What changed in this filing

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Item 1. Financial Statements

2022-05-03 compared with 2021-11-02 · 263 added, 383 removed, 503 unchanged (56% of the section changed)

3 unchanged sentences

(In thousands, except par value amounts)

September 30, 2021

March 31, 2022

December 31, 2021

12 unchanged sentences

Investments in unconsolidated real estate ventures

Intangible assets, net

Other assets, net

6 unchanged sentences

Other liabilities, net

Liabilities related to assets held for sale

Total liabilities

4 unchanged sentences

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

124,248 and 127,378 shares issued and outstanding as of March 31, 2022 and December 31, 2021

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

Total shareholders' equity of JBG SMITH Properties

5 unchanged sentences

(In thousands, except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Property rental

15 unchanged sentences

Interest expense

Gain on sale of real estate

Loss on extinguishment of debt

Loss on the sale of real estate

Loss on the extinguishment of debt

Total other income (expense)

INCOME (LOSS) BEFORE INCOME TAX (EXPENSE) BENEFIT

LOSS BEFORE INCOME TAX (EXPENSE) BENEFIT

Income tax (expense) benefit

NET INCOME (LOSS)

Net (income) loss attributable to redeemable noncontrolling interests

Net loss attributable to noncontrolling interests

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

LOSS PER COMMON SHARE - BASIC AND DILUTED

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED

3 unchanged sentences

(In thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

NET INCOME (LOSS)

Three Months Ended March 31,

OTHER COMPREHENSIVE INCOME (LOSS):

Change in fair value of derivative financial instruments

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

Other comprehensive income (loss)

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

Other comprehensive income

COMPREHENSIVE INCOME (LOSS)

1 unchanged sentence

Net loss attributable to noncontrolling interests

Other comprehensive (income) loss attributable to redeemable noncontrolling interests

Other comprehensive income attributable to redeemable noncontrolling interests

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO JBG SMITH PROPERTIES

3 unchanged sentences

(In thousands)

Common Shares

Comprehensive

Common Shares

Noncontrolling

BALANCE AS OF JUNE 30, 2021

Net income attributable to common shareholders and noncontrolling interests

Conversion of common limited partnership units to common shares

Common shares repurchased

Common shares issued pursuant to employee incentive compensation plan and Employee Share Purchase Plan ("ESPP")

Dividends declared on common shares

($ 0.225 per common share)

Distributions to noncontrolling interests

Redeemable noncontrolling interests redemption value adjustment and other comprehensive income allocation

Other comprehensive income

BALANCE AS OF SEPTEMBER 30, 2021

BALANCE AS OF JUNE 30, 2020

BALANCE AS OF DECEMBER 31, 2021

Net loss attributable to common shareholders and noncontrolling interests

Conversion of common limited partnership units to common shares

Conversion of common limited partnership units ("OP Units") to common shares

Common shares repurchased

Common shares issued pursuant to ESPP

Dividends declared on common shares

($ 0.225 per common share)

Distributions to noncontrolling interests

Common shares issued pursuant to employee incentive compensation plan and Employee Share Purchase Plan ("ESPP")

Contributions from noncontrolling interests, net

Redeemable noncontrolling interests redemption value adjustment and other comprehensive income allocation

Other comprehensive income

BALANCE AS OF SEPTEMBER 30, 2020

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

JBG SMITH PROPERTIES

Condensed Consolidated Statements of Equity

(In thousands)

Common Shares

Comprehensive

Noncontrolling

BALANCE AS OF MARCH 31, 2022

BALANCE AS OF DECEMBER 31, 2020

Net loss attributable to common shareholders and noncontrolling interests

Conversion of common limited partnership units to common shares

Conversion of OP Units to common shares

Common shares repurchased

Common shares issued pursuant to employee incentive compensation plan and ESPP

Dividends declared on common shares

($ 0.45 per common share)

Contributions from noncontrolling interests, net

1 unchanged sentence

Other comprehensive income

BALANCE AS OF SEPTEMBER 30, 2021

BALANCE AS OF DECEMBER 31, 2019

Net loss attributable to common shareholders and noncontrolling interests

Conversion of common limited partnership units to common shares

Common shares repurchased

Common shares issued pursuant to ESPP

Dividends declared on common shares

($ 0.45 per common share)

Distributions to noncontrolling interests

Redeemable noncontrolling interests redemption value adjustment and other comprehensive loss allocation

Other comprehensive loss

BALANCE AS OF SEPTEMBER 30, 2020

BALANCE AS OF MARCH 31, 2021

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

2 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

OPERATING ACTIVITIES:

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

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

Share-based compensation expense

4 unchanged sentences

Amortization of lease incentives

Loss on extinguishment of debt

Gain on sale of real estate

Loss on the sale of real estate

Loss on operating lease and other receivables

Income from investments, net

Return on capital from unconsolidated real estate ventures

8 unchanged sentences

Development costs, construction in progress and real estate additions

Deposits for real estate and other acquisitions

Proceeds from sale of real estate

Proceeds from the sale of real estate

Proceeds from the sale of investments

Distributions of capital from unconsolidated real estate ventures

Investments in unconsolidated real estate ventures and other

Investments in unconsolidated real estate ventures and other investments

Net cash used in investing activities

FINANCING ACTIVITIES:

Borrowings under mortgages payable

Borrowings under revolving credit facility

Borrowings under unsecured term loans

Repayments of mortgages payable

Repayments of revolving credit facility

Debt issuance costs

Finance lease payments

Proceeds from common shares issued pursuant to ESPP

Common shares repurchased

1 unchanged sentence

Distributions to redeemable noncontrolling interests

Distributions to noncontrolling interests

Contributions from noncontrolling interests

Net cash (used in) provided by financing activities

Net (decrease) increase in cash and cash equivalents and restricted cash

Net cash used in financing activities

Net decrease in cash and cash equivalents, and restricted cash

Cash and cash equivalents, and restricted cash, beginning of period

Cash and cash equivalents, and restricted cash, end of period

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD:

Cash and cash equivalents

Restricted cash

Cash and cash equivalents and restricted cash

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

2 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD:

Cash and cash equivalents

Restricted cash

Cash and cash equivalents, and restricted cash

SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION:

2 unchanged sentences

Write-off of fully depreciated assets

Deconsolidation of real estate asset

Conversion of common limited partnership units to common shares

Derecognition of operating lease right-of-use assets

Derecognition of liabilities related to operating lease right-of-use assets

Recognition of finance lease right-of-use assets

Recognition of liabilities related to finance lease right-of-use assets

Conversion of OP Units to common shares

Cash paid for amounts included in the measurement of lease liabilities for operating leases

5 unchanged sentences

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

metropolitan area that have high barriers to entry and 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.

metropolitan area with 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 developer for Amazon.com, Inc.'s ("Amazon") new over five million square foot headquarters and where Virginia Tech's $ 1 billion Innovation Campus is under construction.

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

As of March 31, 2022, JBG SMITH, as its sole general partner, controlled JBG SMITH LP and owned 89.0 % of its OP Units, after giving effect to the conversion of certain vested long-term incentive partnership units ("LTIP Units") that are convertible into OP Units.

JBG SMITH is referred to herein as "we,"

"us,"

6 unchanged sentences

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).

As of March 31, 2022, our Operating Portfolio consisted of 62 operating assets comprising 41 commercial assets totaling 13.0 million square feet ( 11.3 million square feet at our share), 20 multifamily assets totaling 7,715 units ( 6,502 units at our share) and one wholly-owned land asset for which we are the ground lessor.

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;

(i) two under-construction multifamily assets with 1,583 units ( 1,583 units at our share);

(ii) nine near-term development assets totaling 4.1 million square feet ( 3.9 million square feet at our share) of estimated potential development density;

and (iii) 20 future development assets totaling 13.0 million square feet ( 10.5 million square feet at our share) of estimated potential development density.

6 unchanged sentences

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 results of operations for the three months ended March 31, 2022 and 2021 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, 2021, filed with the Securities and Exchange Commission on February 22, 2022 ("Annual Report").

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

information on our VIEs.

See Note 5 for additional 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.

References to our financial statements refer to our condensed consolidated financial statements as of March 31, 2022 and December 31, 2021, and for the three months ended March 31, 2022 and 2021.

References to our balance sheets refer to our condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021.

References to our statements of operations refer to our condensed consolidated statements of operations for the three months ended March 31, 2022 and 2021.

References to our statements of comprehensive income (loss) refer to our condensed consolidated statements of comprehensive income (loss) for the three months ended March 31, 2022 and 2021.

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

3 unchanged sentences

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

Reclassification

Intangible assets, net, totaling $ 202.0 million were reclassified from "Other assets, net"

to "Intangible assets, net"

on our balance sheet as of December 31, 2021 in order to present intangible assets separately from other assets, which is consistent with our current year presentation.

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.

There were no material changes to our significant accounting policies disclosed in our Annual Report.

Use of Estimates

1 unchanged sentence

The most significant of these estimates include:

(i) the underlying cash flows and holding periods used in assessing impairment of long-lived assets;

(i) the underlying cash flows and holding periods used in assessing impairment of our real estate assets;

(ii) the determination of useful lives for tangible and intangible assets;

2 unchanged sentences

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

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").

In March 2020, the Financial Accounting Standards Board 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.

During the three months ended March 31, 2022, we elected to apply the hedge accounting expedient that allows us to continue to assess whether the underlying hedged forecasted transaction remains probable without regard to the replacement of the contractually specified rate.

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.

Acquisition, Dispositions and Assets Held for Sale

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.

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.

Dispositions and Assets Held for Sale

The following is a summary of the disposition activity for the three months ended March 31, 2022:

Date Disposed

March 28, 2022

Development Parcel

Arlington, Virginia

During the three months ended March 31, 2022, one of our unconsolidated real estate ventures disposed of several assets.

See Note 4 for additional information.

On April 1, 2022, we sold the Universal Buildings, commercial assets located in Washington D.C., for a gross sales price of $ 228.0 million, which were classified as assets held for sale as of March 31, 2022.

On April 13, 2022, we formed an unconsolidated real estate venture with affiliates of Fortress Investment Group LLC ("Fortress") to recapitalize a 1.6 million square foot office portfolio and land parcels for a gross sales price of $ 580.0 million comprising four wholly owned commercial assets (7200 Wisconsin Avenue, 1730 M Street, RTC-West/RTC-West Trophy Office/RTC-West Land ("RTC-West") and Courthouse Plaza 1 and 2), which were classified as assets held for sale as of March 31, 2022.

Fortress contributed $ 131.0 million for a 66.5 % interest in the venture.

In connection with the transaction, the real estate venture obtained mortgage loans totaling $ 458.0 million secured by the properties, of which $ 402.0 million was drawn at closing.

We will provide asset management, property management and leasing services to the venture.

Because our interest in the venture is subordinated to a 15 % preferred return to Fortress, we do not anticipate receiving any near-term cash flow distributions from it.

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:

Square Feet (1)

Liabilities Related

to Assets Held

(In thousands)

September 30, 2021

March 31, 2022

Pen Place (3)

Arlington, Virginia

Universal Buildings (4)

Washington, D.C.

7200 Wisconsin Avenue (4)

Bethesda, Maryland

1730 M Street (4)

Washington, D.C.

RTC-West (4) (5)

Commercial / Other

Reston, Virginia

Courthouse Plaza 1 and 2 (4)

Arlington, Virginia

December 31, 2021

1 unchanged sentence

Arlington, Virginia

(1) Represents estimated or approved potential development density.

(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.

(1) Includes $ 180.5 million of finance lease right-of-use assets related to ground leases at 1730 M Street and Courthouse Plaza 1 and 2.

The remaining assets primarily represent the carrying value of real estate.

(2) Includes $ 164.8 million of mortgages payable related to 1730 M Street and RTC-West, which were repaid in April 2022, and $ 163.5 million of liabilities related to finance lease right-of-use assets related to 1730 M Street and Courthouse Plaza 1 and 2.

(3) Under contract for sale to Amazon for $ 198.0 million, which we expect to close during the second quarter of 2022.

Total square feet represent estimated or approved potential development density.

(4) These assets were disposed of or recapitalized in April 2022.

(5) Total square feet include 1.4 million square feet of estimated potential development density.

Investments in Unconsolidated Real Estate Ventures

1 unchanged sentence

Real Estate Venture Partners

September 30, 2021

March 31, 2022

December 31, 2021

1 unchanged sentence

Prudential Global Investment Management

Landmark Partners ("Landmark")

1.8 % - 49.0 %

7 unchanged sentences

Total investments in unconsolidated real estate ventures (3)

(1) Reflects our effective ownership interests in the underlying real estate as of September 30, 2021.

(1) Reflects our effective ownership interests in the underlying real estate as of March 31, 2022.

We have multiple investments with certain venture partners with varying ownership interests in the underlying real estate.

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:

(3) As of March 31, 2022 and December 31, 2021, our total investments in unconsolidated real estate ventures were greater than our share of the net book value of the underlying assets by $ 17.6 million and $ 18.6 million, resulting principally from capitalized interest and our zero investment balance in the real estate venture with CPPIB that owns 1101 17th Street .

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

We recognized revenue, including expense reimbursements, of $ 5.5 million and $ 5.9 million for the three months ended March 31, 2022 and 2021, for such services.

We evaluate reconsideration events as we become aware of them.

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

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

A reconsideration event could cause us to consolidate an unconsolidated real estate venture in the future or deconsolidate a consolidated entity.

The following is a summary of disposition activity by our unconsolidated real estate ventures for the three months ended March 31, 2022:

Proportionate

1 unchanged sentence

(In thousands)

CBREI Venture

Fairway Apartments/Fairway Land ("Fairway") (2)

Courthouse Metro Land/Courthouse Metro Land – Option ("Courthouse Metro")

5615 Fishers Lane

September 17, 2021

500 L'Enfant Plaza (3)

January 27, 2022

The Alaire, The Terano and

12511 Parklawn Drive

1.8 % - 18.0 %

(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.

in our statement of operations.

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

1 unchanged sentence

Interest Rate (1)

September 30, 2021

March 31, 2022

December 31, 2021

5 unchanged sentences

Mortgages payable, net (4)

(1) Weighted average effective interest rate as of September 30, 2021.

(1) Weighted average effective interest rate as of March 31, 2022.

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

2 unchanged sentences

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

September 30, 2021

March 31, 2022

December 31, 2021

7 unchanged sentences

Total liabilities and equity

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

1 unchanged sentence

Total revenue

Operating income (loss) (2)

Operating income (1)

Net income (loss) (1)

(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.

(1) Includes the gain from the sale of The Alaire, The Terano and 12511 Parklawn Drive totaling $ 45.1 million during the three months ended March 31, 2022.

Variable Interest Entities

2 unchanged sentences

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.

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.

As of March 31, 2022 and December 31, 2021, 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 entities, 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"

As of March 31, 2022 and December 31, 2021, the net carrying amounts of our investment in these entities was $ 146.1 million and $ 145.2 million, which were included in "Investments in unconsolidated real estate ventures"

in our balance sheets.

11 unchanged sentences

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

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.

As of March 31, 2022 and December 31, 2021, excluding the operating partnership, we consolidated three VIEs with total assets of $ 300.2 million and $ 269.7 million, and liabilities of $ 21.8 million and $ 13.9 million.

The assets of the VIEs can only be used to settle the obligations of the VIEs, and the liabilities include third-party liabilities of the VIEs for which the creditors or beneficial interest holders do not have recourse against us.

Other Assets, Net

The following is a summary of other assets, net:

September 30, 2021

March 31, 2022

December 31, 2021

(In thousands)

Deferred leasing costs, net

Lease intangible assets, net

Management and leasing contracts, net

Other identified intangible assets

Wireless spectrum licenses (1)

Operating lease right-of-use assets

Finance lease right-of-use assets

Prepaid expenses

Derivative agreements, at fair value

Deferred financing costs, net

Operating lease right-of-use assets

Finance lease right-of-use assets (1)

Other (2) (3)

Total other assets, net

(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 .

(1) Represents finance ground leases at 1730 M Street and Courthouse Plaza 1 and 2, which were classified as "Assets held for sale"

in our balance sheet as of March 31, 2022.

(2) As of March 31, 2022 and December 31, 2021, included $ 11.9 million and $ 9.8 million of investments in funds, which invest in real estate focused technology companies, that are recorded at their fair value based on their reported net asset value.

During the first quarter of 2022, we recorded unrealized gains totaling $ 156,000 related to these investments, which are included in "Interest and other income, net"

in our statement of operations .

(3) As of March 31, 2022 and December 31, 2021, included $ 8.3 million and $ 11.3 million of equity investments that are carried at cost.

During the first quarter of 2022, we recorded a realized gain of $ 13.9 million related to these investments, which is included in "Interest and other income, net"

in our statement of operations .

Mortgages Payable

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Interest Rate (1)

September 30, 2021

March 31, 2022

December 31, 2021

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Mortgages payable, net

(1) Weighted average effective interest rate as of September 30, 2021.

Mortgages payable, net, related to assets held for sale

Mortgages payable, net, including mortgages payable related to assets held for sale

(1) Weighted average effective interest rate as of March 31, 2022.

(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.

(4) As of March 31, 2022 and December 31, 2021, excludes $ 6.1 million and $ 6.4 million of net deferred financing costs related to unfunded mortgage loans that were included in "Other assets, net."

As of March 31, 2022 and December 31, 2021, the net carrying value of real estate collateralizing our mortgages payable, including mortgages payable related to assets held for sale, 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.

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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.

As of March 31, 2022 and December 31, 2021, 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.

Our $ 1.4 billion credit facility consists 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 2025 and a $ 200.0 million unsecured term loan ("Tranche A-2 Term Loan") maturing in July 2024.

Effective as of January 14, 2022, the Tranche A-1 Term Loan was amended to extend the maturity date to January 2025 with two one-year extension options, and to amend the interest rate to Secured Overnight Financing Rate ("SOFR") plus 1.15 % to SOFR plus 1.75 %, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets.

In connection with the loan amendment, we amended the related interest rate swaps, extending the maturity to July 2024 and converting the hedged rate from one-month LIBOR to one-month SOFR.

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

Interest Rate (1)

September 30, 2021

March 31, 2022

December 31, 2021

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Unsecured term loans, net

(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."

(1) Effective interest rate as of March 31, 2022.

(2) As of March 31, 2022 and December 31, 2021, letters of credit with an aggregate face amount of $ 467,000 and $ 911,000 were outstanding under our revolving credit facility.

(3) As of March 31, 2022 and December 31, 2021, excludes $ 4.6 million and $ 5.0 million of net deferred financing costs related to our revolving credit facility that 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 .

In April 2022, we repaid $ 210.0 million on our revolving credit facility.

(5) As of March 31, 2022 and December 31, 2021, the outstanding balance was fixed by interest rate swap agreements.

As of March 31, 2022, the interest rate swaps mature in July 2024, and fix SOFR at a weighted average interest rate of 1.46 % for the Tranche A-1 Term Loan and fix LIBOR at a weighted average interest rate of 1.34 % for the Tranche A-2 Term Loan .

Other Liabilities, Net

The following is a summary of other liabilities, net:

September 30, 2021

March 31, 2022

December 31, 2021

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Derivative agreements, at fair value

Deferred purchase price (1)

Deferred purchase price related to the acquisition of a future development parcel

Total other liabilities, net

(1) Deferred purchase price associated with the December 2020 acquisition of the former Americana Hotel site.

(1) Represents finance ground leases at 1730 M Street and Courthouse Plaza 1 and 2, which were classified as "Assets held for sale"

in our balance sheet as of March 31, 2022.

Redeemable Noncontrolling Interests

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."

Vested LTIP Units are redeemable into OP Units and, in turn cash or, at our election, our common shares, subject to certain limitations.

During the three months ended March 31, 2022 and 2021, unitholders redeemed 207,882 and 119,178 OP Units, which we elected to redeem for an equivalent number of our common shares.

As of March 31, 2022, outstanding OP Units and redeemable LTIP Units totaled 15.3 million, representing an 11.0 % ownership interest in JBG SMITH LP.

In our balance sheets, our OP Units and certain vested 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.

We are a partner in The Wren, 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.

As of March 31, 2022, we held a 96.0 % ownership interest in the real estate venture.

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

Three Months Ended September 30,

(In thousands)

Balance, beginning of period

OP Unit redemptions

Net income (loss) attributable to redeemable noncontrolling interests

Other comprehensive income

Distributions

Share-based compensation expense

Adjustment to redemption value

Balance, end of period

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

2 unchanged sentences

LTIP Units issued in lieu of cash bonuses (1)

Net loss attributable to redeemable noncontrolling interests

Other comprehensive income (loss)

Net income (loss)

Other comprehensive income

Distributions

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

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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

primarily vest ratably over four years subject to continued employment.

In January 2022, we granted to certain employees 660,785 LTIP Units with time-based vesting requirements ("Time-Based LTIP Units") and a weighted average grant-date fair value of $ 27.41 per unit that 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.

In February 2022, we granted 252,206 fully vested LTIP Units to certain employees, who elected to receive all or a portion of their cash bonuses, related to 2021 service, as LTIP Units.

The LTIP units had a weighted average grant-date fair value of $ 22.19 per unit.

Compensation expense totaling $ 5.6 million for these LTIP Units was recognized in 2021.

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 aggregate grant-date fair value of the Time-Based LTIP Units and the LTIP Units granted during the three months ended March 31, 2022 was $ 23.7 million.

The Time-Based LTIP Units and the LTIP Units were valued based on the closing common share price on the grant date, 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

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Post-grant restriction periods

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

Risk-free interest rate

0.2 % - 1.0 %

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.

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:

In April 2022, as part of their annual compensation, we granted to non-employee trustees a total of 2.0 million fully vested LTIP Units with a grant-date fair value of $ 20.90 per unit, which includes LTIP Units elected in lieu of cash retainers.

The LTIP Units may not be sold while a trustee is serving on the Board of Trustees.

Appreciation-Only LTIP Units ("AO LTIP Units")

In January 2022, we granted to certain employees 1.5 million performance-based AO LTIP Units with a weighted average grant-date fair value of $ 4.44 per unit.

The AO LTIP Units are structured in the form of profits interests that provide for a share of appreciation determined by the increase in the value of a common share at the time of conversion over the participation threshold of $ 32.30 .

The AO LTIP Units are subject to a TSR modifier whereby the number of AO LTIP Units that will ultimately be earned will be increased or reduced by as much as 25 % .

The AO LTIP Units have a three-year performance period with 50 % of the AO LTIP Units that are earned vesting at the end of the three-year performance period and the remaining 50 % vesting on the fourth anniversary of the grant date, subject to continued employment.

The AO LTIPs have a 10-year term from the grant date.

The aggregate grant-date fair value of the AO LTIP Units granted during the three months ended March 31, 2022 was $ 6.6 million, valued using Monte Carlo simulations.

The following is a summary of the significant assumptions used to value the AO LTIP Units:

Expected volatility

1 unchanged sentence

Risk-free interest rate

Expected life

Performance-Based LTIP Units

In January 2022, 469,624 LTIP Units with performance-based vesting requirements ("Performance-Based LTIP Units"), which were unvested as of December 31, 2021, were forfeited as the performance measures were not met.

Share-Based Compensation Expense

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

Time-Based LTIP Units

Performance-Based LTIP Units

AO LTIP Units and Performance-Based LTIP Units

Other equity awards (1)

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Formation Awards

LTIP Units (2)

Special Performance-Based LTIP Units (3)

Special Time-Based LTIP Units (3)

OP Units and LTIP Units (2)

Special Time-Based LTIP Units and Special Performance-Based LTIP Units (3)

Share-based compensation related to Formation Transaction and special equity awards (4)

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(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.

(i) fully vested LTIP Units issued to certain employees in lieu of all or a portion of any cash bonuses earned, (ii) restricted share units ("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.

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in the accompanying statements of operations .

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.

As of March 31, 2022, we had $ 76.0 million of total unrecognized compensation expense related to unvested share-based payment arrangements, which is expected to be recognized over a weighted average period of 3.2 years.

Transaction and Other Costs

The following is a summary of transaction and other costs:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

3 unchanged sentences

Transaction and other costs

(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.

(1) Primarily consists of legal costs related to pursued transactions.

Interest Expense

The following is a summary of interest expense:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

2 unchanged sentences

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

Net unrealized (gain) loss on derivative financial instruments not designated as cash flow hedges

Net unrealized gain on derivative financial instruments designated as ineffective hedges

Capitalized interest

Interest expense

Shareholders' Equity and Earnings Per Common Share

Shareholders' Equity and Loss Per Common Share

Common Shares Repurchased

In March 2020, our Board of Trustees authorized the repurchase of up to $ 500.0 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.

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,

During the three months ended March 31, 2022, we repurchased and retired 3.3 million common shares for $ 93.1 million, a weighted average purchase price per share of $ 27.86 .

During the three months ended March 31, 2021, we repurchased and retired 619,749 common shares for $ 19.2 million, a weighted average purchase price per share of $ 30.96 .

Since we began the share repurchase program, we have repurchased and retired 12.5 million common shares for $ 355.6 million, a weighted average purchase price per share of $ 28.45 .

In April 2022, we repurchased and retired 707,000 common shares for $ 19.4 million, a weighted average purchase price per share of $ 27.39 , pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.

Loss Per Common Share

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

Three Months Ended March 31,

(In thousands, except per share amounts)

Net income (loss)

Net (income) loss attributable to redeemable noncontrolling interests

Net loss attributable to noncontrolling interests

Net income (loss) attributable to common shareholders

Distributions to participating securities

Net income (loss) available to common shareholders - basic and diluted

Net loss attributable to common shareholders

Weighted average number of common shares outstanding - basic and diluted

Earnings (loss) per common share - basic and diluted

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.

Loss per common share - basic and diluted

The effect of the redemption of OP Units, Time-Based LTIP Units, fully vested LTIP Units and Special Time-Based LTIP Units that were outstanding as of March 31, 2022 and 2021 is excluded in the computation of diluted earnings (loss) 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 (loss) per share).

Since OP Units, Time-Based LTIP Units, LTIP Units and Special 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 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 (loss) per common share.

Units, Performance-Based LTIP Units, Formation Awards and RSUs, which totaled 6.0 million and 3.9 million for the three months ended March 31, 2022 and 2021, were excluded from the calculation of diluted loss per common share as they were antidilutive, but potentially could be dilutive in the future.

Dividends Declared in April 2022

On April 29, 2022, our Board of Trustees declared a quarterly dividend of $ 0.225 per common share, payable on May 27, 2022 to shareholders of record as of May 13, 2022.

Fair Value Measurements

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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"

As of March 31, 2022 and December 31, 2021, 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 gain (loss) on our derivative financial instruments designated as effective hedges was $ 11.6 million and ($ 17.2 ) million as of March 31, 2022 and December 31, 2021 and was recorded in "Accumulated other comprehensive income (loss)"

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

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(In thousands)

September 30, 2021

Derivative financial instruments designated as cash flow hedges:

March 31, 2022

Derivative financial instruments designated as effective hedges:

Classified as assets in "Other assets, net"

Classified as liabilities in "Other liabilities, net"

Derivative financial instruments not designated as cash flow hedges:

Derivative financial instruments designated as ineffective hedges:

Classified as assets in "Other assets, net"

December 31, 2021

Derivative financial instruments designated as cash flow hedges:

Derivative financial instruments designated as effective hedges:

Classified as assets in "Other assets, net"

Classified as liabilities in "Other liabilities, net"

Derivative financial instruments not designated as cash flow hedges:

Derivative financial instruments designated as ineffective hedges:

Classified as assets in "Other assets, net"

2 unchanged sentences

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.

However, as of March 31, 2022 and December 31, 2021, 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.

in our statements of comprehensive income (loss) for the three months ended March 31, 2022 and 2021 were attributable to the net change in unrealized gains or losses related to the interest rate swaps that were outstanding during those periods, none of which were reported in our statements of operations as the interest rate swaps were documented and qualified as hedging instruments.

Financial Assets and Liabilities Not Measured at Fair Value

As of 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

As of March 31, 2022 and December 31, 2021, 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:

March 31, 2022

December 31, 2021

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Mortgages payable (2)

Revolving credit facility

Unsecured term loans

(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.

(2) Includes mortgages payable related to assets held for sale as of March 31, 2022.

The fair values of the mortgages payable, revolving credit facility 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.

The fair value of our revolving credit facility and 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.

Segment Information

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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.

To conform to the current period presentation, we have reclassified the prior period segment financial data for 1700 M Street, for which we are the ground lessor, that had been classified as part of the commercial segment to other to better align with our internal reporting.

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.

2 unchanged sentences

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,

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

Three Months Ended March 31,

(In thousands)

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Third-party real estate services revenue less expenses

(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.

(1) As of March 31, 2022, we had estimated unrecognized development fee revenue totaling $ 45.2 million, of which $ 10.4 million, $ 12.0 million and $ 6.3 million is expected to be recognized during the remainder of 2022 , 2023 and 2024 , and $ 16.5 million is expected to be recognized thereafter through 2027 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"

Management company assets primarily consist of management and leasing contracts with a net book value of $ 18.1 million and $ 19.6 million as of March 31, 2022 and December 31, 2021, which are classified in "Intangible 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,

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

Three Months Ended March 31,

(In thousands)

Net income (loss) attributable to common shareholders

Net loss attributable to common shareholders

Depreciation and amortization expense

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Interest expense

Loss on extinguishment of debt

Loss on the extinguishment of debt

Income tax expense (benefit)

5 unchanged sentences

Interest and other income, net

Gain on sale of real estate

Loss on the sale of real estate

Consolidated NOI

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

(In thousands)

Property rental revenue

Parking revenue

Total property revenue

Property expense:

Property operating

Real estate taxes

Total property expense

Consolidated NOI

Three Months Ended September 30, 2020

(In thousands)

Property rental revenue

Parking revenue

Total property revenue

Property expense:

Property operating

Real estate taxes

Total property expense

Consolidated NOI

Nine Months Ended September 30, 2021

Items classified in the Other column include future development assets, assets ground leased to third parties, corporate entities and the elimination of inter-segment activity.

Three Months Ended March 31, 2022

(In thousands)

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Consolidated NOI

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

(In thousands)

9 unchanged sentences

(In thousands)

September 30, 2021

March 31, 2022

Real estate, at cost

Investments in unconsolidated real estate ventures

Total assets (1)

December 31, 2021

1 unchanged sentence

Investments in unconsolidated real estate ventures

Total assets (1)

(1) Includes assets held for sale.

See Note 3 for additional information.

Commitments and Contingencies

6 unchanged sentences

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.

Although we believe that we currently have adequate insurance coverage, we may not be able to obtain an equivalent amount of coverage at a reasonable cost in the future.

If lenders insist on greater coverage than we 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.

As of March 31, 2022, we had assets under construction that will, based on our current plans and estimates, require an additional $ 569.0 million to complete, which we anticipate will be primarily expended over the next two to 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, and available cash.

Environmental Matters

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Nevertheless, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites or changes in cleanup requirements would not result in significant cost to us.

Environmental liabilities totaled $ 18.2 million as of September 30, 2021 and December 31, 2020 and are included in "Other liabilities, net"

Environmental liabilities totaled $ 18.2 million as of March 31, 2022 and December 31, 2021 and are included in "Other liabilities, net"

in our balance sheets.

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).

As of March 31, 2022, we had committed tenant-related obligations totaling $ 78.6 million ($ 73.2 million related to our consolidated entities and $ 5.4 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.

3 unchanged sentences

We customarily have agreements with our outside venture partners whereby the partners agree to reimburse the real estate venture or us for their share of any payments made under certain of these guarantees.

At times, we also have agreements with certain of our outside venture partners

whereby we agree to either indemnify the partners and/or the associated ventures with respect to certain contingent liabilities associated with operating assets or to reimburse our partner for its share of any payments made by them under certain guarantees.

At times, we also have agreements with certain of our outside venture partners whereby we agree to either indemnify the partners and/or the associated ventures with respect to certain contingent liabilities associated with operating assets or to reimburse our partner for its share of any payments made by them under certain guarantees.

Guarantees (excluding environmental) customarily terminate either upon the satisfaction of specified circumstances or repayment of the underlying debt.

Amounts that we may be required to pay in future periods in relation to guarantees associated with budget overruns or operating losses are not estimable.

As of September 30, 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.

As of March 31, 2022, we had additional capital commitments and certain recorded guarantees to our unconsolidated real estate ventures totaling $ 68.6 million.

As of March 31, 2022, 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.

As of March 31, 2022, the aggregate amount of principal payment guarantees was $ 8.3 million for our consolidated entities.

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

Under the Tax Matters Agreement, we may be required to indemnify Vornado against any taxes and related amounts and costs resulting from a violation by us of the Tax Matters Agreement.

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.

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

In connection with the contribution to us of certain 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 team 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.

As of March 31, 2022, 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 March 31, 2022, our remaining commitment was $ 7.5 million.

The third-party real estate services revenue, including expense reimbursements, from the JBG Legacy Funds and the WHI Impact Pool was $ 5.5 million and $ 5.8 million for the three months ended March 31, 2022 and 2021.

As of March 31, 2022 and December 31, 2021, we had receivables from the JBG Legacy Funds and the WHI Impact Pool totaling $ 2.7 million and $ 3.2 million for such services.

We rented our former corporate offices from an unconsolidated real estate venture and made payments totaling $ 386,000 and $ 271,000 for the three months ended March 31, 2022 and 2021.

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"

We paid BMS $ 3.1 million and $ 4.3 million during the three months ended March 31, 2022 and 2021, which is included in "Property operating expenses"

in our statements of operations.

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

What changed 10-Q

Item 1. Financial Statements