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 June 30, 2024 and
reported its financial results.
Additional information regarding our results of operations,
properties, and tenants can be found in our Second Quarter 2024
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.
Second Quarter 2024 Highlights
- Net income (loss), Funds From Operations ("FFO") and Core FFO
attributable to common shareholders were:
SECOND QUARTER AND
YEAR-TO-DATE COMPARISON
in millions, except per share amounts
Three Months Ended
Six Months Ended
June 30, 2024
June 30, 2023
June 30, 2024
June 30, 2023
Amount
Per Diluted Share
Amount
Per Diluted Share
Amount
Per Diluted Share
Amount
Per Diluted Share
Net income (loss) (1) (2)
$
(24.4
)
$
(0.27
)
$
(10.5
)
$
(0.10
)
$
(56.6
)
$
(0.63
)
$
10.6
$
0.09
FFO (2)
$
14.3
$
0.16
$
33.4
$
0.30
$
25.0
$
0.27
$
66.4
$
0.59
Core FFO
$
16.1
$
0.18
$
39.8
$
0.36
$
43.0
$
0.47
$
76.9
$
0.69
_____________
(1)
Includes gain on the sale of real estate
totaling $286,000 and $40.7 million recorded during the six months
ended June 30, 2024 and 2023.
(2)
Includes impairment loss of $1.0 million
and $18.2 million related to non-depreciable real estate assets
recorded during the three and six months ended June 30, 2024.
- Annualized Net Operating Income ("NOI") for the three months
ended June 30, 2024 was $286.4 million, compared to $307.5 million
for the three months ended March 31, 2024, at our share. Excluding
the assets that were sold or taken out of service, Annualized NOI
for the three months ended June 30, 2024 was $283.9 million,
compared to $292.6 million for the three months ended March 31,
2024, at our share.
- The decrease in Annualized NOI excluding the assets that were
sold or taken out of service was substantially attributable to (i)
tenant vacates and higher non-reimbursable operating expenses,
partially offset by higher parking revenue and lower bad debt
reserves in our commercial portfolio; and (ii) higher repair and
maintenance expense, unit turn costs, and marketing expense as a
result of higher expirations due to the seasonality in multifamily
leasing, partially offset by higher revenue in our multifamily
portfolio.
- Same Store NOI ("SSNOI") at our share increased 3.2%
quarter-over-quarter to $71.4 million for the three months ended
June 30, 2024.
- The increase in SSNOI was substantially attributable to (i)
higher rents and occupancy and lower concessions, partially offset
by higher operating expenses in our multifamily portfolio; and (ii)
lower real estate taxes and operating expenses, partially offset by
lower occupancy in our commercial portfolio.
Operating Portfolio
- The operating multifamily portfolio was 96.9% leased and 94.3%
occupied as of June 30, 2024, compared to 95.9% and 94.3% as of
March 31, 2024.
- In our multifamily portfolio, we increased effective rents by
4.6% blended across new and renewal leases and 8.6% upon renewal
for second quarter lease expirations while achieving a 50.9%
renewal rate.
- The operating commercial portfolio was 82.3% leased and 80.6%
occupied as of June 30, 2024, compared to 84.6% and 83.1% as of
March 31, 2024, at our share.
- Executed approximately 248,000 square feet of office leases at
our share during the three months ended June 30, 2024, including
approximately 166,000 square feet of new leases. Second-generation
leases generated a 2.0% rental rate increase on a cash basis and a
12.7% rental rate increase on a GAAP basis.
- Executed approximately 347,000 square feet of office leases at
our share during the six months ended June 30, 2024, including
approximately 197,000 square feet of new leases. Second-generation
leases generated a 1.6% rental rate increase on a cash basis and a
10.0% rental rate increase on a GAAP basis.
Development Portfolio
Under-Construction
- As of June 30, 2024, we had two multifamily assets under
construction consisting of 1,583 units at our share, including 1900
Crystal Drive comprising two towers, The Grace and Reva, which
delivered in the second quarter and was 49.5% leased as of July 28,
2024.
Development Pipeline
- As of June 30, 2024, we had 18 assets in the development
pipeline consisting of 9.3 million square feet of estimated
potential development density at our share.
Third-Party Asset Management and Real Estate Services
Business
- For the three months ended June 30, 2024, revenue from
third-party real estate services, including reimbursements, was
$17.4 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 $8.1
million, primarily driven by $5.1 million of property and asset
management fees, $1.3 million of other service revenue and $1.1
million of leasing fees.
Balance Sheet
- As of June 30, 2024, our total enterprise value was
approximately $4.1 billion, comprising 101.1 million common shares
and units valued at $1.5 billion, and debt (net of premium /
(discount) and deferred financing costs) at our share of $2.7
billion, less cash and cash equivalents at our share of $169.3
million.
- As of June 30, 2024, we had $163.5 million of cash and cash
equivalents ($169.3 million of cash and cash equivalents at our
share), and $694.3 million of availability under our revolving
credit facility.
- Net Debt to annualized Adjusted EBITDA at our share for the
three months ended June 30, 2024 was 11.9x, and our Net Debt /
total enterprise value was 62.1% as of June 30, 2024.
Investing and Financing Activities
- We repurchased and retired 4.7 million common shares for $68.7
million, a weighted average purchase price per share of $14.62. In
July 2024, through the date of this release, we repurchased and
retired 0.9 million common shares for $14.0 million, a weighted
average purchase price per share of $15.55, pursuant to a
repurchase plan under Rule 10b5-1 of the Securities Exchange Act of
1934, as amended.
Dividends
- On July 24, 2024, our Board of Trustees declared a quarterly
dividend of $0.175 per common share, payable on August 21, 2024 to
shareholders of record as of August 7, 2024.
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, most notably National Landing. Through
an intense focus on placemaking, JBG SMITH cultivates vibrant,
amenity-rich, walkable neighborhoods throughout the Washington, DC
metropolitan area. Approximately 75.0% 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 our retail and
digital placemaking initiatives and public infrastructure
improvements. JBG SMITH's dynamic portfolio currently comprises
13.4 million square feet of high-growth multifamily, office and
retail assets at share, 98% of which are Metro-served. It also
maintains a development pipeline encompassing 9.3 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 release. We also note the following forward-looking
statements: 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; 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; and our plans to
maintain carbon neutral operations annually.
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, 2023 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 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.
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
caps) 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 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
non-depreciable real estate, 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, litigation settlement 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
non-depreciable real estate, 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,
litigation settlement 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 adjusted for 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.
"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 represents NOI
for the three months ended June 30, 2024 multiplied by four.
Management believes Annualized NOI provides useful information in
understanding our financial performance over a 12‑month period,
however, investors and other users are cautioned against
attributing undue certainty to our calculation of Annualized NOI.
Actual NOI for any 12‑month period will depend on a number of
factors beyond our ability to control or predict, including general
capital markets and economic conditions, any bankruptcy,
insolvency, default or other failure to pay rent by one or more of
our tenants and the destruction of one or more of our assets due to
terrorist attack, natural disaster or other casualty, among others.
We do not undertake any obligation to update our calculation to
reflect events or circumstances occurring after the date of this
earnings release. There can be no assurance that the Annualized NOI
shown will reflect our actual results of operations over any
12‑month period.
Definitions
"Development Pipeline" refers to 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 June 30, 2024. 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 multifamily or commercial
operating assets that are at or above 90% leased or have been
operating and collecting rent for more than 12 months as of June
30, 2024.
"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,
excluding 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, and severance and other costs.
"Under-Construction" refers to assets that were under
construction during the three months ended June 30, 2024.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
in thousands
June 30, 2024
December 31, 2023
ASSETS
Real estate, at cost:
Land and improvements
$
1,196,065
$
1,194,737
Buildings and improvements
4,323,620
4,021,322
Construction in progress, including
land
425,653
659,103
5,945,338
5,875,162
Less: accumulated depreciation
(1,418,923
)
(1,338,403
)
Real estate, net
4,526,415
4,536,759
Cash and cash equivalents
163,536
164,773
Restricted cash
42,366
35,668
Tenant and other receivables
31,427
44,231
Deferred rent receivable
181,295
171,229
Investments in unconsolidated real estate
ventures
101,043
264,281
Deferred leasing costs, net
80,179
81,477
Intangible assets, net
52,421
56,616
Other assets, net
146,434
163,481
TOTAL ASSETS
$
5,325,116
$
5,518,515
LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS AND EQUITY
Liabilities:
Mortgage loans, net
$
1,876,459
$
1,783,014
Revolving credit facility
40,000
62,000
Term loans, net
717,610
717,172
Accounts payable and accrued expenses
107,810
124,874
Other liabilities, net
111,982
138,869
Total liabilities
2,853,861
2,825,929
Commitments and contingencies
Redeemable noncontrolling interests
436,673
440,737
Total equity
2,034,582
2,251,849
TOTAL LIABILITIES, REDEEMABLE
NONCONTROLLING INTERESTS AND EQUITY
$
5,325,116
$
5,518,515
_____________
Note: For complete financial statements, please refer to our
Quarterly Report on Form 10-Q for the quarter ended June 30,
2024.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
in thousands, except per share data
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
REVENUE
Property rental
$
112,536
$
120,592
$
235,172
$
244,625
Third-party real estate services,
including reimbursements
17,397
22,862
35,265
45,646
Other revenue
5,387
8,641
10,067
14,786
Total revenue
135,320
152,095
280,504
305,057
EXPENSES
Depreciation and amortization
51,306
49,218
108,161
102,649
Property operating
36,254
35,912
71,533
71,524
Real estate taxes
14,399
14,424
28,194
29,648
General and administrative:
Corporate and other
17,001
15,093
31,974
31,216
Third-party real estate services
18,650
22,105
40,977
45,928
Share-based compensation related to
Formation Transaction and special equity awards
—
—
—
351
Transaction and other costs
824
3,492
2,338
5,964
Total expenses
138,434
140,244
283,177
287,280
OTHER INCOME (EXPENSE)
Income (loss) from unconsolidated real
estate ventures, net
(226
)
510
749
943
Interest and other income, net
3,432
2,281
5,532
6,358
Interest expense
(31,973
)
(25,835
)
(62,133
)
(52,677
)
Gain on the sale of real estate, net
89
—
286
40,700
Loss on the extinguishment of debt
—
(450
)
—
(450
)
Impairment loss
(1,025
)
—
(18,236
)
—
Total other income (expense)
(29,703
)
(23,494
)
(73,802
)
(5,126
)
INCOME (LOSS) BEFORE INCOME TAX (EXPENSE)
BENEFIT
(32,817
)
(11,643
)
(76,475
)
12,651
Income tax (expense) benefit
(597
)
(611
)
871
(595
)
NET INCOME (LOSS)
(33,414
)
(12,254
)
(75,604
)
12,056
Net (income) loss attributable to
redeemable noncontrolling interests
3,454
1,398
7,988
(1,965
)
Net loss attributable to noncontrolling
interests
5,587
311
10,967
535
NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON SHAREHOLDERS
$
(24,373
)
$
(10,545
)
$
(56,649
)
$
10,626
EARNINGS (LOSS) PER COMMON SHARE - BASIC
AND DILUTED
$
(0.27
)
$
(0.10
)
$
(0.63
)
$
0.09
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC AND DILUTED
91,030
109,695
91,832
111,862
_____________
Note: For complete financial statements, please refer to our
Quarterly Report on Form 10-Q for the quarter ended June 30,
2024.
EBITDA, EBITDAre AND ADJUSTED
EBITDA RECONCILIATIONS (NON-GAAP)
(Unaudited)
dollars in thousands
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
EBITDA, EBITDAre and Adjusted
EBITDA
Net income (loss)
$
(33,414
)
$
(12,254
)
$
(75,604
)
$
12,056
Depreciation and amortization expense
51,306
49,218
108,161
102,649
Interest expense
31,973
25,835
62,133
52,677
Income tax expense (benefit)
597
611
(871
)
595
Unconsolidated real estate ventures
allocated share of above adjustments
1,830
4,618
4,382
8,282
EBITDA attributable to noncontrolling
interests
—
(32
)
—
(2
)
EBITDA
$
52,292
$
67,996
$
98,201
$
176,257
Gain on the sale of real estate, net
(89
)
—
(286
)
(40,700
)
Gain on the sale of unconsolidated real
estate assets
—
—
(480
)
—
EBITDAre
$
52,203
$
67,996
$
97,435
$
135,557
Transaction and other costs, net of
noncontrolling interests (1)
824
3,492
2,338
5,964
(Income) loss from investments, net
(614
)
526
(672
)
(1,335
)
Impairment loss related to non-depreciable
real estate
1,025
—
18,236
—
Loss on the extinguishment of debt
—
450
—
450
Share-based compensation related to
Formation Transaction and special equity awards
—
—
—
351
Earnings and distributions in excess of
our investment in unconsolidated real estate venture
(458
)
(341
)
(671
)
(508
)
Lease liability adjustments
—
(154
)
—
(154
)
Unconsolidated real estate ventures
allocated share of above adjustments
—
—
—
2
Adjusted EBITDA
$
52,980
$
71,969
$
116,666
$
140,327
Net Debt to Annualized Adjusted EBITDA
(2)
11.9
x
8.3
x
10.8
x
8.5
x
June 30, 2024
June 30, 2023
Net Debt (at JBG SMITH Share)
Consolidated indebtedness (3)
$
2,625,329
$
2,454,311
Unconsolidated indebtedness (3)
66,553
87,886
Total consolidated and unconsolidated
indebtedness
2,691,882
2,542,197
Less: cash and cash equivalents
169,278
165,834
Net Debt (at JBG SMITH Share)
$
2,522,604
$
2,376,363
_____________
Note: All EBITDA measures as shown above are attributable to
common limited partnership units ("OP Units") and certain fully
vested incentive equity awards that may be 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. Adjusted EBITDA for the six months ended June
30, 2024 and 2023 is annualized by multiplying by two.
(3)
Net of premium/discount and deferred
financing costs.
FFO, CORE FFO AND FAD
RECONCILIATIONS (NON-GAAP)
(Unaudited)
in thousands, except per share data
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
FFO and Core FFO
Net income (loss) attributable to common
shareholders
$
(24,373
)
$
(10,545
)
$
(56,649
)
$
10,626
Net income (loss) attributable to
redeemable noncontrolling interests
(3,454
)
(1,398
)
(7,988
)
1,965
Net loss attributable to noncontrolling
interests
(5,587
)
(311
)
(10,967
)
(535
)
Net income (loss)
(33,414
)
(12,254
)
(75,604
)
12,056
Gain on the sale of real estate, net of
tax
(89
)
—
(1,498
)
(40,700
)
Gain on the sale of unconsolidated real
estate assets
—
—
(480
)
—
Real estate depreciation and
amortization
49,631
47,502
104,818
99,113
Pro rata share of real estate depreciation
and amortization from unconsolidated real estate ventures
799
3,111
2,290
5,871
FFO attributable to noncontrolling
interests
—
311
—
535
FFO Attributable to OP Units
$
16,927
$
38,670
$
29,526
$
76,875
FFO attributable to redeemable
noncontrolling interests
(2,592
)
(5,247
)
(4,513
)
(10,450
)
FFO Attributable to Common
Shareholders
$
14,335
$
33,423
$
25,013
$
66,425
FFO attributable to OP Units
$
16,927
$
38,670
$
29,526
$
76,875
Transaction and other costs, net of tax
and noncontrolling interests (1)
840
3,337
1,984
5,710
(Income) loss from investments, net of
tax
(465
)
404
(509
)
(1,001
)
Impairment loss related to non-depreciable
real estate
1,025
—
18,236
—
Loss from mark-to-market on derivative
instruments, net of noncontrolling interests
28
2,601
70
5,142
Loss on the extinguishment of debt
—
450
—
450
Earnings and distributions in excess of
our investment in unconsolidated real estate venture
(458
)
(341
)
(671
)
(508
)
Share-based compensation related to
Formation Transaction and special equity awards
—
—
—
351
Lease liability adjustments
—
(154
)
—
(154
)
Amortization of management contracts
intangible, net of tax
1,065
1,024
2,119
2,130
Unconsolidated real estate ventures
allocated share of above adjustments
—
5
—
41
Core FFO Attributable to OP
Units
$
18,962
$
45,996
$
50,755
$
89,036
Core FFO attributable to redeemable
noncontrolling interests
(2,904
)
(6,241
)
(7,753
)
(12,103
)
Core FFO Attributable to Common
Shareholders
$
16,058
$
39,755
$
43,002
$
76,933
FFO per common share - diluted
$
0.16
$
0.30
$
0.27
$
0.59
Core FFO per common share - diluted
$
0.18
$
0.36
$
0.47
$
0.69
Weighted average shares - diluted (FFO and
Core FFO)
91,154
109,708
91,989
111,868
See footnotes under table below.
FFO, CORE FFO AND FAD
RECONCILIATIONS (NON-GAAP)
(Unaudited)
in thousands, except per share data
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
FAD
Core FFO attributable to OP Units
$
18,962
$
45,996
$
50,755
$
89,036
Recurring capital expenditures and
Second-generation tenant improvements and leasing commissions
(2)
(12,095
)
(11,602
)
(21,130
)
(19,396
)
Straight-line and other rent adjustments
(3)
(2,509
)
(6,311
)
(3,939
)
(14,688
)
Third-party lease liability assumption
(payments) refunds
(25
)
(25
)
(25
)
70
Share-based compensation expense
10,864
9,137
20,243
18,485
Amortization of debt issuance costs
4,031
1,343
7,933
2,650
Unconsolidated real estate ventures
allocated share of above adjustments
201
641
660
1,043
Non-real estate depreciation and
amortization
299
341
593
696
FAD available to OP Units (A)
$
19,728
$
39,520
$
55,090
$
77,896
Distributions to common shareholders and
unitholders (B)
$
19,012
$
27,684
$
38,010
$
57,303
FAD Payout Ratio (B÷A) (4)
96.4
%
70.1
%
69.0
%
73.6
%
Capital Expenditures
Maintenance and recurring capital
expenditures
$
4,362
$
4,707
$
5,557
$
7,680
Share of maintenance and recurring capital
expenditures from unconsolidated real estate ventures
14
35
16
35
Second-generation tenant improvements and
leasing commissions
7,719
6,805
15,536
11,547
Share of Second-generation tenant
improvements and leasing commissions from unconsolidated real
estate ventures
—
55
21
134
Recurring capital expenditures and
Second-generation tenant improvements and leasing commissions
12,095
11,602
21,130
19,396
Non-recurring capital expenditures
3,268
10,904
6,790
20,597
Share of non-recurring capital
expenditures from unconsolidated real estate ventures
14
3
28
5
First-generation tenant improvements and
leasing commissions
2,322
4,174
5,217
7,299
Share of First-generation tenant
improvements and leasing commissions from unconsolidated real
estate ventures
36
240
87
553
Non-recurring capital expenditures
5,640
15,321
12,122
28,454
Total JBG SMITH Share of Capital
Expenditures
$
17,735
$
26,923
$
33,252
$
47,850
_____________
(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 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.
NOI RECONCILIATIONS
(NON-GAAP)
(Unaudited)
dollars in thousands
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net income (loss) attributable to common
shareholders
$
(24,373
)
$
(10,545
)
$
(56,649
)
$
10,626
Net income (loss) attributable to
redeemable noncontrolling interests
(3,454
)
(1,398
)
(7,988
)
1,965
Net loss attributable to noncontrolling
interests
(5,587
)
(311
)
(10,967
)
(535
)
Net income (loss)
(33,414
)
(12,254
)
(75,604
)
12,056
Add:
Depreciation and amortization expense
51,306
49,218
108,161
102,649
General and administrative expense:
Corporate and other
17,001
15,093
31,974
31,216
Third-party real estate services
18,650
22,105
40,977
45,928
Share-based compensation related to
Formation Transaction and special equity awards
—
—
—
351
Transaction and other costs
824
3,492
2,338
5,964
Interest expense
31,973
25,835
62,133
52,677
Loss on the extinguishment of debt
—
450
—
450
Impairment loss
1,025
—
18,236
—
Income tax expense (benefit)
597
611
(871
)
595
Less:
Third-party real estate services,
including reimbursements revenue
17,397
22,862
35,265
45,646
Other revenue
2,126
3,846
13,389
5,572
Income (loss) from unconsolidated real
estate ventures, net
(226
)
510
749
943
Interest and other income, net
3,432
2,281
5,532
6,358
Gain on the sale of real estate, net
89
—
286
40,700
Consolidated NOI
65,144
75,051
132,123
152,667
NOI attributable to unconsolidated real
estate ventures at our share
1,168
5,175
4,215
9,604
Non-cash rent adjustments (1)
(2,509
)
(6,311
)
(3,939
)
(14,688
)
Other adjustments (2)
5,450
5,163
10,684
12,008
Total adjustments
4,109
4,027
10,960
6,924
NOI
$
69,253
$
79,078
$
143,083
$
159,591
Less: out-of-service NOI loss (3)
(2,341
)
(902
)
(5,374
)
(1,611
)
Operating Portfolio NOI
$
71,594
$
79,980
$
148,457
$
161,202
Non-Same Store NOI (4)
225
10,853
3,389
23,317
Same Store NOI (5)
$
71,369
$
69,127
$
145,068
$
137,885
Change in Same Store NOI
3.2
%
5.2
%
Number of properties in Same Store
pool
40
40
_____________
(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 related party management fees.
(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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240730384942/en/
Kevin Connolly Executive Vice President, Portfolio Management
& Investor Relations (240) 333‑3837 kconnolly@jbgsmith.com
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