JBG SMITH : Announces First Quarter 2021 Results

JBG SMITH (NYSE: JBGS), a leading owner and developer of high-growth, mixed-use properties in the Washington, DC market, today filed its Form 10-Q for the quarter ended March 31, 2021 and reported its financial results.

Additional information regarding our results of operations, properties and tenants can be found in our First Quarter 2021 Investor Package and Investor Presentation, which are posted in the Investor Relations section of our website at www.jbgsmith.com. We encourage investors to consider the information presented here with the information in those documents.

First Quarter 2021 Highlights

• Net loss attributable to common shareholders was $20.7 million, or $0.16 per diluted share.
• Funds From Operations ("FFO") attributable to common shareholders was $42.3 million, or $0.32 per diluted share.
• Core Funds From Operations ("Core FFO") attributable to common shareholders was $49.6 million, or $0.38 per diluted share.
• Annualized Net Operating Income ("NOI") for the three months ended March 31, 2021 was $322.2 million, compared to $288.2 million for the three months ended December 31, 2020, at our share.
• Same Store Net Operating Income ("SSNOI") at our share decreased 9.2% to $75.9 million for the three months ended March 31, 2021, compared to $83.6 million for the three months ended March 31, 2020.
  • We believe the decrease in SSNOI was substantially attributable to the COVID-19 pandemic, including (i) lower occupancy, higher concessions, lower rents and higher operating costs in our multifamily portfolio, (ii) lower occupancy, rent deferrals and a decline in parking revenue in our commercial portfolio, and (iii) lower occupancy at the Crystal City Marriott. These declines were partially offset by the burn-off of rent abatement as well as cleaning and utilities expense savings across our commercial portfolio.
• NOI for our operating portfolio decreased 3.1% to $80.8 million, and Adjusted EBITDA increased 8.4% to $79.7 million for the three months ended March 31, 2021, compared to the first quarter of 2020.
  • We believe NOI and Adjusted EBITDA were negatively impacted by $12.4 million attributable to the COVID-19 pandemic, comprising $2.9 million of reserves and rent deferrals for office and retail tenants ⁽¹⁾, a $4.8 million decline in NOI in our same store multifamily assets, a $4.1 million decline in parking revenue and a $0.6 million decline in NOI from the Crystal City Marriott. While the COVID-19 pandemic has impacted these income streams in the short term, we expect many will respond favorably to a recovery in demand as the pandemic abates.

(1)

Revenue related to these executed or pending rent deferrals is not included in our first quarter NOI, Adjusted EBITDA or Core FFO.

Operating Portfolio

• The operating commercial portfolio was 87.3% leased and 86.9% occupied as of March 31, 2021, compared to 88.1% and 87.7% as of December 31, 2020, at our share.
• The operating multifamily portfolio was 91.0% leased and 85.9% occupied as of March 31, 2021, compared to 86.5% and 81.1% as of December 31, 2020, at our share.
• Executed approximately 344,000 square feet of office leases at our share during the three months ended March 31, 2021, comprising approximately 24,000 square feet of new leases and approximately 320,000 square feet of second-generation leases, which generated an 8.3% rental rate increase on a GAAP basis and a 2.9% rental rate decrease on a cash basis.

	FIRST QUARTER 2021 RENT COLLECTION
		OFFICE			RESIDENTIAL		RETAIL
	% of Rent Collected (1)		99.6%		98.9%		74.7%
	Variance to Average 2019 Rent Collected		(0.1%)		(1.0%)		(23.7%)
	$ Paid / $ Unpaid		$93.9 M / $0.4 M		$29.4 M / $0.3 M		$7.1 M / $2.4 M

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(1)		Excludes $1.0 million of deferred and abated rents, consisting of $0.2 million for office tenants and $0.8 million for retail tenants. Including these deferred rents and abatements, our rent collections for the first quarter of 2021 would have been 99.3% for office tenants and 69.2% for retail tenants. Our rent collections for April kept pace with our first quarter rent collections.

Development Portfolio

Under-Construction

• As of March 31, 2021, we had two multifamily assets under construction consisting of 969 units at our share, including 7900 Wisconsin Avenue (to be rebranded as 8001 Woodmont) which was delivered in the first quarter.
• In March 2021, we commenced construction on 1900 Crystal Drive in National Landing, an 808-unit multifamily asset comprising two towers with ground floor retail. Through the structuring of the 1900 Crystal Drive transaction, we have the ability to facilitate an exchange out of a non-core asset into 1900 Crystal Drive. The land underlying 1900 Crystal Drive was leased to a ground lessee which 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.

Near-Term Development Pipeline

• As of March 31, 2021, we had nine near-term development pipeline assets consisting of 4.8 million square feet of estimated potential development density.

Future Development Pipeline

• As of March 31, 2021, we had 29 Future Development Pipeline assets consisting of 12.0 million square feet of estimated potential development density at our share, including the 2.1 million square feet held for sale to Amazon.com, Inc. ("Amazon").

Third-Party Asset Management and Real Estate Services Business

• For the three months ended March 31, 2021, revenue from third-party real estate services, including reimbursements, was $38.1 million. Excluding reimbursements and service revenue from our interests in consolidated and unconsolidated real estate ventures, revenue from our third-party asset management and real estate services business was $23.4 million, primarily driven by $14.3 million of development fees including a $10.2 million one-time fee, $6.6 million of property and asset management fees and $1.5 million of other service revenue.

Balance Sheet

• As of March 31, 2021, our total enterprise value was approximately $6.8 billion, comprising 145.0 million common shares and units valued at $4.6 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 $223.1 million.
• As of March 31, 2021, we had $208.7 million of cash and cash equivalents ($223.1 million of cash and cash equivalents at our share), and $998.5 million of capacity under our credit facility.
• Net Debt to Annualized Adjusted EBITDA at our share for the three months ended March 31, 2021 was 6.8x and our Net Debt / Total Enterprise Value was 31.9% as of March 31, 2021. Adjusting for the impact of COVID-19, we believe our Net Debt to Annualized Adjusted EBITDA would have been 5.8x.

Investing and Financing Activities

• Repurchased and retired 619,749 common shares for $19.2 million, an average purchase price of $30.96 per share.

Subsequent to March 31, 2021

• In April, we entered into a real estate venture with institutional investors advised by J.P. Morgan Global Alternatives to design, develop, manage and own approximately 2.0 million square feet of new mixed-use development (1.1 million square feet of office and 900,000 square feet of multifamily) located in Potomac Yard, the southern portion of National Landing. Our venture partner contributed a land site that is entitled for 1.3 million square feet of development it controls at Potomac Yard Landbay F, while we contributed the adjacent land with over 700,000 square feet of estimated development capacity at Potomac Yard Landbay G. In addition to our 50.0% ownership in the venture, we will act as pre-developer, developer, property manager and leasing agent for all future commercial and residential properties on the site. As a result of this transaction, our at share ownership of development rights in Potomac Yard increased by over 285,000 square feet, increasing our economic ownership interest in this emerging-growth submarket to 79% of all unencumbered future development density.

Dividends

• On April 29, 2021, our Board of Trustees declared a quarterly dividend of $0.225 per common share, payable on May 27, 2021 to shareholders of record as of May 13, 2021.

About JBG SMITH

JBG SMITH owns, operates, invests in and develops a dynamic portfolio of mixed-use properties in the high growth and high barrier-to-entry submarkets in and around Washington, DC. Through an intense focus on placemaking, JBG SMITH cultivates vibrant, amenity-rich, walkable neighborhoods throughout the Washington, DC metropolitan area. Over half of JBG SMITH’s holdings are in the National Landing submarket in Northern Virginia, where it serves as the exclusive developer for Amazon’s new headquarters, and where Virginia Tech’s planned new $1 billion Innovation Campus is located. JBG SMITH's portfolio currently comprises 17.3 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 16.8 million square feet of mixed-use development opportunities. 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 of JBG SMITH Properties ("JBG SMITH", the "Company", "we", "us", "our" or similar terms) may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as "approximate", "hypothetical", "potential", "believes", "expects", "anticipates", "estimates", "intends", "plans", "would", "may" or similar expressions in this earnings release. One of the most significant factors that could cause actual outcomes to differ materially from our forward-looking statements is the adverse effect of the current pandemic of the novel coronavirus, or COVID-19, and the ensuing economic turmoil on the Company, our financial condition, results of operations, cash flows, performance, our tenants, the real estate market, and the global economy and financial markets. The extent to which COVID-19 continues to impact us and our tenants depends on future developments, many of which are highly uncertain and cannot be predicted with confidence. These developments include: the continued severity, duration, transmission rate and geographic spread of COVID-19 in the United States, the speed of the vaccine roll-out, the effectiveness and willingness of people to take COVID-19 vaccines, the duration of associated immunity and vaccine efficacy against emerging variants of COVID-19, the extent and effectiveness of other containment measures taken, and the response of the overall economy, the financial markets and the population, particularly in areas in which we operate, once the current containment measures are lifted and whether the residential market in the Washington, DC area and any of our properties will be materially impacted by the various moratoriums on residential evictions, among others. Moreover, investors are cautioned to interpret many of the risks identified under the section titled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic. We also note the following forward-looking statements: the impact of COVID-19 and the ensuing economic turmoil on our Company, net operating income, same store net operating income, net asset value, stock price, occupancy rates, revenue from our multifamily and commercial portfolios, operating costs, deferrals of rent, uncollectable operating lease receivables, parking revenue, and burn-off of rent abatement; the impact of disruptions to the credit and capital markets on our ability to access capital, including refinancing maturing debt; changes to the amount and manner in which tenants use space; whether we incur additional costs or make additional concessions or offer other incentives to existing or prospective tenants to reconfigure space; whether the Washington, DC area will be more resilient than other parts of the country in any recession resulting from COVID-19; our annual dividend per share and dividend yield; annualized net operating income; in the case of our Under-Construction and Near-Term Development Pipeline assets, estimated square feet, estimated number of units and in the case of our Future Development Pipeline assets, estimated potential development density; expected key Amazon transaction terms and timeframes for closing any Amazon transactions not yet closed; planned infrastructure and education improvements related to Amazon's additional headquarters (including whether the incentives bill will have the desired effect on jobs growth, whether state and local governments will make the anticipated infrastructure and education investments and whether the anticipated private investments in National Landing will occur) and the Virginia Tech Innovation Campus; the economic impact of Amazon's additional headquarters on the DC area and National Landing; the impact of our role as the exclusive developer, property manager and retail leasing agent in connection with Amazon's new headquarters; our development plans related to Amazon's additional headquarters; whether any of our tenants succeed in obtaining government assistance under the CARES Act and other programs and use any resulting proceeds to make lease payments owed to us; whether we can access agency debt secured by our currently unencumbered multifamily assets timely, on reasonable terms or at all; whether the delay in our planned 2020 discretionary operating asset capital expenditures had or will have any negative impact on our properties or our ability to generate revenue; and the allocation of capital to our share repurchase plan and any impact on our stock price.

Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. These factors include, among others: adverse economic conditions in the Washington, DC metropolitan area, including in relation to COVID-19, the timing of and costs associated with development and property improvements, financing commitments, and general competitive factors. For further discussion of factors that could materially affect the outcome of our forward-looking statements and other risks and uncertainties, see "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Cautionary Statement Concerning Forward-Looking Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2020. 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.

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.

Non-GAAP Financial Measures

This release includes non-GAAP financial measures. For these measures, we have provided an explanation of how these non-GAAP measures are calculated and why JBG SMITH's management believes that the presentation of these measures provides useful information to investors regarding JBG SMITH's financial condition and results of operations. Reconciliations of certain non-GAAP measures to the most directly comparable GAAP financial measure are included in this earnings release. Our presentation of non-GAAP financial measures may not be comparable to similar non-GAAP measures used by other companies. In addition to "at share" financial information, the following non-GAAP measures are included in this release:

Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), EBITDA for Real Estate ("EBITDAre") and "Adjusted EBITDA" are non-GAAP financial measures. EBITDA and EBITDAre are used by management as supplemental operating performance measures, which we believe help investors and lenders meaningfully evaluate and compare our operating performance from period-to-period by removing from our operating results the impact of our capital structure (primarily interest charges from our outstanding debt and the impact of our interest rate swaps) and certain non-cash expenses (primarily depreciation and amortization on our assets). EBITDAre is computed in accordance with the definition established by the National Association of Real Estate Investment Trusts ("NAREIT"). NAREIT defines EBITDAre as GAAP net income (loss) adjusted to exclude interest expense, income taxes, depreciation and amortization expenses, gains and losses on sales of real estate and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, including our share of such adjustments of unconsolidated real estate ventures. These supplemental measures may help investors and lenders understand our ability to incur and service debt and to make capital expenditures. EBITDA and EBITDAre are not substitutes for net income (loss) (computed in accordance with GAAP) and may not be comparable to similarly titled measures used by other companies.

Adjusted EBITDA represents EBITDAre adjusted for items we believe are not representative of ongoing operating results, such as transaction and other costs, impairment write-downs of right-of-use assets associated with leases in which we are a lessee,gain (loss) on the extinguishment of debt, earnings (losses) and distributions in excess of our investment in unconsolidated real estate ventures, lease liability adjustments and share-based compensation expense related to the Formation Transaction and special equity awards. We believe that adjusting such items not considered part of our comparable operations, provides a meaningful measure to evaluate and compare our performance from period-to-period.

Because EBITDA, EBITDAre and Adjusted EBITDA have limitations as analytical tools, we use EBITDA, EBITDAre and Adjusted EBITDA to supplement GAAP financial measures. Additionally, we believe that users of these measures should consider EBITDA, EBITDAre and Adjusted EBITDA in conjunction with net income (loss) and other GAAP measures in understanding our operating results.

Funds from Operations ("FFO"), "Core FFO" and Funds Available for Distribution ("FAD") are non-GAAP financial measures. FFO is computed in accordance with the definition established by NAREIT in the NAREIT FFO White Paper - 2018 Restatement. NAREIT defines FFO as net income (loss) (computed in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and 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 (net of tax) which we believe are not representative of ongoing operating results, such as transaction and other costs, impairment write-downs of right-of-use assets associated with leases in which we are a lessee, gains (or losses) on 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, amortization of the management contracts intangible and the mark-to-market of derivative instruments.

FAD represents FFO less recurring tenant improvements, leasing commissions and other capital expenditures, net deferred rent activity, third-party lease liability assumption payments, recurring share-based compensation expense, accretion of acquired below-market leases, net of amortization of acquired above-market leases, amortization of debt issuance costs and other non-cash income and charges. 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 and other non-comparable income and expenses, which implicitly assumes that the value of real estate diminishes predictably over time rather than fluctuating based on market conditions. FFO, Core FFO and FAD do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as a performance measure or cash flow as a liquidity measure. FFO, Core FFO and FAD may not be comparable to similarly titled measures used by other companies.

Net Operating Income ("NOI") and "Annualized NOI" are non-GAAP financial measures management uses to assess a segment's performance. The most directly comparable GAAP measure is net income (loss) attributable to common shareholders. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only property related revenue (which includes base rent, tenant reimbursements and other operating revenue, net of free rent and payments associated with assumed lease liabilities) less operating expenses and ground rent, if applicable. NOI also excludes deferred rent, related party management fees, interest expense, and certain other non-cash adjustments, including the accretion of acquired below-market leases and the amortization of acquired above-market leases and below-market ground lease intangibles. Management uses NOI as a supplemental performance measure of our assets and believes it provides useful information to investors because it reflects only those revenue and expense items that are incurred at the asset level, excluding non-cash items. In addition, NOI is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets. However, because NOI excludes depreciation and amortization and captures neither the changes in the value of our assets that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our assets, all of which have real economic effect and could materially impact the financial performance of our assets, the utility of NOI as a measure of the operating performance of our assets is limited. NOI presented by us may not be comparable to NOI reported by other REITs that define these measures differently. We believe to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) attributable to common shareholders as presented in our financial statements. NOI should not be considered as an alternative to net income (loss) attributable to common shareholders as an indication of our performance or to cash flows as a measure of liquidity or our ability to make distributions. Annualized NOI, for all assets except Crystal City Marriott, represents NOI for the three months ended March 31, 2021 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, 2021. 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.

"Non-same store" refers to all operating assets excluded from the same store pool.

"Same store" refers to the pool of assets that were In-service for the entirety of both periods being compared, which excludes assets for which significant redevelopment, renovation, or repositioning occurred during either of the periods being compared.

Definitions

"GAAP" refers to accounting principles generally accepted in the United States of America.

"In-service" refers to commercial or multifamily assets that are at or above 90% leased or have been operating and collecting rent for more than 12 months as of March 31, 2021.

"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.

"JBG Legacy Funds" refers to the legacy funds formerly organized by The JBG Companies.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
in thousands		March 31, 2021				December 31, 2020
ASSETS
Real estate, at cost:
Land and improvements		$	1,384,157			$	1,391,472
Buildings and improvements			4,309,606				4,341,103
Construction in progress, including land			285,206				268,056
			5,978,969				6,000,631
Less accumulated depreciation			(1,249,613	)			(1,232,690	)
Real estate, net			4,729,356				4,767,941
Cash and cash equivalents			208,708				225,600
Restricted cash			39,839				37,736
Tenant and other receivables			45,567				55,903
Deferred rent receivable			177,043				170,547
Investments in unconsolidated real estate ventures			455,476				461,369
Other assets, net			289,452				286,575
Assets held for sale			73,876				73,876
TOTAL ASSETS		$	6,019,317			$	6,079,547
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgages payable, net		$	1,591,883			$	1,593,738
Revolving credit facility			—				—
Unsecured term loans, net			398,151				397,979
Accounts payable and accrued expenses			95,813				103,102
Other liabilities, net			203,484				247,774
Liabilities related to assets held for sale			213				—
Total liabilities			2,289,544				2,342,593
Commitments and contingencies
Redeemable noncontrolling interests			552,927				530,748
Total equity			3,176,846				3,206,206
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY		$	6,019,317			$	6,079,547

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Note: For complete financial statements, please refer to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
in thousands, except per share data		Three Months Ended March 31,
		2021				2020
REVENUE
Property rental		$	122,241			$	120,380
Third-party real estate services, including reimbursements			38,107				29,716
Other revenue			4,941				8,011
Total revenue			165,289				158,107
EXPENSES
Depreciation and amortization			64,726				48,489
Property operating			34,731				34,503
Real estate taxes			18,310				18,199
General and administrative:
Corporate and other			12,475				13,176
Third-party real estate services			28,936				28,814
Share-based compensation related to Formation Transaction and special equity awards			4,945				9,441
Transaction and other costs			3,690				5,309
Total expenses			167,813				157,931
OTHER INCOME (EXPENSE)
Loss from unconsolidated real estate ventures, net			(943	)			(2,692	)
Interest and other income, net			9				907
Interest expense			(16,296	)			(12,005	)
Gain on sale of real estate			—				59,477
Loss on extinguishment of debt			—				(33	)
Total other income (expense)			(17,230	)			45,654
INCOME (LOSS) BEFORE INCOME TAX (EXPENSE) BENEFIT			(19,754	)			45,830
Income tax (expense) benefit			(4,315	)			2,345
NET INCOME (LOSS)			(24,069	)			48,175
Net (income) loss attributable to redeemable noncontrolling interests			2,230				(5,250	)
Net loss attributable to noncontrolling interests			1,108				—
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	(20,731	)		$	42,925
EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED		$	(0.16	)		$	0.32
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic			131,540				134,542
Diluted			131,540				135,429

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Note: For complete financial statements, please refer to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.

EBITDA, EBITDAre AND ADJUSTED EBITDA (NON-GAAP)
(Unaudited)
dollars in thousands		Three Months Ended March 31,
		2021				2020
EBITDA, EBITDAre and Adjusted EBITDA
Net income (loss)		$	(24,069	)		$	48,175
Depreciation and amortization expense			64,726				48,489
Interest expense (1)			16,296				12,005
Income tax expense (benefit)			4,315				(2,345	)
Unconsolidated real estate ventures allocated share of above adjustments			10,164				10,837
EBITDA attributable to noncontrolling interests			1,071				3
EBITDA		$	72,503			$	117,164
Gain on sale of real estate			—				(59,477	)
EBITDAre		$	72,503			$	57,687
Transaction and other costs (2)			2,582				5,309
Loss on extinguishment of debt			—				33
Share-based compensation related to Formation Transaction and special equity awards			4,945				9,441
Earnings (losses) and distributions in excess of our investment in unconsolidated real estate venture			(330	)			374
Unconsolidated real estate ventures allocated share of above adjustments			31				718
Adjusted EBITDA		$	79,731			$	73,562
Net Debt to Annualized Adjusted EBITDA (3)			6.8	x			6.2	x
		March 31, 2021				March 31, 2020
Net Debt (at JBG SMITH Share)
Consolidated indebtedness (4)		$	1,979,208			$	1,784,353
Unconsolidated indebtedness (4)			401,389				339,227
Total consolidated and unconsolidated indebtedness			2,380,597				2,123,580
Less: cash and cash equivalents			223,142				306,988
Net Debt (at JBG SMITH Share)		$	2,157,455			$	1,816,592

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Note: All EBITDA measures as shown above are attributable to common limited partnership units ("OP Units").
(1)		Interest expense includes the amortization of deferred financing costs and the ineffective portion of any interest rate swaps or caps, net of capitalized interest.
(2)		Includes demolition costs, integration and severance costs, pursuit costs related to other completed, potential and pursued transactions, as well as other expenses. For the three months ended March 31, 2021, excludes $1.1 million of transaction costs attributable to noncontrolling interests. For the three months ended March 31, 2020, includes a charitable commitment of $4.0 million to the Washington Housing Conservancy, a non-profit that acquires and owns affordable workforce housing in the Washington, DC metropolitan area.
(3)		Quarterly adjusted EBITDA is annualized by multiplying by four calculated using the Net Debt below. Adjusting for the impact of COVID-19, we believe our net debt to annualized adjusted EBITDA would have been 5.8x for the three months ended March 31, 2021.
(4)		Net of premium/discount and deferred financing costs.

FFO, CORE FFO AND FAD (NON-GAAP)
(Unaudited)
in thousands, except per share data		Three Months Ended March 31,
		2021				2020
FFO and Core FFO
Net income (loss) attributable to common shareholders		$	(20,731	)		$	42,925
Net income (loss) attributable to redeemable noncontrolling interests			(2,230	)			5,250
Net loss attributable to noncontrolling interests			(1,108	)			—
Net income (loss)			(24,069	)			48,175
Gain on sale of real estate			—				(59,477	)
Real estate depreciation and amortization			62,500				45,662
Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures			7,311				6,882
FFO attributable to noncontrolling interests			1,071				3
FFO Attributable to OP Units		$	46,813			$	41,245
FFO attributable to redeemable noncontrolling interests			(4,485	)			(4,497	)
FFO attributable to common shareholders		$	42,328			$	36,748
FFO attributable to OP Units		$	46,813			$	41,245
Transaction and other costs, net of tax (1)			2,552				5,166
Gain from mark-to-market on derivative instruments			(133	)			(47	)
Loss on extinguishment of debt			—				33
Earnings (losses) and distributions in excess of our investment in unconsolidated real estate venture			(330	)			374
Share-based compensation related to Formation Transaction and special equity awards			4,945				9,441
Amortization of management contracts intangible, net of tax			1,072				1,143
Unconsolidated real estate ventures allocated share of above adjustments			(10	)			1,176
Core FFO Attributable to OP Units		$	54,909			$	58,531
Core FFO attributable to redeemable noncontrolling interests			(5,260	)			(6,382	)
Core FFO attributable to common shareholders		$	49,649			$	52,149
FFO per common share - diluted		$	0.32			$	0.27
Core FFO per common share - diluted		$	0.38			$	0.39
Weighted average shares - diluted (FFO and Core FFO)			131,542				135,429

See footnotes under table below.

FFO, CORE FFO AND FAD (NON-GAAP)
(Unaudited)
in thousands, except per share data		Three Months Ended March 31,
		2021				2020
FAD
Core FFO attributable to OP Units		$	54,909			$	58,531
Recurring capital expenditures and second-generation tenant improvements and leasing commissions (2)			(10,431	)			(9,805	)
Straight-line and other rent adjustments (3)			(4,765	)			(3,545	)
Third-party lease liability assumption payments			(678	)			(1,460	)
Share-based compensation expense			8,070				7,730
Amortization of debt issuance costs			1,105				622
Unconsolidated real estate ventures allocated share of above adjustments			(1,326	)			(1,498	)
Non-real estate depreciation and amortization			750				1,254
FAD available to OP Units (A)		$	47,634			$	51,829
Distributions to common shareholders and unitholders (B)		$	35,435			$	34,011
FAD Payout Ratio (B÷A) (4)			74.4	%			65.6	%
Capital Expenditures
Maintenance and recurring capital expenditures		$	3,926			$	2,558
Share of maintenance and recurring capital expenditures from unconsolidated real estate ventures			47				149
Second-generation tenant improvements and leasing commissions			6,064				6,943
Share of second-generation tenant improvements and leasing commissions from unconsolidated real estate ventures			394				155
Recurring capital expenditures and second-generation tenant improvements and leasing commissions			10,431				9,805
Non-recurring capital expenditures			2,836				6,187
Share of non-recurring capital expenditures from unconsolidated real estate ventures			51				102
First-generation tenant improvements and leasing commissions			835				11,847
Share of first-generation tenant improvements and leasing commissions from unconsolidated real estate ventures			1,192				770
Non-recurring capital expenditures			4,914				18,906
Total JBG SMITH Share of Capital Expenditures		$	15,345			$	28,711

_________________
(1)		Includes demolition costs, integration and severance costs, pursuit costs related to other completed, potential and pursued transactions, as well as other expenses. For the three months ended March 31, 2021, excludes $1.1 million of transaction costs attributable to noncontrolling interests. For the three months ended March 31, 2020, includes a charitable commitment of $4.0 million to the Washington Housing Conservancy, a non-profit that acquires and owns affordable workforce housing in the Washington, DC metropolitan area.
(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 timing of capital expenditures, the commencement of new leases and the seasonality of our operations.

NOI RECONCILIATIONS (NON-GAAP)
(Unaudited)
dollars in thousands		Three Months Ended March 31,
		2021				2020
Net income (loss) attributable to common shareholders		$	(20,731	)		$	42,925
Add:
Depreciation and amortization expense			64,726				48,489
General and administrative expense:
Corporate and other			12,475				13,176
Third-party real estate services			28,936				28,814
Share-based compensation related to Formation Transaction and special equity awards			4,945				9,441
Transaction and other costs			3,690				5,309
Interest expense			16,296				12,005
Loss on extinguishment of debt			—				33
Income tax expense (benefit)			4,315				(2,345	)
Net income (loss) attributable to redeemable noncontrolling interests			(2,230	)			5,250
Net loss attributable to noncontrolling interests			(1,108	)			—
Less:
Third-party real estate services, including reimbursements revenue			38,107				29,716
Other revenue			2,186				1,630
Loss from unconsolidated real estate ventures, net			(943	)			(2,692	)
Interest and other income, net			9				907
Gain on sale of real estate			—				59,477
Consolidated NOI			71,955				74,059
NOI attributable to unconsolidated real estate ventures at our share			7,512				8,588
Non-cash rent adjustments (1)			(4,765	)			(3,545	)
Other adjustments (2)			4,738				2,834
Total adjustments			7,485				7,877
NOI		$	79,440			$	81,936
Less: out-of-service NOI loss (3)			(1,361	)			(1,427	)
Operating Portfolio NOI		$	80,801			$	83,363
Non-same store NOI (4)			4,921				(192	)
Same store NOI (5)		$	75,880			$	83,555
Change in same store NOI			(9.2	)%
Number of properties in same store pool			56

_________________
(1)		Adjustment to exclude straight-line rent, above/below market lease amortization and lease incentive amortization.
(2)		Adjustment to include other revenue and payments associated with assumed lease liabilities related to operating properties and to exclude commercial lease termination revenue and allocated corporate general and administrative expenses to operating properties.
(3)		Includes the results of our Under-Construction assets, and Near-Term and Future Development Pipelines.
(4)		Includes the results of properties that were not In-service for the entirety of both periods being compared and properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared.
(5)		Includes the results of the properties that are owned, operated and In-service for the entirety of both periods being compared.

 

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