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Quarterly Investor Package
JBGS Divider
Management Letter
May 9, 2023
In two days, the Federal Government will officially declare the end of the COVID-19 public health emergency. It’s hard to believe that only a year ago masking on airlines had just been dropped and “return to the office” was only beginning. This month Amazon is executing its own return to the office and steaming full speed ahead on its planned move into phase one of HQ2 this summer. As we actively manage 2.1 million square feet of National Landing leases expiring by the end of 2024 (approximately 35% of annualized rent), we are encouraged that daily occupancy continues its steady upward trajectory and the nexus of defense and technology there favors our capture of a disproportionate share of market leasing demand. We saw predictably strong results in our amenity-rich, largely new, residential portfolio with moderate rent growth and occupancy gains throughout the quarter. Finally, our retail and residential placemaking efforts in National Landing are nearing completion, and there is a palpable buzz in the market as our existing and prospective customers anticipate the long-awaited influx of new amenities and premium housing options. Additionally, we expect to benefit from a market with declining new supply and fewer new starts on the horizon. These fundamental tailwinds paint a picture of growth and recovery, yet it’s clear that the driving market forces for 2023 (and likely 2024) will be higher interest rates, looming recession, lower liquidity and continued declines in asset valuations. As landlords and lenders face the music on these conditions, the future will be won by those with liquidity and the willingness to capitalize on opportunities. Fortunately, we were fast on the draw in recycling many of our more challenging assets prior to the current market turmoil and have continued to find success, illustrated by the recapitalization of our corporate headquarters this quarter. These moves have enabled us to advance our strategic transformation, maintain balance sheet strength and liquidity, and capitalize on our single best investment opportunity: the repurchase of our own stock. The following highlights demonstrate the state of our business as of the end of the first quarter.
$202 million of capital recycling transactions closed in the first quarter, despite challenging market conditions, representing an average capitalization rate of 6.2%. These transactions include the recapitalization of 4747 Bethesda Avenue, a trophy office asset built in 2019, where we sold an 80% pari-passu interest at approximately $815 per square foot. Proceeds were used to deleverage our balance sheet and provide capacity to repurchase our shares.
Operating portfolio performance in-line with prior quarters and overall market fundamentals. Multifamily NOI remained relatively flat quarter-over-quarter, and despite lower leasing volume typical to the first quarter, we executed 114,000 square feet of office leases within our commercial portfolio, of which 103,000 square feet (91%) was in National Landing. We believe that our National Landing offering and tenant base remain among the strongest in the market, with vacancy of 12.4% versus JLL reported first quarter vacancy of 21.9% for National Landing and 22.0% for Northern Virginia overall.
Preserved balance sheet strength with $1.7 billion of liquidity, including a large pool of unencumbered multifamily assets. We maintain a well-staggered debt maturity schedule, with a weighted average debt maturity of 4.2 years (adjusting for by-right extension options), and only $165 million of debt maturing by year end 2023, all
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tied to non-core assets. We continue to believe our primarily non-recourse, asset-level financing strategy is most valuable in an environment like today, providing a floor on our downside risk.
Phase One of Amazon’s HQ2 expected to open in June. The 2.1 million square foot Metropolitan Park will accommodate 14,000 Amazon employees, including the 8,000 workers that Amazon has already hired – which puts them ahead of their year-end goal and represents a 60% increase in Amazon’s local workforce since its previous disclosure in spring 2022. In accordance with its announcement, Amazon employees were expected back in the office for a minimum of three days per week as of May 1st.
All 14 retailers at Metropolitan Park have been announced. As we have mentioned before, we anticipate approximately 55 new retailers representing 210,000 square feet open by 2024, tripling the number of street level retailers in the submarket. 85% of this retail is leased today, with 50% currently open for business. By the third quarter, we anticipate approximately 75% of these retailers will be open.
Capital Allocation
Despite the challenging transaction market, certain asset profiles continue to attract buyers, such as Class A office assets with long-term leases and credit tenancy, or assets that have attractive in-place debt with long tenor. In the first quarter, we closed approximately $202 million of capital recycling transactions, including the sale of an 80% pari-passu interest in 4747 Bethesda Avenue, a trophy office building delivered in 2019 and located in Bethesda, MD. The asset’s new trophy-quality construction, credit tenancy, and in-place, assumable, interest-only debt made it an attractive sale candidate with a strong valuation ($815 per square foot). As part of this transaction, we retained property management, and our headquarters will remain at the property.
As we highlighted last quarter, preserving balance sheet strength and flexibility remains paramount; and we expect new investments, including development projects, acquisitions, and share repurchases, to be largely funded, whether up front or after the fact, by asset recycling. When our shares trade at a material discount to NAV, share repurchases are one of the most accretive uses of capital available to us. Accordingly, year-to-date we have repurchased 4.0 million shares at a weighted average price of $14.91 per share, totaling $60.2 million.
While the current transaction market is incredibly challenging, our management team has a proven track record of allocating capital through multiple market cycles, including large transactions where there was limited market appetite, but where our team was successful in threading the needle and executing at attractive valuations. Since 1999, we have successfully raised over $4 billion in private joint venture capital. As we work to transform the National Landing submarket into the nation’s premier live-work-play destination, anchored by the powerful demand drivers of Amazon, Virginia Tech, the Pentagon, and our digital infrastructure transformation, we continue to evaluate various capitalization strategies, including the potential recapitalization of certain development projects, assets, or portfolios, similar to what we recently accomplished at 4747 Bethesda Avenue.
Financial and Operating Metrics
For the three months ended March 31, 2023, we reported Core FFO attributable to common shareholders of $37.2 million, or $0.33 per diluted share. Annualized NOI increased 1.6% quarter-over-quarter to $327.5 million. Our multifamily portfolio ended the quarter at 95.0% leased and 92.9% occupied. Our office portfolio ended the quarter at 87.6% leased and 85.2% occupied. For second generation leases, the rental rate mark-to-market increased 0.3%.
As of March 31, 2023, our Net Debt/Total Enterprise Value was 52.5% and our Net Debt/Annualized Adjusted
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EBITDA was 7.8x. Our floating rate exposure remains limited, with 89.2% of our debt fixed or hedged as of the date of this release, 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.
With respect to our near-term debt maturities, we believe we are well positioned: (i) our weighted average debt maturity stands at 4.2 years, after adjusting for by-right extension options; (ii) we have zero debt maturities tied to office assets in National Landing until 2025; and (iii) $165 million of debt maturing by year end 2023 is tied to non-core assets. Our primarily non-recourse asset-level financing strategy is most valuable in an environment like today, providing a floor on our downside risk.
Operating Portfolio
Our multifamily portfolio ended the quarter at 92.9% occupied and 95.0% leased. Excluding 8001 Woodmont (in lease-up), our multifamily portfolio ended the quarter at 93.5% occupied and 95.6% leased. Multifamily NOI remained flat quarter-over-quarter, primarily driven by seasonality. Also, similar to trends exhibited last year, renewal rents continued to rise. Across our portfolio, we increased rents by 9.3% upon renewal for first quarter lease expirations, while achieving a 54.7% renewal rate. We expect renewal increases to moderate over the coming quarters given in-place portfolio rates are now approximately 3.4% below asking rents.
Market-Wide (DC Metro) Multifamily Trends (based on CoStar, UrbanTurf, and Apartment List data)
Rents continue to trend upward in the DC metro with ApartmentList reporting 3.3% year-over-year rent growth. Market-wide occupancy of 93.7% is in line with our portfolio, although down approximately 100 basis points year-over-year – a trend broadly in line with the other gateway markets. As we saw last quarter, new starts are few and far between given the cost and rate environment, with just two new ground-up projects and one conversion breaking ground in the first quarter. While it will take time for the impact of this significantly reduced pipeline to be felt, we believe that DC’s position as a safe harbor in times of economic distress, coupled with a limited supply environment, provides an opportunity for healthy future growth.
We executed 114,000 square feet of office leases in the first quarter, the majority of which comprised renewals. While leasing volume this quarter was softer than the quarter prior, much of the decrease can be attributed to seasonality, where, in most years, the first and third quarters tend to be slower than the second and fourth. Occupancy in this portfolio increased 10 basis points quarter-over-quarter to 85.2%.
Our team is diligently managing the 2.1 million square feet of leases expiring by the end of 2024 in National Landing. While market wide leasing remains challenging, fundamentals in National Landing benefit from the proximity to the Pentagon and the driving forces of the defense and technology industries. We have seen an uptick in demand for secure/Sensitive Compartmented Information Facility (SCIF) space as threats of cyber-attacks loom and international tensions rise, with 70% of our first quarter leases signed in National Landing incorporating this type of facility. Physical occupancy across our National Landing portfolio continues to increase, with March Kastle data reporting peak-day daily physical occupancy averaging 73%, up from 72% in February 2023. As companies continue calling employees back to the office (such as Amazon on May 1st), we anticipate physical occupancy in National Landing will continue trending upward.
Market-Wide (DC Metro) Office Trends (based on JLL, CBRE, FD Stonewater and Kastle Systems data)
Statistically, the office market across the region was essentially flat, with JLL reporting limited net absorption (0.2% of inventory). While this has been a steady trend for the past several quarters, it also means that the market has not moved off elevated total vacancy levels of over 20% market-wide, which puts tremendous strain on the market
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and makes competitive dealmaking particularly expensive for already distressed owners and lenders. Beneath the numbers, there are a few clear trends: in Northern Virginia, the demand story is heavily weighted to two user types with CBRE reporting that Aerospace and Defense accounted for 42% of all first quarter leasing, and tech accounted for an additional 33%. According to the same report, no leasing was done by the federal government which is not surprising. In a recently released memo regarding the return to work by the Office of Management and Budget, 19 pages were spent laying out paths to evaluate office work versus telework, with no clear deadlines or mandates to bring the federal workforce back in person. In fact, the federal leased footprint in DC has been steadily shrinking since 2014 when telework was enabled, and it seems unlikely that this trend will abate in the near future. Another trend transpiring in the private sector is that deals coming to market are weighted toward contractions – both in the city and in the suburban markets across nearly all tenant types. This widespread desire to contract is supported by CBRE reporting a 135% increase in sublease availability in Northern Virginia since 2020 with little of that space finding a tenant.
Taken together, these trends speak to a shrinking overall level of demand for the office market, but also represent what we believe are strong positives for JBG SMITH and National Landing: we are a well-capitalized landlord in an environment where liquidity is increasingly scarce. We believe National Landing is also a preferred location for the big drivers of private sector demand, including defense and technology, and offers advantages to both groups that are nearly impossible to replicate elsewhere. Our federal tenancy is also largely anchored by the users least likely to shed their space and embrace widespread telework – at least until SCIF spaces can be built in home offices and kitchen tables. These sectors’ preference for in-person work is readily apparent when comparing our peak day 73% physical occupancy to the DC metro market’s peak day of just 56%. Finally, in an era of less overall demand, we believe that users are intentionally choosing centrally located, transit connected, and amenitized environments outside of the traditional core that can serve as hubs for their workforce – in many cases independent of rental costs given the smaller size of their leased footprints. The next several years will be all about using these advantages to capture a larger share of a smaller pie.
Environmental, Social, and Governance (ESG)
In April, we released our annual ESG report highlighting our accomplishments and progress, key performance metrics, and our industry-leading ESG management strategy. This report details our ESG achievements over the past year, including maintaining a carbon neutral operating portfolio, financing over 2,500 units of affordable housing through the Washington Housing Initiative, and illustrating our preparations in anticipation of the SEC’s new ESG-related disclosure requirements. We encourage you to access our ESG report by visiting our website at https://www.jbgsmith.com/about/sustainability.
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Our dramatic repositioning of National Landing, where approximately 70% of our portfolio is located, is happening as we speak. The long-awaited opening of Amazon’s new buildings at HQ2 is just about a month away. Our retail placemaking transformation is well under way, with 75% of our new retailers anticipated to be open by the third quarter, and construction on our over 1,500 multifamily units is on track. (If you have not visited the neighborhood to see the progress – we encourage you to reach out to our team to set up a tour).
Moving from pandemic-mode to market-roller-coaster-mode has challenged every company and management team in the real estate market, especially those that own office assets. The next few years are unlikely to offer any relief as the white-knuckle ride continues amidst recession, defaults, and a painfully slow return to some new normal in how office space is used. We are incredibly fortunate to have positioned ourselves well in the face of these trends, both in terms of asset recycling (selling those office assets most firmly in the cross hairs of these forces) and financial strength (ample liquidity, few near term debt maturities, aggressive share buybacks). This work has been more challenging to execute than any of us can recall – perhaps even more than during the GFC – and the credit
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for our success lies squarely on the shoulders of our exceptional team. I am lucky to work alongside them each and every day and take great pride in the happy warrior spirit they bring to their work.
Several years ago, we quoted from an inscription that some will recognize: “who does not answer to the rudder shall answer to the rock”. No matter how blistered and bloody they become, our hands will not relax their grip on the tiller as we continue our laser focus on taking full advantage of opportunities in the current climate. We appreciate your continued trust and confidence as we do this.
Sincerely,
W. Matthew Kelly
Chief Executive Officer
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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 FIRST QUARTER 2023 RESULTS
Bethesda, MD (May 9, 2023) - 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 March 31, 2023 and reported its financial results.
Additional information regarding our results of operations, properties, and tenants can be found in our First Quarter 2023 Investor Package, which is 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 that document.
First Quarter 2023 Highlights
● | Net income, Funds From Operations ("FFO") and Core FFO attributable to common shareholders were: |
| | | | | | | | | | | |
| | FIRST QUARTER COMPARISON | |||||||||
in millions, except per share amounts | | Three Months Ended | |||||||||
| | | March 31, 2023 | | March 31, 2022 | ||||||
| | | Amount | Per Diluted Share | | Amount | Per Diluted Share | ||||
| Net income | | $ | 21.2 | $ | 0.19 | | $ | - | $ | - |
| FFO | | $ | 33.0 | $ | 0.29 | | $ | 51.3 | $ | 0.40 |
| Core FFO | | $ | 37.2 | $ | 0.33 | | $ | 42.7 | $ | 0.34 |
● | Annualized Net Operating Income ("NOI") for the three months ended March 31, 2023 was $327.5 million, compared to $322.3 million for the three months ended December 31, 2022, at our share. |
o | The slight increase in Annualized NOI was substantially attributable to (i) a decrease in bad debt, partially offset by higher real estate taxes and utilities in our commercial portfolio and (ii) higher rents across the multifamily portfolio. |
● | Same Store NOI ("SSNOI") at our share decreased 0.7% year-over-year to $76.1 million for the three months ended March 31, 2023. |
o | The decrease in SSNOI was substantially attributable to (i) increased abatement and higher utilities, partially offset by an increase in parking revenue in our commercial portfolio and (ii) higher occupancy and rents in our multifamily portfolio. |
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Operating Portfolio
● | The operating commercial portfolio was 87.6% leased and 85.2% occupied as of March 31, 2023, compared to 88.5% and 85.1% as of December 31, 2022, at our share. |
● | The operating multifamily portfolio was 95.0% leased and 92.9% occupied as of March 31, 2023, compared to 94.5% and 93.6% as of December 31, 2022, at our share. |
● | Executed approximately 114,000 square feet of office leases at our share during the three months ended March 31, 2023, comprising approximately 20,000 square feet of first-generation leases and approximately 94,000 square feet of second-generation leases, which generated a 4.5% rental rate increase on a GAAP basis and a 0.3% rental rate increase on a cash basis. |
Development Portfolio
Under-Construction
● | As of March 31, 2023, we had two multifamily assets under construction consisting of 1,583 units at our share. |
Development Pipeline
● | As of March 31, 2023, we had 20 assets in the development pipeline consisting of 9.8 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 March 31, 2023, revenue from third-party real estate services, including reimbursements, was $22.8 million. Excluding reimbursements and service revenue from our interests in real estate ventures, revenue from our third-party asset management and real estate services business was $10.6 million, primarily driven by $5.8 million of property and asset management fees, $2.0 million of development fees, $1.3 million of leasing fees and $1.1 million of other service revenue. |
Balance Sheet
● | As of March 31, 2023, our total enterprise value was approximately $4.1 billion, comprising 128.4 million common shares and units valued at $1.9 billion, and debt (net of premium / (discount) and deferred financing costs) at our share of $2.4 billion, less cash and cash equivalents at our share of $291.8 million. |
● | As of March 31, 2023, we had $279.6 million of cash and cash equivalents ($291.8 million of cash and cash equivalents at our share), and $1.0 billion 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 March 31, 2023 was 7.8x, and our Net Debt / total enterprise value was 52.5% as of March 31, 2023. |
Investing and Financing Activities
● | In March 2023, we sold $201.5 million of assets, which included an 80.0% pari-passu interest in 4747 Bethesda Avenue and a development parcel. |
● | As previously announced, in January 2023, we entered into a $187.6 million loan facility, collateralized by The Wren and F1RST Residences. The loan has a seven-year term and a fixed interest rate of 5.13%. This loan is |
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the initial advance under a Fannie Mae multifamily credit facility which provides flexibility for collateral substitutions, future advances tied to performance, ability to mix fixed and floating rates, and staggered maturities. Proceeds from the loan were used, in part, to repay the $131.5 million mortgage loan on 2121 Crystal Drive, which had a fixed interest rate of 5.51%. |
● | As previously announced, in February 2023, we acquired the remaining 0.3% ownership interest in The Wren, a multifamily asset that was owned by a consolidated real estate venture, for $0.6 million. |
● | We repurchased and retired 1.2 million common shares for $20.1 million, a weighted average purchase price per share of $16.66. |
Subsequent to March 31, 2023:
● | We repurchased and retired 2.8 common shares for $40.1 million, a weighted average purchase price per share of $14.16, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. |
Dividends
● | On May 4, 2023, our Board of Trustees declared a quarterly dividend of $0.225 per common share, payable on June 30, 2023 to shareholders of record as of June 23, 2023. |
About JBG SMITH
JBG SMITH owns, operates, invests in, and develops mixed-use properties in 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. Approximately two-thirds of JBG SMITH's holdings are in the National Landing submarket in Northern Virginia, which is anchored by four key demand drivers: Amazon's new headquarters; Virginia Tech's under-construction $1 billion Innovation Campus; the submarket’s proximity to the Pentagon; and JBG SMITH’s deployment of next-generation public and private 5G digital infrastructure. JBG SMITH's dynamic portfolio currently comprises 15.0 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, primarily multifamily, 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 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
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release. We also note the following forward-looking statements: changes to the amount and manner in which tenants use space; our annual dividend per share and dividend yield; whether in the case of our under-construction assets and assets in the development pipeline, estimated square feet, estimated number of units and estimated potential development density are accurate; expected timing, completion, modifications and delivery dates for the projects we are developing for Amazon; the ability of any or all of our demand drivers to materialize and their effect on economic impact, job growth, expansion of public transportation and related demand in the National Landing submarket; planned infrastructure and educational improvements related to Amazon's additional headquarters and the Virginia Tech Innovation Campus; our development plans related to National Landing; whether we will be able to successfully shift the majority of our portfolio to multifamily; 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, 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, 2022 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 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.
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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, our 33.5% subordinated interest in four commercial buildings, and our 49.0% interest in three commercial buildings, as well as the associated non-recourse mortgage loans, 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.
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 expense 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 expense, 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
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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 expense 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, gain (loss) 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) refunds, 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
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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 an asset's performance. The most directly comparable GAAP measure is net income (loss) attributable to common shareholders. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only property related revenue (which includes base rent, tenant reimbursements and other operating revenue, net of Free Rent and payments associated with assumed lease liabilities) less operating expenses and ground rent for operating leases, if applicable. NOI also excludes deferred rent, related party management fees, interest expense, and certain other non-cash adjustments, including the accretion of acquired below-market leases and the amortization of acquired above-market leases and below-market ground lease intangibles. Management uses NOI as a supplemental performance measure of our assets and believes it provides useful information to investors because it reflects only those revenue and expense items that are incurred at the asset level, excluding non-cash items. In addition, NOI is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets. However, because NOI excludes depreciation and amortization expense and captures neither the changes in the value of our assets that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our assets, all of which have real economic effect and could materially impact the financial performance of our assets, the utility of NOI as a measure of the operating performance of our assets is limited. NOI presented by us may not be comparable to NOI reported by other REITs that define these measures differently. We believe to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) attributable to common shareholders as presented in our financial statements. NOI should not be considered as an alternative to net income (loss) attributable to common shareholders as an indication of our performance or to cash flows as a measure of liquidity or our ability to make distributions. Annualized NOI, for all assets except Crystal City Marriott, represents NOI for the three months ended March 31, 2023 multiplied by four. Due to seasonality in the hospitality business, Annualized NOI for Crystal City Marriott represents the trailing 12-month NOI as of March 31, 2023. 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
8
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 assets that have the potential to commence construction subject to receipt of full entitlements, completion of design and market conditions 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.
"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 March 31, 2023. 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.
"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).
"GAAP" means accounting principles generally accepted in the United States of America.
"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 March 31, 2023.
"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, 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.
"Transaction and Other Costs" include pursuit costs related to completed, potential and pursued transactions, demolition costs, severance and other costs.
9
"Under-Construction" refers to assets that were under construction during the three months ended March 31, 2023.
10
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | | | | | | | |
| in thousands | | March 31, 2023 | | December 31, 2022 |
| ||
| | | | | | | |
|
| ASSETS | | | | | | |
|
| Real estate, at cost: |
| |
|
| |
| |
| Land and improvements | | $ | 1,267,022 | | $ | 1,302,569 | |
| Buildings and improvements | |
| 4,157,110 | |
| 4,310,821 | |
| Construction in progress, including land | |
| 619,111 | |
| 544,692 | |
| | |
| 6,043,243 | |
| 6,158,082 | |
| Less: accumulated depreciation | |
| (1,355,655) | |
| (1,335,000) | |
| Real estate, net | |
| 4,687,588 | |
| 4,823,082 | |
| Cash and cash equivalents | |
| 279,553 | |
| 241,098 | |
| Restricted cash | |
| 42,339 | |
| 32,975 | |
| Tenant and other receivables | |
| 46,241 | |
| 56,304 | |
| Deferred rent receivable | |
| 159,287 | |
| 170,824 | |
| Investments in unconsolidated real estate ventures | |
| 312,651 | |
| 299,881 | |
| Intangible assets, net | | | 149,243 | | | 162,246 | |
| Other assets, net | |
| 158,118 | |
| 117,028 | |
| TOTAL ASSETS | | $ | 5,835,020 | | $ | 5,903,438 | |
| | | | | | | | |
| LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | |
|
| |
|
| |
| Liabilities: | |
|
| |
|
| |
| Mortgage loans, net | | $ | 1,802,051 | | $ | 1,890,174 | |
| Revolving credit facility | |
| — | |
| — | |
| Unsecured term loans, net | |
| 547,256 | |
| 547,072 | |
| Accounts payable and accrued expenses | |
| 124,268 | |
| 138,060 | |
| Other liabilities, net | |
| 164,627 | |
| 132,710 | |
| Total liabilities | |
| 2,638,202 | |
| 2,708,016 | |
| Commitments and contingencies | |
|
| |
|
| |
| Redeemable noncontrolling interests | |
| 457,778 | |
| 481,310 | |
| Total equity | |
| 2,739,040 | |
| 2,714,112 | |
| TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | | $ | 5,835,020 | | $ | 5,903,438 | |
Note: For complete financial statements, please refer to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.
11
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | | | | | |
in thousands, except per share data | | Three Months Ended March 31, | ||||
| | 2023 | | 2022 | ||
REVENUE | | | | | | |
Property rental | | $ | 124,033 |
| $ | 131,598 |
Third-party real estate services, including reimbursements | |
| 22,784 | |
| 23,970 |
Other revenue | |
| 6,145 | |
| 6,397 |
Total revenue | |
| 152,962 | |
| 161,965 |
EXPENSES | |
|
| |
|
|
Depreciation and amortization | |
| 53,431 | |
| 58,062 |
Property operating | |
| 35,612 | |
| 40,644 |
Real estate taxes | |
| 15,224 | |
| 18,186 |
General and administrative: | |
| | |
|
|
Corporate and other | |
| 16,123 | |
| 15,815 |
Third-party real estate services | |
| 23,823 | |
| 27,049 |
Share-based compensation related to Formation Transaction and special equity awards | |
| 351 | |
| 2,244 |
Transaction and other costs | |
| 2,472 | |
| 899 |
Total expenses | |
| 147,036 | |
| 162,899 |
OTHER INCOME (EXPENSE) | |
|
| |
|
|
Income from unconsolidated real estate ventures, net | |
| 433 | |
| 3,145 |
Interest and other income, net | |
| 4,077 | |
| 14,246 |
Interest expense | |
| (26,842) | |
| (16,278) |
Gain (loss) on the sale of real estate, net | |
| 40,700 | |
| (136) |
Loss on the extinguishment of debt | |
| — | |
| (591) |
Total other income (expense) | |
| 18,368 | |
| 386 |
INCOME (LOSS) BEFORE INCOME TAX BENEFIT | |
| 24,294 | |
| (548) |
Income tax benefit | |
| 16 | |
| 471 |
NET INCOME (LOSS) | |
| 24,310 | |
| (77) |
Net income attributable to redeemable noncontrolling interests | |
| (3,363) | |
| (10) |
Net loss attributable to noncontrolling interests | | | 224 | | | 55 |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | | $ | 21,171 | | $ | (32) |
EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED | | $ | 0.19 | | $ | — |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED | |
| 114,052 | |
| 126,682 |
Note: For complete financial statements, please refer to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.
12
EBITDA, EBITDAre AND ADJUSTED EBITDA RECONCILIATIONS (NON-GAAP)
(Unaudited)
| | | | | | | | |
| dollars in thousands |
| Three Months Ended March 31, |
| ||||
| | | 2023 | | 2022 |
| ||
| | | | | | | |
|
| EBITDA, EBITDAre and Adjusted EBITDA |
| |
| | |
| |
| Net income (loss) | | $ | 24,310 | | $ | (77) | |
| Depreciation and amortization expense | | | 53,431 | | | 58,062 | |
| Interest expense | | | 26,842 | | | 16,278 | |
| Income tax benefit | | | (16) | | | (471) | |
| Unconsolidated real estate ventures allocated share of above adjustments | | | 3,664 | | | 9,829 | |
| EBITDA attributable to noncontrolling interests | | | 30 | | | (26) | |
| EBITDA | | $ | 108,261 | | $ | 83,595 | |
| (Gain) loss on the sale of real estate, net | | | (40,700) | | | 136 | |
| Gain on the sale of unconsolidated real estate assets | | | — | | | (5,243) | |
| | | | | | | | |
| EBITDAre | | $ | 67,561 | | $ | 78,488 | |
| Transaction and other costs, net of noncontrolling interests (1) | | | 2,472 | | | 865 | |
| Income from investments, net | | | (1,861) | | | (14,071) | |
| Loss on the extinguishment of debt | | | — | | | 591 | |
| Share-based compensation related to Formation Transaction and special equity awards | | | 351 | | | 2,244 | |
| Earnings and distributions in excess of our investment in unconsolidated real estate venture | | | (167) | | | (441) | |
| Unconsolidated real estate ventures allocated share of above adjustments | | | 2 | | | 204 | |
| | | | | | | | |
| Adjusted EBITDA | | $ | 68,358 | | $ | 67,880 | |
| | | | | | | | |
| Net Debt to Annualized Adjusted EBITDA (2) | | | 7.8 | x | | 9.6 | x |
| | | | | | | | |
| | | March 31, 2023 | | March 31, 2022 | | ||
| Net Debt (at JBG SMITH Share) | | |
| | |
| |
| Consolidated indebtedness (3) | | $ | 2,344,304 | | $ | 2,464,640 | |
| Unconsolidated indebtedness (3) | | | 87,832 | | | 362,861 | |
| Total consolidated and unconsolidated indebtedness | | | 2,432,136 | | | 2,827,501 | |
| Less: cash and cash equivalents | | | 291,799 | | | 207,568 | |
| Net Debt (at JBG SMITH Share) | | $ | 2,140,337 | | $ | 2,619,933 | |
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) | Includes pursuit costs related to completed, potential and pursued transactions, demolition costs, severance and other costs. |
(2) | Quarterly Adjusted EBITDA is annualized by multiplying by four. |
(3) | Net of premium/discount and deferred financing costs. |
13
FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP)
(Unaudited)
| | | | | | | |
| in thousands, except per share data | Three Months Ended March 31, |
| ||||
| | 2023 |
| 2022 | | ||
| | | | | | | |
| FFO and Core FFO | | | | | | |
| Net income (loss) attributable to common shareholders | $ | 21,171 |
| $ | (32) | |
| Net income attributable to redeemable noncontrolling interests |
| 3,363 |
| | 10 | |
| Net loss attributable to noncontrolling interests |
| (224) |
| | (55) | |
| Net income (loss) |
| 24,310 |
| | (77) | |
| (Gain) loss on the sale of real estate, net of tax |
| (40,700) |
| | 136 | |
| Gain on the sale of unconsolidated real estate assets |
| — |
| | (5,243) | |
| Real estate depreciation and amortization |
| 51,611 |
| | 55,517 | |
| Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures |
| 2,760 |
| | 6,870 | |
| FFO attributable to noncontrolling interests |
| 224 |
| | (26) | |
| FFO Attributable to OP Units | $ | 38,205 |
| $ | 57,177 | |
| FFO attributable to redeemable noncontrolling interests |
| (5,203) |
| | (5,877) | |
| FFO Attributable to Common Shareholders | $ | 33,002 |
| $ | 51,300 | |
| | | | | | | |
| FFO attributable to OP Units | $ | 38,205 |
| $ | 57,177 | |
| Transaction and other costs, net of tax and noncontrolling interests (1) |
| 2,373 |
| | 843 | |
| Income from investments, net | | (1,405) | | | (10,538) | |
| Loss (gain) from mark-to-market on derivative instruments, net of noncontrolling interests |
| 2,541 |
| | (3,367) | |
| Loss on the extinguishment of debt |
| — |
| | 591 | |
| Earnings and distributions in excess of our investment in unconsolidated real estate venture |
| (167) |
| | (441) | |
| Share-based compensation related to Formation Transaction and special equity awards |
| 351 |
| | 2,244 | |
| Amortization of management contracts intangible, net of tax |
| 1,106 |
| | 1,105 | |
| Unconsolidated real estate ventures allocated share of above adjustments |
| 36 |
| | (48) | |
| Core FFO Attributable to OP Units | $ | 43,040 |
| $ | 47,566 | |
| Core FFO attributable to redeemable noncontrolling interests |
| (5,862) |
| | (4,889) | |
| Core FFO Attributable to Common Shareholders | $ | 37,178 |
| $ | 42,677 | |
| FFO per common share - diluted | $ | 0.29 |
| $ | 0.40 | |
| Core FFO per common share - diluted | $ | 0.33 |
| $ | 0.34 | |
| Weighted average shares - diluted (FFO and Core FFO) |
| 114,062 |
| | 126,688 | |
See footnotes on page 15.
14
FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP)
(Unaudited)
| | | | | | | | |
| in thousands, except per share data | | Three Months Ended March 31, |
| ||||
| |
| 2023 |
| 2022 | | ||
| | | | | | | | |
| FAD | | | | | | | |
| Core FFO attributable to OP Units |
| $ | 43,040 |
| $ | 47,566 | |
| Recurring capital expenditures and Second-generation tenant improvements and leasing commissions (2) | |
| (7,794) | |
| (13,702) | |
| Straight-line and other rent adjustments (3) | |
| (8,377) | |
| (1,791) | |
| Third-party lease liability assumption (payments) refunds | |
| 95 | |
| — | |
| Share-based compensation expense | |
| 9,348 | |
| 10,493 | |
| Amortization of debt issuance costs | |
| 1,307 | |
| 1,176 | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| 402 | |
| (648) | |
| Non-real estate depreciation and amortization | |
| 355 | |
| 1,068 | |
| FAD available to OP Units (A) | | $ | 38,376 | | $ | 44,162 | |
| Distributions to common shareholders and unitholders (B) | | $ | 29,619 | | $ | 32,603 | |
| FAD Payout Ratio (B÷A) (4) | |
| 77.2 | % |
| 73.8 | % |
| | | | | | | | |
| Capital Expenditures | | | | | | | |
| Maintenance and recurring capital expenditures | | $ | 2,973 | | $ | 4,820 | |
| Share of maintenance and recurring capital expenditures from unconsolidated real estate ventures | |
| — | |
| 82 | |
| Second-generation tenant improvements and leasing commissions | |
| 4,742 | |
| 8,594 | |
| Share of Second-generation tenant improvements and leasing commissions from unconsolidated real estate ventures | |
| 79 | |
| 206 | |
| Recurring capital expenditures and Second-generation tenant improvements and leasing commissions | |
| 7,794 | |
| 13,702 | |
| Non-recurring capital expenditures | |
| 9,693 | |
| 12,810 | |
| Share of non-recurring capital expenditures from unconsolidated real estate ventures | |
| 2 | |
| 12 | |
| First-generation tenant improvements and leasing commissions | |
| 3,125 | |
| 4,450 | |
| Share of First-generation tenant improvements and leasing commissions from unconsolidated real estate ventures | |
| 313 | |
| 473 | |
| Non-recurring capital expenditures | |
| 13,133 | |
| 17,745 | |
| Total JBG SMITH Share of Capital Expenditures | | $ | 20,927 | | $ | 31,447 | |
(1) | Includes pursuit costs related to completed, potential and pursued transactions, demolition costs, severance and other costs. |
(2) | Includes amounts, at JBG SMITH Share, related to unconsolidated real estate ventures. |
(3) | Includes straight-line rent, above/below market lease amortization and lease incentive amortization. |
(4) | 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. |
15
NOI RECONCILIATIONS (NON-GAAP)
(Unaudited)
| | | | | | | | |
| dollars in thousands | | Three Months Ended March 31, |
| ||||
| | | 2023 | | 2022 | | ||
| | | | | | | | |
| Net income (loss) attributable to common shareholders |
| $ | 21,171 |
| $ | (32) | |
| Add: | |
|
| |
|
| |
| Depreciation and amortization expense | |
| 53,431 | |
| 58,062 | |
| General and administrative expense: | |
|
| |
|
| |
| Corporate and other | |
| 16,123 | |
| 15,815 | |
| Third-party real estate services | |
| 23,823 | |
| 27,049 | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 351 | |
| 2,244 | |
| Transaction and other costs | |
| 2,472 | |
| 899 | |
| Interest expense | |
| 26,842 | |
| 16,278 | |
| Loss on the extinguishment of debt | |
| — | |
| 591 | |
| Income tax benefit | |
| (16) | |
| (471) | |
| Net income attributable to redeemable noncontrolling interests | |
| 3,363 | |
| 10 | |
| Net loss attributable to noncontrolling interests | | | (224) | | | (55) | |
| Less: | |
|
| |
|
| |
| Third-party real estate services, including reimbursements revenue | |
| 22,784 | |
| 23,970 | |
| Other revenue | |
| 1,726 | |
| 2,196 | |
| Income from unconsolidated real estate ventures, net | |
| 433 | |
| 3,145 | |
| Interest and other income, net | |
| 4,077 | |
| 14,246 | |
| Gain (loss) on the sale of real estate, net | |
| 40,700 | |
| (136) | |
| | | | | | | | |
| Consolidated NOI | |
| 77,616 | |
| 76,969 | |
| NOI attributable to unconsolidated real estate ventures at our share | |
| 4,429 | |
| 6,967 | |
| Non-cash rent adjustments (1) | |
| (8,377) | |
| (1,791) | |
| Other adjustments (2) | |
| 6,845 | |
| 8,760 | |
| Total adjustments | |
| 2,897 | |
| 13,936 | |
| NOI | | $ | 80,513 | | $ | 90,905 | |
| Less: out-of-service NOI loss (3) | |
| (710) | |
| (1,448) | |
| Operating Portfolio NOI | | $ | 81,223 | | $ | 92,353 | |
| Non-Same Store NOI (4) | |
| 5,114 | |
| 15,716 | |
| Same Store NOI (5) | | $ | 76,109 | | $ | 76,637 | |
| | | | | | | | |
| Change in Same Store NOI | |
| (0.7) | % |
| | |
| Number of properties in Same Store pool | |
| 49 | |
|
| |
(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 assets in the Development Pipeline. |
(4) | Includes the results of properties that were not In-Service for the entirety of both periods being compared, including disposed properties, and properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. |
(5) | Includes the results of the properties that are owned, operated and In-Service for the entirety of both periods being compared. |
16
SEP | |
TABLE OF CONTENTS | MARCH 31, 2023 |
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 | |
21 | |
22 | |
23 | |
24 | |
25 | |
Leasing Activity | |
26 | |
27 | |
28 | |
29 | |
30 | |
31 | |
Property Data | |
32 | |
Property Tables: | |
33-35 | |
36-38 | |
39 | |
40-41 | |
42 | |
Debt | |
43 | |
44-45 | |
46 | |
47-51 | |
Appendices – Transaction and Other Costs, and Reconciliations of Non-GAAP Financial Measures | 52-56 |
| 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. We also note the following forward-looking statements: 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; long-term trends in demand for housing (including multifamily) within major urban employment centers; whether National Landing will benefit economically from its proximity to the Pentagon; the anticipated growth of our target submarkets; the economic impact of DC's diversification into technology; 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; the ability of any or all of our demand drivers to materialize and their effect on economic impact, job growth, expansion of public transportation and related demand in the National Landing submarket; 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; whether Phase One of Amazon’s HQ2 will open on the anticipated timeline; the impact on our net asset value of the Amazon transactions; 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 assets and assets in the Development Pipeline, estimated square feet, estimated number of units, estimated construction start, 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, yield on cost, 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; whether our plans related to our investment in 5G wireless spectrum across National Landing will be a significant demand catalyst; whether the anticipated placemaking in National Landing will be realized; whether the number of retailers and multifamily units in National Landing will increase to the levels anticipated or open on the timelines anticipated; whether we will be able to successfully dispose of certain non-core office assets outside of National Landing; 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 Development Pipeline opportunities, 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, 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, 2022 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 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, a Maryland real estate investment trust, owns and operates a portfolio of multifamily and commercial assets amenitized with ancillary retail. JBG SMITH's portfolio reflects its longstanding strategy of owning and operating assets within Metro-served submarkets in the Washington, D.C. metropolitan area with high barriers to entry and vibrant urban amenities. Approximately two-thirds of our portfolio is in National Landing, which is anchored by four key demand drivers: Amazon's new headquarters; Virginia Tech's under-construction $1 billion Innovation Campus; the submarket’s proximity to the Pentagon; and our deployment of next-generation public and private 5G digital infrastructure. In addition, our third-party asset management and real estate services business provides fee-based real estate services to the Washington Housing Initiative Impact Pool, the legacy funds formerly organized by The JBG Companies (the "JBG Legacy Funds") and other third parties.
| Page 3 |
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, our 33.5% subordinated interest in four commercial buildings, and our 49.0% interest in three commercial buildings, as well as the associated non-recourse mortgage loans, 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 47-51 for definitions of terms used in this Investor Package.
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 |
● | Pro Rata Adjusted General and Administrative Expenses |
● | Net Operating Income ("NOI") |
● | Annualized NOI |
● | Estimated Stabilized NOI |
● | Projected NOI Yield |
● | Same Store NOI |
● | Consolidated and Unconsolidated Indebtedness |
● | Net Debt |
| Page 5 |
| |
COMPANY PROFILE | MARCH 31, 2023 |
| | | | | | | | | |
Executive Officers | | Company Snapshot as of March 31, 2023 | |||||||
| | | | | | | | | |
W. Matthew Kelly |
| Chief Executive Officer and Trustee |
| | Exchange/ticker |
| | NYSE: JBGS | |
M. Moina Banerjee |
| Chief Financial Officer |
| | Indicated annual dividend per share | | $ | 0.90 | |
Kevin P. Reynolds |
| Chief Development Officer |
| | Dividend yield | |
| 6.0 | % |
George L. Xanders | | Chief Investment Officer |
| |
| |
|
| |
Steven A. Museles |
| Chief Legal Officer |
| | Total Enterprise Value (dollars in billions, except share price) | |
|
| |
| | |
| | Common share price | | $ | 15.06 | |
| | |
| | Common shares and common limited partnership units ("OP Units") | |
| 128.38 | |
| | |
| | Total market capitalization | | $ | 1.93 | |
| | |
| | Total consolidated and unconsolidated indebtedness at JBG SMITH Share | |
| 2.43 | |
| | |
| | Less: cash and cash equivalents at JBG SMITH Share | |
| (0.29) | |
| | |
| | Net Debt | | $ | 2.14 | |
| | |
| | Total Enterprise Value | | $ | 4.07 | |
| | | | | | | | | |
|
|
|
| | Net Debt / Total Enterprise Value | |
| 52.5 | % |
| | | | | | | | | |
(1) | Includes certain fully-vested incentive equity awards that are convertible into OP Units. |
| Page 6 |
| |
FINANCIAL HIGHLIGHTS | MARCH 31, 2023 |
| | | | | |
| dollars in thousands, except per share data | | Three Months Ended | | |
| | | March 31, 2023 | | |
| | | | | |
| Summary Financial Results | | | | |
| Total revenue | | $ | 152,962 | |
| Net income attributable to common shareholders | | $ | 21,171 | |
| Per diluted common share | | $ | 0.19 | |
| Operating portfolio NOI | | $ | 81,223 | |
| FFO (1) | | $ | 38,205 | |
| Per OP Unit | | $ | 0.29 | |
| Core FFO (1) | | $ | 43,040 | |
| Per OP Unit | | $ | 0.33 | |
| FAD (1) | | $ | 38,376 | |
| FAD payout ratio | |
| 77.2 | % |
| EBITDA (1) | | $ | 108,261 | |
| EBITDAre (1) | | $ | 67,561 | |
| Adjusted EBITDA (1) | | $ | 68,358 | |
| Net Debt / total enterprise value | |
| 52.5 | % |
| Net Debt to annualized Adjusted EBITDA | |
| 7.8 | x |
| | | | | |
| | | March 31, 2023 | | |
| | | | | |
| Debt Summary (at JBG SMITH Share) | |
|
| |
| Total consolidated indebtedness (2) | | $ | 2,344,304 | |
| Total consolidated and unconsolidated indebtedness (2) | | $ | 2,432,136 | |
| Weighted average interest rates: | |
|
| |
| Variable rate debt (3) | |
| 5.42 | % |
| Fixed rate debt | |
| 4.02 | % |
| Total debt | |
| 4.48 | % |
| Cash and cash equivalents | | $ | 291,799 | |
(1) | Attributable to OP Units, which include units owned by JBG SMITH, and certain incentive equity awards that may be convertible into OP Units. |
(2) | Net of premium/discount and deferred financing costs. |
(3) | For floating rate loans with interest rate caps, the weighted average interest rate cap strike is 2.35% for consolidated debt, and 2.21% for all debt, and the weighted average maturity date of the interest rate caps is in August 2023. The interest rate cap strike is exclusive of the credit spreads associated with the loans. |
| Page 7 |
| |
FINANCIAL HIGHLIGHTS – TRENDS | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended |
| |||||||||||||
| dollars in thousands, except per share data, at JBG SMITH Share |
| Q1 2023 |
| Q4 2022 |
| Q3 2022 |
| Q2 2022 |
| Q1 2022 | | |||||
| Commercial NOI | | $ | 49,522 | | $ | 49,309 | | $ | 52,167 | | $ | 57,437 | | $ | 64,919 | |
| Multifamily NOI | |
| 31,084 | |
| 30,951 | |
| 27,955 | |
| 27,338 | |
| 26,887 | |
| Ground Leases and Other NOI | | | 617 | | | 637 | | | 632 | | | 468 | | | 547 | |
| Operating portfolio NOI | | $ | 81,223 | | $ | 80,897 | | $ | 80,754 | | $ | 85,243 | | $ | 92,353 | |
| Total Annualized NOI | | $ | 327,530 | | $ | 322,284 | | $ | 322,018 | | $ | 337,093 | | $ | 370,691 | |
| | | | | | | | | | | | | | | | | |
| Net income (loss) attributable to common shareholders | | $ | 21,171 | | $ | (18,579) | | $ | (19,293) | | $ | 123,275 | | $ | (32) | |
| Per diluted common share | | $ | 0.19 | | $ | (0.17) | | $ | (0.17) | | $ | 1.02 | | $ | — | |
| FFO (1) | | $ | 38,205 | | $ | 35,865 | | $ | 46,323 | | $ | 38,527 | | $ | 57,177 | |
| Per OP Unit | | $ | 0.29 | | $ | 0.27 | | $ | 0.35 | | $ | 0.28 | | $ | 0.40 | |
| Core FFO (1) | | $ | 43,040 | | $ | 40,186 | | $ | 48,371 | | $ | 42,625 | | $ | 47,566 | |
| Per OP Unit | | $ | 0.33 | | $ | 0.30 | | $ | 0.36 | | $ | 0.31 | | $ | 0.34 | |
| FAD (1) | | $ | 38,376 | | $ | 27,858 | | $ | 37,217 | | $ | 39,099 | | $ | 44,162 | |
| FAD payout ratio | |
| 77.2 | % |
| 106.3 | % |
| 80.2 | % |
| 81.3 | % |
| 73.8 | % |
| EBITDA (1) | | $ | 108,261 | | $ | 63,427 | | $ | 54,270 | | $ | 219,366 | | $ | 83,595 | |
| EBITDAre (1) | | $ | 67,561 | | $ | 63,431 | | $ | 69,671 | | $ | 59,663 | | $ | 78,488 | |
| Adjusted EBITDA (1) | | $ | 68,358 | | $ | 65,251 | | $ | 73,992 | | $ | 64,765 | | $ | 67,880 | |
| Net Debt / total enterprise value | |
| 52.5 | % |
| 47.7 | % |
| 49.3 | % |
| 40.4 | % |
| 39.1 | % |
| Net Debt to annualized Adjusted EBITDA | |
| 7.8 | x |
| 8.6 | x |
| 7.9 | x |
| 8.1 | x |
| 9.6 | x |
| | | | | | | | | | | | | | | | | |
| | | Q1 2023 | | Q4 2022 | | Q3 2022 | | Q2 2022 | | Q1 2022 | | |||||
| | | | | | | | | | | | | | | | | |
| Number of Operating Assets | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Commercial | |
| 31 | |
| 31 | |
| 35 | |
| 35 | |
| 41 | |
| Multifamily | |
| 18 | |
| 18 | |
| 19 | |
| 19 | |
| 20 | |
| Ground Leases and Other | | | 2 | | | 2 | | | 2 | | | 2 | | | 1 | |
| Total | |
| 51 | |
| 51 | |
| 56 | |
| 56 | |
| 62 | |
| | | | | | | | | | | | | | | | | |
| Operating Portfolio % Leased | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Commercial (2) | |
| 87.6 | % |
| 88.5 | % |
| 88.3 | % |
| 87.3 | % |
| 85.2 | % |
| Multifamily (3) | |
| 95.0 | % |
| 94.5 | % |
| 95.5 | % |
| 95.7 | % |
| 94.1 | % |
| Weighted Average | |
| 90.6 | % |
| 90.9 | % |
| 91.1 | % |
| 90.5 | % |
| 88.1 | % |
| | | | | | | | | | | | | | | | | |
| Operating Portfolio % Occupied (4) | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Commercial (2) | |
| 85.2 | % |
| 85.1 | % |
| 85.9 | % |
| 86.1 | % |
| 83.3 | % |
| Multifamily (3) | |
| 92.9 | % |
| 93.6 | % |
| 93.7 | % |
| 92.3 | % |
| 91.6 | % |
| Weighted Average | |
| 88.4 | % |
| 88.5 | % |
| 88.9 | % |
| 88.4 | % |
| 86.0 | % |
See footnotes on page 9.
| Page 8 |
| |
FINANCIAL HIGHLIGHTS – TRENDS | MARCH 31, 2023 |
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 incentive equity awards that may be convertible into OP Units. |
(2) | Crystal City Marriott is excluded from the Percent Leased and the Percent Occupied metrics. |
(3) | Includes Recently Delivered assets. In-Service assets were 96.6% leased and 93.1% occupied as of Q2 2022, and 95.5% leased and 92.9% occupied as of Q1 2022. 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. |
(4) | Percent Occupied excludes occupied retail SF. |
| Page 9 |
| |
PORTFOLIO OVERVIEW | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | 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 | | 22 | | 7,269,464 | | 6,993,667 | | 87.6% | | 86.0% | | $ | 259,282 | | $ | 45.54 | | $ | 170,982 | |
| Other VA | | 4 | | 1,058,289 | | 399,229 | | 95.5% | | 95.8% | | | 17,702 | | | 49.05 | | | 6,036 | |
| DC | | 3 | | 812,393 | | 513,165 | | 79.9% | | 65.5% | | | 21,214 | | | 61.77 | | | 8,788 | |
| MD | | 2 | | 513,647 | | 273,241 | | 88.3% | | 88.1% | | | 9,469 | | | 38.46 | | | 14,920 | |
| Commercial - total / weighted average |
| 31 |
| 9,653,793 |
| 8,179,302 |
| 87.6% | | 85.2% | | $ | 307,667 |
| $ | 46.26 |
| $ | 200,726 | |
| | | | | | | | | | | | | | | | | | | | | |
| Multifamily (4) |
|
|
|
|
|
|
|
|
|
| |
|
| |
|
| |
|
| |
| National Landing | | 4 | | 2,856 | | 2,856 | | 95.8% | | 93.8% | | $ | 68,396 | | $ | 2,245 | | $ | 47,400 | |
| DC | | 11 | | 3,140 | | 3,140 | | 95.0% | | 92.6% | | | 95,342 | | | 2,473 | | | 64,764 | |
| MD | | 3 | | 760 | | 760 | | 92.7% | | 91.4% | | | 20,667 | | | 2,368 | | | 12,172 | |
| Multifamily – total / weighted average |
| 18 |
| 6,756 |
| 6,756 |
| 95.0% | | 92.9% | | $ | 184,405 | | $ | 2,367 | | $ | 124,336 | |
| | | | | | | | | | | | | | | | | | | | | |
| Ground Leases and Other (5) | | | | | | | | | | | | | | | | | | | | |
| Other VA | | 1 | | — | | — | | — | | — | | | — | | | — | | $ | 492 | |
| DC | | 1 | | — | | — | | — | | — | | | — | | | — | | | 1,976 | |
| Ground leases and other – total | | 2 | | — | | — | | — | | — | | | — | | | — | | $ | 2,468 | |
| |
| | | | | | | | | | | | | | | | | | | |
| Operating - Total / Weighted Average |
| 51 |
| 9,653,793 SF/ 6,756 Units |
| 8,179,302 SF/ 6,756 Units |
| 90.6% | | 88.4% | | $ | 492,072 | | | $46.26 per SF/ | | $ | 327,530 | |
| | | | | | | | | | | | | | | | | | | | | |
| Development (6) |
|
|
|
|
|
|
|
|
|
| |
|
| |
|
| |
|
| |
| | | | | | | | | | | | | | | | | | | | | |
| Under-Construction |
| 2 |
| 1,583 Units |
| 1,583 Units |
| | |
| |
| | |
| | |
|
| |
| | | | | | | | | | | | | | | | | | | | | |
| Development Pipeline |
| 20 |
| 12,534,000 |
| 9,797,300 |
|
|
|
| |
|
| |
| | |
|
| |
(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 as they are operated as short-term rental properties. |
(5) | Assets for which we are the ground lessor (1700 M Street and 1831/1861 Wiehle Avenue) are excluded from Percent Leased, Percent Occupied, Annualized Rent and Annualized Rent per Square Foot metrics. See footnote (7) on page 22 for more information. |
(6) | Refer to pages 39 – 41 for detail on Under-Construction assets and assets in the Development Pipeline. |
| | |
| Page 10 |
| |
CONDENSED CONSOLIDATED BALANCE SHEETS | MARCH 31, 2023 |
Condensed Consolidated Balance Sheets
| | | | | | | | |
| in thousands | | March 31, 2023 | | December 31, 2022 |
| ||
| | | | | | | |
|
| ASSETS | | | | | | | |
| Real estate, at cost: |
| |
|
| |
| |
| Land and improvements | | $ | 1,267,022 | | $ | 1,302,569 | |
| Buildings and improvements | |
| 4,157,110 | |
| 4,310,821 | |
| Construction in progress, including land | |
| 619,111 | |
| 544,692 | |
| | |
| 6,043,243 | |
| 6,158,082 | |
| Less: accumulated depreciation | |
| (1,355,655) | |
| (1,335,000) | |
| Real estate, net | |
| 4,687,588 | |
| 4,823,082 | |
| Cash and cash equivalents | |
| 279,553 | |
| 241,098 | |
| Restricted cash | |
| 42,339 | |
| 32,975 | |
| Tenant and other receivables | |
| 46,241 | |
| 56,304 | |
| Deferred rent receivable | |
| 159,287 | |
| 170,824 | |
| Investments in unconsolidated real estate ventures | |
| 312,651 | |
| 299,881 | |
| Intangible assets, net | | | 149,243 | | | 162,246 | |
| Other assets, net | |
| 158,118 | |
| 117,028 | |
| TOTAL ASSETS | | $ | 5,835,020 | | $ | 5,903,438 | |
| | | | | | | | |
| LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | |
|
| |
|
| |
| Liabilities: | |
|
| |
|
| |
| Mortgage loans, net | | $ | 1,802,051 | | $ | 1,890,174 | |
| Revolving credit facility | |
| — | |
| — | |
| Unsecured term loans, net | |
| 547,256 | |
| 547,072 | |
| Accounts payable and accrued expenses | |
| 124,268 | |
| 138,060 | |
| Other liabilities, net | |
| 164,627 | |
| 132,710 | |
| Total liabilities | |
| 2,638,202 | |
| 2,708,016 | |
| Commitments and contingencies | |
|
| |
|
| |
| Redeemable noncontrolling interests | |
| 457,778 | |
| 481,310 | |
| Total equity | |
| 2,739,040 | |
| 2,714,112 | |
| TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | | $ | 5,835,020 | | $ | 5,903,438 | |
Note: For complete financial statements, please refer to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.
| | |
| Page 11 |
| |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | MARCH 31, 2023 |
Condensed Consolidated Statements of Operations
| | | | | | | | |
| in thousands, except per share data | | Three Months Ended March 31, |
| ||||
| | | 2023 | | 2022 |
| ||
| REVENUE | | | | | | | |
| Property rental | | $ | 124,033 |
| $ | 131,598 | |
| Third-party real estate services, including reimbursements | |
| 22,784 | |
| 23,970 | |
| Other revenue | |
| 6,145 | |
| 6,397 | |
| Total revenue | |
| 152,962 | |
| 161,965 | |
| EXPENSES | |
|
| |
|
| |
| Depreciation and amortization | |
| 53,431 | |
| 58,062 | |
| Property operating | |
| 35,612 | |
| 40,644 | |
| Real estate taxes | |
| 15,224 | |
| 18,186 | |
| General and administrative: | |
| | |
| | |
| Corporate and other | |
| 16,123 | |
| 15,815 | |
| Third-party real estate services | |
| 23,823 | |
| 27,049 | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 351 | |
| 2,244 | |
| Transaction and Other Costs | |
| 2,472 | |
| 899 | |
| Total expenses | |
| 147,036 | |
| 162,899 | |
| OTHER INCOME (EXPENSE) | |
|
| |
|
| |
| Income from unconsolidated real estate ventures, net | |
| 433 | |
| 3,145 | |
| Interest and other income, net | |
| 4,077 | |
| 14,246 | |
| Interest expense | |
| (26,842) | |
| (16,278) | |
| Gain (loss) on the sale of real estate, net | |
| 40,700 | |
| (136) | |
| Loss on the extinguishment of debt | |
| — | |
| (591) | |
| Total other income (expense) | |
| 18,368 | |
| 386 | |
| INCOME (LOSS) BEFORE INCOME TAX BENEFIT | |
| 24,294 | |
| (548) | |
| Income tax benefit | |
| 16 | |
| 471 | |
| NET INCOME (LOSS) | |
| 24,310 | |
| (77) | |
| Net income attributable to redeemable noncontrolling interests | |
| (3,363) | |
| (10) | |
| Net loss attributable to noncontrolling interests | | | 224 | |
| 55 | |
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | | $ | 21,171 | | $ | (32) | |
| EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED | | $ | 0.19 | | $ | — | |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED | |
| 114,052 | |
| 126,682 | |
Note: For complete financial statements, please refer to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.
| | |
| Page 12 |
Unconsolidated Real Estate Ventures
| | | | | |
| in thousands, at JBG SMITH Share |
| | |
|
| BALANCE SHEET INFORMATION | | March 31, 2023 |
| |
| | | | | |
| Total real estate, at cost | | $ | 384,948 | |
| Less: accumulated depreciation | |
| (35,164) | |
| Real estate, net | |
| 349,784 | |
| Cash and cash equivalents | |
| 12,275 | |
| Other assets, net | |
| 53,636 | |
| Total assets | | $ | 415,695 | |
| Borrowings, net | | $ | 87,832 | |
| Other liabilities, net | |
| 22,105 | |
| Total liabilities | | $ | 109,937 | |
| | | | | |
| | | Three Months Ended |
| |
| OPERATING INFORMATION | | March 31, 2023 |
| |
| Total revenue | | $ | 6,712 | |
| Expenses: | |
|
| |
| Depreciation and amortization | |
| 2,760 | |
| Property operating | |
| 1,803 | |
| Real estate taxes | |
| 1,095 | |
| Total expenses | |
| 5,658 | |
| Other income (expense): | |
|
| |
| Interest expense | |
| (902) | |
| Interest and other income, net | |
| 71 | |
| | | | | |
| Net income | | $ | 223 | |
| Earnings and distributions in excess of our investment in unconsolidated real estate venture | |
| 167 | |
| Other | |
| 43 | |
| Income from unconsolidated real estate ventures, net | | $ | 433 | |
| | |
| Page 13 |
| |
OTHER TANGIBLE ASSETS AND LIABILITIES | MARCH 31, 2023 |
Other Tangible Assets and Liabilities
| | | | | |
| in thousands, at JBG SMITH Share |
| March 31, 2023 |
| |
| | | | | |
| Other Tangible Assets, Net (1) | | | | |
| Restricted cash | | $ | 42,340 | |
| Tenant and other receivables, net | |
| 46,596 | |
| Other assets, net | |
| 113,216 | |
| Total Other Tangible Assets, Net | | $ | 202,152 | |
| | | | | |
| Other Tangible Liabilities, Net | |
|
| |
| Accounts payable and accrued liabilities | | $ | 127,340 | |
| Other liabilities, net | |
| 110,053 | |
| Total Other Tangible Liabilities, Net | | $ | 237,393 | |
(1) | Excludes cash and cash equivalents. |
| | |
| Page 14 |
| |
EBITDA, EBITDAre AND ADJUSTED EBITDA RECONCILIATIONS (NON-GAAP) | MARCH 31, 2023 |
EBITDA, EBITDAre and Adjusted EBITDA
| | | | | | | |
| dollars in thousands | Three Months Ended March 31, |
| ||||
| | 2023 | | 2022 |
| ||
| | | | | | |
|
| EBITDA, EBITDAre and Adjusted EBITDA | |
| | |
| |
| Net income (loss) | $ | 24,310 | | $ | (77) | |
| Depreciation and amortization expense | | 53,431 | | | 58,062 | |
| Interest expense | | 26,842 | | | 16,278 | |
| Income tax benefit | | (16) | | | (471) | |
| Unconsolidated real estate ventures allocated share of above adjustments | | 3,664 | | | 9,829 | |
| EBITDA attributable to noncontrolling interests | | 30 | | | (26) | |
| EBITDA | $ | 108,261 | | $ | 83,595 | |
| (Gain) loss on the sale of real estate, net | | (40,700) | | | 136 | |
| Gain on the sale of unconsolidated real estate assets | | — | | | (5,243) | |
| | | | | | | |
| EBITDAre | $ | 67,561 | | $ | 78,488 | |
| Transaction and Other Costs, net of noncontrolling interests (1) | | 2,472 | | | 865 | |
| Income from investments, net | | (1,861) | | | (14,071) | |
| Loss on the extinguishment of debt | | — | | | 591 | |
| Share-based compensation related to Formation Transaction and special equity awards | | 351 | | | 2,244 | |
| Earnings and distributions in excess of our investment in unconsolidated real estate venture | | (167) | | | (441) | |
| Unconsolidated real estate ventures allocated share of above adjustments | | 2 | | | 204 | |
| | | | | | | |
| Adjusted EBITDA | $ | 68,358 | | $ | 67,880 | |
| | | | | | | |
| Net Debt to Annualized Adjusted EBITDA (2) | | 7.8 | x | | 9.6 | x |
| | | | | | | |
| Net Debt (at JBG SMITH Share) | March 31, 2023 | | March 31, 2022 | | ||
| Consolidated indebtedness (3) | $ | 2,344,304 | | $ | 2,464,640 | |
| Unconsolidated indebtedness (3) | | 87,832 | | | 362,861 | |
| Total consolidated and unconsolidated indebtedness | | 2,432,136 | | | 2,827,501 | |
| Less: cash and cash equivalents | | 291,799 | | | 207,568 | |
| Net Debt (at JBG SMITH Share) | $ | 2,140,337 | | $ | 2,619,933 | |
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) | See page 52 for the components of Transaction and Other Costs. |
(2) | Quarterly Adjusted EBITDA is annualized by multiplying by four. |
(3) | Net of premium/discount and deferred financing costs. |
| | |
| Page 15 |
| |
FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP) | MARCH 31, 2023 |
| | | | | | | | |
| in thousands, except per share data | | Three Months Ended March 31, | | ||||
| | | 2023 |
| 2022 | | ||
| | | | | | | |
|
| FFO and Core FFO | | | | | | | |
| Net income (loss) attributable to common shareholders | | $ | 21,171 |
| $ | (32) | |
| Net income attributable to redeemable noncontrolling interests | |
| 3,363 |
| | 10 | |
| Net loss attributable to noncontrolling interests | |
| (224) |
| | (55) | |
| Net income (loss) | |
| 24,310 |
| | (77) | |
| (Gain) loss on the sale of real estate, net of tax | |
| (40,700) |
| | 136 | |
| Gain on the sale of unconsolidated real estate assets | |
| — |
| | (5,243) | |
| Real estate depreciation and amortization | |
| 51,611 |
| | 55,517 | |
| Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures | |
| 2,760 |
| | 6,870 | |
| FFO attributable to noncontrolling interests | |
| 224 |
| | (26) | |
| FFO Attributable to OP Units | | $ | 38,205 |
| $ | 57,177 | |
| FFO attributable to redeemable noncontrolling interests | |
| (5,203) |
| | (5,877) | |
| FFO Attributable to Common Shareholders | | $ | 33,002 |
| $ | 51,300 | |
| | | | | | | | |
| FFO attributable to OP Units | | $ | 38,205 |
| $ | 57,177 | |
| Transaction and Other Costs, net of tax and noncontrolling interests (1) | |
| 2,373 |
| | 843 | |
| Income from investments, net | |
| (1,405) |
| | (10,538) | |
| Loss (gain) from mark-to-market on derivative instruments, net of noncontrolling interests | |
| 2,541 |
| | (3,367) | |
| Loss on the extinguishment of debt | |
| — |
| | 591 | |
| Earnings and distributions in excess of our investment in unconsolidated real estate venture | |
| (167) |
| | (441) | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 351 |
| | 2,244 | |
| Amortization of management contracts intangible, net of tax | |
| 1,106 |
| | 1,105 | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| 36 |
| | (48) | |
| Core FFO Attributable to OP Units | | $ | 43,040 |
| $ | 47,566 | |
| Core FFO attributable to redeemable noncontrolling interests | |
| (5,862) |
| | (4,889) | |
| Core FFO Attributable to Common Shareholders | | $ | 37,178 |
| $ | 42,677 | |
| FFO per common share - diluted | | $ | 0.29 |
| $ | 0.40 | |
| Core FFO per common share - diluted | | $ | 0.33 |
| $ | 0.34 | |
| Weighted average shares - diluted (FFO and Core FFO) | |
| 114,062 |
| | 126,688 | |
See footnotes on page 17.
| | |
| Page 16 |
| |
FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP) | MARCH 31, 2023 |
| | | | | | | | |
| in thousands, except per share data | | Three Months Ended March 31, |
| ||||
| | | 2023 | | 2022 | | ||
| | | | | | | | |
| FAD | | | | | | | |
| Core FFO attributable to OP Units | | $ | 43,040 |
| $ | 47,566 | |
| Recurring capital expenditures and Second-generation tenant improvements and leasing commissions (2) | |
| (7,794) | |
| (13,702) | |
| Straight-line and other rent adjustments (3) | |
| (8,377) | |
| (1,791) | |
| Third-party lease liability assumption (payments) refunds | |
| 95 | |
| — | |
| Share-based compensation expense | |
| 9,348 | |
| 10,493 | |
| Amortization of debt issuance costs | |
| 1,307 | |
| 1,176 | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| 402 | |
| (648) | |
| Non-real estate depreciation and amortization | |
| 355 | |
| 1,068 | |
| FAD available to OP Units (A) | | $ | 38,376 | | $ | 44,162 | |
| Distributions to common shareholders and unitholders (B) | | $ | 29,619 | | $ | 32,603 | |
| FAD Payout Ratio (B÷A) (4) | |
| 77.2 | % |
| 73.8 | % |
| | | | | | | | |
| Capital Expenditures | | | | | | | |
| Maintenance and recurring capital expenditures | | $ | 2,973 | | $ | 4,820 | |
| Share of maintenance and recurring capital expenditures from unconsolidated real estate ventures | |
| — | |
| 82 | |
| Second-generation tenant improvements and leasing commissions | |
| 4,742 | |
| 8,594 | |
| Share of Second-generation tenant improvements and leasing commissions from unconsolidated real estate ventures | |
| 79 | |
| 206 | |
| Recurring capital expenditures and Second-generation tenant improvements and leasing commissions | |
| 7,794 | |
| 13,702 | |
| Non-recurring capital expenditures | |
| 9,693 | |
| 12,810 | |
| Share of non-recurring capital expenditures from unconsolidated real estate ventures | |
| 2 | |
| 12 | |
| First-generation tenant improvements and leasing commissions | |
| 3,125 | |
| 4,450 | |
| Share of First-generation tenant improvements and leasing commissions from unconsolidated real estate ventures | |
| 313 | |
| 473 | |
| Non-recurring capital expenditures | |
| 13,133 | |
| 17,745 | |
| Total JBG SMITH Share of Capital Expenditures | | $ | 20,927 | | $ | 31,447 | |
(1) | See page 52 for the components of Transaction and Other Costs. |
(2) | Includes amounts, at JBG SMITH Share, related to unconsolidated real estate ventures. |
(3) | Includes straight-line rent, above/below market lease amortization and lease incentive amortization. |
(4) | 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) | MARCH 31, 2023 |
Third-Party Asset Mgmt and Real Estate Services Business
| | | | | | | | | | | | | | |
| in thousands, at JBG SMITH Share | | Three Months Ended March 31, 2023 |
| ||||||||||
| | | Source of Revenue | | | |
| |||||||
| | | Third-Party | | JBG SMITH | | JBG Legacy | | | |
| |||
| | | Management | | JV Partner (1) | | Funds | | Total |
| ||||
| | | | | | | | | | | | | | |
| Service Revenue | | | | | | | | | | | | | |
| Property management fees |
| $ | 2,932 |
| $ | 1,206 |
| $ | 620 |
| $ | 4,758 | |
| Asset management fees | |
| — | |
| 240 | |
| 821 | |
| 1,061 | |
| Development fees | |
| 1,846 | |
| 129 | |
| 11 | |
| 1,986 | |
| Leasing fees | |
| 1,115 | |
| 233 | |
| — | |
| 1,348 | |
| Construction management fees | |
| 140 | |
| 200 | |
| — | |
| 340 | |
| Other service revenue | |
| 500 | |
| 507 | |
| 111 | |
| 1,118 | |
| Total Revenue (2) | | $ | 6,533 | | $ | 2,515 | | $ | 1,563 | | $ | 10,611 | |
| Pro rata adjusted general and administrative expense: third-party real estate services (3) | |
| | |
|
| |
|
| |
| (11,488) | |
| Total Services Revenue Less Allocated General and Administrative Expenses (4) | | | | |
| | |
| | | $ | (877) | |
(1) | Service revenues from unconsolidated real estate 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 $11.8 million of reimbursement revenue and $0.4 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 of 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 | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | | |
| in thousands | | Three Months Ended March 31, 2023 |
| |||||||||||||
| | | | | | Adjustments (1) | | | |
| |||||||
| | | Per Statement | | | | | | | | | | | Pro Rata |
| ||
| | | of Operations | | A | | B | | C | | Adjusted |
| |||||
| | | | | | | | | | | | | | | | | |
| General and Administrative Expenses | | | | | | | | | | | | | | | | |
| Corporate and other |
| $ | 16,123 |
| $ | — |
| $ | — |
| $ | 512 |
| $ | 16,635 | |
| Third-party real estate services | |
| 23,823 | |
| — | |
| (11,823) | |
| (512) | |
| 11,488 | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 351 | |
| (351) | |
| — | |
| — | |
| — | |
| | | | | | | | | | | | | | | | | |
| Total | | $ | 40,297 | | $ | (351) | | $ | (11,823) | | $ | — | | $ | 28,123 | |
(1) | Adjustments: |
A - Removes share-based compensation related to the Formation Transaction and special equity awards.
B - Removes $11.8 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 | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | | | | |
| dollars in thousands, at JBG SMITH Share |
| | | | |
| | |
| Plus: Signed |
| Plus: Incremental |
| | |
| ||
| | | | | Q1 2023 | | | | | 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 | | 86.0% | | $ | 42,086 | | $ | 170,982 | | $ | 7,172 | | $ | 144 | | $ | 178,298 | |
| Other VA | | 95.8% | | | 1,509 | | | 6,036 | | | 260 | | | — | | | 6,296 | |
| DC |
| 65.5% | | | 2,197 | | | 8,788 | | | 4,488 | | | — | | | 13,276 | |
| MD |
| 88.1% | |
| 3,730 | |
| 14,920 | |
| — | |
| 784 | |
| 15,704 | |
| Total / weighted average |
| 85.2% | | $ | 49,522 | | $ | 200,726 | | $ | 11,920 | | $ | 928 | | $ | 213,574 | |
| | | | | | | | | | | | | | | | | | | |
| Multifamily (3) |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| National Landing |
| 93.8% | | $ | 11,850 | | $ | 47,400 | | $ | — | | $ | — | | $ | 47,400 | |
| DC |
| 92.6% | | | 16,191 | | | 64,764 | | | 1,000 | | | 1,058 | | | 66,822 | |
| MD |
| 91.4% | |
| 3,043 | |
| 12,172 | |
| 64 | |
| 1,634 | |
| 13,870 | |
| Total / weighted average |
| 92.9% | | $ | 31,084 | | $ | 124,336 | | $ | 1,064 | | $ | 2,692 | | $ | 128,092 | |
| | | | | | | | | | | | | | | | | | | |
| Ground Leases and Other (4) |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Other VA | | — | | $ | 123 | | $ | 492 | | $ | — | | $ | — | | $ | 492 | |
| DC | | — | | | 494 | | | 1,976 | | | — | | | — | | | 1,976 | |
| Total | | — | | $ | 617 | | $ | 2,468 | | $ | — | | $ | — | | $ | 2,468 | |
| | | | | | | | | | | | | | | | | | | |
| Total / Weighted Average |
| 88.4% | | $ | 81,223 | | $ | 327,530 | | $ | 12,984 | | $ | 3,620 | | $ | 344,134 | |
(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 March 31, 2023 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 March 31, 2023, multiplied by 12, and assumes no rent growth. Excludes potential revenue from vacant retail space in multifamily assets in their initial lease-up. See page 37 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 as they are operated as short-term rental properties. |
(4) | Assets for which we are the ground lessor (1700 M Street and 1831/1861 Wiehle Avenue) are excluded from the Percent Occupied metric. |
| | |
| Page 20 |
| |
SUMMARY & SAME STORE NOI (NON-GAAP) | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | | | | | |
| dollars in thousands | | | | 100% Share | | At JBG SMITH Share | | ||||||||||||
| | | | | | | | | | | | | NOI for the Three Months Ended March 31, |
| ||||||
| | | Number of | | Square Feet/ | | Square Feet/ | | % | | % | | | | | | | | | |
| | | Assets | | Units | | Units | | Leased (1) | | Occupied (1) | | 2023 | | 2022 | | % Change | | ||
| Same Store (2) | | | | | | | | | | | | | | | | | | | |
| National Landing | | 26 | | 7,269,464 SF/ | | 6,993,667 SF/ | | 89.7% | | 88.0% | | $ | 50,681 | | $ | 49,875 | | 1.6 | % |
| Other VA | | 4 | | 1,058,289 SF | | 399,229 SF | | 95.5% | | 95.8% | | | 4,745 | | | 6,181 | | (23.2) | % |
| DC |
| 15 |
| 812,393 SF/ |
| 513,165 SF/ |
| 92.5% | | 87.9% | | | 18,368 |
| | 17,924 |
| 2.5 | % |
| MD |
| 4 |
| 513,647 SF/ |
| 273,241 SF/ |
| 94.4% | | 93.6% | |
| 2,315 | |
| 2,657 |
| (12.9) | % |
| Total / weighted average |
| 49 |
| 9,653,793 SF/ |
| 8,179,302 SF/ |
| 90.7% | | 88.4% | | $ | 76,109 | | $ | 76,637 |
| (0.7) | % |
| | | | | | | | | | | | | | | | | | | | |
| Non-Same Store |
|
|
| |
| |
|
|
|
| |
|
| |
|
|
|
| |
| National Landing |
| — |
| — |
| — |
| — | | — | | $ | — | | $ | — |
| — | |
| Other VA | | 1 | | — | | — | | — | | — | | | 142 | | | 6,519 | | (97.8) | % |
| DC |
| — |
| — |
| — |
| — | | — | | | 514 | | | 5,815 |
| (91.2) | % |
| MD |
| 1 |
| 322 Units |
| 322 Units |
| 86.5% | | 82.6% | |
| 4,458 | |
| 3,382 |
| 31.8 | % |
| Total / weighted average |
| 2 |
| 322 Units |
| 322 Units |
| 86.5% | | 82.6% | | $ | 5,114 | | $ | 15,716 |
| (67.5) | % |
| | | | | | | | | | | | | | | | | | | | |
| Total Operating Portfolio |
|
|
| |
| |
|
|
|
| |
|
| |
|
|
|
| |
| National Landing | | 26 | | 7,269,464 SF/ | | 6,993,667 SF/ | | 89.7% | | 88.0% | | $ | 50,681 | | $ | 49,875 | | 1.6 | % |
| Other VA | | 5 | | 1,058,289 SF | | 399,229 SF | | 95.5% | | 95.8% | | | 4,887 | | | 12,700 | | (61.5) | % |
| DC |
| 15 |
| 812,393 SF/ |
| 513,165 SF/ |
| 92.5% | | 87.9% | | | 18,882 | | | 23,739 |
| (20.5) | % |
| MD |
| 5 |
| 513,647 SF/ |
| 273,241 SF/ |
| 91.5% | | 89.6% | |
| 6,773 | |
| 6,039 |
| 12.2 | % |
| Operating Portfolio - |
| 51 |
| 9,653,793 SF/ |
| 8,179,302 SF/ |
| 90.6% | | 88.4% | | $ | 81,223 | | $ | 92,353 |
| (12.1) | % |
(1) | Crystal City Marriott, assets operated as short-term rental properties (2221 S. Clark Street – Residential and 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 NOI (NON-GAAP) | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | | | | | |
| dollars in thousands | | NOI for the Three Months Ended March 31, 2023 at JBG SMITH Share |
| ||||||||||||||||
| | | Consolidated | | Unconsolidated | | Commercial | | Multifamily | | Ground Leases and Other (7) | | Total |
| ||||||
| Number of operating assets |
| | 44 |
| | 7 |
| | 31 |
| | 18 |
| | 2 |
| | 51 | |
| Property rental (1) | | $ | 103,777 | | $ | 6,537 | | $ | 64,264 | | $ | 45,425 | | $ | 625 | | $ | 110,314 | |
| Tenant expense reimbursement |
|
| 6,945 |
|
| 385 |
|
| 6,443 |
|
| 887 |
|
| — |
|
| 7,330 | |
| Other revenue (2) | |
| 12,635 | |
| 110 | |
| 7,834 | |
| 4,911 | |
| — | |
| 12,745 | |
| Total revenue | |
| 123,357 | |
| 7,032 | |
| 78,541 | |
| 51,223 | |
| 625 | |
| 130,389 | |
| | | | | | | | | | | | | | | | | | | | |
| Operating expenses | |
| (46,558) | |
| (2,335) | |
| (28,746) | |
| (20,139) | |
| (8) | |
| (48,893) | |
| Ground rent expense | |
| (273) | |
| — | |
| (273) | |
| — | |
| — | |
| (273) | |
| Total expenses | |
| (46,831) | |
| (2,335) | |
| (29,019) | |
| (20,139) | |
| (8) | |
| (49,166) | |
| | | | | | | | | | | | | | | | | | | | |
| Operating Portfolio NOI (3) | | $ | 76,526 | | $ | 4,697 | | $ | 49,522 | | $ | 31,084 | | $ | 617 | | $ | 81,223 | |
| | | | | | | | | | | | | | | | | | | | |
| Annualized NOI | | $ | 308,742 | | $ | 18,788 | | $ | 200,726 | | $ | 124,336 | | $ | 2,468 | | $ | 327,530 | |
| Additional Information | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Free Rent (at 100% share) | | $ | 11,360 | | $ | 756 | | $ | 10,398 | | $ | 1,718 | | $ | — | | $ | 12,116 | |
| Free Rent (at JBG SMITH Share) | | $ | 11,360 | | $ | 166 | | $ | 9,808 | | $ | 1,718 | | $ | — | | $ | 11,526 | |
| Annualized Free Rent (at JBG SMITH Share) (4) | | $ | 45,440 | | $ | 664 | | $ | 39,232 | | $ | 6,872 | | $ | — | | $ | 46,104 | |
| % occupied (at JBG SMITH Share) (5) | |
| 88.2 | % |
| 91.9 | % |
| 85.2 | % |
| 92.9 | % |
| — | |
| 88.4 | % |
| Annualized base rent of signed leases, not commenced (at 100% share) (6) | | $ | 12,704 | | $ | 672 | | $ | 12,312 | | $ | 1,064 | | $ | — | | $ | 13,376 | |
| Annualized base rent of signed leases, not commenced (at JBG SMITH Share) (6) | | $ | 12,704 | | $ | 280 | | $ | 11,920 | | $ | 1,064 | | $ | — | | $ | 12,984 | |
(1) | Property rental revenue excludes straight-line rent adjustments, other GAAP adjustments and commercial lease termination revenue and includes payments associated with assumed lease liabilities. |
(2) | Includes $6.8 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 49. |
(4) | Represents JBG SMITH's share of Free Rent for the three months ended March 31, 2023 multiplied by four. |
(5) | Crystal City Marriott, assets operated as short-term rental properties (2221 S. Clark Street – Residential and 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 March 31, 2023. |
(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. Ground rent on 1831/1861 Wiehle Avenue 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 22 |
| |
SUMMARY NOI - COMMERCIAL (NON-GAAP) | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | | | | | | | | |
| dollars in thousands | | NOI for the Three Months Ended March 31, 2023 at JBG SMITH Share |
| |||||||||||||||||||
| |
| Consolidated |
| Unconsolidated |
| National Landing | | Other VA | | DC |
| MD |
| Total |
| |||||||
| Number of operating assets |
| | 24 |
| | 7 |
| | 22 | | | 4 | | | 3 |
| | 2 |
| | 31 | |
| Property rental (1) | | $ | 57,727 | | $ | 6,537 | | $ | 52,633 | | $ | 1,809 | | $ | 4,443 | | $ | 5,379 | | $ | 64,264 | |
| Tenant expense reimbursement | |
| 6,058 | |
| 385 | |
| 4,370 | |
| 955 | |
| 876 | |
| 242 | |
| 6,443 | |
| Other revenue (2) | |
| 7,722 | |
| 112 | |
| 7,422 | |
| 273 | |
| (346) | |
| 485 | |
| 7,834 | |
| Total revenue | |
| 71,507 | |
| 7,034 | |
| 64,425 | |
| 3,037 | |
| 4,973 | |
| 6,106 | |
| 78,541 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Operating expenses | |
| (26,415) | |
| (2,331) | |
| (22,339) | |
| (1,528) | |
| (2,776) | |
| (2,103) | |
| (28,746) | |
| Ground rent expense | |
| (273) | |
| — | |
| — | |
| — | |
| — | |
| (273) | |
| (273) | |
| Total expenses | |
| (26,688) | |
| (2,331) | |
| (22,339) | |
| (1,528) | |
| (2,776) | |
| (2,376) | |
| (29,019) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Operating Portfolio NOI (3) | | $ | 44,819 | | $ | 4,703 | | $ | 42,086 | | $ | 1,509 | | $ | 2,197 | | $ | 3,730 | | $ | 49,522 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Annualized NOI | | $ | 181,914 | | $ | 18,812 | | $ | 170,982 | | $ | 6,036 | | $ | 8,788 | | $ | 14,920 | | $ | 200,726 | |
| Additional Information | |
|
| |
|
| |
| | |
| | |
|
| |
|
| |
|
| |
| Free Rent (at 100% share) | | $ | 9,642 | | $ | 756 | | $ | 7,572 | | $ | 1,627 | | $ | 630 | | $ | 569 | | $ | 10,398 | |
| Free Rent (at JBG SMITH Share) | | $ | 9,642 | | $ | 166 | | $ | 7,536 | | $ | 1,399 | | $ | 308 | | $ | 565 | | $ | 9,808 | |
| Annualized Free Rent (at JBG SMITH Share) (4) | | $ | 38,568 | | $ | 664 | | $ | 30,144 | | $ | 5,596 | | $ | 1,232 | | $ | 2,260 | | $ | 39,232 | |
| % occupied (at JBG SMITH Share) (5) | |
| 84.7 | % |
| 91.9 | % |
| 86.0 | % |
| 95.8 | % | | 65.5 | % |
| 88.1 | % |
| 85.2 | % |
| Annualized base rent of signed leases, not commenced (at 100% share) (6) | | $ | 11,640 | | $ | 672 | | $ | 7,172 | | $ | 440 | | $ | 4,700 | | $ | — | | $ | 12,312 | |
| Annualized base rent of signed leases, not commenced (at JBG SMITH Share) (6) | | $ | 11,640 | | $ | 280 | | $ | 7,172 | | $ | 260 | | $ | 4,488 | | $ | — | | $ | 11,920 | |
(1) | Property rental revenue excludes straight-line rent adjustments, other GAAP adjustments and commercial lease termination revenue and includes payments associated with assumed lease liabilities. |
(2) | Includes $5.0 million of parking revenue at JBG SMITH Share. |
(3) | NOI excludes $2.3 million of related party management fees at JBG SMITH Share. See definition of NOI on page 49. |
(4) | Represents JBG SMITH's share of Free Rent for the three months ended March 31, 2023 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 March 31, 2023. |
| | |
| Page 23 |
| |
SUMMARY NOI - MULTIFAMILY (NON-GAAP) | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | | | | | |
| dollars in thousands | | NOI for the Three Months Ended March 31, 2023 at JBG SMITH Share |
| ||||||||||||||||
| |
| Consolidated |
| Unconsolidated | | National Landing |
| DC |
| MD |
| Total |
| ||||||
| Number of operating assets |
| | 18 |
| | — | | | 4 |
| | 11 |
| | 3 |
| | 18 | |
| Property rental (1) | | $ | 45,425 | | $ | — | | $ | 17,547 | | $ | 23,019 | | $ | 4,859 | | $ | 45,425 | |
| Tenant expense reimbursement | |
| 887 | |
| — | |
| 88 | |
| 733 | |
| 66 | |
| 887 | |
| Other revenue (2) | |
| 4,913 | |
| (2) | |
| 2,097 | |
| 2,491 | |
| 323 | |
| 4,911 | |
| Total revenue | |
| 51,225 | |
| (2) | |
| 19,732 | |
| 26,243 | |
| 5,248 | |
| 51,223 | |
| | | | | | | | | | | | | | | | | | | | |
| Operating expenses | |
| (20,135) | |
| (4) | |
| (7,882) | |
| (10,052) | |
| (2,205) | |
| (20,139) | |
| Ground rent expense | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| Total expenses | |
| (20,135) | |
| (4) | |
| (7,882) | |
| (10,052) | |
| (2,205) | |
| (20,139) | |
| | | | | | | | | | | | | | | | | | | | |
| Operating Portfolio NOI (3) | | $ | 31,090 | | $ | (6) | | $ | 11,850 | | $ | 16,191 | | $ | 3,043 | | $ | 31,084 | |
| | | | | | | | | | | | | | | | | | | | |
| Annualized NOI | | $ | 124,360 | | $ | (24) | | $ | 47,400 | | $ | 64,764 | | $ | 12,172 | | $ | 124,336 | |
| Additional Information | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Free Rent (at 100% share) | | $ | 1,718 | | $ | — | | $ | 637 | | $ | 904 | | $ | 177 | | $ | 1,718 | |
| Free Rent (at JBG SMITH Share) | | $ | 1,718 | | $ | — | | $ | 637 | | $ | 904 | | $ | 177 | | $ | 1,718 | |
| Annualized Free Rent (at JBG SMITH Share) (4) | | $ | 6,872 | | $ | — | | $ | 2,548 | | $ | 3,616 | | $ | 708 | | $ | 6,872 | |
| % occupied (at JBG SMITH Share) (5) | |
| 92.9 | % |
| — | |
| 93.8 | % |
| 92.6 | % |
| 91.4 | % |
| 92.9 | % |
| Annualized base rent of signed leases, not commenced (at 100% share) (6) | | $ | 1,064 | | $ | — | | $ | — | | $ | 1,000 | | $ | 64 | | $ | 1,064 | |
| Annualized base rent of signed leases, not commenced (at JBG SMITH Share) (6) | | $ | 1,064 | | $ | — | | $ | — | | $ | 1,000 | | $ | 64 | | $ | 1,064 | |
(1) | Property rental revenue excludes straight-line rent adjustments, other GAAP adjustments and commercial lease termination revenue and includes payments associated with assumed lease liabilities. |
(2) | Includes $1.8 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 49. |
(4) | Represents JBG SMITH's share of Free Rent for the three months ended March 31, 2023 multiplied by four. |
(5) | 2221 S. Clark Street – Residential and 900 W Street are excluded from the Percent Occupied metric as they are operated as short-term rental properties. |
(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 March 31, 2023. |
| | |
| Page 24 |
| |
NOI RECONCILIATIONS (NON-GAAP) | MARCH 31, 2023 |
| | | | | | | | |
| dollars in thousands | | Three Months Ended March 31, |
| ||||
| | | 2023 |
| 2022 | | ||
| Net income (loss) attributable to common shareholders | | $ | 21,171 | | $ | (32) | |
| Add: | | |
| | |
| |
| Depreciation and amortization expense | | | 53,431 | | | 58,062 | |
| General and administrative expense: | | |
| | |
| |
| Corporate and other | | | 16,123 | | | 15,815 | |
| Third-party real estate services | | | 23,823 | | | 27,049 | |
| Share-based compensation related to Formation Transaction and special equity awards | | | 351 | | | 2,244 | |
| Transaction and Other Costs | | | 2,472 | | | 899 | |
| Interest expense | | | 26,842 | | | 16,278 | |
| Loss on the extinguishment of debt | | | — | | | 591 | |
| Income tax benefit | | | (16) | | | (471) | |
| Net income attributable to redeemable noncontrolling interests | | | 3,363 | | | 10 | |
| Net loss attributable to noncontrolling interests | | | (224) | | | (55) | |
| Less: | | |
| | |
| |
| Third-party real estate services, including reimbursements revenue | | | 22,784 | | | 23,970 | |
| Other revenue | | | 1,726 | | | 2,196 | |
| Income from unconsolidated real estate ventures, net | | | 433 | | | 3,145 | |
| Interest and other income, net | | | 4,077 | | | 14,246 | |
| Gain (loss) on the sale of real estate, net | | | 40,700 | | | (136) | |
| Consolidated NOI | | | 77,616 | | | 76,969 | |
| NOI attributable to unconsolidated real estate ventures at our share | | | 4,429 | | | 6,967 | |
| Non-cash rent adjustments (1) | | | (8,377) | | | (1,791) | |
| Other adjustments (2) | | | 6,845 | | | 8,760 | |
| Total adjustments | | | 2,897 | | | 13,936 | |
| NOI | | $ | 80,513 | | $ | 90,905 | |
| Less: out-of-service NOI loss (3) | | | (710) | | | (1,448) | |
| Operating Portfolio NOI | | $ | 81,223 | | $ | 92,353 | |
| Non-Same Store NOI (4) | | | 5,114 | | | 15,716 | |
| Same Store NOI (5) | | $ | 76,109 | | $ | 76,637 | |
| | | | | | | | |
| Change in Same Store NOI | | | (0.7) | % | | | |
| Number of properties in Same Store pool | | | 49 | | | | |
(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 assets in the Development Pipeline. |
(4) | Includes the results of properties that were not In-Service for the entirety of both periods being compared, including disposed properties, and properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. |
(5) | Includes the results of the properties that are owned, operated and In-Service for the entirety of both periods being compared. |
| | |
| Page 25 |
| |
LEASING ACTIVITY - OFFICE | MARCH 31, 2023 |
| | | | | |
| square feet in thousands | | Three Months Ended |
| |
| | | March 31, 2023 |
| |
| Square feet leased: | | |
| |
| At 100% share | | | 123 | |
| At JBG SMITH Share | | | 114 | |
| First-generation space: New | | | 20 | |
| Second-generation space: New | | | 6 | |
| Second-generation space: Renewal | | | 89 | |
| Initial rent (1) | | $ | 50.92 | |
| Straight-line rent (2) | | $ | 51.03 | |
| Weighted average lease term (years) | |
| 3.0 | |
| Weighted average Free Rent period (months) | |
| 2.5 | |
| Second-generation space: | |
| | |
| Square feet | |
| 94 | |
| Cash basis: | |
|
| |
| Initial rent (1) | | $ | 52.24 | |
| Prior escalated rent | | $ | 52.08 | |
| % change | |
| 0.3 | % |
| GAAP basis: | |
|
| |
| Straight-line rent (2) | | $ | 52.52 | |
| Prior straight-line rent | | $ | 50.27 | |
| % change | |
| 4.5 | % |
| Tenant improvements: | |
|
| |
| Per square foot | | $ | 31.47 | |
| Per square foot per annum | | $ | 10.59 | |
| % of initial rent | |
| 20.8 | % |
| Leasing commissions: | |
|
| |
| Per square foot | | $ | 4.78 | |
| Per square foot per annum | | $ | 1.61 | |
| % of initial rent | |
| 3.2 | % |
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 26 |
| |
NET EFFECTIVE RENT - OFFICE | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | | | | | |
| square feet in thousands, dollars per square feet, at JBG SMITH Share | | Three Months Ended |
| ||||||||||||||||
| |
| Five Quarter |
| March 31, 2023 |
| December 31, 2022 |
| September 30, 2022 |
| June 30, 2022 |
| March 31, 2022 |
| ||||||
| Square feet |
| | 210 |
| | 114 |
| | 193 |
| | 207 |
| | 326 |
| | 210 | |
| Weighted average lease term (years) |
| | 6.3 |
| | 3.0 |
| | 4.2 |
| | 8.0 |
| | 8.0 |
| | 5.8 | |
| Initial rent (1) | | $ | 46.90 | | $ | 50.92 | | $ | 49.20 | | $ | 45.87 | | $ | 40.34 | | $ | 53.78 | |
| Base rent per annum (2) | | $ | 51.30 | | $ | 51.50 | | $ | 51.72 | | $ | 52.06 | | $ | 41.22 | | $ | 65.64 | |
| Tenant improvements per annum | |
| (7.70) | |
| (10.59) | |
| (7.21) | |
| (8.84) | |
| (4.24) | |
| (10.80) | |
| Leasing commissions per annum | |
| (1.68) | |
| (1.61) | |
| (1.53) | |
| (1.78) | |
| (1.36) | |
| (2.27) | |
| Free Rent per annum | |
| (4.34) | |
| (3.52) | |
| (3.65) | |
| (4.57) | |
| (2.96) | |
| (7.31) | |
| Net Effective Rent | | $ | 37.58 | | $ | 35.78 | | $ | 39.33 | | $ | 36.87 | | $ | 32.66 | | $ | 45.26 | |
| | | | | | | | | | | | | | | | | | | | |
| National Landing | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Square feet | |
| 131 | |
| 103 | |
| 183 | |
| 184 | |
| 52 | |
| 133 | |
| Initial rent (1) | | $ | 48.31 | | $ | 49.74 | | $ | 49.24 | | $ | 46.41 | | $ | 48.00 | | $ | 48.65 | |
| Net effective rent | | $ | 37.72 | | $ | 34.66 | | $ | 39.33 | | $ | 36.93 | | $ | 35.01 | | $ | 40.06 | |
| | | | | | | | | | | | | | | | | | | | |
| Other VA | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Square feet | |
| 29 | |
| 9 | |
| 1 | |
| 1 | |
| 123 | |
| 12 | |
| Initial rent (1) | | $ | 48.96 | | $ | 68.64 | | $ | 31.81 | | $ | 38.61 | | $ | 48.49 | | $ | 41.83 | |
| Net effective rent | | $ | 38.93 | | $ | 57.57 | | $ | 28.93 | | $ | 30.76 | | $ | 38.46 | | $ | 31.52 | |
| | | | | | | | | | | | | | | | | | | | |
| DC | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Square feet | |
| 21 | |
| — | |
| 7 | |
| 9 | |
| 24 | |
| 66 | |
| Initial rent (1) | | $ | 60.26 | | $ | — | | $ | 54.07 | | $ | 55.95 | | $ | 47.34 | | $ | 66.20 | |
| Net effective rent | | $ | 46.13 | | $ | — | | $ | 40.50 | | $ | 42.94 | | $ | 41.04 | | $ | 49.02 | |
| | | | | | | | | | | | | | | | | | | | |
| MD | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Square feet | |
| 29 | |
| 2 | |
| 1 | |
| 13 | |
| 127 | |
| — | |
| Initial rent (1) | | $ | 28.37 | | $ | 30.00 | | $ | 28.70 | | $ | 32.09 | | $ | 27.95 | | $ | — | |
| Net effective rent | | $ | 26.53 | | $ | 27.73 | | $ | 28.28 | | $ | 25.44 | | $ | 26.61 | | $ | — | |
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 27 |
| |
LEASE EXPIRATIONS | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | | | | |
| | | | | 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 |
| 40 |
| 83,612 |
| 1.2 | % | $ | 1,426 |
| 0.4 | % | $ | 17.06 | | $ | 17.06 | |
| 2023 |
| 82 |
| 676,562 |
| 9.5 | % |
| 28,476 |
| 8.8 | % |
| 42.09 | |
| 42.38 | |
| 2024 |
| 75 |
| 1,432,162 |
| 20.1 | % |
| 66,428 |
| 20.6 | % |
| 46.38 | |
| 47.23 | |
| 2025 |
| 73 |
| 729,581 |
| 10.2 | % |
| 32,824 |
| 10.2 | % |
| 44.99 | |
| 47.08 | |
| 2026 |
| 51 |
| 230,842 |
| 3.2 | % |
| 11,528 |
| 3.6 | % |
| 49.94 | |
| 53.56 | |
| 2027 |
| 39 |
| 513,732 |
| 7.2 | % |
| 24,627 |
| 7.6 | % |
| 47.94 | |
| 53.17 | |
| 2028 |
| 56 |
| 413,062 |
| 5.8 | % |
| 20,094 |
| 6.2 | % |
| 48.65 | |
| 55.18 | |
| 2029 |
| 25 |
| 157,637 |
| 2.2 | % |
| 7,590 |
| 2.4 | % |
| 48.15 | |
| 55.49 | |
| 2030 |
| 29 |
| 332,849 |
| 4.7 | % |
| 17,245 |
| 5.4 | % |
| 51.81 | |
| 61.54 | |
| 2031 |
| 26 |
| 576,832 |
| 8.1 | % |
| 20,101 |
| 6.2 | % |
| 34.85 | |
| 37.94 | |
| Thereafter |
| 83 |
| 1,995,131 |
| 27.8 | % |
| 91,617 |
| 28.6 | % |
| 46.84 | |
| 58.35 | |
| Total / Weighted Average |
| 579 |
| 7,142,002 |
| 100.0 | % | $ | 321,956 |
| 100.0 | % | $ | 45.33 | | $ | 50.66 | |
Note: Includes all leases as of March 31, 2023 for which a tenant has taken occupancy 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 5.6 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 March 31, 2023, or management's estimate thereof, by 2.75% annually through the lease expiration year. |
| | |
| Page 28 |
| |
SIGNED BUT NOT YET COMMENCED LEASES | MARCH 31, 2023 |
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) |
| June 30, 2023 |
| September 30, 2023 |
| December 31, 2023 |
| March 31, 2024 |
| June 30, 2024 |
| September 30, 2024 |
| |||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| Commercial |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| |
| Operating |
| C | | $ | 11,640 | | $ | 321 | | $ | 1,965 | | $ | 2,521 | | $ | 2,521 | | $ | 2,521 | | $ | 2,521 | |
| Operating |
| U | |
| 280 | |
| 44 | |
| 70 | |
| 70 | |
| 70 | |
| 70 | |
| 70 | |
| Total | | | | $ | 11,920 | | $ | 365 | | $ | 2,035 | | $ | 2,591 | | $ | 2,591 | | $ | 2,591 | | $ | 2,591 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Multifamily | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Operating | | C | | $ | 1,064 | | $ | 195 | | $ | 265 | | $ | 266 | | $ | 266 | | $ | 266 | | $ | 266 | |
| Under construction | | C | |
| 844 | |
| — | |
| — | |
| — | |
| 13 | |
| 133 | |
| 198 | |
| Total | | | | $ | 1,908 | | $ | 195 | | $ | 265 | | $ | 266 | | $ | 279 | | $ | 399 | | $ | 464 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | | $ | 13,828 | | $ | 560 | | $ | 2,300 | | $ | 2,857 | | $ | 2,870 | | $ | 2,990 | | $ | 3,055 | |
Note: Includes only leases for office and retail spaces for which rent had not yet commenced as of March 31, 2023.
(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 29 |
| |
TENANT CONCENTRATION | MARCH 31, 2023 |
| | | | | | | | | | | | | | |
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) | | 39 | | 1,895,191 | | 26.5 | % | $ | 75,636 | | 23.5 | % |
2 |
| Amazon | | 8 | | 1,035,347 |
| 14.5 | % | | 45,738 |
| 14.2 | % |
3 |
| Gartner, Inc | | 1 | | 174,424 |
| 2.4 | % | | 12,878 |
| 4.0 | % |
4 |
| Lockheed Martin Corporation | | 2 | | 207,095 |
| 2.9 | % | | 9,734 |
| 3.0 | % |
5 |
| Accenture LLP | | 2 | | 116,736 |
| 1.6 | % | | 5,697 |
| 1.8 | % |
6 |
| Public Broadcasting Service | | 1 | | 120,328 |
| 1.7 | % | | 4,871 |
| 1.5 | % |
7 |
| Booz Allen Hamilton Inc | | 3 | | 107,415 |
| 1.5 | % | | 4,799 |
| 1.5 | % |
8 |
| Evolent Health LLC | | 1 | | 90,905 |
| 1.3 | % | | 4,761 |
| 1.5 | % |
9 |
| Greenberg Traurig LLP | | 1 | | 64,090 |
| 0.9 | % | | 4,617 |
| 1.4 | % |
10 |
| The International Justice Mission | | 1 | | 74,833 |
| 1.0 | % | | 4,394 |
| 1.4 | % |
11 |
| American Diabetes Association | | 1 | | 80,998 |
| 1.1 | % | | 3,777 |
| 1.2 | % |
12 |
| SAIC | | 4 | | 69,357 |
| 1.0 | % | | 3,291 |
| 1.0 | % |
13 | | Willis Towers Watson US LLC | | 1 | | 61,653 | | 0.9 | % | | 3,254 | | 1.0 | % |
14 |
| National Consumer Cooperative | | 1 | | 65,736 |
| 0.9 | % | | 3,236 |
| 1.0 | % |
15 |
| WeWork | | 1 | | 41,647 |
| 0.6 | % | | 2,943 |
| 0.9 | % |
16 |
| Management System Intl Inc | | 1 | | 50,069 |
| 0.7 | % | | 2,877 |
| 0.9 | % |
17 |
| Whole Foods Market Group Inc | | 2 | | 81,582 |
| 1.1 | % | | 2,726 |
| 0.8 | % |
18 |
| Cushman & Wakefield U.S. Inc | | 1 | | 38,008 |
| 0.5 | % | | 2,471 |
| 0.8 | % |
19 |
| Food Marketing Institute | | 1 | | 44,196 |
| 0.6 | % | | 2,386 |
| 0.7 | % |
20 |
| DRS Tech Inc dba Finmeccanica | | 2 | | 49,048 |
| 0.7 | % | | 2,188 |
| 0.7 | % |
|
| Other | | 505 | | 2,673,344 |
| 37.6 | % | | 119,682 |
| 37.2 | % |
|
| Total | | 579 | | 7,142,002 |
| 100.0 | % | $ | 321,956 |
| 100.0 | % |
Note: Includes all leases as of March 31, 2023 for which a tenant has taken occupancy for office and retail space within our operating portfolio.
| | |
| Page 30 |
| |
INDUSTRY DIVERSITY | MARCH 31, 2023 |
| | | | | | | | | | | | | | |
dollars in thousands | | | | At JBG SMITH Share |
| |||||||||
|
| |
| Number of |
| |
| % of Total |
| Annualized |
| % of Total |
| |
| | Industry | | Leases | | Square Feet | | Square Feet | | Rent | | Annualized Rent |
| |
1 |
| Business Services |
| 65 |
| 1,716,956 |
| 24.0 | % | $ | 84,160 |
| 26.1 | % |
2 |
| Government |
| 44 |
| 1,906,106 |
| 26.7 | % |
| 76,171 |
| 23.7 | % |
3 |
| Government Contractors |
| 66 |
| 994,377 |
| 13.9 | % |
| 45,916 |
| 14.3 | % |
4 |
| Member Organizations |
| 37 |
| 580,173 |
| 8.1 | % |
| 29,614 |
| 9.2 | % |
5 |
| Real Estate |
| 31 |
| 247,499 |
| 3.5 | % |
| 11,355 |
| 3.5 | % |
6 |
| Health Services |
| 28 |
| 269,636 |
| 3.8 | % |
| 11,037 |
| 3.4 | % |
7 |
| Food and Beverage |
| 70 |
| 180,448 |
| 2.5 | % |
| 10,328 |
| 3.2 | % |
8 |
| Legal Services |
| 19 |
| 107,510 |
| 1.5 | % |
| 6,827 |
| 2.1 | % |
9 |
| Communications |
| 5 |
| 125,659 |
| 1.8 | % |
| 5,111 |
| 1.6 | % |
10 |
| Educational Services |
| 13 |
| 81,749 |
| 1.1 | % |
| 3,896 |
| 1.2 | % |
|
| Other |
| 201 |
| 931,889 |
| 13.1 | % |
| 37,541 |
| 11.7 | % |
|
| Total |
| 579 |
| 7,142,002 |
| 100.0 | % | $ | 321,956 |
| 100.0 | % |
Note: Includes all leases as of March 31, 2023 for which a tenant has taken occupancy for office and retail space within our operating portfolio.
| | |
| Page 31 |
| |
PORTFOLIO SUMMARY | MARCH 31, 2023 |
| | | | | | | | | | |
| | | | | | | | | Potential |
|
| | | Number | | Rentable | | Number of | | Development |
|
| | | of Assets | | Square Feet | | Units (1) | | Density (2) |
|
| | | | | | | | | | |
| Wholly Owned |
|
|
|
|
|
|
|
| |
| Operating |
| 44 |
| 13,295,527 |
| 6,756 |
| — | |
| Under-Construction (3) |
| 2 |
| 1,214,951 |
| 1,583 |
| — | |
| Development Pipeline |
| 11 |
| — |
| — |
| 8,442,000 | |
| Total |
| 57 |
| 14,510,478 |
| 8,339 |
| 8,442,000 | |
| | | | | | | | | | |
| Real Estate Ventures |
|
|
|
|
|
|
|
| |
| Operating |
| 7 |
| 2,043,532 |
| — |
| — | |
| Under-Construction | | — | | — | | — | | — | |
| Development Pipeline |
| 9 |
| — |
| — |
| 4,092,000 | |
| Total |
| 16 |
| 2,043,532 |
| — |
| 4,092,000 | |
| | | | | | | | | | |
| Total Portfolio | | 73 |
| 16,554,010 |
| 8,339 |
| 12,534,000 | |
| | | | | | | | | | |
| Total Portfolio (at JBG SMITH Share) | | 73 |
| 15,079,519 |
| 8,339 |
| 9,797,300 | |
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 39. |
| | |
| Page 32 |
| |
PROPERTY TABLE - COMMERCIAL | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| | |
| Office |
| | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Annualized | | Retail |
| ||
| | | | | | | | Same Store (2): | | | | | | | | | | | | | | | | Annualized | | Rent Per | | Annualized |
| |||
| | | | % | | | Q1 2022 ‑ 2023 / | | Year Built / | | Total | | Office | | Retail | | % | | Office % | | Retail % | | Rent | | Square | | Rent Per |
| ||||
Commercial Assets | | Submarket | | Ownership | | C/U (1) | | YTD 2022 - 2023 | | 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 |
| 549,239 |
| 448,653 | | 100,586 | | 92.2% | | 89.5% | | 95.7% | | $ | 21,929 | | $ | 43.41 | | $ | 46.70 | |
2121 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1985 / 2006 |
| 504,335 |
| 504,335 | | — | | 89.6% | | 75.9% | | — | |
| 17,669 | |
| 46.17 | |
| — | |
2345 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1988 / 2019 |
| 499,675 |
| 491,783 | | 7,892 | | 82.2% | | 81.9% | | 100.0% | |
| 19,504 | |
| 48.13 | |
| 16.17 | |
2231 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1987 / 2009 |
| 468,907 |
| 416,980 | | 51,927 | | 73.6% | | 70.6% | | 97.4% | |
| 16,071 | |
| 47.84 | |
| 39.24 | |
2011 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1984 / 2006 |
| 440,510 |
| 433,748 | | 6,762 | | 59.1% | | 59.2% | | 50.3% | |
| 12,625 | |
| 48.66 | |
| 38.39 | |
2451 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1990 / 2019 |
| 402,374 |
| 390,317 | | 12,057 | | 88.0% | | 87.9% | | 92.6% | |
| 15,305 | |
| 48.69 | |
| 45.13 | |
1235 S. Clark Street |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1981 / 2007 |
| 384,576 |
| 336,230 | | 48,346 | | 97.3% | | 96.1% | | 95.0% | |
| 15,863 | |
| 45.63 | |
| 24.31 | |
241 18th Street S. |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1977 / 2013 |
| 362,219 |
| 333,911 | | 28,308 | | 95.7% | | 96.2% | | 89.9% | |
| 14,067 | |
| 42.27 | |
| 19.18 | |
1215 S. Clark Street |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1983 / 2016 |
| 336,159 |
| 333,546 | | 2,613 | | 99.6% | | 100.0% | | 44.5% | |
| 11,416 | |
| 34.11 | |
| 32.74 | |
201 12th Street S. |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1987 / 2014 |
| 329,607 |
| 317,394 | | 12,213 | | 98.8% | | 98.7% | | 100.0% | |
| 12,524 | |
| 38.17 | |
| 46.25 | |
251 18th Street S. (5) |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1975 / 2013 |
| 317,374 |
| 293,818 | | 23,556 | | 96.2% | | 99.0% | | 61.1% | |
| 13,693 | |
| 44.67 | |
| 48.81 | |
2200 Crystal Drive |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1968 / 2006 |
| 283,608 |
| 283,608 | | — | | 57.0% | | 57.0% | | — | |
| 7,529 | |
| 46.57 | |
| — | |
1225 S. Clark Street |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1982 / 2013 |
| 276,162 |
| 263,312 | | 12,850 | | 97.5% | | 97.0% | | 80.9% | |
| 10,725 | |
| 41.17 | |
| 20.15 | |
1901 South Bell Street (5) |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1968 / 2008 |
| 274,912 |
| 274,912 | | — | | 75.5% | | 75.5% | | — | |
| 8,562 | |
| 41.23 | |
| — | |
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% | | | 12,267 | | | 44.83 | | | 65.42 | |
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% | | — | |
| 11,141 | |
| 43.96 | |
| — | |
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% | | | 8,322 | | | 43.26 | | | 4.43 | |
200 12th Street S. |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1985 / 2013 |
| 202,761 |
| 202,761 | | — | | 77.5% | | 77.5% | | — | |
| 7,657 | |
| 48.71 | |
| — | |
Crystal City Shops at 2100 (5) |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1968 / 2006 |
| 43,241 |
| — | | 43,241 | | 97.5% | | — | | 97.5% | |
| 491 | |
| — | |
| 11.65 | |
Crystal Drive Retail (5) |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 2003 / 2004 |
| 42,938 |
| — | | 42,938 | | 100.0% | | — | | 100.0% | |
| 2,733 | |
| — | |
| 63.66 | |
Central Place Tower (7) | | Rosslyn | | 50.0 | % | U | | Y / Y | | 2018 / N/A | | 551,594 | | 524,316 | | 27,278 | | 99.3% | | 99.2% | | 100.0% | | | 38,382 | | | 72.17 | | | 30.74 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other VA |
|
|
|
|
|
|
|
|
| |
| |
| | | | | | | | | | |
| | |
| | |
| | |
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% | | $ | 15,058 | | $ | 50.51 | | $ | 48.48 | |
Stonebridge at Potomac Town |
| Prince William County |
| 10.0 | % | U |
| Y / Y |
| 2012 / N/A |
| 504,327 |
| — | | 504,327 | | 98.0% | | — | | 94.0% | |
| 15,893 | |
| — | |
| 33.54 | |
Rosslyn Gateway-North |
| Rosslyn |
| 18.0 | % | U |
| Y / Y |
| 1996 / 2014 |
| 146,759 |
| 137,533 | | 9,226 | | 68.8% | | 66.7% | | 100.0% | |
| 4,212 | |
| 42.35 | |
| 35.35 | |
Rosslyn Gateway-South |
| Rosslyn |
| 18.0 | % | U |
| Y / Y |
| 1961 / N/A |
| 103,444 |
| 95,860 | | 7,584 | | 64.6% | | 69.7% | | — | |
| 1,646 | |
| 24.63 | |
| — | |
| | |
| Page 33 |
| |
PROPERTY TABLE - COMMERCIAL | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | Office |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | Annualized | | | Retail |
|
| | | | | | | | Same Store (2): | | | | | | | | | | | | | | | | | Annualized | | | Rent Per | | | Annualized |
|
| | | | % | | | | Q1 2022 ‑ 2023 / | | Year Built / | | Total | | Office | | Retail | | % | | Office % | | Retail % | | | Rent | | | Square | | | Rent Per |
|
Commercial Assets | | Submarket | | Ownership | | C/U (1) | | YTD 2022 - 2023 | | Renovated | | Square Feet | | Square Feet | | Square Feet | | Leased | | Occupied | | Occupied | | | (in thousands) | | | Foot (3) | | | Square Foot (4) |
|
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DC |
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2101 L Street |
| CBD |
| 100.0 | % | C |
| Y / Y |
| 1975 / 2007 |
| 375,493 |
| 344,173 | | 31,320 | | 77.7% | | 59.0% | | 92.6% | | $ | 14,950 | | $ | 65.35 | | $ | 57.59 | |
The Foundry |
| Georgetown |
| 9.9 | % | U |
| Y / Y |
| 1973 / 2017 |
| 227,493 |
| 220,639 | | 6,854 | | 79.8% | | 79.2% | | 100.0% | |
| 9,146 | |
| 50.76 | |
| 40.45 | |
1101 17th Street |
| CBD |
| 55.0 | % | U |
| Y / Y |
| 1964 / 1999 |
| 209,407 |
| 199,653 | | 9,754 | | 87.2% | | 83.1% | | 82.8% | |
| 9,745 | |
| 55.87 | |
| 59.29 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
MD |
|
|
|
|
|
|
|
|
| |
| |
| | | | | | | | | | |
| | |
| | |
| | |
One Democracy Plaza (7) (8) |
| Bethesda- Rock Spring |
| 100.0 | % | C |
| Y / Y |
| 1987 / 2013 |
| 213,139 |
| 211,001 | | 2,138 | | 85.6% | | 85.4% | | 100.0% | | $ | 5,251 | | $ | 28.75 | | $ | 32.77 | |
4747 Bethesda Avenue (9) | | Bethesda CBD | | 20.0 | % | U | | Y / Y | | 2019 / N/A | | 300,508 | | 286,199 | | 14,309 | | 98.0% | | 97.9% | | 100.0% | | | 21,090 | | | 69.69 | | | 109.94 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating - Total / Weighted Average |
|
|
|
|
|
|
|
|
| 9,653,793 |
| 8,326,151 | | 1,061,642 | | 88.1% | | 85.4% | | 92.2% | | $ | 375,466 | | $ | 47.95 | | $ | 37.22 | | ||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total at JBG SMITH Share |
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National Landing |
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|
|
|
|
|
|
|
|
| 6,993,667 |
| 6,291,538 | | 436,129 | | 87.6% | | 86.0% | | 91.9% | | $ | 259,282 | | $ | 45.54 | | $ | 36.67 | |
Other VA | | | | | | | | | | | | 399,229 | | 319,408 | | 79,821 | | 95.5% | | 95.8% | | 88.5% | | | 17,702 | | | 49.05 | | | 38.15 | |
DC | | | | | | | | | | | | 513,165 | | 475,802 | | 37,363 | | 79.9% | | 65.5% | | 91.3% | | | 21,214 | | | 61.77 | | | 57.48 | |
MD |
|
|
|
|
|
|
|
|
|
|
| 273,241 |
| 268,241 | | 5,000 | | 88.3% | | 88.1% | | 100.0% | | | 9,469 | | | 38.46 | | | 77.00 | |
Operating - Total / Weighted Average |
|
|
|
|
|
|
|
|
| 8,179,302 |
| 7,354,989 | | 558,313 | | 87.6% | | 85.2% | | 91.4% | | $ | 307,667 | | $ | 46.26 | | $ | 38.66 | | ||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| Number of Assets and Total Square Feet Reconciliation | | | | |
| ||
| |
| Number of |
| At 100% Share |
| At JBG SMITH Share |
|
| Operating Assets | | Assets | | Square Feet | | Square Feet |
|
| Q4 2022 |
| 31 |
| 9,655,765 |
| 8,421,673 | |
| Placed into service |
| — |
| — |
| — | |
| Dispositions (9) |
| — |
| — |
| (240,406) | |
| Out-of-service adjustment |
| — |
| — |
| — | |
| Portfolio reclassification | | — | | — | | — | |
| Building re-measurements |
| — |
| (1,972) |
| (1,965) | |
| Other | | — | | — | | — | |
| | | | | | | | |
| Q1 2023 |
| 31 |
| 9,653,793 |
| 8,179,302 | |
See footnotes on page 35.
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| Page 34 |
| |
PROPERTY TABLE - COMMERCIAL | MARCH 31, 2023 |
Footnotes
Note: At 100% share, unless otherwise noted.
(1) | "C" denotes a consolidated interest and "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. Annualized Rent and Annualized Rent per Square Foot exclude percentage rent and the square footage of tenants that only pay percentage rent. 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 | | 549,239 | | 1,721 | |
| 251 18th Street S. | | 317,374 | | 21,992 | |
| 1901 South Bell Street | | 274,912 | | 1,924 | |
| Crystal City Shops at 2100 | | 43,241 | | 28,974 | |
| Crystal Drive Retail | | 42,938 | | 14,027 | |
| 2221 S. Clark Street - Office | | - | | 35,182 | |
(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 $3.7 million of Annualized NOI at JBG SMITH's share for the three months ended March 31, 2023. |
(7) | The following assets are subject to ground leases: |
| | | | |
| |
| Ground Lease | |
| Commercial Asset | | Expiration Date |
|
| Central Place Tower (a)(b) |
| 6/2/2102 | |
| One Democracy Plaza |
| 11/17/2084 | |
(a) | The ground lease is recorded as a finance 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) | In March 2023, we sold an 80.0% pari-passu interest in 4747 Bethesda Avenue for a gross sales price of $196.0 million, representing a gross valuation of $245.0 million. Includes JBG SMITH's corporate office lease for approximately 84,400 SF. |
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| Page 35 |
| |
PROPERTY TABLE - MULTIFAMILY | MARCH 31, 2023 |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Monthly | | | Monthly |
| | | | | | | | Same Store (2): | | | | Number | | Total | | Multifamily | | Retail | | | | Multifamily | | Retail | | | Annualized | | | Rent | | | Rent Per |
| | | | % | | | | Q1 2022 ‑ 2023 / | | Year Built / | | of | | Square | | Square | | Square | | | | % | | % | | | Rent | | | Per | | | Square |
Multifamily Assets | | Submarket | | Ownership | | C/U (1) | | YTD 2022 - 2023 | | Renovated | | Units | | Feet | | Feet | | Feet | | % Leased | | Occupied | | Occupied | | | (in thousands) | | | Unit (3) (4) | | | Foot (4) (5) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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 |
| 96.2% | | 94.6% | | 100.0% | | $ | 36,568 | | $ | 1,918 | | $ | 2.43 |
The Bartlett |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 2016 / N/A |
| 699 |
| 619,372 |
| 577,295 |
| 42,077 |
| 94.9% | | 92.3% | | 100.0% | |
| 23,895 | |
| 2,883 | |
| 3.47 |
220 20th Street |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 2009 / N/A |
| 265 |
| 271,476 |
| 269,913 |
| 1,563 |
| 95.9% | | 92.1% | | 100.0% | |
| 7,933 | |
| 2,689 | |
| 2.65 |
2221 S. Clark Street- |
| National Landing |
| 100.0 | % | C |
| Y / Y |
| 1964 / 2016 |
| 216 |
| 96,948 |
| 96,948 |
| — |
| 86.3% | | 82.7% | | — | |
| 4,547 | |
| 2,122 | |
| 4.60 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
DC | |
|
|
|
|
|
|
|
| |
| |
| |
| |
| |
| | | |
| |
| | |
| | |
| | |
West Half |
| Ballpark |
| 100.0 | % | C |
| Y / Y |
| 2019 / N/A |
| 465 |
| 385,368 |
| 343,089 |
| 42,279 |
| 90.1% | | 87.3% | | 83.1% | | $ | 14,246 | | $ | 2,465 | | $ | 3.46 |
Fort Totten Square |
| Brookland/Fort Totten |
| 100.0 | % | C |
| Y / Y |
| 2015 / N/A |
| 345 |
| 384,956 |
| 254,292 |
| 130,664 |
| 98.1% | | 94.2% | | 100.0% | | | 9,842 | | | 1,905 | | | 2.59 |
The Wren (7) | | U Street/Shaw | | 100.0 | % | C | | Y / Y | | 2020 / N/A | | 433 | | 332,682 | | 289,686 | | 42,996 | | 97.4% | | 95.8% | | 100.0% | | | 12,211 | | | 2,184 | | | 3.26 |
The Batley | | Union Market/NoMa/H Street | | 100.0 | % | C | | Y / Y | | 2019 / N/A | | 432 | | 300,388 | | 300,388 | | — | | 93.8% | | 90.7% | | — | | | 11,514 | | | 2,448 | | | 3.55 |
WestEnd25 |
| West End |
| 100.0 | % | C |
| Y / Y |
| 2009 / N/A |
| 283 |
| 273,264 |
| 273,264 |
| — |
| 95.8% | | 93.6% | | — | |
| 11,680 | |
| 3,673 | |
| 3.81 |
F1RST Residences |
| Ballpark |
| 100.0 | % | C |
| Y / Y |
| 2017 / N/A |
| 325 |
| 270,928 |
| 249,456 |
| 21,472 |
| 94.1% | | 90.8% | | 88.8% | |
| 9,853 | |
| 2,407 | |
| 3.12 |
Atlantic Plumbing |
| U Street/Shaw |
| 100.0 | % | C |
| Y / Y |
| 2015 / N/A |
| 310 |
| 245,143 |
| 221,788 |
| 23,355 |
| 97.4% | | 95.5% | | 86.8% | |
| 9,939 | |
| 2,539 | |
| 3.54 |
1221 Van Street |
| Ballpark |
| 100.0 | % | C |
| Y / Y |
| 2018 / N/A |
| 291 |
| 225,530 |
| 202,715 |
| 22,815 |
| 94.7% | | 93.1% | | 93.1% | |
| 8,855 | |
| 2,352 | |
| 3.38 |
901 W Street | | U Street/Shaw | | 100.0 | % | C | | Y / Y | | 2019 / N/A | | 161 | | 154,379 | | 135,499 | | 18,880 | | 92.9% | | 96.3% | | 47.3% | | | 5,589 | | | 2,674 | | | 3.17 |
900 W Street (6) | | U Street/Shaw | | 100.0 | % | C | | Y / Y | | 2019 / N/A | | 95 | | 71,050 | | 71,050 | | — | | 71.6% | | 56.8% | | — | | | 2,801 | | | 4,322 | | | 5.86 |
North End Retail |
| U Street/Shaw |
| 100.0 | % | C |
| Y / Y |
| 2015 / N/A |
| — |
| 27,355 |
| — |
| 27,355 |
| 96.0% | | — | | 91.6% | |
| 1,613 | |
| — | |
| — |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
MD |
|
|
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8001 Woodmont | | Bethesda CBD | | 100.0 | % | C | | N / N | | 2021 / N/A | | 322 | | 363,979 | | 344,405 | | 19,574 | | 86.5% | | 82.6% | | 95.1% | | $ | 11,811 | | $ | 3,413 | | $ | 3.20 |
Falkland Chase-South & West |
| Downtown Silver Spring |
| 100.0 | % | C |
| Y / Y |
| 1938 / 2011 |
| 268 |
| 222,754 |
| 222,754 |
| — |
| 100.0% | | 98.5% | | — | | | 5,816 | | | 1,836 | | | 2.21 |
Falkland Chase-North |
| Downtown Silver Spring |
| 100.0 | % | C |
| Y / Y |
| 1938 / 1986 |
| 170 |
| 112,143 |
| 112,143 |
| — |
| 98.2% | | 97.1% | | — | |
| 3,040 | |
| 1,536 | |
| 2.32 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating - Total / Weighted Average (6) |
|
|
|
|
|
|
|
|
| 6,756 |
| 5,685,266 |
| 5,289,574 |
| 395,692 |
| 95.0% | | 92.9% | | 93.1% | | $ | 184,405 | | $ | 2,367 | | $ | 2.99 | ||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Under-Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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National Landing |
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|
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1900 Crystal Drive (8) |
| National Landing |
| — | | C |
|
|
|
|
| 808 |
| 633,985 |
| 595,315 |
| 38,670 | | | | | | | | | | | | | | | |
2000/2001 South Bell Street (8) | | National Landing | | — | | C | | | | | | 775 | | 580,966 | | 561,961 | | 19,005 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Under-Construction - Total |
|
|
|
|
|
|
|
|
|
|
| 1,583 |
| 1,214,951 |
| 1,157,276 |
| 57,675 |
|
|
|
|
|
|
| |
|
| |
|
| |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total |
|
|
|
|
|
|
|
|
|
|
| 8,339 |
| 6,900,217 |
| 6,446,850 |
| 453,367 |
|
|
|
|
|
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| |
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| Page 36 |
| |
PROPERTY TABLE - MULTIFAMILY | MARCH 31, 2023 |
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| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Monthly | | Monthly | ||
| | | | | | | | Same Store (2): | | | | Number | | Total | | Multifamily | | Retail | | | | Multifamily | | Retail | | Annualized | | Rent | | Rent Per | |||
| | | | % | | | | Q1 2022 ‑ 2023 / | | Year Built / | | of | | Square | | Square | | Square | | | | % | | % | | Rent | | Per | | Square | |||
Multifamily Assets | | Submarket | | Ownership | | C/U (1) | | YTD 2022 - 2023 | | 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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|
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National Landing | | | | | | | | | | | | 2,856 | | 2,315,347 | | 2,269,045 | | 46,302 | | 95.8% | | 93.8% | | 100.0% | | $ | 68,396 | | $ | 2,245 | | $ | 2.73 |
DC | | | | | | | | | | | | 3,140 | | 2,671,043 | | 2,341,227 | | 329,816 | | 95.0% | | 92.6% | | 92.0% | | | 95,342 | | | 2,473 | | | 3.33 |
MD | | | | | | | | | | | | 760 | | 698,876 | | 679,302 | | 19,574 | | 92.7% | | 91.4% | | 95.1% | | | 20,667 | | | 2,368 | | | 2.69 |
Operating - Total/Weighted Average |
|
|
|
|
|
|
|
|
| 6,756 |
| 5,685,266 |
| 5,289,574 |
| 395,692 |
| 95.0% | | 92.9% | | 93.1% | | $ | 184,405 | | $ | 2,367 | | $ | 2.99 | ||
Under-Construction assets |
|
|
|
|
|
|
|
|
|
|
| 1,583 |
| 1,214,951 |
| 1,157,276 |
| 57,675 |
| | | |
|
| |
|
| |
|
| |
|
|
| | | | | | | | |
| 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 |
|
| Q4 2022 |
| 18 |
| 5,685,414 SF/ |
| 5,684,312 SF/ | |
| Acquisitions (7) |
| — |
| — |
| 1,102 SF/ | |
| Placed into service |
| — |
| — |
| — | |
| Dispositions | | — | | — |
| — | |
| Out-of-service adjustment | | — |
| — |
| — | |
| Portfolio reclassification | | — | | — | | — | |
| Building re-measurements | | — |
| (148) SF |
| (148) SF | |
| | | | | | | | |
| Q1 2023 |
| 18 |
| 5,685,266 SF/ |
| 5,685,266 SF/ | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Quarterly Rental Revenue and Occupancy Changes - Same Store Multifamily Assets | | | | | | | | | | | | | | | | | | |
| ||||||||
|
|
|
|
|
| Monthly Rent Per Unit (3) |
| Multifamily % Occupied |
| Annualized Rent (in thousands) |
| ||||||||||||||||
| | Number of Assets | | Number of Units | | | Q1 2023 | | | Q1 2022 | | % Change | | Q1 2023 | | Q1 2022 | | % Change | | | Q1 2023 | | | Q1 2022 | | % Change |
|
National Landing |
| 3 |
| 2,640 | | $ | 2,245 | | $ | 2,043 |
| 9.9% | | 93.8% | | 94.3% | | (0.5%) | | $ | 66,691 | | $ | 61,031 |
| 9.3% | |
DC | | 9 |
| 2,916 | | | 2,472 | | | 2,340 |
| 5.6% | | 92.5% | | 90.9% | | 1.6% | | | 79,994 | | | 74,454 |
| 7.4% | |
MD |
| 2 |
| 438 | |
| 1,720 | |
| 1,567 |
| 9.8% | | 97.9% | | 98.2% | | (0.3%) | |
| 8,856 | |
| 8,086 |
| 9.5% | |
Total / Weighted Average |
| 14 |
| 5,994 | | $ | 2,314 | | $ | 2,148 |
| 7.7% | | 93.4% | | 92.9% | | 0.5% | | $ | 155,541 | | $ | 143,571 |
| 8.3% | |
Note: At JBG SMITH Share. Includes assets placed In-Service prior to January 1, 2022. 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 38.
| | |
| Page 37 |
| |
PROPERTY TABLE - MULTIFAMILY | MARCH 31, 2023 |
Note: At 100% share, unless otherwise noted.
(1) | "C" denotes a consolidated interest and "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) | In February 2023, we purchased the remaining 0.3% ownership interest in The Wren, a multifamily asset that was owned by a consolidated real estate venture, for $0.6 million, increasing our ownership interest to 100.0%. |
(8) | See footnotes (3) and (4) on page 39. |
| | |
| Page 38 |
| |
PROPERTY TABLE – UNDER-CONSTRUCTION | MARCH 31, 2023 |
Property Table – Under Construction
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| dollars in thousands | | | | | | | | | | | | | | | | | | | | |
| ||||
| | | | | | | | | | | 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 |
|
|
|
|
|
|
|
|
|
|
| |
|
|
| |
|
| |
|
| |
|
| |
| 1900 Crystal Drive (3) |
| National Landing |
| — | | 633,985 |
| 808 |
| Q1 2021 |
| | Q1 2024 - Q3 2024 |
| Q1 2026 | | $ | 321,060 | | $ | 101,131 | | $ | 422,191 | |
| 2000/2001 South Bell Street (4) | | National Landing | | — | | 580,966 | | 775 | | Q1 2022 | | | Q1 2025 - Q3 2025 | | Q4 2026 | | | 98,099 | | | 245,336 | | | 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 | | $ | 419,159 | | $ | 346,467 | | $ | 765,626 | |
| | | | |
Weighted average Projected NOI Yield at JBG SMITH Share: |
| Multifamily |
| |
Estimated Total Investment (5) |
| | 5.8 | % |
Estimated Incremental Investment |
| | 12.8 | % |
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, capitalized interest and ground lease costs. See definition of Historical Cost on page 48. |
(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. The ground lessee entered into a mortgage loan collateralized by the leasehold interest with a maximum principal balance of $227.0 million. As of March 31, 2023, $120.3 million was outstanding under the mortgage loan. See page 44 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. The ground lessee entered into a mortgage loan collateralized by the leasehold interest with a maximum principal balance of $208.5 million. As of March 31, 2023, no proceeds had been received from the mortgage loan. See page 44 for additional information. 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 39 |
| |
PROPERTY TABLE – DEVELOPMENT PIPELINE | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | | | |
| dollars in thousands | | | | | | |
| ||||||||||
| | | | | | | | | | | | | | | | | |
|
| | | | | | | Earliest | | | | | | | | | | |
|
| | | | | | | Potential | | | | | | | | | | Estimated | |
| | | | | % | | Construction | | Estimated Potential Development Density (SF) | | Number of | | ||||||
| Asset |
| Submarket | | Ownership | | Start Date (1) | | Total |
| Office |
| Multifamily |
| Retail | | Units |
|
| | | | | | | | | | | | | | | | | | |
| National Landing |
|
|
| | | | | |
|
|
|
|
|
|
| | |
| 3330 Exchange Avenue | | National Landing | | 50.0% | | 2023 | | 239,800 | | — | | 216,400 | | 23,400 | | 240 | |
| 3331 Exchange Avenue | | National Landing | | 50.0% | | 2023 | | 180,600 | | — | | 164,300 | | 16,300 | | 170 | |
| Potomac Yard Landbay F/G/H | | National Landing | | 50.0% / 100.0% | | 2024 - 2026 | | 2,614,000 | | 1,369,000 | | 1,147,000 | | 98,000 | | 1,240 | |
| 2250 Crystal Drive | | National Landing | | 100.0% | | 2024 | | 696,200 | | — | | 681,300 | | 14,900 | | 825 | |
| 1415 S. Eads Street | | National Landing | | 100.0% | | 2024 | | 531,400 | | — | | 527,400 | | 4,000 | | 635 | |
| 223 23rd Street | | National Landing | | 100.0% | | 2024 | | 492,100 | | — | | 484,100 | | 8,000 | | 610 | |
| 101 12th Street S. | | National Landing | | 100.0% | | 2024 | | 239,600 | | 234,400 | | — | | 5,200 | | — | |
| RiverHouse Land | | National Landing | | 100.0% | | 2025 | | 1,988,400 | | — | | 1,960,600 | | 27,800 | | 1,665 | |
| 2525 Crystal Drive | | National Landing | | 100.0% | | 2025 | | 373,000 | | — | | 370,000 | | 3,000 | | 370 | |
| 1800 South Bell Street Land (2) | | National Landing | | 100.0% | | 2025 | | 255,000 | | 245,000 | | — | | 10,000 | | — | |
| DC |
|
|
| | | | |
|
|
|
|
|
|
|
| | |
| Gallaudet Parcel 2-3 (3) | | Union Market/NoMa/H Street |
| 100.0% | | 2023 | | 819,100 |
| — |
| 758,200 |
| 60,900 |
| 820 | |
| 5 M Street Southwest |
| Ballpark | | 100.0% | | 2023 | | 664,700 | | — | | 648,400 | | 16,300 | | 650 | |
| Capitol Point - North | | Union Market/NoMa/H Street | | 100.0% | | 2024 | | 738,300 | | — | | 705,500 | | 32,800 | | 760 | |
| Gallaudet Parcel 4 (3) | | Union Market/NoMa/H Street | | 100.0% | | 2025 | | 644,200 | | — | | 605,200 | | 39,000 | | 645 | |
| Other Development Parcels (4) | | | | | | | | 2,057,600 | | 1,604,400 | | 453,200 | | — | | — | |
| | | | | | | | | | | | | | | | | | |
| Total |
| |
| | | | | 12,534,000 |
| 3,452,800 |
| 8,721,600 |
| 359,600 |
| 8,630 | |
| | | | | | | | | | | | | | | | | | |
| Totals at JBG SMITH Share | | | | | | | | | | | | | | | | | |
| National Landing | | | | | | | | 6,593,000 | | 1,313,900 | | 5,137,300 | | 141,800 | | 5,280 | |
| DC | | | | | | | | 3,058,600 | | 149,600 | | 2,760,000 | | 149,000 | | 2,875 | |
| Other | | | | | | | | 145,700 | | 89,700 | | 56,000 | | — | | — | |
| | | | | | | | | 9,797,300 | | 1,553,200 | | 7,953,300 | | 290,800 | | 8,155 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | Fully Entitled | | 5,293,500 | | 895,700 | | 4,171,800 | | 226,000 | | 4,515 | |
| | | | | | | Entitlement In Process | | 4,503,800 | | 657,500 | | 3,781,500 | | 64,800 | | 3,640 | |
| | | | | | | | | 9,797,300 | | 1,553,200 | | 7,953,300 | | 290,800 | | 8,155 | |
| | | | | | | | | | | | | | | | | | |
| Historical Cost at JBG SMITH Share (5) |
| $ 412,472 | | | | | | | | | | | | | | | |
See footnotes on page 41.
| | |
| Page 40 |
| |
PROPERTY TABLE – DEVELOPMENT PIPELINE | MARCH 31, 2023 |
Footnotes
Note: At 100% share, unless otherwise noted.
(1) | Represents the earliest potential year in which construction could commence, subject to receipt of full entitlements, completion of design and market conditions. Office developments are pre-lease dependent. |
(2) | Currently encumbered by an operating commercial asset. |
(3) | Controlled through an option to acquire a leasehold interest with estimated stabilized annual ground rent payments totaling approximately $3.8 million. As of March 31, 2023, the weighted average remaining term for the option is 1.6 years. |
(4) | Comprises six assets in which we have a minority interest. 809,500 SF is currently encumbered by two operating commercial assets. |
(5) | 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 48. |
| | |
| Page 41 |
| |
DISPOSITION AND RECAPITALIZATION ACTIVITY | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | |
| 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 2023 | | | | | | | | | | | | | | | |
| Development Parcel (1) | | 100.0% | | Development Pipeline | | Arlington, VA | | | March 17, 2023 |
| — | | $ | 5,500 | |
| | | | | | | | | | | | | | | | |
| Total |
|
|
|
|
|
| |
|
|
| — | | $ | 5,500 | |
(1) | One of the parcels which we acquired in December 2020 along with the future development parcel formerly occupied by the Americana Hotel. |
Recapitalization Activity:
On March 23, 2023, we sold an 80.0% pari-passu interest in 4747 Bethesda Avenue for a gross sales price of $196.0 million, representing a gross valuation of $245.0 million. In connection with the transaction, the real estate venture assumed the related $175.0 million mortgage loan.
| | |
| Page 42 |
| |
DEBT SUMMARY | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | | | | | | | | |
| dollars in thousands, at JBG SMITH Share |
| 2023 |
| 2024 |
| 2025 |
| 2026 |
| 2027 |
| Thereafter |
| Total |
| |||||||
| | | | | | | | | | | | | | | | | | | | | | | |
| Consolidated and Unconsolidated Principal Balance | | | | | | | | | | | | | | | | | | | | | | |
| Unsecured Debt: | | | | | | | | | | | | | | | | | | | | | | |
| Revolving credit facility ($1 billion commitment) | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| Term loans ($600 million commitment) | |
| — | |
| — | |
| 200,000 | |
| — | |
| — | |
| 350,000 | |
| 550,000 | |
| Total unsecured debt | |
| — | |
| — | |
| 200,000 | |
| — | |
| — | |
| 350,000 | |
| 550,000 | |
| Secured Debt: | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Consolidated principal balance | |
| 142,960 | |
| 123,084 | |
| 391,029 | |
| 225,325 | |
| 180,514 | |
| 755,003 | |
| 1,817,915 | |
| Unconsolidated principal balance | |
| 22,005 | |
| — | |
| 33,000 | |
| — | |
| 35,000 | |
| — | |
| 90,005 | |
| Total secured debt | |
| 164,965 | |
| 123,084 | |
| 424,029 | |
| 225,325 | |
| 215,514 | |
| 755,003 | |
| 1,907,920 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Total Consolidated and Unconsolidated Principal Balance | | $ | 164,965 | | $ | 123,084 | | $ | 624,029 | | $ | 225,325 | | $ | 215,514 | | $ | 1,105,003 | | $ | 2,457,920 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| % of total debt maturing | |
| 6.7 | % |
| 5.0 | % |
| 25.4 | % |
| 9.2 | % |
| 8.8 | % |
| 44.9 | % |
| 100.0 | % |
| % floating rate (1) | |
| 77.9 | % |
| — | |
| — | |
| 78.9 | % |
| 16.2 | % |
| 42.5 | % |
| 33.0 | % |
| % fixed rate (2) | |
| 22.1 | % |
| 100.0 | % |
| 100.0 | % |
| 21.1 | % |
| 83.8 | % |
| 57.5 | % |
| 67.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Weighted Average Interest Rates | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Variable rate (3) | |
| 6.55 | % |
| — | |
| — | |
| 6.14 | % |
| 5.00 | % |
| 4.86 | % |
| 5.42 | % |
| Fixed rate | |
| 3.78 | % |
| 3.97 | % |
| 3.83 | % |
| 5.15 | % |
| 4.44 | % |
| 4.02 | % |
| 4.02 | % |
| Total Weighted Average Interest Rates | |
| 5.94 | % |
| 3.97 | % |
| 3.83 | % |
| 5.93 | % |
| 4.53 | % |
| 4.38 | % |
| 4.48 | % |
| | | | | | | | | | | | | |
| | Credit Facility | |||||||||||
|
| Revolving |
| | |
| | |
| | |
| |
| | Credit | | Tranche A‑1 | | Tranche A‑2 | | Total/Weighted | | ||||
| | Facility | | Term Loan | | Term Loan | | Average | | ||||
Credit limit | | $ | 1,000,000 | | $ | 200,000 | | $ | 400,000 | | $ | 1,600,000 | |
Outstanding principal balance | | $ | — | | $ | 200,000 | | $ | 350,000 | | $ | 550,000 | |
Letters of credit | | $ | 467 | | $ | — | | $ | — | | $ | 467 | |
Undrawn capacity (4) | | $ | 999,533 | | $ | — | | $ | 50,000 | | $ | 1,049,533 | |
Interest rate spread (5) | |
| 1.15 | % |
| 1.15 | % |
| 1.25 | % |
| 1.21 | % |
All-In interest rate (6) | |
| 5.95 | % |
| 2.61 | % |
| 3.39 | % |
| 3.11 | % |
Initial maturity date | |
| Jan‑25 | |
| Jan‑25 | |
| Jan‑28 | |
| — | |
Note: Amounts shown based on initial maturity date.
(1) | Floating rate debt includes floating rate loans with interest rate caps. |
(2) | Fixed rate debt includes floating rate loans with interest rate swaps. Including interest rate caps, 89.2% of our debt is fixed or hedged. |
(4) | The undrawn Tranche A-2 Term Loan capacity of $50.0 million will be drawn in May 2023. |
(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 March 31, 2023, we had interest rates swaps for the Tranche A-1 Term Loan and the Tranche A-2 Term Loan. |
| | |
| Page 43 |
| |
DEBT BY INSTRUMENT | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | | |
| 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 | | | | | | | | | | | | | | | | |
| Falkland Chase - South & West |
| 100.0 | % |
| 36,450 |
| 3.78 | % | Fixed |
| 3.78 | % | 06/01/23 | | 06/01/23 | |
| 800 North Glebe Road |
| 100.0 | % |
| 106,510 |
| S + 1.71 | % | — |
| 6.51 | % | 06/30/23 | | 06/30/24 | |
| 2101 L Street |
| 100.0 | % |
| 123,084 |
| 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 |
| 100.0 | % |
| — |
| S + 1.15 | % | — |
| 5.95 | % | 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 (4) | | — | | | 120,325 | | S + 3.11 | % | Cap | | 6.61 | % | 04/25/26 | | 04/25/26 | |
| 1215 S. Clark Street (5) | | 100.0 | % | | 105,000 | | S + 1.35 | % | Swap | | 5.15 | % | 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 | |
| 8001 Woodmont | | 100.0 | % | | 102,971 | | 4.82 | % | Fixed | | 4.82 | % | 01/15/27 | | 01/15/27 | |
| 2000/2001 South Bell Street (6) | | — | | | — | | S + 2.25 | % | Cap | | 6.75 | % | 01/22/27 | | 01/22/27 | |
| 1235 S. Clark Street |
| 100.0 | % |
| 77,543 |
| 3.94 | % | Fixed |
| 3.94 | % | 11/01/27 | | 11/01/27 | |
| Credit Facility - Tranche A‑2 Term Loan (7) |
| 100.0 | % |
| 350,000 |
| S + 1.25 | % | Swap |
| 3.39 | % | 01/13/28 | | 01/13/28 | |
| 1225 S. Clark Street |
| 100.0 | % |
| 85,000 |
| S + 1.70 | % | — |
| 6.50 | % | 07/27/28 | | 07/27/28 | |
| WestEnd25 | | 100.0 | % | | 97,500 | | S + 1.45 | % | Swap | | 4.16 | % | 08/05/29 | | 08/05/29 | |
| Multifamily Credit Facility (The Wren and F1RST Residences) | | 100.0 | % | | 187,557 | | 5.13 | % | Fixed | | 5.13 | % | 02/01/30 | | 02/01/30 | |
| 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 |
| | |
| 2,367,915 |
|
|
|
|
|
|
|
|
|
| |
| Deferred financing costs and premium / (discount) - mortgage loans (9) |
| | |
| (17,942) | | |
|
|
|
|
|
|
|
| |
| Deferred financing costs - credit facility (9) |
| | |
| (5,669) | | |
|
|
|
|
|
|
|
| |
| Total Consolidated Indebtedness | | | | $ | 2,344,304 | | |
|
|
|
|
|
|
|
| |
| | | | | | | | | | | | | | | | | |
| Total Consolidated Indebtedness (net of premium / (discount) and deferred financing costs) | |
|
|
|
|
|
|
|
|
|
|
|
| | ||
| Mortgage loans | | | | $ | 1,802,051 |
|
|
|
|
|
|
|
|
|
| |
| Revolving credit facility | | | |
| — |
| |
|
|
|
|
|
|
|
| |
| Deferred financing costs, net (included in other assets) (9) | | | |
| (5,003) |
|
|
|
|
|
|
|
|
|
| |
| Unsecured term loans | | | |
| 547,256 |
|
|
|
|
|
|
|
|
|
| |
| Total Consolidated Indebtedness | | | | $ | 2,344,304 |
|
|
|
|
|
|
|
|
|
| |
| | |
| Page 44 |
| |
DEBT BY INSTRUMENT | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | | |
| 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 | | | | | | | | | | | | | | | | |
| Rosslyn Gateway - North, Rosslyn Gateway - South | | 18.0 | % |
| 46,168 | | S + 2.10 | % | — |
| 6.90 | % | 06/01/23 | | 06/01/23 | |
| Stonebridge at Potomac Town Center | | 10.0 | % |
| 79,600 | | S + 3.50 | % | — |
| 8.30 | % | 12/08/23 | | 12/08/24 | |
| The Foundry (10) | | 9.9 | % |
| 58,000 | | S + 1.50 | % | Cap |
| 4.50 | % | 12/12/23 | | 12/12/24 | |
| 1101 17th Street | | 55.0 | % |
| 60,000 | | S + 1.31 | % | Swap |
| 4.13 | % | 06/13/25 | | 06/13/25 | |
| 4747 Bethesda Avenue (11) | | 20.0 | % | | 175,000 | | S + 1.35 | % | Cap | | 5.00 | % | 02/20/27 | | 02/20/27 | |
| Total Unconsolidated Principal Balance | | | |
| 418,768 | | |
|
|
|
|
|
|
|
| |
| Deferred financing costs and premium / (discount) |
| | | | (10,814) | | |
|
|
|
|
|
|
|
| |
| Total Unconsolidated Indebtedness | | | | $ | 407,954 | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Principal Balance at JBG SMITH Share | | | |
|
|
|
|
|
|
|
|
|
|
|
| |
| Consolidated principal balance at JBG SMITH Share |
| | | $ | 2,367,915 |
|
|
|
|
|
|
|
|
|
| |
| Unconsolidated principal balance at JBG SMITH Share | | | |
| 90,005 |
| |
|
|
| |
|
|
|
| |
| Total Consolidated and Unconsolidated Principal Balance at JBG SMITH Share | | | | $ | 2,457,920 |
|
|
|
|
|
|
|
|
|
| |
| | | | | | | | | | | | | | | | | |
| Indebtedness at JBG SMITH Share (net of premium / (discount) and deferred financing costs) |
|
|
|
|
|
|
|
|
|
| | |||||
| Consolidated indebtedness at JBG SMITH Share |
| | | $ | 2,344,304 |
| |
|
|
|
|
|
|
|
| |
| Unconsolidated indebtedness at JBG SMITH Share | | | | | 87,832 | | | | | | | | | | | |
| Total Consolidated and Unconsolidated Indebtedness at JBG SMITH Share | | | | $ | 2,432,136 | | | | | | | | | | | |
(1) | For floating rate loans with interest rate caps, the weighted average interest rate cap strike is 2.35% for consolidated debt, and 2.21% for all debt, and the weighted average maturity of the interest rate caps is August 2023. The interest rate cap strike is exclusive of the credit spreads associated with the loans. |
(2) | March 31, 2023 one-month LIBOR of 4.86% or one-month term SOFR of 4.80% 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) | We leased the land associated with 1900 Crystal Drive to a lessee which will construct the asset. The ground lessee entered into a mortgage loan collateralized by the asset with a maximum principal balance of $227.0 million. The base rate for this loan was 3.50% as of March 31, 2023. See footnote (3) on page 39 for additional information. |
(5) | The notional value of the 1215 S. Clark Street interest rate swap was $47.5 million. |
(6) | 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. The interest rate cap is effective as of July 1, 2023. The base rate for this loan was 4.50% as of March 31, 2023. See footnote (4) on page 39 for additional information. |
(7) | The undrawn capacity of $50.0 million will be drawn in May 2023. |
(8) | The base rate for these loans was 1.99% as of March 31, 2023. |
(9) | As of March 31, 2023, net deferred financing costs related to unfunded mortgage loans totaling $2.9 million and the revolving credit facility totaling $2.1 million were included in "Other assets, net" in our condensed consolidated balance sheet. |
(10) | The base rate for this loan was 3.00% as of March 31, 2023. |
(11) | The base rate for this loan was 3.65% as March 31, 2023. |
| | |
| Page 45 |
| |
UNCONSOLIDATED REAL ESTATE VENTURES | MARCH 31, 2023 |
Estate Ventures
| | | | | | | | | | | | |
| |
| Asset Type |
| City |
| Submarket |
| % Ownership |
| Total Square Feet |
|
| | | | | | | | | | | | |
| J.P. Morgan Global Alternatives (1) | | | | | | | | | | | |
| Potomac Yard Landbay F/G | | Development Pipeline | | Alexandria, VA | | National Landing | | 50.0 | % | 1,614,000 | |
| 3330 Exchange Avenue | | Development Pipeline | | Alexandria, VA | | National Landing | | 50.0 | % | 239,800 | |
| 3331 Exchange Avenue | | Development Pipeline | | Alexandria, VA | | National Landing | | 50.0 | % | 180,600 | |
| |
| | | | | | | | | 2,034,400 | |
| | | | | | | | | | | | |
| Landmark |
|
|
|
|
|
|
|
|
|
| |
| Rosslyn Gateway - North |
| Commercial |
| Arlington, VA |
| Rosslyn |
| 18.0 | % | 146,759 | |
| Rosslyn Gateway - South |
| Commercial |
| Arlington, VA |
| Rosslyn |
| 18.0 | % | 103,444 | |
| Rosslyn Gateway - South Land |
| Development Pipeline |
| Arlington, VA |
| Rosslyn |
| 18.0 | % | 498,500 | |
| Rosslyn Gateway - North Land |
| Development Pipeline |
| Arlington, VA |
| Rosslyn |
| 18.0 | % | 311,000 | |
| | | | | | | | | | | 1,059,703 | |
| | | | | | | | | | | | |
| 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 | |
| |
| | | | | | | | | 731,820 | |
| | | | | | | | | | | | |
| Bresler / Brookfield |
|
|
|
|
|
|
|
|
|
| |
| Waterfront Station |
| Development Pipeline |
| Washington, DC |
| Southwest |
| 2.5 | % | 662,600 | |
| | | | | | | | | | | | |
| Brandywine |
|
|
|
|
|
|
|
|
|
| |
| 1250 1st Street |
| Development Pipeline |
| Washington, DC |
| Union Market / NoMa / H Street |
| 30.0 | % | 265,800 | |
| 51 N Street |
| Development Pipeline |
| Washington, DC |
| Union Market / NoMa / H Street |
| 30.0 | % | 177,500 | |
| 50 Patterson Street |
| Development Pipeline |
| 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 | % | 551,594 | |
| | | | | | | | | | | | |
| 4747 Bethesda Venture | | | | | | | | | | | |
| 4747 Bethesda Avenue (2) | | Commercial | | Bethesda, MD | | Bethesda CBD | | 20.0 | % | 300,508 | |
| | | | | | | | | | | | |
| Canadian Pension Plan Investment Board |
|
|
|
|
|
|
|
|
|
| |
| 1101 17th Street |
| Commercial |
| Washington, DC |
| CBD |
| 55.0 | % | 209,407 | |
| | | | | | | | | | | | |
| Total Unconsolidated Real Estate Ventures |
| |
|
|
|
|
|
|
| 6,135,532 | |
(1) | J.P. Morgan Global Alternatives is the advisor for an institutional investor. |
(2) | In March 2023, we sold an 80.0% pari-passu interest in 4747 Bethesda Avenue for a gross sales price of $196.0 million, representing a gross valuation of $245.0 million. Includes JBG SMITH's corporate office lease for approximately 84,400 SF. |
| | |
| Page 46 |
| |
DEFINITIONS | MARCH 31, 2023 |
"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 March 31, 2023, 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 March 31, 2023, 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 assets that have the potential to commence construction subject to receipt of full entitlements, completion of design and market conditions 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.
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 expense 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 expense, 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 March 31, 2023, 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 March 31, 2023. 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
| | |
| Page 47 |
| |
DEFINITIONS | MARCH 31, 2023 |
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.
"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.
"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 expense 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, gain (loss) 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) refunds, 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.
"GAAP" means accounting principles generally accepted in the United States of America.
"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 March 31, 2023.
| | |
| Page 48 |
| |
DEFINITIONS | MARCH 31, 2023 |
"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 March 31, 2023.
"JBG SMITH Share" or "our share" refer to our ownership percentage of consolidated and unconsolidated assets in real estate ventures, but exclude our: (i) 10.0% subordinated interest in one commercial building, (ii) 33.5% subordinated interest in four commercial buildings and (iii) 49.0% interest in three commercial buildings, as well as the associated non-recourse mortgage loans, held through unconsolidated real estate ventures; these interests and debt are excluded because our investment in each real estate venture is zero, we do not anticipate receiving any near-term cash flow distributions from the real estate ventures, and we have not guaranteed their obligations or otherwise committed to providing financial support.
"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 March 31, 2023 divided by occupied units; retail rent is excluded from this metric.
"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 an asset's performance. The most directly comparable GAAP measure is net income (loss) attributable to common shareholders. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only property related revenue (which includes base rent, tenant reimbursements and other operating revenue, net of Free Rent and payments associated with assumed lease liabilities) less operating expenses and ground rent for operating leases, if applicable. NOI also excludes deferred rent, related party management fees, interest expense, and certain other non-cash adjustments, including the accretion of acquired below-market leases and the amortization of acquired above-market leases and below-market ground lease intangibles. Management uses NOI as a supplemental performance measure of our assets and believes it provides useful information to investors because it reflects only those revenue and expense items that are incurred at the asset level, excluding non-cash items. In addition, NOI is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets. However, because NOI excludes depreciation and amortization expense and captures neither the changes in the value of our assets that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our assets, all of which have real economic effect and could materially impact the financial performance of our assets, the utility of NOI as a measure of the operating performance of our assets is limited. NOI presented by us may not be comparable to NOI reported by other REITs that define these measures differently. We believe to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) attributable to common shareholders as presented in our financial statements. NOI should not be considered as an alternative to net income (loss) attributable to common shareholders as an indication of our performance or to cash flows as a measure of liquidity or our ability to make distributions. Annualized NOI, for all assets except Crystal City Marriott, represents NOI for the three months ended March 31, 2023 multiplied by four. Due to seasonality in the hospitality business, Annualized NOI for Crystal City Marriott represents the trailing 12-month NOI as of March 31, 2023. 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.
| | |
| Page 49 |
| |
DEFINITIONS | MARCH 31, 2023 |
This Investor Package also contains management's estimate of stabilized NOI and projections of NOI yield for Under-Construction 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 March 31, 2023, 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 March 31, 2023, 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 multifamily and commercial assets that are below 90% leased and have been delivered within the 12 months ended March 31, 2023.
"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.
"Signed But Not Yet Commenced Leases" means leases that, as of March 31, 2023, 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
| | |
| Page 50 |
| |
DEFINITIONS | MARCH 31, 2023 |
assets, management's estimate of approximate rentable square feet based on current design plans as of March 31, 2023, and (iv) for assets in the Development Pipeline, management's estimate of developable gross square feet based on current business plans with respect to real estate owned or controlled as of March 31, 2023.
"Transaction and Other Costs" include pursuit costs related to completed, potential and pursued transactions, demolition costs, severance and other costs.
"Under-Construction" refers to assets that were under construction during the three months ended March 31, 2023.
.
| | |
| Page 51 |
| |
APPENDIX – TRANSACTION AND OTHER COSTS | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | |||||||||||||
| dollars in thousands |
| Q1 2023 |
| Q4 2022 |
| Q3 2022 |
| Q2 2022 |
| Q1 2022 | | |||||
| | | | | | | | | | | | | | | | | |
| Transaction and Other Costs |
| |
|
| |
| | |
| | |
| | |
| |
| Demolition costs | | $ | 977 | | $ | 385 | | $ | — | | $ | 406 | | $ | 22 | |
| Severance and other costs | |
| 1,448 | |
| 20 | |
| 1,146 | |
| 727 | |
| 145 | |
| Completed, potential and pursued transaction expenses | |
| 47 | |
| 474 | |
| 600 | |
| 854 | |
| 732 | |
| Total (1) | | $ | 2,472 | | $ | 879 | | $ | 1,746 | | $ | 1,987 | | $ | 899 | |
(1) | For Q1 2022, includes $34,000 of transaction costs attributable to noncontrolling interests. |
| | |
| Page 52 |
| |
APPENDIX - EBITDA, EBITDAre AND ADJUSTED EBITDA RECONCILIATIONS (NON-GAAP) | MARCH 31, 2023 |
Are Appendix – EBITDAre and Adjusted EBITDA
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | |||||||||||||
| dollars in thousands |
| Q1 2023 |
| Q4 2022 |
| Q3 2022 |
| Q2 2022 |
| Q1 2022 |
| |||||
| | | | | | | | | | | | | | | | | |
| EBITDA, EBITDAre and Adjusted EBITDA |
| |
|
| |
| | |
| | |
| | |
| |
| Net income (loss) | | $ | 24,310 | | $ | (20,850) | | $ | (21,581) | | $ | 141,494 | | $ | (77) | |
| Depreciation and amortization expense | |
| 53,431 | |
| 56,174 | |
| 50,056 | |
| 49,479 | |
| 58,062 | |
| Interest expense | |
| 26,842 | |
| 25,679 | |
| 17,932 | |
| 16,041 | |
| 16,278 | |
| Income tax expense (benefit) | |
| (16) | |
| (1,336) | |
| 166 | |
| 2,905 | |
| (471) | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| 3,664 | |
| 3,738 | |
| 7,725 | |
| 9,494 | |
| 9,829 | |
| EBITDA attributable to noncontrolling interests | |
| 30 | |
| 22 | |
| (28) | |
| (47) | |
| (26) | |
| EBITDA | | $ | 108,261 | | $ | 63,427 | | $ | 54,270 | | $ | 219,366 | | $ | 83,595 | |
| (Gain) loss on the sale of real estate, net | |
| (40,700) | |
| (3,263) | |
| — | |
| (158,767) | |
| 136 | |
| Gain on the sale of unconsolidated real estate assets | |
| — | |
| (618) | |
| — | |
| (936) | |
| (5,243) | |
| Impairment related to unconsolidated real estate ventures (1) | | | — | | | 3,885 | | | 15,401 | | | — | | | — | |
| | | | | | | | | | | | | | | | | |
| EBITDAre | | $ | 67,561 | | $ | 63,431 | | $ | 69,671 | | $ | 59,663 | | $ | 78,488 | |
| Transaction and Other Costs, net of noncontrolling interests (2) | |
| 2,472 | |
| 879 | |
| 1,746 | |
| 1,987 | |
| 865 | |
| Loss (income) from investments, net | | | (1,861) | | | 298 | | | 567 | | | (1,217) | | | (14,071) | |
| Loss on the extinguishment of debt | |
| — | |
| — | |
| 1,444 | |
| 1,038 | |
| 591 | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 351 | |
| 1,022 | |
| 548 | |
| 1,577 | |
| 2,244 | |
| Earnings and distributions in excess of our investment in unconsolidated real estate venture | |
| (167) | |
| (405) | |
| (18) | |
| (124) | |
| (441) | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| 2 | |
| 26 | |
| 34 | |
| 1,841 | |
| 204 | |
| | | | | | | | | | | | | | | | | |
| Adjusted EBITDA | | $ | 68,358 | | $ | 65,251 | | $ | 73,992 | | $ | 64,765 | | $ | 67,880 | |
| | | | | | | | | | | | | | | | | |
| Net Debt to Annualized Adjusted EBITDA (3) | | | 7.8 | x |
| 8.6 | x |
| 7.9 | x |
| 8.1 | x |
| 9.6 | x |
| | | | | | | | | | | | | | | | | |
| Net Debt (at JBG SMITH Share) |
| March 31, 2023 |
| December 31, 2022 |
| September 30, 2022 |
| June 30, 2022 |
| March 31, 2022 |
| |||||
| Consolidated indebtedness (4) | | $ | 2,344,304 | | $ | 2,431,730 | | $ | 2,382,429 | | $ | 2,000,762 | | $ | 2,464,640 | |
| Unconsolidated indebtedness (4) | |
| 87,832 | |
| 54,975 | |
| 215,341 | |
| 279,534 | |
| 362,861 | |
| Total consolidated and unconsolidated indebtedness | |
| 2,432,136 | |
| 2,486,705 | |
| 2,597,770 | |
| 2,280,296 | |
| 2,827,501 | |
| Less: cash and cash equivalents | |
| 291,799 | |
| 253,698 | |
| 272,388 | |
| 181,882 | |
| 207,568 | |
| Net Debt (at JBG SMITH Share) | | $ | 2,140,337 | | $ | 2,233,007 | | $ | 2,325,382 | | $ | 2,098,414 | | $ | 2,619,933 | |
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 real estate assets. |
(2) | See page 52 for the components of Transaction and Other Costs. |
(3) | Adjusted EBITDA is annualized by multiplying by four. |
(4) | Net of premium/discount and deferred financing costs. |
| | |
| Page 53 |
| |
APPENDIX - FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP) | MARCH 31, 2023 |
Appendix – FFO, Core FFO and FAD
| | | | | | | | | | | | | | | | | |
| |
| Three Months Ended |
| |||||||||||||
| in thousands, except per share data |
| Q1 2023 |
| Q4 2022 |
| Q3 2022 |
| Q2 2022 |
| Q1 2022 |
| |||||
| | | | | | | | | | | | | | | | | |
| FFO and Core FFO | | |
|
| |
|
| |
|
| |
|
| |
| |
| Net income (loss) attributable to common shareholders | | $ | 21,171 | | $ | (18,579) | | $ | (19,293) | | $ | 123,275 | | $ | (32) | |
| Net income (loss) attributable to redeemable noncontrolling interests | |
| 3,363 | |
| (2,468) | |
| (2,546) | |
| 18,248 | |
| 10 | |
| Net income (loss) attributable to noncontrolling interests | |
| (224) | |
| 197 | |
| 258 | |
| (29) | |
| (55) | |
| Net income (loss) | |
| 24,310 | |
| (20,850) | |
| (21,581) | |
| 141,494 | |
| (77) | |
| (Gain) loss on the sale of real estate, net of tax | |
| (40,700) | |
| (3,263) | |
| — | |
| (155,642) | |
| 136 | |
| Gain on the sale of unconsolidated real estate assets | |
| — | |
| (618) | |
| — | |
| (936) | |
| (5,243) | |
| Real estate depreciation and amortization | |
| 51,611 | |
| 54,153 | |
| 47,840 | |
| 47,242 | |
| 55,517 | |
| Impairment related to unconsolidated real estate ventures (1) | | | — | | | 3,885 | | | 15,401 | | | — | | | — | |
| Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures | |
| 2,760 | |
| 2,884 | |
| 4,999 | |
| 6,416 | |
| 6,870 | |
| FFO attributable to noncontrolling interests | |
| 224 | |
| (326) | |
| (336) | |
| (47) | |
| (26) | |
| FFO Attributable to OP Units | | $ | 38,205 | | $ | 35,865 | | $ | 46,323 | | $ | 38,527 | | $ | 57,177 | |
| FFO attributable to redeemable noncontrolling interests | |
| (5,203) | |
| (4,776) | |
| (6,227) | |
| (4,966) | |
| (5,877) | |
| FFO Attributable to Common Shareholders | | $ | 33,002 | | $ | 31,089 | | $ | 40,096 | | $ | 33,561 | | $ | 51,300 | |
| | | | | | | | | | | | | | | | | |
| FFO attributable to OP Units | | $ | 38,205 | | $ | 35,865 | | $ | 46,323 | | $ | 38,527 | | $ | 57,177 | |
| Transaction and Other Costs, net of tax and noncontrolling interests (2) | |
| 2,373 | |
| 981 | |
| 1,597 | |
| 1,892 | |
| 843 | |
| (Income) loss from investments, net | | | (1,405) | | | 109 | | | 567 | | | (957) | | | (10,538) | |
| (Gain) loss from mark-to-market on derivative instruments, net of noncontrolling interests | |
| 2,541 | |
| 1,487 | |
| (2,779) | |
| (2,027) | |
| (3,367) | |
| Loss on the extinguishment of debt | |
| — | |
| — | |
| 1,444 | |
| 1,038 | |
| 591 | |
| Earnings and distributions in excess of our investment in unconsolidated real estate venture | |
| (167) | |
| (405) | |
| (18) | |
| (124) | |
| (441) | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 351 | |
| 1,022 | |
| 548 | |
| 1,577 | |
| 2,244 | |
| Amortization of management contracts intangible, net of tax | |
| 1,106 | |
| 1,106 | |
| 1,105 | |
| 1,106 | |
| 1,105 | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| 36 | |
| 21 | |
| (416) | |
| 1,593 | |
| (48) | |
| Core FFO Attributable to OP Units | | $ | 43,040 | | $ | 40,186 | | $ | 48,371 | | $ | 42,625 | | $ | 47,566 | |
| Core FFO attributable to redeemable noncontrolling interests | |
| (5,862) | |
| (5,883) | |
| (7,158) | |
| (5,494) | |
| (4,889) | |
| Core FFO Attributable to Common Shareholders | | $ | 37,178 | | $ | 34,303 | | $ | 41,213 | | $ | 37,131 | | $ | 42,677 | |
| FFO per diluted common share | | $ | 0.29 | | $ | 0.27 | | $ | 0.35 | | $ | 0.28 | | $ | 0.40 | |
| Core FFO per diluted common share | | $ | 0.33 | | $ | 0.30 | | $ | 0.36 | | $ | 0.31 | | $ | 0.34 | |
| Weighted average shares - diluted (FFO and Core FFO) | |
| 114,062 | |
| 113,917 | |
| 114,387 | |
| 121,327 | |
| 126,688 | |
See footnotes on page 55.
| | |
| Page 54 |
| |
APPENDIX - FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP) | MARCH 31, 2023 |
| | | | | | | | | | | | | | | | | |
| in thousands, except per share data |
| Three Months Ended |
| |||||||||||||
| |
| Q1 2023 |
| Q4 2022 |
| Q3 2022 |
| Q2 2022 |
| Q1 2022 |
| |||||
| | | | | | | | | | | | | | | | | |
| FAD | | |
|
| |
|
| |
|
| |
|
| |
| |
| Core FFO attributable to OP Units | | $ | 43,040 | | $ | 40,186 | | $ | 48,371 | | $ | 42,625 | | $ | 47,566 | |
| Recurring capital expenditures and Second-generation tenant improvements and leasing commissions (3) | |
| (7,794) | |
| (16,780) | |
| (10,094) | |
| (13,300) | |
| (13,702) | |
| Straight-line and other rent adjustments (4) | |
| (8,377) | |
| (7,655) | |
| (6,018) | |
| (1,978) | |
| (1,791) | |
| Third-party lease liability assumption (payments) refunds | |
| 95 | |
| — | |
| — | |
| (25) | |
| — | |
| Share-based compensation expense | |
| 9,348 | |
| 8,084 | |
| 5,714 | |
| 10,171 | |
| 10,493 | |
| Amortization of debt issuance costs | |
| 1,307 | |
| 1,162 | |
| 1,122 | |
| 1,135 | |
| 1,176 | |
| Unconsolidated real estate ventures allocated share of above adjustments | |
| 402 | |
| 2,315 | |
| (2,618) | |
| (289) | |
| (648) | |
| Non-real estate depreciation and amortization | |
| 355 | |
| 546 | |
| 740 | |
| 760 | |
| 1,068 | |
| FAD available to OP Units (A) | | $ | 38,376 | | $ | 27,858 | | $ | 37,217 | | $ | 39,099 | | $ | 44,162 | |
| Distributions to common shareholders and unitholders (B) | | $ | 29,619 | | $ | 29,625 | | $ | 29,833 | | $ | 31,768 | | $ | 32,603 | |
| FAD Payout Ratio (B÷A) (5) | | | 77.2 | % |
| 106.3 | % |
| 80.2 | % |
| 81.3 | % |
| 73.8 | % |
| | | | | | | | | | | | | | | | | |
| Capital Expenditures | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Maintenance and recurring capital expenditures | | $ | 2,973 | | $ | 6,282 | | $ | 4,944 | | $ | 6,091 | | $ | 4,820 | |
| Share of maintenance and recurring capital expenditures from unconsolidated real estate ventures | |
| — | |
| 72 | |
| 84 | |
| 312 | |
| 82 | |
| Second-generation tenant improvements and leasing commissions | |
| 4,742 | |
| 10,276 | |
| 5,038 | |
| 6,713 | |
| 8,594 | |
| Share of Second-generation tenant improvements and leasing commissions from unconsolidated real estate ventures | |
| 79 | |
| 150 | |
| 28 | |
| 184 | |
| 206 | |
| Recurring capital expenditures and Second-generation tenant improvements and leasing commissions | |
| 7,794 | |
| 16,780 | |
| 10,094 | |
| 13,300 | |
| 13,702 | |
| Non-recurring capital expenditures | |
| 9,693 | |
| 11,822 | |
| 13,832 | |
| 13,552 | |
| 12,810 | |
| Share of non-recurring capital expenditures from unconsolidated real estate ventures | |
| 2 | |
| 5 | |
| 9 | |
| 37 | |
| 12 | |
| First-generation tenant improvements and leasing commissions | |
| 3,125 | |
| 5,075 | |
| 13,627 | |
| 4,197 | |
| 4,450 | |
| Share of First-generation tenant improvements and leasing commissions from unconsolidated real estate ventures | |
| 313 | |
| 229 | |
| 321 | |
| 244 | |
| 473 | |
| Non-recurring capital expenditures | |
| 13,133 | |
| 17,131 | |
| 27,789 | |
| 18,030 | |
| 17,745 | |
| Total JBG SMITH Share of Capital Expenditures | | $ | 20,927 | | $ | 33,911 | | $ | 37,883 | | $ | 31,330 | | $ | 31,447 | |
(1) | Related to decreases in the value of the underlying real estate assets. |
(2) | See page 52 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 55 |
| |
APPENDIX - NOI RECONCILIATIONS (NON-GAAP) | MARCH 31, 2023 |
Appendix – NOI Reconciliations
| | | | | | | | | | | | | | | | | |
| in thousands |
| Three Months Ended |
| |||||||||||||
| |
| Q1 2023 |
| Q4 2022 |
| Q3 2022 |
| Q2 2022 |
| Q1 2022 |
| |||||
| Net income (loss) attributable to common shareholders | | $ | 21,171 | | $ | (18,579) | | $ | (19,293) | | $ | 123,275 | | $ | (32) | |
| Add: | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Depreciation and amortization expense | |
| 53,431 | |
| 56,174 | |
| 50,056 | |
| 49,479 | |
| 58,062 | |
| General and administrative expense: | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Corporate and other | |
| 16,123 | |
| 15,611 | |
| 12,072 | |
| 14,782 | |
| 15,815 | |
| Third-party real estate services | |
| 23,823 | |
| 22,107 | |
| 21,230 | |
| 24,143 | |
| 27,049 | |
| Share-based compensation related to Formation Transaction and special equity awards | |
| 351 | |
| 1,022 | |
| 548 | |
| 1,577 | |
| 2,244 | |
| Transaction and Other Costs | |
| 2,472 | |
| 879 | |
| 1,746 | |
| 1,987 | |
| 899 | |
| Interest expense | |
| 26,842 | |
| 25,679 | |
| 17,932 | |
| 16,041 | |
| 16,278 | |
| Loss on the extinguishment of debt | |
| — | |
| — | |
| 1,444 | |
| 1,038 | |
| 591 | |
| Income tax expense (benefit) | |
| (16) | |
| (1,336) | |
| 166 | |
| 2,905 | |
| (471) | |
| Net income (loss) attributable to redeemable noncontrolling interests | |
| 3,363 | |
| (2,468) | |
| (2,546) | |
| 18,248 | |
| 10 | |
| Net income (loss) attributable to noncontrolling interests | | | (224) | | | 197 | | | 258 | | | (29) | | | (55) | |
| Less: | |
|
| |
|
| |
|
| |
|
| |
|
| |
| Third-party real estate services, including reimbursements revenue | |
| 22,784 | |
| 21,050 | |
| 21,845 | |
| 22,157 | |
| 23,970 | |
| Other income | |
| 1,726 | |
| 1,663 | |
| 1,764 | |
| 1,798 | |
| 2,196 | |
| Income (loss) from unconsolidated real estate ventures, net | |
| 433 | |
| (4,600) | |
| (13,867) | |
| (2,107) | |
| 3,145 | |
| Interest and other income, net | |
| 4,077 | |
| 1,715 | |
| 984 | |
| 1,672 | |
| 14,246 | |
| Gain (loss) on the sale of real estate, net | |
| 40,700 | |
| 3,263 | |
| — | |
| 158,767 | |
| (136) | |
| Consolidated NOI | |
| 77,616 | |
| 76,195 | |
| 72,887 | |
| 71,159 | |
| 76,969 | |
| NOI attributable to unconsolidated real estate ventures at our share | |
| 4,429 | |
| 4,483 | |
| 7,107 | |
| 8,321 | |
| 6,967 | |
| Non-cash rent adjustments (1) | |
| (8,377) | |
| (7,655) | |
| (6,018) | |
| (1,978) | |
| (1,791) | |
| Other adjustments (2) | |
| 6,845 | |
| 7,069 | |
| 6,230 | |
| 5,695 | |
| 8,760 | |
| Total adjustments | |
| 2,897 | |
| 3,897 | |
| 7,319 | |
| 12,038 | |
| 13,936 | |
| NOI | | $ | 80,513 | | $ | 80,092 | | $ | 80,206 | | $ | 83,197 | | $ | 90,905 | |
| Less: out-of-service NOI loss (3) | |
| (710) | |
| (805) | |
| (548) | | | (2,046) | | | (1,448) | |
| Operating portfolio NOI | | $ | 81,223 | | $ | 80,897 | | $ | 80,754 | | $ | 85,243 | | $ | 92,353 | |
(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 assets in the Development Pipeline. |
| | |
| Page 56 |
JBGS Divider