JBG SMITH Properties 10-Q

ITEM 1. Financial Statements JBG SMITH PROPERTIES Condensed Consolidated Balance Sheets (Unaudited) (In thousands, except par value amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2023 December 31, 2022 ASSETS ​ ​ Real estate, at cost: ​ ​ Land and improvements ​ $ 1,207,873 ​ $ 1,302,569 Buildings and improvements ​ 4,037,280 ​ 4,310,821 Construction in progress, including land ​ 709,878 ​ 544,692 ​ ​ 5,955,031 ​ 6,158,082 Less: accumulated depreciation ​ ( 1,355,355 ) ​ ( 1,335,000 ) Real estate, net ​ 4,599,676 ​ 4,823,082 Cash and cash equivalents ​ 130,522 ​ 241,098 Restricted cash ​ 38,257 ​ 32,975 Tenant and other receivables ​ 44,080 ​ 56,304 Deferred rent receivable ​ 171,121 ​ 170,824 Investments in unconsolidated real estate ventures ​ 296,397 ​ 299,881 Intangible assets, net ​ ​ 139,876 ​ ​ 162,246 Other assets, net ​ 217,903 ​ 117,028 Assets held for sale ​ 28,336 ​ — TOTAL ASSETS ​ $ 5,666,168 ​ $ 5,903,438 ​ ​ ​ ​ ​ ​ ​ LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY ​ Liabilities: ​ ​ Mortgage loans, net ​ $ 1,727,133 ​ $ 1,890,174 Revolving credit facility ​ 92,000 ​ — Term loans, net ​ 716,953 ​ 547,072 Accounts payable and accrued expenses ​ 135,085 ​ 138,060 Other liabilities, net ​ 145,550 ​ 132,710 Total liabilities ​ 2,816,721 ​ 2,708,016 Commitments and contingencies ​ ​ Redeemable noncontrolling interests ​ 444,361 ​ 481,310 Shareholders' equity: ​ ​ Preferred shares, $ 0.01 par value - 200,000 shares authorized; none issued ​ — ​ — Common shares, $ 0.01 par value - 500,000 shares authorized; 97,717 and 114,013 shares issued and outstanding as of September 30, 2023 and December 31, 2022 ​ 978 ​ 1,141 Additional paid-in capital ​ 3,043,036 ​ 3,263,738 Accumulated deficit ​ ( 722,847 ) ​ ( 628,636 ) Accumulated other comprehensive income ​ 51,668 ​ 45,644 Total shareholders' equity of JBG SMITH Properties ​ 2,372,835 ​ 2,681,887 Noncontrolling interests ​ 32,251 ​ 32,225 Total equity ​ 2,405,086 ​ 2,714,112 TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY ​ $ 5,666,168 ​ $ 5,903,438 ​ See accompanying notes to the condensed consolidated financial statements (unaudited). ​ 3 Table of Contents JBG SMITH PROPERTIES Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2023 2022 2023 2022 REVENUE ​ ​ ​ ​ ​ Property rental ​ $ 120,294 ​ $ 119,811 ​ $ 364,919 ​ $ 368,445 Third-party real estate services, including reimbursements ​ 23,942 ​ 21,845 ​ 69,588 ​ 67,972 Other revenue ​ 7,326 ​ 5,958 ​ 22,112 ​ 18,667 Total revenue ​ 151,562 ​ 147,614 ​ 456,619 ​ 455,084 EXPENSES ​ ​ ​ ​ ​ Depreciation and amortization ​ 50,265 ​ 50,056 ​ 152,914 ​ 157,597 Property operating ​ 37,588 ​ 36,380 ​ 109,112 ​ 112,469 Real estate taxes ​ 14,413 ​ 14,738 ​ 44,061 ​ 47,870 General and administrative: ​ ​ ​ ​ ​ Corporate and other ​ 11,246 ​ 12,072 ​ 42,462 ​ 42,669 Third-party real estate services ​ 21,405 ​ 21,230 ​ 67,333 ​ 72,422 Share-based compensation related to Formation Transaction and special equity awards ​ 46 ​ 548 ​ 397 ​ 4,369 Transaction and other costs ​ 1,830 ​ 1,746 ​ 7,794 ​ 4,632 Total expenses ​ 136,793 ​ 136,770 ​ 424,073 ​ 442,028 OTHER INCOME (EXPENSE) ​ ​ ​ ​ Loss from unconsolidated real estate ventures, net ​ ( 2,263 ) ​ ( 13,867 ) ​ ( 1,320 ) ​ ( 12,829 ) Interest and other income, net ​ 7,774 ​ 984 ​ 14,132 ​ 16,902 Interest expense ​ ( 27,903 ) ​ ( 17,932 ) ​ ( 80,580 ) ​ ( 50,251 ) Gain on the sale of real estate, net ​ 906 ​ — ​ 41,606 ​ 158,631 Loss on the extinguishment of debt ​ — ​ ( 1,444 ) ​ ( 450 ) ​ ( 3,073 ) Impairment loss ​ ​ ( 59,307 ) ​ ​ — ​ ​ ( 59,307 ) ​ ​ — Total other income (expense) ​ ( 80,793 ) ​ ( 32,259 ) ​ ( 85,919 ) ​ 109,380 INCOME (LOSS) BEFORE INCOME TAX EXPENSE ​ ( 66,024 ) ​ ​ ( 21,415 ) ​ ( 53,373 ) ​ 122,436 Income tax expense ​ ( 77 ) ​ ( 166 ) ​ ( 672 ) ​ ( 2,600 ) NET INCOME (LOSS) ​ ( 66,101 ) ​ ( 21,581 ) ​ ( 54,045 ) ​ 119,836 Net (income) loss attributable to redeemable noncontrolling interests ​ 7,926 ​ 2,546 ​ 5,961 ​ ( 15,712 ) Net (income) loss attributable to noncontrolling interests ​ 168 ​ ( 258 ) ​ 703 ​ ( 174 ) NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS ​ $ ( 58,007 ) ​ $ ( 19,293 ) ​ $ ( 47,381 ) ​ $ 103,950 EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED ​ $ ( 0.58 ) ​ $ ( 0.17 ) ​ $ ( 0.45 ) ​ $ 0.86 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED ​ 101,445 ​ 114,360 ​ 108,351 ​ 120,741 ​ See accompanying notes to the condensed consolidated financial statements (unaudited). ​ 4 Table of Contents JBG SMITH PROPERTIES Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2023 2022 2023 2022 NET INCOME (LOSS) ​ $ ( 66,101 ) ​ $ ( 21,581 ) ​ $ ( 54,045 ) ​ $ 119,836 OTHER COMPREHENSIVE INCOME: ​ ​ ​ ​ Change in fair value of derivative financial instruments ​ 19,679 ​ 32,939 ​ 32,499 ​ 65,259 Reclassification of net (income) loss on derivative financial instruments from accumulated other comprehensive income into interest expense ​ ( 9,470 ) ​ ( 333 ) ​ ( 24,820 ) ​ 6,214 Total other comprehensive income ​ 10,209 ​ 32,606 ​ 7,679 ​ 71,473 COMPREHENSIVE INCOME (LOSS) ​ ( 55,892 ) ​ 11,025 ​ ( 46,366 ) ​ 191,309 Net (income) loss attributable to redeemable noncontrolling interests ​ 7,926 ​ 2,546 ​ 5,961 ​ ( 15,712 ) Net (income) loss attributable to noncontrolling interests ​ ​ 168 ​ ​ ( 258 ) ​ ​ 703 ​ ​ ( 174 ) Other comprehensive income attributable to redeemable noncontrolling interests ​ ( 1,346 ) ​ ( 4,376 ) ​ ( 902 ) ​ ( 8,653 ) Other comprehensive income attributable to noncontrolling interests ​ ​ ( 686 ) ​ ​ — ​ ​ ( 753 ) ​ ​ — COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO JBG SMITH PROPERTIES ​ $ ( 49,830 ) ​ $ 8,937 ​ $ ( 41,357 ) ​ $ 166,770 ​ See accompanying notes to the condensed consolidated financial statements (unaudited). ​ 5 Table of Contents JBG SMITH PROPERTIES Condensed Consolidated Statements of Equity (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ Common Shares ​ Paid-In ​ Accumulated Comprehensive ​ Noncontrolling ​ Total ​ ​ Shares ​ Amount ​ Capital ​ Deficit Income ​ Interests ​ Equity BALANCE AS OF JUNE 30, 2023 105,139 ​ $ 1,052 ​ $ 3,156,511 ​ $ ( 641,813 ) ​ $ 43,491 ​ $ 31,741 ​ $ 2,590,982 Net loss attributable to common shareholders and noncontrolling interests — ​ — ​ — ​ ( 58,007 ) ​ — ​ ( 168 ) ​ ( 58,175 ) Redemption of common limited partnership units ("OP Units") for common shares 491 ​ 5 ​ 7,597 ​ — ​ — ​ — ​ 7,602 Common shares repurchased ​ ( 7,920 ) ​ ​ ( 79 ) ​ ​ ( 120,760 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 120,839 ) Common shares issued pursuant to employee incentive compensation plan and Employee Share Purchase Plan ("ESPP") ​ 7 ​ ​ — ​ ​ 69 ​ ​ — ​ ​ — ​ ​ — ​ ​ 69 Dividends declared on common shares ($ 0.225 per common share) ​ — ​ ​ — ​ ​ — ​ ​ ( 23,027 ) ​ ​ — ​ ​ — ​ ​ ( 23,027 ) Distributions to noncontrolling interests, net — ​ — ​ — ​ — ​ — ​ ( 8 ) ​ ( 8 ) Redeemable noncontrolling interests redemption value adjustment and total other comprehensive income allocation — ​ — ​ ( 381 ) ​ — ​ ( 1,346 ) ​ — ​ ( 1,727 ) Total other comprehensive income — ​ — ​ — ​ — ​ 10,209 ​ — ​ 10,209 Other comprehensive income attributable to noncontrolling interest ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 686 ) ​ ​ 686 ​ ​ — BALANCE AS OF SEPTEMBER 30, 2023 97,717 ​ $ 978 ​ $ 3,043,036 ​ $ ( 722,847 ) ​ $ 51,668 ​ $ 32,251 ​ $ 2,405,086 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ BALANCE AS OF JUNE 30, 2022 115,862 ​ $ 1,160 ​ $ 3,285,511 ​ $ ( 513,746 ) ​ $ 18,640 ​ $ 31,640 ​ $ 2,823,205 Net income (loss) attributable to common shareholders and noncontrolling interests — ​ — ​ — ​ ( 19,293 ) ​ — ​ 258 ​ ( 19,035 ) Redemption of OP Units for common shares 213 ​ 2 ​ 4,889 ​ — ​ — ​ — ​ 4,891 Common shares repurchased ​ ( 2,311 ) ​ ​ ( 24 ) ​ ​ ( 53,979 ) ​ ​ — ​ — ​ — ​ ​ ( 54,003 ) Common shares issued pursuant to employee incentive compensation plan and ESPP ​ — ​ ​ — ​ ​ 377 ​ ​ — ​ ​ — ​ ​ — ​ ​ 377 Dividends declared on common shares ($ 0.225 per common share) ​ — ​ ​ — ​ ​ — ​ ​ ( 25,749 ) ​ ​ — ​ ​ — ​ ​ ( 25,749 ) Distributions from noncontrolling interests, net — ​ — ​ — ​ — ​ — ​ ( 8 ) ​ ( 8 ) Redeemable noncontrolling interests redemption value adjustment and total other comprehensive income allocation — ​ — ​ 28,861 ​ — ​ ( 4,376 ) ​ — ​ 24,485 Total other comprehensive income — ​ — ​ — ​ — ​ 32,606 ​ — ​ 32,606 BALANCE AS OF SEPTEMBER 30, 2022 113,764 ​ $ 1,138 ​ $ 3,265,659 ​ $ ( 558,788 ) ​ $ 46,870 ​ $ 31,890 ​ $ 2,786,769 ​ See accompanying notes to the condensed consolidated financial statements (unaudited). ​ 6 Table of Contents JBG SMITH PROPERTIES Condensed Consolidated Statements of Equity (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Comprehensive ​ ​ ​ ​ ​ ​ ​ Common Shares ​ Paid-In ​ Accumulated Income ​ Noncontrolling ​ Total ​ ​ Shares ​ Amount ​ Capital ​ Deficit (Loss) ​ Interests ​ Equity BALANCE AS OF DECEMBER 31, 2022 114,013 ​ $ 1,141 ​ $ 3,263,738 ​ $ ( 628,636 ) ​ $ 45,644 ​ $ 32,225 ​ $ 2,714,112 Net loss attributable to common shareholders and noncontrolling interests — ​ — ​ — ​ ( 47,381 ) ​ — ​ ( 703 ) ​ ( 48,084 ) Redemption of OP Units for common shares 2,068 ​ 21 ​ 33,089 ​ — ​ — ​ — ​ 33,110 Common shares repurchased ​ ( 18,446 ) ​ ​ ( 184 ) ​ ​ ( 276,500 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 276,684 ) Common shares issued pursuant to employee incentive compensation plan and ESPP ​ 82 ​ ​ — ​ ​ 1,865 ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,865 Dividends declared on common shares ( $ 0.45 per common share) ​ — ​ ​ — ​ ​ — ​ ​ ( 46,830 ) ​ ​ — ​ ​ — ​ ​ ( 46,830 ) Distributions to noncontrolling interests, net — ​ — ​ — ​ — ​ — ​ ( 24 ) ​ ( 24 ) Redeemable noncontrolling interests redemption value adjustment and total other comprehensive income allocation — ​ — ​ 20,844 ​ — ​ ( 902 ) ​ — ​ 19,942 Other comprehensive income — ​ — ​ — ​ — ​ 7,679 ​ — ​ 7,679 Other comprehensive income attributable to noncontrolling interest ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 753 ) ​ ​ 753 ​ ​ — BALANCE AS OF SEPTEMBER 30, 2023 97,717 ​ $ 978 ​ $ 3,043,036 ​ $ ( 722,847 ) ​ $ 51,668 ​ $ 32,251 ​ $ 2,405,086 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ BALANCE AS OF DECEMBER 31, 2021 127,378 ​ $ 1,275 ​ $ 3,539,916 ​ $ ( 609,331 ) ​ $ ( 15,950 ) ​ $ 22,507 ​ $ 2,938,417 Net income attributable to common shareholders and noncontrolling interests — ​ — ​ — ​ 103,950 ​ — ​ 174 ​ 104,124 Redemption of OP Units for common shares 493 ​ 5 ​ 12,662 ​ — ​ — ​ — ​ 12,667 Common shares repurchased ​ ( 14,151 ) ​ ​ ( 142 ) ​ ​ ( 360,900 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 361,042 ) Common shares issued pursuant to employee incentive compensation plan and ESPP ​ 44 ​ ​ — ​ ​ 1,806 ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,806 Dividends declared on common shares ( $ 0.45 per common share) ​ — ​ ​ — ​ ​ — ​ ​ ( 53,407 ) ​ ​ — ​ ​ — ​ ​ ( 53,407 ) Contributions from noncontrolling interests, net — ​ — ​ — ​ — ​ — ​ 9,209 ​ 9,209 Redeemable noncontrolling interests redemption value adjustment and total other comprehensive income allocation — ​ — ​ 72,175 ​ — ​ ( 8,653 ) ​ — ​ 63,522 Other comprehensive income — ​ — ​ — ​ — ​ 71,473 ​ — ​ 71,473 BALANCE AS OF SEPTEMBER 30, 2022 113,764 ​ $ 1,138 ​ $ 3,265,659 ​ $ ( 558,788 ) ​ $ 46,870 ​ $ 31,890 ​ $ 2,786,769 ​ See accompanying notes to the condensed consolidated financial statements (unaudited). ​ 7 Table of Contents JBG SMITH PROPERTIES Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ 2023 2022 OPERATING ACTIVITIES: ​ ​ Net income (loss) ​ $ ( 54,045 ) ​ $ 119,836 Adjustments to reconcile net income (loss) to net cash provided by operating activities: ​ ​ Share-based compensation expense ​ 27,011 ​ 32,324 Depreciation and amortization expense, including amortization of deferred financing costs ​ 156,841 ​ 160,797 Deferred rent ​ ( 20,594 ) ​ ( 14,764 ) Loss from unconsolidated real estate ventures, net ​ 1,320 ​ 12,829 Amortization of market lease intangibles, net ​ ( 767 ) ​ ( 874 ) Amortization of lease incentives ​ 1,812 ​ 6,175 Loss on the extinguishment of debt ​ 450 ​ 3,073 Impairment loss ​ ​ 59,307 ​ ​ — Gain on the sale of real estate, net ​ ( 41,606 ) ​ ( 158,631 ) (Income) loss on operating lease and other receivables ​ ( 67 ) ​ 1,392 Income from investments, net ​ ​ ( 1,163 ) ​ ​ ( 14,733 ) Return on capital from unconsolidated real estate ventures ​ 12,633 ​ 8,483 Other non-cash items ​ 8,586 ​ ( 7,352 ) Changes in operating assets and liabilities: ​ ​ ​ Tenant and other receivables ​ 12,223 ​ ( 5,044 ) Other assets, net ​ ( 22,305 ) ​ ( 20,552 ) Accounts payable and accrued expenses ​ ( 18,129 ) ​ ( 3,648 ) Other liabilities, net ​ ( 6,614 ) ​ 11,055 Net cash provided by operating activities ​ 114,893 ​ 130,366 INVESTING ACTIVITIES: ​ ​ Development costs, construction in progress and real estate additions ​ ( 241,336 ) ​ ( 218,835 ) Acquisition of real estate ​ ( 19,551 ) ​ ( 15,232 ) Deposits for real estate and other acquisitions ​ — ​ ( 1,750 ) Proceeds from the sale of real estate ​ 162,092 ​ 923,108 Proceeds from the sale of investments ​ ​ — ​ ​ 19,030 Proceeds from derivative financial instruments ​ ​ 465 ​ ​ — Payments on derivative financial instruments ​ ​ ( 9,830 ) ​ ​ — Distributions of capital from unconsolidated real estate ventures and other investments ​ 9,264 ​ 54,759 Investments in unconsolidated real estate ventures and other investments ​ ( 24,344 ) ​ ( 86,678 ) Net cash (used in) provided by investing activities ​ ( 123,240 ) ​ 674,402 FINANCING ACTIVITIES: ​ ​ Borrowings under mortgage loans ​ 287,582 ​ 134,263 Borrowings under revolving credit facility ​ 247,000 ​ 100,000 Borrowings under term loans ​ 170,000 ​ 150,000 Repayments of mortgage loans ​ ( 280,135 ) ​ ( 268,627 ) Repayments of revolving credit facility ​ ( 155,000 ) ​ ( 300,000 ) Proceeds from derivative financial instruments ​ ​ 9,600 ​ ​ — Payments on derivative financial instruments ​ ​ ( 465 ) ​ ​ — Debt issuance and modification costs ​ ( 17,579 ) ​ ( 5,135 ) Redemption of partner's noncontrolling interest ​ ( 647 ) ​ — Proceeds from common shares issued pursuant to ESPP ​ 665 ​ 800 Common shares repurchased ​ ​ ( 273,851 ) ​ ​ ( 361,042 ) Dividends paid to common shareholders ​ ( 72,483 ) ​ ( 82,072 ) Distributions to redeemable noncontrolling interests ​ ( 11,619 ) ​ ( 12,398 ) Distributions to noncontrolling interests ​ ​ ( 15 ) ​ ​ ( 166 ) Contributions from noncontrolling interests ​ ​ — ​ ​ 9,383 Net cash used in financing activities ​ ( 96,947 ) ​ ( 634,994 ) ​ 8 Table of Contents JBG SMITH PROPERTIES Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ 2023 2022 Net (decrease) increase in cash and cash equivalents, and restricted cash ​ ( 105,294 ) ​ 169,774 Cash and cash equivalents, and restricted cash, beginning of period ​ 274,073 ​ 302,095 Cash and cash equivalents, and restricted cash, end of period ​ $ 168,779 ​ $ 471,869 ​ ​ ​ ​ ​ ​ ​ CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD: ​ Cash and cash equivalents ​ $ 130,522 ​ $ 258,871 Restricted cash ​ 38,257 ​ 212,998 Cash and cash equivalents, and restricted cash ​ $ 168,779 ​ $ 471,869 ​ ​ ​ ​ ​ ​ ​ SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION: ​ Cash paid for interest (net of capitalized interest of $ 11,013 and $ 6,816 in 2023 and 2022) ​ $ 65,416 ​ $ 52,620 Accrued capital expenditures included in accounts payable and accrued expenses ​ 80,946 ​ 74,735 Write-off of fully depreciated assets ​ 3,489 ​ 10,642 Conversion of OP Units to common shares ​ 33,110 ​ 12,667 Recognition of operating lease right-of-use asset ​ ​ 61,443 ​ ​ — Recognition of liabilities related to operating lease right-of-use asset ​ ​ 61,443 ​ ​ — Cash paid for amounts included in the measurement of lease liabilities for operating leases ​ 3,567 ​ 1,638 ​ ​ See accompanying notes to the condensed consolidated financial statements (unaudited) . ​ 9 Table of Contents ​ ​ JBG SMITH PROPERTIES Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Organization and Basis of Presentation Organization JBG SMITH Properties ("JBG SMITH"), a Maryland real estate investment trust, owns, operates, invests in and develops mixed-use properties in high growth and high barrier-to-entry submarkets in and around Washington, D.C. Through an intense focus on placemaking, JBG SMITH cultivates vibrant, amenity-rich, walkable neighborhoods throughout the Washington, D.C. metropolitan area. Approximately two-thirds of our holdings are in the National Landing submarket in Northern Virginia, which is anchored by four key demand drivers: Amazon.com, Inc.'s ("Amazon") new headquarters; 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 September 30, 2023, JBG SMITH, as its sole general partner, controlled JBG SMITH LP and owned 87.7 % of its OP Units, after giving effect to the conversion of certain vested long-term incentive partnership units ("LTIP Units") that are convertible into OP Units. JBG SMITH is referred to herein as "we," "us," "our" or other similar terms. References to "our share" 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 (the "Fortress Assets") and (iii) 49.0 % interest in three commercial buildings (the "L'Enfant Plaza Assets"), 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. segment. On July 18, 2017, we acquired the management business, and certain assets and liabilities of JBG (the "Combination"). The Separation and the Combination are collectively referred to as the "Formation Transaction." As of September 30, 2023, our Operating Portfolio consisted of 48 operating assets comprising 30 commercial assets totaling 9.2 million square feet ( 8.1 million square feet at our share), 16 multifamily assets totaling 6,318 units ( 6,318 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 with 1,583 units ( 1,583 units at our share) and 20 assets in the development pipeline totaling 12.5 million square feet ( 9.8 million square feet at our share) of estimated potential development density. We derive our revenue primarily from leases with multifamily and commercial tenants, which include fixed and percentage rents, and reimbursements from tenants for certain expenses such as real estate taxes, property operating expenses, and repairs and maintenance. In addition, our third-party asset management and real estate services business provides fee-based real estate services. Basis of Presentation The accompanying unaudited condensed consolidated financial statements and notes are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not contain certain information required in annual financial statements and notes as required under GAAP. 10 Table of Contents In our opinion, all adjustments considered necessary for a fair presentation have been included, and all such adjustments are of a normal recurring nature. All intercompany transactions and balances have been eliminated. The results of operations for the three and nine months ended September 30, 2023 and 2022 are not necessarily indicative of the results that may be expected for a full year. These condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on February 21, 2023 ("Annual Report"). The accompanying condensed consolidated financial statements include our accounts and those of our wholly owned subsidiaries and consolidated variable interest entities ("VIEs"), including JBG SMITH LP. See Note 5 for additional information on our VIEs. The portions of the equity and net income (loss) of consolidated entities that are not attributable to us are presented separately as amounts attributable to noncontrolling interests in our condensed consolidated financial statements. References to our financial statements refer to our unaudited condensed consolidated financial statements as of September 30, 2023 and December 31, 2022, and for the three and nine months ended September 30, 2023 and 2022. References to our balance sheets refer to our condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022. References to our statements of operations refer to our condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022. References to our statements of comprehensive income (loss) refer to our condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2023 and 2022. Income Taxes We have elected to be taxed as a real estate investment trust ("REIT") under sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code"). Under those sections, a REIT which distributes at least 90% of its REIT taxable income as dividends to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. We currently adhere and intend to continue to adhere to these requirements and to maintain our REIT status in future periods. We also participate in the activities conducted by our subsidiary entities that have elected to be treated as taxable REIT subsidiaries under the Code. As such, we are subject to federal, state and local taxes on the income from those activities. 2. Summary of Significant Accounting Policies Significant Accounting Policies There were no material changes to our significant accounting policies disclosed in our Annual Report. Use of Estimates The preparation of the financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Recent Accounting Pronouncements Reference Rate Reform 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. As of September 30, 2023, we have converted all our London Interbank Offered Rate-indexed debt and derivative financial instruments to Secured Overnight Financing Rate ("SOFR")-based indexes. For all 11 Table of Contents derivative financial instruments designated as effective hedges, we utilized the elective relief in Topic 848 that allows for the continuation of hedge accounting through the transition process. 3. Acquisition, Dispositions and Assets Held for Sale Acquisition During the nine months ended September 30, 2023, we paid the deferred purchase price of $ 19.6 million related to the 2020 acquisition of a development parcel, formerly the Americana hotel. Dispositions The following is a summary of activity for the nine months ended September 30, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain (Loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ Cash ​ on the Sale ​ ​ ​ ​ ​ ​ ​ ​ Total ​ Sales ​ Proceeds ​ of Real Date Disposed Assets Segment Location Units Price from Sale Estate ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) March 17, 2023 ​ Development Parcel ​ Other ​ Arlington, Virginia ​ — ​ $ 5,500 ​ $ 4,954 ​ $ ( 53 ) March 23, 2023 ​ 4747 Bethesda Avenue (1) ​ Commercial ​ Bethesda, Maryland ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 40,053 September 20, 2023 ​ Falkland Chase-South & West and Falkland Chase-North ​ Multifamily ​ Silver Spring, Maryland ​ 438 ​ ​ 95,000 ​ ​ 93,094 ​ ​ 1,208 ​ ​ Other (2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 398 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 41,606 (1) We sold an 80.0 % interest in the asset for a gross sales price of $ 196.0 million, representing a gross valuation of $ 245.0 million. See Note 4 for additional information. (2) Related to prior period dispositions. Assets Held for Sale The following is a summary of assets held for sale as of September 30, 2023. There were no assets held for sale as of December 31, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ Assets Held Assets Segment Location Square Feet for Sale ​ ​ ​ ​ ​ ​ (In thousands) 5 M Street Southwest (1) ​ Other ​ Washington, D.C. ​ 665 ​ $ 28,336 (1) Sold on October 4, 2023 for $ 29.5 million. Total square feet represent estimated potential development density. ​ ​ ​ ​ 12 Table of Contents 4. Investments in Unconsolidated Real Estate Ventures The following is a summary of the composition of our investments in unconsolidated real estate ventures: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effective ​ ​ ​ ​ ​ ​ ​ Ownership ​ ​ ​ ​ ​ ​ Real Estate Venture Interest (1) September 30, 2023 December 31, 2022 ​ ​ ​ ​ (In thousands) Prudential Global Investment Management 50.0 % ​ $ 196,389 ​ $ 203,529 J.P. Morgan Global Alternatives ("J.P. Morgan") (2) ​ 50.0 % ​ ​ 69,860 ​ ​ 64,803 4747 Bethesda Venture (3) ​ 20.0 % ​ ​ 13,349 ​ ​ — Brandywine Realty Trust 30.0 % ​ 13,756 ​ 13,678 CBREI Venture (4) 9.9 % ​ 464 ​ 12,516 Landmark Partners (5) 18.0 % ​ 1,992 ​ 4,809 Other ​ ​ 587 ​ ​ 546 Total investments in unconsolidated real estate ventures (6) (7) ​ ​ ​ $ 296,397 ​ $ 299,881 (1) Reflects our effective ownership interests in the underlying real estate as of September 30, 2023. We have multiple investments with certain venture partners in the underlying real estate. (2) J.P. Morgan is the advisor for an institutional investor. (3) In March 2023, we sold an 80.0 % interest in 4747 Bethesda Avenue for a gross sales price of $ 196.0 million, representing a gross valuation of $ 245.0 million. In connection with the transaction, the real estate venture assumed the related $ 175.0 million mortgage loan. (4) In connection with the preparation and review of the third quarter 2023 financial statements, an impairment loss of $ 3.3 million associated with a commercial asset located in Washington, D.C. was included in "Loss from unconsolidated real estate ventures, net" in our statements of operations for the three and nine months ended September 30, 2023. (5) Excludes the L'Enfant Plaza Assets for which we have a zero investment balance and discontinued applying the equity method of accounting after September 30, 2022. (6) Excludes (i) 10.0 % subordinated interest in one commercial building, (ii) the Fortress Assets and (iii) the L'Enfant Plaza Assets held through unconsolidated real estate ventures. For more information see Note 1. Also, excludes our interest in an investment in the real estate venture that owns 1101 17th Street for which we have discontinued applying the equity method of accounting since June 30, 2018 because we received distributions in excess of our contributions and share of earnings, which reduced our investment to zero ; further, we are not obligated to provide for losses, have not guaranteed its obligations or otherwise committed to provide financial support. (7) As of September 30, 2023 and December 31, 2022, our total investments in unconsolidated real estate ventures were greater than our share of the net book value of the underlying assets by $ 6.9 million and $ 8.9 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. We recognized revenue, including expense reimbursements, of $ 5.4 million and $ 16.3 million for the three and nine months ended September 30, 2023, and $ 6.1 million and $ 18.2 million for the three and nine months ended September 30, 2022 for such services. The following is a summary of disposition activity by our unconsolidated real estate ventures: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage ​ Proportionate ​ ​ Real Estate ​ ​ ​ ​ ​ Gross ​ Loans ​ Share of ​ ​ Venture ​ ​ ​ Ownership ​ Sales ​ Repaid by ​ Aggregate Date Disposed Partner ​ Assets ​ Percentage Price ​ Venture ​ Gain ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) August 24, 2023 ​ CBREI Venture ​ Stonebridge at Potomac Town Center ​ 10.0 % ​ $ 172,500 ​ $ 79,600 ​ $ 641 ​ 13 Table of Contents The following is a summary of the debt of our unconsolidated real estate ventures: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ Average Effective ​ ​ ​ Interest Rate (1) September 30, 2023 December 31, 2022 ​ ​ ​ ​ (In thousands) Variable rate (2) 6.19 % ​ $ 278,175 ​ $ 184,099 Fixed rate (3) 4.13 % ​ 60,000 ​ 60,000 Mortgage loans (4) ​ ​ ​ 338,175 ​ 244,099 Unamortized deferred financing costs and premium / discount, net ​ ​ ​ ( 9,252 ) ​ ( 411 ) Mortgage loans, net (4) (5) ​ ​ ​ $ 328,923 ​ $ 243,688 (1) Weighted average effective interest rate as of September 30, 2023. (2) Includes variable rate mortgages with interest rate cap agreements. (3) Includes variable rate mortgages with interest rates fixed by interest rate swap agreements. (4) Excludes mortgage loans related to the Fortress Assets and the L'Enfant Plaza Assets. (5) See Note 17 for additional information on guarantees of the debt of certain of our unconsolidated real estate ventures. The following is a summary of financial information for our unconsolidated real estate ventures: ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2023 December 31, 2022 ​ (In thousands) Combined balance sheet information: (1) ​ ​ ​ ​ ​ ​ Real estate, net ​ $ 879,369 ​ $ 888,379 Other assets, net ​ 170,007 ​ 160,015 Total assets ​ $ 1,049,376 ​ $ 1,048,394 ​ ​ ​ ​ ​ ​ ​ Mortgage loans, net ​ $ 328,923 ​ $ 243,688 Other liabilities, net ​ 47,424 ​ 54,639 Total liabilities ​ 376,347 ​ 298,327 Total equity ​ 673,029 ​ 750,067 Total liabilities and equity ​ $ 1,049,376 ​ $ 1,048,394 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2023 2022 X 2023 2022 ​ (In thousands) Combined income statement information: (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue ​ $ 23,570 ​ $ 40,881 ​ $ 68,555 ​ $ 125,135 Operating income (loss) (2) ​ ​ ( 20,584 ) ​ ​ ( 7,468 ) ​ ( 13,005 ) ​ 77,066 Net income (loss) (2) ​ ​ ( 27,622 ) ​ ​ ( 15,034 ) ​ ( 31,557 ) ​ 49,376 (1) Excludes amounts related to the Fortress Assets. Excludes combined balance sheet information for both periods presented and combined income statement information for the three and nine months ended September 30, 2023 related to the L'Enfant Plaza Assets as we discontinued applying the equity method of accounting after September 30, 2022. (2) Includes the gain on the sale of Stonebridge at Potomac Town Center of $ 4.6 million for the three and nine months ended September 30, 2023. Includes the gain on the sale of various assets totaling $ 77.4 million during the nine months ended September 30, 2022. Includes impairment losses of $ 30.1 million and $ 16.1 million during the three and nine months ended September 30, 2023 and 2022. ​ ​ ​ 14 Table of Contents 5. Variable Interest Entities We hold various interests in entities deemed to be VIEs, which we evaluate at acquisition, formation, after a change in the ownership agreement, after a change in the entity's economics or after any other reconsideration event to determine if the VIE should be consolidated in our financial statements or should no longer be considered a VIE. An entity is a VIE because it is in the development stage and/or does not hold sufficient equity at risk, or conducts substantially all its operations on behalf of an investor with disproportionately few voting rights. We will consolidate a VIE if we are the primary beneficiary of the VIE, which entails having the power to direct the activities that most significantly impact the VIE’s economic performance. Certain criteria we assess in determining whether we are the primary beneficiary of the VIE include our influence over significant business activities, our voting rights and any noncontrolling interest kick-out or participating rights. Unconsolidated VIEs As of September 30, 2023 and December 31, 2022, we had interests in entities deemed to be VIEs. 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. As of September 30, 2023 and December 31, 2022, the net carrying amounts of our investment in these entities were $ 85.9 million and $ 83.2 million, which were included in "Investments in unconsolidated real estate ventures" in our balance sheets. Our equity in the income of unconsolidated VIEs was included in "Loss from unconsolidated real estate ventures, net" in our statements of operations. Our maximum loss exposure in these entities is limited to our investments, construction commitments and debt guarantees. See Note 17 for additional information. Consolidated VIEs JBG SMITH LP is our most significant consolidated VIE. We hold 87.7 % of the limited partnership interest in JBG SMITH LP, act as the general partner and exercise full responsibility, discretion and control over its day-to-day management. The noncontrolling interests of JBG SMITH LP do not have substantive liquidation rights, substantive kick-out rights without cause or substantive participating rights that could be exercised by a simple majority of noncontrolling interest limited partners (including by such a limited partner unilaterally). Because the noncontrolling interest holders do not have these rights, JBG SMITH LP is a VIE. As general partner, we have the power to direct the activities of JBG SMITH LP that most significantly affect its economic performance, and through our majority interest, we have both the right to receive benefits from and the obligation to absorb losses of JBG SMITH LP. Accordingly, we are the primary beneficiary of JBG SMITH LP and consolidate it in our financial statements. Because we conduct our business through JBG SMITH LP, its total assets and liabilities comprise substantially all our consolidated assets and liabilities. As of September 30, 2023 and December 31, 2022, excluding JBG SMITH LP, we consolidated two VIEs (1900 Crystal Drive and 2000/2001 South Bell Street) with total assets of $ 456.1 million and $ 265.5 million, and liabilities of $ 245.1 million and $ 116.3 million, primarily consisting of construction in process and mortgage loans. 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. 15 Table of Contents 6. Other Assets, Net The following is a summary of other assets, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2023 December 31, 2022 ​ ​ (In thousands) Prepaid expenses ​ $ 27,427 ​ $ 16,440 Derivative financial instruments, at fair value ​ ​ 79,421 ​ ​ 61,622 Deferred financing costs, net ​ 12,732 ​ 5,516 Deposits ​ 584 ​ 483 Operating lease right-of-use assets (1) ​ ​ 61,122 ​ ​ 1,383 Investments in funds (2) ​ ​ 20,366 ​ ​ 16,748 Other investments (3) ​ ​ 3,446 ​ ​ 3,524 Other ​ 12,805 ​ 11,312 Total other assets, net ​ $ 217,903 ​ $ 117,028 (1) Includes our corporate office lease at 4747 Bethesda Avenue as of September 30, 2023. (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 three and nine months ended September 30, 2023, unrealized gains (losses) related to these investments were ($ 492,000 ) and $ 1.2 million . During the three and nine months ended September 30, 2022, unrealized gains (losses) related to these investments were ($ 267,000 ) and $ 928,000 . During the three and nine months ended September 30, 2023, realized losses related to these investments were $ 165,000 and $ 483,000 . Unrealized gains (losses) and realized losses were included in "Interest and other income, net" in our statements of operations. (3) Primarily consists of equity investments that are carried at cost. During the three and nine months ended September 30, 2023, realized gains related to these investments were $ 436,000 . During the three and nine months ended September 30, 2022, realized gains (losses) related to these investments were ($ 300,000 ) and $ 13.8 million. Realized gains (losses) were included in "Interest and other income, net" in our statements of operations . ​ ​ ​ 7. Debt Mortgage Loans The following is a summary of mortgage loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ ​ ​ ​ ​ Effective ​ ​ ​ ​ Interest Rate (1) September 30, 2023 December 31, 2022 ​ ​ ​ ​ (In thousands) Variable rate (2) 6.16 % ​ $ 550,048 ​ $ 892,268 Fixed rate (3) 4.78 % ​ 1,191,362 ​ 1,009,607 Mortgage loans ​ ​ ​ 1,741,410 ​ 1,901,875 Unamortized deferred financing costs and premium / discount, net (4) ​ ​ ​ ( 14,277 ) ​ ( 11,701 ) Mortgage loans, net ​ ​ ​ $ 1,727,133 ​ $ 1,890,174 (1) Weighted average effective interest rate as of September 30, 2023. (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 was 3.16 % , and the weighted average maturity date of the interest rate caps is December 2024. The interest rate cap strike is exclusive of the credit spreads associated with the mortgage loans. As of September 30, 2023, one-month term SOFR was 5.32 % . (3) Includes variable rate mortgages with interest rates fixed by interest rate swap agreements. (4) As of September 30, 2023 and December 31, 2022, excludes $ 1.8 million and $ 2.2 million of net deferred financing costs related to unfunded mortgage loans that were included in "Other assets, net" in our balance sheets. As of September 30, 2023 and December 31, 2022, the net carrying value of real estate collateralizing our mortgage loans totaled $ 2.1 billion and $ 2.2 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 16 Table of Contents maintenance upon repayment prior to maturity. Certain mortgage loans are recourse to us. See Note 17 for additional information. 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, and staggered maturities. Proceeds from the loan were used, in part, to repay the $ 131.5 million mortgage loan collateralized by 2121 Crystal Drive, which had a fixed interest rate of 5.51 %. In June 2023, we repaid $ 142.4 million in mortgage loans collateralized by Falkland Chase-South & West and 800 North Glebe Road. As of September 30, 2023 and December 31, 2022, we had various interest rate swap and cap agreements on certain mortgage loans with an aggregate notional value of $ 1.6 billion and $ 1.3 billion. See Note 15 for additional information. Revolving Credit Facility and Term Loans As of September 30, 2023, our unsecured revolving credit facility and term loans totaling $ 1.5 billion consisted of a $ 750.0 million revolving credit facility maturing in June 2027, a $ 200.0 million term loan ("Tranche A-1 Term Loan") maturing in January 2025, a $ 400.0 million term loan ("Tranche A-2 Term Loan") maturing in January 2028 and a $ 120.0 million term loan ("2023 Term Loan") maturing in June 2028. Effective as of June 29, 2023, the revolving credit facility was amended to: (i) reduce the borrowing capacity from $ 1.0 billion to $ 750.0 million, (ii) extend the maturity date from January 2025 to June 2027 and (iii) amend the interest rate to daily SOFR plus 1.40 % to daily SOFR plus 1.85 %, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets. We have the option to increase the $ 750.0 million revolving credit facility or add term loans up to $ 500.0 million, and we have the right to extend the maturity date beyond June 2027 via two six-month extension options. In addition, on June 29, 2023, we entered into a $ 120.0 million term loan maturing in June 2028 with an interest rate of one-month term SOFR plus 1.25 % to one-month term SOFR plus 1.80 %, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets. We also entered into an interest rate swap with a total notional value of $ 120.0 million, which fixes SOFR at an interest rate of 4.01 % through the maturity date. In July 2023, we amended the covenants related to the Tranche A-1 Term Loan and the Tranche A-2 Term Loan to be consistent with the revolving credit facility and 2023 Term Loan covenants. The following is a summary of amounts outstanding under the revolving credit facility and term loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effective ​ ​ ​ ​ Interest Rate (1) ​ September 30, 2023 December 31, 2022 ​ ​ ​ ​ ​ (In thousands) Revolving credit facility (2) (3) 6.71 % ​ ​ $ 92,000 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tranche A-1 Term Loan (4) 2.60 % ​ ​ $ 200,000 ​ $ 200,000 Tranche A-2 Term Loan (4) 3.53 % ​ ​ 400,000 ​ 350,000 2023 Term Loan (5) ​ 5.26 % ​ ​ ​ 120,000 ​ ​ — Term loans ​ ​ 720,000 ​ 550,000 Unamortized deferred financing costs, net ​ ​ ( 3,047 ) ​ ( 2,928 ) Term loans, net ​ ​ $ 716,953 ​ $ 547,072 (1) Effective interest rate as of September 30, 2023. The interest rate for our revolving credit facility excludes a 0.15 % facility fee. (2) As of September 30, 2023, daily SOFR was 5.31 % . As of September 30, 2023 and December 31, 2022, letters of credit with an aggregate face amount of $ 467,000 were outstanding under our revolving credit facility. In October 2023, we drew an additional $ 50.0 million under the revolving credit facility. 17 Table of Contents (3) As of September 30, 2023 and December 31, 2022, excludes $ 10.9 million and $ 3.3 million of net deferred financing costs related to our revolving credit facility that were included in "Other assets, net" in our balance sheets. (4) As of September 30, 2023 and December 31, 2022, the outstanding balance was fixed by interest rate swap agreements. As of September 30, 2023, these interest rate swap agreements fix SOFR at a weighted average interest rate of 1.46 % for the Tranche A-1 Term Loan and 2.29 % for the Tranche A-2 Term Loa n. Interest rate swaps for the Tranche A-1 Term Loan with a total notional value of $ 200.0 million mature in July 2024. Interest rate swaps for the Tranche A-2 Term Loan with a total notional value of $ 200.0 million mature in July 2024 and with a total notional value of $ 200.0 million mature in January 2028. We have 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 for the Tranche A-2 Term Loan at a weighted average interest rate of 2.81 % through the maturity date . (5) As of September 30, 2023, the outstanding balance was fixed by an interest rate swap agreement, which fixes SOFR at an interest rate of 4.01 % through the maturity date. ​ ​ 8. Other Liabilities, Net The following is a summary of other liabilities, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2023 December 31, 2022 ​ ​ (In thousands) Lease intangible liabilities, net ​ $ 5,967 ​ $ 7,275 Lease assumption liabilities ​ 501 ​ 2,647 Lease incentive liabilities ​ 7,649 ​ 11,539 Liabilities related to operating lease right-of-use assets (1) ​ 65,198 ​ 5,308 Prepaid rent ​ 14,982 ​ 15,923 Security deposits ​ 12,297 ​ 13,963 Environmental liabilities ​ 17,990 ​ 17,990 Deferred tax liability, net ​ 4,903 ​ 4,903 Dividends payable ​ — ​ 29,621 Derivative financial instruments, at fair value ​ 9,242 ​ — Deferred purchase price related to the acquisition of a development parcel ​ ​ — ​ ​ 19,447 Other ​ 6,821 ​ 4,094 Total other liabilities, net ​ $ 145,550 ​ $ 132,710 (1) Includes our corporate office lease at 4747 Bethesda Avenue as of September 30, 2023. ​ ​ ​ ​ ​ 9. Redeemable Noncontrolling Interests JBG SMITH LP OP Units held by persons other than JBG SMITH are redeemable for cash or, at our election, our common shares, subject to certain limitations. Vested LTIP Units are redeemable into OP Units. During the nine months ended September 30, 2023 and 2022, unitholders redeemed 2.1 million and 493,596 OP Units, which we elected to redeem for an equivalent number of our common shares. As of September 30, 2023, outstanding OP Units and redeemable LTIP Units totaled 13.7 million, representing a 12.3 % 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 balance sheets. Redemption value per OP Unit is equivalent to the market value of one common share at the end of the period. Consolidated Real Estate Venture We were a partner in a consolidated real estate venture that owned a multifamily asset, The Wren, located in Washington, D.C. As of September 30, 2022, we held a 96.0 % ownership interest in the real estate venture. In October 2022, one partner redeemed its 3.7 % interest, and in February 2023, another partner redeemed its 0.3 % interest, increasing our ownership interest to 100.0 %. 18 Table of Contents The following is a summary of the activity of redeemable noncontrolling interests: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ ​ 2023 ​ 2022 ​ ​ ​ ​ ​ Consolidated ​ ​ ​ ​ ​ ​ ​ Consolidated ​ ​ ​ ​ ​ JBG ​ Real Estate ​ ​ ​ ​ JBG ​ Real Estate ​ ​ ​ ​ SMITH LP Venture Total SMITH LP Venture Total ​ (In thousands) Balance, beginning of period ​ $ 455,886 ​ $ — ​ $ 455,886 ​ $ 513,426 ​ $ 7,966 ​ $ 521,392 Redemptions ​ ( 7,602 ) ​ — ​ ( 7,602 ) ​ ( 4,891 ) ​ — ​ ( 4,891 ) Net income (loss) ​ ( 7,926 ) ​ — ​ ( 7,926 ) ​ ( 2,557 ) ​ 11 ​ ( 2,546 ) Other comprehensive income ​ 1,346 ​ — ​ 1,346 ​ 4,376 ​ — ​ 4,376 Distributions ​ ( 3,727 ) ​ — ​ ( 3,727 ) ​ ( 4,083 ) ​ ( 119 ) ​ ( 4,202 ) Share-based compensation expense ​ 6,003 ​ — ​ 6,003 ​ 6,211 ​ — ​ 6,211 Adjustment to redemption value ​ 381 ​ — ​ 381 ​ ( 30,681 ) ​ 1,820 ​ ( 28,861 ) Balance, end of period ​ $ 444,361 ​ $ — ​ $ 444,361 ​ $ 481,801 ​ $ 9,678 ​ $ 491,479 ​ ​ Nine Months Ended September 30, ​ ​ 2023 ​ 2022 ​ ​ ​ ​ ​ Consolidated ​ ​ ​ ​ ​ ​ ​ Consolidated ​ ​ ​ ​ ​ JBG ​ Real Estate ​ ​ ​ ​ JBG ​ Real Estate ​ ​ ​ ​ SMITH LP Venture Total SMITH LP Venture Total ​ (In thousands) Balance, beginning of period ​ $ 480,663 ​ $ 647 ​ $ 481,310 ​ $ 513,268 ​ $ 9,457 ​ $ 522,725 Redemptions ​ ( 33,110 ) ​ ( 647 ) ​ ( 33,757 ) ​ ( 12,667 ) ​ — ​ ( 12,667 ) LTIP Units issued in lieu of cash compensation (1) ​ 5,213 ​ — ​ 5,213 ​ 6,584 ​ — ​ 6,584 Net income (loss) ​ ( 5,961 ) ​ — ​ ( 5,961 ) ​ 15,680 ​ 32 ​ 15,712 Other comprehensive income ​ 902 ​ — ​ 902 ​ 8,653 ​ — ​ 8,653 Distributions ​ ( 7,654 ) ​ — ​ ( 7,654 ) ​ ( 8,193 ) ​ ( 267 ) ​ ( 8,460 ) Share-based compensation expense ​ 25,152 ​ — ​ 25,152 ​ 31,107 ​ — ​ 31,107 Adjustment to redemption value ​ ( 20,844 ) ​ — ​ ( 20,844 ) ​ ( 72,631 ) ​ 456 ​ ( 72,175 ) Balance, end of period ​ $ 444,361 ​ $ — ​ $ 444,361 ​ $ 481,801 ​ $ 9,678 ​ $ 491,479 (1) See Note 11 for additional information. ​ 10. Property Rental Revenue The following is a summary of property rental revenue from our non-cancellable leases: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2023 2022 X 2023 2022 ​ ​ (In thousands) Fixed ​ $ 110,333 ​ $ 109,193 ​ $ 331,528 ​ $ 335,328 Variable ​ ​ 9,961 ​ ​ 10,618 ​ ​ 33,391 ​ ​ 33,117 Property rental revenue ​ $ 120,294 ​ $ 119,811 ​ $ 364,919 ​ $ 368,445 ​ ​ 11. Share-Based Payments LTIP Units and Time-Based LTIP Units During the nine months ended September 30, 2023, we granted to certain employees 979,138 LTIP Units with time-based vesting requirements ("Time-Based LTIP Units") and a weighted average grant-date fair value of $ 17.56 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. 19 Table of Contents In February 2023, we granted 280,342 fully vested LTIP Units to certain employees, who elected to receive all or a portion of their cash bonuses related to 2022 service as LTIP Units. The LTIP units had a grant-date fair value of $ 15.90 per unit. Compensation expense totaling $ 4.5 million for these LTIP Units was recognized in 2022. In May 2023, as part of their annual compensation, we granted to non-employee trustees a total of 155,523 fully vested LTIP Units with a grant-date fair value of $ 11.30 per unit, which includes LTIP Units elected in lieu of cash retainers. The LTIP Units may not be sold while a trustee is serving on the Board of Trustees. The aggregate grant-date fair value of the Time-Based LTIP Units and the LTIP Units granted during the nine months ended September 30, 2023 was $ 23.4 million. The Time-Based LTIP Units and the LTIP Units were valued based on the closing common share price on the grant date, less a discount for post-grant restrictions. The discount was determined using Monte Carlo simulations based on the following significant assumptions: ​ ​ ​ ​ Expected volatility 26.0 % to 31.0 % Risk-free interest rate 3.4 % to 4.9 % Post-grant restriction periods 2 to 6 years ​ Appreciation-Only LTIP Units ("AO LTIP Units") In January 2023, we granted to certain employees 1.7 million performance-based AO LTIP Units with a grant-date fair value of $ 3.73 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 $ 20.83 . The AO LTIP Units are subject to a TSR modifier whereby the number of AO LTIP Units that will ultimately be earned will be increased or reduced by as much as 25 % . The AO LTIP Units have a three-year performance period with 50 % of the AO LTIP Units 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 nine months ended September 30, 2023 was $ 6.4 million, valued using Monte Carlo simulations based on the following significant assumptions: ​ ​ ​ ​ Expected volatility 30.0 % Dividend yield 3.2 % Risk-free interest rate 4.1 % ​ LTIP Units with Performance-Based Vesting Requirements ("Performance-Based LTIP Units") In January 2023, 470,773 Performance-Based LTIP Units, which were unvested as of December 31, 2022, were forfeited because the performance measures were not met. Restricted Share Units ("RSUs") In January 2023, we granted to certain non-executive employees 78,681 time-based RSUs ("Time-Based RSUs") with a grant-date fair value of $ 18.94 per unit. Vesting requirements and compensation expense recognition for the Time-Based RSUs are primarily consistent to those of the Time-Based LTIP Units granted in 2023. The aggregate grant-date fair value of the RSUs granted during the nine months ended September 30, 2023 was $ 1.5 million. The Time-Based RSUs were valued based on the closing common share price on the date of grant. 20 Table of Contents ESPP Pursuant to the ESPP, employees purchased 52,089 common shares for $ 665,000 during the nine months ended September 30, 2023. The following is a summary of the significant assumptions used to value the ESPP common shares using the Black-Scholes model: ​ ​ ​ ​ Expected volatility 30.0 % Dividend yield 2.4 % Risk-free interest rate 4.7 % Expected life ​ 6 months ​ Share-Based Compensation Expense The following is a summary of share-based compensation expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2023 2022 X 2023 2022 ​ (In thousands) Time-Based LTIP Units ​ $ 3,517 ​ $ 3,496 ​ $ 14,373 ​ $ 15,824 AO LTIP Units and Performance-Based LTIP Units ​ 2,440 ​ 2,167 ​ 9,382 ​ 9,914 LTIP Units ​ — ​ — ​ 1,000 ​ 1,000 Other equity awards (1) ​ 912 ​ 1,413 ​ 3,710 ​ 4,239 Share-based compensation expense - other ​ 6,869 ​ 7,076 ​ 28,465 ​ 30,977 Formation awards, OP Units and LTIP Units (2) ​ — ​ ( 142 ) ​ 108 ​ 1,832 Special Time-Based LTIP Units and Special Performance-Based LTIP Units (3) ​ 46 ​ 690 ​ 289 ​ 2,537 Share-based compensation related to Formation Transaction and special equity awards (4) ​ 46 ​ 548 ​ 397 ​ 4,369 Total share-based compensation expense ​ 6,915 ​ 7,624 ​ 28,862 ​ 35,346 Less: amount capitalized ​ ( 418 ) ​ ( 675 ) ​ ( 1,851 ) ​ ( 3,022 ) Share-based compensation expense ​ $ 6,497 ​ $ 6,949 ​ $ 27,011 ​ $ 32,324 (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 bonuses earned, (ii) RSUs and (iii) shares issued under our ESPP. (2) Includes share-based compensation expense for formation awards, 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: Share-based compensation related to Formation Transaction and special equity awards" in our statements of operations. As of September 30, 2023, we had $ 31.5 million of total unrecognized compensation expense related to unvested share-based payment arrangements, which is expected to be recognized over a weighted average period of 3.0 years. 21 Table of Contents 12. Transaction and Other Costs The following is a summary of transaction and other costs: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2023 2022 X 2023 2022 ​ (In thousands) Completed, potential and pursued transaction expenses (1) ​ $ 622 ​ $ 600 ​ $ 896 ​ $ 2,186 Severance and other costs ​ 1,033 ​ 1,146 ​ 4,280 ​ 2,018 Demolition costs ​ ​ 175 ​ ​ — ​ ​ 2,618 ​ ​ 428 Transaction and other costs ​ $ 1,830 ​ $ 1,746 ​ $ 7,794 ​ $ 4,632 (1) Primarily consists of legal costs related to pursued transactions. 13. Interest Expense The following is a summary of interest expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2023 2022 X 2023 2022 ​ (In thousands) Interest expense before capitalized interest ​ $ 30,229 ​ $ 22,801 ​ $ 85,942 ​ $ 60,100 Amortization of deferred financing costs ​ 3,381 ​ 1,118 ​ 6,011 ​ 3,369 Interest expense related to finance lease right-of-use assets ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,091 Net (gain) loss on derivative financial instruments designated as ineffective hedges: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net unrealized (gain) loss ​ 1,742 ​ ( 3,099 ) ​ 7,383 ​ ( 8,493 ) Net realized gain ​ ( 230 ) ​ — ​ — ​ — Capitalized interest ​ ( 7,219 ) ​ ( 2,888 ) ​ ( 18,756 ) ​ ( 6,816 ) Interest expense ​ $ 27,903 ​ $ 17,932 ​ $ 80,580 ​ $ 50,251 ​ 14. Shareholders' Equity and Earnings (Loss) Per Common Share Common Shares Repurchased Our Board of Trustees previously authorized the repurchase of up to $ 1.0 billion of our outstanding common shares, and in May 2023, increased the common share repurchase authorization to $ 1.5 billion. During the three and nine months ended September 30, 2023, we repurchased and retired 7.9 million and 18.4 million common shares for $ 120.8 million and $ 276.7 million, a weighted average purchase price per share of $ 15.24 and $ 14.98 . During the three and nine months ended September 30, 2022, we repurchased and retired 2.3 million and 14.2 million common shares for $ 54.0 million and $ 361.0 million, a weighted average purchase price per share of $ 23.35 and $ 25.49 . Since we began the share repurchase program through September 30, 2023, we have repurchased and retired 41.7 million common shares for $ 900.2 million, a weighted average purchase price per share of $ 21.54 . During the fourth quarter of 2023, through the date of this filing, we repurchased and retired 2.0 million common shares for $ 28.0 million, a weighted average purchase price per share of $ 13.85 , pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. 22 Table of Contents Earnings (Loss) Per Common Share 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. Under the two-class method, earnings for the period are allocated between common shareholders and participating securities based on their respective rights to receive dividends. 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. 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ ​ 2023 2022 X 2023 2022 ​ ​ (In thousands, except per share amounts) Net income (loss) ​ $ ( 66,101 ) ​ $ ( 21,581 ) ​ $ ( 54,045 ) ​ $ 119,836 Net (income) loss attributable to redeemable noncontrolling interests ​ ​ 7,926 ​ 2,546 ​ 5,961 ​ ( 15,712 ) Net (income) loss attributable to noncontrolling interests ​ ​ 168 ​ ( 258 ) ​ 703 ​ ( 174 ) Net income (loss) attributable to common shareholders ​ ​ ( 58,007 ) ​ ​ ( 19,293 ) ​ ​ ( 47,381 ) ​ ​ 103,950 Distributions to participating securities ​ ​ ( 689 ) ​ ​ ( 658 ) ​ ( 1,406 ) ​ ( 671 ) Net income (loss) available to common shareholders - basic and diluted ​ $ ( 58,696 ) ​ $ ( 19,951 ) ​ $ ( 48,787 ) ​ $ 103,279 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average number of common shares outstanding - basic and diluted ​ ​ 101,445 ​ ​ 114,360 ​ 108,351 ​ 120,741 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings (loss) per common share - basic and diluted ​ $ ( 0.58 ) ​ $ ( 0.17 ) ​ $ ( 0.45 ) ​ $ 0.86 ​ The effect of the redemption of OP Units, Time-Based LTIP Units, fully vested LTIP Units and Special Time-Based LTIP Units that were outstanding as of September 30, 2023 and 2022 is excluded in the computation of diluted earnings (loss) per common share as the assumed exchange of such units for common shares on a one-for-one basis was antidilutive (the assumed redemption of these units would have no impact on the determination of diluted earnings (loss) per share). Since OP Units, Time-Based LTIP Units, LTIP Units and Special Time-Based LTIP Units, which are held by noncontrolling interests, are attributed gains at an identical proportion to the common shareholders, the gains attributable and their equivalent weighted average impact are excluded from net income (loss) available to common shareholders and from the weighted average number of common shares outstanding in calculating diluted earnings (loss) per common share. AO LTIP Units, Performance-Based LTIP Units, formation awards and RSUs, which totaled 6.6 million and 6.9 million for the three and nine months ended September 30, 2023, and 5.9 million for the three and nine months ended September 30, 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. ​ Dividends Declared in August 2023 On October 31, 2023, our Board of Trustees declared a quarterly dividend of $ 0.225 per common share, payable on December 1, 2023 to shareholders of record as of November 17, 2023. 23 Table of Contents 15. Fair Value Measurements Fair Value Measurements on a Recurring Basis To manage or hedge our exposure to interest rate risk, we follow established risk management policies and procedures, including the use of a variety of derivative financial instruments. As of September 30, 2023 and December 31, 2022, we had various derivative financial instruments consisting of interest rate swap and cap agreements that are measured at fair value on a recurring basis. The net unrealized gain on our derivative financial instruments designated as effective hedges was $ 59.7 million and $ 55.0 million as of September 30, 2023 and December 31, 2022 and was recorded in "Accumulated other comprehensive income" in our balance sheets, of which a portion was allocated to "Redeemable noncontrolling interests." Within the next 12 months, we expect to reclassify $ 35.9 million of the net unrealized gain as a decrease to interest expense. Accounting Standards Codification 820 ("Topic 820"), Fair Value Measurement and Disclosures, defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Topic 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 — quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 — observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 — unobservable inputs that are used when little or no market data is available. The fair values of the derivative financial instruments are based on the estimated amounts we would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and observable inputs. The derivative financial instruments are classified within Level 2 of the valuation hierarchy. The following is a summary of assets and liabilities measured at fair value on a recurring basis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements ​ Total Level 1 Level 2 Level 3 ​ ​ (In thousands) September 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative financial instruments designated as effective hedges: ​ ​ ​ ​ Classified as assets in "Other assets, net" ​ $ 69,499 ​ ​ — ​ $ 69,499 ​ ​ — Derivative financial instruments designated as ineffective hedges: ​ ​ ​ ​ Classified as assets in "Other assets, net" ​ 9,922 ​ — ​ 9,922 ​ — Classified as liabilities in "Other liabilities, net" ​ 9,242 ​ — ​ 9,242 ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ ​ ​ Derivative financial instruments designated as effective hedges: ​ ​ ​ ​ Classified as assets in "Other assets, net" ​ $ 53,515 ​ ​ — ​ $ 53,515 ​ ​ — Derivative financial instruments designated as ineffective hedges: ​ ​ ​ ​ Classified as assets in "Other assets, net" ​ 8,107 ​ — ​ 8,107 ​ — ​ The fair values of our derivative financial instruments were determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of the derivative financial instrument. This analysis reflected the contractual terms of the derivative, including the period to maturity, and used observable market-based inputs, including interest rate market data and implied volatilities in such interest rates. While it was determined that the majority of the inputs used to value the derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with the derivatives also utilized Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default. However, as of September 30, 2023 and December 31, 2022, 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 24 Table of Contents 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" in our statements of comprehensive income (loss) for the three and nine months ended September 30, 2023 and 2022 were attributable to the net change in unrealized gains or losses related to effective interest rate swaps that were outstanding during those periods, none of which were reported in our statements of operations as the interest rate swaps were documented and qualified as hedging instruments. Realized and unrealized gains related to ineffective hedges are included in "Interest expense" in our statements of operations. Fair Value Measurements on a Nonrecurring Basis Our real estate assets are reviewed for impairment whenever there are changes in circumstances or indicators that the carrying amount of the assets may not be recoverable. This assessment resulted in the impairment of 2101 L Street and 2100 Crystal Drive, which were written down to their estimated aggregate fair value of $ 148.9 million and were classified as Level 3 in the fair value hierarchy in connection with the preparation and review of our third quarter 2023 financial statements. Our estimate of fair value for 2101 L Street and 2100 Crystal Drive 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 assessment also resulted in the impairment of a development parcel, which was written down to its estimated fair value of $ 11.3 million based on an expected sales price as determined by a contract under negotiation as of September 30, 2023 and was classified as Level 2 in the fair value hierarchy. The impairment loss totaled $ 59.3 million, which is included in "Impairment loss" in our statements of operations for the three and nine months ended September 30, 2023. There were no assets measured at fair value on a nonrecurring basis as of December 31, 2022. Financial Assets and Liabilities Not Measured at Fair Value As of September 30, 2023 and December 31, 2022, all financial assets and liabilities were reflected in our balance sheets at amounts which, in our estimation, reasonably approximated their fair values, except for the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2023 ​ December 31, 2022 ​ Carrying ​ Carrying ​ ​ ​ Amount (1) ​ Fair Value ​ Amount (1) ​ Fair Value ​ (In thousands) Financial liabilities: ​ ​ ​ ​ Mortgage loans ​ $ 1,741,410 ​ $ 1,655,832 ​ $ 1,901,875 ​ $ 1,830,651 Revolving credit facility ​ 92,000 ​ 92,107 ​ — ​ — Term loans ​ 720,000 ​ 714,987 ​ 550,000 ​ 551,369 (1) The carrying amount consists of principal only. The fair values of the mortgage loans, revolving credit facility and 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 term loans is calculated based on the net present value of payments over the term of the facilities using estimated market rates for similar notes and remaining terms. 16. Segment Information We review operating and financial data for each property on an individual basis; therefore, each of our individual properties is a separate operating segment. We define our reportable segments to be aligned with our method of internal reporting and the way our Chief Executive Officer, who is also our Chief Operating Decision Maker ("CODM"), makes key operating decisions, evaluates financial results, allocates resources and manages our business. Accordingly, we aggregate our operating segments into three reportable segments (multifamily, commercial, and third-party asset management and real estate services) based on the economic characteristics and nature of our assets and services. 25 Table of Contents The CODM measures and evaluates the performance of our operating segments, with the exception of the third-party asset management and real estate services business, based on the net operating income ("NOI") of properties within each segment. NOI includes property rental revenue and parking revenue, and deducts property operating expenses and real estate taxes. With respect to the third-party asset management and real estate services business, the CODM reviews revenue streams generated by this segment ("Third-party real estate services, including reimbursements"), as well as the expenses attributable to the segment ("General and administrative: third-party real estate services"), which are both disclosed separately in our statements of operations. The following represents the components of revenue from our third-party asset management and real estate services business: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2023 2022 X 2023 2022 ​ (In thousands) Property management fees ​ $ 4,910 ​ $ 4,791 ​ $ 14,879 ​ $ 14,575 Asset management fees ​ 1,155 ​ 1,479 ​ 3,513 ​ 4,763 Development fees ​ 4,296 ​ 1,426 ​ 9,038 ​ 7,113 Leasing fees ​ 1,036 ​ 1,713 ​ 3,648 ​ 4,590 Construction management fees ​ 266 ​ 169 ​ 909 ​ 356 Other service revenue ​ 1,399 ​ 1,909 ​ 4,045 ​ 4,224 Third-party real estate services revenue, excluding reimbursements ​ 13,062 ​ 11,487 ​ 36,032 ​ 35,621 Reimbursement revenue (1) ​ 10,880 ​ 10,358 ​ 33,556 ​ 32,351 Third-party real estate services revenue, including reimbursements ​ ​ 23,942 ​ ​ 21,845 ​ ​ 69,588 ​ ​ 67,972 Third-party real estate services expenses ​ ​ 21,405 ​ ​ 21,230 ​ ​ 67,333 ​ ​ 72,422 Third-party real estate services revenue less expenses ​ $ 2,537 ​ $ 615 ​ $ 2,255 ​ $ ( 4,450 ) ​ (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 $ 9.5 million and $ 13.7 million as of September 30, 2023 and December 31, 2022, which were included in "Intangible assets, net" in our balance sheets. Consistent with internal reporting presented to our CODM and our definition of NOI, the third-party asset management and real estate services operating results are excluded from the NOI data below. 26 Table of Contents The following is the reconciliation of net income (loss) attributable to common shareholders to consolidated NOI: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2023 2022 X 2023 2022 ​ (in thousands) Net income (loss) attributable to common shareholders ​ $ ( 58,007 ) ​ $ ( 19,293 ) ​ $ ( 47,381 ) ​ $ 103,950 Add: ​ ​ ​ ​ Depreciation and amortization expense ​ 50,265 ​ 50,056 ​ 152,914 ​ 157,597 General and administrative expense: ​ ​ ​ ​ Corporate and other ​ 11,246 ​ 12,072 ​ 42,462 ​ 42,669 Third-party real estate services ​ 21,405 ​ 21,230 ​ 67,333 ​ 72,422 Share-based compensation related to Formation Transaction and special equity awards ​ 46 ​ 548 ​ 397 ​ 4,369 Transaction and other costs ​ 1,830 ​ 1,746 ​ 7,794 ​ 4,632 Interest expense ​ 27,903 ​ 17,932 ​ 80,580 ​ 50,251 Loss on the extinguishment of debt ​ — ​ 1,444 ​ 450 ​ 3,073 Impairment loss ​ ​ 59,307 ​ — ​ ​ 59,307 ​ ​ — Income tax expense ​ 77 ​ 166 ​ 672 ​ 2,600 Net income (loss) attributable to redeemable noncontrolling interests ​ ( 7,926 ) ​ ( 2,546 ) ​ ( 5,961 ) ​ 15,712 Net income (loss) attributable to noncontrolling interests ​ ​ ( 168 ) ​ ​ 258 ​ ​ ( 703 ) ​ ​ 174 Less: ​ ​ ​ ​ Third-party real estate services, including reimbursements revenue ​ 23,942 ​ 21,845 ​ 69,588 ​ 67,972 Other revenue ​ 2,704 ​ 1,764 ​ 8,276 ​ 5,758 Loss from unconsolidated real estate ventures, net ​ ( 2,263 ) ​ ( 13,867 ) ​ ( 1,320 ) ​ ( 12,829 ) Interest and other income, net ​ 7,774 ​ 984 ​ 14,132 ​ 16,902 Gain on the sale of real estate, net ​ 906 ​ — ​ 41,606 ​ 158,631 Consolidated NOI ​ $ 72,915 ​ $ 72,887 ​ $ 225,582 ​ $ 221,015 ​ 27 Table of Contents The following is a summary of NOI by segment. Items classified in the Other column include development assets, corporate entities, land assets for which we are the ground lessor and the elimination of inter-segment activity. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, 2023 ​ Commercial Multifamily Other Total ​ (In thousands) Property rental revenue ​ $ 63,940 ​ $ 52,461 ​ $ 3,893 ​ $ 120,294 Parking revenue ​ 4,310 ​ 248 ​ 64 ​ 4,622 Total property revenue ​ 68,250 ​ 52,709 ​ 3,957 ​ 124,916 Property expense: ​ ​ ​ ​ ​ ​ ​ Property operating ​ 18,866 ​ 19,379 ​ ( 657 ) ​ 37,588 Real estate taxes ​ 8,210 ​ 5,581 ​ 622 ​ 14,413 Total property expense ​ 27,076 ​ 24,960 ​ ( 35 ) ​ 52,001 Consolidated NOI ​ $ 41,174 ​ $ 27,749 ​ $ 3,992 ​ $ 72,915 ​ ​ Three Months Ended September 30, 2022 ​ Commercial Multifamily Other Total ​ (In thousands) Property rental revenue ​ $ 71,257 ​ $ 45,639 ​ $ 2,915 ​ $ 119,811 Parking revenue ​ 3,859 ​ 248 ​ 87 ​ 4,194 Total property revenue ​ 75,116 ​ 45,887 ​ 3,002 ​ 124,005 Property expense: ​ ​ ​ ​ ​ Property operating ​ 20,151 ​ 16,108 ​ 121 ​ 36,380 Real estate taxes ​ 8,603 ​ 5,311 ​ 824 ​ 14,738 Total property expense ​ 28,754 ​ 21,419 ​ 945 ​ 51,118 Consolidated NOI ​ $ 46,362 ​ $ 24,468 ​ $ 2,057 ​ $ 72,887 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, 2023 ​ Commercial Multifamily Other Total ​ (In thousands) Property rental revenue ​ $ 200,178 ​ $ 154,814 ​ $ 9,927 ​ $ 364,919 Parking revenue ​ 12,874 ​ 767 ​ 195 ​ 13,836 Total property revenue ​ 213,052 ​ 155,581 ​ 10,122 ​ 378,755 Property expense: ​ ​ ​ ​ ​ Property operating ​ 56,489 ​ 55,228 ​ ( 2,605 ) ​ 109,112 Real estate taxes ​ 25,406 ​ 16,837 ​ 1,818 ​ 44,061 Total property expense ​ 81,895 ​ 72,065 ​ ( 787 ) ​ 153,173 Consolidated NOI ​ $ 131,157 ​ $ 83,516 ​ $ 10,909 ​ $ 225,582 ​ ​ Nine Months Ended September 30, 2022 ​ Commercial Multifamily Other Total ​ ​ (In thousands) Property rental revenue ​ $ 230,781 ​ $ 130,686 ​ $ 6,978 ​ $ 368,445 Parking revenue ​ 12,058 ​ 632 ​ 219 ​ 12,909 Total property revenue ​ 242,839 ​ 131,318 ​ 7,197 ​ 381,354 Property expense: ​ ​ ​ ​ Property operating ​ 65,977 ​ 44,733 ​ 1,759 ​ 112,469 Real estate taxes ​ 29,398 ​ 15,586 ​ 2,886 ​ 47,870 Total property expense ​ 95,375 ​ 60,319 ​ 4,645 ​ 160,339 Consolidated NOI ​ $ 147,464 ​ $ 70,999 ​ $ 2,552 ​ $ 221,015 28 Table of Contents The following is a summary of certain balance sheet data by segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Multifamily Other Total ​ ​ (In thousands) September 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real estate, at cost ​ $ 2,492,590 ​ $ 3,087,068 ​ $ 375,373 ​ $ 5,955,031 Investments in unconsolidated real estate ventures ​ 210,619 ​ — ​ 85,778 ​ 296,397 Total assets ​ 2,729,353 ​ 2,524,199 ​ 412,616 ​ 5,666,168 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ ​ ​ Real estate, at cost ​ $ 2,754,832 ​ $ 2,986,907 ​ $ 416,343 ​ $ 6,158,082 Investments in unconsolidated real estate ventures ​ 218,723 ​ 304 ​ 80,854 ​ 299,881 Total assets ​ 2,829,576 ​ 2,483,902 ​ 589,960 ​ 5,903,438 ​ ​ ​ 17. Commitments and Contingencies Insurance We maintain general liability insurance with limits of $ 150.0 million per occurrence and in the aggregate, and property and rental value insurance coverage with limits of $ 1.0 billion per occurrence, with sub-limits for certain perils such as floods and earthquakes on each of our properties. We also maintain coverage, through our wholly owned captive insurance subsidiary, for a portion of the first loss on the above limits and for both conventional terrorist acts and for nuclear, biological, chemical or radiological terrorism events with limits of $ 2.0 billion per occurrence. These policies are partially reinsured by third-party insurance providers. We will continue to monitor the state of the insurance market, and the scope and costs of coverage for acts of terrorism. We cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are responsible for deductibles and losses in excess of the insurance coverage, which could be material. Our debt, consisting of mortgage loans secured by our properties, a revolving credit facility and 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. If lenders insist on greater coverage than we are able to obtain, it could adversely affect our ability to finance or refinance our properties. Construction Commitments As of September 30, 2023, we had assets under construction that, based on our current plans and estimates, require an additional $ 230.5 million to complete, which we anticipate will be primarily expended over the next two years . These capital expenditures are generally due as the work is performed, and we expect to finance them with debt proceeds, proceeds from asset sales and recapitalizations, and available cash. Environmental Matters 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 $ 18.0 million as of September 30, 2023 and December 31, 2022 and are included in "Other liabilities, net" in our balance sheets. 29 Table of Contents Other As of September 30, 2023, we had committed tenant-related obligations totaling $ 47.7 million ($ 46.3 million related to our consolidated entities and $ 1.4 million related to our unconsolidated real estate ventures at our share). The timing and amounts of payments for tenant-related obligations are uncertain and may only be due upon satisfactory performance of certain conditions. There are various legal actions against us in the ordinary course of business. In our opinion, the outcome of such matters will not have a material adverse effect on our financial condition, results of operations or cash flows. During the three months ended September 30, 2023, we recognized a $ 6.0 million gain from the settlement of litigation, which was included in "Interest and other income, net" in our statements of operations. From time to time, we (or ventures in which we have an ownership interest) have agreed, and may in the future agree with respect to unconsolidated real estate ventures, to (i) guarantee portions of the principal, interest and other amounts in connection with borrowings, (ii) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) in connection with borrowings, or (iii) provide guarantees to lenders and other third parties for the completion of development projects. We customarily have agreements with our outside venture partners whereby the partners agree to reimburse the real estate venture or us for their share of any payments made under certain of these guarantees. At times, we also have agreements with certain of our outside venture partners whereby we agree to either indemnify the partners and/or the associated ventures with respect to certain contingent liabilities associated with operating assets or to reimburse our partner for its share of any payments made by them under certain guarantees. Guarantees (excluding environmental) customarily terminate either upon the satisfaction of specified circumstances or repayment of the underlying debt. Amounts that we may be required to pay in future periods in relation to guarantees associated with budget overruns or operating losses are not estimable. As of September 30, 2023, we had additional capital commitments and certain recorded guarantees to our unconsolidated real estate ventures and other investments totaling $ 63.0 million. As of September 30, 2023, we had no debt principal payment guarantees related to our unconsolidated real estate ventures. ​ Additionally, with respect to borrowings of our consolidated entities, we have agreed, and may in the future agree, to (i) guarantee portions of the principal, interest and other amounts, (ii) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) or (iii) provide guarantees to lenders, tenants and other third parties for the completion of development projects. As of September 30, 2023, the aggregate amount of debt principal payment guarantees was $ 8.3 million for our consolidated entities. In connection with the Formation Transaction, we have an agreement with Vornado regarding tax matters (the "Tax Matters Agreement") that provides special rules that allocate tax liabilities if the distribution of JBG SMITH shares by Vornado, together with certain related transactions, is determined not to be tax-free. Under the Tax Matters Agreement, we may be required to indemnify Vornado against any taxes and related amounts and costs resulting from a violation by us of the Tax Matters Agreement. 18. Transactions with Related 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. In addition, certain members of our senior management team and Board of Trustees have ownership interests in the JBG Legacy Funds, and own carried interests in each fund and in certain of our real estate ventures that entitle them to receive cash payments if the fund or real estate venture achieves certain return thresholds. We launched the WHI with the Federal City Council in June 2018 as a scalable market-driven model that uses private capital to help address the scarcity of housing for middle income families. We are the manager for the WHI Impact Pool, 30 Table of Contents which is the social impact investment vehicle of the WHI. As of September 30, 2023, the WHI Impact Pool had completed closings of capital commitments totaling $ 114.4 million, which included a commitment from us of $ 11.2 million. As of September 30, 2023, our remaining unfunded commitment was $ 3.5 million. The third-party real estate services revenue, including expense reimbursements, from the JBG Legacy Funds and the WHI Impact Pool and its affiliates was $ 4.8 million and $ 15.7 million for the three and nine months ended September 30, 2023, and $ 4.9 million and $ 15.1 million for the three and nine months ended September 30, 2022. As of September 30, 2023 and December 31, 2022, we had receivables from the JBG Legacy Funds and the WHI Impact Pool and its affiliates totaling $ 2.3 million and $ 4.5 million for such services. Commencing in March 2023, in connection with the sale of an 80.0 % interest in 4747 Bethesda Avenue, we leased our corporate offices from an unconsolidated real estate venture and incurred $ 1.6 million and $ 3.4 million of rent expense for the three and nine months ended September 30, 2023, which was included in "General and administrative expense" in our statements of operations. 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 $ 2.3 million and $ 7.0 million for the three and nine months ended September 30, 2023, and $ 2.7 million and $ 7.8 million for the three and nine months ended September 30, 2022, which was included in "Property operating expenses" in our statements of operations.