JBG Smith Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2020

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

For the transition period from ___________ to ___________

Commission file number 001-37994

JBG SMITH PROPERTIES

________________________________________________________________________________

(Exact name of Registrant as specified in its charter)

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

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

_______________________________

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

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

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

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

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

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

Emerging growth company ☐

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

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

As of July 30, 2020, JBG SMITH Properties had 133,789,614 common shares outstanding.

Table of Contents

JBG SMITH PROPERTIES

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED JUNE 30, 2020

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	Page
	Condensed Consolidated Balance Sheets (unaudited) as of June 30, 2020 and December 31, 2019	3
	Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 2020 and 2019	4
	Condensed Consolidated Statements of Comprehensive Loss (unaudited) for the three and six months ended June 30, 2020 and 2019	5
	Condensed Consolidated Statements of Equity (unaudited) for the three and six months ended June 30, 2020 and 2019	6
	Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2020 and 2019	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	51
Item 4.	Controls and Procedures	52

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	56
Item 5.	Other Information	57
Item 6.	Exhibits	58
	Signatures	59

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements

JBG SMITH PROPERTIES

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except par value amounts)


	June 30, 2020		December 31, 2019
ASSETS
Real estate, at cost:
Land and improvements	$	1,285,415	$	1,240,455
Buildings and improvements		4,065,543		3,880,973
Construction in progress, including land		563,133		654,091
		5,914,091		5,775,519
Less accumulated depreciation		(1,194,743)		(1,119,571)
Real estate, net		4,719,348		4,655,948
Cash and cash equivalents		710,677		126,413
Restricted cash		20,356		16,103
Tenant and other receivables, net		56,102		52,941
Deferred rent receivable, net		177,951		169,721
Investments in unconsolidated real estate ventures		464,437		543,026
Other assets, net		273,030		253,687
Assets held for sale		73,876		168,412
TOTAL ASSETS	$	6,495,777	$	5,986,251

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgages payable, net	$	1,312,524	$	1,125,777
Revolving credit facility		500,000		200,000
Unsecured term loans, net		397,637		297,295
Accounts payable and accrued expenses		125,433		157,702
Other liabilities, net		220,414		206,042
Total liabilities		2,556,008		1,986,816
Commitments and contingencies
Redeemable noncontrolling interests		499,083		612,758
Shareholders' equity:
Preferred shares, $0.01 par value - 200,000 shares authorized, none issued		—		—
Common shares, $0.01 par value - 500,000 shares authorized; 133,708 and 134,148 shares issued and outstanding as of June 30, 2020 and December 31, 2019		1,338		1,342
Additional paid-in capital		3,742,205		3,633,042
Accumulated deficit		(255,162)		(231,164)
Accumulated other comprehensive loss		(47,886)		(16,744)
Total shareholders' equity of JBG SMITH Properties		3,440,495		3,386,476
Noncontrolling interests in consolidated subsidiaries		191		201
Total equity		3,440,686		3,386,677
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	6,495,777	$	5,986,251

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

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JBG SMITH PROPERTIES

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
REVENUE
Property rental	$	115,459	$	122,326	$	235,839	$	241,739
Third-party real estate services, including reimbursements		27,167		29,487		56,883		57,178
Other revenue		2,326		8,804		10,337		16,899
Total revenue		144,952		160,617		303,059		315,816
EXPENSES
Depreciation and amortization		52,616		45,995		101,105		94,714
Property operating		33,792		32,113		68,295		64,287
Real estate taxes		17,869		18,266		36,068		35,501
General and administrative:
Corporate and other		13,216		11,559		26,392		23,873
Third-party real estate services		29,239		28,710		58,053		56,776
Share-based compensation related to Formation Transaction and special equity awards		8,858		9,523		18,299		20,654
Transaction and other costs		1,372		2,974		6,681		7,869
Total expenses		156,962		149,140		314,893		303,674
OTHER INCOME (EXPENSE)
Income (loss) from unconsolidated real estate ventures, net		(13,485)		(1,810)		(16,177)		1,791
Interest and other income, net		114		2,052		1,021		3,003
Interest expense		(15,770)		(13,107)		(27,775)		(30,281)
Gain on sale of real estate		—		—		59,477		39,033
Loss on extinguishment of debt		—		(1,889)		(33)		(1,889)
Total other income (expense)		(29,141)		(14,754)		16,513		11,657
INCOME (LOSS) BEFORE INCOME TAX (EXPENSE) BENEFIT		(41,151)		(3,277)		4,679		23,799
Income tax (expense) benefit		888		(51)		3,233		1,121
NET INCOME (LOSS)		(40,263)		(3,328)		7,912		24,920
Net (income) loss attributable to redeemable noncontrolling interests		3,483		288		(1,767)		(3,099)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(36,780)	$	(3,040)	$	6,145	$	21,821
EARNINGS (LOSS) PER COMMON SHARE:
Basic	$	(0.28)	$	(0.03)	$	0.04	$	0.16
Diluted	$	(0.28)	$	(0.03)	$	0.04	$	0.16
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic		133,613		131,754		134,078		127,189
Diluted		133,613		131,754		134,078		127,189

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

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JBG SMITH PROPERTIES

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

(In thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
NET INCOME (LOSS)	$	(40,263)	$	(3,328)	$	7,912	$	24,920
OTHER COMPREHENSIVE LOSS:
Change in fair value of derivative financial instruments		(5,283)		(16,256)		(39,211)		(26,952)
Reclassification of net (income) loss on derivative financial instruments from accumulated other comprehensive loss into interest expense		3,156		(951)		4,314		(1,790)
Other comprehensive loss		(2,127)		(17,207)		(34,897)		(28,742)
COMPREHENSIVE LOSS		(42,390)		(20,535)		(26,985)		(3,822)
Net (income) loss attributable to redeemable noncontrolling interests		3,483		288		(1,767)		(3,099)
Other comprehensive loss attributable to redeemable noncontrolling interests		182		1,503		3,755		2,886
COMPREHENSIVE LOSS ATTRIBUTABLE TO JBG SMITH PROPERTIES	$	(38,725)	$	(18,744)	$	(24,997)	$	(4,035)

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

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JBG SMITH PROPERTIES

Condensed Consolidated Statements of Equity

(Unaudited)

(In thousands)


								Accumulated		Noncontrolling
				Additional				Other		Interests in
	Common Shares			Paid-In		Accumulated		Comprehensive		Consolidated		Total
	Shares	Amount		Capital		Deficit		Loss		Subsidiaries		Equity
BALANCE AS OF APRIL 1, 2020	133,517	$	1,336	$	3,723,795	$	(188,239)	$	(45,941)	$	203	$	3,491,154
Net loss attributable to common shareholders and noncontrolling interests	—		—		—		(36,780)		—		—		(36,780)
Conversion of common limited partnership units to common shares	156		2		4,750		—		—		—		4,752
Common shares repurchased	—		—		(15)		—		—		—		(15)
Common shares issued pursuant to Employee Share Purchase Plan ("ESPP")	35		—		1,002		—		—		—		1,002
Dividends declared on common shares ($0.225 per common share)	—		—		—		(30,143)		—		—		(30,143)
Contributions from (distributions to) noncontrolling interests	—		—		—		—		—		(12)		(12)
Redeemable noncontrolling interests redemption value adjustment and other comprehensive loss allocation	—		—		12,673		—		182		—		12,855
Other comprehensive loss	—		—		—		—		(2,127)		—		(2,127)
BALANCE AS OF JUNE 30, 2020	133,708	$	1,338	$	3,742,205	$	(255,162)	$	(47,886)	$	191	$	3,440,686

BALANCE AS OF APRIL 1, 2019	122,594	$	1,227	$	3,150,133	$	(151,157)	$	(3,452)	$	365	$	2,997,116
Net loss attributable to common shareholders and noncontrolling interests	—		—		—		(3,040)		—		—		(3,040)
Common shares issued	11,500		115		472,665		—		—		—		472,780
Conversion of common limited partnership units to common shares	7		—		316		—		—		—		316
Common shares issued pursuant to ESPP	26		—		834		—		—		—		834
Dividends declared on common shares ($0.225 per common share)	—		—		—		(30,176)		—		—		(30,176)
Contributions from (distributions to) noncontrolling interests	—		—		—		—		—		(19)		(19)
Redeemable noncontrolling interests redemption value adjustment and other comprehensive loss allocation	—		—		20,751		—		1,503		—		22,254
Other comprehensive loss	—		—		—		—		(17,207)		—		(17,207)
BALANCE AS OF JUNE 30, 2019	134,127	$	1,342	$	3,644,699	$	(184,373)	$	(19,156)	$	346	$	3,442,858

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

Table of Contents

JBG SMITH PROPERTIES

Condensed Consolidated Statements of Equity

(Unaudited)

(In thousands)


								Accumulated
								Other		Noncontrolling
				Additional				Comprehensive		Interests in
	Common Shares			Paid-In		Accumulated		Income		Consolidated		Total
	Shares	Amount		Capital		Deficit		(Loss)		Subsidiaries		Equity
BALANCE AS OF JANUARY 1, 2020	134,148	$	1,342	$	3,633,042	$	(231,164)	$	(16,744)	$	201	$	3,386,677
Net income attributable to common shareholders and noncontrolling interests	—		—		—		6,145		—		—		6,145
Conversion of common limited partnership units to common shares	943		10		35,868		—		—		—		35,878
Common shares repurchased	(1,418)		(14)		(41,178)		—		—		—		(41,192)
Common shares issued pursuant to ESPP	35		—		1,134		—		—		—		1,134
Dividends declared on common shares ($0.225 per common share)	—		—		—		(30,143)		—		—		(30,143)
Contributions from (distributions to) noncontrolling interests	—		—		—		—		—		(10)		(10)
Redeemable noncontrolling interests redemption value adjustment and other comprehensive loss allocation	—		—		113,339		—		3,755		—		117,094
Other comprehensive loss	—		—		—		—		(34,897)		—		(34,897)
BALANCE AS OF JUNE 30, 2020	133,708	$	1,338	$	3,742,205	$	(255,162)	$	(47,886)	$	191	$	3,440,686

BALANCE AS OF JANUARY 1, 2019	120,937	$	1,210	$	3,155,256	$	(176,018)	$	6,700	$	204	$	2,987,352
Net income attributable to common shareholders and noncontrolling interests	—		—		—		21,821		—		—		21,821
Common shares issued	11,500		115		472,665		—		—		—		472,780
Conversion of common limited partnership units to common shares	1,664		17		57,301		—		—		—		57,318
Common shares issued pursuant to ESPP	26		—		938		—		—		—		938
Dividends declared on common shares ($0.225 per common share)	—		—		—		(30,176)		—		—		(30,176)
Contributions from (distributions to) noncontrolling interests	—		—		—		—		—		142		142
Redeemable noncontrolling interests redemption value adjustment and other comprehensive loss allocation	—		—		(41,461)		—		2,886		—		(38,575)
Other comprehensive loss	—		—		—		—		(28,742)		—		(28,742)
BALANCE AS OF JUNE 30, 2019	134,127	$	1,342	$	3,644,699	$	(184,373)	$	(19,156)	$	346	$	3,442,858

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

Table of Contents

JBG SMITH PROPERTIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Six Months Ended June 30,
	2020		2019
OPERATING ACTIVITIES:
Net income	$	7,912	$	24,920
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense		38,174		32,114
Depreciation and amortization, including amortization of debt issuance costs		102,896		97,053
Deferred rent		(11,728)		(18,342)
(Income) loss from unconsolidated real estate ventures, net		16,177		(1,791)
Amortization of market lease intangibles, net		(260)		(272)
Amortization of lease incentives		3,525		3,789
Loss on extinguishment of debt		33		1,889
Gain on sale of real estate		(59,477)		(39,033)
Net unrealized loss (gain) on ineffective derivative financial instruments		(30)		48
Losses on operating lease and other receivables		10,614		497
Return on capital from unconsolidated real estate ventures		1,877		1,493
Other non-cash items		104		271
Changes in operating assets and liabilities:
Tenant and other receivables		(10,198)		(6,232)
Other assets, net		(87)		(2,940)
Accounts payable and accrued expenses		(1,617)		(28,513)
Other liabilities, net		(12,396)		(12,168)
Net cash provided by operating activities		85,519		52,783
INVESTING ACTIVITIES:
Development costs, construction in progress and real estate additions		(181,232)		(181,007)
Deposits for real estate acquisitions		—		(8,525)
Proceeds from sale of real estate		154,493		117,676
Distributions of capital from unconsolidated real estate ventures		70,818		7,557
Investments in unconsolidated real estate ventures		(10,733)		(4,409)
Net cash provided by (used in) investing activities		33,346

Price	39.15	EPS	0
Shares	134	P/E	147
MCap	5,251	P/FCF	47
Net Debt	-244	EBIT	76
TEV	5,007	TEV/EBIT	66
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-08-05
10-Q	2020-03-31	Filed 2020-05-05
10-K	2019-12-31	Filed 2020-02-25
10-Q	2019-09-30	Filed 2019-11-05
10-Q	2019-06-30	Filed 2019-08-06
10-Q	2019-03-31	Filed 2019-05-07
10-K	2018-12-31	Filed 2019-02-26
10-Q	2018-09-30	Filed 2018-11-07
10-Q	2018-06-30	Filed 2018-08-09
10-Q	2018-03-31	Filed 2018-05-09
10-K	2017-12-31	Filed 2018-03-12
10-Q	2017-09-30	Filed 2017-11-13
10-Q	2017-06-30	Filed 2017-08-14

8-K	2020-08-04	Earnings, Exhibits
8-K	2020-05-05
8-K	2020-04-30
8-K	2020-03-12
8-K	2020-02-25
8-K	2020-02-19
8-K	2020-01-07
8-K	2019-11-12
8-K	2019-11-05
8-K	2019-08-06
8-K	2019-05-14
8-K	2019-05-07
8-K	2019-05-02
8-K	2019-04-15
8-K	2019-04-15
8-K	2019-04-02
8-K	2019-02-26
8-K	2019-02-26
8-K	2018-12-13
8-K	2018-11-07
8-K	2018-08-09
8-K	2018-07-30
8-K	2018-07-02
8-K	2018-07-02
8-K	2018-06-04
8-K	2018-05-09
8-K	2018-05-03
8-K	2018-03-19
8-K	2018-03-12
8-K	2018-03-01

EX-10.1	jbgs-20200630xex10d1.htm
EX-31.1	jbgs-20200630xex31d1.htm
EX-31.2	jbgs-20200630xex31d2.htm
EX-32.1	jbgs-20200630xex32d1.htm

JBGS 10Q Quarterly Report

JBG Smith Earnings 2020-06-30