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Quarterly Investor Package
JBGS Divider
Management Letter
November 1, 2022
We live for times like these. In normal and predictable environments indexing beats active management every time. This is as true in managing real estate as it is in any other asset class. Volatile and uncertain times are when we earn our keep, and it is precisely in these environments when our team’s experience matters most. Although the capital markets are dramatically less active than they were a mere six months ago, the fundamentals of our business remain strong. Physical office occupancies are consistently rising, apartment rents continue to post solid gains, and our underlying growth and demand drivers remain incredibly strong. Against that backdrop continued rate hikes and higher bank capital requirements have curbed lending and investment sales activity, and we expect this reduced level of activity to continue well into next year. We also know that downturns are ripe with opportunity for the well-prepared and well capitalized investor. Thanks to years of prudent, disciplined, and well-timed capital allocation and strategic decisions, our balance sheet and portfolio are positioned not only to weather the storm and protect against downside, but also to capitalize on these opportunities and deliver long-term NAV growth per share. Highlights of our accomplishments in pursuit of this objective follow:
We completed $1 billion of dispositions well in advance of our year-end goal and before market conditions deteriorated. At the same time, we continued to capitalize on the disconnect between our share price and NAV, repurchasing 14.2 million shares year-to-date at a weighted average price per share of $25.49.
We finance our business primarily with non-recourse asset-level financing and maintain a large pool of unencumbered multifamily assets, which serves as a valuable source of potential liquidity. We have a well-staggered debt maturity schedule, with limited near-term office exposure, and we have strategically maintained a pool of unencumbered multifamily assets, with estimated borrowing capacity of at least $500 million, providing a cycle-resistant source of liquidity. Additionally, in July, we successfully refinanced and upsized our Tranche A-2 Term Loan to $400 million at SOFR plus 125 basis points – pricing that would be difficult to achieve today.
We locked in pricing for 1,583 multifamily units currently under construction in late 2020 and 2021, resulting in construction costs below 2019 levels. We are developing these units at an estimated 6% yield on cost and expect deliveries to commence in 2024. Today’s inflated construction pricing adversely impacts new development; accordingly, we intentionally delayed breaking ground on 410 multifamily units (205 units at share) in Potomac Yard, which we initially planned to commence in 2022. We continue to advance the design and entitlement of our land bank to maximize value and monetization opportunities. We expect our 8.6 million square foot Development Pipeline (excluding non-core assets) to be fully entitled by 2024. When costs normalize, we will be prepared with an extremely attractive portfolio of shovel-ready growth opportunities.
Our portfolio is concentrated in the recession-resilient Washington, DC metro area. In addition to the region’s strength, most of our assets are located in, or near, National Landing which benefits from four powerful demand catalysts – Amazon HQ2 (mid-2023 expected delivery), Virginia Tech’s Innovation Campus (2024 expected delivery), the Department of Defense, and our digital infrastructure investments – all of which help position our portfolio to withstand a downturn. These catalysts have already started to manifest in robust leasing activity by
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defense and technology-related tenants seeking local tech talent, proximity to the Pentagon, and participation in the tech ecosystem we are building in National Landing.
Against this backdrop, our core business performed exceptionally well in the third quarter. Same Store NOI increased 11.5% year-over-year. Our multifamily portfolio occupancy increased 140 basis points quarter-over-quarter to 93.7%, with rents increasing 6.7% upon renewal for third quarter lease expirations. And we executed 207,000 square feet of office leases, over 50% of which comprised new leases in National Landing. We provide more detail on our third quarter results below.
While capital markets transaction activity remains muted, we have nevertheless positioned our balance sheet such that we can maintain flexibility and afford to be opportunistic, even in a recessionary environment. We furthered our multifamily growth strategy through three off-market partner buyouts within our multifamily portfolio for approximately $180 million, representing a weighted average stabilized capitalization rate of 4.5% to 5%. These buyouts include (i) the previously announced $55.7 million acquisition of the remaining 36% interest in Atlantic Plumbing; (ii) the $115 million acquisition of the remaining 50% interest in 8001 Woodmont; and (iii) the $9.5 million acquisition of an additional 3.7% interest in The Wren. Through these transactions we increased our multifamily exposure and deferred taxable gains through a like-kind exchange.
During the third quarter we invested approximately $60 million in projects under construction in National Landing, including 1900 Crystal Drive and 2000/2001 South Bell Street, representing 1,583 new multifamily units being developed to an expected 6% yield on cost. As with all our development projects, we secured guaranteed maximum price contracts on these projects with construction costs below 2019 levels. We had planned to commence construction on 410 multifamily units (205 units at share) in Potomac Yard earlier this year. With costs having increased as much as 20% over the last year, however, today’s inflated construction pricing is not favorable for new development. With over 3,600 units in our Near-Term Development Pipeline, we continue to monitor construction costs and overall market conditions to ensure that we maintain our disciplined capital allocation standards.
Finally, in the third quarter, we repurchased 2.3 million shares at a weighted average price per share of $23.35, totaling $54.0 million. These repurchases continue our strategy of averaging in throughout a fluctuating trading environment while maintaining a careful watch on liquidity, balance sheet strength, and attractively priced sources of capital for future opportunities.
Financial and Operating Metrics
For the three months ended September 30, 2022, we reported Core FFO attributable to common shareholders of $41.2 million, or $0.36 per diluted share. Same Store NOI for the quarter increased 11.5% year-over-year to $78.1 million. Our multifamily portfolio ended the quarter at 95.5% leased and 93.7% occupied. Our office portfolio ended the quarter at 88.3% leased and 85.9% occupied. For second generation leases, the rental rate mark-to-market was negative 2.7%. As we have previously mentioned, our mark-to-market will vary from quarter-to-quarter depending on the leases signed.
As of September 30, 2022, our Net Debt/Total Enterprise Value was 49.3% and our Net Debt/Annualized Adjusted
EBITDA was 7.9x. Net Debt to annualized Adjusted EBITDA would have been 7.7x, and Net Debt/Total Enterprise Value would have been 48.6%, after adjusting for acquisitions and dispositions that occurred during and subsequent to quarter end.
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Our floating rate exposure remains limited, with 85.8% of our debt fixed or hedged after accounting for in-place interest rate swaps and caps. The remaining floating rate exposure is tied to our non-core assets, or assets where the business plan warrants preserving flexibility. In August, we successfully closed a $97.5 million loan on WestEnd25 – a multifamily asset located in Washington, DC. The loan carries an interest rate of SOFR plus 145 basis points and matures in 2029. Additionally, as mentioned in our last letter, in July we upsized our Tranche A-2 Term Loan to $400 million, extending the maturity by 3.5 years, with no material change in our spread at SOFR plus 125 basis points.
Our balance sheet remains strong, with $1.9 billion of liquidity from cash, capacity under our credit facility, and estimated unencumbered multifamily borrowing capacity. We are well-positioned with respect to our debt maturities in the near-to-medium term. In addition to limited near-term office exposure, we have strategically maintained a pool of unencumbered multifamily assets with estimated borrowing capacity of at least $500 million, affording us the flexibility to access capital for opportunistic investments, despite market cyclicality.
Operating Portfolio
Fundamentals across our multifamily portfolio improved throughout the third quarter. Our portfolio ended the quarter at 93.7% occupied, up 140 basis points quarter-over-quarter. Excluding 8001 Woodmont which remains in lease-up, our portfolio ended the quarter at 94.1% occupied. Strong market and portfolio rent growth has left us with in-place rents 8.4% below asking rents, supporting an embedded growth opportunity. Despite rising rents, we generated more applications this quarter than the same period in the prior year even with fewer available units, further affirming the unwavering flight to strategically located, high-quality assets like ours. Additionally, for third quarter lease expirations, we increased rents by 6.7% upon renewal while achieving a 57% renewal rate across our portfolio.
Market-Wide (DC Metro) Multifamily Trends (based on CoStar, UrbanTurf, and Apartment List data)
Market asking rents ended the third quarter up 5.8% year-over-year. As a result of this robust growth, trade-outs will likely remain strong across the market as the remainder of COVID-era low lease rates expire. Occupancy remained strong in the region at 95%, signaling continued robust demand for apartment product. While concessions have not burned off entirely, they have materially decreased since pandemic-era peaks.
New starts increased in the third quarter, with over 3,000 units getting underway in our submarkets. We believe these new starts are attributable to a lag between securing financing and locking in construction pricing, meaning projects getting underway in the third quarter were generally not impacted by present spikes in interest rates or double-digit construction price increases. While we forecast a healthy delivery average of 8,000 units per year over the next three years, new starts should begin to materially decline as the impact of rates and pricing are realized.
Our office portfolio ended the third quarter at 88.3% leased and 85.9% occupied. Momentum continued with 207,000 square feet leased, approximately 57% of which represented new leasing with a weighted average lease term of 10.7 years. National Landing led our new leasing success, headlined by several sizable new leases with terms exceeding 10 years. This activity includes Federated Wireless, a private wireless networking company, relocating its corporate headquarters to the submarket with a 36,000 square foot lease, and HII, a technology defense contractor, leasing approximately 37,000 square feet. These new tenants to our National Landing portfolio speak to the importance of demand drivers like digital infrastructure and Pentagon proximity. Other defense contractors (including users with secure space requirements) interested in establishing a presence near the
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Pentagon amidst a historically high defense budget, as well as other technology-oriented tenants seeking digital capabilities that are currently being rolled out in the submarket drove additional new leasing in the submarket.
With respect to renewal activity across our National Landing office portfolio, tenants who renewed over the last 12 months maintained approximately 90% of their expiring square footage – a testament to the importance of in-person work by our office tenants. As we have mentioned in the past, in today’s hybrid work environment, we believe peak occupancy, which generally occurs on Tuesday, Wednesday, and Thursday, is one of the best barometers in gauging true utilization of office space. Recent Kastle data reported daily physical occupancy in our National Landing portfolio continuing to increase over the last several months, with the most recent data in October showing peak days averaging over 65%, more than double the lows of January.
Market-Wide (DC Metro) Office Trends (based on JLL, CoStar and Kastle Systems Q3 2022 reporting)
Third quarter net absorption market-wide remained flat with nearly 893,000 square feet of space (0.3% of inventory) given back year-to-date, driving the total vacancy rate to 20.7%. Of note, physical occupancy grew to 44.3% market-wide. The limited absorption and growing physical occupancy may represent at least a modest recovery in the office sector, but the recovery is far from evenly distributed across submarkets and asset classes.
Downtown DC absorption, like the market at large, was essentially flat. This market-level data point, however, masks tenant moves to mixed-use, amenity rich neighborhoods, like Southwest (DC Wharf), Dupont-Logan-Shaw, and Ballpark neighborhoods, with corresponding losses in the traditional CBD which continues to bleed tenancy. This movement signals not just a flight-to-quality but also a flight-to-amenities – all with corresponding rent savings. The fact that quality matters is evidenced by the fact that nearly all the move-outs in DC are occurring in Class B buildings which face an uncertain future as their largely association and non-profit tenant bases appear among the least likely to return to offices, the buildings require significant capital to modernize, and high construction costs and rates may put a damper on residential conversions.
Northern Virginia was also flat from a total net absorption perspective, but the vacancy rate across the board remains relatively high at over 22%, inclusive of sublease availability. As is the case with DC, one of the main market themes is rightsizing with a significant flight-to-quality. Despite seemingly positive signs from a physical occupancy perspective, the level of large leasing activity is declining significantly, suggesting that tenants are rightsizing their footprints or postponing large lease decisions. Retention rates among deals over 10,000 SF have shrunk from a peak of 78% in Q2 2021 to 52% today, highlighting that the decline in activity is driven by a lack of growth, not renewal levels. Even with the prospect of an overall pool of demand shrinking, JLL and CBRE note that the majority of leasing that occurred through the year has come from the technology sector, with much of what is categorized as technology likely being defense and government contracting-related. We believe this trend disproportionately benefits National Landing given the unique demand drivers in the submarket.
Environmental, Social, and Governance
In October, we received a 5-star rating in the GRESB Assessment for our operating portfolio and development pipeline, ranking first in our sector as a U.S. | Diversified Office/Residential company and first in our sector in the U.S. and Americas under the development assessment. We are proud to have achieved the highest available rating within the 2022 Real Estate Assessment and for being honored as a Global Sector Leader for our operating portfolio and a Global Sector Leader and Regional Sector Leader for our development pipeline. Our GRESB Public Disclosure Report Level for 2022 is an “A” and ranked first in the comparison group of U.S. Office.
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The business units across our organization continue to prepare for new SEC regulations surrounding Annual Report/10-K filings, looking to formulate clear, repeatable processes that can be audited at the same level as our financial statements. Getting ahead of this regulatory change ensures optimal reporting and industry leading ESG transparency with our shareholders. These efforts are spearheaded by our ESG Committee, a cross-functional group that supports JBG SMITH’s ongoing commitment to improving our environmental impact, health, and safety protocols, corporate social responsibility, human capital uses, corporate governance, and other public policy matters relevant to ESG.
In August, we released our second annual Diversity & Inclusion report highlighting some notable accomplishments including increasing diversity in our new employee talent pool by more than 50%, implementing more equitable practices across the organization, and building a more inclusive culture. You can access this report by visiting our website at https://www.jbgsmith.com/about/diversity-inclusion.
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When capital markets are constrained, liquidity and balance sheet strength matter most. We owe the strength of our position to the strategic decisions we made over the past several years, both before and during the worst of the pandemic. When recession looms large, the historic resilience of the Washington, DC market and the fundamentals of our unique demand drivers offer shelter from the storm. The majority of our portfolio benefits directly from the strength of the expanding defense technology sector and the Amazon and Virginia Tech anchored National Landing innovation district. Its urban-suburban location and the dramatic repositioning (now almost complete) of its amenity offering has enabled us to capture a disproportionate share of market demand. This is a trend that we believe will continue even in the face of a potential recession and that will strengthen as residents and tenants alike increasingly demand best-in-class environments in which to live, work, and recreate.
Downturns always present unique challenges, but they are also when the best investment opportunities present themselves, whether they be in the form of lower asset acquisition prices, lower construction costs or more attractive share repurchases. We approach this landscape vigilant in maintaining our strong balance sheet and mindful that things often get worse before they get better. This approach demands discipline, patience, and a belief that prudent averaging in throughout the lows of the cycle will be where some of our best capital allocation decisions are made.
Thank you for your continued trust and confidence.
Sincerely,
W. Matthew Kelly
Chief Executive Officer
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JBG SMITH Overview
We own and operate urban mixed-use properties concentrated in what we believe are the highest growth submarkets of the historically recession-resilient Washington, DC metro area.
Our concentration in these submarkets, our substantial portfolio of operating and development opportunities, and our market-leading platform position us to capitalize on the significant growth we anticipate in our target submarkets.
68% of our holdings are located directly across the Potomac River from Washington, DC in Northern Virginia’s National Landing submarket, where Amazon’s new headquarters and Virginia Tech’s $1 billion Innovation Campus are under construction.
The Commonwealth of Virginia has incentivized Amazon to bring up to 38,000 new jobs to National Landing, which, based on data from the National Landing Business Improvement District provided in November 2018, would increase the daytime population in the submarket from approximately 50,000 people to nearly 90,000 people in the future, representing dramatic growth of nearly 80%. Additionally, in late 2021, Amazon announced its hybrid return-to-the-office policy, requiring employees to live locally and within commuting distance of the office for at least 11 months of the year.
At its Seattle headquarters, approximately 20% of Amazon’s employees live within walking or biking distance to work, and Amazon provides $350 monthly stipends to employees who bike to HQ2. Using Amazon’s Seattle employee patterns and preferences as proxies for behaviors that might be expected at HQ2, 20% of employees, or up to 7,600 Amazon employees, could be expected to live within the National Landing submarket. This potential influx of demand for additional multifamily units aligns well with our plans to deliver new multifamily supply to the submarket. In addition to the 1,583 units currently under construction in National Landing, our Near-Term Development Pipeline could add as many as 2,150 new multifamily units to National Landing.
While we control most of the existing office supply and unencumbered development density in National Landing, the balance of our portfolio is concentrated in what we believe are the highest growth submarkets in the Washington, DC metro region, the majority of which are within a 20-minute commute of the growing technology ecosystem in National Landing.
We believe the strong technology sector tailwinds created by Amazon, the Virginia Tech Innovation Campus, national/international defense and security needs, and our National Landing digital infrastructure initiatives, including our 5G rollout and other connectivity enhancements with best-in-class partners, will drive substantial long-term net asset value per share growth.
Our successful track record and well-established platform position us to maximize the value of our Development Pipeline through development, opportunistic land sales, ground leases, and/or recapitalizations with private investors.
As of the end of the third quarter, we had two multifamily developments under construction in National Landing –1900 Crystal Drive (808 units) and 2000/2001 South Bell Street (775 units). Since our formation in 2017, we have successfully delivered 2.8 million square feet of mixed-use development, with estimated stabilized yields of 6.5% for multifamily assets and 7.0% for commercial assets.
Over the past year, we advanced the design and entitlement of 100% of our Development Pipeline, over 70% of which is in National Landing. Our 8.6 million square foot Development Pipeline (excluding non-core assets), 84% of
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which is multifamily, includes both a 3.5 million square foot Near-Term Development Pipeline and a 5.1 million square foot Future Development Pipeline. Our Near-Term Development Pipeline comprises what we believe to be the most accretive and strategic development opportunities in our growth pipeline – those which have the potential to commence construction over the next 36 months, subject to receipt of final entitlements, completion of design, and market conditions. Within our Future Development Pipeline, we have fully entitled 0.5 million square feet and are actively advancing design and entitlement on an additional 4.6 million square feet. We believe that advancing entitlement and design of these assets is the best way to maximize optionality and value, either through internal development, land sales, ground lease structures, and/or recapitalizations with third parties.
Our capital allocation strategy is to shift the majority of our portfolio to multifamily and concentrate our office portfolio in National Landing.
Our capital allocation strategy is grounded in our primary goal of maximizing long-term net asset value per share. This strategy entails two key elements: repositioning our portfolio to concentrate our office in National Landing; and transitioning to a majority multifamily portfolio that continues to expand in high-growth, amenity-rich DC metro submarkets through acquisitions and development. Opportunistic dispositions of income-producing office assets outside of National Landing, as well as the sale, ground lease, or joint venture of non-core land holdings, serve as important sources of NAV-priced capital to fund our strategy. Allocating capital away from non-core office and land uses allows us to invest in higher growth opportunities, including multifamily acquisitions and development, and to return capital through share repurchases, especially when our shares trade at a material discount to NAV.
Since our formation, we have sold $2.7 billion of non-core assets and invested $546 million into multifamily acquisitions, $889 million into the development of multifamily assets, and committed an additional $468 million to multifamily assets currently under construction.
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Section Two – Earnings Release
FOR IMMEDIATE RELEASE |
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Earnings Release
CONTACT
Barbat Rodgers
Senior Vice President, Investor Relations
(240) 333-3805
brodgers@jbgsmith.com
JBG SMITH ANNOUNCES THIRD QUARTER 2022 RESULTS
Bethesda, MD (November 1, 2022) - JBG SMITH (NYSE: JBGS), a leading owner and developer of high-quality, mixed-use properties in the Washington, DC market, today filed its Form 10-Q for the quarter ended September 30, 2022 and reported its financial results.
Additional information regarding our results of operations, properties, and tenants can be found in our Third Quarter 2022 Investor Package and Investor Presentation, which are posted in the Investor Relations section of our website at www.jbgsmith.com. We encourage investors to consider the information presented here with the information in those documents.
Third Quarter 2022 Highlights
| ● | For the three and nine months ended September 30, 2022, net income (loss), Funds From Operations ("FFO") and Core FFO attributable to common shareholders were: |
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| | THIRD QUARTER AND FULL YEAR COMPARISON | |||||||||||||||||||
in millions, except per share amounts | | Three Months Ended | | Nine Months Ended | |||||||||||||||||
| | | September 30, 2022 | | September 30, 2021 | | September 30, 2022 | | September 30, 2021 | ||||||||||||
| | | Amount | Per Diluted Share | | Amount | Per Diluted Share | | Amount | Per Diluted Share | | Amount | Per Diluted Share | ||||||||
| Net income (loss) (1) | | $ | (19.3) | $ | (0.17) | | $ | (0.9) | $ | 0.00 | | $ | 104.0 | $ | 0.86 | | $ | (22.8) | $ | (0.18) |
| FFO (2) | | $ | 40.1 | $ | 0.35 | | $ | 36.0 | $ | 0.27 | | $ | 125.0 | $ | 1.03 | | $ | 116.2 | $ | 0.88 |
| Core FFO (2) | | $ | 41.2 | $ | 0.36 | | $ | 42.5 | $ | 0.32 | | $ | 121.0 | $ | 1.00 | | $ | 137.0 | $ | 1.04 |
| (1) | Includes an impairment loss recorded in connection with the preparation and review of the third quarter 2022 financial statements of $15.4 million associated with certain commercial assets, located in Washington, D.C., owned by one of our unconsolidated real estate ventures. Excluding this impairment loss, our net income (loss) would have been ($5.7) million and $117.5 million for the three and nine months ended September 30, 2022. |
| (2) | Includes straight-line rental revenue adjustments from the conversion of certain cash basis tenants to accrual; excluding these adjustments FFO would have been $37.3 million or $0.33 per diluted share and Core FFO would have been $38.4 million or $0.34 per diluted share for the three months ended September 30, 2022. |
| ● | Annualized Net Operating Income ("NOI") for the three months ended September 30, 2022 was $322.0 million, compared to $337.1 million for the three months ended June 30, 2022, at our share. (Excluding the assets that |
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| were sold or recapitalized, Annualized NOI for the three months ended September 30, 2022 was $321.4 million, compared to $328.9 million for the three months ended June 30, 2022, at our share.) |
| o | The decrease in Annualized NOI was substantially attributable to (i) an increase in abatement as a result of previously executed lease renewals across the commercial portfolio and (ii) higher utilities due to seasonality, partially offset by (iii) higher occupancy and rents in our multifamily portfolio, (iv) higher parking revenue in our commercial portfolio and (v) the purchase of our partner’s ownership interest in Atlantic Plumbing. |
| ● | Same Store NOI ("SSNOI") at our share increased 11.5% year-over-year to $78.1 million for the three months ended September 30, 2022. SSNOI at our share increased 13.0% year-over-year to $231.5 million for the nine months ended September 30, 2022. |
| o | The increase in SSNOI for the third quarter was substantially attributable to (i) higher occupancy and rents and lower concessions in our multifamily portfolio, (ii) higher occupancy and average daily rates at the Crystal City Marriott, (iii) an increase in parking revenue in our commercial portfolio and (iv) abatement burn-off at certain assets. |
Operating Portfolio
| ● | The operating commercial portfolio was 88.3% leased and 85.9% occupied as of September 30, 2022, compared to 87.3% and 86.1% as of June 30, 2022, at our share. |
| ● | The operating multifamily portfolio was 95.5% leased and 93.7% occupied as of September 30, 2022, compared to 95.7% and 92.3% as of June 30, 2022, at our share. (Excluding 8001 Woodmont, our multifamily portfolio ended the quarter at 96.0% leased and 94.1% occupied.) |
| ● | Executed approximately 207,000 square feet of office leases at our share during the three months ended September 30, 2022, comprising approximately 116,000 square feet of first-generation leases and approximately 91,000 square feet of second-generation leases, which generated a 5.3% rental rate increase on a GAAP basis and a 2.7% rental rate decrease on a cash basis. |
| ● | Executed approximately 743,000 square feet of office leases at our share during the nine months ended September 30, 2022, comprising approximately 166,000 square feet of first-generation leases and approximately 577,000 square feet of second-generation leases, which generated a 5.6% rental rate decrease on a GAAP basis and an 8.7% rental rate decrease on a cash basis. |
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Development Portfolio
Under-Construction
| ● | As of September 30, 2022, we had two multifamily assets under construction consisting of 1,583 units at our share. |
Near-Term Development Pipeline
| ● | As of September 30, 2022, we had eight near-term development pipeline assets consisting of 3.5 million square feet of estimated potential development density at our share. |
Future Development Pipeline
| ● | As of September 30, 2022, we had 16 future development pipeline assets consisting of 6.3 million square feet of estimated potential development density at our share. |
Third-Party Asset Management and Real Estate Services Business
| ● | For the three months ended September 30, 2022, revenue from third-party real estate services, including reimbursements, was $21.8 million. Excluding reimbursements and service revenue from our interests in consolidated and unconsolidated real estate ventures, revenue from our third-party asset management and real estate services business was $10.8 million, primarily driven by $5.8 million of property and asset management fees, $1.7 million of leasing fees, $1.7 million of other service revenue and $1.4 million of development fees. |
Balance Sheet
| ● | As of September 30, 2022, our total enterprise value was approximately $4.7 billion, comprising 128.8 million common shares and units valued at $2.4 billion, and debt (net of premium / (discount) and deferred financing costs) at our share of $2.6 billion, less cash and cash equivalents at our share of $272.4 million. |
| ● | As of September 30, 2022, we had $258.9 million of cash and cash equivalents ($272.4 million of cash and cash equivalents at our share), and $949.5 million of capacity under our credit facility inclusive of our capacity under the term loan. |
| ● | Net Debt to annualized Adjusted EBITDA at our share for the three months ended September 30, 2022 was 7.9x and our Net Debt / total enterprise value was 49.3% as of September 30, 2022. Net Debt to annualized Adjusted EBITDA would have been 7.7x for the three months ended September 30, 2022, and Net Debt / total enterprise value would have been 48.6% as of September 30, 2022 after adjusting for acquisitions and dispositions that occurred during and subsequent to quarter end. |
Investing and Financing Activities
| ● | In July 2022, we borrowed $100.0 million under our revolving credit facility, which was repaid in October 2022. |
| ● | In July 2022, our Tranche A‑2 Term Loan was amended to increase its borrowing capacity by $200.0 million. The incremental $200.0 million includes a delayed draw feature, of which $150.0 million was drawn in September 2022 and the remaining $50.0 million was undrawn as of the date of this release. The amendment extends the maturity date of the term loan from July 2024 to January 2028 and amends the interest rate to SOFR plus 1.25% based on our current leverage level with a resulting all-in interest rate of 3.40%, including our |
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| current interest rate swaps. We also entered into two forward-starting interest rate swaps with an effective date of July 2024 and a total notional value of $200.0 million, which will effectively fix SOFR at a weighted average interest rate of 2.80% through the maturity date, resulting in an all-in interest rate of 4.05% beginning in July 2024 based on our current leverage level. |
| ● | In August 2022, we entered into a mortgage loan with a principal balance of $97.5 million, collateralized by WestEnd25. The mortgage loan has a seven-year term and an interest rate of SOFR plus 1.45%. We also entered into an interest rate swap with a total notional value of $97.5 million, which effectively fixes SOFR at an average interest rate of 2.71% through the maturity date. |
| ● | In August 2022, we acquired the remaining 36.0% ownership interest in an unconsolidated real estate venture that owned Atlantic Plumbing, a multifamily asset, for $55.7 million, including the assumption of $36.0 million of debt. The asset was encumbered by a $100.0 million mortgage, which was repaid subsequent to the acquisition in August 2022. |
| ● | We repurchased and retired 2.3 million common shares for $54.0 million, a weighted average purchase price per share of $23.35. |
Subsequent to September 30, 2022:
| ● | On October 4, 2022, we acquired an additional 3.7% ownership interest in The Wren, a multifamily asset owned by a consolidated real estate venture, for $9.5 million, increasing our ownership interest to 99.7%. |
| ● | On October 5, 2022, we acquired the remaining 50.0% ownership interest in 8001 Woodmont, a multifamily asset owned by an unconsolidated real estate venture, for $115.0 million, including the assumption of $51.9 million of debt at our share. The asset is encumbered by a $103.8 million mortgage, which is consolidated in our balance sheet as of the date of acquisition. |
Dividends
| ● | On October 25, 2022, our Board of Trustees declared a quarterly dividend of $0.225 per common share, payable on November 22, 2022 to shareholders of record as of November 8, 2022. |
About JBG SMITH
JBG SMITH owns, operates, invests in, and develops a dynamic portfolio of mixed-use properties in the high growth and high barrier-to-entry submarkets in and around Washington, DC. Through an intense focus on placemaking, JBG SMITH cultivates vibrant, amenity-rich, walkable neighborhoods throughout the Washington, DC metropolitan area. Over half of JBG SMITH's holdings are in the National Landing submarket in Northern Virginia, where it serves as the developer for Amazon's new headquarters, and where Virginia Tech's $1 billion Innovation Campus is under construction. JBG SMITH's portfolio currently comprises 15.6 million square feet of high-growth office, multifamily and retail assets at share, 98% of which are metro-served. It also maintains a development pipeline encompassing 9.8 million square feet of mixed-use development opportunities. JBG SMITH is committed to the operation and development of green, smart, and healthy buildings and plans to maintain carbon neutral operations annually. For more information on JBG SMITH please visit www.jbgsmith.com.
Forward-Looking Statements
Certain statements contained herein may constitute "forward-looking statements" as such term is defined in
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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 performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Consequently, the future results, financial condition and business of JBG SMITH Properties ("JBG SMITH", the "Company", "we", "us", "our" or similar terms) may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as "approximate", "hypothetical", "potential", "believes", "expects", "anticipates", "estimates", "intends", "plans", "would", "may" or similar expressions in this earnings release. Investors are cautioned to interpret many of the risks identified under the section titled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic. We also note the following forward-looking statements: the impact of COVID-19 and the ensuing economic turmoil on our Company, NOI, SSNOI, net asset value, share price, occupancy rates, revenue from our multifamily and commercial portfolios, operating costs, deferrals of rent, uncollectible operating lease receivables, parking revenue, and burn-off of rent abatement; the impact of disruptions to the credit and capital markets on our ability to access capital, including refinancing maturing debt; changes to the amount and manner in which tenants use space; whether we incur additional costs or make additional concessions or offer other incentives to existing or prospective tenants to reconfigure space; whether the Washington, DC area will be more resilient than other parts of the country in any recession; whether we will recognize currently estimated unrecognized development fee revenue on the anticipated timing or at all; our annual dividend per share and dividend yield; whether in the case of our under-construction and near-term development pipeline assets, estimated square feet, estimated number of units and in the case of our future development pipeline assets, estimated potential development density are accurate; expected timing, completion, modifications and delivery dates for the projects we are developing for Amazon; planned infrastructure and educational improvements related to Amazon's additional headquarters and the Virginia Tech Innovation Campus; the economic impact, job growth, expansion of public transportation and related demand for multifamily and commercial properties of Amazon's additional headquarters on the DC area and National Landing and the speed with which such impact occurs and Amazon's plans for accelerated hiring and in-person work requirements; the impact of our role as the developer, property manager and retail leasing agent in connection with Amazon's new headquarters; our development plans related to National Landing; our ability to satisfy environmental, social or governance standards set by various constituencies; and whether we can access agency debt secured by our currently unencumbered multifamily assets timely, on reasonable terms or at all; whether our estimated borrowing capacity is accurate; and whether the allocation of capital to our share repurchase plan has any impact on our share price.
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. These factors include, among others: adverse economic conditions in the Washington, DC metropolitan area, including in relation to COVID-19, the timing of and costs associated with development and property improvements, financing commitments, and general competitive factors. For further discussion of factors that could materially affect the outcome of our forward-looking statements and other risks and uncertainties, see "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Cautionary Statement Concerning Forward-Looking Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 and other periodic reports the Company files with the Securities and Exchange Commission. For these 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. All subsequent written and oral forward-looking statements
6
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 hereof.
Pro Rata Information
We present certain financial information and metrics in this release "at JBG SMITH Share," which refers to our ownership percentage of consolidated and unconsolidated assets in real estate ventures (collectively, "real estate ventures") as applied to these financial measures and metrics. Financial information "at JBG SMITH Share" is calculated on an asset-by-asset basis by applying our percentage economic interest to each applicable line item of that asset's financial information. "At JBG SMITH Share" information, which we also refer to as being "at share," "our pro rata share" or "our share," is not, and is not intended to be, a presentation in accordance with GAAP. Given that a substantial portion of our assets are held through real estate ventures, we believe this form of presentation, which presents our economic interests in the partially owned entities, provides investors valuable information regarding a significant component of our portfolio, its composition, performance and capitalization.
We do not control the unconsolidated real estate ventures and do not have a legal claim to our co-venturers' share of assets, liabilities, revenue and expenses. The operating agreements of the unconsolidated real estate ventures generally allow each co-venturer to receive cash distributions to the extent there is available cash from operations. The amount of cash each investor receives is based upon specific provisions of each operating agreement and varies depending on certain factors including the amount of capital contributed by each investor and whether any investors are entitled to preferential distributions.
With respect to any such third-party arrangement, we would not be in a position to exercise sole decision-making authority regarding the property, real estate venture or other entity, and may, under certain circumstances, be exposed to economic risks not present were a third-party not involved. We and our respective co-venturers may each have the right to trigger a buy-sell or forced sale arrangement, which could cause us to sell our interest, or acquire our co-venturers' interests, or to sell the underlying asset, either on unfavorable terms or at a time when we otherwise would not have initiated such a transaction. Our real estate ventures may be subject to debt, and the repayment or refinancing of such debt may require equity capital calls. To the extent our co-venturers do not meet their obligations to us or our real estate ventures or they act inconsistent with the interests of the real estate venture, we may be adversely affected. Because of these limitations, the non-GAAP "at JBG SMITH Share" financial information should not be considered in isolation or as a substitute for our financial statements as reported under GAAP.
Occupancy, non-GAAP financial measures, leverage metrics, operating assets and operating metrics presented in our investor package exclude our 10.0% subordinated interest in one commercial building and our 33.5% subordinated interest in four commercial buildings, as well as the associated non-recourse mortgages payable, held through unconsolidated real estate ventures, as our investment in each real estate venture is zero, we do not anticipate receiving any near-term cash flow distributions from the real estate ventures and we have not guaranteed their obligations or otherwise committed to providing financial support.
7
Non-GAAP Financial Measures
This release includes non-GAAP financial measures. For these measures, we have provided an explanation of how these non-GAAP measures are calculated and why JBG SMITH's management believes that the presentation of these measures provides useful information to investors regarding JBG SMITH's financial condition and results of operations. Reconciliations of certain non-GAAP measures to the most directly comparable GAAP financial measure are included in this earnings release. Our presentation of non-GAAP financial measures may not be comparable to similar non-GAAP measures used by other companies. In addition to "at share" financial information, the following non-GAAP measures are included in this release:
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), EBITDA for Real Estate ("EBITDAre") and "Adjusted EBITDA" are non-GAAP financial measures. EBITDA and EBITDAre are used by management as supplemental operating performance measures, which we believe help investors and lenders meaningfully evaluate and compare our operating performance from period-to-period by removing from our operating results the impact of our capital structure (primarily interest charges from our outstanding debt and the impact of our interest rate swaps) and certain non-cash expenses (primarily depreciation and amortization on our assets). EBITDAre is computed in accordance with the definition established by the National Association of Real Estate Investment Trusts ("Nareit"). Nareit defines EBITDAre as GAAP net income (loss) adjusted to exclude interest expense, income taxes, depreciation and amortization expenses, gains and losses on sales of real estate 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 of unconsolidated real estate ventures. These supplemental measures may help investors and lenders understand our ability to incur and service debt and to make capital expenditures. EBITDA and EBITDAre are not substitutes for net income (loss) (computed in accordance with GAAP) and may not be comparable to similarly titled measures used by other companies.
Adjusted EBITDA represents EBITDAre adjusted for items we believe are not representative of ongoing operating results, such as Transaction and Other Costs, impairment write-downs of right-of-use assets associated with leases in which we are a lessee, gain (loss) on the extinguishment of debt, earnings (losses) and distributions in excess of our investment in unconsolidated real estate ventures, lease liability adjustments, income from investments, business interruption insurance proceeds and share-based compensation expense related to the Formation Transaction and special equity awards. We believe that adjusting such items not considered part of our comparable operations, provides a meaningful measure to evaluate and compare our performance from period-to-period.
Because EBITDA, EBITDAre and Adjusted EBITDA have limitations as analytical tools, we use EBITDA, EBITDAre and Adjusted EBITDA to supplement GAAP financial measures. Additionally, we believe that users of these measures should consider EBITDA, EBITDAre and Adjusted EBITDA in conjunction with net income (loss) and other GAAP measures in understanding our operating results.
Funds from Operations ("FFO"), "Core FFO" and Funds Available for Distribution ("FAD") are non-GAAP financial measures. FFO is computed in accordance with the definition established by 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 related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and
8
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.
Core FFO represents FFO adjusted to exclude items which we believe are not representative of ongoing operating results, such as Transaction and Other Costs, impairment write-downs of right-of-use assets associated with leases in which we are a lessee, gains (or losses) on the extinguishment of debt, earnings (losses) and distributions in excess of our investment in unconsolidated real estate ventures, share-based compensation expense related to the Formation Transaction and special equity awards, lease liability adjustments, income from investments, business interruption insurance proceeds, amortization of the management contracts intangible and the mark-to-market of derivative instruments including our share of such adjustments for unconsolidated real estate ventures.
FAD represents Core FFO less recurring tenant improvements, leasing commissions and other capital expenditures, net deferred rent activity, third-party lease liability assumption payments, recurring share-based compensation expense, accretion of acquired below-market leases, net of amortization of acquired above-market leases, amortization of debt issuance costs and other non-cash income and charges, including our share of such adjustments for unconsolidated real estate ventures. FAD is presented solely as a supplemental disclosure that management believes provides useful information as it relates to our ability to fund dividends.
We believe FFO, Core FFO and FAD are meaningful non-GAAP financial measures useful in comparing our levered operating performance from period-to-period and as compared to similar real estate companies because these non-GAAP measures exclude 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, Core FFO and FAD do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as a performance measure or cash flow as a liquidity measure. FFO, Core FFO and FAD may not be comparable to similarly titled measures used by other companies.
"Net Debt" is a non-GAAP financial measurement. Net Debt represents our total consolidated and unconsolidated indebtedness less cash and cash equivalents at our share. Net Debt is an important component in the calculations of Net Debt to Annualized Adjusted EBITDA and Net Debt / total enterprise value. We believe that Net Debt is a meaningful non-GAAP financial measure useful to investors because we review Net Debt as part of the management of our overall financial flexibility, capital structure and leverage. We may utilize a considerable portion of our cash and cash equivalents at any given time for purposes other than debt reduction. In addition, cash and cash equivalents at our share may not be solely controlled by us. The deduction of cash and cash equivalents at our share from consolidated and unconsolidated indebtedness in the calculation of Net Debt, therefore, should not be understood to mean that it is available exclusively for debt reduction at any given time.
Net Operating Income ("NOI") and "Annualized NOI" are non-GAAP financial measures management uses to assess a segment's performance. The most directly comparable GAAP measure is net income (loss) attributable to common shareholders. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only property related revenue (which includes base rent, tenant reimbursements and other operating revenue, net 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
9
other non-cash adjustments, including the accretion of acquired below-market leases and the amortization of acquired above-market leases and below-market ground lease intangibles. Management uses NOI as a supplemental performance measure of our assets and believes it provides useful information to investors because it reflects only those revenue and expense items that are incurred at the asset level, excluding non-cash items. In addition, NOI is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets. However, because NOI excludes depreciation and amortization and captures neither the changes in the value of our assets that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our assets, all of which have real economic effect and could materially impact the financial performance of our assets, the utility of NOI as a measure of the operating performance of our assets is limited. NOI presented by us may not be comparable to NOI reported by other REITs that define these measures differently. We believe to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) attributable to common shareholders as presented in our 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. Annualized NOI, for all assets except Crystal City Marriott, represents NOI for the three months ended September 30, 2022 multiplied by four. Due to seasonality in the hospitality business, Annualized NOI for Crystal City Marriott represents the trailing 12-month NOI as of September 30, 2022. Management believes Annualized NOI provides useful information in understanding our financial performance over a 12-month period, however, investors and other users are cautioned against attributing undue certainty to our calculation of Annualized NOI. Actual NOI for any 12-month period will depend on a number of factors beyond our ability to control or predict, including general capital markets and economic conditions, any bankruptcy, insolvency, default or other failure to pay rent by one or more of our tenants and the destruction of one or more of our assets due to terrorist attack, natural disaster or other casualty, among others. We do not undertake any obligation to update our calculation to reflect events or circumstances occurring after the date of this earnings release. There can be no assurance that the Annualized NOI shown will reflect our actual results of operations over any 12-month period.
Definitions
"Development Pipeline" refers to the Near-Term Development and Future Development Pipelines.
"Estimated Potential Development Density" reflects management's estimate of developable gross square feet based on our current business plans with respect to real estate owned or controlled as of September 30, 2022. Our current business plans may contemplate development of less than the maximum potential development density for individual assets. As market conditions change, our business plans, and therefore, the Estimated Potential Development Density, could change accordingly. Given timing, zoning requirements and other factors, we make no assurance that Estimated Potential Development Density amounts will become actual density to the extent we complete development of assets for which we have made such estimates.
"First-generation" is a lease on space that had been vacant for at least nine months or a lease on newly delivered space.
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"Formation Transaction" refers collectively to the spin-off on July 17, 2017 of substantially all of the assets and liabilities of Vornado Realty Trust's Washington, DC segment, which operated as Vornado / Charles E. Smith, and the acquisition of the management business and certain assets and liabilities of The JBG Companies.
"Free Rent" means the amount of base rent and tenant reimbursements that are abated according to the applicable lease agreement(s).
"Future Development Pipeline" refers to assets that are development opportunities on which we do not intend to commence construction within the next three years where we (i) own land or control the land through a ground lease or (ii) are under a long-term conditional contract to purchase, or enter into, a leasehold interest with respect to land.
"GAAP" refers to accounting principles generally accepted in the United States of America.
"In-Service" refers to commercial or multifamily assets that are at or above 90% leased or have been operating and collecting rent for more than 12 months as of September 30, 2022.
"Near-Term Development Pipeline" refers to select assets that have the potential to commence construction over the next three years, subject to receipt of full entitlements, completion of design and market conditions.
"Non-Same Store" refers to all operating assets excluded from the same store pool.
"Same Store" refers to the pool of assets that were in-service for the entirety of both periods being compared, which excludes assets for which significant redevelopment, renovation, or repositioning occurred during either of the periods being compared.
"Second-generation" is a lease on space that had been vacant for less than nine months.
"Transaction and Other Costs" include demolition costs, integration and severance costs, pursuit costs related to other completed, potential and pursued transactions, as well as other expenses.
"Under-Construction" refers to assets that were under construction during the three months ended September 30, 2022.
11
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | | | | | | | |
| in thousands | | September 30, 2022 | | December 31, 2021 |
| ||
| | | | | | | |
|
| ASSETS | | | | | | |
|
| Real estate, at cost: |
| |
|
| |
| |
| Land and improvements | | $ | 1,273,947 | | $ | 1,378,218 | |
| Buildings and improvements | |
| 4,117,823 | |
| 4,513,606 | |
| Construction in progress, including land | |
| 471,867 | |
| 344,652 | |
| | |
| 5,863,637 | |
| 6,236,476 | |
| Less: accumulated depreciation | |
| (1,299,818) | |
| (1,368,003) | |
| Real estate, net | |
| 4,563,819 | |
| 4,868,473 | |
| Cash and cash equivalents | |
| 258,871 | |
| 264,356 | |
| Restricted cash | |
| 212,998 | |
| 37,739 | |
| Tenant and other receivables | |
| 48,221 | |
| 44,496 | |
| Deferred rent receivable | |
| 161,994 | |
| 192,265 | |
| Investments in unconsolidated real estate ventures | |
| 360,846 | |
| 462,885 | |
| Intangible assets, net | | | 155,812 | | | 201,956 | |
| Other assets, net | |
| 133,419 | |
| 240,160 | |
| Assets held for sale | |
| — | |
| 73,876 | |
| TOTAL ASSETS | | $ | 5,895,980 | | $ | 6,386,206 | |
| | | | | | | | |
| LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | |
|
| |
|
| |
| Liabilities: | |
|
| |
|
| |
| Mortgages payable, net | | $ | 1,741,605 | | $ | 1,777,699 | |
| Revolving credit facility | |
| 100,000 | |
| 300,000 | |
| Unsecured term loans, net | |
| 546,888 | |
| 398,664 | |
| Accounts payable and accrued expenses | |
| 130,408 | |
| 106,136 | |
| Other liabilities, net | |
| 98,831 | |
| 342,565 | |
| Total liabilities | |
| 2,617,732 | |
| 2,925,064 | |
| Commitments and contingencies | |
|
| |
|
| |
| Redeemable noncontrolling interests | |
| 491,479 | |
| 522,725 | |
| Total equity | |
| 2,786,769 | |
| 2,938,417 | |
| TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | | $ | 5,895,980 | | $ | 6,386,206 | |
Note: For complete financial statements, please refer to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | | | | | | | | | | | |
in thousands, except per share data | | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||||
| | 2022 | | 2021 | | 2022 | | 2021 | ||||
REVENUE | | | | | | | | | | | | |
Property rental |
| $ | 119,811 |
| $ | 125,900 | | $ | 368,445 |
| $ | 370,960 |
Third-party real estate services, including reimbursements | |
| 21,845 | |
| 25,842 | |
| 67,972 | |
| 90,694 |
Other revenue | |
| 5,958 | |
| 5,280 | |
| 18,667 | |
| 15,301 |
Total revenue | |
| 147,614 | |
| 157,022 | |
| 455,084 | |
| 476,955 |
EXPENSES | |
|
| |
|
| |
|
| |
|
|
Depreciation and amortization | |
| 50,056 | |
| 56,726 | |
| 157,597 | |
| 178,130 |
Property operating | |
| 36,380 | |
| 40,198 | |
| 112,469 | |
| 109,929 |
Real estate taxes | |
| 14,738 | |
| 18,259 | |
| 47,870 | |
| 55,127 |
General and administrative: | |
|
| |
|
| |
| | |
|
|
Corporate and other | |
| 12,072 | |
| 12,105 | |
| 42,669 | |
| 38,475 |
Third-party real estate services | |
| 21,230 | |
| 25,542 | |
| 72,422 | |
| 80,035 |
Share-based compensation related to Formation Transaction and special equity awards | |
| 548 | |
| 3,480 | |
| 4,369 | |
| 12,866 |
Transaction and other costs | |
| 1,746 | |
| 2,951 | |
| 4,632 | |
| 8,911 |
Total expenses | |
| 136,770 | |
| 159,261 | |
| 442,028 | |
| 483,473 |
OTHER INCOME (EXPENSE) | |
|
| |
|
| |
|
| |
|
|
Income (loss) from unconsolidated real estate ventures, net | |
| (13,867) | |
| 20,503 | |
| (12,829) | |
| 23,513 |
Interest and other income, net | |
| 984 | |
| 192 | |
| 16,902 | |
| 163 |
Interest expense | |
| (17,932) | |
| (17,243) | |
| (50,251) | |
| (50,312) |
Gain on the sale of real estate, net | |
| — | |
| — | |
| 158,631 | |
| 11,290 |
Loss on the extinguishment of debt | |
| (1,444) | |
| — | |
| (3,073) | |
| — |
Total other income (expense) | |
| (32,259) | |
| 3,452 | |
| 109,380 | |
| (15,346) |
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | |
| (21,415) | |
| 1,213 | |
| 122,436 | |
| (21,864) |
Income tax expense | |
| (166) | |
| (217) | |
| (2,600) | |
| (4,527) |
NET INCOME (LOSS) | |
| (21,581) | |
| 996 | |
| 119,836 | |
| (26,391) |
Net (income) loss attributable to redeemable noncontrolling interests | |
| 2,546 | |
| (103) | |
| (15,712) | |
| 2,472 |
Net (income) loss attributable to noncontrolling interests | | | (258) | |
| — | | | (174) | | | 1,108 |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | | $ | (19,293) | | $ | 893 | | $ | 103,950 | | $ | (22,811) |
EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED | | $ | (0.17) | | $ | 0.00 | | $ | 0.86 | | $ | (0.18) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED | |
| 114,360 | |
| 131,351 | |
| 120,741 | |
| 131,456 |
Note: For complete financial statements, please refer to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022.
13
EBITDA, EBITDAre AND ADJUSTED EBITDA RECONCILIATIONS (NON-GAAP)
(Unaudited)
| | | | | | | | | | | | | | |
| dollars in thousands |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| ||||||||
| | | 2022 | | 2021 | | 2022 | | 2021 |
| ||||
| | | | | | | | | | | | | |
|
| EBITDA, EBITDAre and Adjusted EBITDA |
| | | | | | | |
| | |
| |
| Net income (loss) | | $ | (21,581) | | $ | 996 | | $ | 119,836 | | $ | (26,391) | |
| Depreciation and amortization expense | | | 50,056 | | | 56,726 | | | 157,597 | | | 178,130 | |
| Interest expense | | | 17,932 | | | 17,243 | | | 50,251 | | | 50,312 | |
| Income tax expense | | | 166 | | | 217 | | | 2,600 | | | 4,527 | |
| Unconsolidated real estate ventures allocated share of above adjustments | | | 7,725 | | | 10,147 | | | 27,048 | | | 30,892 | |
| EBITDA attributable to noncontrolling interests | | | (28) | | | (54) | | | (101) | | | 976 | |
| EBITDA | | $ | 54,270 | | $ | 85,275 | | $ | 357,231 | | $ | 238,446 | |
| Gain on the sale of real estate, net | | | — | | | — | | | (158,631) | | | (11,290) | |
| Gain on the sale of unconsolidated real estate assets | | | — | | | (23,137) | | | (6,179) | | | (28,326) | |
| Impairment related to unconsolidated real estate ventures (1) | | | 15,401 | | | 1,380 | | | 15,401 | | | 1,380 | |
| | | | | | | | | | | | | | |
| EBITDAre | | $ | 69,671 | | $ | 63,518 | | $ | 207,822 | | $ | 200,210 | |
| Transaction and other costs, net of noncontrolling interests (2) | | | 1,746 | | | 2,951 | | | 4,598 | | | 7,803 | |
| (Income) loss from investments, net | | | 567 | | | — | | | (14,721) | | | — | |
| Loss on the extinguishment of debt | | | 1,444 | | | — | | | 3,073 | | | — | |
| Share-based compensation related to Formation Transaction and special equity awards | | | 548 | | | 3,480 | | | 4,369 | | | 12,866 | |
| Earnings and distributions in excess of our investment in unconsolidated real estate venture | | | (18) | | | (280) | | | (583) | | | (702) | |
| Unconsolidated real estate ventures allocated share of above adjustments | | | 34 | | | 130 | | | 2,079 | | | 170 | |
| | | | | | | | | | | | | | |
| Adjusted EBITDA | | $ | 73,992 | | $ | 69,799 | | $ | 206,637 | | $ | 220,347 | |
| | | | | | | | | | | | | | |
| Net Debt to Annualized Adjusted EBITDA (3) | | | 7.9 | x | | 7.9 | x | | 8.4 | x | | 7.5 | x |
| | | | | | | | | | | | | | |
| | | | | | | | | September 30, 2022 | | September 30, 2021 | | ||
| Net Debt (at JBG SMITH Share) | | | | | | | | |
| | |
| |
| Consolidated indebtedness (4) | | | | | | | | $ | 2,382,429 | | $ | 2,063,426 | |
| Unconsolidated indebtedness (4) | | | | | | | | | 215,341 | | | 362,698 | |
| Total consolidated and unconsolidated indebtedness | | | | | | | | | 2,597,770 | | | 2,426,124 | |
| Less: cash and cash equivalents | | | | | | | | | 272,388 | | | 213,612 | |
| Net Debt (at JBG SMITH Share) | | | | | | | | $ | 2,325,382 | | $ | 2,212,512 | |
Note: All EBITDA measures as shown above are attributable to common limited partnership units ("OP Units") and certain fully-vested incentive equity awards that are convertible into OP Units.
| (1) | Related to decreases in the value of the underlying assets. |
| (2) | Includes demolition costs, integration and severance costs, pursuit costs related to other completed, potential and pursued transactions, as well as other expenses. |
| (3) | Calculated using Net Debt. Quarterly Adjusted EBITDA is annualized by multiplying by four. Adjusted EBITDA for the nine months ended September 30, 2022 and 2021 is annualized by multiplying by 1.33. Net Debt to annualized Adjusted EBITDA would have been 7.7x and 8.7x for the three and nine months ended September 30, 2022, after adjusting for acquisitions and dispositions that occurred during and subsequent to quarter end. |
| (4) | Net of premium/discount and deferred financing costs. |
14
FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP)
(Unaudited)
| | | | | | | | | | | | | | |
| in thousands, except per share data | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| ||||||||
| |
| 2022 |
| 2021 | XX | 2022 |
| 2021 | | ||||
| | | | | | | | | | | | | | |
| FFO and Core FFO | | | | | | | | | | | | | |
| Net income (loss) attributable to common shareholders | | $ | (19,293) |
| $ | 893 | | $ | 103,950 |
| $ | (22,811) | |
| Net income (loss) attributable to redeemable noncontrolling interests | |
| (2,546) |
| | 103 | |
| 15,712 |
| | (2,472) | |
| Net income (loss) attributable to noncontrolling interests | |
| 258 |
| | — | |
| 174 |
| | (1,108) | |
| Net income (loss) | |
| (21,581) |
| | 996 | |
| 119,836 |
| | (26,391) | |
| Gain on the sale of real estate, net of tax | |
| — |
| | — | |
| (155,506) |
| | (11,290) | |
| Gain on the sale of unconsolidated real estate assets | |
| — |
| | (23,137) | |
| (6,179) |
| | (28,326) | |
| Real estate depreciation and amortization | |
| 47,840 |
| | 54,547 | |
| 150,599 |
| | 171,522 | |
| Impairment related to unconsolidated real estate ventures (1) | | | 15,401 | | | 1,380 | | | 15,401 | | | 1,380 | |
| Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures | |
| 4,999 |
| | 7,002 | |
| 18,285 |
| | 21,590 | |
| FFO attributable to noncontrolling interests | |
| (336) |
| | (54) | |
| (409) |
| | 976 | |
| FFO Attributable to OP Units | | $ | 46,323 |
| $ | 40,734 | | $ | 142,027 |
| $ | 129,461 | |
| FFO attributable to redeemable noncontrolling interests | |
| (6,227) |
| | (4,703) | |
| (17,070) |
| | (13,242) | |
| FFO Attributable to Common Shareholders | | $ | 40,096 |
| $ | 36,031 | | $ | 124,957 |
| $ | 116,219 | |
| | | | | | | | | | | | | | |
| FFO attributable to OP Units | | $ | 46,323 |
| $ | 40,734 | | $ | 142,027 |
| $ | 129,461 | |
| Transaction and other costs, net of tax and noncontrolling interests (2) | |
| 1,597 |
| | 2,928 | |
| 4,332 |
| | 7,721 | |
| (Income) loss from investments, net | | | 567 | | | — | | | (10,928) | | | — | |
| (Gain) loss from mark-to-market on derivative instruments, net of noncontrolling interests | |
| (2,779) |
| | 37 | |
| (8,173) |
| | (50) | |
| Loss on the extinguishment of debt | |
| 1,444 |
| | — | |
| 3,073 |
| | — | |
| Earnings and distributions in excess of our investment in unconsolidated real estate venture | |
| (18) |
| | (280) | |
| (583) |
| | (702) | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 548 |
| | 3,480 | |
| 4,369 |
| | 12,866 | |
| Amortization of management contracts intangible, net of tax | |
| 1,105 |
| | 1,072 | |
| 3,316 |
| | 3,217 | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| (416) |
| | 112 | |
| 1,129 |
| | 108 | |
| Core FFO Attributable to OP Units | | $ | 48,371 |
| $ | 48,083 | | $ | 138,562 |
| $ | 152,621 | |
| Core FFO attributable to redeemable noncontrolling interests | |
| (7,158) |
| | (5,552) | |
| (17,541) |
| | (15,612) | |
| Core FFO Attributable to Common Shareholders | | $ | 41,213 |
| $ | 42,531 | | $ | 121,021 |
| $ | 137,009 | |
| FFO per common share - diluted | | $ | 0.35 |
| $ | 0.27 | | $ | 1.03 |
| $ | 0.88 | |
| Core FFO per common share - diluted | | $ | 0.36 |
| $ | 0.32 | | $ | 1.00 |
| $ | 1.04 | |
| Weighted average shares - diluted (FFO and Core FFO) | |
| 114,387 |
| | 131,351 | |
| 120,752 |
| | 131,456 | |
See footnotes on page 16.
15
FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP)
(Unaudited)
| | | | | | | | | | | | | | |
| in thousands, except per share data | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| ||||||||
| |
| 2022 |
| 2021 | | 2022 |
| 2021 | | ||||
| | | | | | | | | | | | | | |
| FAD | | | | | | | | | | | | | |
| Core FFO attributable to OP Units |
| $ | 48,371 |
| $ | 48,083 | | $ | 138,562 |
| $ | 152,621 | |
| Recurring capital expenditures and Second-generation tenant improvements and leasing commissions (3) | |
| (10,094) | |
| (12,124) | |
| (37,096) | |
| (34,781) | |
| Straight-line and other rent adjustments (4) | |
| (6,018) | |
| (3,701) | |
| (9,787) | |
| (12,554) | |
| Third-party lease liability assumption payments | |
| — | |
| (422) | |
| (25) | |
| (1,803) | |
| Share-based compensation expense | |
| 5,714 | |
| 7,805 | |
| 26,378 | |
| 24,920 | |
| Amortization of debt issuance costs | |
| 1,122 | |
| 1,126 | |
| 3,433 | |
| 3,327 | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| (2,618) | |
| (1,478) | |
| (3,555) | |
| (4,137) | |
| Non-real estate depreciation and amortization | |
| 740 | |
| 703 | |
| 2,568 | |
| 2,180 | |
| FAD available to OP Units (A) | | $ | 37,217 | | $ | 39,992 | | $ | 120,478 | | $ | 129,773 | |
| Distributions to common shareholders and unitholders (B) | | $ | 29,833 | | $ | 33,688 | | $ | 94,204 | | $ | 102,634 | |
| FAD Payout Ratio (B÷A) (5) | |
| 80.2 | % |
| 84.2 | % |
| 78.2 | % |
| 79.1 | % |
| | | | | | | | | | | | | | |
| Capital Expenditures | | | | | | | | | | | | | |
| Maintenance and recurring capital expenditures | | $ | 4,944 | | $ | 7,404 | | $ | 15,855 | | $ | 15,706 | |
| Share of maintenance and recurring capital expenditures from unconsolidated real estate ventures | |
| 84 | |
| 265 | |
| 478 | |
| 636 | |
| Second-generation tenant improvements and leasing commissions | |
| 5,038 | |
| 3,762 | |
| 20,345 | |
| 17,280 | |
| Share of Second-generation tenant improvements and leasing commissions from unconsolidated real estate ventures | |
| 28 | |
| 693 | |
| 418 | |
| 1,159 | |
| Recurring capital expenditures and Second-generation tenant improvements and leasing commissions | |
| 10,094 | |
| 12,124 | |
| 37,096 | |
| 34,781 | |
| Non-recurring capital expenditures | |
| 13,832 | |
| 5,885 | |
| 40,194 | |
| 13,073 | |
| Share of non-recurring capital expenditures from unconsolidated real estate ventures | |
| 9 | |
| 177 | |
| 58 | |
| 284 | |
| First-generation tenant improvements and leasing commissions | |
| 13,627 | |
| 2,603 | |
| 22,274 | |
| 5,141 | |
| Share of First-generation tenant improvements and leasing commissions from unconsolidated real estate ventures | |
| 321 | |
| 93 | |
| 1,038 | |
| 1,484 | |
| Non-recurring capital expenditures | |
| 27,789 | |
| 8,758 | |
| 63,564 | |
| 19,982 | |
| Total JBG SMITH Share of Capital Expenditures | | $ | 37,883 | | $ | 20,882 | | $ | 100,660 | | $ | 54,763 | |
| (1) | Related to decreases in the value of the underlying assets. |
| (2) | Includes demolition costs, integration and severance costs, pursuit costs related to other completed, potential and pursued transactions, as well as other expenses. |
| (3) | Includes amounts, at JBG SMITH Share, related to unconsolidated real estate ventures. |
| (4) | Includes straight-line rent, above/below market lease amortization and lease incentive amortization. |
| (5) | The quarterly FAD payout ratio is not necessarily indicative of an amount for the full year due to fluctuation in the timing of capital expenditures, the commencement of new leases and the seasonality of our operations. |
16
NOI RECONCILIATIONS (NON-GAAP)
(Unaudited)
| | | | | | | | | | | | | | |
| dollars in thousands | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| ||||||||
| | | 2022 | | 2021 | | 2022 | | 2021 | | ||||
| | | | | | | | | | | | | | |
| Net income (loss) attributable to common shareholders |
| $ | (19,293) |
| $ | 893 | | $ | 103,950 |
| $ | (22,811) | |
| Add: | |
|
| |
|
| |
|
| |
|
| |
| Depreciation and amortization expense | |
| 50,056 | |
| 56,726 | |
| 157,597 | |
| 178,130 | |
| General and administrative expense: | |
|
| |
|
| |
|
| |
|
| |
| Corporate and other | |
| 12,072 | |
| 12,105 | |
| 42,669 | |
| 38,475 | |
| Third-party real estate services | |
| 21,230 | |
| 25,542 | |
| 72,422 | |
| 80,035 | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 548 | |
| 3,480 | |
| 4,369 | |
| 12,866 | |
| Transaction and other costs | |
| 1,746 | |
| 2,951 | |
| 4,632 | |
| 8,911 | |
| Interest expense | |
| 17,932 | |
| 17,243 | |
| 50,251 | |
| 50,312 | |
| Loss on the extinguishment of debt | |
| 1,444 | |
| — | |
| 3,073 | |
| — | |
| Income tax expense | |
| 166 | |
| 217 | |
| 2,600 | |
| 4,527 | |
| Net income (loss) attributable to redeemable noncontrolling interests | |
| (2,546) | |
| 103 | |
| 15,712 | |
| (2,472) | |
| Net income (loss) attributable to noncontrolling interests | | | 258 | |
| — | | | 174 | | | (1,108) | |
| Less: | |
|
| |
|
| |
|
| |
|
| |
| Third-party real estate services, including reimbursements revenue | |
| 21,845 | |
| 25,842 | |
| 67,972 | |
| 90,694 | |
| Other revenue | |
| 1,764 | |
| 1,568 | |
| 5,758 | |
| 5,658 | |
| Income (loss) from unconsolidated real estate ventures, net | |
| (13,867) | |
| 20,503 | |
| (12,829) | |
| 23,513 | |
| Interest and other income, net | |
| 984 | |
| 192 | |
| 16,902 | |
| 163 | |
| Gain on the sale of real estate, net | |
| — | |
| — | |
| 158,631 | |
| 11,290 | |
| | | | | | | | | | | | | | |
| Consolidated NOI | |
| 72,887 | |
| 71,155 | |
| 221,015 | |
| 215,547 | |
| NOI attributable to unconsolidated real estate ventures at our share | |
| 7,107 | |
| 7,336 | |
| 22,371 | |
| 22,951 | |
| Non-cash rent adjustments (1) | |
| (6,018) | |
| (3,701) | |
| (9,787) | |
| (12,554) | |
| Other adjustments (2) | |
| 6,230 | |
| 4,683 | |
| 20,689 | |
| 14,608 | |
| Total adjustments | |
| 7,319 | |
| 8,318 | |
| 33,273 | |
| 25,005 | |
| NOI | | $ | 80,206 | | $ | 79,473 | | $ | 254,288 | | $ | 240,552 | |
| Less: out-of-service NOI loss (3) | |
| (548) | |
| (2,019) | |
| (4,043) | |
| (4,638) | |
| Operating Portfolio NOI | | $ | 80,754 | | $ | 81,492 | | $ | 258,331 | | $ | 245,190 | |
| Non-Same Store NOI (4) | |
| 2,645 | |
| 11,450 | |
| 26,828 | |
| 40,262 | |
| Same Store NOI (5) | | $ | 78,109 | | $ | 70,042 | | $ | 231,503 | | $ | 204,928 | |
| | | | | | | | | | | | | | |
| Change in Same Store NOI | | | 11.5 | % | | | |
| 13.0 | % |
| | |
| Number of properties in Same Store pool | | | 53 | | | | |
| 52 | |
|
| |
| (1) | Adjustment to exclude straight-line rent, above/below market lease amortization and lease incentive amortization. |
| (2) | Adjustment to include other revenue and payments associated with assumed lease liabilities related to operating properties and to exclude commercial lease termination revenue and allocated corporate general and administrative expenses to operating properties. |
| (3) | Includes the results of our Under-Construction assets, and Near-Term and Future Development Pipelines. |
| (4) | Includes the results of properties that were not In-Service for the entirety of both periods being compared and properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. |
| (5) | Includes the results of the properties that are owned, operated and In-Service for the entirety of both periods being compared. |
17
SEP | |
TABLE OF CONTENTS | SEPTEMBER 30, 2022 |
Table of Contents
| Page |
Overview | |
3-5 | |
6 | |
7 | |
8-9 | |
10 | |
Financial Information | |
11 | |
12 | |
Unconsolidated Real Estate Ventures - Balance Sheet and Operating Information | 13 |
14 | |
EBITDA, EBITDAre and Adjusted EBITDA Reconciliations (Non-GAAP) | 15 |
16-17 | |
Third-Party Asset Management and Real Estate Services Business (Non-GAAP) | 18 |
Pro Rata Adjusted General and Administrative Expenses (Non-GAAP) | 19 |
20 | |
22-22 | |
23 | |
24 | |
25 | |
26 | |
Leasing Activity | |
27 | |
28 | |
29 | |
30 | |
31 | |
32 | |
Property Data | |
33 | |
Property Tables: | |
34-37 | |
38-40 | |
41 | |
42 | |
43 | |
44 | |
Debt | |
45 | |
46-47 | |
Real Estate Ventures | |
48-49 | |
50-54 | |
Appendices – Transaction and Other Costs, and Reconciliations of Non-GAAP Financial Measures | 55-59 |
| | Page 2 |
Disclosures
Certain statements contained herein may 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 performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Consequently, the future results, financial condition and business of JBG SMITH Properties ("JBG SMITH", the "Company", "we", "us", "our" or similar terms) may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as "approximate", "hypothetical", "potential", "believes", "expects", "anticipates", "estimates", "intends", "plans", "would", "may" or similar expressions in this Investor Package. Investors are cautioned to interpret many of the risks identified under the section titled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic. We also note the following forward-looking statements: the impact of COVID-19 and the ensuing economic turmoil on our Company, Net Operating Income, Same Store Net Operating Income, net asset value, share price, liquidity, occupancy rates, property rental revenue, operating costs, deferrals of rent, uncollectible operating lease receivables, parking revenue, burn-off of rent abatement, construction costs, the timing of disposition of assets in the JBG Legacy Funds, demand for new office space and potential bias of multifamily leasing to renewals; the impact of disruptions to the credit and capital markets on our ability to access capital, including refinancing maturing debt; potential Net Operating Income growth and the assumptions on which such growth is premised, our estimated future leverage (Net Debt/Annualized Adjusted EBITDA and Net Debt/Total Enterprise Value) profile, the economic impact, job growth, expansion of public transportation and related demand for multifamily and commercial properties of Amazon.com, Inc.'s ("Amazon") additional headquarters on the Washington, DC metropolitan area and National Landing and the speed with which such impact occurs and Amazon's plans for accelerated hiring and in-person work requirements; changes to the amount and manner in which tenants use space; whether we incur additional costs or make additional concessions or offer other incentives to existing or prospective tenants to reconfigure space; long-term trends in demand for housing (including multifamily) within major urban employment centers; whether the Washington, DC area will be more resilient than other parts of the country in any recession; whether we will recognize currently estimated unrecognized development fee revenue on the anticipated timing or at all; potential countercyclical growth caused by the concentration in the Washington, DC area of Amazon, the federal government, government contractors, and the Virginia Tech Innovation campus; whether National Landing will benefit economically from its proximity to the Department of Defense and elevated defense spending; the anticipated growth of our target submarkets; the economic impact of DC's diversification into technology; our anticipated acquisitions and dispositions and the ability to identify associated like-kind exchanges; our annual dividend per share and dividend yield; annualized Net Operating Income; adjusted annualized Net Operating Income; expected timing, completion, modifications and delivery dates for the projects we are developing for Amazon; planned infrastructure and educational improvements related to Amazon's additional headquarters; the impact of our role as the developer, property manager and retail leasing agent in connection with Amazon's new headquarters; our development plans related to National Landing; the impact on our net asset value of the Amazon transactions; in the case of any further Amazon lease transactions and our new development opportunities in National Landing, the total square feet to be leased to Amazon and the expected net effective rent; the impact of increases in government spending on increases in agency and contractor spending locally; whether we can access agency debt secured by our currently unencumbered multifamily assets timely, on reasonable terms or at all; whether our estimated borrowing capacity is accurate; whether we will succeed in our contemplated recycling of disposition proceeds into acquisitions yielding the anticipated stabilized capitalization rates; whether we are able to renew at or above our historical retention rates on rolling leases; whether the allocation of capital to our share repurchase plan has any impact on our share price; whether our rent estimates are accurate; whether in the case of our Under-Construction and Near-Term Development Pipeline assets, estimated square feet, estimated number of units, estimated construction start, occupancy stabilization dates, the estimated completion date, estimated stabilization date, Estimated Incremental Investment, Estimated Total Investment, Projected NOI Yield, weighted average Projected NOI Yield, NOI yield or Estimated Total Project Cost, estimated total NOI weighted average completion date, weighted average stabilization date, intended type of asset use and potential tenants, Estimated Potential Development Density, and Estimated Stabilized NOI are accurate; whether our Under-Construction assets will deliver the Annualized NOI that we anticipate; our ability to satisfy environmental, social or governance standards set by various constituencies; whether our plans related to our investment in 5G wireless spectrum across National Landing will be a significant demand catalyst; whether the required 5G sites will be delivered on the anticipated timeline or at all; whether the anticipated placemaking in National Landing will be realized; whether the number of retailers and multifamily units in National Landing will increase on the anticipated timelines; whether Amazon's return-to-the-office policy will continue to require that employees live within commuting distance of their office; whether we will be able to successfully shift the majority of our portfolio to multifamily and concentrate our office portfolio in National Landing, and in the case of our Future Development Pipeline opportunities, estimated commercial SF/multifamily units to be replaced, estimated remaining acquisition cost, estimated capitalized cost, Estimated Total Investment, Estimated Potential Development Density and estimated entitlement timeline including the potential for delays in the entitlement process.
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. These factors include, among others: adverse economic conditions in the Washington, DC metropolitan area, including in relation to COVID-19, the timing of and costs associated with development and property improvements, financing commitments, and general competitive factors. For further discussion of factors that could materially affect the outcome of our forward-looking statements and other risks and uncertainties, see "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Cautionary Statement Concerning Forward-Looking Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 and other periodic reports the Company files with the Securities and Exchange
| | Page 3 |
Commission. For these 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. 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 hereof.
Organization and Basis of Presentation
JBG SMITH Properties ("JBG SMITH") was organized as a Maryland real estate investment trust ("REIT") 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 Washington, DC segment. On July 18, 2017, JBG SMITH acquired the management business and certain assets and liabilities of The JBG Companies ("JBG") (the "Combination"). The Separation and the Combination are collectively referred to as the "Formation Transaction."
The information contained in this Investor Package does not purport to disclose all items required by the accounting principles generally accepted in the United States of America ("GAAP") and is unaudited information, unless otherwise indicated.
Pro Rata Information
We present certain financial information and metrics in this Investor Package "at JBG SMITH Share," which refers to our ownership percentage of consolidated and unconsolidated assets in real estate ventures (collectively, "real estate ventures") as applied to these financial measures and metrics. Financial information "at JBG SMITH Share" is calculated on an asset-by-asset basis by applying our percentage economic interest to each applicable line item of that asset's financial information. "At JBG SMITH Share" information, which we also refer to as being "at share," "our pro rata share" or "our share," is not, and is not intended to be, a presentation in accordance with GAAP. Given that a substantial portion of our assets are held through real estate ventures, we believe this form of presentation, which presents our economic interests in the partially owned entities, provides investors valuable information regarding a significant component of our portfolio, its composition, performance and capitalization.
We do not control the unconsolidated real estate ventures and do not have a legal claim to our co-venturers' share of assets, liabilities, revenue and expenses. The operating agreements of the unconsolidated real estate ventures generally allow each co-venturer to receive cash distributions to the extent there is available cash from operations. The amount of cash each investor receives is based upon specific provisions of each operating agreement and varies depending on certain factors including the amount of capital contributed by each investor and whether any investors are entitled to preferential distributions.
With respect to any such third-party arrangement, we would not be in a position to exercise sole decision-making authority regarding the property, real estate venture or other entity, and may, under certain circumstances, be exposed to economic risks not present were a third-party not involved. We and our respective co-venturers may each have the right to trigger a buy-sell or forced sale arrangement, which could cause us to sell our interest, or acquire our co-venturers' interests, or to sell the underlying asset, either on unfavorable terms or at a time when we otherwise would not have initiated such a transaction. Our real estate ventures may be subject to debt, and the repayment or refinancing of such debt may require equity capital calls. To the extent our co-venturers do not meet their obligations to us or our real estate ventures or they act inconsistent with the interests of the real estate venture, we may be adversely affected. Because of these limitations, the non-GAAP "at JBG SMITH Share" financial information should not be considered in isolation or as a substitute for our financial statements as reported under GAAP.
Occupancy, non-GAAP financial measures, leverage metrics, operating assets and operating metrics presented in our investor package exclude our 10.0% subordinated interest in one commercial building and our 33.5% subordinated interest in four commercial buildings, as well as the associated non-recourse mortgages payable, held through unconsolidated real estate ventures, as our investment in each real estate venture is zero, we do not anticipate receiving any near-term cash flow distributions from the real estate ventures and we have not guaranteed their obligations or otherwise committed to providing financial support.
| | Page 4 |
Definitions
See pages 50-54 for definitions of terms used in this Investor Package.
Information herein with respect to the proposed transactions with Amazon is based on executed leases and a purchase and sale agreement between us and Amazon. Closing under this agreement is subject to customary closing conditions.
Non-GAAP Measures
This Investor Package includes non-GAAP measures. For these measures, we have provided an explanation of how these non-GAAP measures are calculated and why our management believes that the presentation of these measures provides useful information to investors regarding our financial condition and results of operations. Reconciliations of certain non-GAAP measures to the most directly comparable GAAP financial measure are included in this Investor Package. Our presentation of non-GAAP financial measures may not be comparable to similar non-GAAP measures used by other companies.
In addition to "at share" financial information, the following non-GAAP measures are included in this Investor Package:
| ● | Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") |
| ● | EBITDA for Real Estate ("EBITDAre") |
| ● | Adjusted EBITDA |
| ● | Funds from Operations ("FFO") |
| ● | Core FFO |
| ● | Funds Available for Distribution ("FAD") |
| ● | Third-Party Asset Management and Real Estate Services Business |
| ● | Net Operating Income ("NOI") |
| ● | Annualized NOI |
| ● | Estimated Stabilized NOI |
| ● | Projected NOI Yield |
| ● | Same Store NOI |
| ● | Consolidated and Unconsolidated Indebtedness |
| ● | Net Debt |
| ● | Pro Rata Adjusted General and Administrative Expenses |
| | Page 5 |
| |
COMPANY PROFILE | SEPTEMBER 30, 2022 |
| | | | | | | | | |
Executive Officers | | Company Snapshot as of September 30, 2022 | |||||||
| | | | | | | | | |
W. Matthew Kelly |
| Chief Executive Officer and Trustee |
| | Exchange/ticker |
| | NYSE: JBGS | |
David P. Paul |
| President and Chief Operating Officer |
| | Indicated annual dividend per share | | $ | 0.90 | |
M. Moina Banerjee |
| Chief Financial Officer |
| | Dividend yield | |
| 4.8 | % |
Kevin P. Reynolds |
| Chief Development Officer |
| |
| |
|
| |
George L. Xanders | | Chief Investment Officer |
| | Total Enterprise Value (dollars in billions, except share price) | |
|
| |
Steven A. Museles |
| Chief Legal Officer |
| | Common share price | | $ | 18.58 | |
| | |
| | Common shares and common limited partnership units ("OP Units") | |
| 128.84 | |
| | |
| | Total market capitalization | | $ | 2.39 | |
| | |
| | Total consolidated and unconsolidated indebtedness at JBG SMITH Share | |
| 2.60 | |
| | |
| | Less: cash and cash equivalents at JBG SMITH Share | |
| (0.27) | |
| | |
| | Net Debt | | $ | 2.33 | |
| | |
| | Total Enterprise Value | | $ | 4.72 | |
| | | | | | | | | |
|
|
|
| | Net Debt / Total Enterprise Value (2) | |
| 49.3 | % |
| | | | | | | | | |
| (1) | Includes certain fully-vested incentive equity awards that are convertible into OP Units. |
| (2) | Net Debt to total enterprise value would have been 48.6% as of September 30, 2022 after adjusting for acquisitions and dispositions that occurred during and subsequent to quarter end. |
| | Page 6 |
| |
FINANCIAL HIGHLIGHTS | SEPTEMBER 30, 2022 |
| | | | | | | | | |
| dollars in thousands, except per share data |
| Three Months Ended | | | Nine Months Ended | | ||
| | | September 30, 2022 | | | September 30, 2022 | | ||
| | | | | | | | | |
| Summary Financial Results | | | | | | | | |
| Total revenue | | $ | 147,614 | | | $ | 455,084 | |
| Net income (loss) attributable to common shareholders | | $ | (19,293) | | | $ | 103,950 | |
| Per diluted common share | | $ | (0.17) | | | $ | 0.86 | |
| Operating portfolio NOI | | $ | 80,754 | | | $ | 258,331 | |
| FFO (1) | | $ | 46,323 | | | $ | 142,027 | |
| Per OP Unit | | $ | 0.35 | | | $ | 1.03 | |
| Core FFO (1) | | $ | 48,371 | | | $ | 138,562 | |
| Per OP Unit | | $ | 0.36 | | | $ | 1.00 | |
| FAD (1) | | $ | 37,217 | | | $ | 120,478 | |
| FAD payout ratio | |
| 80.2 | % | |
| 78.2 | % |
| EBITDA (1) | | $ | 54,270 | | | $ | 357,231 | |
| EBITDAre (1) | | $ | 69,671 | | | $ | 207,822 | |
| Adjusted EBITDA (1) | | $ | 73,992 | | | $ | 206,637 | |
| Net Debt / total enterprise value (2) | |
| 49.3 | % | |
| 49.3 | % |
| Net Debt to annualized Adjusted EBITDA (2) | |
| 7.9 | x | |
| 8.4 | x |
| | | | | | | | | |
| | | | | | | September 30, 2022 | | |
| | | | | | | | | |
| Debt Summary and Key Ratios (at JBG SMITH Share) | | | | | |
|
| |
| Total consolidated indebtedness (3) | | | | | | $ | 2,382,429 | |
| Total consolidated and unconsolidated indebtedness (3) | | | | | | $ | 2,597,770 | |
| Weighted average interest rates: | | | | | |
|
| |
| Variable rate debt (4) | | | | | |
| 4.77 | % |
| Fixed rate debt | | | | | |
| 3.95 | % |
| Total debt | | | | | |
| 4.29 | % |
| Cash and cash equivalents | | | | | | $ | 272,388 | |
| (1) | Attributable to OP Units, which include units owned by JBG SMITH, and certain fully-vested incentive equity awards that are convertible into OP Units. |
| (2) | Net Debt to total enterprise value would have been 48.6% as of September 30, 2022, and Net Debt to annualized Adjusted EBITDA would have been 7.7x and 8.7x for the three and nine months ended September 30, 2022, after adjusting for acquisitions and dispositions that occurred during and subsequent to quarter end. |
| (3) | Net of premium/discount and deferred financing costs. |
| (4) | For floating rate loans with interest rate caps, the weighted average cap strike is 2.57% for consolidated debt, and 2.64% for all debt, and the weighted average maturity date of the caps is September 11, 2023. The interest rate cap strike is exclusive of the credit spreads associated with the loans. |
| | Page 7 |
| |
FINANCIAL HIGHLIGHTS – TRENDS | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended |
| |||||||||||||
| dollars in thousands, except per share data, at JBG SMITH Share |
| Q3 2022 |
| Q2 2022 |
| Q1 2022 |
| Q4 2021 |
| Q3 2021 | | |||||
| Commercial NOI | | $ | 52,167 | | $ | 57,437 | | $ | 64,919 | | $ | 62,300 | | $ | 61,889 | |
| Multifamily NOI | |
| 27,955 | |
| 27,338 | |
| 26,887 | |
| 24,061 | |
| 19,107 | |
| Ground Leases and Other NOI | | | 632 | | | 468 | | | 547 | | | 475 | | | 496 | |
| Operating portfolio NOI | | $ | 80,754 | | $ | 85,243 | | $ | 92,353 | | $ | 86,836 | | $ | 81,492 | |
| Total Annualized NOI | | $ | 322,018 | | $ | 337,093 | | $ | 370,691 | | $ | 345,763 | | $ | 324,001 | |
| | | | | | | | | | | | | | | | | |
| Net income (loss) attributable to common shareholders | | $ | (19,293) | | $ | 123,275 | | $ | (32) | | $ | (56,446) | | $ | 893 | |
| Per diluted common share | | $ | (0.17) | | $ | 1.02 | | $ | — | | $ | (0.45) | | $ | — | |
| FFO (1) | | $ | 46,323 | | $ | 38,527 | | $ | 57,177 | | $ | 47,924 | | $ | 40,734 | |
| Per OP Unit | | $ | 0.35 | | $ | 0.28 | | $ | 0.40 | | $ | 0.33 | | $ | 0.27 | |
| Core FFO (1) | | $ | 48,371 | | $ | 42,625 | | $ | 47,566 | | $ | 44,943 | | $ | 48,083 | |
| Per OP Unit | | $ | 0.36 | | $ | 0.31 | | $ | 0.34 | | $ | 0.31 | | $ | 0.32 | |
| FAD (1) | | $ | 37,217 | | $ | 39,099 | | $ | 44,162 | | $ | 30,453 | | $ | 39,992 | |
| FAD payout ratio | |
| 80.2 | % |
| 81.3 | % |
| 73.8 | % |
| 108.8 | % |
| 84.2 | % |
| EBITDA (1) | | $ | 54,270 | | $ | 219,366 | | $ | 83,595 | | $ | 21,744 | | $ | 85,275 | |
| EBITDAre (1) | | $ | 69,671 | | $ | 59,663 | | $ | 78,488 | | $ | 70,771 | | $ | 63,518 | |
| Adjusted EBITDA (1) | | $ | 73,992 | | $ | 64,765 | | $ | 67,880 | | $ | 66,169 | | $ | 69,799 | |
| Net Debt / total enterprise value (2) | |
| 49.3 | % |
| 40.4 | % |
| 39.1 | % |
| 38.5 | % |
| 34.3 | % |
| Net Debt to annualized Adjusted EBITDA (2) | |
| 7.9 | x |
| 8.1 | x |
| 9.6 | x |
| 9.6 | x |
| 7.9 | x |
| | | | | | | | | | | | | | | | | |
| | | Q3 2022 | | Q2 2022 | | Q1 2022 | | Q4 2021 | | Q3 2021 | | |||||
| | | | | | | | | | | | | | | | | |
| Number of Operating Assets | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Commercial | |
| 35 | |
| 35 | |
| 41 | |
| 41 | |
| 41 | |
| Multifamily | |
| 19 | |
| 19 | |
| 20 | |
| 22 | |
| 21 | |
| Ground Leases and Other | | | 2 | | | 2 | | | 1 | | | 1 | | | 1 | |
| Total | |
| 56 | |
| 56 | |
| 62 | |
| 64 | |
| 63 | |
| | | | | | | | | | | | | | | | | |
| Operating Portfolio % Leased | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Commercial (3) | |
| 88.3 | % |
| 87.3 | % |
| 85.2 | % |
| 84.9 | % |
| 84.9 | % |
| Multifamily (4) | |
| 95.5 | % |
| 95.7 | % |
| 94.1 | % |
| 93.6 | % |
| 94.0 | % |
| Weighted Average | |
| 91.1 | % |
| 90.5 | % |
| 88.1 | % |
| 87.7 | % |
| 87.7 | % |
| | | | | | | | | | | | | | | | | |
| Operating Portfolio % Occupied (5) | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Commercial (3) | |
| 85.9 | % |
| 86.1 | % |
| 83.3 | % |
| 82.9 | % |
| 82.6 | % |
| Multifamily (4) | |
| 93.7 | % |
| 92.3 | % |
| 91.6 | % |
| 91.8 | % |
| 92.4 | % |
| Weighted Average | |
| 88.9 | % |
| 88.4 | % |
| 86.0 | % |
| 85.8 | % |
| 85.7 | % |
See footnotes on page 9.
| | Page 8 |
| |
FINANCIAL HIGHLIGHTS – TRENDS | SEPTEMBER 30, 2022 |
Footnotes
Note: See appendices for reconciliations of non-GAAP financial measures to their respective comparable GAAP financial measures.
| (1) | Attributable to OP Units, which include units owned by JBG SMITH, and certain fully-vested incentive equity awards that are convertible into OP Units. |
| (2) | Net Debt to total enterprise value would have been 48.6% as of September 30, 2022, and Net Debt to annualized Adjusted EBITDA would have been 7.7x for the three months ended September 30, 2022, after adjusting for acquisitions and dispositions that occurred during and subsequent to quarter end. |
| (3) | Crystal City Marriott is excluded from the Percent Leased and the Percent Occupied metrics. |
| (4) | Includes Recently Delivered assets. In-Service assets were 96.6% leased and 93.1% occupied as of Q2 2022, 95.5% leased and 92.9% occupied as of Q1 2022, 95.4% leased and 93.4% occupied as of Q4 2021, and 96.3% leased and 94.5% occupied as of Q3 2021. 2221 S. Clark Street - Residential and 900 W Street are excluded from the Percent Leased and the Percent Occupied metrics as they are operated as short-term rental properties. |
| (5) | Percent Occupied excludes occupied retail SF. |
| | Page 9 |
| |
PORTFOLIO OVERVIEW | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | 100% Share | | At JBG SMITH Share |
| |||||||||||||
| | | | | | | | | | | | | | | Annualized Rent | | | | | ||
| | | | | | | | | | | | | Annualized | | per Square Foot/ | | |
| |||
| | | Number of | | Square Feet/ | | Square Feet/ | | % | | | | Rent | | Monthly Rent | | Annualized NOI | | |||
| | | Assets | | Units | | Units | | Leased | | % Occupied (1) | | (in thousands) | | Per Unit (2) | | (in thousands) |
| |||
| | | | | | | | | | | | | | | | | | | | | |
| Operating | | | | | | | | | | | | | | | | | | | | |
| Commercial (3) | | | | | | | | | | | | | | | | | | | | |
| National Landing | | 23 | | 7,327,446 | | 7,051,642 | | 88.4% | | 86.5% | | $ | 257,069 | | $ | 44.66 | | $ | 167,862 | |
| Other VA | | 4 | | 1,058,111 | | 399,197 | | 95.2% | | 95.6% | | | 17,776 | | | 49.62 | | | 7,784 | |
| DC | | 6 | | 1,629,541 | | 913,509 | | 81.8% | | 73.6% | | | 37,843 | | | 56.95 | | | 16,644 | |
| MD | | 2 | | 513,647 | | 513,647 | | 94.0% | | 93.2% | | | 26,078 | | | 52.24 | | | 15,380 | |
| Commercial - total / weighted average |
| 35 |
| 10,528,745 |
| 8,877,995 |
| 88.3% | | 85.9% | | $ | 338,766 |
| $ | 46.49 |
| $ | 207,670 | |
| | | | | | | | | | | | | | | | | | | | | |
| Multifamily (4) |
|
|
|
|
|
|
|
|
|
| |
|
| |
|
| |
|
| |
| National Landing | | 4 | | 2,856 | | 2,856 | | 97.2% | | 95.8% | | $ | 67,993 | | $ | 2,184 | | $ | 45,620 | |
| DC | | 12 | | 3,743 | | 3,153 | | 94.8% | | 92.6% | | | 93,830 | | | 2,416 | | | 59,476 | |
| MD | | 3 | | 760 | | 599 | | 92.2% | | 89.6% | | | 13,691 | | | 2,047 | | | 6,724 | |
| Multifamily – total / weighted average |
| 19 |
| 7,359 |
| 6,608 |
| 95.5% | | 93.7% | | $ | 175,514 | | $ | 2,283 | | $ | 111,820 | |
| | | | | | | | | | | | | | | | | | | | | |
| Ground Leases and Other (5) | | | | | | | | | | | | | | | | | | | | |
| Other VA | | 1 | | — | | — | | — | | — | | | — | | | — | | $ | 544 | |
| DC | | 1 | | — | | — | | — | | — | | | — | | | — | | | 1,984 | |
| Ground leases and other – total | | 2 | | — | | — | | — | | — | | | — | | | — | | $ | 2,528 | |
| |
| | | | | | | | | | | | | | | | | | | |
| Operating - Total / Weighted Average |
| 56 |
| 10,528,745 SF/ 7,359 Units |
| 8,877,995 SF/ 6,608 Units |
| 91.1% | | 88.9% | | $ | 514,280 | | | $46.49 per SF/ | | $ | 322,018 | |
| | | | | | | | | | | | | | | | | | | | | |
| Development (6) |
|
|
|
|
|
|
|
|
|
| |
|
| |
|
| |
|
| |
| | | | | | | | | | | | | | | | | | | | | |
| Under-Construction |
| 2 |
| 1,583 Units |
| 1,583 Units |
| | |
| |
| | |
| | |
|
| |
| | | | | | | | | | | | | | | | | | | | | |
| Near-Term Development |
| 8 |
| 3,742,300 |
| 3,532,700 |
|
|
|
| |
|
| |
| | |
|
| |
| | | | | | | | | | | | | | | | | | | | | |
| Future Development |
| 16 |
| 8,799,800 |
| 6,273,700 |
|
|
|
| |
|
| |
| | |
|
| |
| (1) | Percent Occupied excludes retail SF. |
| (2) | For commercial assets, represents annualized office rent divided by occupied office SF; annualized retail rent and retail SF are excluded from this metric. For multifamily assets, represents monthly multifamily rent divided by occupied units; retail rent is excluded from this metric. Annualized Rent and Annualized Rent per Square Foot exclude percentage rent and the square footage of office tenants that only pay percentage rent. Occupied square footage may differ from leased square footage because leased square footage includes space for leases that have been signed but the tenant has not yet taken occupancy (not yet included in Percent Occupied metrics). |
| (3) | Crystal City Marriott is excluded from Percent Leased, Percent Occupied, Annualized Rent and Annualized Rent per Square Foot metrics. |
| (4) | 2221 S. Clark Street - Residential and 900 W Street are excluded from Percent Leased, Percent Occupied, Annualized Rent and Monthly Rent Per Unit metrics. |
| (5) | 1700 M Street and 1831/1861 Wiehle Avenue (for which we are the ground lessor) are excluded from Percent Leased, Percent Occupied, Annualized Rent and Annualized Rent per Square Foot metrics. See footnote (7) on page 23 for more information. |
| (6) | Refer to pages 41- 43 for detail on Under-Construction assets, and Near-Term and Future Development Pipelines. |
| | |
| | Page 10 |
| |
CONDENSED CONSOLIDATED BALANCE SHEETS | SEPTEMBER 30, 2022 |
Condensed Consolidated Balance Sheets
| | | | | | | | |
| in thousands | | September 30, 2022 | | December 31, 2021 |
| ||
| | | | | | | |
|
| ASSETS | | | | | | | |
| Real estate, at cost: |
| |
|
| |
| |
| Land and improvements | | $ | 1,273,947 | | $ | 1,378,218 | |
| Buildings and improvements | |
| 4,117,823 | |
| 4,513,606 | |
| Construction in progress, including land | |
| 471,867 | |
| 344,652 | |
| | |
| 5,863,637 | |
| 6,236,476 | |
| Less: accumulated depreciation | |
| (1,299,818) | |
| (1,368,003) | |
| Real estate, net | |
| 4,563,819 | |
| 4,868,473 | |
| Cash and cash equivalents | |
| 258,871 | |
| 264,356 | |
| Restricted cash | |
| 212,998 | |
| 37,739 | |
| Tenant and other receivables | |
| 48,221 | |
| 44,496 | |
| Deferred rent receivable | |
| 161,994 | |
| 192,265 | |
| Investments in unconsolidated real estate ventures | |
| 360,846 | |
| 462,885 | |
| Intangible assets, net | | | 155,812 | | | 201,956 | |
| Other assets, net | |
| 133,419 | |
| 240,160 | |
| Assets held for sale | |
| — | |
| 73,876 | |
| TOTAL ASSETS | | $ | 5,895,980 | | $ | 6,386,206 | |
| | | | | | | | |
| LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | |
|
| |
|
| |
| Liabilities: | |
|
| |
|
| |
| Mortgages payable, net | | $ | 1,741,605 | | $ | 1,777,699 | |
| Revolving credit facility | |
| 100,000 | |
| 300,000 | |
| Unsecured term loans, net | |
| 546,888 | |
| 398,664 | |
| Accounts payable and accrued expenses | |
| 130,408 | |
| 106,136 | |
| Other liabilities, net | |
| 98,831 | |
| 342,565 | |
| Total liabilities | |
| 2,617,732 | |
| 2,925,064 | |
| Commitments and contingencies | |
|
| |
|
| |
| Redeemable noncontrolling interests | |
| 491,479 | |
| 522,725 | |
| Total equity | |
| 2,786,769 | |
| 2,938,417 | |
| TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | | $ | 5,895,980 | | $ | 6,386,206 | |
Note: For complete financial statements, please refer to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022.
| | |
| | Page 11 |
| |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | SEPTEMBER 30, 2022 |
Condensed Consolidated Statements of Operations
| | | | | | | | | | | | | | |
| in thousands, except per share data | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| ||||||||
| | | 2022 | | 2021 | | 2022 | | 2021 |
| ||||
| REVENUE | | | | | | | | | | | | | |
| Property rental |
| $ | 119,811 |
| $ | 125,900 | | $ | 368,445 |
| $ | 370,960 | |
| Third-party real estate services, including reimbursements | |
| 21,845 | |
| 25,842 | |
| 67,972 | |
| 90,694 | |
| Other revenue | |
| 5,958 | |
| 5,280 | |
| 18,667 | |
| 15,301 | |
| Total revenue | |
| 147,614 | |
| 157,022 | |
| 455,084 | |
| 476,955 | |
| EXPENSES | |
|
| |
|
| |
|
| |
|
| |
| Depreciation and amortization | |
| 50,056 | |
| 56,726 | |
| 157,597 | |
| 178,130 | |
| Property operating | |
| 36,380 | |
| 40,198 | |
| 112,469 | |
| 109,929 | |
| Real estate taxes | |
| 14,738 | |
| 18,259 | |
| 47,870 | |
| 55,127 | |
| General and administrative: | |
| | |
| | |
| | |
| | |
| Corporate and other | |
| 12,072 | |
| 12,105 | |
| 42,669 | |
| 38,475 | |
| Third-party real estate services | |
| 21,230 | |
| 25,542 | |
| 72,422 | |
| 80,035 | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 548 | |
| 3,480 | |
| 4,369 | |
| 12,866 | |
| Transaction and Other Costs | |
| 1,746 | |
| 2,951 | |
| 4,632 | |
| 8,911 | |
| Total expenses | |
| 136,770 | |
| 159,261 | |
| 442,028 | |
| 483,473 | |
| OTHER INCOME (EXPENSE) | |
|
| |
|
| |
|
| |
|
| |
| Income (loss) from unconsolidated real estate ventures, net | |
| (13,867) | |
| 20,503 | |
| (12,829) | |
| 23,513 | |
| Interest and other income, net | |
| 984 | |
| 192 | |
| 16,902 | |
| 163 | |
| Interest expense | |
| (17,932) | |
| (17,243) | |
| (50,251) | |
| (50,312) | |
| Gain on the sale of real estate, net | |
| — | |
| — | |
| 158,631 | |
| 11,290 | |
| Loss on the extinguishment of debt | |
| (1,444) | |
| — | |
| (3,073) | |
| — | |
| Total other income (expense) | |
| (32,259) | |
| 3,452 | |
| 109,380 | |
| (15,346) | |
| INCOME (LOSS) BEFORE INCOME TAX EXPENSE | |
| (21,415) | |
| 1,213 | |
| 122,436 | |
| (21,864) | |
| Income tax expense | |
| (166) | |
| (217) | |
| (2,600) | |
| (4,527) | |
| NET INCOME (LOSS) | |
| (21,581) | |
| 996 | |
| 119,836 | |
| (26,391) | |
| Net (income) loss attributable to redeemable noncontrolling interests | |
| 2,546 | |
| (103) | |
| (15,712) | |
| 2,472 | |
| Net (income) loss attributable to noncontrolling interests | | | (258) | | | — | | | (174) | |
| 1,108 | |
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | | $ | (19,293) | | $ | 893 | | $ | 103,950 | | $ | (22,811) | |
| EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED | | $ | (0.17) | | $ | 0.00 | | $ | 0.86 | | $ | (0.18) | |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED | |
| 114,360 | |
| 131,351 | |
| 120,741 | |
| 131,456 | |
Note: For complete financial statements, please refer to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022.
| | |
| | Page 12 |
nconsolidated Real Estate Ventures
| | | | | |
| in thousands, at JBG SMITH Share |
| | |
|
| BALANCE SHEET INFORMATION | | September 30, 2022 |
| |
| | | | | |
| Total real estate, at cost | | $ | 561,316 | |
| Less: accumulated depreciation | |
| (38,765) | |
| Real estate, net | |
| 522,551 | |
| Cash and cash equivalents | |
| 13,563 | |
| Other assets, net | |
| 69,957 | |
| Total assets | | $ | 606,071 | |
| Borrowings, net | | $ | 215,341 | |
| Other liabilities, net | |
| 34,332 | |
| Total liabilities | | $ | 249,673 | |
| | | | | | | | |
| |
| Three Months Ended | | Nine Months Ended |
| ||
| OPERATING INFORMATION | | September 30, 2022 | | September 30, 2022 |
| ||
| Total revenue | | $ | 15,882 | | $ | 46,815 | |
| Expenses: | |
|
| |
|
| |
| Depreciation and amortization | |
| 4,932 | |
| 17,953 | |
| Property operating | |
| 4,648 | |
| 15,279 | |
| Impairment loss | | | 7,879 | | | 7,879 | |
| Real estate taxes | |
| 2,148 | |
| 7,208 | |
| Total expenses | |
| 19,607 | |
| 48,319 | |
| Other income (expense): | |
|
| |
|
| |
| Interest expense | |
| (2,724) | |
| (8,756) | |
| Gain on the sale of real estate | |
| — | |
| 6,179 | |
| Loss on the extinguishment of debt | | | — | | | (1,950) | |
| Interest and other income, net | |
| 2 | |
| 15 | |
| | | | | | | | |
| Net loss | | $ | (6,447) | | $ | (6,016) | |
| Earnings and distributions in excess of our investment in unconsolidated real estate venture | |
| 18 | |
| 583 | |
| Impairment of investment in unconsolidated real estate venture | | | (7,522) | | | (7,522) | |
| Other | |
| 85 | |
| 126 | |
| Loss from unconsolidated real estate ventures, net | | $ | (13,867) | | $ | (12,829) | |
| | |
| | Page 13 |
| |
OTHER TANGIBLE ASSETS AND LIABILITIES | SEPTEMBER 30, 2022 |
Other Tangible Assets and Liabilities
| | | | | |
| in thousands, at JBG SMITH Share |
| September 30, 2022 |
| |
| | | | | |
| Other Tangible Assets, Net (1) | | | | |
| Restricted cash (2) | | $ | 221,364 | |
| Tenant and other receivables, net | |
| 51,022 | |
| Other assets, net | |
| 151,079 | |
| Total Other Tangible Assets, Net | | $ | 423,465 | |
| | | | | |
| Other Tangible Liabilities, Net | |
|
| |
| Accounts payable and accrued liabilities | | $ | 143,286 | |
| Other liabilities, net | |
| 106,157 | |
| Total Other Tangible Liabilities, Net | | $ | 249,443 | |
| (1) | Excludes cash and cash equivalents |
| (2) | Includes net proceeds from certain sales and recapitalizations that are held in escrow at a qualified intermediary, all of which was released in October 2022. |
| | |
| | Page 14 |
| |
EBITDA, EBITDAre AND ADJUSTED EBITDA RECONCILIATIONS (NON-GAAP) | SEPTEMBER 30, 2022 |
EBITDA, EBITDAre and Adjusted EBITDA
| | | | | | | | | | | | | | |
| dollars in thousands |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| ||||||||
| | | 2022 | | 2021 | | 2022 | | 2021 |
| ||||
| | | | | | | | | | | | | |
|
| EBITDA, EBITDAre and Adjusted EBITDA |
| | | | | | | |
| | |
| |
| Net income (loss) | | $ | (21,581) | | $ | 996 | | $ | 119,836 | | $ | (26,391) | |
| Depreciation and amortization expense | | | 50,056 | | | 56,726 | | | 157,597 | | | 178,130 | |
| Interest expense | | | 17,932 | | | 17,243 | | | 50,251 | | | 50,312 | |
| Income tax expense | | | 166 | | | 217 | | | 2,600 | | | 4,527 | |
| Unconsolidated real estate ventures allocated share of above adjustments | | | 7,725 | | | 10,147 | | | 27,048 | | | 30,892 | |
| EBITDA attributable to noncontrolling interests | | | (28) | | | (54) | | | (101) | | | 976 | |
| EBITDA | | $ | 54,270 | | $ | 85,275 | | $ | 357,231 | | $ | 238,446 | |
| Gain on the sale of real estate, net | | | — | | | — | | | (158,631) | | | (11,290) | |
| Gain on the sale of unconsolidated real estate assets | | | — | | | (23,137) | | | (6,179) | | | (28,326) | |
| Impairment related to unconsolidated real estate ventures (1) | | | 15,401 | | | 1,380 | | | 15,401 | | | 1,380 | |
| | | | | | | | | | | | | | |
| EBITDAre | | $ | 69,671 | | $ | 63,518 | | $ | 207,822 | | $ | 200,210 | |
| Transaction and Other Costs, net of noncontrolling interests (2) | | | 1,746 | | | 2,951 | | | 4,598 | | | 7,803 | |
| (Income) loss from investments, net | | | 567 | | | — | | | (14,721) | | | — | |
| Loss on the extinguishment of debt | | | 1,444 | | | — | | | 3,073 | | | — | |
| Share-based compensation related to Formation Transaction and special equity awards | | | 548 | | | 3,480 | | | 4,369 | | | 12,866 | |
| Earnings and distributions in excess of our investment in unconsolidated real estate venture | | | (18) | | | (280) | | | (583) | | | (702) | |
| Unconsolidated real estate ventures allocated share of above adjustments | | | 34 | | | 130 | | | 2,079 | | | 170 | |
| | | | | | | | | | | | | | |
| Adjusted EBITDA | | $ | 73,992 | | $ | 69,799 | | $ | 206,637 | | $ | 220,347 | |
| | | | | | | | | | | | | | |
| Net Debt to Annualized Adjusted EBITDA (3) | | | 7.9 | x | | 7.9 | x | | 8.4 | x | | 7.5 | x |
| | | | | | | | | | | | | | |
| Net Debt (at JBG SMITH Share) | | | | | | | | September 30, 2022 | | September 30, 2021 | | ||
| Consolidated indebtedness (4) | | | | | | | | $ | 2,382,429 | | $ | 2,063,426 | |
| Unconsolidated indebtedness (4) | | | | | | | | | 215,341 | | | 362,698 | |
| Total consolidated and unconsolidated indebtedness | | | | | | | | | 2,597,770 | | | 2,426,124 | |
| Less: cash and cash equivalents | | | | | | | | | 272,388 | | | 213,612 | |
| Net Debt (at JBG SMITH Share) | | | | | | | | $ | 2,325,382 | | $ | 2,212,512 | |
Note: All EBITDA measures as shown above are attributable to OP Units and certain fully-vested incentive equity awards that are convertible into OP Units.
| (1) | Related to decreases in the value of the underlying assets. |
| (2) | See page 55 for the components of Transaction and Other Costs. |
| (3) | Calculated using Net Debt. Quarterly Adjusted EBITDA is annualized by multiplying by four. Adjusted EBITDA for the nine months ended September 30, 2022 and 2021 is annualized by multiplying by 1.33. Net Debt to annualized Adjusted EBITDA would have been 7.7x and 8.7x for the three and nine months ended September 30, 2022, after adjusting for acquisitions and dispositions that occurred during and subsequent to quarter end. |
| (4) | Net of premium/discount and deferred financing costs. |
| | |
| | Page 15 |
| |
FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP) | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | |
| in thousands, except per share data | | Three Months Ended September 30, | | Nine Months Ended September 30, | | ||||||||
| |
| 2022 |
| 2021 | | 2022 |
| 2021 | | ||||
| | | | | | | | | | | | | |
|
| FFO and Core FFO | | | | | | | | | | | | | |
| Net income (loss) attributable to common shareholders | | $ | (19,293) |
| $ | 893 | | $ | 103,950 |
| $ | (22,811) | |
| Net income (loss) attributable to redeemable noncontrolling interests | |
| (2,546) |
| | 103 | |
| 15,712 |
| | (2,472) | |
| Net income (loss) attributable to noncontrolling interests | |
| 258 |
| | — | |
| 174 |
| | (1,108) | |
| Net income (loss) | |
| (21,581) |
| | 996 | |
| 119,836 |
| | (26,391) | |
| Gain on the sale of real estate, net of tax | |
| — |
| | — | |
| (155,506) |
| | (11,290) | |
| Gain on the sale of unconsolidated real estate assets | |
| — |
| | (23,137) | |
| (6,179) |
| | (28,326) | |
| Real estate depreciation and amortization | |
| 47,840 |
| | 54,547 | |
| 150,599 |
| | 171,522 | |
| Impairment related to unconsolidated real estate ventures (1) | | | 15,401 |
| | 1,380 | |
| 15,401 |
| | 1,380 | |
| Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures | |
| 4,999 |
| | 7,002 | |
| 18,285 |
| | 21,590 | |
| FFO attributable to noncontrolling interests | |
| (336) |
| | (54) | |
| (409) |
| | 976 | |
| FFO Attributable to OP Units | | $ | 46,323 |
| $ | 40,734 | | $ | 142,027 |
| $ | 129,461 | |
| FFO attributable to redeemable noncontrolling interests | |
| (6,227) |
| | (4,703) | |
| (17,070) |
| | (13,242) | |
| FFO Attributable to Common Shareholders | | $ | 40,096 |
| $ | 36,031 | | $ | 124,957 |
| $ | 116,219 | |
| | | | | | | | | | | | | | |
| FFO attributable to OP Units | | $ | 46,323 |
| $ | 40,734 | | $ | 142,027 |
| $ | 129,461 | |
| Transaction and Other Costs, net of tax and noncontrolling interests (2) | |
| 1,597 |
| | 2,928 | |
| 4,332 |
| | 7,721 | |
| (Income) loss from investments, net | | | 567 |
| | — | |
| (10,928) |
| | — | |
| (Gain) loss from mark-to-market on derivative instruments, net of noncontrolling interests | |
| (2,779) |
| | 37 | |
| (8,173) |
| | (50) | |
| Loss on the extinguishment of debt | |
| 1,444 |
| | — | |
| 3,073 |
| | — | |
| Earnings and distributions in excess of our investment in unconsolidated real estate venture | |
| (18) |
| | (280) | |
| (583) |
| | (702) | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 548 |
| | 3,480 | |
| 4,369 |
| | 12,866 | |
| Amortization of management contracts intangible, net of tax | |
| 1,105 |
| | 1,072 | |
| 3,316 |
| | 3,217 | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| (416) |
| | 112 | |
| 1,129 |
| | 108 | |
| Core FFO Attributable to OP Units | | $ | 48,371 |
| $ | 48,083 | | $ | 138,562 |
| $ | 152,621 | |
| Core FFO attributable to redeemable noncontrolling interests | |
| (7,158) |
| | (5,552) | |
| (17,541) |
| | (15,612) | |
| Core FFO Attributable to Common Shareholders | | $ | 41,213 |
| $ | 42,531 | | $ | 121,021 |
| $ | 137,009 | |
| FFO per common share - diluted | | $ | 0.35 |
| | 0.27 | | $ | 1.03 |
| | 0.88 | |
| Core FFO per common share - diluted | | $ | 0.36 |
| | 0.32 | | $ | 1.00 |
| | 1.04 | |
| Weighted average shares - diluted (FFO and Core FFO) | |
| 114,387 |
| | 131,351 | |
| 120,752 |
| | 131,456 | |
See footnotes on page 17.
| | |
| | Page 16 |
| |
FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP) | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | |
| in thousands, except per share data | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| ||||||||
| | | 2022 | | 2021 | | 2022 | | 2021 | | ||||
| | | | | | | | | | | | | | |
| FAD | | | | | | | | | | | | | |
| Core FFO attributable to OP Units |
| $ | 48,371 |
| $ | 48,083 | | $ | 138,562 |
| $ | 152,621 | |
| Recurring capital expenditures and Second-generation tenant improvements and leasing commissions (3) | |
| (10,094) | |
| (12,124) | |
| (37,096) | |
| (34,781) | |
| Straight-line and other rent adjustments (4) | |
| (6,018) | |
| (3,701) | |
| (9,787) | |
| (12,554) | |
| Third-party lease liability assumption payments | |
| — | |
| (422) | |
| (25) | |
| (1,803) | |
| Share-based compensation expense | |
| 5,714 | |
| 7,805 | |
| 26,378 | |
| 24,920 | |
| Amortization of debt issuance costs | |
| 1,122 | |
| 1,126 | |
| 3,433 | |
| 3,327 | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| (2,618) | |
| (1,478) | |
| (3,555) | |
| (4,137) | |
| Non-real estate depreciation and amortization | |
| 740 | |
| 703 | |
| 2,568 | |
| 2,180 | |
| FAD available to OP Units (A) | | $ | 37,217 | | $ | 39,992 | | $ | 120,478 | | $ | 129,773 | |
| Distributions to common shareholders and unitholders (B) | | $ | 29,833 | | $ | 33,688 | | $ | 94,204 | | $ | 102,634 | |
| FAD Payout Ratio (B÷A) (5) | |
| 80.2 | % |
| 84.2 | % |
| 78.2 | % |
| 79.1 | % |
| | | | | | | | | | | | | | |
| Capital Expenditures | | | | | | | | | | | | | |
| Maintenance and recurring capital expenditures | | $ | 4,944 | | $ | 7,404 | | $ | 15,855 | | $ | 15,706 | |
| Share of maintenance and recurring capital expenditures from unconsolidated real estate ventures | |
| 84 | |
| 265 | |
| 478 | |
| 636 | |
| Second-generation tenant improvements and leasing commissions | |
| 5,038 | |
| 3,762 | |
| 20,345 | |
| 17,280 | |
| Share of Second-generation tenant improvements and leasing commissions from unconsolidated real estate ventures | |
| 28 | |
| 693 | |
| 418 | |
| 1,159 | |
| Recurring capital expenditures and Second-generation tenant improvements and leasing commissions | |
| 10,094 | |
| 12,124 | |
| 37,096 | |
| 34,781 | |
| Non-recurring capital expenditures | |
| 13,832 | |
| 5,885 | |
| 40,194 | |
| 13,073 | |
| Share of non-recurring capital expenditures from unconsolidated real estate ventures | |
| 9 | |
| 177 | |
| 58 | |
| 284 | |
| First-generation tenant improvements and leasing commissions | |
| 13,627 | |
| 2,603 | |
| 22,274 | |
| 5,141 | |
| Share of First-generation tenant improvements and leasing commissions from unconsolidated real estate ventures | |
| 321 | |
| 93 | |
| 1,038 | |
| 1,484 | |
| Non-recurring capital expenditures | |
| 27,789 | |
| 8,758 | |
| 63,564 | |
| 19,982 | |
| Total JBG SMITH Share of Capital Expenditures | | $ | 37,883 | | $ | 20,882 | | $ | 100,660 | | $ | 54,763 | |
| (1) | Related to decreases in the value of the underlying assets. |
| (2) | See page 55 for the components of Transaction and Other Costs. |
| (3) | Includes amounts, at JBG SMITH Share, related to unconsolidated real estate ventures. |
| (4) | Includes straight-line rent, above/below market lease amortization and lease incentive amortization. |
| (5) | The quarterly FAD payout ratio is not necessarily indicative of an amount for the full year due to fluctuation in the timing of capital expenditures, the commencement of new leases and the seasonality of our operations. |
| | |
| | Page 17 |
| |
THIRD-PARTY ASSET MANAGEMENT AND REAL ESTATE SERVICES BUSINESS (NON-GAAP) | SEPTEMBER 30, 2022 |
Third-Party Asset Mgmt and Real Estate Services Business
| | | | | | | | | | | | | | |
| in thousands, at JBG SMITH Share | | Three Months Ended September 30, 2022 |
| ||||||||||
| | | Source of Revenue | | | |
| |||||||
| | | Third-Party | | JBG SMITH | | JBG Legacy | | | |
| |||
| | | Management | | JV Partner (1) | | Funds | | Total |
| ||||
| | | | | | | | | | | | | | |
| Service Revenue | | | | | | | | | | | | | |
| Property management fees |
| $ | 2,552 |
| $ | 1,217 |
| $ | 630 |
| $ | 4,399 | |
| Asset management fees | |
| — | |
| 385 | |
| 1,047 | |
| 1,432 | |
| Development fees | |
| 1,152 | |
| 249 | |
| 27 | |
| 1,428 | |
| Leasing fees | |
| 1,443 | |
| 208 | |
| 62 | |
| 1,713 | |
| Construction management fees | |
| 39 | |
| 130 | |
| — | |
| 169 | |
| Other service revenue | |
| 846 | |
| 644 | |
| 168 | |
| 1,658 | |
| Total Revenue (2) | | $ | 6,032 | | $ | 2,833 | | $ | 1,934 | | $ | 10,799 | |
| Pro rata adjusted general and administrative expense: third-party real estate services (3) | |
| | |
|
| |
|
| |
| (9,827) | |
| Total Services Revenue Less Allocated General and Administrative Expenses (4) | | | | |
| | |
| | | $ | 972 | |
| (1) | Service revenues from joint ventures are calculated on an asset-by-asset basis by applying our real estate venture partners' respective economic interests to the fees we earned from each consolidated and unconsolidated real estate venture. |
| (2) | Included in "Third-party real estate services, including reimbursements" in our consolidated statement of operations are $10.4 million of reimbursement revenue and $2.4 million of service revenue from our economic interest in consolidated and unconsolidated real estate ventures that are excluded from this table. |
| (3) | Our personnel perform services for wholly owned properties and properties we manage on behalf of third parties, real estate ventures and JBG Legacy Funds. |
We allocate personnel and other costs to wholly owned properties (included in "Property operating expenses" and "General and administrative expense: corporate and other" in our consolidated statement of operations) and to properties owned by the third parties, real estate ventures and JBG Legacy Funds (included in "General and administrative expense: third-party real estate services" in our consolidated statement of operations) using estimates of the time spent performing services related to properties in the respective portfolios and other allocation methodologies.
Allocated general and administrative expenses related to real estate ventures are calculated on an asset-by-asset basis by applying our real estate venture partners' respective economic interests to the total general and administrative expenses allocated to each asset. See "Pro Rata Adjusted General and Administrative Expenses" on the next page for a reconciliation of "General and administrative expenses: third-party real estate services" to "Pro Rata Adjusted General and Administrative Expenses."
| (4) | Services revenue, excluding reimbursement revenue and service revenue from our economic interest in consolidated and unconsolidated real estate ventures, less allocated general and administrative expenses. Management uses this measure as a supplemental performance measure for its third-party asset management and real estate services business and believes it provides useful information to investors because it reflects only those revenue and expense items incurred by us and can be used to assess the profitability of the third-party asset management and real estate services business. |
| | |
| | Page 18 |
| |
PRO RATA ADJUSTED GENERAL AND ADMINISTRATIVE EXPENSES | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | | |
| in thousands | | Three Months Ended September 30, 2022 |
| |||||||||||||
| | | | | | Adjustments (1) | | | |
| |||||||
| | | Per Statement | | | | | | | | | | | Pro Rata |
| ||
| | | of Operations | | A | | B | | C | | Adjusted |
| |||||
| | | | | | | | | | | | | | | | | |
| General and Administrative Expenses | | | | | | | | | | | | | | | | |
| Corporate and other |
| $ | 12,072 |
| $ | — |
| $ | — |
| $ | 1,045 |
| $ | 13,117 | |
| Third-party real estate services | |
| 21,230 | |
| — | |
| (10,358) | |
| (1,045) | |
| 9,827 | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 548 | |
| (548) | |
| — | |
| — | |
| — | |
| | | | | | | | | | | | | | | | | |
| Total | | $ | 33,850 | | $ | (548) | | $ | (10,358) | | $ | — | | $ | 22,944 | |
| (1) | Adjustments: |
A - Removes share-based compensation related to the Formation Transaction and special equity awards.
B - Removes $10.4 million of general and administrative expenses reimbursed by third-party owners of real estate we manage related to revenue which has been excluded from Service Revenue on page 18. Revenue from reimbursements is included in "Third-party real estate services, including reimbursements" in our consolidated statement of operations.
C - Reflects an adjustment to allocate our share of general and administrative expenses of unconsolidated real estate ventures from "Third-party real estate services" to "Corporate and other" and our consolidated real estate venture partners' share of general and administrative expenses from "Corporate and other" to "Third-party real estate services."
| | |
| | Page 19 |
| |
OPERATING ASSETS | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | | | | | |
| dollars in thousands, at JBG SMITH Share |
| |
| | | |
| | |
| Plus: Signed |
| Plus: Incremental |
| | |
| ||
| | | | | | Q3 2022 | | | | | But Not Yet | | NOI from Assets | | Adjusted |
| ||||
| | | | | | Operating | | Annualized | | Commenced | | in Initial | | Annualized |
| |||||
| | | % Occupied | | | Portfolio NOI | | NOI | | Leases | | Lease-up (1) | | NOI |
| |||||
| | | | | | | | | | | | | | | | | | | | |
| Commercial (2) | | | | | | | | | | | | | | | | | | | |
| National Landing | | 86.5 | % | | $ | 42,215 | | $ | 167,862 | | $ | 6,544 | | $ | 144 | | $ | 174,550 | |
| Other VA | | 95.6 | % | | | 1,946 | | | 7,784 | | | 276 | | | — | | | 8,060 | |
| DC |
| 73.6 | % | | | 4,161 | | | 16,644 | | | 4,688 | | | — | | | 21,332 | |
| MD |
| 93.2 | % | |
| 3,845 | |
| 15,380 | |
| 452 | |
| 1,616 | |
| 17,448 | |
| Total / weighted average |
| 85.9 | % | | $ | 52,167 | | $ | 207,670 | | $ | 11,960 | | $ | 1,760 | | $ | 221,390 | |
| | | | | | | | | | | | | | | | | | | | |
| Multifamily (3) |
|
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
| National Landing |
| 95.8 | % | | $ | 11,405 | | $ | 45,620 | | $ | — | | $ | — | | $ | 45,620 | |
| DC |
| 92.6 | % | | | 14,869 | | | 59,476 | | | 648 | | | 1,546 | | | 61,670 | |
| MD |
| 89.6 | % | |
| 1,681 | |
| 6,724 | |
| 32 | |
| 1,289 | |
| 8,045 | |
| Total / weighted average |
| 93.7 | % | | $ | 27,955 | | $ | 111,820 | | $ | 680 | | $ | 2,835 | | $ | 115,335 | |
| | | | | | | | | | | | | | | | | | | | |
| Ground Leases and Other (4) |
|
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Other VA | | — | | | $ | 136 | | $ | 544 | | $ | — | | $ | — | | $ | 544 | |
| DC | | — | | | | 496 | | | 1,984 | | | — | | | — | | | 1,984 | |
| Total | | — | | | $ | 632 | | $ | 2,528 | | $ | — | | $ | — | | $ | 2,528 | |
| | | | | | | | | | | | | | | | | | | | |
| Total / Weighted Average |
| 88.9 | % | | $ | 80,754 | | $ | 322,018 | | $ | 12,640 | | $ | 4,595 | | $ | 339,253 | |
| (1) | Incremental revenue from commercial assets represents the burn-off of Free Rent and is calculated as Free Rent incurred at assets in their initial lease-up for the three months ended September 30, 2022 multiplied by four. Incremental revenue from multifamily assets in their initial lease-up is calculated as the product of units available for occupancy up to 95.0% occupancy and the weighted average monthly in-place rent per unit as of September 30, 2022, multiplied by 12, and assumes no rent growth. Excludes potential revenue from vacant retail space in multifamily assets in their initial lease-up. Average in-place rents were 8.4% below asking rents as of September 30, 2022. See page 39 for more detail. |
| (2) | Crystal City Marriott is excluded from the Percent Occupied metric. |
| (3) | 2221 S. Clark Street - Residential and 900 W Street are excluded from the Percent Occupied metric. |
| (4) | 1700 M Street and 1831/1861 Wiehle Avenue (for which we are the ground lessor) are excluded from the Percent Occupied metric. |
| | |
| | Page 20 |
| |
SUMMARY & SAME STORE NOI (NON-GAAP) | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | | | | | |
| dollars in thousands | | | | 100% Share | | At JBG SMITH Share | | ||||||||||||
| | | | | | | | | | | | | NOI for the Three Months Ended September 30, |
| ||||||
| | | Number of | | Square Feet/ | | Square Feet/ | | % | | % | | | | | | | | | |
| | | Assets | | Units | | Units | | Leased (1) | | Occupied (1) | | 2022 | | 2021 | | % Change | | ||
| Same Store (2) | | | | | | | | | | | | | | | | | | | |
| National Landing | | 27 | | 7,327,446 SF/ | | 7,051,642 SF/ | | 90.6 | % | 88.9 | % | $ | 50,303 | | $ | 45,962 | | 9.4 | % |
| Other VA | | 4 | | 1,058,111 SF | | 399,197 SF | | 95.2 | % | 95.6 | % | | 5,200 | | | 6,345 | | (18.0) | % |
| DC |
| 18 |
| 1,629,541 SF/ |
| 913,509 SF/ |
| 91.2 | % | 87.2 | % | | 17,422 |
| | 13,616 |
| 28.0 | % |
| MD |
| 4 |
| 513,647 SF/ |
| 513,647 SF/ |
| 95.6 | % | 94.0 | % |
| 5,184 | |
| 4,119 |
| 25.9 | % |
| Total / weighted average |
| 53 |
| 10,528,745 SF/ |
| 8,877,995 SF/ |
| 91.2 | % | 89.0 | % | $ | 78,109 | | $ | 70,042 |
| 11.5 | % |
| | | | | | | | | | | | | | | | | | | | |
| Non-Same Store |
|
|
| |
| |
|
|
|
| |
|
| |
|
|
|
| |
| National Landing |
| — |
| — |
| — |
| — | | — | | $ | — | | $ | — |
| — | |
| Other VA | | 1 | | — | | — | | — | | — | | | 199 | | | 5,127 | | (96.1) | % |
| DC |
| 1 |
| 432 Units |
| 432 Units |
| 93.8 | % | 92.1 | % | | 2,104 | | | 5,071 |
| (58.5) | % |
| MD |
| 1 |
| 322 Units |
| 161 Units |
| 81.5 | % | 74.8 | % |
| 342 | |
| 1,253 |
| (72.7) | % |
| Total / weighted average |
| 3 |
| 754 Units |
| 593 Units |
| 89.1 | % | 85.8 | % | $ | 2,645 | | $ | 11,451 |
| (76.9) | % |
| | | | | | | | | | | | | | | | | | | | |
| Total Operating Portfolio |
|
|
| |
| |
|
|
|
| |
|
| |
|
|
|
| |
| National Landing | | 27 | | 7,327,446 SF/ | | 7,051,642 SF/ | | 90.6 | % | 88.9 | % | $ | 50,303 | | $ | 45,962 | | 9.4 | % |
| Other VA | | 5 | | 1,058,111 SF | | 399,197 SF | | 95.2 | % | 95.6 | % | | 5,399 | | | 11,472 | | (52.9) | % |
| DC |
| 19 |
| 1,629,541 SF/ |
| 913,509 SF/ |
| 91.4 | % | 87.7 | % | | 19,526 | | | 18,687 |
| 4.5 | % |
| MD |
| 5 |
| 513,647 SF/ |
| 513,647 SF/ |
| 93.1 | % | 90.7 | % |
| 5,526 | |
| 5,372 |
| 2.9 | % |
| Operating Portfolio - |
| 56 |
| 10,528,745 SF/ |
| 8,877,995 SF/ |
| 91.1 | % | 88.9 | % | $ | 80,754 | | $ | 81,493 |
| (0.9) | % |
| (1) | Crystal City Marriott, 2221 S. Clark Street - Residential, 900 W Street, and assets for which we are the ground lessor (1700 M Street and 1831/1861 Wiehle Avenue) are excluded from the Percent Leased and Percent Occupied metrics. |
| (2) | Same Store refers to the pool of assets that were In-Service for the entirety of both periods being compared, which excludes assets for which significant redevelopment, renovation, or repositioning occurred during either of the periods being compared. |
| | |
| | Page 21 |
| |
SUMMARY & SAME STORE NOI (NON-GAAP) | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | | | | | |
| dollars in thousands | | | | 100% Share | | At JBG SMITH Share | | ||||||||||||
| | | | | | | | | | | | | NOI for the Nine Months Ended September 30, |
| ||||||
| | | Number of | | Square Feet/ | | Square Feet/ | | % | | % | | | | | | | | | |
| | | Assets | | Units | | Units | | Leased (1) | | Occupied (1) | | 2022 | | 2021 | | % Change | | ||
| Same Store (2) | | | | | | | | | | | | | | | | | | | |
| National Landing | | 27 | | 7,327,446 SF/ | | 7,051,642 SF/ | | 90.6 | % | 88.9 | % | $ | 152,583 | | $ | 136,803 | | 11.5 | % |
| Other VA | | 4 | | 1,058,111 SF | | 399,197 SF | | 95.2 | % | 95.6 | % | | 16,786 | | | 19,072 | | (12.0) | % |
| DC |
| 17 |
| 1,629,541 SF/ |
| 913,509 SF/ |
| 90.6 | % | 86.7 | % | | 46,186 |
| | 36,802 |
| 25.5 | % |
| MD |
| 4 |
| 513,647 SF/ |
| 513,647 SF/ |
| 95.6 | % | 94.0 | % |
| 15,948 | |
| 12,251 |
| 30.2 | % |
| Total / weighted average |
| 52 |
| 10,528,745 SF/ |
| 8,877,995 SF/ |
| 91.0 | % | 88.9 | % | $ | 231,503 | | $ | 204,928 |
| 13.0 | % |
| | | | | | | | | | | | | | | | | | | | |
| Non-Same Store |
|
|
| |
| |
|
|
|
| |
|
| |
|
|
|
| |
| National Landing |
| — |
| — |
| — |
| — | | — | | $ | — | | $ | — |
| — | |
| Other VA | | 1 | | — | | — | | — | | — | | | 7,541 | | | 15,408 | | (51.1) | % |
| DC |
| 2 |
| 865 Units |
| 848 Units |
| 95.5 | % | 92.1 | % | | 17,382 | | | 20,789 |
| (16.4) | % |
| MD |
| 1 |
| 322 Units |
| 161 Units |
| 81.5 | % | 74.8 | % |
| 1,905 | |
| 4,066 |
| (53.1) | % |
| Total / weighted average |
| 4 |
| 1,187 Units |
| 1,009 Units |
| 92.3 | % | 88.2 | % | $ | 26,828 | | $ | 40,263 |
| (33.4) | % |
| | | | | | | | | | | | | | | | | | | | |
| Total Operating Portfolio |
|
|
| |
| |
|
|
|
| |
|
| |
|
|
|
| |
| National Landing | | 27 | | 7,327,446 SF/ | | 7,051,642 SF/ | | 90.6 | % | 88.9 | % | $ | 152,583 | | $ | 136,803 | | 11.5 | % |
| Other VA | | 5 | | 1,058,111 SF | | 399,197 SF | | 95.2 | % | 95.6 | % | | 24,327 | | | 34,480 | | (29.4) | % |
| DC |
| 19 |
| 1,629,541 SF/ |
| 913,509 SF/ |
| 91.4 | % | 87.7 | % | | 63,568 | | | 57,591 |
| 10.4 | % |
| MD |
| 5 |
| 513,647 SF/ |
| 513,647 SF/ |
| 93.1 | % | 90.7 | % |
| 17,853 | |
| 16,317 |
| 9.4 | % |
| Operating Portfolio - |
| 56 |
| 10,528,745 SF/ |
| 8,877,995 SF/ |
| 91.1 | % | 88.9 | % | $ | 258,331 | | $ | 245,191 |
| 5.4 | % |
| | |
| | Page 22 |
| |
SUMMARY NOI (NON-GAAP) | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | | | | | |
| dollars in thousands | | NOI for the Three Months Ended September 30, 2022 at JBG SMITH Share |
| ||||||||||||||||
| | | Consolidated | | Unconsolidated | | Commercial | | Multifamily | | Ground Leases and Other (7) | | Total |
| ||||||
| Number of operating assets |
| | 45 |
| | 11 |
| | 35 |
| | 19 |
| | 2 |
| | 56 | |
| Property rental (1) | | $ | 104,505 | | $ | 11,194 | | $ | 71,873 | | $ | 43,201 | | $ | 625 | | $ | 115,699 | |
| Tenant expense reimbursement |
|
| 6,101 |
|
| 466 |
|
| 5,381 |
|
| 1,023 |
|
| 163 |
|
| 6,567 | |
| Other revenue (2) | |
| 9,775 | |
| 1,510 | |
| 6,820 | |
| 4,465 | |
| — | |
| 11,285 | |
| Total revenue | |
| 120,381 | |
| 13,170 | |
| 84,074 | |
| 48,689 | |
| 788 | |
| 133,551 | |
| | | | | | | | | | | | | | | | | | | | |
| Operating expenses | |
| (46,636) | |
| (5,890) | |
| (31,636) | |
| (20,734) | |
| (156) | |
| (52,526) | |
| Ground rent expense | |
| (271) | |
| — | |
| (271) | |
| — | |
| — | |
| (271) | |
| Total expenses | |
| (46,907) | |
| (5,890) | |
| (31,907) | |
| (20,734) | |
| (156) | |
| (52,797) | |
| | | | | | | | | | | | | | | | | | | | |
| Operating Portfolio NOI (3) | | $ | 73,474 | | $ | 7,280 | | $ | 52,167 | | $ | 27,955 | | $ | 632 | | $ | 80,754 | |
| | | | | | | | | | | | | | | | | | | | |
| Annualized NOI | | $ | 292,898 | | $ | 29,120 | | $ | 207,670 | | $ | 111,820 | | $ | 2,528 | | $ | 322,018 | |
| Additional Information | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Free Rent (at 100% share) | | $ | 7,994 | | $ | 1,876 | | $ | 8,007 | | $ | 1,863 | | $ | — | | $ | 9,870 | |
| Free Rent (at JBG SMITH Share) | | $ | 7,992 | | $ | 666 | | $ | 7,258 | | $ | 1,400 | | $ | — | | $ | 8,658 | |
| Annualized Free Rent (at JBG SMITH Share) (4) | | $ | 31,968 | | $ | 2,664 | | $ | 29,032 | | $ | 5,600 | | $ | — | | $ | 34,632 | |
| % occupied (at JBG SMITH Share) (5) | |
| 89.3 | % |
| 83.5 | % |
| 85.9 | % |
| 93.7 | % |
| — | |
| 88.9 | % |
| Annualized base rent of signed leases, not commenced (at 100% share) (6) | | $ | 12,088 | | $ | 1,204 | | $ | 12,580 | | $ | 712 | | $ | — | | $ | 13,292 | |
| Annualized base rent of signed leases, not commenced (at JBG SMITH Share) (6) | | $ | 12,088 | | $ | 552 | | $ | 11,960 | | $ | 680 | | $ | — | | $ | 12,640 | |
| (1) | Property rental revenue excludes straight-line rent adjustments and other GAAP adjustments, and includes payments associated with assumed lease liabilities. |
| (2) | Includes $6.6 million of parking revenue at JBG SMITH Share. |
| (3) | NOI excludes $3.9 million of related party management fees at JBG SMITH Share. See definition of NOI on page 52. |
| (4) | Represents JBG SMITH's share of Free Rent for the three months ended September 30, 2022 multiplied by four. |
| (5) | Crystal City Marriott, 2221 S. Clark Street - Residential, 900 W Street, and assets for which we are the ground lessor (1700 M Street and 1831/1861 Wiehle Avenue) are excluded from the Percent Leased and Percent Occupied metrics. |
| (6) | Represents monthly base rent before Free Rent and straight-line rent adjustments, plus estimated tenant reimbursements for the month in which the lease commences, multiplied by 12. Includes only leases for office and retail spaces for which rent had not yet commenced as of September 30, 2022. |
| (7) | Includes 1700 M Street and 1831/1861 Wiehle Avenue for which we are the ground lessor. In 2021, the 1700 M Street ground lessee commenced construction on the site and provided us with a completion guarantee. The ground rent is currently $2.0 million per annum payable in equal quarterly installments. The ground rent will increase to $4.95 million per annum upon substantial completion of the ground lessee's construction but no later than December 4, 2023 and includes market escalations and CPI resets. The ground lease expires on December 4, 2117. In April 2022, we sold the leasehold interest in 1831/1861 Wiehle Avenue. Ground rent commenced on July 1, 2022 and is currently $500,000 per annum payable in equal monthly installments. The ground lease expires on April 29, 2121. |
| | |
| | Page 23 |
| |
SUMMARY NOI - COMMERCIAL (NON-GAAP) | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | | | | | | | | |
| dollars in thousands | | NOI for the Three Months Ended September 30, 2022 at JBG SMITH Share |
| |||||||||||||||||||
| |
| Consolidated |
| Unconsolidated |
| National Landing | | Other VA | | DC |
| MD |
| Total |
| |||||||
| Number of operating assets |
| | 26 |
| | 9 |
| | 23 | | | 4 | | | 6 |
| | 2 |
| | 35 | |
| Property rental (1) | | $ | 62,278 | | $ | 9,595 | | $ | 56,572 | | $ | 2,318 | | $ | 7,425 | | $ | 5,558 | | $ | 71,873 | |
| Tenant expense reimbursement | |
| 4,943 | |
| 438 | |
| 3,301 | |
| 804 | |
| 1,100 | |
| 176 | |
| 5,381 | |
| Other revenue (2) | |
| 5,509 | |
| 1,311 | |
| 5,059 | |
| 292 | |
| 1,047 | |
| 422 | |
| 6,820 | |
| Total revenue | |
| 72,730 | |
| 11,344 | |
| 64,932 | |
| 3,414 | |
| 9,572 | |
| 6,156 | |
| 84,074 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Operating expenses | |
| (26,739) | |
| (4,897) | |
| (22,717) | |
| (1,456) | |
| (5,411) | |
| (2,052) | |
| (31,636) | |
| Ground rent expense | |
| (271) | |
| — | |
| — | |
| (12) | |
| — | |
| (259) | |
| (271) | |
| Total expenses | |
| (27,010) | |
| (4,897) | |
| (22,717) | |
| (1,468) | |
| (5,411) | |
| (2,311) | |
| (31,907) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Operating Portfolio NOI (3) | | $ | 45,720 | | $ | 6,447 | | $ | 42,215 | | $ | 1,946 | | $ | 4,161 | | $ | 3,845 | | $ | 52,167 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Annualized NOI | | $ | 181,882 | | $ | 25,788 | | $ | 167,862 | | $ | 7,784 | | $ | 16,644 | | $ | 15,380 | | $ | 207,670 | |
| Additional Information | |
|
| |
|
| |
| | |
| | |
|
| |
|
| |
|
| |
| Free Rent (at 100% share) | | $ | 6,847 | | $ | 1,160 | | $ | 4,592 | | $ | 913 | | $ | 1,748 | | $ | 754 | | $ | 8,007 | |
| Free Rent (at JBG SMITH Share) | | $ | 6,847 | | $ | 411 | | $ | 4,556 | | $ | 820 | | $ | 1,128 | | $ | 754 | | $ | 7,258 | |
| Annualized Free Rent (at JBG SMITH Share) (4) | | $ | 27,388 | | $ | 1,644 | | $ | 18,224 | | $ | 3,280 | | $ | 4,512 | | $ | 3,016 | | $ | 29,032 | |
| % occupied (at JBG SMITH Share) (5) | |
| 86.0 | % |
| 85.0 | % |
| 86.5 | % |
| 95.6 | % | | 73.6 | % |
| 93.2 | % |
| 85.9 | % |
| Annualized base rent of signed leases, not commenced (at 100% share) (6) | | $ | 11,440 | | $ | 1,140 | | $ | 6,544 | | $ | 496 | | $ | 5,088 | | $ | 452 | | $ | 12,580 | |
| Annualized base rent of signed leases, not commenced (at JBG SMITH Share) (6) | | $ | 11,440 | | $ | 520 | | $ | 6,544 | | $ | 276 | | $ | 4,688 | | $ | 452 | | $ | 11,960 | |
| (1) | Property rental revenue excludes straight-line rent adjustments and other GAAP adjustments, and includes payments associated with assumed lease liabilities. |
| (2) | Includes $4.9 million of parking revenue at JBG SMITH Share. Parking revenue in our commercial portfolio during the quarter was approximately 79% of pre-pandemic levels of approximately $25 million annually. |
| (3) | NOI excludes $2.3 million of related party management fees at JBG SMITH Share. See definition of NOI on page 52. |
| (4) | Represents JBG SMITH's share of Free Rent for the three months ended September 30, 2022 multiplied by four. |
| (5) | Crystal City Marriott is excluded from the Percent Occupied metric. |
| (6) | Represents monthly base rent before Free Rent and straight-line rent adjustments, plus estimated tenant reimbursements for the month in which the lease commences, multiplied by 12. Includes only leases for office and retail spaces for which rent had not yet commenced as of September 30, 2022. |
| | |
| | Page 24 |
| |
SUMMARY NOI - MULTIFAMILY (NON-GAAP) | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | | | | | |
| dollars in thousands | | NOI for the Three Months Ended September 30, 2022 at JBG SMITH Share |
| ||||||||||||||||
| |
| Consolidated |
| Unconsolidated | | National Landing |
| DC |
| MD |
| Total |
| ||||||
| Number of operating assets |
| | 17 |
| | 2 | | | 4 |
| | 12 |
| | 3 |
| | 19 | |
| Property rental (1) | | $ | 41,602 | | $ | 1,599 | | $ | 17,606 | | $ | 22,548 | | $ | 3,047 | | $ | 43,201 | |
| Tenant expense reimbursement | |
| 995 | |
| 28 | |
| 85 | |
| 917 | |
| 21 | |
| 1,023 | |
| Other revenue (2) | |
| 4,266 | |
| 199 | |
| 1,994 | |
| 2,196 | |
| 275 | |
| 4,465 | |
| Total revenue | |
| 46,863 | |
| 1,826 | |
| 19,685 | |
| 25,661 | |
| 3,343 | |
| 48,689 | |
| | | | | | | | | | | | | | | | | | | | |
| Operating expenses | |
| (19,741) | |
| (993) | |
| (8,280) | |
| (10,792) | |
| (1,662) | |
| (20,734) | |
| Ground rent expense | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| Total expenses | |
| (19,741) | |
| (993) | |
| (8,280) | |
| (10,792) | |
| (1,662) | |
| (20,734) | |
| | | | | | | | | | | | | | | | | | | | |
| Operating Portfolio NOI (3) | | $ | 27,122 | | $ | 833 | | $ | 11,405 | | $ | 14,869 | | $ | 1,681 | | $ | 27,955 | |
| | | | | | | | | | | | | | | | | | | | |
| Annualized NOI | | $ | 108,488 | | $ | 3,332 | | $ | 45,620 | | $ | 59,476 | | $ | 6,724 | | $ | 111,820 | |
| Additional Information | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Free Rent (at 100% share) | | $ | 1,147 | | $ | 716 | | $ | 335 | | $ | 1,109 | | $ | 419 | | $ | 1,863 | |
| Free Rent (at JBG SMITH Share) | | $ | 1,145 | | $ | 255 | | $ | 335 | | $ | 855 | | $ | 210 | | $ | 1,400 | |
| Annualized Free Rent (at JBG SMITH Share) (4) | | $ | 4,580 | | $ | 1,020 | | $ | 1,340 | | $ | 3,420 | | $ | 840 | | $ | 5,600 | |
| % occupied (at JBG SMITH Share) (5) | |
| 94.2 | % |
| 77.6 | % |
| 95.8 | % |
| 92.6 | % |
| 89.6 | % |
| 93.7 | % |
| Annualized base rent of signed leases, not commenced (at 100% share) (6) | | $ | 648 | | $ | 64 | | $ | — | | $ | 648 | | $ | 64 | | $ | 712 | |
| Annualized base rent of signed leases, not commenced (at JBG SMITH Share) (6) | | $ | 648 | | $ | 32 | | $ | — | | $ | 648 | | $ | 32 | | $ | 680 | |
| (1) | Property rental revenue excludes straight-line rent adjustments and other GAAP adjustments, and includes payments associated with assumed lease liabilities. Average in-place rents were 8.4% below asking rents as of September 30, 2022. |
| (2) | Includes $1.7 million of parking revenue at JBG SMITH Share. |
| (3) | NOI excludes $1.6 million of related party management fees at JBG SMITH Share. See definition of NOI on page 52. |
| (4) | Represents JBG SMITH's share of Free Rent for the three months ended September 30, 2022 multiplied by four. |
| (5) | 2221 S. Clark Street – Residential and 900 W Street are excluded from the Percent Occupied metric. |
| (6) | Represents monthly base rent before Free Rent and straight-line rent adjustments, plus estimated tenant reimbursements for the month in which the lease commences, multiplied by 12. Includes only leases for retail spaces for which rent had not yet commenced as of September 30, 2022. |
| | |
| | Page 25 |
| |
NOI RECONCILIATIONS (NON-GAAP) | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | |
| dollars in thousands | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| ||||||||
| |
| 2022 |
| 2021 | | 2022 |
| 2021 | | ||||
| Net income (loss) attributable to common shareholders | | $ | (19,293) | | $ | 893 | | $ | 103,950 | | $ | (22,811) | |
| Add: | | |
| | |
| | |
| | |
| |
| Depreciation and amortization expense | | | 50,056 | | | 56,726 | | | 157,597 | | | 178,130 | |
| General and administrative expense: | | |
| | |
| | |
| | |
| |
| Corporate and other | | | 12,072 | | | 12,105 | | | 42,669 | | | 38,475 | |
| Third-party real estate services | | | 21,230 | | | 25,542 | | | 72,422 | | | 80,035 | |
| Share-based compensation related to Formation Transaction and special equity awards | | | 548 | | | 3,480 | | | 4,369 | | | 12,866 | |
| Transaction and Other Costs | | | 1,746 | | | 2,951 | | | 4,632 | | | 8,911 | |
| Interest expense | | | 17,932 | | | 17,243 | | | 50,251 | | | 50,312 | |
| Loss on the extinguishment of debt | | | 1,444 | | | — | | | 3,073 | | | — | |
| Income tax expense | | | 166 | | | 217 | | | 2,600 | | | 4,527 | |
| Net income (loss) attributable to redeemable noncontrolling interests | | | (2,546) | | | 103 | | | 15,712 | | | (2,472) | |
| Net income (loss) attributable to noncontrolling interests | | | 258 | | | — | | | 174 | | | (1,108) | |
| Less: | | |
| | |
| | |
| | |
| |
| Third-party real estate services, including reimbursements revenue | | | 21,845 | | | 25,842 | | | 67,972 | | | 90,694 | |
| Other revenue | | | 1,764 | | | 1,568 | | | 5,758 | | | 5,658 | |
| Income (loss) from unconsolidated real estate ventures, net | | | (13,867) | | | 20,503 | | | (12,829) | | | 23,513 | |
| Interest and other income, net | | | 984 | | | 192 | | | 16,902 | | | 163 | |
| Loss on the sale of real estate | | | — | | | — | | | 158,631 | | | 11,290 | |
| Consolidated NOI | | | 72,887 | | | 71,155 | | | 221,015 | | | 215,547 | |
| NOI attributable to unconsolidated real estate ventures at our share | | | 7,107 | | | 7,336 | | | 22,371 | | | 22,951 | |
| Non-cash rent adjustments (1) | | | (6,018) | | | (3,701) | | | (9,787) | | | (12,554) | |
| Other adjustments (2) | | | 6,230 | | | 4,683 | | | 20,689 | | | 14,608 | |
| Total adjustments | | | 7,319 | | | 8,318 | | | 33,273 | | | 25,005 | |
| NOI | | $ | 80,206 | | $ | 79,473 | | $ | 254,288 | | $ | 240,552 | |
| Less: out-of-service NOI loss (3) | | | (548) | | | (2,019) | | | (4,043) | | | (4,638) | |
| Operating Portfolio NOI | | $ | 80,754 | | $ | 81,492 | | $ | 258,331 | | $ | 245,190 | |
| Non-Same Store NOI (4) | | | 2,645 | | | 11,450 | | | 26,828 | | | 40,262 | |
| Same Store NOI (5) | | $ | 78,109 | | $ | 70,042 | | $ | 231,503 | | $ | 204,928 | |
| | | | | | | | | | | | | | |
| Change in Same Store NOI | | | 11.5 | % | | | | | 13.0 | % | | | |
| Number of properties in Same Store pool | | | 53 | | | | | | 52 | | | | |
| (1) | Adjustment to exclude straight-line rent, above/below market lease amortization and lease incentive amortization. |
| (2) | Adjustment to include other revenue and payments associated with assumed lease liabilities related to operating properties and to exclude commercial lease termination revenue and allocated corporate general and administrative expenses to operating properties. |
| (3) | Includes the results of our Under-Construction assets, and Near-Term and Future Development Pipelines. |
| (4) | Includes the results of properties that were not In-Service for the entirety of both periods being compared and properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. |
| (5) | Includes the results of the assets that are owned, operated and In-Service for the entirety of both periods being compared. |
| | |
| | Page 26 |
| |
LEASING ACTIVITY - OFFICE | SEPTEMBER 30, 2022 |
| | | | | | | | | |
| square feet in thousands |
| Three Months Ended | | | Nine Months Ended |
| ||
| | | September 30, 2022 | | | September 30, 2022 |
| ||
| Square feet leased: |
| | | | | |
| |
| At 100% share |
| | 216 | | | | 807 | |
| At JBG SMITH Share |
| | 207 | | | | 743 | |
| First-generation space: New | | | 116 | | | | 166 | |
| Second-generation space: New | | | 3 | | | | 98 | |
| Second-generation space: Renewal | | | 88 | | | | 479 | |
| Initial rent (1) | | $ | 45.87 | | | $ | 45.69 | |
| Straight-line rent (2) | | $ | 46.81 | | | $ | 45.03 | |
| Weighted average lease term (years) | |
| 8.0 | | |
| 7.4 | |
| Weighted average Free Rent period (months) | |
| 9.5 | | |
| 8.5 | |
| Second-generation space: | |
| | | |
| | |
| Square feet | |
| 91 | | |
| 577 | |
| Cash basis: | |
|
| | |
|
| |
| Initial rent (1) | | $ | 45.08 | | | $ | 45.52 | |
| Prior escalated rent | | $ | 46.33 | | | $ | 49.84 | |
| % change | |
| (2.7) | % | |
| (8.7) | % |
| GAAP basis: | |
|
| | |
|
| |
| Straight-line rent (2) | | $ | 43.96 | | | $ | 43.83 | |
| Prior straight-line rent | | $ | 41.73 | | | $ | 46.43 | |
| % change | |
| 5.3 | % | |
| (5.6) | % |
| Tenant improvements: | |
|
| | |
|
| |
| Per square foot | | $ | 70.54 | | | $ | 52.20 | |
| Per square foot per annum | | $ | 8.84 | | | $ | 7.08 | |
| % of initial rent | |
| 19.3 | % | |
| 15.5 | % |
| Leasing commissions: | |
|
| | |
|
| |
| Per square foot | | $ | 14.20 | | | $ | 12.44 | |
| Per square foot per annum | | $ | 1.78 | | | $ | 1.69 | |
| % of initial rent | |
| 3.9 | % | |
| 3.7 | % |
Note: At JBG SMITH Share, unless otherwise indicated. The leasing activity and related statistics are based on leases signed during the period and are not intended to coincide with the commencement of property rental revenue in accordance with GAAP. Second-generation space represents square footage that was vacant for less than nine months. Weighted average lease term is weighted by SF and weighted average Free Rent period is weighted by Annualized Rent.
| (1) | Represents the cash basis weighted average starting rent per square foot, which is generally indicative of market rents. Triple net leases are converted to a gross basis by adding estimated tenant reimbursements to monthly base rent. Most leases include Free Rent and periodic step-ups in rent which are not included in the initial cash basis rent per square foot but are included in the GAAP basis rent per square foot. |
| (2) | Represents the GAAP basis weighted average rent per square foot that is recognized over the term of the respective leases, including the effect of Free Rent and fixed step-ups in rent. |
| | |
| | Page 27 |
| |
NET EFFECTIVE RENT - OFFICE | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | | | | | |
| square feet in thousands, dollars per square feet, at JBG SMITH Share | | Three Months Ended |
| ||||||||||||||||
| |
| Five Quarter |
| September 30, 2022 |
| June 30, 2022 |
| March 31, 2022 |
| December 31, 2021 |
| September 30, 2021 |
| ||||||
| Square feet |
| | 267 |
| | 207 |
| | 326 |
| | 210 |
| | 468 |
| | 126 | |
| Weighted average lease term (years) |
| | 7.4 |
| | 8.0 |
| | 8.0 |
| | 5.8 |
| | 8.0 |
| | 5.4 | |
| Initial rent (1) | | $ | 45.16 | | $ | 45.87 | | $ | 40.34 | | $ | 53.78 | | $ | 44.41 | | $ | 44.82 | |
| Base rent per annum (2) | | $ | 48.96 | | $ | 52.06 | | $ | 41.22 | | $ | 65.64 | | $ | 46.32 | | $ | 45.78 | |
| Tenant improvements per annum | |
| (5.59) | |
| (8.84) | |
| (4.24) | |
| (10.80) | |
| (3.00) | |
| (4.68) | |
| Leasing commissions per annum | |
| (1.58) | |
| (1.78) | |
| (1.36) | |
| (2.27) | |
| (1.51) | |
| (0.90) | |
| Free Rent per annum | |
| (4.59) | |
| (4.57) | |
| (2.96) | |
| (7.31) | |
| (4.79) | |
| (3.60) | |
| Net Effective Rent | | $ | 37.19 | | $ | 36.87 | | $ | 32.66 | | $ | 45.26 | | $ | 37.02 | | $ | 36.60 | |
| | | | | | | | | | | | | | | | | | | | |
| National Landing | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Square feet | |
| 159 | |
| 184 | |
| 52 | |
| 133 | |
| 337 | |
| 89 | |
| Initial rent (1) | | $ | 45.51 | | $ | 46.41 | | $ | 48.00 | | $ | 48.65 | | $ | 43.58 | | $ | 44.85 | |
| Net effective rent | | $ | 36.60 | | $ | 36.93 | | $ | 35.01 | | $ | 40.06 | | $ | 35.64 | | $ | 35.36 | |
| | | | | | | | | | | | | | | | | | | | |
| Other VA | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Square feet | |
| 42 | |
| 1 | |
| 123 | |
| 12 | |
| 60 | |
| 16 | |
| Initial rent (1) | | $ | 44.70 | | $ | 38.61 | | $ | 48.49 | | $ | 41.83 | | $ | 38.05 | | $ | 42.95 | |
| Net effective rent | | $ | 36.79 | | $ | 30.76 | | $ | 38.46 | | $ | 31.52 | | $ | 33.53 | | $ | 40.43 | |
| | | | | | | | | | | | | | | | | | | | |
| DC | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Square feet | |
| 28 | |
| 9 | |
| 24 | |
| 66 | |
| 32 | |
| 9 | |
| Initial rent (1) | | $ | 60.41 | | $ | 55.95 | | $ | 47.34 | | $ | 66.20 | | $ | 62.30 | | $ | 50.75 | |
| Net effective rent | | $ | 47.81 | | $ | 42.94 | | $ | 41.04 | | $ | 49.02 | | $ | 52.86 | | $ | 43.86 | |
| | | | | | | | | | | | | | | | | | | | |
| MD | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Square feet | |
| 38 | |
| 13 | |
| 127 | |
| — | |
| 38 | |
| 11 | |
| Initial rent (1) | | $ | 32.87 | | $ | 32.09 | | $ | 27.95 | | $ | — | | $ | 46.74 | | $ | 42.27 | |
| Net effective rent | | $ | 28.77 | | $ | 25.44 | | $ | 26.61 | | $ | — | | $ | 36.08 | | $ | 32.33 | |
Note: Leasing activity and related statistics are based on leases signed during the period and are not intended to coincide with the recognition of property rental revenue in accordance with GAAP. Weighted average lease term is weighted by SF and weighted average Free Rent period is weighted by Annualized Rent.
| (1) | Represents the cash basis weighted average starting rent per square foot, which is generally indicative of market rents. Triple net leases are converted to a gross basis by adding estimated tenant reimbursements to monthly base rent. Most leases include Free Rent and periodic step-ups in rent which are not included in the initial cash basis rent per square foot. |
| (2) | Represents the weighted average base rent before Free Rent, plus estimated tenant reimbursements recognized over the term of the respective leases, including the effect of fixed step-ups in rent, divided by SF, and divided by years of lease term. Triple net leases are converted to a gross basis by adding estimated tenant reimbursements to base rent. Tenant reimbursements are estimated by escalating tenant reimbursements as of the respective reporting period, or management's estimate thereof, by 2.75% annually through the lease expiration year. |
| | |
| | Page 28 |
| |
LEASE EXPIRATIONS | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | | | | |
| | | | | At JBG SMITH Share | | |||||||||||||
| |
| |
| |
| |
| | |
| |
| | |
| Estimated |
| |
| | | | | | | | | | | | % of | | | | | Annualized |
| |
| | | | | | | % of | | Annualized | | Total | | Annualized | | Rent Per |
| |||
| | | Number | | | | Total | | Rent (1) | | Annualized | | Rent Per | | Square Foot at |
| |||
| Year of Lease Expiration | | of Leases | | Square Feet | | Square Feet | | (in thousands) | | Rent | | Square Foot (1) | | Expiration (1) (2) |
| |||
| Month-to-Month |
| 34 |
| 126,140 |
| 1.6 | % | $ | 3,492 |
| 1.0 | % | $ | 27.68 | | $ | 27.68 | |
| 2022 |
| 28 |
| 198,260 |
| 2.6 | % |
| 7,780 |
| 2.2 | % |
| 39.24 | |
| 39.26 | |
| 2023 |
| 115 |
| 925,676 |
| 11.9 | % |
| 40,793 |
| 11.6 | % |
| 44.07 | |
| 45.02 | |
| 2024 |
| 79 |
| 1,346,648 |
| 17.3 | % |
| 61,772 |
| 17.5 | % |
| 45.87 | |
| 46.93 | |
| 2025 |
| 79 |
| 826,889 |
| 10.7 | % |
| 37,035 |
| 10.5 | % |
| 44.79 | |
| 47.14 | |
| 2026 |
| 61 |
| 257,651 |
| 3.3 | % |
| 12,551 |
| 3.6 | % |
| 48.71 | |
| 52.77 | |
| 2027 |
| 46 |
| 562,645 |
| 7.2 | % |
| 26,344 |
| 7.5 | % |
| 46.82 | |
| 52.12 | |
| 2028 |
| 50 |
| 389,786 |
| 5.0 | % |
| 18,524 |
| 5.3 | % |
| 47.52 | |
| 54.75 | |
| 2029 |
| 24 |
| 144,081 |
| 1.9 | % |
| 6,823 |
| 1.9 | % |
| 47.35 | |
| 54.54 | |
| 2030 |
| 27 |
| 390,163 |
| 5.0 | % |
| 21,919 |
| 6.2 | % |
| 56.18 | |
| 67.30 | |
| Thereafter |
| 106 |
| 2,596,008 |
| 33.5 | % |
| 115,662 |
| 32.7 | % |
| 45.24 | |
| 56.26 | |
| Total / Weighted Average |
| 649 |
| 7,763,947 |
| 100.0 | % | $ | 352,695 |
| 100.0 | % | $ | 45.66 | | $ | 51.44 | |
Note: Includes all in-place leases as of September 30, 2022 for office and retail space within our operating portfolio and assuming no exercise of renewal options or early termination rights. The weighted average remaining lease term for the entire portfolio is 5.7 years.
| (1) | Annualized Rent and Annualized Rent per Square Foot exclude percentage rent and the square footage of tenants that only pay percentage rent. |
| (2) | Represents monthly base rent before Free Rent, plus tenant reimbursements, as of lease expiration multiplied by 12 and divided by SF. Triple net leases are converted to a gross basis by adding tenant reimbursements to monthly base rent. Tenant reimbursements at lease expiration are estimated by escalating tenant reimbursements as of September 30, 2022, or management's estimate thereof, by 2.75% annually through the lease expiration year. |
| | |
| | Page 29 |
| |
SIGNED BUT NOT YET COMMENCED LEASES | SEPTEMBER 30, 2022 |
Signed But Not Yet Commenced Leases
| | | | | | | | | | | | | | | | | | | | | | | | | |
| in thousands, at JBG SMITH Share | | Total | | | | | | | | | | | | | | | | | | |
| |||
| | | | | Annualized | | | | | | | | | | | | | | | | | | | | |
| | | | | Estimated | | Estimated Rent (1) for the Quarter Ending | | |||||||||||||||||
| Assets |
| C/U (2) |
| Rent (3) |
| December 31, 2022 |
| March 31, 2023 |
| June 30, 2023 |
| September 30, 2023 |
| December 31, 2023 |
| March 31, 2024 |
| |||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| Commercial |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| |
| Operating |
| C | | $ | 11,440 | | $ | 337 | | $ | 819 | | $ | 957 | | $ | 2,286 | | $ | 2,831 | | $ | 2,831 | |
| Operating |
| U | |
| 520 | |
| 55 | |
| 56 | |
| 108 | |
| 130 | |
| 130 | |
| 130 | |
| Total | | | | $ | 11,960 | | $ | 392 | | $ | 875 | | $ | 1,065 | | $ | 2,416 | | $ | 2,961 | | $ | 2,961 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Multifamily | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Operating | | C | | $ | 648 | | $ | 69 | | $ | 69 | | $ | 124 | | $ | 161 | | $ | 162 | | $ | 162 | |
| Operating | | U | |
| 32 | |
| 3 | |
| 8 | |
| 8 | |
| 8 | |
| 8 | |
| 8 | |
| Under construction | | C | |
| 696 | |
| — | |
| — | |
| — | |
| — | |
| — | |
| 13 | |
| Total | | | | $ | 1,376 | | $ | 72 | | $ | 77 | | $ | 132 | | $ | 169 | | $ | 170 | | $ | 183 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | | $ | 13,336 | | $ | 464 | | $ | 952 | | $ | 1,197 | | $ | 2,585 | | $ | 3,131 | | $ | 3,144 | |
Note: Includes only leases for office and retail spaces for which rent had not yet commenced as of September 30, 2022.
| (1) | Represents contractual monthly base rent before Free Rent, plus estimated tenant reimbursements for the month in which the lease is estimated to commence, multiplied by the applicable number of months for each quarter based on the lease's estimated commencement date. |
| (2) | "C" denotes a consolidated interest. "U" denotes an unconsolidated interest. |
| (3) | Represents contractual monthly base rent before Free Rent, plus estimated tenant reimbursements for the month in which the lease is expected to commence, multiplied by 12. |
| | |
| | Page 30 |
| |
TENANT CONCENTRATION | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | |
dollars in thousands |
|
|
| At JBG SMITH Share |
| |||||||||
| | Tenant | | Number of Leases | | Square Feet | | % of Total Square Feet | | Annualized | | % of Total Annualized Rent |
| |
1 | | U.S. Government (GSA) | | 52 | | 2,127,926 | | 27.4 | % | $ | 85,922 | | 24.4 | % |
2 |
| Amazon | | 8 | | 1,035,347 |
| 13.3 | % | | 44,807 |
| 12.7 | % |
3 |
| Gartner, Inc | | 1 | | 174,424 |
| 2.2 | % | | 12,397 |
| 3.5 | % |
4 |
| Lockheed Martin Corporation | | 2 | | 207,095 |
| 2.7 | % | | 9,746 |
| 2.8 | % |
5 |
| Booz Allen Hamilton Inc | | 3 | | 159,610 |
| 2.1 | % | | 7,922 |
| 2.2 | % |
6 |
| Greenberg Traurig LLP | | 1 | | 101,602 |
| 1.3 | % | | 7,196 |
| 2.0 | % |
7 |
| Accenture LLP | | 2 | | 116,736 |
| 1.5 | % | | 5,987 |
| 1.7 | % |
8 |
| Public Broadcasting Service | | 1 | | 120,328 |
| 1.5 | % | | 4,737 |
| 1.3 | % |
9 |
| Evolent Health LLC | | 1 | | 90,905 |
| 1.2 | % | | 4,693 |
| 1.3 | % |
10 |
| The International Justice Mission | | 1 | | 74,833 |
| 1.0 | % | | 4,348 |
| 1.2 | % |
11 |
| Host Hotels & Resorts LP | | 1 | | 55,009 |
| 0.7 | % | | 4,127 |
| 1.2 | % |
12 |
| American Diabetes Association | | 1 | | 80,998 |
| 1.0 | % | | 3,666 |
| 1.0 | % |
13 | | Willis Towers Watson US LLC | | 1 | | 61,653 | | 0.8 | % | | 3,216 | | 0.9 | % |
14 |
| National Consumer Cooperative | | 1 | | 65,736 |
| 0.8 | % | | 3,141 |
| 0.9 | % |
15 |
| WeWork | | 1 | | 41,647 |
| 0.5 | % | | 2,909 |
| 0.8 | % |
16 |
| Management System Intl Inc | | 1 | | 50,069 |
| 0.6 | % | | 2,816 |
| 0.8 | % |
17 |
| Whole Foods Market Group Inc | | 2 | | 79,875 |
| 1.0 | % | | 2,622 |
| 0.7 | % |
18 |
| SAIC | | 3 | | 53,882 |
| 0.7 | % | | 2,509 |
| 0.7 | % |
19 |
| The District of Columbia | | 4 | | 52,134 |
| 0.7 | % | | 2,490 |
| 0.7 | % |
20 |
| Cushman & Wakefield U.S. Inc | | 1 | | 38,008 |
| 0.5 | % | | 2,471 |
| 0.7 | % |
|
| Other (1) | | 561 | | 2,976,130 |
| 38.5 | % | | 134,973 |
| 38.5 | % |
|
| Total | | 649 | | 7,763,947 |
| 100.0 | % | $ | 352,695 |
| 100.0 | % |
Note: Includes all leases as of September 30, 2022 for which a tenant has taken occupancy for office and retail space within our operating portfolio.
| (1) | Includes JBG SMITH's lease for approximately 84,400 SF at 4747 Bethesda Avenue. |
| | |
| | Page 31 |
| |
INDUSTRY DIVERSITY | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | |
dollars in thousands | | | | At JBG SMITH Share |
| |||||||||
|
| |
| Number of |
| |
| % of Total |
| Annualized |
| % of Total |
| |
| | Industry | | Leases | | Square Feet | | Square Feet | | Rent | | Annualized Rent |
| |
1 |
| Government |
| 60 |
| 2,187,287 |
| 28.2 | % | $ | 88,755 |
| 25.2 | % |
2 |
| Business Services |
| 86 |
| 1,824,124 |
| 23.5 | % |
| 87,298 |
| 24.8 | % |
3 |
| Government Contractors |
| 50 |
| 934,983 |
| 12.0 | % |
| 42,890 |
| 12.2 | % |
4 |
| Member Organizations |
| 40 |
| 596,555 |
| 7.7 | % |
| 29,738 |
| 8.4 | % |
5 |
| Real Estate |
| 33 |
| 329,534 |
| 4.2 | % |
| 16,497 |
| 4.7 | % |
6 |
| Food and Beverage |
| 84 |
| 178,816 |
| 2.3 | % |
| 10,289 |
| 2.9 | % |
7 |
| Health Services |
| 30 |
| 269,632 |
| 3.5 | % |
| 10,922 |
| 3.1 | % |
8 |
| Legal Services |
| 20 |
| 149,094 |
| 1.9 | % |
| 10,038 |
| 2.8 | % |
9 |
| Communications |
| 6 |
| 125,842 |
| 1.6 | % |
| 5,005 |
| 1.4 | % |
10 |
| Educational Services |
| 12 |
| 81,279 |
| 1.0 | % |
| 3,815 |
| 1.1 | % |
|
| Other |
| 228 |
| 1,086,801 |
| 14.1 | % |
| 47,448 |
| 13.4 | % |
|
| Total |
| 649 |
| 7,763,947 |
| 100.0 | % | $ | 352,695 |
| 100.0 | % |
Note: Includes all in-place leases as of September 30, 2022 for office and retail space within our operating portfolio.
| | |
| | Page 32 |
| |
PORTFOLIO SUMMARY | SEPTEMBER 30, 2022 |
| | | | | | | | | | |
| | | | | | | | | Potential |
|
| | | Number | | Rentable | | Number of | | Development |
|
| | | of Assets | | Square Feet | | Units (1) | | Density (2) |
|
| | | | | | | | | | |
| Wholly Owned |
|
|
|
|
|
|
|
| |
| Operating |
| 44 |
| 12,957,693 |
| 6,001 |
| — | |
| Under-Construction (3) |
| 2 |
| 1,214,951 |
| 1,583 |
| — | |
| Near-Term Development | | 6 | | — | | — | | 3,322,900 | |
| Future Development |
| 8 |
| — |
| — |
| 5,129,200 | |
| Total (4) |
| 60 |
| 14,172,644 |
| 7,584 |
| 8,452,100 | |
| | | | | | | | | | |
| Real Estate Ventures |
|
|
|
|
|
|
|
| |
| Operating |
| 12 |
| 3,723,417 |
| 1,358 |
| — | |
| Under-Construction | | — | | — | | — | | | |
| Near-Term Development |
| 2 |
| — |
| — |
| 419,400 | |
| Future Development |
| 8 |
| — |
| — |
| 3,670,600 | |
| Total |
| 22 |
| 3,723,417 |
| 1,358 |
| 4,090,000 | |
| | | | | | | | | | |
| Total Portfolio | | 82 |
| 17,896,061 |
| 8,942 |
| 12,542,100 | |
| | | | | | | | | | |
| Total Portfolio (at JBG SMITH Share) | | 82 |
| 15,606,737 |
| 8,191 |
| 9,806,400 | |
Note: At 100% share, unless otherwise indicated.
| (1) | For Under-Construction assets, represents estimated number of units based on current design plans. |
| (2) | Includes estimated potential office, multifamily and retail development density. |
| (3) | See footnotes (3) and (4) on page 41. |
| | |
| | Page 33 |
| |
PROPERTY TABLE - COMMERCIAL | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| | |
| Office |
| | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Annualized | | Retail |
| ||
| | | | | | | | Same Store (2): | | | | | | | | | | | | | | | | Annualized | | Rent Per | | Annualized |
| |||
| | | | % | | | Q3 2021‑2022 / | | Year Built / | | Total | | Office | | Retail | | % | | Office % | | Retail % | | Rent | | Square | | Rent Per |
| ||||
Commercial Assets | | Submarket | | Ownership | | C/U (1) | | YTD 2021 - 2022 | | Renovated | | Square Feet | | Square Feet | | Square Feet | | Leased | | Occupied | | Occupied | | (in thousands) | | Foot (3) | | Square Foot (4) |
| |||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
National Landing |
|
|
|
|
|
|
|
|
| |
| |
| | | | | | | | | | |
| | |
| | |
| | |
1550 Crystal Drive (5) | | National Landing |
| 100.0 | % | C |
| Y / Y |
| 1980 / 2020 |
| 550,184 |
| 449,719 | | 100,465 | | 96.6% | | 96.1% | | 98.5% | | $ | 22,910 | | $ | 42.69 | | $ | 45.06 | |
2121 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1985 / 2006 |
| 505,038 |
| 505,038 | | — | | 78.6% | | 66.3% | | — | |
| 15,361 | |
| 45.88 | |
| — | |
2345 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1988 / 2019 |
| 499,675 |
| 491,783 | | 7,892 | | 87.3% | | 87.1% | | 100.0% | |
| 20,856 | |
| 48.38 | |
| 16.17 | |
2231 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1987 / 2009 |
| 468,906 |
| 416,979 | | 51,927 | | 88.0% | | 85.2% | | 97.4% | |
| 17,781 | |
| 44.48 | |
| 39.29 | |
2011 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1984 / 2006 |
| 440,996 |
| 434,234 | | 6,762 | | 58.5% | | 58.6% | | 50.3% | |
| 12,093 | |
| 47.01 | |
| 38.33 | |
2451 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1990 / 2019 |
| 402,374 |
| 390,317 | | 12,057 | | 88.0% | | 76.3% | | 92.6% | |
| 13,004 | |
| 48.33 | |
| 45.13 | |
1235 S. Clark Street |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1981 / 2007 |
| 384,777 |
| 336,431 | | 48,346 | | 96.9% | | 96.8% | | 97.2% | |
| 15,831 | |
| 45.12 | |
| 24.15 | |
241 18th Street S. |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1977 / 2013 |
| 362,219 |
| 333,911 | | 28,308 | | 96.7% | | 97.2% | | 89.9% | |
| 13,577 | |
| 40.38 | |
| 18.32 | |
251 18th Street S. (5) |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1975 / 2013 |
| 337,886 |
| 293,818 | | 44,068 | | 90.3% | | 99.0% | | 32.7% | |
| 13,469 | |
| 43.95 | |
| 47.72 | |
1215 S. Clark Street |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1983 / 2016 |
| 336,159 |
| 333,546 | | 2,613 | | 100.0% | | 100.0% | | 100.0% | |
| 11,379 | |
| 33.84 | |
| 35.42 | |
201 12th Street S. |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1987 / 2014 |
| 329,607 |
| 317,394 | | 12,213 | | 98.0% | | 97.9% | | 100.0% | |
| 12,354 | |
| 37.93 | |
| 46.04 | |
2200 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1968 / 2006 |
| 283,608 |
| 283,608 | | — | | 57.0% | | 57.0% | | — | |
| 7,452 | |
| 46.10 | |
| — | |
1225 S. Clark Street |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1982 / 2013 |
| 276,155 |
| 263,305 | | 12,850 | | 97.1% | | 93.4% | | 100.0% | |
| 10,185 | |
| 40.15 | |
| 24.12 | |
1901 South Bell Street (5) |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1968 / 2008 |
| 274,912 |
| 274,912 | | — | | 92.1% | | 92.1% | | — | |
| 10,636 | |
| 41.99 | |
| — | |
1770 Crystal Drive | | National Landing | | 100.0 | % | C | | Y / Y | | 2020 / N/A | | 273,650 | | 259,651 | | 13,999 | | 98.4% | | 100.0% | | 68.5% | | | 11,805 | | | 43.29 | | | 59.05 | |
Crystal City Marriott (345 Rooms) (6) |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1968 / 2019 |
| 266,000 |
| — | | — | | — | | — | | — | |
| — | |
| — | |
| — | |
2100 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1968 / 2006 |
| 253,437 |
| 253,437 | | — | | 100.0% | | 100.0% | | — | |
| 10,785 | |
| 42.55 | |
| — | |
1800 South Bell Street |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1969 / 2019 |
| 206,186 |
| 190,984 | | 15,202 | | 99.2% | | 100.0% | | 88.8% | | | 8,402 | | | 43.67 | | | 4.55 | |
200 12th Street S. |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1985 / 2013 |
| 202,708 |
| 202,708 | | — | | 74.5% | | 74.5% | | — | |
| 7,308 | |
| 48.39 | |
| — | |
Crystal City Shops at 2100 (5) |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1968 / 2006 |
| 43,241 |
| — | | 43,241 | | 100.0% | | — | | 100.0% | |
| 521 | |
| — | |
| 12.04 | |
Crystal Drive Retail (5) |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 2003 / 2004 |
| 42,938 |
| — | | 42,938 | | 100.0% | | — | | 100.0% | |
| 2,740 | |
| — | |
| 63.82 | |
2221 S. Clark Street-Office | | National Landing | | 100.0 | % | C |
| Y / Y | | 1964 / 2016 | | 35,182 | | 26,238 | | 8,944 | | — | | — | | — | | | — | | | — | | | — | |
Central Place Tower (7) | | Rosslyn | | 50.0 | % | U | | Y / Y | | 2018 / N/A | | 551,608 | | 524,330 | | 27,278 | | 99.3% | | 99.2% | | 100.0% | | | 37,242 | | | 70.03 | | | 29.79 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other VA |
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|
|
|
|
|
|
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| |
| |
| | | ��� | | | | | | | |
| | |
| | |
| | |
800 North Glebe Road |
| Ballston |
| 100.0 | % | C |
| Y / Y |
| 2012 / N/A |
| 303,759 |
| 277,397 | | 26,362 | | 99.3% | | 100.0% | | 81.9% | | $ | 15,207 | | $ | 51.11 | | $ | 47.72 | |
Stonebridge at Potomac Town |
| Prince William County |
| 10.0 | % | U |
| Y / Y |
| 2012 / N/A |
| 504,327 |
| — | | 504,327 | | 97.4% | | — | | 96.4% | |
| 15,751 | |
| — | |
| 32.41 | |
Rosslyn Gateway-North |
| Rosslyn |
| 18.0 | % | U |
| Y / Y |
| 1996 / 2014 |
| 146,676 |
| 133,922 | | 12,754 | | 66.4% | | 64.2% | | 72.3% | |
| 3,928 | |
| 41.98 | |
| 34.29 | |
Rosslyn Gateway-South |
| Rosslyn |
| 18.0 | % | U |
| Y / Y |
| 1961 / N/A |
| 103,349 |
| 95,765 | | 7,584 | | 63.0% | | 68.0% | | — | |
| 1,594 | |
| 24.50 | |
| — | |
| | |
| | Page 34 |
| |
PROPERTY TABLE - COMMERCIAL | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| |
| |
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| |
| |
| |
| |
| |
| |
| |
| | |
| | Office |
| | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Annualized | | | Retail |
|
| | | | | | | | Same Store (2): | | | | | | | | | | | | | | | | | Annualized | | | Rent Per | | | Annualized |
|
| | | | % | | | | Q3 2021‑2022 / | | Year Built / | | Total | | Office | | Retail | | % | | Office % | | Retail % | | | Rent | | | Square | | | Rent Per |
|
Commercial Assets | | Submarket | | Ownership | | C/U (1) | | YTD 2021 - 2022 | | Renovated | | Square Feet | | Square Feet | | Square Feet | | Leased | | Occupied | | Occupied | | | (in thousands) | | | Foot (3) | | | Square Foot (4) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
DC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
| |
| |
2101 L Street |
| CBD |
| 100.0 | % | C |
| Y / Y |
| 1975 / 2007 |
| 375,461 |
| 344,141 | | 31,320 | | 85.2% | | 66.6% | | 92.6% | | $ | 17,103 | | $ | 67.43 | | $ | 57.20 | |
L'Enfant Plaza Office-East (7) |
| Southwest |
| 49.0 | % | U |
| Y / Y |
| 1972 / 2012 |
| 399,163 |
| 399,163 | | — | | 70.7% | | 70.7% | | — | |
| 14,044 | |
| 49.79 | |
| — | |
L'Enfant Plaza Office-North |
| Southwest |
| 49.0 | % | U |
| Y / Y |
| 1969 / 2014 |
| 298,788 |
| 277,464 | | 21,324 | | 86.7% | | 86.7% | | 87.1% | |
| 11,968 | |
| 48.06 | |
| 21.97 | |
L'Enfant Plaza Retail (7) |
| Southwest |
| 49.0 | % | U |
| Y / Y |
| 1968 / 2014 |
| 119,291 |
| 16,596 | | 102,695 | | 70.6% | | 100.0% | | 63.4% | |
| 3,775 | |
| 47.91 | |
| 45.74 | |
The Foundry |
| Georgetown |
| 9.9 | % | U |
| Y / Y |
| 1973 / 2017 |
| 227,493 |
| 220,639 | | 6,854 | | 79.4% | | 78.8% | | 100.0% | |
| 9,086 | |
| 50.67 | |
| 40.72 | |
1101 17th Street |
| CBD |
| 55.0 | % | U |
| Y / Y |
| 1964 / 1999 |
| 209,345 |
| 199,591 | | 9,754 | | 89.1% | | 81.7% | | 82.8% | |
| 9,539 | |
| 54.89 | |
| 72.44 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
MD |
|
|
|
|
|
|
|
|
| |
| |
| | | | | | | | | | |
| | |
| | |
| | |
4747 Bethesda Avenue (9) | | Bethesda CBD | | 100.0 | % | C | | Y / Y | | 2019 / N/A | | 300,508 | | 286,199 | | 14,309 | | 98.0% | | 97.9% | | 100.0% | | $ | 20,826 | | $ | 67.93 | | $ | 125.82 | |
One Democracy Plaza (7) (8) |
| Bethesda- Rock Spring |
| 100.0 | % | C |
| Y / Y |
| 1987 / 2013 |
| 213,139 |
| 211,001 | | 2,138 | | 88.4% | | 86.9% | | 100.0% | |
| 5,252 | |
| 28.28 | |
| 32.16 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating - Total / Weighted Average |
|
|
|
|
|
|
|
|
| 10,528,745 |
| 9,044,221 | | 1,218,524 | | 87.9% | | 85.4% | | 89.0% | | $ | 403,764 | | $ | 47.34 | | $ | 36.94 | | ||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total at JBG SMITH Share |
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|
|
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|
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|
|
|
|
|
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|
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|
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| |
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National Landing |
|
|
|
|
|
|
|
|
|
|
| 7,051,642 |
| 6,320,178 | | 465,464 | | 88.4% | | 86.5% | | 87.9% | | $ | 257,069 | | $ | 44.66 | | $ | 36.04 | |
Other VA | | | | | | | | | | | | 399,197 | | 318,741 | | 80,456 | | 95.2% | | 95.6% | | 89.3% | | | 17,776 | | | 49.62 | | | 37.05 | |
DC | | | | | | | | | | | | 913,509 | | 815,383 | | 98,126 | | 81.8% | | 73.6% | | 76.6% | | | 37,843 | | | 56.95 | | | 48.82 | |
MD |
|
|
|
|
|
|
|
|
|
|
| 513,647 |
| 497,200 | | 16,447 | | 94.0% | | 93.2% | | 100.0% | | | 26,078 | | | 52.24 | | | 113.64 | |
Operating - Total / Weighted Average |
|
|
|
|
|
|
|
|
| 8,877,995 |
| 7,951,502 | | 660,493 | | 88.3% | | 85.9% | | 86.7% | | $ | 338,766 | | $ | 46.49 | | $ | 40.07 | | ||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| | Page 35 |
| |
PROPERTY TABLE - COMMERCIAL | SEPTEMBER 30, 2022 |
| | | | | | | | |
| Number of Assets and Total Square Feet Reconciliation | | | | |
| ||
| |
| Number of |
| At 100% Share |
| At JBG SMITH Share |
|
| Operating Assets | | Assets | | Square Feet | | Square Feet |
|
| Q2 2022 |
| 35 |
| 10,537,333 |
| 8,887,187 | |
| Placed into service |
| — |
| — |
| — | |
| Dispositions |
| — |
| — |
| — | |
| Out-of-service adjustment |
| — |
| (9,933) |
| (9,933) | |
| Portfolio reclassification | | — | | — | | — | |
| Building re-measurements |
| — |
| 1,345 |
| 741 | |
| | | | | | | | |
| Q3 2022 |
| 35 |
| 10,528,745 |
| 8,877,995 | |
See footnotes on page 37.
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| | Page 36 |
| |
PROPERTY TABLE - COMMERCIAL | SEPTEMBER 30, 2022 |
Footnotes
Note: At 100% share, unless otherwise noted.
| (1) | "C" denotes a consolidated interest. "U" denotes an unconsolidated interest. |
| (2) | "Y" denotes an asset as Same Store and "N" denotes an asset as Non-Same Store. |
| (3) | Represents annualized office rent divided by occupied office SF; annualized retail rent and retail SF are excluded from this metric. Annualized Rent and Annualized Rent per Square Foot exclude percentage rent and the square footage of tenants that only pay percentage rent. Occupied office square footage may differ from leased office square footage because leased office square footage includes space for leases that have been signed but the tenant has not yet taken occupancy (not yet included in Percent Occupied metrics). |
| (4) | Represents annualized retail rent divided by occupied retail SF. Occupied retail square footage may differ from leased retail square footage because leased retail square footage includes space for leases that have been signed but the tenant has not yet taken occupancy (not yet included in Percent Occupied metrics). |
| (5) | The following assets contain space that is held for development or not otherwise available for lease. This out-of-service square footage is excluded from Square Feet, leased and occupancy metrics. |
| | | | | | |
| | | | | Not Available | |
| Commercial Asset |
| In-Service |
| for Lease |
|
| 1550 Crystal Drive | | 550,184 | | 1,721 | |
| 251 18th Street S. | | 337,886 | | 1,480 | |
| 1901 South Bell Street | | 274,912 | | 1,924 | |
| Crystal City Shops at 2100 | | 43,241 | | 28,974 | |
| Crystal Drive Retail | | 42,938 | | 14,027 | |
| (6) | Under the current management agreement, JBG SMITH receives 50% of the net cash flows from the hotel. Upon expiration on July 31, 2025, JBG SMITH expects to receive 100% of the cash flows. The Crystal City Marriott generated $2.5 million of Annualized NOI at JBG SMITH's share for the three months ended September 30, 2022. The Crystal City Marriott generated $1.8 million of NOI at JBG SMITH's share in 2019 while undergoing a rooms renovation and $3.5 million of NOI at JBG SMITH's share in 2018 before the renovation began. |
| (7) | The following assets are subject to ground leases: |
| | | | |
| |
| Ground Lease | |
| Commercial Asset | | Expiration Date |
|
| Central Place Tower (a)(b) |
| 6/2/2102 | |
| L'Enfant Plaza Office - East |
| 11/23/2064 | |
| L'Enfant Plaza Retail |
| 11/23/2064 | |
| One Democracy Plaza |
| 11/17/2084 | |
| (a) | The ground lease is recorded as a financing lease for accounting purposes; therefore, any expense is recorded as interest expense and excluded from NOI. |
| (b) | We have an option to purchase the ground lease at a fixed price |
| (8) | Not Metro-Served. |
| (9) | Includes JBG SMITH's share for approximately 84,400 SF. |
| | |
| | Page 37 |
| |
PROPERTY TABLE - MULTIFAMILY | SEPTEMBER 30, 2022 |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Monthly | | | Monthly |
| | | | | | | | Same Store (2): | | | | Number | | Total | | Multifamily | | Retail | | | | Multifamily | | Retail | | | Annualized | | | Rent | | | Rent Per |
| | | | % | | | | Q3 2021‑2022 / | | Year Built / | | of | | Square | | Square | | Square | | | | % | | % | | | Rent | | | Per | | | Square |
Multifamily Assets | | Submarket | | Ownership | | C/U (1) | | YTD 2021 - 2022 | | Renovated | | Units | | Feet | | Feet | | Feet | | % Leased | | Occupied | | Occupied | | | (in thousands) | | | Unit (3) (4) | | | Foot (4) (5) |
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National Landing |
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RiverHouse Apartments |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1960 / 2014 |
| 1,676 |
| 1,327,551 |
| 1,324,889 |
| 2,662 |
| 97.2% | | 95.5% | | 100.0% | | $ | 35,904 | | $ | 1,865 | | $ | 2.36 |
The Bartlett |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 2016 / N/A |
| 699 |
| 619,372 |
| 577,295 |
| 42,077 |
| 97.3% | | 96.1% | | 100.0% | |
| 23,974 | |
| 2,778 | |
| 3.38 |
220 20th Street |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 2009 / N/A |
| 265 |
| 271,476 |
| 269,913 |
| 1,563 |
| 96.6% | | 96.6% | | 100.0% | |
| 8,115 | |
| 2,624 | |
| 2.59 |
2221 S. Clark Street- |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1964 / 2016 |
| 216 |
| 96,948 |
| 96,948 |
| — |
| 93.8% | | 91.8% | | — | |
| 4,845 | |
| 2,036 | |
| 4.49 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
DC | |
|
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| |
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West Half |
| Ballpark |
| 100.0 | % | C |
| Y / Y |
| 2019 / N/A |
| 465 |
| 385,368 |
| 343,089 |
| 42,279 |
| 89.6% | | 85.8% | | 84.5% | | $ | 13,855 | | $ | 2,406 | | $ | 3.41 |
Fort Totten Square |
| Brookland/Fort Totten |
| 100.0 | % | C |
| Y / Y |
| 2015 / N/A |
| 345 |
| 384,956 |
| 254,292 |
| 130,664 |
| 97.5% | | 94.5% | | 100.0% | | | 9,656 | | | 1,856 | | | 2.55 |
The Wren (7) | | U Street/Shaw | | 96.0 | % | C | | Y / N | | 2020 / N/A | | 433 | | 332,682 | | 289,686 | | 42,996 | | 97.2% | | 92.1% | | 100.0% | | | 11,784 | | | 2,193 | | | 3.27 |
The Batley | | Union Market/NoMa/H Street | | 100.0 | % | C | | N / N | | 2019 / N/A | | 432 | | 300,388 | | 300,388 | | — | | 93.8% | | 92.1% | | — | | | 11,432 | | | 2,394 | | | 3.46 |
WestEnd25 |
| West End |
| 100.0 | % | C |
| Y / Y |
| 2009 / N/A |
| 283 |
| 273,264 |
| 273,264 |
| — |
| 96.8% | | 96.1% | | — | |
| 11,528 | |
| 3,532 | |
| 3.65 |
F1RST Residences |
| Ballpark |
| 100.0 | % | C |
| Y / Y |
| 2017 / N/A |
| 325 |
| 270,928 |
| 249,456 |
| 21,472 |
| 94.9% | | 92.6% | | 88.8% | |
| 9,933 | |
| 2,361 | |
| 3.07 |
Atlantic Plumbing (8) |
| U Street/Shaw |
| 100.0 | % | C |
| Y / Y |
| 2015 / N/A |
| 310 |
| 245,527 |
| 221,788 |
| 23,739 |
| 94.8% | | 95.2% | | 72.9% | |
| 9,497 | |
| 2,468 | |
| 3.42 |
1221 Van Street |
| Ballpark |
| 100.0 | % | C |
| Y / Y |
| 2018 / N/A |
| 291 |
| 225,530 |
| 202,715 |
| 22,815 |
| 96.0% | | 94.2% | | 100.0% | |
| 8,739 | |
| 2,267 | |
| 3.27 |
901 W Street | | U Street/Shaw | | 100.0 | % | C | | Y / Y | | 2019 / N/A | | 161 | | 154,378 | | 135,499 | | 18,879 | | 93.2% | | 96.9% | | 57.9% | | | 5,572 | | | 2,611 | | | 3.11 |
900 W Street (6) | | U Street/Shaw | | 100.0 | % | C | | Y / Y | | 2019 / N/A | | 95 | | 71,050 | | 71,050 | | — | | 93.7% | | 91.6% | | — | | | 4,883 | | | 4,677 | | | 6.14 |
North End Retail |
| U Street/Shaw |
| 100.0 | % | C |
| Y / Y |
| 2015 / N/A |
| — |
| 27,355 |
| — |
| 27,355 |
| 91.6% | | — | | 91.6% | |
| 1,620 | |
| — | |
| — |
The Gale Eckington |
| Union Market/NoMa/H Street |
| 5.0 | % | U |
| Y / Y |
| 2013 / N/A |
| 603 |
| 466,716 |
| 465,516 |
| 1,200 |
| 97.2% | | 92.2% | | 100.0% | |
| 13,574 | |
| 2,028 | |
| 2.62 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
MD |
|
|
|
|
|
|
|
|
|
|
| |
| |
| |
| |
| | | | | | |
| | |
| | |
| |
Falkland Chase-South & West |
| Downtown Silver Spring |
| 100.0 | % | C |
| Y / Y |
| 1938 / 2011 |
| 268 |
| 222,754 |
| 222,754 |
| — |
| 98.1% | | 95.9% | | — | | $ | 5,560 | | $ | 1,803 | | $ | 2.17 |
Falkland Chase-North |
| Downtown Silver Spring |
| 100.0 | % | C |
| Y / Y |
| 1938 / 1986 |
| 170 |
| 112,143 |
| 112,143 |
| — |
| 97.6% | | 93.5% | | — | |
| 2,834 | |
| 1,485 | |
| 2.26 |
8001 Woodmont (9) | | Bethesda CBD | | 50.0 | % | U | | N / N | | 2021 / N/A | | 322 | | 363,979 | | 344,405 | | 19,574 | | 81.5% | | 74.8% | | 95.1% | | | 10,595 | | | 3,311 | | | 3.17 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating - Total / Weighted Average (6) |
|
|
|
|
|
|
|
|
| 7,359 |
| 6,152,365 |
| 5,755,090 |
| 397,275 |
| 95.2% | | 93.1% | | 93.3% | | $ | 194,172 | | $ | 2,281 | | $ | 2.90 | ||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Under-Construction |
|
|
|
|
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|
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National Landing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | |
1900 Crystal Drive (10) |
| National Landing |
| — | | C |
|
|
|
|
| 808 |
| 633,985 |
| 595,315 |
| 38,670 | | | | | | | | | | | | | | | |
2000/2001 South Bell Street (10) | | National Landing | | — | | C | | | | | | 775 | | 580,966 | | 561,961 | | 19,005 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Under-Construction - Total |
|
|
|
|
|
|
|
|
|
|
| 1,583 |
| 1,214,951 |
| 1,157,276 |
| 57,675 |
|
|
|
|
|
|
| |
|
| |
|
| |
|
| | | | | | | �� | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total |
|
|
|
|
|
|
|
|
|
|
| 8,942 |
| 7,367,316 |
| 6,912,366 |
| 454,950 |
|
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|
|
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| |
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| | |
| | Page 38 |
| |
PROPERTY TABLE - MULTIFAMILY | SEPTEMBER 30, 2022 |
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| | |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Monthly | | Monthly | ||
| | | | | | | | Same Store (2): | | | | Number | | Total | | Multifamily | | Retail | | | | Multifamily | | Retail | | Annualized | | Rent | | Rent Per | |||
| | | | % | | | | Q3 2021‑2022 / | | Year Built / | | of | | Square | | Square | | Square | | | | % | | % | | Rent | | Per | | Square | |||
Multifamily Assets | | Submarket | | Ownership | | C/U (1) | | YTD 2021 - 2022 | | Renovated | | Units | | Feet | | Feet | | Feet | | % Leased | | Occupied | | Occupied | | (in thousands) | | Unit (3) (4) | | Foot (4) (5) | |||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Totals at JBG SMITH Share (6) |
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National Landing | | | | | | | | | | | | 2,856 | | 2,315,347 | | 2,269,045 | | 46,302 | | 97.2% | | 95.8% | | 100.0% | | $ | 67,993 | | $ | 2,184 | | $ | 2.66 |
DC | | | | | | | | | | | | 3,153 | | 2,681,556 | | 2,353,005 | | 328,552 | | 94.8% | | 92.6% | | 92.2% | | | 93,830 | | | 2,416 | | | 3.26 |
MD | | | | | | | | | | | | 599 | | 516,887 | | 507,100 | | 9,787 | | 92.2% | | 89.6% | | 95.1% | | | 13,691 | | | 2,047 | | | 2.47 |
Operating - Total/Weighted Average |
|
|
|
|
|
|
|
|
| 6,608 |
| 5,513,790 |
| 5,129,150 |
| 384,641 |
| 95.5% | | 93.7% | | 93.2% | | $ | 175,514 | | $ | 2,283 | | $ | 2.91 | ||
Operating excluding 8001 Woodmont | | | | | | | | | | 6,447 | | 5,331,801 | | 4,956,947 | | 374,854 | | 96.0% | | 94.1% | | 93.2% | | $ | 170,217 | | $ | 2,262 | | $ | 2.91 | ||
Under-Construction assets |
|
|
|
|
|
|
|
|
|
|
| 1,583 |
| 1,214,951 |
| 1,157,276 |
| 57,675 |
| | | |
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| |
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| |
|
| |
|
|
| | | | | | | | |
| Number of Assets and Total Square Feet/Units Reconciliation |
| ||||||
| | | Number of | | At 100% Share | | At JBG SMITH Share |
|
| Operating Assets |
| Assets |
| Square Feet/Units |
| Square Feet/Units |
|
| Q2 2022 |
| 19 |
| 6,152,365 SF/ |
| 5,425,401 SF/ | |
| Acquisitions (8) |
| — |
| — |
| 88,389 SF/ | |
| Placed into service |
| — |
| — |
| — | |
| Dispositions | | — | | — |
| — | |
| Out-of-service adjustment | | — |
| — |
| — | |
| Portfolio reclassification | | — | | — | | — | |
| Building re-measurements | | — |
| — |
| — | |
| | | | | | | | |
| Q3 2022 |
| 19 |
| 6,152,365 SF/ |
| 5,513,790 SF/ | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Quarterly Rental Revenue and Occupancy Changes - Same Store Multifamily Assets | | | | | | | | | | | | | | | | | | |
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|
|
|
|
| Monthly Rent Per Unit (3) |
| Multifamily % Occupied |
| Annualized Rent (in thousands) |
| ||||||||||||||||
| | Number of Assets | | Number of Units | | | Q3 2022 | | | Q3 2021 | | % Change | | Q3 2022 | | Q3 2021 | | % Change | | | Q3 2022 | | | Q3 2021 | | % Change |
|
National Landing |
| 3 |
| 2,640 | | $ | 2,184 | | $ | 2,000 |
| 9.2% | | 95.8% | | 96.0% | | (0.2%) | | $ | 66,295 | | $ | 60,823 |
| 9.0% | |
DC | | 8 |
| 2,099 | | | 2,462 | | | 2,330 |
| 5.7% | | 92.7% | | 95.0% | | (2.3%) | | | 57,445 | | | 55,733 |
| 3.1% | |
MD |
| 2 |
| 438 | |
| 1,682 | |
| 1,560 |
| 7.8% | | 95.0% | | 97.3% | | (2.3%) | |
| 8,394 | |
| 7,975 |
| 5.3% | |
Total / Weighted Average |
| 13 |
| 5,177 | | $ | 2,252 | | $ | 2,095 |
| 7.5% | | 94.4% | | 95.7% | | (1.3%) | | $ | 132,134 | | $ | 124,531 |
| 6.1% | |
Note: At JBG SMITH Share. Includes assets placed In-Service prior to July 1, 2021. Excludes North End Retail and assets which are operated as short-term rental properties (2221 S. Clark Street - Residential and 900 W Street).
See footnotes on page 40.
| | |
| | Page 39 |
| |
PROPERTY TABLE - MULTIFAMILY | SEPTEMBER 30, 2022 |
Note: At 100% share, unless otherwise noted.
| (1) | "C" denotes a consolidated interest. "U" denotes an unconsolidated interest. |
| (2) | "Y" denotes an asset as Same Store and "N" denotes an asset as Non-Same Store. |
| (3) | Represents multifamily rent divided by occupied multifamily units; retail rent is excluded from this metric. Occupied units may differ from leased units because leased units include leases that have been signed but the tenant has not yet taken occupancy (not yet included in Percent Occupied metrics). |
| (4) | Excludes North End Retail. |
| (5) | Represents multifamily rent divided by occupied multifamily SF; retail rent and retail SF are excluded from this metric. Occupied multifamily square footage may differ from leased multifamily square footage because leased multifamily square footage includes space for leases that have been signed but the tenant has not yet taken occupancy (not yet included in Percent Occupied metrics). |
| (6) | 2221 S. Clark Street - Residential and 900 W Street are excluded from Percent Leased, Percent Occupied, Annualized Rent, Monthly Rent Per Unit and Monthly Rent per Square Foot metrics as they are operated as short-term rental properties. |
| (7) | On October 4, 2022, we acquired an additional 3.7% ownership interest in The Wren for $9.5 million, increasing our ownership interest to 99.7%. |
| (8) | In August 2022, we acquired the remaining 36.0% ownership interest in Atlantic Plumbing for $55.7 million, including the assumption of $36.0 million of debt. The asset was encumbered by a $100.0 million mortgage, which was repaid subsequent to the acquisition in August 2022. |
| (10) | See footnotes (3) and (4) on page 41. |
| | |
| | Page 40 |
| |
PROPERTY TABLE – UNDER-CONSTRUCTION | SEPTEMBER 30, 2022 |
Property Table – Under Construction
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| dollars in thousands, except per square foot data | | | | | | | | | | | | | | | | | | | | |
| ||||
| | | | | | | | | | | Schedule (1) | | At JBG SMITH Share | | ||||||||||||
| | | | | | | Estimated | | Estimated | | | | Estimated | | | | | | | Estimated | | Estimated |
| |||
| | | | | % | | Square | | Number of | | Construction | | Completion | | Estimated | | Historical | | Incremental | | Total |
| ||||
| Asset |
| Submarket |
| Ownership | | Feet | | Units | | Start Date | | Date | | Stabilization Date |
| Cost (2) | | Investment | | Investment | | ||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Multifamily | | | | | | | | | | | | | | | | | | | | | | | | | |
| National Landing |
|
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| 1900 Crystal Drive (3) |
| National Landing |
| — | | 633,985 |
| 808 |
| Q1 2021 |
| | Q1 2024 - Q3 2024 |
| Q1 2026 | | $ | 239,756 | | $ | 182,435 | | $ | 422,191 | |
| 2000/2001 South Bell Street (4) | | National Landing | | — | | 580,966 | | 775 | | Q1 2022 | | | Q1 2025 - Q3 2025 | | Q4 2026 | | | 57,743 | | | 285,692 | | | 343,435 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Under-Construction - Total / Weighted Average | 1,214,951 |
| 1,583 |
| | | | | | | | | | | | | | | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Under-Construction - Total / Weighted Average at JBG SMITH Share | 1,214,951 |
| 1,583 |
| Q3 2021 | | | Q3 2024 - Q1 2025 | | Q3 2026 | | $ | 297,499 | | $ | 468,127 | | $ | 765,626 | | |||||
| | | | |
Weighted average Projected NOI Yield at JBG SMITH Share: |
| Multifamily |
| |
Estimated Total Investment (5) |
| | 5.8 | % |
Estimated Incremental Investment |
| | 9.5 | % |
Estimated Stabilized NOI at JBG SMITH Share (dollars in millions) | | $ | 44.2 | |
Note: At 100% share, unless otherwise noted.
| (1) | Average dates are weighted by JBG SMITH Share of estimated SF. |
| (2) | Historical Cost excludes certain GAAP adjustments, interest and ground lease costs. See definition of Historical Cost on page 52. |
| (3) | We leased the land underlying 1900 Crystal Drive to a lessee, which is constructing a multifamily asset comprising two towers with ground floor retail. The ground lessee has engaged us to be the development manager for the construction of 1900 Crystal Drive, and separately, we are the lessee in a master lease of the asset. We have an option to acquire the asset until a specified period after completion. In March 2021, the ground lessee entered into a mortgage loan collateralized by the leasehold interest with a maximum principal balance of $227.0 million. As of September 30, 2022, $36.8 million was outstanding under the mortgage loan. See page 46 for additional information. The ground lessee was obligated to invest $17.5 million of equity funding, all of which was funded, and JBG SMITH is obligated to provide the additional project funding through a mezzanine loan to the ground lessee. We determined that 1900 Crystal Drive is a variable interest entity ("VIE") and that we are the primary beneficiary of the VIE. Accordingly, we consolidated the VIE with the lessee's ownership interest shown as "Noncontrolling interests" in our condensed consolidated balance sheets. The ground lease, the mezzanine loan and the master lease described above are eliminated in consolidation. 1900 Crystal Drive's full cost, debt balance and other metrics are included at 100% in the at JBG SMITH Share metrics presented within this Investor Package. |
| (4) | We leased the land underlying 2000/2001 South Bell Street to a lessee, which is constructing a multifamily asset comprising two towers with ground floor retail. The ground lessee has engaged us to be the development manager for the construction of 2000/2001 South Bell Street, and separately, we are the lessee in a master lease of the asset. We have an option to acquire the asset until a specified period after completion. In December 2021, the ground lessee entered into a mortgage loan collateralized by the leasehold interest with a maximum principal balance of $208.5 million and an interest rate of LIBOR plus 2.15%. As of September 30, 2022, no proceeds had been received from the mortgage loan. The ground lessee was obligated to invest $16.0 million of equity funding, all of which was funded, and JBG SMITH is obligated to provide additional project funding through a mezzanine loan to the ground lessee. We determined that 2000/2001 South Bell Street is a VIE and that we are the primary beneficiary of the VIE. Accordingly, we consolidated the VIE with the lessee's ownership interest shown as "Noncontrolling interests" in our condensed consolidated balance sheets. The ground lease, the mezzanine loan and the master lease described above are eliminated in consolidation. 2000/2001 South Bell Street's full cost, debt balance and other metrics are included at 100% in the at JBG SMITH Share metrics presented within this Investor Package. |
| (5) | Historical Cost of 1900 Crystal Drive includes $22.6 million of design costs, the majority of which were incurred prior to the Formation Transaction, that are not related to the current planned development. Excluding these costs, Projected NOI Yield on Estimated Total Investment would be 6.0%. |
| | |
| | Page 41 |
Property Table – Near-Term Development
| | | | | | | | | | | | | | | | | | | | | | | |
| dollars in thousands, except per square foot data | | | | | | | | | |
| ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | Earliest | | | | | | | | | | | | | | | |
|
| | | | | | | Potential | | | | | | | | | | | | Estimated | | At JBG SMITH Share | | |
| | | | | % | | Construction | | Entitlement | | Estimated Potential Development Density (SF) | | Number of | | Historical | | |||||||
| Asset |
| Submarket | | Ownership | | Start Date | | Status | | Total |
| Office |
| Multifamily |
| Retail | | Units | | Cost (1) |
| |
| | | | | | | | | | | | | | | | | | | | | | | |
| National Landing |
|
|
| | | | | | | |
|
|
|
|
|
|
| | |
|
| |
| Potomac Yard Landbay F - Block 15 - 3331 Exchange Avenue | | National Landing | | 50.0% | | 2022 | | Fully Entitled | | 181,300 | | — | | 164,300 | | 17,000 | | 170 | | $ | 8,120 | |
| Potomac Yard Landbay F - Block 19 - 3330 Exchange Avenue | | National Landing | | 50.0% | | 2022 | | Fully Entitled | | 238,100 | | — | | 214,800 | | 23,300 | | 240 | | | 9,835 | |
| 2250 Crystal Drive | | National Landing | | 100.0% | | 2023 | | Entitlement In Process | | 677,100 | | — | | 677,100 | | — | | 825 | | | 24,441 | |
| 223 23rd Street | | National Landing | | 100.0% | | 2023 | | Entitlement In Process | | 512,800 | | — | | 512,800 | | — | | 620 | | | 19,005 | |
| 2525 Crystal Drive | | National Landing | | 100.0% | | 2024 | | Entitlement In Process | | 370,000 | | — | | 370,000 | | — | | 500 | | | 12,789 | |
| 101 12th Street | | National Landing | | 100.0% | | Pre-lease Dependent | | Fully Entitled | | 239,600 | | 234,400 | | — | | 5,200 | | — | | | 11,010 | |
| DC |
|
|
| | | | | | |
|
|
|
|
|
|
|
| | |
| | |
| 5 M Street Southwest |
| Ballpark | | 100.0% | | 2022 | | Fully Entitled | | 705,400 | | — | | 675,400 | | 30,000 | | 615 | | | 29,048 | |
| Gallaudet Parcel 1-3 (2) | | Union Market/NoMa/H Street |
| 100.0% | | 2023 | | Fully Entitled | | 818,000 |
| — |
| 756,400 |
| 61,600 |
| 840 | | | 23,175 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Total |
| |
| | | | | | | 3,742,300 |
| 234,400 |
| 3,370,800 |
| 137,100 |
| 3,810 | | $ | 137,423 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Total at JBG SMITH Share | | | | | | | | | | | | | | | | | | | | | | |
| National Landing | | | | | | | | | | 2,009,300 | | 234,400 | | 1,749,500 | | 25,400 | | 2,150 | | $ | 85,200 | |
| DC | | | | | | | | | | 1,523,400 | | — | | 1,431,800 | | 91,600 | | 1,455 | | | 52,223 | |
| | | | | | | | | | | 3,532,700 | | 234,400 | | 3,181,300 | | 117,000 | | 3,605 | | $ | 137,423 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Fully Entitled | | 1,972,800 | | 234,400 | | 1,621,400 | | 117,000 | | 1,660 | | | | |
| | | | | | | | | Entitlement In Process | | 1,559,900 | | — | | 1,559,900 | | — | | 1,945 | | | | |
| | | | | | | | | | | 3,532,700 | | 234,400 | | 3,181,300 | | 117,000 | | 3,605 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Note: Represents select assets that have the potential to commence construction over the next three years, subject to receipt of full entitlements, completion of design and market conditions.
| (1) | Historical Cost includes certain intangible assets, such as option and transferable density rights values recorded as part of the Formation Transaction; and excludes certain GAAP adjustments, such as capitalized interest and ground lease costs. See definition of Historical Cost on page 52. |
| | |
| | Page 42 |
| |
PROPERTY TABLE – FUTURE DEVELOPMENT | SEPTEMBER 30, 2022 |
Property Table – Future Development
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| dollars in thousands, except per square foot data, at JBG SMITH Share | | | | Estimated | | | | | | | | Estimated | | Estimated | | | | | | |
| ||||||||
| | | | | | | | | | | Commercial | | | | | Estimated | | Capitalized | | Capitalized | | | | | Estimated |
| ||||
| | | | | | | | | | | SF / Multifamily | | | | | Remaining | | Cost of SF / | | Cost of | | Estimated | | Total | | |||||
| | | Number of | | Estimated Potential Development Density (SF) | | Units to be | | Historical | | Acquisition | | Units to Be | | Ground Rent | | Total | | Investment | | ||||||||||
| Region |
| Assets | | Total |
| Office |
| Multifamily | | Replaced (1) | | Cost (2) | | Cost (3) | | Replaced (4) | | Payments (5) | | Investment (6) | | per SF |
| ||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Owned | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| VA |
|
|
| |
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|
| |
| |
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|
| |
|
| |
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| |
| National Landing |
| 7 |
| 4,491,500 |
| 1,113,000 | | 3,378,500 |
| 206,186 SF | | $ | 178,357 |
| | N/A | | $ | 91,067 | | $ | — | | $ | 269,424 | | $ | 59.99 | |
| Other VA |
| 2 |
| 145,700 |
| 89,700 | | 56,000 |
| 21,776 SF | |
| 1,432 |
| | N/A | |
| 2,156 | |
| — | |
| 3,588 | |
| 24.63 | |
| |
| 9 |
| 4,637,200 |
| 1,202,700 |
| 3,434,500 |
| 227,962 SF | | $ | 179,789 |
| | N/A | | $ | 93,223 | | $ | — | | $ | 273,012 | | $ | 58.87 | |
| DC | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| DC |
| 5 |
| 852,900 |
| 149,600 |
| 703,300 |
| — | | $ | 71,171 |
| | N/A | | $ | — | | $ | — | | $ | 71,171 | | $ | 83.45 | |
| Total / weighted average |
| 14 |
| 5,490,100 |
| 1,352,300 |
| 4,137,800 |
| 227,962 SF | | $ | 250,960 |
| | N/A | | $ | 93,223 | | $ | — | | $ | 344,183 | | $ | 62.69 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Optioned (7) |
|
|
|
|
|
|
|
|
|
| |
|
|
| |
| |
|
| |
|
| |
|
| |
|
| |
| DC |
|
|
|
|
|
|
|
|
|
| |
|
|
| |
| |
|
| |
|
| |
|
| |
|
| |
| DC |
| 2 |
| 783,600 |
| — |
| 783,600 |
| — | | $ | 11,638 | | $ | 7,850 | | $ | — | | $ | 40,580 | | $ | 60,068 | | $ | 76.66 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total / Weighted Average |
| 16 |
| 6,273,700 |
| 1,352,300 |
| 4,921,400 |
| 227,962 SF | | $ | 262,598 | | $ | 7,850 | | $ | 93,223 | | $ | 40,580 | | $ | 404,251 | | $ | 64.44 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total / Weighted Average (Fully Entitled and Entitlement In Process) | | 13 | | 6,051,200 | | 1,335,700 | | 4,715,500 | | 227,962 SF | | $ | 260,980 | | $ | N/A | | $ | 93,223 | | $ | 40,580 | | $ | 394,783 | | $ | 65.24 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Entitlement Status | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fully Entitled | | 7 | | 1,432,500 | | 673,200 | | 759,300 | | | | | | | | | | | | | | | | | | | | | |
| Entitlement In Process | | 6 | | 4,618,700 | | 662,500 | | 3,956,200 | | | | | | | | | | | | | | | | | | | | | |
| Encumbered / Not Currently Entitling | | 3 | | 222,500 | | 16,600 | | 205,900 | | | | | | | | | | | | | | | | | | | | | |
| Total | | 16 | | 6,273,700 | | 1,352,300 | | 4,921,400 | | | | | | | | | | | | | | | | | | | | | |
| (1) | Represents management's estimate of the total office and/or retail rentable SF and multifamily units currently included in our operating portfolio that would need to be redeveloped to access some of the Estimated Potential Development Density. |
| (2) | Historical Cost includes certain intangible assets, such as option and transferable density rights values recorded as part of the Formation Transaction; and excludes certain GAAP adjustments, such as capitalized interest and ground lease costs. See definition of Historical Cost on page 52. |
| (3) | Represents management's estimate of remaining deposits, option payments, and option strike prices as of September 30, 2022. |
| (4) | Capitalized value of estimated commercial SF / multifamily units to be replaced, which generated $1.4 million of NOI for the three months ended September 30, 2022 (included in the NOI of the applicable operating segment), at a 6.0% capitalization rate. |
| (5) | Capitalized value of stabilized annual ground rent payments associated with leasehold assets at a 5.0% capitalization rate. One optioned parcel is a leasehold interest with estimated stabilized annual ground rent payments totaling $2.0 million. |
| (6) | Represents Historical Cost plus incremental costs to access the Estimated Potential Development Density, but does not include potential entitlement costs or infrastructure costs. |
| (7) | As of September 30, 2022, the weighted average remaining term for the optioned Future Development Pipeline assets is 2.7 years. |
| | |
| | Page 43 |
| |
DISPOSITION AND RECAPITALIZATION ACTIVITY | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | |
| dollars in thousands, at JBG SMITH Share | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | Total Square Feet/ | | | |
|
| | | | | | | | | | | | Estimated Potential | | | |
|
| | | | | | | | | | |
| Development | | | | |
| | | Ownership | | | | | | | | | Density | | Gross Sales | | |
| Assets | | Percentage | | Asset Type | | Location | | Date Disposed | | (Square Feet) | | Price |
| ||
| | | | | | | | | | | | | | | | |
| Q1 2022 | | | | | | | | | | | | | | | |
| The Alaire, The Terano and 12511 Parklawn Drive |
| 1.8% to 18.0% | | Multifamily / Future Development |
| Rockville, MD | | | January 27, 2022 |
| 51,546 / 1,170 | | $ | 15,384 | |
| Development Parcel | | 100.0% | | Future Development | | Arlington, VA | | | March 28, 2022 | | — | | | 3,250 | |
| Subtotal | | | | | | | | | | | 51,546 / 1,170 | | $ | 18,634 | |
| | | | | | | | | | | | | | | | |
| Q2 2022 | | | | | | | | | | | | | | | |
| Universal Buildings | | 100.0% | | Commercial | | Washington, DC | | | April 1, 2022 | | 659,459 | | $ | 228,000 | |
| Galvan | | 1.8% | | Multifamily | | Rockville, MD | | | May 10, 2022 | | 7,025 | | | 2,745 | |
| Pen Place | | 100.0% | | Other | | Arlington, VA | | | May 25, 2022 | | 2,082,000 | | | 198,000 | |
| 1900 N Street | | 55.0% | | Commercial | | Washington, DC | | | June 1, 2022 | | 148,226 | | | 145,750 | |
| Subtotal | | | | | | | | | | | 814,710 / 2,082,000 | | $ | 574,495 | |
| | | | | | | | | | | | | | | | |
| Q3 2022 | | | | | | | | | | | | | | | |
| None | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Total |
|
|
|
|
|
| |
|
|
| 866,256 / 2,083,170 | | $ | 593,129 | |
Recapitalization and Other Activity:
In January 2022, we sold investments in equity securities for $17.8 million, resulting in a realized gain of $13.9 million.
On April 13, 2022, we formed an unconsolidated real estate venture with affiliates of Fortress to recapitalize a 1.6 million square foot office portfolio and land parcels valued at $580.0 million comprising four wholly owned commercial assets (7200 Wisconsin Avenue, 1730 M Street, RTC-West/RTC-West Trophy Office/RTC-West Land and Courthouse Plaza 1 and 2). Fortress contributed $131.0 million for a 66.5% interest in the venture. In connection with the transaction, the real estate venture obtained mortgage loans totaling $458.0 million secured by the properties, of which $402.0 million was drawn at closing. We provide asset management, property management and leasing services to the venture. Because our interest in the venture is subordinated to a 15% preferred return to Fortress, we do not anticipate receiving any near-term cash flow distributions from it. As of September 30, 2022, our investment in the venture was zero, and we have discontinued applying the equity method as we have not guaranteed its obligations or otherwise committed to providing financial support. These assets, as well as the associated non-recourse mortgages payable, held through an unconsolidated real estate venture are excluded from the occupancy, non-GAAP financial measures, leverage metrics, operating assets and operating metrics presented in our investor package.
On April 29, 2022, we sold a 99-year term leasehold interest in a future development asset located in Reston, VA.
| | |
| | Page 44 |
| |
DEBT SUMMARY | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | | | | | | | | |
| dollars in thousands, at JBG SMITH Share |
| 2022 |
| 2023 |
| 2024 |
| 2025 |
| 2026 |
| Thereafter |
| Total |
| |||||||
| | | | | | | | | | | | | | | | | | | | | | | |
| Consolidated and Unconsolidated Principal Balance | | | | | | | | | | | | | | | | | | | | | | |
| Unsecured Debt: | | | | | | | | | | | | | | | | | | | | | | |
| Revolving credit facility ($1 billion commitment) (1) | | $ | — | | $ | — | | $ | — | | $ | 100,000 | | $ | — | | $ | — | | $ | 100,000 | |
| Term loans ($600 million commitment) | |
| — | |
| — | |
| — | |
| 200,000 | |
| — | |
| 350,000 | |
| 550,000 | |
| Total unsecured debt | |
| — | |
| — | |
| — | |
| 300,000 | |
| — | |
| 350,000 | |
| 650,000 | |
| Secured Debt: | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Consolidated principal balance | |
| — | |
| 275,736 | |
| 124,921 | |
| 391,029 | |
| 141,816 | |
| 820,446 | |
| 1,753,948 | |
| Unconsolidated principal balance | |
| 22,460 | |
| 108,127 | |
| — | |
| 33,000 | |
| — | |
| 51,905 | |
| 215,492 | |
| Total secured debt | |
| 22,460 | |
| 383,863 | |
| 124,921 | |
| 424,029 | |
| 141,816 | |
| 872,351 | |
| 1,969,440 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Total Consolidated and Unconsolidated Principal Balance | | $ | 22,460 | | $ | 383,863 | | $ | 124,921 | | $ | 724,029 | | $ | 141,816 | | $ | 1,222,351 | | $ | 2,619,440 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| % of total debt maturing | |
| 0.9 | % |
| 14.7 | % |
| 4.8 | % |
| 27.6 | % |
| 5.4 | % |
| 46.6 | % |
| 100.0 | % |
| % floating rate (2) | |
| 100.0 | % |
| 56.1 | % |
| — | |
| 13.8 | % |
| 66.5 | % |
| 52.8 | % |
| 41.1 | % |
| % fixed rate (3) | |
| — | |
| 43.9 | % |
| 100.0 | % |
| 86.2 | % |
| 33.5 | % |
| 47.2 | % |
| 58.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Weighted Average Interest Rates | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Variable rate (4) | |
| 5.23 | % |
| 5.64 | % |
| — | |
| 4.29 | % |
| 4.95 | % |
| 4.50 | % |
| 4.77 | % |
| Fixed rate | |
| — | |
| 5.13 | % |
| 3.97 | % |
| 3.83 | % |
| 4.18 | % |
| 3.73 | % |
| 3.95 | % |
| Total Weighted Average Interest Rates | |
| 5.23 | % |
| 5.42 | % |
| 3.97 | % |
| 3.89 | % |
| 4.69 | % |
| 4.14 | % |
| 4.29 | % |
| | | | | | | | | | | | | |
| | Credit Facility | |||||||||||
|
| Revolving |
| | |
| | |
| | |
| |
| | Credit | | Tranche A‑1 | | Tranche A‑2 | | Total/Weighted | | ||||
| | Facility (1) | | Term Loan | | Term Loan | | Average | | ||||
Credit limit | | $ | 1,000,000 | | $ | 200,000 | | $ | 400,000 | | $ | 1,600,000 | |
Outstanding principal balance | | $ | 100,000 | | $ | 200,000 | | $ | 350,000 | | $ | 650,000 | |
Letters of credit | | $ | 467 | | $ | — | | $ | — | | $ | 467 | |
Undrawn capacity | | $ | 899,533 | | $ | — | | $ | 50,000 | | $ | 949,533 | |
Interest rate spread (5) | |
| 1.15 | % |
| 1.15 | % |
| 1.25 | % |
| 1.22 | % |
All-In interest rate (6) | |
| 4.19 | % |
| 2.61 | % |
| 3.40 | % |
| 3.29 | % |
Initial maturity date | |
| Jan‑25 | |
| Jan‑25 | |
| Jul‑28 | |
| — | |
| (1) | In October 2022, we repaid our outstanding revolving credit facility of $100.0 million. |
| (2) | Floating rate debt includes floating rate loans with interest rate caps. |
| (3) | Fixed rate debt includes floating rate loans with interest rate swaps. Including caps, 85.8% of our debt is fixed or hedged. |
| (5) | The interest rate for the revolving credit facility excludes a 0.15% facility fee. |
| (6) | The all-in interest rate is inclusive of interest rate swaps. As of September 30, 2022, we had interest rates swaps for the Tranche A-1 Term Loan and the Tranche A-2 Term Loan. |
| | |
| | Page 45 |
| |
DEBT BY INSTRUMENT | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | | |
| dollars in thousands | | | | | | | Stated | | Interest | | Current | | Initial | | Extended | |
| | | % | | Principal | | Interest | | Rate | | Annual | | Maturity | | Maturity |
| |
| Asset | | Ownership | | Balance | | Rate | | Hedge (1) |
| Interest Rate (2) | | Date | | Date (3) | | |
| | | | | | | | | | | | | | | | |
|
| Consolidated | | | | | | | | | | | | | | | | |
| 2121 Crystal Drive |
| 100.0 | % | $ | 131,535 |
| 5.51 | % | Fixed |
| 5.51 | % | 03/01/23 | | 03/01/23 | |
| Falkland Chase - South & West |
| 100.0 | % |
| 37,031 |
| 3.78 | % | Fixed |
| 3.78 | % | 06/01/23 | | 06/01/23 | |
| 800 North Glebe Road |
| 100.0 | % |
| 107,170 |
| S + 1.71 | % | — |
| 4.75 | % | 06/30/23 | | 06/30/24 | |
| 2101 L Street |
| 100.0 | % |
| 124,921 |
| 3.97 | % | Fixed |
| 3.97 | % | 08/15/24 | | 08/15/24 | |
| 201 12th Street S., 200 12th Street S., and 251 18th Street S. |
| 100.0 | % |
| 83,319 |
| 7.94 | % | Fixed |
| 7.94 | % | 01/01/25 | | 01/01/25 | |
| Credit Facility - Revolving Credit Facility (4) |
| 100.0 | % |
| 100,000 |
| S + 1.15 | % | — |
| 4.19 | % | 01/07/25 | | 01/07/25 | |
| RiverHouse Apartments |
| 100.0 | % |
| 307,710 |
| L + 1.28 | % | Swap |
| 3.47 | % | 04/01/25 | | 04/01/25 | |
| 1900 Crystal Drive (5) | | — | | | 36,816 | | S + 3.11 | % | Cap | | 6.15 | % | 04/25/26 | | 04/25/26 | |
| 1215 S. Clark Street (6) | | 100.0 | % | | 105,000 | | L + 1.25 | % | Swap | | 4.18 | % | 12/22/26 | | 12/22/26 | |
| Credit Facility - Tranche A‑1 Term Loan |
| 100.0 | % | | 200,000 |
| S + 1.15 | % | Swap |
| 2.61 | % | 01/14/25 | | 01/14/27 | |
| 2000/2001 South Bell Street (7) | | — | | | — | | L + 2.15 | % | — | | 5.29 | % | 01/22/27 | | 01/22/27 | |
| 4747 Bethesda Avenue | | 100.0 | % | | 175,000 | | S + 1.35 | % | Cap | | 4.39 | % | 02/20/27 | | 02/20/27 | |
| 1235 S. Clark Street |
| 100.0 | % |
| 78,000 |
| 3.94 | % | Fixed |
| 3.94 | % | 11/01/27 | | 11/01/27 | |
| Credit Facility - Tranche A‑2 Term Loan |
| 100.0 | % |
| 350,000 |
| S + 1.25 | % | Swap |
| 3.40 | % | 01/13/28 | | 01/13/28 | |
| 1225 S. Clark Street |
| 100.0 | % |
| 85,000 |
| L + 1.60 | % | — |
| 4.74 | % | 07/27/28 | | 07/27/28 | |
| WestEnd25 | | 100.0 | % | | 97,500 | | S + 1.45 | % | Swap | | 4.16 | % | 08/05/29 | | 08/05/29 | |
| 1221 Van Street (8) | | 100.0 | % | | 87,253 | | L + 2.51 | % | Cap | | 4.50 | % | 08/01/30 | | 08/01/30 | |
| 220 20th Street (8) | | 100.0 | % | | 80,240 | | L + 2.51 | % | Cap | | 4.50 | % | 08/01/30 | | 08/01/30 | |
| The Bartlett (8) | | 100.0 | % | | 217,453 | | L + 2.51 | % | Cap | | 4.50 | % | 08/01/30 | | 08/01/30 | |
| Total Consolidated Principal Balance |
| | |
| 2,403,948 |
|
|
|
|
|
|
|
|
|
| |
| Premium / (discount) recognized as a result of the Formation Transaction |
| | |
| 476 |
|
|
|
|
|
|
|
|
|
| |
| Deferred financing costs - mortgage loans (9) |
| | |
| (15,129) | | |
|
|
|
|
|
|
|
| |
| Deferred financing costs - credit facility (9) |
| | |
| (6,866) | | |
|
|
|
|
|
|
|
| |
| Total Consolidated Indebtedness | | | | $ | 2,382,429 | | |
|
|
|
|
|
|
|
| |
| | | | | | | | | | | | | | | | | |
| Total Consolidated Indebtedness (net of premium / (discount) and deferred financing costs) | |
|
|
|
|
|
|
|
|
|
|
|
| | ||
| Mortgages payable | | | | $ | 1,741,605 |
|
|
|
|
|
|
|
|
|
| |
| Revolving credit facility | | | |
| 100,000 |
| |
|
|
|
|
|
|
|
| |
| Deferred financing costs, net (included in other assets) (9) | | | |
| (6,064) |
|
|
|
|
|
|
|
|
|
| |
| Unsecured term loans | | | |
| 546,888 |
|
|
|
|
|
|
|
|
|
| |
| Total Consolidated Indebtedness | | | | $ | 2,382,429 |
|
|
|
|
|
|
|
|
|
| |
| | |
| | Page 46 |
| |
DEBT BY INSTRUMENT | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | | |
| dollars in thousands | | | | | | | Stated | | Interest | | Current | | Initial | | Extended | |
| | | % | | Principal | | Interest | | Rate | | Annual | | Maturity | | Maturity | | |
| Asset | | Ownership | | Balance | | Rate | | Hedge (1) |
| Interest Rate (2) | | Date | | Date (3) |
| |
| | | | | | | | | | | | | | | | | |
| Unconsolidated | | | | | | | | | | | | | | | | |
| Stonebridge at Potomac Town Center | | 10.0 | % |
| 84,600 | | L + 2.50 | % | — |
| 5.64 | % | 12/10/22 | | 12/10/22 | |
| L'Enfant Plaza Office - North, L'Enfant Plaza Office - East, L'Enfant Plaza Retail (10) | | 49.0 | % | | 208,984 | | L + 3.65 | % | Cap |
| 6.65 | % | 05/09/23 | | 05/09/24 | |
| Rosslyn Gateway - North, Rosslyn Gateway - South | | 18.0 | % |
| 46,996 | | S + 2.10 | % | — |
| 5.14 | % | 11/29/22 | | 11/29/24 | |
| The Foundry (10) | | 9.9 | % |
| 58,000 | | L + 1.40 | % | Cap |
| 4.40 | % | 12/12/23 | | 12/12/24 | |
| 1101 17th Street | | 55.0 | % |
| 60,000 | | L + 1.25 | % | Swap |
| 4.13 | % | 06/13/25 | | 06/13/25 | |
| The Gale Eckington | | 5.0 | % |
| 110,813 | | L + 1.60 | % | — |
| 4.74 | % | 12/31/22 | | 12/31/25 | |
| 8001 Woodmont | | 50.0 | % |
| 103,810 | | 4.82 | % | Fixed |
| 4.82 | % | 01/15/27 | | 01/15/27 | |
| Total Unconsolidated Principal Balance | | | |
| 673,203 | | |
|
|
|
|
|
|
|
| |
| Deferred financing costs |
| | | | (393) | | |
|
|
|
|
|
|
|
| |
| Total Unconsolidated Indebtedness | | | | $ | 672,810 | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Principal Balance at JBG SMITH Share | | | |
|
|
|
|
|
|
|
|
|
|
|
| |
| Consolidated principal balance at JBG SMITH Share |
| | | $ | 2,403,948 |
|
|
|
|
|
|
|
|
|
| |
| Unconsolidated principal balance at JBG SMITH Share | | | |
| 215,492 |
| |
|
|
| |
|
|
|
| |
| Total Consolidated and Unconsolidated Principal Balance at JBG SMITH Share | | | | $ | 2,619,440 |
|
|
|
|
|
|
|
|
|
| |
| | | | | | | | | | | | | | | | | |
| Indebtedness at JBG SMITH Share (net of premium / (discount) and deferred financing costs) |
|
|
|
|
|
|
|
|
|
| | |||||
| Consolidated indebtedness at JBG SMITH Share |
| | | $ | 2,382,429 |
| |
|
|
|
|
|
|
|
| |
| Unconsolidated indebtedness at JBG SMITH Share | | | | | 215,341 | | | | | | | | | | | |
| Total Consolidated and Unconsolidated Indebtedness at JBG SMITH Share | | | | | 2,597,770 | | | | | | | | | | | |
| (1) | For floating rate loans with interest rate caps, the weighted average cap strike is 2.57% for consolidated debt, and 2.64% for all debt, and the weighted average maturity date of the caps is September 11, 2023. The interest rate cap strike is exclusive of the credit spreads associated with the loans. |
| (2) | September 30, 2022 one-month LIBOR of 3.14% or one-month term SOFR of 3.04%, as applicable, applied to loans, which are denoted as floating (no swap) or floating with a cap, except as otherwise noted. |
| (3) | Represents the maturity date based on execution of all extension options. Many of these extensions are subject to lender covenant tests. |
| (4) | In October 2022, we repaid our outstanding revolving credit facility of $100.0 million. |
| (5) | In March 2021, we leased the land associated with 1900 Crystal Drive to a lessee which will construct the asset. In March 2021, the ground lessee entered into a mortgage loan collateralized by the asset with a maximum principal balance of $227.0 million. See footnote (3) on page 41 for additional information. |
| (6) | The notional value of the 1215 S. Clark Street interest rate swap was $47.5 million. |
| (7) | In December 2021, we leased the land associated with 2000/2001 South Bell Street to a lessee which will construct the asset. In December 2021, the ground lessee entered into a mortgage loan collateralized by the asset with a maximum principal balance of $208.5 million. See footnote (4) on page 41 for additional information. |
| (8) | The base rate for these loans was 1.99% as of September 30, 2022. |
| (9) | As of September 30, 2022, net deferred financing costs related to unfunded mortgage loans totaling $2.3 million and the revolving credit facility totaling $3.8 million were included in "Other assets, net" in our condensed consolidated balance sheet. |
| (10) | The base rate for these loans was 3.00% as of September 30, 2022. |
| | |
| | Page 47 |
| |
CONSOLIDATED AND UNCONSOLIDATED REAL ESTATE VENTURES | SEPTEMBER 30, 2022 |
Estate Ventures
| | | | | | | | | | | | |
| |
| Asset Type |
| City |
| Submarket |
| % Ownership |
| Total Square Feet |
|
| | | | | | | | | | | | |
| Consolidated Real Estate Ventures | | | | | | | | | | | |
| MRP Realty | | | | | | | | | | | |
| The Wren (1) |
| Multifamily |
| Washington, DC |
| U Street/Shaw |
| 96.0 | % | 332,682 | |
| | | | | | | | | | | | |
| Total Consolidated Real Estate Ventures | | | | | | | | |
| 332,682 | |
| | | | | | | | | | | | |
| Unconsolidated Real Estate Ventures | | | | | | | | | | | |
| Landmark |
|
|
|
|
|
|
|
|
|
| |
| L'Enfant Plaza Office - East |
| Commercial |
| Washington, DC |
| Southwest |
| 49.0 | % | 399,163 | |
| L'Enfant Plaza Office - North |
| Commercial |
| Washington, DC |
| Southwest |
| 49.0 | % | 298,788 | |
| L'Enfant Plaza Retail |
| Commercial |
| Washington, DC |
| Southwest |
| 49.0 | % | 119,291 | |
| Rosslyn Gateway - North |
| Commercial |
| Arlington, VA |
| Rosslyn |
| 18.0 | % | 146,676 | |
| Rosslyn Gateway - South |
| Commercial |
| Arlington, VA |
| Rosslyn |
| 18.0 | % | 103,349 | |
| Rosslyn Gateway - South Land |
| Future Development |
| Arlington, VA |
| Rosslyn |
| 18.0 | % | 498,500 | |
| Rosslyn Gateway - North Land |
| Future Development |
| Arlington, VA |
| Rosslyn |
| 18.0 | % | 311,000 | |
| | | | | | | | | | | 1,876,767 | |
| | | | | | | | | | | | |
| J.P. Morgan Global Alternatives (2) | | | | | | | | | | | |
| Potomac Yard Landbay F - Block 15 - 3331 Exchange Avenue | | Multifamily | | Alexandria, VA | | National Landing | | 50.0 | % | 181,300 | |
| Potomac Yard Landbay F - Block 19 - 3330 Exchange Avenue | | Multifamily | | Alexandria, VA | | National Landing | | 50.0 | % | 238,100 | |
| Potomac Yard Landbay G | | Future Development | | Alexandria, VA | | National Landing | | 50.0 | % | 712,000 | |
| Potomac Yard Landbay F | | Future Development | | Alexandria, VA | | National Landing | | 50.0 | % | 901,000 | |
| |
| | | | | | | | | 2,032,400 | |
| | | | | | | | | | | | |
| CBREI Venture |
|
|
|
|
|
|
|
|
|
| |
| Stonebridge at Potomac Town Center |
| Commercial |
| Woodbridge, VA |
| Prince William County |
| 10.0 | % | 504,327 | |
| The Foundry |
| Commercial |
| Washington, DC |
| Georgetown |
| 9.9 | % | 227,493 | |
| The Gale Eckington |
| Multifamily |
| Washington, DC |
| Union Market / NoMa / H Street |
| 5.0 | % | 466,716 | |
| |
| | | | | | | | | 1,198,536 | |
| | |
| | Page 48 |
| |
CONSOLIDATED AND UNCONSOLIDATED REAL ESTATE VENTURES | SEPTEMBER 30, 2022 |
| | | | | | | | | | |
| | Asset Type |
| City |
| Submarket |
| % Ownership |
| Total Square Feet |
| | | | | | | | | | |
Canadian Pension Plan Investment Board |
|
|
|
|
|
|
|
|
|
|
1101 17th Street |
| Commercial |
| Washington, DC |
| CBD |
| 55.0 | % | 209,345 |
| | | | | | | | | | |
Bresler / Brookfield |
|
|
|
|
|
|
|
|
|
|
Waterfront Station |
| Future Development |
| Washington, DC |
| Southwest |
| 2.5 | % | 662,600 |
| | | | | | | | | | |
Brandywine |
|
|
|
|
|
|
|
|
|
|
1250 1st Street |
| Future Development |
| Washington, DC |
| Union Market / NoMa / H Street |
| 30.0 | % | 265,800 |
51 N Street |
| Future Development |
| Washington, DC |
| Union Market / NoMa / H Street |
| 30.0 | % | 177,500 |
50 Patterson Street |
| Future Development |
| Washington, DC |
| Union Market / NoMa / H Street |
| 30.0 | % | 142,200 |
|
| | | | | | | | | 585,500 |
| | | | | | | | | | |
Prudential Global Investment Management |
|
|
|
|
|
|
|
|
|
|
Central Place Tower |
| Commercial |
| Arlington, VA |
| Rosslyn |
| 50.0 | % | 551,608 |
| | | | | | | | | | |
Berkshire Group |
|
|
|
|
|
|
|
|
|
|
8001 Woodmont (3) |
| Multifamily |
| Bethesda, MD |
| Bethesda CBD |
| 50.0 | % | 363,979 |
| | | | | | | | | | |
Total Unconsolidated Real Estate Ventures |
| |
|
|
|
|
|
|
| 7,480,735 |
| (1) | On October 4, 2022, we acquired an additional 3.7% ownership interest in The Wren for $9.5 million, increasing our ownership interest to 99.7%. |
| (2) | J.P. Morgan Global Alternatives is the advisor for an institutional investor. |
| (3) | On October 5, 2022, we acquired the remaining 50.0% ownership interest in 8001 Woodmont for $115.0 million. |
| | |
| | Page 49 |
| |
DEFINITIONS | SEPTEMBER 30, 2022 |
"Annualized Rent" is defined as (i) for commercial assets, or the retail component of a mixed-use asset, the in-place monthly base rent before Free Rent, plus tenant reimbursements as of September 30, 2022, multiplied by 12, and (ii) for multifamily assets, or the multifamily component of a mixed-use asset, the in-place monthly base rent before Free Rent as of September 30, 2022, multiplied by 12. Annualized Rent excludes rent from leases that have been signed but the tenant has not yet taken occupancy (not yet included in Percent Occupied metrics). The in-place monthly base rent does not take into consideration temporary rent relief arrangements.
"Annualized Rent per Square Foot" is defined as (i) for commercial assets, annualized office rent divided by occupied office square feet and annualized retail rent divided by occupied retail square feet; and (ii) for multifamily assets, monthly multifamily rent divided by occupied multifamily square feet; annualized retail rent and retail square feet are excluded from this metric. Occupied square footage may differ from leased square footage because leased square footage includes leases that have been signed but the tenant has not yet taken occupancy (not yet included in Percent Occupied metrics).
"Development Pipeline" refers to the Near-Term Development and Future Development Pipelines.
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), EBITDA for Real Estate ("EBITDAre") and "Adjusted EBITDA" are non-GAAP financial measures. EBITDA and EBITDAre are used by management as supplemental operating performance measures, which we believe help investors and lenders meaningfully evaluate and compare our operating performance from period-to-period by removing from our operating results the impact of our capital structure (primarily interest charges from our outstanding debt and the impact of our interest rate swaps) and certain non-cash expenses (primarily depreciation and amortization on our assets). EBITDAre is computed in accordance with the definition established by Nareit. Nareit defines EBITDAre as GAAP net income (loss) adjusted to exclude interest expense, income taxes, depreciation and amortization expenses, gains and losses on sales of real estate 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 of unconsolidated real estate ventures. These supplemental measures may help investors and lenders understand our ability to incur and service debt and to make capital expenditures. EBITDA and EBITDAre are not substitutes for net income (loss) (computed in accordance with GAAP) and may not be comparable to similarly titled measures used by other companies.
Adjusted EBITDA represents EBITDAre adjusted for items we believe are not representative of ongoing operating results, such as Transaction and Other Costs, impairment write-downs of right-of-use assets associated with leases in which we are a lessee, gain (loss) on the extinguishment of debt, earnings (losses) and distributions in excess of our investment in unconsolidated real estate ventures, lease liability adjustments, income from investments, business interruption insurance proceeds and share-based compensation expense related to the Formation Transaction and special equity awards. We believe that adjusting such items not considered part of our comparable operations, provides a meaningful measure to evaluate and compare our performance from period-to-period.
Because EBITDA, EBITDAre and Adjusted EBITDA have limitations as analytical tools, we use EBITDA, EBITDAre and Adjusted EBITDA to supplement GAAP financial measures. Additionally, we believe that users of these measures should consider EBITDA, EBITDAre and Adjusted EBITDA in conjunction with net income (loss) and other GAAP measures in understanding our operating results. A reconciliation of net income (loss) to EBITDA, EBITDAre and Adjusted EBITDA is presented on page 15.
"Estimated Incremental Investment" means management's estimate of the remaining cost to be incurred in connection with the development of an asset as of September 30, 2022, including all remaining acquisition costs, hard costs, soft costs, tenant improvements (excluding Free Rent converted to tenant improvement allowances), leasing costs and other similar costs to develop and stabilize the asset but excluding any financing costs and ground rent expenses. Actual incremental investment may differ substantially from our estimates due to numerous factors, including unanticipated expenses, delays in the estimated start and/or completion date, changes in design and other contingencies.
"Estimated Potential Development Density" reflects management's estimate of developable gross square feet based on our current business plans with respect to real estate owned or controlled as of September 30, 2022. Our current business plans may contemplate development of less than the maximum potential development density for individual assets. As market conditions change, our business plans, and therefore, the Estimated Potential Development Density, could change accordingly. Given timing, zoning requirements and other factors, we make no assurance that Estimated Potential Development Density amounts will become actual density to the extent we complete development of assets for which we have made such estimates.
| | |
| | Page 50 |
| |
DEFINITIONS | SEPTEMBER 30, 2022 |
"Estimated Total Investment" means, with respect to the development of an asset, the sum of the Historical Cost in such asset and the Estimated Incremental Investment for such asset. Actual total investment may differ substantially from our estimates due to numerous factors, including unanticipated expenses, delays in the estimated start and/or completion date, changes in design and other contingencies. For Future Development assets, Estimated Total Investment represents Historical Cost plus incremental costs to access the Estimated Potential Development Density, but does not include potential entitlement costs or infrastructure costs.
"First-generation" is a lease on space that had been vacant for at least nine months or a lease on newly delivered space.
"Formation Transaction" refers collectively to the spin-off on July 17, 2017 of substantially all of the assets and liabilities of Vornado Realty Trust's Washington, DC segment, which operated as Vornado / Charles E. Smith, and the acquisition of the management business and certain assets and liabilities of The JBG Companies.
"Free Rent" means the amount of base rent and tenant reimbursements that are abated according to the applicable lease agreement(s).
Funds from Operations ("FFO"), "Core FFO" and Funds Available for Distribution ("FAD") are non-GAAP financial measures. FFO is computed in accordance with the definition established by 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 related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs 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.
Core FFO represents FFO adjusted to exclude items which we believe are not representative of ongoing operating results, such as Transaction and Other Costs, impairment write-downs of right-of-use assets associated with leases in which we are a lessee, gains (or losses) on the extinguishment of debt, earnings (losses) and distributions in excess of our investment in unconsolidated real estate ventures, share-based compensation expense related to the Formation Transaction and special equity awards, lease liability adjustments, income from investments, business interruption insurance proceeds, amortization of the management contracts intangible and the mark-to-market of derivative instruments, including our share of such adjustments for unconsolidated real estate ventures.
FAD represents Core FFO less recurring tenant improvements, leasing commissions and other capital expenditures, net deferred rent activity, third-party lease liability assumption payments, recurring share-based compensation expense, accretion of acquired below-market leases, net of amortization of acquired above-market leases, amortization of debt issuance costs and other non-cash income and charges, including our share of such adjustments for unconsolidated real estate ventures. FAD is presented solely as a supplemental disclosure that management believes provides useful information as it relates to our ability to fund dividends.
We believe FFO, Core FFO and FAD are meaningful non-GAAP financial measures useful in comparing our levered operating performance from period-to-period and as compared to similar real estate companies because these non-GAAP measures exclude 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, Core FFO and FAD do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as a performance measure or cash flow as a liquidity measure. FFO, Core FFO and FAD may not be comparable to similarly titled measures used by other companies. A reconciliation of net income (loss) to FFO, Core FFO and FAD is presented on pages 16-17.
"Future Development Pipeline" refers to assets that are development opportunities on which we do not intend to commence construction within the next three years where we (i) own land or control the land through a ground lease or (ii) are under a long-term conditional contract to purchase, or enter into, a leasehold interest with respect to land.
| | |
| | Page 51 |
| |
DEFINITIONS | SEPTEMBER 30, 2022 |
"GAAP" means accounting principles generally accepted in the United States.
"Historical Cost" is a non-GAAP measure which includes the total Historical Cost incurred by JBG SMITH with respect to the development of an asset, including any acquisition costs, hard costs, soft costs, tenant improvements (excluding Free Rent converted to tenant improvement allowances), leasing costs and other similar costs, but excluding any financing costs and ground rent expenses incurred as of September 30, 2022.
"In-Service" refers to commercial or multifamily operating assets that are at or above 90% leased or have been operating and collecting rent for more than 12 months as of September 30, 2022.
"JBG SMITH Share" or "our share" refers to our ownership percentage of consolidated and unconsolidated assets in real estate ventures.
"Metro-Served" means locations, submarkets or assets that are within 0.5 miles of an existing or planned Metro station.
"Monthly Rent Per Unit" represents multifamily rent for the month ended September 30, 2022 divided by occupied units; retail rent is excluded from this metric.
"Near-Term Development Pipeline" refers to select assets that have the potential to commence construction over the next three years, subject to receipt of full entitlements, completion of design and market conditions.
"Net Debt" is a non-GAAP financial measurement. Net Debt represents our total consolidated and unconsolidated indebtedness less cash and cash equivalents at our share. Net Debt is an important component in the calculations of Net Debt to Annualized Adjusted EBITDA and Net Debt / total enterprise value. We believe that Net Debt is a meaningful non-GAAP financial measure useful to investors because we review Net Debt as part of the management of our overall financial flexibility, capital structure and leverage. We may utilize a considerable portion of our cash and cash equivalents at any given time for purposes other than debt reduction. In addition, cash and cash equivalents at our share may not be solely controlled by us. The deduction of cash and cash equivalents at our share from consolidated and unconsolidated indebtedness in the calculation of Net Debt, therefore, should not be understood to mean that it is available exclusively for debt reduction at any given time.
Net Operating Income ("NOI"), "Annualized NOI", "Estimated Stabilized NOI" and "Projected NOI Yield" are non-GAAP financial measures management uses to assess a segment's performance. The most directly comparable GAAP measure is net income (loss) attributable to common shareholders. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only property related revenue (which includes base rent, tenant reimbursements and other operating revenue, net of Free Rent and payments associated with assumed lease liabilities) less operating expenses and ground rent for operating leases, if applicable. NOI also excludes deferred rent, related party management fees, interest expense, and certain other non-cash adjustments, including the accretion of acquired below-market leases and the amortization of acquired above-market leases and below-market ground lease intangibles. Management uses NOI as a supplemental performance measure of our assets and believes it provides useful information to investors because it reflects only those revenue and expense items that are incurred at the asset level, excluding non-cash items. In addition, NOI is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets. However, because NOI excludes depreciation and amortization and captures neither the changes in the value of our assets that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our assets, all of which have real economic effect and could materially impact the financial performance of our assets, the utility of NOI as a measure of the operating performance of our assets is limited. NOI presented by us may not be comparable to NOI reported by other REITs that define these measures differently. We believe to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) attributable to common shareholders as presented in our 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. Annualized NOI, for all assets except Crystal City Marriott, represents NOI for the three months ended September 30, 2022 multiplied by four. Due to seasonality in the hospitality business, Annualized NOI for Crystal City Marriott represents the trailing 12-month NOI as of September 30, 2022. Management believes Annualized NOI provides useful information in understanding our financial performance over a 12-month period, however, investors and other users are cautioned against attributing undue certainty to our calculation of Annualized NOI. Actual NOI for any 12-month period will depend on a number of factors beyond our ability to
| | |
| | Page 52 |
| |
DEFINITIONS | SEPTEMBER 30, 2022 |
control or predict, including general capital markets and economic conditions, any bankruptcy, insolvency, default or other failure to pay rent by one or more of our tenants and the destruction of one or more of our assets due to terrorist attack, natural disaster or other casualty, among others. We do not undertake any obligation to update our calculation to reflect events or circumstances occurring after the date of this earnings release. There can be no assurance that the Annualized NOI shown will reflect our actual results of operations over any 12-month period.
This Investor Package also contains management's estimate of stabilized NOI and projections of NOI yield for Under-Construction and Near-Term Development Pipeline assets, which are based on management's estimates of property-related revenue and operating expenses for each asset. These estimates are inherently uncertain and represent management's plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. The property-related revenues and operating expenses for our assets may differ materially from the estimates included in this Investor Package. Management's projections of NOI yield are not projections of our overall financial performance or cash flow, and there can be no assurance that the Projected NOI Yield set forth in this Investor Package will be achieved.
Projected NOI Yield means our Estimated Stabilized NOI reported as a percentage of (i) Estimated Total Investment and (ii) Estimated Incremental Investment. Actual initial full year stabilized NOI yield may vary from the Projected NOI Yield based on the actual incremental investment to complete the asset and its actual initial full year stabilized NOI, and there can be no assurance that we will achieve the Projected NOI Yields described in this Investor Package.
We do not provide reconciliations for non-GAAP estimates on a future basis, including Estimated Stabilized NOI and expected Annualized NOI because we are unable to provide a meaningful or accurate calculation or estimate of reconciling items and the information is not available without unreasonable effort. This inability is due to the inherent difficulty of forecasting the timing and/or amounts of various items that would impact net income (loss). Additionally, no reconciliation of Projected NOI Yield to the most directly comparable GAAP measure is included in this Investor Package because we are unable to quantify certain amounts that would be required to be included in the comparable GAAP financial measures without unreasonable efforts because such data is not currently available or cannot be currently estimated with confidence. Accordingly, we believe such reconciliations would imply a degree of precision that would be confusing or misleading to investors.
"Non-Same Store" refers to all operating assets excluded from the Same Store pool.
"Percent Leased" is based on leases signed as of September 30, 2022, and is calculated as total rentable square feet less rentable square feet available for lease divided by total rentable square feet expressed as a percentage. Out-of-service square feet are excluded from this calculation.
"Percent Occupied" is based on occupied rentable square feet/units as of September 30, 2022, and is calculated as (i) for office and retail space, total rentable square feet less unoccupied square feet divided by total rentable square feet, (ii) for multifamily space, total units less unoccupied units divided by total units, expressed as a percentage. Out-of-service square feet and units are excluded from this calculation.
"Pro Rata Adjusted General and Administrative Expenses", a non-GAAP financial measure, represents general and administrative expenses adjusted for share-based compensation expense related to the Formation Transaction and special equity awards and the general and administrative expenses of our third-party asset management and real estate services business that are directly reimbursed. We believe that adjusting such items not considered part of our comparable operations provides a meaningful measure to assess our general and administrative expenses as compared to similar real estate companies and in general.
"Recently Delivered" refers to commercial and multifamily assets that are below 90% leased and have been delivered within the 12 months ended September 30, 2022.
"Same Store" refers to the pool of assets that were In-Service for the entirety of both periods being compared, except for assets for which significant redevelopment, renovation, or repositioning occurred during either of the periods being compared.
"Second-generation" is a lease on space that had been vacant for less than nine months.
| | |
| | Page 53 |
| |
DEFINITIONS | SEPTEMBER 30, 2022 |
"Signed But Not Yet Commenced Leases" means leases that, as of September 30, 2022, have been executed but for which rent has not commenced.
"Square Feet" or "SF" refers to the area that can be rented to tenants, defined as (i) for commercial assets, rentable square footage defined in the current lease and for vacant space the rentable square footage defined in the previous lease for that space, (ii) for multifamily assets, management's estimate of approximate rentable square feet, (iii) for Under-Construction assets, management's estimate of approximate rentable square feet based on current design plans as of September 30, 2022, and (iv) for Near-Term and Future Development Pipeline assets, management's estimate of developable gross square feet based on current business plans with respect to real estate owned or controlled as of September 30, 2022.
"Transaction and Other Costs" include demolition costs, integration and severance costs, pursuit costs related to other completed, potential and pursued transactions, as well as other expenses.
"Under-Construction" refers to assets that were under construction during the three months ended September 30, 2022.
.
| | |
| | Page 54 |
| |
APPENDIX – TRANSACTION AND OTHER COSTS | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | |||||||||||||
| dollars in thousands |
| Q3 2022 |
| Q2 2022 |
| Q1 2022 |
| Q4 2021 |
| Q3 2021 | | |||||
| | | | | | | | | | | | | | | | | |
| Transaction and Other Costs |
| |
|
| |
| | |
| | |
| | |
| |
| Demolition costs | | $ | — | | $ | 406 | | $ | 22 | | $ | 704 | | $ | 1,422 | |
| Integration and severance costs | |
| 1,146 | |
| 727 | |
| 145 | |
| 422 | |
| 154 | |
| Completed, potential and pursued transaction expenses | |
| 600 | |
| 854 | |
| 732 | |
| 392 | |
| 1,375 | |
| Total (1) | | $ | 1,746 | | $ | 1,987 | | $ | 899 | | $ | 1,518 | | $ | 2,951 | |
| (1) | For Q1 2022 and Q4 2021, excludes $34,000 and $0.6 million of transaction costs attributable to noncontrolling interests. |
| | |
| | Page 55 |
| |
APPENDIX - EBITDA, EBITDAre AND ADJUSTED EBITDA RECONCILIATIONS (NON-GAAP) | SEPTEMBER 30, 2022 |
Are Appendix – EBITDAAre and Adjusted EBITDA
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | |||||||||||||
| dollars in thousands |
| Q3 2022 |
| Q2 2022 |
| Q1 2022 |
| Q4 2021 |
| Q3 2021 |
| |||||
| | | | | | | | | | | | | | | | | |
| EBITDA, EBITDAre and Adjusted EBITDA |
| |
|
| |
| | |
| | |
| | |
| |
| Net income (loss) | | $ | (21,581) | | $ | 141,494 | | $ | (77) | | $ | (63,334) | | $ | 996 | |
| Depreciation and amortization expense | |
| 50,056 | |
| 49,479 | |
| 58,062 | |
| 58,173 | |
| 56,726 | |
| Interest expense | |
| 17,932 | |
| 16,041 | |
| 16,278 | |
| 17,649 | |
| 17,243 | |
| Income tax expense (benefit) | |
| 166 | |
| 2,905 | |
| (471) | |
| (986) | |
| 217 | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| 7,725 | |
| 9,494 | |
| 9,829 | |
| 9,696 | |
| 10,147 | |
| EBITDA attributable to noncontrolling interests | |
| (28) | |
| (47) | |
| (26) | |
| 546 | |
| (54) | |
| EBITDA | | $ | 54,270 | | $ | 219,366 | | $ | 83,595 | | $ | 21,744 | | $ | 85,275 | |
| (Gain) loss on the sale of real estate | |
| — | |
| (158,767) | |
| 136 | |
| — | |
| — | |
| Gain on the sale of unconsolidated real estate assets | |
| — | |
| (936) | |
| (5,243) | |
| — | |
| (23,137) | |
| Real estate impairment loss (1) | | | — | | | — | | | — | | | 25,144 | | | — | |
| Impairment related to unconsolidated real estate ventures (2) | | | 15,401 | | | — | | | — | | | 23,883 | | | 1,380 | |
| | | | | | | | | | | | | | | | | |
| EBITDAre | | $ | 69,671 | | $ | 59,663 | | $ | 78,488 | | $ | 70,771 | | $ | 63,518 | |
| Transaction and Other Costs, net of noncontrolling interests (3) | |
| 1,746 | |
| 1,987 | |
| 865 | |
| 888 | |
| 2,951 | |
| Business interruption insurance proceeds | | | — | | | — | | | — | | | (4,517) | | | — | |
| (Income) loss from investments, net | | | 567 | | | (1,217) | | | (14,071) | | | (3,620) | | | — | |
| Loss on the extinguishment of debt | |
| 1,444 | |
| 1,038 | |
| 591 | |
| — | |
| — | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 548 | |
| 1,577 | |
| 2,244 | |
| 3,459 | |
| 3,480 | |
| Earnings and distributions in excess of our investment in unconsolidated real estate venture | |
| (18) | |
| (124) | |
| (441) | |
| (181) | |
| (280) | |
| Lease liability adjustments | | | — | | | — | | | — | | | (134) | | | — | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| 34 | |
| 1,841 | |
| 204 | |
| (497) | |
| 130 | |
| | | | | | | | | | | | | | | | | |
| Adjusted EBITDA | | $ | 73,992 | | $ | 64,765 | | $ | 67,880 | | $ | 66,169 | | $ | 69,799 | |
| | | | | | | | | | | | | | | | | |
| Net Debt to Annualized Adjusted EBITDA (4) | | | 7.9 | x |
| 8.1 | x |
| 9.6 | x |
| 9.6 | x |
| 7.9 | x |
| | | | | | | | | | | | | | | | | |
| Net Debt (at JBG SMITH Share) |
| September 30, 2022 |
| June 30, 2022 |
| March 31, 2022 |
| December 31, 2021 |
| September 30, 2021 |
| |||||
| Consolidated indebtedness (5) | | $ | 2,382,429 | | $ | 2,000,762 | | $ | 2,464,640 | | $ | 2,464,927 | | $ | 2,063,426 | |
| Unconsolidated indebtedness (5) | |
| 215,341 | |
| 279,534 | |
| 362,861 | |
| 370,743 | |
| 362,698 | |
| Total consolidated and unconsolidated indebtedness | |
| 2,597,770 | |
| 2,280,296 | |
| 2,827,501 | |
| 2,835,670 | |
| 2,426,124 | |
| Less: cash and cash equivalents | |
| 272,388 | |
| 181,882 | |
| 207,568 | |
| 282,097 | |
| 213,612 | |
| Net Debt (at JBG SMITH Share) | | $ | 2,325,382 | | $ | 2,098,414 | | $ | 2,619,933 | | $ | 2,553,573 | | $ | 2,212,512 | |
Note: All EBITDA measures as shown above are attributable to OP Units and certain fully-vested incentive equity awards that are convertible into OP Units.
| (1) | In connection with the preparation and review of our annual financial statements, we determined that certain assets were impaired and recorded impairment losses in Q4 2021 totaling $25.1 million. |
| (2) | Includes impairments on real estate assets taken by unconsolidated real estate ventures and an impairment of our investment in an unconsolidated real estate venture related to a decrease in the value of the underlying asset. |
| (3) | See page 55 for the components of Transaction and Other Costs. |
| (4) | Calculated using Net Debt. Adjusted EBITDA is annualized by multiplying by four. |
| (5) | Net of premium/discount and deferred financing costs. |
| | |
| | Page 56 |
| |
APPENDIX - FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP) | SEPTEMBER 30, 2022 |
Appendix – FFO, Core FFO and FAD
| | | | | | | | | | | | | | | | | |
| |
| Three Months Ended |
| |||||||||||||
| in thousands, except per share data |
| Q3 2022 |
| Q2 2022 |
| Q1 2022 |
| Q4 2021 |
| Q3 2021 |
| |||||
| | | | | | | | | | | | | | | | | |
| FFO and Core FFO | | |
|
| |
|
| |
|
| |
|
| |
| |
| Net income (loss) attributable to common shareholders | | $ | (19,293) | | $ | 123,275 | | $ | (32) | | $ | (56,446) | | $ | 893 | |
| Net income (loss) attributable to redeemable noncontrolling interests | |
| (2,546) | |
| 18,248 | |
| 10 | |
| (6,256) | |
| 103 | |
| Net income (loss) attributable to noncontrolling interests | |
| 258 | |
| (29) | |
| (55) | |
| (632) | |
| — | |
| Net income (loss) | |
| (21,581) | |
| 141,494 | |
| (77) | |
| (63,334) | |
| 996 | |
| (Gain) loss on the sale of real estate, net of tax | |
| — | |
| (155,642) | |
| 136 | |
| — | |
| — | |
| Gain on the sale of unconsolidated real estate assets | |
| — | |
| (936) | |
| (5,243) | |
| — | |
| (23,137) | |
| Real estate depreciation and amortization | |
| 47,840 | |
| 47,242 | |
| 55,517 | |
| 55,902 | |
| 54,547 | |
| Real estate impairment loss, net of tax (1) | | | — | | | — | | | — | | | 24,301 | | | — | |
| Impairment related to unconsolidated real estate ventures (2) | | | 15,401 | | | — | | | — | | | 23,883 | | | 1,380 | |
| Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures | |
| 4,999 | |
| 6,416 | |
| 6,870 | |
| 6,626 | |
| 7,002 | |
| FFO attributable to noncontrolling interests | |
| (336) | |
| (47) | |
| (26) | |
| 546 | |
| (54) | |
| FFO Attributable to OP Units | | $ | 46,323 | | $ | 38,527 | | $ | 57,177 | | $ | 47,924 | | $ | 40,734 | |
| FFO attributable to redeemable noncontrolling interests | |
| (6,227) | |
| (4,966) | |
| (5,877) | |
| (4,792) | |
| (4,703) | |
| FFO Attributable to Common Shareholders | | $ | 40,096 | | $ | 33,561 | | $ | 51,300 | | $ | 43,132 | | $ | 36,031 | |
| | | | | | | | | | | | | | | | | |
| FFO attributable to OP Units | | $ | 46,323 | | $ | 38,527 | | $ | 57,177 | | $ | 47,924 | | $ | 40,734 | |
| Transaction and Other Costs, net of tax and noncontrolling interests (3) | |
| 1,597 | |
| 1,892 | |
| 843 | |
| 865 | |
| 2,928 | |
| Business interruption insurance proceeds | | | — | | | — | | | — | | | (4,517) | | | — | |
| (Income) loss from investments, net | | | 567 | | | (957) | | | (10,538) | | | (2,711) | | | — | |
| (Gain) loss from mark-to-market on derivative instruments, net of noncontrolling interests | |
| (2,779) | |
| (2,027) | |
| (3,367) | |
| (292) | |
| 37 | |
| Loss on the extinguishment of debt | |
| 1,444 | |
| 1,038 | |
| 591 | |
| — | |
| — | |
| Earnings and distributions in excess of our investment in unconsolidated real estate venture | |
| (18) | |
| (124) | |
| (441) | |
| (181) | |
| (280) | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 548 | |
| 1,577 | |
| 2,244 | |
| 3,459 | |
| 3,480 | |
| Lease liability adjustments | |
| — | |
| — | |
| — | |
| (134) | |
| — | |
| Amortization of management contracts intangible, net of tax | |
| 1,105 | |
| 1,106 | |
| 1,105 | |
| 1,073 | |
| 1,072 | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| (416) | |
| 1,593 | |
| (48) | |
| (543) | |
| 112 | |
| Core FFO Attributable to OP Units | | $ | 48,371 | | $ | 42,625 | | $ | 47,566 | | $ | 44,943 | | $ | 48,083 | |
| Core FFO attributable to redeemable noncontrolling interests | |
| (7,158) | |
| (5,494) | |
| (4,889) | |
| (4,494) | |
| (5,552) | |
| Core FFO Attributable to Common Shareholders | | $ | 41,213 | | $ | 37,131 | | $ | 42,677 | | $ | 40,449 | | $ | 42,531 | |
| FFO per diluted common share | | $ | 0.35 | | $ | 0.26 | | $ | 0.40 | | $ | 0.33 | | $ | 0.27 | |
| Core FFO per diluted common share | | $ | 0.36 | | $ | 0.28 | | $ | 0.34 | | $ | 0.31 | | $ | 0.32 | |
| Weighted average shares - diluted (FFO and Core FFO) | |
| 114,387 | |
| 131,327 | |
| 126,688 | |
| 129,009 | |
| 131,351 | |
See footnotes on page 58.
| | |
| | Page 57 |
| |
APPENDIX - FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP) | SEPTEMBER 30, 2022 |
| | | | | | | | | | | | | | | | | |
| in thousands, except per share data |
| Three Months Ended |
| |||||||||||||
| |
| Q3 2022 |
| Q2 2022 |
| Q1 2022 |
| Q4 2021 |
| Q3 2021 |
| |||||
| | | | | | | | | | | | | | | | | |
| FAD | | |
|
| |
|
| |
|
| |
|
| |
| |
| Core FFO attributable to OP Units | | $ | 48,371 | | $ | 42,625 | | $ | 47,566 | | $ | 44,943 | | $ | 48,083 | |
| Recurring capital expenditures and Second-generation tenant improvements and leasing commissions (4) | |
| (10,094) | |
| (13,300) | |
| (13,702) | |
| (21,773) | |
| (12,124) | |
| Straight-line and other rent adjustments (5) | |
| (6,018) | |
| (1,978) | |
| (1,791) | |
| (2,985) | |
| (3,701) | |
| Third-party lease liability assumption payments | |
| — | |
| (25) | |
| — | |
| — | |
| (422) | |
| Share-based compensation expense | |
| 5,714 | |
| 10,171 | |
| 10,493 | |
| 9,663 | |
| 7,805 | |
| Amortization of debt issuance costs | |
| 1,122 | |
| 1,135 | |
| 1,176 | |
| 1,142 | |
| 1,126 | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| (2,618) | |
| (289) | |
| (648) | |
| (1,332) | |
| (1,478) | |
| Non-real estate depreciation and amortization | |
| 740 | |
| 760 | |
| 1,068 | |
| 795 | |
| 703 | |
| FAD available to OP Units (A) | | $ | 37,217 | | $ | 39,099 | | $ | 44,162 | | $ | 30,453 | | $ | 39,992 | |
| Distributions to common shareholders and unitholders (B) | | $ | 29,833 | | $ | 31,768 | | $ | 32,603 | | $ | 33,137 | | $ | 33,688 | |
| FAD Payout Ratio (B÷A) (6) | | | 80.2 | % |
| 81.3 | % |
| 73.8 | % |
| 108.8 | % |
| 84.2 | % |
| | | | | | | | | | | | | | | | | |
| Capital Expenditures | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Maintenance and recurring capital expenditures | | $ | 4,944 | | $ | 6,091 | | $ | 4,820 | | $ | 8,121 | | $ | 7,404 | |
| Share of maintenance and recurring capital expenditures from unconsolidated real estate ventures | |
| 84 | |
| 312 | |
| 82 | |
| 168 | |
| 265 | |
| Second-generation tenant improvements and leasing commissions | |
| 5,038 | |
| 6,713 | |
| 8,594 | |
| 12,815 | |
| 3,762 | |
| Share of Second-generation tenant improvements and leasing commissions from unconsolidated real estate ventures | |
| 28 | |
| 184 | |
| 206 | |
| 669 | |
| 693 | |
| Recurring capital expenditures and Second-generation tenant improvements and leasing commissions | |
| 10,094 | |
| 13,300 | |
| 13,702 | |
| 21,773 | |
| 12,124 | |
| Non-recurring capital expenditures | |
| 13,832 | |
| 13,552 | |
| 12,810 | |
| 15,008 | |
| 5,885 | |
| Share of non-recurring capital expenditures from unconsolidated real estate ventures | |
| 9 | |
| 37 | |
| 12 | |
| 145 | |
| 177 | |
| First-generation tenant improvements and leasing commissions | |
| 13,627 | |
| 4,197 | |
| 4,450 | |
| 6,229 | �� |
| 2,603 | |
| Share of First-generation tenant improvements and leasing commissions from unconsolidated real estate ventures | |
| 321 | |
| 244 | |
| 473 | |
| 987 | |
| 93 | |
| Non-recurring capital expenditures | |
| 27,789 | |
| 18,030 | |
| 17,745 | |
| 22,369 | |
| 8,758 | |
| Total JBG SMITH Share of Capital Expenditures | | $ | 37,883 | | $ | 31,330 | | $ | 31,447 | | $ | 44,142 | | $ | 20,882 | |
| (1) | In connection with the preparation and review of our annual financial statements, we determined that certain assets were impaired and recorded impairment losses in Q4 2021 totaling $25.1 million ($24.3 million after tax). |
| (2) | Includes impairments on real estate assets taken by unconsolidated real estate ventures and an impairment of our investment in an unconsolidated real estate venture related to a decrease in the value of the underlying asset. |
| (3) | See page 55 for the components of Transaction and Other Costs. |
| (4) | Includes straight-line rent, above/below market lease amortization and lease incentive amortization. |
| (5) | The quarterly FAD payout ratio is not necessarily indicative of an amount for the full year due to fluctuation in the timing of capital expenditures, the commencement of new leases and the seasonality of our operations. |
| | |
| | Page 58 |
| |
APPENDIX - NOI RECONCILIATIONS (NON-GAAP) | SEPTEMBER 30, 2022 |
Appendix – NOI Reconciliations
| | | | | | | | | | | | | | | | | |
| in thousands |
| Three Months Ended |
| |||||||||||||
| |
| Q3 2022 |
| Q2 2022 |
| Q1 2022 |
| Q4 2021 |
| Q3 2021 |
| |||||
| Net income (loss) attributable to common shareholders | | $ | (19,293) | | $ | (32) | | $ | (56,446) | | $ | 893 | | $ | (2,973) | |
| Add: | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Depreciation and amortization expense | |
| 50,056 | |
| 58,062 | |
| 58,173 | |
| 56,726 | |
| 56,678 | |
| General and administrative expense: | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Corporate and other | |
| 12,072 | |
| 15,815 | |
| 15,344 | |
| 12,105 | |
| 13,895 | |
| Third-party real estate services | |
| 21,230 | |
| 27,049 | |
| 27,124 | |
| 25,542 | |
| 25,557 | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 548 | |
| 2,244 | |
| 3,459 | |
| 3,480 | |
| 4,441 | |
| Transaction and Other Costs | |
| 1,746 | |
| 899 | |
| 1,518 | |
| 2,951 | |
| 2,270 | |
| Interest expense | |
| 17,932 | |
| 16,278 | |
| 17,649 | |
| 17,243 | |
| 16,773 | |
| Loss on the extinguishment of debt | |
| 1,444 | |
| 591 | |
| — | |
| — | |
| — | |
| Impairment loss | | | — | | | — | | | 25,144 | | | — | | | — | |
| Income tax expense (benefit) | |
| 166 | |
| (471) | |
| (986) | |
| 217 | |
| (5) | |
| Net income (loss) attributable to redeemable noncontrolling interests | |
| (2,546) | |
| 10 | |
| (6,256) | |
| 103 | |
| (345) | |
| Net income (loss) attributable to noncontrolling interests | | | 258 | | | (55) | | | (632) | | | — | | | — | |
| Less: | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Third-party real estate services, including reimbursements revenue | |
| 21,845 | |
| 23,970 | |
| 23,309 | |
| 25,842 | |
| 26,745 | |
| Other income | |
| 1,764 | |
| 2,196 | |
| 2,013 | |
| 1,568 | |
| 1,904 | |
| Income (loss) from unconsolidated real estate ventures, net | |
| (13,867) | |
| 3,145 | |
| (25,583) | |
| 20,503 | |
| 3,953 | |
| Interest and other income (loss), net | |
| 984 | |
| 14,246 | |
| 8,672 | |
| 192 | |
| (38) | |
| Gain (loss) on the sale of real estate | |
| — | |
| (136) | |
| — | |
| — | |
| 11,290 | |
| | | | | | | | | | | | | | | | | |
| Consolidated NOI | |
| 72,887 | |
| 76,969 | |
| 75,680 | |
| 71,155 | |
| 72,437 | |
| NOI attributable to unconsolidated real estate ventures at our share | |
| 7,107 | |
| 6,967 | |
| 6,289 | |
| 7,336 | |
| 8,109 | |
| Non-cash rent adjustments (1) | |
| (6,018) | |
| (1,791) | |
| (2,985) | |
| (3,701) | |
| (4,088) | |
| Other adjustments (2) | |
| 6,230 | |
| 8,760 | |
| 6,107 | |
| 4,683 | |
| 5,191 | |
| Total adjustments | |
| 7,319 | |
| 13,936 | |
| 9,411 | |
| 8,318 | |
| 9,212 | |
| NOI | | $ | 80,206 | | $ | 90,905 | | $ | 85,091 | | $ | 79,473 | | $ | 81,649 | |
| Less: out-of-service NOI loss (3) | |
| (548) | |
| (1,448) | | | (1,745) | | | (2,019) | | | (1,329) | |
| Operating portfolio NOI | | $ | 80,754 | | $ | 92,353 | | $ | 86,836 | | $ | 81,492 | | $ | 82,978 | |
Note: NOI, Non-Same Store NOI and Same Store NOI are presented as originally reported in the respective quarter.
| (1) | Adjustment to exclude straight-line rent, above/below market lease amortization and lease incentive amortization. |
| (2) | Adjustment to include other revenue and payments associated with assumed lease liabilities related to operating properties and to exclude commercial lease termination revenue and allocated corporate general and administrative expenses to operating properties. |
| (3) | Includes the results of our Under-Construction assets and Near-Term and Future Development Pipelines. |
| | |
| | Page 59 |
JBGS Divider