, 2020, letters of credit with an aggregate face amount of $ 1.4 million and $ 1.5 million were outstanding under our revolving credit facility. (3) As of September 30, 2021 and December 31, 2020, net deferred financing costs related to our revolving credit facility totaling $ 5.4 million and $ 6.7 million were included in "Other assets, net." (4) The interest rate for our revolving credit facility excludes a 0.15 % facility fee. (5) As of September 30, 2021 and December 31, 2020, the outstanding balance was fixed by interest rate swap agreements. The interest rate swaps mature concurrently with the respective term loan and provide a weighted average interest rate of 1.39 % for the Tranche A-1 Term Loan and 1.34 % for the Tranche A-2 Term Loan . ​ ​ 17 Table of Contents 8. Other Liabilities, Net The following is a summary of other liabilities, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 December 31, 2020 ​ ​ (In thousands) Lease intangible liabilities, net ​ $ 8,567 ​ $ 10,300 Lease assumption liabilities ​ 6,257 ​ 10,126 Lease incentive liabilities ​ 14,125 ​ 13,913 Liabilities related to operating lease right-of-use assets ​ 8,914 ​ 10,752 Liabilities related to finance lease right-of-use assets ​ 40,733 ​ 40,221 Prepaid rent ​ 20,343 ​ 19,809 Security deposits ​ 17,953 ​ 13,654 Environmental liabilities ​ 18,168 ​ 18,242 Deferred tax liability, net ​ 6,290 ​ 2,509 Dividends payable ​ — ​ 34,075 Derivative agreements, at fair value ​ 28,406 ​ 44,222 Deferred purchase price (1) ​ ​ 19,639 ​ ​ 19,479 Other ​ 10,809 ​ 10,472 Total other liabilities, net ​ $ 200,204 ​ $ 247,774 (1) Deferred purchase price associated with the December 2020 acquisition of the former Americana Hotel site. ​ ​ 9. Redeemable Noncontrolling Interests JBG SMITH LP 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, 2021 and 2020, unitholders redeemed 829,107 and 1.1 million OP Units, which we elected to redeem for an equivalent number of our common shares. As of September 30, 2021, outstanding OP Units totaled 13.1 million, representing a 9.2 % 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 adjustments to the redemption value 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 October 2021, unitholders redeemed 20,953 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 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 are obligated to 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, 2021, we held a 96.0 % ownership interest in the real estate venture. 18 Table of Contents The following is a summary of the activity of redeemable noncontrolling interests: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ ​ 2021 ​ 2020 ​ ​ ​ ​ ​ Consolidated ​ ​ ​ ​ ​ ​ ​ Consolidated ​ ​ ​ ​ ​ JBG ​ Real Estate ​ ​ ​ ​ JBG ​ Real Estate ​ ​ ​ ​ SMITH LP Venture Total SMITH LP Venture Total ​ (In thousands) Balance, beginning of period ​ $ 536,171 ​ $ 8,468 ​ $ 544,639 ​ $ 493,067 ​ $ 6,016 ​ $ 499,083 OP Unit redemptions ​ ( 5,670 ) ​ — ​ ( 5,670 ) ​ ( 4,796 ) ​ — ​ ( 4,796 ) Net income (loss) attributable to redeemable noncontrolling interests ​ 116 ​ ( 13 ) ​ 103 ​ ( 2,176 ) ​ ( 36 ) ​ ( 2,212 ) Other comprehensive income ​ 413 ​ — ​ 413 ​ 309 ​ — ​ 309 Distributions ​ ( 3,993 ) ​ — ​ ( 3,993 ) ​ ( 3,723 ) ​ — ​ ( 3,723 ) Share-based compensation expense ​ 10,695 ​ — ​ 10,695 ​ 14,496 ​ — ​ 14,496 Adjustment to redemption value ​ ( 20,748 ) ​ 1,474 ​ ( 19,274 ) ​ ( 14,012 ) ​ 1,776 ​ ( 12,236 ) Balance, end of period ​ $ 516,984 ​ $ 9,929 ​ $ 526,913 ​ $ 483,165 ​ $ 7,756 ​ $ 490,921 ​ ​ Nine Months Ended September 30, ​ ​ 2021 ​ 2020 ​ ​ ​ ​ ​ Consolidated ​ ​ ​ ​ ​ ​ ​ Consolidated ​ ​ ​ ​ ​ JBG ​ Real Estate ​ ​ ​ ​ JBG ​ Real Estate ​ ​ ​ ​ SMITH LP Venture Total SMITH LP Venture Total ​ (In thousands) Balance, beginning of period ​ $ 522,882 ​ $ 7,866 ​ $ 530,748 ​ $ 606,699 ​ $ 6,059 ​ $ 612,758 OP Unit redemptions ​ ( 27,350 ) ​ — ​ ( 27,350 ) ​ ( 40,674 ) ​ — ​ ( 40,674 ) LTIP Units issued in lieu of cash bonuses (1) ​ 5,614 ​ — ​ 5,614 ​ 4,066 ​ — ​ 4,066 Net loss attributable to redeemable noncontrolling interests ​ ( 2,400 ) ​ ( 72 ) ​ ( 2,472 ) ​ ( 366 ) ​ ( 79 ) ​ ( 445 ) Other comprehensive income (loss) ​ 1,621 ​ — ​ 1,621 ​ ( 3,446 ) ​ — ​ ( 3,446 ) Distributions ​ ( 9,282 ) ​ — ​ ( 9,282 ) ​ ( 7,505 ) ​ — ​ ( 7,505 ) Share-based compensation expense ​ 36,066 ​ — ​ 36,066 ​ 51,742 ​ — ​ 51,742 Adjustment to redemption value ​ ( 10,167 ) ​ 2,135 ​ ( 8,032 ) ​ ( 127,351 ) ​ 1,776 ​ ( 125,575 ) Balance, end of period ​ $ 516,984 ​ $ 9,929 ​ $ 526,913 ​ $ 483,165 ​ $ 7,756 ​ $ 490,921 (1) See Note 11 for additional information. ​ 10. Property Rental Revenue The following is a summary of property rental revenue from our non-cancellable leases: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2021 2020 X 2021 2020 ​ ​ ​ (In thousands) ​ Fixed ​ $ 114,100 ​ $ 109,321 ​ $ 339,321 ​ $ 326,866 ​ Variable ​ ​ 11,800 ​ ​ 9,359 ​ ​ 31,639 ​ ​ 27,653 ​ Property rental revenue ​ $ 125,900 ​ $ 118,680 ​ $ 370,960 ​ $ 354,519 ​ ​ ​ 11. Share-Based Payments LTIP Units and Time-Based LTIP Units During the nine months ended September 30, 2021, we granted to certain employees 498,955 LTIP Units with time-based vesting requirements ("Time-Based LTIP Units") with a weighted average grant-date fair value of $ 29.21 per unit that 19 Table of Contents primarily vest ratably over four years subject to continued employment. Compensation expense for these units is being recognized over a four-year period. Additionally, in January 2021, we granted 163,065 fully vested LTIP Units to certain employees, who elected to receive all or a portion of their cash bonus, related to 2020 service, as LTIP Units. The LTIP units had a grant-date fair value of $ 29.54 per unit. Compensation expense totaling $ 4.8 million for these LTIP Units was recognized in 2020. In April 2021, as part of their annual compensation, we granted to non-employee trustees a total of 71,792 fully vested LTIP Units with an aggregate grant-date fair value of $ 1.9 million. The LTIP Units may not be sold while a trustee is serving on the Board of Trustees. In July 2021, we granted to certain employees 608,325 Time-Based LTIP Units with a weighted average grant-date fair value of $ 31.73 per unit that vest 50 % on the fifth anniversary of the grant date and 25 % on each of the sixth and seventh anniversaries of the grant date, subject to continued employment. Compensation expense for these units is being recognized over a seven-year period. The aggregate grant-date fair value of the Time-Based LTIP Units and LTIP Units granted during the nine months ended September 30, 2021 was $ 40.6 million. The Time-Based LTIP Units and LTIP Units were valued based on the closing common share price on the date of grant, less a discount for post-grant restrictions. The discount was determined using Monte Carlo simulations, and the following is a summary of the significant assumptions used to value these units: ​ ​ ​ ​ Expected volatility 34.0 % to 39.0 % Risk-free interest rate 0.1 % to 0.4 % Post-grant restriction periods 2 to 3 years ​ Performance-Based LTIP Units In January 2021, we granted to certain employees 627,874 LTIP Units with performance-based vesting requirements ("Performance-Based LTIP Units") with a weighted average grant-date fair value of $ 15.14 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 % 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 units that are earned will vest if and when we achieve a positive TSR during the succeeding seven years , measured at the end of each quarter. Compensation expense for these units is generally being recognized over a four-year period. In January 2021, the three-year performance period ended for the Performance-Based LTIP Units granted on February 2, 2018. Based on our relative performance and absolute TSR over the three-year performance period, 100 % of the units granted were earned. In July 2021, we granted to certain employees 844,070 Performance-Based LTIP Units with a weighted average grant-date fair value of $ 23.08 per unit that vest 50 % on the fifth anniversary of the grant date and 25 % on each of the sixth and seventh anniversaries of the grant date, subject to continued employment, and earn based on our achievement of four share price targets during the performance period commencing on the first anniversary of the grant date and ending on the sixth anniversary of the grant date. Compensation expense for these units is being recognized over a seven-year period. The aggregate grant-date fair value of the Performance-Based LTIP Units granted during the nine months ended September 30, 2021 was $ 29.0 million, valued using Monte Carlo simulations. The following is a summary of the significant assumptions used to value the Performance-Based LTIP Units: ​ ​ ​ ​ Expected volatility 31.0 % - 34.0 % Dividend yield 2.6 % Risk-free interest rate 0.2 % - 1.0 % ​ 20 Table of Contents Restricted Share Units ("RSUs") In January 2021, we granted to certain non-executive employees 22,194 RSUs with time-based vesting requirements ("Time-Based RSUs") with a weighted average grant-date fair value of $ 31.52 per unit and 13,516 RSUs with performance-based vesting requirements ("Performance-Based RSUs") with a weighted average grant-date fair value of $ 15.16 per unit. Vesting requirements and compensation expense recognition for the Time-Based RSUs and the Performance-Based RSUs are identical to those of the Time-Based LTIP Units and Performance-Based LTIP Units granted in January 2021. The aggregate grant-date fair value of the RSUs granted during the nine months ended September 30, 2021 was $ 905,000 . The Time-Based RSUs were valued based on the closing common share price on the date of grant and the Performance-Based RSUs were valued using Monte Carlo simulations with the same significant assumptions used to value the Performance-Based LTIP Units above. ESPP Pursuant to the ESPP, employees purchased 34,320 common shares for $ 880,000 during the nine months ended September 30, 2021. The following is a summary of the significant assumptions used to value the ESPP common shares using the Black-Scholes model: ​ ​ ​ ​ Expected volatility 39.0 % Dividend yield 1.5 % Risk-free interest rate 0.1 % Expected life ​ 6 months ​ Share-Based Compensation Expense The following is a summary of share-based compensation expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2021 2020 X 2021 2020 ​ (In thousands) Time-Based LTIP Units ​ $ 3,999 ​ $ 3,364 ​ $ 12,494 ​ $ 11,003 Performance-Based LTIP Units ​ 3,216 ​ 3,999 ​ 9,615 ​ 14,207 LTIP Units ​ — ​ — ​ 1,091 ​ 1,100 Other equity awards (1) ​ 1,473 ​ 1,690 ​ 4,395 ​ 4,829 Share-based compensation expense - other ​ 8,688 ​ 9,053 ​ 27,595 ​ 31,139 Formation Awards ​ 476 ​ 875 ​ 1,923 ​ 3,473 OP Units (2) ​ 1,610 ​ 4,780 ​ 6,508 ​ 17,398 LTIP Units (2) ​ 66 ​ 95 ​ 217 ​ 310 Special Performance-Based LTIP Units (3) ​ 629 ​ 657 ​ 2,014 ​ 2,015 Special Time-Based LTIP Units (3) ​ 699 ​ 726 ​ 2,204 ​ 2,236 Share-based compensation related to Formation Transaction and special equity awards (4) ​ 3,480 ​ 7,133 ​ 12,866 ​ 25,432 Total share-based compensation expense ​ 12,168 ​ 16,186 ​ 40,461 ​ 56,571 Less: amount capitalized ​ ( 740 ) ​ ( 1,177 ) ​ ( 2,141 ) ​ ( 3,388 ) Share-based compensation expense ​ $ 11,428 ​ $ 15,009 ​ $ 38,320 ​ $ 53,183 (1) Primarily comprising compensation expense for: (i) fully vested LTIP Units issued to certain employees in lieu of all or a portion of any cash bonus earned, (ii) RSUs and (iii) shares issued under our ESPP. (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. (4) Included in "General and administrative expense: Share-based compensation related to Formation Transaction and special equity awards" in the accompanying statements of operations . 21 Table of Contents As of September 30, 2021, we had $ 73.7 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 3.5 years. 12. Transaction and Other Costs The following is a summary of transaction and other costs: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2021 2020 X 2021 2020 ​ (In thousands) Demolition costs ​ $ 1,422 ​ $ 179 ​ $ 2,869 ​ $ 179 Integration and severance costs ​ 154 ​ 406 ​ 616 ​ 3,066 Completed, potential and pursued transaction expenses ​ 1,375 ​ 260 ​ 5,426 ​ 281 Other (1) ​ — ​ — ​ — ​ 4,000 Transaction and other costs ​ $ 2,951 ​ $ 845 ​ $ 8,911 ​ $ 7,526 (1) Related to a charitable commitment to the Washington Housing Conservancy, a non-profit that acquires and owns affordable workforce housing in the Washington, D.C. metropolitan area. 13. Interest Expense The following is a summary of interest expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2021 2020 X 2021 2020 ​ (In thousands) Interest expense before capitalized interest ​ $ 17,278 ​ $ 18,274 ​ $ 50,744 ​ $ 52,751 Amortization of deferred financing costs ​ 1,096 ​ 857 ​ 3,188 ​ 2,255 Interest expense related to finance lease right-of-use assets ​ ​ 430 ​ ​ 464 ​ ​ 1,284 ​ ​ 1,026 Net unrealized (gain) loss on derivative financial instruments not designated as cash flow hedges ​ 37 ​ 202 ​ ( 50 ) ​ 173 Capitalized interest ​ ( 1,598 ) ​ ( 2,912 ) ​ ( 4,854 ) ​ ( 11,545 ) Interest expense ​ $ 17,243 ​ $ 16,885 ​ $ 50,312 ​ $ 44,660 ​ 14. Shareholders' Equity and Earnings Per Common Share Common Shares Repurchased In March 2020, our Board of Trustees authorized the repurchase of up to $ 500 million of our outstanding common shares. During three and nine months ended September 30, 2021, we repurchased and retired 2.3 million and 2.9 million common shares for $ 68.9 million and $ 88.1 million, an average purchase price of $ 29.73 and $ 29.99 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. Since we began the share repurchase program, we have repurchased and retired 6.7 million common shares for $ 192.9 million, an average purchase price of $ 28.71 per share. 22 Table of Contents Earnings (Loss) Per Common Share The following is a summary of the calculation of basic and diluted earnings (loss) 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 September 30, ​ Nine Months Ended September 30, ​ ​ 2021 2020 X 2021 2020 ​ ​ (In thousands, except per share amounts) Net income (loss) ​ $ 996 ​ $ ( 25,005 ) ​ $ ( 26,391 ) ​ $ ( 17,093 ) Net (income) loss attributable to redeemable noncontrolling interests ​ ​ ( 103 ) ​ 2,212 ​ 2,472 ​ 445 Net loss attributable to noncontrolling interests ​ ​ — ​ — ​ 1,108 ​ — Net income (loss) attributable to common shareholders ​ ​ 893 ​ ​ ( 22,793 ) ​ ​ ( 22,811 ) ​ ​ ( 16,648 ) Distributions to participating securities ​ ​ ( 763 ) ​ ​ ( 822 ) ​ ( 1,497 ) ​ ( 1,729 ) Net income (loss) available to common shareholders - basic and diluted ​ $ 130 ​ $ ( 23,615 ) ​ $ ( 24,308 ) ​ $ ( 18,377 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average number of common shares outstanding - basic and diluted ​ ​ 131,351 ​ ​ 133,620 ​ 131,456 ​ 133,924 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings (loss) per common share - basic and diluted ​ $ 0.00 ​ $ ( 0.18 ) ​ $ ( 0.18 ) ​ $ ( 0.14 ) ​ The effect of the redemption of OP Units, LTIP Units and Time-Based LTIP Units that were outstanding as of September 30, 2021 and 2020 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, LTIP 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 Units, LTIP Units 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, Formation Awards and RSUs, which totaled 5.2 million and 4.9 million for the three and nine months ended September 30, 2021, and 4.4 million and 4.9 million for the three and nine months ended September 30, 2020, were excluded from the calculation of diluted earnings per common share as they were antidilutive, but potentially could be dilutive in the future. ​ Dividends Declared in October 2021 On October 27, 2021, our Board of Trustees declared a quarterly dividend of $ 0.225 per common share, payable on November 24, 2021 to shareholders of record as of November 10, 2021. 15. Fair Value Measurements Fair Value Measurements on a Recurring Basis To manage or hedge our exposure to interest rate risk, we follow established risk management policies and procedures, including the use of a variety of derivative financial instruments. We do not enter into derivative financial instruments for speculative purposes. As of September 30, 2021 and December 31, 2020, 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 $ 27.8 million and $ 43.9 million as of September 30, 2021 and December 31, 2020 and was recorded in "Accumulated other comprehensive loss" in our balance sheets, of which a portion was reclassified to "Redeemable noncontrolling interests." Within the next 12 months, we expect to reclassify $ 14.6 million of net unrealized loss as an increase to interest expense. 23 Table of Contents Accounting Standards Codification 820 ("Topic 820"), Fair Value Measurement and Disclosures, defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Topic 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 — quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 — observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 — unobservable inputs that are used when little or no market data is available. The fair values of the derivative financial instruments are based on the estimated amounts we would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and observable inputs. The derivative financial instruments are classified within Level 2 of the valuation hierarchy. The following is a summary of assets and liabilities measured at fair value on a recurring basis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements ​ Total Level 1 Level 2 Level 3 ​ ​ (In thousands) September 30, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative financial instruments designated as cash flow hedges: ​ ​ ​ ​ Classified as liabilities in "Other liabilities, net" ​ $ 28,406 ​ — ​ $ 28,406 ​ — Derivative financial instruments not designated as cash flow hedges: ​ ​ ​ ​ Classified as assets in "Other assets, net" ​ 266 ​ — ​ 266 ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ ​ ​ ​ Derivative financial instruments designated as cash flow hedges: ​ ​ ​ ​ Classified as liabilities in "Other liabilities, net" ​ $ 44,222 ​ — ​ $ 44,222 ​ — Derivative financial instruments not designated as cash flow hedges: ​ ​ ​ ​ Classified as assets in "Other assets, net" ​ 35 ​ — ​ 35 ​ — ​ The fair values of our derivative financial instruments were determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of the derivative financial instrument. This analysis reflected the contractual terms of the derivative, including the period to maturity, and used observable market-based inputs, including interest rate market data and implied volatilities in such interest rates. While it was determined that the majority of the inputs used to value the derivatives fall within Level 2 of the fair value hierarchy under authoritative accounting guidance, the credit valuation adjustments associated with the derivatives also utilized Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default. However, as of September 30, 2021 and December 31, 2020, 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 income (loss)" in our statements of comprehensive income (loss) for the three and nine months ended September 30, 2021 and 2020 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. 24 Table of Contents Financial Assets and Liabilities Not Measured at Fair Value As of September 30, 2021 and December 31, 2020, all financial assets 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, 2021 ​ December 31, 2020 ​ Carrying ​ Carrying ​ ​ ​ Amount (1) ​ Fair Value ​ Amount (1) ​ Fair Value ​ (In thousands) Financial liabilities: ​ ​ ​ ​ Mortgages payable ​ $ 1,684,407 ​ $ 1,739,548 ​ $ 1,603,869 ​ $ 1,606,470 Unsecured term loans ​ 400,000 ​ 400,201 ​ 400,000 ​ 399,678 (1) The carrying amount consists of principal only. The fair values of the mortgages payable and unsecured term loans were determined using Level 2 inputs of the fair value hierarchy. The fair value of our mortgages payable is estimated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit profiles based on market sources. The fair value of our unsecured term loans is calculated based on the net present value of payments over the term of the facilities using estimated market rates for similar notes and remaining terms. 16. Segment Information We review operating and financial data for each property on an individual basis; therefore, each of our individual properties is a separate operating segment. 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. The CODM measures and evaluates the performance of our operating segments, with the exception of the third-party asset management and real estate services business, based on the net operating income ("NOI") of properties within each segment. NOI includes property rental revenue and parking revenue, and deducts property operating expenses and real estate taxes. With respect to the third-party asset management and real estate services business, the CODM reviews revenue streams generated by this segment ("Third-party real estate services, including reimbursements"), as well as the expenses attributable to the segment ("General and administrative: third-party real estate services"), which are both disclosed separately in our statements of operations. The following represents the components of revenue from our third-party real estate services business: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2021 2020 X 2021 2020 ​ (In thousands) Property management fees ​ $ 4,831 ​ $ 4,694 ​ $ 14,549 ​ $ 15,453 Asset management fees ​ 2,145 ​ 2,301 ​ 6,602 ​ 7,400 Development fees (1) ​ 4,032 ​ 2,614 ​ 22,705 ​ 8,474 Leasing fees ​ 1,822 ​ 1,086 ​ 4,106 ​ 3,627 Construction management fees ​ — ​ 584 ​ 375 ​ 2,057 Other service revenue ​ 1,295 ​ 2,000 ​ 4,783 ​ 5,452 Third-party real estate services revenue, excluding reimbursements ​ 14,125 ​ 13,279 ​ 53,120 ​ 42,463 Reimbursement revenue (2) ​ 11,717 ​ 13,708 ​ 37,574 ​ 41,407 Third-party real estate services revenue, including reimbursements ​ ​ 25,842 ​ ​ 26,987 ​ ​ 90,694 ​ ​ 83,870 Third-party real estate services expenses ​ ​ 25,542 ​ ​ 28,207 ​ ​ 80,035 ​ ​ 86,260 Third-party real estate services revenue less expenses ​ $ 300 ​ $ ( 1,220 ) ​ $ 10,659 ​ $ ( 2,390 ) ​ 25 Table of Contents (1) Estimated development fee revenue totaling $ 51.2 million as of September 30, 2021 is expected to be recognized over the next six years as unsatisfied performance obligations are completed. (2) Represents reimbursement of expenses incurred by us on behalf of third parties, including allocated payroll costs and amounts paid to third-party contractors for construction management projects. Management company assets primarily consist of management and leasing contracts with a net book value of $ 21.1 million and $ 25.5 million as of September 30, 2021 and December 31, 2020, which are classified in "Other assets, net" in our balance sheets. 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 September 30, ​ Nine Months Ended September 30, ​ 2021 2020 X 2021 2020 ​ ​ (In thousands) Net income (loss) attributable to common shareholders ​ $ 893 ​ $ ( 22,793 ) ​ $ ( 22,811 ) ​ $ ( 16,648 ) Add: ​ ​ ​ ​ Depreciation and amortization expense ​ 56,726 ​ 56,481 ​ 178,130 ​ 157,586 General and administrative expense: ​ ​ ​ ​ Corporate and other ​ 12,105 ​ 11,086 ​ 38,475 ​ 37,478 Third-party real estate services ​ 25,542 ​ 28,207 ​ 80,035 ​ 86,260 Share-based compensation related to Formation Transaction and special equity awards ​ 3,480 ​ 7,133 ​ 12,866 ​ 25,432 Transaction and other costs ​ 2,951 ​ 845 ​ 8,911 ​ 7,526 Interest expense ​ 17,243 ​ 16,885 ​ 50,312 ​ 44,660 Loss on extinguishment of debt ​ — ​ — ​ — ​ 33 Income tax expense (benefit) ​ 217 ​ ( 488 ) ​ 4,527 ​ ( 3,721 ) Net income (loss) attributable to redeemable noncontrolling interests ​ 103 ​ ( 2,212 ) ​ ( 2,472 ) ​ ( 445 ) Net loss attributable to noncontrolling interests ​ ​ — ​ ​ — ​ ​ ( 1,108 ) ​ ​ — Less: ​ ​ ​ ​ Third-party real estate services, including reimbursements revenue ​ 25,842 ​ 26,987 ​ 90,694 ​ 83,870 Other revenue ​ 1,568 ​ 2,292 ​ 5,658 ​ 5,438 Income (loss) from unconsolidated real estate ventures, net ​ 20,503 ​ ( 965 ) ​ 23,513 ​ ( 17,142 ) Interest and other income, net ​ 192 ​ — ​ 163 ​ 1,021 Gain on sale of real estate ​ — ​ — ​ 11,290 ​ 59,477 Consolidated NOI ​ $ 71,155 ​ $ 66,830 ​ $ 215,547 ​ $ 205,497 ​ 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 September 30, 2021 ​ Commercial Multifamily Other Total ​ (In thousands) Property rental revenue ​ $ 92,522 ​ $ 35,020 ​ $ ( 1,642 ) ​ $ 125,900 Parking revenue ​ 3,520 ​ 111 ​ 81 ​ 3,712 Total property revenue ​ 96,042 ​ 35,131 ​ ( 1,561 ) ​ 129,612 Property expense: ​ ​ ​ ​ ​ ​ ​ Property operating ​ 27,068 ​ 14,212 ​ ( 1,082 ) ​ 40,198 Real estate taxes ​ 12,098 ​ 4,930 ​ 1,231 ​ 18,259 Total property expense ​ 39,166 ​ 19,142 ​ 149 ​ 58,457 Consolidated NOI ​ $ 56,876 ​ $ 15,989 ​ $ ( 1,710 ) ​ $ 71,155 26 Table of Contents ​ ​ Three Months Ended September 30, 2020 ​ Commercial Multifamily Other Total ​ (In thousands) Property rental revenue ​ $ 90,050 ​ $ 30,452 ​ $ ( 1,822 ) ​ $ 118,680 Parking revenue ​ 3,002 ​ 74 ​ — ​ 3,076 Total property revenue ​ 93,052 ​ 30,526 ​ ( 1,822 ) ​ 121,756 Property expense: ​ ​ ​ ​ ​ Property operating ​ 26,701 ​ 13,226 ​ ( 2,355 ) ​ 37,572 Real estate taxes ​ 12,136 ​ 4,656 ​ 562 ​ 17,354 Total property expense ​ 38,837 ​ 17,882 ​ ( 1,793 ) ​ 54,926 Consolidated NOI ​ $ 54,215 ​ $ 12,644 ​ $ ( 29 ) ​ $ 66,830 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, 2021 ​ Commercial Multifamily Other Total ​ (In thousands) Property rental revenue ​ $ 275,736 ​ $ 100,324 ​ $ ( 5,100 ) ​ $ 370,960 Parking revenue ​ 9,169 ​ 286 ​ 188 ​ 9,643 Total property revenue ​ 284,905 ​ 100,610 ​ ( 4,912 ) ​ 380,603 Property expense: ​ ​ ​ ​ ​ Property operating ​ 76,155 ​ 38,449 ​ ( 4,675 ) ​ 109,929 Real estate taxes ​ 36,018 ​ 15,240 ​ 3,869 ​ 55,127 Total property expense ​ 112,173 ​ 53,689 ​ ( 806 ) ​ 165,056 Consolidated NOI ​ $ 172,732 ​ $ 46,921 ​ $ ( 4,106 ) ​ $ 215,547 ​ ​ Nine Months Ended September 30, 2020 ​ Commercial Multifamily Other Total ​ ​ (In thousands) Property rental revenue ​ $ 266,823 ​ $ 94,873 ​ $ ( 7,177 ) ​ $ 354,519 Parking revenue ​ 10,018 ​ 249 ​ — ​ 10,267 Total property revenue ​ 276,841 ​ 95,122 ​ ( 7,177 ) ​ 364,786 Property expense: ​ ​ ​ ​ Property operating ​ 78,645 ​ 34,238 ​ ( 7,016 ) ​ 105,867 Real estate taxes ​ 36,532 ​ 14,088 ​ 2,802 ​ 53,422 Total property expense ​ 115,177 ​ 48,326 ​ ( 4,214 ) ​ 159,289 Consolidated NOI ​ $ 161,664 ​ $ 46,796 ​ $ ( 2,963 ) ​ $ 205,497 ​ The following is a summary of certain balance sheet data by segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Multifamily Other Total ​ ​ (In thousands) September 30, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real estate, at cost ​ $ 3,494,929 ​ $ 2,135,448 ​ $ 395,758 ​ $ 6,026,135 Investments in unconsolidated real estate ventures ​ 300,304 ​ 110,369 ​ 75,379 ​ 486,052 Total assets (1) ​ 3,541,397 ​ 1,779,416 ​ 688,165 ​ 6,008,978 December 31, 2020 ​ ​ ​ ​ Real estate, at cost ​ $ 3,459,171 ​ $ 2,036,131 ​ $ 505,329 ​ $ 6,000,631 Investments in unconsolidated real estate ventures ​ 327,798 ​ 108,593 ​ 24,978 ​ 461,369 Total assets (1) ​ 3,430,509 ​ 1,787,718 ​ 861,320 ​ 6,079,547 (1) Includes assets held for sale. See Note 3 for additional information. ​ 27 Table of Contents 17. Commitments and Contingencies Insurance We maintain general liability insurance with limits of $ 150.0 million per occurrence and in the aggregate, and property and rental value insurance coverage with limits of $ 1.5 billion per occurrence, with sub-limits for certain perils such as floods and earthquakes on each of our properties. We also maintain coverage, through our wholly owned captive insurance subsidiary, for a portion of the first loss on the above limits and for both terrorist acts and for nuclear, biological, chemical or radiological terrorism events with limits of $ 2.0 billion per occurrence. These policies are partially reinsured by third-party insurance providers. We will continue to monitor the state of the insurance market, and the scope and costs of coverage for acts of terrorism. We cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are responsible for deductibles and losses in excess of the insurance coverage, which could be material. Our debt, consisting of mortgages payable secured by our properties, a revolving credit facility and unsecured term loans, contains customary covenants requiring adequate insurance coverage. Although we believe that we currently have adequate insurance coverage, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. If lenders insist on greater coverage than we are able to obtain, it could adversely affect our ability to finance or refinance our properties. Construction Commitments As of September 30, 2021, we had assets under construction that will, based on our current plans and estimates, require an additional $ 320.3 million to complete, which we anticipate will be primarily expended over the next three 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 securities, and available cash. Environmental Matters Most of our assets have been subject, at some point, to environmental assessments that are intended to evaluate the environmental condition of the assets. The environmental assessments did not reveal any material environmental contamination that we believe would have a material adverse effect on our overall business, financial condition or results of operations, or that have not been anticipated and remediated during site redevelopment as required by law. Nevertheless, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites or changes in cleanup requirements would not result in significant cost to us. Environmental liabilities totaled $ 18.2 million as of September 30, 2021 and December 31, 2020 and are included in "Other liabilities, net" in our balance sheets. Other As of September 30, 2021, we had committed tenant-related obligations totaling $ 76.9 million ($ 73.6 million related to our consolidated entities and $ 3.3 million related to our unconsolidated real estate ventures at our share). The timing and amounts of payments for tenant-related obligations are uncertain and may only be due upon satisfactory performance of certain conditions. There are various legal actions against us in the ordinary course of business. 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 (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. At times, we also have agreements with certain of our outside venture partners 28 Table of Contents whereby we agree to either indemnify the partners and/or the associated ventures with respect to certain contingent liabilities associated with operating assets or to reimburse our partner for its share of any payments made by them under certain guarantees. Guarantees (excluding environmental) customarily terminate either upon the satisfaction of specified circumstances or repayment of the underlying debt. Amounts that we may be required to pay in future periods in relation to guarantees associated with budget overruns or operating losses are not estimable. As of September 30, 2021, we had additional capital commitments and certain recorded guarantees to our unconsolidated real estate ventures totaling $ 66.1 million. As of September 30, 2021, 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, 2021, the aggregate amount of principal payment guarantees was $ 8.3 million for our consolidated entities. 18. Transactions with Related Parties 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. We provide services for the benefit of the JBG Legacy Funds that own interests in the assets retained by the JBG Legacy Funds. In connection with the contribution to us of the assets formerly owned by the JBG Legacy Funds as part of the Formation Transaction, the general partner and managing member interests in the JBG Legacy Funds that were held by certain former JBG executives (and who became members of our management team and/or Board of Trustees) were not transferred to us and remain under the control of these individuals. In addition, certain members of our senior management and Board of Trustees have ownership interests in the JBG Legacy Funds and own carried interests in each fund and in certain of our real estate ventures that entitle them to receive cash payments if the fund or real estate venture achieves certain return thresholds. We launched the WHI with the Federal City Council in June 2018 as a scalable market-driven model that uses private capital to help address the scarcity of housing for middle income families. We are the manager for the WHI Impact Pool, which is the social impact debt financing vehicle of the WHI. As of September 30, 2021, the WHI Impact Pool had completed closings of capital commitments totaling $ 114.4 million, which included a commitment from us of $ 11.2 million. As of September 30, 2021, our remaining commitment was $ 8.3 million. The third-party real estate services revenue, including expense reimbursements, from the JBG Legacy Funds and the WHI Impact Pool was $ 5.6 million and $ 17.2 million for the three and nine months ended September 30, 2021, and $ 4.6 million and $ 17.3 million for the three and nine months ended September 30, 2020. As of September 30, 2021 and December 31, 2020, we had receivables from the JBG Legacy Funds and the WHI Impact Pool totaling $ 3.5 million and $ 7.5 million for such services. We rented our former corporate offices from an unconsolidated real estate venture and made payments totaling $ 246,000 and $ 1.0 million for the three and nine months ended September 30, 2021, and $ 403,000 and $ 4.1 million for the three and nine months ended September 30, 2020. 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 $ 4.9 million and $ 13.4 million during the three and nine months ended September 30, 2021, and $ 4.0 million and $ 12.6 million for the three and nine months ended September 30, 2020, which is included in "Property operating expenses" in our statements of operations. 29 Table of Contents