Item 5. Other Information
ITEM 5. OTHER INFORMATION
Delayed Draw Term Credit Agreement
On July 29, 2022, JBG SMITH LP entered into a new Credit Agreement (the "Delayed Draw Term Credit Agreement") with Wells Fargo Bank, National Association, as administrative agent (the "Agent"), and the lenders party thereto as set forth in the Delayed Draw Term Credit Agreement. The Delayed Draw Term Credit Agreement provides for a $400.0 million senior unsecured delayed draw term loan facility maturing January 13, 2028 (the "Delayed Draw Term Loan"). As of July 29, 2022, $200.0 million of the Delayed Draw Term Loan was advanced, substantially all the proceeds of which were used to repay in full JBG SMITH LP’s existing $200.0 million Tranche A-2 Term Loan facility previously outstanding
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under the Existing Credit Agreement (as defined below). This draw of the Delayed Draw Term Loan as well as the repayment of Tranche A-2 Term Loan of the existing term loan facility results in an overall increased borrowing capacity of $200.0 million. The additional $200.0 million of commitments in respect of the Delayed Draw Term Loan may be borrowed, in whole or in part, in one or more draws, at any time until July 29, 2023. The Delayed Draw Term Credit Agreement includes the option to add additional term loans up to $200.0 million in the aggregate to the extent that the lenders (whether or not an existing lender under the Delayed Draw Term Loan) agree to provide such additional credit extensions .
The Delayed Draw Term Loan bears interest, at JBG SMITH LP’s option, at a rate of either SOFR plus a margin ranging from 1.15% to 1.70% (plus a credit spread adjustment of 0.10%) or the base rate plus a margin ranging from 0.15% to 0.70%, in each case, with the actual margin determined according to JBG SMITH LP’s ratio of indebtedness to a valuation of certain real property and assets. The base rate is the highest of the Agent’s prime rate, the federal funds rate plus 0.50% and the adjusted Term SOFR for a one-month tenor plus 1.0%. The Delayed Draw Term Loan may be voluntarily prepaid in full or in part at any time, subject to customary breakage costs, if applicable. The Delayed Draw Term Credit Agreement also includes a sustainability component whereby the applicable margin can decrease upon JBG SMITH LP’s achievement of certain sustainability performance metrics specified in the Delayed Draw Term Credit Agreement.
The Delayed Draw Term Credit Agreement contains customary representations and warranties and affirmative, negative and financial covenants that are substantially similar to JBG SMITH LP’s existing Credit Agreement, dated as of July 18, 2017, as amended, by and among JBG SMITH LP, Wells Fargo Bank, National Association , as administrative agent, and the lenders from time to time party thereto (as amended, the "Existing Credit Agreement"). Consistent with the Existing Credit Agreement, such Delayed Draw Term Credit Agreement covenants include restrictions on mergers, affiliate transactions, and asset sales as well as the following financial maintenance covenants:
●
percentage of total debt to capitalization value of not more than 60% (subject to a higher level of 65% for a period of 4 fiscal quarters following a real property asset acquisition);
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ratio of combined EBITDA to fixed charges of not less than 1.50 to 1.00;
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percentage of secured indebtedness to capitalization value of not more than 50%;
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ratio of combined EBITDA for unencumbered properties to interest expense on unsecured debt of not less than 1.50 to 1.00; and
·
●
percentage of unsecured indebtedness to the capitalization value of unencumbered properties of not more than 60% (subject to a higher level of 65% for a period of 4 fiscal quarters following a real property asset acquisition).
Consistent with the Existing Credit Agreement, the Delayed Draw Term Credit Agreement also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations of JBG SMITH LP under the Delayed Draw Term Credit Agreement to be immediately due and payable.
The foregoing description does not purport to be complete and is qualified in its entirety by reference to the full text of the Delayed Draw Term Credit Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 10-Q and is incorporated herein by reference.
Concurrently with entering into the Delayed Draw Term Credit Agreement, JBG SMITH LP amended their Credit Agreement with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto, which amends the existing Credit Agreement, dated January 14, 2022, by and among JBG SMITH LP, Wells Fargo Bank, National Association, as administrative agent, and the lenders from time to time party thereto, to change the benchmark interest rate applicable to the revolving loans under the Existing Credit Agreement from one or more rates based on LIBOR to one or more rates based on SOFR and to conform terms of the existing term credit agreement under the Existing Credit Agreement to the terms of the Delayed Draw Term Credit Agreement.
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Executive Retirement Agreement
On July 29, 2022, David P. Paul, President and Chief Operating Officer, informed us of his plans to retire from his position, effective December 31, 2022. Mr. Paul will continue to serve as a Senior Advisor until February 3, 2023.
On July 29, 2022, in connection with Mr. Paul’s planned retirement, we entered into a retirement agreement and release with Mr. Paul (the "Retirement Agreement"). The Retirement Agreement provides for the following: (i) for a six-month period following February 3, 2023 (the "Transition Period"), Mr. Paul will provide strategic advice to us regarding transition of his responsibilities and duties, (ii) during the Transition Period, we will pay Mr. Paul a monthly fee of $10,000, (iii) the time-based equity awards granted to Mr. Paul on November 12, 2018 not vested on the date that the Transition Period begins (the "In-Flight Awards"), will continue to vest during the Transition Period and, upon successful completion of the Transition Period or earlier termination thereof by us for any reason, any remaining unvested In-Flight Awards will continue to vest in accordance with the applicable Equity Award Agreement and (iv) subject to certain exceptions specified in the Retirement Agreement, all other outstanding equity awards held by Mr. Paul that are unvested as of the date that the Transition Period begins will remain outstanding, without requiring Mr. Paul’s continued employment by us.
The description of the Retirement Agreement herein is qualified by reference to the full text of the Retirement Agreement which is attached as Exhibit 10.4 to this report on Form 10-Q.
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ITEM 6. EXHIBITS
(a) Exhibit Index
Exhibits
Description
3.1
Declaration of Trust of JBG SMITH Properties, as amended and restated (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed on July 21, 2017).
3.2
Articles Supplementary to Declaration of Trust of JBG SMITH Properties (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed on March 6, 2018).
3.3
Articles of Amendment to Declaration of Trust of JBG SMITH Properties (incorporated by reference to Exhibit 3.1 to our current report on Form 8-K, filed on May 3, 2018).
3.4
Amended and Restated Bylaws of JBG SMITH Properties (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed on February 21, 2020).
10.1**
Credit Agreement, dated as of July 29, 2022, by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as Administrative Agent .
10.2**
Fourth Amendment to Credit Agreement, dated as of July 29, 2022, by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as Administrative Agent.
10.3**
First Amendment to Credit Agreement, dated as of July 29, 2022, by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as Administrative Agent .
10.4†**
Retirement Agreement and Release, dated as of July 29, 2022, by and between JBG SMITH Properties and David P. Paul.
31.1**
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002.
31.2**
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended and 18 U.S.C 1350, as created by Section 906 of the Sarbanes- Oxley Act of 2002.
101.INS
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema
101.CAL
Inline XBRL Extension Calculation Linkbase
101.LAB
Inline XBRL Extension Labels Linkbase
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
**
Filed herewith.
†
Denotes a management contract or compensatory plan, contract or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
JBG SMITH Properties
Date:
August 2, 2022
/s/ M. Moina Banerjee
M. Moina Banerjee
Chief Financial Officer
(Principal Financial Officer)
JBG SMITH Properties
Date:
August 2, 2022
/s/ Angela Valdes
Angela Valdes
Chief Accounting Officer
(Principal Accounting Officer)
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