JBG SMITH Announces Fourth Quarter and Full Year 2022 Results

Rhea-AI Summary

JBG SMITH (NYSE: JBGS) has filed its Form 10-K for the year ended December 31, 2022, reporting a net loss of $18.6 million for Q4 and $56.4 million for the full year. The company's Funds From Operations (FFO) for the year stood at $156 million, with a Core FFO of $155.3 million. Annualized Net Operating Income (NOI) slightly increased to $322.3 million. Same Store NOI rose 7.4% year-over-year for Q4. The operating commercial portfolio was 88.5% leased, while the multifamily portfolio was 94.5% leased. After various acquisitions, total enterprise value reached approximately $4.7 billion. A quarterly dividend of $0.225 per share was declared on December 15, 2022.

Positive

• Same Store NOI increased 7.4% year-over-year in Q4.
• Annualized NOI was $322.3 million, slightly up from the previous quarter.
• Operating multifamily portfolio was 94.5% leased.
• Executed approximately 193,000 square feet of office leases over Q4.

Negative

• Net loss of $18.6 million in Q4 and $56.4 million for the year.
• FFO declined from $159.4 million in 2021 to $156 million in 2022.
• Rental rates decreased by 3.9% on a GAAP basis for the year.

BETHESDA, Md.--(BUSINESS WIRE)-- 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-K for the year ended December 31, 2022 and reported its financial results.

Additional information regarding our results of operations, properties, and tenants can be found in our Fourth Quarter 2022 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.

Fourth Quarter 2022 Highlights

• For the three months and year ended December 31, 2022, net income (loss), Funds From Operations ("FFO") and Core FFO attributable to common shareholders were:

FOURTH QUARTER AND FULL YEAR COMPARISON
in millions, except per share amounts		Three Months Ended										Year Ended
		December 31, 2022					December 31, 2021					December 31, 2022					December 31, 2021
		Amount		Per Diluted Share			Amount		Per Diluted Share			Amount		Per Diluted Share			Amount		Per Diluted Share
Net income (loss)		$	(18.6)	$	(0.17)		$	(56.4)	$	(0.45)		$	85.4	$	0.70		$	(79.3)	$	(0.63)
FFO		$	31.1	$	0.27		$	43.1	$	0.33		$	156.0	$	1.31		$	159.4	$	1.22
Core FFO		$	34.3	$	0.30		$	40.4	$	0.31		$	155.3	$	1.30		$	177.5	$	1.36

• Annualized Net Operating Income ("NOI") for the three months ended December 31, 2022 was $322.3 million, compared to $322.0 million for the three months ended September 30, 2022, at our share.
  • The slight increase in Annualized NOI was substantially attributable to (i) additional NOI resulting from the purchase of our partners’ ownership interests in Atlantic Plumbing and 8001 Woodmont, (ii) real estate tax refunds received during the quarter, (iii) higher parking revenue in our commercial portfolio, and (iv) lower utilities due to seasonality, offset by (v) an increase in abatements as a result of certain previously executed lease renewals and (vi) the exclusion of our interest in L’Enfant Plaza.
• Same Store NOI ("SSNOI") at our share increased 7.4% year-over-year to $77.2 million for the three months ended December 31, 2022. SSNOI at our share increased 12.1% year-over-year to $302.3 million for the year ended December 31, 2022.
  • The increase in SSNOI was substantially attributable to (i) higher occupancy and rents, and lower concessions in our multifamily portfolio, (ii) higher occupancy and average daily rates at the Crystal City Marriott, (iii) an increase in parking revenue in our commercial portfolio and (iv) abatement burn-off at certain assets, partially offset by (v) higher utilities and cleaning expenses.

Operating Portfolio

• The operating commercial portfolio was 88.5% leased and 85.1% occupied as of December 31, 2022, compared to 88.3% and 85.9% as of September 30, 2022, at our share.
• The operating multifamily portfolio was 94.5% leased and 93.6% occupied as of December 31, 2022, compared to 95.5% and 93.7% as of September 30, 2022, at our share. (Excluding 8001 Woodmont, which is in lease-up, our multifamily portfolio ended the quarter at 95.3% leased and 94.2% occupied.)
• Executed approximately 193,000 square feet of office leases at our share during the three months ended December 31, 2022, comprising approximately 72,000 square feet of first-generation leases and approximately 121,000 square feet of second-generation leases, which generated a 3.9% rental rate increase on a GAAP basis and a 0.1% rental rate decrease on a cash basis.
• Executed approximately 936,000 square feet of office leases at our share during the year ended December 31, 2022, comprising approximately 238,000 square feet of first-generation leases and approximately 698,000 square feet of second-generation leases, which generated a 3.9% rental rate decrease on a GAAP basis and a 7.2% rental rate decrease on a cash basis.

Development Portfolio

Under-Construction

• As of December 31, 2022, we had two multifamily assets under construction consisting of 1,583 units at our share.

Development Pipeline

• As of December 31, 2022, we had 20 assets in the development pipeline consisting of 9.7 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 December 31, 2022, revenue from third-party real estate services, including reimbursements, was $21.1 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 $10.1 million, primarily driven by $6.1 million of property and asset management fees, $1.4 million of leasing fees, $1.3 million of other service revenue and $1.2 million of development fees.

Balance Sheet

• As of December 31, 2022, our total enterprise value was approximately $4.7 billion, comprising 129.1 million common shares and units valued at $2.4 billion, and debt (net of premium / (discount) and deferred financing costs) at our share of $2.5 billion, less cash and cash equivalents at our share of $253.7 million.
• As of December 31, 2022, we had $241.1 million of cash and cash equivalents ($253.7 million of cash and cash equivalents at our share), and $1.0 billion of capacity under our credit facility inclusive of our capacity under the term loan.
• Net Debt to annualized Adjusted EBITDA at our share for the three months ended December 31, 2022 was 8.6x and our Net Debt / total enterprise value was 47.7% as of December 31, 2022.

Investing and Financing Activities

• In October 2022, we repaid the $100.0 million outstanding balance under our revolving credit facility.
• As previously announced, in October 2022, we acquired an additional 3.7% ownership interest in The Wren, a multifamily asset owned by a consolidated real estate venture, for $9.5 million, increasing our ownership interest to 99.7%.
• As previously announced, in October 2022, we acquired the remaining 50.0% ownership interest in 8001 Woodmont, a multifamily asset owned by an unconsolidated real estate venture, for $115.0 million, including the assumption of $51.9 million of debt at our share. The asset was encumbered by a $103.8 million mortgage loan, which was consolidated as of the date of acquisition.
• In December 2022, one of our unconsolidated real estate ventures sold The Gale Eckington for $10.8 million at our share.
• In December 2022, we sold a land option for $6.2 million.

Subsequent to December 31, 2022:

• In January 2023, we entered into a $187.6 million loan facility, collateralized by The Wren and F1RST Residences. The loan has a seven-year term and a fixed interest rate of 5.13%. This loan is the initial advance under a Fannie Mae multifamily credit facility, which provides flexibility for collateral substitutions, future advances tied to performance, ability to mix fixed and floating rates, as well as stagger maturities. Proceeds from the loan were used to repay the mortgage loan on 2121 Crystal Drive, which had a fixed interest rate of 5.51%.
• In February 2023, we purchased the remaining 0.3% ownership interest in The Wren, a multifamily asset that was owned by a consolidated real estate venture, for $0.6 million, increasing our ownership interest to 100.0%.

Dividends

• On December 15, 2022, our Board of Trustees declared a quarterly dividend of $0.225 per common share, which was paid on January 12, 2023 to shareholders of record as of December 29, 2022.

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. Through an intense focus on placemaking, JBG SMITH cultivates vibrant, amenity-rich, walkable neighborhoods throughout the Washington, DC metropolitan area. Approximately two-thirds 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, which is being developed by JBG SMITH; Virginia Tech's under-construction $1 billion Innovation Campus; the submarket’s proximity to the Pentagon; and JBG SMITH’s deployment of next-generation public and private 5G digital infrastructure. JBG SMITH's dynamic portfolio currently comprises 15.3 million square feet of high-growth office, multifamily, and retail assets at share, 98% of which are metro-served. It also maintains a development pipeline encompassing 9.7 million square feet of mixed-use development opportunities. JBG SMITH’s capital allocation strategy is to shift the majority of its portfolio to multifamily and concentrate its office assets in National Landing. 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: the potential impact of COVID-19 and the ensuing economic turmoil on our Company, NOI, SSNOI, net asset value, share price, occupancy rates, revenue from our multifamily and commercial portfolios, operating costs, deferrals of rent, uncollectible operating lease receivables, parking revenue, and burn-off of rent abatement; the impact of disruptions to the credit and capital markets on our ability to access capital, including refinancing maturing debt; changes to the amount and manner in which tenants use space; whether we incur additional costs or make additional concessions or offer other incentives to existing or prospective tenants to reconfigure space; whether the Washington, DC area will be more resilient than other parts of the country in any recession; whether we will recognize currently estimated unrecognized development fee revenue on the anticipated timing or at all; our annual dividend per share and dividend yield; whether in the case of our under-construction 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 for Amazon; 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; whether we will be able to successfully shift the majority of our portfolio to multifamily; our ability to satisfy environmental, social or governance standards set by various constituencies; and whether we can access agency debt secured by our currently unencumbered multifamily assets timely, on reasonable terms or at all; whether our estimated borrowing capacity is accurate; and whether the allocation of capital to our share repurchase plan has any impact on our share price.

Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. These factors include, among others: adverse economic conditions in the Washington, DC metropolitan area, 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, 2022 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 substantial portion of our assets are held through real estate ventures, we believe this form of presentation, which presents our economic interests in the partially owned entities, provides investors valuable information regarding a significant component of our portfolio, its composition, performance and capitalization.

We do not control the unconsolidated real estate ventures and do not have a legal claim to our co-venturers' share of assets, liabilities, revenue and expenses. The operating agreements of the unconsolidated real estate ventures generally allow each co-venturer to receive cash distributions to the extent there is available cash from operations. The amount of cash each investor receives is based upon specific provisions of each operating agreement and varies depending on certain factors including the amount of capital contributed by each investor and whether any investors are entitled to preferential distributions.

With respect to any such third-party arrangement, we would not be in a position to exercise sole decision-making authority regarding the property, real estate venture or other entity, and may, under certain circumstances, be exposed to economic risks not present were a third-party not involved. We and our respective co-venturers may each have the right to trigger a buy-sell or forced sale arrangement, which could cause us to sell our interest, or acquire our co-venturers' interests, or to sell the underlying asset, either on unfavorable terms or at a time when we otherwise would not have initiated such a transaction. Our real estate ventures may be subject to debt, and the repayment or refinancing of such debt may require equity capital calls. To the extent our co-venturers do not meet their obligations to us or our real estate ventures or they act inconsistent with the interests of the real estate venture, we may be adversely affected. Because of these limitations, the non-GAAP "at JBG SMITH Share" financial information should not be considered in isolation or as a substitute for our financial statements as reported under GAAP.

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 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 right-of-use assets associated with leases in which we are a lessee, gain (loss) on the extinguishment of debt, earnings (losses) and distributions in excess of our investment in unconsolidated real estate ventures, lease liability adjustments, income from investments, business interruption insurance 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 right-of-use assets associated with leases in which we are a lessee, gains (or losses) 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, 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 less recurring tenant improvements, leasing commissions and other capital expenditures, net deferred rent activity, third-party lease liability assumption payments, recurring share-based compensation expense, accretion of acquired below-market leases, net of amortization of acquired above-market leases, amortization of debt issuance costs and other non-cash income and charges, 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, for all assets except Crystal City Marriott, represents NOI for the three months ended December 31, 2022 multiplied by four. Due to seasonality in the hospitality business, Annualized NOI for Crystal City Marriott represents the trailing 12‑month NOI as of December 31, 2022. 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 December 31, 2022. 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" refers to accounting principles generally accepted in the United States of America.

"In-Service" refers to commercial or multifamily assets that are at or above 90% leased or have been operating and collecting rent for more than 12 months as of December 31, 2022.

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

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

"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, integration and severance costs, and other expenses.

"Under-Construction" refers to assets that were under construction during the three months ended December 31, 2022.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
in thousands		December 31, 2022				December 31, 2021
ASSETS
Real estate, at cost:
Land and improvements		$	1,302,569			$	1,378,218
Buildings and improvements			4,310,821				4,513,606
Construction in progress, including land			544,692				344,652
			6,158,082				6,236,476
Less: accumulated depreciation			(1,335,000	)			(1,368,003	)
Real estate, net			4,823,082				4,868,473
Cash and cash equivalents			241,098				264,356
Restricted cash			32,975				37,739
Tenant and other receivables			56,304				44,496
Deferred rent receivable			170,824				192,265
Investments in unconsolidated real estate ventures			299,881				462,885
Intangible assets, net			162,246				201,956
Other assets, net			117,028				240,160
Assets held for sale			—				73,876
TOTAL ASSETS		$	5,903,438			$	6,386,206
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgage loans, net		$	1,890,174			$	1,777,699
Revolving credit facility			—				300,000
Unsecured term loans, net			547,072				398,664
Accounts payable and accrued expenses			138,060				106,136
Other liabilities, net			132,710				342,565
Total liabilities			2,708,016				2,925,064
Commitments and contingencies
Redeemable noncontrolling interests			481,310				522,725
Total equity			2,714,112				2,938,417
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY		$	5,903,438			$	6,386,206
_________________
Note: For complete financial statements, please refer to our Annual Report on Form 10-K for the year ended December 31, 2022.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
in thousands, except per share data		Three Months Ended December 31,								Year Ended December 31,
		2022				2021				2022				2021
REVENUE
Property rental		$	123,293			$	128,626			$	491,738			$	499,586
Third-party real estate services, including reimbursements			21,050				23,309				89,022				114,003
Other revenue			6,397				5,472				25,064				20,773
Total revenue			150,740				157,407				605,824				634,362
EXPENSES
Depreciation and amortization			56,174				58,173				213,771				236,303
Property operating			37,535				40,709				150,004				150,638
Real estate taxes			14,297				15,696				62,167				70,823
General and administrative:
Corporate and other			15,611				15,344				58,280				53,819
Third-party real estate services			22,107				27,124				94,529				107,159
Share-based compensation related to Formation Transaction and special equity awards			1,022				3,459				5,391				16,325
Transaction and other costs			879				1,518				5,511				10,429
Total expenses			147,625				162,023				589,653				645,496
OTHER INCOME (EXPENSE)
Loss from unconsolidated real estate ventures, net			(4,600	)			(25,583	)			(17,429	)			(2,070	)
Interest and other income, net			1,715				8,672				18,617				8,835
Interest expense			(25,679	)			(17,649	)			(75,930	)			(67,961	)
Gain on the sale of real estate, net			3,263				—				161,894				11,290
Loss on the extinguishment of debt			—				—				(3,073	)			—
Impairment loss			—				(25,144	)			—				(25,144	)
Total other income (expense)			(25,301	)			(59,704	)			84,079				(75,050	)
INCOME (LOSS) BEFORE INCOME TAX (EXPENSE) BENEFIT			(22,186	)			(64,320	)			100,250				(86,184	)
Income tax (expense) benefit			1,336				986				(1,264	)			(3,541	)
NET INCOME (LOSS)			(20,850	)			(63,334	)			98,986				(89,725	)
Net (income) loss attributable to redeemable noncontrolling interests			2,468				6,256				(13,244	)			8,728
Net (income) loss attributable to noncontrolling interests			(197	)			632				(371	)			1,740
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	(18,579	)		$	(56,446	)		$	85,371			$	(79,257	)
EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED		$	(0.17	)		$	(0.45	)		$	0.70			$	(0.63	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED			113,854				129,009				119,005				130,839
_________________
Note: For complete financial statements, please refer to our Annual Report on Form 10-K for the year ended December 31, 2022.

EBITDA, EBITDAre AND ADJUSTED EBITDA RECONCILIATIONS (NON-GAAP) (Unaudited)
dollars in thousands		Three Months Ended December 31,								Year Ended December 31,
		2022				2021				2022				2021
EBITDA, EBITDAre and Adjusted EBITDA
Net income (loss)		$	(20,850	)		$	(63,334	)		$	98,986			$	(89,725	)
Depreciation and amortization expense			56,174				58,173				213,771				236,303
Interest expense			25,679				17,649				75,930				67,961
Income tax expense (benefit)			(1,336	)			(986	)			1,264				3,541
Unconsolidated real estate ventures allocated share of above adjustments			3,738				9,696				30,786				40,588
EBITDA attributable to noncontrolling interests			22				546				(79	)			1,522
EBITDA		$	63,427			$	21,744			$	420,658			$	260,190
Gain on the sale of real estate, net			(3,263	)			—				(161,894	)			(11,290	)
Gain on the sale of unconsolidated real estate assets			(618	)			—				(6,797	)			(28,326	)
Real estate impairment loss			—				25,144				—				25,144
Impairment related to unconsolidated real estate ventures (1)			3,885				23,883				19,286				25,263
EBITDAre		$	63,431			$	70,771			$	271,253			$	270,981
Transaction and other costs, net of noncontrolling interests (2)			879				888				5,477				8,691
Business interruption insurance proceeds			—				(4,517	)			—				(4,517	)
Loss (income) from investments, net			298				(3,620	)			(14,423	)			(3,620	)
Loss on the extinguishment of debt			—				—				3,073				—
Share-based compensation related to Formation Transaction and special equity awards			1,022				3,459				5,391				16,325
Earnings and distributions in excess of our investment in unconsolidated real estate venture			(405	)			(181	)			(988	)			(883	)
Lease liability adjustments			—				(134	)			—				(134	)
Unconsolidated real estate ventures allocated share of above adjustments			26				(497	)			2,105				(327	)
Adjusted EBITDA		$	65,251			$	66,169			$	271,888			$	286,516
Net Debt to Annualized Adjusted EBITDA (3)			8.6	x			9.6	x			8.2	x			8.9	x
										December 31, 2022				December 31, 2021
Net Debt (at JBG SMITH Share)
Consolidated indebtedness (4)										$	2,431,730			$	2,464,927
Unconsolidated indebtedness (4)											54,975				370,743
Total consolidated and unconsolidated indebtedness											2,486,705				2,835,670
Less: cash and cash equivalents											253,698				282,097
Net Debt (at JBG SMITH Share)										$	2,233,007			$	2,553,573

_________________
Note: All EBITDA measures as shown above are attributable to common limited partnership units ("OP Units") and certain fully-vested incentive equity awards that are convertible into OP Units.
(1)	Related to decreases in the value of the underlying real estate assets.
(2)	Includes pursuit costs related to completed, potential and pursued transactions, demolition costs, integration and severance costs, and other expenses.
(3)	Calculated using Net Debt. Quarterly Adjusted EBITDA is annualized by multiplying by four.
(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 December 31,								Year Ended December 31,
	2022				2021				2022				2021
FFO and Core FFO
Net income (loss) attributable to common shareholders	$	(18,579	)		$	(56,446	)		$	85,371			$	(79,257	)
Net income (loss) attributable to redeemable noncontrolling interests		(2,468	)			(6,256	)			13,244				(8,728	)
Net income (loss) attributable to noncontrolling interests		197				(632	)			371				(1,740	)
Net income (loss)		(20,850	)			(63,334	)			98,986				(89,725	)
Gain on the sale of real estate, net of tax		(3,263	)			—				(158,769	)			(11,290	)
Gain on the sale of unconsolidated real estate assets		(618	)			—				(6,797	)			(28,326	)
Real estate depreciation and amortization		54,153				55,902				204,752				227,424
Real estate impairment loss, net of tax		—				24,301				—				24,301
Impairment related to unconsolidated real estate ventures (1)		3,885				23,883				19,286				25,263
Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures		2,884				6,626				21,169				28,216
FFO attributable to noncontrolling interests		(326	)			546				(735	)			1,522
FFO Attributable to OP Units	$	35,865			$	47,924			$	177,892			$	177,385
FFO attributable to redeemable noncontrolling interests		(4,776	)			(4,792	)			(21,846	)			(18,034	)
FFO Attributable to Common Shareholders	$	31,089			$	43,132			$	156,046			$	159,351
FFO attributable to OP Units	$	35,865			$	47,924			$	177,892			$	177,385
Transaction and other costs, net of tax and noncontrolling interests (2)		981				865				5,313				8,586
Business interruption insurance proceeds		—				(4,517	)			—				(4,517	)
Loss (income) from investments, net		109				(2,711	)			(10,819	)			(2,711	)
(Gain) loss from mark-to-market on derivative instruments, net of noncontrolling interests		1,487				(292	)			(6,686	)			(342	)
Loss on the extinguishment of debt		—				—				3,073				—
Earnings and distributions in excess of our investment in unconsolidated real estate venture		(405	)			(181	)			(988	)			(883	)
Share-based compensation related to Formation Transaction and special equity awards		1,022				3,459				5,391				16,325
Lease liability adjustments		—				(134	)			—				(134	)
Amortization of management contracts intangible, net of tax		1,106				1,073				4,422				4,290
Unconsolidated real estate ventures allocated share of above adjustments		21				(543	)			1,150				(435	)
Core FFO Attributable to OP Units	$	40,186			$	44,943			$	178,748			$	197,564
Core FFO attributable to redeemable noncontrolling interests		(5,883	)			(4,494	)			(23,424	)			(20,106	)
Core FFO Attributable to Common Shareholders	$	34,303			$	40,449			$	155,324			$	177,458
FFO per common share - diluted	$	0.27			$	0.33			$	1.31			$	1.22
Core FFO per common share - diluted	$	0.30			$	0.31			$	1.30			$	1.36
Weighted average shares - diluted (FFO and Core FFO)		113,917				129,009				119,036				130,839
See footnotes under table below.

FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP) (Unaudited)
in thousands, except per share data		Three Months Ended December 31,								Year Ended December 31,
		2022				2021				2022				2021
FAD
Core FFO attributable to OP Units		$	40,186			$	44,943			$	178,748			$	197,564
Recurring capital expenditures and Second-generation tenant improvements and leasing commissions (3)			(16,780	)			(21,773	)			(53,876	)			(56,554	)
Straight-line and other rent adjustments (4)			(7,655	)			(2,985	)			(17,442	)			(15,539	)
Third-party lease liability assumption payments			—				—				(25	)			(1,803	)
Share-based compensation expense			8,084				9,663				34,462				34,583
Amortization of debt issuance costs			1,162				1,142				4,595				4,469
Unconsolidated real estate ventures allocated share of above adjustments			2,315				(1,332	)			(1,240	)			(5,469	)
Non-real estate depreciation and amortization			546				795				3,114				2,975
FAD available to OP Units (A)		$	27,858			$	30,453			$	148,336			$	160,226
Distributions to common shareholders and unitholders (B)		$	29,625			$	33,137			$	123,829			$	135,771
FAD Payout Ratio (B÷A) (5)			106.3	%			108.8	%			83.5	%			84.7	%
Capital Expenditures
Maintenance and recurring capital expenditures		$	6,282			$	8,121			$	22,137			$	23,827
Share of maintenance and recurring capital expenditures from unconsolidated real estate ventures			72				168				550				804
Second-generation tenant improvements and leasing commissions			10,276				12,815				30,621				30,095
Share of Second-generation tenant improvements and leasing commissions from unconsolidated real estate ventures			150				669				568				1,828
Recurring capital expenditures and Second-generation tenant improvements and leasing commissions			16,780				21,773				53,876				56,554
Non-recurring capital expenditures			11,822				15,008				52,016				28,081
Share of non-recurring capital expenditures from unconsolidated real estate ventures			5				145				63				429
First-generation tenant improvements and leasing commissions			5,075				6,229				27,349				11,370
Share of First-generation tenant improvements and leasing commissions from unconsolidated real estate ventures			229				987				1,267				2,471
Non-recurring capital expenditures			17,131				22,369				80,695				42,351
Total JBG SMITH Share of Capital Expenditures		$	33,911			$	44,142			$	134,571			$	98,905

_________________
(1)	Related to decreases in the value of the underlying real estate assets.
(2)	Includes pursuit costs related to completed, potential and pursued transactions, demolition costs, integration and severance costs, and other expenses.
(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 quarterly 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 December 31,								Year Ended December 31,
		2022				2021				2022				2021
Net income (loss) attributable to common shareholders		$	(18,579	)		$	(56,446	)		$	85,371			$	(79,257	)
Add:
Depreciation and amortization expense			56,174				58,173				213,771				236,303
General and administrative expense:
Corporate and other			15,611				15,344				58,280				53,819
Third-party real estate services			22,107				27,124				94,529				107,159
Share-based compensation related to Formation Transaction and special equity awards			1,022				3,459				5,391				16,325
Transaction and other costs			879				1,518				5,511				10,429
Interest expense			25,679				17,649				75,930				67,961
Loss on the extinguishment of debt			—				—				3,073				—
Impairment loss			—				25,144				—				25,144
Income tax expense (benefit)			(1,336	)			(986	)			1,264				3,541
Net income (loss) attributable to redeemable noncontrolling interests			(2,468	)			(6,256	)			13,244				(8,728	)
Net income (loss) attributable to noncontrolling interests			197				(632	)			371				(1,740	)
Less:
Third-party real estate services, including reimbursements revenue			21,050				23,309				89,022				114,003
Other revenue			1,663				2,013				7,421				7,671
Loss from unconsolidated real estate ventures, net			(4,600	)			(25,583	)			(17,429	)			(2,070	)
Interest and other income, net			1,715				8,672				18,617				8,835
Gain on the sale of real estate, net			3,263				—				161,894				11,290
Consolidated NOI			76,195				75,680				297,210				291,227
NOI attributable to unconsolidated real estate ventures at our share			4,483				6,289				26,861				29,232
Non-cash rent adjustments (1)			(7,655	)			(2,985	)			(17,442	)			(15,539	)
Other adjustments (2)			7,069				6,107				27,739				20,732
Total adjustments			3,897				9,411				37,158				34,425
NOI		$	80,092			$	85,091			$	334,368			$	325,652
Less: out-of-service NOI loss (3)			(805	)			(1,745	)			(4,849	)			(6,382	)
Operating Portfolio NOI		$	80,897			$	86,836			$	339,217			$	332,034
Non-Same Store NOI (4)			3,744				14,988				36,962				62,293
Same Store NOI (5)		$	77,153			$	71,848			$	302,255			$	269,741
Change in Same Store NOI			7.4	%							12.1	%
Number of properties in Same Store pool			48								47

_________________
(1)	Adjustment to exclude straight-line rent, above/below market lease amortization and lease incentive amortization.
(2)	Adjustment to include other revenue and payments associated with assumed lease liabilities related to operating properties and to exclude commercial lease termination revenue and allocated corporate general and administrative expenses to operating properties.
(3)	Includes the results of our Under-Construction assets and 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/20230221005638/en/

Barbat Rodgers

Senior Vice President, Investor Relations

(240) 333‑3805

brodgers@jbgsmith.com

Source: JBG SMITH

FAQ

What were JBG SMITH's financial results for Q4 2022?

JBG SMITH reported a net loss of $18.6 million for Q4 2022, with FFO of $31.1 million.

How much did JBG SMITH earn in Funds From Operations in 2022?

The Funds From Operations (FFO) for JBG SMITH in 2022 was $156 million.

What is the occupancy rate of JBG SMITH's multifamily properties?

As of December 31, 2022, JBG SMITH's multifamily portfolio was 94.5% leased.

Did JBG SMITH declare any dividends in 2022?

Yes, JBG SMITH declared a quarterly dividend of $0.225 per share on December 15, 2022.

What is the total enterprise value of JBG SMITH as of December 31, 2022?

JBG SMITH's total enterprise value was approximately $4.7 billion as of December 31, 2022.