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 September 30, 2024
and reported its financial results.
Additional information regarding our results of operations,
properties, and tenants can be found in our Third 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.
Third Quarter 2024 Highlights
- Net loss, Funds From Operations ("FFO") and Core FFO
attributable to common shareholders were:
THIRD QUARTER AND YEAR-TO-DATE
COMPARISON
in millions, except per share amounts
Three Months Ended
Nine Months Ended
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Amount
Per Diluted
Share
Amount
Per Diluted
Share
Amount
Per Diluted
Share
Amount
Per Diluted
Share
Net loss (1) (2)
$
(27.0
)
$
(0.32
)
$
(58.0
)
$
(0.58
)
$
(83.6
)
$
(0.95
)
$
(47.4
)
$
(0.45
)
FFO (2)
$
19.5
$
0.23
$
40.1
$
0.40
$
44.5
$
0.50
$
106.5
$
0.98
Core FFO
$
19.3
$
0.23
$
41.0
$
0.40
$
62.3
$
0.69
$
118.0
$
1.09
_____________
(1)
Includes loss on the sale of real estate
of $5.4 million and $5.1 million for the three and nine months
ended September 30, 2024. Includes gain on the sale of real estate
of $41.6 million for the nine months ended September 30, 2023.
Includes impairment loss of $59.3 million related to real estate
assets, and impairment losses recorded by our unconsolidated real
estate ventures, of which our proportionate share was $3.3 million,
for the three and nine months ended September 30, 2023.
(2)
Includes impairment loss of $18.2 million
related to non-depreciable real estate assets for the nine months
ended September 30, 2024.
- Annualized Net Operating Income ("NOI") for the three months
ended September 30, 2024 was $282.4 million, compared to $286.4
million for the three months ended June 30, 2024, at our share.
Excluding the assets that were sold or taken out of service,
Annualized NOI for the three months ended September 30, 2024 was
$278.1 million, compared to $278.4 million for the three months
ended June 30, 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, partially offset by lower real estate tax expense
as a result of successful appeals in our commercial portfolio; and
(ii) transitioning The Grace and Reva into the operating portfolio,
partially offset by higher concessions at certain assets in our
multifamily portfolio.
- Same Store NOI ("SSNOI") at our share increased 0.5%
quarter-over-quarter to $68.6 million for the three months ended
September 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 occupancy and recovery revenue in our commercial portfolio,
partially offset by lower real estate taxes.
Operating Portfolio
- The operating multifamily portfolio was 92.7% leased and 90.6%
occupied as of September 30, 2024, compared to 96.9% and 94.3% as
of June 30, 2024. Our operating In-Service multifamily portfolio
was 97.0% leased and 95.7% occupied as of September 30, 2024,
compared to 96.9% and 94.3% as of June 30, 2024.
- In our Same Store multifamily portfolio, we increased effective
rents by 4.5% for new leases and 6.1% upon renewal for third
quarter lease expirations while achieving a 60.0% renewal
rate.
- The operating commercial portfolio was 80.7% leased and 79.1%
occupied as of September 30, 2024, compared to 82.3% and 80.6% as
of June 30, 2024, at our share.
- Executed approximately 150,000 square feet of office leases at
our share during the three months ended September 30, 2024,
including approximately 46,000 square feet of new leases.
Second-generation leases generated a 1.2% rental rate increase on a
cash basis and an 8.4% rental rate increase on a GAAP basis.
- Executed approximately 496,000 square feet of office leases at
our share during the nine months ended September 30, 2024,
including approximately 241,000 square feet of new leases.
Second-generation leases generated a 1.5% rental rate increase on a
cash basis and a 9.6% rental rate increase on a GAAP basis.
Development Portfolio
Under-Construction
- As of September 30, 2024, we had one multifamily asset under
construction consisting of 775 units at our share.
- In the second quarter, The Grace and Reva (formerly known
collectively as 1900 Crystal Drive) were placed into the operating
multifamily portfolio as recently delivered.
Development Pipeline
- As of September 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 September 30, 2024, revenue from
third-party real estate services, including reimbursements, was
$17.1 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 $8.3
million, primarily driven by $5.0 million of property and asset
management fees, $1.6 million of other service revenue and $1.0
million of leasing fees.
Balance Sheet
- As of September 30, 2024, our total enterprise value was
approximately $4.3 billion, comprising 98.4 million common shares
and units valued at $1.7 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 $141.7
million.
- As of September 30, 2024, we had $137.0 million of cash and
cash equivalents ($141.7 million of cash and cash equivalents at
our share), and $644.3 million of availability under our revolving
credit facility.
- Net Debt to annualized Adjusted EBITDA at our share for the
three months ended September 30, 2024 was 10.6x, and our Net Debt /
total enterprise value was 59.6% as of September 30, 2024.
Investing and Financing Activities
- In September 2024, we sold Fort Totten Square, a multifamily
asset with 345 units and 130,664 square feet of retail space in
Washington, DC, for $86.8 million.
- In September 2024, we repaid the $83.3 million mortgage loan
collateralized by 201 12th Street S., 200 12th Street S. and 251
18th Street S.
- In September 2024, we extended the maturity date of the $200.0
million Tranche A-1 Term Loan by one year to January 2026. The
Tranche A-1 Term Loan has an additional one-year extension option
that would extend the maturity date to January 2027.
- We repurchased and retired 3.1 million common shares for $50.2
million, a weighted average purchase price per share of
$16.23.
Dividends
- On October 24, 2024, our Board of Trustees declared a quarterly
dividend of $0.175 per common share, payable on November 22, 2024
to shareholders of record as of November 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
13.1 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 for 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 real
estate investment trusts 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 September
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 September 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
September 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 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 September 30, 2024.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
in thousands
September 30, 2024
December 31, 2023
ASSETS
Real estate, at cost:
Land and improvements
$
1,171,458
$
1,194,737
Buildings and improvements
4,243,690
4,021,322
Construction in progress, including
land
443,908
659,103
5,859,056
5,875,162
Less: accumulated depreciation
(1,429,079
)
(1,338,403
)
Real estate, net
4,429,977
4,536,759
Cash and cash equivalents
136,983
164,773
Restricted cash
33,161
35,668
Tenant and other receivables
30,734
44,231
Deferred rent receivable
185,221
171,229
Investments in unconsolidated real estate
ventures
100,682
264,281
Deferred leasing costs, net
78,171
81,477
Intangible assets, net
49,045
56,616
Other assets, net
138,503
163,481
TOTAL ASSETS
$
5,182,477
$
5,518,515
LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS AND EQUITY
Liabilities:
Mortgage loans, net
$
1,816,156
$
1,783,014
Revolving credit facility
90,000
62,000
Term loans, net
717,578
717,172
Accounts payable and accrued expenses
99,773
124,874
Other liabilities, net
118,373
138,869
Total liabilities
2,841,880
2,825,929
Commitments and contingencies
Redeemable noncontrolling interests
444,945
440,737
Total equity
1,895,652
2,251,849
TOTAL LIABILITIES, REDEEMABLE
NONCONTROLLING INTERESTS AND EQUITY
$
5,182,477
$
5,518,515
________________
Note: For complete financial statements,
please refer to our Quarterly Report on Form 10-Q for the quarter
ended September 30, 2024.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
in thousands, except per share data
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
REVENUE
Property rental
$
113,349
$
120,294
$
348,521
$
364,919
Third-party real estate services,
including reimbursements
17,061
23,942
52,326
69,588
Other revenue
5,616
7,326
15,683
22,112
Total revenue
136,026
151,562
416,530
456,619
EXPENSES
Depreciation and amortization
50,050
50,265
158,211
152,914
Property operating
39,258
37,588
110,791
109,112
Real estate taxes
11,812
14,413
40,006
44,061
General and administrative:
Corporate and other
11,881
11,246
43,855
42,462
Third-party real estate services
16,088
21,405
57,065
67,333
Share-based compensation related to
Formation Transaction and special equity awards
—
46
—
397
Transaction and other costs
667
1,830
3,005
7,794
Total expenses
129,756
136,793
412,933
424,073
OTHER INCOME (EXPENSE)
Income (loss) from unconsolidated real
estate ventures, net
(745
)
(2,263
)
4
(1,320
)
Interest and other income, net
4,573
7,774
10,105
14,132
Interest expense
(35,267
)
(27,903
)
(97,400
)
(80,580
)
Gain (loss) on the sale of real estate,
net
(5,352
)
906
(5,066
)
41,606
Gain (loss) on the extinguishment of
debt
43
—
43
(450
)
Impairment loss
—
(59,307
)
(18,236
)
(59,307
)
Total other income (expense)
(36,748
)
(80,793
)
(110,550
)
(85,919
)
LOSS BEFORE INCOME TAX (EXPENSE)
BENEFIT
(30,478
)
(66,024
)
(106,953
)
(53,373
)
Income tax (expense) benefit
(831
)
(77
)
40
(672
)
NET LOSS
(31,309
)
(66,101
)
(106,913
)
(54,045
)
Net loss attributable to redeemable
noncontrolling interests
4,365
7,926
12,353
5,961
Net (income) loss attributable to
noncontrolling interests
(36
)
168
10,931
703
NET LOSS ATTRIBUTABLE TO COMMON
SHAREHOLDERS
$
(26,980
)
$
(58,007
)
$
(83,629
)
$
(47,381
)
LOSS PER COMMON SHARE - BASIC AND
DILUTED
$
(0.32
)
$
(0.58
)
$
(0.95
)
$
(0.45
)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC AND DILUTED
85,292
101,445
89,637
108,351
________________
Note: For complete financial statements,
please refer to our Quarterly Report on Form 10-Q for the quarter
ended September 30, 2024.
EBITDA, EBITDAre AND ADJUSTED
EBITDA RECONCILIATIONS (NON-GAAP)
(Unaudited)
dollars in thousands
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
EBITDA, EBITDAre and Adjusted
EBITDA
Net loss
$
(31,309
)
$
(66,101
)
$
(106,913
)
$
(54,045
)
Depreciation and amortization expense
50,050
50,265
158,211
152,914
Interest expense
35,267
27,903
97,400
80,580
Income tax expense (benefit)
831
77
(40
)
672
Unconsolidated real estate ventures
allocated share of above adjustments
1,837
4,499
6,219
12,781
EBITDA attributable to noncontrolling
interests
—
(2
)
—
(4
)
EBITDA
$
56,676
$
16,641
$
154,877
$
192,898
(Gain) loss on the sale of real estate,
net
5,352
(906
)
5,066
(41,606
)
Gain on the sale of unconsolidated real
estate assets
—
(641
)
(480
)
(641
)
Real estate impairment loss
—
59,307
—
59,307
Impairment related to unconsolidated real
estate ventures (1)
—
3,319
—
3,319
EBITDAre
$
62,028
$
77,720
$
159,463
$
213,277
Transaction and other costs, net of
noncontrolling interests (2)
667
1,830
3,005
7,794
Litigation settlement proceeds, net
—
(3,455
)
—
(3,455
)
(Income) loss from investments, net
(2,534
)
221
(3,206
)
(1,114
)
Impairment loss related to non-depreciable
real estate
—
—
18,236
—
(Gain) loss on the extinguishment of
debt
(43
)
—
(43
)
450
Share-based compensation related to
Formation Transaction and special equity awards
—
46
—
397
Earnings and distributions in excess of
our investment in unconsolidated real estate venture
(335
)
(80
)
(1,006
)
(588
)
Lease liability adjustments
—
—
—
(154
)
Unconsolidated real estate ventures
allocated share of above adjustments
227
31
227
33
Adjusted EBITDA
$
60,010
$
76,313
$
176,676
$
216,640
Net Debt to Annualized Adjusted EBITDA
(3)
10.6
x
8.1
x
10.8
x
8.5
x
September 30, 2024
September 30, 2023
Net Debt (at JBG SMITH Share)
Consolidated indebtedness (4)
$
2,615,724
$
2,523,354
Unconsolidated indebtedness (4)
66,693
79,992
Total consolidated and unconsolidated
indebtedness
2,682,417
2,603,346
Less: cash and cash equivalents
141,669
138,282
Net Debt (at JBG SMITH Share)
$
2,540,748
$
2,465,064
________________
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)
Related to decreases in the value of the
underlying real estate assets.
(2)
Includes costs related to completed,
potential and pursued transactions, demolition costs, severance and
other costs.
(3)
Quarterly Adjusted EBITDA is annualized by
multiplying by four. Adjusted EBITDA for the nine months ended
September 30, 2024 and 2023 is annualized by multiplying by
1.33.
(4)
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 September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
FFO and Core FFO
Net loss attributable to common
shareholders
$
(26,980
)
$
(58,007
)
$
(83,629
)
$
(47,381
)
Net loss attributable to redeemable
noncontrolling interests
(4,365
)
(7,926
)
(12,353
)
(5,961
)
Net income (loss) attributable to
noncontrolling interests
36
(168
)
(10,931
)
(703
)
Net loss
(31,309
)
(66,101
)
(106,913
)
(54,045
)
(Gain) loss on the sale of real estate,
net of tax
5,352
(906
)
3,854
(41,606
)
Gain on the sale of unconsolidated real
estate assets
—
(641
)
(480
)
(641
)
Real estate depreciation and
amortization
48,385
48,568
153,203
147,681
Real estate impairment loss
—
59,307
—
59,307
Impairment related to unconsolidated real
estate ventures (1)
—
3,319
—
3,319
Pro rata share of real estate depreciation
and amortization from unconsolidated real estate ventures
796
2,984
3,086
8,855
FFO attributable to noncontrolling
interests
—
168
—
703
FFO Attributable to OP Units
$
23,224
$
46,698
$
52,750
$
123,573
FFO attributable to redeemable
noncontrolling interests
(3,725
)
(6,600
)
(8,238
)
(17,050
)
FFO Attributable to Common
Shareholders
$
19,499
$
40,098
$
44,512
$
106,523
FFO attributable to OP Units
$
23,224
$
46,698
$
52,750
$
123,573
Transaction and other costs, net of tax
and noncontrolling interests (2)
754
1,755
2,738
7,465
Litigation settlement proceeds, net
—
(3,455
)
—
(3,455
)
(Income) loss from investments, net of
tax
(1,919
)
165
(2,428
)
(836
)
Impairment loss related to non-depreciable
real estate
—
—
18,236
—
Loss from mark-to-market on derivative
instruments, net of noncontrolling interests
7
1,572
77
6,714
(Gain) loss on the extinguishment of
debt
(43
)
—
(43
)
450
Earnings and distributions in excess of
our investment in unconsolidated real estate venture
(335
)
(80
)
(1,006
)
(588
)
Share-based compensation related to
Formation Transaction and special equity awards
—
46
—
397
Lease liability adjustments
—
—
—
(154
)
Amortization of management contracts
intangible, net of tax
1,059
1,031
3,178
3,161
Unconsolidated real estate ventures
allocated share of above adjustments
230
63
230
104
Core FFO Attributable to OP
Units
$
22,977
$
47,795
$
73,732
$
136,831
Core FFO attributable to redeemable
noncontrolling interests
(3,685
)
(6,755
)
(11,438
)
(18,858
)
Core FFO Attributable to Common
Shareholders
$
19,292
$
41,040
$
62,294
$
117,973
FFO per common share - diluted
$
0.23
$
0.40
$
0.50
$
0.98
Core FFO per common share - diluted
$
0.23
$
0.40
$
0.69
$
1.09
Weighted average shares - diluted (FFO and
Core FFO)
85,446
101,461
89,806
108,359
See footnotes under table below.
FFO, CORE FFO AND FAD
RECONCILIATIONS (NON-GAAP)
(Unaudited)
in thousands, except per share data
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
FAD
Core FFO attributable to OP Units
$
22,977
$
47,795
$
73,732
$
136,831
Recurring capital expenditures and
Second-generation tenant improvements and leasing commissions
(3)
(10,221
)
(9,225
)
(31,351
)
(28,621
)
Straight-line and other rent adjustments
(4)
(3,817
)
(5,226
)
(7,756
)
(19,914
)
Third-party lease liability assumption
(payments) refunds
—
—
(25
)
70
Share-based compensation expense
4,810
5,995
25,053
24,480
Amortization of debt issuance costs
4,030
3,372
11,963
6,022
Unconsolidated real estate ventures
allocated share of above adjustments
381
875
1,041
1,918
Non-real estate depreciation and
amortization
290
323
883
1,019
FAD available to OP Units (A)
$
18,450
$
43,909
$
73,540
$
121,805
Distributions to common shareholders and
unitholders (B)
$
17,891
$
26,801
$
55,901
$
84,104
FAD Payout Ratio (B÷A) (5)
97.0
%
61.0
%
76.0
%
69.0
%
Capital Expenditures
Maintenance and recurring capital
expenditures
$
4,808
$
3,964
$
10,365
$
11,644
Share of maintenance and recurring capital
expenditures from unconsolidated real estate ventures
—
10
16
45
Second-generation tenant improvements and
leasing commissions
5,413
5,222
20,949
16,769
Share of Second-generation tenant
improvements and leasing commissions from unconsolidated real
estate ventures
—
29
21
163
Recurring capital expenditures and
Second-generation tenant improvements and leasing commissions
10,221
9,225
31,351
28,621
Non-recurring capital expenditures
1,718
10,422
8,508
31,019
Share of non-recurring capital
expenditures from unconsolidated real estate ventures
—
—
28
5
First-generation tenant improvements and
leasing commissions
1,367
7,288
6,584
14,587
Share of First-generation tenant
improvements and leasing commissions from unconsolidated real
estate ventures
18
94
105
647
Non-recurring capital expenditures
3,103
17,804
15,225
46,258
Total JBG SMITH Share of Capital
Expenditures
$
13,324
$
27,029
$
46,576
$
74,879
________________
(1)
Related to decreases in the value of the
underlying real estate assets.
(2)
Includes costs related to completed,
potential and pursued transactions, demolition costs, severance and
other costs.
(3)
Includes amounts, at JBG SMITH Share,
related to unconsolidated real estate ventures.
(4)
Includes straight-line rent, above/below
market lease amortization and lease incentive amortization.
(5)
The 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 September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Net loss attributable to common
shareholders
$
(26,980
)
$
(58,007
)
$
(83,629
)
$
(47,381
)
Net loss attributable to redeemable
noncontrolling interests
(4,365
)
(7,926
)
(12,353
)
(5,961
)
Net income (loss) attributable to
noncontrolling interests
36
(168
)
(10,931
)
(703
)
Net loss
(31,309
)
(66,101
)
(106,913
)
(54,045
)
Add:
Depreciation and amortization expense
50,050
50,265
158,211
152,914
General and administrative expense:
Corporate and other
11,881
11,246
43,855
42,462
Third-party real estate services
16,088
21,405
57,065
67,333
Share-based compensation related to
Formation Transaction and special equity awards
—
46
—
397
Transaction and other costs
667
1,830
3,005
7,794
Interest expense
35,267
27,903
97,400
80,580
(Gain) loss on the extinguishment of
debt
(43
)
—
(43
)
450
Impairment loss
—
59,307
18,236
59,307
Income tax expense (benefit)
831
77
(40
)
672
Less:
Third-party real estate services,
including reimbursements revenue
17,061
23,942
52,326
69,588
Other revenue
2,827
2,704
16,216
8,276
Income (loss) from unconsolidated real
estate ventures, net
(745
)
(2,263
)
4
(1,320
)
Interest and other income, net
4,573
7,774
10,105
14,132
Gain (loss) on the sale of real estate,
net
(5,352
)
906
(5,066
)
41,606
Consolidated NOI
65,068
72,915
197,191
225,582
NOI attributable to unconsolidated real
estate ventures at our share
1,292
5,374
5,506
14,977
Non-cash rent adjustments (1)
(3,817
)
(5,226
)
(7,756
)
(19,914
)
Other adjustments (2)
5,793
5,803
16,486
17,820
Total adjustments
3,268
5,951
14,236
12,883
NOI
$
68,336
$
78,866
$
211,427
$
238,465
Less: out-of-service NOI loss (3)
(2,261
)
(995
)
(7,632
)
(2,606
)
Operating Portfolio NOI
$
70,597
$
79,861
$
219,059
$
241,071
Non-Same Store NOI (4)
2,012
11,607
7,466
37,961
Same Store NOI (5)
$
68,585
$
68,254
$
211,593
$
203,110
Change in Same Store NOI
0.5
%
4.2
%
Number of properties in Same Store
pool
39
39
________________
(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/20241029229327/en/
Kevin Connolly Executive Vice President, Portfolio Management
& Investor Relations (240) 333‑3837 kconnolly@jbgsmith.com
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