What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-21 compared with 2022-02-22 · 432 added, 388 removed, 970 unchanged (46% of the section changed)

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Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Real Estate – Impairment Indicators - Refer to Note 2 to the consolidated financial statements

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An impairment exists when the carrying amount of an asset exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.

The Company evaluates real estate assets for impairment whenever events or changes in circumstances occur that indicate the carrying amount of the asset may not be recoverable.

These indicators may include operating performance, shortened anticipated holding periods, and adverse changes in circumstances.

At December 31, 2021, the carrying value

of the Company's real estate assets was approximately $4.87 billion, including an impairment loss in the year ended December 31, 2021 of $25.1 million .

Given the Company's evaluation of possible indications of impairment of real estate assets requires management to make significant judgments, performing audit procedures to evaluate whether management appropriately identified events or changes in circumstances indicating that the carrying amounts of real estate assets may not be recoverable required an increased extent of effort and high degree of auditor judgment.

The Company evaluates real estate assets for impairment whenever there are changes in circumstances or indicators that the carrying amount of the asset may not be recoverable.

These indicators may include declining operating

performance, below average occupancy, shortened anticipated holding periods, and other adverse changes.

At December 31, 2022, the carrying value of the Company's real estate assets, net, was approximately $4.82 billion .

Given the Company's evaluation of possible indications of impairment of real estate assets requires management to make significant judgments, including anticipated holding periods, performing audit procedures to evaluate whether management appropriately identified events or changes in circumstances indicating that the carrying amounts of real estate assets may not be recoverable required an increased extent of effort and high degree of auditor judgment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the evaluation of real estate assets for possible indications of impairment included the following, among others:

● We tested the effectiveness of controls over management's identification of impairment indicators, which include assessing possible circumstances that could indicate that the carrying amounts of real estate assets are not recoverable.

● We tested the effectiveness of controls over management's review of impairment indicators, which include assessing possible circumstances that could indicate that the carrying amounts of real estate assets are not recoverable.

● We evaluated the reasonableness of management's judgments by:

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– Developing an expectation of assets for which impairment indicators are identified in management's analysis.

Investments in Unconsolidated Real Estate Ventures - Refer to Notes 2 and 5 to the consolidated financial statements

Critical Audit Matter Description

The Company has investments in real estate ventures which are required to be evaluated for consolidation, including determining whether each entity is a variable interest entity ("VIE").

If it is determined that an entity is a VIE in which it has a variable interest, the Company assesses whether it is the primary beneficiary of the VIE to determine whether it should be consolidated.

If it is determined that a real estate venture is not a VIE, then the determination as to whether the Company consolidates the entity is based on whether it has a controlling financial interest in the real estate venture, which is based on voting interests and the degree of influence the Company has over the real estate venture.

In April 2022, the Company entered into an agreement to form a real estate venture (the "Venture") with affiliates of Fortress Investment Group, LLC to recapitalize a 1.6 million square foot office portfolio and land parcels for a gross sales price of $580 million comprising four commercial assets.

The Company acquired a 33.5% equity interest in the Venture.

The Venture was determined not to be a VIE and, therefore, was evaluated under the voting interest model, under which the Company determined it does not have a controlling financial interest and therefore does not consolidate the Venture.

Given the complexities associated with accounting for the Company’s interest in the Venture, and the related management judgments to determine whether the Venture is a VIE or whether the Company has a controlling financial interest, performing audit procedures to evaluate these conclusions required an increased extent of audit effort, including the involvement of professionals in our firm having expertise in consolidation accounting.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s judgments to determine whether the Venture is a VIE and, if not, whether the Company has a controlling financial interest included the following, among others:

● We tested the effectiveness of the controls over management’s judgments to determine whether the Venture is a VIE and, if not, whether the Company’s has a controlling financial interest under the voting interest model.

● We evaluated the appropriateness of the Company’s accounting conclusions upon formation of the Venture by:

– With the assistance of professionals in our firm having expertise in consolidation accounting, reading the operating agreements and other related documents, including operating budgets and mortgage loan agreements, to evaluate the risks that the Venture was designed to pass onto its members and management’s conclusion that the Venture was not a VIE.

– Performing corroborating management inquiries and inspecting relevant agreements, to understand the Venture’s voting interests and participating rights of the members, in order to evaluate the Company’s conclusion as to whether it has a controlling financial interest that should be consolidated.

/s/ Deloitte & Touche LLP

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Investments in unconsolidated real estate ventures

Intangible assets, net

Other assets, net

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LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Mortgages payable, net

Mortgage loans, net

Revolving credit facility

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Accumulated deficit

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

Total shareholders' equity of JBG SMITH Properties

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Interest expense

Gain on sale of real estate

Loss on extinguishment of debt

Gain on the sale of real estate, net

Loss on the extinguishment of debt

Impairment loss

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Net (income) loss attributable to redeemable noncontrolling interests

Net loss attributable to noncontrolling interests

Net (income) loss attributable to noncontrolling interests

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

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

Total other comprehensive income (loss)

COMPREHENSIVE INCOME (LOSS)

Net (income) loss attributable to redeemable noncontrolling interests

Net loss attributable to noncontrolling interests

Net (income) loss attributable to noncontrolling interests

Other comprehensive (income) loss attributable to redeemable noncontrolling interests

Other comprehensive income attributable to noncontrolling interests

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO JBG SMITH PROPERTIES

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BALANCE AS OF DECEMBER 31, 2019

Net income attributable to common shareholders and noncontrolling interests

Common shares issued

Conversion of common limited partnership units to common shares

Net loss attributable to common shareholders and noncontrolling interests

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

Common shares repurchased

Common shares issued pursuant to Employee Share Purchase Plan ("ESPP")

Dividends declared on common shares ($ 0.90 per common share)

Distributions to noncontrolling interests, net

Distributions to noncontrolling interests

Redeemable noncontrolling interests redemption value adjustment and other comprehensive loss allocation

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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 ESPP

Common shares issued pursuant to employee incentive compensation plan and ESPP

Dividends declared on common shares ($ 0.90 per common share)

Distributions to noncontrolling interests

Redeemable noncontrolling interests redemption value adjustment and other comprehensive loss allocation

Other comprehensive loss

Contributions from noncontrolling interests, net

Redeemable noncontrolling interests redemption value adjustment and other comprehensive income allocation

Other comprehensive income

BALANCE AS OF DECEMBER 31, 2021

Net loss attributable to common shareholders and noncontrolling interests

Conversion of common limited partnership units to common shares

Net income attributable to common shareholders and noncontrolling interests

Conversion of OP Units to common shares

Common shares repurchased

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Other comprehensive income

Other comprehensive income attributable to noncontrolling interests

BALANCE AS OF DECEMBER 31, 2022

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Share-based compensation expense

Depreciation and amortization, including amortization of deferred financing costs

Depreciation and amortization expense, including amortization of deferred financing costs

Deferred rent

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Amortization of lease incentives

Loss on extinguishment of debt

Loss on the extinguishment of debt

Impairment loss

Gain on sale of real estate

Gain on the sale of real estate, net

Loss on operating lease and other receivables

Income from investment funds, net

Income from investments, net

Return on capital from unconsolidated real estate ventures

Other non-cash items

Impairment of corporate assets

Changes in operating assets and liabilities:

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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

Net cash used in investing activities

Investments in unconsolidated real estate ventures and other investments

Net cash provided by (used in) investing activities

FINANCING ACTIVITIES:

Borrowings under mortgages payable

Borrowings under mortgage loans

Borrowings under revolving credit facility

Borrowings under unsecured term loans

Repayments of mortgages payable

Repayments of mortgage loans

Repayments of revolving credit facility

Debt issuance costs

Debt issuance and modification costs

Redemption of partner's noncontrolling interest

Finance lease payments

Proceeds from the issuance of common stock, net of issuance costs

Proceeds from common shares issued pursuant to ESPP

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Net cash provided by (used in) financing activities

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

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

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

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Accrued distributions to redeemable noncontrolling interests

Conversion of common limited partnership units to common shares

Recognition (derecognition) of operating lease right-of-use assets

Recognition (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

Derecognition of operating lease right-of-use assets

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

(Derecognition) recognition of finance lease right-of-use assets

(Derecognition) recognition of liabilities related to finance lease right-of-use assets

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

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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 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 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.

Approximately two-thirds of our portfolio is in National Landing, which is anchored by four key demand drivers:

Amazon.com, Inc.'s ("Amazon") new headquarters, which is being developed by us;

Virginia Tech's under-construction $ 1 billion Innovation Campus;

the submarket’s proximity to the Pentagon;

and our deployment of next-generation public and private 5G digital infrastructure.

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, 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 December 31, 2021, JBG SMITH, as its sole general partner, controlled JBG SMITH LP and owned 89.5 % of its common limited partnership units ("OP Units"), after incorporating the conversion of certain vested long-term incentive partnership units ("LTIP Units") that are convertible into OP Units.

As of December 31, 2022, JBG SMITH, as its sole general partner, controlled JBG SMITH LP and owned 88.3 % 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,"

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References to "our share"

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

refer to our ownership percentage of consolidated and unconsolidated assets in real estate ventures, but exclude our:

(i) 10.0 % subordinated interest in one commercial building, (ii) 33.5 % subordinated interest in four commercial buildings and (iii) 49.0 % interest in three commercial buildings, as well as the associated non-recourse mortgage loans, held through unconsolidated real estate ventures;

these interests and debt are excluded because our investment in each real estate venture is zero, we do not anticipate receiving any near-term cash flow distributions from the real estate ventures and we have not guaranteed their obligations or otherwise committed to providing financial support.

We were organized for the purpose of receiving, via the spin-off on July 17, 2017 (the "Separation"), substantially all of the assets and liabilities of Vornado Realty Trust's ("Vornado") Washington, D.C.

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

As of December 31, 2021, our Operating Portfolio consisted of 64 operating assets comprising 42 commercial assets totaling 13.1 million square feet ( 11.3 million square feet at our share) and 22 multifamily assets totaling 8,208 units ( 6,557 units at our share).

Additionally, we have:

(i) one under-construction multifamily asset totaling 808 units ( 808 units at our share);

(ii) 11 near-term development pipeline assets totaling 5.3 million square feet ( 5.0 million square feet at our share) of estimated potential development density;

and (iii) 25 future development pipeline assets totaling 14.3 million square feet ( 11.6 million square feet at our share) of estimated potential development density.

As of December 31, 2022, our Operating Portfolio consisted of 51 operating assets comprising 31 commercial assets totaling 9.7 million square feet ( 8.4 million square feet at our share), 18 multifamily assets totaling 6,756 units ( 6,755 units at our share) and two wholly owned land assets for which we are the ground lessor.

Additionally, we have two under-construction multifamily assets totaling 1,583 units ( 1,583 units at our share) and 20 assets in the development pipeline totaling 12.5 million square feet ( 9.7 million square feet at our share) of estimated potential development density.

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

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Percentage of commercial segment rental revenue

Percentage of total rental revenue

Percentage of rental revenue

Basis of Presentation

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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 consolidated financial statements.

Reclassification

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

to "Intangible assets, net"

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

Summary of Significant Accounting Policies

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

The most significant of these estimates include:

(i) the underlying cash flows and anticipated holding periods used in assessing impairment;

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

and (iii) the assessment of the collectability of receivables, including deferred rent receivables.

Longer anticipated holding periods for real estate assets directly reduce the likelihood of recording an impairment loss.

If there is a change in the strategy for an asset or if market conditions dictate an earlier sale date, an impairment loss may be recognized, and such loss could be material.

In March 2020, the World Health Organization declared a global pandemic related to the novel coronavirus ("COVID-19").

The significance, extent and duration of the impact of COVID-19 on us and our tenants remains largely uncertain and dependent on near-term and future developments that cannot be accurately predicted at this time, such as the continued severity, duration, transmission rate and geographic spread of COVID-19, the distribution, effectiveness and willingness of people to take COVID-19 vaccines, the extent and effectiveness of the containment measures taken, and the response of the overall economy, the financial markets and the population, particularly in the area in which we operate.

The ultimate adverse impact of COVID-19 is highly uncertain;

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

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

To the extent these estimates differ from actual results, our consolidated financial statements may be materially affected.

During the years ended December 31, 2021 and 2020, we recorded $ 1.1 million and $ 11.2 million of credit losses against billed rent receivables, and $ 19.6 million against deferred (straight-line) rent receivables during the year ended December 31, 2020.

These losses were due to the effects of COVID-19, primarily from co-working and retail tenants, that were unable to pay rent while businesses were closed, not operating at full capacity or while employees continue to work from home.

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.

We provided rent deferrals that had been contractually due during 2020 and 2021 totaling $ 10.1 million, of which $ 4.0 million was subsequently abated and $ 1.2 million was collected.

During 2021, revenue for the majority of these tenants continued to be recognized on the cash basis of accounting.

While we have seen some improvement in performance and cash collections, our retailers and co-working tenants are still experiencing some impact from the effects of COVID-19 and may continue to experience such impact.

During the fourth quarter of 2021, we received $ 4.5 million of business interruption insurance proceeds for COVID-19 related losses, which were included in "Interest and other income (loss), net"

in our consolidated statement of operations.

Actual results could differ from those estimates.

Asset Acquisitions

We account for asset acquisitions at cost, which includes the consolidation of previously unconsolidated real estate ventures, including transaction costs, plus the fair value of any assumed debt.

We estimate the fair values of acquired tangible assets (consisting of real estate, tenant and other receivables, and other assets, as applicable), identified intangible assets and liabilities (consisting of in-place leases, above- and below-market leases, options to enter into ground leases and management contracts, as applicable), assumed debt and other liabilities, and noncontrolling interests, as applicable, based on our evaluation of information and estimates available at the date of acquisition.

Based on these estimates, we allocate the purchase price, including all transaction costs related to the acquisition and any contingent consideration, to

the identified assets acquired and liabilities assumed based on their relative fair value.

We account for asset acquisitions, which includes the consolidation of previously unconsolidated real estate ventures, at cost, including transaction costs, plus the fair value of any assumed debt.

We estimate the fair values of acquired tangible assets (consisting of real estate, tenant and other receivables, and other assets, as applicable), identified intangible assets and liabilities (consisting of in-place leases and above- and below-market leases, as applicable), assumed debt and other liabilities, and noncontrolling interests, as applicable, based on our evaluation of information and estimates available at the date of acquisition.

Based on these estimates, we allocate the purchase price, including all transaction costs related to the acquisition and any contingent consideration, to the identified assets acquired and liabilities assumed based on their relative fair value.

The results of operations of acquisitions are prospectively included in our consolidated financial statements beginning with the date of the acquisition.

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approach whereby we use discounted cash flow models with inputs and assumptions that we believe are consistent with current market conditions for similar assets.

The most significant assumptions in determining the allocation of the purchase price to buildings are the exit capitalization rate, discount rate, estimated market rents and hypothetical expected lease-up periods.

We assess the fair value of land based on market comparisons and development projects using an income approach of cost plus a margin.

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(i) the contractual amounts to be received pursuant to the lease over its remaining term and (ii) management's estimate of the amounts that would be received using market rates over the remaining term of the lease.

Amounts allocated to above- market leases are recorded as lease intangible assets in "Other assets, net"

Amounts allocated to above- market leases are recorded as lease intangible assets in "Intangible assets, net"

in our consolidated balance sheets, and amounts allocated to below-market leases are recorded as lease intangible liabilities in "Other liabilities, net"

in our consolidated balance sheets.

These intangibles are amortized to "Property rental revenue"

These intangibles are amortized

to "Property rental revenue"

in our consolidated statements of operations over the remaining terms of the respective leases;

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(i) lost rent and operating cost recoveries during the hypothetical lease-up period and (ii) theoretical leasing commissions required to execute similar leases.

These intangible assets are recorded as lease intangible assets in "Other assets, net"

These intangible assets are recorded as lease intangible assets in "Intangible assets, net"

in our consolidated balance sheets and are amortized to "Depreciation and amortization expense"

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As real estate is undergoing redevelopment activities, all property operating expenses directly associated with and attributable to the redevelopment, including interest expense, are capitalized to the extent that we believe such costs are recoverable through the value of the property.

The capitalization period ends when the asset is ready for its intended use, but no later than one year from substantial completion of major construction activities.

General and administrative costs are expensed as incurred.

Depreciation and amortization require an estimate of the useful life of each property and improvement as well as an allocation of the costs associated with a property to its various components.

Depreciation and amortization are recognized on a straight-line basis over estimated useful lives, which range from three to 40 years .

The capitalization period ends when the asset is ready for its intended use, but no later than one year from substantial completion of major construction activities, at which point the costs associated with a property are allocated to its various components.

Depreciation and amortization expense require an estimate of the useful life of each property and improvement.

Depreciation and amortization expense are recognized on a straight-line basis over estimated useful lives, which range from three to 40 years .

Tenant improvements are amortized on a straight-line basis over the lives of the related leases, which approximate the useful lives of the tenant improvements.

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Our real estate and related intangible assets are reviewed for impairment whenever there are changes in circumstances or indicators that the carrying amount of the assets may not be recoverable.

These indicators may include operating performance, shortened anticipated holding periods, costs in excess of budgets for under-construction assets and adverse changes in circumstances.

These indicators may include declining operating performance, below average occupancy, shortened anticipated holding periods, costs in excess of budgets for under-construction assets and other adverse changes.

An impairment exists when the carrying amount of an asset exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.

Estimates of future cash flows are based on our current plans, anticipated holding periods and available market information at the time the analyses are prepared.

Longer anticipated holding periods for real estate assets directly reduce the likelihood of recording an impairment loss.

An impairment loss is recognized if the carrying amount of the asset is not recoverable and is measured based on the excess of the property's carrying amount over its estimated fair value.

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(i) pending or executed agreements, (ii) market prices for comparable properties or (iii) the sum of discounted cash flows.

If our estimates of future cash flows, anticipated holding periods, or fair values change, based on market conditions, anticipated selling prices or other factors, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements.

If our estimates of future cash flows, anticipated holding periods, asset strategy or fair values change, based on market conditions, anticipated selling prices or other factors, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements.

Estimates of future cash flows are subjective and are based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results.

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Investments in Real Estate Ventures

We analyze each real estate venture to determine whether the entity should be consolidated.

We analyze each real estate venture at acquisition, formation, after a change in the ownership agreement, after a change in the entity's economics or after any other reconsideration event to determine whether the entity is a VIE.

An entity is a VIE because it is in the development stage and/or does not hold sufficient equity at risk, or conducts substantially all its operations on behalf of an investor with disproportionately few voting rights.

If it is determined that an entity is a VIE in which we have a variable interest, we assess whether we are the primary beneficiary of the VIE to determine whether it should be consolidated.

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.

We are not the primary beneficiary of a VIE when we do not have voting control, lack the power to direct the activities that most significantly impact the entity's economic performance, or the limited partners (or non-managing members) have substantive participatory rights.

If it is determined that the entity is not a VIE, then the determination as to whether we consolidate is based on whether we have a controlling financial interest in the entity, which is based on our voting interests and the degree of influence we have over the entity.

Management uses judgment when determining if we are the primary beneficiary of or have a controlling financial interest in a VIE.

If it is determined that the real estate venture is not a VIE, then the determination as to whether we consolidate is based on whether we have a controlling financial interest in the real estate venture, which is based on our voting interests and the degree of influence we have over the real estate venture.

Management uses judgment when determining if we are the primary beneficiary of a VIE or have a controlling financial interest in a real estate venture determined not to be a VIE.

Factors considered in determining whether we have the power to direct the activities that most significantly impact the entity's economic performance include voting rights, involvement in day-to-day capital and operating decisions, and the extent of our involvement in the entity.

We use the equity method of accounting for investments in unconsolidated real estate ventures when we have significant influence, but do not have a controlling financial interest.

We use the equity method of accounting for investments in unconsolidated real estate ventures when we have significant influence but are not the primary beneficiary of a VIE or do not have a controlling financial interest in a real estate venture determined not to be a VIE.

Significant influence is typically indicated through ownership of 20% or more of the voting interests.

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in our consolidated statements of operations.

In the event our investment in a real estate venture is reduced to zero, and we are not obligated to provide for additional losses, have not guaranteed its obligations or otherwise committed to providing financial support, we will discontinue the equity method of accounting until such point that our share of net income equals the share of net losses not recognized during the period the equity method was suspended.

With regard to distributions from unconsolidated real estate ventures, we use the information that is available to us to determine the nature of the underlying activity that generated the distributions.

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We consider various qualitative factors to determine if a decrease in the value of our investment is other-than-temporary.

These factors include the age of the venture, our intent and ability to retain our investment in the entity, financial condition and long-term prospects of the entity and relationships with our partners and banks.

These factors include the age of the venture, our intent and ability to retain our investment in the real estate venture, financial condition and long-term prospects of the real estate venture and relationships with our partners and banks.

If we believe that the decline in the fair value of the investment is temporary, no impairment loss is recorded.

If our analysis indicates that there is an other-than temporary impairment related to the investment in a particular real estate venture, the carrying value of the venture will be adjusted to an amount that reflects the estimated fair value of the investment.

Intangible assets consist of:

(i) in-place leases, below-market ground rent obligations, above-market real estate leases and options to enter into ground leases that were recorded in connection with the acquisition of properties and (ii) management and leasing contracts acquired in the Combination.

Intangible assets primarily consist of:

(i) in-place leases, below-market ground rent obligations, and above-market real estate leases that were recorded in connection with the acquisition of properties and (ii) management and leasing contracts and options to enter into ground leases that were acquired in the Combination.

Intangible liabilities consist of above-market ground rent obligations and below-market real estate leases that are also recorded in connection with the acquisition of properties.

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Intangible assets also include the wireless spectrum licenses we acquired.

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.

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, which would be capitalized as part of the asset.

Accordingly, we have concluded that the licenses are indefinite-lived intangible assets.

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Investments in investment funds without readily determinable fair values that qualify for the net asset value ("NAV") practical expedient are carried at fair value based on their reported NAV.

Investments in equity securities and investment funds are included in "Other assets"

Investments in equity securities and investment funds are included in "Other assets, net"

in our consolidated balance sheets.

Realized and unrealized gains and losses are included in “Interest and other income (loss), net” in our consolidated statements of operations.

Realized and unrealized gains and losses are included in "Interest and other income (loss), net"

in our consolidated statements of operations.

Assets Held for Sale

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(i) management, having the authority to approve action, commits to a plan to sell the property in its present condition, (ii) the sale of the property is at a price reasonable in relation to its current fair value and (iii) the sale is probable and expected to be completed within one year.

Real estate held for sale is carried at the lower of carrying amounts or

estimated fair value less disposal costs.

Depreciation and amortization is not recognized on real estate classified as held for sale.

Real estate held for sale is carried at the lower of carrying amounts or estimated fair value less disposal costs.

Depreciation and amortization expense is not recognized on real estate classified as held for sale.

Deferred Costs

Deferred leasing costs include direct and incremental costs incurred in the successful negotiation of leases, including leasing commissions and other costs, which are deferred and amortized on a straight-line basis over the corresponding lease term.

Unamortized leasing costs are charged to expense upon the early termination of the lease.

Deferred financing costs consist of loan issuance costs directly related to financing transactions that are deferred and amortized over the term of the related loan as a component of interest expense.

Unamortized deferred financing costs related to our mortgages payable and unsecured term loans are presented as a direct deduction from the carrying amounts of the related debt instruments, while such costs related to our revolving credit facility are included in other assets.

Unamortized deferred financing costs related to our mortgage loans and unsecured term loans are presented as a direct deduction from the carrying amounts of the related debt instruments, while such costs related to our revolving credit facility are included in other assets.

Noncontrolling Interests

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Amounts of consolidated net income (loss) attributable to redeemable noncontrolling interests and to the noncontrolling interests in consolidated subsidiaries are presented separately in our consolidated statements of operations.

Redeemable Noncontrolling Interests - Redeemable noncontrolling interests consists of OP Units issued in conjunction with the Formation Transaction, LTIP Units issued to employees and our venture partners' interests in The Wren.

Redeemable Noncontrolling Interests - Redeemable noncontrolling interests primarily consists of OP Units issued in conjunction with the Formation Transaction and LTIP Units issued to employees.

Redeemable noncontrolling interests are generally redeemable at the option of the holder for our common shares, or cash at our election, subject to certain limitations, and are presented in the mezzanine section between total liabilities and shareholders' equity in our consolidated balance sheets.

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The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation.

Derivative Financial Instruments Designated as Cash Flow Hedges - Certain derivative financial instruments, consisting of interest rate swap and cap agreements, are designated as cash flow hedges, and are carried at their estimated fair value on a recurring basis.

We assess the effectiveness of our cash flow hedges both at inception and on an ongoing basis.

If the hedges are deemed to be effective, the fair value is recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into "Interest expense"

in the period that the hedged forecasted transactions affect earnings.

Our cash flow hedges become less than perfectly effective if the critical terms of the hedging instrument and the forecasted transactions do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and interest rates.

Derivative Financial Instruments Designated as Effective Hedges - Certain derivative financial instruments, consisting of interest rate swap and cap agreements, are cash flow hedges that are designated as effective hedges, and are carried at their estimated fair value on a recurring basis.

We assess the effectiveness of our hedges both at inception and on an ongoing basis.

If the hedges are deemed to be effective, the fair value is recorded in "Accumulated other comprehensive income (loss)"

in our consolidated balance sheets and is subsequently reclassified into "Interest expense"

in our consolidated statements of operations in the period that the hedged forecasted transactions affect earnings.

Our hedges become less than perfectly effective if the critical terms of the hedging instrument and the forecasted transactions do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and interest rates.

In addition, we evaluate the default risk of the counterparty by monitoring the creditworthiness of the counterparty.

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These judgments determine if the changes in fair value of the derivative instruments are reported in our consolidated statements of operations, or in our consolidated statements of comprehensive income (loss).

Derivative Financial Instruments Not Designated as Accounting Hedges - Certain derivative financial instruments, consisting of interest rate swap and cap agreements, are considered cash flow hedges, but are not designated as accounting hedges, and are carried at their estimated fair value on a recurring basis.

Derivative Financial Instruments Designated as Ineffective Hedges - Certain derivative financial instruments, consisting of interest rate cap agreements, are cash flow hedges that are designated as ineffective hedges, and are carried at their estimated fair value on a recurring basis.

Realized and unrealized gains are recorded in "Interest expense"

in our consolidated statements of operations in the period in which the change occurs.

in our consolidated statements of operations.

Fair Value of Assets and Liabilities

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We have elected the practical expedient that allows us to combine certain lease and non-lease components of our operating leases.

Non-lease components are recognized together with fixed base rent in "Property rental revenue", as variable lease income in the same periods as the related expenses are incurred.

Non-lease components are recognized together with fixed base rent in "Property rental revenue,"

as variable lease income in the same periods as the related expenses are incurred.

Certain commercial leases may also provide for the payment by the lessee of additional rents based on a percentage of sales, which are recorded as variable lease income in the period the additional rents are earned.

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In circumstances where we provide a tenant improvement allowance for improvements that are owned by the tenant, we recognize the allowance as a reduction of property rental revenue on a straight-line basis over the term of the lease commencing when the tenant takes possession of the space.

Differences between rental revenue recognized and amounts due under the respective lease agreements are recorded as an increase or decrease to "Deferred rent receivable, net"

Differences between rental revenue recognized and amounts due under the respective lease agreements are recorded as an increase or decrease to "Deferred rent receivable"

in our consolidated balance sheets.

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in our consolidated statements of operations.

We exercise judgment in assessing the probability of collection and consider payment history and current credit status in making this determination.

We exercise judgment in assessing the probability of collection and consider payment history, current credit status and economic outlook in making this determination.

Third-party real estate services revenue, including reimbursements, includes property and asset management fees, and transactional fees for leasing, acquisition, development and construction, financing, and legal services.

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The performance obligations associated with our development services contracts are satisfied over time and we recognize our development fee revenue using a time-based measure of progress over the course of the development project due to the stand-ready nature of the promised services.

The transaction prices for our performance obligations that are expected to be completed in greater than twelve months are variable based on the costs ultimately incurred to develop the underlying assets.

Judgments impacting the timing and amount of revenue recognized from our development services contracts include the determination of the nature and number of performance obligations within a contract, estimates of total development project costs, from which the fees are typically derived, and estimates of the period of time over which the development services are expected to be performed, which is the period over which the revenue is recognized.

The transaction prices for our performance obligations are variable based on the costs ultimately incurred to develop the underlying assets and are estimated based on their expected value.

Our transaction prices, and the corresponding recognition of revenue, are constrained such that a significant reversal of revenue is not probable when the variability is subsequently resolved.

Judgments impacting the timing and amount of revenue recognized from our development services contracts include the determination of the nature and number of performance obligations within a contract, estimates of total development project costs, from which the fees are typically derived, the application of a constraint to our transaction price and estimates of the period of time over which the development services are expected to be performed, which is the period over which the revenue is recognized.

We recognize development fees earned from unconsolidated real estate venture projects to the extent of our venture partners' ownership interest.

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

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

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

REIT taxable income to its shareholders;

Under those sections, a REIT which distributes at least 90% of its REIT taxable income as dividends to its

shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders.

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

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

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Earnings (Loss) Per Common Share

Basic earnings (loss) per common share is computed by dividing net income (loss) attributable to common shareholders by the weighted average common shares outstanding during the period.

Unvested share-based compensation awards that entitle holders to receive non-forfeitable dividends are considered participating securities.

Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding during the period.

Unvested share-based compensation awards that entitle holders to receive non-forfeitable distributions are considered participating securities.

Consequently, we are required to apply the two-class method of computing basic and diluted earnings (loss) that would otherwise have been available to common shareholders.

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During periods of net loss, losses are allocated only to the extent the participating securities are required to absorb their share of such losses.

Distributions to participating securities in excess of their allocated income or loss are shown as a reduction to net income (loss) attributable to common shareholders.

Diluted earnings (loss) per common share reflects the potential dilution of the assumed exchange of various unit and share-based compensation awards into common shares to the extent they are dilutive.

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We account for forfeitures as they occur.

Distributions paid on unvested OP Units and LTIP Units are recorded to "Redeemable noncontrolling interests"

Distributions paid on

unvested OP Units and LTIP Units are recorded to "Redeemable noncontrolling interests"

in our consolidated balance sheets.

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Reference Rate Reform

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

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform ("Topic 848"), which was amended in December 2022 by ASU 2022-06, 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 year ended December 31, 2021, we did not make any elections.

During the year ended December 31, 2020, we elected to apply the hedge accounting expedients related to (i) the assertion that our hedged forecasted transactions remain probable and (ii) the assessments of effectiveness for future London Interbank Offered Rate ("LIBOR") indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

Application of these expedients preserves our past presentation of our derivatives.

We will continue to evaluate the impact of the guidance and may apply other elections, as applicable.

The guidance in Topic 848 is optional and may be elected through December 31, 2024 as reference rate reform activities occur.

During the year ended December 31, 2022, we elected to apply the hedge accounting expedients that allows us to (i) continue to amortize previously deferred gains and losses in accumulated other comprehensive income (loss) related to terminated hedges into earnings in accordance with the underlying hedged forecasted transactions, (ii) modify loan agreements to replace the reference rate without treating the change as a contract modification and (iii) modify the reference rate of the hedging instruments without it being considered a change in critical terms requiring redesignation.

We have 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 the past presentation of our derivatives.

Acquisitions, Dispositions and Assets Held for Sale

In October 2022, we acquired the remaining 50.0 % ownership interest in 8001 Woodmont, a 322 -unit multifamily asset in Bethesda, Maryland previously owned by an unconsolidated real estate venture, for a purchase price of $ 115.0 million, including the assumption of the $ 51.9 million mortgage loan at our share.

The asset was encumbered by a $ 103.8 million mortgage loan and was consolidated as of the date of acquisition.

We recorded our investment in the asset at the carryover basis for our previously held equity investment plus the incremental cash consideration paid to acquire our partner's interest.

In August 2022, we acquired the remaining 36.0 % ownership interest in Atlantic Plumbing, a 310 -unit multifamily asset in Washington, D.C.

previously owned by an unconsolidated real estate venture, which was encumbered by a $ 100.0 million mortgage loan, for a purchase price of $ 19.7 million and our partner’s share of the working capital.

The mortgage loan was repaid in August 2022.

Atlantic Plumbing was consolidated as of the date of acquisition.

We recorded our investment in the asset at the carryover basis for our previously held equity investment plus the incremental cash consideration paid to acquire our partner's interest.

In November 2021, we acquired The Batley, a 432 -unit multifamily asset in the Union Market submarket of Washington, D.C., for $ 205.3 million, exclusive of $ 3.1 million of transaction costs that were capitalized as part of the acquisition.

We intend to use The Batley as a replacement property in a like-kind exchange for the sale of Pen Place, which is expected to close during the second quarter of 2022.

We used The Batley as a replacement property in a like-kind exchange for the sale of Pen Place, which closed during the second quarter of 2022.

See Note 6 for additional information.

In December 2020, we acquired a 1.4 -acre future development parcel in National Landing, which was formerly occupied by the Americana Hotel, and three other parcels for an aggregate total of $ 65.0 million, exclusive of $ 688,000 of transaction costs that were capitalized as part of the acquisition.

Of the total purchase price, $ 47.3 million was allocated to the former Americana Hotel site, of which $ 20.0 million has been deferred until the earlier of the approval of certain entitlements or January 1, 2023, and $ 17.7 million was allocated to the other three parcels.

In December 2020, we acquired a 1.4 -acre development parcel in National Landing formerly occupied by the Americana Hotel and three other parcels for an aggregate total of $ 65.0 million, exclusive of $ 688,000 of transaction costs that were capitalized as part of the acquisition.

Of the total purchase price, $ 47.3 million was allocated to the former Americana Hotel site, of which $ 20.0 million was deferred and $ 17.7 million was allocated to the other three parcels.

The former Americana Hotel site has the potential to accommodate up to approximately 550,000 square feet of new development density and is located directly across the street from Amazon's future headquarters.

In December 2019, we acquired F1RST Residences, a 325 -unit multifamily asset in the Ballpark submarket of Washington, D.C.

with approximately 21,000 square feet of street level retail, for $ 160.5 million, exclusive of $ 4.7 million of transaction costs that were capitalized as part of the acquisition.

We used F1RST Residences as a replacement property in a like-kind exchange for the sale of Metropolitan Park in January 2020.

The following is a summary of activity for the year ended December 31, 2022:

Date Disposed

(In thousands)

March 28, 2022

Development Parcel

Arlington, Virginia

April 1, 2022

Universal Buildings (1)

Washington, D.C.

April 13, 2022

7200 Wisconsin Avenue, 1730 M Street, RTC-West and Courthouse Plaza 1 and 2 (2)

Bethesda, Maryland,

Washington, D.C.,

Reston, Virginia,

Arlington, Virginia

Pen Place (3)

Arlington, Virginia

December 23, 2022

Land Option (3)

Washington, D.C.

(1) Cash proceeds from sale excludes a lease termination fee of $ 24.3 million received during the first quarter of 2022.

(2) Assets were sold to an unconsolidated real estate venture.

See Note 5 for additional information.

In April 2021, we invested cash in and contributed land to two real estate ventures and recognized an $ 11.3 million gain on the disposition of land, which is included in "Gain on sale of real estate"

"RTC-West"

refers to RTC-West, RTC-West Trophy Office and RTC-West Land.

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

In April 2022, $ 164.8 million of mortgage loans related to 1730 M Street and RTC-West were repaid.

(3) Total square feet represents estimated or approved potential development density.

in our consolidated statement of operations for the year ended December 31, 2021.

See Note 5 for additional information.

In January 2020, we sold Metropolitan Park for $ 155.0 million and recognized a $ 59.5 million gain, which is included in "Gain on sale of real estate"

in our consolidated statement of operations for the year ended December 31, 2020.

During the year ended December 31, 2019, we sold three commercial assets for a gross sales price of $ 165.4 million and a 50.0 % interest in a real estate venture that owned Central Place Tower for a gross sales price of $ 220.0 million, resulting in a $ 105.0 million aggregate gain, which is included in "Gain on sale of real estate"

In January 2020, we sold Metropolitan Park for $ 155.0 million and recognized a $ 59.5 million gain, which is included in "Gain on sale of real estate, net"

in our consolidated statement of operations for the year ended December 31, 2020.

During the years ended December 31, 2021 and 2020, we recognized our proportionate share of the gain (loss) from the sale of various assets by our unconsolidated real estate ventures.

See Note 5 for additional information.

On February 11, 2022, we entered into a definitive agreement with affiliates of Fortress Investment Group LLC to form a real estate venture in which we will have a noncontrolling interest.

The unconsolidated real estate venture will acquire a 1.6 million square foot portfolio of four wholly owned commercial assets from us.

The assets include 7200 Wisconsin Avenue, 1730 M Street, RTC-West and Courthouse Plaza 1 and 2.

The transaction is expected to close in the first half of 2022, subject to financing and customary closing conditions.

See Note 5 for additional information related to the sale of assets by our unconsolidated real estate ventures.

Assets Held for Sale

The amounts included in "Assets held for sale"

in our consolidated balance sheets primarily represent the carrying value of real estate.

The following is a summary of assets held for sale:

Square Feet (1)

There were no assets held for sale as of December 31, 2022.

The following is a summary of assets held for sale as of December 31, 2021:

(In thousands)

December 31, 2021

Pen Place (1)

Arlington, Virginia

December 31, 2020

Pen Place (2)

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.

In December 2021, we finalized the agreement for the sale of Pen Place for $ 198.0 million, which represents a $ 48.1 million increase over the previously estimated contract value.

(1) Sold to Amazon in May 2022.

Total square feet represents estimated or approved potential development density.

Tenant and Other Receivables

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(In thousands)

Prudential Global Investment Management ("PGIM")

Prudential Global Investment Management

Morgan Global Alternatives ("J.P.

Morgan") (2)

Landmark Partners ("Landmark")

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Canadian Pension Plan Investment Board ("CPPIB") (4) (5)

Morgan Global Alternatives ("J.P.

Morgan") (2)

Berkshire Group (6)

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Morgan is the advisor for an institutional investor.

(3) As of December 31, 2021 and 2020, our total investments in unconsolidated real estate ventures were greater than our share of the net book value of the underlying assets by $ 18.6 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.

(3) In August 2022, we acquired the remaining 36.0 % ownership interest in Atlantic Plumbing, an asset previously owned by the venture.

See Note 3 for additional information.

(4) Our effective ownership interest reflects an investment in the real estate venture that owns 1101 17 th Street for which we have a zero investment balance and discontinued applying the equity method of accounting since June 30, 2018.

We will recognize as income any future distributions from the venture until our share of unrecorded earnings and contributions exceeds the cumulative excess distributions previously recognized in income.

(5) In June 2022, the venture sold its interest in 1900 N Street.

(6) In October 2022, we acquired the remaining 50.0 % ownership interest in 8001 Woodmont, an asset previously owned by the venture.

See Note 3 for additional information.

(7) As of December 31, 2022 and 2021, our total investments in unconsolidated real estate ventures were greater than our share of the net book value of the underlying assets by $ 8.9 million and $ 18.6 million, resulting principally from capitalized interest and our zero investment balance in certain real estate ventures.

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

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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.

Reconsideration events include, among other criteria, amendments to real estate venture agreements or changes in the capital requirements of the real estate venture.

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

The following is a summary of disposition activity by our unconsolidated real estate ventures:

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Year Ended December 31, 2022

January 27, 2022

The Alaire, The Terano and

12511 Parklawn Drive

1.8 % - 18.0 %

1900 N Street

December 15, 2022

CBREI Venture

Fairway Apartments/Fairway Land ("Fairway")

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

The Gale Eckington

Year Ended December 31, 2021

CBREI Venture

Fairway Apartments/Fairway Land

Courthouse Metro Land/Courthouse Metro Land – Option

5615 Fishers Lane

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Year Ended December 31, 2020

11333 Woodglen Drive/NoBe II Land/Woodglen ("Woodglen")

11333 Woodglen Drive/NoBe II Land/Woodglen

October 28, 2020

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in our consolidated statements of operations.

In December 2019, we sold a 50.0 % interest in a real estate venture that owns Central Place Tower, a 552,000 square foot office building located in Arlington, Virginia, to PGIM for $ 220.0 million.

Fortress Investment Group LLC ("Fortress")

In April 2022, we formed an unconsolidated real estate venture with affiliates of 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 and Courthouse Plaza 1 and 2).

Additionally, we contributed $ 66.1 million in cash for a 33.5 % interest in the venture, while Fortress contributed $ 131.0 million in cash for a 66.5 % interest in the venture.

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

We 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.

Per the terms of the venture agreement, we determined the venture was not a VIE and we do not have a controlling financial interest in the venture.

As a result, we deconsolidated our remaining 50.0 % interest in the real estate venture and recorded a gain as our unconsolidated interest was increased to reflect its fair value.

We recognized an aggregate $ 53.4 million gain, net of certain liabilities, which was included in "Gain on sale of real estate"

in our consolidated statement of operations for the year ended December 31, 2019, on the partial sale and remeasurement of our remaining interest in the real estate venture subsequent to the transfer of control.

In connection with the preparation and review of their 2021 annual financial statements, our unconsolidated real estate venture with Landmark recorded an aggregate impairment loss of $ 48.7 million on the L'Enfant Plaza assets.

Our proportionate share of the impairment loss was $ 23.9 million, which was included in "Loss from unconsolidated real estate ventures, net"

As of the transaction date, our investment in the venture was zero , and we have discontinued applying the equity method of accounting as we have not guaranteed its obligations or otherwise committed to providing financial support.

In connection with the preparation and review of the third quarter 2022 financial statements and 2021 annual financial statements, impairment losses of $ 15.4 million and $ 23.9 million on the L'Enfant Plaza assets were included in "Loss from unconsolidated real estate ventures, net"

in our consolidated statements of operations for the years ended December 31, 2022 and 2021.

As of December 31, 2022, our investment in the L'Enfant Plaza assets was zero , and we have discontinued applying the equity method of accounting on these assets after September 30, 2022 as we have not guaranteed their obligations or otherwise committed to providing financial support.

In connection with the preparation and review of the 2022 annual financial statements, an impairment loss of $ 3.9 million on the Rosslyn Gateway assets was included in "Loss from unconsolidated real estate ventures, net"

in our consolidated statement of operations for the year ended December 31, 2022.

In January 2022, our unconsolidated real estate venture with Landmark sold The Alaire, The Terano and 12511 Parklawn Drive, multifamily and future development assets located in Rockville, Maryland, for $ 137.5 million.

Additionally, the venture repaid the related mortgages payable of $ 79.8 million.

Our ownership in these assets ranged from 1.8 % to 18.0 %.

As of December 31, 2021 and 2020, we had a zero investment balance in the real estate venture that owns 1101 17th Street and had suspended equity loss recognition for the venture since June 30, 2018.

During the year ended December 31, 2019, we recognized income of $ 6.4 million related to distributions from this venture, which was included in "Loss from unconsolidated real estate ventures, net"

in our consolidated statement of operations.

In April 2020, our real estate venture with CPPIB entered into a mortgage loan with a maximum principal balance of $ 160.0 million collateralized by 1900 N Street, and as a result, we received a distribution of $ 70.8 million from the venture during the second quarter of 2020.

In April 2021, we entered into two real estate ventures with an institutional investor advised by J.P.

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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 consolidated statement of operations for the year ended December 31, 2021.

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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.

Pacific Life Insurance Company ("PacLife")

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

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Fixed rate (3)

Mortgages payable

Mortgage loans (4)

Unamortized deferred financing costs

Mortgages payable, net (4)

Mortgage loans, net (4) (5)

(1) Weighted average effective interest rate as of December 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) See Note 19 for additional information on guarantees of the debt of certain of our unconsolidated real estate ventures.

(2) Includes variable rate mortgage loans with interest rate cap agreements.

(3) Includes variable rate mortgage loans with interest rates fixed by interest rate swap agreements.

(4) Excludes mortgage loans related to the L'Enfant Plaza assets and the unconsolidated real estate venture with Fortress.

(5) See Note 20 for additional information on guarantees related to our unconsolidated real estate ventures.

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

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Other assets, net

Mortgages payable, net

Mortgage loans, net

Other liabilities, net

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Net income (loss) (2)

(1) Excludes information related to the venture that owned The Marriott Wardman Park hotel for the second half of 2020 as we suspended equity loss recognition for the venture after June 30, 2020 .

(1) Excludes information related to the unconsolidated real estate venture with Fortress.

Excludes information related to the L'Enfant Plaza assets as of December 31, 2022 and for the fourth quarter of 2022.

Also, excludes information related to the venture that owned The Marriott Wardman Park hotel for the second half of 2020 as we discontinued applying the equity method of accounting .

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

(2) Includes the gain from the sale of Fairway, Courthouse Metro, 5615 Fishers Lane and 500 L'Enfant Plaza totaling $ 85.5 million during the year ended December 31, 2021.

Includes the impairment loss recognized by the unconsolidated real estate venture that owns the L'Enfant Plaza assets totaling $ 48.7 million during the year ended December 31, 2021.

Includes the loss from the sale of Woodglen of $ 16.4 million and the gain from the sale of Pickett Industrial Park of $ 8.0 million during the year ended December 31, 2020.

(2) Includes the gain (loss) from the sale of various assets totaling $ 114.9 million, $ 85.5 million and ( $ 8.4 million) for each of the three years in the period ended December 31, 2022.

Includes impairment losses of $ 37.7 million and $ 48.7 million for the years ended December 31, 2022 and 2021.

Variable Interest Entities

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

We will consolidate a VIE if we are the primary beneficiary of the VIE, which entails having the power to direct the activities that most significantly impact the VIE's economic performance.

Certain criteria we assess in determining whether we are the primary beneficiary of the VIE include our influence over significant business activities, our voting rights, and any noncontrolling interest kick-out or participating rights.

Unconsolidated VIEs

As of December 31, 2022 and 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 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.

Although we may be responsible for managing the day-to-day operations of these investees, we are not the primary beneficiary of these VIEs, as we do not hold unilateral power over activities that, when taken together, most significantly impact the respective VIE's economic performance.

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

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

Because the noncontrolling interest holders do not have these rights, JBG SMITH LP is a VIE.

Because the noncontrolling interest holders do

not have these rights, JBG SMITH LP is a VIE.

As general partner, we have the power to direct the activities of JBG SMITH LP that most significantly affect its economic performance, and through our majority interest, we have both the right to receive benefits from and the obligation to absorb losses of JBG SMITH LP.

Accordingly, we are the primary beneficiary of JBG SMITH LP and consolidate it in our financial statements.

Because we conduct our business and hold our assets and liabilities through JBG SMITH LP, its total assets and liabilities comprise substantially all of our consolidated assets and liabilities.

In conjunction with the acquisition of The Batley in November 2021, we entered into an agreement with a third-party intermediary to facilitate a like-kind exchange.

As a result, the third-party intermediary was the legal owner of the entity that owned this property as of December 31, 2021.

We determined that the entity that owns the Batley was a VIE, and we are the primary beneficiary of the VIE.

Because we conduct our business through JBG SMITH LP, its total assets and liabilities comprise substantially all of our consolidated assets and liabilities.

In conjunction with the acquisition of The Batley in November 2021, we entered into an agreement with a qualified intermediary to facilitate a like-kind exchange.

As a result, the qualified intermediary was the legal owner of the entity that owned this property as of December 31, 2021.

We determined that the entity that owned the Batley was a VIE, and we were the primary beneficiary of the VIE.

We consolidated the property and its operations as of the acquisition date.

Legal ownership of this entity will be transferred to us by the third-party intermediary when the like-kind exchange agreement is completed with the sale of Pen Place, which we expect to close during the second quarter of 2022.

As of December 31, 2021, the VIE had total assets, consisting of primarily real estate, and liabilities of $ 207.2 million and $ 792,000 .

In March 2021, 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.

Legal ownership of this entity was transferred to us by the qualified intermediary when the like-kind exchange agreement was completed with the sale of Pen Place in May 2022.

In March 2021, we leased the land underlying 1900 Crystal Drive located in National Landing to a lessee, which is constructing 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 December 31, 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 non-recourse carve-outs (e.g., guarantees against fraud, misrepresentation, bankruptcy and certain environmental liabilities).

The ground lessee invested $ 17.5 million of equity funding, and we are obligated to provide additional project funding through a mezzanine loan to the ground lessee estimated at $ 104.8 million, of which $ 96.7 million has been funded as of December 31, 2022.

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 consolidated balance sheet.

The aforementioned ground lease, the mezzanine loan and the master lease are eliminated in consolidation.

As of December 31, 2021, the VIE had total assets, consisting of primarily construction in process, and liabilities of $ 58.6 million and $ 12.0 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.

In December 2021, we leased the land underlying 2000 South Bell Street and 2001 South Bell Street ("2000/2001 South Bell Street") located in National Landing to a lessee, which plans to construct a 775 -unit multifamily asset comprising two towers with ground floor retail.

In December 2021, we leased the land underlying 2000 South Bell Street and 2001 South Bell Street ("2000/2001 South Bell Street") located in National Landing to a lessee, which is constructing a 775 -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 2000/2001 South Bell Street, 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 December 2021, the ground lessee entered into a mortgage loan collateralized by the leasehold interest with a maximum principal balance of $ 208.5 million and an interest rate of LIBOR plus 2.15 % per annum.

As of December 31, 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 non-recourse carve-outs (e.g., guarantees against fraud, misrepresentation, bankruptcy and certain environmental liabilities).

The ground lessee is obligated to invest $ 16.0 million of equity funding, of which $ 6.7 million was funded as of December 31, 2021, and we are obligated to provide additional project funding through a mezzanine loan to the ground lessee, estimated at $ 96.2 million, none of which has been funded as of December 31, 2021.

We determined that 2000/2001 South Bell Street 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 consolidated balance sheet.

The aforementioned ground lease, the mezzanine loan and the master lease are eliminated in consolidation.

As of December 31, 2021, the VIE had total assets and liabilities of $ 3.9 million and $ 1.1 million.

Other Assets, Net

The following is a summary of other assets, net:

(In thousands)

Deferred leasing costs, net

Lease intangible assets, net

Other identified intangible assets

Wireless spectrum licenses (1)

Operating lease right-of-use assets

Finance lease right-of-use assets (2)

Prepaid expenses

Deferred financing costs, net

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.

(2) Includes $ 139.4 million as of December 31, 2021 related to the amendment of the ground lease for Courthouse Plaza 1 and 2, which was executed in December 2021.

The amendment extended the expiration date of the lease from January 2062 to December 2119, and resulted in a change in its classification from an operating lease to a finance lease.

(3) As of December 31, 2021, included $ 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 NAV.

During the fourth quarter of 2021, we recorded unrealized gains totaling $ 4.6 million related to these investments, which are included in "Interest and other income (loss), net"

in our consolidated statement of operations .

The following is a summary of the composition of deferred leasing costs, lease intangible assets and other identified intangible assets:

The ground lessee invested $ 16.0 million of equity funding, and we are obligated to provide additional project funding through a mezzanine loan to the ground lessee, estimated at $ 96.2 million, of which $ 31.6 million has been funded as of December 31, 2022.

We determined that 1900 Crystal Drive and 2000/2001 South Bell Street are VIEs and that we are the primary beneficiary of the VIEs.

Accordingly, we consolidate the VIEs with the lessee's ownership interest shown as "Noncontrolling interests"

in our consolidated balance sheets.

The aforementioned ground leases, mezzanine loans and master leases are eliminated in consolidation.

As of December 31, 2022, excluding JBG SMITH LP, we consolidated two VIEs (1900 Crystal Drive and 2000/2001 South Bell Street) with total assets of $ 265.5 million and liabilities of $ 116.3 million, primarily consisting of construction in process and mortgage loans.

As of December 31, 2021, excluding JBG SMITH LP, we consolidated three VIEs (1900 Crystal Drive, 2000/2001 South Bell Street and The Batley) with total assets of $ 269.7 million and liabilities of $ 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.

Intangible Assets, Net

The following is a summary of the intangible assets, net:

December 31, 2022

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Other identified intangible assets:

Wireless spectrum licenses

Option to enter into ground lease

Management and leasing contracts

Total intangible assets, net

The following is a summary of amortization expense related to lease and other identified intangible assets:

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(1) Estimated amortization related to the option to enter into ground lease is excluded from the amortization table above as the ground lease does not have a definite start date .

Estimated amortization related to wireless spectrum licenses is excluded from the amortization table above as they are indefinite-lived.

Mortgages Payable

The following is a summary of mortgages payable:

Additionally, the wireless spectrum licenses are excluded from the amortization table as they are indefinite-lived intangible assets.

Other Assets, Net

The following is a summary of other assets, net:

(In thousands)

Prepaid expenses

Derivative agreements, at fair value

Deferred financing costs, net

Operating lease right-of-use assets

Finance lease right-of-use assets (1)

Investments in funds (2)

Other investments (3)

Total other assets, net

(1) Represents assets related to finance ground leases at 1730 M Street and Courthouse Plaza 1 and 2, which were sold to an unconsolidated real estate venture in April 2022.

(2) Consists of investments in real estate focused technology companies, which are recorded at their fair value based on their reported net asset value.

During the years ended December 31, 2022 and 2021, unrealized gains totaled $ 2.1 million and $ 4.6 million related to these investments, which are included in "Interest and other income (loss), net"

in our consolidated statements of operations.

During the year ended December 31, 2022, realized losses related to these investments were $ 1.2 million.

(3) Primarily consists of equity investments that are carried at cost.

During the years ended December 31, 2022 and 2021, realized gains (losses) totaled $ 13.5 million and ($ 1.0 ) million related to these investments, which are included in "Interest and other income (loss), net"

in our consolidated statements of operations.

Mortgage Loans

The following is a summary of mortgage loans:

Weighted Average

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Fixed rate (3)

Mortgages payable

Mortgage loans

Unamortized deferred financing costs and premium / discount, net (4)

Mortgages payable, net

Mortgage loans, net

(1) Weighted average effective interest rate as of December 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 December 31, 2021, excludes $ 6.4 million of net deferred financing costs related to unfunded mortgage loans that were included in "Other assets, net."

As of December 31, 2021 and 2020, the net carrying value of real estate collateralizing our mortgages payable totaled $ 1.8 billion.

Our mortgages payable contain covenants that limit our ability to incur additional indebtedness on these properties and, in certain circumstances, require lender approval of tenant leases and/or yield maintenance upon repayment prior to maturity.

Certain mortgages payable are recourse to us.

(2) Includes variable rate mortgage loans with interest rate cap agreements.

For mortgage loans with interest rate caps, the weighted average interest rate cap strike is 2.64 % , and the weighted average maturity date of the interest rate caps is September 27, 2023.

The interest rate cap strike is exclusive of the credit spreads associated with the mortgage loans.

As of December 31, 2022, one-month LIBOR was 4.39 % and one-month term Secured Overnight Financing Rate ("SOFR") was 4.36 % , as applicable.

(3) Includes variable rate mortgage loans with interest rates fixed by interest rate swap agreements .

(4) As of December 31, 2022 and 2021, excludes $ 2.2 million and $ 6.4 million of net deferred financing costs related to unfunded mortgage loans that were included in "Other assets, net."

As of December 31, 2022 and 2021, the net carrying value of real estate collateralizing our mortgage loans totaled $ 2.2 billion and $ 1.8 billion.

Our mortgage loans contain covenants that limit our ability to incur additional indebtedness on

these properties and, in certain circumstances, require lender approval of tenant leases and/or yield maintenance upon repayment prior to maturity.

Certain mortgage loans are recourse to us.

See Note 20 for additional information.

We were not in default under any mortgage loan as of December 31, 2021.

In August 2022, we entered into a mortgage loan with a principal balance of $ 97.5 million collateralized by WestEnd25.

The mortgage loan has a seven-year term and an interest rate of SOFR plus 1.45 %.

We also entered into an interest rate swap with a total notional value of $ 97.5 million, which effectively fixes SOFR at an average interest rate of 2.71 % through the maturity date.

During the year ended December 31, 2021, we entered into two separate mortgage loans with an aggregate principal balance of $ 190.0 million, collateralized by 1225 S.

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Clark Street.

During the year ended December 31, 2020, we entered into four separate mortgage loans with an aggregate principal balance of $ 560.0 million, collateralized by 4747 Bethesda Avenue, The Bartlett, 1221 Van Street and 220 20th Street, and refinanced the mortgage payable collateralized by RTC-West, increasing the principal balance by $ 20.2 million.

In December 2020, we repaid the mortgage payable collateralized by WestEnd25 with a principal balance of $ 94.7 million.

As of December 31, 2021 and 2020, we had various interest rate swap and cap agreements on certain of our mortgages payable with an aggregate notional value of $ 1.3 billion.

In January 2023, we entered into a $ 187.6 million loan facility, collateralized by The Wren and F1RST Residences.

The loan has a seven-year term and a fixed interest rate of 5.13 %.

This loan is the initial advance under a Fannie Mae multifamily credit facility, which provides flexibility for collateral substitutions, future advances tied to performance, ability to mix fixed and floating rates, as well as stagger maturities.

Proceeds from the loan were used to repay the mortgage loan on 2121 Crystal Drive, which had a fixed interest rate of 5.51 %.

As of December 31, 2022 and 2021, we had various interest rate swap and cap agreements on certain of our mortgage loans with an aggregate notional value of $ 1.3 billion.

See Note 18 for additional information.

Credit Facility

As of December 31, 2021 and 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.

Based on the terms as of December 31, 2021, the interest rate for the credit facility varies based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets, and ranges (i) in the case of the revolving credit facility from LIBOR plus 1.05 % to LIBOR plus 1.50 %, (ii) in the case of the Tranche A-1 Term Loan, from LIBOR plus 1.20 % to LIBOR plus 1.70 % and (iii) in the case of the Tranche A-2 Term Loan, from LIBOR plus 1.15 % to LIBOR plus 1.70 %.

There are various LIBOR options in the credit facility, and we elected the one-month LIBOR option as of December 31, 2021.

We were not in default under our credit facility as of December 31, 2021.

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 1.05 % to SOFR plus 1.65 %, in each case including a credit spread adjustment.

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

As of December 31, 2022, our $ 1.6 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 2025, and a $ 400.0 million unsecured term loan ("Tranche A-2 Term Loan") maturing in January 2028, of which $ 50.0 million remains available to be borrowed until July 2023.

In January 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 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 term SOFR.

In July 2022, the Tranche A-2 Term Loan was amended to increase its borrowing capacity by $ 200.0 million.

The incremental $ 200.0 million includes a delayed draw feature, of which $ 150.0 million was drawn in September 2022 with the remaining $ 50.0 million undrawn as of the date of this filing.

The amendment extends the maturity date of the term loan from July 2024 to January 2028 and amends the interest rate to SOFR plus 1.25 % to SOFR plus 1.80 %, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets.

We entered into two interest rate swaps that were effective September 2022 with a total notional value of $ 150.0 million, which effectively fix SOFR at a weighted average interest rate of 2.15 % through the maturity date.

We also entered into two forward-starting interest rate swaps that will be effective July 2024 with a total notional value of $ 200.0 million, which will effectively fix SOFR at a weighted average interest rate of 2.80 % through the maturity date.

Additionally, we amended the interest rate of the revolving credit facility to SOFR plus 1.15 % to SOFR plus 1.60 %, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets.

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

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

(2) As of December 31, 2021 and 2020, letters of credit with an aggregate face amount of $ 911,000 and $ 1.5 million were outstanding under our revolving credit facility.

(3) As of December 31, 2021 and 2020, excludes net deferred financing costs related to our revolving credit facility of $ 5.0 million and $ 6.7 million that were included in "Other assets, net."

The interest rate for the revolving credit facility excludes a 0.15 % facility fee.

(2) As of December 31, 2022, one-month term SOFR was 4.36 % .

As of December 31, 2022 and 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 December 31, 2022 and 2021, excludes net deferred financing costs related to our revolving credit facility of $ 3.3 million and $ 5.0 million that were included in "Other assets, net."

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

As of December 31, 2021, the interest rate swaps mature concurrently with the respective term loan and fix LIBOR at 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.

As of December 31, 2022, the interest rate swaps fix SOFR at a weighted average interest rate of 1.46 % for the Tranche A-1 Term Loan and 2.15 % for the Tranche A-2 Term Loan.

Principal Maturities

The following is a summary of principal maturities of debt outstanding, including mortgages payable, revolving credit facility and the term loans, as of December 31, 2021:

The following is a summary of principal maturities of debt outstanding, including mortgage loans and the term loans, as of December 31, 2022:

Year ending December 31,

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Derivative agreements, at fair value

Deferred purchase price (2)

Deferred purchase price related to the acquisition of a development parcel

Total other liabilities, net

(1) Includes $ 121.6 million as of December 31, 2021 related to the amendment of the ground lease for Courthouse Plaza 1 and 2, which was executed in December 2021.

The amendment extended the expiration date of the lease from January 2062 to December 2119, and resulted in a change in its classification from an operating lease to a finance lease.

(2) Deferred purchase price associated with the acquisition of the former Americana Hotel site.

See Note 3 for additional information.

(1) Represents liabilities related to finance ground leases at 1730 M Street and Courthouse Plaza 1 and 2, which were sold to an unconsolidated real estate venture in April 2022 .

Amortization expense included in "Property rental revenue"

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Our consolidated financial statements include the operations of our TRSs, which are subject to federal, state and local income taxes on their taxable income.

As a REIT, we may also be subject to federal excise taxes if we engage in certain

types of transactions.

Continued qualification as a REIT depends on our ability to satisfy the REIT distribution tests, stock ownership requirements and various other qualification tests.

Our TRSs have estimated federal and state net operating loss (“NOL”) carry forwards of $ 4.8 million and $ 11.0 million as of December 31, 2021 and 2020, all of which are subject to limitations.

As a REIT, we may also be subject to federal excise taxes if we engage in certain types of transactions.

Continued qualification as a REIT depends on our ability to satisfy the REIT distribution tests, stock

ownership requirements and various other qualification tests.

Our TRSs had an estimated federal net operating loss ("NOL") carry forward of $ 4.8 million that was utilized in 2022.

As of December 31, 2022, the state NOL carryforward was $ 159,000 , tax-effected.

The net basis of our assets and liabilities for tax reporting purposes is approximately $ 223.8 million higher than the amounts reported in our consolidated balance sheet as of December 31, 2022.

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Income tax (expense) benefit

As of December 31, 2021 and 2020, we have a net deferred tax liability of $ 5.3 million and $ 2.5 million primarily related to the management and leasing contracts assumed in the Combination, partially offset by deferred tax assets associated with tax versus book differences, related general and administrative expenses and the NOL carry forward from 2020 and 2019, as well as NOLs converted from charitable contribution carry forwards from 2021 and 2020.

As of December 31, 2022 and 2021, we have a net deferred tax liability of $ 4.9 million and $ 5.3 million primarily related to investments in real estate, and management and leasing contracts, partially offset by deferred tax assets associated with tax versus book differences and related general and administrative expenses.

We are subject to federal, state and local income tax examinations by taxing authorities for the tax years ending in 2018 through 2021.

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Net deferred tax liability

During the year ended December 31, 2021, our Board of Trustees declared cash dividends totaling $ 0.90 of which $ 0.252 was taxable as ordinary income for federal income tax purposes, $ 0.423 were capital gain distributions and the remaining $ 0.225 will be determined in 2022.

During the year ended December 31, 2022, our Board of Trustees declared cash dividends totaling $ 0.90 of which $ 0.775 were capital gain distributions for federal income tax purposes and the remaining $ 0.125 will be determined in 2023.

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

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 years ended December 31, 2021 and 2020, unitholders redeemed 906,126 and 1.3 million OP Units and LTIP Units, which we elected to redeem for an equivalent number of our common shares.

As of December 31, 2021, outstanding OP Units and redeemable LTIP Units totaled 14.9 million, representing a 10.5 % ownership interest in JBG SMITH LP.

In our consolidated 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."

Vested LTIP Units are redeemable into OP Units.

During the years ended December 31, 2022 and 2021, unitholders redeemed 701,222 and 906,126 OP Units, which we elected to redeem for an equivalent number of our common shares.

As of December 31, 2022, outstanding OP Units and redeemable LTIP Units totaled 15.0 million, representing an 11.7 % ownership interest in JBG SMITH LP.

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"

in our consolidated balance sheets.

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

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Consolidated Real Estate Venture

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 December 31, 2021, we held a 96.0 % ownership interest in the real estate venture.

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

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

As of December 31, 2022, we held a 99.7 % ownership interest in the real estate venture, which reflects the redemption of a 3.7 % interest in October 2022 for $ 9.5 million.

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

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Balance, beginning of period

OP Unit redemptions

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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Property rental revenue

As of December 31, 2021, the amounts that are contractually due, including amounts due from tenants that were placed on a cash basis, from lease payments under our operating leases on an annual basis for the next five years and thereafter are as follows:

As of December 31, 2022, the amounts that are contractually due from lease payments under our operating leases on an annual basis for the next five years and thereafter are as follows:

Year ending December 31,

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Certain OP Units issued in the Combination to the former owners of JBG/Operating Partners, L.P.

are subject to post-combination vesting over a period of 60 months based on continued employment.

Compensation expense for these OP Units is recognized over the graded vesting period through July 2022.

were subject to post-combination vesting over a period of 60 months based on continued employment.

Compensation expense for these OP Units was recognized over the graded vesting period through July 2022.

The following is a summary of the OP Units activity:

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Unvested as of December 31, 2021

( 1,079,472 )

Unvested as of December 31, 2022

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Formation Awards

The formation awards issued in the Combination ("Formation Awards") were structured in the form of profits interests in JBG SMITH LP 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 volume-weighted average price of a common share at the time the formation unit was granted.

The Formation Awards, subject to certain conditions, generally vest 25 % on each of the third and fourth anniversaries and 50 % on the fifth anniversary of the date granted, subject to continued employment.

Compensation expense for these awards is being recognized over a five-year period through July 2022.

The formation awards issued in the Combination ("Formation Awards") were structured in the form of profits interests in JBG SMITH LP that provided for a share of appreciation determined by the increase in the value of a common share at the time of conversion over the volume-weighted average price of a common share at the time the formation unit was granted.

The Formation Awards, subject to certain conditions, generally vested 25 % on each of the third and fourth anniversaries and 50 % on the fifth anniversary of the date granted, subject to continued employment.

Compensation expense for these awards was recognized over a five-year period through July 2022.

The value of vested Formation Awards is realized through conversion of the award into a number of LTIP Units, and subsequent conversion into a number of OP Units determined based on the difference between the volume-weighted average price of a common share at the time the Formation Award was granted and the value of a common share on the conversion date.

The conversion ratio between Formation Awards and LTIP Units, which starts at zero, is the quotient of:

(i) the excess of the value of a common share on the conversion date above the per share value at the time the Formation Award was granted over (ii) the value of a common share as of the date of conversion.

(i) the excess of the value of a common share on the conversion date above the per share value at the time the Formation

Award was granted over (ii) the value of a common share as of the date of conversion.

Formation Awards have a finite 10-year term over which their value is allowed to increase and during which they may be converted into LTIP Units (and in turn, OP Units).

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Unvested as of December 31, 2021

( 1,005,426 )

Unvested as of December 31, 2022

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Time-Based LTIP Units, LTIP Units and Special Time-Based LTIP Units

During each of the three years in the period ended December 31, 2021, we granted to certain employees 498,955 , 381,504 and 351,982 LTIP Units with time-based vesting requirements ("Time-Based LTIP Units") with a weighted average grant-date fair value of $ 29.21 , $ 38.52 and $ 34.26 per unit that primarily vest over four years subject to continued employment.

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

Additionally, in July 2021, we granted to certain employees as part of a long-term retention incentive award 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.

During each of the three years in the period ended December 31, 2022, we granted to certain employees 644,995 , 498,955 and 381,504 LTIP Units with time-based vesting requirements ("Time-Based LTIP Units") and a weighted average grant-date fair value of $ 27.39 , $ 29.21 and $ 38.52 per unit that primarily vest ratably over four years subject to continued employment.

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

In July 2021, we granted to certain employees as part of a long-term retention incentive award 608,325 Time-Based LTIP Units with a 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.

Additionally, in January 2022 , we granted to certain employees 15,790 LTIP Units with a grant-date fair value of $ 28.39 per unit that vest over the same period.

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

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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 the Granted LTIPs:

The discount was determined using Monte Carlo simulations based on the following significant assumptions:

Year Ended December 31,

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The total-grant date fair value of the Granted LTIPs and Special Time-Based LTIP Units that vested for each of the three years in the period ended December 31, 2022 was $ 27.2 million, $ 19.1 million and $ 15.3 million.

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 total shareholder return ("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 LTIP Units expire on the ten th anniversary of their grant date.

The aggregate grant-date fair value of the AO LTIP Units granted during the year ended December 31, 2022 was $ 6.6 million, valued using Monte Carlo simulations based on the following significant assumptions:

Expected volatility

Dividend yield

Risk-free interest rate

The following is a summary of the AO LTIP Units activity:

Average Grant-

Date Fair Value

Unvested as of December 31, 2021

Forfeited / cancelled

Unvested as of December 31, 2022

Performance-Based LTIP Units

During each of the three years in the period ended December 31, 2021, we granted to certain employees 627,874 , 593,100 and 478,411 LTIP Units with performance-based vesting requirements ("Performance-Based LTIP Units") with a weighted average grant-date fair value of $ 15.14 , $ 18.67 and $ 19.49 per unit.

Performance-Based LTIP Units are performance-based equity compensation pursuant to which participants have the opportunity to earn LTIP Units based on the relative performance of the total shareholder return ("TSR") of our common shares compared to the companies in the FTSE Nareit Equity Office Index, over the defined performance period beginning on the grant date, inclusive of dividends and stock price appreciation.

During the years ended December 31, 2021 and 2020, we granted to certain employees 627,874 and 593,100 LTIP Units with performance-based vesting requirements ("Performance-Based LTIP Units") and a weighted average grant-date fair value of $ 15.14 and $ 18.67 per unit.

Performance-Based LTIP Units are performance-based equity compensation pursuant to which participants have the opportunity to earn LTIP Units based on the relative performance of the TSR of our common shares compared to the companies in the FTSE Nareit Equity Office Index, over the defined performance period beginning on the grant date, inclusive of dividends and stock price appreciation.

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

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

Additionally, in July 2021, we granted to certain employees as part of a long-term retention incentive award 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, 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.

In July 2021 , we granted to certain employees as part of a long-term retention incentive award 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, 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.

Additionally, in January 2022, we granted to certain employees 21,705 Performance-Based LTIP Units with a grant-date fair value of $ 17.68 per unit that vest over the same period.

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 for each of the three years in the period ended December 31, 2021 was $ 29.0 million, $ 11.1 million and $ 9.3 million, valued using Monte Carlo simulations.

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

The aggregate grant-date fair value of the Performance-Based LTIP Units granted for each of the three years in the period ended December 31, 2022 was $ 384,000 , $ 29.0 million and $ 11.1 million, valued using Monte Carlo simulations based on the following significant assumptions:

Year Ended December 31,

Expected volatility

31.0 % - 34.0 %

31.0 % to 34.0 %

Dividend yield

2.3 % to 2.5 %

Risk-free interest rate

0.2 % - 1.0 %

0.2 % to 1.0 %

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Unvested as of December 31, 2022 (1)

(1) Primarily represents the Performance-Based LTIP Units granted in February 2018.

Based on our relative performance and absolute TSR over the three-year performance period, all of the outstanding units were earned, with half of the units vesting at the end of the performance period and the remaining half vesting in February 2022.

(2) Includes 506,182 Performance-Based LTIP Units issued in 2018 related to our successful pursuit of Amazon’s new headquarters ("Special Performance-Based LTIP Units") that were forfeited in November 2021 as the performance measures were not met.

(1) In January 2023, 470,655 Performance-Based LTIP Units, which were unvested as of December 31, 2022, were forfeited as the performance measures were not met .

The total-grant date fair value of the Performance-Based LTIP that vested for the year ended December 31, 2021 and 2020 was $ 5.1 million and $ 4.6 million.

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 similar to those of the Time-Based LTIP Units and Performance-Based LTIP Units granted in 2021.

The aggregate grant-date fair value of the RSUs granted during the year ended December 31, 2021 was $ 905,000 .

The total-grant date fair value of the Performance-Based LTIP that vested for each of the three years in the period ended December 31, 2022 was $ 4.2 million, $ 5.1 million and $ 4.6 million.

During the years ended December 31, 2022 and 2021, we granted to certain non-executive employees 39,536 and 22,194 RSUs with time-based vesting requirements ("Time-Based RSUs") and a weighted average grant-date fair value of $ 29.36 and $ 31.52 per unit.

During the year ended December 31, 2021, we granted to certain non-executive employees 13,516 RSUs with performance-based vesting requirements ("Performance-Based RSUs") and 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 primarily consistent to those of the Time-Based LTIP Units and Performance-Based LTIP Units granted in 2022 and 2021.

The aggregate grant-date fair value of the RSUs granted during the years ended December 31, 2022 and 2021 was $ 1.2 million and $ 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.

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Unvested as of December 31, 2022

The aggregate total-grant date fair value of the RSUs that vested for the year ended December 31, 2022 was $ 271,000 .

The ESPP authorized the issuance of up to 2.1 million common shares.

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As of December 31, 2022, there were 1.8 million common shares available for issuance under the ESPP.

Pursuant to the ESPP, employees purchased 64,321 , 68,047 and 47,022 common shares for $ 1.6 million, $ 1.7 million and $ 1.5 million during each of the three years in the period ended December 31, 2021.

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

Pursuant to the ESPP, employees purchased 79,040 , 64,321 and 68,047 common shares for $ 1.5 million, $ 1.6 million and $ 1.7 million during each of the three years in the period ended December 31, 2022, valued using Black Scholes model based on the following significant assumptions:

Year Ended December 31,

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Time-Based LTIP Units

Performance-Based LTIP Units

AO LTIP Units and Performance-Based LTIP Units

Other equity awards (1)

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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.

(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 .

(i) fully vested LTIP Units issued to certain employees in lieu of all or a portion of any cash bonuses earned, (ii) RSUs and (iii) shares issued under our ESPP.

(2) Includes share-based compensation expense for LTIP Units and OP Units issued in the Formation Transaction, which fully vested in July 2022 .

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

(4) Included in "General and administrative expense:

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We provide a discretionary matching contribution.

Employees' contributions, which vests after one year of service.

Employer contributions vest after one year of service.

Our contributions for each of the three years in the period ended December 31, 2022 were $ 2.4 million, $ 2.4 million and $ 2.2 million.

Beginning in 2022, certain employees were granted performance-based, appreciation-only LTIP Units ("AO LTIP Units").

The AO LTIP Units are structured in the form of profit 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 have a three-year performance period.

50 % of any AO 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.

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 %.

In January 2022, we granted 1.5 million AO LTIP Units, 702,888 Time-Based LTIP Units, 21,705 Performance-Based LTIP Units and 39,536 Time-Based RSUs to certain employees with an estimated aggregate grant-date fair value of $ 27.3 million.

In February 2022, we granted 252,206 fully vested LTIP Units, with a total grant-date fair value of $ 5.6 million, to certain employees who elected to receive all or a portion of their cash bonus earned, related to 2021 service, as LTIP Units.

In 2023, we granted 1.7 million AO LTIP Units, 923,305 Time-Based LTIP Units and 78,681 Time-Based RSUs to certain employees with an estimated total grant-date fair value of $ 24.2 million.

Additionally, we granted 280,342 fully vested LTIP Units, with a total grant-date fair value of $ 4.5 million, to certain employees who elected to receive all or a portion of their cash bonus earned, related to 2022 service, as LTIP Units.

Transaction and Other Costs

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Completed, potential and pursued transaction expenses (1)

Relocation of corporate headquarters (2)

Transaction and other costs

(1) Includes primarily legal and dead deal costs.

(2) In November 2019, we relocated our corporate headquarters and incurred an impairment loss on the right-of-use assets for leases related to our former corporate headquarters as well as other costs.

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

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

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

Net (gain) loss on derivative financial instruments designated as ineffective hedges:

Net unrealized

Capitalized interest

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Common Shares Repurchased

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

In March 2020, our Board of Trustees authorized the repurchase of up to $ 500.0 million of our outstanding common shares, which it increased to an aggregate of $ 1.0 billion in June 2022.

During the year ended December 31, 2022, we repurchased and retired 14.2 million common shares for $ 361.0 million, a weighted average purchase price per share of $ 25.49 .

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Since we began the share repurchase program, we have repurchased and retired 23.3 million common shares for $ 623.5 million, a weighted average purchase price per share of $ 26.74 .

Shareholders' Equity

In April 2019, we closed an underwritten public offering of 11.5 million common shares (including 1.5 million common shares related to the exercise of the underwriters' option to cover overallotments) at $ 42.00 per share, which generated net proceeds, after deducting the underwriting discounts and commissions and other offering expenses, of $ 472.8 million.

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 (loss) per common share to net income (loss):

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

Year Ended December 31,

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Net (income) loss attributable to redeemable noncontrolling interests

Net loss attributable to noncontrolling interests

Net (income) loss attributable to noncontrolling interests

Net income (loss) attributable to common shareholders

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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.

Performance-Based LTIP Units, Formation Awards and RSUs, which totaled 4.5 million, 4.7 million and 4.7 million for each of the three years in the period ended December 31, 2021, were excluded from the calculation of diluted earnings (loss) per common share as they were antidilutive, but potentially could be dilutive in the future.

AO LTIP Units, Performance-Based LTIP Units, Formation Awards and RSUs, which totaled 5.9 million, 4.5 million and 4.7 million for each of the three years in the period ended December 31, 2022, were excluded from the calculation of diluted earnings (loss) per common share as they were antidilutive, but potentially could be dilutive in the future.

Fair Value Measurements

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As of December 31, 2022 and 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 loss on our derivative financial instruments designated as cash flow hedges was $ 17.2 million and $ 43.9 million as of December 31, 2021 and 2020 and was recorded in "Accumulated other comprehensive loss"

The net unrealized gain (loss) on our derivative financial instruments designated as effective hedges was $ 55.0 million and ($ 17.2 ) million as of December 31, 2022 and 2021 and was recorded in "Accumulated other comprehensive income (loss)"

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

Within the next 12 months, we expect to reclassify $ 11.4 million of the net unrealized loss as an increase to interest expense.

Within the next 12 months, we expect to reclassify $ 29.2 million of the net unrealized gain as a decrease to interest expense.

The fair values of the derivative financial instruments are based on the estimated amounts we would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and observable inputs.

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December 31, 2022

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 accounting 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 accounting hedges:

Derivative financial instruments designated as ineffective hedges:

Classified as assets in "Other assets, net"

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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 December 31, 2021 and 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 December 31, 2022 and 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 consolidated statements of comprehensive income (loss) for each of the three years in the period ended December 31, 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 consolidated statements of operations as the interest rate swaps were documented and qualified as hedging instruments.

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

Fair Value Measurements on a Nonrecurring Basis

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In connection with the preparation and review of our 2021 annual consolidated financial statements, we assessed the recoverability of the carrying amount of our real estate and related intangible assets.

This assessment resulted in the remeasurement of 7200 Wisconsin Avenue, RTC-West and a future development parce1, which are non-core assets that were written down to their estimated aggregate fair value of $ 309.0 million and were classified as Level 2 in the fair value hierarchy.

Our estimates of the fair values were based on expected sales prices as determined by contracts under negotiation as of December 31, 2021, after adjusting for estimated selling costs.

The remeasurements results in impairment losses totaling $ 25.1 million, which are included in "Impairment loss"

in our consolidated statement of operations.

In connection with the preparation and review of our 2020 annual consolidated financial statements, we assessed the recoverability of the carrying amount of our real estate and related intangible assets.

This assessment resulted in the remeasurement of One Democracy Plaza, a non-core commercial asset which was written down to its estimated fair value of $ 3.3 million, including the right-of-use asset associated with the property's ground lease, and was classified as Level 3 in the fair value hierarchy.

Our estimate of fair value was determined using a discounted cash flow model, which considers, among other things, the anticipated holding period, current market conditions and utilizes unobservable quantitative inputs, including appropriate capitalization and discount rates.

The remeasurements resulted in an impairment loss of $ 10.2 million, which is included in "Impairment loss"

in our consolidated statement of operations.

This assessment resulted in the remeasurement of 7200 Wisconsin Avenue, RTC-West and a development parcel, which were written down to their estimated aggregate fair value of $ 309.0 million and were classified as Level 2 in the fair value hierarchy.

Our estimates of the fair values were based on expected sales prices as determined by contracts that were under negotiation as of December 31, 2021, after adjusting for estimated selling costs.

The assets were sold to an unconsolidated real estate venture in April 2022.

The remeasurement results in impairment losses totaling $ 25.1 million, which are included in "Impairment loss"

in our consolidated statement of operations for the year ended December 31, 2021.

There were no other assets measured at fair value on a nonrecurring basis as of December 31, 2022 and 2021.

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Financial liabilities:

Mortgages payable

Mortgage loans

Revolving credit facility

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(1) The carrying amount consists of principal only.

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 values of the mortgage loans, revolving credit facility and unsecured term loans were determined using Level 2 inputs of the fair value hierarchy.

The fair value of our mortgage loans 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 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.

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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 the other segment 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.

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Third-party real estate services revenue less expenses

(1) As of December 31, 2021 , we had estimated unrecognized development fee revenue totaling $ 48.6 million, of which $ 13.8 million, $ 12.0 million and $ 6.3 million is expected to be recognized in 2022 , 2023 and 2024 , and $ 16.5 million is expected to be recognized thereafter through 2027 as unsatisfied performance obligations are completed.

(1) 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 $ 19.6 million and $ 25.5 million as of December 31, 2021 and 2020, which are classified in "Other assets, net"

Management company assets primarily consist of management and leasing contracts with a net book value of $ 13.7 million and $ 19.6 million as of December 31, 2022 and 2021, which are classified in "Intangible assets, net"

in our consolidated balance sheets.

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Interest expense

Loss on extinguishment of debt

Loss on the extinguishment of debt

Impairment loss

1 unchanged sentence

Net income (loss) attributable to redeemable noncontrolling interests

Net loss attributable to noncontrolling interests

Net income (loss) attributable to noncontrolling interests

Third-party real estate services, including reimbursements revenue

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Interest and other income (loss), net

Gain on sale of real estate

Gain on the sale of real estate, net

Consolidated NOI

The following is a summary of NOI by segment.

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

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

Year Ended December 31, 2022

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We are responsible for deductibles and losses in excess of the insurance coverage, which could be material.

Our debt, consisting of mortgages payable secured by our properties, a revolving credit facility and unsecured term loans, contains customary covenants requiring adequate insurance coverage.

Our debt, consisting of mortgage loans 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 a reasonable cost in the future.

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Construction Commitments

As of December 31, 2021, we had assets under construction that will, based on our current plans and estimates, require an additional $ 291.4 million to complete, which we anticipate will be primarily expended over the next two to three years .

As of December 31, 2022, we had assets under construction that, based on our current plans and estimates, require an additional $ 403.5 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

Most of our assets have been subject, at some point, to environmental assessments that are intended to evaluate the environmental condition of the assets.

Most of our assets have been subject to environmental assessments that are intended to evaluate the environmental condition of the assets.

The environmental assessments did not reveal any material environmental contamination that we believe would have a material adverse effect on our overall business, financial condition or results of operations, or that have not been anticipated and remediated during site redevelopment as required by law.

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

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

Environmental liabilities totaled $ 18.0 million and $ 18.2 million as of December 31, 2022 and 2021, and are included in "Other liabilities, net"

in our consolidated balance sheets.

Operating and Finance Leases

As of December 31, 2021, our operating and finance lease liabilities were calculated based on the weighted average discount rates of 5.5 % and 4.5 %, and had weighted average remaining lease terms of 5.4 years and 97.7 years.

As of December 31, 2021, future minimum lease payments under our non-cancellable operating and finance leases are as follows:

As of December 31, 2022, our operating lease liabilities were calculated based on the weighted average discount rates of 5.8 %, and had a weighted average remaining lease term of 5.0 years.

As of December 31, 2022, future minimum lease payments under our non-cancellable operating leases are as follows:

Year ending December 31,

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Imputed interest

( 1,203,246 )

Total liabilities related to lease right-of-use assets

During the year ended December 31, 2021, we incurred $ 731,000 and $ 2.8 million of fixed operating and finance lease expenses, and $ 2.6 million of variable operating lease expenses.

During the year ended December 31, 2020, we incurred $ 1.1 million and $ 1.8 million of fixed operating and finance lease costs, and $ 1.6 million of variable operating lease costs.

In April 2022, we sold the finance ground leases at 1730 M Street and Courthouse Plaza 1 and 2 to an unconsolidated real estate venture.

During the year ended December 31, 2022, we incurred $ 601,000 and $ 2.6 million of fixed operating and finance lease expenses, and $ 97,000 of variable operating lease expenses.

During the year ended December 31, 2021, we incurred $ 731,000 and $ 2.8 million of fixed operating and finance lease costs, and $ 2.6 million of variable operating lease costs.

As of December 31, 2022, we had committed tenant-related obligations totaling $ 62.3 million ($ 60.4 million related to our consolidated entities and $ 1.9 million related to our unconsolidated real estate ventures at our share).

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

As of December 31, 2021, we had additional capital commitments and certain recorded guarantees to our unconsolidated real estate ventures totaling $ 66.9 million.

As of December 31, 2022, we had additional capital commitments and certain recorded guarantees to our unconsolidated real estate ventures and other investments totaling $ 62.8 million.

As of December 31, 2022, we had no principal payment guarantees related to our unconsolidated real estate ventures.

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.

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

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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.

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.

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.

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As of December 31, 2022 and 2021, we had receivables from the JBG Legacy Funds and the WHI Impact Pool totaling $ 4.5 million and $ 3.2 million for such services.

We rented our former corporate offices from an unconsolidated real estate venture and made payments totaling $ 1.3 million, $ 4.6 million and $ 5.0 million for each of the three years in the period ended December 31, 2021.

We rented our former corporate offices from an unconsolidated real estate venture and made payments totaling $ 922,000 , $ 1.3 million and $ 4.6 million for each of the three years in the period ended December 31, 2022.

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 $ 10.7 million, $ 18.6 million and $ 16.9 million for each of the three years in the period ended December 31, 2022, which is included in "Property operating expenses"

in our statements of operations.

in our consolidated statements of operations.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data