Table of Contents

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 June 30, 2023March 31, 2024

OR

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

Graphic

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 August 4, 2023,April 26, 2024, JBG SMITH Properties had 103,439,32791,903,118 common shares outstanding.

Table of Contents

JBG SMITH PROPERTIES

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED JUNE 30, 2023MARCH 31, 2024

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

Page

Condensed Consolidated Balance Sheets (unaudited) as of June 30, 2023March 31, 2024 and December 31, 20222023

3

Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended June 30,March 31, 2024 and 2023 and 2022

4

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and six months ended June 30,March 31, 2024 and 2023 and 2022

5

Condensed Consolidated Statements of Equity (unaudited) for the three and six months ended June 30,March 31, 2024 and 2023 and 2022

6

Condensed Consolidated Statements of Cash Flows (unaudited) for the sixthree months ended June 30,March 31, 2024 and 2023 and 2022

87

Notes to Condensed Consolidated Financial Statements (unaudited)

109

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

2928

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

4743

Item 4.

Controls and Procedures

4844

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

4844

Item 1A.

Risk Factors

4845

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

4945

Item 3.

Defaults Upon Senior Securities

4945

Item 4.

Mine Safety Disclosures

4945

Item 5.

Other Information

4946

Item 6.

Exhibits

5148

Signatures

5250

2

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)

    

June 30, 2023

    

December 31, 2022

ASSETS

 

  

 

  

Real estate, at cost:

 

  

 

  

Land and improvements

$

1,267,379

$

1,302,569

Buildings and improvements

 

4,175,488

 

4,310,821

Construction in progress, including land

 

694,793

 

544,692

 

6,137,660

 

6,158,082

Less: accumulated depreciation

 

(1,396,766)

 

(1,335,000)

Real estate, net

 

4,740,894

 

4,823,082

Cash and cash equivalents

 

156,639

 

241,098

Restricted cash

 

46,205

 

32,975

Tenant and other receivables

 

44,863

 

56,304

Deferred rent receivable

 

165,797

 

170,824

Investments in unconsolidated real estate ventures

 

309,219

 

299,881

Intangible assets, net

144,308

162,246

Other assets, net

 

175,677

 

117,028

TOTAL ASSETS

$

5,783,602

$

5,903,438

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

 

  

Liabilities:

 

  

 

  

Mortgage loans, net

$

1,689,207

$

1,890,174

Revolving credit facility

 

62,000

 

Term loans, net

 

716,757

 

547,072

Accounts payable and accrued expenses

 

129,325

 

138,060

Other liabilities, net

 

139,445

 

132,710

Total liabilities

 

2,736,734

 

2,708,016

Commitments and contingencies

 

  

 

  

Redeemable noncontrolling interests

 

455,886

 

481,310

Shareholders' equity:

 

  

 

  

Preferred shares, $0.01 par value - 200,000 shares authorized; none issued

 

 

Common shares, $0.01 par value - 500,000 shares authorized; 105,139 and 114,013 shares issued and outstanding as of June 30, 2023 and December 31, 2022

 

1,052

 

1,141

Additional paid-in capital

 

3,156,511

 

3,263,738

Accumulated deficit

 

(641,813)

 

(628,636)

Accumulated other comprehensive income

 

43,491

 

45,644

Total shareholders' equity of JBG SMITH Properties

 

2,559,241

 

2,681,887

Noncontrolling interests

 

31,741

 

32,225

Total equity

 

2,590,982

 

2,714,112

TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

$

5,783,602

$

5,903,438

    

March 31, 2024

    

December 31, 2023

ASSETS

 

  

 

  

Real estate, at cost:

 

  

 

  

Land and improvements

$

1,187,685

$

1,194,737

Buildings and improvements

 

4,283,889

 

4,021,322

Construction in progress, including land

 

427,524

 

659,103

 

5,899,098

 

5,875,162

Less: accumulated depreciation

 

(1,379,090)

 

(1,338,403)

Real estate, net

 

4,520,008

 

4,536,759

Cash and cash equivalents

 

220,514

 

164,773

Restricted cash

 

39,752

 

35,668

Tenant and other receivables

 

40,223

 

44,231

Deferred rent receivable

 

178,111

 

171,229

Investments in unconsolidated real estate ventures

 

104,782

 

264,281

Deferred leasing costs, net

79,538

81,477

Intangible assets, net

54,401

56,616

Other assets, net

 

168,021

 

163,481

TOTAL ASSETS

$

5,405,350

$

5,518,515

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

 

  

Liabilities:

 

  

 

  

Mortgage loans, net

$

1,816,508

$

1,783,014

Revolving credit facility

 

 

62,000

Term loans, net

 

717,391

 

717,172

Accounts payable and accrued expenses

 

133,084

 

124,874

Other liabilities, net

 

129,489

 

138,869

Total liabilities

 

2,796,472

 

2,825,929

Commitments and contingencies

 

  

 

  

Redeemable noncontrolling interests

 

435,529

 

440,737

Shareholders' equity:

 

  

 

  

Preferred shares, $0.01 par value - 200,000 shares authorized; none issued

 

 

Common shares, $0.01 par value - 500,000 shares authorized; 91,819 and 94,309 shares issued and outstanding as of March 31, 2024 and December 31, 2023

 

919

 

944

Additional paid-in capital

 

2,941,724

 

2,978,852

Accumulated deficit

 

(825,304)

 

(776,962)

Accumulated other comprehensive income

 

31,352

 

20,042

Total shareholders' equity of JBG SMITH Properties

 

2,148,691

 

2,222,876

Noncontrolling interests

 

24,658

 

28,973

Total equity

 

2,173,349

 

2,251,849

TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

$

5,405,350

$

5,518,515

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

3

Table of Contents

JBG SMITH PROPERTIES

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)

Three Months Ended June 30, 

Six Months Ended June 30, 

Three Months Ended March 31, 

    

2023

    

2022

    

2023

    

2022

    

2024

    

2023

REVENUE

 

  

 

  

  

 

  

  

 

  

Property rental

$

120,592

$

117,036

$

244,625

$

248,634

$

122,636

$

124,033

Third-party real estate services, including reimbursements

 

22,862

 

22,157

 

45,646

 

46,127

 

17,868

 

22,784

Other revenue

 

8,641

 

6,312

 

14,786

 

12,709

 

4,680

 

6,145

Total revenue

 

152,095

 

145,505

 

305,057

 

307,470

 

145,184

 

152,962

EXPENSES

 

  

 

  

 

 

  

 

 

  

Depreciation and amortization

 

49,218

 

49,479

 

102,649

 

107,541

 

56,855

 

53,431

Property operating

 

35,912

 

35,445

 

71,524

 

76,089

 

35,279

 

35,612

Real estate taxes

 

14,424

 

14,946

 

29,648

 

33,132

 

13,795

 

15,224

General and administrative:

 

  

 

  

 

 

  

 

 

  

Corporate and other

 

15,093

 

14,782

 

31,216

 

30,597

 

14,973

 

16,123

Third-party real estate services

 

22,105

 

24,143

 

45,928

 

51,192

 

22,327

 

23,823

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

 

 

1,577

 

351

 

3,821

 

 

351

Transaction and other costs

 

3,492

 

1,987

 

5,964

 

2,886

 

1,514

 

2,472

Total expenses

 

140,244

 

142,359

 

287,280

 

305,258

 

144,743

 

147,036

OTHER INCOME (EXPENSE)

 

  

 

  

 

  

 

  

 

  

 

  

Income (loss) from unconsolidated real estate ventures, net

 

510

 

(2,107)

 

943

 

1,038

Income from unconsolidated real estate ventures, net

 

975

 

433

Interest and other income, net

 

2,281

 

1,672

 

6,358

 

15,918

 

2,100

 

4,077

Interest expense

 

(25,835)

 

(16,041)

 

(52,677)

 

(32,319)

 

(30,160)

 

(26,842)

Gain on the sale of real estate, net

 

 

158,767

 

40,700

 

158,631

 

197

 

40,700

Loss on the extinguishment of debt

 

(450)

 

(1,038)

 

(450)

 

(1,629)

Impairment loss

(17,211)

Total other income (expense)

 

(23,494)

 

141,253

 

(5,126)

 

141,639

 

(44,099)

 

18,368

INCOME (LOSS) BEFORE INCOME TAX EXPENSE

 

(11,643)

144,399

 

12,651

 

143,851

Income tax expense

 

(611)

 

(2,905)

 

(595)

 

(2,434)

INCOME (LOSS) BEFORE INCOME TAX BENEFIT

 

(43,658)

 

24,294

Income tax benefit

 

1,468

 

16

NET INCOME (LOSS)

 

(12,254)

 

141,494

 

12,056

 

141,417

 

(42,190)

 

24,310

Net (income) loss attributable to redeemable noncontrolling interests

 

1,398

 

(18,248)

 

(1,965)

 

(18,258)

 

4,534

 

(3,363)

Net loss attributable to noncontrolling interests

 

311

 

29

 

535

 

84

 

5,380

 

224

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

(10,545)

$

123,275

$

10,626

$

123,243

$

(32,276)

$

21,171

EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED

$

(0.10)

$

1.02

$

0.09

$

0.99

$

(0.36)

$

0.19

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED

 

109,695

 

121,316

 

111,862

 

123,984

 

92,635

 

114,052

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

4

Table of Contents

JBG SMITH PROPERTIES

Condensed Consolidated Statements of ComprehensiveIncome (Loss)

(Unaudited)

(In thousands)

Three Months Ended June 30, 

Six Months Ended June 30, 

Three Months Ended March 31, 

    

2023

    

2022

    

2023

    

2022

    

2024

    

2023

NET INCOME (LOSS)

$

(12,254)

$

141,494

$

12,056

$

141,417

$

(42,190)

$

24,310

OTHER COMPREHENSIVE INCOME (LOSS):

 

  

 

  

 

  

 

  

 

  

 

  

Change in fair value of derivative financial instruments

 

21,789

 

7,225

 

12,820

 

32,320

 

24,840

 

(8,969)

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

 

(7,534)

 

2,791

 

(15,350)

 

6,547

Reclassification of net income on derivative financial instruments from accumulated other comprehensive income into interest expense

 

(10,421)

 

(7,816)

Total other comprehensive income (loss)

 

14,255

 

10,016

 

(2,530)

 

38,867

 

14,419

 

(16,785)

COMPREHENSIVE INCOME

 

2,001

 

151,510

 

9,526

 

180,284

COMPREHENSIVE INCOME (LOSS)

 

(27,771)

 

7,525

Net (income) loss attributable to redeemable noncontrolling interests

 

1,398

 

(18,248)

 

(1,965)

 

(18,258)

 

4,534

 

(3,363)

Net loss attributable to noncontrolling interests

311

29

535

84

5,380

224

Other comprehensive (income) loss attributable to redeemable noncontrolling interests

 

(1,781)

 

(1,311)

 

444

 

(4,277)

 

(2,026)

 

2,225

Other comprehensive income attributable to noncontrolling interests

(1,019)

(67)

COMPREHENSIVE INCOME ATTRIBUTABLE TO JBG SMITH PROPERTIES

$

910

$

131,980

$

8,473

$

157,833

Other comprehensive (income) loss attributable to noncontrolling interests

(1,083)

952

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO JBG SMITH PROPERTIES

$

(20,966)

$

7,563

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

5

Table of Contents

JBG SMITH PROPERTIES

Condensed Consolidated Statements of Equity

(Unaudited)

(In thousands)

Accumulated 

Additional 

Other 

Common Shares

Paid-In 

Accumulated 

 

Comprehensive

Noncontrolling

Total 

Shares

Amount

Capital

Deficit

 

Income

Interests

Equity

BALANCE AS OF MARCH 31, 2023

 

113,583

$

1,137

$

3,282,290

$

(607,465)

$

32,036

$

31,042

$

2,739,040

Net loss attributable to common shareholders and noncontrolling interests

 

 

 

 

(10,545)

 

 

(311)

 

(10,856)

Redemption of common limited partnership units ("OP Units") for common shares

 

821

 

8

 

11,718

 

 

 

 

11,726

Common shares repurchased

(9,321)

(93)

(135,654)

(135,747)

Common shares issued pursuant to employee incentive compensation plan and Employee Share Purchase Plan ("ESPP")

56

1,172

1,172

Dividends declared on common shares
($0.225 per common share)

(23,803)

(23,803)

Distributions to noncontrolling interests, net

 

 

 

 

 

 

(9)

 

(9)

Redeemable noncontrolling interests redemption value adjustment and total other comprehensive income allocation

 

 

 

(3,015)

 

 

(1,781)

 

 

(4,796)

Total other comprehensive income

 

 

 

 

 

14,255

 

 

14,255

Other comprehensive income attributable to noncontrolling interest

(1,019)

1,019

BALANCE AS OF JUNE 30, 2023

 

105,139

$

1,052

$

3,156,511

$

(641,813)

$

43,491

$

31,741

$

2,590,982

��

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

Redemption of OP Units for common shares

 

72

 

1

 

1,761

 

 

 

 

1,762

Common shares repurchased

(8,499)

(84)

(213,807)

 

 

(213,891)

Common shares issued pursuant to employee incentive compensation plan and ESPP

41

1,143

1,143

Dividends declared on common shares
($0.225 per common share)

(27,658)

(27,658)

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

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

6

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JBG SMITH PROPERTIES

Condensed Consolidated Statements of Equity

(Unaudited)

(In thousands)

    

Accumulated 

    

Other 

Accumulated 

Additional 

Comprehensive

Additional 

Other 

Common Shares

Paid-In 

Accumulated

 

Income

Noncontrolling

Total 

Common Shares

Paid-In 

Accumulated

 

Comprehensive

Noncontrolling

Total 

Shares

Amount

Capital

Deficit

 

(Loss)

Interests

Equity

Shares

Amount

Capital

Deficit

 

Income

Interests

Equity

BALANCE AS OF DECEMBER 31, 2023

 

94,309

$

944

$

2,978,852

$

(776,962)

$

20,042

$

28,973

$

2,251,849

Net loss attributable to common shareholders and noncontrolling interests

 

 

 

 

(32,276)

 

 

(5,380)

 

(37,656)

Redemption of common limited partnership units ("OP Units") for common shares

 

468

 

5

 

7,870

 

 

 

 

7,875

Common shares repurchased

(2,993)

(30)

(49,414)

(49,444)

Common shares issued pursuant to employee incentive compensation plan and employee share purchase plan ("ESPP")

35

589

589

Dividends declared on common shares

($0.175 per common share)

(16,066)

(16,066)

Distributions to noncontrolling interests, net

 

 

 

 

 

 

(18)

 

(18)

Redeemable noncontrolling interests redemption value adjustment and total other comprehensive income allocation

 

 

 

3,827

 

 

(2,026)

 

 

1,801

Total other comprehensive income

 

 

 

 

 

14,419

 

 

14,419

Other comprehensive income attributable to noncontrolling interests

(1,083)

1,083

BALANCE AS OF MARCH 31, 2024

 

91,819

$

919

$

2,941,724

$

(825,304)

$

31,352

$

24,658

$

2,173,349

BALANCE AS OF DECEMBER 31, 2022

 

114,013

$

1,141

$

3,263,738

$

(628,636)

$

45,644

$

32,225

$

2,714,112

 

114,013

$

1,141

$

3,263,738

$

(628,636)

$

45,644

$

32,225

$

2,714,112

Net income (loss) attributable to common shareholders and noncontrolling interests

 

 

 

 

10,626

 

 

(535)

 

10,091

 

 

 

 

21,171

 

 

(224)

 

20,947

Redemption of OP Units for common shares

 

1,577

 

16

 

25,492

 

 

 

 

25,508

 

756

 

8

 

13,774

 

 

 

 

13,782

Common shares repurchased

(10,526)

(105)

(155,740)

(155,845)

(1,205)

(12)

(20,086)

(20,098)

Common shares issued pursuant to employee incentive compensation plan and ESPP

75

1,796

1,796

19

624

624

Dividends declared on common shares

($0.225 per common share)

(23,803)

(23,803)

Distributions to noncontrolling interests, net

 

 

 

 

 

 

(16)

 

(16)

 

 

 

 

 

 

(7)

 

(7)

Redeemable noncontrolling interests redemption value adjustment and total other comprehensive loss allocation

 

 

 

21,225

 

 

444

 

 

21,669

 

 

 

24,240

 

 

2,225

 

 

26,465

Other comprehensive loss

 

 

 

 

 

(2,530)

 

 

(2,530)

Other comprehensive income attributable to noncontrolling interest

(67)

67

BALANCE AS OF JUNE 30, 2023

 

105,139

$

1,052

$

3,156,511

$

(641,813)

$

43,491

$

31,741

$

2,590,982

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

Redemption of OP Units for 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

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

Total other comprehensive loss

 

 

 

 

 

(16,785)

 

 

(16,785)

Other comprehensive loss attributable to noncontrolling interests

952

(952)

BALANCE AS OF MARCH 31, 2023

 

113,583

$

1,137

$

3,282,290

$

(607,465)

$

32,036

$

31,042

$

2,739,040

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)

Six Months Ended June 30, 

Three Months Ended March 31, 

    

2023

    

2022

    

2024

    

2023

OPERATING ACTIVITIES:

 

  

 

  

 

  

 

  

Net income

$

12,056

$

141,417

Adjustments to reconcile net income to net cash provided by operating activities:

 

  

 

  

Net income (loss)

$

(42,190)

$

24,310

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

  

 

  

Share-based compensation expense

 

20,514

 

25,375

 

9,538

 

10,428

Depreciation and amortization expense, including amortization of deferred financing costs

 

105,105

 

109,697

 

58,462

 

54,637

Deferred rent

 

(15,256)

 

(7,237)

 

(7,051)

 

(8,733)

Income from unconsolidated real estate ventures, net

 

(943)

 

(1,038)

 

(975)

 

(433)

Amortization of market lease intangibles, net

 

(510)

 

(621)

 

58

 

(253)

Amortization of lease incentives

 

1,340

 

4,303

 

2,696

 

741

Loss on the extinguishment of debt

 

450

 

1,629

Impairment loss

17,211

Gain on the sale of real estate, net

 

(40,700)

 

(158,631)

 

(197)

 

(40,700)

(Income) loss on operating lease and other receivables

 

(351)

 

738

Loss (income) on operating lease and other receivables

 

311

 

(1,215)

Income from investments, net

��

(1,305)

(15,282)

(20)

(1,798)

Return on capital from unconsolidated real estate ventures

 

9,354

 

6,028

 

1,179

 

3,861

Other non-cash items

 

5,800

 

(4,781)

 

365

 

3,032

Changes in operating assets and liabilities:

 

 

  

 

 

  

Tenant and other receivables

 

12,138

 

(2,847)

 

3,710

 

11,624

Other assets, net

 

4,273

 

(3,669)

 

464

 

1,420

Accounts payable and accrued expenses

 

(19,172)

 

(1,375)

 

(6,015)

 

(16,069)

Other liabilities, net

 

(3,362)

 

13,943

 

(503)

 

1,780

Net cash provided by operating activities

 

89,431

 

107,649

 

37,043

 

42,632

INVESTING ACTIVITIES:

 

  

 

  

 

  

 

  

Development costs, construction in progress and real estate additions

 

(164,776)

 

(128,114)

 

(47,982)

 

(78,332)

Acquisition of real estate

 

(19,551)

 

 

 

(450)

Proceeds from the sale of real estate

 

68,998

 

923,108

 

12,410

 

68,998

Proceeds from the sale of investments

19,030

Distributions of capital from unconsolidated real estate ventures

 

 

52,465

Proceeds from derivative financial instruments

1,465

Distributions of capital from unconsolidated real estate ventures and other investments

 

160,250

 

Investments in unconsolidated real estate ventures and other investments

 

(20,171)

 

(81,185)

 

(2,541)

 

(16,889)

Net cash (used in) provided by investing activities

 

(135,500)

 

785,304

Net cash provided by (used in) investing activities

 

123,602

 

(26,673)

FINANCING ACTIVITIES:

 

  

 

  

 

  

 

  

Borrowings under mortgage loans

 

251,714

 

 

31,600

 

223,303

Borrowings under revolving credit facility

 

122,000

 

 

30,000

 

Borrowings under term loans

 

170,000

 

Repayments of mortgage loans

 

(278,469)

 

(167,132)

 

(786)

 

(133,860)

Repayments of revolving credit facility

 

(60,000)

 

(300,000)

 

(92,000)

 

Payments on derivative financial instruments

(1,465)

Debt issuance and modification costs

 

(17,213)

 

(1,256)

 

(10)

 

(7,206)

Redemption of partner's noncontrolling interest

 

(647)

 

 

 

(647)

Proceeds from common shares issued pursuant to ESPP

 

665

 

800

 

292

 

Common shares repurchased

(155,845)

(297,040)

(49,444)

(20,098)

Dividends paid to common shareholders

 

(49,455)

 

(56,323)

 

(16,066)

 

(25,664)

Distributions to redeemable noncontrolling interests

 

(7,895)

 

(8,196)

 

(2,931)

 

(3,968)

Distributions to noncontrolling interests

(15)

(21)

(10)

Contributions from noncontrolling interests

9,238

Net cash used in financing activities

 

(25,160)

 

(819,930)

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

 

(71,229)

 

73,023

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

 

274,073

 

302,095

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

$

202,844

$

375,118

Net cash (used in) provided by financing activities

 

(100,820)

 

31,860

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)

Six Months Ended June 30, 

    

2023

    

2022

CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD:

 

  

Cash and cash equivalents

$

156,639

$

162,270

Restricted cash

 

46,205

 

212,848

Cash and cash equivalents, and restricted cash

$

202,844

$

375,118

SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION:

 

  

Cash paid for interest (net of capitalized interest of $7,221 and $3,928 in 2023 and 2022)

$

44,379

$

34,612

Accrued capital expenditures included in accounts payable and accrued expenses

 

75,565

 

57,426

Write-off of fully depreciated assets

 

3,335

 

7,993

Conversion of OP Units to common shares

 

25,508

 

7,776

Recognition of operating lease right-of-use asset

61,443

Recognition of liabilities related to operating lease right-of-use asset

61,443

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

 

1,967

 

1,092

Three Months Ended March 31, 

    

2024

    

2023

Net increase in cash and cash equivalents, and restricted cash

$

59,825

$

47,819

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

 

200,441

 

274,073

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

$

260,266

$

321,892

CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD:

 

  

Cash and cash equivalents

$

220,514

$

279,553

Restricted cash

 

39,752

 

42,339

Cash and cash equivalents, and restricted cash

$

260,266

$

321,892

SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION:

 

  

Cash paid for interest (net of capitalized interest of $3,008 and $5,175 in 2024 and 2023)

$

25,623

$

22,705

Accrued capital expenditures included in accounts payable and accrued expenses

 

77,358

 

72,375

Write-off of fully depreciated assets

 

10,574

 

192

Redemption of OP Units for common shares

 

7,875

 

13,782

Recognition of operating lease right-of-use asset

61,443

Recognition of liabilities related to operating lease right-of-use asset

61,443

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

 

1,616

 

398

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, operates, invests in and develops mixed-use properties in high growth and high barrier-to-entry submarkets in and around Washington, D.C., most notably National Landing. Through an intense focus on placemaking, JBG SMITH cultivates vibrant, amenity-rich, walkable neighborhoods throughout the Washington, D.C. metropolitan area. Approximately two-thirds75.0% of our holdings are in the National Landing submarket in Northern Virginia, which is anchored by four key demand drivers: Amazon.com, Inc.'s ("Amazon") new headquarters; Virginia Tech's under-construction $1 billion Innovation Campus; the submarket’s proximity to the Pentagon; and our deployment of next-generation public and private 5G digital infrastructure. In addition, our third-party asset management and real estate services business provides fee-based real estate services to the Washington Housing Initiative ("WHI") Impact Pool, the legacy funds formerly organized by The JBG Companies ("JBG") (the "JBG Legacy Funds") and other third parties.

Substantially all our assets are held by, and our operations are conducted through, JBG SMITH Properties LP ("JBG SMITH LP"), our operating partnership. As of June 30, 2023,March 31, 2024, JBG SMITH, as its sole general partner, controlled JBG SMITH LP and owned 88.1%87.6% of its OP Units, after giving effect to the conversion of certain vested long-term incentive partnership units ("LTIP Units") that are convertible into OP Units. JBG SMITH is referred to herein as "we," "us," "our" or other similar terms. References to "our share" refer to our ownership percentage of consolidated and unconsolidated assets in real estate ventures, but exclude our: (i) 10.0% subordinated interest in one commercial building, (ii) 33.5% subordinated interest in four commercial buildings (the "Fortress Assets") and, (iii) 49.0% interest in three commercial buildings (the "L'Enfant Plaza Assets"), and (iv) 9.9% interest in The Foundry, as well as the associated non-recourse mortgage loans, held through unconsolidated real estate ventures; these interests and debt are excluded because our investment in each real estate venture is zero, we do not anticipate receiving any near-term cash flow distributions from the real estate ventures, and we have not guaranteed their obligations or otherwise committed to providing financial support.

We were organized for the purpose of receiving, via the spin-off on July 17, 2017 (the "Separation"), substantially all of the assets and liabilities of Vornado Realty Trust's ("Vornado") Washington, D.C. segment. On July 18, 2017, we acquired the management business, and certain assets and liabilities of JBG (the "Combination"). The Separation and the Combination are collectively referred to as the "Formation Transaction."

As of June 30, 2023,March 31, 2024, our Operating Portfolio consisted of 5141 operating assets comprising 3115 multifamily assets totaling 6,318 units (6,318 units at our share), 24 commercial assets totaling 9.77.5 million square feet (8.2(7.2 million square feet at our share), 18 multifamily assets totaling 6,756 units (6,756 units at our share) and two wholly owned land assets for which we are the ground lessor. Additionally, we have two under-construction multifamily assets withtotaling 1,583 units (1,583 units at our share) and 2018 assets in the development pipeline totaling 12.511.3 million square feet (9.8(9.3 million square feet at our share) of estimated potential development density.

We derive our revenue primarily from leases with multifamily and commercial tenants, which include fixed and percentage rents, and reimbursements from tenants for certain expenses such as real estate taxes, property operating expenses, and repairs and maintenance. In addition, our third-party asset management and real estate services business provides fee-based real estate services.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and notes are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not contain certain information required in annual financial statements and notes as required under GAAP. In our opinion, all adjustments considered necessary for a fair presentation have been included, and all such adjustments

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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 six months ended June 30,March 31, 2024 and 2023 and 2022 are not necessarily indicative of the results that may be expected for a full year. These condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022,2023, filed with the Securities and Exchange Commission ("SEC") on February 21, 202320, 2024 ("Annual Report").

The accompanying condensed consolidated financial statements include our accounts and those of our wholly owned subsidiaries and consolidated variable interest entities ("VIEs"), including JBG SMITH LP. See Note 5 for additional information on our VIEs.information. 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 June 30, 2023March 31, 2024 and December 31, 2022,2023, and for the three and six months ended June 30, 2023March 31, 2024 and 2022.2023. References to our balance sheets refer to our condensed consolidated balance sheets as of June 30, 2023March 31, 2024 and December 31, 2022.2023. References to our statements of operations refer to our condensed consolidated statements of operations for the three and six months ended June 30, 2023March 31, 2024 and 2022.2023. References to our statements of comprehensive income (loss) refer to our condensed consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2023March 31, 2024 and 2022.2023.

Income Taxes

We have elected to be taxed as a real estate investment trust ("REIT")REIT under sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code"). Under those sections, a REIT which distributes at least 90% of its REIT taxable income as dividends to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. We currently adhere and intend to continue to adhere to these requirements and to maintain our REIT status in future periods. We also participate in the activities conducted by our subsidiary entities that have elected to be treated as taxable REIT subsidiaries under the Code. As such, we are subject to federal, state and local taxes on the income from those activities.

2.Summary of Significant Accounting Policies

Significant Accounting Policies

There were no material changes to our significant accounting policies disclosed in our Annual Report.

Use of Estimates

The preparation of the financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Recent Accounting Pronouncements

Reference Rate ReformStandards Not Yet Adopted

Climate-Related Disclosures

In March 2020,2024, the SEC issued final rules on the enhancement and standardization of climate-related disclosures. The rules require disclosure of, among other things, (i) actual and potential material impacts of climate-related risks on our strategy, business model and outlook, (ii) climate-related targets and goals that have materially affected or are reasonably likely to materially affect our business, results of operations or financial condition, (iii) governance and management of climate-related risks and (iv) material Scope 1 and Scope 2 greenhouse gas emissions. Additionally, the rules require disclosures in the notes to the financial statements regarding the effects of severe weather events and other natural conditions, subject to certain materiality thresholds, and certain carbon offsets and renewable energy certificates. The rules are effective on a phased-in timeline beginning in the annual reports for the year ended December 31, 2025. In April 2024, the SEC announced

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a stay of these climate disclosure rules pending judicial review. We are currently evaluating the potential impact of adopting these new rules on our disclosures.

Income Taxes

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("Topic 848"740"), which was amended in December 2022 by ASU 2022-06, Reference Rate Reform (Topic 848). Topic 848 contains practical expedients740 modifies the rules on income tax disclosures to require entities to disclose (i) specific categories in the rate reconciliation, (ii) the income (loss) from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (iii) income tax expense or benefit from continuing operations (separated by federal, state and foreign). Topic 740 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for reference rate reform related activitiesannual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. This guidance should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the potential impact debt, leases, derivativesof adopting this new guidance on our financial statement disclosures.

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segments Disclosures" ("Topic 280"). Topic 280 enhances disclosures of significant segment expenses and other contracts.segment items regularly provided to the chief operating decision maker ("CODM"), extends certain annual disclosures to interim periods and permits more than one measure of segment profit (loss) to be reported under certain conditions. The guidanceamendments are effective in Topic 848fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Retrospective adoption to all periods presented is optionalrequired, and may be elected through December 31, 2024 as reference rate reform activities occur. We elected to apply the hedge accounting expedients that allow us to (i) continue to amortize previously deferred gains and losses in accumulated other comprehensive income related to terminated hedges into earnings in accordance with the underlying hedged forecasted transactions, (ii) modify loan agreements to replace the reference rate without treating the change as a contract modification and (iii) modify the reference rateearly adoption of the hedging instruments without it being consideredamendments is permitted. We are currently evaluating the potential impact of adopting this new guidance on our financial statement disclosures.

3.Dispositions

Dispositions

The following is a change in critical terms requiring redesignation. We also elected to applysummary of activity for 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 thatthree months ended March 31, 2024:

Gain (Loss)

Gross

Cash

on the Sale

Sales

Proceeds

of Real

Date Disposed

    

Assets

    

Segment

    

Price

    

from Sale

    

Estate

(In thousands)

January 22, 2024

North End Retail

Multifamily

$

14,250

$

12,410

$

(1,200)

Other (1)

1,397

$

197

(1)Primarily related to certain previously recorded contingent liabilities which were relieved in connection with the sale of Central Place Tower by one of our unconsolidated real estate ventures. See Note 4 for additional information.

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index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the past presentation of our derivatives. We will continue to evaluate the impact of the guidance and may apply other elections, as applicable.

3.Acquisition and Dispositions

Acquisition

During the six months ended June 30, 2023, we paid the deferred purchase price of $19.6 million related to the acquisition of a development parcel, formerly the Americana hotel, in 2020.

Dispositions

The following is a summary of activity for the six months ended June 30, 2023:

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 17, 2023

Development Parcel

Other

Arlington, Virginia

$

5,500

$

4,954

$

(53)

March 23, 2023

4747 Bethesda Avenue (1)

Commercial

Bethesda, Maryland

40,053

Other (2)

700

$

40,700

(1)We sold an 80.0% interest in the asset for a gross sales price of $196.0 million, representing a gross valuation of $245.0 million. See Note 4 for additional information.
(2)Represents recognition of contingent consideration related to a prior period disposition.

4.Investments in Unconsolidated Real Estate Ventures

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

Effective

Effective

    

Ownership

    

Ownership

Real Estate Venture

    

Interest (1)

    

June 30, 2023

    

December 31, 2022

    

Interest (1)

    

March 31, 2024

    

December 31, 2023

(In thousands)

Prudential Global Investment Management

 

50.0%

$

198,475

$

203,529

J.P. Morgan Global Alternatives ("J.P. Morgan") (2)

50.0%

68,275

64,803

4747 Bethesda Venture (3)

20.0%

13,577

(In thousands)

Prudential Global Investment Management ("PGIM") (2)

 

50.0%

$

4,358

$

163,375

J.P. Morgan Global Alternatives ("J.P. Morgan") (3)

50.0%

73,592

72,742

4747 Bethesda Venture

20.0%

12,141

13,118

Brandywine Realty Trust

 

30.0%

 

13,682

 

13,678

 

30.0%

 

13,625

 

13,681

CBREI Venture

 

9.9% - 10.0%

 

12,380

 

12,516

Landmark Partners (4)

 

18.0%

 

2,267

 

4,809

CBREI Venture (4)

 

10.0%

 

169

 

180

Landmark Partners (5)

 

18.0%

 

585

 

605

Other

 

 

563

546

 

 

312

580

Total investments in unconsolidated real estate ventures (5) (6)

$

309,219

$

299,881

Total investments in unconsolidated real estate ventures (6) (7)

$

104,782

$

264,281

(1)Reflects our effective ownership interests in the underlying real estate as of June 30, 2023.March 31, 2024. We have multiple investments with certain venture partners with varying ownership interests in the underlying real estate.
(2)In February 2024, the venture sold its interest in Central Place Tower for a gross sales price of $325.0 million.
(3)J.P. Morgan is the advisor for an institutional investor.
(3)(4)Excludes The Foundry for which we have a zero-investment balance and discontinued applying the equity method of accounting after September 30, 2023. In March 2023, we sold an 80.0% interest in 4747 Bethesda Avenue for a gross sales priceApril 2024, the lender foreclosed on the loan secured by The Foundry and took possession of $196.0 million, representing a gross valuation of $245.0 million. In connection with the transaction, the real estate venture assumed the related $175.0 million mortgage loan.property.
(4)(5)Excludes the L'Enfant Plaza Assets for which we have a zero investmentzero-investment balance and discontinued applying the equity method of accounting after September 30, 2022.
(5)(6)Excludes (i) 10.0% subordinated interest in one commercial building, (ii) the Fortress Assets, and (iii) the L'Enfant Plaza Assets and (iv) The Foundry held through unconsolidated real estate ventures. ForSee Note 1 for more information see Note 1.information. Also, excludes our interest in an investment in the real estate venture that owns 1101 17th Street for which we have discontinued applying the equity method of accounting since June 30, 2018 because we received distributions in excess of our contributions and share of earnings, which reduced our investment to zero; further, we are not obligated to provide for losses, have not guaranteed its obligations or otherwise committed to provide financial support.
(7)As of March 31, 2024 and December 31, 2023, our total investments in unconsolidated real estate ventures were greater than our share of the net book value of the underlying assets by $9.0 million and $8.7 million, resulting principally from our zero-investment balance in certain real estate ventures and capitalized interest.

We provide leasing, property management and other real estate services to our unconsolidated real estate ventures. We recognized revenue, including expense reimbursements, of $4.5 million and $5.3 million for the three months ended March 31, 2024 and 2023 for such services.

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

Proportionate

Real Estate

Gross

Share of

Venture

Ownership

Sales

Aggregate

Date Disposed

    

Partner

Assets

Percentage

    

Price

Gain (1)

(In thousands)

February 13, 2024

PGIM

Central Place Tower

50.0%

$

325,000

$

480

(1)Additionally, we recognized $1.4 million related to certain previously recorded contingent liabilities, which were relieved in connection with the sale and included in "Gain on the sale of real estate, net" in our statement of operations.

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30, 2018 because we received distributions in excess of our contributions and share of earnings, which reduced our investment to zero; further, we are not obligated to provide for losses, have not guaranteed its obligations or otherwise committed to provide financial support.
(6)As of June 30, 2023 and December 31, 2022, our total investments in unconsolidated real estate ventures were greater than our share of the net book value of the underlying assets by $7.0 million and $8.9 million, resulting principally from capitalized interest and our zero investment balance in certain real estate ventures.

We provide leasing, property management and other real estate services to our unconsolidated real estate ventures. We recognized revenue, including expense reimbursements, of $5.6 million and $10.8 million for the three and six months ended June 30, 2023, and $6.6 million and $12.2 million for the three and six months ended June 30, 2022 for such services.

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

Weighted

Weighted

Average Effective

Average Effective

    

Interest Rate (1)

    

June 30, 2023

    

December 31, 2022

    

Interest Rate (1)

    

March 31, 2024

    

December 31, 2023

(In thousands)

(In thousands)

Variable rate (2)

 

6.06%

$

358,271

$

184,099

 

5.73%

$

175,000

$

175,000

Fixed rate (3)

 

4.13%

 

60,000

 

60,000

 

4.13%

 

60,000

 

60,000

Mortgage loans (4)

 

418,271

 

244,099

 

235,000

 

235,000

Unamortized deferred financing costs and premium / discount, net

 

(10,082)

 

(411)

 

(7,847)

 

(8,531)

Mortgage loans, net (4) (5)

$

408,189

$

243,688

$

227,153

$

226,469

(1)Weighted average effective interest rate as of June 30, 2023.March 31, 2024.
(2)Includes variable rate mortgages with interest rate cap agreements.
(3)Includes variable rate mortgages with interest rates fixed by interest rate swap agreements.
(4)Excludes mortgage loans related to the Fortress Assets, and the L'Enfant Plaza Assets.Assets and The Foundry.
(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:

    

June 30, 2023

    

December 31, 2022

    

March 31, 2024

    

December 31, 2023

 

(In thousands)

 

(In thousands)

Combined balance sheet information: (1)

Real estate, net

$

1,070,477

$

888,379

$

450,949

$

729,791

Other assets, net

 

184,566

 

160,015

 

76,246

 

137,771

Total assets

$

1,255,043

$

1,048,394

$

527,195

$

867,562

Mortgage loans, net

$

408,189

$

243,688

$

227,153

$

226,469

Other liabilities, net

 

53,163

 

54,639

 

29,266

 

47,251

Total liabilities

 

461,352

 

298,327

 

256,419

 

273,720

Total equity

 

793,691

 

750,067

 

270,776

 

593,842

Total liabilities and equity

$

1,255,043

$

1,048,394

$

527,195

$

867,562

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Three Months Ended June 30, 

Six Months Ended June 30, 

Three Months Ended March 31, 

    

2023

    

2022

X

2023

    

2022

    

2024

    

2023

 

(In thousands)

 

(In thousands)

Combined income statement information: (1)

Total revenue

$

24,952

$

41,379

$

44,985

$

84,253

$

13,282

$

20,033

Operating income (2)

5,088

36,108

 

7,579

 

84,534

 

4,524

 

2,491

Net income (loss) (2)

(2,214)

25,127

 

(3,934)

 

64,410

 

644

 

(1,720)

(1)Excludes amounts related to the Fortress Assets and the L'Enfant Plaza Assets. Excludes combined balance sheet information for both periods presented and combined income statement information for the three and six months ended June 30, 2023March 31, 2024 related to the L'Enfant Plaza AssetsThe Foundry as we discontinued applying the equity method of accounting after September 30, 2022.2023.
(2)Includes the gain on the sale of various assets totaling $32.3 million and $77.4 million duringCentral Place Tower of $894,000 for the three and six months ended June 30, 2022.March 31, 2024.

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

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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 June 30, 2023March 31, 2024 and December 31, 2022,2023, we had interests in entities deemed to be VIEs. Although we may be responsible for managing the day-to-day operations of these investees, we are not the primary beneficiary of these VIEs, as we do not hold unilateral power over activities that, when taken together, most significantly impact the respective VIE's economic performance. We account for our investment in these entities under the equity method. As of June 30, 2023March 31, 2024 and December 31, 2022,2023, the net carrying amounts of our investment in these entities were $84.3$88.1 million and $83.2$87.3 million, which were included in "Investments in unconsolidated real estate ventures" in our balance sheets. Our equity in the income of unconsolidated VIEs was included in "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 88.1%87.6% of the limited partnership interest in JBG SMITH LP, act as the general partner and exercise full responsibility, discretion and control over its day-to-day management. The noncontrolling interests of JBG SMITH LP do not have substantive liquidation rights, substantive kick-out rights without cause or substantive participating rights that could be exercised by a simple majority of noncontrolling interest limited partners (including by such a limited partner unilaterally). Because the noncontrolling interest holders do not have these rights, JBG SMITH LP is a VIE. As general partner, we have the power to direct the activities of JBG SMITH LP that most significantly affect its economic performance, and through our majority interest, we have both the right to receive benefits from and the obligation to absorb losses of JBG SMITH LP. Accordingly, we are the primary beneficiary of JBG SMITH LP and consolidate it in our financial statements. Because we conduct our business through JBG SMITH LP, its total assets and liabilities comprise substantially all our consolidated assets and liabilities.

As of June 30, 2023March 31, 2024 and December 31, 2022, excluding JBG SMITH LP,2023, we also consolidated two VIEs (1900 Crystal Drive and 2000/2001 South Bell Street) with total assets of $392.2$543.1 million and $265.5$503.2 million, and liabilities of $198.7$339.0 million and $116.3$293.3 million, primarily consisting of construction in process and mortgage loans. The assets of the VIEs can only be

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used to settle the obligations of the VIEs, and the liabilities include third-party liabilities of the VIEs for which the creditors or beneficial interest holders do not have recourse against us.

6.Other Assets, Net

The following is a summary of other assets, net:

    

June 30, 2023

    

December 31, 2022

    

March 31, 2024

    

December 31, 2023

(In thousands)

(In thousands)

Prepaid expenses

$

11,056

$

16,440

$

12,863

$

13,215

Derivative agreements, at fair value

53,569

61,622

Derivative financial instruments, at fair value

47,116

42,341

Deferred financing costs, net

 

13,653

 

5,516

 

9,469

 

10,199

Deposits

 

401

 

483

Operating lease right-of-use assets (1)

61,908

1,383

59,529

60,329

Investments in funds (2)

19,671

16,748

22,874

21,785

Other investments (3)

3,589

3,524

3,487

3,487

Other

 

11,830

 

11,312

 

12,683

 

12,125

Total other assets, net

$

175,677

$

117,028

$

168,021

$

163,481

(1)Includes our corporate office lease at 4747 Bethesda Avenue as of June 30, 2023.Avenue.
(2)Consists of investments in real estate-focused technology companies, which are recorded at their fair value based on their reported net asset value. During the three and six months ended June 30,March 31, 2024 and 2023, unrealized (losses) gains related to these investments were ($338,000) and $1.7 million. During the three and six months ended June 30, 2022, unrealized gains related to these investments were $1.0 million$497,000 and $1.2$2.0 million. During the three and six months ended June 30,March 31, 2024 and 2023, realized losses related to these investments

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were $189,000$439,000 and $318,000.$129,000. Unrealized (losses) gains and realized losses were included in "Interest and other income, net" in our statements of operations.
(3)Primarily consists of equity investments that are carried at cost. During the three and six months ended June 30, 2022, realized gains related to these investments were $178,000 and $14.1 million, which were included in "Interest and other income, net" in our statements of operations.

7.Debt

Mortgage Loans

The following is a summary of mortgage loans:

Weighted Average

Weighted Average

Effective

Effective

   

Interest Rate (1)

  

June 30, 2023

   

December 31, 2022

   

Interest Rate (1)

  

March 31, 2024

   

December 31, 2023

(In thousands)

(In thousands)

Variable rate (2)

 

5.43%

$

678,671

$

892,268

 

6.31%

$

641,382

$

608,582

Fixed rate (3)

 

4.45%

 

1,025,535

 

1,009,607

 

4.78%

 

1,189,484

 

1,189,643

Mortgage loans

 

1,704,206

 

1,901,875

 

1,830,866

 

1,798,225

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

 

(14,999)

 

(11,701)

Unamortized deferred financing costs and premium / discount, net

 

(14,358)

 

(15,211)

Mortgage loans, net

$

1,689,207

$

1,890,174

$

1,816,508

$

1,783,014

(1)Weighted average effective interest rate as of June 30, 2023.March 31, 2024.
(2)Includes variable rate mortgage loans with interest rate cap agreements. For mortgage loans with interest rate caps, the weighted average interest rate cap strike was 2.42%3.41%, and the weighted average maturity date of the interest rate caps is August 2023.was April 2025. The interest rate cap strike is exclusive of the credit spreads associated with the mortgage loans. As of June 30, 2023, one-month LIBOR was 5.22% andMarch 31, 2024, one-month term Secured Overnight Financing Rate ("SOFR") was 5.14%5.33%.
(3)Includes variable rate mortgages with interest rates fixed by interest rate swap agreements.
(4)As of June 30, 2023 and December 31, 2022, excludes $2.0 million and $2.2 million of net deferred financing costs related to unfunded mortgage loans that were included in "Other assets, net" in our balance sheets.

As of June 30, 2023March 31, 2024 and December 31, 2022,2023, the net carrying value of real estate collateralizing our mortgage loans totaled $2.1 billion and $2.2 billion. Our mortgage loans contain covenants that limit our ability to incur additional indebtedness

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on these properties and, in certain circumstances, require lender approval of tenant leases and/or yield maintenance upon repayment prior to maturity. Certain mortgage loans are recourse to us. See Note 17 for additional information.

In January 2023, we entered into a $187.6 million loan facility, collateralized by The Wren and F1RST Residences. The loan has a seven-year term and a fixed interest rate of 5.13%. This loan is the initial advance under a Fannie Mae multifamily credit facility which provides flexibility for collateral substitutions, future advances tied to performance, ability to mix fixed and floating rates, and staggered maturities. Proceeds from the loan were used, in part, to repay the $131.5 million mortgage loan collateralized by 2121 Crystal Drive, which had a fixed interest rate of 5.51%.

In June 2023, we repaid $142.4 million in mortgage loans collateralized by Falkland Chase – South & West and 800 North Glebe Road.

As of June 30, 2023March 31, 2024 and December 31, 2022,2023, we had various interest rate swap and cap agreements on certain mortgage loans with an aggregate notional value of $1.2$1.6 billion and $1.3$1.7 billion. See Note 15 for additional information.

Revolving Credit Facility and Term Loans

As of June 30,March 31, 2024 and December 31, 2023, our unsecured revolving credit facility and term loans totaling $1.5 billion consisted of a $750.0 million revolving credit facility maturing in June 2027, a $200.0 million term loan ("Tranche A-1 Term Loan") maturing in January 2025, a $400.0 million term loan ("Tranche A-2 Term Loan") maturing in January 2028 which includes the $50.0 million remaining advance drawn in May 2023, and a $120.0 million term loan ("2023 Term Loan") maturing in June 2028.

Effective as of June 29, 2023, the The revolving credit facility was amended to: (i) reduce the borrowing capacity from $1.0 billion to $750.0 million, (ii) extend the maturity date from January 2025 to June 2027 and (iii) amend the interest rate to daily SOFR plus 1.40% to daily SOFR plus 1.85%, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets. We have the option to increase the $750.0 million revolving credit facility or add term loans up to $500.0 million, and we also have the right to extend the maturity date beyond June 2027 viahas two six-month extension options.

In addition, on June 29, 2023, we entered into a $120.0 million term loan maturing in June 2028 with an interest rate of one-month term SOFR plus 1.25% to one-month term SOFR plus 1.80%, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real propertyoptions, and assets. We also entered into an interest rate swap with a total notional value of $120.0 million, which fixes SOFR at an interest rate of 4.01% through the maturity date.

In July 2023, we amended the covenants related to the Tranche A-1 Term Loan and the Tranche A-2 Term Loan to be consistent with the revolving credit facility and 2023 Term Loan covenants.has two one-year extension options.

The following is a summary of amounts outstanding under the revolving credit facility and term loans:

Effective

Effective

    

Interest Rate (1)

    

June 30, 2023

    

December 31, 2022

    

Interest Rate (1)

March 31, 2024

    

December 31, 2023

(In thousands)

(In thousands)

Revolving credit facility (2) (3)

 

6.49%

$

62,000

$

 

6.79%

$

$

62,000

Tranche A-1 Term Loan (4)

 

2.61%

$

200,000

$

200,000

 

2.70%

$

200,000

$

200,000

Tranche A-2 Term Loan (4)

 

3.54%

 

400,000

 

350,000

2023 Term Loan (5)

5.26%

120,000

Tranche A-2 Term Loan (5)

 

3.58%

 

400,000

 

400,000

2023 Term Loan (6)

5.31%

120,000

120,000

Term loans

 

  

 

720,000

 

550,000

 

  

 

720,000

 

720,000

Unamortized deferred financing costs, net

 

  

 

(3,243)

 

(2,928)

 

  

 

(2,609)

 

(2,828)

Term loans, net

 

  

$

716,757

$

547,072

 

  

$

717,391

$

717,172

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(1)Effective interest rate as of June 30, 2023.March 31, 2024. The interest rate for our revolving credit facility excludes a 0.15% facility fee.
(2)As of June 30, 2023,March 31, 2024, daily SOFR was 5.09%5.34%. As of June 30, 2023March 31, 2024 and December 31, 2022,2023, letters of credit with an aggregate face amount of $467,000 were outstanding under our revolving credit facility.

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(3)As of June 30, 2023March 31, 2024 and December 31, 2022,2023, excludes $11.7$9.5 million and $3.3$10.2 million of net deferred financing costs related to our revolving credit facility that were included in "Other assets, net" in our balance sheets.
(4)As of June 30, 2023March 31, 2024 and December 31, 2022,2023, the outstanding balance was fixed by interest rate swap agreements. As of June 30, 2023, these interest rate swap agreementsswaps fix SOFR at a weighted average interest rate of 1.46% for the Tranche A-1 Term Loan and 2.29% for the Tranche A-2 Term Loan.. Interest rate swaps for the Tranche A-1 Term Loan with a total notional value of $200.0 million mature in July 2024. We have two forward-starting interest rate swaps that will be effective July 2024 with a total notional value of $200.0 million, which will effectively fix SOFR at a weighted average interest rate of 4.00% through January 2027.
(5)As of March 31, 2024 and December 31, 2023, the interest rate swaps fix SOFR at a weighted average interest rate of 2.29%. Interest rate swaps for the Tranche A-2 Term Loan with a total notional value of $200.0 million mature in July 2024 and with a total notional value of $200.0 million mature in January 2028. We have two forward-starting interest rate swaps that will be effective July 2024 with a total notional value of $200.0 million, which will effectively fix SOFR for the Tranche A-2 Term Loan at a weighted average interest rate of 2.81% through the maturity date.
(5)(6)As of June 30,March 31, 2024 and December 31, 2023, the outstanding balance was fixed by an interest rate swap agreement, which fixes SOFR at an interest rate of 4.01% through the maturity date.

8.Other Liabilities, Net

The following is a summary of other liabilities, net:

    

June 30, 2023

    

December 31, 2022

    

March 31, 2024

    

December 31, 2023

(In thousands)

(In thousands)

Lease intangible liabilities, net

$

6,403

$

7,275

$

3,382

$

3,496

Lease assumption liabilities

 

1,228

 

2,647

Lease incentive liabilities

 

9,685

 

11,539

 

8,777

 

7,546

Liabilities related to operating lease right-of-use assets (1)

 

65,875

 

5,308

 

63,789

 

64,501

Prepaid rent

 

15,428

 

15,923

 

13,016

 

11,881

Security deposits

 

12,879

 

13,963

 

12,287

 

12,133

Environmental liabilities

 

17,990

 

17,990

 

17,568

 

17,568

Deferred tax liability, net

 

5,181

 

4,903

 

1,847

 

3,326

Dividends payable

 

 

29,621

Derivative agreements, at fair value

 

755

 

Deferred purchase price related to the acquisition of a development parcel

19,447

Derivative financial instruments, at fair value

 

6,422

 

14,444

Other

 

4,021

 

4,094

 

2,401

 

3,974

Total other liabilities, net

$

139,445

$

132,710

$

129,489

$

138,869

(1)Includes our corporate office lease at 4747 Bethesda Avenue as of June 30, 2023.Avenue.

9.Redeemable Noncontrolling Interests

JBG SMITH LP

OP Units held by persons other than JBG SMITH are redeemable for cash or, at our election, our common shares, subject to certain limitations. Vested LTIP Units are redeemable into OP Units. During the sixthree months ended June 30,March 31, 2024 and 2023, and 2022, unitholders redeemed 1.6 million468,081 and 280,451756,356 OP Units, which we elected to redeem for an equivalent number of our common shares. As of June 30, 2023,March 31, 2024, outstanding OP Units and redeemable LTIP Units totaled 14.113.0 million, representing an 11.9%a 12.4% ownership interest in JBG SMITH LP. Our OP Units and certain vested LTIP Units are presented at the higher of their redemption value or their carrying value, with adjustments to the redemption value recognized in "Additional paid-in capital" in our balance sheets. Redemption value per OP Unit is equivalent to the market value of one common share at the end of the period. In July 2023,April 2024, unitholders redeemed 257,15183,887 OP Units and LTIP Units, which we elected to redeem for an equivalent number of our common shares.

Consolidated Real Estate Venture

We were a partner in a consolidated real estate venture that owned a multifamily asset, The Wren, located in Washington, D.C. As of June 30, 2022, we held a 96.0% ownership interest in the real estate venture. In October 2022, one partner redeemed its 3.7% interest, and in February 2023, another partner redeemed its 0.3% interest, increasing our ownership interest to 100.0%.

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

Three Months Ended June 30, 

Three Months Ended March 31, 

2023

2022

2024

2023

Consolidated

Consolidated

Consolidated

JBG

Real Estate

JBG

Real Estate

JBG

JBG

Real Estate

   

SMITH LP

   

Venture

   

Total

   

SMITH LP

   

Venture

   

Total

   

SMITH LP

   

SMITH LP

   

Venture (1)

   

Total

 

(In thousands)

Balance, beginning of period

$

457,778

$

$

457,778

$

536,725

$

9,324

$

546,049

Redemptions

 

(11,726)

 

 

(11,726)

 

(1,762)

 

 

(1,762)

LTIP Units issued in lieu of cash compensation (1)

 

757

 

 

757

 

987

 

 

987

Net income (loss)

 

(1,398)

 

 

(1,398)

 

18,240

 

8

 

18,248

Other comprehensive income

 

1,781

 

 

1,781

 

1,311

 

 

1,311

Distributions

 

(3,927)

 

 

(3,927)

 

(4,110)

 

(79)

 

(4,189)

Share-based compensation expense

 

9,606

 

 

9,606

 

12,369

 

 

12,369

Adjustment to redemption value

 

3,015

 

 

3,015

 

(50,334)

 

(1,287)

 

(51,621)

Balance, end of period

$

455,886

$

$

455,886

$

513,426

$

7,966

$

521,392

Six Months Ended June 30, 

2023

2022

Consolidated

Consolidated

JBG

Real Estate

JBG

Real Estate

   

SMITH LP

   

Venture

   

Total

   

SMITH LP

   

Venture

   

Total

 

(In thousands)

 

(In thousands)

Balance, beginning of period

$

480,663

$

647

$

481,310

$

513,268

$

9,457

$

522,725

$

440,737

$

480,663

$

647

$

481,310

Redemptions

 

(25,508)

 

(647)

 

(26,155)

 

(7,776)

 

 

(7,776)

 

(7,875)

 

(13,782)

 

(647)

 

(14,429)

LTIP Units issued in lieu of cash compensation (1)

 

5,213

 

 

5,213

 

6,584

 

 

6,584

Net income

 

1,965

 

 

1,965

 

18,237

 

21

 

18,258

LTIP Units issued in lieu of cash compensation (2)

 

2,983

 

4,456

 

 

4,456

Net income (loss)

 

(4,534)

 

3,363

 

 

3,363

Other comprehensive income (loss)

 

(444)

 

 

(444)

 

4,277

 

 

4,277

 

2,026

 

(2,225)

 

 

(2,225)

Distributions

 

(3,927)

 

 

(3,927)

 

(4,110)

 

(148)

 

(4,258)

 

(2,931)

 

 

 

Share-based compensation expense

 

19,149

 

 

19,149

 

24,896

 

 

24,896

 

8,950

 

9,543

 

 

9,543

Adjustment to redemption value

 

(21,225)

 

 

(21,225)

 

(41,950)

 

(1,364)

 

(43,314)

 

(3,827)

 

(24,240)

 

 

(24,240)

Balance, end of period

$

455,886

$

$

455,886

$

513,426

$

7,966

$

521,392

$

435,529

$

457,778

$

$

457,778

(1)As of December 31, 2022, we held a 99.7% ownership interest in a real estate venture that owned The Wren, a multifamily asset. In February 2023, the partner redeemed its 0.3% interest, increasing our ownership interest to 100.0%.
(2)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 June 30, 

Six Months Ended June 30, 

Three Months Ended March 31, 

    

2023

    

2022

X

2023

    

2022

2024

    

2023

(In thousands)

(In thousands)

Fixed

$

108,124

$

105,498

$

221,195

$

226,135

$

112,977

$

113,071

Variable

12,468

11,538

23,430

22,499

9,659

10,962

Property rental revenue

$

120,592

$

117,036

$

244,625

$

248,634

$

122,636

$

124,033

11.Share-Based Payments

LTIP Units and Time-Based LTIP Units

During the six months ended June 30, 2023,In January 2024, we granted to certain employees 945,872974,140 LTIP Units with time-based vesting requirements ("Time-Based LTIP Units") and a weighted average grant-date fair value of $17.65$15.93 per unit that primarily vest ratably over four years subject to continued employment. Compensation expense for these units is primarily being recognized over a four-year period.

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In February 2023,January 2024, we granted 280,342209,047 fully vested LTIP Units to certain employees, who elected to receive all or a portion of their cash bonuses related to 20222023 service as LTIP Units. The LTIP units had a grant-date fair value of $15.90$14.27 per unit. Compensation expense totaling $4.5$3.0 million for these LTIP Units was recognized in 2022.

In May 2023, as part of their annual compensation, we granted to non-employee trustees a total of 155,523 fully vested LTIP Units with a grant-date fair value of $11.30 per unit, which includes LTIP Units elected in lieu of cash retainers. The LTIP Units may not be sold while a trustee is serving on the Board of Trustees.2023.

The aggregate grant-date fair value of the Time-Based LTIP Units and the LTIP Units granted during the sixthree months ended June 30, 2023March 31, 2024 was $22.9$18.5 million. The Time-Based LTIP Units and the LTIP Units were valued based on the closing common share price on the grant date, less a discount for post-grant restrictions. The discount was determined using Monte Carlo simulations based on the following significant assumptions:

Expected volatility

   

26.0% to 31.0%35.0%

Risk-free interest rate

 

3.4%4.4% to 4.9%4.6%

Post-grant restriction periods

 

2 to 6 years

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In April 2024, as part of their annual compensation, we granted to non-employee trustees a total of 141,422 fully vested LTIP Units with a grant-date fair value of $12.40 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.

Appreciation-Only LTIP Units ("AO LTIP Units")

In January 2023,2024, we granted to certain employees 1.71.9 million performance-based AO LTIP Units with a grant-date fair value of $3.73$3.79 per unit. The AO LTIP Units are structured in the form of profits interests that provide for a share of appreciation determined by the increase in the value of a common share at the time of conversion over the participation threshold of $20.83.$18.93. The AO LTIP Units are subject to a TSR modifier whereby the number of AO LTIP Units that will ultimately be earned will be increased or reduced by as much as 25%. The AO LTIP Units have a three-year performance period with 50% of the AO LTIP Units earned vesting at the end of the three-year performance period and the remaining 50% vesting on the fourth anniversary of the grant date, subject to continued employment. The AO LTIP Units expire on the tenth anniversary of their grant date.

The aggregate grant-date fair value of the AO LTIP Units granted during the sixthree months ended June 30, 2023March 31, 2024 was $6.4$7.1 million, valued using Monte Carlo simulations based on the following significant assumptions:

Expected volatility

   

30.0%32.0%

Dividend yield

 

3.2%

Risk-free interest rate

 

4.1%

LTIP Units with Performance-Based Vesting Requirements ("Performance-Based LTIP Units")

In January 2023, 470,773 Performance-Based LTIP Units, which were unvested as of December 31, 2022, were forfeited because the performance measures were not met.

Restricted Share Units ("RSUs")

In January 2023,2024, we granted to certain non-executive employees 78,68174,842 time-based RSUs ("Time-Based RSUs") with a grant-date fair value of $18.94$17.21 per unit. Vesting requirements and compensation expense recognition for the Time-Based RSUs are primarily consistent towith those of the Time-Based LTIP Units granted in 2023.2024.

The aggregate grant-date fair value of the RSUs granted during the sixthree months ended June 30, 2023March 31, 2024 was $1.5$1.3 million. The Time-Based RSUs were valued based on the closing common share price on the date of grant.

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ESPP

Pursuant to the ESPP, employees purchased 52,08921,401 common shares for $665,000$292,000 during the sixthree months ended June 30, 2023. The following is a summary of the significant assumptions used to value the ESPP common sharesMarch 31, 2024, valued using the Black-Scholes model:model based on the following significant assumptions:

Expected volatility

   

30.0%48.0%

Dividend yield

 

2.4%4.2%

Risk-free interest rate

 

4.7%5.3%

Expected life

63 months

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Share-Based Compensation Expense

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

Three Months Ended June 30, 

Six Months Ended June 30, 

Three Months Ended March 31, 

    

2023

    

2022

X

2023

    

2022

    

2024

    

2023

 

(In thousands)

 

(In thousands)

Time-Based LTIP Units

$

5,324

$

6,202

$

10,856

$

12,328

$

5,472

$

5,532

AO LTIP Units and Performance-Based LTIP Units

 

3,282

 

3,590

 

6,942

 

7,747

 

3,478

 

3,660

LTIP Units

 

1,000

 

1,000

 

1,000

 

1,000

Other equity awards (1)

 

1,262

 

1,399

 

2,798

 

2,826

 

1,044

 

1,536

Share-based compensation expense - other

 

10,868

 

12,191

 

21,596

 

23,901

 

9,994

 

10,728

Formation awards, OP Units and LTIP Units (2)

 

 

1,017

 

108

 

1,974

Special Time-Based LTIP Units and Special Performance-Based LTIP Units (3)

 

 

560

 

243

 

1,847

Share-based compensation related to Formation Transaction and special equity awards (4)

 

 

1,577

 

351

 

3,821

Share-based compensation related to Formation Transaction and special equity awards (2)

 

 

351

Total share-based compensation expense

 

10,868

 

13,768

 

21,947

 

27,722

 

9,994

 

11,079

Less: amount capitalized

 

(782)

 

(1,297)

 

(1,433)

 

(2,347)

 

(456)

 

(651)

Share-based compensation expense

$

10,086

$

12,471

$

20,514

$

25,375

$

9,538

$

10,428

(1)Primarily comprising compensation expense for: (i) fully vested LTIP Units issued to certain employees in lieu of all or a portion of any cash bonuses earned, (ii) RSUs and (iii) shares issued under our ESPP.
(2)Includes share-based compensation expense for formation awards, LTIP Units and OP Units issued in the Formation Transaction, which fully vested in July 2022.
(3)Represents equity awards issued related to our successful pursuit of Amazon's additional headquarters in National Landing.
(4)Included in "General and administrative expense: Share-based compensation related to Formation Transaction and special equity awards" in our statementsstatement of operations. Includes share-based compensation expense for awards issued in connection with the Formation Transaction and with our successful pursuit of Amazon's additional headquarters in National Landing all of which were fully expensed as of December 31, 2023.

As of June 30, 2023,March 31, 2024, we had $41.1$40.8 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 2.92.4 years.

In April 2024, our shareholders approved an amendment to the JBG SMITH 2017 Omnibus Share Plan, as amended, (the "Plan") to increase the common shares reserved for issuance under the Plan by 7.5 million common shares.

12.Transaction and Other Costs

The following is a summary of transaction and other costs:

Three Months Ended March 31, 

    

2024

    

2023

 

(In thousands)

Completed, potential and pursued transaction expenses (1)

$

1,507

$

47

Severance and other costs

 

7

 

1,448

Demolition costs

977

Transaction and other costs

$

1,514

$

2,472

(1)Primarily consists of dead deal costs.

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13.Interest Expense

The following is a summary of interest expense:

Three Months Ended March 31, 

    

2024

    

2023

 

(In thousands)

Interest expense before capitalized interest

$

30,840

$

27,908

Amortization of deferred financing costs

 

3,903

 

1,279

Net loss on non-designated derivatives:

 

  

Net unrealized loss

 

42

 

2,697

Net realized loss

 

 

133

Capitalized interest

 

(4,625)

 

(5,175)

Interest expense

$

30,160

$

26,842

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

Common Shares Repurchased

Our Board of Trustees has authorized the repurchase of up to $1.5 billion of our outstanding common shares. During the three months ended March 31, 2024, we repurchased and retired 3.0 million common shares for $49.4 million, a weighted average purchase price per share of $16.50. During the three months ended March 31, 2023, we repurchased and retired 1.2 million common shares for $20.1 million, a weighted average purchase price per share of $16.66. Since we began the share repurchase program through March 31, 2024, we have repurchased and retired 48.9 million common shares for $1.0 billion, a weighted average purchase price per share of $20.61.

Earnings (Loss) Per Common Share

Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding during the period. Unvested share-based compensation awards that entitle holders to receive non-forfeitable distributions are considered participating securities. Consequently, we are required to apply the two-class method of computing basic and diluted earnings (loss) that would otherwise have been available to common shareholders. Under the two-class method, earnings for the period are allocated between common shareholders and participating securities based on their respective rights to receive dividends. During periods of net loss, losses are allocated only to the extent the participating securities are required to absorb their share of such losses. Distributions to participating securities in excess of their allocated income or loss are shown as a reduction to net income (loss) attributable to common shareholders. Diluted earnings (loss) per common share reflects the potential dilution of the assumed exchange of various unit and share-based compensation awards into common shares to the extent they are dilutive.

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12.Transaction and Other Costs

The following is a summary of transaction and other costs:

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2023

    

2022

X

2023

    

2022

 

(In thousands)

Completed, potential and pursued transaction expenses (1)

$

227

$

854

$

274

$

1,586

Severance and other costs

 

1,799

 

727

 

3,247

 

872

Demolition costs

1,466

406

2,443

428

Transaction and other costs

$

3,492

$

1,987

$

5,964

$

2,886

(1)Primarily consists of legal costs related to pursued transactions.

13.Interest Expense

The following is a summary of interest expense:

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2023

    

2022

X

2023

    

2022

 

(In thousands)

Interest expense before capitalized interest

$

27,805

$

18,857

$

55,713

$

37,299

Amortization of deferred financing costs

 

1,351

 

1,121

 

2,630

 

2,251

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

247

2,091

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

 

  

Net unrealized (gain) loss

 

2,944

 

(2,027)

 

5,641

 

(5,394)

Net realized loss

 

97

 

 

230

 

Capitalized interest

 

(6,362)

 

(2,157)

 

(11,537)

 

(3,928)

Interest expense

$

25,835

$

16,041

$

52,677

$

32,319

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

Common Shares Repurchased

Our Board of Trustees previously authorized the repurchase of up to $1.0 billion of our outstanding common shares, and in May 2023, increased the common share repurchase authorization to $1.5 billion. During the three and six months ended June 30, 2023, we repurchased and retired 9.3 million and 10.5 million common shares for $135.7 million and $155.8 million, a weighted average purchase price per share of $14.54 and $14.79. 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. Since we began the share repurchase program through June 30, 2023, we have repurchased and retired 33.8 million common shares for $779.3 million, a weighted average purchase price per share of $23.02.

During the third quarter of 2023, through the date of this filing, we repurchased and retired 2.0 million common shares for $31.5 million, a weighted average purchase price per share of $16.03, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.

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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 net income (loss) to the amounts of net income (loss) available to common shareholders used in calculating basic and diluted earnings (loss) per common share:

Three Months Ended June 30, 

Six Months Ended June 30, 

Three Months Ended March 31, 

2023

    

2022

X

2023

    

2022

2024

    

2023

(In thousands, except per share amounts)

(In thousands, except per share amounts)

Net income (loss)

$

(12,254)

$

141,494

$

12,056

$

141,417

$

(42,190)

$

24,310

Net (income) loss attributable to redeemable noncontrolling interests

1,398

 

(18,248)

 

(1,965)

 

(18,258)

 

4,534

 

(3,363)

Net loss attributable to noncontrolling interests

311

 

29

 

535

 

84

 

5,380

 

224

Net income (loss) attributable to common shareholders

(10,545)

123,275

10,626

123,243

(32,276)

21,171

Distributions to participating securities

(717)

(12)

 

(717)

 

(12)

 

(654)

 

Net income (loss) available to common shareholders - basic and diluted

$

(11,262)

$

123,263

$

9,909

$

123,231

$

(32,930)

$

21,171

Weighted average number of common shares outstanding - basic and diluted

109,695

121,316

 

111,862

 

123,984

 

92,635

 

114,052

Earnings (loss) per common share - basic and diluted

$

(0.10)

$

1.02

$

0.09

$

0.99

$

(0.36)

$

0.19

The effect of the redemption of OP Units, Time-Based LTIP Units, fully vested LTIP Units and Special Time-Based LTIP Unitsspecial equity awards that were outstanding as of June 30,March 31, 2024 and 2023 and 2022 is excluded in the computation of diluted earnings (loss) per common share as the assumed exchange of such units for common shares on a one-for-one basis was antidilutive (the assumed redemption of these units would have no impact on the determination of diluted earnings (loss) per share). Since OP Units, Time-Based LTIP Units, LTIP Units and Special Time-Based LTIP Units,special equity awards, which are held by noncontrolling interests, are attributed gains at an identical proportion to the common shareholders, the gains attributable and their equivalent weighted average impact are excluded from net income (loss) available to common shareholders and from the weighted average number of common shares outstanding in calculating diluted earnings (loss) per common share. AO LTIP Units, Performance-Based LTIP Units, formation awards and RSUs, which totaled 5.27.9 million and 5.35.5 million for the three and six months ended June 30,March 31, 2024 and 2023, and 6.0 million and 5.9 million for the three and six months ended June 30, 2022, were excluded from the calculation of diluted earnings (loss) per common share as they were antidilutive, but potentially could be dilutive in the future.

Dividends Declared in August 2023April 2024

On August 3, 2023,April 25, 2024, our Board of Trustees declared a quarterly dividend of $0.225$0.175 per common share, payable on August 31, 2023May 24, 2024 to shareholders of record as of August 17, 2023.May 10, 2024.

15.Fair Value Measurements

Fair Value Measurements on a Recurring Basis

To manage or hedge our exposure to interest rate risk, we follow established risk management policies and procedures, including the use of a variety of derivative financial instruments.

As of June 30, 2023March 31, 2024 and December 31, 2022,2023, we had various derivative financial instruments consisting of interest rate swap and cap agreements that are measured at fair value on a recurring basis. The net unrealized gain on our derivative financial instruments designated as effective hedges was $50.2$36.0 million and $55.0$22.7 million as of June 30, 2023March 31, 2024 and December 31, 20222023 and was recorded in "Accumulated other comprehensive income" in our balance sheets, of which a portion was allocated to "Redeemable noncontrolling interests." Within the next 12 months, we expect to reclassify $34.9$25.0 million of the net unrealized gain as 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.

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)

June 30, 2023

 

(In thousands)

March 31, 2024

 

Derivative financial instruments designated as effective hedges:

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Classified as assets in "Other assets, net"

$

51,313

$

51,313

$

40,590

$

40,590

Classified as liabilities in "Other liabilities, net"

755

 

755

 

16

 

16

 

Derivative financial instruments designated as ineffective hedges:

 

  

 

  

 

  

 

  

Non-designated derivatives:

 

  

 

  

 

  

 

  

Classified as assets in "Other assets, net"

 

2,256

 

 

2,256

 

 

6,526

 

 

6,526

 

Classified as liabilities in "Other liabilities, net"

 

6,406

 

 

6,406

 

December 31, 2022

 

  

 

  

 

  

 

  

December 31, 2023

 

  

 

  

 

  

 

  

Derivative financial instruments designated as effective hedges:

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Classified as assets in "Other assets, net"

$

53,515

$

53,515

$

35,632

$

35,632

Derivative financial instruments designated as ineffective hedges:

 

  

 

  

 

  

 

  

Classified as liabilities in "Other liabilities, net"

7,936

 

7,936

 

Non-designated derivatives:

 

  

 

  

 

  

 

  

Classified as assets in "Other assets, net"

 

8,107

 

 

8,107

 

 

6,709

 

 

6,709

 

Classified as liabilities in "Other liabilities, net"

 

6,508

 

 

6,508

 

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 June 30, 2023March 31, 2024 and December 31, 2022,2023, 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(losses) included in "Other comprehensive income (loss)" in our statements of comprehensive income (loss) for the three and six months ended June 30,March 31, 2024 and 2023 and 2022 were attributable to the net change in unrealized gains or losses related to effective interest rate swapsderivative financial instruments that were outstanding during those periods, none of which were reported in our statements of operations as the interest rate swapsderivative financial instruments were documented and qualified as hedging instruments. Realized and unrealized gains related to non-designated hedges are included in "Interest expense" in our statements of operations.

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Fair Value Measurements on a Nonrecurring Basis

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

During the three months ended March 31, 2024, this assessment resulted in the impairment of a development parcel, which had an estimated fair value of $19.5 million based on a market approach and was classified as Level 2 in the fair value hierarchy. The impairment loss totaled $17.2 million, which was included in "Impairment loss" in our consolidated statement of operations for the three months ended March 31, 2024.

Financial Assets and Liabilities Not Measured at Fair Value

As of June 30, 2023March 31, 2024 and December 31, 2022,2023, 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:

June 30, 2023

December 31, 2022

March 31, 2024

December 31, 2023

    

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:

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Mortgage loans

$

1,704,206

$

1,651,156

$

1,901,875

$

1,830,651

$

1,830,866

$

1,790,066

$

1,798,225

$

1,753,251

Revolving credit facility

 

62,000

 

65,295

 

 

 

 

 

62,000

 

62,000

Term loans

 

720,000

 

723,019

 

550,000

 

551,369

 

720,000

 

715,502

 

720,000

 

715,950

(1)The carrying amount consists of principal only.

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

16.Segment Information

We review operating and financial data for each property on an individual basis; therefore, each of our individual properties is a separate operating segment. We define our reportable segments to be aligned with our method of internal reporting and the way our Chief Executive Officer, who is also our Chief Operating Decision Maker ("CODM"),CODM makes key operating decisions, evaluates financial results, allocates resources and manages our business. Accordingly, we aggregate our operating segments into three reportable segments (multifamily, commercial, and third-party asset management and real estate services) based on the economic characteristics and nature of our assets and services.

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 June 30, 

Six Months Ended June 30, 

    

2023

    

2022

X

2023

    

2022

 

(In thousands)

Property management fees

$

5,017

$

4,976

$

9,969

$

9,784

Asset management fees

 

1,255

 

1,513

 

2,358

 

3,284

Development fees

 

2,756

 

2,148

 

4,742

 

5,687

Leasing fees

 

1,256

 

1,038

 

2,612

 

2,877

Construction management fees

 

303

 

37

 

643

 

187

Other service revenue

 

1,422

 

1,499

 

2,646

 

2,315

Third-party real estate services revenue, excluding reimbursements

 

12,009

 

11,211

 

22,970

 

24,134

Reimbursement revenue (1)

 

10,853

 

10,946

 

22,676

 

21,993

Third-party real estate services revenue, including reimbursements

22,862

22,157

45,646

46,127

Third-party real estate services expenses

22,105

24,143

45,928

51,192

Third-party real estate services revenue less expenses

$

757

$

(1,986)

$

(282)

$

(5,065)

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The following represents the components of revenue from our third-party asset management and real estate services business:

Three Months Ended March 31, 

    

2024

    

2023

 

(In thousands)

Property management fees

$

4,271

$

4,952

Asset management fees

 

924

 

1,103

Development fees

 

238

 

1,986

Leasing fees

 

1,135

 

1,356

Construction management fees

 

383

 

340

Other service revenue

 

1,054

 

1,224

Third-party real estate services revenue, excluding reimbursements

 

8,005

 

10,961

Reimbursement revenue (1)

 

9,863

 

11,823

Third-party real estate services revenue, including reimbursements

17,868

22,784

Third-party real estate services expenses

22,327

23,823

Third-party real estate services revenue less expenses

$

(4,459)

$

(1,039)

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

Management company assets primarily consist of management and leasing contracts with a net book value of $10.9$6.7 million and $13.7$8.1 million as of June 30, 2023March 31, 2024 and December 31, 2022,2023, which were included in "Intangible assets, net" in our balance sheets. Consistent with internal reporting presented to our CODM and our definition of NOI, the third-party asset management and real estate services operating results are excluded from the NOI data below.

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, 

    

2023

    

2022

X

2023

    

2022

 

(in thousands)

Net income (loss) attributable to common shareholders

$

(10,545)

$

123,275

$

10,626

$

123,243

Add:

 

  

 

  

 

  

 

  

Depreciation and amortization expense

 

49,218

 

49,479

 

102,649

 

107,541

General and administrative expense:

 

  

 

  

 

  

 

  

Corporate and other

 

15,093

 

14,782

 

31,216

 

30,597

Third-party real estate services

 

22,105

 

24,143

 

45,928

 

51,192

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

 

 

1,577

 

351

 

3,821

Transaction and other costs

 

3,492

 

1,987

 

5,964

 

2,886

Interest expense

 

25,835

 

16,041

 

52,677

 

32,319

Loss on the extinguishment of debt

 

450

 

1,038

 

450

 

1,629

Income tax expense

 

611

 

2,905

 

595

 

2,434

Net income (loss) attributable to redeemable noncontrolling interests

 

(1,398)

 

18,248

 

1,965

 

18,258

Net loss attributable to noncontrolling interests

(311)

(29)

(535)

(84)

Less:

 

  

 

  

 

  

 

  

Third-party real estate services, including reimbursements revenue

 

22,862

 

22,157

 

45,646

 

46,127

Other revenue

 

3,846

 

1,798

 

5,572

 

3,994

Income (loss) from unconsolidated real estate ventures, net

 

510

 

(2,107)

 

943

 

1,038

Interest and other income, net

 

2,281

 

1,672

 

6,358

 

15,918

Gain on the sale of real estate, net

 

 

158,767

 

40,700

 

158,631

Consolidated NOI

$

75,051

$

71,159

$

152,667

$

148,128

c

Three Months Ended March 31, 

    

2024

    

2023

 

(In thousands)

Net income (loss) attributable to common shareholders

$

(32,276)

$

21,171

Add:

 

  

 

  

Depreciation and amortization expense

 

56,855

 

53,431

General and administrative expense:

 

  

 

  

Corporate and other

 

14,973

 

16,123

Third-party real estate services

 

22,327

 

23,823

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

 

 

351

Transaction and other costs

 

1,514

 

2,472

Interest expense

 

30,160

 

26,842

Impairment loss

17,211

Income tax benefit

 

(1,468)

 

(16)

Net income (loss) attributable to redeemable noncontrolling interests

 

(4,534)

 

3,363

Net loss attributable to noncontrolling interests

(5,380)

(224)

Less:

 

  

 

  

Third-party real estate services, including reimbursements revenue

 

17,868

 

22,784

Other revenue

 

11,263

 

1,726

Income from unconsolidated real estate ventures, net

 

975

 

433

Interest and other income, net

 

2,100

 

4,077

Gain on the sale of real estate, net

 

197

 

40,700

Consolidated NOI

$

66,979

$

77,616

2524

Table of Contents

The following is a summary of NOI and certain balance sheet data by segment. Items classified in the Other column include development assets, corporate entities, land assets for which we are the ground lessor and the elimination of inter-segment activity.

Three Months Ended June 30, 2023

Three Months Ended March 31, 2024

    

Commercial

    

Multifamily

    

Other

    

Total

    

Multifamily

    

Commercial

    

Other

    

Total

 

(In thousands)

Property rental revenue

$

64,321

$

52,443

$

3,828

$

120,592

 

(In thousands)

Property rental revenue (1)

$

51,446

$

57,579

$

3,279

$

112,304

Parking revenue

 

4,426

 

295

 

74

 

4,795

 

181

 

3,600

 

(32)

 

3,749

Total property revenue

 

68,747

 

52,738

 

3,902

 

125,387

 

51,627

 

61,179

 

3,247

 

116,053

Property expense:

 

 

 

 

  

 

 

  

 

  

 

  

Property operating

 

18,252

 

18,394

 

(734)

 

35,912

 

17,406

 

17,077

 

796

 

35,279

Real estate taxes

 

8,195

 

5,648

 

581

 

14,424

 

5,957

 

7,401

 

437

 

13,795

Total property expense

 

26,447

 

24,042

 

(153)

 

50,336

 

23,363

 

24,478

 

1,233

 

49,074

Consolidated NOI

$

42,300

$

28,696

$

4,055

$

75,051

$

28,264

$

36,701

$

2,014

$

66,979

Three Months Ended June 30, 2022

    

Commercial

    

Multifamily

    

Other

    

Total

Three Months Ended March 31, 2023

    

Multifamily

    

Commercial

    

Other

    

Total

 

(In thousands)

(In thousands)

Property rental revenue

$

71,903

$

42,939

$

2,194

$

117,036

$

49,910

$

71,917

$

2,206

$

124,033

Parking revenue

 

4,187

 

250

 

77

 

4,514

 

224

 

4,138

 

57

 

4,419

Total property revenue

 

76,090

 

43,189

 

2,271

 

121,550

 

50,134

 

76,055

 

2,263

 

128,452

Property expense:

 

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Property operating

 

19,624

 

14,870

 

951

 

35,445

 

17,455

 

19,371

 

(1,214)

 

35,612

Real estate taxes

 

9,018

 

5,054

 

874

 

14,946

 

5,608

 

9,001

 

615

 

15,224

Total property expense

 

28,642

 

19,924

 

1,825

 

50,391

 

23,063

 

28,372

 

(599)

 

50,836

Consolidated NOI

$

47,448

$

23,265

$

446

$

71,159

$

27,071

$

47,683

$

2,862

$

77,616

Six Months Ended June 30, 2023

    

Commercial

    

Multifamily

    

Other

    

Total

 

(In thousands)

Property rental revenue

$

136,238

$

102,353

$

6,034

$

244,625

Parking revenue

 

8,564

 

519

 

131

 

9,214

Total property revenue

 

144,802

 

102,872

 

6,165

 

253,839

Property expense:

 

 

  

 

  

 

  

Property operating

 

37,623

 

35,849

 

(1,948)

 

71,524

Real estate taxes

 

17,196

 

11,256

 

1,196

 

29,648

Total property expense

 

54,819

 

47,105

 

(752)

 

101,172

Consolidated NOI

$

89,983

$

55,767

$

6,917

$

152,667

Six Months Ended June 30, 2022

    

Commercial

    

Multifamily

    

Other

    

Total

(In thousands)

Property rental revenue

$

159,524

$

85,047

$

4,063

$

248,634

Parking revenue

 

8,199

 

384

 

132

 

8,715

Total property revenue

 

167,723

 

85,431

 

4,195

 

257,349

Property expense:

 

  

 

  

 

  

 

  

Property operating

 

45,826

 

28,625

 

1,638

 

76,089

Real estate taxes

 

20,795

 

10,275

 

2,062

 

33,132

Total property expense

 

66,621

 

38,900

 

3,700

 

109,221

Consolidated NOI

$

101,102

$

46,531

$

495

$

148,128

    

Multifamily

    

Commercial

    

Other

    

Total

(In thousands)

March 31, 2024

Real estate, at cost

$

3,178,316

$

2,325,479

$

395,303

$

5,899,098

Investments in unconsolidated real estate ventures

 

 

12,436

 

92,346

 

104,782

Total assets

 

2,572,311

 

2,529,171

 

303,868

 

5,405,350

December 31, 2023

 

  

 

  

 

  

 

  

Real estate, at cost

$

3,154,116

$

2,357,713

$

363,333

$

5,875,162

Investments in unconsolidated real estate ventures

 

 

176,786

 

87,495

 

264,281

Total assets

 

2,559,395

 

2,683,947

 

275,173

 

5,518,515

26

(1)Property rental revenue excludes $10.3 million of lease termination revenue.

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

    

Commercial

    

Multifamily

    

Other

    

Total

(In thousands)

June 30, 2023

Real estate, at cost

$

2,585,492

$

3,126,375

$

425,793

$

6,137,660

Investments in unconsolidated real estate ventures

 

224,620

 

 

84,599

 

309,219

Total assets

 

2,787,056

 

2,508,503

 

488,043

 

5,783,602

December 31, 2022

 

  

 

  

 

  

 

  

Real estate, at cost

$

2,754,832

$

2,986,907

$

416,343

$

6,158,082

Investments in unconsolidated real estate ventures

 

218,723

 

304

 

80,854

 

299,881

Total assets

 

2,829,576

 

2,483,902

 

589,960

 

5,903,438

17.Commitments and Contingencies

Insurance

We maintain general liability insurance with limits of $150.0 million per occurrence and in the aggregate, and property and rental value insurance coverage with limits of $1.0 billion per occurrence, with sub-limits for certain perils such as floods and earthquakes on each of our properties. We also maintain coverage, through our wholly owned captive insurance subsidiary, for a portion of the first loss on the above limits and for both conventional terrorist acts and for nuclear,

25

biological, chemical or radiological terrorism events with limits of $2.0 billion per occurrence. These policies are partially reinsured by third-party insurance providers.

We will continue to monitor the state of the insurance market, and the scope and costs of coverage for acts of terrorism. We cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are responsible for deductibles and losses in excess of the insurance coverage, which could be material.

Our debt, consisting of mortgage loans secured by our properties, a revolving credit facility and term loans, contains customary covenants requiring adequate insurance coverage. Although we believe that we currently have adequate insurance coverage, we may not be able to obtain an equivalent amount of coverage at a reasonable cost in the future. If lenders insist on greater coverage than we are able to obtain, it could adversely affect our ability to finance or refinance our properties.

Construction Commitments

As of June 30, 2023,March 31, 2024, we had assets under construction that, based on our current plans and estimates, require an additional $284.7$134.4 million to complete, which we anticipate will be primarily expended over the next threetwo years. These capital expenditures are generally due as the work is performed, and we expect to finance them with debt proceeds, proceeds from asset sales and recapitalizations, and available cash.

Environmental Matters

Most of our assets have been subject, at some point, to environmental assessments that are intended to evaluate the environmental condition of the subject and surrounding assets. These environmental assessments generally have included a historical review, a public records review, a visual inspection of the site and surrounding assets, visual or historical evidence of underground storage tanks and other features, and the preparation and issuance of a written report. Soil, soil vapor and/or groundwater subsurface testing is conducted at our assets, when necessary, to further investigate any issues raised by the initial assessment that could reasonably be expected to pose a material concern to the property or result in us incurring material environmental liabilities as a result of redevelopment. The tests may not, however, have included extensive sampling or subsurface investigations. In each case where the environmental assessments have identified conditions requiring remedial actions required by law, we have initiated appropriate actions. The environmental assessments didhave not revealrevealed any material environmental contamination that we believe would have a material adverse effect on our overall business, financial condition or results of operations, or that have not been anticipated and remediated during site redevelopment as required by law. Nevertheless, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites or changes in cleanup requirements would not result in significant cost to us. Environmental liabilities totaled $18.0$17.6 million as of June 30, 2023March 31, 2024 and December 31, 20222023, and are included in "Other liabilities, net" in our balance sheets.

27

Other

As of June 30, 2023,March 31, 2024, we had committed tenant-related obligations totaling $53.1$33.4 million ($51.433.3 million related to our consolidated entities and $1.7 million$113,000 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.

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

26

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 June 30, 2023,March 31, 2024, we had additional capital commitments and certain recorded guarantees to our unconsolidated real estate ventures and other investments totaling $62.0$58.7 million. As of June 30, 2023,March 31, 2024, we had no debt principal payment guarantees related to our unconsolidated real estate ventures.

Additionally, with respect to borrowings of our consolidated entities, we have agreed, and may in the future agree, to (i) guarantee portions of the principal, interest and other amounts, (ii) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) or (iii) provide guarantees to lenders, tenants and other third parties for the completion of development projects. As of June 30, 2023,March 31, 2024, the aggregate amount of debt principal payment guarantees was $8.3 million for our consolidated entities.

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

18.Transactions with Related Parties

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

We launched the WHIWashington Housing Initiative ("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 theThe WHI Impact Pool which is the social impact debt financing vehicle of the WHI. As of June 30, 2023, the WHI Impact Pool had completed

28

closings of fundraising in 2020 with capital commitments totaling $114.4 million, which included a commitment from us of $11.2 million. As of June 30, 2023,March 31, 2024, our remaining unfunded commitment was $4.3$2.9 million.

The third-party real estate services revenue, including expense reimbursements, from the JBG Legacy Funds and the WHI Impact Pool and its affiliates was $5.9$4.0 million and $10.8$5.0 million for the three and six months ended June 30, 2023,March 31, 2024 and $4.8 million and $10.3 million for the three and six months ended June 30, 2022.2023. As of June 30, 2023March 31, 2024 and December 31, 2022,2023, we had receivables from the JBG Legacy Funds and the WHI Impact Pool and its affiliates totaling $3.8$3.3 million and $4.5$3.5 million for such services.

Commencing in March 2023, in connection with the sale of an 80.0% interest in 4747 Bethesda Avenue in 2023, we leased our corporate offices from an unconsolidated real estate venture and incurred $1.6$1.5 million and $1.8 million$158,000 of rent expense for the three and six months ended June 30,March 31, 2024 and 2023, which was included in "General and administrative expense" in our statements of operations.

We have agreements with Building Maintenance Services ("BMS"), an entity in which we have a minor preferred interest, to supervise cleaning, engineering and security services at our properties. We paid BMS $2.3$2.5 million and $4.6$2.4 million for the three and six months ended June 30,March 31, 2024 and 2023, and $2.0 million and $5.1 million for the three and six months ended June 30, 2022, which was included in "Property operating expenses" in our statements of operations.

27

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, 20222023 filed with the Securities and Exchange Commission on February 21, 202320, 2024 ("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.

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, operates, invests in and develops mixed-use properties in high growth and high barrier-to-entry submarkets in and around Washington, D.C., most notably National Landing. Through an intense focus on placemaking, JBG SMITH cultivates vibrant, amenity-rich, walkable neighborhoods throughout the Washington, D.C. metropolitan area. Approximately two-thirds75.0% of our holdings are in the National Landing submarket in Northern Virginia, which is anchored by four key demand drivers: Amazon.com, Inc.'s ("Amazon") new headquarters; Virginia Tech's under-construction $1 billion Innovation Campus; the submarket’s proximity to the Pentagon; and our deployment of next-generation public and private 5G digital infrastructure. In addition, our third-party asset management and real estate services business provides fee-based real estate services to the Washington Housing Initiative ("WHI") Impact Pool, the legacy funds formerly organized by The JBG Companies ("JBG") (the "JBG Legacy Funds") and other

29

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 herein as "we," "us," "our" or other similar terms. References to "our share" refer to our ownership percentage of consolidated and unconsolidated assets in real estate ventures, but exclude our: (i) 10.0% subordinated interest in one commercial building, (ii) 33.5% subordinated interest in four commercial buildings and(the "Fortress Assets"), (iii) 49.0% interest in three commercial buildings (the "L'Enfant Plaza Assets"), and (iv) 9.9% interest in The Foundry, as well as the associated non-recourse mortgage loans, held through unconsolidated real estate ventures; these interests and debt are excluded because our investment in each real estate venture is zero, we do not anticipate receiving any near-term cash flow distributions from the real estate ventures, and we have not guaranteed their obligations or otherwise committed to providing financial support.

We were organized for the purpose of receiving, via the spin-off on July 17, 2017 (the "Separation"), substantially all of the assets and liabilities of Vornado Realty Trust's ("Vornado") Washington, D.C. segment. On July 18, 2017, we acquired the management business, and certain assets and liabilities of JBG (the "Combination"). The Separation and the Combination are collectively referred to as the "Formation Transaction."

References to our financial statements refer to our unaudited condensed consolidated financial statements as of June 30, 2023March 31, 2024 and December 31, 2022,2023, and for the three and six months ended June 30, 2023March 31, 2024 and 2022.2023. References to our balance sheets refer to our condensed consolidated balance sheets as of June 30, 2023March 31, 2024 and December 31, 2022.2023. References

28

to our statements of operations refer to our condensed consolidated statements of operations for the three and six months ended June 30, 2023March 31, 2024 and 2022.2023. References to our statements of cash flows refer to our condensed consolidated statements of cash flows for the sixthree months ended June 30, 2023March 31, 2024 and 2022.2023.

The accompanying financial statements and notes 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 the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.

We have elected to be taxed as a real estate investment trust ("REIT")REIT under sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code"). Under those sections, a REIT which distributes at least 90% of its REIT taxable income as dividends to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. We currently adhere and intend to continue to adhere to these requirements and to maintain our REIT status in future periods. We also participate in the activities conducted by our subsidiary entities that have elected to be treated as taxable REIT subsidiaries under the Code. As such, we are subject to federal, state and local taxes on the income from those activities.

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

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; this seasonality 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 June 30, 2023,March 31, 2024, our Operating Portfolio consisted of 5141 operating assets comprising 3115 multifamily assets totaling 6,318 units (6,318 units at our share), 24 commercial assets totaling 9.77.5 million square feet (8.2(7.2 million square feet at our share), 18 multifamily assets totaling 6,756 units (6,756 units at our share) and two wholly owned land assets for which we are the ground lessor. Additionally, we have two under-construction

30

multifamily assets with 1,583 units (1,583 units at our share) and 2018 assets in the development pipeline totaling 12.511.3 million square feet (9.8(9.3 million square feet at our share) of estimated potential development density.

We continue to implement our comprehensive plan to reposition our holdings in the National Landing submarket in Northern Virginia by executing a broad array of Placemakingplacemaking strategies. Our Placemakingplacemaking 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,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. To that end, we saw the delivery of two placemaking projects, Water Park and Surreal in 2023. Additionally, the cutting-edge digital infrastructure investments we are making, including our ownership of Citizens Broadband Radio Service wireless spectrum in National Landing and our agreements with AT&T, Cisco and Federated Wireless, are advancing our efforts to make National Landing among the first 5G-operable submarkets in the nation.

During the second quarter of 2023, we completed the construction of two new office buildings for Amazon on Metropolitan Park in National Landing, totaling 2.1 million square feet, inclusive of approximately 50,000 square feet of street-level retail with new shops and restaurants, and Amazon took occupancy of its new headquarters in June 2023. We are the developer, property manager and retail leasing agent for Amazon's new headquarters at National Landing. We currently have leases with Amazon totaling 1.0 million square feet across six office buildings in National Landing.

Outlook

A fundamental component of our strategy to maximize long-term net asset value ("NAV") per share is active capital allocation. We evaluate development, acquisition, disposition, share repurchases and other investment decisions based on

29

how they may impact long-term NAV per share. We intend to continue to opportunistically sell or recapitalize assets as well as land sites where a ground lease or joint venture execution may represent the most attractive path to maximizing value. 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 share repurchases, 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.potential, and share repurchases. Consequently, at any given time, we expect to be in various stages of discussions and negotiations with potential buyers, real estate venture partners, ground lessors and other counterparties with respect to sales, joint ventures and/or ground leases for certain of our assets, including portfolios thereof. These discussions and negotiations may or may not lead to definitive documentation or closed transactions. We anticipate redeploying the proceeds from these sales will not only help fund our planned growth, but will also further advance the strategic shift of our portfolio to majority multifamily. Curbed lending activity, however, hasCurrent market conditions have significantly slowed down the pace of asset sales, and we expect this reduced activity to continue forin 2024.

Our multifamily portfolio occupancy as of March 31, 2024 of 94.3% decreased by 40 basis points compared to December 31, 2023. First quarter lease expirations increased effective rents, which represent the restaverage change in rental rates versus expiring rental rates net of 2023. In the meantime, weconcessions, by 9.4% upon renewal while achieving a 52.4% renewal rate across our portfolio. We continue to advance our two under-construction multifamily assets in National Landing, 1900 Crystal Drive (The Grace and Reva) and 2000/2001 South Bell Street, totaling 1,583 units. 1900 Crystal Drive began leasing in January 2024 with move-ins commencing in February 2024 and expected delivery of all remaining units in the second quarter of 2024. 2000/2001 South Bell Street is expected to deliver in the third quarter of 2025. We expect that interest expense will increase as we deliver our under-construction assets and cease capitalization of interest on those assets.

Our office portfolio occupancy as of June 30, 2023March 31, 2024 of 83.1% decreased by 120180 basis points to 84.0% as compared to MarchDecember 31, 2023. New leasing and lease renewals have been slow and will likely continueAs the office market continues to lagexperience headwinds due to decision-making relatedhybrid work trends and tenants seeking to futurerepurpose space for flexibility, we anticipate continued weakness in the commercial office utilization, resulting in higher concessions and an increase in vacancy. During the three months ended June 30, 2023,sector. In this environment, we executed 210,000 square feet of office leases, approximately 30% of which comprised leases in National Landing.expect many tenants will look for space that is newer or repurposed for their current flexible workspace needs. We have 1.8 million square feetalso seen tenants lease space but contract their total footprint. Accordingly, our efforts to re-lease certain spaces will be targeted toward buildings with long-term viability where we can concentrate occupancy, and we intend to take some of office leases in National Landing expiring through 2024 or on a month-to-month status. Based on tenant discussionsour other buildings out of service. In addition to date, we anticipate 1.2 million square feet will vacate, implying an approximately 33% retention rate. Over half of the anticipated vacates are leases with Amazon (678,000 square feet), 300,000 square feet of which expires in 2023, and 378,000 square feet in 2024. 444,000 square feet of the Amazon vacates represent the entirety

31

of 1800 South Bell Street, and 2100 Crystal Drive, two assets thatwhich we took out of service in the first quarter of 2024, we plan to take off-line and entitle for an alternate use. Our ability to renew or re-lease this space will impact our future occupancy.

Our multifamily portfolio occupancy as2100 Crystal Drive out of June 30, 2023 increased by 80 basis points compared to March 31, 2023as higher leasing volume is typical for summer months. Forservice when Amazon vacates in the second quarter lease expirations,of 2024. We are also phasing 2200 Crystal Drive out of service as leases expire. With the objective of ultimately reducing our competitive office inventory in National Landing, we increased gross rents by 7.5% upon renewal while achievingexpect to repurpose these older, obsolete and under-leased buildings for redevelopment, conversion to multifamily, hospitality or another specialty use.

We continue to advance the design and entitlement of our 11.3 million square feet (9.3 million square feet at our share) of estimated potential development density in our development pipeline and will look to source joint venture capital as a 49.3% renewal rate across our portfolio.means of funding these developments as market conditions permit.

Operating Results

Key highlights for the three and six months ended June 30, 2023March 31, 2024 included:

net loss attributable to common shareholders of $10.5$32.3 million, or $0.10$0.36 per diluted common share, for the three months ended June 30, 2023March 31, 2024 compared to net income attributable to common shareholders of $123.3$21.2 million, or $1.02$0.19 per diluted common share, for the three months ended June 30, 2022. Net income attributable to common shareholders of $10.6 million, or $0.09 per diluted common share, for the six months ended June 30, 2023 compared to $123.2 million, or $0.99 per diluted common share, for the six months ended June 30, 2022;March 31, 2023;
third-party real estate services revenue, including reimbursements, of $22.9$17.9 million and $45.6$22.8 million for the three and six months ended June 30, 2023,March 31, 2024 and 2023;
operating multifamily portfolio leased and occupied percentages (1) at our share of 95.9% and 94.3% as of March 31, 2024 compared to $22.2 million96.0% and $46.1 million for the three94.7% as of December 31, 2023, and six months ended June 30, 2022;95.0% and 92.9% as of March 31, 2023;
operating commercial portfolio leased and occupied percentages at our share of 84.6% and 83.1% as of March 31, 2024 compared to 86.3% and 84.0%84.9% as of June 30,December 31, 2023, compared toand 87.6% and 85.2% as of March 31, 2023, and 87.3% and 86.1% as of June 30, 2022;
operating multifamily portfolio leased and occupied percentages(1) at our share of 96.8% and 93.7% as of June 30, 2023 compared to 95.0% and 92.9% as of March 31, 2023, and 95.7% and 92.3% as of June 30, 2022;2023;
the leasing of 210,00099,000 square feet at our share, at an initial rent (2) of $45.49$45.68 per square foot and a GAAP-basis weighted average rent per square foot (3) of $44.47$45.38 for the three months ended June 30, 2023, and the leasing of 323,000 square feet at our share, at an initial rent (2) of $47.40 per square foot and a GAAP-basis weighted average rent per square foot (3) of $46.78 for the six months ended June 30, 2023;March 31, 2024; and

30

an increase in same store (4) NOI of 0.1%6.5% to $78.3$75.7 million for the three months ended June 30, 2023March 31, 2024 compared to $78.2$71.1 million for the three months ended June 30, 2022, and a decrease in same store (4) NOI of 0.7% to $153.5 million for the six months ended June 30, 2023 compared to $154.7 million for the six months ended June 30, 2022.March 31, 2023.
(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.
(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.
(4)Includes the results of the properties that are owned, operated and in-service for the entirety of both periods being compared 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 sixthree months ended June 30, 2023March 31, 2024 included:

the sale of an 80.0% interest in 4747 Bethesda Avenue.North End Retail. See Note 3 to the financial statements for additional information;
the sale of Central Place Tower by one of our unconsolidated real estate ventures. See Note 4 to the financial statements for additional information;
a $187.6 million loan facility, collateralized by The Wren and F1RST Residences. See Note 7 to the financial statements for additional information;
thenet repayment of $142.4 million in mortgage loans collateralized by Falkland Chase – South & West and 800 North Glebe Road;
net borrowings of $62.0 million under our revolving credit facility;
the amendment of our revolving credit facility. See Note 7 to the financial statements for additional information;
the drawing of the $50.0 million remaining advance under our Tranche A-2 Term Loan. See Note 7 to the financial statements for additional information;
a $120.0 million term loan. See Note 7 to the financial statements for additional information;

32

the payment of dividends totaling $49.5$16.1 million and distributions to redeemable noncontrolling interests of $7.9$2.9 million;
the increase by our Board of Trustees of our common share repurchase authorization to $1.5 billion;
the repurchase and retirement of 10.53.0 million of our common shares for $155.8$49.4 million, a weighted average purchase price per share of $14.79;$16.50; and
the investment of $164.8$48.0 million in development costs, construction in progress and real estate additions.

Activity subsequent to June 30, 2023March 31, 2024 included:

the repurchase and retirement of 2.0 million common shares for $31.5 million, a weighted average purchase price per share of $16.03, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended; and
the declaration of a quarterly dividend of $0.225$0.175 per common share, payable on August 31, 2023May 24, 2024 to shareholders of record as of August 17, 2023.May 10, 2024.

Critical Accounting Estimates

Our Annual Report contains a description of our critical accounting estimates, including asset acquisitions, real estate, investments in real estate ventures and revenue recognition. There have been no significant changes to our policies during the sixthree months ended June 30, 2023.March 31, 2024.

Recent Accounting Pronouncements

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

Results of Operations

During the three months ended March 31, 2024, we sold North End Retail. In March 2023, we sold an 80.0% interest in 4747 Bethesda Avenue to an unconsolidated real estate venture. In 2022,venture, and we sold the Universal Buildings and Pen Place, and sold 7200 Wisconsin Avenue, 1730Falkland Chase-South & West/North, 5 M Street RTC-West/RTC-West Trophy Office/RTC-West LandSouthwest, Crystal City Marriott and Courthouse Plaza 1 and 2 to an unconsolidated real estate venture.Capital Point-North-75 New York Avenue. We collectively refer to these assets as the "Disposed Properties" in the discussion below. In 2022, we acquired the remaining 36.0% ownership interest in Atlantic Plumbing and the remaining 50.0% ownership interest in 8001 Woodmont, which were previously owned by unconsolidated real estate ventures and consolidated upon acquisition.

31

Comparison of the Three Months Ended June 30,March 31, 2024 to 2023 to 2022

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 June 30, 2023March 31, 2024 compared to the same period in 2022:2023:

Three Months Ended June 30, 

 

    

2023

    

2022

    

% Change

 

(Dollars in thousands)

 

Property rental revenue

$

120,592

$

117,036

 

3.0

%

Third-party real estate services revenue, including reimbursements

 

22,862

 

22,157

 

3.2

%

Depreciation and amortization expense

 

49,218

 

49,479

 

(0.5)

%

Property operating expense

 

35,912

 

35,445

 

1.3

%

Real estate taxes expense

 

14,424

 

14,946

 

(3.5)

%

General and administrative expense:

Corporate and other

 

15,093

 

14,782

 

2.1

%

Third-party real estate services

 

22,105

 

24,143

 

(8.4)

%

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

 

 

1,577

 

(100.0)

%

Income (loss) from unconsolidated real estate ventures, net

 

510

 

(2,107)

 

124.2

%

Interest expense

 

25,835

 

16,041

 

61.1

%

Gain on the sale of real estate, net

 

 

158,767

 

(100.0)

%

Three Months Ended March 31, 

    

2024

    

2023

    

% Change

 

(Dollars in thousands)

 

Property rental revenue

$

122,636

$

124,033

 

(1.1)

%

Third-party real estate services revenue, including reimbursements

 

17,868

 

22,784

 

(21.6)

%

Depreciation and amortization expense

 

56,855

 

53,431

 

6.4

%

Property operating expense

 

35,279

 

35,612

 

(0.9)

%

Real estate taxes expense

 

13,795

 

15,224

 

(9.4)

%

General and administrative expense:

Corporate and other

 

14,973

 

16,123

 

(7.1)

%

Third-party real estate services

 

22,327

 

23,823

 

(6.3)

%

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

 

 

351

 

(100.0)

%

Income from unconsolidated real estate ventures, net

 

975

 

433

 

125.2

%

Interest expense

 

30,160

 

26,842

 

12.4

%

Gain on the sale of real estate, net

 

197

 

40,700

 

(99.5)

%

Impairment loss

17,211

*

33_____________

Table of Contents* Not meaningful.

Property rental revenue increaseddecreased by approximately $3.6$1.4 million, or 3.0%1.1%, to $120.6$122.6 million in 20232024 from $117.0$124.0 million in 2022.2023. The increasedecrease was primarily due to a $9.5$14.3 million decrease in revenue from our commercial assets, partially offset by $10.3 million in lease termination revenue, a $1.5 million increase in revenue from our multifamily assets partially offset byand a $7.6$1.1 million decrease in revenue from our commercial assets. The increase in revenue from our multifamily assets was primarily due to a $6.1 million increase related to the consolidation of Atlantic Plumbing and 8001 Woodmont, and higher occupancies and rents across the portfolio.other revenue. The decrease in revenue from our commercial assets was primarily due to a $5.9$3.8 million decrease related to the Disposed Properties, a $2.1 million decrease related to 1800 South Bell Street, which was taken out of service during the first quarter of 2024, and lower occupancy and rents across the portfolio. The increase in revenue from our multifamily assets was primarily due to higher occupancy and rents across the portfolio and continued lease up of 8001 Woodmont, partially offset by a $2.6 million decrease related to the Disposed Properties.

Third-party real estate services revenue, including reimbursements, increaseddecreased by approximately $705,000,$4.9 million, or 3.2%21.6%, to $22.9$17.9 million in 20232024 from $22.2$22.8 million in 2022.2023. The increasedecrease was primarily due to a $608,000 increase$2.0 million decrease in reimbursement revenue, a $1.7 million decrease in development fees related to the timing of development projects.projects and a $681,000 decrease in property management fees.

Depreciation and amortization expense increased by approximately $3.4 million, or 6.4%, to $56.9 million in 2024 from $53.4 million in 2023. The increase was primarily due to (i) a $7.7 million increase related to 2100 Crystal Drive due to the acceleration of depreciation of certain assets as the building will be taken out of service in the second quarter of 2024, (ii) a $2.3 million increase related to 1900 Crystal Drive, which we began leasing during the first quarter of 2024, and (iii) a $1.7 million increase related to various National Landing assets primarily due to placing Water Park and Surreal into service and the acceleration of depreciation of certain assets. The increase in depreciation and amortization expense was partially offset by (iv) a $3.3 million decrease related to 8001 Woodmont due to the amortization of acquired in-place lease intangibles in 2023, (v) a $3.0 million decrease related to the Disposed Properties and (vi) a $2.2 million decrease related to 1800 South Bell Street, which was taken out of service during the first quarter of 2024.

Property operating expense decreased by approximately $261,000,$333,000, or 0.5%0.9%, to $49.2$35.3 million in 20232024 from $49.5$35.6 million in 2022.2023. The decrease was primarily due to a $2.3 million decrease related to the Disposed Propertiesin property operating expense from our commercial assets and a $1.4 million decrease due to the amortization of the acquired in-place lease intangible at The Batley in 2022. The$49,000 decrease in depreciation and amortizationproperty operating expense wasfrom our multifamily assets, partially offset by a $2.9$2.0 million increase related to the consolidation of Atlantic Plumbing and 8001 Woodmont.

Propertyin other property operating expense. The decrease in property operating expense increased by approximately $467,000, or 1.3%, to $35.9 million in 2023 from $35.4 million in 2022. The increaseour commercial assets was primarily due to a $2.6 million increase related to the consolidation of Atlantic Plumbing and 8001 Woodmont, and a $879,000 increase in property operating expenses across our multifamily portfolio, primarily related to higher compensation expenses, cleaning expenses and rising costs. The increase in property operating expense was partially offset by a $1.7$1.3 million decrease related to the Disposed Properties, a $699,000 decrease in construction management services provided to tenants and an $855,000a $329,000 decrease related to 1800 South Bell Street, which was taken out of service during the

32

first quarter of 2024. The increase in other property operating expense was primarily due to a $1.3 million increase in insurance claims covered by our captive insurance subsidiary.

Real estate taxtaxes expense decreased by approximately $522,000,$1.4 million, or 3.5%9.4%, to $14.4$13.8 million in 20232024 from $14.9$15.2 million in 2022.2023. The decrease was primarily due to a $920,000$1.1 million decrease related to the Disposed Properties, partially offset by a $728,000 increase related to the consolidation of Atlantic Plumbing and 8001 Woodmont.Properties.

General and administrative expense: corporate and other increaseddecreased by approximately $311,000,$1.2 million, or 2.1%7.1%, to $15.1$15.0 million in 20232024 from $14.8$16.1 million in 2022.2023. The increasedecrease was primarily due to lower compensation expenses, partially offset by a decrease in capitalized payroll, partially offset by lower compensation expenses.payroll.

General and administrative expense: third-party real estate services decreased by approximately $2.0$1.5 million, or 8.4%6.3%, to $22.1$22.3 million in 20232024 from $24.1$23.8 million in 2022.2023. The decrease was primarily due to lower compensationthird-party reimbursable expenses.

General and administrative expense: share-based compensation related to Formation Transaction and special equity awards decreased by approximately $1.6 million,$351,000, or 100.0%, to $0 in 20232024 from $1.6 million$351,000 in 2022.2023. The decrease was primarily due to the graded vesting of certain awards issuedfully vesting in prior years, which resulted in lower expense as portions of the awards vested, as well as an increase in expense recovery due to termination forfeitures.2023.

Income (loss) from unconsolidated real estate ventures increased by approximately $2.6 million,$542,000, or 124.2%125.2%, to income of $510,000$975,000 in 20232024 from a loss of $2.1 million$433,000 in 2022.2023. The increase was primarily due to a $2.1 million increase related to the consolidation of Atlantic Plumbing and 8001 Woodmont as these assets were not yet stabilized and incurring losses, and a $1.8 million loss on the extinguishment of debt related to a property that was sold in 2022. The increase in income (loss) from unconsolidated real estate ventures was partially offset by a $936,000$480,000 gain at our share from the sale of various assetsCentral Place Tower in 2022.2024.

Interest expense increased by approximately $9.8$3.3 million, or 61.1%12.4%, to $25.8$30.2 million in 20232024 from $16.0$26.8 million in 2022.2023. The increase in interest expense was primarily due to (i) a $5.0 million decrease in the fair value of our ineffective interest rate caps due to a decline in the forward interest rate curve, (ii) a $3.8$6.8 million increase due to new mortgage loans, (iii)higher outstanding debt, (ii) a $3.7$3.1 million increase related to rising interest rates on variable rate mortgage loans due to risingand (iii) a $550,000 decrease in capitalized interest rates, (iv) a $2.1 million increase related to construction draws foras we began placing 1900 Crystal Drive (v) a $2.1 million increase related to additional draws on our term loans and (vi) a $1.2 million increase related tointo service during the consolidationfirst quarter of 8001 Woodmont.2024. The increase in interest expense was partially offset by (i)(iv) a $4.2$2.7 million decrease related to the increase in capitalized interest, (ii)mark-to-market associated with our non-designated derivatives, (v) a $2.0$2.7 million decrease related to mortgage loans

34

collateralized by 800 North Glebe Road, 2121 Crystal Drive and Falkland Chase – SouthChase-South & West, which were repaid during 2023 and (iii)(vi) a $1.5$2.1 million decrease related to the Disposed Properties.Properties, excluding Falkland Chase-South & West.

Gain on the sale of real estate of $158.8 million$197,000 in 2022 was due to the sale of the Disposed Properties.

Comparison of the Six Months Ended June 30, 2023 to 2022

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, 2023 compared to the same period in 2022:

Six Months Ended June 30, 

    

2023

    

2022

    

% Change

 

(Dollars in thousands)

 

Property rental revenue

$

244,625

$

248,634

 

(1.6)

%

Third-party real estate services revenue, including reimbursements

 

45,646

 

46,127

 

(1.0)

%

Depreciation and amortization expense

 

102,649

 

107,541

 

(4.5)

%

Property operating expense

 

71,524

 

76,089

 

(6.0)

%

Real estate taxes expense

 

29,648

 

33,132

 

(10.5)

%

General and administrative expense:

Corporate and other

 

31,216

 

30,597

 

2.0

%

Third-party real estate services

 

45,928

 

51,192

 

(10.3)

%

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

 

351

 

3,821

 

(90.8)

%

Income from unconsolidated real estate ventures, net

 

943

 

1,038

 

(9.2)

%

Interest and other income, net

 

6,358

 

15,918

 

(60.1)

%

Interest expense

 

52,677

 

32,319

 

63.0

%

Gain on the sale of real estate, net

 

40,700

 

158,631

 

(74.3)

%

Property rental revenue decreased by approximately $4.0 million, or 1.6%, to $244.6 million in 2023 from $248.6 million in 2022. The decrease was primarily due to a $23.3 million decrease in revenue from our commercial assets, partially offset by a $17.3 million increase in revenue from our multifamily assets. The decrease in revenue from our commercial assets was primarily due to a $24.4 million decrease related to the Disposed Properties. The increase in revenue from our multifamily assets was primarily due to an $11.4 million increase related to the consolidation of Atlantic Plumbing and 8001 Woodmont, and higher occupancies and rents across the portfolio.

Third-party real estate services revenue, including reimbursements, decreased by approximately $481,000, or 1.0%, to $45.6 million in 2023 from $46.1 million in 2022. The decrease was primarily due to a $945,000 decrease in development fees related to the timing of development projectsand a $926,000 decrease in asset management fees due to the sale of assets within the JBG Legacy Funds. The decrease in third-party real estate services revenue was partially offset by a $683,000 increase in reimbursement revenue, a $456,000 increase in construction management fees and a $331,000 increase in other service revenue.

Depreciation and amortization expense decreased by approximately $4.9 million, or 4.5%, to $102.6 million in 2023 from $107.5 million in 2022. The decrease was primarily due to a $9.6 million decrease related to the Disposed Properties and a $4.3 million decrease due to the amortization of the acquired in-place lease intangible at The Batley in 2022. The decrease in depreciation and amortization expense was partially offset by a $9.1 million increase related to the consolidation of Atlantic Plumbing and 8001 Woodmont.

Property operating expense decreased by approximately $4.6 million, or 6.0%, to $71.5 million in 2023 from $76.1 million in 2022. The decrease was primarily due to (i) an $8.4 million decrease related to the Disposed Properties, (ii) a $1.2 million decrease in costs incurred related to digital infrastructure initiatives in National Landing and (iii) a $933,000 decrease in insurance claims covered by our captive insurance subsidiary. The decrease in property operating expense was partially offset by a $5.3 million increase related to the consolidation of Atlantic Plumbing and 8001 Woodmont, and a $1.9 million increase in property operating expenses across our multifamily portfolio, primarily related to higher compensation expenses, cleaning expenses and rising costs.

35

Real estate tax expense decreased by approximately $3.5 million, or 10.5%, to $29.6 million in 2023 from $33.1 million in 2022. The decrease was primarily due to a $4.2 million decrease related to the Disposed Properties, partially offset by a $1.5 million increase related to the consolidation of Atlantic Plumbing and 8001 Woodmont.

General and administrative expense: corporate and other increased by approximately $619,000, or 2.0%, to $31.2 million in 2023 from $30.6 million in 2022. The increase was primarily due to a decrease in capitalized payroll, partially offset by lower compensation expenses.

General and administrative expense: third-party real estate services decreased by approximately $5.3 million, or 10.3%, to $45.9 million in 2023 from $51.2 million in 2022. The decrease was primarily due to lower compensation expenses.

General and administrative expense: share-based compensation related to Formation Transaction and special equity awards decreased by approximately $3.5 million, or 90.8%, to $351,000 in 2023 from $3.8 million in 2022. The decrease2024 was primarily due to the graded vestingrecognition of certain awards issuedpreviously recorded contingent liabilities, which were relieved in prior years, which resulted in lower expense as portionsconnection with the sale of the awards vested, as well as an increase in expense recovery due to termination forfeitures.

Income fromCentral Place Tower by one of our unconsolidated real estate ventures, decreasedpartially offset by approximately $95,000, or 9.2%, to $943,000 in 2023 from $1.0 million in 2022. The decrease was primarily due to a $6.2 million gain at our share fromthe loss on the sale of various assets in 2022. The decrease in income from unconsolidated real estate ventures was partially offset by (i) a $3.9 million increase related to the consolidation of Atlantic Plumbing and 8001 Woodmont as these assets were not yet stabilized and incurring losses, (ii) a $1.8 million loss on the extinguishment of debt related to a property that was sold in 2022, and (iii) an $875,000 increase related to our suspension of the equity method of accounting for the L’Enfant Plaza Assets as it was incurring losses.

Interest and other income decreased by approximately $9.6 million, or 60.1%, to $6.4 million in 2023 from $15.9 million in 2022. The decrease was primarily due to a $14.4 million decrease in realized gains primarily from the sale of investments in equity securities in 2022, partially offset by a $4.6 million increase in interest income on our outstanding cash balances and a $458,000 increase in unrealized gains from investments in real estate-focused technology companies.

Interest expense increased by approximately $20.4 million, or 63.0%, to $52.7 million in 2023 from $32.3 million in 2022. The increase in interest expense was primarily due to (i) an $11.0 million decrease in the fair value of our ineffective interest rate caps due to a decline in the forward interest rate curve, (ii) an $8.0 million increase related to variable rate mortgage loans due to rising interest rates, (iii) a $6.6 million increase due to new mortgage loans, (iv) a $3.5 million increase related to additional draws on our term loans, (v) a $3.5 million increase related to construction draws for 1900 Crystal Drive and (vi) a $2.5 million increase related to the consolidation of 8001 Woodmont. The increase in interest expense was partially offset by (i) a $7.6 million increase in capitalized interest, (ii) a $3.4 million decrease related to the Disposed Properties, (iii) a $3.2 million decrease related to mortgage loans collateralized by 2121 Crystal Drive and Falkland Chase – South & West repaid during 2023 and (iv) a $927,000 decrease related to a lower average outstanding balance on our revolving credit facility.

North End Retail. Gain on the sale of real estate of $40.7 million in 2023 and $158.6 million in 2022 was due to the sale of the Disposed Properties.

Impairment loss of $17.2 million in 2024 is related to a development parcel, which was written down to its estimated fair value.

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") in the Nareit FFO White Paper - 2018 Restatement. Nareit defines FFO as net income (loss) (computed in accordance with GAAP), excluding depreciation and amortization expense related to real estate, gains and losses(losses) from the sale of certain real estate assets, gains and losses(losses) from change in control and impairment write-downs 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.

36

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, which implicitly assumes that the value of real estate diminishes predictably over time rather than fluctuating based on market conditions and other non-comparable income and expenses. FFO does not represent cash generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should

33

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 June 30, 

Six Months Ended June 30, 

Three Months Ended March 31, 

    

2023

    

2022

2023

    

2022

2024

    

2023

(In thousands)

(In thousands)

Net income (loss) attributable to common shareholders

$

(10,545)

$

123,275

$

10,626

$

123,243

$

(32,276)

$

21,171

Net income (loss) attributable to redeemable noncontrolling interests

 

(1,398)

 

18,248

 

1,965

 

18,258

 

(4,534)

 

3,363

Net loss attributable to noncontrolling interests

 

(311)

 

(29)

 

(535)

 

(84)

 

(5,380)

 

(224)

Net income (loss)

 

(12,254)

 

141,494

 

12,056

 

141,417

 

(42,190)

 

24,310

Gain on the sale of real estate, net of tax

 

 

(155,642)

 

(40,700)

 

(155,506)

 

(1,409)

 

(40,700)

Gain on the sale of unconsolidated real estate assets

 

 

(936)

 

 

(6,179)

 

(480)

 

Real estate depreciation and amortization

 

47,502

 

47,242

 

99,113

 

102,759

 

55,187

 

51,611

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

 

3,111

 

6,416

 

5,871

 

13,286

 

1,491

 

2,760

FFO attributable to noncontrolling interests

 

311

 

(47)

 

535

 

(73)

 

 

224

FFO attributable to common limited partnership units ("OP Units")

 

38,670

 

38,527

 

76,875

 

95,704

 

12,599

 

38,205

FFO attributable to redeemable noncontrolling interests

 

(5,247)

 

(4,966)

 

(10,450)

 

(10,843)

 

(1,921)

 

(5,203)

FFO attributable to common shareholders

$

33,423

$

33,561

$

66,425

$

84,861

$

10,678

$

33,002

NOI and Same Store NOI

NOI is a non-GAAP financial measure management uses to assess an asset'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 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 expense 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 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.

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 disposed properties or properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. During the three months ended June 30, 2023,March 31, 2024, our same store pool increaseddecreased to 5041 properties from 4942 properties due to (i) the sale of North End Retail and Central Place Tower, (ii) the exclusion of 1800 South Bell Street, which was taken out of service, and (iii) the inclusion of 8001

37

Woodmont as it was in service for the entirety of the comparable period. During the six months ended June 30, 2023, our same store pool increased to 49 properties from 47 properties due to the inclusion of The Wren and The Batley1831/1861 Wiehle Avenue as they were in service for the entirety of the comparable periods. 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

34

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 increased $104,000,$4.6 million, or 0.1%6.5%, to $78.3$75.7 million for the three months ended June 30, 2023March 31, 2024 from $78.2$71.1 million for the same period in 2022. Same store NOI decreased $1.1 million, or 0.7%, to $153.5 million for the six months ended June 30, 2023 from $154.7 million for the same period in 2022.2023. The decrease for the six months ended June 30, 2023increase was substantially attributable to (i) increased abatementhigher rents and higher vacancy,occupancy, partially offset by an increase in parking revenue in our commercial portfolio and (ii) higher occupancy and rents, partially offset by higher concessions and higher operating expenses in our multifamily portfolio and (ii) burn off of rent abatements and lower bad debt, real estate taxes and operating expenses, partially offset by lower occupancy in our commercial portfolio.

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

Three Months Ended June 30, 

Six Months Ended June 30, 

Three Months Ended March 31, 

    

2023

    

2022

    

2023

    

2022

    

2024

    

2023

(Dollars in thousands)

(Dollars in thousands)

Net income (loss) attributable to common shareholders

$

(10,545)

$

123,275

$

10,626

$

123,243

$

(32,276)

$

21,171

Add:

Depreciation and amortization expense

 

49,218

 

49,479

 

102,649

 

107,541

 

56,855

 

53,431

General and administrative expense:

Corporate and other

 

15,093

 

14,782

 

31,216

 

30,597

 

14,973

 

16,123

Third-party real estate services

 

22,105

 

24,143

 

45,928

 

51,192

 

22,327

 

23,823

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

 

 

1,577

 

351

 

3,821

 

 

351

Transaction and other costs

 

3,492

 

1,987

 

5,964

 

2,886

 

1,514

 

2,472

Interest expense

 

25,835

 

16,041

 

52,677

 

32,319

 

30,160

 

26,842

Loss on the extinguishment of debt

 

450

 

1,038

 

450

 

1,629

Income tax expense

 

611

 

2,905

 

595

 

2,434

Impairment loss

17,211

Income tax benefit

 

(1,468)

 

(16)

Net income (loss) attributable to redeemable noncontrolling interests

 

(1,398)

 

18,248

 

1,965

 

18,258

 

(4,534)

 

3,363

Net loss attributable to noncontrolling interests

(311)

(29)

(535)

(84)

(5,380)

(224)

Less:

Third-party real estate services, including reimbursements revenue

 

22,862

 

22,157

 

45,646

 

46,127

 

17,868

 

22,784

Other revenue

 

3,846

 

1,798

 

5,572

 

3,994

 

11,263

 

1,726

Income (loss) from unconsolidated real estate ventures, net

 

510

 

(2,107)

 

943

 

1,038

Income from unconsolidated real estate ventures, net

 

975

 

433

Interest and other income, net

 

2,281

 

1,672

 

6,358

 

15,918

 

2,100

 

4,077

Gain on the sale of real estate, net

 

 

158,767

 

40,700

 

158,631

 

197

 

40,700

Consolidated NOI

 

75,051

 

71,159

 

152,667

 

148,128

 

66,979

 

77,616

NOI attributable to unconsolidated real estate ventures at our share

 

5,175

 

8,321

 

9,604

 

15,268

 

3,046

 

4,429

Non-cash rent adjustments (1)

 

(6,311)

 

(1,978)

 

(14,688)

 

(3,769)

 

(1,430)

 

(8,377)

Other adjustments (2)

 

5,163

 

5,695

 

12,008

 

14,443

 

5,240

 

6,845

Total adjustments

 

4,027

 

12,038

 

6,924

 

25,942

 

6,856

 

2,897

NOI

 

79,078

 

83,197

 

159,591

 

174,070

 

73,835

 

80,513

Less: out-of-service NOI loss (3)

 

(902)

 

(2,046)

 

(1,611)

 

(3,498)

 

(3,032)

 

(710)

Operating Portfolio NOI

 

79,980

 

85,243

 

161,202

 

177,568

 

76,867

 

81,223

Non-same store NOI (4)

 

1,640

 

7,007

 

7,667

 

22,918

 

1,130

 

10,109

Same store NOI (5)

$

78,340

$

78,236

$

153,535

$

154,650

$

75,737

$

71,114

Change in same store NOI

 

0.1%

 

(0.7%)

 

6.5%

Number of properties in same store pool

 

50

 

49

 

41

38

(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 related party management fees.
(3)Includes the results of our under-construction assets and assets in the development pipeline.
(4)Includes the results of properties that were not in-service for the entirety of both periods being compared, including disposed properties, 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.

35

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 define our reportable segments to be aligned with our method of internal reporting and the way our Chief Executive Officer, who is also our Chief Operating Decision Maker ("CODM"), makes key operating decisions, evaluates financial results, allocates resources and manages our business. Accordingly, we aggregate our operating segments into three reportable segments (multifamily, commercial, and third-party asset management and real estate services) based on the economic characteristics and nature of our assets and services.

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 NOI of properties within each segment.

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 June 30, 

Six Months Ended June 30, 

Three Months Ended March 31, 

    

2023

    

2022

2023

    

2022

2024

    

2023

(In thousands)

(In thousands)

Property management fees

$

5,017

$

4,976

$

9,969

$

9,784

$

4,271

$

4,952

Asset management fees

 

1,255

 

1,513

 

2,358

 

3,284

 

924

 

1,103

Development fees

 

2,756

 

2,148

 

4,742

 

5,687

 

238

 

1,986

Leasing fees

 

1,256

 

1,038

 

2,612

 

2,877

 

1,135

 

1,356

Construction management fees

 

303

 

37

 

643

 

187

 

383

 

340

Other service revenue

 

1,422

 

1,499

 

2,646

 

2,315

 

1,054

 

1,224

Third-party real estate services revenue, excluding reimbursements

 

12,009

 

11,211

 

22,970

 

24,134

 

8,005

 

10,961

Reimbursement revenue (1)

 

10,853

 

10,946

 

22,676

 

21,993

 

9,863

 

11,823

Third-party real estate services revenue, including reimbursements

22,862

22,157

45,646

46,127

17,868

22,784

Third-party real estate services expenses

22,105

24,143

45,928

51,192

22,327

23,823

Third-party real estate services revenue less expenses

$

757

$

(1,986)

$

(282)

$

(5,065)

$

(4,459)

$

(1,039)

(1)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 six months ended June 30, 2023March 31, 2024 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. 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 six months ended June 30, 2023March 31, 2024 and 2022.

2023.

3936

The following is a summary of NOI by segment:

Three Months Ended June 30, 

Six Months Ended June 30, 

Three Months Ended March 31, 

    

2023

    

2022

2023

    

2022

2024

    

2023

(In thousands)

(In thousands)

Property revenue: (1)

 

  

 

  

  

 

  

  

 

  

Multifamily

$

51,627

$

50,134

Commercial

$

68,747

$

76,090

$

144,802

$

167,723

 

61,179

 

76,055

Multifamily

 

52,738

 

43,189

 

102,872

 

85,431

Other (2)

 

3,902

 

2,271

 

6,165

 

4,195

 

3,247

 

2,263

Total property revenue

 

125,387

 

121,550

 

253,839

 

257,349

 

116,053

 

128,452

Property expense: (3)

 

  

 

  

 

  

 

  

 

  

 

  

Multifamily

 

23,363

 

23,063

Commercial

 

26,447

 

28,642

 

54,819

 

66,621

 

24,478

 

28,372

Multifamily

 

24,042

 

19,924

 

47,105

 

38,900

Other (2)

 

(153)

 

1,825

 

(752)

 

3,700

 

1,233

 

(599)

Total property expense

 

50,336

 

50,391

 

101,172

 

109,221

 

49,074

 

50,836

Consolidated NOI:

 

  

 

  

 

  

 

  

 

  

 

  

Multifamily

 

28,264

 

27,071

Commercial

 

42,300

 

47,448

 

89,983

 

101,102

 

36,701

 

47,683

Multifamily

 

28,696

 

23,265

 

55,767

 

46,531

Other (2)

 

4,055

 

446

 

6,917

 

495

 

2,014

 

2,862

Consolidated NOI

$

75,051

$

71,159

$

152,667

$

148,128

$

66,979

$

77,616

(1)Includes property rental revenue and parking revenue.
(2)Includes activity related to development assets, corporate entities, land assets for which we are the ground lessor and the elimination of inter-segment activity.
(3)Includes property operating expenses and real estate taxes.

Comparison of the Three Months Ended June 30,March 31, 2024 to 2023

Multifamily: Property revenue increased by $1.5 million, or 3.0%, to 2022$51.6 million in 2024 from $50.1 million in 2023. Consolidated NOI increased by $1.2 million, or 4.4%, to $28.3 million in 2024 from $27.1 million in 2023. The increases in property revenue and consolidated NOI were primarily due to higher occupancy and rents across the portfolio, partially offset by the Disposed Properties. The increase in consolidated NOI was partially offset by an increase in property operating costs.

Commercial: Property revenue decreased by $7.3$14.9 million, or 9.7%19.6%, to $68.7$61.2 million in 20232024 from $76.1 million in 2022.2023. Consolidated NOI decreased by $5.1$11.0 million, or 10.8%23.0%, to $42.3$36.7 million in 20232024 from $47.4$47.7 million in 2022.2023. The decreases in property revenue and consolidated NOI were primarily due to the Disposed Properties, partially offset by increased occupancy at 800 North Glebe1800 South Bell Street being taken out of service during the first quarter of 2024, and 2121 Crystal Drive.

Multifamily: Property revenue increased by $9.5 million, or 22.1%, to $52.7 million in 2023 from $43.2 million in 2022. Consolidated NOI increased by $5.4 million, or 23.3%, to $28.7 million in 2023 from $23.3 million in 2022. The increases in property revenue and consolidated NOI were primarily due to the consolidation of Atlantic Plumbing and 8001 Woodmont, and higherlower occupancy and rents across the portfolio. The increase in consolidated NOI was partially offset by an increase in property operating costs.

Comparison of the Six Months Ended June 30, 2023 to 2022

Commercial: Property revenue decreased by $22.9 million, or 13.7%, to $144.8 million in 2023 from $167.7 million in 2022. Consolidated NOI decreased by $11.1 million, or 11.0%, to $90.0 million in 2023 from $101.1 million in 2022. The decreases in property revenue and consolidated NOI were primarily due to the Disposed Properties.

Multifamily: Property revenue increased by $17.4 million, or 20.4%, to $102.9 million in 2023 from $85.4 million in 2022. Consolidated NOI increased by $9.2 million, or 19.8%, to $55.8 million in 2023 from $46.5 million in 2022. The increases in property revenue and consolidated NOI were primarily due to the consolidation of Atlantic Plumbing and 8001 Woodmont, and higher occupancy and rents across the portfolio. The increase in consolidated NOI was partially offset by an increase in property operating costs.

Liquidity and Capital Resources

Property rental income is our primary source of operating cash flow and 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

40

estate services business provides fee-based real estate services to the WHI 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 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, asset sales and 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.

37

Mortgage Loans

The following is a summary of mortgage loans:

Weighted Average

Weighted Average

Effective

    

Effective

    

  

Interest Rate (1)

    

June 30, 2023

    

December 31, 2022

  

Interest Rate (1)

    

March 31, 2024

    

December 31, 2023

(In thousands)

(In thousands)

Variable rate (2)

 

5.43%

$

678,671

$

892,268

 

6.31%

$

641,382

$

608,582

Fixed rate (3)

 

4.45%

 

1,025,535

 

1,009,607

 

4.78%

 

1,189,484

 

1,189,643

Mortgage loans

 

 

1,704,206

 

1,901,875

 

 

1,830,866

 

1,798,225

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

 

 

(14,999)

 

(11,701)

Unamortized deferred financing costs and premium/discount, net

 

 

(14,358)

 

(15,211)

Mortgage loans, net

$

1,689,207

$

1,890,174

$

1,816,508

$

1,783,014

(1)Weighted average effective interest rate as of June 30, 2023.March 31, 2024.
(2)Includes variable rate mortgage loans with interest rate cap agreements. For mortgage loans with interest rate caps, the weighted average interest rate cap strike was 2.42%3.41%, and the weighted average maturity date of the interest rate caps is August 2023.was April 2025. The interest rate cap strike is exclusive of the credit spreads associated with the mortgage loans. As of June 30, 2023, one-month London Interbank Offered Rate ("LIBOR") was 5.22% andMarch 31, 2024, one-month term Secured Overnight Financing Rate ("SOFR") was 5.14%5.33%.
(3)Includes variable rate mortgages with interest rates fixed by interest rate swap agreements.
(4)As of June 30, 2023 and December 31, 2022, excludes $2.0 million and $2.2 million of net deferred financing costs related to unfunded mortgage loans that were included in "Other assets, net" in our balance sheets.

As of June 30, 2023March 31, 2024 and December 31, 2022,2023, the net carrying value of real estate collateralizing our mortgage loans totaled $2.1 billion and $2.2 billion. Our mortgage loans contain covenants that limit our ability to incur additional indebtedness on these properties and, in certain circumstances, require lender approval of tenant leases and/or yield maintenance upon repayment prior to maturity. Certain mortgage loans are recourse to us. See Note 17 to the financial statements for additional information.

In January 2023, we entered into a $187.6 million loan facility, collateralized by The Wren and F1RST Residences. The loan has a seven-year term and a fixed interest rate of 5.13%. This loan is the initial advance under a Fannie Mae multifamily credit facility which provides flexibility for collateral substitutions, future advances tied to performance, ability to mix fixed and floating rates, and staggered maturities. Proceeds from the loan were used, in part, to repay the $131.5 million mortgage loan collateralized by 2121 Crystal Drive, which had a fixed interest rate of 5.51%.

In June 2023, we repaid $142.4 million in mortgage loans collateralized by Falkland Chase – South & West and 800 North Glebe Road.

As of June 30, 2023March 31, 2024 and December 31, 2022,2023, we had various interest rate swap and cap agreements on certain mortgage loans with an aggregate notional value of $1.2$1.6 billion and $1.3$1.7 billion. See Note 15 to the financial statements for additional information.

Revolving Credit Facility and Term Loans

As of June 30,March 31, 2024 and December 31, 2023, our unsecured revolving credit facility and term loans totaling $1.5 billion consisted of a $750.0 million revolving credit facility maturing in June 2027, a $200.0 million term loan ("Tranche A-1 Term Loan") maturing in January 2025, a $400.0 million term loan ("Tranche A-2 Term Loan") maturing in January 2028 which includes the

41

$50.0 million remaining advance drawn in May 2023, and a $120.0 million term loan ("2023 Term Loan") maturing in June 2028.

Effective as of June 29, 2023, the The revolving credit facility was amended to: (i) reduce the borrowing capacity from $1.0 billion to $750.0 million, (ii) extend the maturity date from January 2025 to June 2027 and (iii) amend the interest rate to daily SOFR plus 1.40% to daily SOFR plus 1.85%, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets. We have the option to increase the $750.0 million revolving credit facility or add term loans up to $500.0 million, and we also have the right to extend the maturity date beyond June 2027 viahas two six-month extension options.

In addition, on June 29, 2023, we entered into a $120.0 million term loan maturing in June 2028 with an interest rate of one-month term SOFR plus 1.25% to one-month term SOFR plus 1.80%, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real propertyoptions, and assets. We also entered into an interest rate swap with a total notional value of $120.0 million, which fixes SOFR at an interest rate of 4.01% through the maturity date.

In July 2023, we amended the covenants related to the Tranche A-1 Term Loan and the Tranche A-2 Term Loan to be consistent with those of the revolving credit facility and 2023 Term Loan covenants.has two one-year extension options.

The following is a summary of amounts outstanding under the revolving credit facility and term loans:

Effective

Effective

    

Interest Rate (1)

    

June 30, 2023

    

December 31, 2022

    

Interest Rate (1)

    

March 31, 2024

    

December 31, 2023

(In thousands)

(In thousands)

Revolving credit facility (2) (3)

 

6.49%

$

62,000

$

 

6.79%

$

$

62,000

Tranche A-1 Term Loan (4)

 

2.61%

$

200,000

$

200,000

 

2.70%

$

200,000

$

200,000

Tranche A-2 Term Loan (4)

 

3.54%

 

400,000

 

350,000

2023 Term Loan (5)

5.26%

120,000

Tranche A-2 Term Loan (5)

 

3.58%

 

400,000

 

400,000

2023 Term Loan (6)

5.31%

120,000

120,000

Term loans

 

 

720,000

 

550,000

 

 

720,000

 

720,000

Unamortized deferred financing costs, net

 

 

(3,243)

 

(2,928)

 

 

(2,609)

 

(2,828)

Term loans, net

$

716,757

$

547,072

$

717,391

$

717,172

(1)Effective interest rate as of June 30, 2023.March 31, 2024. The interest rate for our revolving credit facility excludes a 0.15% facility fee.
(2)As of June 30, 2023,March 31, 2024, daily SOFR was 5.09%5.34%. As of June 30, 2023March 31, 2024 and December 31, 2022,2023, letters of credit with an aggregate face amount of $467,000 were outstanding under our revolving credit facility.
(3)As of June 30, 2023March 31, 2024 and December 31, 2022,2023, excludes $11.7$9.5 million and $3.3$10.2 million of net deferred financing costs related to our revolving credit facility that were included in "Other assets, net" in our balance sheets.

38

(4)As of June 30, 2023March 31, 2024 and December 31, 2022,2023, the outstanding balance was fixed by interest rate swap agreements. As of June 30, 2023, these interest rate swap agreementsswaps fix SOFR at a weighted average interest rate of 1.46% for the Tranche A-1 Term Loan and 2.29% for the Tranche A-2 Term Loan.. Interest rate swaps for the Tranche A-1 Term Loan with a total notional value of $200.0 million mature in July 2024. We have two forward-starting interest rate swaps that will be effective July 2024 with a total notional value of $200.0 million, which will effectively fix SOFR at a weighted average interest rate of 4.00% through January 2027.
(5)As of March 31, 2024 and December 31, 2023, the interest rate swaps fix SOFR at a weighted average interest rate of 2.29%. Interest rate swaps for the Tranche A-2 Term Loan with a total notional value of $200.0 million mature in July 2024 and with a total notional value of $200.0 million mature in January 2028. We have two forward-starting interest rate swaps that will be effective July 2024 with a total notional value of $200.0 million, which will effectively fix SOFR for the Tranche A-2 Term Loan at a weighted average interest rate of 2.81% through the maturity date.
(5)(6)As of June 30,March 31, 2024 and December 31, 2023, the outstanding balance was fixed by an interest rate swap agreement, which fixes SOFR at an interest rate of 4.01% through the maturity date.

As of June 30, 2023, we had fully-hedged debt with a principal balance totaling $692.7 million that used LIBOR as a reference rate. As of the date of this filing, all our debt and hedging arrangements use SOFR as a reference rate.

Common Shares Repurchased

Our Board of Trustees previouslyhas authorized the repurchase of up to $1.0$1.5 billion of our outstanding common shares, and in May 2023, increased the common share repurchase authorization to $1.5 billion.shares. During the three and six months ended June 30, 2023,March 31, 2024, we repurchased and retired 9.3 million and 10.53.0 million common shares for $135.7 million and $155.8$49.4 million, a weighted average purchase price per share of $14.54 and $14.79.$16.50. During the three and six months ended

42

June 30, 2022, March 31, 2023, we repurchased and retired 8.5 million and 11.81.2 million common shares for $213.9 million and $307.0$20.1 million, a weighted average purchase price per share of $25.15 and $25.91.$16.66. Since we began the share repurchase program through June 30, 2023,March 31, 2024, we have repurchased and retired 33.848.9 million common shares for $779.3 million,$1.0 billion, a weighted average purchase price per share of $23.02.

During the third quarter of 2023, through the date of this filing, we repurchased and retired 2.0 million common shares for $31.5 million, a weighted average purchase price per share of $16.03, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.$20.61.

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

Material Cash Requirements

Our material cash requirements for the next 12 months and beyond are to fund:

normal recurring expenses;
debt service and principal repayment obligations, including balloon payments on maturing mortgage loans — asAs of June 30, 2023,March 31, 2024, we had no debt$120.9 million on a consolidated basis and $13.7 million at our share related to a mortgage loan scheduled to mature in 2023;2024;
capital expenditures, including major renovations, tenant improvements and leasing costs — asAs of June 30, 2023,March 31, 2024, we had committed tenant-related obligations totaling $53.1$33.4 million ($51.433.3 million related to our consolidated entities and $1.7 million$113,000 related to our unconsolidated real estate ventures at our share);
development expenditures — asAs of June 30, 2023,March 31, 2024, we had assets under construction that, based on our current plans and estimates, require an additional $284.7$134.4 million to complete, which we anticipate will be primarily expended over the next threetwo years;
dividends to shareholders and distributions to holders of OP Units and LTIP Units — on August 3, 2023,On April 25, 2024, our Board of Trustees declared a quarterly dividend of $0.225$0.175 per common share;
possible common share repurchases — during the third quarter of 2023, through the date of this filing, we repurchased and retired 2.0 million common shares for $31.5 million;repurchases; and
possible acquisitions of properties, either directly or indirectly through the acquisition of equity interests.

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

cash and cash equivalents — asAs of June 30, 2023,March 31, 2024, we had cash and cash equivalents of $156.6$220.5 million;
cash flows from operations;
distributions from real estate ventures;
borrowing capacity under our revolving credit facility — asAs of June 30, 2023,March 31, 2024, we had $687.5$749.5 million of availability under our revolving credit facility; and
proceeds from financings, asset sales and recapitalizations.recapitalizations; and

39

proceeds from the issuance of securities.

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

During the sixthree months ended June 30, 2023,March 31, 2024, there were no significant changes to the material cash requirements information presented in Item 7 of Part II of our Annual Report.

See additional information in the following pages under "Commitments and Contingencies."

43

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:

Six Months Ended June 30, 

Three Months Ended March 31, 

    

2023

    

2022

    

2024

    

2023

(In thousands)

(In thousands)

Net cash provided by operating activities

$

89,431

$

107,649

$

37,043

$

42,632

Net cash (used in) provided by investing activities

 

(135,500)

 

785,304

Net cash used in financing activities

 

(25,160)

 

(819,930)

Net cash provided by (used in) investing activities

 

123,602

 

(26,673)

Net cash (used in) provided by financing activities

 

(100,820)

 

31,860

Cash Flows for the SixThree Months Ended June 30, 2023March 31, 2024

Cash and cash equivalents, and restricted cash decreased $71.2increased $59.8 million to $202.8$260.3 million as of June 30, 2023,March 31, 2024, compared to $274.1$200.4 million as of December 31, 2022.2023. This decreaseincrease resulted from $135.5$123.6 million of net cash used inprovided by investing activities and $25.2$37.0 million of net cash provided by operating activities, partially offset by $100.8 million of net cash used in financing activities, partially offset by $89.4 million of net cash provided by operating activities. Our outstanding debt was $2.5$2.6 billion as of June 30, 2023March 31, 2024 and December 31, 2022.2023.

Net cash provided by operating activities of $89.4$37.0 million comprised: (i) $86.2$38.2 million of net income (before $114.8$80.6 million of non-cash items and a $40.7 million$197,000 gain on the sale of real estate), (ii) $9.4$1.2 million of return on capital from unconsolidated real estate ventures and (iii) $6.1$2.3 million of net change in operating assets and liabilities. Non-cash income adjustments of $114.8$80.6 million primarily include depreciation and amortization expense, impairment loss, share-based compensation expense, deferred rent and other non-cash items.amortization of lease incentives.

Net cash used inprovided by investing activities of $135.5$123.6 million primarily comprised: (i) $164.8$160.3 million of distributions of capital from unconsolidated real estate ventures and other investments primarily related to the sale of Central Place Tower by one of our unconsolidated real estate ventures, and (ii) $12.4 million of proceeds from the sale of real estate, partially offset by (iii) $48.0 million of development costs, construction in progress and real estate additions, (ii) $20.2and (iv) $2.5 million of investments in unconsolidated real estate ventures and other investments and (iii) a $19.6 million payment of a deferred purchase price related to the acquisition of a development parcel in 2020, partially offset by (iv) $69.0 million of proceeds from the sale of real estate.investments.

Net cash used in financing activities of $25.2$100.8 million primarily comprised: (i) $278.5 million of repayments of mortgage loans, (ii) $155.8 million of common shares repurchased, (iii) $60.0$92.0 million of repayments on the revolving credit facility, (iv) $49.5(ii) $49.4 million of common shares repurchased, (iii) $16.1 million of dividends paid to common shareholders (v) $17.2 million of debt issuance and modification costs, and (vi) $7.9(iv) $2.9 million of distributions to our redeemable noncontrolling interests, partially offset by (vii) $251.7(v) $31.6 million of borrowings under mortgage loans (viii) $170.0 million of borrowings under term loans and (ix) $122.0(vi) $30.0 million of borrowings under the revolving credit facility.

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 June 30, 2023,March 31, 2024, we had investments in unconsolidated real estate ventures totaling $309.2$104.8 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.

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

40

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

44

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 June 30, 2023,March 31, 2024, we had additional capital commitments and certain recorded guarantees to our unconsolidated real estate ventures and other investments totaling $62.0$58.7 million. As of June 30, 2023,March 31, 2024, we had no debt principal payment guarantees related to our unconsolidated real estate ventures.

Commitments and Contingencies

Insurance

We maintain general liability insurance with limits of $150.0 million per occurrence and in the aggregate, and property and rental value insurance coverage with limits of $1.0 billion per occurrence, with sub-limits for certain perils such as floods and earthquakes on each of our properties. We also maintain coverage, through our wholly owned captive insurance subsidiary, for a portion of the first loss on the above limits and for both conventional terrorist acts and for nuclear, biological, chemical or radiological terrorism events with limits of $2.0 billion per occurrence. These policies are partially reinsured by third-party insurance providers.

We will continue to monitor the state of the insurance market, and the scope and costs of coverage for acts of terrorism. We cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are responsible for deductibles and losses in excess of the insurance coverage, which could be material.

Our debt, consisting of mortgage loans secured by our properties, a revolving credit facility and term loans, contains customary covenants requiring adequate insurance coverage. Although we believe that we currently have adequate insurance coverage, we may not be able to obtain an equivalent amount of coverage at a reasonable cost in the future. If lenders insist on greater coverage than we are able to obtain, it could adversely affect our ability to finance or refinance our properties.

Construction Commitments

As of June 30, 2023,March 31, 2024, we had assets under construction that, based on our current plans and estimates, require an additional $284.7$134.4 million to complete, which we anticipate will be primarily expended over the next threetwo years. These capital expenditures are generally due as the work is performed, and we expect to finance them with debt proceeds, proceeds from asset sales and recapitalizations, and available cash.

Other

As of June 30, 2023,March 31, 2024, we had committed tenant-related obligations totaling $53.1$33.4 million ($51.433.3 million related to our consolidated entities and $1.7 million$113,000 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.

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

41

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 June 30, 2023,March 31, 2024, the aggregate amount of debt principal payment guarantees was $8.3 million for our consolidated entities.

In connection with the Formation Transaction, we have an agreement with Vornado regarding tax matters (the "Tax Matters Agreement") that provides special rules that allocate tax liabilities if the distribution of JBG SMITH shares by Vornado,

45

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 AgreementAgreement.

Environmental Matters

Under various federal, state and local laws, ordinances and regulations, ana current or former owner or operator of real estate ismay be liable for conducting or paying for the costs of the investigation, removal or remediation of certain hazardous or toxic substances on that real estate. These laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence of hazardous or toxic substances.substances, and the liability may be joint and several. The costs of remediation or removal of these substances may be substantial and could exceed the value of the property, and the presence of these substances, or the failure to promptly remediate these substances, may adversely affect the owner's ability to sell or develop the real estate or to borrow using the real estate as collateral. In connection with the ownership and operation of our current and former assets, we may be potentially liable for these costs. The operations of current and former tenants at our assets have involved, or may have involved, the use of hazardous materialssubstances or generated hazardous wastes.wastes, and indemnities in our lease agreements may not fully protect us from liability, if, for example, a tenant responsible for environmental noncompliance or contamination becomes insolvent. The release of these hazardous materialssubstances and wastes could result in us incurring liabilities to remediate any resulting contamination. The presence of contamination or the failure to remediate contamination at our properties may (i) expose us to third-party liability (e.g., for cleanup costs, natural resource damages, bodily injury or property damage), (ii) subject our properties to liens in favor of the government for damages and costs the government incurs in connection with the contamination, (iii) impose restrictions on the manner in which a property may be used or businesses may be operated, or (iv) materially adversely affect our ability to sell, lease or develop the real estate or to borrow using the real estate as collateral. In addition, our assets are exposed to the risk of contamination originating from other sources. While a property owner may not be responsible for remediating contamination that has migrated onsite from an identifiable and viable offsite source, the contaminant's presence can have adverse effects on operations and the redevelopment of our assets. To the extent we sendarrange for contaminated materials to be sent to other locations for treatment or disposal, we may be liable for the cleanup of those sites if they become contaminated.contaminated, without regard to whether we complied with environmental laws in doing so.

Most of our assets have been subject, at some point, to environmental assessments that are intended to evaluate the environmental condition of the subject and surrounding assets. These environmental assessments generally have included a historical review, a public records review, a visual inspection of the site and surrounding assets, visual or historical evidence of underground storage tanks and other features, and the preparation and issuance of a written report. Soil, soil vapor and/or groundwater subsurface testing is conducted at our assets, when necessary, to further investigate any issues raised by the initial assessment that could reasonably be expected to pose a material concern to the property or result in us incurring material environmental liabilities as a result of redevelopment. The tests may not, however, have included extensive sampling or subsurface investigations. In each case where the environmental assessments have identified conditions requiring remedial actions required by law, we have initiated appropriate actions. The environmental assessments didhave not revealrevealed 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 $18.0$17.6 million as of June 30, 2023March 31, 2024 and December 31, 20222023, and are included in "Other liabilities, net" in our balance sheets.

4642

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, 2023

December 31, 2022

 

    

March 31, 2024

December 31, 2023

 

    

    

Weighted 

    

    

    

Weighted 

 

    

    

Weighted 

    

    

    

Weighted 

 

Average

Annual

Average  

 

Average

Annual

Average  

 

 Effective 

Effect of 1% 

Effective  

 

 Effective 

Effect of 1% 

Effective  

 

Interest 

Change in 

Interest  

 

Interest 

Change in 

Interest  

 

Balance

Rate

   

Base Rates

Balance

Rate

 

Balance

Rate

   

Base Rates

Balance

Rate

 

(Dollars in thousands)

 

(Dollars in thousands)

 

Debt (contractual balances):

Mortgage loans:

  

 

  

 

  

 

  

 

  

  

 

  

 

  

 

  

 

  

Variable rate (1)

$

678,671

 

5.43%

$

1,445

$

892,268

 

5.21%

$

641,382

 

6.31%

$

1,445

$

608,582

 

6.25%

Fixed rate (2)

 

1,025,535

 

4.45%

 

 

1,009,607

 

4.44%

 

1,189,484

 

4.78%

 

 

1,189,643

 

4.78%

$

1,704,206

$

1,445

$

1,901,875

$

1,830,866

$

1,445

$

1,798,225

Revolving credit facility and term loans:

Revolving credit facility (3)

$

62,000

 

6.49%

$

629

$

 

5.51%

$

 

6.79%

$

$

62,000

 

6.83%

Tranche A-1 Term Loan (4)

 

200,000

 

2.61%

 

 

200,000

 

2.61%

 

200,000

 

2.70%

 

 

200,000

 

2.70%

Tranche A-2 Term Loan (4)

 

400,000

 

3.54%

 

 

350,000

 

3.40%

 

400,000

 

3.58%

 

 

400,000

 

3.58%

2023 Term Loan (5)

120,000

5.26%

2023 Term Loan (4)

120,000

5.31%

120,000

5.31%

$

782,000

$

629

$

550,000

$

720,000

$

$

782,000

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

Variable rate (1)

$

56,916

 

5.84%

$

164

$

22,065

 

6.45%

$

35,000

 

5.73%

$

$

35,000

 

5.00%

Fixed rate (2)

 

33,000

 

4.13%

 

 

33,000

 

4.13%

 

33,000

 

4.13%

 

 

33,000

 

4.13%

$

89,916

$

164

$

55,065

$

68,000

$

$

68,000

(1)Includes variable rate mortgage loans with interest rate cap agreements. For mortgage loans with interest rate caps, the weighted average interest rate cap strike was 2.42%3.41%, and the weighted average maturity date of the interest rate caps is August 2023.was April 2025. The interest rate cap strike is exclusive of the credit spreads associated with the mortgage loans. As of June 30, 2023, one-month LIBOR was 5.22% andMarch 31, 2024, one-month term SOFR was 5.14%5.33%. The impact of these interest rate caps is reflected in our calculation of the annual effect of a 1% change in base rates.
(2)Includes variable rate mortgages with interest rates fixed by interest rate swap agreements.
(3)As of June 30, 2023,March 31, 2024, daily SOFR was 5.09%5.34%. The interest rate for our revolving credit facility excludes a 0.15% facility fee.
(4)As of June 30, 2023March 31, 2024 and December 31, 2022,2023, the outstanding balance was fixed by interest rate swap agreements. As of June 30, 2023,March 31, 2024, the interest rate swaps fix SOFR at a weighted average interest rate of 1.46% for the Tranche A-1 Term Loan, and 2.29% for the Tranche A-2 Term Loan and 4.01% for the 2023 Term Loan. See Note 7 to the financial statements for additional information.
(5)As of June 30, 2023, the outstanding balance was fixed by an interest rate swap agreement, which fixes SOFR at an interest rate of 4.01% through the maturity date.

The fair value of our mortgage loans is estimated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit profiles based on market sources. The fair value of our revolving credit facility and term loans is calculated based on the net present value of payments over the term of the facilities using estimated market rates for similar notes and remaining terms. As of June 30, 2023March 31, 2024 and December 31, 2022,2023, the estimated fair value of our consolidated debt was $2.4$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

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.

4743

Derivative Financial Instruments Designated as Effective Hedges

Certain derivative financial instruments, consisting of interest rate swap and cap agreements, are cash flow hedges that are designated as effective hedges, and are carried at their estimated fair value on a recurring basis. We assess the effectiveness of our hedges both at inception and on an ongoing basis. If the hedges are deemed to be effective, the fair value is recorded in "Accumulated other comprehensive income" 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 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 June 30, 2023March 31, 2024 and December 31, 2022,2023, we had interest rate swap and cap agreements with an aggregate notional value of $1.4$2.2 billion, which were designated as effective hedges. The fair value of our interest rate swaps and caps designated as effective hedges primarily consisted of assets totaling $51.3$40.6 million and $53.5$35.6 million as of June 30, 2023March 31, 2024 and December 31, 2022,2023, included in "Other assets, net" in our balance sheets.sheets, and liabilities totaling $16,000 and $7.9 million as of March 31, 2024 and December 31, 2023, included in "Other liabilities, net" in our balance sheet.

Derivative Financial Instruments Designated as Ineffective HedgesNon-Designated Derivatives

Certain derivative financial instruments, consisting of interest rate cap agreements, are cash flow hedges that are designateddo not meet the accounting requirements to be classified as ineffective hedges, andhedging instruments. These derivatives are carried at their estimated fair value on a recurring basis. Realizedbasis with realized and unrealized gains or losses are recorded in "Interest expense" in our statements of operations. As of June 30, 2023March 31, 2024 and December 31, 2022,2023, we had various interest rate cap agreements with an aggregate notional value of $711.8$475.2 million and $642.7 million, which were designated as ineffective hedges.non-designated derivatives. The fair value of our interest rate cap agreements designated as ineffective hedgeswhich were non-designated derivatives consisted of assets totaling $2.3$6.5 million and $8.1$6.7 million as of June 30, 2023March 31, 2024 and December 31, 2022,2023, included in "Other assets, net" in our balance sheets, and liabilities totaling $6.4 million and $6.5 million as of March 31, 2024 and December 31, 2023, included in "Other liabilities, 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 June 30, 2023,March 31, 2024, 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 June 30, 2023March 31, 2024 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.

44

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors previously disclosed in our Annual Report.

48

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

April 1, 2023 - April 30, 2023

2,399,238

$

14.17

2,399,238

$

322,367,801

May 1 2023 - May 31, 2023

4,065,637

14.54

4,065,637

763,155,096

June 1, 2023 - June 30, 2023

2,856,095

14.86

2,856,095

720,668,410

Total for the three months ended June 30, 2023

9,320,970

14.54

9,320,970

Total for the six months ended June 30, 2023

10,526,158

14.79

10,526,158

Program total since inception in March 2020 (1)

33,823,567

23.02

33,823,567

(1)During the third quarter of 2023, through the date of this filing, we repurchased and retired 2.0 million common shares for $31.5 million, a weighted average purchase price per share of $16.03, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.

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

January 1, 2024 - January 31, 2024

1,231,419

$

16.77

1,231,419

$

508,168,718

February 1, 2024 - February 29, 2024

1,759,441

16.31

1,759,441

479,438,393

March 1, 2024 - March 31, 2024

-

-

-

479,438,393

Total for the three months ended March 31, 2024

2,990,860

16.50

2,990,860

Program total since inception in March 2020

48,864,863

20.61

48,864,863

In June 2022, our Board of Trustees authorized the repurchase of up to $1.0 billion of our outstanding common shares, and in May 2023, increased the authorized repurchase amount to $1.5 billion.billion. 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, applicable legal requirements and other factors. The program may be suspended or discontinued at our discretion without prior notice, and, in any event.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

45

ITEM 5. OTHER INFORMATION

Trading Arrangements

During the three months ended June 30, 2023,March 31, 2024, none of our officers or trustees adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement."

Omnibus Share Plan

On April 25, 2024, we held our 2024 Annual Meeting of Shareholders (the "Annual Meeting")at which our shareholders approved an amendment (the "Plan Amendment") to the JBG SMITH Properties 2017 Omnibus Share Plan, as amended, (the "Plan") to increase the total number of common shares of beneficial interest reserved for issuance under the Plan by 7.5 million common shares.

The material terms and conditions of the Plan have been previously described under Proposal No. 4 in our Definitive Proxy Statement on Schedule 14A (beginning on page 21) filed with the Securities and Exchange Commission ("SEC") on March 13, 2024 (the "Proxy Statement") and Plan Amendment attached as Annex A thereto.

The description of the Plan Amendment contained herein and in the Proxy Statement are qualified in their entirety by reference to the full text of the Plan Amendment, which is attached to this Quarterly Report on Form 10-Q as Exhibit 10.9 and incorporated herein by reference.

2024 Annual Meeting Voting Results

At the Annual Meeting, our shareholders voted on the (i) election of 10 trustees to our Board of Trustees (the "Board") to serve until our 2025 annual meeting of shareholders, (ii) approval, on a non-binding advisory basis, of the compensation of the named executive officers, (iii) approval, on a non-binding advisory basis, on whether the vote on compensation of named executive officers should occur every one, two or three years, (iv) approval of an amendment to the Plan to increase the number of common shares available for issuance under the Plan and (v) ratification of the appointment of Deloitte & Touche LLP ("Deloitte") as our independent registered public accounting firm for the fiscal year ending December 31, 2024. The proposals are described in detail in our Proxy Statement. The final voting results for each proposal are set forth below.

Proposal 1: Election of Trustees

At the Annual Meeting, our shareholders elected 10 trustees to our Board to serve until the 2025 annual meeting of shareholders and until their respective successors have been duly elected and qualified. The table below sets forth the voting results for each trustee nominee:

Nominee

 

Votes For

Votes Against

 

Abstentions

 

Broker Non-Votes

Phyllis R. Caldwell

73,059,149

879,318

12,357

4,383,782

Scott A. Estes

 

73,491,985

415,992

42,847

4,383,782

Alan S. Forman

 

70,126,986

3,780,842

42,996

4,383,782

Michael J. Glosserman

 

73,466,250

471,502

13,072

4,383,782

W. Matthew Kelly

73,513,331

425,477

12,016

4,383,782

Alisa M. Mall

 

69,294,636

4,643,780

12,408

4,383,782

Carol A. Melton

73,299,313

639,029

12,482

4,383,782

William J. Mulrow

72,007,090

1,930,815

12,919

4,383,782

D. Ellen Shuman

70,074,935

3,861,634

14,255

4,383,782

Robert A. Stewart

73,294,574

641,665

14,585

4,383,782

4946

Second Amended and Restated BylawsProposal 2: Advisory Vote on Executive Compensation

On August 3, 2023,At the Annual Meeting, our Boardshareholders voted affirmatively on a non-binding resolution to approve the compensation of Trustees (the "Board") amended and restated our Amended and Restated Bylaws (the "Second Amended and Restated Bylaws"), effective immediately, to: (i) expressly providenamed executive officers. The table below sets forth the voting results for the ability of stockholders to participate in meetings of stockholders by electronic transmission, (ii) require any shareholder directly or indirectly soliciting proxies from other shareholders to use a proxy card color other than white, (iii) implement and update the procedure and information requirements for the nominations of persons for election to the Board, including to address matters relating to the new universal proxy rules set forth in Rule 14a-19 under the Securities Exchange Act of 1934, as amended, (iv) revise the information required to be included in or updated in a shareholder's notice regarding nomination of a trustee for election or reelection, (v) clarifying the instances in which a shareholder’s notice regarding nomination of a trustee for election or reelection may be disregarded and (vi) make certain other administrative, clarifying and conforming and/or immaterial changes throughout.this proposal:

Votes For

 

Votes Against

 

Abstentions

 

Broker Non-Votes

49,724,873

 

24,159,332

 

66,619

 

4,383,782

The foregoing descriptionProposal 3: Advisory Vote on the Frequency of the Second Amended and Restated Bylaws is not complete and is qualifiedAdvisory Vote on Executive Compensation

At the Annual Meeting, our shareholders voted on a non-binding resolution regarding the frequency with which the shareholder advisory vote on executive compensation should be held. The table below sets forth the voting results for this proposal:

One Year

 

Two Years

 

Three Years

 

Abstentions

72,154,780

 

23,038

 

1,722,890

 

50,116

Consistent with the advisory vote of our shareholders, our Board determined that we will include a non-binding shareholder advisory vote on executive compensation in its entirety by referenceour proxy materials every year, until the next required advisory vote on the frequency of shareholder votes on executive compensation, which will occur no later than our annual meeting of shareholders in 2030.

Proposal 4: Amendment to the Second Amended and Restated Bylaws, which are filedPlan to Increase the Number of Common Shares Available for Issuance Under the Plan

At the Annual Meeting, our shareholders voted affirmatively on the Plan Amendment to increase the total number of our common shares reserved for issuance under the Plan by 7.5 million common shares. The table below sets forth the voting results for this proposal:

Votes For

 

Votes Against

 

Abstentions

 

Broker Non-Votes

54,021,951

 

19,897,397

 

31,476

 

4,383,782

Proposal 5: Ratification of the Appointment of Independent Registered Public Accounting Firm

At the Annual Meeting, our shareholders ratified the appointment of Deloitte to serve as Exhibit 3.4 hereto in unmarked form, and as Exhibit 3.5 hereto in redline form markingour independent registered public accounting firm for the amendments described above, and are incorporated herein by reference.fiscal year ending December 31, 2024. The table below sets forth the voting results for this proposal:

Votes For

 

Votes Against

 

Abstentions

76,585,767

 

1,715,549

 

33,290

5047

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**

Second Amended and Restated Bylaws of JBG SMITH Properties, effective August 3, 2023.

3.5**3.4

Second Amended and Restated Bylaws of JBG SMITH Properties, effective August 3, 2023 (redline).

10.1

Amended and Restated Credit Agreement, dated as of June 29, 2023, by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to3.4 in our Current Report on Form 8-K,10-Q, filed on June 29,August 8, 2023)..

10.210.1†

Second Amendment to CreditForm of 2024 AO LTIP Unit Agreement dated as of July 24, 2023, 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 (incorporated by reference to Exhibit 10.110.52 to our CurrentAnnual Report on Form 8-K,10-K, filed on July 28, 2023)February 20, 2024)..

10.310.2†

Form of Agreement Equity Award in Lieu of Annual Cash Bonus (incorporated by reference to Exhibit 10.53 to our Annual Report on Form 10-K, filed on February 20, 2024).

10.3†

First Amendment to CreditSecond Amended and Restated Employment Agreement, dated as of July 24, 2023,February 14, 2024, by and amongbetween JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as Administrative AgentKevin P. Reynolds (incorporated by reference to Exhibit 10.210.54 to our CurrentAnnual Report on Form - K,10-K, filed on July 28, 2023)February 20, 2024).

10.4†

Employment Agreement, dated as of February 14, 2024, by and between JBG SMITH Properties and Evan Regan-Levine (incorporated by reference to Exhibit 10.55 to our Annual Report on Form 10-K, filed on February 20, 2024).

10.5†

Employment Agreement, dated as of February 14, 2024, by and between JBG SMITH Properties and David Ritchey (incorporated by reference to Exhibit 10.56 to our Annual Report on Form 10-K, filed on February 20, 2024).

10.6†

First Amendment to Amended and Restated Employment Agreement, dated as of February 14, 2024, by and between JBG SMITH Properties and Madhumita Moina Banerjee (incorporated by reference to Exhibit 10.57 to our Annual Report on Form 10-K, filed on February 20, 2024).

10.7†

First Amendment to Amended and Restated Employment Agreement, dated as of February 14, 2024, by and between JBG SMITH Properties and Steven A. Museles (incorporated by reference to Exhibit 10.58 to our Annual Report on Form 10-K, filed on February 20, 2024).

10.8†

First Amendment to Employment Agreement, dated as of February 14, 2024, by and between JBG SMITH Properties and George Xanders (incorporated by reference to Exhibit 10.59 to our Annual Report on Form 10-K, filed on February 20, 2024).

10.9†**

Amendment No. 4 to the JBG SMITH Properties 2017 Omnibus Share Plan, effective April 25, 2024.

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.

48

Exhibits

Description

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.

5149

SIGNATURES

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

JBG SMITH Properties

Date:

August 8, 2023April 30, 2024

/s/ M. Moina Banerjee

M. Moina Banerjee

Chief Financial Officer

(Principal Financial Officer)

JBG SMITH Properties

Date:

August 8, 2023April 30, 2024

/s/ Angela Valdes

Angela Valdes

Chief Accounting Officer

(Principal Accounting Officer)

5250