UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2021~~2022

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number 001-37994

JBG SMITH PROPERTIES

________________________________________________________________________________

(Exact name of Registrant as specified in its charter)

Maryland	81-4307010
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4747 Bethesda Avenue Suite 200 Bethesda MD	20814
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number, including area code: (240) 333-3600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, par value $0.01 per share	JBGS	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

As of ~~October~~July 29, ~~2021,~~2022, JBG SMITH Properties had ~~129,725,289~~114,390,891 common shares outstanding.

Table of Contents

JBG SMITH PROPERTIES

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED ~~SEPTEMBER~~JUNE 30, ~~2021~~2022

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	Page
	Condensed Consolidated Balance Sheets (unaudited) as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021	3
	Condensed Consolidated Statements of Operations (unaudited) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021	5
	Condensed Consolidated Statements of Equity (unaudited) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021	6
	Condensed Consolidated Statements of Cash Flows (unaudited) for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	10

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	49
Item 4.	Controls and Procedures	50

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults Upon Senior Securities	51
Item 4.	Mine Safety Disclosures	51
Item 5.	Other Information	51
Item 6.	Exhibits	5254
	Signatures	5355

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements

JBG SMITH PROPERTIES

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except par value amounts)

September 30, 2021

December 31, 2020
ASSETS




Real estate, at cost:




Land and improvements

$
1,358,299

$
1,391,472
Buildings and improvements

4,368,477

4,341,103
Construction in progress, including land

299,359

268,056

6,026,135

6,000,631
Less: accumulated depreciation

(1,346,107)

(1,232,690)
Real estate, net

4,680,028

4,767,941
Cash and cash equivalents

194,277

225,600
Restricted cash

34,900

37,736
Tenant and other receivables

51,128

55,903
Deferred rent receivable

187,882

170,547
Investments in unconsolidated real estate ventures

486,052

461,369
Other assets, net

300,537

286,575
Assets held for sale

74,174

73,876
TOTAL ASSETS

$
6,008,978

$
6,079,547

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY


Liabilities:




Mortgages payable, net

$
1,674,285

$
1,593,738
Revolving credit facility

—

—
Unsecured term loans, net

398,493

397,979
Accounts payable and accrued expenses

105,307

103,102
Other liabilities, net

200,204

247,774
Total liabilities

2,378,289

2,342,593
Commitments and contingencies




Redeemable noncontrolling interests

526,913

530,748
Shareholders' equity:




Preferred shares, $0.01 par value - 200,000 shares authorized; NaN issued

0

0
Common shares, $0.01 par value - 500,000 shares authorized; 129,704 and 131,778 shares issued and outstanding as of September 30, 2021 and December 31, 2020

1,298

1,319
Additional paid-in capital

3,606,462

3,657,643
Accumulated deficit

(495,033)

(412,944)
Accumulated other comprehensive loss

(25,446)

(39,979)
Total shareholders' equity of JBG SMITH Properties

3,087,281

3,206,039
Noncontrolling interests

16,495

167
Total equity

3,103,776

3,206,206
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

$
6,008,978

$
6,079,547


	June 30, 2022		December 31, 2021
ASSETS
Real estate, at cost:
Land and improvements	$	1,217,216	$	1,378,218
Buildings and improvements		4,004,286		4,513,606
Construction in progress, including land		385,085		344,652
		5,606,587		6,236,476
Less: accumulated depreciation		(1,257,871)		(1,368,003)
Real estate, net		4,348,716		4,868,473
Cash and cash equivalents		162,270		264,356
Restricted cash		212,848		37,739
Tenant and other receivables		46,605		44,496
Deferred rent receivable		154,487		192,265
Investments in unconsolidated real estate ventures		414,349		462,885
Intangible assets, net		157,819		201,956
Other assets, net		82,808		240,160
Assets held for sale		—		73,876
TOTAL ASSETS	$	5,579,902	$	6,386,206

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgages payable, net	$	1,612,169	$	1,777,699
Revolving credit facility		—		300,000
Unsecured term loans, net		398,500		398,664
Accounts payable and accrued expenses		112,784		106,136
Other liabilities, net		111,852		342,565
Total liabilities		2,235,305		2,925,064
Commitments and contingencies
Redeemable noncontrolling interests		521,392		522,725
Shareholders' equity:
Preferred shares, $0.01 par value - 200,000 shares authorized; NaN issued		0		0
Common shares, $0.01 par value - 500,000 shares authorized; 115,862 and 127,378 shares issued and outstanding as of June 30, 2022 and December 31, 2021		1,160		1,275
Additional paid-in capital		3,285,511		3,539,916
Accumulated deficit		(513,746)		(609,331)
Accumulated other comprehensive income (loss)		18,640		(15,950)
Total shareholders' equity of JBG SMITH Properties		2,791,565		2,915,910
Noncontrolling interests		31,640		22,507
Total equity		2,823,205		2,938,417
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	5,579,902	$	6,386,206

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

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,				Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
REVENUE
Property rental	$	125,900	$	118,680	$	370,960	$	354,519	$	117,036	$	122,819	$	248,634	$	245,060
Third-party real estate services, including reimbursements		25,842		26,987		90,694		83,870		22,157		26,745		46,127		64,852
Other revenue		5,280		5,368		15,301		15,705		6,312		5,080		12,709		10,021
Total revenue		157,022		151,035		476,955		454,094		145,505		154,644		307,470		319,933
EXPENSES
Depreciation and amortization		56,726		56,481		178,130		157,586		49,479		56,678		107,541		121,404
Property operating		40,198		37,572		109,929		105,867		35,445		35,000		76,089		69,731
Real estate taxes		18,259		17,354		55,127		53,422		14,946		18,558		33,132		36,868
General and administrative:
Corporate and other		12,105		11,086		38,475		37,478		14,782		13,895		30,597		26,370
Third-party real estate services		25,542		28,207		80,035		86,260		24,143		25,557		51,192		54,493
Share-based compensation related to Formation Transaction and special equity awards		3,480		7,133		12,866		25,432		1,577		4,441		3,821		9,386
Transaction and other costs		2,951		845		8,911		7,526		1,987		2,270		2,886		5,960
Total expenses		159,261		158,678		483,473		473,571		142,359		156,399		305,258		324,212
OTHER INCOME (EXPENSE)
Income (loss) from unconsolidated real estate ventures, net		20,503		(965)		23,513		(17,142)		(2,107)		3,953		1,038		3,010
Interest and other income, net		192		—		163		1,021
Interest and other income (loss), net										1,672		(38)		15,918		(29)
Interest expense		(17,243)		(16,885)		(50,312)		(44,660)		(16,041)		(16,773)		(32,319)		(33,069)
Gain on sale of real estate		—		—		11,290		59,477
Loss on extinguishment of debt		—		—		—		(33)
Gain on the sale of real estate, net										158,767		11,290		158,631		11,290
Loss on the extinguishment of debt										(1,038)		—		(1,629)		—
Total other income (expense)		3,452		(17,850)		(15,346)		(1,337)		141,253		(1,568)		141,639		(18,798)
INCOME (LOSS) BEFORE INCOME TAX (EXPENSE) BENEFIT		1,213		(25,493)		(21,864)		(20,814)		144,399		(3,323)		143,851		(23,077)
Income tax (expense) benefit		(217)		488		(4,527)		3,721		(2,905)		5		(2,434)		(4,310)
NET INCOME (LOSS)		996		(25,005)		(26,391)		(17,093)		141,494		(3,318)		141,417		(27,387)
Net (income) loss attributable to redeemable noncontrolling interests		(103)		2,212		2,472		445		(18,248)		345		(18,258)		2,575
Net loss attributable to noncontrolling interests		—		—		1,108		—		29		—		84		1,108
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	893	$	(22,793)	$	(22,811)	$	(16,648)	$	123,275	$	(2,973)	$	123,243	$	(23,704)
EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED	$	0.00	$	(0.18)	$	(0.18)	$	(0.14)	$	1.02	$	(0.03)	$	0.99	$	(0.19)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED		131,351		133,620		131,456		133,924		121,316		131,480		123,984		131,510

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

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,				Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
NET INCOME (LOSS)	$	996	$	(25,005)	$	(26,391)	$	(17,093)	$	141,494	$	(3,318)	$	141,417	$	(27,387)
OTHER COMPREHENSIVE INCOME (LOSS):
OTHER COMPREHENSIVE INCOME:
Change in fair value of derivative financial instruments		(329)		(278)		4,678		(39,489)		7,225		(1,404)		32,320		5,007
Reclassification of net loss on derivative financial instruments from accumulated other comprehensive loss into interest expense		3,901		3,823		11,476		8,137
Other comprehensive income (loss)		3,572		3,545		16,154		(31,352)
Reclassification of net loss on derivative financial instruments from accumulated other comprehensive income (loss) into interest expense										2,791		3,834		6,547		7,575
Total other comprehensive income										10,016		2,430		38,867		12,582
COMPREHENSIVE INCOME (LOSS)		4,568		(21,460)		(10,237)		(48,445)		151,510		(888)		180,284		(14,805)
Net (income) loss attributable to redeemable noncontrolling interests		(103)		2,212		2,472		445		(18,248)		345		(18,258)		2,575
Net loss attributable to noncontrolling interests		—		—		1,108		—		29		—		84		1,108
Other comprehensive (income) loss attributable to redeemable noncontrolling interests		(413)		(309)		(1,621)		3,446
Other comprehensive income attributable to redeemable noncontrolling interests										(1,311)		(235)		(4,277)		(1,208)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO JBG SMITH PROPERTIES	$	4,052	$	(19,557)	$	(8,278)	$	(44,554)	$	131,980	$	(778)	$	157,833	$	(12,330)

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

Table of Contents

JBG SMITH PROPERTIES

Condensed Consolidated Statements of Equity

(Unaudited)

(In thousands)


								Accumulated													Accumulated
				Additional				Other													Other
	Common Shares			Paid-In		Accumulated		Comprehensive		Noncontrolling		Total					Additional				Comprehensive
	Shares	Amount		Capital		Deficit		Loss		Interests		Equity		Common Shares			Paid-In		Accumulated		Income		Noncontrolling		Total
BALANCE AS OF JUNE 30, 2021	131,841	$	1,319	$	3,650,217	$	(466,230)	$	(28,605)	$	16,540	$	3,173,241
Net income attributable to common shareholders and noncontrolling interests	—		—		—		893		—		—		893
Conversion of common limited partnership units to common shares	180		2		5,668		—		—		—		5,670
														Shares	Amount		Capital		Deficit		(Loss)		Interests		Equity
BALANCE AS OF MARCH 31, 2022														124,248	$	1,243	$	3,444,793	$	(609,363)	$	9,935	$	28,438	$	2,875,046
Net income (loss) attributable to common shareholders and noncontrolling interests														—		—		—		123,275		—		(29)		123,246
Conversion of common limited partnership units ("OP Units") to common shares														72		1		1,761		—		—		—		1,762
Common shares repurchased	(2,317)		(23)		(68,907)		—		—		—		(68,930)	(8,499)		(84)		(213,807)		—		—		—		(213,891)
Common shares issued pursuant to employee incentive compensation plan and Employee Share Purchase Plan ("ESPP")	—		—		210		—		—		—		210	41		—		1,143		—		—		—		1,143
Dividends declared on common shares ($0.225 per common share)	—		—		—		(29,696)		—		—		(29,696)	—		—		—		(27,658)		—		—		(27,658)
Distributions to noncontrolling interests	—		—		—		—		—		(45)		(45)
Redeemable noncontrolling interests redemption value adjustment and other comprehensive income allocation	—		—		19,274		—		(413)		—		18,861
Other comprehensive income	—		—		—		—		3,572		—		3,572
BALANCE AS OF SEPTEMBER 30, 2021	129,704	$	1,298	$	3,606,462	$	(495,033)	$	(25,446)	$	16,495	$	3,103,776
Contributions from noncontrolling interests, net														—		—		—		—		—		3,231		3,231
Redeemable noncontrolling interests redemption value adjustment and total other comprehensive income allocation														—		—		51,621		—		(1,311)		—		50,310
Total other comprehensive income														—		—		—		—		10,016		—		10,016
BALANCE AS OF JUNE 30, 2022														115,862	$	1,160	$	3,285,511	$	(513,746)	$	18,640	$	31,640	$	2,823,205

BALANCE AS OF JUNE 30, 2020	133,708	$	1,338	$	3,742,205	$	(255,162)	$	(47,886)	$	191	$	3,440,686
BALANCE AS OF MARCH 31, 2021														131,277	$	1,314	$	3,631,277	$	(433,675)	$	(30,800)	$	8,730	$	3,176,846
Net loss attributable to common shareholders and noncontrolling interests	—		—		—		(22,793)		—		—		(22,793)	—		—		—		(2,973)		—		—		(2,973)
Conversion of common limited partnership units to common shares	169		2		4,794		—		—		—		4,796
Common shares repurchased	(1,439)		(15)		(38,362)		—		—		—		(38,377)
Common shares issued pursuant to ESPP	—		—		186		—		—		—		186
Conversion of OP Units to common shares														530		5		17,756		—		—		—		17,761
Common shares issued pursuant to employee incentive compensation plan and ESPP														34		—		1,090		—		—		—		1,090
Dividends declared on common shares ($0.225 per common share)	—		—		—		(30,020)		—		—		(30,020)	—		—		—		(29,582)		—		—		(29,582)
Distributions to noncontrolling interests	—		—		—		—		—		(12)		(12)
Redeemable noncontrolling interests redemption value adjustment and other comprehensive income allocation	—		—		12,236		—		(309)		—		11,927
Other comprehensive income	—		—		—		—		3,545		—		3,545
BALANCE AS OF SEPTEMBER 30, 2020	132,438	$	1,325	$	3,721,059	$	(307,975)	$	(44,650)	$	179	$	3,369,938
Contributions from noncontrolling interests, net														—		—		—		—		—		7,810		7,810
Redeemable noncontrolling interests redemption value adjustment and total other comprehensive income allocation														—		—		94		—		(235)		—		(141)
Total other comprehensive income														—		—		—		—		2,430		—		2,430
BALANCE AS OF JUNE 30, 2021														131,841	$	1,319	$	3,650,217	$	(466,230)	$	(28,605)	$	16,540	$	3,173,241

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

Table of Contents

JBG SMITH PROPERTIES

Condensed Consolidated Statements of Equity

(Unaudited)

(In thousands)


																					Accumulated
								Accumulated													Other
				Additional				Other									Additional				Comprehensive
	Common Shares			Paid-In		Accumulated		Comprehensive		Noncontrolling		Total		Common Shares			Paid-In		Accumulated		Income		Noncontrolling		Total
	Shares	Amount		Capital		Deficit		Loss		Interests		Equity		Shares	Amount		Capital		Deficit		(Loss)		Interests		Equity
BALANCE AS OF DECEMBER 31, 2021														127,378	$	1,275	$	3,539,916	$	(609,331)	$	(15,950)	$	22,507	$	2,938,417
Net income (loss) attributable to common shareholders and noncontrolling interests														—		—		—		123,243		—		(84)		123,159
Conversion of OP Units to common shares														280		3		7,773		—		—		—		7,776
Common shares repurchased														(11,840)		(118)		(306,921)		—		—		—		(307,039)
Common shares issued pursuant to employee incentive compensation plan and ESPP														44		—		1,429		—		—		—		1,429
Dividends declared on common shares ($0.225 per common share)														—		—		—		(27,658)		—		—		(27,658)
Contributions from noncontrolling interests, net														—		—		—		—		—		9,217		9,217
Redeemable noncontrolling interests redemption value adjustment and total other comprehensive income allocation														—		—		43,314		—		(4,277)		—		39,037
Total other comprehensive income														—		—		—		—		38,867		—		38,867
BALANCE AS OF JUNE 30, 2022														115,862	$	1,160	$	3,285,511	$	(513,746)	$	18,640	$	31,640	$	2,823,205

BALANCE AS OF DECEMBER 31, 2020	131,778	$	1,319	$	3,657,643	$	(412,944)	$	(39,979)	$	167	$	3,206,206	131,778	$	1,319	$	3,657,643	$	(412,944)	$	(39,979)	$	167	$	3,206,206
Net loss attributable to common shareholders and noncontrolling interests	—		—		—		(22,811)		—		(1,108)		(23,919)	—		—		—		(23,704)		—		(1,108)		(24,812)
Conversion of common limited partnership units to common shares	829		8		27,342		—		—		—		27,350
Conversion of OP Units to common shares														649		6		21,674		—		—		—		21,680
Common shares repurchased	(2,937)		(29)		(88,104)		—		—		—		(88,133)	(620)		(6)		(19,197)		—		—		—		(19,203)
Common shares issued pursuant to employee incentive compensation plan and ESPP	34		—		1,549		—		—		—		1,549	34		—		1,339		—		—		—		1,339
Dividends declared on common shares ($0.45 per common share)	—		—		—		(59,278)		—		—		(59,278)
Dividends declared on common shares ($0.225 per common share)														—		—		—		(29,582)		—		—		(29,582)
Contributions from noncontrolling interests, net	—		—		—		—		—		17,436		17,436	—		—		—		—		—		17,481		17,481
Redeemable noncontrolling interests redemption value adjustment and other comprehensive income allocation	—		—		8,032		—		(1,621)		—		6,411
Other comprehensive income	—		—		—		—		16,154		—		16,154
BALANCE AS OF SEPTEMBER 30, 2021	129,704	$	1,298	$	3,606,462	$	(495,033)	$	(25,446)	$	16,495	$	3,103,776

BALANCE AS OF DECEMBER 31, 2019	134,148	$	1,342	$	3,633,042	$	(231,164)	$	(16,744)	$	201	$	3,386,677
Net loss attributable to common shareholders and noncontrolling interests	—		—		—		(16,648)		—		—		(16,648)
Conversion of common limited partnership units to common shares	1,112		12		40,662		—		—		—		40,674
Common shares repurchased	(2,857)		(29)		(79,540)		—		—		—		(79,569)
Common shares issued pursuant to ESPP	35		—		1,320		—		—		—		1,320
Dividends declared on common shares ($0.45 per common share)	—		—		—		(60,163)		—		—		(60,163)
Distributions to noncontrolling interests	—		—		—		—		—		(22)		(22)
Redeemable noncontrolling interests redemption value adjustment and other comprehensive loss allocation	—		—		125,575		—		3,446		—		129,021
Other comprehensive loss	—		—		—		—		(31,352)		—		(31,352)
BALANCE AS OF SEPTEMBER 30, 2020	132,438	$	1,325	$	3,721,059	$	(307,975)	$	(44,650)	$	179	$	3,369,938
Redeemable noncontrolling interests redemption value adjustment and total other comprehensive income allocation														—		—		(11,242)		—		(1,208)		—		(12,450)
Total other comprehensive income														—		—		—		—		12,582		—		12,582
BALANCE AS OF JUNE 30, 2021														131,841	$	1,319	$	3,650,217	$	(466,230)	$	(28,605)	$	16,540	$	3,173,241

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

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JBG SMITH PROPERTIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Nine Months Ended September 30,				Six Months Ended June 30,
	2021		2020		2022		2021
OPERATING ACTIVITIES:
Net loss	$	(26,391)	$	(17,093)
Net income (loss)					$	141,417	$	(27,387)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Share-based compensation expense		38,320		53,183		25,375		26,892
Depreciation and amortization, including amortization of deferred financing costs		181,217		160,395		109,697		123,444
Deferred rent		(17,463)		(19,124)		(7,237)		(12,170)
(Income) loss from unconsolidated real estate ventures, net		(23,513)		17,142
Income from unconsolidated real estate ventures, net						(1,038)		(3,010)
Amortization of market lease intangibles, net		(896)		(356)		(621)		(658)
Amortization of lease incentives		6,083		5,144		4,303		4,191
Loss on extinguishment of debt		—		33		1,629		—
Gain on sale of real estate		(11,290)		(59,477)
Gain on the sale of real estate, net						(158,631)		(11,290)
Loss on operating lease and other receivables		1,071		14,750		738		975
Income from investments, net						(15,282)		—
Return on capital from unconsolidated real estate ventures		13,212		3,697		6,028		10,348
Other non-cash items		583		265		(4,781)		473
Changes in operating assets and liabilities:
Tenant and other receivables		3,704		(4,757)		(2,847)		11,204
Other assets, net		(12,059)		(11,566)		(3,669)		274
Accounts payable and accrued expenses		5,954		1,366		(1,375)		238
Other liabilities, net		(4,120)		(15,747)		13,943		32
Net cash provided by operating activities		154,412		127,855		107,649		123,556
INVESTING ACTIVITIES:
Development costs, construction in progress and real estate additions		(108,361)		(245,456)		(128,114)		(67,408)
Deposits for real estate and other acquisitions		(10,263)		(25,274)
Proceeds from sale of real estate		14,370		154,493
Proceeds from the sale of real estate						923,108		14,370
Proceeds from the sale of investments						19,030		—
Distributions of capital from unconsolidated real estate ventures		40,188		70,818		52,465		4,583
Investments in unconsolidated real estate ventures and other		(32,685)		(12,277)
Net cash used in investing activities		(96,751)		(57,696)
Investments in unconsolidated real estate ventures and other investments						(81,185)		(21,990)
Net cash provided by (used in) investing activities						785,304		(70,445)
FINANCING ACTIVITIES:
Borrowings under mortgages payable		85,000		580,105
Borrowings under revolving credit facility		—		500,000
Borrowings under unsecured term loans		—		100,000
Repayments of mortgages payable		(4,462)		(6,680)		(167,132)		(3,342)
Repayments of revolving credit facility		—		(700,000)		(300,000)		—
Debt issuance costs		(5,747)		(14,856)		(1,256)		(4,587)
Finance lease payments		—		(3,281)
Proceeds from common shares issued pursuant to ESPP		880		887		800		880
Common shares repurchased		(82,300)		(74,434)		(297,040)		(19,203)
Dividends paid to common shareholders		(88,928)		(90,347)		(56,323)		(59,232)
Distributions to redeemable noncontrolling interests		(13,705)		(11,333)		(8,196)		(9,712)
Distributions to noncontrolling interests		(22)		(23)		(21)		(22)
Contributions from noncontrolling interests		17,464		—		9,238		17,464
Net cash (used in) provided by financing activities		(91,820)		280,038
Net (decrease) increase in cash and cash equivalents and restricted cash		(34,159)		350,197
Cash and cash equivalents and restricted cash, beginning of period		263,336		142,516
Cash and cash equivalents and restricted cash, end of period	$	229,177	$	492,713
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD:
Cash and cash equivalents	$	194,277	$	455,111
Restricted cash		34,900		37,602
Cash and cash equivalents and restricted cash	$	229,177	$	492,713
Net cash used in financing activities						(819,930)		(77,754)
Net increase (decrease) in cash and cash equivalents, and restricted cash						73,023		(24,643)
Cash and cash equivalents, and restricted cash, beginning of period						302,095		263,336
Cash and cash equivalents, and restricted cash, end of period					$	375,118	$	238,693

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

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JBG SMITH PROPERTIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


		Nine Months Ended September 30,					Six Months Ended June 30,
		2021		2020			2022		2021
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD:						CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD:
Cash and cash equivalents							$	162,270	$	201,150
Restricted cash								212,848		37,543
Cash and cash equivalents, and restricted cash							$	375,118	$	238,693

SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION:	SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION:					SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION:
Cash paid for interest (net of capitalized interest of $4,854 and $11,545 in 2021 and 2020)		$	46,010	$	40,744
Cash paid for interest (net of capitalized interest of $3,928 and $3,256 in 2022 and 2021)							$	34,612	$	30,335
Accrued capital expenditures included in accounts payable and accrued expenses			41,660		51,092			57,426		41,662
Write-off of fully depreciated assets			46,278		29,393			7,993		43,185
Deconsolidation of real estate asset			26,476		—			—		26,476
Conversion of common limited partnership units to common shares			27,350		40,674
Derecognition of operating lease right-of-use assets			—		(13,151)
Derecognition of liabilities related to operating lease right-of-use assets			—		(13,151)
Recognition of finance lease right-of-use assets			—		42,354
Recognition of liabilities related to finance lease right-of-use assets			—		40,684
Conversion of OP Units to common shares								7,776		21,680
Cash paid for amounts included in the measurement of lease liabilities for operating leases			1,761		4,603			1,092		1,320

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

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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 ("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 ~~that have~~with high barriers to entry and vibrant urban amenities. ~~Over half~~Approximately two-thirds of our portfolio is in National Landing in Northern Virginia, where we serve as the ~~exclusive~~ developer for Amazon.com, Inc.'s ("Amazon") new headquarters and where Virginia Tech's ~~under-construction~~ $1 billion Innovation Campus is ~~located.~~under construction. In addition, our third-party asset management and real estate services business provides fee-based real estate services to Amazon, the Washington Housing Initiative ("WHI") Impact Pool, ~~Amazon,~~ 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~~June 30, ~~2021,~~2022, JBG SMITH, as its sole general partner, controlled JBG SMITH LP and owned ~~90.8%~~88.4% of its ~~common limited~~OP Units, after giving effect to the conversion of certain vested long-term incentive partnership units ("LTIP Units") that are convertible into OP ~~Units").~~Units. JBG SMITH is ~~hereinafter~~ 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.~~ventures, but exclude our 10% subordinated interest in 1 commercial building and our 33.5% subordinated interest in 4 commercial buildings, as well as the associated non-recourse mortgages payable, held through unconsolidated real estate ventures as 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 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~~June 30, ~~2021,~~2022, our Operating Portfolio consisted of 6356 operating assets comprising 4235 commercial assets totaling ~~13.1~~10.5 million square feet ~~(11.3~~(8.9 million square feet at our share) ~~and 21~~, 19 multifamily assets totaling ~~7,776~~7,359 units ~~(6,125~~(6,496 units at our share). and 2 wholly owned land assets for which we are the ground lessor. Additionally, we have: (i) 12 under-construction multifamily ~~asset~~assets with ~~808~~1,583 units ~~(808~~(1,583 units at our share); (ii) 118 near-term development assets totaling ~~5.3~~3.7 million square feet ~~(5.0~~(3.5 million square feet at our share) of estimated potential development density; and (iii) 2516 future development assets totaling ~~14.3~~8.8 million square feet ~~(11.6~~(6.3 million square feet at our share) of estimated potential development density.

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

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for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 are not necessarily indicative of the results that may be expected for a full year. These condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the Securities and Exchange ~~Commission.~~Commission on February 22, 2022 ("Annual Report").

The accompanying condensed consolidated financial statements include our accounts and those of our wholly owned subsidiaries and consolidated variable interest entities ("VIEs"), including JBG SMITH LP. See Note 5 for additional

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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~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021. References to our balance sheets refer to our condensed consolidated balance sheets as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021. References to our statements of operations refer to our condensed consolidated statements of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021. References to our statements of comprehensive income (loss) refer to our condensed consolidated statements of comprehensive income (loss) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021.

Income Taxes

We have elected to be taxed as a REIT under sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code"). Under those sections, a REIT which distributes at least 90% of its REIT taxable income as dividends to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. 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 ~~these~~those activities.

Reclassification

Intangible assets totaling $202.0 million were reclassified from "Other assets, net" to "Intangible assets, net" in our balance sheet as of December 31, 2021 to present intangible assets separately from other assets, which is consistent with our current year presentation.

2.Summary of Significant Accounting Policies

Significant Accounting Policies

There were no material changes to our significant accounting policies disclosed in our Annual ~~Report on Form 10-K for the year ended December 31, 2020.~~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 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. The most significant of these estimates include: (i) the underlying cash flows and holding periods used in assessing impairment of ~~long-lived~~our real estate assets; (ii) the determination of useful lives for tangible and intangible assets; and (iii) the assessment of the collectability of receivables, including deferred rent receivables. Longer estimated holding periods for real estate assets directly reduce the likelihood of recording an impairment loss. If there is a change in the strategy for an asset or if market conditions dictate an earlier sale date, an impairment loss may be recognized, and such loss could be material.

In March 2020, the World Health Organization declared a global pandemic related to the novel coronavirus ("COVID-19"). The significance, extent and duration of the impact of COVID-19 on us and our tenants remains largely uncertain and dependent on near-term and future developments that cannot be accurately predicted at this time, such as the continued severity, duration, transmission rate and geographic spread of COVID-19, the distribution, effectiveness and willingness of people to take COVID-19 vaccines, the extent and effectiveness of the containment measures taken, and the response of the overall economy, the financial markets and the population, particularly in the area in which we operate. The ultimate adverse impact of COVID-19 is highly uncertain; however, the effects of COVID-19 on us and our tenants have affected estimates used in the preparation of the underlying cash flows used in assessing our long-lived assets for impairment and the assessment of the collectability of receivables from tenants, including deferred rent receivables. We have made what we believe to be appropriate accounting estimates based on the facts and circumstances available as of the reporting date. To the extent these estimates differ from actual results, our consolidated financial statements may be materially affected.

Due to the business disruptions and challenges caused by COVID-19, we have provided rent deferrals and other lease concessions to certain tenants. We have entered into agreements with certain tenants, many of which have been placed on the cash basis of accounting, resulting in the deferral to future periods or abatement of $492,000 of rent that had been contractually due in the third quarter of 2021. We are negotiating additional rent deferrals and other lease concessions with

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some of our tenants, which have been considered when establishing credit losses against billed and deferred rent receivables. During 2020, we began recognizing revenue from substantially all co-working tenants and retailers except for grocers, pharmacies, essential businesses and certain national credit tenants on the cash basis of accounting.

Recent Accounting Pronouncements

Reference Rate Reform

In March 2020, the Financial Accounting Standards Board ~~("FASB")~~ issued Accounting Standards Update 2020-04, Reference Rate Reform ("Topic 848"). Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in Topic 848 is optional and may be elected over the period of March 12, 2020 through December 31, 2022 as reference rate reform activities occur. During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we ~~did not make any elections. During~~elected to apply the ~~year ended December 31, 2020, we~~hedge accounting expedient that allows us to continue to amortize previously deferred gains and losses in accumulated other comprehensive income (loss) related to terminated hedges into earnings in accordance with the underlying hedged forecasted transactions. We have elected to apply the hedge accounting expedients related to (i) the assertion that our hedged forecasted transactions remain probable and (ii) the assessments of effectiveness for future London Interbank Offered Rate ("LIBOR") indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves ~~our~~the past presentation of our derivatives. We will continue to evaluate the impact of the guidance and may apply other elections, as applicable.

3.~~Acquisition, Dispositions and Assets Held for Sale~~

~~Acquisition~~

We have agreed, subject to customary closing conditions, to acquire The Batley, a 432-unit multifamily asset in the Union Market submarket of Washington, D.C., for a purchase price of approximately $205 million. The building was 90.7% occupied as of September 30, 2021. We expect the acquisition to close in 2021. We intend to use The Batley as a replacement property in a like-kind exchange for the proceeds from the sale of Pen Place to Amazon, which is expected to close during the second quarter of 2022.

~~Dispositions~~

In April 2021, we invested cash in and contributed land to 2 real estate ventures and recognized an $11.3 million gain, which is included in "Gain on sale of real estate" in our statements of operations for the nine months ended September 30, 2021. See Note 4 for additional information.

During the three and nine months ended September 30, 2021, we recognized our proportionate share of the gain from the sale of various assets by our unconsolidated real estate ventures, which is included in "Income (loss) from unconsolidated real estate ventures, net" in our statements of operations. See Note 4 for additional information.

~~Assets Held for Sale~~

~~The amounts included in "Assets held for sale" in our balance sheets primarily represent the carrying value of real estate. The following is a summary of assets held for sale:~~

Total

Assets Held
Assets

Segment

Location

Square Feet ⁽¹⁾

for Sale

(In thousands)
September 30, 2021

Pen Place ⁽²⁾

Other

Arlington, Virginia

2,082

$
74,174
December 31, 2020

Pen Place ⁽²⁾

Other

Arlington, Virginia

2,082

$
73,876

~~(1)~~

~~Represents estimated or approved potential development density.~~

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~~(2)~~

~~In March 2019, we entered into an agreement for the sale of Pen Place to Amazon, which we expect to close during the second quarter of 2022.~~

3.Dispositions and Assets Held for Sale

Dispositions

The following is a summary of activity for the six months ended June 30, 2022:


									Gain (Loss)
				Total	Gross		Cash		on the Sale
				Square	Sales		Proceeds		of Real
Date Disposed	Assets	Segment	Location	Feet	Price		from Sale		Estate

				(In thousands)
March 28, 2022	Development Parcel	Other	Arlington, Virginia	—	$	3,250	$	3,149	$	(136)
April 1, 2022	Universal Buildings ⁽¹⁾	Commercial	Washington, D.C.	659		228,000		194,737		41,245
April 13, 2022	7200 Wisconsin Avenue, 1730 M Street, RTC-West and Courthouse Plaza 1 and 2 ⁽²⁾	Commercial/ Other	Bethesda, Maryland, Washington, D.C., Reston, Virginia, Arlington, Virginia	2,944		580,000		527,694		(3,980)
May 25, 2022	Pen Place ⁽³⁾	Other	Arlington, Virginia	2,082		198,000		197,528		121,502
				5,685	$	1,009,250	$	923,108	$	158,631

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

(2)

Assets were sold to an unconsolidated real estate venture. See Note 4 for additional information. "RTC-West" refers to RTC-West, RTC-West Trophy Office and RTC-West Land. Total square feet include 1.4 million square feet of estimated potential development density. In April 2022, $164.8 million of mortgages payable related to 1730 M Street and RTC-West were repaid.

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

During the six months ended June 30, 2022, our unconsolidated real estate ventures sold several assets. See Note 4 for additional information.

Assets Held for Sale

There were 0 assets held for sale as of June 30, 2022. The following is a summary of assets held for sale as of December 31, 2021:



			Total	Assets Held
Assets	Segment	Location	Square Feet	for Sale

			(In thousands)
Pen Place ⁽¹⁾	Other	Arlington, Virginia	2,082	$	73,876

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(1)	Sold to Amazon in May 2022. Total square feet represent estimated or approved potential development density.

4.Investments in Unconsolidated Real Estate Ventures

The following is a summary of our investments in unconsolidated real estate ventures:


	Effective					Effective
	Ownership					Ownership
Real Estate Venture Partners	Interest ⁽¹⁾	September 30, 2021		December 31, 2020		Interest ⁽¹⁾	June 30, 2022		December 31, 2021

		(In thousands)					(In thousands)
Prudential Global Investment Management	50.0%	$	209,261	$	216,939	50.0%	$	205,965	$	208,421
Landmark	1.8% - 49.0%		53,295		66,724
Landmark Partners ("Landmark")						18.0% - 49.0%		25,437		28,298
CBREI Venture(2)	5.0% - 64.0%		59,028		65,190	5.0% - 64.0%		56,170		57,812
Canadian Pension Plan Investment Board ("CPPIB")	55.0%		49,098		47,522	55.0%		1,358		48,498
J.P. Morgan Global Alternatives ("J.P. Morgan") ⁽²⁾⁽³⁾	50.0%		47,362		—	50.0%		60,203		52,769
Berkshire Group	50.0%		53,589		50,649	50.0%		50,941		52,770
Brandywine Realty Trust	30.0%		13,755		13,710	30.0%		13,694		13,693
Other			664		635			581		624
Total investments in unconsolidated real estate ventures ⁽³⁾⁽⁴⁾		$	486,052	$	461,369		$	414,349	$	462,885

(1)	Reflects our effective ownership interests in the underlying real estate as of ~~September~~June 30, ~~2021.~~2022. We have multiple investments with certain venture partners with varying ownership interests in the underlying real estate.

(2)	On August 1, 2022, we acquired the remaining 36.0% ownership interest in Atlantic Plumbing, a multifamily asset owned by the venture, for $19.7 million.

(3)	J.P. Morgan is the advisor for an institutional investor.

~~(3)~~(4)

As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, our total investments in unconsolidated real estate ventures were greater than our share of the net book value of the underlying assets by ~~$20.2~~$12.6 million and ~~$18.9~~$18.6 million, resulting principally from capitalized interest and our 0 investment balance in the real estate venture with CPPIB that owns 1101 17th Street.

InOn April ~~2021,~~13, 2022, we ~~entered into 2~~formed an unconsolidated real estate ~~ventures~~venture with ~~an institutional investor advised~~affiliates of Fortress Investment Group LLC ("Fortress") to recapitalize a 1.6 million square foot office portfolio and land parcels for a gross sales price of $580.0 million comprising 4 wholly owned commercial assets (7200 Wisconsin Avenue, 1730 M Street, RTC-West and Courthouse Plaza 1 and 2). Additionally, we contributed $66.1 million in cash for a 33.5% interest in the venture, while Fortress contributed $131.0 million for a 66.5% interest in the venture. In connection with the transaction, the venture obtained mortgage loans totaling $458.0 million secured by ~~J.P. Morgan,~~the properties, of which $402.0 million was drawn at closing. We provide asset management, property management and leasing services to the venture. Because our interest in ~~which~~the venture is subordinated to a 15% preferred return to Fortress, we do not anticipate receiving any near-term cash flow distributions from it. As of June 30, 2022, our investment in the venture was 0, and we have ~~50% ownership interests, to design, develop, manage and own approximately 2.0 million square feet of new mixed-use development located in Potomac Yard,~~discontinued applying the southern portion of National Landing. Our venture partner contributed a land site that is entitled for 1.3 million square feet of development at Potomac Yard Landbay F, while we contributed cash and adjacent land with over 700,000 square feet of estimated development capacity at Potomac Yard Landbay G. We will also actequity method as pre-developer, developer, property manager and leasing agent for all future commercial and residential properties on the site. We have determined the ventures are VIEs, but we are not the primary beneficiary of the VIEs and, accordingly, we have not ~~consolidated either venture.~~ guaranteed its obligations or otherwise committed to providing financial support.

We ~~recognized an $11.3 million gain on the land contributed to one of the~~provide leasing, property management and other real estate ventures based on the cash received and the remeasurement of our retained interest in the asset, which was included in "Gain on sale of real estate" in our statements of operations for the nine months ended September 30, 2021. As part of the transaction, our venture partner electedservices to accelerate the monetization of a 2013 promote interest in the land contributed by it to the ventures. During the second quarter of 2021, the total amount of the promote paid was $17.5 million, of which $4.2 million was paid to certain of our non-employee trustees and certain of our executives.

~~The following is a summary of disposition activity by~~ our unconsolidated real estate ~~ventures~~ventures. We recognized revenue, including expense reimbursements, of $6.6 million and $12.2 million for the ~~nine~~three and six months ended ~~September~~June 30, ~~2021:~~2022, and $5.9 million and $11.8 million for the three and six months ended June 30, 2021, for such services.

Proportionate

Real Estate

Gross

Share of

Venture

Ownership

Sales

Aggregate
Date Disposed

Partners

Assets

Percentage

Price

Gain ⁽¹⁾

(In thousands)
May 3, 2021

CBREI Venture

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

10.0%

$
93,000

$
2,094
May 19, 2021

Landmark

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

18.0%

3,000

2,352
May 27, 2021

Landmark

5615 Fishers Lane

18.0%

6,500

743
September 17, 2021

Landmark

500 L'Enfant Plaza ⁽³⁾

49.0%

166,500

23,137

$
28,326

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The following is a summary of disposition activity by our unconsolidated real estate ventures for the six months ended June 30, 2022:

Mortgages

Proportionate

Real Estate

Gross

Payable

Share of

Venture

Ownership

Sales

Repaid by

Aggregate

Date Disposed

Partner

Assets

Percentage

Price

Venture

Gain ⁽¹⁾

(In thousands)

January 27, 2022

Landmark

The Alaire, The Terano and
12511 Parklawn Drive

1.8% - 18.0%

137,500

79,829

5,243

May 10, 2022

Landmark

Galvan

1.8%

152,500

89,500

407

June 1, 2022

CPPIB

1900 N Street

55.0%

265,000

151,709

529

6,179

(1)	Included in "Income (loss) from unconsolidated real estate ventures, net" in our statements of operations.

~~(2)~~

~~The venture repaid a related mortgage payable of $45.3 million.~~

~~(3)~~

~~The venture repaid a related mortgage payable of $80.0 million.~~

We provide leasing, property management and other real estate services to our unconsolidated real estate ventures. We recognized revenue, including expense reimbursements, of $5.9 million and $17.8 million for the three and nine months ended September 30, 2021, and $6.3 million and $19.3 million for the three and nine months ended September 30, 2020, for such services.

A reconsideration event could cause us to consolidate an unconsolidated real estate venture in the future or deconsolidate a consolidated entity. We evaluate reconsideration events as we become aware of them. Reconsideration events include amendments to real estate venture agreements and changes in our partner's ability to make contributions to the venture. Under certain circumstances, we may purchase our partner's interest.

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


	Weighted					Weighted
	Average Effective					Average Effective
	Interest Rate ⁽¹⁾	September 30, 2021		December 31, 2020		Interest Rate ⁽¹⁾	June 30, 2022		December 31, 2021

		(In thousands)					(In thousands)
Variable rate ⁽²⁾	2.59%	$	786,169	$	863,617	4.60%	$	499,076	$	785,369
Fixed rate ⁽³⁾ ⁽⁴⁾	4.16%		293,920		323,050
Fixed rate ⁽³⁾						4.16%		275,016		309,813
Mortgages payable(4)			1,080,089		1,186,667			774,092		1,095,182
Unamortized deferred financing costs			(5,785)		(7,479)			(597)		(5,239)
Mortgages payable, net ⁽⁴⁾		$	1,074,304	$	1,179,188
Mortgages payable, net ^{(4) (5)}							$	773,495	$	1,089,943

(1)	Weighted average effective interest rate as of ~~September~~June 30, ~~2021.~~2022.

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

(3)	Includes variable rate mortgages payable with interest rates fixed by interest rate swap agreements.

(4)	Excludes mortgages payable related to the unconsolidated real estate venture with Fortress.

(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, 2021		December 31, 2020		June 30, 2022		December 31, 2021

	(In thousands)				(In thousands)
Combined balance sheet information:(1)
Real estate, net	$	2,170,039	$	2,247,384	$	1,684,823	$	2,116,290
Other assets, net		257,138		270,516		217,108		264,397
Total assets	$	2,427,177	$	2,517,900	$	1,901,931	$	2,380,687

Mortgages payable, net	$	1,074,304	$	1,179,188	$	773,495	$	1,089,943
Other liabilities, net		128,554		140,304		81,925		118,752
Total liabilities		1,202,858		1,319,492		855,420		1,208,695
Total equity		1,224,319		1,198,408		1,046,511		1,171,992
Total liabilities and equity	$	2,427,177	$	2,517,900	$	1,901,931	$	2,380,687

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	Three Months Ended September 30,					Nine Months Ended September 30,				Three Months Ended June 30,					Six Months Ended June 30,
	2021		2020		X	2021		2020		2022		2021		X	2022		2021

	(In thousands)									(In thousands)
Combined income statement information: ⁽¹⁾
Total revenue	$	45,289	$	47,235		$	141,370	$	162,128	$	41,379	$	47,864		$	84,253	$	96,081
Operating income (loss) ⁽²⁾		51,068		1,296			94,275		(24,418)
Net income (loss) ⁽²⁾		42,261		(6,265)			69,091		(60,331)
Operating income ⁽²⁾											36,108		41,493			84,534		43,207
Net income ⁽²⁾											25,127		33,356			64,410		26,830

(1)

Excludes ~~information~~amounts related to the unconsolidated real estate venture that owned The Marriott Wardman Park hotel for the three months ended September 30, 2020 as we suspended equity loss recognition for the venture after June 30, 2020. On October 1, 2020, we transferred our interest in the related venture to our venture partner.with Fortress.

(2)

Includes the gain ~~from~~on the sale ~~500 L'Enfant Plaza~~ of ~~$47.4~~various assets totaling $32.3 million and $77.4 million during the three and six months ended ~~September~~June 30, ~~2021. Includes the gain from the sale of Fairway, Courthouse Metro, 5615 Fishers Lane~~2022 and ~~500 L'Enfant Plaza totaling $85.5~~$38.1 million during the ~~nine~~three and six months ended ~~September~~June 30, 2021. ~~Includes the loss from the sale of Woodglen of $16.4 million during the nine months ended September 30, 2020.~~

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~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had interests in entities deemed to be VIEs. Although we are engaged to act as the managing partner in charge of day-to-day operations of these ~~investees,~~entities, we are not the primary beneficiary of these VIEs, as we do not hold unilateral power over activities that, when taken together, most significantly impact the respective VIE's economic performance. We account for our investment in these entities under the equity method. As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the net carrying ~~amount~~amounts of our investment in these entities was ~~$165.4~~$149.0 million and ~~$116.2~~$145.2 million, which iswere included in "Investments in unconsolidated real estate ventures" in our balance sheets. Our equity in the income of unconsolidated VIEs is included in "Income (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 ~~90.8%~~88.4% 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 ~~and hold our assets and liabilities~~ through JBG SMITH LP, its total assets and liabilities comprise substantially all of our consolidated assets and liabilities.

~~Through~~In conjunction with the ~~structure~~acquisition of The Batley in November 2021, we entered into an agreement with a qualified intermediary to facilitate a like-kind exchange. As a result, the qualified intermediary was the legal owner of the ~~1900 Crystal Drive transaction~~entity that owned this property as of December 31, 2021. We determined that the entity that owned the Batley was a VIE, and we ~~executed~~were the primary beneficiary of the VIE. We consolidated the property and its operations as of the acquisition date. Legal ownership of this entity was transferred to us by the qualified intermediary when the like-kind exchange agreement was completed with the sale of Pen Place in ~~March 2021, we have the ability to facilitate an exchange out~~May 2022, and therefore, is not a VIE as of ~~an asset into 1900 Crystal Drive~~. ~~We leased the land underlying 1900 Crystal Drive located in National~~June 30, 2022.

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Landing to a lessee, which plans to construct an 808-unit multifamily asset comprising 2 towers with ground floor retail. The ground lessee has engaged us to be the development manager for the construction of 1900 Crystal Drive, and separately, we are the lessee in a master lease of the asset. We have an option to acquire the asset until a specified period after completion. In March 2021, the ground lessee entered into a mortgage loan collateralized by the leasehold interest with a maximum principal balance of $227.0 million and an interest rate of LIBOR plus 3.0% per annum. As of ~~September~~June 30, ~~2021, 0 proceeds had been received from the mortgage loan. In connection~~2022, excluding JBG SMITH LP, we consolidated 2 VIEs with ~~the mortgage loan, we have guaranteed the completion~~total assets of ~~the asset and provided certain carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy). The ground lessee was obligated to invest $17.5~~$135.4 million of equity funding, all of which has been funded, and we are obligated to provide additional project funding through a mezzanine loan to the ground lessee, of which we have funded $11.7 million as of September 30, 2021. We determined that 1900 Crystal Drive is a VIE and that we are the primary beneficiary of the VIE. Accordingly, we consolidate the VIE with the lessee's ownership interest shown as "Noncontrolling interests" in our balance sheet. The ground lease, the mezzanine loan and the master lease described above are eliminated in consolidation. As of September 30, 2021, the VIE had total assets and liabilities of ~~$29.7~~$24.6 million. As of December 31, 2021, excluding JBG SMITH LP, we consolidated 3 VIEs with total assets of $269.7 million and ~~$4.5~~liabilities of $13.9 million. The assets of the ~~VIE~~VIEs can only be used to settle the obligations of the ~~VIE,~~VIEs, and the liabilities include third-party liabilities of the ~~VIE~~VIEs for which the creditors or beneficial interest holders do not have recourse against us.

6.Other Assets, Net

The following is a summary of other assets, net:

September 30, 2021

December 31, 2020

(In thousands)
Deferred leasing costs, net

$
116,544

$
117,141
Lease intangible assets, net

11,055

15,565
Management and leasing contracts, net

21,084

25,512
Other identified intangible assets

17,360

17,500
Wireless spectrum licenses ⁽¹⁾

25,730

—
Operating lease right-of-use assets

3,326

3,542
Finance lease right-of-use assets

41,675

41,996
Prepaid expenses

20,171

14,000
Deferred financing costs, net

9,352

6,656
Deposits ⁽¹⁾

12,026

28,560
Other

22,214

16,103
Total other assets, net

$
300,537

$
286,575


	June 30, 2022		December 31, 2021

	(In thousands)
Prepaid expenses	$	14,651	$	17,104
Derivative agreements, at fair value		26,334		951
Deferred financing costs, net		9,907		11,436
Deposits		1,870		1,938
Operating lease right-of-use assets		1,521		1,660
Finance lease right-of-use assets ⁽¹⁾		—		180,956
Other ⁽²⁾ ⁽³⁾		28,525		26,115
Total other assets, net	$	82,808	$	240,160

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

(2)

As of June 30, 2022 and December 31, 2021, included $14.8 million and $9.8 million of investments in funds, which invest in real estate focused technology companies, that are recorded at their fair value based on their reported net asset value. During ~~2020,~~the three and six months ended June 30, 2022, we ~~deposited $25.3~~recorded unrealized gains totaling $1.0 million ~~with~~and $1.2 million related to these investments, which are included in "Interest and other income (loss), net" in our statements of operations.

(3)

As of June 30, 2022 and December 31, 2021, included $8.6 million and $11.3 million of equity investments that are carried at cost. During the ~~Federal Communications Commission~~three and six months ended June 30, 2022, we recorded a realized gain of $178,000 and $14.1 million related to these investments, which is included in ~~connection with the acquisition~~"Interest and other income (loss), net" in our statements of wireless spectrum licenses. In March 2021, we received the licenses. While the licenses are issued for ten years, as long as we act within the requirements and constraints of the regulatory authorities, the renewal and extension of these licenses is reasonably certain at minimal cost. Accordingly, we have concluded that the licenses are indefinite-lived intangible assets.operations.

7.Debt

Mortgages Payable

The following is a summary of mortgages payable:

Weighted Average

Effective


Interest Rate ⁽¹⁾


September 30, 2021

December 31, 2020

(In thousands)
Variable rate ⁽²⁾

2.08%

$
762,246

$
678,346
Fixed rate ⁽³⁾

4.32%

922,161

925,523
Mortgages payable

1,684,407

1,603,869
Unamortized deferred financing costs and premium / discount, net ⁽⁴⁾

(10,122)

(10,131)
Mortgages payable, net

$
1,674,285

$
1,593,738

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	Weighted Average
	Effective
	Interest Rate ⁽¹⁾	June 30, 2022		December 31, 2021

		(In thousands)
Variable rate ⁽²⁾	3.68%	$	857,446	$	867,246
Fixed rate ⁽³⁾	4.45%		763,681		921,013
Mortgages payable			1,621,127		1,788,259
Unamortized deferred financing costs and premium / discount, net ⁽⁴⁾			(8,958)		(10,560)
Mortgages payable, net		$	1,612,169	$	1,777,699

(1)	Weighted average effective interest rate as of ~~September~~June 30, ~~2021.~~2022.

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

(3)	Includes variable rate mortgages payable with interest rates fixed by interest rate swap agreements.

(4)	As of ~~September~~June 30, 2022 and December 31, 2021, excludes $5.7 million and $6.4 million of net deferred financing costs related to an unfunded mortgage ~~loan totaling $4.0 million~~loans that were included in "Other assets, net."

As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the net carrying value of real estate collateralizing our mortgages payable, totaled $1.6 billion and $1.8 billion. Our mortgages payable contain covenants that limit our ability to incur additional indebtedness on these properties and, in certain circumstances, require lender approval of tenant leases and/or yield

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maintenance upon repayment prior to maturity. Certain mortgages payable are recourse to us. See Note 17 for additional information.

In July 2021, we entered into a mortgage loan with a principal balance of $85.0 million, collateralized by 1225 S. Clark Street. The mortgage loan has a seven-year term and an interest rate of LIBOR plus 1.60% per annum.

As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had various interest rate swap and cap agreements on certain mortgages payable with an aggregate notional value of $1.2 billion and $1.3 billion. See Note 15 for additional information.

Credit Facility

As of ~~September~~June 30, ~~2021 and December 31, 2020,~~2022, our $1.4 billion credit facility consisted of a $1.0 billion revolving credit facility maturing in January 2025, a $200.0 million unsecured term loan ("Tranche A-1 Term Loan") maturing in January ~~2023~~2025 and a $200.0 million unsecured term loan ("Tranche A-2 Term Loan") maturing in July 2024. In January 2022, the Tranche A-1 Term Loan was amended to extend the maturity date to January 2025 with 2 one-year extension options, and to amend the interest rate to Secured Overnight Financing Rate ("SOFR") plus 1.15% to SOFR plus 1.75%, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets. In connection with the loan amendment, we amended the related interest rate swaps, extending the maturity to July 2024 and converting the hedged rate from one-month LIBOR to one-month SOFR. The following is a summary of amounts outstanding under the credit facility:


	Effective					Effective
	Interest Rate ⁽¹⁾	September 30, 2021		December 31, 2020		Interest Rate ⁽¹⁾	June 30, 2022		December 31, 2021

		(In thousands)					(In thousands)
Revolving credit facility ^{(2) (3) (4)}	1.13%	$	—	$	—	2.84%	$	—	$	300,000

Tranche A-1 Term Loan ⁽⁵⁾	2.59%	$	200,000	$	200,000	2.61%	$	200,000	$	200,000
Tranche A-2 Term Loan ⁽⁵⁾	2.49%		200,000		200,000	2.49%		200,000		200,000
Unsecured term loans			400,000		400,000			400,000		400,000
Unamortized deferred financing costs, net			(1,507)		(2,021)			(1,500)		(1,336)
Unsecured term loans, net		$	398,493	$	397,979		$	398,500	$	398,664

(1)	Effective interest rate as of ~~September~~June 30, ~~2021.~~

~~(2)~~

~~As of September 30, 2021 and December 31, 2020, letters of credit with an aggregate face amount of $1.4 million and $1.5 million were outstanding under our revolving credit facility.~~

~~(3)~~

~~As of September 30, 2021 and December 31, 2020, net deferred financing costs related to our revolving credit facility totaling $5.4 million and $6.7 million were included in "Other assets, net."~~

~~(4)~~

2022. The interest rate for our revolving credit facility excludes a 0.15% facility fee.

(2)	As of June 30, 2022 and December 31, 2021, letters of credit with an aggregate face amount of $467,000 and $911,000 were outstanding under our revolving credit facility.

(3)	As of June 30, 2022 and December 31, 2021, excludes $4.2 million and $5.0 million of net deferred financing costs related to our revolving credit facility that were included in "Other assets, net."

(4)	In July 2022, we borrowed $100.0 million under our revolving credit facility.

(5)

As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the outstanding balance was fixed by interest rate swap agreements. ~~The~~As of June 30, 2022, the interest rate swaps mature ~~concurrently with the respective term loan and provide~~in July 2024, fix SOFR at a weighted average interest rate of ~~1.39%~~1.46% for the Tranche A-1 Term Loan, and fix LIBOR at a weighted average interest rate of 1.34% for the Tranche A-2 Term Loan.

In July 2022, the Tranche A-2 Term Loan was amended to increase its borrowing capacity by $200.0 million. The incremental $200.0 million includes a one-year delayed draw feature, which was undrawn as of the date of this filing. The amendment extends the maturity date of the term loan from July 2024 to January 2028 and amends the interest rate to SOFR plus 1.25% to SOFR plus 1.80% per annum, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets. We also entered into 2 forward-starting interest rate swaps with an effective date of July 2024 and a total notional value of $200.0 million, which will effectively fix SOFR at a weighted average interest rate of 2.25% through the maturity date. Additionally, we amended the interest rate of the revolving credit facility to SOFR plus 1.15% to SOFR plus 1.60%, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets.

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8.Other Liabilities, Net

The following is a summary of other liabilities, net:


	September 30, 2021		December 31, 2020		June 30, 2022		December 31, 2021

	(In thousands)				(In thousands)
Lease intangible liabilities, net	$	8,567	$	10,300		7,008		8,272
Lease assumption liabilities		6,257		10,126		3,970		5,399
Lease incentive liabilities		14,125		13,913		5,758		21,163
Liabilities related to operating lease right-of-use assets		8,914		10,752		5,868		6,910
Liabilities related to finance lease right-of-use assets(1)		40,733		40,221		—		162,510
Prepaid rent		20,343		19,809		14,752		19,852
Security deposits		17,953		13,654		13,973		18,188
Environmental liabilities		18,168		18,242		19,418		18,168
Deferred tax liability, net		6,290		2,509		6,888		5,340
Dividends payable		—		34,075		—		32,603
Derivative agreements, at fair value		28,406		44,222		—		18,361
Deferred purchase price ⁽¹⁾		19,639		19,479
Deferred purchase price related to the acquisition of a future development parcel						19,793		19,691
Other		10,809		10,472		14,424		6,108
Total other liabilities, net	$	200,204	$	247,774	$	111,852	$	342,565

(1)	~~Deferred purchase price associated with the December 2020 acquisition of the former Americana Hotel site.~~Represents liabilities related to finance ground leases at 1730 M Street and Courthouse Plaza 1 and 2, which were sold to an unconsolidated real estate venture in April 2022.

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 convertible into OP Units and, in turn redeemable into cash or, at our election, our common shares, subject to certain limitations. During the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, unitholders redeemed ~~829,107~~280,451 and ~~1.1 million~~648,752 OP Units, which we elected to redeem for an equivalent number of our common shares. As of ~~September~~June 30, ~~2021,~~2022, outstanding OP Units and redeemable LTIP Units totaled ~~13.1~~15.3 million, representing ~~a 9.2%~~an 11.6% ownership interest in JBG SMITH LP. OnIn our balance sheets, our OP Units and certain vested ~~long-term incentive partnership units ("~~LTIP ~~Units")~~Units are presented at the higher of their redemption value or their carrying value, with adjustments to the redemption value recognized in "Additional paid-in capital." Redemption value per OP Unit is equivalent to the market value of one of our common shares at the end of the period. ~~In October 2021, unitholders redeemed 20,953 OP Units, which we elected to redeem for an equivalent number of our common shares.~~

Consolidated Real Estate Venture

We are a partner in a consolidated real estate venture that owns a multifamily asset, The Wren located in Washington, D.C. Pursuant to the terms of the real estate venture agreement, we are obligated to fund all capital contributions until our ownership interest reaches a maximum of 97.0%. Our partner can redeem its interest for cash under certain conditions. As of ~~September~~June 30, ~~2021,~~2022, we held a 96.0% ownership interest in the real estate venture.

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


	Three Months Ended September 30,												Three Months Ended June 30,
	2021						2020						2022						2021
			Consolidated						Consolidated						Consolidated						Consolidated
	JBG		Real Estate				JBG		Real Estate				JBG		Real Estate				JBG		Real Estate
	SMITH LP		Venture		Total		SMITH LP		Venture		Total		SMITH LP		Venture		Total		SMITH LP		Venture		Total

	(In thousands)												(In thousands)
Balance, beginning of period	$	536,171	$	8,468	$	544,639	$	493,067	$	6,016	$	499,083	$	536,725	$	9,324	$	546,049	$	545,051	$	7,876	$	552,927
OP Unit redemptions		(5,670)		—		(5,670)		(4,796)		—		(4,796)		(1,762)		—		(1,762)		(17,761)		—		(17,761)
Net income (loss) attributable to redeemable noncontrolling interests		116		(13)		103		(2,176)		(36)		(2,212)
LTIP Units issued in lieu of cash bonuses ⁽¹⁾														987		—		987		797		—		797
Net income (loss)														18,240		8		18,248		(319)		(26)		(345)
Other comprehensive income		413		—		413		309		—		309		1,311		—		1,311		235		—		235
Distributions		(3,993)		—		(3,993)		(3,723)		—		(3,723)		(4,110)		(79)		(4,189)		(3,927)		—		(3,927)
Share-based compensation expense		10,695		—		10,695		14,496		—		14,496		12,369		—		12,369		12,807		—		12,807
Adjustment to redemption value		(20,748)		1,474		(19,274)		(14,012)		1,776		(12,236)		(50,334)		(1,287)		(51,621)		(712)		618		(94)
Balance, end of period	$	516,984	$	9,929	$	526,913	$	483,165	$	7,756	$	490,921	$	513,426	$	7,966	$	521,392	$	536,171	$	8,468	$	544,639

	Nine Months Ended September 30,												Six Months Ended June 30,
	2021						2020						2022						2021
			Consolidated						Consolidated						Consolidated						Consolidated
	JBG		Real Estate				JBG		Real Estate				JBG		Real Estate				JBG		Real Estate
	SMITH LP		Venture		Total		SMITH LP		Venture		Total		SMITH LP		Venture		Total		SMITH LP		Venture		Total

	(In thousands)												(In thousands)
Balance, beginning of period	$	522,882	$	7,866	$	530,748	$	606,699	$	6,059	$	612,758	$	513,268	$	9,457	$	522,725	$	522,882	$	7,866	$	530,748
OP Unit redemptions		(27,350)		—		(27,350)		(40,674)		—		(40,674)		(7,776)		—		(7,776)		(21,680)		—		(21,680)
LTIP Units issued in lieu of cash bonuses ⁽¹⁾		5,614		—		5,614		4,066		—		4,066		6,584		—		6,584		5,614		—		5,614
Net loss attributable to redeemable noncontrolling interests		(2,400)		(72)		(2,472)		(366)		(79)		(445)
Other comprehensive income (loss)		1,621		—		1,621		(3,446)		—		(3,446)
Net income (loss)														18,237		21		18,258		(2,516)		(59)		(2,575)
Other comprehensive income														4,277		—		4,277		1,208		—		1,208
Distributions		(9,282)		—		(9,282)		(7,505)		—		(7,505)		(4,110)		(148)		(4,258)		(5,289)		—		(5,289)
Share-based compensation expense		36,066		—		36,066		51,742		—		51,742		24,896		—		24,896		25,371		—		25,371
Adjustment to redemption value		(10,167)		2,135		(8,032)		(127,351)		1,776		(125,575)		(41,950)		(1,364)		(43,314)		10,581		661		11,242
Balance, end of period	$	516,984	$	9,929	$	526,913	$	483,165	$	7,756	$	490,921	$	513,426	$	7,966	$	521,392	$	536,171	$	8,468	$	544,639

(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,				Three Months Ended June 30,					Six Months Ended June 30,
	2021		2020		X	2021		2020		2022		2021		X	2022		2021

	(In thousands)									(In thousands)
Fixed	$	114,100	$	109,321		$	339,321	$	326,866	$	105,498	$	112,972		$	226,135	$	225,221
Variable		11,800		9,359			31,639		27,653		11,538		9,847			22,499		19,839
Property rental revenue	$	125,900	$	118,680		$	370,960	$	354,519	$	117,036	$	122,819		$	248,634	$	245,060

11.Share-Based Payments

LTIP Units and Time-Based LTIP Units

~~During the nine months ended September 30, 2021,~~In January 2022, we granted to certain employees ~~498,955~~660,785 LTIP Units with time-based vesting requirements ("Time-Based LTIP Units") ~~with~~and a weighted average grant-date fair value of ~~$29.21~~$27.41 per unit that

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~~primarily~~ vest ratably over four years subject to continued employment. Compensation expense for these units is being recognized over a four-year period.

~~Additionally, in January 2021,~~19

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In February 2022, we granted ~~163,065~~252,206 fully vested LTIP Units to certain employees, who elected to receive all or a portion of their cash ~~bonus,~~bonuses, related to ~~2020~~2021 service, as LTIP Units. The LTIP units had a weighted average grant-date fair value of ~~$29.54~~$22.19 per unit. Compensation expense totaling ~~$4.8~~$5.6 million for these LTIP Units was recognized in ~~2020.~~2021.

In April ~~2021,~~2022, as part of their annual compensation, we granted to non-employee trustees a total of ~~71,792~~95,084 fully vested LTIP Units with ~~an aggregate~~a grant-date fair value of ~~$1.9 million.~~$20.90 per unit, which includes LTIP Units elected in lieu of cash retainers. The LTIP Units may not be sold while a trustee is serving on the Board of Trustees.

In July 2021, we granted to certain employees 608,325 Time-Based LTIP Units with a weighted average grant-date fair value of $31.73 per unit that vest 50% on the fifth anniversary of the grant date and 25% on each of the sixth and ~~seventh~~ ~~anniversaries of the grant date, subject to continued employment. Compensation expense for these units is being recognized over a seven-year period.~~

The aggregate grant-date fair value of the Time-Based LTIP Units and the LTIP Units granted during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 was ~~$40.6~~$25.7 million. The Time-Based LTIP Units and the LTIP Units were valued based on the closing common share price on the grant date, ~~of grant,~~ less a discount for post-grant restrictions. The discount was determined using Monte Carlo simulations ~~and~~based on the following ~~is a summary of the~~ significant ~~assumptions used to value these units:~~assumptions:


Expected volatility		~~34.0%~~30.0% to ~~39.0%~~41.0%
Risk-free interest rate		~~0.1%~~0.4% to ~~0.4%~~2.9%
Post-grant restriction periods		2 to 36 years

~~Performance-Based~~Appreciation-Only LTIP Units ("AO LTIP Units")

In January ~~2021,~~2022, we granted to certain employees ~~627,874~~1.5 million performance-based AO LTIP Units ~~with performance-based vesting requirements ("Performance-Based LTIP Units")~~ with a weighted average grant-date fair value of ~~$15.14~~$4.44 per unit. ~~Our Performance-Based~~The AO LTIP Units are structured in the form of profits interests that provide for a share of appreciation determined by the increase in the value of a common share at the time of conversion over the participation threshold of $32.30. The AO LTIP Units are subject to a TSR modifier whereby the number of AO LTIP Units that will ultimately be earned will be increased or reduced by as much as 25%. The AO LTIP Units have a three-year performance ~~period.~~period with 50% of ~~any Performance-Based~~the AO LTIP Units that are earned ~~vest~~vesting at the end of the three-year performance period and the remaining 50% ~~vest~~vesting on the fourth anniversary of the date of grant, subject to continued employment. If, however, the Performance-Based LTIP Units do not achieve a positive absolute total shareholder return ("TSR") at the end of the three-year performance period, but satisfy the relative performance criteria thereof, 50% of the units that otherwise could have been earned will be forfeited, and the remaining units that are earned will vest if and when we achieve a positive TSR during the succeeding seven years, measured at the end of each quarter. Compensation expense for these units is generally being recognized over a four-year period. In January 2021, the three-year performance period ended for the Performance-Based LTIP Units granted on February 2, 2018. Based on our relative performance and absolute TSR over the three-year performance period, 100% of the units granted were earned.

In July 2021, we granted to certain employees 844,070 Performance-Based LTIP Units with a weighted average grant-date fair value of $23.08 per unit that vest 50% on the fifth anniversary of the grant date and 25% on each of the sixth and ~~seventh~~ ~~anniversaries~~ of the grant date, subject to continued ~~employment, and earn based on our achievement of 4 share price targets during the performance period commencing~~employment. The AO LTIPs expire on the ~~first~~tenth anniversary of ~~the~~their grant ~~date and ending on the sixth anniversary of the grant~~ date. ~~Compensation expense for these units is being recognized over a seven-year period.~~

The aggregate grant-date fair value of the ~~Performance-Based~~AO LTIP Units granted during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 was ~~$29.0~~$6.6 million, valued using Monte Carlo ~~simulations. The~~simulations based on the following ~~is a summary of the~~ significant ~~assumptions used to value the Performance-Based LTIP Units:~~assumptions:


Expected volatility		~~31.0% - 34.0%~~27.0%
Dividend yield		~~2.6%~~2.7%
Risk-free interest rate		~~0.2% - 1.0%~~1.6%

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~~Restricted Share~~Performance-Based LTIP Units ~~("RSUs")~~

In January 2021, we granted to certain non-executive employees 22,194 RSUs with time-based vesting requirements ("Time-Based RSUs") with a weighted average grant-date fair value of $31.52 per unit and 13,516 RSUs2022, 469,624 LTIP Units with performance-based vesting requirements ("Performance-Based ~~RSUs"~~LTIP Units") ~~with a weighted average grant-date fair value~~, which were unvested as of ~~$15.16 per unit. Vesting requirements and compensation expense recognition for~~December 31, 2021, were forfeited as the ~~Time-Based RSUs and the Performance-Based RSUs are identical to those of the Time-Based LTIP Units and Performance-Based LTIP Units granted in January 2021.~~performance measures were not met.

The aggregate grant-date fair value of the RSUs granted during the nine months ended September 30, 2021 was $905,000. The Time-Based RSUs were valued based on the closing common share price on the date of grant and the Performance-Based RSUs were valued using Monte Carlo simulations with the same significant assumptions used to value the Performance-Based LTIP Units above.

ESPP

Pursuant to the ESPP, employees purchased ~~34,320~~39,851 common shares for ~~$880,000~~$801,000 during the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The following is a summary of the significant assumptions used to value the ESPP common shares using the Black-Scholes model:


Expected volatility		~~39.0%~~23.0%
Dividend yield		~~1.5%~~1.6%
Risk-free interest rate		~~0.1%~~0.2%
Expected life		6 months

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Share-Based Compensation Expense

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


	Three Months Ended September 30,					Nine Months Ended September 30,				Three Months Ended June 30,					Six Months Ended June 30,
	2021		2020		X	2021		2020		2022		2021		X	2022		2021

	(In thousands)									(In thousands)
Time-Based LTIP Units	$	3,999	$	3,364		$	12,494	$	11,003	$	6,202	$	4,115		$	12,328	$	8,495
Performance-Based LTIP Units		3,216		3,999			9,615		14,207
AO LTIP Units and Performance-Based LTIP Units											3,590		3,160			7,747		6,399
LTIP Units		—		—			1,091		1,100		1,000		1,091			1,000		1,091
Other equity awards ⁽¹⁾		1,473		1,690			4,395		4,829		1,399		1,459			2,826		2,922
Share-based compensation expense - other		8,688		9,053			27,595		31,139		12,191		9,825			23,901		18,907
Formation Awards		476		875			1,923		3,473		769		718			1,143		1,447
OP Units ⁽²⁾		1,610		4,780			6,508		17,398
LTIP Units ⁽²⁾		66		95			217		310
Special Performance-Based LTIP Units ⁽³⁾		629		657			2,014		2,015
Special Time-Based LTIP Units ⁽³⁾		699		726			2,204		2,236
OP Units and LTIP Units ⁽²⁾											248		2,265			831		5,049
Special Time-Based LTIP Units and Special Performance-Based LTIP Units ⁽³⁾											560		1,458			1,847		2,890
Share-based compensation related to Formation Transaction and special equity awards ⁽⁴⁾		3,480		7,133			12,866		25,432		1,577		4,441			3,821		9,386
Total share-based compensation expense		12,168		16,186			40,461		56,571		13,768		14,266			27,722		28,293
Less: amount capitalized		(740)		(1,177)			(2,141)		(3,388)		(1,297)		(610)			(2,347)		(1,401)
Share-based compensation expense	$	11,428	$	15,009		$	38,320	$	53,183	$	12,471	$	13,656		$	25,375	$	26,892

(1)	Primarily ~~comprising~~comprised of compensation expense for: (i) fully vested LTIP Units issued to certain employees in lieu of all or a portion of any cash ~~bonus~~bonuses earned, (ii) ~~RSUs~~restricted share units ("RSUs") and (iii) shares issued under our ESPP.

(2)	Represents share-based compensation expense for LTIP Units and OP Units issued in the Formation Transaction, which ~~are subject to post-Combination employment obligations.~~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 the accompanying statements of operations.

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As of ~~September~~June 30, ~~2021,~~2022, we had ~~$73.7~~$63.3 million of total unrecognized compensation expense related to unvested share-based payment arrangements, which is expected to be recognized over a weighted average period of ~~3.5~~3.3 years.

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,				Three Months Ended June 30,					Six Months Ended June 30,
	2021		2020		X	2021		2020		2022		2021		X	2022		2021

	(In thousands)									(In thousands)
Demolition costs	$	1,422	$	179		$	2,869	$	179	$	406	$	439		$	428	$	1,447
Integration and severance costs		154		406			616		3,066		727		222			872		462
Completed, potential and pursued transaction expenses(1)		1,375		260			5,426		281		854		1,609			1,586		4,051
Other ⁽¹⁾		—		—			—		4,000
Transaction and other costs	$	2,951	$	845		$	8,911	$	7,526	$	1,987	$	2,270		$	2,886	$	5,960

(1)	~~Related~~Primarily consists of legal and dead deal costs related to ~~a charitable commitment to the Washington Housing Conservancy, a non-profit that acquires and owns affordable workforce housing in the Washington, D.C. metropolitan area.~~pursued transactions.

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13.Interest Expense

The following is a summary of interest expense:


	Three Months Ended September 30,					Nine Months Ended September 30,				Three Months Ended June 30,					Six Months Ended June 30,
	2021		2020		X	2021		2020		2022		2021		X	2022		2021

	(In thousands)									(In thousands)
Interest expense before capitalized interest	$	17,278	$	18,274		$	50,744	$	52,751	$	18,857	$	16,800		$	37,299	$	33,466
Amortization of deferred financing costs		1,096		857			3,188		2,255		1,121		1,045			2,251		2,092
Interest expense related to finance lease right-of-use assets		430		464			1,284		1,026		247		428			2,091		854
Net unrealized (gain) loss on derivative financial instruments not designated as cash flow hedges		37		202			(50)		173
Net unrealized (gain) loss on derivative financial instruments designated as ineffective hedges											(2,027)		46			(5,394)		(87)
Capitalized interest		(1,598)		(2,912)			(4,854)		(11,545)		(2,157)		(1,546)			(3,928)		(3,256)
Interest expense	$	17,243	$	16,885		$	50,312	$	44,660	$	16,041	$	16,773		$	32,319	$	33,069

~~14.~~~~Shareholders' Equity and Earnings Per Common Share~~

~~Common Shares Repurchased~~

In March 2020, our Board of Trustees authorized the repurchase of up to $500 million of our outstanding common shares. During three and nine months ended September 30, 2021, we repurchased and retired 2.3 million and 2.9 million common shares for $68.9 million and $88.1 million, an average purchase price of $29.73 and $29.99 per share. During the three and nine months ended September 30, 2020, we repurchased and retired 1.4 million and 2.9 million common shares for $38.4 million and $79.6 million, an average purchase price of $26.64 and $27.82 per share. Since we began the share repurchase program, we have repurchased and retired 6.7 million common shares for $192.9 million, an average purchase price of $28.71 per share.

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14.Shareholders' Equity and Earnings (Loss) Per Common Share

Common Shares Repurchased

In March 2020, our Board of Trustees authorized the repurchase of up to $500.0 million of our outstanding common shares and in June 2022, increased the authorized repurchase amount by $500.0 million to an aggregate of $1.0 billion. During the three and six months ended June 30, 2022, we repurchased and retired 8.5 million and 11.8 million common shares for $213.9 million and $307.0 million, a weighted average purchase price per share of $25.15 and $25.91. During the six months ended June 30, 2021, we repurchased and retired 619,749 common shares for $19.2 million, a weighted average purchase price per share of $30.96. Since we began the share repurchase program, we have repurchased and retired 21.0 million common shares for $569.5 million, a weighted average purchase price per share of $27.12.

In July 2022, we repurchased and retired 1.5 million common shares for $36.0 million, a weighted average purchase price per share of $23.92, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.

Earnings (Loss) Per Common Share

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


	Three Months Ended September 30,					Nine Months Ended September 30,				Three Months Ended June 30,					Six Months Ended June 30,
	2021		2020		X	2021		2020		2022		2021		X	2022		2021

	(In thousands, except per share amounts)									(In thousands, except per share amounts)
Net income (loss)	$	996	$	(25,005)		$	(26,391)	$	(17,093)	$	141,494	$	(3,318)		$	141,417	$	(27,387)
Net (income) loss attributable to redeemable noncontrolling interests		(103)		2,212			2,472		445		(18,248)		345			(18,258)		2,575
Net loss attributable to noncontrolling interests		—		—			1,108		—		29		—			84		1,108
Net income (loss) attributable to common shareholders		893		(22,793)			(22,811)		(16,648)		123,275		(2,973)			123,243		(23,704)
Distributions to participating securities		(763)		(822)			(1,497)		(1,729)		(12)		(734)			(12)		(734)
Net income (loss) available to common shareholders - basic and diluted	$	130	$	(23,615)		$	(24,308)	$	(18,377)	$	123,263	$	(3,707)		$	123,231	$	(24,438)

Weighted average number of common shares outstanding - basic and diluted		131,351		133,620			131,456		133,924		121,316		131,480			123,984		131,510

Earnings (loss) per common share - basic and diluted	$	0.00	$	(0.18)		$	(0.18)	$	(0.14)	$	1.02	$	(0.03)		$	0.99	$	(0.19)

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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~~June 30, ~~2021~~2022 and ~~2020~~2021 is excluded in the computation of diluted earnings (loss) per common share as the assumed exchange of such units for common shares on a one-for-one basis was antidilutive (the assumed redemption of these units would have no impact on the determination of diluted earnings (loss) per share). Since OP Units, Time-Based LTIP Units, LTIP Units and Special Time-Based LTIP Units, which are held by noncontrolling interests, are attributed gains at an identical proportion to the common shareholders, the gains attributable and their equivalent weighted average ~~OP Units, LTIP Units and Time-Based LTIP Unit~~ impact are excluded from net income (loss) available to common shareholders and from the weighted average number of common shares outstanding in calculating diluted earnings (loss) per common share. ~~Performance-Based~~AO LTIP Units, ~~Special~~ Performance-Based LTIP Units, Formation Awards and RSUs, which totaled ~~5.2~~6.0 million and ~~4.9~~5.9 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, and ~~4.4 million and 4.9~~3.9 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, were excluded from the calculation of diluted earnings (loss) per common share as they were antidilutive, but potentially could be dilutive in the future.

Dividends Declared in ~~October 2021~~July 2022

On ~~October 27, 2021,~~July 29, 2022, our Board of Trustees declared a quarterly dividend of $0.225 per common share, payable on ~~November 24, 2021~~August 26, 2022 to shareholders of record as of ~~November 10, 2021.~~August 12, 2022.

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. We do not enter into derivative financial instruments for speculative purposes.

As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had various derivative financial instruments consisting of interest rate swap and cap agreements that are measured at fair value on a recurring basis. The net unrealized ~~loss~~gain (loss) on our derivative financial instruments designated as ~~cash flow~~effective hedges was ~~$27.8~~$21.6 million and ~~$43.9~~($17.2) million as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 and was recorded in "Accumulated other comprehensive ~~loss"~~income (loss)" in our balance sheets, of which a portion was ~~reclassified~~allocated to "Redeemable noncontrolling interests." Within the next 12 months, we expect to reclassify ~~$14.6~~$10.0 million of net unrealized ~~loss~~gain as ~~an increase~~a decrease to interest expense.

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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.

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The following is a summary of assets and liabilities measured at fair value on a recurring basis:


	Fair Value Measurements								Fair Value Measurements
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3

	(In thousands)								(In thousands)
September 30, 2021
Derivative financial instruments designated as cash flow hedges:
Classified as liabilities in "Other liabilities, net"	$	28,406		—	$	28,406		—
Derivative financial instruments not designated as cash flow hedges:
June 30, 2022
Derivative financial instruments designated as effective hedges:
Classified as assets in "Other assets, net"									$	20,383		—	$	20,383		—
Derivative financial instruments designated as ineffective hedges:
Classified as assets in "Other assets, net"		266		—		266		—		5,951		—		5,951		—

December 31, 2020
Derivative financial instruments designated as cash flow hedges:
December 31, 2021
Derivative financial instruments designated as effective hedges:
Classified as assets in "Other assets, net"									$	393		—	$	393		—
Classified as liabilities in "Other liabilities, net"	$	44,222		—	$	44,222		—		18,361		—		18,361		—
Derivative financial instruments not designated as cash flow hedges:
Derivative financial instruments designated as ineffective hedges:
Classified as assets in "Other assets, net"		35		—		35		—		558		—		558		—

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 under authoritative accounting guidance, the credit valuation adjustments associated with the derivatives also utilized Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default. However, as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the significance of the impact of the credit valuation adjustments on the overall valuation of the derivative financial instruments was assessed, and it was determined that these adjustments were not significant to the overall valuation of the derivative financial instruments. As a result, it was determined that the derivative financial instruments in their entirety should be classified in Level 2 of the fair value hierarchy. The net unrealized gains and losses included in "Other comprehensive ~~income (loss)"~~income" in our statements of comprehensive income (loss) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 were attributable to the net change in unrealized gains or losses related to the interest rate swaps that were outstanding during those periods, none of which were reported in our statements of operations as the interest rate swaps were documented and qualified as hedging instruments.

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Financial Assets and Liabilities Not Measured at Fair Value

As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, all financial assets and liabilities were reflected in our balance sheets at amounts which, in our estimation, reasonably approximated their fair values, except for the following:


	September 30, 2021				December 31, 2020				June 30, 2022				December 31, 2021
	Carrying				Carrying				Carrying				Carrying
	Amount ⁽¹⁾		Fair Value		Amount ⁽¹⁾		Fair Value		Amount ⁽¹⁾		Fair Value		Amount ⁽¹⁾		Fair Value

	(In thousands)								(In thousands)
Financial liabilities:
Mortgages payable	$	1,684,407	$	1,739,548	$	1,603,869	$	1,606,470	$	1,621,127	$	1,606,673	$	1,788,259	$	1,814,780
Revolving credit facility										—		—		300,000		300,363
Unsecured term loans		400,000		400,201		400,000		399,678		400,000		400,263		400,000		400,519

(1)	The carrying amount consists of principal only.

The fair values of the mortgages payable, revolving credit facility and unsecured term loans were determined using Level 2 inputs of the fair value hierarchy. The fair value of our mortgages payable is estimated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit profiles based on market sources. The fair value of our revolving credit facility and unsecured term loans is calculated based on the net present value of payments over the term of the facilities using estimated market rates for similar notes and remaining terms.

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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 3 reportable segments (commercial, multifamily, and third-party asset management and real estate services) based on the economic characteristics and nature of our assets and services. To conform to the current period presentation, we have reclassified the prior period segment financial data for 1700 M Street, for which we are the ground lessor, that had been classified as part of the commercial segment to other to better align with our internal reporting.

The CODM measures and evaluates the performance of our operating segments, with the exception of the third-party asset management and real estate services business, based on the net operating income ("NOI") of properties within each segment. 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,				Three Months Ended June 30,					Six Months Ended June 30,
	2021		2020		X	2021		2020		2022		2021		X	2022		2021

	(In thousands)									(In thousands)
Property management fees	$	4,831	$	4,694		$	14,549	$	15,453	$	4,976	$	4,776		$	9,784	$	9,718
Asset management fees		2,145		2,301			6,602		7,400		1,513		2,229			3,284		4,457
Development fees ⁽¹⁾		4,032		2,614			22,705		8,474		2,148		4,392			5,687		18,642
Leasing fees		1,822		1,086			4,106		3,627		1,038		1,424			2,877		2,284
Construction management fees		—		584			375		2,057		37		234			187		406
Other service revenue		1,295		2,000			4,783		5,452		1,499		1,790			2,315		3,488
Third-party real estate services revenue, excluding reimbursements		14,125		13,279			53,120		42,463		11,211		14,845			24,134		38,995
Reimbursement revenue ⁽²⁾		11,717		13,708			37,574		41,407		10,946		11,900			21,993		25,857
Third-party real estate services revenue, including reimbursements		25,842		26,987			90,694		83,870		22,157		26,745			46,127		64,852
Third-party real estate services expenses		25,542		28,207			80,035		86,260		24,143		25,557			51,192		54,493
Third-party real estate services revenue less expenses	$	300	$	(1,220)		$	10,659	$	(2,390)	$	(1,986)	$	1,188		$	(5,065)	$	10,359

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(1)

~~Estimated~~As of June 30, 2022, we had estimated unrecognized development fee revenue totaling ~~$51.2~~$43.2 million, as of ~~September 30, 2021~~which $7.1 million, $12.3 million and $6.6 million is expected to be recognized ~~over~~during the ~~next six years~~remainder of 2022, 2023 and 2024, and $17.2 million is expected to be recognized thereafter through 2027 as unsatisfied performance obligations are completed.

(2)	Represents reimbursement of expenses incurred by us on behalf of third parties, including allocated payroll costs and amounts paid to third-party contractors for construction management projects.

Management company assets primarily consist of management and leasing contracts with a net book value of ~~$21.1~~$16.7 million and ~~$25.5~~$19.6 million as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, which are classified in ~~"Other~~"Intangible assets, net" in our balance sheets. Consistent with internal reporting presented to our CODM and our definition of NOI, the third-party asset management and real estate services operating results are excluded from the NOI data below.

~~The following is the reconciliation of net income (loss) attributable to common shareholders to consolidated NOI:~~

Three Months Ended September 30,

Nine Months Ended September 30,


2021

2020
X
2021

2020

(In thousands)
Net income (loss) attributable to common shareholders

$
893

$
(22,793)

$
(22,811)

$
(16,648)
Add:








Depreciation and amortization expense

56,726

56,481

178,130

157,586
General and administrative expense:








Corporate and other

12,105

11,086

38,475

37,478
Third-party real estate services

25,542

28,207

80,035

86,260
Share-based compensation related to Formation Transaction and special equity awards

3,480

7,133

12,866

25,432
Transaction and other costs

2,951

845

8,911

7,526
Interest expense

17,243

16,885

50,312

44,660
Loss on extinguishment of debt

—

—

—

33
Income tax expense (benefit)

217

(488)

4,527

(3,721)
Net income (loss) attributable to redeemable noncontrolling interests

103

(2,212)

(2,472)

(445)
Net loss attributable to noncontrolling interests

—

—

(1,108)

—
Less:








Third-party real estate services, including reimbursements revenue

25,842

26,987

90,694

83,870
Other revenue

1,568

2,292

5,658

5,438
Income (loss) from unconsolidated real estate ventures, net

20,503

(965)

23,513

(17,142)
Interest and other income, net

192

—

163

1,021
Gain on sale of real estate

—

—

11,290

59,477
Consolidated NOI

$
71,155

$
66,830

$
215,547

$
205,497

~~The following is a summary of NOI by segment. Items classified in the Other column include future development assets, corporate entities and the elimination of intersegment activity.~~

Three Months Ended September 30, 2021


Commercial

Multifamily

Other

Total

(In thousands)
Property rental revenue

$
92,522

$
35,020

$
(1,642)

$
125,900
Parking revenue

3,520

111

81

3,712
Total property revenue

96,042

35,131

(1,561)

129,612
Property expense:


Property operating

27,068

14,212

(1,082)

40,198
Real estate taxes

12,098

4,930

1,231

18,259
Total property expense

39,166

19,142

149

58,457
Consolidated NOI

$
56,876

$
15,989

$
(1,710)

$
71,155

2625

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


	Three Months Ended June 30,					Six Months Ended June 30,
	2022		2021		X	2022		2021

	(In thousands)
Net income (loss) attributable to common shareholders	$	123,275	$	(2,973)		$	123,243	$	(23,704)
Add:
Depreciation and amortization expense		49,479		56,678			107,541		121,404
General and administrative expense:
Corporate and other		14,782		13,895			30,597		26,370
Third-party real estate services		24,143		25,557			51,192		54,493
Share-based compensation related to Formation Transaction and special equity awards		1,577		4,441			3,821		9,386
Transaction and other costs		1,987		2,270			2,886		5,960
Interest expense		16,041		16,773			32,319		33,069
Loss on the extinguishment of debt		1,038		—			1,629		—
Income tax expense (benefit)		2,905		(5)			2,434		4,310
Net income (loss) attributable to redeemable noncontrolling interests		18,248		(345)			18,258		(2,575)
Net loss attributable to noncontrolling interests		(29)		—			(84)		(1,108)
Less:
Third-party real estate services, including reimbursements revenue		22,157		26,745			46,127		64,852
Other revenue		1,798		1,904			3,994		4,090
Income (loss) from unconsolidated real estate ventures, net		(2,107)		3,953			1,038		3,010
Interest and other income (loss), net		1,672		(38)			15,918		(29)
Gain on the sale of real estate, net		158,767		11,290			158,631		11,290
Consolidated NOI	$	71,159	$	72,437		$	148,128	$	144,392

The following is a summary of NOI by segment. Items classified in the Other column include future development assets, assets ground leased to third parties, corporate entities and the elimination of inter-segment activity.


	Three Months Ended June 30, 2022
	Commercial		Multifamily		Other		Total

	(In thousands)
Property rental revenue	$	71,903	$	42,939	$	2,194	$	117,036
Parking revenue		4,187		250		77		4,514
Total property revenue		76,090		43,189		2,271		121,550
Property expense:
Property operating		19,624		14,870		951		35,445
Real estate taxes		9,018		5,054		874		14,946
Total property expense		28,642		19,924		1,825		50,391
Consolidated NOI	$	47,448	$	23,265	$	446	$	71,159

	Three Months Ended June 30, 2021
	Commercial		Multifamily		Other		Total

	(In thousands)
Property rental revenue	$	89,189	$	32,718	$	912	$	122,819
Parking revenue		2,959		110		107		3,176
Total property revenue		92,148		32,828		1,019		125,995
Property expense:
Property operating		25,097		12,042		(2,139)		35,000
Real estate taxes		12,148		5,065		1,345		18,558
Total property expense		37,245		17,107		(794)		53,558
Consolidated NOI	$	54,903	$	15,721	$	1,813	$	72,437

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Three Months Ended September 30, 2020


Commercial

Multifamily

Other

Total

(In thousands)
Property rental revenue

$
90,050

$
30,452

$
(1,822)

$
118,680
Parking revenue

3,002

74

—

3,076
Total property revenue

93,052

30,526

(1,822)

121,756
Property expense:






Property operating

26,701

13,226

(2,355)

37,572
Real estate taxes

12,136

4,656

562

17,354
Total property expense

38,837

17,882

(1,793)

54,926
Consolidated NOI

$
54,215

$
12,644

$
(29)

$
66,830


	Nine Months Ended September 30, 2021								Six Months Ended June 30, 2022
	Commercial		Multifamily		Other		Total		Commercial		Multifamily		Other		Total

	(In thousands)								(In thousands)
Property rental revenue	$	275,736	$	100,324	$	(5,100)	$	370,960	$	159,524	$	85,047	$	4,063	$	248,634
Parking revenue		9,169		286		188		9,643		8,199		384		132		8,715
Total property revenue		284,905		100,610		(4,912)		380,603		167,723		85,431		4,195		257,349
Property expense:
Property operating		76,155		38,449		(4,675)		109,929		45,826		28,625		1,638		76,089
Real estate taxes		36,018		15,240		3,869		55,127		20,795		10,275		2,062		33,132
Total property expense		112,173		53,689		(806)		165,056		66,621		38,900		3,700		109,221
Consolidated NOI	$	172,732	$	46,921	$	(4,106)	$	215,547	$	101,102	$	46,531	$	495	$	148,128

	Nine Months Ended September 30, 2020								Six Months Ended June 30, 2021
	Commercial		Multifamily		Other		Total		Commercial		Multifamily		Other		Total

	(In thousands)								(In thousands)
Property rental revenue	$	266,823	$	94,873	$	(7,177)	$	354,519	$	176,370	$	65,304	$	3,386	$	245,060
Parking revenue		10,018		249		—		10,267		5,649		175		107		5,931
Total property revenue		276,841		95,122		(7,177)		364,786		182,019		65,479		3,493		250,991
Property expense:
Property operating		78,645		34,238		(7,016)		105,867		49,061		24,237		(3,567)		69,731
Real estate taxes		36,532		14,088		2,802		53,422		23,920		10,310		2,638		36,868
Total property expense		115,177		48,326		(4,214)		159,289		72,981		34,547		(929)		106,599
Consolidated NOI	$	161,664	$	46,796	$	(2,963)	$	205,497	$	109,038	$	30,932	$	4,422	$	144,392

The following is a summary of certain balance sheet data by segment:

Commercial

Multifamily

Other

Total

(In thousands)
September 30, 2021

Real estate, at cost

$
3,494,929

$
2,135,448

$
395,758

$
6,026,135
Investments in unconsolidated real estate ventures

300,304

110,369

75,379

486,052
Total assets ⁽¹⁾

3,541,397

1,779,416

688,165

6,008,978
December 31, 2020








Real estate, at cost

$
3,459,171

$
2,036,131

$
505,329

$
6,000,631
Investments in unconsolidated real estate ventures

327,798

108,593

24,978

461,369
Total assets⁽¹⁾

3,430,509

1,787,718

861,320

6,079,547

~~(1)~~

~~Includes assets held for sale. See Note 3 for additional information.~~


	Commercial		Multifamily		Other		Total

	(In thousands)
June 30, 2022
Real estate, at cost	$	2,722,907	$	2,481,213	$	402,467	$	5,606,587
Investments in unconsolidated real estate ventures		233,519		96,030		84,800		414,349
Total assets		3,016,911		1,856,493		706,498		5,579,902
December 31, 2021
Real estate, at cost	$	3,422,278	$	2,367,712	$	446,486	$	6,236,476
Investments in unconsolidated real estate ventures		281,515		103,389		77,981		462,885
Total assets		3,591,839		1,797,807		996,560		6,386,206

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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 $1.5 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 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.

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Our debt, consisting of mortgages payable secured by our properties, a revolving credit facility and unsecured term loans, contains customary covenants requiring adequate insurance coverage. Although we believe that we currently have adequate insurance coverage, we may not be able to obtain an equivalent amount of coverage at a reasonable ~~costs~~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~~June 30, ~~2021,~~2022, we had assets under construction that will, based on our current plans and estimates, require an additional ~~$320.3~~$528.5 million to complete, which we anticipate will be primarily expended over the nexttwo to three years. These capital expenditures are generally due as the work is performed, and we expect to finance them with debt proceeds, proceeds from asset ~~recapitalizations~~sales and ~~sales, issuance and sale of securities,~~recapitalizations, and available cash.

Environmental Matters

Most of our assets have been subject, at some point, to environmental assessments that are intended to evaluate the environmental condition of the assets. 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 $19.4 million and $18.2 million as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 and are included in "Other liabilities, net" in our balance sheets.

Other

As of ~~September~~June 30, ~~2021,~~2022, we had committed tenant-related obligations totaling ~~$76.9~~$74.3 million ($~~73.6~~68.8 million related to our consolidated entities and ~~$3.3~~$5.5 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.

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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~~June 30, ~~2021,~~2022, we had additional capital commitments and certain recorded guarantees to our unconsolidated real estate ventures and other investments totaling ~~$66.1~~$66.4 million. As of ~~September~~June 30, ~~2021,~~2022, we had 0 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

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lenders, tenants and other third parties for the completion of development projects. As of ~~September~~June 30, ~~2021,~~2022, the aggregate amount of principal payment guarantees was $8.3 million for our consolidated entities.

In connection with the Formation Transaction, we have an agreement with Vornado regarding tax matters (the "Tax Matters Agreement") that provides special rules that allocate tax liabilities if the distribution of JBG SMITH shares by Vornado, together with certain related transactions, is determined not to be tax-free. Under the Tax Matters Agreement, we may be required to indemnify Vornado against any taxes and related amounts and costs resulting from a violation by us of the Tax Matters Agreement.

18.Transactions with Related Parties

Our third-party asset management and real estate services business provides fee-based real estate services to the WHI, ~~Amazon,~~ the JBG Legacy Funds and other third ~~parties. We provide services for the benefit of the JBG Legacy Funds that own interests in the assets retained by the JBG Legacy Funds.~~parties, including Amazon. In connection with the contribution to us of ~~the~~certain assets formerly owned by the JBG Legacy Funds as part of the Formation Transaction, the general partner and managing member interests in the JBG Legacy Funds that were held by certain former JBG executives (and who became members of our management team and/or Board of Trustees) were not transferred to us and remain under the control of these individuals. In addition, certain members of our senior management team and Board of Trustees have ownership interests in the JBG Legacy Funds, and own carried interests in each fund and in certain of our real estate ventures that entitle them to receive cash payments if the fund or real estate venture achieves certain return thresholds.

We launched the WHI with the Federal City Council in June 2018 as a scalable market-driven model that uses private capital to help address the scarcity of housing for middle income families. We are the manager for the WHI Impact Pool, which is the social impact debt financing vehicle of the WHI. As of ~~September~~June 30, ~~2021,~~2022, the WHI Impact Pool had completed closings of capital commitments totaling $114.4 million, which included a commitment from us of $11.2 million. As of ~~September~~June 30, ~~2021,~~2022, our remaining unfunded commitment was ~~$8.3~~$6.2 million.

The third-party real estate services revenue, including expense reimbursements, from the JBG Legacy Funds and the WHI Impact Pool was ~~$5.6~~$4.8 million and ~~$17.2~~$10.3 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, and ~~$4.6~~$5.8 million and ~~$17.3~~$11.6 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had receivables from the JBG Legacy Funds and the WHI Impact Pool totaling ~~$3.5~~$3.3 million and ~~$7.5~~$3.2 million for such services.

We rented our former corporate offices from an unconsolidated real estate venture and made payments totaling ~~$246,000~~$321,000 and ~~$1.0 million~~$708,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, and ~~$403,000~~$495,000 and ~~$4.1 million~~$766,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021.

We have agreements with Building Maintenance Services ("BMS"), an entity in which we have a minor preferred interest, to supervise cleaning, engineering and security services at our properties. We paid BMS ~~$4.9~~$2.0 million and ~~$13.4~~$5.1 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, and ~~$4.0~~$4.1 million and ~~$12.6~~$8.5 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, which is included in "Property operating expenses" in our statements of operations.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as "approximates," "believes," "expects," "anticipates," "estimates," "intends," "plans," "would," "may" or other similar expressions in this Quarterly Report on Form 10-Q. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the Securities and Exchange Commission on February 22, 2022 ("Annual Report") and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report on Form 10-Q and our Annual ~~Report on Form 10-K for the year ended December 31, 2020.~~

One of the most significant factors that could cause actual outcomes to differ materially from our forward-looking statements is the adverse effect of the current pandemic of the novel coronavirus ("COVID-19") on our financial condition, results of operations, cash flows, performance, tenants, the real estate market, and the global economy and financial markets. The significance, extent and duration of the impact of COVID-19 on us and our tenants remains largely uncertain and dependent on near-term and future developments that cannot be accurately predicted at this time, such as the continued severity, duration, transmission rate and geographic spread of COVID-19, the distribution, effectiveness and willingness of people to take COVID-19 vaccines, the extent and effectiveness of the containment measures taken, and the response of the overall economy, the financial markets and the population, particularly in the area in which we operate. Moreover, investors are cautioned to interpret many of the risks identified under the section titled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as being heightened as a result of the ongoing and numerous adverse impacts of COVID-19.Report.

For these forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.

Organization and Basis of Presentation

JBG SMITH Properties ("JBG SMITH"), a Maryland real estate investment trust ("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 ~~that have~~with high barriers to entry and vibrant urban amenities. ~~Over half~~Approximately two-thirds of our portfolio is in National Landing in Northern Virginia where we serve as the ~~exclusive~~ developer for Amazon.com, Inc.'s ("Amazon") new headquarters and where Virginia Tech's ~~under-construction~~ $1 billion Innovation Campus is ~~located.~~under construction. In addition, our third-party asset management and real estate services business provides fee-based real estate services to Amazon, the Washington Housing Initiative ("WHI") Impact Pool, ~~Amazon,~~ 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. JBG SMITH is referred to 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.~~ventures, but exclude our 10% subordinated interest in one commercial building and our 33.5% subordinated interest in four commercial buildings, as well as the associated non-recourse mortgages payable, held through unconsolidated real estate ventures as 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 have not guaranteed their obligations or otherwise committed to providing financial support.

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References to our financial statements refer to our unaudited condensed consolidated financial statements as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021. References to our balance sheets refer to our condensed consolidated balance sheets as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021. References to our statements of operations refer to our condensed consolidated statements of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021. References to our statements of cash flows refer to our condensed consolidated statements of cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021.

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The accompanying financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and 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 these estimates.

We aggregate our operating segments into three reportable segments (commercial, multifamily, and third-party asset management and real estate services) based on the economic characteristics and nature of our assets and services.

Our revenues and expenses are, to some extent, subject to seasonality during the year, which impacts quarterly net earnings, cash flows and funds from operations that affects the sequential comparison of our results in individual quarters over time. For instance, we have historically experienced higher utility costs in the first and third quarters of the year.

We compete with many property owners and developers. Our success depends upon, among other factors, trends affecting national and local economies, the financial condition and operating results of current and prospective tenants, the availability and cost of capital, interest rates, construction and renovation costs, taxes, governmental regulations and legislation, population trends, zoning laws, and our ability to lease, sublease or sell our assets at profitable levels. Our success is also subject to our ability to refinance existing debt on acceptable terms as it comes due.

Overview

As of ~~September~~June 30, ~~2021,~~2022, our Operating Portfolio consisted of 6356 operating assets comprising 4235 commercial assets totaling ~~13.1~~10.5 million square feet ~~(11.3~~(8.9 million square feet at our share) ~~and 21~~, 19 multifamily assets totaling ~~7,776~~7,359 units ~~(6,125~~(6,496 units at our share). and two wholly owned land assets for which we are the ground lessor. Additionally, we have: (i) ~~one~~two under-construction multifamily ~~asset~~assets with ~~808~~1,583 units ~~(808~~(1,583 units at our share); (ii) 11eight near-term development assets totaling ~~5.3~~3.7 million square feet ~~(5.0~~(3.5 million square feet at our share) of estimated potential development density; and (iii) 2516 future development assets totaling ~~14.3~~8.8 million square feet ~~(11.6~~(6.3 million square feet at our share) of estimated potential development density. ~~In 2021, we achieved carbon neutrality across our Operating Portfolio through the purchase of verified carbon offsets and renewable energy credits.~~

We continue to ~~focus on~~implement our comprehensive plan to reposition our holdings in National Landing in Northern Virginia by executing a broad array of Placemaking strategies. Our Placemaking ~~strategies include~~includes the delivery of new multifamily and office developments, locally sourced amenity retail, and thoughtful improvements to the streetscape, sidewalks, parks and other outdoor gathering spaces. In keeping with our dedication to Placemaking, 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. ~~We have also invested in~~Additionally, the cutting-edge digital infrastructure investments we are making, including our ownership of Citizens Broadband Radio Service ~~("CBRS")~~ wireless spectrum in National Landing ~~as part of~~and an agreement with AT&T, are advancing our efforts to make National Landing among the first 5G-operable submarkets in the nation.

In November 2018, Amazon announced it had selected sites ~~that we own~~ in National Landing as the location of its new headquarters. We currently have leases with Amazon totaling ~~approximately~~ 1.0 million square feet at six office buildings

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in National Landing. ~~In March 2019, we executed purchase and sale agreements with~~We have sold to Amazon ~~for~~ two of our National Landing development sites, Metropolitan Park and Pen Place, which will serve as the initial phase of construction associated with Amazon's new headquarters at National Landing. In January 2020, we sold Metropolitan Park to Amazon for $155.0 million and beganPlace. We are currently constructing two new office buildings ~~thereon,~~for Amazon on Metropolitan Park, totaling 2.1 million square feet, inclusive of over 50,000 square feet of street-level retail with new shops and restaurants. We are the developer, property manager and retail leasing agent for Amazon's new headquarters at National Landing.

~~2021~~31

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2022 Outlook

A fundamental component of our strategy to maximize long-term net asset value ("NAV") per share is active capital allocation. ~~Since our inception in 2017, we have completed the sale, recapitalization and/or ground lease of $1.7 billion of primarily office assets,~~We evaluate development, acquisition, disposition, share repurchase and weother investment decisions based on how they may impact long-term NAV per share. We intend to continue to opportunistically sell ~~at least another $1.4 billion of~~ non-core office assets ~~and land. We are currently targeting dispositions primarily~~outside of ~~office assets in submarkets~~National Landing as well as land sites where ~~we have less concentration and where we anticipate lower growth rates going forward relative to other opportunities within our portfolio. Additionally, we may market select land assets where~~a ground lease or joint venture execution may represent the ~~clearest~~most attractive path to maximizing value. 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 and intend to continue disposing of assets where the disparity in public and private market valuations is greatest. 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. These discussions and negotiations may or may not lead to definitive documentation or closed transactions. Redeploying the proceeds from ~~any such~~these sales ~~and recapitalizations~~ will not only help fund our planned growth, but will also further advance the strategic shift of our portfolio to majority multifamily.

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. On March 13, 2020, a National Emergency was declaredOur office portfolio occupancy improved by 280 basis points in the United States in response to COVID-19. The efforts made by federal, state and local governments to mitigate the spread of COVID-19 included orders requiring the temporary closure of or imposed limitations on the operations of certain non-essential businesses, which adversely affected many tenants, especially tenants in the retail industry.

The pandemic continues to evolve, and while we are optimistic about the future, we remain cautious about the medium-term implications for office assets. Vacancy is still at record highs across the region, and most companies are still not fully back in the office. Occupancy of our commercial portfolio declined by 180 basis points from June 30, 2021, the majority of which was related to pre-pandemic decision making, although we had two civilian agency Government Services Administration tenants that reduced their leased square footage due to a planned shift toward working from home. We expect continued pressure on our office occupancy through the end of the year and into 2022. Although parking revenue increased during the three months ended September 30, 2021second quarter as compared to March 31, 2022. Excluding assets that were sold during the ~~same period~~quarter, our operating commercial operating occupancy increased by 40 basis points in ~~2020,~~the second quarter. New leasing has been slow to recover from the pandemic and will likely continue to lag due to delayed return-to-the office plans and decision-making related to future office utilization. We expect this lag to continue to impact our occupancy levels for the foreseeable future. We have seen an increase in the number of employees returning to the office, with parking revenue in our commercial portfolio ~~was~~at approximately ~~60% below~~74% of pre-pandemic levels of approximately ~~$30~~$25 million annually, at our share.

Our multifamily portfolio occupancy improved by 70 basis points in the second quarter as compared to March 31, 2022, as residents continued to return to urban environments and cities repopulated. Although asking rents in our portfolio ended the quarter above pre-pandemic levels, average in-place rents ended the quarter approximately 10.9% below asking rents. For the second quarter lease expirations, we increased average renewal rates by approximately 8.6%. We expect in-place rents to increase as leases roll due to ~~delayed return-to-the-office plans for many~~the expiration of ~~our office tenants.~~

We are seeing improvements in our multifamily portfolio, with a 390 basis point increase in the occupancy of our operating multifamily portfolio from June 30, 2021 and an increase in market rents due to increased demand and limited new supply.several jurisdictional restrictions on rent increases.

The significance, extent and duration of the impact of COVID-19 on our business remains largely uncertain and dependent on future developments that cannot be accurately predicted at this time. These developments include: the continued severity, duration, transmission rate and geographic spread of COVID-19 in the United States, the continued speed of the vaccine distribution, the effectiveness and willingness of people to take COVID-19 vaccines, the duration of associated immunity and the efficacy of vaccines against variants of COVID-19, the extent and effectiveness of other containment measurestaken, and the response of the overall economy, the financial markets and the population, particularly in areas in which we operate, as containment measures continue to be lifted, and whether the residential market in the Washington, D.C. region and any of our properties will be materially impacted by the moratoriums on residential evictions, among others. These uncertainties make it difficult to predict operating results for our business for 2021. Therefore, we could experience material declines in revenue, net income, NOI and/or Funds from Operations ("FFO"). For more information, see "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Operating Results

Key highlights for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 included:

●	net income attributable to common shareholders of ~~$893,000,~~$123.3 million, or ~~$0.00~~$1.02 per diluted common share, for the three months ended ~~September~~June 30, ~~2021~~2022 compared to a net loss attributable to common shareholders of ~~$22.8~~$3.0 million, or ~~$0.18~~$0.03 per

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diluted common share, for the three months ended ~~September~~June 30, ~~2020.~~2021. Net income attributable to common shareholders of $123.2 million, or $0.99 per diluted common share, for the six months ended June 30, 2022 compared to a net loss attributable to common shareholders of ~~$22.8~~$23.7 million, or ~~$0.18~~$0.19 per diluted common share, for the ~~nine~~six months ended ~~September~~June 30, ~~2021 compared to $16.6 million, or $0.14 per diluted common share, for the nine months ended September 30, 2020;~~2021;

●

third-party real estate services revenue, including reimbursements, of ~~$25.8~~$22.2 million and ~~$90.7~~$46.1 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to ~~$27.0~~$26.7 million and ~~$83.9~~$64.9 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020;~~2021;

●	operating commercial portfolio leased and occupied percentages at our share of ~~84.9%~~87.3% and ~~82.6%~~86.1% as of ~~September~~June 30, ~~2021~~2022 compared to 85.2% and 83.3% as of March 31, 2022, and 85.9% and 84.4% as of June 30, ~~2021, and 88.4% and 85.3% as of September 30, 2020;~~2021;

●

operating multifamily portfolio leased and occupied percentages ⁽¹⁾at our share of ~~92.9%~~95.7% and ~~90.2% as of September 30, 2021 compared to 91.6% and 86.3%~~92.3% as of June 30, ~~2021,~~2022 compared to 94.1% and ~~83.0% and 76.6%~~91.6% as of ~~September 30, 2020. The in-service operating multifamily portfolio was 95.1% leased~~March 31, 2022, and ~~92.1% occupied as of September 30, 2021, compared to 95.0% leased~~92.8% and ~~89.8% occupied~~88.7% as of June 30, ~~2021, and 92.8%~~2021. In-service operating multifamily portfolio leased and ~~88.1%~~ occupied percentages at our share of 96.6% and 93.1% as of ~~September~~June 30, ~~2020;~~2022, compared to 95.5% and 92.9% as of March 31, 2022, and 96.4% and 92.7% as of June 30, 2021;

●

the leasing of ~~159,000 square feet, or 126,000~~326,000 square feet at our share, at an initial rent⁽¹⁾⁽²⁾of ~~$44.82~~$40.34 per square foot and a GAAP-basis weighted average rent per square foot ⁽²⁾⁽³⁾of ~~$45.87~~$38.43 for the three months ended ~~September~~June 30, ~~2021,~~2022, and the leasing of ~~1.2 million~~536,000 square feet ~~on a consolidated basis and~~ at our share, at an initial rent⁽¹⁾⁽²⁾of ~~$46.04~~$45.62 per square foot and a GAAP-basis weighted average rent per square foot⁽²⁾⁽³⁾of ~~$45.43~~$44.34 for the ~~nine~~six months ended ~~September~~June 30, ~~2021;~~2022; and

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●

an increase in same store ⁽³⁾⁽⁴⁾NOI of ~~$72.7~~13.8% to $79.3 million for the three months ended ~~September~~June 30, ~~2021 was unchanged~~2022 compared to $69.7 million for the three months ended ~~September~~June 30, ~~2020,~~2021, and ~~a decrease~~an increase in same store ⁽³⁾⁽⁴⁾NOI of ~~3.3%~~13.9% to ~~$223.3~~$155.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to ~~$231.0~~$136.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021.

(1)	2221 S. Clark Street - Residential and 900 W Street are excluded from leased and occupied percentages as they are operated as short-term rental properties

(2)	Represents the cash basis weighted average starting rent per square foot at our share, which excludes free rent and fixed escalations.

~~(2)~~(3)

Represents the weighted average rent per square foot recognized over the term of the respective leases, including the effect of free rent and fixed escalations.

~~(3)~~(4)

Includes the results of the properties that are owned, operated and in-service for the entirety of both periods being compared ~~which excludes~~except for properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared.

Additionally, investing and financing activity during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 included:

●

the ~~lease~~sale of the ~~land underlying 1900 Crystal Drive located in National Landing to~~Universal Buildings, Pen Place and a ~~lessee, which plans to construct~~development parcel for an ~~808-unit multifamily asset comprising two towers with ground floor retail. Through the structure~~aggregate gross sales price of ~~the 1900 Crystal Drive transaction, we have the ability to facilitate an exchange out of an asset into 1900 Crystal Drive~~. The ground lessee has engaged us to be the development manager for the construction of 1900 Crystal Drive, and separately, we are the lessee in a master lease of the asset. We have an option to acquire the asset until a specified period after completion.$429.3 million. See Note 53 to the financial statements for additional information;

●

the formation of an ~~investment in two~~unconsolidated real estate ~~ventures, in which we have 50% ownership interests,~~venture with affiliates of Fortress Investment Group LLC to ~~design, develop, manage and own approximately 2.0~~recapitalize a 1.6 million square ~~feet~~foot office portfolio and land parcels for a gross sales price of ~~new mixed-use development located in Potomac Yard, the southern portion of National Landing. We recognized an $11.3~~$580.0 million ~~gain on the land contributed to one of the real estate ventures based on the cash received and the remeasurement of our retained interest in the asset.~~comprising four wholly owned commercial assets. See Note 4 to the financial statements for additional information;

●	recognition of an aggregate gain of ~~$28.3~~$6.2 million from the sale of various assets by our unconsolidated real estate ventures. See Note 4 to the financial statements for additional information;

●

the ~~execution~~sale of ~~an agreement to~~ ~~acquire The Batley, a 432-unit multifamily asset~~investments in equity securities during the ~~Union Market submarket~~first quarter of ~~Washington, D.C., for a purchase price of approximately $205 million,~~2022, which ~~we intend to use as a replacement property~~had been carried at cost, resulting in a ~~like-kind exchange for the proceeds from the sale~~realized gain of ~~Pen Place to Amazon. See Note 3 to the financial statements for additional information;~~$13.9 million;

●

the amendment of a ~~new mortgage~~$200.0 million unsecured term loan, originally maturing in January 2023, to extend the maturity date to January 2025 with two one-year extension options, and to amend the interest rate to Secured Overnight Financing Rate ("SOFR") plus 1.15% to SOFR plus 1.75%, varying based on a ~~principal~~ratio of our total outstanding indebtedness to a valuation of certain real property and assets;

●	the repayment of the outstanding balance on our revolving credit facility totaling $300.0 million;

●	the payment of ~~$85.0~~dividends totaling $56.3 million ~~collateralized~~and distributions to our redeemable noncontrolling interests of $8.2 million;

●	the repurchase and retirement of 11.8 million of our common shares for $307.0 million, a weighted average purchase price per share of $25.91; and

●	the investment of $128.1 million in development, construction in progress and real estate additions.

Activity subsequent to June 30, 2022 included:

●	the borrowing of $100.0 million under our revolving credit facility, and the amendment of the interest rate to SOFR plus 1.15% to SOFR plus 1.60%, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets;

●

the amendment of a $200.0 million unsecured term loan to increase its borrowing capacity by ~~1225 S. Clark Street.~~$200.0 million. The ~~mortgage~~incremental $200.0 million includes a one-year delayed draw feature, which was undrawn as of the date of this filing. The amendment extends the maturity date of the term loan ~~has~~from July 2024 to January 2028 and amends the interest rate to SOFR plus 1.25% to SOFR plus 1.80% per annum, varying based on a ~~seven-year term~~ratio of our total outstanding indebtedness to a valuation of certain real property and assets. We also entered into two forward-starting interest rate swaps with an effective date of July 2024 and a total notional value of $200.0 million, which will effectively fix SOFR at a weighted average interest rate of ~~LIBOR plus 1.60% per annum;~~2.25% through the maturity date;

●	the acquisition of the remaining 36.0% ownership interest in Atlantic Plumbing, a multifamily asset owned by an unconsolidated real estate venture, for $19.7 million;

●	the repurchase and retirement of 1.5 million common shares for $36.0 million, a weighted average purchase price per share of $23.92, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended; and

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●	the ~~payment of dividends to our common shareholders totaling $88.9 million and distributions to our noncontrolling interests of $13.7 million;~~

●	~~the repurchase and retirement of 2.9 million of our common shares for $88.1 million, an average purchase price of $29.99 per share; and~~

●	~~the investment of $108.4 million in development, construction in progress and real estate additions.~~

~~Activity subsequent to September 30, 2021 included:~~

●	~~the~~ declaration of a quarterly dividend of $0.225 per common share, payable on ~~November 24, 2021~~August 26, 2022 to shareholders of record as of ~~November 10, 2021.~~August 12, 2022.

Critical Accounting ~~Policies and~~ Estimates

Our Annual Report ~~on Form 10-K for the year ended December 31, 2020~~ contains a description of our critical accounting ~~policies,~~estimates, including asset acquisitions, ~~and business combinations,~~ real estate, investments in real estate ventures and revenue ~~recognition and share-based compensation.~~recognition. There have been no significant changes to our policies during the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022.

Recent Accounting Pronouncements

See Note 2 to the financial statements for a description of recent accounting pronouncements.

Results of Operations

~~In January 2020,~~During the six months ended June 30, 2022, we sold ~~Metropolitan Park. In December 2020, we acquired~~ the ~~Americana Portfolio, which consists of a 1.4-acre future development parcel in National Landing that was formerly occupied by the Americana Hotel~~Universal Buildings and ~~three other parcels. In April 2021, we contributed Potomac Yard Landbay G~~Pen Place, and sold 7200 Wisconsin Avenue, 1730 M Street, RTC-West/RTC-West Trophy Office/RTC-West Land ("RTC-West") and Courthouse Plaza 1 and 2 to an unconsolidated real estate venture. We collectively refer to these assets as the "Disposed Properties" in the discussion below. In November 2021, we acquired The Batley.

Comparison of the Three Months Ended ~~September~~June 30, ~~2021~~2022 to ~~2020~~2021

The following summarizes certain line items from our statements of operations that we believe are important in understanding our operations and/or those items which significantly changed in the three months ended ~~September~~June 30, ~~2021~~2022 compared to the same period in ~~2020:~~2021:


	Three Months Ended September 30,						Three Months Ended June 30,
	2021		2020		% Change		2022		2021		% Change

	(Dollars in thousands)						(Dollars in thousands)
Property rental revenue	$	125,900	$	118,680	6.1	%	$	117,036	$	122,819	(4.7)	%
Third-party real estate services revenue, including reimbursements		25,842		26,987	(4.2)	%		22,157		26,745	(17.2)	%
Depreciation and amortization expense		56,726		56,481	0.4	%		49,479		56,678	(12.7)	%
Property operating expense		40,198		37,572	7.0	%		35,445		35,000	1.3	%
Real estate taxes expense		18,259		17,354	5.2	%		14,946		18,558	(19.5)	%
General and administrative expense:
Corporate and other		12,105		11,086	9.2	%		14,782		13,895	6.4	%
Third-party real estate services		25,542		28,207	(9.4)	%		24,143		25,557	(5.5)	%
Share-based compensation related to Formation Transaction and special equity awards		3,480		7,133	(51.2)	%		1,577		4,441	(64.5)	%
Transaction and other costs		2,951		845	249.2	%		1,987		2,270	(12.5)	%
Income (loss) from unconsolidated real estate ventures, net		20,503		(965)	*			(2,107)		3,953	(153.3)	%
Interest expense		17,243		16,885	2.1	%		16,041		16,773	(4.4)	%
Gain on the sale of real estate, net								158,767		11,290	*

* Not meaningful.

Property rental revenue ~~increased~~decreased by approximately ~~$7.2~~$5.8 million, or ~~6.1%~~4.7%, to ~~$125.9~~$117.0 million in ~~2021~~2022 from ~~$118.7~~$122.8 million in ~~2020.~~2021. The ~~increase~~decrease was primarily due to a $16.8 million decrease related to the Disposed Properties and a $1.3 million decrease related to 2451 Crystal Drive due to construction management services provided to tenants in 2021. The decrease in property rental revenue was partially offset by (i) a ~~$5.1~~$4.6 million increase related to ~~the deferral of rent~~ higher occupancy at several recently developed properties (4747 Bethesda Avenue, West Half, The Wren, 900 W Street and ~~the write-off of deferred rent receivables for tenants that were placed on the cash basis of accounting in 2020 and~~901 W Street), (ii) a ~~decrease in uncollectable operating lease receivables attributable to COVID-19 in 2021, (ii)~~ ~~a $4.7~~$2.8 million increase related to ~~4747 Bethesda Avenue,~~The Batley, (iii) a $1.8 million increase at RiverHouse and The Bartlett due to higher occupancy, (iv) a $1.4 million increase related to Crystal City Marriott due to increased occupancy, (v) a $1.3 million increase due to cash basis tenants paying previously deferred rent in 2022 and to a decrease in uncollectible operating lease receivables, and (vi) an $808,000 increase related to the commencement of a lease with Amazon at 2100 Crystal Drive.

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West Half, The Wren, 900 W Street and 901 W Street as these properties placed additional space into service, (iii) a $2.6 million increase related to 1770 Crystal Drive, which was placed into service in the fourth quarter of 2020, and (iv) a $1.8 million increase related to the commencement of the lease with Amazon at 2100 Crystal Drive. The increase in property rental revenue was partially offset by a $6.4 million decrease related to lower occupancy at the Universal Buildings, 2011 Crystal Drive, 2101 L Street and RTC-West.

Third-party real estate services revenue, including reimbursements, decreased by approximately ~~$1.1~~$4.6 million, or ~~4.2%~~17.2%, to ~~$25.8~~$22.2 million in ~~2021~~2022 from ~~$27.0~~$26.7 million in ~~2020.~~2021. The decrease was primarily due to (i) a ~~$2.0~~$2.2 million decrease in ~~reimbursements revenue, a $705,000 decrease in other service revenue and a $584,000 decrease in construction management~~development fees ~~partially offset by a $1.4 million increase in development fee revenue primarily~~ related to the timing of development projects, (ii) a $954,000 decrease in reimbursement revenue and (iii) a ~~$736,000 increase~~$716,000 decrease in ~~leasing fees.~~asset management fees due to the sale of assets within the JBG Legacy Funds.

Depreciation and amortization expense decreased by approximately $7.2 million, or 12.7%, to $49.5 million in 2022 from $56.7 million in 2021. The decrease was primarily due to an $8.7 million decrease related to the Disposed Properties and a $1.7 million decrease related to 2345 Crystal Drive primarily due to the amortization and disposal of certain tenant improvements in 2021. The decrease in depreciation and amortization expense was partially offset by a $2.9 million increase related to The Batley.

Property operating expense increased by approximately ~~$245,000,~~$445,000, or ~~0.4%~~1.3%, to ~~$56.7~~$35.4 million in ~~2021~~2022 from ~~$56.5~~$35.0 million in ~~2020.~~2021. The increase was primarily due to (i) a ~~$1.9~~$2.8 million increase in property operating expenses across our portfolio, primarily utility, and repairs and maintenance expenses, (ii) an $875,000 increase related to ~~2345 Crystal Drive due to~~The Batley, (iii) an ~~increase in tenant improvements, (ii) a $1.7 million~~$821,000 increase related to ~~4747~~higher occupancy at several recently developed properties (4747 Bethesda Avenue, West Half, The Wren, 900 W Street and 901 W ~~Street as these~~Street), (iv) a $772,000 increase at properties ~~placed additional space into service, and (iii) a $924,000 increase~~in our development pipeline due to ~~1770 Crystal Drive being placed into service. The~~an increase in ~~depreciation~~marketing expenses and ~~amortization expense was partially offset by~~(v) a ~~$4.0 million decrease related to 2000 South Bell Street and 2001 South Bell Street as we commenced construction on two new buildings in 2021.~~

~~Property operating expense increased by approximately $2.6 million, or 7.0%, to $40.2 million in 2021 from $37.6 million in 2020. The increase was primarily due to (i) a $1.2 million~~$552,000 increase related to 2451 Crystal Drive for costs incurred for construction management services provided to tenants, (ii) an $885,000 increase related to 4747 Bethesda Avenue, West Half, The Wren, 900 W Street and 901 W Street as these properties placed additional space into service, (iii) a $576,000 increase due to 1770 Crystal Drive being placed into service and (iv) $535,000 related to 2221 South Clark Street due to higher operating expenses.technology initiatives in National Landing. The increase in property operating expense was partially offset by a ~~$1.5~~$5.6 million decrease related to ~~1901 South Bell Street due to costs incurred in 2020 for construction management services provided to tenants.~~the Disposed Properties.

Real estate tax expense ~~increased~~decreased by approximately ~~$905,000,~~$3.6 million, or ~~5.2%~~19.5%, to ~~$18.3~~$14.9 million in ~~2021~~2022 from ~~$17.4~~$18.6 million in ~~2020.~~2021. The ~~increase~~decrease was primarily due to a ~~$548,000 increase~~$3.4 million decrease related to 4747 Bethesda Avenue and The Wren as these properties placed additional space into service, and a $543,000 increase related to 5 M Street Southwest due to an increase in its applicable tax rate in 2021.the Disposed Properties.

General and administrative expense: corporate and other increased by approximately ~~$1.0 million,~~$887,000, or ~~9.2%~~6.4%, to ~~$12.1~~$14.8 million in ~~2021~~2022 from ~~$11.1~~$13.9 million in ~~2020.~~2021. The increase was primarily due to ~~a decrease~~an increase in ~~capitalizable payroll costs related to development projects.~~compensation expense.

General and administrative expense: third-party real estate services decreased by approximately ~~$2.7~~$1.4 million, or ~~9.4%~~5.5%, to ~~$25.5~~$24.1 million in ~~2021~~2022 from ~~$28.2~~$25.6 million in ~~2020.~~2021. The decrease was primarily due to a decrease in reimbursable ~~expenses.~~expenses, partially offset by an increase in compensation expense.

General and administrative expense: share-based compensation related to Formation Transaction and special equity awards decreased by approximately ~~$3.7~~$2.9 million, or ~~51.2%~~64.5%, to ~~$3.5~~$1.6 million in ~~2021~~2022 from ~~$7.1~~$4.4 million in ~~2020.~~2021. The decrease was primarily due to the graded vesting of certain awards issued in prior years, which resulted in lower expense as portions of the awards vested.

Transaction and other costs of ~~$3.0~~$2.0 million in ~~2021 primarily~~2022 included ~~$1.4 million~~(i) $854,000 of expenses related to completed, potential and pursued transactions, (ii) $727,000 of integration and severance costs and (iii) $406,000 of demolition costs related to ~~2000 South Bell~~223 23^rd Street and ~~2001 South Bell Street~~2250/2300 Crystal Drive. Transaction and ~~$1.4~~other costs of $2.3 million in 2021 included (i) $1.6 million of expenses related to completed, potential and pursued ~~transactions. Transaction and other costs of $845,000 in 2020 consisted of $406,000 of integration and severance costs, $260,000 of expenses related to completed, potential and pursued~~ transactions, ~~and $179,000~~(ii) $439,000 of demolition costs related to ~~223 23rd~~2000/2001 South Bell Street and ~~2300 Crystal Drive.~~(iii) $222,000 of integration and severance costs.

Income (loss) from unconsolidated real estate ventures ~~increased~~decreased by approximately ~~$21.5~~$6.1 million, or 153.3%, to ~~$20.5 million for 2021 from~~ a loss of ~~$965,000~~$2.1 million for 2022 from income of $4.0 million in ~~2020.~~2021. The ~~increase~~decrease was primarily due to a $4.3 million reduction in gains on sale of real estate related to various asset sales in 2022 compared to 2021 and a $1.8 million loss on the ~~recognition~~extinguishment of debt related to a property that was sold in 2022.

Interest expense decreased by approximately $732,000, or 4.4%, to $16.0 million in 2022 from $16.8 million in 2021. The decrease in interest expense was due to a $2.0 million increase in the fair value of our ~~proportionate share of~~interest rate caps due to rising interest rates and a $1.0 million decrease related to the ~~gain from the sale of 500 L'Enfant Plaza of $23.1 million.~~Disposed Properties. The decrease in interest expense was partially offset by (i) a $1.1 million increase due to new mortgage loans entered into in 2021 at 1225 S. Clark Street and 1215 S. Clark Street, (ii) a $445,000 increase related to a higher average outstanding balance on our revolving credit facility, (iii) a $276,000 increase at 4747 Bethesda due to rising interest rates and (iv) a $199,000 increase due to an increase in ~~income from unconsolidated real estate ventures was~~rates related to the Tranche A-1 Term Loan.

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~~partially offset by a $1.4 million impairment~~Gain on the sale of ~~our investment in an unconsolidated~~ real estate ~~venture due to a decrease in the value~~ of ~~the underlying asset.~~

~~Interest expense increased by approximately $358,000, or 2.1%, to $17.2~~$158.8 million in ~~2021 from $16.9 million in 2020. The increase~~2022 was ~~primarily due to a $1.3 million decrease in capitalized interest primarily~~ due to the ~~placing~~disposition of additional space into service at 4747 Bethesda Avenue, West Half, The Wren, 901 W Street and 1770 Crystal Drive, and a $293,000 increase due to a new mortgage loan at 1225 S. Clark Street. The increase in interest expense was partially offset by a $1.2 million decrease relatedthe Disposed Properties. See Note 3 to the ~~repayment of a mortgage loan at WestEnd25 in 2020.~~

~~Comparison of the Nine Months Ended September 30, 2021 to 2020~~

~~The following summarizes certain line items from our~~financial statements of operations that we believe are important in understanding our operations and/or those items which significantly changed in the nine months ended September 30, 2021 compared to the same period in 2020:

Nine Months Ended September 30,


2021

2020

% Change

(Dollars in thousands)

Property rental revenue

$
370,960

$
354,519

4.6
%
Third-party real estate services revenue, including reimbursements

90,694

83,870

8.1
%
Depreciation and amortization expense

178,130

157,586

13.0
%
Property operating expense

109,929

105,867

3.8
%
Real estate taxes expense

55,127

53,422

3.2
%
General and administrative expense:

Corporate and other

38,475

37,478

2.7
%
Third-party real estate services

80,035

86,260

(7.2)
%
Share-based compensation related to Formation Transaction and special equity awards

12,866

25,432

(49.4)
%
Transaction and other costs

8,911

7,526

18.4
%
Income (loss) from unconsolidated real estate ventures, net

23,513

(17,142)

237.2
%
Interest expense

50,312

44,660

12.7
%
Gain on sale of real estate

11,290

59,477

(81.0)
%

Property rental revenue increased by approximately $16.4 million, or 4.6%, to $371.0 million in 2021 from $354.5 million in 2020. The increase was primarily due to (i) a $12.8 million increase related to 4747 Bethesda Avenue, West Half, The Wren, 900 W Street and 901 W Street as these properties placedfor additional ~~space into service, (ii) an $11.1 million increase due to~~ the deferral of rent and the write-off of deferred rent receivable for tenants that were placed on the cash basis of accounting in 2020 and a decrease in uncollectable operating lease receivables attributable to COVID-19, (iii) a $7.4 million increase related to 1770 Crystal Drive, which was placed into service in the fourth quarter of 2020, (iv) a $3.9 million increase related to 1225 S. Clark Street due to the commencement of a lease and (v) a $3.2 million increase related to the additional space leased by Amazon at 2345 Crystal Drive. The increase in property rental revenue was partially offset by (i) a $14.1 million decrease related to lower occupancy at the Universal Buildings, 2011 Crystal Drive, 2101 L Street and RTC-West, (ii) a $4.2 million decrease related to RiverHouse Apartments and The Bartlett due to increased rent concessions and lower market rents, and (iii) a $3.4 million decrease related to 1901 South Bell Street due to tenant reimbursements for construction services in 2020.

Third-party real estate services revenue, including reimbursements, increased by approximately $6.8 million, or 8.1%, to $90.7 million in 2021 from $83.9 million in 2020. The increase was primarily due to a $14.2 million increase in development fees related to the timing of development projects. The increase in third-party real estate services revenue was partially offset by a $3.8 million decrease in reimbursements revenue, a $1.7 million decrease in property and asset management fees due to the sale of assets within the JBG Legacy Funds and a $1.7 million decrease in construction management fees due to the timing of construction projects.

Depreciation and amortization expense increased by approximately $20.5 million, or 13.0%, to $178.1 million in 2021 from $157.6 million in 2020. The increase was primarily due to (i) an $8.1 million increase related to 4747 Bethesda Avenue, West Half, The Wren, 900 W Street and 901 W Street as these properties placed additional space into service, (ii) a $6.8 million increase related to the Universal Buildings due to the write-off of certain tenant improvements, (iii) a $6.0 million increase related to 2345 Crystal Drive due to an increase in tenant improvements, (iv) a $2.5 million increase due to 1770

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Crystal Drive being placed into service, (v) a $1.5 million increase related to 1550 Crystal Drive as additional space was placed into service and (vi) a $1.3 million increase related to RTC-West due to the acceleration of depreciation of certain assets. The increase in depreciation and amortization expense was partially offset by a $5.1 million decrease related to 2000 South Bell Street and 2001 South Bell Street as we commenced construction on two new buildings in 2021.

Property operating expense increased by approximately $4.1 million, or 3.8%, to $109.9 million in 2021 from $105.9 million in 2020. The increase was primarily due to (i) a $3.3 million increase related to 4747 Bethesda Avenue, West Half, The Wren, 900 W Street and 901 W Street as these properties placed additional space into service, (ii) a $2.8 million increase related to 2451 Crystal Drive due to costs incurred for construction management services provided to tenants, (iii) a $1.4 million increase due to 1770 Crystal Drive being placed into service and (iv) an $832,000 increase at Courthouse Plaza 1 and 2 related to ground rent expense. The increase in property operating expense was partially offset by a $4.3 million decrease related to 1901 South Bell Street due to costs incurred in 2020 for construction management services provided to tenants.

Real estate tax expense increased by approximately $1.7 million, or 3.2%, to $55.1 million in 2021 from $53.4 million in 2020. The increase was primarily due to (i) a $1.8 million increase at 4747 Bethesda Avenue, West Half, The Wren, 900 W Street and 901 W Street as these properties placed additional space into service, (ii) a $701,000 increase related to 5 M Street Southwest due to an increase in its applicable tax rate in 2021 and (iii) an increase of $533,000 due to 1770 Crystal Drive being placed into service. The increase in real estate tax expense was partially offset by a decrease in real estate tax assessments for various properties located in National Landing.

General and administrative expense: corporate and other increased by approximately $997,000, or 2.7%, to $38.5 million in 2021 from $37.5 million in 2020. The increase was primarily due to a decrease in capitalizable payroll costs related to development projects.

General and administrative expense: third-party real estate services decreased by approximately $6.2 million, or 7.2%, to $80.0 million in 2021 from $86.3 million in 2020. This decrease was primarily due to a decrease in reimbursable expenses and a decrease in share-based compensation expense.

General and administrative expense: share-based compensation related to Formation Transaction and special equity awards decreased by approximately $12.6 million, or 49.4%, to $12.9 million in 2021 from $25.4 million in 2020. The decrease was primarily due to the graded vesting of certain awards issued in prior years, which resulted in lower expense as portions of the awards vested.

Transaction and other costs of $8.9 million in 2021 consisted of $5.4 million of expenses related to completed, potential and pursued transactions, $2.9 million of demolition costs related to 2000 South Bell Street and 2001 South Bell Street and $616,000 of integration and severance costs. Transaction and other costs of $7.5 million in 2020 primarily included $4.0 million of costs related to a charitable commitment to the Washington Housing Conservancy, a non-profit that acquires and owns affordable workforce housing in the Washington, D.C. metropolitan area, and $3.1 million of integration and severance costs.

Income from unconsolidated real estate ventures increased by approximately $40.7 million, or 237.2%, to $23.5 million for 2021 from a loss of $17.1 million in 2020. The increase was primarily due to (i) the recognition of our proportionate share of the gain from the sale of various assets totaling $28.3 million as compared to a $3.0 million loss from the sale of Woodglen in 2020 and (ii) a $6.5 million impairment charge recognized in 2020 related to our investment in a venture that owned The Marriott Wardman Park hotel, and $2.7 million for losses incurred from its COVID-19 related closure. The increase in income from unconsolidated real estate ventures was partially offset by a $1.4 million impairment of our investment in an unconsolidated real estate venture due to a decrease in the value of the underlying asset.

Interest expense increased by approximately $5.7 million, or 12.7%, to $50.3 million in 2021 from $44.7 million in 2020. The increase was primarily due to a $6.7 million decrease in capitalized interest primarily due to the placing of additional space into service at 4747 Bethesda Avenue, West Half, The Wren, 901 W Street and 1770 Crystal Drive and a $5.7 million increase due to new mortgage loans entered into in 2020 at 1221 Van Street, The Bartlett and 220 20^th ~~Street. The increase was also due to higher average outstanding balances under our unsecured term loans. The increase in interest expense was~~

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~~partially offset by a lower outstanding balance under our revolving credit facility and a $3.6 million decrease related to the repayment of a mortgage loan at WestEnd25 in 2020.~~

information. Gain on the sale of real estate of $11.3 million in 2021 was based on the cash received and the remeasurement of our retained interest in the land we contributed to one of our unconsolidated real estate ventures.

Comparison of the Six Months Ended June 30, 2022 to 2021

The following summarizes certain line items from our statements of operations that we believe are important in understanding our operations and/or those items which significantly changed in the six months ended June 30, 2022 compared to the same period in 2021:


		Six Months Ended June 30,
		2022		2021		% Change

	(Dollars in thousands)
Property rental revenue		$	248,634	$	245,060	1.5	%
Third-party real estate services revenue, including reimbursements			46,127		64,852	(28.9)	%
Depreciation and amortization expense			107,541		121,404	(11.4)	%
Property operating expense			76,089		69,731	9.1	%
Real estate taxes expense			33,132		36,868	(10.1)	%
General and administrative expense:
Corporate and other			30,597		26,370	16.0	%
Third-party real estate services			51,192		54,493	(6.1)	%
Share-based compensation related to Formation Transaction and special equity awards			3,821		9,386	(59.3)	%
Transaction and other costs			2,886		5,960	(51.6)	%
Income from unconsolidated real estate ventures, net			1,038		3,010	65.5	%
Interest and other income (loss), net			15,918		(29)	*
Interest expense			32,319		33,069	(2.3)	%
Gain on the sale of real estate, net			158,631		11,290	*

* Not meaningful.

Property rental revenue increased by approximately $3.6 million, or 1.5%, to $248.6 million in 2022 from $245.1 million in 2021. The increase was primarily due to (i) a $9.1 million increase related to higher occupancy at several recently developed properties (4747 Bethesda Avenue, West Half, The Wren, 900 W Street and 901 W Street), (ii) a $5.6 million increase related to The Batley, (iii) a $3.7 million increase related to the commencement of a lease with Amazon at 2100 Crystal Drive, (iv) a $3.0 million increase at RiverHouse and The Bartlett due to higher occupancy and (v) a $1.4 million increase related to Crystal City Marriott due to increased occupancy. The increase in property rental revenue was partially offset by an $18.5 million decrease related to the Disposed Properties.

Third-party real estate services revenue, including reimbursements, decreased by approximately $18.7 million, or 28.9%, to $46.1 million in 2022 from $64.9 million in 2021. The decrease was primarily due to a $13.0 million decrease in development fees related to the timing of development projects and a $3.9 million decrease in reimbursement revenue due to the termination of a management agreement.

Depreciation and amortization expense decreased by approximately $13.9 million, or 11.4%, to $107.5 million in 2022 from $121.4 million in 2021. The decrease was primarily due to an $18.5 million decrease related to the Disposed Properties and a $3.6 million decrease related to 2345 Crystal Drive primarily due to the amortization and disposal of certain tenant improvements in 2021. The decrease in depreciation and amortization expense was partially offset by a $7.2 million increase related to The Batley and an $820,000 increase related to 1770 Crystal Drive due to new tenants taking occupancy.

Property operating expense increased by approximately $6.4 million, or 9.1%, to $76.1 million in 2022 from $69.7 million in 2021. The increase was primarily due to (i) a $4.2 million increase in property operating expenses across our portfolio, primarily utility, and repairs and maintenance expenses, (ii) a $2.3 million increase related to technology initiatives in National Landing, (iii) a $1.8 million increase related to The Batley, (iv) a $1.4 million increase related to higher occupancy at several recently developed properties (4747 Bethesda Avenue, West Half, The Wren, 900 W Street and 901 W Street), (v) a $1.0 million increase at properties in our development pipeline due to an increase in marketing expenses and (vi) a $902,000 increase related to 2221 S. Clark Street – Residential due to higher property management and other operating

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expenses. The increase in property operating expense was partially offset by a $5.7 million decrease related to the Disposed Properties.

Real estate tax expense decreased by approximately $3.7 million, or 10.1%, to $33.1 million in 2022 from $36.9 million in 2021. The decrease was primarily due to a $3.8 million decrease related to the Disposed Properties.

General and administrative expense: corporate and other increased by approximately $4.2 million, or 16.0%, to $30.6 million in 2022 from $26.4 million in 2021. The increase was primarily due to an increase in compensation expense.

General and administrative expense: third-party real estate services decreased by approximately $3.3 million, or 6.1%, to $51.2 million in 2022 from $54.5 million in 2021. The decrease was primarily due to a decrease in reimbursable expenses, partially offset by an increase in compensation expense.

General and administrative expense: share-based compensation related to Formation Transaction and special equity awards decreased by approximately $5.6 million, or 59.3%, to $3.8 million in 2022 from $9.4 million in 2021. The decrease was primarily due to the graded vesting of certain awards issued in prior years, which resulted in lower expense as portions of the awards vested.

Transaction and other costs of $2.9 million in 2022 included (i) $1.6 million of expenses related to completed, potential and pursued transactions, (ii) $872,000 of integration and severance costs and (iii) $428,000 of demolition costs related to 223 23^rd Street and 2250/2300 Crystal Drive. Transaction and other costs of $6.0 million in 2021 included (i) $4.1 million of expenses related to completed, potential and pursued transactions, (ii) $1.4 million of demolition costs related to 2000/2001 South Bell Street and (iii) $462,000 of integration and severance costs.

Income from unconsolidated real estate ventures decreased by approximately $2.0 million, or 65.5%, to $1.0 million for 2022 from $3.0 million in 2021. The decrease was primarily due to a $1.0 million reduction in gains on sale of real estate related to various asset sales in 2022 compared to 2021.

Interest and other income of $15.9 million in 2022 was primarily related to a realized gain of $13.9 million from the sale of investments in equity securities during the first quarter of 2022, which had been carried at cost, and a $1.2 million unrealized gain in 2022 related to equity investments carried at fair value.

Interest expense decreased by approximately $750,000, or 2.3%, to $32.3 million in 2022 from $33.1 million in 2021. The decrease in interest expense was due to a $5.4 million increase in the fair value of our interest rate caps due to rising interest rates and a $1.2 million decrease related to 1730 M Street and RTC-West, which were sold to an unconsolidated real estate venture in April 2022. The decrease in interest expense was partially offset by (i) a $2.0 million increase due to new mortgage loans entered into in 2021 at 1225 S. Clark Street and 1215 S. Clark Street, (ii) a $1.6 million increase at Courthouse Plaza 1 and 2 due to a ground lease amendment in December 2021, which resulted in the ground lease being treated as a finance lease until we sold the asset to an unconsolidated real estate venture in April 2022, (iii) a $1.3 million increase related to a higher average outstanding balance on our revolving credit facility, (iv) a $326,000 increase related to 4747 Bethesda Avenue due to rising interest rates and (v) a $244,000 increase due to an increase in rates related to the Tranche A-1 Term Loan.

Gain on the sale of real estate of $158.6 million in 2022 was primarily due to the sale of the Disposed Properties. See Note 43 to the financial statements for additional information. Gain on the sale of real estate of ~~$59.5~~$11.3 million in ~~2020~~2021 was ~~due~~based on the cash received and the remeasurement of our retained interest in the land we contributed to ~~the sale~~one of ~~Metropolitan Park.~~our unconsolidated real estate ventures.

FFO

FFO is a non-GAAP financial measure computed in accordance with the definition established by the National Association of Real Estate Investment Trusts ("~~NAREIT"~~Nareit") in the ~~NAREIT~~Nareit FFO White Paper - 2018 Restatement. ~~NAREIT~~Nareit defines FFO as net income (loss) (computed in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs

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of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, including our share of such adjustments for unconsolidated real estate ventures.

We believe FFO is a meaningful non-GAAP financial measure useful in comparing our levered operating performance from period-to-period and as compared to similar real estate companies because FFO excludes real estate depreciation and amortization expense and other non-comparable income and expenses, which implicitly assumes that the value of real estate diminishes predictably over time rather than fluctuating based on market conditions. FFO does not represent cash generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income (loss) (computed in accordance with GAAP), as a performance measure or cash flow as a liquidity measure. FFO may not be comparable to similarly titled measures used by other companies.

The following is the reconciliation of net income (loss) attributable to common shareholders, the most directly comparable GAAP measure, to FFO:

Three Months Ended September 30,

Nine Months Ended September 30,


2021

2020
X
2021

2020

(In thousands)
Net income (loss) attributable to common shareholders

$
893

$
(22,793)

$
(22,811)

$
(16,648)
Net income (loss) attributable to redeemable noncontrolling interests

103

(2,212)

(2,472)

(445)
Net loss attributable to noncontrolling interests

—

—

(1,108)

—
Net income (loss)

996

(25,005)

(26,391)

(17,093)
Gain on sale of real estate

—

—

(11,290)

(59,477)
(Gain) loss on sale of unconsolidated real estate assets

(23,137)

—

(28,326)

2,952
Real estate depreciation and amortization

54,547

54,004

171,522

149,590
Impairment of investments in unconsolidated real estate ventures ⁽¹⁾

1,380

—

1,380

6,522
Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures

7,002

7,350

21,590

21,730
FFO attributable to noncontrolling interests

(54)

(4)

976

(7)
FFO attributable to OP Units

40,734

36,345

129,461

104,217
FFO attributable to redeemable noncontrolling interests

(4,703)

(3,945)

(13,242)

(11,353)
FFO attributable to common shareholders

$
36,031

$
32,400

$
116,219

$
92,864

~~(1)~~

~~Related to decreases in the value of the underlying assets.~~


	Three Months Ended June 30,					Six Months Ended June 30,
	2022		2021		X	2022		2021

	(In thousands)
Net income (loss) attributable to common shareholders	$	123,275	$	(2,973)		$	123,243	$	(23,704)
Net income (loss) attributable to redeemable noncontrolling interests		18,248		(345)			18,258		(2,575)
Net loss attributable to noncontrolling interests		(29)		—			(84)		(1,108)
Net income (loss)		141,494		(3,318)			141,417		(27,387)
Gain on the sale of real estate, net of tax		(155,642)		(11,290)			(155,506)		(11,290)
Gain on the sale of unconsolidated real estate assets		(936)		(5,189)			(6,179)		(5,189)
Real estate depreciation and amortization		47,242		54,475			102,759		116,975
Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures		6,416		7,277			13,286		14,588
FFO attributable to noncontrolling interests		(47)		(41)			(73)		1,030
FFO attributable to common limited partnership units ("OP Units")		38,527		41,914			95,704		88,727
FFO attributable to redeemable noncontrolling interests		(4,966)		(4,054)			(10,843)		(8,539)
FFO attributable to common shareholders	$	33,561	$	37,860		$	84,861	$	80,188

NOI and Same Store NOI

NOI is a non-GAAP financial measure management uses to assess a segment's performance. The most directly comparable GAAP measure is net income (loss) attributable to common shareholders. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only property related revenue (which includes base rent, tenant reimbursements and other operating revenue, net

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of free rent and payments associated with assumed lease liabilities) less operating expenses and ground rent for operating leases, if applicable. NOI also excludes deferred rent, related party management fees, interest expense, and certain other non-cash adjustments, including the accretion of acquired below-market leases and the amortization of acquired above-market leases and below-market ground lease intangibles. Management uses NOI as a supplemental performance measure of our assets and believes it provides useful information to investors because it reflects only those revenue and expense items that are incurred at the asset level, excluding non-cash items. In addition, NOI is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets. However, because NOI excludes depreciation and amortization and captures neither the changes in the value of our assets that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our assets, all of which have real economic effect and could materially impact the financial performance of our assets, the utility of NOI as a measure of the operating performance of our assets is limited. NOI presented by us may not be comparable to NOI reported by other REITs that define these measures differently. We believe to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) attributable to common shareholders as presented in our consolidated financial statements. NOI should not be considered as an alternative to net income (loss) attributable to common shareholders as an indication of our performance or to cash flows as a measure of liquidity or our ability to make distributions.

~~During the three months ended September 30, 2021, our same store pool decreased to 55 properties from 56 properties due to the exclusion~~38

Table of 500 L'Enfant Plaza, which was sold by an unconsolidated real estate venture during the period. During the nine months ended September 30, 2021, our same store pool increased from 52 properties to 55 properties due to the inclusion of 1800 South Bell Street, F1RST Residences, 1221 Van Street and the commercial portion of 2221 S. Clark Street, and the exclusion of Fairway Apartments, which was sold during the period. Contents

Information provided on a same store basis includes the results of properties that are owned, operated and in-service for the entirety of both periods being compared, which excludes properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. During the three months ended June 30, 2022, our same store pool decreased to 52 properties from 59 properties due to the exclusion of the Universal Buildings, 7200 Wisconsin Avenue, 1730 M Street, RTC-West, Courthouse Plaza 1 and 2, Galvan and 1900 N Street, which were sold during the period. During the six months ended June 30, 2022, our same store pool decreased to 52 properties from 55 properties due to the inclusion of West Half, 901 W Street, 900 W Street, 1770 Crystal Drive, and 4747 Bethesda Avenue, and the exclusion of The Alaire, The Terano, the Universal Buildings, 7200 Wisconsin Avenue, 1730 M Street, RTC-West, Courthouse Plaza 1 and 2, and Galvan, which were sold during the period. While there is judgment surrounding changes in designations, a property is removed from the same store pool when the property is considered to be under-construction because it is undergoing significant redevelopment or renovation pursuant to a formal plan or is being repositioned in the market and such renovation or repositioning is expected to have a significant impact on property NOI. A development property or under-construction property is moved to the same store pool once a substantial portion of the growth expected from the development or redevelopment is reflected in both the current and comparable prior year period. Acquisitions are moved into the same store pool once we have owned the property for the entirety of the comparable periods and the property is not under significant development or redevelopment.

Same store NOI ~~remained at $72.7~~increased $9.6 million, or 13.8%, to $79.3 million for the three months ended ~~September~~June 30, 2021 compared to the same period in 2020. Same Store NOI was positively impacted by a decrease in uncollectable operating lease receivables and rent deferrals, which was offset by lower occupancy in our commercial portfolio, and lower rents and higher concessions for certain of our multifamily assets.

~~Same store NOI decreased $7.7 million, or 3.3%, to $223.3 million for the nine months ended September 30, 2021~~2022 from ~~$231.0~~$69.7 million for the same period in ~~2020.~~2021. Same store NOI increased $18.9 million, or 13.9%, to $155.4 million for the six months ended June 30, 2022 from $136.5 million for the same period in 2021. The ~~decrease~~increase was substantially attributable to ~~the COVID-19 pandemic, which commenced at the end of the first quarter of 2020, including~~ (i) higher occupancy and rents, and lower concessions and ~~lower rents~~bad debt reserves in our multifamily portfolio, ~~and~~ (ii) ~~lower~~higher occupancy and ~~a decline~~average daily rates at the Crystal City Marriott, (iii) an increase in parking revenue in our commercial ~~portfolio. These declines were partially offset by a decrease~~portfolio and (iv) the burn-off of rent abatement in ~~cleaning expenses across~~ our commercial portfolio.

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The following is the reconciliation of net income (loss) attributable to common shareholders to NOI and same store NOI:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020		2022		2021		2022		2021

	(Dollars in thousands)								(Dollars in thousands)
Net income (loss) attributable to common shareholders	$	893	$	(22,793)	$	(22,811)	$	(16,648)	$	123,275	$	(2,973)	$	123,243	$	(23,704)
Add:
Depreciation and amortization expense		56,726		56,481		178,130		157,586		49,479		56,678		107,541		121,404
General and administrative expense:
Corporate and other		12,105		11,086		38,475		37,478		14,782		13,895		30,597		26,370
Third-party real estate services		25,542		28,207		80,035		86,260		24,143		25,557		51,192		54,493
Share-based compensation related to Formation Transaction and special equity awards		3,480		7,133		12,866		25,432		1,577		4,441		3,821		9,386
Transaction and other costs		2,951		845		8,911		7,526		1,987		2,270		2,886		5,960
Interest expense		17,243		16,885		50,312		44,660		16,041		16,773		32,319		33,069
Loss on extinguishment of debt		—		—		—		33
Loss on the extinguishment of debt										1,038		—		1,629		—
Income tax expense (benefit)		217		(488)		4,527		(3,721)		2,905		(5)		2,434		4,310
Net income (loss) attributable to redeemable noncontrolling interests		103		(2,212)		(2,472)		(445)		18,248		(345)		18,258		(2,575)
Net loss attributable to noncontrolling interests		—		—		(1,108)		—		(29)		—		(84)		(1,108)
Less:
Third-party real estate services, including reimbursements revenue		25,842		26,987		90,694		83,870		22,157		26,745		46,127		64,852
Other revenue		1,568		2,292		5,658		5,438		1,798		1,904		3,994		4,090
Income (loss) from unconsolidated real estate ventures, net		20,503		(965)		23,513		(17,142)		(2,107)		3,953		1,038		3,010
Interest and other income, net		192		—		163		1,021
Gain on sale of real estate		—		—		11,290		59,477
Interest and other income (loss), net										1,672		(38)		15,918		(29)
Gain on the sale of real estate, net										158,767		11,290		158,631		11,290
Consolidated NOI		71,155		66,830		215,547		205,497		71,159		72,437		148,128		144,392
NOI attributable to unconsolidated real estate ventures at our share		7,336		7,130		22,951		23,206		8,321		8,109		15,268		15,613
Non-cash rent adjustments ⁽¹⁾		(3,701)		(4,934)		(12,554)		(9,898)		(1,978)		(4,088)		(3,769)		(8,853)
Other adjustments ⁽²⁾		4,683		2,881		14,608		9,236		5,695		5,191		14,443		9,933
Total adjustments		8,318		5,077		25,005		22,544		12,038		9,212		25,942		16,693
NOI		79,473		71,907		240,552		228,041		83,197		81,649		174,070		161,085
Less: out-of-service NOI loss ⁽³⁾		(2,019)		(442)		(4,638)		(2,774)		(2,046)		(1,329)		(3,498)		(2,619)
Operating Portfolio NOI		81,492		72,349		245,190		230,815		85,243		82,978		177,568		163,704
Non-same store NOI ⁽⁴⁾		8,777		(388)		21,868		(165)		5,915		13,257		22,152		27,226
Same store NOI ⁽⁵⁾	$	72,715	$	72,737	$	223,322	$	230,980	$	79,328	$	69,721	$	155,416	$	136,478

Change in same store NOI		0.0%				(3.3)%				13.8%				13.9%
Number of properties in same store pool		55				55				52				52

(1)	Adjustment to exclude straight-line rent, above/below market lease amortization and lease incentive amortization.

(2)	Adjustment to include other revenue and payments associated with assumed lease liabilities related to operating properties and to exclude commercial lease termination revenue and allocated corporate general and administrative expenses to operating properties.

(3)	Includes the results of our under-construction assets, and near-term and future development pipelines.

(4)	Includes the results of properties that were not in-service for the entirety of both periods being compared and properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared.

(5)	Includes the results of the properties that are owned, operated and in-service for the entirety of both periods being compared.

Reportable Segments

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 ~~defined~~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 (commercial, multifamily, and third-party asset management and real estate services) based on the economic characteristics and nature of our assets and services.

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	Three Months Ended September 30,					Nine Months Ended September 30,				Three Months Ended June 30,					Six Months Ended June 30,
	2021		2020		X	2021		2020		2022		2021		X	2022		2021

	(In thousands)									(In thousands)
Property management fees	$	4,831	$	4,694		$	14,549	$	15,453	$	4,976	$	4,776		$	9,784	$	9,718
Asset management fees		2,145		2,301			6,602		7,400		1,513		2,229			3,284		4,457
Development fees ⁽¹⁾		4,032		2,614			22,705		8,474		2,148		4,392			5,687		18,642
Leasing fees		1,822		1,086			4,106		3,627		1,038		1,424			2,877		2,284
Construction management fees		—		584			375		2,057		37		234			187		406
Other service revenue		1,295		2,000			4,783		5,452		1,499		1,790			2,315		3,488
Third-party real estate services revenue, excluding reimbursements		14,125		13,279			53,120		42,463		11,211		14,845			24,134		38,995
Reimbursement revenue ⁽²⁾		11,717		13,708			37,574		41,407		10,946		11,900			21,993		25,857
Third-party real estate services revenue, including reimbursements		25,842		26,987			90,694		83,870		22,157		26,745			46,127		64,852
Third-party real estate services expenses		25,542		28,207			80,035		86,260		24,143		25,557			51,192		54,493
Third-party real estate services revenue less expenses	$	300	$	(1,220)		$	10,659	$	(2,390)	$	(1,986)	$	1,188		$	(5,065)	$	10,359

(1)

(2)	Represents reimbursements 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.

See discussion of third-party real estate services revenue, including reimbursements, and third-party real estate services expenses for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 in the preceding pages under "Results of Operations."

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

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Property revenue is calculated as property rental revenue plus parking revenue. Property expense is calculated as property operating expenses plus real estate taxes. Consolidated NOI is calculated as property revenue less property expense. See Note 16 to the financial statements for the reconciliation of net income (loss) attributable to common shareholders to consolidated NOI for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021. The following is a summary of NOI by segment:


	Three Months Ended September 30,					Nine Months Ended September 30,				Three Months Ended June 30,					Six Months Ended June 30,
	2021		2020		X	2021		2020		2022		2021		X	2022		2021

	(In thousands)									(In thousands)
Property revenue:
Commercial	$	96,042	$	93,052		$	284,905	$	276,841	$	76,090	$	92,148		$	167,723	$	182,019
Multifamily		35,131		30,526			100,610		95,122		43,189		32,828			85,431		65,479
Other ⁽¹⁾		(1,561)		(1,822)			(4,912)		(7,177)		2,271		1,019			4,195		3,493
Total property revenue		129,612		121,756			380,603		364,786		121,550		125,995			257,349		250,991

Property expense:
Commercial		39,166		38,837			112,173		115,177		28,642		37,245			66,621		72,981
Multifamily		19,142		17,882			53,689		48,326		19,924		17,107			38,900		34,547
Other ⁽¹⁾		149		(1,793)			(806)		(4,214)		1,825		(794)			3,700		(929)
Total property expense		58,457		54,926			165,056		159,289		50,391		53,558			109,221		106,599

Consolidated NOI:
Commercial		56,876		54,215			172,732		161,664		47,448		54,903			101,102		109,038
Multifamily		15,989		12,644			46,921		46,796		23,265		15,721			46,531		30,932
Other ⁽¹⁾		(1,710)		(29)			(4,106)		(2,963)		446		1,813			495		4,422
Consolidated NOI	$	71,155	$	66,830		$	215,547	$	205,497	$	71,159	$	72,437		$	148,128	$	144,392

(1)	Includes activity related to future development assets, ~~and~~ground leases in which we are the lessor, corporate entities and the elimination of ~~intersegment~~inter-segment activity.

Comparison of the Three Months Ended ~~September~~June 30, ~~2021~~2022 to ~~2020~~2021

Commercial: Property rental revenue ~~increased~~decreased by ~~$3.0~~$16.1 million, or ~~3.2%~~17.4%, to ~~$96.0~~$76.1 million in ~~2021~~2022 from ~~$93.1~~$92.1 million in ~~2020.~~2021. Consolidated NOI ~~increased~~decreased by ~~$2.7~~$7.5 million, or ~~4.9%~~13.6%, to ~~$56.9~~$47.4 million in ~~2021~~2022 from ~~$54.2~~$54.9 million in ~~2020.~~2021. The ~~increase~~decreases in property revenue and consolidated NOI ~~was~~were due to ~~(i) a decline~~the Disposed Properties, which were partially offset by an increase at the Crystal City Marriott due to higher occupancy, an increase in ~~rent deferrals~~parking revenue driven by an increase in both contract and ~~uncollectable operating lease receivables related to tenants impacted by COVID-19, (ii) increases related to 1770 Crystal Drive as the property was placed into service,~~transient parking, and ~~(iii) increases related to~~an increase at 2100 ~~Crystal Drive, 1225 South Clark Street and 2345~~ Crystal Drive due to ~~higher occupancy. These increases were partially offset by~~the commencement of a ~~decrease related to the Universal Buildings and 2101 L Street due to lower occupancy.~~lease with Amazon.

Multifamily: Property rental revenue increased by ~~$4.6~~$10.4 million, or ~~15.1%~~31.6%, to ~~$35.1~~$43.2 million in ~~2021~~2022 from ~~$30.5~~$32.8 million in ~~2020.~~2021. Consolidated NOI increased by ~~$3.3~~$7.5 million, or ~~26.5%~~48.0%, to ~~$16.0~~$23.3 million in ~~2021~~2022 from ~~$12.6~~$15.7 million in ~~2020.~~2021. The ~~increase~~increases in property revenue and consolidated NOI ~~was~~were due to the acquisition of The ~~Wren, 900 W Street, 901 W Street~~Batley in November 2021, higher occupancy and ~~West Half as these properties placed additional units into service. These increases~~rental rates, and lower bad debt reserves across the portfolio. The increase in property rental revenue and consolidated NOI were partially offset by ~~lower rents and higher concessions at RiverHouse Apartments and 2221 South Clark Street.~~an increase in operating costs.

Comparison of the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 to ~~2020~~2021

Commercial: Property rental revenue ~~increased~~decreased by ~~$8.1~~$14.3 million, or ~~2.9%~~7.9%, to ~~$284.9~~$167.7 million in ~~2021~~2022 from ~~$276.8~~$182.0 million in ~~2020.~~2021. Consolidated NOI ~~increased~~decreased by ~~$11.1~~$7.9 million, or ~~6.8%~~7.3%, to ~~$172.7~~$101.1 million in ~~2021~~2022 from ~~$161.7~~$109.0 million in ~~2020.~~2021. The ~~increase~~decreases in property revenue and consolidated NOI ~~was~~were due to ~~(i) a decline~~the Disposed Properties, which were partially offset by an increase at the Crystal City Marriott due to higher occupancy, an increase in ~~rent deferrals~~parking revenue driven by an increase in both contract and ~~uncollectable operating lease receivables related to tenants impacted by COVID-19, (ii) increases in revenues related to 4747 Bethesda Avenue~~transient parking, and ~~1770 Crystal Drive as these properties were placed into service, and (iii) increases related to~~an increase at 2100 ~~Crystal Drive, 1225 South Clark Street and 2345~~ Crystal Drive due to ~~higher occupancy. These~~the commencement of a lease with Amazon.

Multifamily: Property rental revenue increased by $20.0 million, or 30.5%, to $85.4 million in 2022 from $65.5 million in 2021. Consolidated NOI increased by $15.6 million, or 50.4%, to $46.5 million in 2022 from $30.9 million in 2021. The increases ~~were partially offset by a decrease~~ in ~~parking~~property revenue and consolidated NOI were due to ~~reduced transient and office parking and decreases related to~~ the ~~Universal Buildings, 2101 L Street and RTC-West due to lower occupancy.~~acquisition of The Batley in November 2021, higher

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~~Multifamily: Property~~occupancy and rental ~~revenue increased by $5.5 million, or 5.8%, to $100.6 million in 2021 from $95.1 million in 2020. Consolidated NOI increased by $125,000, or 0.3%, to $46.9 million in 2021 from $46.8 million in 2020.~~rates, and lower bad debt reserves across the portfolio. The increase in property rental revenue and consolidated NOI ~~was due to The Wren, 900 W Street, 901 W Street and West Half as these properties placed additional units into service. These increases~~ were partially offset by ~~lower rents and higher concessions at RiverHouse Apartments and The Bartlett.~~an increase in operating costs.

Liquidity and Capital Resources

Property rental income is our primary source of operating cash flow and ~~is dependent~~depends on many factors including occupancy levels and rental rates, as well as our tenants' ability to pay rent. In addition, our third-party asset management and real estate services business provides fee-based real estate services to Amazon, the WHI ~~Amazon,~~Impact Pool, the JBG Legacy Funds and other third parties. Our assets provide a relatively consistent level of cash flow that enables us to pay operating expenses, debt service, recurring capital expenditures, dividends to shareholders and distributions to holders of OP ~~Units.~~Units and long-term incentive partnership units ("LTIP Units"). Other sources of liquidity to fund cash requirements include proceeds from financings, recapitalizations, asset sales and the issuance and sale of securities. We anticipate that cash flows from continuing operations and proceeds from financings, ~~recapitalizations~~asset sales and ~~asset sales,~~recapitalizations, together with existing cash balances, will be adequate to fund our business operations, debt amortization, capital expenditures, any dividends to shareholders and distributions to holders of OP Units and LTIP Units over the next 12 months.

Financing Activities

The following is a summary of mortgages payable:


	Weighted Average					Weighted Average
	Effective					Effective
	Interest Rate ⁽¹⁾	September 30, 2021		December 31, 2020		Interest Rate ⁽¹⁾	June 30, 2022		December 31, 2021

		(In thousands)					(In thousands)
Variable rate ⁽²⁾	2.08%	$	762,246	$	678,346	3.68%	$	857,446	$	867,246
Fixed rate ⁽³⁾	4.32%		922,161		925,523	4.45%		763,681		921,013
Mortgages payable			1,684,407		1,603,869			1,621,127		1,788,259
Unamortized deferred financing costs and premium/discount, net ⁽⁴⁾			(10,122)		(10,131)			(8,958)		(10,560)
Mortgages payable, net		$	1,674,285	$	1,593,738		$	1,612,169	$	1,777,699

(1)	Weighted average effective interest rate as of ~~September~~June 30, ~~2021.~~2022.

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

(3)	Includes variable rate mortgages payable with interest rates fixed by interest rate swap agreements.

(4)	As of ~~September~~June 30, 2022 and December 31, 2021, excludes $5.7 million and $6.4 million of net deferred financing costs related to an unfunded mortgage ~~loan totaling $4.0 million~~loans that were included in "Other assets, net."

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Credit Facility

As of ~~September~~June 30, ~~2021 and December 31, 2020,~~2022, our $1.4 billion credit facility consisted of a $1.0 billion revolving credit facility maturing in January 2025, a $200.0 million unsecured term loan ("Tranche A-1 Term Loan") maturing in January ~~2023~~2025 and a $200.0 million unsecured term loan ("Tranche A-2 Term Loan") maturing in July 2024. In January 2022, the Tranche A-1 Term Loan was amended to extend the maturity date to January 2025 with two one-year extension options, and to amend the interest rate to SOFR plus 1.15% to SOFR plus 1.75%, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets. In connection with the loan amendment, we amended the related interest rate swaps, extending the maturity to July 2024 and converting the hedged rate from one-month LIBOR to one-month SOFR. The following is a summary of amounts outstanding under the credit facility:


	Effective					Effective
	Interest Rate ⁽¹⁾	September 30, 2021		December 31, 2020		Interest Rate ⁽¹⁾	June 30, 2022		December 31, 2021

		(In thousands)					(In thousands)
Revolving credit facility ^{(2) (3) (4)}	1.13%	$	—	$	—	2.84%	$	—	$	300,000

Tranche A-1 Term Loan ⁽⁵⁾	2.59%	$	200,000	$	200,000	2.61%	$	200,000	$	200,000
Tranche A-2 Term Loan ⁽⁵⁾	2.49%		200,000		200,000	2.49%		200,000		200,000
Unsecured term loans			400,000		400,000			400,000		400,000
Unamortized deferred financing costs, net			(1,507)		(2,021)			(1,500)		(1,336)
Unsecured term loans, net		$	398,493	$	397,979		$	398,500	$	398,664

(1)	Effective interest rate as of ~~September~~June 30, ~~2021.~~

~~(2)~~

~~As of September 30, 2021 and December 31, 2020, letters of credit with an aggregate face amount of $1.4 million and $1.5 million were outstanding under our revolving credit facility.~~

~~(3)~~

~~As of September 30, 2021 and December 31, 2020, net deferred financing costs related to our revolving credit facility totaling $5.4 million and $6.7 million were included in "Other assets, net."~~

~~(4)~~

2022. The interest rate for our revolving credit facility excludes a 0.15% facility fee.

(2)	As of June 30, 2022 and December 31, 2021, letters of credit with an aggregate face amount of $467,000 and $911,000 were outstanding under our revolving credit facility.

(3)	As of June 30, 2022 and December 31, 2021, excludes $4.2 million and $5.0 million of net deferred financing costs related to our revolving credit facility that were included in "Other assets, net."

(4)	In July 2022, we borrowed $100.0 million under our revolving credit facility.

(5)

~~Our existing~~In July 2022, the Tranche A-2 Term Loan was amended to increase its borrowing capacity by $200.0 million. The incremental $200.0 million includes a one-year delayed draw feature, which was undrawn as of the date of this filing. The amendment extends the maturity date of the term loan from July 2024 to January 2028 and amends the interest rate to SOFR plus 1.25% to SOFR plus 1.80% per annum, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets. We also entered into two forward-starting interest rate swaps with an effective date of July 2024 and a total notional value of $200.0 million, which will effectively fix SOFR at a weighted average interest rate of 2.25% through the maturity date. Additionally, we amended the interest rate of the revolving credit facility to SOFR plus 1.15% to SOFR plus 1.60%, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets.

As of June 30, 2022, we had floating rate debt ~~instruments, including our credit facility,~~ with a principal balance totaling ~~$1.6~~$1.1 billion and ~~our~~ hedging arrangements with a notional value totaling ~~$1.7~~$1.2 billion ~~currently~~that use LIBOR as a reference ~~rate~~rate. On November 30, 2020, the ~~U.S. dollar London Interbank Offered Rate ("LIBOR"),~~United Kingdom regulator announced its intentions, subject to confirmation following an early December consultation, to cease the publication of the one-week and ~~we expect a transition from LIBOR to another reference rate due to plans to phase out~~two-month USD-LIBOR immediately following the ~~reference rate by~~December 31, 2021 publications, and the ~~end of 2021, after which point its continuation cannot be assured.~~remaining USD-LIBOR tenors immediately following the June 30, 2023 publications. Though an alternative reference rate for LIBOR, ~~the Secured Overnight Financing Rate ("SOFR"),~~SOFR, exists, significant uncertainties still remain. We can provide no assurance regarding the future of LIBOR and when our LIBOR-based instruments will transition from LIBOR as a reference rate to SOFR or another reference rate. The discontinuation of a benchmark rate or other financial metric, changes in a benchmark rate or other financial metric, or changes in market perceptions of the acceptability of a benchmark rate or other financial metric, including LIBOR, could, among other things, result in increased interest payments, changes to our risk exposures, or require renegotiation of previous transactions. In addition, any such discontinuation or changes, whether actual or anticipated, could result in market volatility, adverse tax or accounting effects, increased compliance, legal and operational costs, and risks associated with contract negotiations.

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Common Shares Repurchased

In March 2020, our Board of Trustees authorized the repurchase of up to ~~$500~~$500.0 million of our outstanding common ~~shares.~~shares and in June 2022, increased the authorized repurchase amount by $500.0 million to an aggregate of $1.0 billion. During the three and ~~nine~~six months ended ~~September~~June 30, 2022, we repurchased and retired 8.5 million and 11.8 million common shares for $213.9 million and $307.0 million, a weighted average purchase price per share of $25.15 and $25.91. During the six months ended June 30, 2021, we repurchased and retired ~~2.3 million and 2.9 million~~619,749 common shares for ~~$68.9~~$19.2 million, ~~and $88.1 million, an~~a weighted average purchase price per share of $29.73 and $29.99 per share. During the three and nine months ended September 30, 2020, we repurchased and retired 1.4 million and 2.9 million common shares for $38.4 million and $79.6 million, an average purchase price of $26.64 and $27.82 per share.$30.96. Since we began the share repurchase program, we have repurchased and retired ~~6.7~~21.0 million common shares for ~~$192.9~~$569.5 million, ana weighted average purchase price per share of ~~$28.71~~$27.12.

In July 2022, we repurchased and retired 1.5 million common shares for $36.0 million, a weighted average purchase price per ~~share.~~share of $23.92, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.

Purchases under the program are made either in the open market or in privately negotiated transactions from time to time as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by us at our discretion and will be subject to economic and market conditions, share price,

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applicable legal requirements and other factors. The program may be suspended or discontinued at our discretion without prior notice.

~~Liquidity~~Material Cash Requirements

Our ~~principal liquidity needs~~material cash requirements for the next 12 months and beyond include:

●	normal recurring expenses;

●	debt service and principal repayment obligations, including balloon payments on maturing ~~debt;~~debt — As of June 30, 2022, we had no mortgages payable on a consolidated basis and $86.6 million at our share scheduled to mature in 2022;

●

capital expenditures, including major renovations, tenant improvements and leasing ~~costs;~~costs — As of June 30, 2022, we had committed tenant-related obligations totaling $74.3 million ($68.8 million related to our consolidated entities and $5.5 million related to our unconsolidated real estate ventures at our share);

●	development ~~expenditures;~~expenditures — As of June 30, 2022, we had assets under construction that will, based on our current plans and estimates, require an additional $528.5 million to complete, which we anticipate will be primarily expended over the next two to three years;

●	dividends to shareholders and distributions to holders of OP ~~Units;~~Units and LTIP Units — On July 29, 2022, our Board of Trustees declared a quarterly dividend of $0.225 per common share;

●	possible common share ~~repurchases;~~repurchases — In July 2022, we repurchased and retired 1.5 million common shares for $36.0 million and we are authorized to repurchase an additional $394.5 million under our current common share repurchase program; and

●

possible acquisitions of properties, either directly or indirectly through the acquisition of equity interests ~~therein.~~therein — On August 1, 2022, we acquired the remaining 36.0% ownership interest in Atlantic Plumbing, a multifamily asset owned by an unconsolidated real estate venture, for $19.7 million.

We expect to satisfy these needs using one or more of the following:

●	cash and cash ~~equivalent balances;~~equivalents — As of June 30, 2022, we had cash and cash equivalents of $162.3 million and had restricted cash of $187.4 million held by a qualified intermediary to facilitate a potential like-kind exchange transaction;

●	cash flows from operations;

●	distributions from real estate ventures;

●

borrowing capacity under our current credit facility — As of June 30, 2022, we had $999.5 million of availability under our credit facility. In July 2022, we borrowed $100.0 million under our revolving credit facility and amended our Tranche A‑2 Term Loan to increase its borrowing capacity by $200.0 million. The incremental $200.0 million includes a one-year delayed draw feature, which was undrawn as of the date of this filing; and

●	proceeds from financings, ~~recapitalizations~~asset sales and ~~asset sales.~~recapitalizations.

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While we do not expect the need to do so during the next 12 months, we also can issue securities to raise funds.

While we have not experienced a significant impact to date in this regard, we expect COVID-19 to continue to have an adverse impact on our liquidity and capital resources. Future decreases in cash flows from operations resulting from tenant defaults, rent deferrals or decreases in our rents or occupancy, would decrease the cash available for the capital uses described above.

As of September 30, 2021, we had $998.6 million of availability under our credit facility (net of outstanding letters of credit totaling $1.4 million). As of September 30, 2021, we had no debt on a consolidated basis and at our share scheduled to mature in 2021.

~~Contractual Obligations and Commitments~~

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, there were no ~~material~~significant changes to the ~~contractual obligation~~material cash requirements information presented in Item 7 of Part II of our Annual Report, ~~on Form 10-K~~except for ~~the year ended December 31, 2020.~~

~~As of September 30, 2021, we had additional capital commitments and certain recorded guarantees to our unconsolidated real estate ventures totaling $66.1 million.~~

~~As of September 30, 2021, we had committed tenant-related obligations totaling $76.9 million ($73.6 million~~a $1.4 billion decrease in future finance lease payments related to the Disposed Properties, a $300.0 million decrease in the principal amount due on our ~~consolidated entities~~revolving credit facility and ~~$3.3~~a $164.8 million decrease in the principal amount due on mortgages payable related to ~~our unconsolidated real estate ventures at our share). The timing~~the Disposed Properties.

See additional information in the following pages under "Commitments and ~~amounts of payments for tenant-related obligations are uncertain and may only be due upon satisfactory performance of certain conditions.~~Contingencies."

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~~completed closings of capital commitments totaling $114.4 million, which included a commitment from us of $11.2 million. As of September 30, 2021, our remaining commitment was $8.3 million.~~

~~On October 27, 2021, our Board of Trustees declared a quarterly dividend of $0.225 per common share.~~

Summary of Cash Flows

The following summary discussion of our cash flows is based on our statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows:


	Nine Months Ended September 30,				Six Months Ended June 30,
	2021		2020		2022		2021

	(In thousands)				(In thousands)
Net cash provided by operating activities	$	154,412	$	127,855	$	107,649	$	123,556
Net cash used in investing activities		(96,751)		(57,696)
Net cash (used in) provided by financing activities		(91,820)		280,038
Net cash provided by (used in) investing activities						785,304		(70,445)
Net cash used in financing activities						(819,930)		(77,754)

Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022

Cash and cash equivalents, and restricted cash ~~decreased $34.2~~increased $73.0 million to ~~$229.2~~$375.1 million as of ~~September~~June 30, ~~2021,~~2022, compared to ~~$263.3~~$302.1 million as of December 31, ~~2020.~~2021. This ~~decrease~~increase resulted from ~~$91.8~~$785.3 million of net cash provided by investing activities and $107.6 million of net cash provided by operating activities, partially offset by $819.9 million of net cash used in financing ~~activities and $96.8 million of net cash used in investing activities, partially offset by $154.4 million of net cash provided by operating~~ activities. Our outstanding debt was ~~$2.1~~$2.0 billion and ~~$2.0~~$2.5 billion as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

Net cash provided by operating activities of ~~$154.4~~$107.6 million primarily comprised: (i) ~~$147.7~~$95.6 million of net income (before ~~$185.4~~$112.8 million of non-cash items and ~~$11.3~~a $158.6 million gain on the sale of real estate), (ii) ~~$13.2~~$6.0 million of return on capital from unconsolidated real estate ventures and (iii) ~~$6.5~~$6.1 million of net change in operating assets and liabilities. Non-cash income adjustments of ~~$185.4~~$112.8 million primarily include depreciation and amortization expense, share-based compensation expense, net income from investments, deferred rent, amortization of lease incentives and other non-cash items.

Net cash provided by investing activities of $785.3 million comprised: (i) $923.1 million of proceeds from the sale of real estate, (ii) $52.5 million of distributions of capital from unconsolidated real estate ventures ~~deferred rent~~ and ~~amortization~~(iii) $19.0 million of ~~lease incentives.~~

~~Net cash used in investing activities~~proceeds from the sale of ~~$96.8 million comprised: (i) $108.4~~investments, partially offset by (iv) $128.1 million of development costs, construction in progress and real estate additions ~~(ii) $32.7~~and (v) $81.2 million of investments in unconsolidated real estate ventures and other and (iii) $10.3 million of deposits for real estate and other acquisitions, partially offset by (iv) $40.2 million of distributions of capital from unconsolidated real estate ventures and (v) $14.4 million of proceeds from the sale of real estate.investments.

Net cash used in financing activities of ~~$91.8~~$819.9 million primarily comprised: (i) ~~$88.9~~$300.0 million of repayments of our revolving credit facility, (ii) $297.0 million of common shares repurchased, (iii) $167.1 million of repayments of mortgages payable, (iv) $56.3 million of dividends paid to common shareholders ~~(ii) $82.3 million of common shares repurchased, (iii) $13.7~~and (v) $8.2 million of distributions to our redeemable noncontrolling interests, ~~(iv) $5.7 million of debt issuance costs, and (v) $4.5 million of repayments of mortgages payable,~~ partially offset by (vi) ~~$85.0 million of borrowings under mortgages payable and (vii) $17.5~~$9.2 million of contributions from noncontrolling interests.

~~Off-Balance Sheet Arrangements~~

Unconsolidated Real Estate Ventures

We consolidate entities in which we have a controlling interest or are the primary beneficiary in a variable interest entity. From time to time, we may have off-balance-sheet unconsolidated real estate ventures and other unconsolidated arrangements with varying structures.

As of ~~September~~June 30, ~~2021,~~2022, we ~~have~~had investments in unconsolidated real estate ventures totaling ~~$486.1~~$414.3 million. For these investments, we exercise significant influence over but do not control these entities and, therefore, account for these investments using the equity method of accounting. For a more complete description of our real estate ventures, see Note 4 to the financial statements.

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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~~June 30, ~~2021,~~2022, we had additional capital commitments and certain recorded guarantees to our unconsolidated real estate ventures and other investments totaling ~~$66.1~~$66.4 million. As of ~~September~~June 30, ~~2021,~~2022, we had no principal payment guarantees related to our unconsolidated real estate ventures.

We evaluate reconsideration events as we become aware of them. Reconsideration events include amendments to real estate venture agreements or changes in our partner's ability to make contributions to the venture. Under certain circumstances, we may purchase our partner's interest. A reconsideration event could cause us to consolidate an unconsolidated real estate venture in the future or deconsolidate a consolidated entity. We evaluate reconsideration events as we become aware of them. Reconsideration events include amendments to real estate venture agreements and changes in our partner's ability to make contributions to the venture. Under certain circumstances, we may purchase our partner's interest.

Commitments and Contingencies

Insurance

Construction Commitments

As of ~~September~~June 30, ~~2021,~~2022, we had assets under construction that will, based on our current plans and estimates, require an additional ~~$320.3~~$528.5 million to complete, which we anticipate will be primarily expended over the next two to three years. These capital expenditures are generally due as the work is performed, and we expect to finance them with debt proceeds, proceeds from asset ~~recapitalizations~~sales and ~~sales, issuance and sale of securities,~~recapitalizations, and available cash.

Other

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amounts of payments for tenant-related obligations are uncertain and may only be due upon satisfactory performance of certain conditions.

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~~June 30, ~~2021,~~2022, the aggregate amount of principal payment guarantees was $8.3 million for our consolidated entities.

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 such real estate. These laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous or toxic substances. The costs of remediation or removal of such substances may be substantial and the presence of such substances, or the failure to promptly remediate such substances, may adversely affect the owner's ability to sell such real estate or to borrow using such real estate as collateral. In connection with the ownership and operation of our assets, we may be potentially liable for such 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.~~waste. The release of such hazardous materials and ~~wastes~~waste 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 which 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 cleanup of those sites if they become contaminated.

Most of our assets have been subject, at some point, to environmental assessments that are intended to evaluate the environmental condition of the 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. They 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. 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. As disclosed in Note 17 to the financial statements, environmental liabilities totaled $19.4 million and $18.2 million as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 and are included in "Other liabilities, net" in our balance sheets.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We have exposure to fluctuations in interest rates, which are sensitive to many factors that are beyond our control. The following is a summary of our annual exposure to a change in interest rates:


	June 30, 2022						December 31, 2021
			Weighted						Weighted
			Average		Annual				Average
			Effective		Effect of 1%				Effective
			Interest		Change in				Interest
	Balance		Rate		Base Rates		Balance		Rate

	(Dollars in thousands)
Debt (contractual balances):
Mortgages payable:
Variable rate ⁽¹⁾	$	857,446		3.68%	$	8,694	$	867,246	2.01%
Fixed rate ⁽²⁾		763,681		4.45%		—		921,013	4.32%
	$	1,621,127			$	8,694	$	1,788,259
Credit facility:
Revolving credit facility ⁽³⁾	$	—		2.84%	$	—	$	300,000	1.15%
Tranche A-1 Term Loan ⁽⁴⁾		200,000		2.61%		—		200,000	2.59%
Tranche A-2 Term Loan ⁽⁴⁾		200,000		2.49%		—		200,000	2.49%
	$	400,000			$	—	$	700,000
Pro rata share of debt of unconsolidated real estate ventures (contractual balances):
Variable rate ⁽¹⁾	$	189,136		4.78%	$	1,918	$	281,608	2.56%
Fixed rate ⁽²⁾		90,643		4.49%		—		91,653	4.49%
	$	279,779			$	1,918	$	373,261

September 30, 2021

December 31, 2020




Weighted





Weighted

Average

Annual

Average

Effective

Effect of 1%

Effective

Interest

Change in

Interest

Balance

Rate


Base Rates

Balance

Rate

(Dollars in thousands)

Debt (contractual balances):

Mortgages payable:











Variable rate ⁽¹⁾

$
762,246

2.08%

$
7,728

$
678,346

2.18%

Fixed rate ⁽²⁾

922,161

4.32%

—

925,523

4.32%

$
1,684,407

$
7,728

$
1,603,869

Credit facility:

Revolving credit facility ⁽³⁾

$
—

1.13%

$
—

$
—

1.19%

Tranche A-1 Term Loan ⁽⁴⁾

200,000

2.59%

—

200,000

2.59%

Tranche A-2 Term Loan ⁽⁴⁾

200,000

2.49%

—

200,000

2.49%

$
400,000

$
—

$
400,000

Pro rata share of debt of unconsolidated real estate ventures (contractual balances):

Variable rate ⁽¹⁾

$
281,752

2.57%

$
2,857

$
319,057

2.47%

Fixed rate ⁽²⁾

83,707

4.46%

—

79,989

4.36%

$
365,459

$
2,857

$
399,046

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

(2)	Includes variable rate mortgages payable with interest rates fixed by interest rate swap agreements.

(3)	The interest rate for our revolving credit facility excludes a 0.15% facility fee.

(4)

As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the outstanding balance was fixed by interest rate swap agreements. ~~The~~As of June 30, 2022, the interest rate swaps mature ~~concurrently with the term loan and provide~~in July 2024, fix SOFR at a weighted average interest rate of ~~1.39%~~1.46% for the Tranche A-1 Term Loan, and fix LIBOR at a weighted average rate of 1.34% for the Tranche A-2 Term Loan. In July 2022, the Tranche A-2 Term Loan was amended. See Note 7 to the financial statements for additional information.

The fair value of our mortgages payable is estimated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit profiles based on market sources. The fair value of our revolving credit facility and unsecured term loans is calculated based on the net present value of payments over the term of the facilities using estimated market rates for similar notes and remaining terms. As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the estimated fair value of our consolidated debt was ~~$2.1~~$2.0 billion and ~~$2.0~~$2.5 billion. These estimates of fair value, which are made at the end of the reporting period, may be different from the amounts that may ultimately be realized upon the disposition of our financial instruments.

Hedging Activities

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Derivative Financial Instruments Designated as ~~Cash Flow~~Effective Hedges

Certain derivative financial instruments, consisting of interest rate swap and cap agreements, are cash flow hedges that are designated as ~~cash flow~~effective hedges, and are carried at their estimated fair value on a recurring basis. We assess the effectiveness of our ~~cash flow~~ hedges

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both at inception and on an ongoing basis. If the hedges are deemed to be effective, the fair value is recorded in ~~“Accumulated~~"Accumulated other comprehensive ~~loss”~~income (loss)" in our balance sheets and is subsequently reclassified into "Interest expense" in our statements of operations in the period that the hedged forecasted transactions affect earnings. Our ~~cash flow~~ hedges become less than perfectly effective if the critical terms of the hedging instrument and the forecasted transactions do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and interest rates. In addition, we evaluate the default risk of the counterparty by monitoring the creditworthiness of the counterparty. While management believes its judgments are reasonable, a change in a derivative's effectiveness as a hedge could materially affect expenses, net income (loss) and equity.

As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had interest rate swap and cap agreements with an aggregate notional value of $930.2 million and $862.7 million, which were designated as ~~cash flow~~effective hedges. The fair value of our interest rate swaps and caps designated as ~~cash flow~~effective hedges consisted of assets totaling $20.4 million and $393,000 as of June 30, 2022 and December 31, 2021 included in "Other assets, net" in our balance sheets, and liabilities totaling ~~$28.4 million and $44.2~~$18.4 million as of ~~September 30, 2021 and~~ December 31, ~~2020,~~2021, included in "Other liabilities, net" in our balance ~~sheets.~~sheet.

Derivative Financial Instruments ~~Not~~ Designated as Ineffective Hedges

Certain derivative financial instruments, consisting of interest rate swap and cap agreements, are ~~considered economic~~cash flow hedges ~~but not~~that are designated as ~~accounting~~ineffective hedges, and are carried at their estimated fair value on a recurring basis. Realized and unrealized gains or losses are recorded in "Interest expense" in our statements of ~~operations in the period in which the change occurs.~~operations. As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had various interest rate swap and cap agreements with an aggregate notional value of $692.7 million and $867.7 million, which were ~~not~~ designated as ~~cash flow~~ineffective hedges. The fair value of our interest rate swaps and caps ~~not~~ designated as ineffective hedges consisted of assets totaling ~~$266,000~~$6.0 million and ~~$35,000~~$558,000 as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, included in "Other assets, net" in our balance sheets.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of ~~September~~June 30, ~~2021,~~2022, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended ~~September~~June 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are, from time to time, involved in legal actions arising in the ordinary course of business. In our opinion, the outcome of such matters is not expected to have a material adverse effect on our financial position, results of operations or cash flows.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors previously disclosed in our Annual ~~Report for the year ended December 31, 2020, filed with the SEC on February 23, 2021.~~

Report.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)

Not applicable.

(b)

Not applicable.

(c)

Purchases of equity securities by the issuer and affiliated purchasers:

Period

Total Number Of Common Shares Purchased

Average Price Paid Per Common Share

Total Number Of Common Shares Purchased As Part Of Publicly Announced Plans Or Programs

Approximate Dollar Value Of Common Shares That May Yet Be Purchased Under the Plan Or Programs
July 1, 2021 - July 31, 2021

-

$
-

-

$
376,038,752
August 1, 2021 - August 31, 2021

972,766

29.70

972,766

347,130,941
September 1, 2021 - September 30, 2021

1,344,318

29.75

1,344,318

307,107,767
Total for the three months ended September 30, 2021

2,317,084

29.73

2,317,084

Total for the nine months ended September 30, 2021

2,936,833

29.99

2,936,833

Program total since inception in March 2020

6,713,185

28.71

6,713,185


Period	Total Number Of Common Shares Purchased		Average Price Paid Per Common Share	Total Number Of Common Shares Purchased As Part Of Publicly Announced Plans Or Programs		Approximate Dollar Value Of Common Shares That May Yet Be Purchased Under the Plan Or Programs
April 1, 2022 - April 30, 2022	706,598	$	27.39	706,598	$	125,042,507
May 1, 2022 - May 31, 2022	3,465,029		25.31	3,465,029		37,281,008
June 1, 2022 - June 30, 2022	4,326,740		24.66	4,326,740		430,516,492
Total for the three months ended June 30, 2022	8,498,367		25.15	8,498,367
Total for the six months ended June 30, 2022	11,839,514		25.91	11,839,514
Program total since inception in March 2020 ⁽¹⁾	20,986,335		27.12	20,986,335

(1)	In July 2022, we repurchased and retired 1.5 million common shares for $36.0 million, a weighted average purchase price per share of $23.92, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

~~None.~~Delayed Draw Term Credit Agreement

On July 29, 2022, JBG SMITH LP entered into a new Credit Agreement (the "Delayed Draw Term Credit Agreement") with Wells Fargo Bank, National Association, as administrative agent (the "Agent"), and the lenders party thereto as set forth in the Delayed Draw Term Credit Agreement. The Delayed Draw Term Credit Agreement provides for a $400.0 million senior unsecured delayed draw term loan facility maturing January 13, 2028 (the "Delayed Draw Term Loan"). As of July 29, 2022, $200.0 million of the Delayed Draw Term Loan was advanced, substantially all the proceeds of which were used to repay in full JBG SMITH LP’s existing $200.0 million Tranche A-2 Term Loan facility previously outstanding

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under the Existing Credit Agreement (as defined below). This draw of the Delayed Draw Term Loan as well as the repayment of Tranche A-2 Term Loan of the existing term loan facility results in an overall increased borrowing capacity of $200.0 million. The additional $200.0 million of commitments in respect of the Delayed Draw Term Loan may be borrowed, in whole or in part, in one or more draws, at any time until July 29, 2023. The Delayed Draw Term Credit Agreement includes the option to add additional term loans up to $200.0 million in the aggregate to the extent that the lenders (whether or not an existing lender under the Delayed Draw Term Loan) agree to provide such additional credit extensions.

The Delayed Draw Term Loan bears interest, at JBG SMITH LP’s option, at a rate of either SOFR plus a margin ranging from 1.15% to 1.70% (plus a credit spread adjustment of 0.10%) or the base rate plus a margin ranging from 0.15% to 0.70%, in each case, with the actual margin determined according to JBG SMITH LP’s ratio of indebtedness to a valuation of certain real property and assets. The base rate is the highest of the Agent’s prime rate, the federal funds rate plus 0.50% and the adjusted Term SOFR for a one-month tenor plus 1.0%. The Delayed Draw Term Loan may be voluntarily prepaid in full or in part at any time, subject to customary breakage costs, if applicable. The Delayed Draw Term Credit Agreement also includes a sustainability component whereby the applicable margin can decrease upon JBG SMITH LP’s achievement of certain sustainability performance metrics specified in the Delayed Draw Term Credit Agreement.

The Delayed Draw Term Credit Agreement contains customary representations and warranties and affirmative, negative and financial covenants that are substantially similar to JBG SMITH LP’s existing Credit Agreement, dated as of July 18, 2017, as amended, by and among JBG SMITH LP, Wells Fargo Bank, National Association, as administrative agent, and the lenders from time to time party thereto (as amended, the "Existing Credit Agreement"). Consistent with the Existing Credit Agreement, such Delayed Draw Term Credit Agreement covenants include restrictions on mergers, affiliate transactions, and asset sales as well as the following financial maintenance covenants:


		● percentage of total debt to capitalization value of not more than 60% (subject to a higher level of 65% for a period of 4 fiscal quarters following a real property asset acquisition);
		● ratio of combined EBITDA to fixed charges of not less than 1.50 to 1.00;
		● percentage of secured indebtedness to capitalization value of not more than 50%;
		● ratio of combined EBITDA for unencumbered properties to interest expense on unsecured debt of not less than 1.50 to 1.00; and
·		● percentage of unsecured indebtedness to the capitalization value of unencumbered properties of not more than 60% (subject to a higher level of 65% for a period of 4 fiscal quarters following a real property asset acquisition).

Consistent with the Existing Credit Agreement, the Delayed Draw Term Credit Agreement also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations of JBG SMITH LP under the Delayed Draw Term Credit Agreement to be immediately due and payable.

The foregoing description does not purport to be complete and is qualified in its entirety by reference to the full text of the Delayed Draw Term Credit Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 10-Q and is incorporated herein by reference.

Concurrently with entering into the Delayed Draw Term Credit Agreement, JBG SMITH LP amended their Credit Agreement with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto, which amends the existing Credit Agreement, dated January 14, 2022, by and among JBG SMITH LP, Wells Fargo Bank, National Association, as administrative agent, and the lenders from time to time party thereto, to change the benchmark interest rate applicable to the revolving loans under the Existing Credit Agreement from one or more rates based on LIBOR to one or more rates based on SOFR and to conform terms of the existing term credit agreement under the Existing Credit Agreement to the terms of the Delayed Draw Term Credit Agreement.

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Executive Retirement Agreement

On July 29, 2022, David P. Paul, President and Chief Operating Officer, informed us of his plans to retire from his position, effective December 31, 2022. Mr. Paul will continue to serve as a Senior Advisor until February 3, 2023.

On July 29, 2022, in connection with Mr. Paul’s planned retirement, we entered into a retirement agreement and release with Mr. Paul (the "Retirement Agreement"). The Retirement Agreement provides for the following: (i) for a six-month period following February 3, 2023 (the "Transition Period"), Mr. Paul will provide strategic advice to us regarding transition of his responsibilities and duties, (ii) during the Transition Period, we will pay Mr. Paul a monthly fee of $10,000, (iii) the time-based equity awards granted to Mr. Paul on November 12, 2018 not vested on the date that the Transition Period begins (the "In-Flight Awards"), will continue to vest during the Transition Period and, upon successful completion of the Transition Period or earlier termination thereof by us for any reason, any remaining unvested In-Flight Awards will continue to vest in accordance with the applicable Equity Award Agreement and (iv) subject to certain exceptions specified in the Retirement Agreement, all other outstanding equity awards held by Mr. Paul that are unvested as of the date that the Transition Period begins will remain outstanding, without requiring Mr. Paul’s continued employment by us.

The description of the Retirement Agreement herein is qualified by reference to the full text of the Retirement Agreement which is attached as Exhibit 10.4 to this report on Form 10-Q.

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ITEM 6. EXHIBITS

(a) Exhibit Index


Exhibits	Description
3.1	Declaration of Trust of JBG SMITH Properties, as amended and restated (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed on July 21, 2017).
3.2	Articles Supplementary to Declaration of Trust of JBG SMITH Properties (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed on March 6, 2018).
3.3	Articles of Amendment to Declaration of Trust of JBG SMITH Properties (incorporated by reference to Exhibit 3.1 to our current report on Form 8-K, filed on May 3, 2018).
3.4	Amended and Restated Bylaws of JBG SMITH Properties (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed on February 21, 2020).
~~10.1†~~10.1**	~~Form~~Credit Agreement, dated as of July ~~2021 Performance LTIP Unit~~29, 2022, by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as Administrative Agent.
10.2**	Fourth Amendment to Credit Agreement, ~~(incorporated~~dated as of July 29, 2022, by ~~reference to Exhibit 10.3 to our Current Report on Form 10-Q, filed on August 3, 2021).~~and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as Administrative Agent.
10.210.3*†	~~Amended Form~~First Amendment to Credit Agreement, dated as of July ~~2021 Performance LTIP Unit Agreement.~~29, 2022, by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as Administrative Agent
~~10.3†~~	~~Form of July 2021 Restricted LTIP Unit Agreement (incorporated by reference to Exhibit 10.5 to our Current Report on Form 10-Q, filed on August 3, 2021)~~.
10.4†**	~~Form~~Retirement Agreement and Release, dated as of July ~~2021 Restricted LTIP Unit Agreement (Special Termination & Vesting Provisions) (incorporated~~29, 2022, by ~~reference to Exhibit 10.6 to our Current Report on Form 10-Q, filed on August 3, 2021).~~and between JBG SMITH Properties and David P. Paul.
31.1**	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002.
31.2**	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended and 18 U.S.C 1350, as created by Section 906 of the Sarbanes- Oxley Act of 2002.
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Extension Calculation Linkbase
101.LAB	Inline XBRL Extension Labels Linkbase
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


**	Filed herewith.
†	Denotes a management contract or compensatory plan, contract or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		JBG SMITH Properties

Date:	~~November~~August 2, ~~2021~~2022	/s/ M. Moina Banerjee
		M. Moina Banerjee
		Chief Financial Officer
		(Principal Financial Officer)


		JBG SMITH Properties

Date:	~~November~~August 2, ~~2021~~2022	/s/ Angela Valdes
		Angela Valdes
		Chief Accounting Officer
		(Principal Accounting Officer)

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