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Item 1. Business

2024-02-20 compared with 2023-02-21 · 124 added, 136 removed, 240 unchanged (52% of the section changed)

JBG SMITH, a Maryland REIT, owns and operates a portfolio of commercial and multifamily assets amenitized with ancillary retail.

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

metropolitan area with high barriers to entry and vibrant urban amenities.

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

Amazon's new headquarters, which is being developed by us;

JBG SMITH, a Maryland REIT, owns, operates, invests in and develops mixed-use properties in high growth and high barrier-to-entry submarkets in and around Washington, D.C., most notably National Landing.

Through an intense focus on placemaking, JBG SMITH cultivates vibrant, amenity-rich, walkable neighborhoods throughout the Washington, D.C.

metropolitan area.

Approximately 75.0% of our holdings are in the National Landing submarket in Northern Virginia, which is anchored by four key demand drivers:

Amazon's 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 WHI, the JBG Legacy Funds and other third parties.

and our deployment of 5G digital infrastructure.

In addition, our third-party asset management and real estate services business provides fee-based real estate services to the JBG Legacy Funds, other third parties and the WHI Impact Pool.

Substantially all our assets are held by, and our operations are conducted through, JBG SMITH LP.

As of December 31, 2023, JBG SMITH, as its sole general partner, controlled JBG SMITH LP and owned 87.8% of its OP Units, after giving effect to the conversion of certain vested LTIP Units that are convertible into OP Units.

JBG SMITH is referred to herein as "we,"

"us,"

"our"

or other similar terms.

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.

JBG SMITH is referred to herein as "we," "us," "our" or other similar terms.

As of December 31, 2023, our Operating Portfolio consisted of 44 operating assets comprising 16 multifamily assets totaling 6,318 units (6,318 units at our share), 26 commercial assets totaling 8.3 million square feet (7.7 million square feet 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 17 assets in the development pipeline totaling 10.8 million square feet (8.8 million square feet at our share) of estimated potential development density.

We present combined portfolio operating data that aggregates assets we consolidate in our consolidated financial statements and assets in which we own an interest, but do not consolidate in our financial results.

For additional information regarding our assets, see Item 2 "Properties."

Certain terms used throughout this Annual Report on Form 10-K are defined under "Definitions"

starting on page 3.

We own and operate urban mixed-use properties concentrated in what we believe are the highest growth, Metro-served submarkets in the Washington, D.C.

metropolitan area, including National Landing, that have significant barriers to entry and key urban amenities.

For additional information regarding our assets, see Item 2 "Properties."

Certain terms used throughout this Annual Report on Form 10-K are defined under "Definitions" starting on page 3.

We own and operate urban mixed-use properties concentrated in what we believe are the highest growth, Metro-served submarkets in and around Washington, D.C., most notably National Landing, that have significant barriers to entry and key urban amenities.

We have significant expertise with multifamily, office and retail assets.

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We intend to continue to opportunistically sell or recapitalize assets as well as land sites where a ground lease or joint venture execution may represent the most attractive path to maximizing value.

Recycling the proceeds from these sales will not only fund our planned growth through value-added development and acquisitions, but will also further advance the strategic shift in the composition of our portfolio to majority multifamily, with an office portfolio concentrated in National Landing.

One of our approaches to value creation uses a series of complementary disciplines through a process we call "Placemaking."

Placemaking involves strategically mixing high-quality multifamily and commercial buildings with anchor, specialty and neighborhood retail in a high density, thoughtfully planned and designed public space.

Recycling the proceeds from these sales will not only fund our planned growth through value-added development and potential acquisitions but will also further advance the strategic shift in the composition of our portfolio to majority multifamily, with an office portfolio concentrated in National Landing.

One of our approaches to value creation uses a series of complementary disciplines through a process we call "Placemaking." Placemaking involves strategically mixing high-quality multifamily and commercial buildings with anchor, specialty and neighborhood retail in a high density, thoughtfully planned and designed public space.

Through this process, we create synergies, and thus value, across those varied uses leading to unique, amenity-rich, walkable neighborhoods that are desirable and enhance tenant and investor demand.

We believe our Placemaking approach will increase occupancy and rental rates in our portfolio, in particular with respect to our concentrated and extensive land and operating asset holdings in National Landing, the location of Amazon's second headquarters and Virginia Tech's currently under construction $1 billion Innovation Campus.

National Landing, situated in Northern Virginia directly across the Potomac River from Washington, D.C., is the interconnected and walkable neighborhood that encompasses Crystal City, the eastern portion of Pentagon City and the northern portion of Potomac Yard.

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Utilizing our Placemaking expertise, each new project is intended to contribute to authentic and distinct neighborhoods by creating a vibrant street environment with robust retail offerings and other amenities, including improved public spaces.

Additionally, the cutting-edge digital infrastructure investments we are making in National Landing, including the CBRS wireless spectrum we own and agreements with AT&T and Federated Wireless, are advancing our efforts to make National Landing among the first 5G-operable submarkets in the nation, as discussed below.

Amazon's new headquarters is located in National Landing.

We currently have leases with Amazon totaling 1.0 million square feet across six office buildings in National Landing.

We sold Amazon two of our National Landing development sites, Metropolitan Park and Pen Place.

During the second quarter of 2023, we completed the construction of two new office buildings for Amazon on Metropolitan Park in National Landing, totaling 2.1 million square feet, inclusive of approximately 50,000 square feet of street-level retail with new shops and restaurants, and Amazon took occupancy of its new headquarters in June 2023.

We are the developer, property manager and retail leasing agent for Amazon's new headquarters at National Landing.

We are currently constructing two new office buildings for Amazon on Metropolitan Park, totaling 2.1 million square feet, inclusive of approximately 50,000 square feet of street-level retail with new shops and restaurants.

We expect to deliver Metropolitan Park and Amazon to occupy it this summer.

As of December 31, 2023, we have leases with Amazon totaling approximately 927,000 square feet across five office buildings in National Landing.

In connection with Amazon's new headquarters in National Landing, the Commonwealth of Virginia agreed to provide tax incentives to Amazon to create a minimum of 25,000 new full-time jobs and potentially 37,850 full-time jobs in National Landing with average annual wage targets for each calendar year, starting with $150,000 in 2019, and escalating 1.5% per year.

We, alongside Amazon, Virginia Tech, and federal, state, and local governments plan to invest more than $12.4 billion, including infrastructure investments, that will directly benefit National Landing.

As of March 2023, Amazon has created approximately 8,000 new full-time jobs in National Landing.

We, alongside Amazon, Virginia Tech, and federal, state, and local governments plan to invest over $12.0 billion, including infrastructure investments, that will directly benefit National Landing.

The infrastructure investments include:

two new Metro entrances (Crystal Drive and Potomac Yard);

a pedestrian bridge to Reagan National Airport;

a new Metro station (Potomac Yard), a new Metro entrance (Crystal Drive) a pedestrian bridge to Reagan National Airport;

a new commuter rail station located between two of our Crystal Drive office assets;

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and National Landing .

The Potomac Yard Metro station opened in May 2023.

In the fall of 2020, Virginia Tech virtually launched the inaugural academic year of its $1 billion Innovation Campus in National Landing, which is under construction.

This expected powerful demand driver sits adjacent to 2.0 million square feet of development density we own in National Landing and a new, under-construction Potomac Yard Metro station (scheduled to open this summer), all approximately one mile south of Amazon's new headquarters.

This expected powerful demand driver sits adjacent to 2.0 million square feet of development density we own in National Landing and the new Potomac Yard Metro station, which opened in May 2023, all approximately one mile south of Amazon's new headquarters.

The campus is part of a 20-acre innovation district, of which the fully entitled first phase encompasses approximately 1.6 million square feet of space, including four office towers and two residential buildings, with ground-level retail.

On this campus, Virginia Tech intends to create an innovation ecosystem by co-locating academic and private sector uses to accelerate research and development spending, as well as the commercialization of technology.

When the Innovation Campus is fully operational, Virginia Tech plans to annually graduate approximately 750 master students and 150 PhD students in STEM fields.

Virginia Tech is expected to occupy 675,000 square feet in the Innovation Campus.

When the Innovation Campus is fully operational, Virginia Tech plans to annually enroll approximately 750 master students and 200 PhD students in STEM fields.

Virginia Tech is expected to occupy a 3.5-acre campus in the Innovation Campus.

In December 2023, we, along with Monumental Sports & Entertainment, the Commonwealth of Virginia, and the City of Alexandria announced a plan to build a new sports and entertainment anchor in National Landing, subject to definitive documentation and applicable government approvals.

This 1.2 million square foot anchor would include a new arena for the Washington Capitals and Washington Wizards, along with a global corporate headquarters for Monumental Sports & Entertainment, a Monumental Sports Network media studio, the Wizards practice facility, a performing arts venue, and an expanded e-sports facility – all situated adjacent to the Virginia Tech Innovation Campus and the recently delivered Potomac Yard Metro Station.

We are making cutting-edge digital infrastructure investments to establish National Landing as among the first 5G-operable submarkets in the nation.

Building upon our Placemaking efforts, we are leveraging our concentrated and extensive land and operating asset holdings in National Landing to deploy a digital infrastructure platform at a neighborhood scale that delivers an amenity that we believe enhances tenant demand, specifically in the technology and defense sectors, and further differentiates National Landing.

The following are key components of our strategy:

Capitalize on Significant Demand Catalysts in National Landing.

We believe the strong technology sector tailwinds created by Amazon, the Virginia Tech Innovation Campus, the Pentagon and our National Landing digital infrastructure initiative will contribute to substantial growth from our Operating Portfolio and our 6.6 million square foot development pipeline in National Landing.

Approximately two-thirds of our portfolio is located in National Landing where Amazon is incentivized to employ a minimum of 25,000 new full-time jobs and potentially 37,850 planned employees, and Virginia Tech's $1 billion Innovation Campus is under construction.

We believe the strong technology sector tailwinds created by Amazon, the Virginia Tech Innovation Campus, the Pentagon and our National Landing digital infrastructure

platform will contribute to substantial growth from our Operating Portfolio and our 6.6 million square foot development pipeline in National Landing.

Approximately 75.0% of our portfolio is located in National Landing where Amazon is incentivized to employ a minimum of 25,000 new full-time jobs and potentially 37,850 planned employees, and Virginia Tech's $1 billion Innovation Campus is under construction.

Given National Landing’s proximity to the Pentagon, recent historic increases in the U.S.

defense budget and robust foreign defense spending, National Landing is positioned to capture growing defense demand, particularly as tech and defense are increasingly intertwined.

Evidencing this point, in 2022, Huntington Ingalls Industries, Inc., a large defense contractor responsible for building a majority of the U.S.

Navy fleet, leased significant space from us in National Landing.

Two other large defense contractors — The Boeing Company and Raytheon Technologies Corporation — have also announced their global headquarter relocations to the National Landing area.

We believe our investment in next-generation connectivity infrastructure such as dense, redundant, and secure fiber networks, data center access, and world-class 5G connectivity, will be a key advantage in continuing to attract companies to National Landing.

We have secured access to multiple blocks for between 30 and 40 megahertz of licensed CBRS wireless spectrum to support 5G broadband communications for the geographic license areas stretching across National Landing.

In addition to other investments that we are making in the submarket, we believe this investment in CBRS spectrum and agreements with AT&T and Federated Wireless will allow us to control the process of attracting and partnering with best-in-class service providers, making National Landing among the first 5G-operable submarkets in the nation.

This digital infrastructure will also provide us with valuable tenant inducement tools, such as the ability to offer ubiquitous and redundant fiber connectivity and 5G private cellular networks.

These features are increasingly important to technology companies, especially innovators in cybersecurity, internet of things, artificial intelligence and cloud computing.

defense budget and robust foreign defense spending, we believe National Landing is positioned to capture growing defense demand, particularly as tech and defense are increasingly intertwined.

In 2023, 47.4% of leases executed by us in National Landing were with the Department of Defense and defense contractors.

We believe our investment in digital infrastructure including dense, redundant, and secure fiber networks, data center access, next-generation 5G connectivity, and privately held CBRS wireless spectrum provide a key advantage in continuing to attract companies to National Landing.

The digital infrastructure provides us with valuable tenant inducement tools, such as the ability to offer ubiquitous and redundant fiber connectivity and 5G private cellular networks.

Based on our experience, these features, delivered with support from industry-leading service providers including AT&T, Cisco, and Federated Wireless, are increasingly important to technology and defense companies, especially innovators in cybersecurity, internet of things, artificial intelligence and cloud computing.

In 2023, we believe that access to the unique digital infrastructure amenity was a decision factor for many of the tenants who executed leases in National Landing.

In addition to our Primary Focus on National Landing, Invest in and Operate Mixed-Use Assets in Other High-Growth, Metro-Served Submarkets in the Washington, D.C.

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In addition to National Landing, these submarkets include the Rosslyn-Ballston Corridor in Northern Virginia;

the Ballpark, U Street/Shaw, and Union Market, in the District of Columbia;

the Ballpark, U Street/Shaw, and Union Market/NoMa, in the District of Columbia;

and Bethesda in Maryland.

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Given our leasing capabilities and tenant demand for high-quality space in our submarkets, we believe that we are well positioned to achieve significant internal growth from the lease-up of vacant space in our in-service Operating Portfolio.

As of December 31, 2022, we had 31 operating commercial assets totaling 9.7 million square feet (8.4 million square feet at our share), which were 88.5% leased at our share, resulting in 939,000 square feet available for lease.

As of December 31, 2023, we had 16 multifamily assets totaling 6,318 units (6,318 units at our share), which were 96.0% leased at our share.

As of December 31, 2023, we had 26 commercial assets totaling 8.3 million square feet (7.7 million square feet at our share), which were 86.3% leased at our share, resulting in 1.0 million square feet available for lease.

In addition to portfolio lease-up, we expect increases in NOI from:

(i) the commencement of signed but not yet commenced leases ($16.4 million total annualized estimated rent as of December 31, 2022, of which $9.8 million is expected in 2023) and (ii) contractual rent escalators in our non-GSA office and retail leases, which are based on increases in the Consumer Price Index or a fixed percentage.

(i) the commencement of signed but not yet commenced office and retail leases ($4.7 million total annualized estimated rent as of December 31, 2023, of which $2.7 million is expected in 2024) and (ii) contractual rent escalators in our non-GSA office and retail leases, which are based on increases in the Consumer Price Index or a fixed percentage.

As of December 31, 2023, we had 1,583 multifamily units under construction in National Landing across two projects (4 buildings):

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Based on our current plans and estimates, these assets will require an additional $177.1 million to complete.

We have one multifamily asset in its initial lease up, 8001 Woodmont, which was delivered in the second quarter of 2021 and was 81.1% occupied as of December 31, 2022.

Monetize Our Significant Development Pipeline.

We expect our pipeline of ground-up development opportunities will produce favorable risk-adjusted returns on invested capital.

As of December 31, 2022, our development pipeline consists of 20 assets, and we estimate it can support 12.5 million square feet (9.7 million square feet at our share) of estimated potential development density:

83.1% of this potential development density comprises multifamily projects located in the high-growth submarkets of National Landing, the Ballpark, and Union Market/NoMa/H Street;

As of December 31, 2023, our development pipeline consisted of 17 assets, and we estimate it can support 10.8 million square feet (8.8 million square feet at our share) of estimated potential development density:

82.1% of this potential development density comprises multifamily projects located in the high-growth submarkets of National Landing, the Ballpark, and Union Market/NoMa;

and 100.0% of this potential development density is Metro-served.

We expect five of these multifamily projects to deliver 4,105 units within a half mile of Amazon's new headquarters.

We intend to invest in multifamily development as market demand evolves, matching delivery dates with Amazon's expected job growth in National Landing, and in new office development subject to preleasing.

While we expect these opportunities to be entitled over the next 24 months, construction remains subject to completion of design, market conditions and our rigorous return requirements.

Subject to market conditions, we intend to invest in multifamily development and in new office development subject to preleasing.

The estimated potential development densities and uses reflect our current business plans as of December 31, 2023 and are subject to change based on market conditions.

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A fundamental component of our strategy to maximize long-term NAV per share is active capital allocation.

We evaluate development, acquisition, disposition, share repurchase and other investment decisions based on how they may impact long-term NAV per share.

We evaluate development, acquisition, disposition, share repurchases and other investment decisions based on how they may impact long-term NAV per share.

Successful execution of our capital allocation strategy enables us to source capital at NAV from the disposition of assets generating low cash yields and invest those proceeds in new acquisitions with higher cash yields and growth, as well as in development projects with significant yield spreads and profit potential.

We view this strategy as a key tool to source capital.

Successful execution of our capital allocation strategy enables us to source capital at NAV from the disposition of assets generating low cash yields and invest those proceeds in new acquisitions with higher cash yields and growth, development projects with significant yield spreads and profit potential, and share repurchases.

Consequently, at any given time, we expect to be in various stages of discussions and negotiations with potential buyers, real estate venture partners, ground lessors, and other counterparties with respect to sales, joint ventures, and/or ground leases for certain of our assets, including portfolios thereof.

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We anticipate redeploying the proceeds from these sales will not only help fund our planned growth but will also further advance the strategic shift of our portfolio to majority multifamily.

Current market conditions, however, have significantly slowed down the pace of asset sales, and we expect this reduced activity to continue in 2024.

In the meantime, we continue to advance our two under-construction multifamily assets in National Landing, 1900 Crystal Drive and 2000/2001 South Bell Street, totaling 1,583 units.

We expect near-term acquisition activity to be focused on assets in emerging growth neighborhoods, as well as assets adjacent to our existing holdings where the combination of sites can add unique value to any new investment with a focus on multifamily given our long-term objective of growing our portfolio to majority multifamily.

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Third-Party Services Business

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.

The WHI pursues a transformational approach to producing affordable workforce housing and creating sustainable, mixed-income communities in the Washington, D.C.

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

Although a significant portion of the assets and interests in assets formerly owned by certain of the JBG Legacy Funds were contributed to us in the Combination, the JBG Legacy Funds retained certain assets that were not consistent with our long-term business strategy.

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We compete with numerous acquirers, developers, owners and operators of commercial real estate including other REITs, private equity investors, domestic and foreign financial institutions, life insurance companies, pension trusts, partnerships, and individual investors, many of which own or may seek to acquire or develop assets similar to ours in the same markets in which our assets are located.

These competitors may have greater financial resources or access to capital than we do or be willing to acquire assets in transactions which are more highly leveraged or are less attractive from a financial viewpoint than we are willing to pursue, which may reduce the number of suitable investment opportunities available to us or increase pricing.

These competitors may have greater financial resources or access to capital than we do or be willing to acquire assets in

transactions which are more highly leveraged or are less attractive from a financial viewpoint than we are willing to pursue, which may reduce the number of suitable investment opportunities available to us or increase pricing.

Leasing is a major component of our business and is highly competitive.

The principal means of competition in leasing are lease terms (including rent charged and tenant improvement allowances), location, services provided and the nature and condition of

the asset to be leased.

The principal means of competition in leasing are lease terms (including rent charged and tenant improvement allowances), location, services provided, and the nature and condition of the asset to be leased.

If our competitors offer space at rental rates below current market rates, below the rental rates we currently charge our tenants, in better locations within our markets, in higher quality assets or offer better services, we may lose existing and potential tenants, and we may be pressured to reduce our rental rates below those we currently charge to retain tenants when our tenants' leases expire.

We operate in the following business segments:

commercial, multifamily and third-party asset management and real estate services.

multifamily, commercial and third-party asset management and real estate services.

Financial information related to these business segments for each of the three years in the period ended December 31, 2023 is set forth in Note 20 to the consolidated financial statements.

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

For additional information regarding our REIT status, see Item 9B "Other Information."

Significant Tenants

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We remain committed to transparent reporting of ESG financial and non-financial indicators.

We intend to continue publishing an annual ESG report with key performance indicators that are aligned with the Global Reporting Initiative reporting framework, United Nations Sustainable Development Goals, Sustainability Accounting Standards Board Standards, and recommendations set forth by the Task Force on Climate-Related Financial Disclosures.

We achieved carbon neutrality across our Operating Portfolio for energy associated with the operations of our buildings in 2021.

In 2022, we expanded our ESG reporting commitment to include full coverage of Scope 1.

Carbon neutrality was

accomplished first through energy and water efficiency, then the purchase of verified carbon offsets for Scope 1 emissions produced by onsite natural gas consumption and fugitive refrigerant emissions, and the purchase of Green-e RECs for Scope 2 emissions produced by consuming onsite electricity procured by us.

We intend to continue publishing an annual ESG report with key performance indicators that are aligned with the Global Reporting Initiative

reporting framework, United Nations Sustainable Development Goals, Sustainability Accounting Standards Board Standards, and recommendations set forth by the Task Force on Climate-Related Financial Disclosures.

In 2023, we maintained a carbon neutral operating portfolio for Scope 1 and Scope 2.

Carbon neutrality was accomplished first through energy and water efficiency, then the purchase of verified carbon offsets for Scope 1 emissions produced by onsite natural gas consumption and fugitive refrigerant emissions, and the purchase of Green-e RECs for Scope 2 emissions produced by consuming onsite electricity procured by us.

(We own three company vehicles with emissions that are less than 0.01% of our carbon footprint and, therefore, are not included in our calculations of carbon neutrality.) Our planned next step toward long-term sustainability includes the development and execution of an offsite renewable energy strategy, which is expected to replace a significant portion of our annual REC purchases, which add renewable energy capacity to the national electrical grid.

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We have demonstrated the results of this focus by:

● Achieving a 5-star designation in the GRESB Global ESG Benchmark for Real Assets for both diversified operating assets and future development, and being recognized as a 2021 Global Sector Leader - Diversified - Office/Residential Sector.

● Achieving a 5-star designation in the GRESB Global ESG Benchmark for Real Assets for both diversified operating assets and future development, and being recognized as a 2023 Global Sector Leader - Development - Residential Sector.

● Being named 2023 Nareit Diversified Leader in the Light award winner for sustained ESG excellence.

● Establishing an ESG Committee and maintaining oversight of environmental and social matters by the Board of Trustees' Corporate Governance & Nominating Committee.

● Being named a 2023 U.S.

Green Building Council Leadership award winner for sustainability leadership in the real estate sector.

● Maintaining an ESG Committee and oversight of environmental and social matters by the Board of Trustees' Corporate Governance & Nominating Committee.

● Being named to Bloomberg's Gender Equality Index.

● Improving the diversity of our Board of Trustees, which currently comprises 36% women.

● Maintaining the diversity of our Board of Trustees, which currently comprises 40% women.

Reflecting the strength and diversity of our national labor force, our Board of Trustees has made a long-term commitment to evolve its composition to have equal balance between men and women and to reflect the ethnic diversity of our country.

● Surpassing $114 million in investor commitments to the JBG SMITH-managed WHI Impact Pool, which raises funds from third parties and, through 2022, closed $64.7 million in financing related to the purchase of residential communities that contain 2,565 units.

● Surpassing $114 million in investor commitments to the JBG SMITH-managed WHI Impact Pool, which raises funds from third parties and, through 2023, has closed $72.0 million in financing related to the purchase of residential communities containing 2,833 units.

We launched the WHI in 2018 in partnership with the Federal City Council to preserve or build between 2,000 and 3,000 units of affordable workforce housing in the Washington, D.C.

In 2022, WHI was named ESG Investing Awards' 2022 Best ESG Investment Fund:

Our sustainability team works directly with our business units to integrate our ESG principles throughout our operations and investment processes.

Our sustainability team is responsible for leading annual ESG reporting efforts, maintaining building certifications, energy, water and waste benchmarking, sustainability strategy development, and implementation and coordination with industry and community partners.

To ensure that our ESG principles are fully integrated into our business practices, our sustainability, human resources, legal, accounting, D&I and WHI teams, as well as members of our management team, provide top-down support for the implementation of ESG initiatives.

Our ESG Committee is responsible for ESG improvement programs and provides our Board of Trustees' Corporate Governance & Nominating Committee with periodic updates on ESG strategy.

To ensure that our ESG principles are fully integrated into our business practices, our sustainability, human resources, legal, accounting, D&I, and social impact investing teams, as well as members of our management team, provide top-down support for the implementation of ESG initiatives.

Our ESG Committee is responsible for ESG improvement initiatives and provides our Board of Trustees' Corporate Governance & Nominating and Audit Committees with periodic updates on ESG strategy.

Accomplishments of this group in 2023 include an update to climate-related risks inclusive of physical and transition risks and the potential financial impacts of those risks, and the creation and adoption of human rights and ESG policies.

Energy and Water Efficiency and Management

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By 2030, we have committed to reduce:

energy consumption 25%, predicted energy consumption 25%, water consumption 20%, predicted water consumption 20%, embodied carbon 20%, and greenhouse gas emissions (Scope 1 and 2) 25%.

energy consumption 25%, predicted energy consumption 25%, water consumption 20% and greenhouse gas emissions (Scope 1 and 2) 25%.

Further, by 2030, we have committed to increase waste diversion to 60% and verify all assets using green building and health and well-being certifications across our Operating Portfolio and development pipeline.

In addition to our 2030 targets, we have a legacy commitment to improve the energy efficiency of our commercial Operating Portfolio by at least 20% over the 10-year period ending in 2024 through the Department of Energy Better Buildings Challenge.

this improvement through real time energy use monitoring.

We plan to report progress on these commitments annually in our ESG report.

We achieve this improvement through real time energy use monitoring.

We are tracking a 15% reduction in energy consumption, a 12% reduction in water consumption and a 25% reduction in carbon emissions from our 2018 baseline through 2022.

We report progress on these commitments annually in our ESG report.

Our long-term strategy to reduce energy and water consumption includes operational and capital improvements that align with our business plan and contribute to attaining our performance targets.

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Capital investment planning considers the useful life of equipment, energy and water efficiency, occupant health impacts and maintenance requirements.

Asset-level business plans that include energy and water efficiency capital investments are underway.

Asset-level business plans that include energy and water efficiency capital investments were completed in 2023.

Our development strategy focuses on reducing predicted energy and water consumption and embodied carbon, contributing to attaining our performance targets.

Development teams use energy, water, and embodied carbon modeling to inform design decisions that best fit each individual building program, adapt to identified climate change conditions for our region, and promote healthy buildings.

Since the establishment of performance targets for our development projects, we are tracking an aggregate 25% reduction in predicted energy consumption, 35% reduction in predicted water use and 20% reduction in embodied carbon as of December 31, 2023.

We use green building and health and well-being certifications as a verification tool across our portfolio.

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● 95% of all operating assets, based on square footage, have earned at least one green building or health and well-being certification:

o 4.7 million square feet of LEED Certified Commercial Space (57%)

o 3.2 million square feet of LEED Certified Multifamily Space (61%)

o 3.9 million square feet of ENERGY STAR Certified Commercial Space (46%)

o 3.3 million square feet of LEED Certified Commercial Space (43%)

o 2.7 million square feet of ENERGY STAR Certified Multifamily Space (52%)

o 3.9 million square feet of ENERGY STAR Certified Commercial Space (51%)

o 7.5 million square feet of BOMA 360 Certified Commercial Space (99%)

o 7.7 million square feet of Fitwel Viral Response Module Certified Commercial Space (92%)

o 3.8 million square feet of Fitwel Full Building Certified Commercial and Multifamily Space (29%)

o 7.3 million square feet of Fitwel Viral Response Module Certified Commercial Space (96%)

● 99.4% of our operating assets' energy and water use are benchmarked

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We stand with our communities, tenants and shareholders in supporting meaningful solutions that address this global challenge.

To develop a more informed view of future climate conditions and further our understanding of the direct physical risks to our properties, we have conducted a physical climate-related risk assessment (both acute and chronic risks), which includes our operating assets and land holdings in our development pipeline.

We intend to conduct periodic physical climate-related risk assessments.

We continue to proactively assess the potential risks that may impact our portfolio and endeavor to conduct more robust analyses surrounding transitional and financial risks.

To develop a more informed view of future climate conditions and further our understanding of the direct climate-related risks to our properties, we have conducted a new climate-related risk assessment (both acute and chronic risks across our operating assets and development pipeline) which addresses both physical and transition climate risk factors, and estimates the financial implications of those modeled risks at the asset level.

Climate Change Risk Management Strategy

We have aligned our climate-related disclosures with the recommendations of the TCFD.

As defined by the TCFD framework, physical risks associated with climate change include acute risks (extreme weather-related events) and chronic risks (such as extreme heat and sea-level rise), and transition risks associated with climate change include policy and legal risks, market and reputation-related risks and decarbonization technology risks.

We continue to assess the potential risks that may impact our portfolio and endeavor to expand our assessments further into additional transitional and financial risk dimensions.

Our preliminary physical climate-related assessment on our portfolio was conducted by a third party.

The assessment and physical risk scoring was based on an RCP 8.5 emissions scenario, which is a worst-case, high emissions scenario, under a time horizon up to 2040.

The assessment included all in-service assets, and our development pipeline and landholdings, and included climate events such as hurricane, wildfire, heat, water stress, flooding and sea-level rise.

The assessment of our portfolio identified flooding and heat stress as top hazards.

As defined by the TCFD framework, physical risks associated with climate change include acute risks (extreme weather-related events) and chronic risks (such as extreme heat and coastal flooding), and transition risks associated with climate change include policy and legal risks, market and reputation-related risks and decarbonization technology risks.

Our 2023 assessment of climate change risk relied on S&P Global Inc.'s Climanomics modeling tool.

The Climanomics methodology projects portfolio level risk exposure as well as individual asset risk exposure over four reference scenarios, or representative concentration pathways, established by the Intergovernmental Panel on Climate Change and across a range of time horizons through 2100.

Climanomics’ primary output is a risk exposure metric called MAAL.

This value is presented as both absolute MAAL ($ in millions) and relative MAAL (% of total asset or portfolio value).

We intend to conduct periodic climate-related risk assessments as the composition of our portfolio changes.

The assessment included all in-service assets, and our development pipeline and landholdings, and included climate events such as hurricane, wildfire, temperature extremes, water stress, drought, fluvial and coastal flooding.

The assessment of our portfolio identified fluvial and coastal flooding and temperature extremes (heat stress) as top hazards.

We currently have no properties in a Federal Emergency Management Agency hazard designated area.

We work with our insurance team to benchmark resilience features and adaptations for short-term horizons.

Asset-Level Risk Management

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As a leader in green building, we will continue to make capital investments that enhance building performance and tenant comfort, energy and water efficiency, on-site renewable energy and other decarbonization strategies.

We work with our insurance team to benchmark resilience features and develop adaptations for short-term horizons.

We aim to develop risk mitigation and physical resilience plans for all assets taking into account the outputs from the Climanomics tool.

Carbon-Neutral Operations Strategy

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We recognize, however, that new development can foster challenging growth dynamics, with matters of social equity at the forefront.

We strive to work alongside community members, leaders, and local and

federal governments to appropriately respond to these challenges.

We strive to work alongside community members, leaders, and local and federal governments to appropriately respond to these challenges.

One of our efforts is the WHI, which we launched in 2018 in partnership with the Federal City Council.

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The WHI is a scalable, market-driven model funded by a unique relationship between philanthropy and private investment.

As of December 31, 2022, we have committed to invest $11.2 million in the WHI, and our Executive Vice President of Social Impact Investing manages this effort.

As of December 31, 2022, our remaining commitment was $4.8 million.

The WHI Impact Pool has completed closings of capital commitments totaling $114.4 million, and closed $64.7 million in financing related to the purchase of residential communities that contain 2,565 units.

The initiatives' goals include:

● Preserving or building between 2,000 and 3,000 units of affordable workforce housing in the Washington, D.C.

● Delivering triple bottom line results consisting of environmental and social objectives in addition to financial returns.

As of December 31, 2023, we have invested $7.7 million of our $11.2 million commitment in the WHI Impact Pool.

The WHI Impact Pool completed fundraising in 2020 with capital commitments totaling $114.4 million, and has closed $72.0 million in financing related to the purchase of residential communities containing 2,833 units through December 31, 2023.

To learn more about our ESG initiatives and performance, please visit https://www.JBGSMITH.com/About/Sustainability and download our ESG Report.

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We have a comprehensive, multi-year D&I strategy.

See "Human Capital"

below for further discussion.

See "Human Capital" below for further discussion.

We are engaged in addressing ESG matters, including climate-related matters, at all levels of our organization.

Management’s role in overseeing, assessing, and managing climate-related risks, opportunities and initiatives is integrated throughout our business units.

We have a dedicated team of sustainability professionals focused on ESG matters that coordinates and collaborates across business units and with our Board of Trustees and management, and which advises on environmental sustainability matters and develops and implements related initiatives.

We have a dedicated team of sustainability professionals focused on ESG matters that coordinate and collaborate across business units and with our Board of Trustees and management, and which advises on environmental sustainability matters and develops and implements related initiatives.

In 2022, management established a new ESG Committee to help inform ESG strategy and more robustly advise the Board of Trustees on climate-related risks and opportunities.

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Environmental Matters

Under various federal, state and local laws, ordinances and regulations, an owner of real estate is liable for the costs of removal or remediation of certain hazardous or toxic substances on that real estate.

These laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence of hazardous or toxic substances.

The costs of remediation or removal of these substances may be substantial, and the presence of these substances, or the failure to promptly remediate these substances, may adversely affect the owner's ability to sell the real estate or to borrow using the real estate as collateral.

In connection with the ownership and operation of our assets, we may be potentially liable for these costs.

The operations of current and former tenants at our assets have involved, or may have involved, the use of hazardous materials or generated hazardous wastes.

The release of these hazardous materials and wastes could result in us incurring liabilities to remediate any resulting contamination.

The presence of contamination or the failure to remediate contamination at our properties may (i) expose us to third-party liability (e.g., for cleanup costs, natural resource damages,

bodily injury or property damage), (ii) subject our properties to liens in favor of the government for damages and costs the government incurs in connection with the contamination, (iii) impose restrictions on the manner in which a property may be used or businesses may be operated, or (iv) materially adversely affect our ability to sell, lease or develop the real estate or to borrow using the real estate as collateral.

Under various federal, state and local laws, ordinances and regulations, a current or former owner or operator of real estate may be liable for conducting or paying for the costs of the investigation, removal or remediation of certain hazardous or toxic substances on that real estate.

These laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence of hazardous or toxic substances, and the liability may be joint and several.

The costs of remediation or removal of these substances may be substantial and could exceed the value of the property, and the presence of these substances, or the failure to promptly remediate these substances, may adversely affect the owner's ability to sell or develop the real estate or to borrow using the real estate as collateral.

In connection with the ownership and operation of our current and former assets, we may be potentially liable for these costs.

The operations of current and former tenants at our assets have involved, or may have involved, the use of hazardous substances or generated hazardous wastes, and indemnities in our lease agreements may not fully protect us from liability, if, for example, a tenant responsible for environmental noncompliance or contamination becomes insolvent.

The release of these hazardous substances and wastes could result in us incurring liabilities to remediate any resulting contamination.

The presence of contamination or the failure to remediate contamination at our properties may (i) expose us to third-party liability (e.g., for cleanup costs, natural resource damages, bodily injury or property damage), (ii) subject our properties to liens in favor of the government for damages and costs the government incurs in connection with the contamination, (iii) impose restrictions on the manner in which a property may be used or businesses may be operated, or (iv) materially adversely affect our ability to sell, lease or develop the real estate or to borrow using the real estate as collateral.

In addition, our assets are exposed to the risk of contamination originating from other sources.

While a property owner may not be responsible for remediating contamination that has migrated onsite from an identifiable and viable offsite source, the contaminant's presence can have adverse effects on operations and the redevelopment of our assets.

To the extent we send contaminated materials to other locations for treatment or disposal, we may be liable for the cleanup of those sites if they become contaminated.

To the extent we arrange for contaminated materials to be sent to other locations for treatment or disposal, we may be liable for the cleanup of those sites if they become contaminated, without regard to whether we complied with environmental laws in doing so.

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

These environmental assessments generally have included a historical review, a public records review, a visual inspection of the site and surrounding assets, visual or historical evidence of underground storage tanks, and the preparation and issuance of a written report.

Soil and/or groundwater subsurface testing is conducted at our assets, when necessary, to further investigate any issues raised by the initial assessment that could reasonably be expected to pose a material concern to the property or result in us incurring material environmental liabilities as a result of redevelopment.

These environmental assessments generally have included a historical review, a public records review, a visual inspection of the site and surrounding assets, visual or historical evidence of underground storage tanks and other features, and the preparation and issuance of a written report.

Soil, soil vapor and/or groundwater subsurface testing is conducted at our assets, when necessary, to further investigate any issues raised by the initial assessment that could reasonably be expected to pose a material concern to the property or result in us incurring material environmental liabilities as a result of redevelopment.

The tests may not, however, have included extensive sampling or subsurface investigations.

In each case where the environmental assessments have identified conditions requiring remedial actions required by law, we have initiated appropriate actions.

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.

The environmental assessments have not revealed 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.

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federal government is a significant tenant.

examination of records, audits and records, equal opportunity provisions, prohibition against segregated facilities, certain executive orders, subcontractor cost or pricing data, and certain provisions intending to assist small businesses.

Lease agreements with federal government agencies contain provisions required by federal law, which require, among other things, that the lessor of the property agree to comply with certain rules and regulations, including rules and regulations related to anti-kickback procedures, examination of records, audits and records, equal opportunity provisions, prohibition against segregated facilities, certain executive orders, subcontractor cost or pricing data, and certain provisions intending to assist small businesses.

We directly manage assets with federal government agency tenants, which subjects us to additional risks associated with compliance with applicable federal rules and regulations.

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To that end, we focus on talent development and succession planning, pay-for-performance, and D&I.

We utilize talent management practices in the broadest sense to create a holistic, engaging work experience for our employees.

The upshot of these practices has resulted (based on employee surveys) in us continuing to be an employer of choice, with an extremely engaged workforce (92% favorable) that has also shown a strong positive attitude around the work we have done in D&I (91% favorable).

Our ability to cultivate an inclusive environment that values diversity and fosters a sense of belonging and connection, has resulted in D&I becoming a key driver of overall engagement.

We utilize talent management practices in the broadest sense to create an engaging workplace experience for our employees, where they feel valued, respected and supported.

Based on our most recent engagement survey, our employees are highly satisfied with their jobs (90% favorable) and feel positive about our D&I efforts and progress (88% favorable).

We are keenly focused on the employee experience and want every person to feel respected for what makes them unique.

At the same time, our core values provide a sound structure for finding common ground and working together as a team to deliver the best possible outcomes.

In addition to our inclusive culture, our pay equity study results show no systemic disparity in compensation related to race or gender, affirming our strong belief in treating people equitably.

With our hybrid corporate office schedule, flexibility, and keen focus on health and welfare, we offer our employees an environment that enables them to be confident in their in-office experience and demonstrate the energy and excitement that comes from being together and collaborating with coworkers to achieve desirable outcomes.

Key to our high levels of engagement is ensuring we are putting our employees' needs first and creating an inclusive workplace experience where employees thrive.

We are proud to have been recognized by the Washington Post as a "Top Workplace"

several times in past years, and are focused on providing a positive employee experience to ensure that we remain an employer of choice.

With our hybrid corporate office schedule, flexibility, and emphasis on health and welfare, we offer our employees an environment that enables them to be confident in their in-office experience and demonstrate the energy and excitement that comes from being together and collaborating with coworkers to achieve desirable outcomes.

In addition, we are proud to have been recognized by the Washington Post as a "Top Workplace" several times in past years, and are focused on providing a positive employee experience to ensure that we remain an employer of choice.

We continually invest in our employee population, ensuring our employee experience more broadly continues to help us attract and retain the best talent in the industry.

The list below is a more comprehensive list of offerings that help create a compelling employee experience:

● Talent reviews and 360 surveys for senior leaders

The list below is a sampling of offerings that help create a compelling employee experience:

● Streamlined annual performance reviews

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● Employee surveys

● Mentorship program to develop and retain talent

● Mentorship and coaching programs to develop and retain talent

● Monthly D&I communications

● Employee roundtable discussions on pertinent current events, workplace issues and teambuilding

● Utilization of JBGS Inclusion Community and Women's Initiative to guide programming

● Utilization of JBGS Inclusion Community and Women's Initiative to guide D&I programming and events

● Partnerships with schools and organizations to facilitate recruitment of diverse talent

● Workforce development partnerships focused on diverse pipeline development

● Employee referral program

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● Volunteer opportunities

In addition to the above, we have a strong pay-for-performance culture where compensation is tied to both company and individual performance, ensuring that employees focus on both broader business focused goals, as well as their individual goals.

To that end, we also have a strong track record of promoting from within.

In addition to the above, we have a strong pay-for-performance culture where compensation is tied to both company and individual performance, ensuring that employees are focused on our success, as well as their individual goals.

We want our employees to feel aligned with our company vision and enabled to grow in their careers.

To that end, we have a strong track record of promoting from within;

in 2023, 50% of promotions went to people of color.

Consequently, the opportunities for growth and development also help to keep our population engaged and motivated.

2023 continued the evolution of our comprehensive, multi-year D&I strategy.

With an ongoing focus on our five strategic pillars – (i) workforce and talent, (ii) workplace culture, (iii) business integration, (iv) industry and branding and (v) metrics and accountability – we have made additional progress and have continued to drive cultural and behavioral change.

With an ongoing focus on our three strategic pillars – (i) employee development, (ii) engagement and (iii) recruiting – we have made additional progress and have continued to drive cultural and behavioral change.

We offered a broad range of events and activities to recognize and celebrate our employees’ rich cultural diversity.

We recognize that diversity in our workforce brings valuable perspectives, views and ideas to our organization.

We pride ourselves on our strong, collaborative culture, and we strive to create an inclusive and healthy work environment for our employees, which helps us continue to attract innovators to our organization.

Our workforce comprises 36% women and 56% minorities, and our senior leadership has 41% women representation.

Our workforce comprises 38% women and 61% people of color, and our senior leadership has 39% women representation.

In addition, we were proud to be named to the 2023 Bloomberg Gender Equality Index.

Implementing more inclusive, equitable systems and practices had a significant impact on our ability to identify diverse talent, particularly related to our entry-level recruitment efforts.

Our 2022 intern hires were 67% diverse (i.e.

women and/or people of color).

In addition, we have continued to expand our strategic partnerships with diverse educational, professional and community organizations.

100% of 2023 intern hires were from underrepresented groups, and 81% of our new hires at all levels were people of color.

In addition, we have continued to expand our strategic partnerships with diverse educational, professional and community organizations to ensure that we are building a strong, diverse pipeline of talent.

Available Information

Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports are available free of charge through our website ( https://www.JBGSMITH.com ) as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC.

reasonably practicable after they are electronically filed with, or furnished to, the SEC.

Also available on our website are copies of our Audit Committee Charter, Compensation Committee Charter, Corporate Governance and Nominating Committee Charter, Code of Business Conduct and Ethics and Corporate Governance Guidelines.

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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 1. Business