JBG SMITH Properties [JBGS] Filings

10-Q 1 jbgs-20210930x10q.htm 10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2021

☐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 October 29, 2021, JBG SMITH Properties had 129,725,289 common shares outstanding.

Table of Contents

JBG SMITH PROPERTIES

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED SEPTEMBER 30, 2021

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	Page
	Condensed Consolidated Balance Sheets (unaudited) as of September 30, 2021 and December 31, 2020	3
	Condensed Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2021 and 2020	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and nine months ended September 30, 2021 and 2020	5
	Condensed Consolidated Statements of Equity (unaudited) for the three and nine months ended September 30, 2021 and 2020	6
	Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2021 and 2020	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	10

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	49
Item 4.	Controls and Procedures	50

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults Upon Senior Securities	51
Item 4.	Mine Safety Disclosures	51
Item 5.	Other Information	51
Item 6.	Exhibits	52
	Signatures	53

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)


	September 30, 2021		December 31, 2020
ASSETS
Real estate, at cost:
Land and improvements	$	1,358,299	$	1,391,472
Buildings and improvements		4,368,477		4,341,103
Construction in progress, including land		299,359		268,056
		6,026,135		6,000,631
Less: accumulated depreciation		(1,346,107)		(1,232,690)
Real estate, net		4,680,028		4,767,941
Cash and cash equivalents		194,277		225,600
Restricted cash		34,900		37,736
Tenant and other receivables		51,128		55,903
Deferred rent receivable		187,882		170,547
Investments in unconsolidated real estate ventures		486,052		461,369
Other assets, net		300,537		286,575
Assets held for sale		74,174		73,876
TOTAL ASSETS	$	6,008,978	$	6,079,547

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgages payable, net	$	1,674,285	$	1,593,738
Revolving credit facility		—		—
Unsecured term loans, net		398,493		397,979
Accounts payable and accrued expenses		105,307		103,102
Other liabilities, net		200,204		247,774
Total liabilities		2,378,289		2,342,593
Commitments and contingencies
Redeemable noncontrolling interests		526,913		530,748
Shareholders' equity:
Preferred shares, $0.01 par value - 200,000 shares authorized; none issued		—		—
Common shares, $0.01 par value - 500,000 shares authorized; 129,704 and 131,778 shares issued and outstanding as of September 30, 2021 and December 31, 2020		1,298		1,319
Additional paid-in capital		3,606,462		3,657,643
Accumulated deficit		(495,033)		(412,944)
Accumulated other comprehensive loss		(25,446)		(39,979)
Total shareholders' equity of JBG SMITH Properties		3,087,281		3,206,039
Noncontrolling interests		16,495		167
Total equity		3,103,776		3,206,206
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	6,008,978	$	6,079,547

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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
REVENUE
Property rental	$	125,900	$	118,680	$	370,960	$	354,519
Third-party real estate services, including reimbursements		25,842		26,987		90,694		83,870
Other revenue		5,280		5,368		15,301		15,705
Total revenue		157,022		151,035		476,955		454,094
EXPENSES
Depreciation and amortization		56,726		56,481		178,130		157,586
Property operating		40,198		37,572		109,929		105,867
Real estate taxes		18,259		17,354		55,127		53,422
General and administrative:
Corporate and other		12,105		11,086		38,475		37,478
Third-party real estate services		25,542		28,207		80,035		86,260
Share-based compensation related to Formation Transaction and special equity awards		3,480		7,133		12,866		25,432
Transaction and other costs		2,951		845		8,911		7,526
Total expenses		159,261		158,678		483,473		473,571
OTHER INCOME (EXPENSE)
Income (loss) from unconsolidated real estate ventures, net		20,503		(965)		23,513		(17,142)
Interest and other income, net		192		—		163		1,021
Interest expense		(17,243)		(16,885)		(50,312)		(44,660)
Gain on sale of real estate		—		—		11,290		59,477
Loss on extinguishment of debt		—		—		—		(33)
Total other income (expense)		3,452		(17,850)		(15,346)		(1,337)
INCOME (LOSS) BEFORE INCOME TAX (EXPENSE) BENEFIT		1,213		(25,493)		(21,864)		(20,814)
Income tax (expense) benefit		(217)		488		(4,527)		3,721
NET INCOME (LOSS)		996		(25,005)		(26,391)		(17,093)
Net (income) loss attributable to redeemable noncontrolling interests		(103)		2,212		2,472		445
Net loss attributable to noncontrolling interests		—		—		1,108		—
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	893	$	(22,793)	$	(22,811)	$	(16,648)
EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED	$	0.00	$	(0.18)	$	(0.18)	$	(0.14)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED		131,351		133,620		131,456		133,924

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

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JBG SMITH PROPERTIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(In thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
NET INCOME (LOSS)	$	996	$	(25,005)	$	(26,391)	$	(17,093)
OTHER COMPREHENSIVE INCOME (LOSS):
Change in fair value of derivative financial instruments		(329)		(278)		4,678		(39,489)
Reclassification of net loss on derivative financial instruments from accumulated other comprehensive loss into interest expense		3,901		3,823		11,476		8,137
Other comprehensive income (loss)		3,572		3,545		16,154		(31,352)
COMPREHENSIVE INCOME (LOSS)		4,568		(21,460)		(10,237)		(48,445)
Net (income) loss attributable to redeemable noncontrolling interests		(103)		2,212		2,472		445
Net loss attributable to noncontrolling interests		—		—		1,108		—
Other comprehensive (income) loss attributable to redeemable noncontrolling interests		(413)		(309)		(1,621)		3,446
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO JBG SMITH PROPERTIES	$	4,052	$	(19,557)	$	(8,278)	$	(44,554)

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
				Additional				Other
	Common Shares			Paid-In		Accumulated		Comprehensive		Noncontrolling		Total
	Shares	Amount		Capital		Deficit		Loss		Interests		Equity
BALANCE AS OF JUNE 30, 2021	131,841	$	1,319	$	3,650,217	$	(466,230)	$	(28,605)	$	16,540	$	3,173,241
Net income attributable to common shareholders and noncontrolling interests	—		—		—		893		—		—		893
Conversion of common limited partnership units to common shares	180		2		5,668		—		—		—		5,670
Common shares repurchased	(2,317)		(23)		(68,907)		—		—		—		(68,930)
Common shares issued pursuant to employee incentive compensation plan and Employee Share Purchase Plan ("ESPP")	—		—		210		—		—		—		210
Dividends declared on common shares ($0.225 per common share)	—		—		—		(29,696)		—		—		(29,696)
Distributions to noncontrolling interests	—		—		—		—		—		(45)		(45)
Redeemable noncontrolling interests redemption value adjustment and other comprehensive income allocation	—		—		19,274		—		(413)		—		18,861
Other comprehensive income	—		—		—		—		3,572		—		3,572
BALANCE AS OF SEPTEMBER 30, 2021	129,704	$	1,298	$	3,606,462	$	(495,033)	$	(25,446)	$	16,495	$	3,103,776

BALANCE AS OF JUNE 30, 2020	133,708	$	1,338	$	3,742,205	$	(255,162)	$	(47,886)	$	191	$	3,440,686
Net loss attributable to common shareholders and noncontrolling interests	—		—		—		(22,793)		—		—		(22,793)
Conversion of common limited partnership units to common shares	169		2		4,794		—		—		—		4,796
Common shares repurchased	(1,439)		(15)		(38,362)		—		—		—		(38,377)
Common shares issued pursuant to ESPP	—		—		186		—		—		—		186
Dividends declared on common shares ($0.225 per common share)	—		—		—		(30,020)		—		—		(30,020)
Distributions to noncontrolling interests	—		—		—		—		—		(12)		(12)
Redeemable noncontrolling interests redemption value adjustment and other comprehensive income allocation	—		—		12,236		—		(309)		—		11,927
Other comprehensive income	—		—		—		—		3,545		—		3,545
BALANCE AS OF SEPTEMBER 30, 2020	132,438	$	1,325	$	3,721,059	$	(307,975)	$	(44,650)	$	179	$	3,369,938

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
				Additional				Other
	Common Shares			Paid-In		Accumulated		Comprehensive		Noncontrolling		Total
	Shares	Amount		Capital		Deficit		Loss		Interests		Equity
BALANCE AS OF DECEMBER 31, 2020	131,778	$	1,319	$	3,657,643	$	(412,944)	$	(39,979)	$	167	$	3,206,206
Net loss attributable to common shareholders and noncontrolling interests	—		—		—		(22,811)		—		(1,108)		(23,919)
Conversion of common limited partnership units to common shares	829		8		27,342		—		—		—		27,350
Common shares repurchased	(2,937)		(29)		(88,104)		—		—		—		(88,133)
Common shares issued pursuant to employee incentive compensation plan and ESPP	34		—		1,549		—		—		—		1,549
Dividends declared on common shares ($0.45 per common share)	—		—		—		(59,278)		—		—		(59,278)
Contributions from noncontrolling interests, net	—		—		—		—		—		17,436		17,436
Redeemable noncontrolling interests redemption value adjustment and other comprehensive income allocation	—		—		8,032		—		(1,621)		—		6,411
Other comprehensive income	—		—		—		—		16,154		—		16,154
BALANCE AS OF SEPTEMBER 30, 2021	129,704	$	1,298	$	3,606,462	$	(495,033)	$	(25,446)	$	16,495	$	3,103,776

BALANCE AS OF DECEMBER 31, 2019	134,148	$	1,342	$	3,633,042	$	(231,164)	$	(16,744)	$	201	$	3,386,677
Net loss attributable to common shareholders and noncontrolling interests	—		—		—		(16,648)		—		—		(16,648)
Conversion of common limited partnership units to common shares	1,112		12		40,662		—		—		—		40,674
Common shares repurchased	(2,857)		(29)		(79,540)		—		—		—		(79,569)
Common shares issued pursuant to ESPP	35		—		1,320		—		—		—		1,320
Dividends declared on common shares ($0.45 per common share)	—		—		—		(60,163)		—		—		(60,163)
Distributions to noncontrolling interests	—		—		—		—		—		(22)		(22)
Redeemable noncontrolling interests redemption value adjustment and other comprehensive loss allocation	—		—		125,575		—		3,446		—		129,021
Other comprehensive loss	—		—		—		—		(31,352)		—		(31,352)
BALANCE AS OF SEPTEMBER 30, 2020	132,438	$	1,325	$	3,721,059	$	(307,975)	$	(44,650)	$	179	$	3,369,938

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)


	Nine Months Ended September 30,
	2021		2020
OPERATING ACTIVITIES:
Net loss	$	(26,391)	$	(17,093)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Share-based compensation expense		38,320		53,183
Depreciation and amortization, including amortization of deferred financing costs		181,217		160,395
Deferred rent		(17,463)		(19,124)
(Income) loss from unconsolidated real estate ventures, net		(23,513)		17,142
Amortization of market lease intangibles, net		(896)		(356)
Amortization of lease incentives		6,083		5,144
Loss on extinguishment of debt		—		33
Gain on sale of real estate		(11,290)		(59,477)
Loss on operating lease and other receivables		1,071		14,750
Return on capital from unconsolidated real estate ventures		13,212		3,697
Other non-cash items		583		265
Changes in operating assets and liabilities:
Tenant and other receivables		3,704		(4,757)
Other assets, net		(12,059)		(11,566)
Accounts payable and accrued expenses		5,954		1,366
Other liabilities, net		(4,120)		(15,747)
Net cash provided by operating activities		154,412		127,855
INVESTING ACTIVITIES:
Development costs, construction in progress and real estate additions		(108,361)		(245,456)
Deposits for real estate and other acquisitions		(10,263)		(25,274)
Proceeds from sale of real estate		14,370		154,493
Distributions of capital from unconsolidated real estate ventures		40,188		70,818
Investments in unconsolidated real estate ventures and other		(32,685)		(12,277)
Net cash used in investing activities		(96,751)		(57,696)
FINANCING ACTIVITIES:
Borrowings under mortgages payable		85,000		580,105
Borrowings under revolving credit facility		—		500,000
Borrowings under unsecured term loans		—		100,000
Repayments of mortgages payable		(4,462)		(6,680)
Repayments of revolving credit facility		—		(700,000)
Debt issuance costs		(5,747)		(14,856)
Finance lease payments		—		(3,281)
Proceeds from common shares issued pursuant to ESPP		880		887
Common shares repurchased		(82,300)		(74,434)
Dividends paid to common shareholders		(88,928)		(90,347)
Distributions to redeemable noncontrolling interests		(13,705)		(11,333)
Distributions to noncontrolling interests		(22)		(23)
Contributions from noncontrolling interests		17,464		—
Net cash (used in) provided by financing activities		(91,820)		280,038
Net (decrease) increase in cash and cash equivalents and restricted cash		(34,159)		350,197
Cash and cash equivalents and restricted cash, beginning of period		263,336		142,516
Cash and cash equivalents and restricted cash, end of period	$	229,177	$	492,713
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD:
Cash and cash equivalents	$	194,277	$	455,111
Restricted cash		34,900		37,602
Cash and cash equivalents and restricted cash	$	229,177	$	492,713

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)


	Nine Months Ended September 30,
	2021		2020
SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION:
Cash paid for interest (net of capitalized interest of $4,854 and $11,545 in 2021 and 2020)	$	46,010	$	40,744
Accrued capital expenditures included in accounts payable and accrued expenses		41,660		51,092
Write-off of fully depreciated assets		46,278		29,393
Deconsolidation of real estate asset		26,476		—
Conversion of common limited partnership units to common shares		27,350		40,674
Derecognition of operating lease right-of-use assets		—		(13,151)
Derecognition of liabilities related to operating lease right-of-use assets		—		(13,151)
Recognition of finance lease right-of-use assets		—		42,354
Recognition of liabilities related to finance lease right-of-use assets		—		40,684
Cash paid for amounts included in the measurement of lease liabilities for operating leases		1,761

JBG SMITH Properties [JBGS] Filings
10-Q	[2021-11-02]
10-Q	[2021-08-03]
10-Q	[2021-05-04]
10-K	[2021-02-23]
10-Q	[2020-11-03]
10-Q	[2020-08-04]
10-Q	[2020-05-05]
10-K	[2020-02-25]
10-Q	[2019-11-05]
10-Q	[2019-08-06]
10-Q	[2019-05-07]
10-K	[2019-02-26]
10-Q	[2018-11-07]
10-Q	[2018-08-09]
10-Q	[2018-05-09]
10-K	[2018-03-12]
10-Q	[2017-11-13]
10-Q	[2017-08-14]