of total annualized rent at our share. The occurrence of events that have a negative impact on the demand for federal government office space, such as a decrease in federal government payrolls or a change in policy that prevents governmental tenants from renting our office space, would have a much larger adverse effect on our ~~revenues~~revenue than a corresponding occurrence affecting other categories of tenants. Additionally, a federal government shutdown could delay or prevent us from collecting rent payments from our federal government tenants. If demand for federal government office space were to decline, it would be more difficult for us to lease our buildings and could reduce overall market demand and corresponding rental rates, all of which could have a material adverse effect on us.

~~We may face additional risks and costs associated with directly managing assets occupied~~ For example, we have been notified by ~~government tenants.~~

~~As of December 31, 2017, we owned 27 assets~~various GSA tenants that they are vacating their space totaling approximately 293,000 square feet in ~~which some or all of the tenants were federal government agencies.~~2024. Lease agreements with these federal government agencies contain provisions required by federal law, which require, among other things, that the lessor of the property agree to comply with certain rules and regulations, including rules and regulations related to ~~anti-kickback procedures, examination of records,~~ audits and records ~~equal opportunity provisions, prohibition against segregated facilities, certain executive orders,~~and subcontractor cost or pricing data, and certain provisions intending to assist small businesses. Through one of our wholly owned subsidiaries, we directly manage assets with federal government agency tenants and, therefore, we are subject to additional risks associated with compliance with all applicable federal rules and regulations.data. In addition, there are ~~certain~~ additional requirements relating to the potential application of equal opportunity provisions and ~~the~~ related ~~requirement~~requirements to prepare written affirmative action plans applicable to government contractors and subcontractors. Some of the factors used to determine whether these requirements apply to a company that is affiliated with the actual government contractor (the legal entity that is the lessor under a lease with a federal government agency) include whether such company and the government contractor are under common ownership, have common management, and are under common control. We own the entity that is the government contractor and the property manager, increasing the risk that requirements of the Employment Standards ~~Administration’s~~Administration's Office of Federal Contract Compliance Programs and requirements to prepare affirmative action plans pursuant to the applicable executive order may be determined to be applicable to us. Compliance with these regulations is costly and any increase in regulation could increase our costs, which could have a material adverse effect on us.

~~Capital markets and economic conditions can materially affect our liquidity, financial condition and results of operations, as well as the value of our debt and equity securities.~~

There are many factors that can affect the value of our equity securities and any debt securities we may issue in the future, including the state of the capital markets and the economy. Demand for office space may decline nationwide as it did in 2008 and 2009, due to an economic downturn, bankruptcies, downsizing, layoffs and cost cutting. Government action or inaction may adversely affect the state of the capital markets. The cost and availability of credit may be adversely affected by illiquid credit markets and wider credit spreads, which may adversely affect our liquidity and financial condition, including our results of operations, and the liquidity

and financial condition of our tenants. Our inability or the inability of our tenants to timely refinance maturing liabilities and access the capital markets to meet liquidity needs may materially affect our financial condition and results of operations and the value of our equity securities and any debt securities we may issue in the future.

We are exposed to risks associated with real estate development and redevelopment, such as unanticipated expenses, delays and other contingencies, any of which could have a material adverse effect on us.

Real estate development and redevelopment activities are a critical element of our business strategy, and we expect to engage in such activities with respect to ~~certain~~several of our properties and with properties that we may acquire in the future. To the extent that we do so, we will continue to be subject to ~~certain~~ risks, including, without limitation:

●

construction or redevelopment costs of a project may exceed original estimates, possibly making the project less profitable than originally estimated, or unprofitable;

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inflation could increase the costs of construction and development projects, which could decrease the yield on such projects, delaying their commencement or resulting in fewer such pursuits. In 2023, these conditions made new development starts infeasible;

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time required to complete the construction or redevelopment of a project or to lease-up the completed project may be greater than originally anticipated, thereby adversely affecting our cash flow and liquidity;

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contractor, subcontractor and supplier disputes, strikes, labor disputes or shortages, weather conditions or supply disruptions (including those related to the supply chain);

●

failure to achieve expected occupancy and/or rent levels within the projected time frame, if at all;

●

delays with respect to obtaining, or the inability to obtain, necessary zoning, occupancy, land use and other governmental permits, and changes in zoning and land use laws;

●

occupancy rates and rents of a completed project may not be sufficient to make the project profitable;

●

incurrence of design, permitting and other development costs for opportunities that we ultimately abandon;

●

the ability of prospective real estate venture partners or buyers of our properties to obtain financing; and

●

the availability and pricing of financing to fund our development activities on favorable terms or at all.

~~construction or redevelopment costs of a project may exceed original estimates, possibly making the project less profitable than originally estimated, or unprofitable;~~

~~contractor and subcontractor disputes, strikes, labor disputes, weather conditions or supply disruptions;~~

~~failure to achieve expected occupancy and/or rent levels within the projected time frame, if at all;~~

~~delays with respect to obtaining, or the inability to obtain, necessary zoning, occupancy, land use and other governmental permits, and changes in zoning and land use laws;~~

~~occupancy rates and rents of a completed project may not be sufficient to make the project profitable;~~

~~incurrence of design, permitting and other development costs for opportunities that we ultimately abandon;~~

~~the ability of prospective real estate venture partners or buyers of our properties to obtain financing; and~~

~~the availability and pricing of financing to fund our development activities on favorable terms or at all.~~

Furthermore, if we develop assets in new markets or asset classes where we do not have the same level of market knowledge or experience as with our current markets and asset classes, then we may experience weaker than anticipated performance.

These risks could result in substantial unanticipated delays or expenses and, under certain circumstances, could prevent the initiation or the completion of development or redevelopment activities, any of which could have a material adverse effect on us.

~~We may be unable to identify and complete acquisitions~~

Table of ~~properties that meet our criteria, which may impede our growth.~~Contents

Our business strategy includes the acquisition of office, multifamily and retail properties and properties to be held for development. We evaluate the market for suitable acquisition candidates or investment opportunities that meet our criteria and are compatible with our growth strategies. However, we may be unable to acquire properties identified as potential acquisition opportunities on favorable terms, or at all. We may incur significant costs and divert management attention in connection with evaluating and negotiating potential acquisitions, including ones that we are subsequently unable to complete. Even if we enter into agreements for the acquisition of properties, these agreements are subject to customary conditions to closing, including the completion of due diligence investigations and other conditions that are not within our control, which may not be satisfied. In addition, we may be unable to finance the acquisition on favorable terms or at all. Furthermore, if we acquire assets in new markets or asset classes where we do not have the same level of market knowledge or experience as with our current markets and asset classes, then we may experience weaker than anticipated performance. Our inability to identify, negotiate, finance or consummate property acquisitions, or acquire properties on favorable terms, or at all, could impede our growth and have a material adverse effect on us.

Our future acquisitions may not yield the returns we expect, and we may otherwise be unable to operate acquired properties to meet our financial expectations, which could have a material adverse effect on us.

~~Our future acquisitions and our ability to successfully operate the properties we acquire in such acquisitions may be exposed to the following significant risks:~~

~~even if we are able to acquire a desired property, competition from other potential acquirers may significantly increase the purchase price;~~

~~we may acquire properties that are not accretive to our results upon acquisition, and we may not be able to successfully manage and lease those properties to meet our expectations;~~

~~we may spend more than budgeted amounts to make necessary improvements or renovations to acquired properties;~~

we may be unable to integrate new acquisitions quickly and efficiently, particularly acquisitions of portfolios of properties, into our existing operations, and, as a result, our results of operations and financial condition could be adversely affected;

~~market conditions may result in higher than expected vacancy rates and lower than expected rental rates; and~~

we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities, such as liabilities for clean‑up of undisclosed environmental contamination, claims by tenants, vendors or other persons dealing with the former owners of such properties, liabilities incurred in the ordinary course of business and claims for indemnification by general partners, trustees, officers and others indemnified by the former owners of such properties.

If our future acquisitions do not yield the returns we expect, and we are otherwise unable to operate acquired properties to meet our financial expectations, it could have a material adverse effect on us.

~~We may not be able to control our operating expenses, or our operating expenses may remain constant or increase, even if our revenues do not increase, which could have a material adverse effect on us.~~

Operating expenses associated with owning a property include real estate taxes, insurance, loan payments maintenance, repair and renovation costs, the cost of compliance with governmental regulation (including zoning) and the potential for liability under applicable laws. If our operating expenses increase, our results of operations may be adversely affected. Moreover, operating expenses are not necessarily reduced when circumstances such as market factors, competition or reduced occupancy cause a reduction in revenues from the property. As a result, if revenues decline, we may not be able to reduce our operating expenses associated with the property. An increase in operating expenses or the inability to reduce operating expenses commensurate with revenue reductions could have a material adverse effect on us.

Partnership or real estate venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on ~~partners’~~partners' or ~~co-venturers’~~co-venturers' financial condition and disputes between us and our partners or co-venturers, which could have a material adverse effect on us.

As of December 31, ~~2017, approximately 12.6%~~2023, 7.2% of our assets measured by total square feet ~~were~~at our share was held through real estate ventures, and we expect to co-invest in the future with other third parties through partnerships, real estate ventures or other entities, acquiring noncontrolling interests in or sharing responsibility for managing the affairs of a property, partnership, real estate venture or other entity. In particular, we ~~expect to~~may use real estate ventures as a significant source of equity capital to fund our development strategy. Consequently, with respect to any such third-party arrangement, we would not be in a position to exercise sole decision-making authority regarding the property, partnership, real estate venture or other entity, or structure of ownership and may, under certain circumstances, be exposed to risks not present were a third party not involved, including the possibility that partners or co-venturers might become bankrupt or fail to fund their share of required capital contributions, and we may be forced to make contributions to maintain the value of the property. Partners or co-venturers may have economic or other business interests or goals that are inconsistent or in direct conflict with our business interests or goals and may be in a position to take action or withhold consent contrary to our policies or objectives. ~~In some instances, partners or co-venturers may have competing interests in our markets that could create conflict of interest issues.~~ These investments may also have the potential risk of impasses on decisions, such as a sale, because neither we nor the partner or co-venturer would have full control over the partnership or real estate venture. We and our respective partners or co-venturers may each have the right to trigger a buy-sell right or forced sale arrangement, which could cause us to sell our interest, or acquire our ~~partners’~~partners' or ~~co-venturers’~~co-venturers' interest, or to sell the underlying asset, either on unfavorable terms or at a time when we otherwise would not have initiated such a transaction. In addition, a sale or transfer by us to a third party of our interests in the partnership or real estate venture may be subject to consent rights or rights of first refusal in favor of our partners or co-venturers, which would in each case restrict our ability to dispose of our interest in the partnership or real estate venture. Where we are a limited partner or non-managing member in any partnership or limited liability company, if the entity takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in that entity, including by contributing our interest to a subsidiary of ours that is subject to corporate level income tax. Disputes between us and partners or co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and/or trustees from focusing their time and effort on our business. ~~Consequently, actions by or disputes with partners or co-venturers might result in subjecting assets owned by the partnership or real estate venture to additional risk.~~ In addition, we may in certain circumstances be liable for the actions of our third-party partners or co-venturers. Our real estate ventures may be subject to debt, and the refinancing of such debt may require equity capital calls. We will review the qualifications and previous experience of any partners and co-venturers, although we may not obtain financial information from, or undertake independent investigations with respect to, prospective partners or co-venturers. In addition,Furthermore, any cash distributions from real estate ventures will be subject to the operating agreements of the real estate ventures, which may limit distributions, the timing of distributions or specify certain preferential distributions among the respective parties. The occurrence of any of the risks described above could have a material adverse effect on us.

~~We may be unable to renew leases, lease vacant space or re-let space as leases expire, which could have a material adverse effect on us.~~

As of December 31, 2017, leases representing 8.9% of our share of the office and retail square footage in our Operating Portfolio will expire during the year ended December 31, 2018 and 12.3% of our share of the square footage of the assets in our office and other portfolios was unoccupied and not generating rent. We cannot assure you that expiring leases will be renewed or that our assets will be re-let at rental rates equal to or above current average rental rates or that substantial free rent, tenant improvements, early termination rights or below-market renewal options will not be offered to attract new tenants or retain existing tenants.

In addition, our ability to lease our multifamily assets at favorable rates, or at all, may be adversely affected by any increase in supply and/or deterioration in the multifamily market, which is dependent upon the overall level of spending in the economy; and spending is adversely affected by, among other things, job losses and unemployment levels, recession, personal debt levels, housing market conditions, stock market volatility and uncertainty about the future.

If the rental rates on new leases at our assets decrease, our existing tenants do not renew their leases or we do not re-let a significant portion of our available space and space for which leases expire, it could have a material adverse affect on us.

We depend on major tenants in our ~~office~~commercial portfolio, and the bankruptcy, insolvency or inability to pay rent of any of these tenants could have a material adverse effect on us.

As of December 31, ~~2017,~~2023, the 20 largest office and retail tenants in our ~~operating portfolio~~Operating Portfolio represented ~~approximately 49.3%~~61.7% of our share of total annualized office and retail rent. In many cases, through tenant improvement allowances and other concessions, we have made substantial upfront investments in leases with our major tenants that we may not recover if they fail to pay rent through the end of the lease term.

The inability or failure of a major tenant to pay rent, or the bankruptcy or insolvency of a major tenant, may adversely affect the income produced by our Operating Portfolio. If a tenant becomes bankrupt or insolvent, federal law may prohibit us from evicting such tenant based solely upon such bankruptcy or insolvency. In addition, a bankrupt or insolvent tenant may be authorized to reject and terminate its lease with us. If a lease is rejected by a tenant in bankruptcy, we may have only a general unsecured claim for damages that is limited in amount and may only be paid to the extent that funds are available and in the same percentage as is paid to all other holders of unsecured claims. Moreover, any claim against this tenant for unpaid, future rent would be subject to a statutory cap that might be substantially less than the remaining rent owed under the lease.

If any of our major tenants were to experience a downturn in its business, or a weakening of its financial condition resulting in its failure to make timely rental payments or causing it to default under its lease,Additionally, we may experience delays in enforcing our rights as landlord due to federal, state and local laws and regulations and may incur substantial costs in protecting our investment. Any such event could have a material adverse effect on us.

We derive a significant portion of our ~~revenues~~revenue from five of our assets.

As of December 31, ~~2017,~~2023, five of our assets in the aggregate generated ~~approximately 25%~~26.1% of our share of annualized rent. The occurrence of events that have a negative impact on one or more of these assets, such as a natural disaster that damages one or more of these assets, would have a much larger adverse effect on our ~~revenues~~revenue than a corresponding occurrence affecting a less significant property. A substantial decline in the ~~revenues~~revenue generated by one or more of these assets could have a material adverse effect on us.

We derive most of our revenues from office assets and are subject to risks that affect the businesses of our office tenants, which are generally financial, legal and other professional firms as well as the federal government and defense contractors.

As of December 31, 2017, our 51 operating office assets generated approximately 80.9% of our share of annualized rent. As a result, the occurrence of events that have a negative impact on the market for office space, such as increased unemployment in the Washington, DC metropolitan area, would have a much larger adverse effect on our revenues than a corresponding occurrence affecting our other segments. Our office tenants are generally financial, legal and other professional firms, as well as the federal government and defense contractors. Consequently, we are subject to factors that affect the financial, legal and professional services industries or the federal government generally, including the state of the economy, stock market volatility, and the level of unemployment. These factors could adversely affect the financial condition of our office tenants and the willingness of firms to lease space in our office buildings, which in turn could have a material adverse effect on us.

~~Some of our assets depend on anchor or major retail tenants to attract shoppers and could be adversely affected by the loss of, or a store closure by, one or more of these tenants.~~

Some of our assets are anchored by large, nationally recognized tenants. These tenants may experience a downturn in their business that may significantly weaken their financial condition. As a result, these tenants may fail to comply with their contractual obligations to us, seek concessions to continue operations or declare bankruptcy, any of which could result in the termination of these tenants’ leases. In addition, some of our tenants may cease operations at stores in our assets while continuing to pay rent. Moreover, mergers or consolidations among large retail establishments could result in the closure of existing stores or duplicate or geographically overlapping store locations, which could include stores at our assets.

Loss of, or a store closure by, an anchor or significant tenant could decrease customer traffic, thereby decreasing sales for our other tenants at the applicable retail property. If sales of our other tenants decrease, they may be unable to pay their minimum rents or expense recovery charges. These circumstances may significantly reduce our occupancy level or the rent we receive from our retail assets, and we may not have the right to re-lease vacated space or we may be unable to re-lease vacated space at attractive rents or at all. Moreover, if a significant tenant or anchor store defaults, we may experience delays and costs in enforcing our rights as landlord to recover amounts due to us under the terms of our agreements with those parties.

~~The occurrence of any of the situations described above, particularly if it involves an anchor or major tenant with leases in multiple locations, could have a material adverse effect on us.~~

Our Placemaking ~~business model~~ depends in significant part on a retail component, which frequently involves retail assets embedded in or adjacent to our ~~office~~multifamily assets and/or ~~multifamily~~commercial assets, making us subject to risks that affect the retail environment generally, such as competition from discount and online retailers, weakness in the economy, fluctuations in foot traffic, pandemics, a decline in consumer spending and the financial condition of ~~large~~major retail ~~companies,~~tenants, any of

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which could adversely affect market rents for retail space and the willingness or ability of retailers to lease space in our retail assets.

We own and operate retail real estate assets and, consequently, are subject to factors that affect the retail environment generally, as well as the market for retail space. The retail environment and the market for retail space have previously been, and could again be, adversely affected by increasing competition from online retailers and other online businesses, discount retailers and outlet malls, weakness in national, regional and local economies, consumer spending and consumer confidence, adverse financial condition of some large retailing companies, ongoing consolidation in the retail sector and an excess amount of retail space in a number of markets. Increases in online consumer spending may significantly affect our retail tenants’ ability to generate sales in their stores. This inability to generate sales may cause retailers to, among other things, close stores, decrease the size of new or existing stores, ask for concessions or go bankrupt, all of which could have a material adverse effect on us.

~~Additionally, our Placemaking model depends in significant part on a retail component, which frequently involves retail assets embedded in or adjacent to our office and/or multifamily assets and if~~

If our retail assets lose tenants, whether to the proliferation of ~~e-commerce business~~online businesses and discount retailers, a decline in general economic conditions and consumer spending or otherwise, it could have a material adverse effect on us.

If we fail to reinvest in and redevelop our assets ~~so as~~ to maintain their attractiveness to retailers and shoppers, then retailers or shoppers may perceive that shopping at other venues or online is more convenient, cost-effective or otherwise more attractive, which could negatively affect our ability to rent retail space at our assets.

In addition, some of our assets depend on anchor or major retail tenants and/or occupancy in surrounding offices to attract shoppers and could be adversely affected by the loss of, or a store closure by, one or more of these tenants or changes to in-office policies of surrounding businesses. Any of the foregoing factors could adversely affect the financial condition of our retail tenants, the willingness of retailers to lease space from us, and the success of our Placemaking, ~~business model,~~ which could have a material adverse effect on us.

The ~~composition of our portfolio by asset type may change over time, which could expose us to different asset class risks than if our portfolio composition remained static.~~

We own office, multifamily and other assets, with office representing 80.9% of our annualized rent and 64.5% of our portfolio based on square footage. Therefore, our results of operations are more affected by conditions in the office market than markets for other asset types. If the composition of our portfolio changes, however, then we would become more exposed to the risks and markets of other asset classes. Under our current business plan, we expect that multifamily assets will become a greater proportion of our portfolio. If we are successful in executing the current business plan, then we will become more exposed to the risks of the multifamily market and we may not manage those assets as well as our office assets, any of which could have a material adverse effect on us.

~~Real estate is a competitive business.~~

We compete with numerous acquirers, developers, owners and operators of commercial real estate including other REITs, private real estate funds, domestic and foreign financial institutions, life insurance companies, pension trusts, partnerships and individual investors, some of which may have greater financial resources and be willing to accept lower returns on their investments than we are. The principal means of competition in leasing are lease terms (including rent charged and tenant improvement allowances), location, services provided and the nature and condition of the asset to be leased. If our competitors offer space at rental rates below current market rates, below the rental rates we currently charge our tenants, in better locations within our markets, in higher quality assets or offer better services, we may lose potential tenants and we may be pressured to reduce our rental rates below those we currently charge to retain tenants when our tenants’ leases expire.

Our success depends upon, among other factors, trends of the global, national, regional and local economies, the financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation and population and employment trends.

~~We depend on leasing space to tenants on economically favorable terms and collecting rent from tenants who may not be able to pay.~~

Our financial results depend significantly on leasing space in our assets to tenants on economically favorable terms. In addition, because a majority of our income is derived from renting real property, our income, funds available to pay indebtedness and funds available for distribution to shareholders will decrease if our tenants cannot pay their rent or if we are not able to maintain occupancy levels on favorable terms. If a tenant does not pay its rent, we might not be able to enforce our rights as landlord without delays and might incur substantial legal and other costs. During periods of economic adversity, there may be an increase in the number of tenants that cannot pay their rent and an increase in vacancy rates, which could have a material adverse effect on us.

We may find it necessary to make rent or other concessions and/or significant capital expenditures to improve our assets to retain and attract tenants, which could have a material adverse effect on us.

We may find it necessary to make rent or other concessions to tenants, accommodate requests for renovations, build-to-suit remodeling and other improvements or provide additional services to our tenants. As a result, we may have to make significant capital or other expenditures to retain tenants whose leases expire and to attract new tenants in sufficient numbers. If the necessary capital is unavailable, we may be unable to make such expenditures. This could result in non-renewals by tenants upon expiration of their leases and our vacant space remaining untenanted, which could have a material adverse effect on us.

~~Affordable housing and tenant protection regulations may limit our ability to increase rents and pass through new or increased operating expenses to our tenants.~~

Certain states and municipalities have adopted laws and regulations imposing restrictions on the timing or amount of rent increases and other tenant protections. As of December 31, 2017, approximately 5% of the multifamily units in our Operating Portfolio were designated as affordable housing. In addition, Washington, DC and Montgomery County, Maryland have laws that require, in certain circumstances, an owner of a multifamily rental property to allow tenant organizations the option to purchase the building at a market price if the owner attempts to sell the property. We expect to continue operating and acquiring assets in areas that either are subject to these types of laws or regulations or where such laws or regulations may be enacted in the future. Such laws and regulations limit our ability to charge market rents, increase rents, evict tenants or recover increases in our operating expenses and could make it more difficult for us to dispose of assets in certain circumstances.

~~Our success depends on our senior management team whose continued service is not guaranteed, and the~~ loss of one or more members of ~~these persons~~our senior management team could adversely affect our ability to manage our business and to implement our growth strategies or could create a negative perception in the capital markets.

Our success and our ability to implement and manage anticipated future growth depend, in large part, upon the efforts of our senior management ~~team, who have extensive market knowledge and relationships, and exercise substantial influence over our operational, financing, acquisition and disposition activity.~~team. Members of our senior management team have national or regional industry reputations that attract business and investment opportunities and assist us in negotiations with lenders, existing and potential tenants and other industry participants. The loss of services of one or more members of our senior management team, or our inability to attract and retain similarly qualified personnel, could adversely affect our business, diminish our investment opportunities and weaken our relationships with lenders, business partners, existing and prospective tenants and industry participants, which could have a material adverse effect on us.

The actual density of our ~~future~~ development pipeline and/or any ~~particular future~~ development parcel may not be consistent with our estimated potential development density.

As of December 31, ~~2017,~~2023, we estimate that our ~~43-asset future~~17 assets in the development pipeline will total ~~over approximately 21.4~~10.8 million square feet ~~(17.9~~(8.8 million square feet at our share) of estimated potential development density. ~~We caution you not to place undue reliance on the~~The potential development density estimates for our ~~future~~ development pipeline and/or any particular ~~future~~ development parcel ~~because they~~ are based solely on our estimates, using data available to us, and our business plans as of December 31, ~~2017.~~2023. The actual density of our ~~future~~ development pipeline and/or any ~~particular future~~ development parcel may differ substantially from our estimates based on numerous factors, including our inability to obtain necessary zoning, land use and other required entitlements, legal challenges to our plans by activists and others, as well as building, occupancy and other required governmental permits and authorizations, and changes in the entitlement, permitting and authorization processes that restrict or delay our ability to develop, redevelop or use our ~~future~~ development pipeline at anticipated density levels. Moreover, we may strategically choose not to develop, redevelop or use our future development pipeline to its maximum potential development density or may be unable to do so as a result of factors beyond our control, including our ability to obtain financing on terms and conditions that we find acceptable, or at all, to fund our development activities. We can provide no assurance that the actual density of our ~~future~~ development pipeline and/or any ~~particular future~~ development parcel will be consistent with our estimated potential development density.

~~We may not be able to realize potential incremental annualized rent from our office, multifamily or other lease-up opportunities.~~

Based on current market demand in our submarkets and the efforts of our dedicated in-house leasing teams, we believe we can increase our occupancy and revenue at certain office, multifamily and retail assets. However, we cannot assure you that we will be able to realize potential incremental annualized rent from our office, multifamily or other lease-up opportunities. Our ability to increase our occupancy and revenue at certain office, multifamily and other assets may be adversely affected by an increase in supply and/or deterioration in the office, multifamily or other markets. In addition, if our competitors offer space at rental rates below current asking rates or below our in-place rates, we may experience difficulties attracting new tenants or retaining existing tenants and may be pressured to reduce our rental rates below those we currently charge or to offer more substantial free rent, tenant improvements, early termination rights or below-market renewal options in order to attract or retain tenants. We caution you not to place undue reliance on our belief that we can increase our occupancy and revenue at certain office, multifamily and retail assets.

~~Revenues from our third-party asset management and real estate services business may decline more quickly than expected, which could have a material adverse effect on us.~~

Our third-party asset management and real estate services business provides fee-based real estate services to the JBG Legacy Funds and third parties. Our expectation is that the fund portion of this business will wind down over the next several years, but the wind down could accelerate and the business could be less profitable than anticipated. Although we expect to receive fees for the services provided to the funds as they wind down, the amount of those fees will decrease significantly as the number of assets under management is reduced. In addition to reduced revenue, if we cannot reduce our general and administrative expenses to correspond to the decreasing asset management fees, our profitability will be negatively affected. Fees from management of real estate ventures and third parties may also be negatively affected if management contracts are terminated or if we are unable to secure new sources of fee-based revenue. Any of the foregoing could have a material adverse effect on us.

~~We may from time to time be subject to litigation, which could have a material adverse effect on us.~~

We are a party to various claims and routine litigation arising in the ordinary course of business. Some of these claims or others to which we may be subject from time to time may result in defense costs, settlements, fines or judgments against us, some of which are not, or cannot be, covered by insurance. Payment of any such costs, settlements, fines or judgments that are not insured could have a material adverse effect on us. In addition, certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flow, expose us to increased risks that would be uninsured, and/or adversely impact our ability to attract officers and trustees.

~~Some of our potential losses may not be covered by insurance.~~

We maintain general liability insurance as well as all-risk property and rental value insurance coverage, with sub-limits for certain perils such as floods and earthquakes on each of our properties. However, there can be no assurance that losses incurred by us will be covered by these insurance policies. We maintain coverage for terrorism acts including terrorism involving nuclear, biological, chemical and radiological terrorism events, as defined by the Terrorism Risk Insurance Program Reauthorization Act, which expires in December 2020. We will continue to monitor the state of the insurance market and the scope and costs of coverage for acts of

~~terrorism. However, we cannot provide assurance that such coverage will be available on commercially reasonable terms in the future.~~

Our mortgage loans are generally non-recourse and contain customary covenants requiring adequate insurance coverage. Although we believe that we currently have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. If lenders insist on greater coverage than we are able to obtain, it could adversely affect the ability to finance or refinance the properties.

~~Compliance or failure to comply with the Americans with Disabilities Act or other safety regulations and requirements could result in substantial costs.~~

The Americans with Disabilities Act ("ADA") generally requires that public buildings, including our assets, meet certain federal requirements related to access and use by disabled persons. Noncompliance could result in the imposition of fines by the federal government or the award of damages to private litigants and/or legal fees to their counsel. If, under the ADA, we are required to make substantial alterations and capital expenditures in one or more of our assets, including the removal of access barriers, it could have a material adverse effect on us.

Our assets are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements. If we fail to comply with these requirements, we could incur fines or private damage awards. We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that will affect our cash flow and results of operations.

~~Terrorist attacks, such as those of September 11, 2001, may adversely affect the value of our assets and our ability to generate revenue.~~

Our assets are located in the Washington, DC metropolitan area, which has been and may be in the future the target of actual or threatened terrorism activity. As a result, some tenants in this market may choose to relocate their businesses to other markets or to lower-profile office buildings within this market that may be perceived to be less likely targets of future terrorist activity. This could result in an overall decrease in the demand for office space in this market generally or in our assets in particular, which could increase vacancies in our assets or necessitate that we lease our assets on less favorable terms or both. In addition, future terrorist attacks in the Washington, DC metropolitan area could directly or indirectly damage our assets, both physically and financially, or cause losses that materially exceed our insurance coverage. Properties that are occupied by federal government tenants may be more likely to be the target of a future attack. As of December 31, 2017, 27of our assets had federal government agencies as tenants. As a result of the foregoing, the value of our assets and our ability to generate revenues could decline materially, which could have a material adverse effect on us.

~~If one of our tenants were designated a "Prohibited Person" by the Office of Foreign Assets Control, we could be materially adversely effected.~~

Pursuant to Executive Order 13224 and other laws, the Office of Foreign Assets Control of the United States Department of the Treasury ("OFAC") maintains a list of persons designated as terrorists or who are otherwise blocked or banned ("Prohibited Persons") from conducting business or engaging in transactions in the United States and thereby restricts our doing business with such persons. In addition, our leases, loans and other agreements may require us to comply with OFAC and related requirements, and any failure to do so may result in a breach of such agreements. If a tenant or other party with whom we conduct business is placed on the OFAC list or is otherwise a party with whom we are prohibited from doing business, we may be required to terminate the lease or other agreement. Any such termination could result in a loss of revenue and negative publicity and could otherwise have a material adverse effect on us.

~~Our business and operations would suffer in the event of system failures.~~

Despite system redundancy, the implementation of security measures and the existence of a disaster recovery plan for our internal information technology systems, our systems are vulnerable to damages from any number of sources, including computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism, war and telecommunication failures. Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business. We may also incur additional costs to remedy damages caused by such disruptions. Any of the foregoing could have a material adverse effect on us.

The occurrence of cyber incidents, or a deficiency in our cybersecurity, or the cybersecurity of our service providers, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, regulatory enforcement and other legal proceedings, and/or damage to our business relationships, all of which could negatively impact our financial results.

A cyber incident is ~~considered to be~~ any intentional or unintentional adverse event that threatens the confidentiality, integrity, or availability of our information ~~resources. More specifically, a cyber incident is an intentional attack or an unintentional event that~~resources and can include unauthorized persons gaining access to systems to disrupt operations, ~~corrupt~~corrupting data or ~~steal~~stealing confidential information. The risk of a cyber incident or disruption, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks have increased globally. As our reliance on technology ~~has increased,~~increases, so ~~have~~do the risks posed to our systems – both internal and ~~those we have outsourced.~~external. Our primary risks that could directly result from the occurrence of a cyber incident are theft of assets; operational interruption; reputational damage; stolen funds; regulatory enforcement, lawsuits and other legal proceedings; damage to our ~~relationship~~relationships with our tenants; and private data exposure. WeA significant and extended disruption could damage our business or reputation, cause a loss of revenue, have an adverse effect on tenant relations, cause an unintended or unauthorized public disclosure, or lead to the misappropriation of proprietary, personally identifying, and confidential information, any of which could result in us incurring significant expenses to resolve these kinds of issues. Although we have implemented processes, procedures and controls to help mitigate ~~these~~the risks ~~but despite these measures and our increased awareness of a risk of~~associated with a cyber incident, there can be no assurance that these measures will be sufficient for all possible situations. Even security measures

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that are appropriate, reasonable and/or in accordance with applicable legal requirements may not be sufficient to protect the information we maintain. Unauthorized parties, whether within or outside our company, may disrupt or gain access to our systems, or those of third parties with whom we do business, through human error, misfeasance, fraud, trickery, or other forms of deceit, including break-ins, use of stolen credentials, social engineering, phishing, computer viruses or other malicious codes, and similar means of unauthorized and destructive tampering. A successful attack on one of our service providers could result in a compromise of our own network, theft of our data, legal obligations or liabilities, deployment of ransomware or a disruption in our supply chain or of services upon which we rely. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted cyber ~~incident~~incidents evolve and generally are not recognized until they have been launched against a number of targets. Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, making it impossible for us to entirely mitigate this risk. If any of the foregoing risks materialize, it could have a material adverse effect on us.

Pandemics and other health concerns, including COVID-19, could have a ~~limited operating history as a REIT and may not be able to successfully operate as a REIT.~~

We have a limited operating history as a REIT. We cannot assure you that the experience of our senior management team will be sufficient to successfully operate our company as a REIT. We have control systems and procedures to maintain our qualification as a REIT, and these efforts could place a significant strain on our management systems, infrastructure and other resources. Failure to maintain our qualification as a REIT would have a material adverse effect on us.

~~Risks Related to the Formation Transaction~~

We have a limited history operating as an independent company, and our historical financial information is not necessarily representative of the results that we would have achieved as a separate, publicly traded company and may not be a reliable indicator of our future results.

The historical information included herein covering periods prior to the Formation Transaction refers to our business as operated by Vornado and JBG separately from each other. Our historical financial information included herein covering periods prior to the Formation Transaction is derived from the consolidated financial statements and accounting records of Vornado and does not include the results of the assets contributed by JBG for any period prior to completion of the Formation Transaction. Accordingly, the historical financial information included herein does not necessarily reflect the financial condition, results of operations or cash flows that we would have achieved as a separate, publicly traded company during the periods presented or those that we will achieve in the future. Factors that could cause our results to differ from those reflected in our historical financial information and which may adversely impact our ability to receive similar results in the future may include, but are not limited to, the following:

Prior to the Formation Transaction, our business was operated by Vornado or JBG, as applicable, as part of their broader organizations, rather than as an independent company. Vornado and JBG performed various management functions for our business, such as accounting, information technology and finance. Vornado continues to provide some of these functions to us, as described in Note 18 to our consolidated and combined financial statements included herein, and we provide some of these functions on our own behalf through the management business we acquired from JBG. Our historical financial results reflect allocations of expenses from Vornado for such functions and may be less than the expenses we would have incurred had we operated as a separate, publicly traded company. We may need to make certain investments to replicate or outsource from other providers certain facilities, systems, infrastructure and personnel previously provided by Vornado. Continuing to develop our ability to operate as a separate, publicly traded company is costly and difficult. We may not be able to operate our business efficiently or at comparable costs to when we were not a separate, publicly traded company, and our profitability may decline;

Although we have entered into certain transition and other separation-related agreements with Vornado, these arrangements may not fully capture the benefits we have enjoyed as a result of being integrated with Vornado and may result in us paying higher charges than in the past for these services. In addition, services provided to us under the Transition Services Agreement will generally only be provided for up to 24 months following the completion of the Formation Transaction in July 2017, and this may not be sufficient to meet our needs. As a separate, independent company, we may be unable to obtain goods and services at the prices and terms obtained prior to the Formation Transaction, which could decrease our overall profitability. As a separate, independent company, we may also not be as successful in negotiating favorable tax treatments and credits with governmental entities. Likewise, it may be more difficult for us to attract and retain desired tenants. This could have an adversenegative effect on our business, results of operations, cash flows and financial ~~condition;~~

~~Generally, our working capital requirements~~condition.

Pandemics, including COVID-19, as well as both future widespread and ~~capital for our general business purposes, including acquisitions~~localized outbreaks of infectious diseases and capital expenditures, have historically been satisfied as part of the company-wide cash management policies of Vornado or of JBG, as applicable. Going forward, we may need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities, strategic relationships or other ~~arrangements, which may not be on terms as favorable to those obtained by Vornado or JBG,~~health concerns, and the ~~cost~~measures taken to prevent the spread or lessen the impact, could cause a material disruption to multifamily and office industry or the economy as a whole. The impacts of ~~capital for~~such events could be severe and far-reaching, and may impact our ~~business may be higher than Vornado’s or JBG’s cost of capital prior to the Formation Transaction; and~~

As a separate public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the Dodd-Frank Act and are required to prepare our financial statements according to the rules and regulations required by the SEC. We are required to develop and implement control systems and procedures to satisfy our periodic and current reporting requirements under applicable SEC regulations and comply with NYSE listing standards, and this transitionoperations in several ways. Additionally, pandemic outbreaks could ~~place a significant strain on our management systems, infrastructure~~lead governments and other ~~resources. We cannot assure you that~~authorities around the ~~past experience~~world, including federal, state and local authorities in the United States, to impose new or heightened measures intended to mitigate its spread, including restrictions on freedom of ~~our senior management team will be sufficient to successfully operate as a publicly traded company.~~

~~Other significant changes may occur in our cost structure, management, financing~~movement and business operations such as issuing guidelines, travel bans, border closings, business closures, quarantine orders, and orders not allowing the collection of rents, rent increases, or eviction of non-paying tenants. In the event of a decline in business activity and demand for real estate transactions, our ability or desire to grow or diversify our portfolio could be affected. Additionally, local and national authorities could extend or re-implement certain measures imposing restrictions on our ability to enforce contractual rental obligations upon our residents and tenants. Unanticipated costs and operating expenses coupled with decreased anticipated and actual revenue as a result of ~~operating as an independent company. For additional information about the past financial performance of~~compliance with regulations, could negatively impact our business, results of operations, cash flow, and ~~the basis of presentation~~overall financial condition and/or our ability to satisfy certain REIT-related requirements.

The full extent of the ~~historical combined financial statements, refer to "Selected Historical Combined Financial Data," "Management’s Discussion~~impact of a pandemic on our business is largely uncertain and ~~Analysis of Financial Condition and Results of Operations" and the historical financial statements and accompanying notes included herein.~~

~~We are~~ dependent on ~~Vornado~~a number of factors beyond our control, and we are not able to ~~provide certain services~~estimate with any degree of certainty the effect a pandemic, or measures intended to ~~us pursuant to a Transition Services Agreement, and it may be difficult to replace the services provided under such agreement.~~

~~Prior to the Formation Transaction, we relied~~curb its spread, could have on ~~Vornado to provide certain financial, administrative and other support functions to operate~~ our business, results of operations, financial condition and ~~we will continue~~cash flows. Moreover, many of the other risk factors described herein could be more likely to ~~rely~~impact us as a result of a pandemic or measures intended to curb its spread.

Increased focus on ~~Vornado for certain of these services on a transitional basis pursuant to the Transition Services Agreement that we entered into with Vornado. See Note 18 to~~ our ~~consolidated~~ESG business values may constrain our business operations, impose additional costs and ~~combined financial statements included herein. In addition, it may be difficult for~~expose us to replace the services provided by Vornado under the Transition Services Agreement, and the terms of any agreements to replace such services may be less favorable to us. Any failure by Vornado in the performance of such services, or any failure on our part to successfully transition these services away from Vornado by the expiration of the Transition Services Agreement in July of 2019,new risks that could have a material adverse effect on us.

Our business values integrate environmental sustainability, social responsibility, D&I and strong governance practices throughout our organization—these types of ESG matters have become increasingly important to investors and other stakeholders. Some investors may use these factors to determine their investment strategies, while current and potential employees and business partners may consider these factors when considering relationships with us. Certain organizations that provide corporate risk and corporate governance advisory services to investors have developed scores and ratings to evaluate companies based upon ESG metrics, and investors may consider a company's score as a factor in making an investment decision. There can be no assurance that our focus on our ESG business values will be well regarded by investors, particularly since the criteria by which companies are rated for their ESG efforts may change. Additionally, focus and activism related to ESG matters may constrain our business operations or increase expenses, and we may face reputational damage if our corporate responsibility initiatives do not meet the standards set by various constituencies, including those of third-party providers of corporate responsibility ratings and reports. A low ESG score could result in a negative perception of us, exclusion of our securities from consideration by certain investors and/or cause investors to reallocate their capital away from us, each of which could have an adverse impact on the price of our securities.

As we continue to integrate environmental sustainability, social responsibility, D&I and strong governance practices throughout our organization, we could also be criticized by ESG detractors for the scope or nature of our ESG initiatives

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or goals. We could ~~be required to indemnify Vornado for certain material tax obligations~~also encounter negative reactions from governmental actors (such as anti-ESG legislation or retaliatory legislative treatment), tenants and residents, that ~~could arise as addressed in the Tax Matters Agreement.~~

~~The Tax Matters Agreement~~ that we entered into with Vornado provides special rules that allocate tax liabilities if the distribution of JBG SMITH shares by Vornado, together with certain related transactions, is not tax-free. Under the Tax Matters Agreement, we may be required to indemnify Vornado against any taxes and related amounts and costs resulting from (i) an acquisition of all or a portion of our equity securities or our assets, whether by merger or otherwise, (ii) other actions or failures to act by us, or (iii) any of our representations or undertakings being incorrect or violated. In addition, under the Tax Matters Agreement, we are liable for any taxes attributable to us and our subsidiaries, unless such taxes are imposed on us or any of the REITs contributed by Vornado (i) with respect to a period before the distribution as a result of any action taken by Vornado after the distribution, or (ii) with respect to any period as a result of Vornado’s failure to qualify as a REIT for the taxable year of Vornado that includes the distribution.

Unless Vornado and JBG SMITH are both REITs immediately after the distribution of JBG SMITH from Vornado and at all times during the two years thereafter, JBG SMITH could be required to recognize certain corporate-level gains for tax purposes.

~~Section 355(h) of the Code provides that tax-free treatment will not be available unless, as relevant here, Vornado and JBG SMITH are both REITs immediately after the distribution.~~

In addition, the Treasury Department and the IRS recently released temporary Treasury regulations pursuant to which, subject to certain exceptions, a REIT must recognize corporate-level gain if it acquires property from a non-REIT "C" corporation in certain so-called "conversion" transactions and engages in a Section 355 transaction within ten years of such conversion. For this purpose, a conversion transaction refers to the qualification of a non-REIT "C" corporation as a REIT or the transfer of property owned by a non-REIT "C" corporation to a REIT. JBG SMITH or its subsidiaries have acquired property pursuant to conversion transactions within ten years of the distribution. One of the exceptions to the recognition of corporate-level gain applies to a distribution described in Section 355 of the Code in which the distributing corporation and the controlled corporation are both REITs immediately after such distribution and at all times during the two years thereafter.

We believe that each of Vornado and JBG SMITH qualifies as a REIT and intends to operate in a manner so that each qualified immediately after the distribution and will qualify at all times during the two years after the distribution. However, if either Vornado or JBG SMITH failed to qualify as a REIT immediately after the distribution of JBG SMITH from Vornado or fails to qualify at any time during the two years after the distribution, then, for our taxable year that includes the distribution, the IRS may assert that JBG SMITH would have to recognize corporate-level gain on assets acquired in conversion transactions. The Treasury Department recently issued a notice identifying the temporary Treasury regulations as a significant tax regulation that imposes an

undue financial burden on U.S. taxpayers and/or adds undue complexity to the federal tax laws, pursuant to Executive Order 13789 (issued April 21, 2017). In its two reports to the President pursuant to Executive Order 13789, the Treasury Department has indicated that it intends to propose reforms to mitigate the burdens of the regulation. It is unclear the exact form any such proposed reforms would take and what the impact of such reforms would be on JBG SMITH.

We may not be able to engage in potentially desirable strategic or capital-raising transactions for the 24-month period following the Formation Transaction. In addition, if we were able to engage in such transactions, we could be liable for adverse tax consequences resulting therefrom.

To preserve the tax-free treatment of the Formation Transaction, for the two-year period following the Formation Transaction, we are prohibited, except in specific circumstances, from: (i) entering into any transaction pursuant to which all or a portion of our shares would be acquired, whether by merger or otherwise, (ii) issuing equity securities beyond certain thresholds and except in certain circumscribed manners, (iii) repurchasing common shares, (iv) ceasing to actively conduct certain of our businesses, or (v) taking or failing to take any other action that prevents the distribution of JBG SMITH shares by Vornado and certain related transactions from being tax-free.

~~These restrictions may limit our ability to pursue strategic transactions or engage in new business or other transactions that may maximize the value of our business.~~

~~Potential indemnification liabilities to Vornado pursuant to the Separation and Distribution Agreement (the "Separation Agreement")~~ could have a material adverse effect on us.

The Separation Agreement with Vornado governs our ongoing relationship with Vornado. Among other things, the Separation Agreement provides for indemnification obligations designed to make us financially responsible for substantially all liabilities that may exist relating to our business activities, whether incurred prior to or after the Formation Transaction, as well as those obligations of Vornado that we assumed pursuant

We face risks related to the ~~Separation Agreement. If~~real estate industry.

As a REIT we are ~~required to indemnify Vornado under the circumstances set forth in this agreement, we may be~~ subject to ~~substantial liabilities.~~

~~There may be undisclosed liabilities of the Vornado and JBG assets contributed to us in the Formation Transaction that might expose us to potentially large, unanticipated costs.~~

~~Prior to entering into the Master Transaction Agreement ("MTA"), each of Vornado and JBG performed diligence with respect~~significant risks related to the ~~business and assets~~real estate industry, any of the other. However, these diligence reviews were necessarily limited in nature and scope, and may not have adequately uncovered all of the contingent or undisclosed liabilities that we assumed in connection with the Formation Transaction, many of which may not be covered by insurance. The MTA does not provide for indemnification for these types of liabilities by either party post-closing, and, therefore, we may not have any recourse with respect to such unexpected liabilities. Any such liabilities could cause us to experience losses, which may be significant, which could have a material adverse effect on us.

Certain of our trustees and executive officers may have actual or potential conflicts of interest because of their previous or continuing equity interest in, or positions at, Vornado or JBG, as applicable, including members of our senior management, who have an ownership interest in the JBG Legacy Funds and own carried interests in certain JBG legacy Funds and in certain of our real estate ventures that entitles them to receive additional compensation if the fund or real estate venture achieves certain return thresholds.

Some of our trustees and executive officers are persons who are or have been employees of Vornado or were employees of JBG. Because of their current or former positions with Vornado or JBG, certain of our trustees and executive officers own Vornado common shares or other Vornado equity awards or equity interests in certain JBG Legacy Funds and related entities. In addition, one of our trustees continues to serve as chief executive officer and chairman of the Board of Trustees of Vornado. Ownership of Vornado common shares or interests in the JBG Legacy Funds, or service as a trustee or managing partner, as applicable, at either company, could create, or appear to create, potential conflicts of interest.

Certain of the JBG Legacy Funds own assets that were not contributed to us in the combination (the "JBG Excluded Assets"), which JBG Legacy Funds are owned in part by members of our senior management. In addition, although the asset management and property management fees associated with the JBG Excluded Assets were assigned to us upon completion of the Formation Transaction, the general partner and managing member interests in the JBG Legacy Funds held by former JBG executives (who became members of our management team) were not transferred to us and remain under the control of these individuals. As a result, our management’s time and efforts may be diverted from the management of our assets to management of the JBG Legacy Funds, which could adversely affect the execution of our business plan and our results of operations and cash flow.

In addition, members of our senior management have an ownership interest in the JBG Legacy Funds and own carried interests in each fund and in certain of our real estate ventures that entitles them to receive additional compensation if the fund or real estate venture achieves certain return thresholds. As a result, members of our senior management could be incentivized to spend time and effort maximizing the cash flow from the assets being retained by the JBG Legacy Funds and certain real estate ventures, particularly through sales of assets, which may accelerate payments of the carried interest but would reduce the asset management and other fees that would otherwise be payable to us with respect to the JBG Excluded Assets. These ~~actions could adversely impact our results of operations and cash flow.~~

Other potential conflicts of interest with the JBG Legacy Funds include transactions with these funds and competition for tenants. We have, and in the future we may, enter into transactions with the JBG Legacy Funds, such as purchasing assets from them. Any such transaction would create a conflict of interest as a result of our management team’s interests on both sides of the transaction, because we manage the JBG Legacy Funds and because members of our management own interests in the general partner or other managing entities of the funds. We may compete for tenants with the JBG Legacy Funds and because we typically manage the assets of the JBG Legacy Funds, we may have a conflict of interest when competing for a tenant if the tenant is interested in assets owned by us and the JBG Legacy Funds. Any of the above described conflicts of interest could have a material adverse effect on us.

~~Vornado is not required to present investments to us that satisfy our investment guidelines before pursuing such opportunities on Vornado’s behalf.~~

Our agreements with Vornado do not require Vornado to present to us investment opportunities that satisfy our investment guidelines before Vornado pursues such opportunities. While Vornado advised us at the time of the Formation Transaction that it did not intend to make acquisitions within the Washington, DC metropolitan area after the Formation Transaction, should it choose to do so, Vornado is free to direct investment opportunities away from us, and we may be unable to compete with Vornado in pursuing such opportunities. In addition, our declaration of trust provides that a trustee who is also a trustee, officer, employee or agent of Vornado or any of Vornado’s affiliates has no duty to communicate or present any business opportunity to us.

~~We may not achieve some or all of the expected benefits, including expected synergies, of the Formation Transaction.~~

JBG SMITH is a new public company with significantly more revenues, assets and employees than management of the company was responsible for prior to the combination and many members of management, including our CEO, did not have experience running a public company prior to our formation. A primary initial focus of our management team has been integrating the operations of the Vornado and JBG assets that were contributed to us in the Formation Transaction, which, consequently, has required a significant amount of their time and attention. In addition, as part of our integration plan, we expect to realize cost reductions, or synergies, compared to the cost of managing the assets contributed to us by Vornado and JBG separately and compared to the current cost of managing our assets. We may, however, overestimate the amount of synergies or fail to realize all or any of the synergies, which could cause our costs to be higher than expected. Furthermore, if our management team is unable to effectively manage a large, public company or successfully integrate the operations of the Vornado and JBG assets, then it could have a material adverse effect on us.

In connection with the Formation Transaction, Vornado agreed to indemnify us for certain pre-distribution liabilities and liabilities related to Vornado assets. However, there can be no assurance that these indemnities will be sufficient to protect us against the full amount of such liabilities, or that Vornado’s ability to satisfy its indemnification obligation will not be impaired in the future.

Pursuant to the Separation Agreement, Vornado agreed to indemnify us for certain liabilities. However, third parties could seek to hold us responsible for any of the liabilities that Vornado agreed to retain, and there can be no assurance that Vornado will be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering from Vornado any amounts for which we are held liable, such indemnification may be insufficient to fully offset the financial impact of such liabilities and/or we may be temporarily required to bear these losses while seeking recovery from Vornado.

~~Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and share price.~~

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the Dodd-Frank Act and are required to prepare our financial statements according to the rules and regulations required by the SEC. In addition, the Exchange Act requires that we file annual, quarterly and current reports. Our failure to prepare and disclose this information in a timely manner or to otherwise comply with applicable law could subject us to penalties under federal securities laws, expose us to lawsuits and restrict our ability to access financing.

In addition, the Sarbanes-Oxley Act requires that we, among other things, establish and maintain effective internal controls and procedures for financial reporting and disclosure purposes. Internal control over financial reporting is complex and may be revised over time to adapt to changes in our business, or changes in applicable accounting rules. We cannot assure you that our internal control over financial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which we had previously believed that internal controls were effective. If we are not able to maintain or document effective internal control over financial reporting, our independent registered public accounting firm will not be able to certify as to the effectiveness of our internal control over financial reporting.

Matters impacting our internal controls may cause us to be unable to report our financial information on a timely basis, or may cause our company to restate previously issued financial information, and thereby subject us to adverse regulatory consequences, including sanctions or investigations by the SEC, or violations of applicable stock exchange listing rules. There could also be a negative reaction in the financial markets due to a loss of investor confidence in our company and the reliability of our financial statements. Confidence in the reliability of our financial statements is also likely to suffer if we or our independent registered public accounting firm report a material weakness in our internal control over financial reporting. Any of the foregoing could have a material adverse effect on us.

~~Risks Related to Our Indebtedness and Financing~~

~~We have a substantial amount of indebtedness, which may limit our financial and operating activities and expose us to the risk of default under our debt obligations.~~

As of December 31, 2017, we had approximately $2.2 billion aggregate principal amount of consolidated debt outstanding and our unconsolidated real estate ventures had approximately $1.2 billion aggregate principal amount of debt outstanding ($396.3 million at our share), resulting in a total of over $2.6 billion aggregate principal amount of debt outstanding at our share. A portion of our outstanding debt is guaranteed by our operating partnership, and we may incur significant additional debt to finance future acquisition and development activities.

Payments of principal and interest on borrowings may leave us with insufficient cash resources to operate our assets or to pay the dividends currently contemplated. Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following:

~~our cash flow may be insufficient to meet our required principal and interest payments;~~

~~we may be unable to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our ability to meet operational needs;~~

~~we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness;~~

~~we may be forced to dispose of one or more of our assets, possibly on unfavorable terms or in violation of certain covenants to which we may be subject;~~

~~we may violate restrictive covenants in our loan documents, which would entitle the lenders to accelerate our debt obligations; and~~

~~our default under any loan with cross-default provisions could result in a default on other indebtedness.~~

~~If any one of these events were to occur, it could have a material adverse effect on us.~~

Our debt agreements include restrictive covenants, requirements to maintain financial ratios and default provisions, which could limit our flexibility and our ability to make distributions and require us to repay the indebtedness prior to its maturity.

The mortgages on our assets contain customary negative covenants that, among other things, limit our ability, without the prior consent of the lender, to further mortgage the property and to reduce or change insurance coverage. We have a $1.4 billion credit facility under which we have significant borrowing capacity. Additionally, our debt agreements contain customary covenants that, among other things, restrict our ability to incur additional indebtedness and may restrict our ability to engage in material asset sales, mergers, consolidations and acquisitions, and restrict our ability to make capital expenditures. These debt agreements, in some cases, also subject us to guarantor and liquidity covenants, and our credit facility requires, and other future debt may require, us to maintain various financial ratios. Some of our debt agreements contain cash flow sweep requirements and mandatory escrows, and our property mortgages generally require mandatory prepayments upon disposition of underlying collateral. Our ability to borrow is subject to compliance with these and other covenants, and failure to comply with our covenants could cause a default under the applicable debt instrument, and we may then be required to repay such debt with capital from other sources or give possession of a property to the lender. Under those circumstances, other sources of capital may not be available to us, or may be available only on unattractive terms.

~~We may not be able to obtain capital to make investments.~~

Because the Code requires us, as a REIT, to distribute at least 90% of our taxable income, excluding net capital gains, to our shareholders, we depend primarily on external financing to fund the growth of our business. There is a separate requirement to distribute net capital gains or pay a corporate level tax in lieu thereof. Our access to debt or equity financing depends on the willingness of third parties to lend or make equity investments and on conditions in the capital markets generally. There can be no assurance that new financing will be available or available on acceptable terms.

Our future development plans are capital intensive. To complete these plans, we anticipate financing this construction and development through asset sales, real estate ventures with third parties, recapitalizations of assets, and public or private equity offerings, or a combination thereof. Similarly, these plans require an even more significant amount of debt financing. If we are unable to obtain the required debt or equity capital, then we will not be able to execute our business plan, which could have a material adverse effect on us.

For information about our available sources of funds, see "Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources" and the notes to the consolidated and combined financial statements included herein.

High mortgage rates and/or unavailability of mortgage debt may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire or retain, our net income and the amount of cash distributions we can make.

If mortgage debt is not available at reasonable rates, or if lenders currently under contractual obligations to lend to us fail to perform on such obligations, we may not be able to finance the purchase of properties. If we place mortgages on properties, we may be unable to refinance the properties when the loans become due, or refinance on favorable terms or at all, including as a result of increases in interest rates or a decline in the value of our portfolio or portions thereof. If principal payments due at maturity cannot be refinanced, extended or paid with proceeds from other capital transactions, such as new equity issuances, our operating cash flow may not be sufficient in all years to repay all maturing debt. This, in turn, could reduce cash available for distribution to our shareholders and may hinder our ability to raise more capital by issuing more shares or by borrowing more money. In addition, payments of principal and interest made to service our debts may leave us with insufficient cash to make distributions necessary to meet the distribution requirements imposed on REITs under the Code. As a result, we may be forced to postpone capital expenditures necessary for the maintenance of our properties, we may have to dispose of one or more properties on terms that would otherwise be unacceptable to us or we may be forced to allow the mortgage holder to foreclose on a property, any of the foregoing could have a material adverse effect on us.

~~Mortgage debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in a property or group of properties subject to mortgage debt.~~

Incurring mortgage and other secured debt obligations increases our risk of property losses because defaults on indebtedness secured by properties may result in foreclosure actions initiated by lenders and ultimately our loss of the property collateralizing loans for which we are in default. Any foreclosure on a mortgaged property or group of properties could adversely affect the overall value of our portfolio of properties. For tax purposes, a foreclosure on any of our properties that is subject to a nonrecourse mortgage loan would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured

by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Code.

~~Variable rate debt is subject to interest rate risk that could increase our interest expense, increase the cost to refinance and increase the cost of issuing new debt.~~

As of December 31, 2017, $664.0 million of our outstanding consolidated debt was subject to instruments that bear interest at variable rates, and we may also borrow additional money at variable interest rates in the future. Unless we have made arrangements that hedge against the risk of rising interest rates, increases in interest rates would increase our interest expense under these instruments, increase the cost of refinancing these instruments or issuing new debt, and adversely affect our cash flow and our ability to service our indebtedness and make distributions to our shareholders, which could, in turn, adversely affect the market price of our common shares. Based on our aggregate variable rate debt outstanding as of December 31, 2017, an increase of 100 basis points in interest rates would result in a hypothetical increase of approximately $6.7 million in interest expense on an annual basis. The amount of this change includes the benefit of swaps and caps we currently have in place.

~~Failure to hedge effectively against interest rate changes could have a material adverse effect on us.~~

The REIT provisions of the Code impose certain restrictions on our ability to utilize hedges, swaps and other types of derivatives to hedge our liabilities. Subject to these restrictions, we may enter into hedging transactions to protect ourselves from the effects of interest rate fluctuations on floating rate debt. Our hedging transactions may include entering into interest rate cap agreements or interest rate swap agreements. These agreements involve risks, such as the risk that such arrangements would not be effective in reducing our exposure to interest rate changes or that a court could rule that such an agreement is not legally enforceable. In addition, interest rate hedging can be expensive, particularly during periods of rising and volatile interest rates, which could reduce the overall returns on our investments. Failure to hedge effectively against interest rate changes could have a material adverse effect on us. In addition, while such agreements would be intended to lessen the impact of rising interest rates on us, they could also expose us to the risk that the other parties to the agreements would not perform, and that the hedging arrangements may not be effective in reducing our exposure to interest rate changes. Moreover, there can be no assurance that our hedging arrangements will qualify as highly effective cash flow hedges under Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 815, Derivatives and Hedging, or that our hedging activities will have the desired beneficial impact on our results of operations. Furthermore, should we desire to terminate a hedging agreement, there could be significant costs and cash requirements involved to fulfill our obligation under the hedging agreement. Any of the foregoing could have a material adverse effect on us.

~~We may acquire properties or portfolios of properties through tax deferred contribution transactions, which could result in shareholder dilution and limit our ability to sell or refinance such assets.~~

In the future, we may acquire properties or portfolios of properties through tax deferred contribution transactions in exchange for partnership interests in our operating partnership, which may result in shareholder dilution through the issuance of common limited partnership units ("OP Units") that may be exchanged for common shares. This acquisition structure may have the effect of, among other things, reducing the amount of tax depreciation we could deduct (as compared to a transaction where we do not inherit the contributor’s tax basis but acquire tax basis equal to the value of the consideration exchanged) until the OP units issued in such transactions are redeemed for cash or converted into common shares. While no such protection arrangements existed at December 31, 2017, in the future we may agree to protect the contributors’ ability to defer recognition of taxable gain through restrictions on our ability to dispose of, or refinance the debt on, the acquired properties for specified periods of time. Similarly, we may be required to incur or maintain debt we would otherwise not incur or maintain so that we can allocate the debt to the contributors to maintain their tax bases. These restrictions could limit our ability to sell an asset at a time, or on terms, that would be favorable absent such restrictions.

Our decision to dispose of real estate assets would change the holding period assumption in our valuation analyses, which could result in material impairment losses and adversely affect our financial results.

We evaluate real estate assets for impairment based on the projected cash flow of the asset over our anticipated holding period. If we change our intended holding period, due to our intention to sell or otherwise dispose of an asset, then under GAAP, we must reevaluate whether that asset is impaired. Depending on the carrying value of the property at the time we change our intention and the amount that we estimate we would receive on disposal, we may record an impairment loss that would adversely affect our financial results. This loss could be material to our results of operations in the period that it is recognized, which could have a material adverse effect on us.

~~Risks Related to the Real Estate Industry~~

~~Real estate investments’ value and income fluctuate due to various factors.~~

~~The value of real estate fluctuates depending on conditions in the general economy and the real estate business. These conditions may also adversely impact our revenues and cash flows.~~

~~The factors that affect the value of our real estate~~ include, among other things:

●

The value of real estate fluctuates depending on conditions in the general economy and the real estate business. Additionally, adverse changes in these conditions may result in a decline in rental revenue, sales proceeds and occupancy levels at our assets and adversely impact our revenue and cash flows. If rental revenue, sales proceeds and/or occupancy levels decline, we generally would expect to have less cash available to pay indebtedness and for distribution to shareholders. In addition, some of our major expenses, including mortgage loan payments, real estate taxes and maintenance costs generally do not decline when the related rents decline.

●

The cost and availability of credit may be adversely affected by illiquid credit markets and wider credit spreads, and our inability or the inability of our tenants to timely refinance maturing liabilities to meet liquidity needs may materially affect our financial condition and results of operations. Additionally, mortgage loan obligations expose us to risk of foreclosure and the loss of properties subject to such obligations.

●

It may be difficult to buy and sell real estate quickly, or we or potential buyers of our assets may experience difficulty in obtaining financing, which may limit our ability to vary our portfolio promptly in response to changes in economic or other conditions. Additionally, we may be unable to identify, negotiate, finance or consummate acquisitions of properties, or acquire properties on favorable terms, or at all.

●

The composition of our portfolio by asset type is likely to continue to change over time, which could expose us to different asset class risks than if our portfolio composition remained static, and we may be adversely affected by trends in the asset classes we currently own.

●

We may not be able to control the operating expenses associated with our properties, which include real estate taxes, insurance, loan payments, maintenance, and costs of compliance with governmental regulation, or our operating expenses may remain constant or increase, even if our revenue does not increase, which could have a material adverse effect on us.

●

Macroeconomic trends, including increases in inflation and interest rates, could have a material adverse effect on us, as well as our tenants, which may adversely impact our business, financial condition and results of operations.

●

We may be unable to renew leases, lease vacant space or re-let space as leases expire, or do so on favorable terms, which could have a material adverse effect on us. As of December 31, 2023, leases representing 25.7% of our share of the office and retail square footage in our Operating Portfolio were scheduled to expire in 2024 or have month-to-month terms, 6.8% were scheduled to expire in 2025, and 14.4% of our share of the square footage of the assets in our commercial portfolio was unoccupied and not generating rent. We may find it necessary to make rent or other concessions and/or significant capital expenditures to improve our assets to retain and attract tenants.

●

We may be unable to maintain or increase our occupancy and revenue at certain multifamily, commercial and other assets due to an increase in supply, more favorable terms offered by competitors, and/or deterioration in our markets.

●

Increased affordability of residential homes and other competition for tenants of our multifamily properties could affect our ability to retain current residents of our multifamily properties, attract new ones or increase or maintain rents, which could adversely affect our results of operations and our financial condition.

●

We may from time to time be subject to litigation, which may significantly divert the attention of our officers and/or trustees and result in defense costs, settlements, fines or judgments against us, some of which are not, or cannot be, covered by insurance, any of which could have a material adverse effect on us. For example, we are currently a defendant in an antitrust lawsuit, brought by the Washington, D.C. Attorney General, involving RealPage, which is one of our vendors, alleging that RealPage and lessors of multifamily residential real estate conspired, principally in connection with the alleged use of RealPage revenue management systems, to artificially inflate the rental rates for multifamily residential real estate above competitive levels.

●

We own leasehold interests in certain land on which some of our assets are located. If we default under the terms

~~global, national, regional and local economic conditions;~~

~~competition from other available space;~~

~~local conditions such as an oversupply of space or a reduction in demand for real estate in the area;~~

~~how well we manage our assets;~~

~~the development and/or redevelopment~~

Table of ~~our assets;~~

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~~changes in market rental rates;~~

of any of these ground leases, we may be liable for damages and could lose our leasehold interest in the property or our option to purchase the underlying fee interest in such asset. In addition, unless we purchase the underlying fee interests in the land on which a particular property is located, we will lose our right to operate the property or we will continue to operate it at much lower profitability, which would significantly adversely affect our results of operations. In addition, if we are perceived to have breached the terms of a ground lease, the fee owner may initiate proceedings to terminate the lease.

●

Our assets may be subject to impairment losses, which could have a material adverse effect on our results of operations.

●

Climate change, including rising sea levels, flooding, prolonged periods of extreme temperature or other extreme weather, and changes in precipitation and temperature, may result in physical damage to, or a total loss of, our assets located in areas affected by these conditions, including those in low-lying areas close to sea level, such as National Landing, and/or decreases in demand, rent from, or the value of those assets. In addition, we may incur material costs to protect these assets, including increases in our insurance premiums as a result of the threat of climate change, or the effects of climate change may not be covered by our insurance policies. Furthermore, changes in federal and state legislation and regulations on climate change could result in increased utility expenses and/or increased capital expenditures to improve the energy efficiency and reduce carbon emissions of our properties in order to comply with such regulations or result in fines for non-compliance. Any of the foregoing could have a material and adverse effect on us.

~~the timing and costs associated with property improvements and rentals;~~

~~whether we are able to pass all or portions of any increases in operating costs through to tenants;~~

~~changes in real estate taxes and other expenses;~~

~~whether tenants and users consider a property attractive;~~

~~the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;~~

~~availability of financing on acceptable terms or at all;~~

~~inflation or deflation;~~

~~fluctuations in interest rates;~~

~~our ability to obtain adequate insurance;~~

~~changes in zoning laws and taxation;~~

~~government regulation;~~

~~consequences of any armed conflict involving, or terrorist attack against, the United States or individual acts of violence in public spaces;~~

~~potential liability under environmental or other laws or regulations;~~

~~natural disasters;~~

~~general competitive factors; and~~

~~climate changes.~~

The rents or sales proceeds we receive and the occupancy levels at our assets may decline as a result of adverse changes in any of these factors. If rental revenues, sales proceeds and/or occupancy levels decline, we generally would expect to have less cash available to pay indebtedness and for distribution to shareholders. In addition, some of our major expenses, including mortgage payments, real estate taxes and maintenance costs generally do not decline when the related rents decline.

~~It may be difficult to buy and sell real estate quickly, which may limit our flexibility.~~

Real estate investments are relatively difficult to buy and sell quickly. Consequently, we may have limited ability to vary our portfolio promptly in response to changes in economic or other conditions. Moreover, our ability to buy, sell, or finance real estate assets may be adversely affected during periods of uncertainty or unfavorable conditions in the credit markets as we, or potential buyers of our assets, may experience difficulty in obtaining financing.

~~Our property taxes could increase due to property tax rate changes or reassessment, which could have a material adverse effect on us.~~

Even if we qualify as a REIT for U.S. federal income tax purposes, we will be required to pay certain state and local taxes on our properties. The real property taxes on our properties may increase as property tax rates change or as our properties are assessed or reassessed by taxing authorities. Therefore, the amount of property taxes we pay in the future may increase substantially from what we have paid in the past and such increases may not be covered by tenants pursuant to our lease agreements. An increase in the property taxes we pay could have a material adverse effect on us.

We may incur significant costs to comply with environmental laws, and environmental contamination may impair our ability to lease and/or sell real estate.

Our operations and assets are subject to various federal, state and local laws and regulations concerning the protection of the environment including air and water quality, hazardous or toxic substances and health and safety. Under some environmental laws, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released at a property. The owner or operator may also be held liable to a governmental entity or to third parties for property damage or personal injuries and for investigation and clean-up costs incurred by those parties because of the contamination. These laws often impose liability without regard to whether the owner or operator knew of the release of the substances or caused such release. The presence of contamination or the failure to remediate contamination may (i) expose us to third-party liability (e.g., for cleanup costs, natural resource damages, bodily injury or property damage), (ii) subject our properties to liens in favor of the government for damages and costs the government incurs in connection with the contamination, (iii) result in restrictions on the manner in which a property may be used or businesses may be operated, or (iv) impair our ability to sell or lease real estate or to borrow using the real estate as collateral. To the extent we send contaminated materials to other locations for treatment or disposal, we may be liable for cleanup of those sites if they become contaminated. Other laws and regulations govern indoor and outdoor air quality including those that can require the abatement or removal of asbestos-containing materials in the event of damage, demolition, renovation or remodeling, and also govern emissions of and exposure to asbestos fibers in the air. The maintenance and removal of lead paint and certain electrical equipment containing polychlorinated biphenyls (PCBs) are also regulated by federal and state laws. We are also subject to risks associated with human exposure to chemical or biological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be alleged to be connected to allergic or other health effects and symptoms in susceptible individuals. Our predecessor companies may be subject to similar liabilities for activities of those companies in the past. We could incur fines for environmental noncompliance and be held liable for the costs of remedial action with respect to the foregoing regulated substances or related claims arising out of environmental contamination or human exposure at or from our assets.

Most of our assets have been subjected to varying degrees of environmental assessment at various times. To date, these environmental assessments have not revealed any environmental condition material to our business. However, identification of new compliance concerns or undiscovered areas of contamination, changes in the extent or known scope of contamination, human exposure to contamination or changes in cleanup or compliance requirements could result in significant costs to us.

In addition, we may become subject to costs or taxes, or increases therein, associated with natural resource or energy usage (such as a "carbon tax"). These costs or taxes could increase our operating costs and decrease the cash available to pay our obligations or distribute to equity holders.

~~If we default~~

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Increasingly competitive labor markets and our need to provide additional incentives to remain competitive in our hiring and retention efforts may hurt our ability to effectively operate our business and have a negative effect on ~~or fail to renew at expiration the ground leases for land on which some of~~ our ~~assets are located or other long-term leases, our~~business, results of operations, cash flows, and financial condition.

Our success depends on our ability to continue to attract, retain and motivate qualified personnel, but we may not be able to do so on acceptable terms or at all. Recently, the U.S. job market has experienced labor shortages, resulting in intense competition for retaining and hiring skilled employees. Additionally, the competitive labor conditions have significantly increased compensation expectations for our existing and prospective personnel. If we are unable to hire and retain qualified personnel as required for our operations, our business, results of operations, cash flows and financial condition could be adversely affected.

Risks Related to the Capital Markets and Related Activities

We ~~own leasehold interests~~face risks related to our common shares.

These risks include, among other things, the risk that an economic downturn or a deterioration in ~~certain land on which some~~the capital markets may materially affect the value of our ~~assets are located. If we default under~~equity securities; the ~~terms~~absence of any guarantee or certainty regarding the timing, amount, or payment of ~~these ground leases, we~~future dividends on our common shares; the risk of dilution of ownership in our company due to certain actions taken by us; the risk that future offerings of debt or preferred equity securities, which would be senior to our common shares upon liquidation, and in the case of preferred equity securities may be ~~liable~~senior to our common shares for ~~damages~~purposes of dividend distributions or upon liquidation, may adversely affect the per share trading price of our common shares; and ~~could lose our leasehold interest~~the risk that the announcement of a material acquisition may result in a rapid and significant decline in the ~~property~~price of our common shares. If any of the foregoing risks materialize, it could have a material adverse effect on us.

We have a substantial amount of indebtedness, and our debt agreements include restrictive covenants and other requirements, which may limit our financial and operating activities, our future acquisition and development activities, or our option to purchase the underlying fee interest in such assets. In addition, unless we purchase the underlying fee interests in the land on which a particular property is located, we will lose our right to operate the property or we will continue to operate it at much lower profitability, which would significantly adverselyotherwise affect our ~~results of operations. In addition, if we are perceived to have breached the terms of a ground lease, the fee owner may initiate proceedings to terminate the lease.~~ financial condition.

As of December 31, ~~2017, the remaining weighted average term~~2023, we had $2.6 billion aggregate principal amount of consolidated debt outstanding, and our unconsolidated real estate ventures had $235.0 million aggregate principal amount of debt outstanding ($68.0 million at our share), resulting in a total of $2.6 billion aggregate principal amount of debt outstanding at our share. A portion of our ~~ground leases, including unilateral as-of-right extension rights available~~outstanding debt is guaranteed by JBG SMITH LP. Our cash flow from operations may be insufficient to meet our required debt service and payments of principal and interest on borrowings may leave us ~~was approximately 67.1 years.~~with insufficient cash resources to operate our assets or to pay the dividends currently contemplated. Additionally, our debt agreements include customary restrictive covenants, that, among other things, restrict our ability to incur additional indebtedness, to engage in material asset sales, mergers, consolidations and acquisitions, and to make capital expenditures, and some of our debt agreements also include requirements to maintain financial ratios. Our ~~share of annualized rent from assets~~ability to borrow is subject to ~~ground leases~~compliance with these and other covenants, and failure to comply with our covenants could cause a default under the applicable debt instrument, and we may then be required to repay such debt with capital from other sources or give possession of a property to the lender. Any of the foregoing could affect our ability to obtain additional funds as needed, or on favorable terms, which could, among other things, adversely affect our ability to meet operational needs or to finance our future acquisition and development activities.

We may not be able to obtain capital to make investments.

We are primarily dependent on external capital to fund the expected growth of our business. Our access to debt or equity capital depends on the willingness of third parties to lend or make equity investments and on conditions in the capital markets generally. There can be no assurance that new capital will be available or available on acceptable terms.

Our future development plans are capital intensive. To complete these plans, we anticipate funding construction and development through asset sales, real estate ventures with third parties, recapitalizations of assets, and public or private securities offerings, or a combination thereof. Similarly, these plans require a significant amount of debt financing which subjects us to additional risks, such as rising interest rates. For information about our available sources of funds, see "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources" and the notes to the consolidated financial statements included herein.

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We are subject to interest rate risk, which could increase our interest expense, increase the cost to refinance and increase the cost of issuing new debt.

As of December 31, ~~2017~~2023, $670.6 million of our outstanding consolidated debt was ~~approximately $53.8 million,~~subject to instruments that bear interest at variable rates, and we may continue to incur indebtedness that bears interest at variable interest rates. While some of this debt is protected against interest rate increases above specified rates via interest rate cap agreements, the remainder does not benefit from such arrangements. Further, we may borrow money at variable interest rates in the future without the benefit of associated hedges and caps. With respect to these unhedged amounts, increases in interest rates would increase our interest expense under these instruments, increase the cost of refinancing these instruments or ~~9.6% of total annualized rent.~~

~~Climate change may~~issuing new debt, and adversely affect our ~~business.~~

~~Climate change, including rising sea levels, extreme weather~~cash flow and ~~changes~~our ability to service our indebtedness and make distributions to our shareholders, which could, in ~~precipitation and temperature, may result in physical damage to, a decrease in demand for and/or a decrease in rent from and value~~turn, adversely affect the market price of our ~~properties located in the areas affected by these conditions.~~common shares. We ~~own a number of assets in low-lying areas close to sea level, making those assets susceptible to a rise in sea level. If sea levels were to rise, we~~ may ~~incur material costs~~enter into hedging transactions to protect ~~our low-lying assets or sustain damage, a decrease in value or total loss to those assets. Furthermore, our insurance premiums may increase as a result of the threat of climate change or~~ourselves from the effects of ~~climate change may not be~~interest rate fluctuations on floating rate debt. As of December 31, 2023, our hedging transactions included interest rate cap agreements, which covered ~~by our insurance policies. In addition, changes in federal and state legislation and regulations on climate change could result in increased capital expenditures to improve the energy efficiency~~$466.1 million of our ~~existing properties or other related aspects~~outstanding consolidated debt, a significant portion of which is with one counterparty, which also exposes us to counterparty risk. Interest rate hedging can be expensive, particularly during periods of rising and volatile interest rates, which could reduce the overall returns on our investments. Moreover, there can be no assurance that our hedging arrangements will qualify as highly effective hedges under applicable accounting standards. Furthermore, should we desire to terminate a hedging agreement, there could be significant costs and cash requirements. Additionally, we are required to maintain interest rate cap agreements under certain of our ~~properties~~variable rate debt agreements. Renewing, extending or entering into new interest rate cap agreements in ~~order~~a rising and volatile interest rate environment may cause us to ~~comply with such regulations or otherwise adapt~~incur significant upfront costs. Finally, the REIT provisions of the Code impose certain restrictions on our ability to ~~climate change.~~use hedges, swaps and other types of derivatives to hedge our liabilities. Any of the ~~above~~foregoing could ~~have a material~~increase our interest expense, increase the cost to refinance and ~~adverse effect on us.~~

increase the cost of issuing new debt.

Risks and Conflicts of Interest Related to Our Organization and Structure

Tax consequences to holders of ~~JBG SMITH LP limited partnership units~~OP Units upon a sale of certain of our assets may cause the interests of our senior management to differ from your own.

Some holders of ~~JBG SMITH LP limited partnership units,~~OP Units, including some members of our senior management, may suffer different and more adverse tax consequences than holders of our common shares upon the sale of certain of the assets owned by ~~our operating partnership,~~JBG SMITH LP, and therefore these holders may have different objectives regarding the ~~appropriate pricing, timing and other~~ material terms of any sale or refinancing of certain assets, or whether to sell such assets at all.

Certain of our trustees and executive officers may have actual or potential conflicts of interest, including because of their previous or continuing equity interest in, or positions at JBG, including trustees and members of our senior management, who have an ownership interest in the JBG Legacy Funds and own carried interests in certain JBG Legacy Funds and in certain of our real estate ventures that entitle them to receive additional compensation if certain funds or real estate ventures achieve certain return thresholds.

Some of our trustees and executive officers are persons who were employees of JBG, and they own equity interests in certain JBG Legacy Funds and related entities. Ownership of interests in the JBG Legacy Funds and current or past service as a managing member, at JBG, could create, or appear to create, potential conflicts of interest. Certain of the JBG Legacy Funds own the JBG Excluded Assets, which JBG Legacy Funds are owned in part by members of our senior management and certain trustees. In addition, although the asset management and property management fees associated with the JBG Excluded Assets were assigned to us upon completion of the Formation Transaction, the general partner and managing member interests in the JBG Legacy Funds held by former JBG executives (who became members of our management team) and certain trustees were not transferred to us and remain under the control of these individuals. Our management's time and efforts may be diverted from the management of our assets to management of the JBG Legacy Funds, which could adversely affect the execution of our business plan and our results of operations and cash flow.

Members of our senior management and certain trustees have an ownership interest in the JBG Legacy Funds and own carried interests in each fund and in certain of our real estate ventures that entitle them to receive additional compensation if the fund or real estate venture achieves certain return thresholds. Additionally, in the future, we may elect to assign to certain employees a percentage of third-party fees, carried interests or other equity interests in certain assets, joint ventures or other real estate ventures. As a result, such employees could be incentivized to spend time and effort maximizing the

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cash flow from the assets being retained by the JBG Legacy Funds or other relevant real estate ventures in which they have an ownership or other interest, including through sales of assets, which may, for example, accelerate payments of the carried interest but would reduce the asset management and other fees that would otherwise be payable to us with respect to the JBG Excluded Assets. These actions could adversely impact our results of operations and cash flow. Other potential conflicts of interest may arise with the JBG Legacy Funds or other relevant real estate ventures if we engage in direct transactions or compete for tenants. For example, we have entered, and in the future may enter into transactions with the JBG Legacy Funds, such as purchasing assets from them. Any such transaction creates a conflict of interest as a result of our management team's interests on both sides of the transaction, because we manage the JBG Legacy Funds and because members of our management and Board of Trustees own interests in the general partner or other managing entities of the funds. Any of the above-described conflicts of interest could have a material adverse effect on us.

We may acquire properties or portfolios of properties through tax deferred contribution transactions, which could result in shareholder dilution and limit our ability to sell or refinance such assets.

In the future, we may acquire properties or portfolios of properties through tax deferred contribution transactions in exchange for partnership interests in JBG SMITH LP, which may result in shareholder dilution through the issuance of OP Units that may be exchanged for common shares. This acquisition structure may have the effect of, among other things, reducing the amount of tax depreciation we could deduct (as compared to a transaction where we do not inherit the contributor's tax basis but acquire tax basis equal to the value of the consideration exchanged for the property) until the OP Units issued in such transactions are redeemed for cash or converted into common shares. While no such protection arrangements existed as of December 31, 2023, in the future we may agree to protect the contributors' ability to defer recognition of taxable gain through restrictions on our ability to dispose of, or refinance the debt on, the acquired properties for specified periods of time. Similarly, we may be required to incur or maintain debt we would otherwise not incur or maintain so that we can allocate the debt to the contributors to maintain their tax bases. These restrictions could limit our ability to sell an asset at a time, or on terms that would be favorable absent such restrictions.

Our declaration of trust and bylaws, the partnership agreement of ~~our operating partnership~~JBG SMITH LP and ~~Maryland law~~MGCL, and the Code contain provisions that may delay, defer or prevent a change of control transaction that might involve a premium price for our common shares or that our shareholders otherwise believe to be in their best interest.

Our declaration of trust contains ownership limits with respect to our shares.

Generally, to maintain our qualification as a REIT nounder the Code, not more than 50% in value of our outstanding shares of beneficial interest may be owned, directly or indirectly, by five or fewer ~~individuals~~"individuals" (including some types of entities) at any time during the last half of our taxable year. ~~The Code defines "individuals" for purposes of the~~To address this requirement ~~described in the preceding sentence to include some types of entities. Our declaration of trust authorizes~~and other tax considerations, our ~~Board of Trustees to take such actions as it determines are necessary or advisable to preserve our qualification as a REIT. Our~~ declaration of trust prohibits, among other things, the actual, beneficial or constructive ownership by any person of more than 7.5% in value or number of shares, whichever is more restrictive, of the outstanding shares of any class or ~~series.~~series, including our common shares. For these purposes, our declaration of trust includes a "group" as that term is used for purposes of Section 13(d)(3) of the Exchange Act in the definition of "person." Our Board of Trustees may exempt a person, prospectively or retroactively, from these ownership limits if certain conditions are ~~satisfied.~~

satisfied, but is not required to grant any exemption. Our Board of Trustees may determine not to grant an exemption even if no adverse tax or REIT qualification consequences would be caused by ownership in excess of the 7.5% ownership limit.

This ownership limit and the other restrictions on ownership and transfer of our shares contained in our declaration of trust may:

(i) discourage a tender offer or other transactions or a change in management or of control that might involve a premium price for our common shares or that our shareholders might otherwise believe to be in their best interest; or

(ii) result in the transfer of shares acquired in excess of the restrictions to a trust for the benefit of a charitable beneficiary and, as a result, the forfeiture by the acquirer of the benefits of owning the additional shares.

Additionally, our declaration of trust authorizes the Board of Trustees, without shareholder approval, to establish a class or series of common or preferred shares whose terms could delay, deter or prevent a change in control or other transaction that might involve a premium price or otherwise be in the best interest of our shareholders. Our declaration of trust and bylaws contain other provisions that may delay, deter or prevent a change of control or other transaction that might involve a premium price or otherwise be in the best interest of our shareholders.

Provisions of ~~Maryland law~~MGCL could inhibit changes in control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that might involve a premium price for our common shares or that our shareholders might otherwise believe to be in their best interest.

Provisions of the ~~Maryland General Corporation Law, or "MGCL",~~MGCL, may have the effect of inhibiting

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a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of common shares with the opportunity to realize a premium over the then-prevailing market price of such shares, including:

●

provisions that prohibit business combinations between us and an "interested shareholder," defined generally as any holder or affiliate of any holder who beneficially owns 10% or more of the voting power of our shares, for five years after the most recent date on which the shareholder becomes an interested shareholder, and thereafter impose fair price and/or supermajority shareholder voting requirements on these combinations; and

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provisions that provide that a shareholder's "control shares" acquired in a "control share acquisition," as defined in the MGCL, have no voting rights, except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

"business combination" provisions that, subject to limitations, prohibit business combinations between us and an "interested shareholder" (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then-outstanding voting shares at any time within the two-year period immediately prior to the date in question) for five years after the most recent date on which the shareholder becomes an interested shareholder, and thereafter impose fair price and/or supermajority shareholder voting requirements on these combinations; and

"control share" provisions that provide that a shareholder’s "control shares" of our company (defined as shares that, when aggregated with other shares controlled by the shareholder, entitle the shareholder to exercise one of three increasing ranges of voting power in electing trustees) acquired in a "control share acquisition" (defined as the direct or indirect acquisition of ownership or control of issued and outstanding "control shares") have no voting rights with respect to their control shares, except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

As permitted by the MGCL, we have elected in our bylaws to opt out of the business combination and control share provisions of the MGCL. However, we cannot assure you that our Board of Trustees will not opt to be subject to such provisions of the MGCL in the future, including opting to be subject to such provisions retroactively.

The limited partnership agreement of ~~our operating partnership~~JBG SMITH LP requires the approval of the limited partners with respect to certain extraordinary transactions involving JBG SMITH, which may reduce the likelihood of such transactions being consummated, even if they are in the best interests of, and have been approved by, our shareholders.

The limited partnership agreement of JBG SMITH LP ~~as amended and restated in connection with the Formation Transaction,~~ provides that we may not engage in a merger, consolidation or other combination with or into another person, a sale of all or substantially all of our assets, or a reclassification, recapitalization or a change in outstanding shares (except for changes in par value, or from par value to no par value, or as a result of a subdivision or combination of our common shares), which we refer to collectively as an extraordinary transaction, unless specified criteria are met. In particular, with respect to any extraordinary transaction, if partners will receive consideration for their limited partnership units and if we seek the approval of our shareholders for the transaction (or if we would have been required to obtain shareholder approval of any such extraordinary transaction but for the fact that a tender offer shall have been accepted with respect to a sufficient number of our common shares to permit consummation of such extraordinary transaction without shareholder approval), then the limited partnership agreement prohibits us from engaging in the extraordinary transaction unless we also obtain "partnership approval." To obtain "partnership approval," we must obtain the consent of our limited partners (including us and any limited partners majority owned, directly or indirectly, by us) representing a percentage interest in JBG SMITH LP that is equal to or greater than the percentage of our outstanding common shares required (or that would have been required in the absence of a tender offer) to approve the extraordinary transaction, provided that we and any limited partners majority owned, directly or indirectly, by us will be deemed to have provided consent for our partnership units solely in proportion to the percentage of our common shares approving the extraordinary transaction (or, if there is no shareholder vote with respect to such extraordinary transaction because a tender offer shall have been accepted with respect to a sufficient number of our common shares to permit consummation of the extraordinary transaction without shareholder approval, the percentage of our common shares with respect to which such tender offer shall have been accepted).

The limited partners of JBG SMITH LP may have interests in an extraordinary transaction that differ from those of common shareholders, and there can be no assurance that, if we are required to seek "partnership approval" for such a transaction, we will be able to obtain it. As a result, if a sufficient number of limited partners oppose such an extraordinary transaction, the limited partnership agreement may prohibit us from consummating it, even if it is in the best interests of, and has been approved by, our shareholders.

~~Until the 2020 annual meeting of shareholders, we will have a classified Board of Trustees, and that may reduce the likelihood of certain takeover transactions.~~

Our declaration of trust divides our Board of Trustees into three classes. The initial terms of the first, second and third classes will expire at the first, second and third annual meetings of shareholders, held following the Formation Transaction. At the 2018 annual shareholders meeting, shareholders will elect successors to trustees of the first class for a two-year term and, at the 2019 annual shareholders meeting, successors to trustees of the second class for a one-year term. Commencing with the 2020 annual meeting of shareholders, each trustee shall be elected annually for a term of one year and shall hold office until the next succeeding annual meeting and until a successor is duly elected and qualifies. There is no cumulative voting in the election of trustees. Until the 2020 annual meeting of the shareholders, our Board is classified, which may reduce the possibility of a tender offer or an attempt to change control, even though a tender offer or change in control might be in the best interest of our shareholders.

~~We may issue additional shares in a manner that could adversely affect the likelihood of takeover transactions.~~

~~Our declaration of trust authorizes the Board of Trustees, without shareholder approval, to:~~

~~cause us to issue additional authorized but unissued common or preferred shares;~~

~~classify or reclassify, in one or more classes or series, any unissued common or preferred shares;~~

~~set the preferences, rights and other terms of any classified or reclassified shares that we issue; and~~

~~amend our declaration of trust to increase the number of shares of beneficial interest that we may issue.~~

The Board of Trustees could establish a class or series of common or preferred shares whose terms could delay, deter or prevent a change in control or other transaction that might involve a premium price or otherwise be in the best interest of our shareholders, although the Board of Trustees does not now intend to establish a class or series of common or preferred shares of this kind. Our declaration of trust and bylaws contain other provisions that may delay, deter or prevent a change in control or other transaction that might involve a premium price or otherwise be in the best interest of our shareholders.

Substantially all of our assets are owned by subsidiaries. We depend on dividends and distributions from these subsidiaries. The creditors of these subsidiaries are entitled to amounts payable to them by the subsidiaries before the subsidiaries may pay any dividends or other distributions to us.

Substantially all of our assets are held through JBG SMITH LP, which holds substantially all of its assets through wholly owned subsidiaries. JBG SMITH ~~LP’s~~LP's cash flow is dependent on cash distributions to it by its subsidiaries, and in turn, substantially all of our cash flow is dependent on cash distributions to us by JBG SMITH LP. The creditors of each of our subsidiaries are entitled to payment of that ~~subsidiary’s~~subsidiary's obligations to them when due and payable before distributions may be made by that subsidiary to its equity holders. In addition, the operating agreements governing some of our subsidiaries which are parties to real estate joint ventures may have restrictions on distributions which could limit the ability of those subsidiaries to make distributions to JBG SMITH LP. Thus, JBG SMITH ~~LP’s~~LP's ability to make distributions to holders of its units, including us, depends on its ~~subsidiaries’~~subsidiaries' ability first to satisfy their obligations to their creditors, and then to

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make distributions to ~~JBG SMITH LP.~~holders of its units. Likewise, our ability to pay dividends ~~to our shareholders~~ depends on JBG SMITH ~~LP’s~~LP's ability first to satisfy its obligations, if any, to its creditors and make distributions payable to holders of preferred units (if any), and then to make distributions to us.

In addition, our participation in any distribution of the assets of any of our subsidiaries upon the liquidation, reorganization or insolvency of the subsidiary, occurs only after the claims of the creditors, including trade creditors, and preferred security holders, if any, of the applicable direct or indirect subsidiaries are satisfied.

Our rights and the rights of our shareholders to take action against our ~~Trustees~~trustees and officers are limited.

As permitted by ~~Maryland law,~~MGCL, under our declaration of trust, trustees and officers shall not be liable to us and our shareholders for money damages, except for liability resulting ~~from:~~

from actual receipt of an improper benefit or profit in money, property or services; or

a final judgment based upon a finding of active and deliberate dishonesty by the trustee or officer that was material to the cause of action adjudicated.

In addition, our declaration of trust ~~requires~~and indemnification agreements require us to indemnify our trustees and officers (in some cases, without requiring a preliminary determination of the trustee's or officer's ultimate entitlement to indemnification) for actions taken by them in those and certain other capacities to the maximum extent permitted by ~~Maryland law.~~MGCL. The Maryland REIT law permits a REIT to indemnify and advance expenses to its trustees, officers, employees and agents to the same extent as permitted by the MGCL for directors and officers of a Maryland corporation. Generally, ~~Maryland law~~MGCL permits a Maryland corporation to indemnify its present and former directors and officers except in instances where the person seeking indemnification acted in bad faith or with active and deliberate dishonesty, actually received an improper personal benefit in money, property or services or, in the case of a criminal proceeding, had reasonable cause to believe that his or her actions were unlawful. Under ~~Maryland law,~~MGCL, a Maryland corporation also may not indemnify a director or officer in a suit by or in the right of the corporation in which the director or officer was adjudged liable to the corporation or for a judgment of liability on the basis that a personal benefit was improperly received. A court may order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer did not meet the prescribed standard of conduct; however, indemnification for an adverse judgment in a suit by us or in our right, or for a judgment of liability on the basis that personal benefit was improperly received, is limited to expenses. As a result, we and our shareholders may have more limited rights against our trustees and officers than might otherwise exist. Accordingly, if actions taken in good faith by any of our trustees or officers impede the performance of our company, ~~your~~our shareholder’s ability to recover damages from such trustee or officer will be limited.

Risks Related to Our Status as a REIT

We may fail to qualify or remain qualified as a REIT and may be required to pay income taxes at corporate rates.

Although we believe that we are organized and intend to operate ~~so as~~ to qualify as a REIT for federal income tax purposes, we may fail to remain so qualified. ~~Qualifications~~Qualification and taxation as a REIT are governed by highly technical and complex provisions of the Code for which there are only limited judicial or administrative interpretations and depend on various facts and circumstances that are not entirely within our control. In addition, legislation, new regulations, administrative interpretations or court decisions may significantly change the relevant tax laws and/or the federal income tax consequences of qualifying as a REIT. If, with respect to any taxable year, we fail to maintain our qualification as a REIT and do not qualify under the relevant statutory relief provisions, we ~~could not deduct distributions to shareholders in computing our taxable income and~~ would have to pay federal income tax on our taxable income at regular corporate ~~rates.~~rates, could not deduct our distributions in determining our taxable income subject to tax, and would possibly also be subject to certain taxes enacted by the Inflation Reduction Act of 2022 that are applicable to non-REIT corporations, including the nondeductible 1% excise tax on certain stock repurchases. If we had to pay federal income tax, the amount of money available to distribute to shareholders and pay our indebtedness would be reduced for the year or years involved, and we would not be required to make distributions to shareholders in that taxable year and in future years until we again were able to qualify as a REIT. In addition, we would also be

disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost, unless we were entitled to relief under the relevant statutory provisions.

REIT distribution requirements could adversely affect our liquidity and our ability to execute our business ~~plan.~~

plan or require us to make distributions of our shares or other securities.

For us to qualify to be taxed as a REIT, ~~and assuming that certain other requirements are also satisfied,~~ we generally must distribute to our shareholders each year at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains, to our shareholders each year, so that U.S. federal corporate income tax does not apply to earnings that we distribute. To the extent that we satisfy this distribution requirement and qualify for taxation as a REIT, but distribute less than 100% of our REIT taxable income, determined without regard to the dividends paid deduction and including any net capital gains, we will be subject to U.S. federal corporate income tax on our undistributed net taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we distribute to our shareholders in a calendar year is less than a minimum amount specified under U.S. federal income tax laws.gains. We intend to distribute 100% of our REIT taxable income to our shareholders out of assets legally available therefor.

From time to time, we may generate taxable income greater than our cash flow as a result of differences in timing between the recognition of taxable income and the actual receipt of cash or the effect of nondeductible capital expenditures, the creation of reserves, or required debt or amortization payments. Further, under amendments to the Code made by federal tax reform legislation , which was signed into law on December 22, 2017 and which we refer to as the 2017 Tax Act, income must be accrued for U.S. federal income tax purposes no later than when such income is taken into account as revenue in our financial statements, subject to certain exceptions, which could also create mismatches between REIT taxable income and the receipt of cash attributable to such income.flow. If we do not have other funds available, ~~in these situations,~~ we could be required to borrow funds on unfavorable terms, sell assets at disadvantageous prices, distribute amounts that

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would otherwise be invested in future acquisitions, capital expenditures or repayment of debt, or make taxable distributions of our shares ~~or debt securities~~ to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirement and avoid corporate income tax and ~~the~~a 4% excise tax in a particular year. These alternatives could increase our costs or reduce our equity. ~~Further,~~Because amounts distributed will not be available to fund investment ~~activities. Thus,~~activities, compliance with the REIT requirements may hinder our ability to grow, which could adversely affect the value of our shares. ~~Any restrictions~~Restrictions on our ability to incur additional indebtedness or make certain distributions could preclude us from meeting the 90% distribution requirement. Decreases in funds from operations due to unfinanced expenditures for acquisitions of assets or increases in the number of shares outstanding without commensurate increases in funds from operations would each adversely affect our ability to maintain distributions to our shareholders. Consequently, there can be no assurance that we will be able to make distributions at the anticipated distribution rate or any other rate.

Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends, which could depress the market price of our common shares if perceived as a less attractive investment.

The maximum tax rate applicable to income from "qualified dividends" payable by non‑REIT corporations to U.S. shareholders that are individuals, trusts and estates is 20%, and a 3.8% Medicare tax may also apply. Dividends payable by REITs, however, generally are not eligible for this reduced rate. Commencing with taxable years beginning on or after January 1, 2018 and continuing through 2025, the 2017 Tax Act temporarily reduces the effective tax rate on ordinary REIT dividends (i.e., dividends other than capital gain dividends and dividends attributable to certain qualified dividend income received by us) for U.S. holders of our common shares that are individuals, estates or trusts by permitting such holders to claim a deduction in determining their taxable income equal to 20% of any such dividends they receive. Taking into account the 2017 Tax Act’s reduction in the maximum individual federal income tax rate from 39.6% to 37%, this results in a maximum effective rate of federal income tax (exclusive of the 3.8% Medicare tax) on ordinary REIT dividends of 29.6% through 2025, as compared to the 20% maximum federal income tax rate applicable to qualified dividend income received from a non-REIT corporation (although the maximum effective rate applicable to such dividends, after taking into account the 21% federal income tax applicable to non-REIT corporations, is 36.8%). Although these rules do not adversely affect the taxation of REITs or dividends payable by REITs, investors who are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in the shares of non‑REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including the per share trading price of our common shares.

The tax imposed on REITs engaging in "prohibited transactions" may limit our ability to engage in transactions that would be treated as sales for U.S. federal income tax purposes.

A ~~REIT’s~~REIT's net income from prohibited transactions is subject to a 100% penalty tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business. Although we and our subsidiary REITs believe that we have held, and intend to continue to hold, our properties for

investment and do not intend to hold directly (rather than through taxable corporate subsidiaries) any properties that could be characterized as held for sale to customers in the ordinary course of our business, ~~unless a sale or disposition qualifies under a statutory safe harbor applicable to REITs,~~ such characterization is a factual determination and no guarantee can be given that the IRS would agree with our characterization of our properties or that we will always be able to make use of the available statutory safe harbor. In the case of some of our properties held through partnerships with third parties, our ability to ~~dispose~~control the disposition of such properties in a manner that ~~satisfies~~avoids the ~~statutory safe harbor~~imposition of the prohibited transactions tax depends in part on the action of third parties over which we have no control or only limited influence.

~~If our operating partnership failed to qualify as a partnership for U.S. federal income tax purposes, we would cease to qualify as a REIT and suffer other adverse consequences.~~

We believe that our operating partnership will be treated as a partnership for U.S. federal income tax purposes. As a partnership, our operating partnership will not be subject to U.S. federal income tax on its income. Instead, each of its partners, including us, will be allocated, and may be required to pay tax with respect to, its share of our operating partnership’s income. We cannot assure you, however, that the IRS will not challenge the status of our operating partnership or that a court would not sustain such a challenge. If the IRS were successful in treating our operating partnership as an entity taxable as a corporation for U.S. federal income tax purposes we would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, we would cease to qualify as a REIT. Also, the failure of our operating partnership or any subsidiary partnership to qualify as a partnership could cause the entity to become subject to U.S. federal, state or local corporate income tax, which would reduce significantly the amount of cash available for debt service and for distribution to us.

~~Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.~~

The REIT provisions of the Code may limit our ability to hedge our assets and operations. Under these provisions, income that we generate from transactions intended to hedge our interest rate and certain types of foreign currency risk generally will be excluded from gross income for purposes of the 75% and 95% gross income tests applicable to REITs if the instrument hedges interest rate or foreign currency risk on liabilities used to carry or acquire real estate assets or certain other types of foreign currency risk, and such instrument is properly identified. Income from certain hedges entered into in connection

To comply with the termination of a hedging transaction described in the preceding sentence, where the property or indebtedness that was the subject of the prior hedging transaction was extinguished or disposed of, will also be excluded from gross income for purposes of the 75% and 95% gross income tests. Income from hedging transactions that do not meet these requirements will generally constitute non‑qualifying income for purposes of both the 75% and 95% gross income tests. As a result of these rules,restrictions imposed on REITs, we may have to ~~limit our use of hedging techniques that might otherwise be advantageous or implement those hedges~~conduct certain activities and own certain assets through a ~~TRS. This could increase the cost of our hedging activities, because our~~ TRS, ~~would~~which will be subject to normal corporate income tax, ~~on gains, or~~and we could expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. In addition, losses in our TRS will generally not provide any tax benefit, except to the extent they can be carried forward and used to offset future taxable income in the TRS.

~~Our subsidiary REITs may~~ be subject to a ~~corporate tax on recognized gain if some properties are sold within five years of their acquisition.~~

To the extent that our operating partnership contributes appreciated properties to a subsidiary REIT that were acquired in the Formation Transaction from tax partnerships in which investors that are C corporations under the Code hold interests, the subsidiary REIT will be subject to a corporate level tax on the portion of the net built‑in gain attributable to the C corporation investors’ interests that would have otherwise been taxable to such investors if such gain is recognized by the subsidiary REIT as the result of a sale of any such property within a five‑year period following the contribution of the properties to the subsidiary REIT. This corporate level tax will be borne proportionately by all of the holders of OP Units, including us. In the alternative, we may cause our operating partnership to elect to cause the recognition of such net built‑in gain at the time of the contribution of the properties to the subsidiary REIT (a so‑called deemed sale election). In this case, the taxable recognized gain would be allocated to the C corporation investors by the operating partnership (expected to be with respect to the operating partnership’s 2017 tax year), which would increase the operating partnership’s basis in the stock of the subsidiary REIT (as to the C corporation investors only) by the amount of net built‑in gain allocated to such investors. We will decide, as general partner of the operating partnership, whether or not to cause the operating partnership to make such a deemed sale election.

~~Our ownership of TRSs will be limited, and we will be required to pay a~~ 100% penalty tax ~~on certain income or deductions~~ if our transactions with our TRSs are not conducted on ~~arm’s~~arm's length terms.

~~We own an interest in certain TRSs, and may establish additional TRSs in the future.~~

A TRS is an entity taxed as a corporation ~~other than a REIT~~ in which a REIT directly or indirectly holds stock and ~~that~~which has ~~made a joint election~~elected with ~~such~~the REIT to be treated as a ~~TRS. If a~~ TRS ~~owns more than 35% percent~~ of the ~~total voting power or value of the outstanding securities of another corporation, such other corporation will also be treated as a TRS. Other than some activities relating to lodging~~REIT and ~~health care facilities, a TRS may~~

~~generally engage in any business, including the provision of customary or non-customary services to tenants of its parent REIT. A TRS~~which is ~~subject to U.S. federal, state and local income tax~~taxable as a regular C corporation, and its after-tax net income is available for distribution to the parent REIT but is not required to be distributed. As a result of the enactment of the 2017 Tax Act, effective for taxable years beginning on or after January 1, 2018 our domestic TRSs are subject to U.S. federalat regular corporate income tax on their taxable income at a maximum rate of 21% (as well as applicable state and local income tax), but net operating loss, or NOL, carryforwards of TRS losses arising in taxable years beginning after December 31, 2017 may be deducted only to the extent of 80% of TRS taxable income in the carryforward year (computed without regard to the NOL deduction). In contrast to prior law, which permitted unused NOL carryforwards to be carried back two years and forward 20 years, the 2017 Tax Act provides that losses arising in taxable years ending after December 31, 2017 can no longer be carried back but can be carried forward indefinitely. In addition, a 100% excise tax will be imposed on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s length basis. Rules also limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation.

A REIT’s ownership of securities of a TRS is not subject to the 5% or 10% asset tests applicable to REITs. Not more than 25% (20% for taxable years beginning after December 31, 2017) of our total assets may be represented by securities (including securities of one or more TRSs), other than those securities includable in the 75% asset test. We anticipate that the aggregate value of the stock and securities of our TRSs and other nonqualifying assets will be less than 25% of the value of our total assets through December 31, 2017 (and less than 20% of the value of our total assets after that date), and we will monitor the value of these investments to ensure compliance with applicable ownership limitations. In addition, we intend to structure our transactions with our TRSs to ensure that they are entered into on arm’s length terms to avoid incurring the 100% excise tax described above. There can be no assurance, however, that we will be able to comply with the TRS asset limitation or to avoid application of the 100% excise tax discussed above.

~~Our ability to provide certain services to our tenants may be limited by the REIT provisions of the Code, or we may have to provide such services through a TRS.~~

rates. As a REIT, we cannot own certain assets or conduct certain activities directly, without risking failing the income or asset tests that apply to REITs. We can, however, hold these assets or undertake these activities through a TRS. For example, we generally cannot provide certain non-customary services to our tenants, ~~other than those that are customarily provided by landlords,~~ and we cannot derive income from a third party that provides such services. If we forego providing such services to our tenants, we may be at a disadvantage to competitors who are not subject to the same restrictions. ~~However,~~Accordingly, we ~~can~~ provide such ~~non‑customary~~non-customary services to our tenants orand share in the revenue from such services ~~if we do so~~ through ~~a TRS, though~~our TRSs. As noted, the income earned through ~~the TRS~~our TRSs will be subject to corporate income taxes. In addition, a 100% excise tax will be imposed on certain transactions between us and our TRSs that are not conducted on an arm's length basis.

Risks Related to the Formation Transaction

We could be required to indemnify Vornado for certain material tax obligations that could arise as addressed in the Tax Matters Agreement and certain obligations under the Separation and Distribution Agreement. Furthermore, Vornado agreed to indemnify us for certain pre-distribution liabilities and liabilities related to Vornado assets and there can be no assurance that these obligations will be sufficient to protect us. Additionally, there may be undisclosed liabilities of the Vornado and JBG assets contributed to us in the Formation Transaction that might expose us to potentially large, unanticipated costs.

Under the Tax Matters Agreement that we entered into with Vornado, we may be required to indemnify Vornado against any taxes and related amounts and costs if the distribution of JBG SMITH shares by Vornado, together with certain related transactions, is not tax-free and that treatment results from (i) actions or failures to act by us, or (ii) our breach of certain representations or undertakings. The Separation Agreement provides for indemnification obligations designed to make us financially responsible for substantially all liabilities that may exist relating to our business activities, whether incurred prior to or after the Formation Transaction, as well as those obligations of Vornado that we assumed pursuant to the Separation Agreement. If we are required to indemnify Vornado under the circumstances set forth in the Tax Matters Agreement or the Separation Agreement, we may be subject to substantial liabilities. Pursuant to the Separation Agreement, Vornado agreed to indemnify us for certain liabilities. However, third parties could seek to hold us responsible

~~We face possible adverse changes~~

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for any of the liabilities that Vornado agreed to retain, and there can be no assurance that Vornado will be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in ~~tax laws,~~recovering from Vornado any amounts for which we are held liable, such indemnification may be insufficient to fully offset the financial impact of such liabilities and/or we may be temporarily required to bear these losses while seeking recovery from Vornado. Additionally, prior to entering into the MTA, the diligence reviews performed by each of Vornado and JBG with respect to the business and assets of the other were necessarily limited in nature and scope and may not have adequately uncovered all of the contingent or undisclosed liabilities that we assumed in connection with the Formation Transaction, many of which may ~~result in an increase in our tax liability~~not be covered by insurance. The MTA does not provide for indemnification for these types of liabilities by either party post-closing, and, ~~adverse consequences~~therefore, we may not have any recourse with respect to ~~our shareholders.~~

~~At any time, the U.S. federal income tax laws governing REITs or the administrative interpretations of those laws~~such unexpected liabilities. Any such liabilities could cause us to experience losses, which may be amended. We cannot predict when or if any new U.S. federal income tax law, regulation, or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation will be adopted, promulgated or become effective and any such law, regulation, or interpretation may take effect retroactively. Any such change in, or any new, U.S. federal income tax law, regulation or administrative interpretation,significant, which could have a material adverse effect on us.

~~In particular,~~

Unless Vornado and JBG SMITH were both REITs following the 2017 Tax Act, which generally takes effect for taxable years beginning on or after January 1, 2018 (subject to certain exceptions), makes many significant changes to the U.S. federal income tax laws that will profoundly impact the taxation of individuals, corporations (both regular C corporations as well as corporations that have elected to be taxed as REITs), and the taxation of taxpayers with overseas assets and operations. A number of changes that affect noncorporate taxpayers will expire at the end of 2025 unless Congress acts to extend them. These changes will impact us and our shareholders in various ways, some of which are adverse or potentially adverse compared to prior law. To date, the IRS has issued only limited guidance with respect to certain of the new provisions, and there are numerous interpretive issues that will require guidance. It is highly likely that technical corrections legislation will be needed to clarify certain aspects of the new law and give proper effect to Congressional intent. There can be no assurance, however, that technical clarifications or changes needed to prevent unintended or unforeseen tax consequences will be enacted by Congress in the near future.

Additionally, the rules of Section 355 of the Code and the Treasury regulations promulgated thereunder, which apply to determine the taxability of the Formation Transaction, have been the subject of change and may continue to be the subject of change, possibly with retroactive application, whichSeparation, JBG SMITH could ~~have a negative effect on us and our shareholders. If such changes occur, we may~~ be required to ~~pay additional taxes~~recognize certain corporate-level gains for tax purposes as a result of the Separation.

We believe that each of Vornado and JBG SMITH operated in a manner so that each qualified as a REIT immediately after the Separation and at all times during the two years after the Separation. However, if either Vornado or JBG SMITH failed to qualify as a REIT following the Separation, then, for our taxable year that includes the Separation, the IRS may assert that JBG SMITH would have to recognize corporate-level gain on ~~our~~ assets ~~or income. These increased tax costs could have a material adverse effect on us.~~

~~Other legislative proposals could be enacted~~acquired in the future that could affect REITs and their shareholders. Prospective investors are urged to consult their tax advisors regarding the effect of the 2017 Tax Act and any other potential tax law changes on an investment in our common shares.

~~Risks Related to Our Common Shares~~

~~We cannot guarantee the timing, amount, or payment of dividends on our common shares.~~

Although we expect to pay regular cash dividends, the timing, declaration, amount and payment of future dividends to shareholders will fall within the discretion of our Board of Trustees. Our Board of Trustees’ decisions regarding the payment of dividends will depend on many factors, such as our financial condition, earnings, capital requirements, debt service obligations, limitations under our financing arrangements, industry practice, legal requirements, regulatory constraints, and other factors that it deems relevant. Our ability to pay dividends will depend on our ongoing ability to generate cash from operations and access the capital markets. We cannot guarantee that we will pay a dividend in the future.

Future offerings of debt or equity securities, which would be senior to our common shares upon liquidation, and/or preferred equity securities, which may be senior to our common shares for purposes of dividend distributions or upon liquidation, may adversely affect the per share trading price of our common shares.

In the future, we may attempt to increase our capital resources by offering debt or equity securities (or causing our operating partnership to issue debt securities), including medium-term notes, senior or subordinated notes and classes or series of preferred shares. Upon liquidation, holders of our debt securities and preferred shares and lenders with respect to other borrowings will be entitled to receive our available assets prior to distribution to the holders of our common shares. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common shares and may result in dilution to owners of our common shares. Holders of our common shares are not entitled to preemptive rights or other protections against dilution. Our preferred shares, if issued, could have a preference on liquidating distributions or a preference on dividend payments that could limit our ability pay dividends to the holders of our common shares. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings.

~~Your percentage of ownership in our company may be diluted in the future.~~

Your percentage of ownership in us may be diluted because of equity issuances for acquisitions, capital market transactions or otherwise. We also have granted and anticipate continuing to grant compensatory equity awards to our trustees, officers, employees, advisors and consultants who provide services to us. Such awards have a dilutive effect on our earnings per share, which could adversely affect the market price of our common shares.

In addition, our declaration of trust authorizes us to issue, without the approval of our shareholders, one or more classes or series of preferred shares having such designation, voting powers, preferences, rights and other terms, including preferences over our common shares with respect to dividends and distributions, as our Board of Trustees generally may determine. The terms of one or more classes or series of preferred shares could dilute the voting power or reduce the value of our common shares. For example, we could grant the holders of preferred shares the right to elect some number of our trustees in all events or on the occurrence of specified events, or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we could assign to holders of preferred shares could affect the residual value of our common shares.

From time to time we may seek to make one or more material acquisitions. The announcement of such a material acquisition may result in a rapid and significant decline in the price of our common shares.

We are continuously looking at material transactions that we believe will maximize shareholder value. However, an announcement by us of one or more significant acquisitions could result in a quick and significant decline in the price of our common shares.

Separation.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements contained herein constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not guarantees of future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as "approximates," "believes," "expects," "anticipates," "estimates," "intends," "plans," "would," "may" or other similar expressions in this Annual Report on Form 10-K.

Investors are cautioned to interpret many of the risks identified under the section titled "Risk Factors" in this Annual Report on Form 10-K as being heightened as a result of the numerous adverse impacts of COVID-19.

In particular, information included under "Business," "Risk Factors," and ~~"Management’s~~"Management's Discussion and Analysis of Financial Condition and Results of Operations" contains forward-looking statements. 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. Such factors include:

●

the economic health and public safety climate of the greater Washington Metro region and our geographic concentration therein, particularly our concentration in National Landing;

●

decreases in demand for office space in the Washington, D.C. metropolitan area, particularly with respect to our two largest tenants, Amazon and the federal government;

●

the amount and timing of Amazon’s investments in National Landing and revenue we receive from them currently and may receive in the future;

●

whether any or all of the other three demand drivers discussed above will fail to materialize;

●

whether the plan to build a sports and entertainment anchor in National Landing will materialize at the planned scale, or at all;

●

reductions in or actual or threatened changes to the timing of federal government spending;

●

changes in general political, economic, public safety and competitive conditions and specific market conditions;

●

the risks associated with real estate development and redevelopment, including unanticipated expenses, delays and other contingencies;

●

the risks associated with the acquisition, disposition and ownership of real estate in general and our real estate assets in particular;

●

the ability to control our operating expenses;

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the risks related to co-investments in real estate ventures and partnerships;

●

the ability to renew leases, lease vacant space or re-let space as leases expire, and to do so on favorable terms;

●

the economic health of our tenants;

●

fluctuations in interest rates;

●

the supply of competing properties and competition in the real estate industry generally;

●

the availability and terms of financing and capital and the general volatility of securities markets;

●

the risks associated with mortgage loans and other indebtedness;

●

compliance with applicable laws, including those concerning the environment and access by persons with disabilities;

●

increased investor focus and activism related to ESG matters;

●

terrorist attacks, acts of violence and the occurrence of cyber incidents or system failures;

●

the ability to maintain key personnel;

●

failure to qualify and maintain our qualification as a REIT and the risks of changes in laws affecting REITs; and

●

other factors discussed under the caption "Risk Factors."

For a further discussion of factors that could materially affect the outcome of our forward-looking statements, see "Risk Factors" in this Annual Report on Form 10-K.

For these forward-looking 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, which speak only as of the date of this Annual Report on Form 10-K or the date of any document incorporated by reference. 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 of this Annual Report on Form 10-K.

ITEM 1B. UNRESOLVED STAFF COMMENTS

There are no unresolved comments from the staff of the SEC as of the date of this Annual Report on Form 10-K.

ITEM 1C. CYBERSECURITY

Strategy and Risk Management

To mitigate cybersecurity risks we have adopted a process of continuous improvement and adaptation to the ever-changing threat landscape. As part of this process, we engage with industry-leading managed security service provider(s) to supplement our efforts in preventing, identifying and responding to cybersecurity threats. Our information technology operations, information security processes and CIRP are generally aligned with the National Institute of Standards and Technology’s framework.

We have adopted a cloud-first strategy which is a foundational element to our overall cybersecurity posture. For essential systems, we utilize SaaS-based software partners who annually conduct Statement on Standards for Attestation Engagements SOC 1 or SOC 2 assessments, as appropriate, based on functional use within our company. Based on the nature of services provided by our technology partners, our third-party risk management process may include:

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●

Reviewing cybersecurity practices of such provider.

●

Contractually obligating the provider to share detailed results of cybersecurity assessments on an annual basis.

●

Contractually obligating the provider to make us aware of significant cybersecurity related incidents.

●

Coordinating independent security assessments with the provider utilizing our own resources.

Cybersecurity Risk Management

We have adopted a cybersecurity risk management process that is designed to identify and mitigate potential cybersecurity risks. On an annual basis, we work with credible, third-party cybersecurity experts to assess our ability to prevent, identify, and respond to cybersecurity threats through internal and external penetration tests and monthly vulnerability scans. We also test our organizational cybersecurity capabilities through facilitated tabletop exercises which simulate real life scenarios. Together with the findings of the SOC 1 and 2 assessments, and our threat intelligence and monitoring activities, these exercises, tests and scans help us identify potential cybersecurity risks.

We seek to mitigate cybersecurity risks we identify through a variety of methods, including:

●

When practical and necessary, we patch vulnerabilities that are identified.

●

We deploy endpoint detection and monitoring technologies to identify potential cybersecurity incidents.

●

We back up our systems and data to mitigate the impact of a cybersecurity event that would impact our ability to operate or result in the loss of data.

●

We partner with strategic managed cybersecurity service providers to supplement the capabilities of our internal team.

●

We update and refine our CIRP in response to identified risks.

●

To manage the third-party cybersecurity risk introduced by our cloud-first strategy, we have implemented a due diligence process for new software partners as well as an annual review process for essential SaaS system partners.

●

We conduct cybersecurity awareness training annually and simulated phishing campaigns no less than quarterly to test and educate our employees.

Notwithstanding the steps we take to address cybersecurity, we may not be successful in preventing or mitigating all cybersecurity incidents or threats. See Item 1A. Risk Factors - Risks Related to Our Business and Operations – The occurrence of cyber incidents, or a deficiency in our cybersecurity, or the cybersecurity of our service providers, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, regulatory enforcement and other legal proceedings, and/or damage to our business relationships, all of which could negatively impact our financial results – for a discussion of cybersecurity risks.To date, we have not experienced any material cybersecurity incidents.

Governance

Our Chief Information & Technology Officer along with our Vice President of Cybersecurity & Cloud Infrastructure provide principal oversight and guidance of our cybersecurity risk management strategy, programs and processes. The Chief Information & Technology Officer has over 20 years of experience in information technology in the real estate sector, leading organizations through strategic technology and process improvement initiatives. The Vice President of Cybersecurity & Cloud Infrastructure has over 15 years of extensive experience in cybersecurity and information technology. They are supported in their efforts by a team of technical experts who have had formal training and possess relevant industry related experience in addition to managed cybersecurity service providers who specialize in preventing, identifying, and responding to cybersecurity threats.

The Audit Committee of our Board of Trustees provides board-level governance and oversight regarding cybersecurity matters. Management meets with the Audit Committee periodically to discuss cybersecurity strategy, risk, trends, and internal personnel and qualifications. As part of our annual enterprise risk assessment, technology and cyber risks are standing risk factors which are ranked and reviewed by management.

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In the event of a cyberattack, we engage our CIRP, which provides a framework of processes and procedures related to identifying, categorizing, responding, containing, analyzing, and eradicating cybersecurity threats to mitigate downtime and promptly restore systems and services. Management has responsibility for reporting cybersecurity incidents to the Audit Committee as they occur, if consistent with our CIRP. The CIRP also addresses management's responsibility, with Audit Committee oversight, with respect to any reporting or disclosure determinations related to a given cybersecurity incident and provides for Audit Committee and Board of Trustee briefings as appropriate.

ITEM 2. PROPERTIES

Note on presentation of "at share" information. We present certain financial information and metrics "at JBG SMITH Share," which ~~refers to our ownership percentage of consolidated and unconsolidated assets in real estate ventures. Financial information "at JBG SMITH Share"~~ is calculated on an entity-by-entity ~~basis.~~basis, but exclude our: (i) 10.0% subordinated interest in one commercial building, (ii) 33.5% subordinated interest in four commercial buildings, (iii) 49.0% interest in three commercial buildings and (iv) 9.9% interest in one commercial building, as well as the associated non-recourse mortgage loans, held through unconsolidated real estate ventures; these interests and debt are excluded because 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. "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. Because as of December 31, ~~2017, approximately 12.6%~~2023, 7.2% of our assets, as measured by total square feet, ~~were~~was held through real estate ventures in which we own less than 100% of the ownership interest, we believe this form of presentation, which includes our economic interests in the unconsolidated real estate ventures, provides investors important information regarding a significant component of our portfolio, its composition, performance and capitalization. We classify our portfolio as ~~“operating,” “near-term development”~~"operating," "under-construction," or ~~“future development.” “Near-term development” refers to assets that have substantially completed the entitlement process and on which we intend to commence construction within 18 months~~"development pipeline."

The following December 31, 2017, subject to market conditions. We had no near-term development assets as of December 31, 2017. “Future development” refers to assets that are development opportunities on which we do not intend to commence construction within 18 months of December 31, 2017 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.

~~The~~ tables ~~below~~ provide information about ~~each of~~ our ~~office,~~ multifamily, ~~other, near-term~~commercial and development ~~and future development~~pipeline portfolios as of December 31, ~~2017.~~2023. Many of our ~~future~~assets in the development ~~parcels~~pipeline are adjacent to or an integrated component of operating ~~office,~~ multifamily or ~~other~~commercial assets in our portfolio. A ~~significant~~ number of our assets included in the following tables ~~below~~ are held through real estate ventures with third parties or are subject to ground leases. In addition to other information, the following tables ~~below~~ indicate our percentage ownership, whether the ~~assets are~~asset is consolidated or unconsolidated, and whether the asset is subject to a ground lease.

~~Office~~

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Multifamily Assets


					Number	Total		Multifamily
	%			Same Store ⁽²⁾:	of	Square	%	%	Retail %
Multifamily Assets	Ownership		C/U ⁽¹⁾	YTD 2022-2023	Units	Feet	Leased	Occupied	Occupied

National Landing
RiverHouse Apartments	100.0	%	C	Y	1,676	1,327,551	96.6%	96.0%	100.0%
The Bartlett	100.0	%	C	Y	699	619,372	97.2%	96.7%	100.0%
220 20th Street	100.0	%	C	Y	265	271,476	95.1%	94.0%	100.0%
2221 S. Clark Street - Residential ⁽³⁾	100.0	%	C	Y	216	96,948	88.6%	85.9%	-

D.C.
West Half	100.0	%	C	Y	465	385,368	94.4%	93.1%	83.1%
Fort Totten Square	100.0	%	C	Y	345	384,956	97.3%	91.6%	100.0%
The Wren	100.0	%	C	Y	433	332,682	96.8%	94.2%	100.0%
The Batley	100.0	%	C	Y	432	300,388	96.1%	94.4%	-
WestEnd25	100.0	%	C	Y	283	273,264	94.3%	93.6%	-
F1RST Residences	100.0	%	C	Y	325	270,928	95.1%	94.2%	100.0%
Atlantic Plumbing	100.0	%	C	Y	310	245,143	94.0%	93.9%	89.2%
1221 Van Street	100.0	%	C	Y	291	225,592	96.0%	93.1%	100.0%
901 W Street	100.0	%	C	Y	161	154,379	94.5%	95.7%	63.9%
900 W Street ⁽³⁾	100.0	%	C	Y	95	71,050	61.1%	47.4%	-
North End Retail ⁽⁴⁾	100.0	%	C	Y	—	27,355	96.0%	-	96.0%

MD
8001 Woodmont	100.0	%	C	N	322	363,979	96.2%	94.1%	95.1%

Operating - Total / Weighted Average ⁽³⁾					6,318	5,350,431	96.0%	94.7%	95.3%

Under-Construction
National Landing
1900 Crystal Drive ⁽⁵⁾	—		C		808	633,985
2000/2001 South Bell Street ⁽⁵⁾	—		C		775	580,966
Under-Construction - Total					1,583	1,214,951
Total					7,901	6,565,382

Totals at JBG SMITH Share ⁽³⁾
National Landing					2,856	2,315,347	96.6%	96.0%	100.0%
D.C.					3,140	2,671,105	95.5%	93.7%	94.7%
MD					322	363,979	96.2%	94.1%	95.1%
Operating - Total / Weighted Average					6,318	5,350,431	96.0%	94.7%	95.3%
Under-construction assets					1,583	1,214,951

Office Assets %
Ownership

C/U ⁽¹⁾
Same Store ⁽²⁾
YTD 2016-2017
Total
Square Feet %
Leased Office % Occupied Retail % Occupied

DC
Universal Buildings 100.0 % C Y 686,919
97.7 % 98.9 % 99.6 %
2101 L Street 100.0 % C Y 380,375
98.7 % 99.0 % 100.0 %
Bowen Building 100.0 % C Y 231,402
86.1 % 86.1 % —
1730 M Street ⁽³⁾
100.0 % C Y 205,360
92.5 % 92.2 % 100.0 %
1233 20th Street 100.0 % C N 151,695
86.8 % 87.2 % —
Executive Tower 100.0 % C Y 129,739
79.7 % 80.0 % 88.6 %
1600 K Street 100.0 % C N 84,601
92.6 % 91.0 % 100.0 %
L’Enfant Plaza Office-East ⁽³⁾
49.0 % U N 437,518
89.7 % 89.9 % —
L’Enfant Plaza Office-North 49.0 % U N 305,157
84.7 % 83.8 % 85.9 %
L’Enfant Plaza Retail ⁽³⁾
49.0 % U N 143,614
78.1 % 100.0 % 79.0 %
The Warner 55.0 % U Y 585,040
98.6 % 99.6 % 90.4 %
Investment Building 5.0 % U Y 401,400
91.3 % 91.1 % 100.0 %
The Foundry 9.9 % U N 233,533
91.2 % 92.4 % 70.3 %
1101 17th Street 55.0 % U Y 215,675
97.0 % 98.4 % 82.7 %

Office Assets %
Ownership

C/U ⁽¹⁾
Same Store ⁽²⁾
YTD 2016-2017
Total
Square Feet %
Leased Office % Occupied Retail % Occupied

VA
Courthouse Plaza 1 and 2 ⁽³⁾
100.0 % C Y 639,431
93.6 % 91.9 % 100.0 %
2345 Crystal Drive 100.0 % C Y 507,336
82.2 % 82.4 % 100.0 %
2121 Crystal Drive 100.0 % C Y 505,754
99.9 % 95.6 % —
1550 Crystal Drive ⁽⁴⁾
100.0 % C Y 489,997
78.7 % 80.2 % 75.5 %
RTC-West ⁽⁴⁾
100.0 % C N 446,176
94.8 % 93.2 % —
2231 Crystal Drive 100.0 % C Y 466,975
89.3 % 83.7 % 100.0 %
2011 Crystal Drive 100.0 % C Y 444,905
82.5 % 82.7 % 100.0 %
2451 Crystal Drive 100.0 % C Y 402,172
75.6 % 74.8 % 100.0 %
Commerce Executive ⁽⁴⁾
100.0 % C Y 393,527
89.8 % 89.9 % 95.2 %
1235 S. Clark Street 100.0 % C Y 384,026
84.4 % 82.1 % 100.0 %
241 18th Street S. 100.0 % C Y 361,193
76.2 % 73.5 % 89.9 %
251 18th Street S. 100.0 % C Y 343,245
98.0 % 98.9 % 95.8 %
1215 S. Clark Street 100.0 % C Y 336,159
100.0 % 100.0 % 100.0 %
201 12th Street S. 100.0 % C Y 333,838
95.3 % 96.2 % 100.0 %
800 North Glebe Road 100.0 % C N 305,039
99.5 % 100.0 % 100.0 %
1225 S. Clark Street 100.0 % C Y 283,812
50.8 % 48.4 % 100.0 %
2200 Crystal Drive 100.0 % C Y 282,920
45.6 % 45.6 % —
1901 South Bell Street 100.0 % C Y 277,003
100.0 % 100.0 % 100.0 %
2100 Crystal Drive 100.0 % C Y 249,281
98.8 % 100.0 % —
200 12th Street S. 100.0 % C Y 202,736
86.7 % 83.1 % —
2001 Jefferson Davis Highway 100.0 % C Y 160,817
62.4 % 61.4 % —
Summit I ⁽⁵⁾
100.0 % C N 145,768
100.0 % 100.0 % —
Summit II ^{(4) (5)}
100.0 % C N 138,350
100.0 % 100.0 % 100.0 %
1800 South Bell Street ⁽⁴⁾
100.0 % C N 74,701
100.0 % 100.0 % 100.0 %
Crystal City Shops at 2100 100.0 % C Y 79,755
93.3 % —
93.5 %
Wiehle Avenue Office Building 100.0 % C N 77,528
55.9 % 57.5 % —
1831 Wiehle Avenue ⁽⁴⁾
100.0 % C N 25,152
100.0 % 100.0 % —
Crystal Drive Retail 100.0 % C Y 56,965
100.0 % —
100.0 %
Pickett Industrial Park 10.0 % U N 246,145
100.0 % 100.0 % —
Rosslyn Gateway-North 18.0 % U N 144,483
91.4 % 86.6 % 96.0 %
Rosslyn Gateway-South 18.0 % U N 105,723
79.8 % 81.8 % 40.4 %

MD
7200 Wisconsin Avenue 100.0 % C N 270,628
68.7 % 67.6 % 82.2 %
One Democracy Plaza* ⁽³⁾
100.0 % C Y 214,300
98.4 % 98.9 % 100.0 %
4749 Bethesda Avenue Retail 100.0 % C N 13,633
100.0 % —
100.0 %
11333 Woodglen Drive 18.0 % U N 62,875
97.6 % 97.2 % 100.0 %
NoBe II Office ⁽⁴⁾
18.0 % U N 39,836
61.9 % 51.7 % 100.0 %

Total / Weighted Average 13,704,212
88.5 % 87.9 % 93.5 %

Recently Delivered
VA
RTC - West Retail 100.0 % C N 40,025
77.8 % —
48.4 %

Operating - Total / Weighted Average 13,744,237
88.5 % 87.9 % 91.7 %

Office Assets %
Ownership

C/U ⁽¹⁾
Same Store ⁽²⁾
YTD 2016-2017
Total
Square Feet %
Leased Office % Occupied Retail % Occupied

Under Construction
DC
1900 N Street⁽³⁾ ⁽⁶⁾
100.0 % C N 271,433
29.6 %
L’Enfant Plaza Office-Southeast 49.0 % U N 215,185
65.1 %
VA
CEB Tower at Central Place ⁽³⁾
100.0 % C N 529,997
73.3 %
MD
4747 Bethesda Avenue ⁽⁷⁾
100.0 % C N 287,183
69.8 %
Under Construction - Total / Weighted Average 1,303,798
62.1 %

Total / Weighted Average 15,048,035
86.2 %

Totals at JBG SMITH Share
Operating assets 11,829,162
88.0 % 87.2 % 92.9 %
Under construction assets 1,194,043
61.8 %

~~_______________~~

Note: At 100% ~~share. Excludes our 10% subordinated interests in five commercial buildings held through a real estate venture in which we have no economic interest.~~

* ~~Not Metro-served.~~

share, unless otherwise noted.

(1)
⁽¹⁾	"C" denotes a consolidated ~~interest.~~interest and "U" denotes an unconsolidated interest.

(2)
⁽²⁾	"Y" denotes an asset as same store and "N" denotes an asset as non-same store. Same store refers to assets that were in service for the entirety of both periods being compared, except for assets for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. No JBG Assets are considered same store.

(3)
⁽³⁾	~~Asset is subject to a ground lease.~~2221 S. Clark Street - Residential and 900 W Street are excluded from percent leased and percent occupied metrics as they are operated as short-term rental properties.

(4)	In January 2024, we sold North End Retail for a gross sales price of $14.3 million.

⁽⁴⁾

(5)

In 2021, we leased the land underlying 1900 Crystal Drive and 2000/2001 South Bell Street to a lessee. The assets are consolidated in our financial statements as they are owned through variable interest entities for which we are the primary beneficiary. See Note 6 to the consolidated financial statements for additional information.

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Commercial Assets


					Total			��
	%			Same Store ⁽²⁾:	Square	%	Office %		Retail %
Commercial Assets	Ownership		C/U ⁽¹⁾	YTD 2022-2023	Feet	Leased	Occupied		Occupied

National Landing
1550 Crystal Drive ⁽³⁾	100.0	%	C	Y	555,302	95.3%	91.4%		100.0%
2121 Crystal Drive	100.0	%	C	Y	509,922	89.7%	87.0%		100.0%
2345 Crystal Drive	100.0	%	C	Y	499,688	55.4%	55.0%		74.3%
2231 Crystal Drive	100.0	%	C	Y	468,907	72.7%	69.6%		97.4%
2011 Crystal Drive	100.0	%	C	Y	440,510	57.6%	57.7%		50.3%
2451 Crystal Drive	100.0	%	C	Y	402,375	86.3%	86.1%		92.6%
1235 S. Clark Street	100.0	%	C	Y	384,656	97.5%	95.4%		95.0%
241 18th Street S. ⁽³⁾	100.0	%	C	Y	355,728	96.3%	93.8%		100.0%
1215 S. Clark Street	100.0	%	C	Y	336,159	99.6%	100.0%		44.5%
201 12th Street S.	100.0	%	C	Y	329,687	99.8%	98.4%		100.0%
251 18th Street S. ⁽³⁾	100.0	%	C	Y	309,450	82.7%	81.7%		100.0%
1225 S. Clark Street	100.0	%	C	Y	276,203	94.2%	91.1%		80.9%
1901 South Bell Street	100.0	%	C	Y	274,912	67.6%	67.6%		-
1770 Crystal Drive	100.0	%	C	Y	273,787	100.0%	100.0%		100.0%
2100 Crystal Drive	100.0	%	C	Y	253,437	100.0%	100.0%		-
1800 South Bell Street⁽³⁾	100.0	%	C	Y	203,273	100.0%	100.0%		100.0%
200 12th Street S.	100.0	%	C	Y	202,761	77.5%	77.5%		-
2200 Crystal Drive ⁽³⁾	100.0	%	C	Y	161,668	100.0%	100.0%		-
Crystal Drive Retail ⁽³⁾	100.0	%	C	Y	42,938	100.0%	-		100.0%
Crystal City Shops at 2100 ⁽³⁾	100.0	%	C	Y	34,452	100.0%	-		100.0%
Central Place Tower ⁽⁴⁾	50.0	%	U	Y	551,594	96.4%	96.2%		100.0%

Other
2101 L Street	100.0	%	C	Y	375,493	76.1%	74.6%		92.6%
800 North Glebe Road	100.0	%	C	Y	303,759	99.3%	100.0%		92.4%
One Democracy Plaza ⁽⁴⁾ ⁽⁵⁾	100.0	%	C	Y	213,139	85.5%	85.6%		70.5%
4747 Bethesda Avenue ⁽⁶⁾	20.0	%	U	Y	300,535	98.0%	97.9%		100.0%
1101 17th Street	55.0	%	U	Y	209,401	88.6%	88.9%		82.8%

Operating - Total / Weighted Average					8,269,736	87.0%	85.7%		95.9%

Totals at JBG SMITH Share
National Landing					6,591,612	86.2%	84.6%		96.5%
Other					1,067,669	87.2%	86.9%		91.4%
Operating - Total / Weighted Average					7,659,281	86.3%	84.9%		95.8%

Note: At 100% share, unless otherwise noted.

(1)	"C" denotes a consolidated interest and "U" denotes an unconsolidated interest.

(2)	"Y" denotes an asset as same store and "N" denotes an asset as non-same store.

(3)	The following assets contain space that is held for development or not otherwise available for lease. This out-of-service square footage is excluded from ~~area,~~square feet, leased and occupancy metrics in the above table.


		Not Available
Commercial Asset	In-Service	for Lease
1550 Crystal Drive	555,302	3,270
241 18th Street S.	355,728	6,612
251 18th Street S.	309,450	29,996
1800 South Bell Street	203,273	2,913
2200 Crystal Drive	161,668	121,940
Crystal Drive Retail	42,938	14,027
Crystal City Shops at 2100	34,452	37,763
2221 S. Clark Street - Office	—	35,182

Office Asset In-Service
Not Available
for Lease
1550 Crystal Drive 489,997
18,293
RTC - West 446,176
19,911
Commerce Executive 393,527
14,085
Summit II 138,350
6,480
1800 South Bell Street 74,701
146,079
1831 Wiehle Avenue 25,152
50,039
NoBe II Office 39,836
96,983

(4)
⁽⁵⁾	~~In January 2018, we entered into an agreement for the sale of Summit I and II. See Note 20 to the financial statements for additional information.~~


⁽⁶⁾	Subsequent to December 31, 2017, we recapitalized the asset through a real estate venture, which will reduce our ownership percentage from 100.0% to 55.0% as contributions are funded. See Note 20 to the financial statements for additional information.


⁽⁷⁾	~~Includes JBG SMITH’s lease for approximately 80,200 square feet.~~

~~Multifamily Assets~~

Multifamily Assets %
Ownership

C/U ⁽¹⁾
Same Store ⁽²⁾ YTD 2016-2017
Number
of
Units Total
Square
Feet % Leased Multifamily
%
Occupied Retail
%
Occupied

DC
Fort Totten Square 100.0 % C N 345
384,316
93.3 % 86.7 % 100.0 %
WestEnd25 100.0 % C Y 283
273,264
98.1 % 95.8 % —
The Gale Eckington 5.0 % U N 603
466,716
94.2 % 91.8 % 100.0 %
Atlantic Plumbing 64.0 % U N 310
245,527
96.4 % 93.1 % 100.0 %

VA
RiverHouse Apartments 100.0 % C Y 1,670
1,322,016
94.7 % 93.7 % 100.0 %
The Bartlett 100.0 % C N 699
619,372
95.2 % 94.1 % 100.0 %
220 20th Street 100.0 % C Y 265
271,790
96.8 % 94.3 % 83.3 %
2221 South Clark Street 100.0 % C Y 216
171,080
100.0 % 100.0 % —
Fairway Apartments* 10.0 % U N 346
370,850
93.5 % 92.3 % —

MD
Falkland Chase-South & West 100.0 % C N 268
222,949
97.7 % 96.6 % —
Falkland Chase-North ⁽³⁾
100.0 % C N 162
106,159
97.8 % 95.1 % —
Galvan 1.8 % U N 356
390,650
92.4 % 88.5 % 96.8 %
The Alaire ⁽⁴⁾
18.0 % U N 279
266,497
92.5 % 91.9 % 100.0 %
The Terano ^{(3) (4)}
1.8 % U N 214
195,864
90.7 % 88.1 % 76.2 %

Operating - Total / Weighted Average 6,016
5,307,050
94.8 % 93.0 % 98.1 %

Under Construction
DC
West Half 95.4 % C N 465
388,174

965 Florida Avenue ⁽⁵⁾
96.1 % C N 433
336,092

1221 Van Street 100.0 % C N 291
226,546

Atlantic Plumbing C 100.0 % C N 256
225,531

MD
7900 Wisconsin Avenue 50.0 % U N 322
359,025

Under Construction - Total 1,767
1,535,368

Total 7,783
6,842,418

Totals at JBG SMITH Share
Operating assets 4,232
3,647,031
95.6 % 93.8 % 99.8 %
Under construction assets 1,568
1,325,142

~~_______________~~

~~Note: At 100% share.~~

* Not Metro-served.


⁽¹⁾	~~"C" denotes a consolidated interest. "U" denotes an unconsolidated interest.~~


⁽²⁾	"Y" denotes an asset as same store and "N" denotes an asset as non-same store. Same store refers to assets that were in service for the entirety of both periods being compared, except for assets for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. No JBG Assets are considered same store.


⁽³⁾	The following assets contain space that is held for development or not otherwise available for lease. This out-of-service square footage is excluded from area, leased, and occupancy metrics in the above table.

Multifamily Asset In-Service Not Available
for Lease
Falkland Chase - North 106,159
13,284
The Terano 195,864
3,904


⁽⁴⁾	Asset is subject to a ground ~~lease.~~lease where we are the lessee. In February 2024, one of our unconsolidated real estate ventures sold Central Place Tower for a gross sales price of $325.0 million.

(5)	Not Metro-served.

⁽⁵⁾

(6)

~~Ownership percentage reflects expected dilution of JBG SMITH's real estate venture partner as contributions are funded during the construction of the~~Includes our corporate office lease for approximately 84,400 square feet.

Table of Contents

Development Pipeline


						Estimated
	%	Estimated Potential Development Density (SF)				Number of
Asset	Ownership	Total	Multifamily	Office	Retail	Units

National Landing
Potomac Yard Landbay F/G/H	50.0% / 100.0%	2,614,000	1,147,000	1,369,000	98,000	1,240
1415 S. Eads Street	100.0%	531,400	527,400	—	4,000	635
3330 Exchange Avenue	50.0%	239,800	216,400	—	23,400	240
3331 Exchange Avenue	50.0%	180,600	164,300	—	16,300	170
RiverHouse Land	100.0%	1,988,400	1,960,600	—	27,800	1,665
2250 Crystal Drive	100.0%	696,200	681,300	—	14,900	825
223 23rd Street	100.0%	492,100	484,100	—	8,000	610
2525 Crystal Drive	100.0%	373,000	370,000	—	3,000	370
101 12th Street S.	100.0%	239,600	—	234,400	5,200	—
1800 South Bell Street Land ⁽¹⁾	100.0%	311,000	—	307,000	4,000	—

D.C.
Gallaudet Parcel 2-3 ⁽²⁾	100.0%	819,100	758,200	—	60,900	820
Capitol Point - North	100.0%	451,400	434,100	—	17,300	470
Gallaudet Parcel 4 ⁽²⁾	100.0%	644,200	605,200	—	39,000	645
					—
Other Development Parcels ⁽³⁾		1,248,100	142,200	1,105,900	—	—

Total		10,828,900	7,490,800	3,016,300	321,800	7,690

Totals at JBG SMITH Share
National Landing		6,649,000	5,137,300	1,375,900	135,800	5,280
D.C.		2,107,000	1,840,200	149,600	117,200	1,935
		8,756,000	6,977,500	1,525,500	253,000	7,215

Note: At 100% share, unless otherwise noted.

(1)	Currently encumbered by an operating commercial asset.

(2)	Controlled through an option to acquire a leasehold interest. As of December 31, ~~2017, JBG SMITH's ownership interest was 67.6%.~~

~~Other Assets~~

Other Assets %
Ownership

C/U ⁽¹⁾
Same Store ⁽²⁾ YTD 2016-2017
Total
Square
Feet ⁽³⁾
%
Leased %
Occupied

Retail
DC
North End Retail 100.0% C N 27,432
100.0 % 99.0 %
VA
Vienna Retail* 100.0% C Y 8,547
100.0 % 100.0 %
Stonebridge at Potomac Town Center-Phase I* 10.0% U N 462,633
93.9 % 93.9 %
Total / Weighted Average 498,612
94.3 % 94.2 %

Hotel
VA
Crystal City Marriott Hotel 100.0% C Y 266,000
(345 Rooms)

Operating - Total 764,612

Under Construction
VA
Stonebridge at Potomac Town Center-Phase II* 10.0% U N 41,050
100.0 %

Total 805,662

Totals at JBG SMITH Share
Operating assets 348,242
96.5 % 96.2 %
Under construction assets 4,105
100.0 %

~~_______________~~

~~Note: At 100% share.~~

* Not Metro-served.


⁽¹⁾	~~"C" denotes a consolidated interest. "U" denotes an unconsolidated interest.~~


⁽²⁾	"Y" denotes an asset as same store and "N" denotes an asset as non-same store. Same store refers to assets that were in service for the entirety of both periods being compared, except for assets for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. No JBG Assets are considered same store.

~~Near-Term Developments~~

~~As of December 31, 2017, we had no near-term development assets.~~

~~Future Developments~~

Estimated Commercial SF / Multifamily Units to be Replaced ⁽¹⁾

Number of Assets
Estimated Total Investment
(In thousands)
Estimated Potential Development Density (SF)
Region Total Office Multifamily Retail

Owned
DC
DC Emerging 7
1,426,900
312,100
1,105,800
9,000
—
$ 77,143
DC CBD 1
336,200
324,400
—
11,800
—
51,093
8
1,763,100
636,500
1,105,800
20,800
—
128,236
VA
Pentagon City 5
4,572,800
1,429,100
2,999,100
144,600
—
163,284
Reston 6
4,193,100
1,282,800
2,683,600
226,700
102,680 SF / 15 units
92,596
Crystal City 9
2,982,400
620,000
2,088,200
274,200
74,701 SF
143,575
Other VA 5
951,300
496,400
394,300
60,600
22,203 SF
33,122
25
12,699,600
3,828,300
8,165,200
706,100
199,584 SF / 15 units
432,577
MD
Silver Spring 1
1,276,300
—
1,156,300
120,000
162 units
40,198
Greater Rockville 4
126,500
19,200
88,600
18,700
7,170 SF
4,029
5
1,402,800
19,200
1,244,900
138,700
7,170 SF /
162 units
44,227
Total / weighted average 38
15,865,500
4,484,000
10,515,900
865,600
206,754 SF / 177 units
$ 605,040
Optioned ⁽²⁾

DC
DC Emerging 4
2,045,100
78,800
1,750,400
215,900
—
$ 131,432
VA
Other VA 1
11,300
—
10,400
900
—
1,019
Total / weighted average 5
2,056,400
78,800
1,760,800
216,800
—
$ 132,451
Total / Weighted Average 43
17,921,900
4,562,800
12,276,700
1,082,400
206,754 SF / 177 units
$ 737,491

~~_______________~~

~~Note: At JBG SMITH share.~~


⁽¹⁾	Represents management's estimate of the total office and/or retail rentable square feet and multifamily units that would need to be redeveloped to access some of the estimated potential development density.


⁽²⁾	~~As of December 31, 2017,~~2023, the weighted average remaining term for the ~~optioned future development~~option is 1.4 years.

(3)	Comprises four assets is ~~5.8 years~~.in which we have a minority interest.

Major Tenants

The following table sets forth information for our 10 largest tenants by annualized rent for the year ended December 31, ~~2017:~~

2023:


		At JBG SMITH Share
					Annualized		% of Total
	Number of	Square	% of Total		Rent		Annualized
Tenant	Leases	Feet	Square Feet		(In thousands)		Rent
GSA	37	1,810,310	26.1	%	$	72,167	22.7	%
Amazon	6	926,703	13.4	%		41,640	13.1	%
Gartner, Inc	1	174,424	2.5	%		12,878	4.1	%
Lockheed Martin Corporation	2	207,095	3.0	%		10,001	3.2	%
Accenture LLP	2	116,736	1.7	%		5,722	1.8	%
Public Broadcasting Service	1	120,328	1.7	%		5,004	1.6	%
Booz Allen Hamilton Inc	3	107,415	1.5	%		4,859	1.5	%
Greenberg Traurig LLP	1	64,090	0.9	%		4,698	1.5	%
The International Justice Mission	1	74,833	1.1	%		4,508	1.4	%
Family Health International	1	59,514	0.9	%		4,047	1.3	%
Total	55	3,661,448	52.8	%	$	165,524	52.2	%

At JBG SMITH Share
Tenant Number of Leases

Square Feet
% of Total Square Feet
Annualized Rent
(In thousands)
% of Total Annualized Rent
GSA 82
2,579,525
24.4 % $ 103,149
22.3 %
Family Health International 9
320,791
3.0 % 15,641
3.4 %
Lockheed Martin Corporation 5
274,361
2.6 % 13,493
2.9 %
Arlington County 9
241,288
2.3 % 11,608
2.5 %
Paul Hastings LLP 5
125,863
1.2 % 9,478
2.1 %
Greenberg Traurig LLP 1
115,315
1.1 % 8,904
1.9 %
Baker Botts 2
85,090
0.8 % 6,796
1.5 %
Public Broadcasting Service 5
140,885
1.3 % 5,707
1.2 %
WeWork 3
122,271
1.2 % 5,553
1.2 %
Accenture LLP 1
102,756
1.0 % 5,545
1.2 %
Total 122
4,108,145
38.9 % $ 185,874
40.2 %

~~________________~~

Note: Includes all ~~in-place~~ leases as of December 31, ~~2017~~2023 for which a tenant has taken occupancy for office and retail space within ~~JBG SMITH's operating portfolio.~~our Operating Portfolio.

Table of Contents

Lease Expirations

The following table sets forth as of December 31, ~~2017~~2023 the ~~anticipated~~scheduled expirations of tenant leases in our ~~consolidated portfolio~~Operating Portfolio for each year from ~~2018~~2024 through ~~2026~~2032 and ~~thereafter,~~thereafter:


		At JBG SMITH Share

							% of
			% of		Annualized		Total		Annualized
	Number of	Square	Total		Rent⁽¹⁾		Annualized		Rent Per
Year of Lease Expiration	Leases	Feet	Square Feet		(In thousands)		Rent		Square Foot⁽¹⁾
Month-to-Month	34	350,538	5.1	%	$	12,823	4.0	%	$	36.58
2024	84	1,425,853	20.6	%		67,318	21.2	%		47.21
2025	59	470,183	6.8	%		21,600	6.8	%		45.94
2026	52	246,936	3.6	%		12,414	3.9	%		50.27
2027	34	508,033	7.3	%		24,879	7.8	%		48.97
2028	39	429,762	6.2	%		20,916	6.6	%		48.67
2029	27	199,507	2.9	%		9,730	3.1	%		48.77
2030	22	608,111	8.8	%		29,839	9.4	%		49.07
2031	27	552,510	8.0	%		21,122	6.7	%		38.23
2032	20	793,813	11.5	%		36,919	11.6	%		46.51
Thereafter	62	1,345,827	19.2	%		59,766	18.9	%		45.74
Total / Weighted Average	460	6,931,073	100.0	%	$	317,326	100.0	%	$	46.04

Note: Includes all leases as of December 31, 2023 for which a tenant has taken occupancy for office and retail space within our Operating Portfolio and assuming no exercise of renewal options or early termination ~~rights:~~

At JBG SMITH Share
Year of Lease Expiration Number
of Leases
Square Feet % of
Total
Square Feet
Annualized
Rent
(in thousands)
% of
Total
Annualized
Rent Annualized
Rent Per
Square Foot
Estimated
Annualized
Rent Per
Square Foot at
Expiration ⁽¹⁾
Month-to-Month 77
126,322
1.2 % $ 2,949
0.6 % $ 23.34
$ 23.34
2018 193
945,626
8.9 % 40,977
8.9 % 43.33
43.72
2019 174
1,182,027
11.2 % 53,758
11.6 % 45.48
46.65
2020 187
1,472,239
13.9 % 69,613
15.1 % 47.28
49.37
2021 130
1,044,166
9.9 % 47,870
10.4 % 45.84
49.58
2022 126
1,437,614
13.6 % 66,269
14.3 % 46.10
49.36
2023 74
462,611
4.4 % 18,683
4.0 % 40.39
45.85
2024 80
646,725
6.1 % 29,030
6.3 % 44.89
52.42
2025 57
417,943
4.0 % 16,299
3.5 % 39.00
45.34
2026 69
387,140
3.7 % 17,316
3.7 % 44.73
51.89
Thereafter 155
2,453,264
23.1 % 99,555
21.6 % 40.58
51.87
In‑Place Leases - Total/Weighted Average 1,322
10,575,677
100.0 % $ 462,319
100.0 % $ 43.72
$ 48.81

~~____________________~~

~~Note: Includes all leases~~rights. The weighted average remaining lease term for ~~office and retail space within JBG SMITH's operating portfolio.~~

the entire portfolio is 5.1 years.

(1)

~~Represents monthly base~~Annualized rent ~~before free~~and annualized rent ~~plus tenant reimbursements, as~~per square foot exclude percentage rent and the square footage of ~~lease expiration multiplied by 12 and divided by square feet. Triple net leases are converted to a gross basis by adding tenant reimbursements to monthly base~~tenants that only pay percentage rent. Tenant reimbursements at lease expiration are estimated by escalating tenant reimbursements as of December 31, 2017, or management’s estimate thereof, by 2.75% annually through the lease expiration year.

ITEM 3. LEGAL PROCEEDINGS

We are, from time to time, involved in legal actions arising in the ordinary course of business. In our opinion, the outcome of such matters is not expected to have a material adverse effect on our financial position, results of operations or cash flows.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

Table of Contents

PART II

ITEM 5. MARKET FOR ~~REGISTRANT’S~~REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND

ISSUER PURCHASES OF EQUITY SECURITIES

Market Information and Dividends

Our common shares ~~began regular way trading on the New York Stock Exchange, or NYSE, on July 18, 2017,~~trade under the symbol "JBGS." On ~~March 5, 2018,~~February 16, 2024, there were ~~882~~832 holders of record of our common shares. This number does not reflect individuals or other entities who hold their shares in "street name." ~~The following table sets forth~~

Dividends declared for the ~~high and low closing prices and the cash~~year ended December 31, 2023 totaled $0.675 per common share (quarterly dividends ~~declared on our common shares by quarter for 2017 as applicable:~~

2017
High Price Per Share Low Price per Share
Dividends Declared Per Common Share ⁽¹⁾
Third quarter (July 18 - September 30) $ 37.24
$ 32.08
$ —
Fourth quarter 35.64
30.79
0.45

~~_______________~~

⁽¹⁾ ~~Of the total dividends declared, dividends declared in December 2017~~ of $0.225 per common share ~~were paid in January 2018.~~

for the first three quarters of 2023. On February 14, 2024, our Board of Trustees declared a quarterly dividend of $0.175 per common share, payable on March 15, 2024 to shareholders of record as of March 1, 2024. Dividends declared for the years ended December 31, 2022 and 2021 totaled $0.90 per common share (quarterly dividends of $0.225 per common share). Future ~~declarations of~~ dividends will be ~~made~~declared at the discretion of our Board of Trustees and will depend upon cash generated by our operating activities, our financial condition, capital requirements, annual distribution requirements under the REIT provisions of the Code and such other factors as our Board of Trustees deems relevant. To qualify for the beneficial tax treatment accorded to REITs under the Code, we are currently required to make distributions to holders of our shares in an amount equal to at least 90% of our REIT taxable income as defined in Section 857 of the Code.

The annual ~~dividend~~distribution amounts are different from dividends as calculated for federal income tax purposes. Distributions to the extent of our current and accumulated earnings and profits for federal income tax purposes generally will be taxable to a shareholder as ordinary dividend income. Distributions in excess of current and accumulated earnings and profits will be treated as a nontaxable reduction of the ~~shareholder’s~~shareholder's basis in ~~such shareholder’s~~the shareholder's shares, to the extent thereof, and thereafter as taxable capital gain. Distributions that are treated as a reduction of the ~~shareholder’s~~shareholder's basis in its shares will have the effect of increasing the amount of gain, or reducing the amount of loss, recognized upon the sale of the ~~shareholder’s~~shareholder's shares. No assurances can be given regarding what portion, if any, of distributions in ~~2018~~2024 or subsequent years will constitute a return of capital for federal income tax purposes. During a year in which a REIT earns a net long-term capital gain, the REIT can elect under Section 857(b)(3) of the Code to designate a portion of dividends paid to shareholders as capital gain dividends. If this election is made, the capital gain dividends are generally taxable to the shareholder as long-term capital gains.

Performance Graph

This performance graph shall not be deemed "soliciting material" or to be "filed" with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings of under the Securities Act or the Exchange Act.

The graph below compares the cumulative total return of our common shares, the S&P MidCap 400 Index and the FTSE ~~NAREIT~~Nareit Equity Office Index, from ~~July 18, 2017 (the completion date of the Formation Transaction)~~December 31, 2018 through December 31, ~~2017.~~2023. The comparison assumes $100 was invested on ~~July 18, 2017~~December 31, 2018 in our common shares and in each of the foregoing indexes and assumes reinvestment of dividends, as applicable. We have included the FTSE ~~NAREIT~~Nareit Equity Office Index because we believe that it is representative of the industry in which we compete and is relevant to an assessment of our performance. There can be no assurance that the performance of our shares will continue in line with the same or similar trends depicted in the graph below.

Table of Contents

Period Ending
07/18/17 07/31/17 08/31/17 09/30/17 10/31/17 11/30/17 12/31/17
JBG SMITH Properties 100.00 95.27 87.89 91.86 83.81 90.07 94.51
S&P MidCap 400 Index 100.00 99.90 98.37 102.22 104.54 108.38 108.61
FTSE NAREIT Equity Office Index 100.00 98.56 97.48 99.26 98.39 101.15 102.57



	12/31/2018	12/31/2019	12/31/2020	12/31/2021	12/31/2022	12/31/2023
JBG SMITH Properties	100.00	117.23	94.71	89.58	61.77	57.98
S&P MidCap 400 Index	100.00	126.20	143.44	178.95	155.58	181.15
FTSE Nareit Equity Office Index	100.00	131.42	107.19	130.77	81.58	83.23

Sales of Unregistered Shares

In connection with the Separation, on July 17, 2017, JBG SMITH LP issued 100.6 million OP Units to VRLP in exchange for the contribution by VRLP of Vornado’s Washington, DC business (including interests in entities holding properties). In addition, we issued 94.7 million common shares to Vornado in exchange for the contribution by Vornado of the 94.7 million OP Units that Vornado received in the distribution by VRLP. The OP Units and common shares issued to VRLP and Vornado, respectively, were issued in reliance upon an exemption from registration pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended, which exempts transactions by an issuer not involving any public offering. Neither of these offerings was a “public offering” because only one person was involved in each transaction, neither JBG SMITH nor JBG SMITH LP has engaged in general solicitation or advertising with regard to the issuance and sale of the OP Units and common shares to VRLP and Vornado, and neither JBG SMITH nor JBG SMITH LP has offered securities to the public in connection with such issuances and sales to VRLP and Vornado.

In connection with the Combination, on July 18, 2017, we issued 23.2 million common shares and JBG SMITH LP issued 13.9 million OP Units as consideration for contribution of the JBG Assets, which were issued in reliance upon an exemption from registration pursuant to Regulation D under the Securities Act of 1933, as amended, which exempts transactions by an issuer not involving any public offering. Among other things, JBG SMITH and JBG SMITH LP relied on the fact that there was no general solicitation or advertising with regard to the issuance and sale of these securities. The OP Units are redeemable for cash or, at our election, common shares, beginning August 1, 2018, subject to certain limitations.

~~Repurchases of Equity Securities~~

During the year ended December 31, ~~2017,~~2023, we did not sell any unregistered securities.

Table of Contents

Repurchases of Equity Securities

The following is a summary of common shares repurchased:


Period	Total Number Of Common Shares Purchased		Average Price Paid Per Common Share	Total Number Of Common Shares Purchased As Part Of Publicly Announced Plans Or Programs		Approximate Dollar Value Of Common Shares That May Yet Be Purchased Under the Plan Or Programs
October 1, 2023 - October 31, 2023	2,021,688	$	13.85	2,021,688	$	559,438,395
November 1, 2023 - November 30, 2023	914,797		13.40	914,797		547,157,665
December 1, 2023 - December 31, 2023	1,194,234		15.31	1,194,234		528,849,166
Total for the three months ended December 31, 2023	4,130,719		14.17	4,130,719
Total for the year ended December 31, 2023	22,576,594		14.83	22,576,594
Program total since inception in March 2020 ⁽¹⁾	45,874,003		20.88	45,874,003

(1)	During the first quarter of 2024, through the date of this filing, we repurchased and retired 2.7 million common shares for $45.4 million, a weighted average purchase price per share of $16.52, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.

Our Board of Trustees previously authorized the repurchase ~~any~~of up to $1.0 billion of our ~~equity securities.~~

outstanding common shares, and in May 2023, increased the authorized repurchase amount to $1.5 billion. Purchases under the program are made either in the open market or in privately negotiated transactions from time to time as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by us at our discretion and will be subject to economic and market conditions, share price, applicable legal requirements and other factors. The program may be suspended or discontinued at our discretion without prior notice.

Equity Compensation Plan Information

Information regarding equity compensation plans is presented in Part III, Item 12 of this Annual Report on Form 10-K and incorporated herein by reference.

ITEM 6. ~~SELECTED FINANCIAL DATA~~

The following table includes selected consolidated and combined financial data set forth as of and for each of the five years in the period ended December 31, 2017. The consolidated balance sheet as of December 31, 2017 reflects the consolidation of properties that are wholly owned and properties in which we own less than 100% interest, including JBG SMITH LP, but in which we have a controlling interest. The consolidated and combined statement of operations for the year ended December 31, 2017 includes our consolidated accounts and the combined accounts of the Vornado Included Assets. Accordingly, the results presented for the year ended December 31, 2017 reflect the operations, comprehensive income (loss), and changes in cash flows and equity on a carved-out and combined basis for the period from January 1, 2017 through the date of the Separation and on a consolidated basis subsequent to the Separation. Consequently, our results for the periods before and after the Formation Transaction are not directly comparable. The financial data for the periods prior to the Separation are derived from audited combined financial statements. This selected financial data should be read in conjunction with "Management’s Discussion and Analysis of Financial Condition and Results of Operations", and our audited consolidated and combined financial statements and related notes included in Part II, Items 7 and 8 of this Annual Report on Form 10-K.

Year Ended December 31,
2017 2016 2015 2014 2013

Statement of Operations Data:
Total revenue $ 543,013
$ 478,519
$ 470,607
$ 472,923
$ 476,311
Depreciation and amortization 161,659
133,343
144,984
112,046
108,571
Property operating 111,055
100,304
101,511
101,597
99,069
Real estate taxes 66,434
57,784
58,874
56,165
55,361
General and administrative:
Corporate and other 47,131
48,753
44,424
46,188
46,652
Third-party real estate services 51,919
19,066
18,217
18,308
16,984
Share-based compensation related to Formation
Transaction
29,251
—
—
—
—
Transaction and other costs 127,739
6,476
—
—
—
Total operating expenses 595,188
365,726
368,010
334,304
326,637
Operating income (loss) (52,175 ) 112,793
102,597
138,619
149,674
Loss from unconsolidated real estate ventures, net (4,143 ) (947 ) (4,283 ) (1,278 ) (4,444 )
Interest and other income, net 1,788
2,992
2,557
1,338
129
Interest expense (58,141 ) (51,781 ) (50,823 ) (57,137 ) (65,813 )
Loss on extinguishment of debt (701 ) —
—
—
—
Gain on bargain purchase 24,376
—
—
—
—
Income (loss) before income tax benefit (expense) (88,996 ) 63,057
50,048
81,542
79,546
Income tax benefit (expense) 9,912
(1,083 ) (420 ) (242 ) 12,480
Net income (loss) (79,084 ) 61,974
49,628
81,300
92,026
Net loss attributable to redeemable noncontrolling interests 7,328
—
—
—
—
Net loss attributable to noncontrolling interest 3
—
—
—
—
Net income (loss) attributable to common shareholders $ (71,753 ) $ 61,974
$ 49,628
$ 81,300
$ 92,026
Earnings (loss) per common share:
Basic $ (0.70 ) $ 0.62
$ 0.49
$ 0.81
$ 0.92
Diluted $ (0.70 ) $ 0.62
0.49
0.81
0.92
Weighted average number of common shares
outstanding - basic and diluted
105,359
100,571
100,571
100,571
100,571
Dividends declared per common share $ 0.45
$ —
$ —
$ —
$ —
Balance Sheet Data:
Real estate, net $ 5,014,467
$ 3,224,622
$ 3,129,973
$ 3,011,407
$ 2,968,056
Total assets 6,071,807
3,660,640
3,575,878
3,357,744
3,226,203
Mortgages payable, net 2,025,692
1,165,014
1,302,956
1,277,889
1,180,480
Revolving credit facility 115,751
—
—
—
—
Unsecured term loan, net 46,537
—
—
—
—
Redeemable noncontrolling interests 609,129
—
—
—
—
Total equity 2,974,814
2,121,984
2,059,491
1,988,915
1,966,321
Cash Flow Statement Data:
Provided by operating activities $ 74,183
$ 159,541
$ 178,230
$ 187,386
$ 176,255
Used in investing activities (7,676 ) (258,807 ) (236,617 ) (239,336 ) (98,349 )
Provided by (used in) financing activities 239,787
51,083
122,671
33,353
(73,711 )

[RESERVED]

ITEM 7. ~~MANAGEMENT’S~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is intended to provide material information relevant to our financial condition and results of operations, including cash flows, and should be read in conjunction with the consolidated ~~and combined~~ financial statements and notes thereto appearing in Item 8 - Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

Organization and Basis of Presentation

JBG SMITH, ~~was organized by Vornado as~~ a Maryland REIT, owns, operates, invests in and develops mixed-use properties in high growth and high barrier-to-entry submarkets in and around Washington, D.C.,most notably National Landing. Through an intense focus on ~~October 27, 2016 (capitalized on November 22, 2016).~~placemaking, JBG SMITH ~~was formed for~~cultivates vibrant, amenity-rich, walkable neighborhoods throughout the ~~purpose~~Washington, D.C. metropolitan area. Approximately 75.0% of ~~receiving, via the Separation on July 17, 2017, substantially all of the assets and liabilities of Vornado’s Washington, DC segment, which~~our holdings are ~~referred to as the Vornado Included Assets. On July 18, 2017, JBG SMITH acquired the JBG Assets of JBG~~ in the ~~Combination.~~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 deployment of 5G digital infrastructure. In addition, our third-party asset management and real estate services business provides fee-based real estate services to the

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JBG Legacy Funds, other third parties and the WHI Impact Pool. Substantially all of our assets are held by, and our operations are conducted through, JBG SMITH LP.

~~Prior to~~

We were organized for the ~~Separation from Vornado, JBG SMITH was a wholly owned subsidiary~~purpose of ~~Vornado and had no material assets or operations. On~~receiving, via the spin-off on July 17, 2017, ~~Vornado distributed 100% of~~substantially all the then outstanding common shares of JBG SMITH on a pro rata basis to the holders of its common shares. Prior to such distribution by VRLP, Vornado's operating partnership, distributed OP Units in JBG SMITH LP on a pro rata basis to the holders of VRLP's common limited partnership units, consisting of Vornado and the other common limited partners of VRLP. Following such distribution by VRLP and prior to such distribution by Vornado, Vornado contributed to JBG SMITH all of the OP Units it received in exchange for common shares of JBG SMITH. Each Vornado common shareholder received one JBG SMITH common share for every two Vornado common shares held as of the close of business on July 7, 2017 (the "Record Date"). Vornado and each of the other limited partners of VRLP received one JBG SMITH LP OP Unit for every two common limited partnership units in VRLP held as of the close of business on the Record Date. Our operations are presented as if the transfer of the Vornado Included Assets had been consummated prior to all historical periods presented in the accompanying consolidated and combined financial statements at the carrying amounts of such assets and liabilities ~~reflected in Vornado’s books and records.~~

~~The following is a discussion~~ of the historical results of operations and liquidity and capital resources of JBG SMITH as of December 31, 2017 and 2016, and for each of the three years in the period ended December 31, 2017, which includes results prior to the consummation of the Separation. The historical results presented prior to the consummation of the Separation include the Vornado Included Assets, all of which were under common control of Vornado until July 17, 2017. Unless otherwise specified, the discussion of the historical results prior toVornado's Washington, D.C. segment. On July 18, 2017, ~~does not include~~we acquired the ~~results of the JBG Assets. Consequently, our results for the periods before~~management business and ~~after the Formation Transaction are not directly comparable.~~

References to the financial statements refer to our consolidated and combined financial statements as of December 31, 2017 and 2016, and for each of the three years in the period ended December 31, 2017. References to the balance sheets refer to our consolidated and combined balance sheets as of December 31, 2017 and 2016. References to the statement of operations refer to our consolidated and combined statements of operations for each of the three years in the period ended December 31, 2017. References to the statement of cash flows refer to our consolidated and combined statements of cash flows for each of the three years in the period ended December 31, 2017.

~~The accompanying financial statements are prepared in accordance with GAAP. GAAP requires us to make estimates and assumptions that affect the reported amounts of~~certain assets and liabilities and revenue and expenses during the reporting periods. Actual results could differ from these estimates. The historical financial results for the Vornado Included Assets reflect charges for certain corporate costs allocated by the former parent which we believe are reasonable. These charges were based on either actual costs incurred or a proportion of ~~costs estimated to be applicable to the Vornado Included Assets based on an analysis of key metrics, including total revenues. Such costs do not necessarily reflect what the actual costs would~~JBG.

We have ~~been if the Vornado Included Assets had been operating as a separate standalone public company. These charges are discussed further in Note 18 to the financial statements included herein.~~

~~We intend to elect~~elected to be taxed as a REIT under sections 856-860 of the Code. Under those sections, a REIT which distributes at least 90% of its REIT taxable income as dividends to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. ~~Prior~~We currently adhere and intend to the Separation, Vornado operated as a REIT and distributed 100% of taxable income to its shareholders, accordingly, no provision for federal income taxes has been made in the accompanying financial statements for the periods prior to the Separation. We intendcontinue to adhere to these requirements and to maintain our REIT status in future periods.

our financial condition, capital requirements, annual dividend requirements under the REIT provisions of the Code, ~~as amended,~~ and such other factors as our Board of Trustees deems relevant.

We also participate in the activities conducted by our subsidiary entities ~~which~~that have elected to be treated as TRSs under the Code. As such, we are subject to federal, state, and local taxes on the income from these activities. Income taxes attributable to our TRSs are accounted for under the asset and liability method. Under the asset and liability method, deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, which will result in taxable or deductible amounts in the future.

We aggregate our operating segments into three reportable segments ~~(office, multifamily,~~(multifamily, commercial and third-party asset management and real estate services) based on the economic characteristics and nature of our assets and services.

We compete with ~~a large number of~~many property owners and developers. Our success depends upon, among other factors, trends affecting national and local economies, the financial condition and operating results of current and prospective tenants, the availability and cost of capital, interest rates, construction and renovation costs, taxes, governmental regulations and legislation, population trends, zoning laws, and our ability to lease, sublease or sell our assets at profitable levels. Our success is also subject to our ability to refinance existing debt on acceptable terms as it comes due.

Overview

We own and operate a portfolio of high-quality office and multifamily assets, many of which are amenitized with ancillary retail. Our portfolio reflects our longstanding strategy of owning and operating assets within Metro-served submarkets in the Washington, DC metropolitan area that have high barriers to entry and key urban amenities, including being within walking distance of a Metro station.

As of December 31, ~~2017,~~2023, our Operating Portfolio ~~consists~~consisted of 6944 operating assets comprising ~~51 office~~16 multifamily assets totaling ~~over 13.7~~6,318 units (6,318 units at our share), 26 commercial assets totaling 8.3 million square feet ~~(11.8~~(7.7 million square feet at our share)~~, 14~~ and two wholly owned land assets for which we are the ground lessor. Additionally, we have two under-construction multifamily assets ~~totaling 6,016~~with 1,583 units ~~(4,232~~(1,583 units at our share) and ~~four other~~17 assets in the development pipeline totaling ~~approximately 765,000 square feet (348,000 square feet at our share). Additionally, we have (i) ten assets under construction comprising four office assets totaling approximately 1.3~~10.8 million square feet (1.2 million square feet at our share), five multifamily assets totaling 1,767 units (1,568 units at our share) and one other asset totaling approximately 41,100 square feet (4,100 square feet at our share); and (iii) 43 future development assets totaling approximately 21.4 million square feet (17.9(8.8 million square feet at our share) of estimated potential development density.

We continue to implement our comprehensive plan to reposition our holdings in the National Landing submarket in Northern Virginia by executing a broad array of Placemaking strategies. Our Placemaking includes the delivery of new multifamily and office developments, locally sourced amenity retail, and thoughtful improvements to the streetscape, sidewalks, parks and other outdoor gathering spaces. In keeping with our dedication to Placemaking, each new project is intended to contribute to authentic and distinct neighborhoods by creating a vibrant street environment with robust retail offerings and other amenities, including improved public spaces. To that end, we saw the delivery of two Placemaking projects, Water Park and Surreal, this year. Additionally, the digital infrastructure investments we are making, including our ownership of CBRS wireless spectrum in National Landing and our agreements with AT&T, Cisco and Federated Wireless, are advancing our efforts to make National Landing among the first 5G-operable submarkets in the nation.

During the second quarter of 2023, we completed the construction of two new office buildings for Amazon on Metropolitan Park in National Landing, totaling 2.1 million square feet, inclusive of approximately 50,000 square feet of street-level retail with new shops and restaurants, and Amazon took occupancy of its new headquarters in June 2023. We are the developer, property manager and retail leasing agent for Amazon's new headquarters at National Landing. As of December

~~Key highlights~~

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31, 2023, we also have leases with Amazon totaling approximately 927,000 square feet across five office buildings in National Landing.

Outlook

A fundamental component of our strategy to maximize long-term NAV per share is active capital allocation. We evaluate development, acquisition, disposition, share repurchases and other investment decisions based on how they may impact long-term NAV per share. We intend to continue to opportunistically sell or recapitalize assets as well as land sites where a ground lease or joint venture execution may represent the most attractive path to maximizing value. Successful execution of our capital allocation strategy enables us to source capital at NAV from the disposition of assets generating low cash yields and invest those proceeds in new acquisitions with higher cash yields and growth, development projects with significant yield spreads and profit potential, and share repurchases. Consequently, at any given time, we expect to be in various stages of discussions and negotiations with potential buyers, real estate venture partners, ground lessors and other counterparties with respect to sales, joint ventures and/or ground leases for certain of our assets, including portfolios thereof. These discussions and negotiations may or may not lead to definitive documentation or closed transactions. We anticipate redeploying the proceeds from these sales will not only help fund our planned growth, but will also further advance the strategic shift of our portfolio to majority multifamily. Current market conditions have significantly slowed down the pace of asset sales, and we expect this reduced activity to continue in 2024.

Our multifamily portfolio occupancy as of December 31, 2023 increased by 110 basis points compared to December 31, 2022. For fourth quarter lease expirations, we increased effective rents, which represent the average change in rental rates versus expiring rental rates net of concessions, by 7.0% upon renewal while achieving a 56.0% renewal rate across our portfolio. We continue to advance our two under-construction multifamily assets in National Landing, 1900 Crystal Drive and 2000/2001 South Bell Street, totaling 1,583 units. Upon delivery of 1900 Crystal Drive, expected in the second quarter of 2024, we will no longer be able to capitalize interest, which will increase annual interest expense by approximately $17.3 million once the mortgage loan is fully drawn. Upon delivery of 2000/2001 South Bell Street, expected in the third quarter of 2025, we will no longer be able to capitalize interest, which will increase annual interest expense by approximately $14.1 million once the mortgage loan is fully drawn. The current weighted average interest rate on these mortgage loans is 7.2%, and while we anticipate refinancing with agency debt upon stabilization, the ultimate terms of those future refinancings are not yet known.

Our office portfolio occupancy as of December 31, 2023 decreased by 20 basis points compared to December 31, 2022. During 2023, we executed 927,000 square feet of office leases during the year at our share, approximately 89% of which comprised leases in National Landing and 90.3% of leases (on a square footage basis) were with defense and technology tenants. We have 1.5 million square feet of office leases in National Landing expiring in 2024 or on a month-to-month statusand expect only approximately 20.0% of this space to be renewed. As of December 31, 2023, we have leases with Amazon across five office buildings in National Landing totaling approximately 927,000 square feet with annualized rent totaling $41.6 million, of which 191,000 square feet are month-to-month and 378,000 square feet expire in 2024. Of the month-to-month leases and leases expiring in 2024, 444,000 square feet represent the entirety of 1800 South Bell Street and 2100 Crystal Drive (which together generated $14.7 million of NOI in 2023). In addition, we anticipate approximately 750,000 square feet (approximately $36.9 million of annualized rent) will be vacated in 2024. In 2025, we have approximately 375,000 square feet expiring, and while it is too early to determine a precise retention rate, we expect at least 110,000 square feet or 29% (at least $4.4 million of annualized rent) will vacate, but that number could increase as those expirations grow nearer.

As the office market continues to experience headwinds due to hybrid work trends and the broader macroeconomic environment, we anticipate continued weakness in the commercial office sector. In this environment, we expect many tenants will look for space that is newer or repurposed for their current flexible workspace needs. We have also seen tenants lease space but contract their total footprint. Accordingly, our efforts to re-lease certain spaces will be targeted toward buildings with long-term viability where we can concentrate occupancy, and we intend to take some of our other buildings out of service. In addition to 1800 South Bell Street, which we took out of service in the first quarter of 2024, we plan to take 2100 Crystal Drive out of service when Amazon vacates in the second quarter of 2024. We also plan to begin phasing 2200 Crystal Drive out of service as leases expire. With the objective of ultimately reducing our competitive

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inventory in National Landing, we expect to repurpose these older, obsolete and vacant buildings for redevelopment, conversion to multifamily or another specialty use.

Operating Results

Highlights of operating results for the year ended December 31, ~~2017~~2023 included:

a net loss of $71.8 million, or $0.70 per diluted common share, for the year ended December 31, 2017 as compared to net income of $62.0 million, or $0.62 per diluted common share, for the year ended December 31, 2016. The net loss for the year ended December 31, 2017 included transaction and other costs of $127.7 million and a gain on bargain purchase of $24.4 million;

~~a decrease in operating office portfolio leased and occupied percentages to 88.0% leased and 87.2% occupied as of December 31, 2017 from 88.2% and 87.5% as of September 30, 2017;~~

~~a decrease in operating multifamily portfolio leased and occupancy percentages to 95.6% leased and 93.8% occupied as of December 31, 2017 from 96.2% and 94.6% as of September 30, 2017;~~

●

net loss attributable to common shareholders of $80.0 million, or $0.78 per diluted common share, compared to net income attributable to common shareholders of $85.4 million, or $0.70 per diluted common share, for 2022;

•

●

third-party real estate services revenue, including reimbursements, of $92.1 million compared to $89.0 million for 2022;

●

operating multifamily portfolio leased and occupied percentages ⁽¹⁾ at our share of 96.0% and 94.7% compared to 94.5% and 93.6% as of December 31, 2022;

●

operating commercial portfolio leased and occupied percentages at our share of 86.3% and 84.9% compared to 88.5% and 85.1% as of December 31, 2022;

●

the leasing of ~~approximately 1.7 million square feet, or 1.6 million~~927,000 square feet at our share, at an initial rent⁽¹⁾⁽²⁾of ~~$45.92~~$47.14 per square foot and a GAAP-basis weighted average rent per square foot ⁽³⁾of ~~$47.19 for the year ended December 31, 2017;~~$45.52; and

	●
•	an increase in same store ⁽²⁾⁽⁴⁾NOI of ~~6.5%~~1.6% to ~~$272.0~~$299.9 million compared to $295.0 million for ~~the year ended December 31, 2017 as compared to $255.3 million for the year ended December 31, 2016.~~ 2022.

~~_________________~~

(1)	2221 S. Clark Street - Residential and 900 W Street are excluded from leased and occupied percentages as they are operated as short-term rental properties.

⁽¹⁾

(2)

Represents the cash basis weighted average starting rent per square foot, which excludes free rent and ~~periodic rent steps.~~fixed escalations.

(3)	Represents the weighted average rent per square foot recognized over the term of the respective leases, including the effect of free rent and fixed escalations.

⁽²⁾

(4)

Includes the results of the properties that are owned, operated and ~~in service~~in-service for the entirety of both periods being compared except for properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. ~~Excludes the JBG Assets acquired in the Combination.~~

Additionally, investing and financing activity during the year ended December 31, ~~2017~~2023 included:

●

the sale of Falkland Chase, 5 M Street Southwest, Crystal City Marriott and Capitol Point-North-75 New York Avenue. See Note 3 to the consolidated financial statements for additional information;

●

the sale of an 80.0% interest in 4747 Bethesda Avenue, and the sale of Stonebridge at Potomac Town Center and Rosslyn Gateway by our unconsolidated real estate ventures. See Note 5 to the consolidated financial statements for additional information;

●

a $187.6 million loan facility, collateralized by The Wren and F1RST Residences. See Note 10 to the consolidated financial statements for additional information;

●

the repayment of $142.4 million in mortgage loans collateralized by Falkland Chase-South & West and 800 North Glebe Road;

●

net borrowings of $62.0 million under our revolving credit facility;

●

the amendment of our revolving credit facility. See Note 10 to the consolidated financial statements for additional information;

●

the drawing of the $50.0 million remaining advance under our Tranche A-2 Term Loan;

●

a $120.0 million term loan. See Note 10 to the consolidated financial statements for additional information;

●

the payment of dividends totaling $94.0 million and distributions to our noncontrolling interests of $15.3 million;

●

the repurchase and retirement of 22.6 million of our common shares for $335.3 million, a weighted average purchase price per share of $14.83; and

●

the investment of $333.7 million in development costs, construction in progress and real estate additions.

~~the issuance~~

Table of ~~94.7 million common shares and 5.8 million OP Units in connection with the Separation (see Note 1~~Contents

Activity subsequent to ~~the financial statements for more information);~~

~~the issuance of 23.2 million common shares and 13.9 million OP Units in connection with the Combination (see Note 3 to the financial statements for more information);~~

the closing of a $1.4 billion credit facility, consisting of a $1.0 billion revolving credit facility maturing in July 2021, with two six-month extension options, a delayed draw $200.0 million unsecured term loan maturing in JanuaryDecember 31, 2023 ~~and a delayed draw $200.0 million unsecured term loan maturing in July 2024;~~included:

●

the repurchase and retirement of 2.7 million common shares for $45.4 million, a weighted average purchase price per share of $16.52, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended;

●

the repayment of our outstanding revolving credit facility;

●

the sale of North End Retail, a multifamily asset, for a gross sales price of $14.3 million;

●

the sale of Central Place Tower by one of our unconsolidated real estate venturesfor a gross sales price of $325.0 million; and

●

the declaration of a quarterly dividend of $0.175 per common share, payable on March 15, 2024 to shareholders of record as of March 1, 2024.

~~the prepayment of mortgages payable with an aggregate principal balance of $250.0 million;~~

the execution of interest rate swap agreements with an aggregate notional value of $856.9 million to convert variable interest rates applicable to our unsecured term loan and certain mortgages payable to fixed rates;

~~the payment of dividends during 2017 of $0.225 per common share. Dividends declared in December 2017 of $0.225 per common share were paid in January 2018; and~~

~~the investment of $210.6 million in development costs, construction in progress and real estate additions.~~

Critical Accounting ~~Policies and~~ Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that in certain circumstances may significantly impact our financial results. These estimates are prepared using ~~management’s~~management's best judgment, after considering past and current events and economic conditions. In addition, certain information relied upon by management in preparing such estimates includes internally generated financial and operating information, external market information, when available, and when necessary, information obtained from consultations with third-party experts. Actual results could differ from these estimates. We consider an accounting estimate to be critical if changes in the estimate could have a material impact on our consolidated ~~and combined~~ results of operations or financial condition.

Our significant accounting policies are ~~more~~ fully described in Note 2 to the consolidated financial ~~statements included in Part II, Item 8 of this Annual Report on Form 10-K;~~statements; however, the most critical accounting ~~policies,~~estimates, which involve the use of ~~estimates and assumptions~~judgments as to future uncertainties and, therefore, may result in actual amounts that differ from estimates, are as follows:

~~Business Combinations~~

Asset Acquisitions

Description: We account for ~~business combinations, including~~asset acquisitions, which includes the ~~acquisition~~consolidation of previously unconsolidated real estate ~~using~~ventures, at cost, including transaction costs, plus the ~~acquisition method pursuant to which we recognize and measure the identifiable assets acquired, liabilities~~fair value of any assumed ~~and any noncontrolling interests in the acquiree at their acquisition date fair values. Accordingly, we~~debt. We estimate the fair values of acquired tangible assets (consisting of real estate, cash and cash equivalents, tenant and other receivables, investments in unconsolidated real estate ventures and other assets, as applicable), identified intangible assets and liabilities ~~(consisting of the value of in-place leases, above- and below-market leases, options to enter into ground leases and management contracts, as applicable),~~ assumed ~~debt and other liabilities, and noncontrolling interests, as applicable,~~ based on our evaluation of information and estimates available at ~~that date.~~the date of acquisition. Based on these estimates, we allocate the purchase price, including all transaction costs related to the acquisition and any contingent consideration, to the identified assets acquired and liabilities ~~assumed. Any excess~~assumed based on their relative fair value.

Judgments and Uncertainties: Asset acquisitions primarily consist of the purchase price over the estimated fair value of the net assets acquired is recorded as goodwill. Any excess of the fair value of assets acquired over the purchase price is recorded as a gain on bargain purchase. If, up to one year from the acquisition date, information regarding the fair value of the net assets acquiredbuildings and liabilities assumed is received and estimates are refined, appropriate adjustments are made on a prospective basis to the purchase price allocation, which may include adjustments to identified assets, assumed liabilities, and goodwill or the gain on bargain purchase, as applicable. The results of operations of acquisitions are prospectively included in our financial statements beginning with the date of the acquisition. Transaction costs related to business combinations are expensed as incurred and included in "Transaction and other costs" in our statements of operations.

land. The fair values of buildings are determined using the "as-if vacant" approach whereby we use discounted ~~income or~~ cash flow models with inputs and assumptions that we believe are consistent with current market conditions for similar assets. The most significant assumptions in determining the allocation of the purchase price to buildings are the exit capitalization rate, discount rate, estimated market rents and hypothetical expected lease-up ~~periods.~~periods, when applicable. We assess the fair value of land based on market comparisons and development projects using an income approach of cost plus a margin.

~~The fair values~~

Sensitivity of ~~identified intangible assets are determined based on the following:~~

~~The value allocable~~Estimate to Change: While our methodology did not change in 2023, to the ~~above- or below-market component of an acquired in-place lease is determined based upon~~extent the present value (using a discount rate which reflects the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be received pursuant to the lease over its remaining termestimates and (ii) management’s estimate of the amounts that would be received using market rates over the remaining term of the lease. Amounts allocated to above- market leases are recorded as "Identified intangible assets" in "Other assets, net" in the balance sheets, and amounts allocated to below-market leases are recorded as "Lease intangible liabilities" in "Other liabilities, net" in the balance sheets. These intangibles are amortized to "Property rentals"assumptions in our ~~statements~~discounted cash flow models used to value our buildings or our projections of ~~operations over the remaining terms of the respective leases.~~

~~Factors considered in determining the~~land value ~~allocable~~change due to ~~in-place leases during hypothetical lease-up periods related to space that is leased at the time of acquisition include (i) lost rent and operating cost recoveries during the hypothetical lease-up~~

period and (ii) theoretical leasing commissions required to execute similar leases. These intangible assets are recorded as "Identified intangible assets" in "Other assets, net" in the balance sheets and are amortized to "Depreciation and amortization expenses" inmarket conditions or other factors, our ~~statements of operations over the remaining term of the existing lease.~~

The fair value of the in-place property management, leasing, asset management, and development and construction management contracts is based on revenue and expense projections over the estimated life of each contract discounted using a market discount rate. These management contract intangibles are amortized to "Depreciation and amortization expenses" in our statements of operations over the weighted average life of the management contracts.

~~The fair value of investments in unconsolidated real estate ventures and related noncontrolling interests is based on the~~ estimated fair values ~~of the identified assets acquired~~may be different and ~~liabilities assumed of each venture, including future expected cash flows from promote interests.~~

The fair value of the mortgages payable assumed was determined using current market interest rates for comparable debt financings. The fair values of the interest rate swaps and caps are based on the estimated amounts we would receive or paysuch differences could be material to terminate the contract at the acquisition date and are determined using interest rate pricing models and observable inputs. The carrying value of cash, restricted cash, working capital balances, leasehold improvements and equipment, and other assets acquired and liabilities assumed approximates fair value.

our consolidated financial statements.

Real Estate

Description:Real estate is carried at cost, net of accumulated depreciation and amortization. ~~Maintenance and repairs are expensed as incurred and are included in "Property operating expenses" in our statements of operations.~~ As real estate is undergoing redevelopment activities, all property operating expenses directly associated with and attributable to the redevelopment, including interest expense, are capitalized to the extent that we believe such costs are recoverable through the value of the property.

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Judgments and Uncertainties: Our real estate and related intangible assets are reviewed for impairment whenever there are changes in circumstances or indicators that the carrying amount of the assets may not be recoverable. These indicators may include declining operating performance, below average occupancy, shortened anticipated holding periods, costs in excess of budgets for under-construction assets and other adverse changes. An impairment exists when the carrying amount of an asset exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Estimates of future cash flows are based on our current plans, anticipated holding periods and available market information at the time the analyses are prepared. An impairment loss is recognized if the carrying amount of the asset is not recoverable and is measured based on the excess of the property's carrying amount over its estimated fair value. Estimated fair values are calculated based on the following information in order of preference, dependent upon availability: (i) pending or executed agreements, (ii) market prices for comparable properties or (iii) the sum of discounted cash flows.

Sensitivity of Estimate to Change: While our methodology did not change in 2023, if our estimates of future cash flows, anticipated holding periods, asset strategy or fair values change, based on market conditions, anticipated selling prices or other factors, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. Estimates of future cash flows are subjective and are based, in part, on assumptions regarding future occupancy, rental rates, capitalization and discount rates, and capital requirements that could differ materially from actual results. Longer anticipated holding periods for real estate assets directly reduce the likelihood of recording an impairment loss. If there is a change in the strategy for an asset or if market conditions dictate a shorter holding period, an impairment loss may be recognized, and such loss could be material.

Investments in Real Estate Ventures

Description: We use the equity method of accounting for investments in unconsolidated real estate ventures when we have significant influence, but do not have a controlling financial interest.

Judgments and Uncertainties: On a periodic basis, we evaluate our investments in unconsolidated real estate ventures for impairment. An investment in a real estate venture is considered impaired if we determine that its fair value is less than the net carrying value of the investment in that real estate venture on an other-than-temporary basis. Cash flow projections for the investments consider property level factors such as expected future operating income, trends and prospects, anticipated holding periods, as well as the effects of demand, competition and other factors. We consider various qualitative factors to determine if a decrease in the value of our investment is other-than-temporary. These factors include the age of the venture, our intent and ability to retain our investment in the real estate venture, financial condition and long-term prospects of the real estate venture and relationships with our partners and banks. If we believe that the decline in the fair value of the investment is temporary, no impairment loss is recorded. If our analysis indicates that there is an other-than temporary impairment related to the investment in a particular real estate venture, the carrying value of the venture will be adjusted to an amount that reflects the estimated fair value of the investment. In the event our investment in a real estate venture is reduced to zero, and we are not obligated to provide for additional losses, have not guaranteed its obligations or otherwise committed to providing financial support, we will discontinue the equity method of accounting until such point that our share of net income equals the share of net losses not recognized during the period the equity method was suspended.

Sensitivity of Estimate to Change: While our methodology did not change in 2023, if our cash flow projections or our evaluation of qualitative factors change, based on market conditions or other factors, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. Cash flow projections are subjective and are based, in part, on assumptions regarding expected future operating income, trends and prospects, anticipated holding periods, as well as the effects of demand, competition and other factors that could differ materially from actual results. If our assessment that an impairment is other-than-temporary changes, it could result in an impairment loss that could be material to our consolidated financial statements.

Revenue Recognition

Description: We have leases with various tenants across our portfolio of properties, which generate rental income and operating cash flows for our benefit. Property rental revenue includes base rent each tenant pays in accordance with the terms of its respective lease and is reported on a straight-line basis over the non-cancellable term of the lease, which includes the effects of periodic step-ups in rent and rent abatements under the lease.

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Judgments and Uncertainties: We periodically evaluate the collectability of amounts due from tenants and recognize an adjustment to property rental revenue for accounts receivable and deferred rent receivable if we conclude it is not probable we will collect the remaining lease payments under the lease agreements. We exercise judgment in assessing the probability of collection and consider payment history, current credit status and economic outlook in making this determination.

Sensitivity of Estimate to Change: If the probability of collection changes, due to tenant creditworthiness, changes to tenant payment patterns or economic trends, our evaluation of collectability may be different and such differences could be material to our consolidated financial statements.

Recent Accounting Pronouncements

See Note 2 to the consolidated financial statements for a description of recent accounting pronouncements.

Results of Operations

The ~~capitalization~~following section discusses certain line items from our consolidated statements of operations and the year-to-year comparisons between 2023 and 2022. Discussions of the year-to-year comparisons between 2022 and 2021 can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 21, 2023.

In 2023, we sold an 80.0% interest in 4747 Bethesda Avenue to an unconsolidated real estate venture, and we sold Falkland Chase, 5 M Street Southwest, Crystal City Marriott and Capital Point-North-75 New York Avenue. In 2022, we sold the Universal Buildings and Pen Place, and sold 7200 Wisconsin Avenue, 1730 M Street, RTC-West/RTC-West Trophy Office/RTC-West Land and Courthouse Plaza 1 and 2 to an unconsolidated real estate venture. We collectively refer to these assets as the "Disposed Properties" in the discussion below. In 2022, we acquired the remaining 36.0% ownership interest in Atlantic Plumbing and the remaining 50.0% ownership interest in 8001 Woodmont, which were previously owned by unconsolidated real estate ventures and consolidated upon acquisition.

Comparison of the Year Ended December 31, 2023 to 2022

The following summarizes certain line items from our consolidated statements of operations that we believe are important in understanding our operations and/or those items which significantly changed in the year ended December 31, 2023 compared to the same period ~~ends when redevelopment activities are substantially complete.~~ in 2022:


		Year Ended December 31,
		2023		2022		% Change

	(Dollars in thousands)
Property rental revenue		$	483,159	$	491,738	(1.7)	%
Third-party real estate services revenue, including reimbursements			92,051		89,022	3.4	%
Depreciation and amortization expense			210,195		213,771	(1.7)	%
Property operating expense			144,049		150,004	(4.0)	%
Real estate taxes expense			57,668		62,167	(7.2)	%
General and administrative expense:
Corporate and other			54,838		58,280	(5.9)	%
Third-party real estate services			88,948		94,529	(5.9)	%
Share-based compensation related to Formation Transaction and special equity awards			549		5,391	(89.8)	%
Loss from unconsolidated real estate ventures, net			26,999		17,429	54.9	%
Interest and other income, net			15,781		18,617	(15.2)	%
Interest expense			108,660		75,930	43.1	%
Gain on the sale of real estate, net			79,335		161,894	(51.0)	%
Impairment loss			90,226		—	*

*Not meaningful.

Property rental revenue decreased by $8.6 million, or 1.7%, to $483.2 million in 2023 from $491.7 million in 2022. The decrease was primarily due to a $39.1 million decrease in revenue from our commercial assets, partially offset by a $26.6

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million increase in revenue from our multifamily assets and a $3.9 million increase in other revenue. The decrease in revenue from our commercial assets was primarily due to a $31.2 million decrease related to the Disposed Properties, and lower occupancy and rents across the portfolio. The increase in revenue from our multifamily assets was primarily due to a $16.9 million increase related to the consolidation of Atlantic Plumbing and 8001 Woodmont, and higher occupancy and rents across the portfolio, partially offset by a $2.0 million decrease related to the sale of Falkland Chase.

Third-party real estate services revenue, including reimbursements, increased by $3.0 million, or 3.4%, to $92.1 million in 2023 from $89.0 million in 2022. The increase was primarily due to a $1.9 million increase in development fees related to the timing of development projects, a $1.9 million increase in reimbursement revenue and an $861,000 increase in construction management fees due to an increase in active projects, partially offset by a $1.2 million decrease in asset management fees due to the sale of assets within the JBG Legacy Funds.

Depreciation and amortization expense decreased by $3.6 million, or 1.7%, to $210.2 million in 2023 from $213.8 million in 2022. The decrease was primarily due to a $14.9 million decrease related to the Disposed Properties, a $4.3 million decrease due to the amortization of the acquired in-place lease intangible at The Batley in 2022 and a $3.9 million decrease related to 2221 S. Clark Street-Residential due to the amortization and disposal of certain tenant improvements in 2022. The decrease in depreciation and amortization expense was partially offset by an $8.9 million increase related to the consolidation of Atlantic Plumbing and 8001 Woodmont, a $6.5 million increase related to 2100 Crystal Drive due to the acceleration of depreciation of certain assets as the building will be taken out of service in the second quarter of 2024, and a $4.2 million increase related to 2451 Crystal Drive and 1550 Crystal Drive due to the amortization and disposal of certain tenant improvements in 2023.

Property operating expense decreased by $6.0 million, or 4.0%, to $144.0 million in 2023 from $150.0 million in 2022. The decrease was primarily due to a $11.0 million decrease in property operating expense from our commercial assets and a $5.2 million decrease in other property operating expense, partially offset by a $10.2 million increase in property operating expense from our multifamily assets. The decrease in property operating expense from our commercial assets was primarily due to a $9.5 million decrease related to the Disposed Properties and a $1.4 million decrease in construction management services provided to tenants. The decrease in other property operating expense was primarily due to a $1.9 million decrease in insurance claims covered by our captive insurance subsidiary, a $1.1 million decrease in costs incurred related to digital infrastructure initiatives in National Landing and a $1.1 million decrease related to operating expenses for properties under development. The increase in property operating expense from our multifamily assets was primarily due to a $6.9 million increase related to the consolidation of Atlantic Plumbing and 8001 Woodmont, and a $3.6 million increase in operating expenses across our multifamily portfolio, primarily related to higher compensation, temporary staffing, cleaning, marketing, legal and security expenses.

Real estate taxes expense decreased by $4.5 million, or 7.2%, to $57.7 million in 2023 from $62.2 million in 2022. The decrease was primarily due to a $5.8 million decrease related to the Disposed Properties and lower assessments across the portfolio, partially offset by a $2.1 million increase related to the consolidation of Atlantic Plumbing and 8001 Woodmont.

General and administrative expense: corporate and other decreased by $3.4 million, or 5.9%, to $54.8 million in 2023 from $58.3 million in 2022. The decrease was primarily due to lower compensation expense resulting from lower headcount, partially offset by a decrease in capitalized payroll.

General and administrative expense: third-party real estate services decreased by $5.6 million, or 5.9%, to $88.9 million in 2023 from $94.5 million in 2022. The decrease was primarily due to lower compensation expense resulting from lower headcount, partially offset by an increase in third-party reimbursable expenses.

General and administrative expense: share-based compensation related to Formation Transaction and special equity awards decreased by $4.8 million, or 89.8%, to $549,000 in 2023 from $5.4 million in 2022. The decrease was primarily due to the graded vesting of certain awards issued in prior years, which resulted in lower expense as portions of the awards vested.

Loss from unconsolidated real estate ventures increased by $9.6 million, or 54.9%, to $27.0 million for 2023 from $17.4 million in 2022. The increase was primarily due to a $9.3 million increase in impairment losses, a $6.4 million reduction in gains at our share from the sale of various assets in 2022 and a decrease in income at our share. The increase in loss

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from unconsolidated real estate ventures was partially offset by a $5.6 million decrease in loss related to the consolidation of Atlantic Plumbing and 8001 Woodmont as these assets were not yet stabilized and incurring losses and a $1.6 million decrease related to our suspension of the equity method of accounting for the L’Enfant Plaza Assets.

Interest and other income decreased by approximately $2.8 million, or 15.2%, to $15.8 million in 2023 from $18.6 million in 2022. The decrease was primarily due to a $12.6 million decrease in realized gains primarily from the sale of investments in equity securities in 2022 and an $883,000 decrease in unrealized gains from investments. The decrease in interest and other income was partially offset by a $6.2 million increase in interest income from our outstanding cash balances and a $6.0 million gain from the settlement of litigation in 2023.

Interest expense increased by $32.7 million, or 43.1%, to $108.7 million in 2023 from $75.9 million in 2022. The increase in interest expense was primarily due to (i) a $32.3 million increase due to higher outstanding debt, (ii) a $15.2 million decrease related to the mark-to-market associated with our non-designated derivatives, (iii) a $14.0 million increase related to rising interest rates on variable rate mortgage loans and (iv) a $3.8 million increase related to the consolidation of 8001 Woodmont. The increase in interest expense was partially offset by (v) a $15.9 million increase in capitalized interest, (vi) a $7.7 million decrease related to mortgage loans collateralized by 2121 Crystal Drive and Falkland Chase-South & West, which were repaid during 2023, and (vii) a $7.1 million decrease related to the Disposed Properties, excluding Falkland Chase-South & West.

Gain on the sale of real estate of $79.3 million in 2023 and $161.9 million in 2022 was due to the sale of the Disposed Properties.

Impairment loss of $90.2 million in 2023 related to various commercial assets (2101 L Street, 2100 Crystal Drive and 2200 Crystal Drive) and a development parcel, which were written down to their estimated fair value.

FFO

FFO isa non-GAAP financial measure 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 (losses) from the sale of certain real estate assets, gains (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.

We believe FFO is a meaningful non-GAAP financial measure useful in comparing our levered operating performance from period-to-period and compared to similar real estate companies because FFO excludes 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 does not represent cash generated from operating activities and is 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 may not be comparable to similarly titled measures used by other companies.

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The following is the reconciliation of net income (loss) attributable to common shareholders, the most directly comparable GAAP measure, to FFO:


		Year Ended December 31,
		2023		2022		2021

	(In thousands)
Net income (loss) attributable to common shareholders		$	(79,978)	$	85,371	$	(79,257)
Net income (loss) attributable to redeemable noncontrolling interests			(10,596)		13,244		(8,728)
Net income (loss) attributable to noncontrolling interests			(1,135)		371		(1,740)
Net income (loss)			(91,709)		98,986		(89,725)
Gain on the sale of real estate, net of tax			(79,335)		(158,769)		(11,290)
Gain on the sale of unconsolidated real estate assets			(411)		(6,797)		(28,326)
Real estate depreciation and amortization			203,269		204,752		227,424
Real estate impairment loss, net of tax			90,226		—		24,301
Impairment related to unconsolidated real estate ventures ⁽¹⁾			28,598		19,286		25,263
Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures			11,545		21,169		28,216
FFO attributable to noncontrolling interests			1,024		(735)		1,522
FFO attributable to OP Units			163,207		177,892		177,385
FFO attributable to redeemable noncontrolling interests			(22,820)		(21,846)		(18,034)
FFO attributable to common shareholders		$	140,387	$	156,046	$	159,351

(1)	Related to decreases in the value of the underlying real estate assets.

NOI and Same Store NOI

NOI is a non-GAAP financial measure 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 consolidated 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.

Information provided on a same store basis includes the results of properties that are owned, operated and in-service for the entirety of both periods being compared, which excludes disposed properties or properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. During the year ended December 31, 2023, our same store pool decreased to 42 properties from 47 properties due to (i) the sale of Falkland Chase, Crystal City Marriott, Stonebridge at Potomac Town Center and Rosslyn Gateway, (ii) the exclusion of The Foundry as we discontinued the equity method of accounting for this unconsolidated real estate venture and our investment in the venture was reduced to zero and (iii) the inclusion of The Wren and The Batley as they were in service for the entirety of the comparable periods. While there is judgment surrounding changes in designations, a property is removed

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from the same store pool when the property is considered to be under-construction because it is undergoing significant redevelopment or renovation pursuant to a formal plan or is being repositioned in the market and such renovation or repositioning is expected to have a significant impact on property NOI. A development property or under-construction property is moved to the same store pool once a substantial portion of the growth expected from the development or redevelopment is reflected in both the current and comparable prior year period. Acquisitions are moved into the same store pool once we have owned the property for the entirety of the comparable periods and the property is not under significant development or redevelopment.

Same store NOI increased by $4.8 million, or 1.6%, to $299.9 million for the year ended December 31, 2023 from $295.0 million for the year ended December 31, 2022. The increase was substantially attributable to (i) higher rents and occupancy, partially offset by higher concessions and higher operating expenses in our multifamily portfolio and (ii) lower occupancy, partially offset by the burn off of rent abatements, higher parking revenue and lower operating expenses in our commercial portfolio.

The following is the reconciliation of net income (loss) attributable to common shareholders to NOI and same store NOI:


	Year Ended December 31,
	2023		2022

	(Dollars in thousands)
Net income (loss) attributable to common shareholders	$	(79,978)	$	85,371
Add:
Depreciation and amortization expense		210,195		213,771
General and administrative expense:
Corporate and other		54,838		58,280
Third-party real estate services		88,948		94,529
Share-based compensation related to Formation Transaction and special equity awards		549		5,391
Transaction and other costs		8,737		5,511
Interest expense		108,660		75,930
Loss on the extinguishment of debt		450		3,073
Impairment loss		90,226		—
Income tax expense (benefit)		(296)		1,264
Net income (loss) attributable to redeemable noncontrolling interests		(10,596)		13,244
Net income (loss) attributable to noncontrolling interests		(1,135)		371
Less:
Third-party real estate services, including reimbursements revenue		92,051		89,022
Other revenue		10,902		7,421
Loss from unconsolidated real estate ventures, net		(26,999)		(17,429)
Interest and other income, net		15,781		18,617
Gain on the sale of real estate, net		79,335		161,894
Consolidated NOI		299,528		297,210
NOI attributable to unconsolidated real estate ventures at our share		19,452		26,861
Non-cash rent adjustments ⁽¹⁾		(23,482)		(17,442)
Other adjustments ⁽²⁾		22,994		27,739
Total adjustments		18,964		37,158
NOI		318,492		334,368
Less: out-of-service NOI loss ⁽³⁾		(3,512)		(4,849)
Operating Portfolio NOI		322,004		339,217
Non-same store NOI ⁽⁴⁾		22,125		44,174
Same store NOI ⁽⁵⁾	$	299,879	$	295,043

Change in same store NOI		1.6%
Number of properties in same store pool		42

(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.

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(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.

Reportable Segments

We review operating and financial data for each property on an individual basis; therefore, each of our individual properties is a separate operating segment. We define our reportable segments to be aligned with our method of internal reporting and the way our Chief Executive Officer, who is also our CODM, makes key operating decisions, evaluates financial results, allocates resources and manages our business. Accordingly, we aggregate our operating segments into three reportable segments (multifamily, commercial and third-party asset management and real estate services) based on the economic characteristics and nature of our assets and services.

With respect to the third-party asset management and real estate services business, the CODM reviews revenue streams generated by this segment ("Third-party real estate services, including reimbursements"), as well as the expenses attributable to the segment ("General and administrative: third-party real estate services"), which are both disclosed separately in our consolidated statements of operations. The following represents the components of revenue from our third-party asset management and real estate services business:


		Year Ended December 31,
		2023		2022

	(In thousands)
Property management fees		$	19,930	$	19,589
Asset management fees			5,030		6,191
Development fees			10,253		8,325
Leasing fees			5,592		6,017
Construction management fees			1,383		522
Other service revenue			5,316		5,706
Third-party real estate services revenue, excluding reimbursements			47,504		46,350
Reimbursement revenue ⁽¹⁾			44,547		42,672
Third-party real estate services revenue, including reimbursements			92,051		89,022
Third-party real estate services expenses			88,948		94,529
Third-party real estate services revenue less expenses		$	3,103	$	(5,507)

(1)	Represents reimbursements of expenses incurred by us on behalf of third parties, including allocated payroll costs and amounts paid to third-party contractors for construction management projects.

See discussion of third-party real estate services revenue, including reimbursements, and third-party real estate services expenses for the year ended December 31, 2023 in the preceding pages under "Results of Operations."

Consistent with internal reporting presented to our CODM and our definition of NOI, the third-party asset management and real estate services operating results are excluded from the NOI data below. Property revenue is calculated as property rental revenue plus parking revenue. Property expense is calculated as property operating expenses plus real estate taxes. Consolidated NOI is calculated as property revenue less property expense. See Note 20 to the consolidated financial statements for the reconciliation of net income (loss) attributable to common shareholders to consolidated NOI for the years ended December 31, 2023 and 2022.

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The following is a summary of NOI by segment:


		Year Ended December 31,
		2023		2022

	(In thousands)
Property revenue: ⁽¹⁾
Multifamily		$	207,752	$	180,925
Commercial			279,670		318,485
Other ⁽²⁾			13,823		9,971
Total property revenue			501,245		509,381

Property expense: ⁽³⁾
Multifamily			94,225		82,597
Commercial			108,800		124,173
Other ⁽²⁾			(1,308)		5,401
Total property expense			201,717		212,171

Consolidated NOI:
Multifamily			113,527		98,328
Commercial			170,870		194,312
Other ⁽²⁾			15,131		4,570
Consolidated NOI		$	299,528	$	297,210

(1)	Includes property rental revenue and parking revenue.

(2)	Includes activity related to development assets, corporate entities, land assets for which we are the ground lessor and the elimination of inter-segment activity.

(3)	Includes property operating expenses and real estate taxes.

Comparison of the Year Ended December 31, 2023 to 2022

Multifamily: Property revenue increased by $26.8 million, or 14.8%, to $207.8 million in 2023 from $180.9 million in 2022. Consolidated NOI increased by $15.2 million, or 15.5%, to $113.5 million in 2023 from $98.3 million in 2022. The increases in property revenue and consolidated NOI were primarily due to the consolidation of Atlantic Plumbing and 8001 Woodmont, and higher occupancy and rents across the portfolio. The increase in consolidated NOI was partially offset by an increase in property operating costs.

Commercial: Property revenue decreased by $38.8 million, or 12.2%, to $279.7 million in 2023 from $318.5 million in 2022. Consolidated NOI decreased by $23.4 million, or 12.1%, to $170.9 million in 2023 from $194.3 million in 2022. The decreases in property revenue and consolidated NOI were primarily due to the Disposed Properties and lower occupancy and rents across the portfolio.

Liquidity and Capital Resources

Property rental revenue is our primary source of operating cash flow and depends on many factors including occupancy levels and rental rates, as well as our tenants' ability to pay rent. In addition, our third-party asset management and real estate services business provides fee-based real estate services to the JBG Legacy Funds, other third parties and the WHI Impact Pool. Our assets provide a relatively consistent level of cash flow that enables us to pay operating expenses, debt service, recurring capital expenditures, dividends to shareholders and distributions to holders of OP Units and LTIP Units. Other sources of liquidity to fund cash requirements include proceeds from financings, recapitalizations, asset sales, and the issuance and sale of securities. We anticipate that cash flows from continuing operations and proceeds from financings, asset sales and recapitalizations, together with existing cash balances, will be adequate to fund our business operations, debt amortization, capital expenditures, any dividends to shareholders, and distributions to holders of OP Units and LTIP Units.

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Mortgage Loans

The following is a summary of mortgage loans:


	Weighted Average
	Effective	December 31,
	Interest Rate ⁽¹⁾	2023		2022

		(In thousands)
Variable rate ⁽²⁾	6.25%	$	608,582	$	892,268
Fixed rate ⁽³⁾	4.78%		1,189,643		1,009,607
Mortgage loans			1,798,225		1,901,875
Unamortized deferred financing costs and premium/discount, net ⁽⁴⁾			(15,211)		(11,701)
Mortgage loans, net		$	1,783,014	$	1,890,174

(1)	Weighted average effective interest rate as of December 31, 2023.

(2)

Includes variable rate mortgage loans with interest rate cap agreements. For mortgage loans with interest rate caps, the weighted average interest rate cap strike was 3.33%, and the weighted average maturity date of the interest rate caps is March 2025. The interest rate cap strike is exclusive of the credit spreads associated with the mortgage loans. As of December 31, 2023, one-month term SOFR was 5.35%.

(3)	Includes variable rate mortgage loans with interest rates fixed by interest rate swap agreements.

(4)	As of December 31, 2022, excludes $2.2 million of net deferred financing costs related to unfunded mortgage loans that were included in "Other assets, net" in our consolidated balance sheet.

As of December 31, 2023 and 2022, the net carrying value of real estate collateralizing our mortgage loans totaled $2.2 billion. Our mortgage loans contain covenants that limit our ability to incur additional indebtedness on these properties and, in certain circumstances, require lender approval of tenant leases and/or yield maintenance upon repayment prior to maturity. Certain mortgage loans are recourse to us. See Note 21 to the consolidated financial statements for additional information.

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, and staggered maturities. Proceeds from the loan were used, in part, to repay the $131.5 million mortgage loan collateralized by 2121 Crystal Drive, which had a fixed interest rate of 5.51%.

In June 2023, we repaid $142.4 million in mortgage loans collateralized by Falkland Chase-South & West and 800 North Glebe Road.

In August 2022, we entered into a mortgage loan with a principal balance of $97.5 million collateralized by WestEnd25. The mortgage loan has a seven-year term and an interest rate of SOFR plus 1.45%. We also entered into an interest rate swap with a total notional value of $97.5 million, which effectively fixes SOFR at an average interest rate of 2.71% through the maturity date. During the year ended December 31, 2021, we entered into two separate mortgage loans with an aggregate principal balance of $190.0 million, collateralized by 1225 S. Clark Street and 1215 S. Clark Street.

As of December 31, 2023 and 2022, we had various interest rate swap and cap agreements on certain of our mortgage loans with an aggregate notional value of $1.7 billion and $1.3 billion. See Note 19 to the consolidated financial statements for additional information.

Revolving Credit Facility and Term Loans

As of December 31, 2023, our unsecured revolving credit facility and term loans totaling $1.5 billion consisted of a $750.0 million revolving credit facility maturing in June 2027, a $200.0 million Tranche A-1 Term Loan maturing in January 2025, a $400.0 million Tranche A-2 Term Loan maturing in January 2028 and a $120.0 million 2023 Term Loan maturing in June 2028.

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In January 2022, the Tranche A-1 Term Loan was amended to extend the maturity date to January 2025 with two one-year extension options, and to amend the interest rate to SOFR plus 1.15% to SOFR plus 1.75%, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets.

In July 2022, the Tranche A-2 Term Loan was amended to increase its borrowing capacity by $200.0 million. The incremental $200.0 million included a delayed draw feature, of which $150.0 million was drawn in September 2022 and the remaining $50.0 million was drawn in May 2023. The amendment extended the maturity date of the term loan to January 2028 and amended the interest rate to SOFR plus 1.25% to SOFR plus 1.80%, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets.

Effective as of June 29, 2023, the revolving credit facility was amended to: (i) reduce the borrowing capacity from $1.0 billion to $750.0 million, (ii) extend the maturity date from January 2025 to June 2027 and (iii) amend the interest rate to daily SOFR plus 1.40% to daily SOFR plus 1.85%, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets. We have the option to increase the $750.0 million revolving credit facility or add term loans up to $500.0 million, and we also have the right to extend the maturity date beyond June 2027 via two six-month extension options.

In addition, on June 29, 2023, we entered into a $120.0 million term loan maturing in June 2028 with an interest rate of one-month term SOFR plus 1.25% to one-month term SOFR plus 1.80%, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets.

In July 2023, we amended the covenants related to the Tranche A-1 Term Loan and the Tranche A-2 Term Loan to be consistent with the revolving credit facility and 2023 Term Loan covenants.

The following is a summary of amounts outstanding under the revolving credit facility and term loans:


	Effective	December 31,
	Interest Rate ⁽¹⁾	2023		2022

		(In thousands)
Revolving credit facility ^{(2) (3)}	6.83%	$	62,000	$	—

Tranche A-1 Term Loan ⁽⁴⁾	2.70%	$	200,000	$	200,000
Tranche A-2 Term Loan ⁽⁵⁾	3.58%		400,000		350,000
2023 Term Loan ⁽⁶⁾	5.31%		120,000		—
Term loans			720,000		550,000
Unamortized deferred financing costs, net			(2,828)		(2,928)
Term loans, net		$	717,172	$	547,072

(1)	Effective interest rate as of December 31, 2023. The interest rate for the revolving credit facility excludes a 0.15% facility fee.

(2)	As of December 31, 2023, daily SOFR was 5.38%. As of December 31, 2023 and 2022, letters of credit with an aggregate face amount of $467,000 were outstanding under our revolving credit facility. In February 2024, we repaid all amounts outstanding under our revolving credit facility.

(3)	As of December 31, 2023 and 2022, excludes net deferred financing costs related to our revolving credit facility of $10.2 million and $3.3 million that were included in "Other assets, net" in our consolidated balance sheets.

(4)

As of December 31, 2023, the interest rate swaps fix SOFR at a weighted average interest rate of 1.46%. Interest rate swaps with a total notional value of $200.0 million mature in July 2024. We have two forward-starting interest rate swaps that will be effective July 2024 with a total notional value of $200.0 million, which will effectively fix SOFR at a weighted average interest rate of 4.00% through January 2027.

(5)

As of December 31, 2023, the interest rate swaps fix SOFR at a weighted average interest rate of 2.29%. Interest rate swaps with a total notional value of $200.0 million mature in July 2024 and with a total notional value of $200.0 million mature in January 2028. We have two forward-starting interest rate swaps that will be effective July 2024 with a total notional value of $200.0 million, which will effectively fix SOFR at a weighted average interest rate of 2.81% through the maturity date.

(6)	As of December 31, 2023, the outstanding balance was fixed by an interest rate swap agreement, which fixes SOFR at an interest rate of 4.01% through the maturity date.

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Common Shares Repurchased

Our Board of Trustees previously authorized the repurchase of up to $1.0 billion of our outstanding common shares, and in May 2023, increased the common share repurchase authorization to $1.5 billion. During the year ended December 31, 2023, we repurchased and retired 22.6 million common shares for $335.3 million, a weighted average purchase price per share of $14.83. During the year ended December 31, 2022, we repurchased and retired 14.2 million common shares for $361.0 million, a weighted average purchase price per share of $25.49. During the year ended December 31, 2021, we repurchased and retired 5.4 million common shares for $157.7 million, a weighted average purchase price per share of $29.34. Since we began the share repurchase program through December 31, 2023, we have repurchased and retired 45.9 million common shares for $958.8 million, a weighted average purchase price per share of $20.88.

During the first quarter of 2024, through the date of this filing, we repurchased and retired 2.7 million common shares for $45.4 million, a weighted average purchase price per share of $16.52, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.

Purchases under the program are made either in the open market or in privately negotiated transactions from time to time as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by us at our discretion and will be subject to economic and market conditions, share price, applicable legal requirements and other factors. The program may be suspended or discontinued at our discretion without prior notice.

Material Cash Requirements

Our material cash requirements for the next 12 months and beyond are to fund:

●

normal recurring expenses;

●

debt service and principal repayment obligations, including balloon payments on maturing mortgage debt — As of December 31, 2023, we had $120.3 million on a consolidated basis and at our share related to a mortgage loan scheduled to mature in 2024;

●

capital expenditures, including major renovations, tenant improvements and leasing costs — As of December 31, 2023, we had committed tenant-related obligations totaling $46.8 million ($46.0 million related to our consolidated entities and $828,000 related to our unconsolidated real estate ventures at our share);

●

development expenditures — As of December 31, 2023, we had assets under construction that, based on our current plans and estimates, require an additional $177.1 million to complete, which we anticipate will be primarily expended over the next two years;

●

dividends to shareholders and distributions to holders of OP Units and LTIP Units — on February 14, 2024, our Board of Trustees declared a quarterly dividend of $0.175 per common share;

●

possible common share repurchases — during the first quarter of 2024, through the date of this filing, we repurchased and retired 2.7 million common shares for $45.4 million; and

●

possible acquisitions of properties, either directly or indirectly through the acquisition of equity interests.

We expect to satisfy these requirements using one or more of the following:

●

cash and cash equivalents — As of December 31, 2023, we had cash and cash equivalents of $164.8 million;

●

cash flows from operations;

●

distributions from real estate ventures;

●

borrowing capacity under our current revolving credit facility — As of December 31, 2023, we had $687.5 million of availability under our revolving credit facility;

●

proceeds from financings, asset sales and recapitalizations; and

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●

proceeds from the issuance of securities.

The following is a summary of our material cash requirements as of December 31, 2023:


	Total		2024		2025		2026		2027		2028		Thereafter

	(In thousands)
Material cash requirements (principal and interest):
Debt obligations ^{(1) (2)}	$	3,120,752	$	254,845	$	712,085	$	213,919	$	560,265	$	660,333	$	719,305
Operating leases ⁽³⁾		93,848		6,539		6,737		6,942		7,154		5,934		60,542
Other		662		365		108		105		84		—		—
Total material cash requirements ⁽⁴⁾	$	3,215,262	$	261,749	$	718,930	$	220,966	$	567,503	$	666,267	$	779,847

(1)	Interest was computed giving effect to interest rate hedges. One-month term SOFR of 5.35% and daily SOFR of 5.38% was applied to loans, as applicable, which are variable (no hedge) or variable with an interest rate cap. Additionally, we assumed no additional borrowings on construction loans.

(2)	Excludes our proportionate share of unconsolidated real estate venture indebtedness. See additional information in Unconsolidated Real Estate Ventures section below.

(3)	We have operating lease right-of-use assets and lease liabilities associated with various ground leases for which we are the lessee in our consolidated balance sheet. See Note 21 to the consolidated financial statements for additional information.

(4)

Excludes obligations related to construction or development contracts totaling $177.1 million since payments are only due upon satisfactory performance under the contracts. Also excludes committed tenant-related obligations totaling $46.8 million ($46.0 million related to our consolidated entities and $828,000 related to our unconsolidated real estate ventures at our share) as timing and amounts of payments are uncertain and may only be due upon satisfactory performance of certain conditions. See Commitments and Contingencies section below for additional information.

Summary of Cash Flows

The following summary discussion of our cash flows is based on our consolidated statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows:


	Year Ended December 31,
	2023		2022

	(In thousands)
Net cash provided by operating activities	$	183,372	$	178,037
Net cash (used in) provided by investing activities		(98,179)		524,021
Net cash used in financing activities		(158,825)		(730,080)

Cash Flows for the Year Ended December 31, 2023

Cash and cash equivalents, and restricted cash decreased $73.6 million to $200.4 million as of December 31, 2023, compared to $274.1 million as of December 31, 2022. This decrease resulted from $158.8 million of net cash used in financing activities and $98.2 million of net cash used in investing activities, partially offset by $183.4 million of net cash provided by operating activities. Our outstanding debt was $2.6 billion and $2.5 billion as of December 31, 2023 and 2022.

Net cash provided by operating activities of $183.4 million primarily comprised: (i) $185.2 million of net income (before $356.2 million of non-cash items and $79.3 million of gain on the sale of real estate), (ii) $20.7 million of return on capital from unconsolidated real estate ventures and (iii) $22.5 million of net change in operating assets and liabilities. Non-cash income adjustments of $356.2 million primarily include depreciation and amortization expense, impairment loss, share-based compensation expense, loss from unconsolidated real estate ventures, deferred rent and other non-cash items.

Net cash used in investing activities of $98.2 million primarily comprised: (i) $333.7 million of development costs, construction in progress and real estate additions, (ii) $29.0 million of investments in unconsolidated real estate ventures and other investments and (iii) a $19.6 million payment of a deferred purchase price related to the 2020 acquisition of a development parcel, partially offset by (iv) $281.5 million of proceeds from the sale of real estate and (v) $10.5 million of distributions of capital from unconsolidated real estate ventures and other investments.

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Net cash used in financing activities of $158.8 million primarily comprised: (i) $335.3 million of common shares repurchased, (ii) $309.8 million of repayments of the revolving credit facility, (iii) $281.9 million of repayments of mortgage loans, (iv) $94.0 million of dividends paid to common shareholders, (v) $17.6 million of debt issuance and modification costs and (vi) $15.3 million of distributions to redeemable noncontrolling interests, partially offset by (vii) $371.8 million of proceeds from borrowings under the revolving credit facility, (viii) $345.1 million of borrowings under mortgage loans and (ix) $170.0 million of borrowings under the term loans.

Unconsolidated Real Estate Ventures

We consolidate entities in which we have a controlling interest or are the primary beneficiary in a variable interest entity. From time to time, we may have off-balance-sheet unconsolidated real estate ventures and other unconsolidated arrangements with varying structures.

As of December 31, 2023, we have investments in unconsolidated real estate ventures totaling $264.3 million. For these investments, we exercise significant influence over but do not control these entities and, therefore, account for these investments using the equity method of accounting. For a more complete description of our real estate ventures, see Note 5 to the consolidated financial statements.

From time to time, we (or ventures in which we have an ownership interest) have agreed, and may in the future agree with respect to unconsolidated real estate ventures, to (i) guarantee portions of the principal, interest and other amounts in connection with borrowings, (ii) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) in connection with borrowings or (iii) provide guarantees to lenders and other third parties for the completion of development projects. We customarily have agreements with our outside venture partners whereby the partners agree to reimburse the real estate venture or us for their share of any payments made under certain of these guarantees. At times, we also have agreements with certain of our outside venture partners whereby we agree to either indemnify the partners and/or the associated ventures with respect to certain contingent liabilities associated with operating assets or to reimburse our partner for its share of any payments made by them under certain guarantees. Guarantees (excluding environmental) customarily terminate either upon the satisfaction of specified circumstances or repayment of the underlying debt. Amounts that we may be required to pay in future periods in relation to guarantees associated with budget overruns or operating losses are not estimable.

As of December 31, 2023, we had additional capital commitments and certain recorded guarantees to our unconsolidated real estate ventures and other investments totaling $61.3 million. As of December 31, 2023, we had no principal payment guarantees related to our unconsolidated real estate ventures.

Commitments and Contingencies

Insurance

We maintain general liability insurance with limits of $150.0 million per occurrence and in the aggregate, and property and rental value insurance coverage with limits of $1.0 billion per occurrence, with sub-limits for certain perils such as floods and earthquakes on each of our properties. We also maintain coverage, through our wholly owned captive insurance subsidiary, for a portion of the first loss on the above limits and for both conventional terrorist acts and for nuclear, biological, chemical or radiological terrorism events with limits of $2.0 billion per occurrence. These policies are partially reinsured by third-party insurance providers.

We will continue to monitor the state of the insurance market, and the scope and costs of coverage for acts of terrorism. We cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are responsible for deductibles and losses in excess of the insurance coverage, which could be material.

Our debt, consisting of mortgage loans secured by our properties, a revolving credit facility and term loans, contains customary covenants requiring adequate insurance coverage. Although we believe that we currently have adequate insurance coverage, we may not be able to obtain an equivalent amount of coverage at a reasonable cost in the future. If lenders insist on greater coverage than we are able to obtain, it could adversely affect our ability to finance or refinance our properties.

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Construction Commitments

As of December 31, 2023, we had assets under construction that will, based on our current plans and estimates, require an additional $177.1 million to complete, which we anticipate will be primarily expended over the next two years. These capital expenditures are generally due as the work is performed, and we expect to finance them with debt proceeds, proceeds from asset recapitalizations and sales, and available cash.

Other

As of December 31, 2023, we had committed tenant-related obligations totaling $46.8 million ($46.0 million related to our consolidated entities and $828,000 related to our unconsolidated real estate ventures at our share). The timing and amounts of payments for tenant-related obligations are uncertain and may only be due upon satisfactory performance of certain conditions.

There are various legal actions against us in the ordinary course of business. In our opinion, the outcome of such matters will not have a material adverse effect on our financial condition, results of operations or cash flows. During the year ended December 31, 2023, we recognized a $6.0 million gain from the settlement of litigation, which was included in "Interest and other income, net" in our consolidated statement of operations.

With respect to borrowings of our consolidated entities, we have agreed, and may in the future agree, to (i) guarantee portions of the principal, interest and other amounts, (ii) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) or (iii) provide guarantees to lenders, tenants and other third parties for the completion of development projects.As of December 31, 2023, the aggregate amount of principal payment guarantees was $8.3 million for our consolidated entities.

In connection with the Formation Transaction, we have a Tax Matters Agreement that provides special rules that allocate tax liabilities if the distribution of JBG SMITH shares by Vornado, together with certain related transactions, is determined not to be tax-free. Under the Tax Matters Agreement, we may be required to indemnify Vornado against any taxes and related amounts and costs resulting from a violation by us of the Tax Matters Agreement.

Environmental Matters

Under various federal, state and local laws, ordinances and regulations, a current or former owner or operator of real estate may be liable for conducting or paying for the costs of the investigation, removal or remediation of certain hazardous or toxic substances on that real estate. These laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence of hazardous or toxic substances, and the liability may be joint and several. The costs of remediation or removal of these substances may be substantial and could exceed the value of the property, and the presence of these substances, or the failure to promptly remediate these substances, may adversely affect the owner's ability to sell or develop the real estate or to borrow using the real estate as collateral. In connection with the ownership and operation of our current and former assets, we may be potentially liable for these costs. The operations of current and former tenants at our assets have involved, or may have involved, the use of hazardous substances or generated hazardous wastes, and indemnities in our lease agreements may not fully protect us from liability, if, for example, a tenant responsible for environmental noncompliance or contamination becomes insolvent. The release of these hazardous substances and wastes could result in us incurring liabilities to remediate any resulting contamination. The presence of contamination or the failure to remediate contamination at our properties may (i) expose us to third-party liability (e.g., for cleanup costs, natural resource damages, bodily injury or property damage), (ii) subject our properties to liens in favor of the government for damages and costs the government incurs in connection with the contamination, (iii) impose restrictions on the manner in which a property may be used or businesses may be operated, or (iv) materially adversely affect our ability to sell, lease or develop the real estate or to borrow using the real estate as collateral. In addition, our assets are exposed to the risk of contamination originating from other sources. While a property owner may not be responsible for remediating contamination that has migrated onsite from an identifiable and viable offsite source, the contaminant's presence can have adverse effects on operations and the redevelopment of our assets. To the extent we arrange for contaminated materials to be sent to other locations for treatment or disposal, we may be liable for the cleanup of those sites if they become contaminated, without regard to whether we complied with environmental laws in doing so.

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Most of our assets have been subject, at some point, to environmental assessments that are intended to evaluate the environmental condition of the subject and surrounding assets. These environmental assessments generally have included a historical review, a public records review, a visual inspection of the site and surrounding assets, visual or historical evidence of underground storage tanks and other features, and the preparation and issuance of a written report. Soil, soil vapor and/or groundwater subsurface testing is conducted at our assets, when necessary, to further investigate any issues raised by the initial assessment that could reasonably be expected to pose a material concern to the property or result in us incurring material environmental liabilities as a result of redevelopment. The tests may not, however, have included extensive sampling or subsurface investigations. In each case where the environmental assessments have identified conditions requiring remedial actions required by law, we have initiated appropriate actions. The environmental assessments have not revealed any material environmental contamination that we believe would have a material adverse effect on our overall business, financial condition or results of operations, or that have not been anticipated and remediated during site redevelopment as required by law. Nevertheless, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites or changes in cleanup requirements would not result in significant cost to us. As disclosed in Note 21 to the consolidated financial statements, environmental liabilities totaled $17.6 million and $18.0 million as of December 31, 2023 and 2022, and are included in "Other liabilities, net" in our consolidated balance sheets.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We have exposure to fluctuations in interest rates, which are sensitive to many factors that are beyond our control. The following is a summary of our exposure to a change in interest rates:


	December 31, 2023						December 31, 2022
			Weighted						Weighted
			Average		Annual				Average
			Effective		Effect of 1%				Effective
			Interest		Change in				Interest
	Balance		Rate		Base Rates		Balance		Rate

	(Dollars in thousands)
Debt (contractual balances):
Mortgage loans:
Variable rate ⁽¹⁾	$	608,582		6.25%	$	1,445	$	892,268	5.21%
Fixed rate ⁽²⁾		1,189,643		4.78%		—		1,009,607	4.44%
	$	1,798,225			$	1,445	$	1,901,875
Revolving credit facility and term loans:
Revolving credit facility ⁽³⁾	$	62,000		6.83%	$	629	$	—	5.51%
Tranche A-1 Term Loan ⁽⁴⁾		200,000		2.70%		—		200,000	2.61%
Tranche A-2 Term Loan ⁽⁴⁾		400,000		3.58%		—		350,000	3.40%
2023 Term Loan ⁽⁵⁾		120,000		5.31%		—		—	—
	$	782,000			$	629	$	550,000
Pro rata share of debt of unconsolidated real estate ventures (contractual balances):
Variable rate ⁽¹⁾	$	35,000		5.00%	$	—	$	22,065	6.45%
Fixed rate ⁽²⁾		33,000		4.13%		—		33,000	4.13%
	$	68,000			$	—	$	55,065

(1)

(2)	Includes variable rate mortgage loans with interest rates fixed by interest rate swap agreements.

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(3)	As of December 31, 2023, daily SOFR was 5.38%. The interest rate for the revolving credit facility excludes a 0.15% facility fee. In February 2024, we repaid all amounts outstanding under our revolving credit facility.

(4)

As of December 31, 2023 and 2022, the outstanding balance was fixed by interest rate swap agreements. As of December 31, 2023, the interest rate swaps fix SOFR at a weighted average interest rate of 1.46% for the Tranche A-1 Term Loan and 2.29% for the Tranche A-2 Term Loan. See Note 10 to the consolidated financial statements for additional information.

(5)	As of December 31, 2023, the outstanding balance was fixed by an interest rate swap agreement, which fixes SOFR at an interest rate of 4.01% through the maturity date.

The fair value of our mortgage loans is estimated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit profiles based on market sources. The fair value of our revolving credit facility and term loans is calculated based on the net present value of payments over the term of the facilities using estimated market rates for similar notes and remaining terms. As of December 31, 2023 and 2022, the estimated fair value of our consolidated debt was $2.5 billion and $2.4 billion. These estimates of fair value, which are made at the end of the reporting period, may be different from the amounts that may ultimately be realized upon the disposition of our financial instruments.

Hedging Activities

To manage, or hedge, our exposure to interest rate risk, we follow established risk management policies and procedures, including the use of a variety of derivative financial instruments.

Derivative Financial Instruments Designated as Effective Hedges

Certain derivative financial instruments, consisting of interest rate swap and cap agreements, are cash flow hedges that are designated as effective hedges, and are carried at their estimated fair value on a recurring basis. We assess the effectiveness of our hedges both at inception and on an ongoing basis. If the hedges are deemed to be effective, the fair value is recorded in "Accumulated other comprehensive income" in our consolidated balance sheets and is subsequently reclassified into "Interest expense" in our consolidated statements of operations in the period that the hedged forecasted transactions affect earnings. Our hedges become less than perfectly effective if the critical terms of the hedging instrument and the forecasted transactions do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and interest rates. In addition, we evaluate the default risk of the counterparty by monitoring the creditworthiness of the counterparty. While management believes its judgments are reasonable, a change in a derivative's effectiveness as a hedge could materially affect expenses, net income (loss) and equity.

As of December 31, 2023 and 2022, we had interest rate swap and cap agreements with an aggregate notional value of $2.2 billion and $1.4 billion, which were designated as effective hedges. The fair value of our interest rate swaps and caps designated as effective hedges consisted of assets totaling $35.6 million and $53.5 million as of December 31, 2023 and 2022 included in "Other assets, net" in our consolidated balance sheets, and liabilities totaling $7.9 million as of December 31, 2023 included in "Other liabilities, net" in our consolidated balance sheet.

Non-Designated Derivatives

Certain derivative financial instruments, consisting of interest rate cap agreements, do not meet the accounting requirements to be classified as hedging instruments. These derivatives are carried at their estimated fair value on a recurring basis with realized and unrealized gains recorded in "Interest expense" in our consolidated statements of operations. As of December 31, 2023 and 2022, we had various interest rate cap agreements with an aggregate notional value of $642.7 million and $711.8 million, which were non-designated derivatives. The fair value of our interest rate cap agreements which were non-designated derivatives consisted of assets totaling $6.7 million and $8.1 million as of December 31, 2023 and 2022, included in "Other assets, net" in our consolidated balance sheets, and liabilities totaling $6.5 million as of December 31, 2023, included in "Other liabilities, net" in our consolidated balance sheet.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


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		Page
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)		66
Consolidated Balance Sheets as of December 31, 2023 and 2022		69
Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021		70
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022 and 2021		71
Consolidated Statements of Equity for the years ended December 31, 2023, 2022 and 2021		72
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021		73
Notes to Consolidated Financial Statements		75

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Trustees of JBG SMITH Properties

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of JBG SMITH Properties and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 20, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Real Estate – Impairment Indicators and Impairment- Refer to Notes 2 and 19 to the consolidated financial statements

Critical Audit Matter Description

The Company evaluates real estate assets for impairment whenever there are changes in circumstances or indicators that the carrying amount of the asset may not be recoverable. These indicators may include declining operating performance, below average occupancy, shortened anticipated holding periods, and other adverse changes. An impairment exists when

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the carrying amount of an asset exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.

For those real estate assets where an indicator of impairment has been identified, estimates of future cash flows are based on the Company’s current plans, anticipated holding periods and available market information. Estimates of future cash flows are subjective and are based, in part, on assumptions regarding future occupancy, rental rates and capital requirements. An impairment loss is recognized if the carrying amount of the asset is not recoverable and is measured based on the excess of a property's carrying amount over its estimated fair value. Estimated fair values are calculated based on the following information in order of preference, dependent upon availability: (i) pending or executed agreements, (ii) market prices for comparable properties or (iii) the sum of discounted cash flows. The Company’s estimates of fair value are determined using either a discounted cash flow model which requires judgements related to the anticipated holding periods, current market conditions and unobservable quantitative inputs, including appropriate capitalization and discount rates, or a market approach.

Given (1) the Company's evaluation of possible indicators of impairment of real estate assets requires management to make significant judgments, including anticipated holding periods, when determining whether events or changes in circumstances indicate that the carrying amounts of real estate assets may not be recoverable and (2) for those real estate assets where indicators of impairment have been identified, the Company’s evaluation of the recoverability and fair value of such assets requires management to make significant estimates and assumptions, our audit procedures to evaluate (a) whether management appropriately identified impairment indicators (b) the reasonableness of management’s undiscounted future cash flows analysis and (c) when required, the reasonableness of the estimated fair values of real estate assets required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the assessment of real estate assets for possible indicators of impairment, the estimate of future operating cash flows, and the determination of fair value for those assets where impairment has been identified included the following, among others:

●

We tested the effectiveness of controls over management’s identification of possible circumstances that may indicate that the carrying amounts of real estate assets may not be recoverable. We tested the effectiveness of controls over management’s cash flow recoverability and fair value analyses, including controls over management’s estimates of future occupancy, rental rates, capital requirements and, as applicable, capitalization and discount rates and management’s selection of comparable properties used in the market approach, when applicable.

●	We evaluated the Company’s assessment of impairment indicators by:

–

Testing real estate assets for possible indicators of impairment, including searching for adverse asset-specific and/or market conditions.

–

Inquiring of management and reading business performance reports and board minutes to identify properties that should be evaluated for shortened anticipated holding periods.

–

Developing an expectation of assets for which impairment indicators are identified in management's analysis.

●	We evaluated the Company’s future cash flows prepared when an indicator of impairment has been identified by performing the following:

–

Discussing with management the assumptions used in the Company’s undiscounted cash flow models and evaluating the consistency of the assumptions used with evidence obtained in other areas of the audit.

–

Testing the recoverability assessments by developing independent estimates, based in part on applicable third-party market data, and compared our estimates to those used by management.

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●	We evaluated the Company’s determination of fair value for those assets where impairment had been identified by performing the following:

–

With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodology and the market prices for comparable properties, and we developed a range of independent estimates of fair value and compared our estimates to those used by management.

/s/ Deloitte & Touche LLP

McLean, Virginia

February 20, 2024

We have served as the Company's auditor since 2016.

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JBG SMITH PROPERTIES

Consolidated Balance Sheets

(In thousands, except par value amounts)


	December 31,
	2023		2022
ASSETS
Real estate, at cost:
Land and improvements	$	1,194,737	$	1,302,569
Buildings and improvements		4,021,322		4,310,821
Construction in progress, including land		659,103		544,692
		5,875,162		6,158,082
Less: accumulated depreciation		(1,338,403)		(1,335,000)
Real estate, net		4,536,759		4,823,082
Cash and cash equivalents		164,773		241,098
Restricted cash		35,668		32,975
Tenant and other receivables		44,231		56,304
Deferred rent receivable		171,229		170,824
Investments in unconsolidated real estate ventures		264,281		299,881
Deferred leasing costs, net		81,477		94,069
Intangible assets, net		56,616		68,177
Other assets, net		163,481		117,028
TOTAL ASSETS	$	5,518,515	$	5,903,438

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgage loans, net	$	1,783,014	$	1,890,174
Revolving credit facility		62,000		—
Term loans, net		717,172		547,072
Accounts payable and accrued expenses		124,874		138,060
Other liabilities, net		138,869		132,710
Total liabilities		2,825,929		2,708,016
Commitments and contingencies
Redeemable noncontrolling interests		440,737		481,310
Shareholders' equity:
Preferred shares, $0.01 par value - 200,000 shares authorized; none issued		—		—
Common shares, $0.01 par value - 500,000 shares authorized; 94,309 and 114,013 shares issued and outstanding as of December 31, 2023 and 2022		944		1,141
Additional paid-in capital		2,978,852		3,263,738
Accumulated deficit		(776,962)		(628,636)
Accumulated other comprehensive income		20,042		45,644
Total shareholders' equity of JBG SMITH Properties		2,222,876		2,681,887
Noncontrolling interests		28,973		32,225
Total equity		2,251,849		2,714,112
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	5,518,515	$	5,903,438

See accompanying notes to the consolidated financial statements.

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JBG SMITH PROPERTIES

Consolidated Statements of Operations

(In thousands, except per share data)


	Year Ended December 31,
	2023		2022		2021
REVENUE
Property rental	$	483,159	$	491,738	$	499,586
Third-party real estate services, including reimbursements		92,051		89,022		114,003
Other revenue		28,988		25,064		20,773
Total revenue		604,198		605,824		634,362
EXPENSES
Depreciation and amortization		210,195		213,771		236,303
Property operating		144,049		150,004		150,638
Real estate taxes		57,668		62,167		70,823
General and administrative:
Corporate and other		54,838		58,280		53,819
Third-party real estate services		88,948		94,529		107,159
Share-based compensation related to Formation Transaction and special equity awards		549		5,391		16,325
Transaction and other costs		8,737		5,511		10,429
Total expenses		564,984		589,653		645,496
OTHER INCOME (EXPENSE)
Loss from unconsolidated real estate ventures, net		(26,999)		(17,429)		(2,070)
Interest and other income, net		15,781		18,617		8,835
Interest expense		(108,660)		(75,930)		(67,961)
Gain on the sale of real estate, net		79,335		161,894		11,290
Loss on the extinguishment of debt		(450)		(3,073)		—
Impairment loss		(90,226)		—		(25,144)
Total other income (expense)		(131,219)		84,079		(75,050)
INCOME (LOSS) BEFORE INCOME TAX (EXPENSE) BENEFIT		(92,005)		100,250		(86,184)
Income tax (expense) benefit		296		(1,264)		(3,541)
NET INCOME (LOSS)		(91,709)		98,986		(89,725)
Net (income) loss attributable to redeemable noncontrolling interests		10,596		(13,244)		8,728
Net (income) loss attributable to noncontrolling interests		1,135		(371)		1,740
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(79,978)	$	85,371	$	(79,257)
EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED	$	(0.78)	$	0.70	$	(0.63)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED		105,095		119,005		130,839

See accompanying notes to the consolidated financial statements.

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JBG SMITH PROPERTIES

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)


	Year Ended December 31,
	2023		2022		2021
NET INCOME (LOSS)	$	(91,709)	$	98,986	$	(89,725)
OTHER COMPREHENSIVE INCOME (LOSS):
Change in fair value of derivative financial instruments		2,603		67,576		11,326
Reclassification of net (income) loss on derivative financial instruments from accumulated other comprehensive income (loss) into interest expense		(34,776)		2,574		15,378
Total other comprehensive income (loss)		(32,173)		70,150		26,704
COMPREHENSIVE INCOME (LOSS)		(123,882)		169,136		(63,021)
Net (income) loss attributable to redeemable noncontrolling interests		10,596		(13,244)		8,728
Net (income) loss attributable to noncontrolling interests		1,135		(371)		1,740
Other comprehensive (income) loss attributable to redeemable noncontrolling interests		4,486		(8,411)		(2,675)
Other comprehensive (income) loss attributable to noncontrolling interests		2,085		(145)		—
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO JBG SMITH PROPERTIES	$	(105,580)	$	146,965	$	(55,228)

See accompanying notes to the consolidated financial statements.

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JBG SMITH PROPERTIES

Consolidated Statements of Equity

(In thousands)


								Accumulated
								Other
				Additional				Comprehensive
	Common Shares			Paid-In		Accumulated		Income		Noncontrolling		Total
	Shares	Amount		Capital		Deficit		(Loss)		Interests		Equity
BALANCE AS OF DECEMBER 31, 2020	131,778	$	1,319	$	3,657,643	$	(412,944)	$	(39,979)	$	167	$	3,206,206
Net loss attributable to common shareholders and noncontrolling interests	—		—		—		(79,257)		—		(1,740)		(80,997)
Redemption of common limited partnership units ("OP Units") for common shares	906		9		29,625		—		—		—		29,634
Common shares repurchased	(5,370)		(54)		(157,632)		—		—		—		(157,686)
Common shares issued pursuant to employee incentive compensation plan and employee share purchase plan ("ESPP")	64		1		2,426		—		—		—		2,427
Dividends declared on common shares ($0.90 per common share)	—		—		—		(117,130)		—		—		(117,130)
Contributions from noncontrolling interests, net	—		—		—		—		—		24,080		24,080
Redeemable noncontrolling interests redemption value adjustment and total other comprehensive income allocation	—		—		7,854		—		(2,675)		—		5,179
Total other comprehensive income	—		—		—		—		26,704		—		26,704
BALANCE AS OF DECEMBER 31, 2021	127,378		1,275		3,539,916		(609,331)		(15,950)		22,507		2,938,417
Net income attributable to common shareholders and noncontrolling interests	—		—		—		85,371		—		371		85,742
Redemption of OP Units for common shares	701		7		16,697		—		—		—		16,704
Common shares repurchased	(14,151)		(142)		(360,900)		—		—		—		(361,042)
Common shares issued pursuant to employee incentive compensation plan and ESPP	85		1		2,661		—		—		—		2,662
Dividends declared on common shares ($0.90 per common share)	—		—		—		(104,676)		—		—		(104,676)
Contributions from noncontrolling interests, net	—		—		—		—		—		9,202		9,202
Redeemable noncontrolling interests redemption value adjustment and total other comprehensive income allocation	—		—		65,364		—		(8,411)		—		56,953
Total other comprehensive income	—		—		—		—		70,150		—		70,150
Other comprehensive income attributable to noncontrolling interests	—		—		—		—		(145)		145		—
BALANCE AS OF DECEMBER 31, 2022	114,013		1,141		3,263,738		(628,636)		45,644		32,225		2,714,112
Net loss attributable to common shareholders and noncontrolling interests	—		—		—		(79,978)		—		(1,135)		(81,113)
Redemption of OP Units for common shares	2,758		28		44,592		—		—		—		44,620
Common shares repurchased	(22,576)		(225)		(335,088)		—		—		—		(335,313)
Common shares issued pursuant to employee incentive compensation plan and ESPP	114		—		2,506		—		—		—		2,506
Dividends declared on common shares ($0.675 per common share)	—		—		—		(68,348)		—		—		(68,348)
Distributions to noncontrolling interests, net	—		—		—		—		—		(32)		(32)
Redeemable noncontrolling interests redemption value adjustment and total other comprehensive loss allocation	—		—		3,104		—		4,486		—		7,590
Total other comprehensive loss	—		—		—		—		(32,173)		—		(32,173)
Other comprehensive loss attributable to noncontrolling interests	—		—		—		—		2,085		(2,085)		—
BALANCE AS OF DECEMBER 31, 2023	94,309	$	944	$	2,978,852	$	(776,962)	$	20,042	$	28,973	$	2,251,849

See accompanying notes to the consolidated financial statements.

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JBG SMITH PROPERTIES

Consolidated Statements of Cash Flows

(In thousands)


	Year Ended December 31,
	2023		2022		2021
OPERATING ACTIVITIES:
Net income (loss)	$	(91,709)	$	98,986	$	(89,725)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Share-based compensation expense		32,100		41,272		51,551
Depreciation and amortization expense, including amortization of deferred financing costs		215,628		217,841		240,454
Deferred rent		(20,664)		(23,602)		(21,964)
Loss from unconsolidated real estate ventures, net		26,999		17,429		2,070
Amortization of market lease intangibles, net		(960)		(1,127)		(1,189)
Amortization of lease incentives		1,711		7,734		7,973
Loss on the extinguishment of debt		450		3,073		—
Impairment loss		90,226		—		25,144
Gain on the sale of real estate, net		(79,335)		(161,894)		(11,290)
Loss on operating lease and other receivables		882		2,160		2,595
Income from investments, net		(972)		(14,488)		(3,620)
Return on capital from unconsolidated real estate ventures		20,701		11,407		15,912
Other non-cash items		10,818		(5,517)		(922)
Changes in operating assets and liabilities:
Tenant and other receivables		11,123		(13,154)		8,812
Other assets, net		(8,959)		(10,737)		(12,780)
Accounts payable and accrued expenses		(11,255)		(1,282)		8,700
Other liabilities, net		(13,412)		9,936		(4,099)
Net cash provided by operating activities		183,372		178,037		217,622
INVESTING ACTIVITIES:
Development costs, construction in progress and real estate additions		(333,744)		(326,741)		(173,177)
Acquisition of real estate		(19,551)		(65,302)		(208,342)
Proceeds from the sale of real estate		281,525		928,908		14,370
Proceeds from the sale of investments		—		19,030		—
Proceeds from derivative financial instruments		1,922		—		—
Payments on derivative financial instruments		(9,830)		—		—
Distributions of capital from unconsolidated real estate ventures and other investments		10,503		59,717		40,188
Investments in unconsolidated real estate ventures and other investments		(29,004)		(91,591)		(41,780)
Net cash (used in) provided by investing activities		(98,179)		524,021		(368,741)
FINANCING ACTIVITIES:
Borrowings under mortgage loans		345,140		179,744		190,000
Borrowings under revolving credit facility		371,750		100,000		300,000
Borrowings under term loans		170,000		150,000		—
Repayments of mortgage loans		(281,854)		(270,676)		(5,611)
Repayments of revolving credit facility		(309,750)		(400,000)		—
Proceeds from derivative financial instruments		9,600		—		—
Payments on derivative financial instruments		(1,922)		—		—
Debt issuance and modification costs		(17,579)		(5,137)		(6,610)
Redemption of partner's noncontrolling interest		(647)		(9,531)		—
Finance lease payments		—		—		(19,970)
Proceeds from common shares issued pursuant to ESPP		1,102		1,458		1,594
Common shares repurchased		(335,313)		(361,042)		(157,686)
Dividends paid to common shareholders		(94,002)		(107,688)		(118,115)
Distributions to redeemable noncontrolling interests		(15,318)		(16,409)		(17,804)
Distributions to noncontrolling interests		(32)		(182)		(46)
Contributions from noncontrolling interests		—		9,383		24,126
Net cash (used in) provided by financing activities		(158,825)		(730,080)		189,878

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JBG SMITH PROPERTIES

Consolidated Statements of Cash Flows

(In thousands)


	Year Ended December 31,
	2023		2022		2021
Net (decrease) increase in cash and cash equivalents, and restricted cash	$	(73,632)	$	(28,022)	$	38,759
Cash and cash equivalents, and restricted cash, beginning of period		274,073		302,095		263,336
Cash and cash equivalents, and restricted cash, end of period	$	200,441	$	274,073	$	302,095

CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD:
Cash and cash equivalents	$	164,773	$	241,098	$	264,356
Restricted cash		35,668		32,975		37,739
Cash and cash equivalents, and restricted cash	$	200,441	$	274,073	$	302,095

SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION:
Cash paid for interest (net of capitalized interest of $17,357, $10,888 and $6,734 in 2023, 2022 and 2021)	$	88,755	$	71,861	$	61,928
Accrued capital expenditures included in accounts payable and accrued expenses		63,136		73,612		43,290
Write-off of fully depreciated assets		6,281		19,794		61,123
Cash paid for income taxes		1,916		1,205		815
Deconsolidation of real estate asset		—		—		26,476
Accrued dividends to common shareholders		—		25,653		28,665
Accrued distributions to redeemable noncontrolling interests		—		3,968		3,938
Redemption of OP Units for common shares		44,620		16,704		29,634
Recognition (derecognition) of operating lease right-of-use asset		61,443		—		(1,596)
Recognition (derecognition) of liabilities related to operating lease right-of-use asset		61,443		—		(1,587)
(Derecognition) recognition of finance lease right-of-use assets		—		(179,668)		139,507
(Derecognition) recognition of liabilities related to finance lease right-of-use assets		—		(163,586)		141,574
Cash paid for amounts included in the measurement of lease liabilities for operating leases		5,178		1,906		2,295

See accompanying notes to the consolidated financial statements.

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JBG SMITH PROPERTIES

Notes to Consolidated Financial Statements

1. Organization and Basis of Presentation

Organization

JBG SMITH Properties ("JBG SMITH"), a Maryland real estate investment trust ("REIT"), owns, operates, invests in and develops mixed-use properties in high growth and high barrier-to-entry submarkets in and around Washington, D.C., most notably National Landing. Through an intense focus on placemaking, JBG SMITH cultivates vibrant, amenity-rich, walkable neighborhoods throughout the Washington, D.C. metropolitan area. Approximately 75.0% of our holdings are in the National Landing submarket in Northern Virginia, which is anchored by four key demand drivers: Amazon.com, Inc.'s ("Amazon") new headquarters; Virginia Tech's under-construction $1 billion Innovation Campus; the submarket’s proximity to the Pentagon; and our deployment of 5G digital infrastructure. In addition, our third-party asset management and real estate services business provides fee-based real estate services to the legacy funds formerly organized by The JBG Companies ("JBG") (the "JBG Legacy Funds"), other third parties and the Washington Housing Initiative ("WHI") Impact Pool.

Substantially all our assets are held by, and our operations are conducted through, JBG SMITH Properties LP ("JBG SMITH LP"), our operating partnership. As of December 31, 2023, JBG SMITH, as its sole general partner, controlled JBG SMITH LP and owned 87.8% of its OP Units, after giving effect to the conversion of certain vested long-term incentive partnership units ("LTIP Units") that are convertible into OP Units. JBG SMITH is referred to herein as "we," "us," "our" or other similar terms. References to "our share" refer to our ownership percentage of consolidated and unconsolidated assets in real estate ventures, but exclude our: (i) 10.0% subordinated interest in one commercial building, (ii) 33.5% subordinated interest in four commercial buildings (the "Fortress Assets"), (iii) 49.0% interest in three commercial buildings (the "L'Enfant Plaza Assets") and (iv) 9.9% interest in The Foundry, as well as the associated non-recourse mortgage loans, held through unconsolidated real estate ventures; these interests and debt are excluded because 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.

We were organized for the purpose of receiving, via the spin-off on July 17, 2017 (the "Separation"), substantially all of the assets and liabilities of Vornado Realty Trust's ("Vornado") Washington, D.C. segment. On July 18, 2017, we acquired the management business and certain assets and liabilities of JBG (the "Combination"). The Separation and the Combination are collectively referred to as the "Formation Transaction."

As of December 31, 2023, our Operating Portfolio consisted of 44 operating assets comprising 16 multifamily assets totaling 6,318 units (6,318 units at our share), 26 commercial assets totaling 8.3 million square feet (7.7 million square feet at our share) and two wholly owned land assets for which we are the ground lessor. Additionally, we have two under-construction multifamily assets totaling 1,583 units (1,583 units at our share) and 17 assets in the development pipeline totaling 10.8 million square feet (8.8 million square feet at our share) of estimated potential development density.

We derive our revenue primarily from leases with multifamily and commercial tenants, which include fixed and percentage rents, and reimbursements from tenants for certain expenses such as real estate taxes, property operating expenses, and repairs and maintenance. In addition, our third-party asset management and real estate services business provides fee-based real estate services.

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Only the U.S. federal government accounted for 10% or more of our rental revenue, which consists of property rental and other property revenue, as follows:


	Year Ended December 31,
	2023			2022			2021

	(Dollars in thousands)
Rental revenue from the U.S. federal government	$	64,439		$	75,516		$	83,256
Percentage of commercial segment rental revenue		23.0	%		23.7	%		22.8	%
Percentage of rental revenue		12.9	%		14.8	%		16.2	%

Basis of Presentation

The accompanying consolidated financial statements and notes are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). All intercompany transactions and balances have been eliminated.

The accompanying consolidated financial statements include our accounts and those of our wholly owned subsidiaries and consolidated variable interest entities ("VIEs"), including JBG SMITH LP. See Note 6 for additional information. The portions of the equity and net income (loss) of consolidated entities that are not attributable to us are presented separately as amounts attributable to noncontrolling interests in our consolidated financial statements.

Reclassification

Deferred leasing costs totaling $94.1 million were reclassified from "Intangible assets, net" to "Deferred leasing costs, net" in our balance sheet as of December 31, 2022 to present deferred leasing costs separately from intangible assets, which is consistent with our current year presentation.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Asset Acquisitions

We account for asset acquisitions, which includes the consolidation of previously unconsolidated real estate ventures, at cost, including transaction costs, plus the fair value of any assumed debt. We estimate the fair values of acquired tangible assets (consisting of real estate, tenant and other receivables, and other assets, as applicable), identified intangible assets and liabilities (consisting of in-place leases and above- and below-market leases, as applicable), assumed debt and other liabilities, and noncontrolling interests, as applicable, based on our evaluation of information and estimates available at the date of acquisition. Based on these estimates, we allocate the purchase price, including all transaction costs related to the acquisition and any contingent consideration, to the identified assets acquired and liabilities assumed based on their relative fair value. The results of operations of acquisitions are prospectively included in our consolidated financial statements beginning with the date of the acquisition.

The fair values of buildings are determined using the "as-if vacant" approach whereby we use discounted cash flow models with inputs and assumptions that we believe are consistent with current market conditions for similar assets. The most significant assumptions in determining the allocation of the purchase price to buildings are the exit capitalization rate, discount rate, estimated market rents and hypothetical expected lease-up periods, when applicable. We assess the fair value of land based on market comparisons and development projects using an income approach of cost plus a margin.

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The fair values of identified intangible assets and liabilities are determined based on the following:

●

The value allocable to the above- or below-market component of an acquired in-place lease is determined based upon the present value (using a discount rate which reflects the risks associated with the acquired lease) of the difference between: (i) the contractual amounts to be received pursuant to the lease over its remaining term and (ii) management's estimate of the amounts that would be received using market rates over the remaining term of the lease. Amounts allocated to above- market leases are recorded as lease intangible assets in "Intangible assets, net" in our consolidated balance sheets, and amounts allocated to below-market leases are recorded as lease intangible liabilities in "Other liabilities, net" in our consolidated balance sheets. These intangibles are amortized to "Property rental revenue" in our consolidated statements of operations over the remaining terms of the respective leases.

●

Factors considered in determining the value allocable to in-place leases during hypothetical lease-up periods related to space that is leased at the time of acquisition include: (i) lost rent and operating cost recoveries during the hypothetical lease-up period and (ii) theoretical leasing commissions required to execute similar leases. These intangible assets are recorded as lease intangible assets in "Intangible assets, net" in our consolidated balance sheets and are amortized to "Depreciation and amortization expense" in our consolidated statements of operations over the remaining term of the existing lease.

Real Estate

Real estate is carried at cost, net of accumulated depreciation and amortization. Maintenance and repairs are expensed as ~~incurred. Depreciation requires an estimate~~incurred and are included in "Property operating expenses" in our consolidated statements of the useful life of each property and improvement as well as an allocation of the costs associated with a property to its various components. Depreciation is recognized on a straight‑line basis over estimated useful lives, which range from three to 40 years. Tenant improvements are amortized on a straight‑line basis over the lives of the related leases, which approximate the useful lives of the tenant improvements.

operations.

Construction in progress, including land, is carried at cost, and no depreciation is recorded. ~~Real estate undergoing significant renovations and improvements is considered to be under development.~~ All direct and indirect costs related to development activities, including redevelopment activities, are capitalized to the extent that we believe such costs are recoverable through the value of the property into "Construction in progress, including land" onin our consolidated balance sheets, except for certain demolition costs, which are expensed as incurred. Direct development costs incurred include: pre-development expenditures directly related to a specific project, development and construction costs, interest, insurance and real estate taxes. Indirect development costs include: employee salaries and benefits, travel and other related costs that are directly associated with the development. Our method of calculating capitalized interest expense is based upon applying our weighted average borrowing rate to the actual accumulated expenditures if the property does not have property specific debt. If the property is encumbered by specific debt, we will capitalize both the interest incurred applicable to that debt and additional interest expense using our weighted average borrowing rate for any accumulated expenditures in excess of the principal balance of the debt encumbering the property. The capitalization of such expenses ceases when the real estate is ready for its intended use, but no later than one-year from substantial completion of major construction ~~activity. If we determine that~~activities at which point the costs associated with a ~~project is no longer viable, all pre-development project~~property are allocated to its various components.

Depreciation and amortization expense require an estimate of the useful life of each property and improvement. Depreciation and amortization expense are recognized on a straight-line basis over estimated useful lives, which range from three to 40 years. Tenant improvements are amortized on a straight-line basis over the lives of the related leases, which approximate the useful lives of the tenant improvements. When assets are sold or retired, their costs and related accumulated depreciation are ~~immediately expensed.~~

removed from the accounts with the resulting gains (losses) reflected in net income (loss) for the period.

Our ~~assets~~real estate and related intangible assets are ~~individually~~ reviewed for impairment whenever ~~events or~~there are changes in circumstances ~~indicate~~or indicators that the carrying amount of the assets may not be recoverable. These indicators may include declining operating performance, below average occupancy, shortened anticipated holding periods, costs in excess of budgets for under-construction assets and other adverse changes. An impairment exists when the carrying amount of an asset exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Estimates of future cash flows are based on our current plans, ~~intended~~anticipated holding periods and available market information at the time the analyses are prepared. Longer anticipated holding periods for real estate assets directly reduce the likelihood of recording an impairment loss. An impairment loss is recognized if the carrying amount of the asset is not recoverable and is measured based on the excess of the ~~property’s~~property's carrying amount over its estimated fair value. Estimated fair values are

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calculated based on the following information in order of preference, dependent upon availability: (i) pending or executed agreements, (ii) market prices for comparable properties or (iii) the sum of discounted cash flows.

If our estimates of future cash flows, anticipated holding periods, asset strategy or fair values change, based on market conditions, anticipated selling prices or ~~otherwise,~~other factors, our evaluation of impairment ~~charges~~losses may be different and such differences could be material to our consolidated financial statements. Estimates of future cash flows are subjective and are based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results.

~~Real estate is classified as held for sale when all the necessary criteria~~

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments with a purchase date life to maturity of three months or less and are ~~met. The criteria include (i) management, having the authority to approve action, commits to a plan to sell the property in its present condition, (ii) the sale of the property is~~carried at ~~a price reasonable in relation to its current~~cost, which approximates fair value due to their short-term maturities.

Restricted Cash

Restricted cash consists primarily of proceeds from property dispositions held in escrow, security deposits held on behalf of our tenants and ~~(iii) the sale is probable and expected to be completed within one year. Real estate held~~cash escrowed under loan agreements for ~~sale is carried at the lower of carrying amounts or estimated fair value less disposal costs. Depreciation and amortization is not recognized on~~debt service, real estate ~~classified as held for sale.~~

taxes, property insurance and capital improvements.

Investments in ~~and Advances to~~ Real Estate Ventures

We analyze ~~our~~each real estate ~~ventures~~venture at acquisition, formation, after a change in the ownership agreement, after a change in the entity's economics or after any other reconsideration event to determine whether the ~~entities should be consolidated.~~entity is a VIE. An entity is a VIE because it is in the development stage and/or does not hold sufficient equity at risk, or conducts substantially all its operations on behalf of an investor with disproportionately few voting rights. If it is determined that ~~these investments do not require consolidation because the entities are not VIEs~~an entity is a VIE in ~~accordance with the Consolidation Topic of the FASB ASC,~~which we have a variable interest, we assess whether we are ~~not considered~~ the primary beneficiary of the ~~entities determined~~VIE to determine whether it should be ~~VIEs,~~consolidated. We will consolidate a VIE if we are the primary beneficiary of the VIE, which entails having the power to direct the activities that most significantly impact the VIE's economic performance. We are not the primary beneficiary of a VIE when we do not have voting control, ~~and/~~lack the power to direct the activities that most significantly impact the entity's economic performance, or the limited partners (or non-managing members) have substantive participatory ~~rights,~~rights. If it is determined that the real estate venture is not a VIE, then the ~~selection of~~determination as to whether we consolidate is based on whether we have a controlling financial interest in the ~~accounting method used to account for our investments in unconsolidated~~ real estate ~~ventures~~venture, which is ~~generally determined by~~based on our voting interests and the degree of influence we have over the ~~entity.~~real estate venture. Management uses ~~its~~ judgment when determining if we are the primary beneficiary of a VIE or have a controlling financial interest in ~~an entity in which we have~~ a ~~variable interest.~~real estate venture determined not to be a VIE. Factors considered in determining whether we have the power to direct the activities that most significantly impact the ~~entity’s~~entity's economic performance include ~~risk and reward sharing, experience and financial condition of the other partners,~~ voting rights, involvement in day-to-day capital and operating decisions, and the extent of our involvement in the entity.

We use the equity method of accounting for investments in unconsolidated real estate ventures when we ~~own 20% or more of the voting interests and~~ have significant influence but are not the primary beneficiary of a VIE or do not have a controlling financial interest in a real estate venture determined not to be a VIE. Significant influence is typically indicated through ownership of 20% or ~~if we own less than 20%~~more of the voting ~~interests but have determined that we have significant influence.~~interests. Under the equity method, we record our investments in ~~and advances to~~ these entities in "Investments in unconsolidated real estate ventures" in our consolidated balance sheets, and our proportionate share of earnings ~~or losses~~(losses) earned by the real estate venture is recognized in ~~"Income (loss)~~"Loss from unconsolidated real estate ventures, net" in the accompanying consolidated statements of operations.

We earn ~~revenues~~revenue from the management services we provide to unconsolidated ~~entities.~~real estate ventures. These fees are determined in accordance with the terms specific to each arrangement and may include property and asset management fees, or transactional fees for leasing, acquisition, development and construction, financing and legal services provided. We account for this revenue gross of our ownership interest in each respective real estate venture and recognize such revenue in "Third-party real estate services, including reimbursements" in our consolidated statements of ~~operations.~~operations when earned. Our proportionate share of related expenses is recognized in ~~"Income (loss)~~"Loss from unconsolidated real estate ventures, net" in our consolidated statements of operations.

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We may also earn incremental promote distributions if certain financial return benchmarks are achieved upon ultimate disposition of the underlying properties. ~~Management fees are recognized when earned, and promote fees are~~Promote revenue is recognized when certain earnings events have occurred, and the amount of revenue is determinable and collectible. Any promote ~~fees are~~revenue is reflected in ~~"Income (loss)~~"Loss from unconsolidated real estate ventures, net" in our consolidated statements of operations.

~~On a periodic basis, we evaluate~~ In the event our investments in unconsolidated entities for impairment. We assess whether there are any indicators, including underlying property operating performance and general market conditions, that the value of our investments in unconsolidated real estate ventures may be impaired. An investment in a real estate venture is considered impaired if we determine that its fair value is less than the net carrying value of the investment in that real estate venture on an other-than-temporary basis. Cash flow projections for the investments consider property level factors such as expected future operating income, trendsreduced to zero, and prospects, as well as the effects of demand, competition and other factors. We consider various qualitative factors to determine if a decrease in the value of our investment is other-than-temporary. These factors include age of the venture, our intent and ability to retain our investment in the entity, financial condition and long-term prospects of the entity and relationships with our partners and banks. If we believe that the decline in the fair value of the investment is temporary, no impairment charge is recorded. If our analysis indicates that there is an other-than temporary impairment related to the investment in a particular real estate venture, the carrying value of the venture will be adjusted to an amount that reflects the estimated fair value of the investment.

~~Revenue Recognition~~

Property rentals income includes base rents that each tenant pays in accordance with the terms of its respective lease and is reported on a straight-line basis over the non-cancellable term of the lease, which includes the effects of periodic step-ups in rent and rent abatements under the leases. We commence rental revenue recognition when the tenant takes possession of the leased space or controls the physical use of the leased space and the leased space is substantially ready for its intended use. In circumstances where we provide a tenant improvement allowance for improvements that are owned by the tenant, we recognize the allowance as a reduction of property rentals revenue on a straight-line basis over the term of the lease. Differences between rental income recognized and amounts due under the respective lease agreements are recorded as an increase or decrease to "Deferred rent receivable, net" on our balance sheets. Property rentals also includes the amortization/accretion of acquired above-and below-market leases.

Tenant reimbursements provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective assets. Tenant reimbursements are accrued in the same periods as the related expenses are incurred.

Third-party real estate services revenue, including reimbursements, is determined in accordance with the terms specific to each arrangement and may include property and asset management fees or transactional fees for leasing, acquisition, development and construction, financing, and legal services provided. These fees are determined in accordance with the terms specific to each arrangement and are recognized as the related services are performed. Development and construction fees earned from providing services to our unconsolidated real estate ventures are recorded on a percentage of completion basis.

~~Share-Based Compensation~~

~~We granted OP Units, formation awards ("Formation Awards"), long-term incentive partnership units ("LTIP Units"), LTIP Units with time-based vesting requirements (“Time-Based LTIP Units”)~~and Performance-Based LTIP Units to our trustees, management and employees in connection with the Separation and Combination. Fair value is determined, depending on the type of award, using the Monte Carlo method or post-vesting restriction periods, which is intended to estimate the fair value of the awards at the grant date using dividend yields and expected volatilities that are primarily based on available implied data and peer group companies' historical data. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The shortcut method is used for determining the expected life used in the valuation method.

~~Recent Accounting Pronouncements~~

~~See Note 2 to the financial statements for a description of the potential impact of the adoption of any new accounting pronouncements.~~

~~Results of Operations~~

~~Comparison of the Year Ended December 31, 2017 to 2016~~

The following summarizes certain line items from our statements of operations that we believe are important in understanding our operations and/or those items which significantly changed in the year ended December 31, 2017 as compared to the same period in 2016:

Year Ended December 31,
2017 2016 % Change
(In thousands)
Property rentals revenue $ 436,625
$ 401,595
8.7 %
Tenant reimbursements revenue 37,985
37,661
0.9 %
Third-party real estate services revenue, including reimbursements
63,236
33,882
86.6 %
Depreciation and amortization expense 161,659
133,343
21.2 %
Property operating expense 111,055
100,304
10.7 %
Real estate taxes expense 66,434
57,784
15.0 %
General and administrative expense:
Corporate and other 47,131
48,753
(3.3 )%
Third-party real estate services 51,919
19,066
172.3 %
Share-based compensation related to Formation Transaction
29,251
—
*
Transaction and other costs 127,739
6,476
1,872.5 %
Loss from unconsolidated real estate ventures, net 4,143
947
337.5 %
Interest expense 58,141
51,781
12.3 %
Loss on extinguishment of debt 701
—
*
Gain on bargain purchase 24,376
—
*
Net loss attributable to redeemable noncontrolling interests 7,328
—
*

~~______________~~

* Not meaningful.

Property rentals revenue increased by approximately $35.0 million, or 8.7%, to $436.6 million in 2017 from $401.6 million in 2016. The increase was primarily due to revenues of $31.4 million associated with the JBG Assets acquired in the Combination and an increase of $3.6 million in revenues associated with the Vornado Included Assets that were theexisting assets in the prior period. The $3.6 million increase in revenues associated with existing assets is primarily due to an increase in occupancy and associated rentals at The Bartlett multifamily asset as the property was placed into service in the second quarter of 2016 and rent commencements at 1215 S. Clark St, partially offset by a decrease in revenues at 1700 M Street and 1770 Crystal Drive, which were taken out of service.

Tenant reimbursements revenue increased by approximately $324,000, or 0.9%, to $38.0 million in 2017 from $37.7 million in 2016. Revenue associated with existing assets decreased by $2.8 million, primarily due to lower construction services provided to tenants and lower operating expenses, partially offset by an increase of $3.1 million associated with the assets acquired in the Combination.

Third-party real estate services revenue, including reimbursements, increased by approximately $29.4 million, or 86.6%, to $63.2 million in 2017 from $33.9 million in 2016. The increase was primarily due to the real estate services business acquired in the Combination, partially offset by lower management fees and leasing commissions from existing arrangements with third-parties.

Depreciation and amortization expense increased by approximately $28.3 million, or 21.2%, to $161.7 million for 2017 from $133.3 million in 2016. The increase was primarily due to depreciation and amortization expense associated with the assets acquired in the Combination.

Property operating expense increased by approximately $10.8 million, or 10.7%, to $111.1 million in 2017 from $100.3 million in 2016. The increase was primarily due to property operating expenses of $10.4 million associated with the assets acquired in the Combination and an increase of approximately $400,000 associated with existing assets due primarily to higher bad debt expense, partially offset by lower tenant services expense and lower utilities.

Real estate tax expense increased by approximately $8.7 million, or 15.0%, to $66.4 million in 2017 from $57.8 million in 2016. The increase was primarily due to real estate tax expense of $4.8 million associated with the assets acquired in the Combination, an increase in the tax assessments and lower capitalized real estate taxes.

General and administrative expense: corporate and other decreased by approximately $1.6 million, or 3.3%, to $47.1 million for 2017 from $48.8 million in 2016. The decrease was due to lower corporate allocated overhead costs associated with our former parent, partially offset by an increase in general operating expenses associated with the operations acquired in the Combination.

General and administrative expense: third-party real estate services increased by approximately $32.9 million, or 172.3%, to $51.9 million in 2017 from $19.1 million in 2016 primarily due to the real estate services business acquired in the Combination.

General and administrative expense: share-based compensation related to Formation Transaction of $29.3 million in 2017 consists of expense related to share-based compensation issued in connection with the Formation Transaction.

Transaction and other costs of $127.7 million in 2017 consists primarily of fees and expenses incurred in connection with the Formation Transaction, including severance and transaction bonus expense of $40.8 million, investment banking fees of $33.6 million, legal fees of $13.9 million and accounting fees of $10.8 million.

Loss from unconsolidated real estate ventures, net increased by approximately $3.2 million to $4.1 million in 2017 from $947,000 in 2016. The increase in the loss was primarily due to losses from interests in real estate ventures acquired in the Combination, partially offset by an increase in equity income of approximately $2.5 million primarily from the refinancing of the Warner Building mortgage loan in May 2016 at a lower interest rate and for a lower outstanding principal amount.

Interest expense increased by approximately $6.4 million, or 12.3%, to $58.1 million for 2017 from $51.8 million in 2016. The increase was primarily due to $3.3 million of interest expense associated with the assets acquired in the Combination and lower capitalized interest related to The Bartlett multifamily asset which was placed into service during the second quarter of 2016.

~~Loss on extinguishment of debt of $701,000 in 2017 is related to the prepayment of mortgages payable.~~

The gain on bargain purchase of approximately $24.4 million in 2017 represents the estimated fair value of the identifiable net assets acquired in excess of the purchase consideration in the Combination. The purchase consideration was based on the fair value of the common shares and OP Units issued in the Combination. See Note 3 to the financial statements for additional information.

Net loss attributable to redeemable noncontrolling interests of approximately $7.3 million in 2017 relates to the allocation of net loss to the noncontrolling interests in JBG SMITH LP and 965 Florida Avenue.

~~Comparison of the Year Ended December 31, 2016 to 2015~~

Year Ended December 31,
2016 2015 % Change
(In thousands)
Property rentals revenue $ 401,595
$ 389,810
3.0 %
Tenant reimbursements revenue 37,661
40,476
(7.0 )%
Third-party real estate services revenue, including reimbursements
33,882
29,467
15.0 %
Depreciation and amortization expense 133,343
144,984
(8.0 )%
Property operating expense 100,304
101,511
(1.2 )%
Real estate taxes expense 57,784
58,874
(1.9 )%
General and administrative expense:
Corporate and other 48,753
44,424
9.7 %
Third-party real estate services 19,066
18,217
4.7 %
Transaction and other costs 6,476
—
*
Loss from unconsolidated real estate ventures, net 947
4,283
(77.9 )%
Interest expense 51,781
50,823
1.9 %

~~______________~~

* Not meaningful.

Property rentals revenue increased by approximately $11.8 million, or 3.0%, to $401.6 million in 2016 from $389.8 million in 2015. The increase was primarily due to (i) The Bartlett multifamily asset being placed into service during the second quarter of 2016, (ii) 2221 South Clark Street being placed into service beginning in the third quarter of 2015 and (iii) higher average office occupancy.

Tenant reimbursements revenue decreased by approximately $2.8 million, or 7.0%, to $37.7 million in 2016 from $40.5 million in 2015. The decrease was primarily due to a decrease in real estate taxes at certain of our office assets and a decrease in tenant services.

Third-party real estate services revenue, including reimbursements, increased by approximately $4.4 million, or 15.0%, to $33.9 million in 2016 from $29.5 million in 2015. The increase was primarily due to an increase in leasing fees as a result of higher leasing activity in 2016.

Depreciation and amortization expense decreased by approximately $11.6 million, or 8.0%, to $133.3 million in 2016 from $145.0 million in 2015. The decrease was primarily due to 1150 17th Street and 1726 M Street, which were taken out of service during the second quarter of 2016 to prepare for the development of a new Class A office building.

~~Property operating expense decreased by approximately $1.2 million, or 1.2%, to $100.3 million in 2016 from $101.5 million in 2015. The decrease was primarily due to a reduction in utility expenses.~~

Real estate tax expense decreased by approximately $1.1 million, or 1.9%, to $57.8 million in 2016 from $58.9 million in 2015. The decrease was primarily due to lower tax assessments on certain of our office assets.

General and administrative expense: corporate and other increased by approximately $4.3 million, or 9.7%, to $48.8 million in 2016 from $44.4 million in 2015. The increase was due to higher payroll and benefits in 2016, including lower capitalized amounts and an increase in allocated overhead costs by Vornado.

~~General and administrative expense: third-party real estate services increased by approximately $849,000, or 4.7%, to $19.1 million in 2016 from $18.2 million in 2015primarily due to higher payroll and benefits.~~

~~Transaction and other costs of $6.5 million in 2016 consists primarily of fees and expenses incurred in connection with the Formation Transaction.~~

Loss from unconsolidated real estate ventures, net decreased by approximately $3.3 million, or 77.9%, to $947,000 in 2016 from $4.3 million in 2015. The decrease was primarily due to our share of interest savings from the refinancing of the Warner Building in May 2016 at a lower interest rate and lower outstanding principal balance.

Interest expense increased by approximately $1.0 million, or 1.9%, to $51.8 million for 2016 from $50.8 million in 2015. The increase was primarily due to (i) $4.4 million of interest on higher average outstanding payable balances to Vornado, partially

~~offset by (ii) lower interest rates resulting from the refinancing of RiverHouse apartments in April 2015 and the Bowen Building in June 2016.~~

~~NOI and Same Store NOI~~

In this section, we present NOI, which is a non-GAAP financial measure that we use to assess a segment’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) less operating expense, before deferred rent and related party management fees. Management uses NOI as a supplemental performance measure for 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 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 that 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.

We also provide certain information on a "same store" basis. Information provided on a same store basis includes the results of properties that are owned, operated and in service for the entirety of both periods being compared except for properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. While there is judgment surrounding changes in designations, a property is removed from the same store pool when a property is considered to be a property under construction because it is undergoing significant redevelopment or renovation pursuant to a formal plan or is being repositioned in the market and such renovation or repositioning is expected to have a significant impact on property operating income. A development property or property under construction is moved to the same store pool once a substantial portion of the growth expected from the development or redevelopment is reflected in both the current and comparable prior year period. Acquisitions are moved into the same store pool once we have owned the property for the entirety of the comparable periods, and the property is not under significant development or redevelopment.

For the year ended December 31, 2017, all of the JBG Assets and two Vornado Included Assets (The Bartlett and 1800 South Bell Street) were not included in the same store comparison as they were not in service during portions of the periods being compared.

Same store NOI increased by $16.7 million, or 6.5%, for the year ended December 31, 2017 as compared to the year ended December 31, 2016. The increase in same store NOI was primarily due to the expiration of rent abatements, the expiration of payments associated with the assumption of lease liabilities and higher property rental revenue from lease commencements.

~~The following table reflects the reconciliation of net income (loss) attributable to common shareholders to NOI and same store NOI for the periods presented:~~

Year Ended December 31,
2017 2016
(In thousands)
Net income (loss) attributable to common shareholders $ (71,753 ) $ 61,974
Add:
Depreciation and amortization expense 161,659
133,343
General and administrative expense:
Corporate and other 47,131
48,753
Third-party real estate services 51,919
19,066
Share-based compensation related to Formation Transaction
29,251
—
Transaction and other costs 127,739
6,476
Interest expense 58,141
51,781
Loss on extinguishment of debt 701
—
Income tax expense (benefit) (9,912 ) 1,083
Less:
Third-party real estate services, including reimbursements
63,236
33,882
Other income 5,167
5,381
Loss from unconsolidated real estate ventures, net (4,143 ) (947 )
Interest and other income (loss), net 1,788
2,992
Gain on bargain purchase 24,376
—
Net loss attributable to redeemable noncontrolling interests 7,328
—
Net loss attributable to noncontrolling interest 3
—
Consolidated NOI 297,121
281,168
NOI attributable to consolidated JBG Assets ⁽¹⁾
25,165
39,641
Proportionate NOI attributable to unconsolidated JBG Assets ⁽²⁾
8,646
11,692
Proportionate NOI attributable to unconsolidated real estate ventures ⁽³⁾
21,515
7,326
Non-cash rent adjustments ⁽⁴⁾
(6,715 ) (13,030 )
Other adjustments ⁽⁵⁾
3,819
(13,670 )
Total adjustments 52,430
31,959
NOI 349,551
313,127
Non-same store NOI⁽⁶⁾
77,547
57,828
Same store NOI ⁽⁷⁾
$ 272,004
$ 255,299

Growth in same store NOI 6.5 %
Number of properties 36

^{___________________________________________________}


⁽¹⁾	~~NOI attributable to consolidated JBG Assets for 2017 is for the period January 1, 2017 to July 17, 2017.~~


⁽²⁾	~~Proportionate NOI attributable to unconsolidated JBG Assets for 2017 is for the period January 1, 2017 to July 17, 2017.~~


⁽³⁾	Proportionate NOI attributable to unconsolidated real estate ventures includes Vornado Included Assets for all of 2017 and 2016 and JBG Assets for 2017 for the period July 18, 2017 to December 31, 2017.


⁽⁴⁾	~~Adjustment to exclude straight-line rent, above/below market lease amortization and lease incentive amortization.~~


⁽⁵⁾	Adjustment to include other income and payments associated with assumed lease liabilities related to operating properties, and exclude incidental income generated by development assets and commercial lease termination revenue.


⁽⁶⁾	Includes the results for properties that were not owned, operated and in service for the entirety of both periods being compared and properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared.


⁽⁷⁾	Includes the results of the properties that are owned, operated and in service for the entirety of both periods being compared except for properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared.

~~Reportable Segments~~

We review operating and financial data for each property on an individual basis; therefore, each of our individual properties is a separate operating segment. As a result of the Formation Transaction, we redefined our reportable segments to be aligned with our method of internal reporting and the way our Chief Executive Officer, who is also our Chief Operating Decision Maker ("CODM"), makes key operating decisions, evaluates financial results, allocates resources and manages our business. Accordingly, we aggregate our operating segments into three reportable segments (office, multifamily, and third-party real estate services) based on the

~~economic characteristics and nature of our assets and services. In connection therewith, we have reclassified the prior period segment financial data to conform to the current period presentation.~~

The CODM measures and evaluates the performance of our operating segments, with the exception of the third-party real estate services business, based on the NOI of properties within each segment. With respect to the third-party real estate services business, the CODM reviews revenues streams generated by this segment ("Third-party real estate services, including reimbursements"), as well as the expenses attributable to the segment ("General and administrative: third-party real estate services"), which are disclosed separately in the statements of operations and discussed in the preceding pages under "Results of Operations.”

Rental revenue is calculated as property rentals plus tenant reimbursements. Rental expense is calculated as property operating expenses plus real estate taxes. NOI is calculated as rental revenue less rental expense. See Note 16 to the financial statements for the reconciliation of net income (loss) attributable common shareholders to consolidated NOI for each of the three years in the period ended December 31, 2017.

Year Ended December 31,
2017 2016 2015
(In thousands)
Rental revenue:
Office $ 375,528
$ 351,317
$ 347,179
Multifamily 90,821
66,855
55,861
Other 11,166
24,080
29,682
Eliminations of intersegment activity (2,905 ) (2,996 ) (2,436 )
Total rental revenue 474,610
439,256
430,286

Rental expense:
Office 144,317
137,243
137,834
Multifamily 35,237
24,231
20,628
Other 13,539
11,892
16,641
Eliminations of intersegment activity (15,604 ) (15,278 ) (14,718 )
Total rental expense 177,489
158,088
160,385

Consolidated NOI:
Office 231,211
214,074
209,345
Multifamily 55,584
42,624
35,233
Other (2,373 ) 12,188
13,041
Eliminations of intersegment activity 12,699
12,282
12,282
Consolidated NOI $ 297,121
$ 281,168
$ 269,901

~~Comparison of the Year Ended December 31, 2017 to 2016~~

Office: Rental revenue increased by $24.2 million, or 6.9%, to $375.5 million in 2017 from $351.3 million in 2016. Consolidated NOI increased by $17.1 million, or 8.0%, to $231.2 million in 2017 from $214.1 million in 2016. The increase in rental revenue and consolidated NOI is primarily due to the Combination and higher rents due to rent commencements at 1215 S. Clark St.

Multifamily: Rental revenue increased by $24.0 million, or 35.8%, to $90.8 million in 2017 from $66.9 million in 2016. Consolidated NOI increased by $13.0 million, or 30.4%, to $55.6 million in 2017 from $42.6 million in 2016. The increase in rental revenue and consolidated NOI is primarily due to the Combination and an increase in occupancy and associated rentals at The Bartlett which was placed into service in the second quarter of 2016.

Other: Rental revenue decreased by $12.9 million, or 53.6%, to $11.2 million in 2017 from $24.1 million in 2016. Consolidated NOI decreased by $14.6 million, or 119.5%, to a loss of $2.4 million in 2017 from $12.2 million of income in 2016. The decrease in rental revenue and increase in net operating loss is primarily due to properties which were taken out of service, including 1700 M Street and 1770 Crystal Drive.

~~Comparison of the Year Ended December 31, 2016 to 2015~~

Office: Rental revenue increased by $4.1 million, or 1.2%, to $351.3 million in 2016 from $347.2 million in 2015. Consolidated NOI increased by $4.7 million, or 2.3%, to $214.1 million in 2016 from $209.3 million in 2015. The increase in rental revenue

~~and consolidated NOI is primarily due to higher average office occupancy and higher rents due to rent commencements at 1215 S. Clark St.~~

Multifamily: Rental revenue increased by $11.0 million, or 19.7%, to $66.9 million in 2016 from $55.9 million in 2015. Consolidated NOI increased by $7.4 million, or 21.0%, to $42.6 million in 2016 from $35.2 million in 2015. The increase in rental revenue and consolidated NOI is primarily due to an increase in occupancy and associated rentals at The Bartlett which was placed into service in the second quarter of 2016 and 2221 South Clark Street which was placed into service in the third quarter of 2015.

Other: Rental revenue decreased by $5.6 million, or 18.9%, to $24.1 million in 2016 from $29.7 million in 2015. Consolidated NOI decreased by $853,000, or 6.5%, to $12.2 million in 2016 from $13.0 million in 2015. The decrease in rental revenue and consolidated NOI is primarily due to 1700 M which was taken out of service during the second quarter of 2016.

~~Liquidity and Capital Resources~~

Property rental income is our primary source of operating cash flow and is dependent on a number of factors including occupancy levels and rental rates, as well as our tenants’ ability to pay rent. In addition, we have a third-party real estate services business that provides fee-based real estate services to the JBG Legacy Funds and other third parties. Our assets provide a relatively consistent level of cash flow that enables us to pay operating expenses, debt service, recurring capital expenditures, dividends to shareholders and distributions to holders of OP Units. Other sources of liquidity to fund cash requirements include proceeds from financings and asset sales. We anticipate that cash flows from continuing operations and proceeds from financings, recapitalizations and asset sales, together with existing cash balances, will be adequate to fund our business operations, debt amortization, capital expenditures, dividends to shareholders and distributions to holders of OP Units over the next 12 months.

~~Financing Activities~~

~~The following is a summary of mortgages payable as of December 31, 2017 and 2016:~~

Weighted Average
Effective
Interest Rate at December 31,
December 31,
2017
2017 ⁽¹⁾
2016
(In thousands)
Variable rate ⁽²⁾
3.62% $ 498,253
$ 547,291
Fixed rate ⁽³⁾
4.25% 1,537,706
620,327
Mortgages payable 2,035,959
1,167,618
Unamortized deferred financing costs and premium/discount, net (10,267 ) (2,604 )
Mortgages payable, net $ 2,025,692
$ 1,165,014
Payable to former parent ⁽⁴⁾
— $ —
$ 283,232

^{__________________________}


⁽¹⁾	~~Includes mortgages payable assumed in the Combination. See Note 3 to the financial statements for additional information.~~


⁽²⁾	~~Includes variable rate mortgages payable with interest rate cap agreements.~~


⁽³⁾	~~Includes variable rate mortgages payable with interest rates fixed by interest rate swap agreements.~~


⁽⁴⁾	~~Includes amounts payable to former parent as of December 31, 2016 in connection with the Bowen Building and The Bartlett. See Note 18 to the financial statements for additional information.~~

As of December 31, 2017, the net carrying value of real estate collateralizing our mortgages payable totaled $2.9 billion. Our mortgage loans contain covenants that limit our ability to incur additional indebtedness on these properties and in certain circumstances, require lender approval of tenant leases and/or yield maintenance upon repayment prior to maturity. Certain of our mortgage loans are recourse to us. As of December 31, 2017, we were not in default under any mortgage loan.

In the Combination, we assumed mortgages payable with an aggregate principal balance of $768.5 million. In addition, we entered into mortgages payable with an aggregate principal balance of $79.3 million during the year ended December 31, 2017 with an ability to draw an additional $143.7 million for construction. During the year ended December 31, 2017, we repaid mortgages payable with an aggregate principal balance of $250.0 million, which includes mortgages payable totaling $64.8 million assumed in the Combination. We recognized losses on the extinguishment of debt in conjunction with these repayments of $701,000 for the year ended December 31, 2017.

As of December 31, 2017, we had various interest rate swap and cap agreements with an aggregate notional value of $1.4 billion to swap variable interest rates to fixed rates on certain of our mortgages payable. See Note 15 to the financial statements for additional information.

On July 18, 2017, we entered into a $1.4 billion credit facility, consisting of a $1.0 billion revolving credit facility maturing in July 2021, with two six-month extension options, a delayed draw $200.0 million unsecured term loan ("Tranche A-1 Term Loan") maturing in January 2023 and a delayed draw $200.0 million unsecured term loan ("Tranche A-2 Term Loan") maturing in July 2024. The interest rate for the credit facility varies based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets and ranges (a) in the case of the revolving credit facility, from LIBOR plus 1.10% to LIBOR plus 1.50%, (b) in the case of the Tranche A-1 Term Loan, from LIBOR plus 1.20% to LIBOR plus 1.70% and (c) in the case of the Tranche A-2 Term Loan, from LIBOR plus 1.55% to LIBOR plus 2.35%. There are various LIBOR options in the credit facility, and we elected the one-month LIBOR option as of December 31, 2017. In October 2017, we entered into an interest rate swap with a notional value of $50.0 million to convert the variable interest rate applicable to our Tranche A-1 Term Loan to a fixed interest rate, providing a base interest rate under the facility agreement of 1.97% per annum. The interest rate swap matures in January 2023, concurrent with the maturity of our Tranche A-1 Term Loan. As of December 31, 2017, we were not in default under our credit facility.

On July 18, 2017, in connection with the Combination, we drew $115.8 million on the revolving credit facility and $50.0 million under the Tranche A-1 Term Loan. In connection with the execution of the credit facility, we incurred $11.2 million in debt issuance costs.

~~The following is a summary of amounts outstanding under the credit facility as of December 31, 2017:~~

December 31, 2017
Interest Rate Balance
(In thousands)
Revolving credit facility ⁽¹⁾
2.66% $ 115,751

Tranche A-1 Term Loan 3.17% $ 50,000
Unamortized deferred financing costs, net (3,463 )
Unsecured term loan, net $ 46,537

^{__________________________}


⁽¹⁾	~~As of December 31, 2017, letters of credit with an aggregate face amount of $5.7 million were provided under our revolving credit facility.~~

~~Long-term Liquidity Requirements~~

Our long-term capital requirements consist primarily of maturities under our credit facility and mortgage loans, construction commitments for development and redevelopment projects and costs related to growing our business, including acquisitions. We intend to fund these requirements through a combination of sources including debt proceeds, proceeds from asset recapitalizations and sales, capital from institutional partners that desire to form real estate venture relationships with us and available cash.

~~Contractual Obligations and Commitments~~

~~Below is a summary of our contractual obligations and commitments as of December 31, 2017:~~

Total 2018 2019 2020 2021 2022 Thereafter
Contractual cash obligations
(principal and interest):
(In thousands)
Debt obligations ^{(1) (2)}
$ 2,581,330
$ 438,149
$ 305,909
$ 297,501
$ 272,901
$ 379,286
$ 887,584
Operating leases ⁽³⁾
707,134
7,564
7,324
6,939
6,484
5,548
673,275
Capital leases and lease assumption
liabilities
58,833
6,122
6,749
6,927
7,110
7,297
24,628
Total contractual cash obligations ⁽⁴⁾
$ 3,347,297
$ 451,835
$ 319,982
$ 311,367
$ 286,495
$ 392,131
$ 1,585,487

~~_________________~~


⁽¹⁾	~~One-month LIBOR of 1.56% is applied to loans which are variable (no hedge) or variable with an interest rate cap. Additionally, we assumed no additional borrowings on construction loans.~~


⁽²⁾	~~Excludes our proportionate share of unconsolidated real estate venture indebtedness. See additional information in Off-Balance Sheet Arrangements section below.~~


⁽³⁾	~~Includes ground leases.~~


⁽⁴⁾	Excludes obligations related to construction or development contracts, since payments are only due upon satisfactory performance under the contracts. See Commitments and Contingencies section below for additional information.

As of December 31, 2017, we expect to fund additional capital to certain of our unconsolidated investments totaling approximately $49.3 million, which we anticipate will be primarily expended over the next two to three years.

Subsequent to the Formation Transaction, our Board of Trustees declared two cash dividends of $0.225 per common share. These dividends were paid in November 2017 and January 2018. See Note 20 to the financial statements for additional information about events occurring after December 31, 2017.

~~Summary of Cash Flows~~

The following summary discussion of our cash flows is based on the statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.

Year Ended December 31,
2017 2016 Change
(In thousands)
Net cash provided by operating activities $ 74,183
$ 159,541
$ (85,358 )
Net cash used in investing activities (7,676 ) (258,807 ) 251,131
Net cash provided by financing activities 239,787
51,083
188,704

~~Cash Flows for the Year Ended December 31, 2017~~

Cash and cash equivalents and restricted cash were $338.6 million at December 31, 2017, compared to $32.3 million at December 31, 2016, an increase of $306.3 million. This increase resulted from $74.2 million of net cash provided by operating activities, $7.7 million of net cash used in investing activities and $239.8 million of net cash provided by financing activities. Our outstanding debt was $2.2 billion at December 31, 2017, a $1.0 billion increase from the balance at December 31, 2016 primarily from mortgages payable assumed in the Combination and borrowings under our credit facility.

Net cash provided by operating activities of $74.2 million primarily comprised: (i) $88.4 million of net income (before $191.9 million of non-cash items and $24.4 million gain on bargain purchase) and (ii) $2.6 million of return on capital from unconsolidated real estate ventures, partially offset by (iii) $16.8 million of net change in operating assets and liabilities. Non-cash adjustments of $191.9 million primarily include depreciation and amortization, share-based compensation expense, deferred rent, deferred income tax benefit, net loss from unconsolidated real estate ventures, bad debt expense and other non-cash items.

Net cash used in investing activities of $7.7 million primarily comprised: (i) $210.6 million of development costs, construction in progress and real estate additions, (ii) $16.3 million of investments in and advances to unconsolidated real estate ventures, (iii) $8.8 million of acquisition of interests in unconsolidated real estate ventures, net of cash acquired, and (iv) $2.2 million of other investments, partially offset by (v) $97.4 million of net cash consideration received in connection with the Combination, (vi) $75.0 million of proceeds from the repayment of a receivable by our former parent, and (vii) $50.9 million repayment of notes receivable.

Net cash provided by financing activities of $239.8 million primarily comprised: (i) $366.2 million of proceeds from borrowings under mortgages payable, (ii) $160.2 million of net contributions from our former parent, (iii) $115.8 million of proceeds from borrowings under our revolving credit facility, (iv) $50.0 million of proceeds from borrowings under our unsecured term loan, partially offset by (v) $272.9 million repayment of mortgages payable, (vi) $115.6 million repayment of borrowings by our former parent, (vii) $31.1 million of dividends and distributions to noncontrolling interests; (viii) $19.3 million of debt issuance costs and (ix) $17.8 million of capital lease payments.

~~Cash Flows for the Year Ended December 31, 2016~~

~~Cash and cash equivalents and restricted cash were~~ ~~$32.3 million~~ ~~at December 31, 2016, compared to~~ ~~$80.4 million~~ at ~~December 31, 2015, a decrease of~~ ~~$48.2 million. This decrease resulted from~~ ~~$258.8 million~~ ~~of net cash used in investing activities, partially offset by~~ ~~$159.5 million~~ ~~of net cash provided by operating activities and~~ ~~$51.1 million~~ ~~of net cash provided by financing activities.~~

Net cash provided by operating activities of $159.5 million primarily comprised: (i) $196.2 million of net income (before $134.2 million of non-cash items) and (ii) $1.5 million of return on capital from unconsolidated real estate ventures, partially offset by

(iii) $38.1 million of net change in operating assets and liabilities. Non-cash adjustments of $134.2 million primarily include depreciation and amortization, deferred rent, share-based compensation expense and other non-cash items.

Net cash used in investing activities of $258.8 million primarily comprised: (i) $237.8 million of development costs, construction in progress and real estate additions, (ii) $23.0 million of investments in and advances to unconsolidated real estate ventures, and (iii) $2.0 million of other investments, partially offset by (iv) $4.0 million of proceeds from repayment of a receivable by our former parent.

Net cash provided by financing activities of $51.1 million primarily comprised: (i) $79.5 million of proceeds from borrowings from our former parent partially offset by (ii) $24.4 million repayment of mortgages payable and (iii) $3.8 million of net distributions to our former parent.

~~Off-Balance Sheet Arrangements~~

~~Unconsolidated Real Estate Ventures~~

We consolidate entities in which we own less than a 100% equity interest if we have a controlling interest or are the primary beneficiary in a variable interest entity. From time to time, we may have off-balance-sheet unconsolidated real estate ventures and other unconsolidated arrangements with varying structures.

As of December 31, 2017, we have investments in and advances to unconsolidated real estate ventures totaling $261.8 million. For the majority of these investments, we exercise significant influence over, but do not control these entities and therefore account for these investments using the equity method of accounting. For a more complete description of our real estate ventures, see Note 5 to the financial statements.

From time to time, we (or ventures in which we have an ownership interest) have agreed, and may in the future agree with respect to unconsolidated real estate ventures, to (1) guarantee portions of the principal, interest and other amounts in connection with their borrowings, (2) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) in connection with their borrowings and (3) provide guarantees to lenders and other third parties for the completion of development projects. We customarily have agreements with our outside partners whereby the partners agree to reimburse the real estate venture or us for their share of any payments made under certain of these guarantees. Amounts that may be required to be paid in future periods in relation to budget overruns or operating losses that are also included in some of our guarantees are not estimable. Guarantees (excluding environmental) terminate either upon the satisfaction of specified circumstances or repayment of the underlying debt. At times, we have agreements with our outside partners whereby we agree to reimburse our partner for their share of any payments made by them under certain guarantees. As of December 31, 2017, the aggregate amount of our principal payment guarantees was approximately $31.0 million for our unconsolidated real estate ventures.

Reconsideration events could cause us to consolidate these unconsolidated real estate ventures and partnerships in the future. We evaluate reconsideration events as we become aware of them. Some triggers to be considered are additional contributions required by each partner and each partners’ ability to make those contributions. Under certain of these circumstances, we may purchase our partner’s interest. Our unconsolidated real estate ventures are held in entities which appear sufficiently stable to meet their capital requirements; however, if market conditions worsen and our partners are unable to meet their commitments, there is a possibility we may have to consolidate these entities.

~~Commitments and Contingencies~~

~~Insurance~~

We maintain general liability insurance with limits of $200.0 million per occurrence and in the aggregate, and property and rental value insurance coverage with limits of $2.0 billion per occurrence, with sub-limits for certain perils such as floods and earthquakes on each of our properties. We also maintain coverage, through our wholly owned captive insurance subsidiary, for both terrorist acts and for nuclear, biological, chemical or radiological terrorism events with limits of $2.0 billion per occurrence. These policies are partially reinsured by third-party insurance providers.

We will continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism. We cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are responsible for deductibles and losses in excess of the insurance coverage, which could be material.

Our debt, consisting of mortgage loans secured by our properties, revolving credit facility and unsecured term loans contain customary covenants requiring adequate insurance coverage. Although we believe that we currently have adequate insurance coverage, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. If lenders insist on greater coverage than we are able to obtain, it could adversely affect the ability to finance or refinance our properties.

~~Construction Commitments~~

As of December 31, 2017, we have construction in progress that will require an additional $766.0 million to complete ($676.0 million related to our consolidated entities and $90.0 million related to our unconsolidated real estate ventures at our share), based on our current plans and estimates, which we anticipate will be primarily expended over the next two to three years. These capital expenditures are generally due as the work is performed, and we expect to finance them with debt proceeds, proceeds from asset recapitalizations and sales, and available cash.

~~Other~~

In connection with the Formation Transaction, we entered into a Tax Matters Agreement with Vornado that provides special rules that allocate tax liabilities if the distribution of JBG SMITH shares by Vornado, together with certain related transactions, is not tax-free. Under the Tax Matters Agreement, we may be required to indemnify Vornado against any taxes and related amounts and costs resulting from a violation by us of the Tax Matters Agreement, or from the taking of certain restricted actions by us.

~~Inflation~~

Substantially all of our office and retail leases contain provisions designed to mitigate the adverse impact of inflation. These provisions generally increase rental rates or reimbursable expenses during the terms of the lease either at (i) fixed rates, (ii) indexed escalations (based on the Consumer Price Index of other measures) or (iii) the lesser of a fixed rate or an indexed escalation. We may be adversely impacted by inflation on the leases that do not contain indexed escalation provisions or when the increases provided by the escalation provisions are less than inflation. In addition, most of our office and retail leases require the tenant to pay an allocable share of operating expenses, including common area maintenance costs, real estate taxes and insurance. We believe that inflationary increases may be at least partially offset by the contractual rent increases and expense escalations described above. The majority of our multifamily properties are subject to one-year leases, which provide us with the opportunity to adjust rental rates annually and mitigate the impact of inflation. We do not believe inflation has had a material impact on our historical financial position or results of operations.

~~Environmental Matters~~

Under various federal, state and local laws, ordinances and regulations, an owner of real estate is liable for the costs of removal or remediation of certain hazardous or toxic substances on such real estate. These laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous or toxic substances. The costs of remediation or removal of such substances may be substantial and the presence of such substances, or the failure to promptly remediate such substances, may adversely affect the owner’s ability to sell such real estate or to borrow using such real estate as collateral. In connection with the ownership and operation of our assets, we may be potentially liable for such costs. The operations of current and former tenants at our assets have involved, or may have involved, the use of hazardous materials or generated hazardous wastes. The release of such hazardous materials and wastes could result in us incurring liabilities to remediate any resulting contamination if the responsible party is unable or unwilling to do so. In addition, our assets are exposed to the risk of contamination originating from other sources. While a property owner may not be responsible for remediating contamination that has migrated onsite from an identifiable and viable offsite source, the contaminant’s presence can have adverse effects on operations and the redevelopment of our assets.

~~Each of our properties has been subjected to varying degrees of environmental assessment at various times. The environmental~~

assessments did not reveal any material environmental contamination that we believe would have a material adverse effect on our overall business, financial condition or results of operations, or that have not been anticipated and remediated during site redevelopment as required by law. Nevertheless, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites or changes in cleanup requirements would not result in significant cost to us.

~~ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

~~Interest Rate Risk~~

~~We have exposure to fluctuations in interest rates, which are sensitive to many factors that are beyond our control. Our exposure to a change in interest rates is summarized in the table below.~~

December 31, 2017 December 31, 2016
(Amounts in thousands)
Weighted
Average
Effective
Interest
Rate

Effect of 1%
Change in
Base Rates
Weighted
Average
Effective
Interest
Rate
Balance Balance
Debt (contractual balances):
Mortgages payable
Variable rate ⁽¹⁾
$ 498,253
3.62 % $ 5,052
$ 547,291
2.11%
Fixed rate ⁽²⁾
1,537,706
4.25 % —
620,327
5.52%
$ 2,035,959
$ 5,052
$ 1,167,618

Credit facility (variable rate):
Revolving credit facility $ 115,751
2.66 % $ 1,174
—
—
Tranche A-1 Term Loan 50,000
3.17 % 507
—
—
Pro rata share of debt of unconsolidated entities (contractual balances):
Variable rate ⁽¹⁾
$ 158,154
4.40 % $ 1,604
$ 17,050
1.87%
Fixed rate ⁽²⁾
238,138
3.79 % —
150,150
3.65%
$ 396,292
$ 1,604
$ 167,200

~~_________________~~


⁽¹⁾	~~Includes variable rate mortgages payable with interest rate cap agreements.~~


⁽²⁾	~~Includes variable rate mortgages payable with interest rates fixed by interest rate swap agreements.~~

The fair value of our debt is calculated by discounting the future contractual cash flows of these instruments using current risk‑adjusted rates available to borrowers with similar credit profiles based on market sources. As of December 31, 2017 and ~~2016~~, the estimated fair value of our consolidated debt was $2.2 billion and $1.2 billion. These estimates of fair value, which are made at the end of the reporting period, may be different from the amounts that may ultimately be realized upon the disposition of our financial instruments.

~~Hedging Activities~~

To manage, or hedge, our exposure to interest rate risk, we follow established risk management policies and procedures, including the use of a variety of derivative financial instruments. We do not enter into derivative instruments for speculative purposes. As of December 31, 2017, the fair value of our interest rate swaps and caps consisted of assets totaling $1.5 million included in "Other assets, net" in our balance sheet, and liabilities totaling $2.6 million included in "Other liabilities, net" in our balance sheet.

~~Derivative Financial Instruments Designated as Cash Flow Hedges~~ - Certain derivative financial instruments, consisting of interest rate swap and cap agreements, are designated as cash flow hedges, and are carried at their estimated fair value on a recurring basis. We assess the effectiveness of our cash flow hedges both at inception and on an ongoing basis. If the hedges are deemed to be effective, the fair value is recorded in accumulated other comprehensive income and is subsequently reclassified into "Interest expense" in the period that the hedged forecasted transactions affect earnings. Our cash flow hedges become less than perfectly effective if the critical terms of the hedging instrument and the forecasted transactions do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and interest rates. In addition, we evaluate the default risk of the

counterparty by monitoring the credit worthiness of the counterparty. While management believes its judgments are reasonable, a change in a derivative’s effectiveness as a hedge could materially affect expenses, net income and equity.

As of December 31, 2017, we had interest rate swap and cap agreements which convert variable interest rates applicable to our $50.0 million Tranche A-1 Term Loan and various mortgages payable with an aggregate notional value of $806.9 million to fixed rates.

~~Derivative Financial Instruments Not Designated as Hedges~~ - Certain derivative financial instruments, consisting of interest rate swap and cap agreements, are considered economic hedges, but not designated as accounting hedges, and are carried at their estimated fair value on a recurring basis. Realized and unrealized gains are recorded in "Interest expense" in the statements of operations in the period in which the change occurs. As of December 31, 2017, we had various interest rate swap and cap agreements assumed in the Combination.

~~ITEM 8. Financial Statements and Supplementary Data~~



~~TABLE OF CONTENTS~~

	~~Page~~
~~Report of Independent Registered Public Accounting Firm~~	62
~~Consolidated and Combined Balance Sheets as of December 31, 2017 and 2016~~	63
~~Consolidated and Combined Statements of Operations for the years ended December 31, 2017, 2016 and 2015~~	64
~~Consolidated and Combined Statements of Comprehensive Income (Loss) for the years ended December 31, 2017, 2016 and 2015~~	65
~~Consolidated and Combined Statements of Equity for the years ended December 31, 2017, 2016 and 2015~~	66
~~Consolidated and Combined Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015~~	67
~~Notes to Consolidated and Combined Financial Statements~~	69

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

~~Shareholders and Board of Trustees of~~

~~JBG SMITH Properties~~

~~Opinion on the Financial Statements~~

We have audited the accompanying consolidated and combined balance sheets of JBG SMITH Properties and its subsidiaries (the "Company"), as described in Note 1, as of December 31, 2017 and 2016, and the related consolidated and combined statements of operations, comprehensive income (loss), equity, and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and schedules listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements referred to above present fairly, in all material aspects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017 in conformity with the accounting principles generally accepted in the United States of America.

~~Basis for Opinion~~

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

~~Emphasis of a Matter~~

As discussed in Note 1 to the consolidated and combined financial statements, the historical financial results reflect charges for certain corporate costs allocated by Vornado Realty Trust. These costs may not be reflective of the actual costs which would have been incurred had the Company operated as an independent, standalone entity separate from Vornado Realty Trust.

~~/s/ DELOITTE & TOUCHE LLP~~

~~McLean, Virginia~~

~~March 12, 2018~~

~~We have served as the Company's auditor since 2016.~~

JBG SMITH PROPERTIES
Consolidated and Combined Balance Sheet
(In thousands, except par value amounts)
December 31,
2017 December 31,
2016
ASSETS
Real estate, at cost:
Land and improvements $ 1,368,294
$ 939,592
Buildings and improvements 3,670,268
3,064,466
Construction in progress, including land 978,942
151,333
Real estate held for sale 8,293
—
6,025,797
4,155,391
Less accumulated depreciation (1,011,330 ) (930,769 )
Real estate, net 5,014,467
3,224,622
Cash and cash equivalents 316,676
29,000
Restricted cash 21,881
3,263
Tenant and other receivables, net 46,734
33,380
Deferred rent receivable, net
146,315
136,582
Investments in and advances to unconsolidated real estate ventures 261,811
45,776
Receivable from former parent —
75,062
Other assets, net
263,923
112,955
TOTAL ASSETS $ 6,071,807
$ 3,660,640

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgages payable, net $ 2,025,692
$ 1,165,014
Revolving credit facility 115,751
—
Unsecured term loan, net 46,537
—
Payable to former parent —
283,232
Accounts payable and accrued expenses 138,607
40,923
Other liabilities, net 161,277
49,487
Total liabilities 2,487,864
1,538,656
Commitments and contingencies

Redeemable noncontrolling interests 609,129
—
Shareholders' equity:
Preferred shares, $0.01 par value - 200,000 shares authorized, none issued —
—
Common shares, $0.01 par value - 500,000 shares authorized and 117,955 shares issued and outstanding at December 31, 2017 1,180
—
Additional paid-in capital 3,063,625
—
Accumulated deficit (95,809 ) —
Accumulated other comprehensive income 1,612
—
Total shareholders' equity of JBG SMITH Properties 2,970,608
—
Former parent equity —
2,121,689
Noncontrolling interests in consolidated subsidiaries 4,206
295
Total equity 2,974,814
2,121,984
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY $ 6,071,807
$ 3,660,640

~~See accompanying notes to the consolidated and combined financial statements.~~

JBG SMITH PROPERTIES
Consolidated and Combined Statements of Operations
(In thousands, except per share data)
Year Ended December 31,
2017 2016 2015
REVENUE
Property rentals $ 436,625
$ 401,595
$ 389,810
Tenant reimbursements 37,985
37,661
40,476
Third-party real estate services, including reimbursements
63,236
33,882
29,467
Other income 5,167
5,381
10,854
Total revenue 543,013
478,519
470,607
EXPENSES
Depreciation and amortization 161,659
133,343
144,984
Property operating 111,055
100,304
101,511
Real estate taxes 66,434
57,784
58,874
General and administrative:
Corporate and other 47,131
48,753
44,424
Third-party real estate services 51,919
19,066
18,217
Share-based compensation related to Formation Transaction
29,251
—
—
Transaction and other costs 127,739
6,476
—
Total operating expenses 595,188
365,726
368,010
OPERATING INCOME (LOSS) (52,175 ) 112,793
102,597
Loss from unconsolidated real estate ventures, net (4,143 ) (947 ) (4,283 )
Interest and other income, net 1,788
2,992
2,557
Interest expense (58,141 ) (51,781 ) (50,823 )
Loss on extinguishment of debt (701 ) —
—
Gain on bargain purchase 24,376
—
—
INCOME (LOSS) BEFORE INCOME TAX BENEFIT (EXPENSE) (88,996 ) 63,057
50,048
Income tax benefit (expense) 9,912
(1,083 ) (420 )
NET INCOME (LOSS) (79,084 ) 61,974
49,628
Net loss attributable to redeemable noncontrolling interests 7,328
—
—
Net loss attributable to noncontrolling interest 3
—
—
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (71,753 ) $ 61,974
$ 49,628
EARNINGS (LOSS) PER COMMON SHARE:
Basic $ (0.70 ) $ 0.62
$ 0.49
Diluted $ (0.70 ) $ 0.62
$ 0.49
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - basic and diluted 105,359
100,571
100,571
DIVIDENDS DECLARED PER COMMON SHARE $ 0.45
$ —
$ —

~~See accompanying notes to the consolidated and combined financial statements.~~

JBG SMITH PROPERTIES
Consolidated and Combined Statements of Comprehensive Income (Loss)
(In thousands)
Year Ended December 31,
2017 2016 2015
NET INCOME (LOSS) $ (79,084 ) $ 61,974
$ 49,628
OTHER COMPREHENSIVE INCOME (LOSS):
Change in fair value of derivative financial instruments 1,438
—
—
Reclassification of net loss on derivative financial instruments 399
—
—
Other comprehensive income 1,837
—
—
COMPREHENSIVE INCOME (LOSS) (77,247 ) 61,974
49,628
Comprehensive loss attributable to redeemable noncontrolling interests 7,103
—
—
Comprehensive loss attributable to noncontrolling interests 3
—
—
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO
COMMON SHAREHOLDERS $ (70,141 ) $ 61,974
$ 49,628

~~See accompanying notes to the consolidated and combined financial statements.~~

~~JBG SMITH PROPERTIES~~

~~Consolidated and Combined Statements of Equity~~

~~(In thousands)~~

Common Shares
Additional
Paid-In
Capital
Accumulated Deficit Accumulated Other Comprehensive Income
Former
Parent
Equity
Noncontrolling Interests Total Equity
Shares Amount
BALANCE AT JANUARY 1, 2015 $ 1,988,347
$ 568
$ 1,988,915
Net income attributable to former parent 49,628
—
49,628
Deferred compensation shares and options, net 4,506
—
4,506
Contributions from former parent, net 16,495
(53 ) 16,442
BALANCE AT DECEMBER 31, 2015 2,058,976
515
2,059,491
Net income attributable to former parent 61,974
—
61,974
Deferred compensation shares and options, net 4,502
—
4,502
Distributions to former parent, net (3,763 ) (220 ) (3,983 )
BALANCE AT DECEMBER 31, 2016 2,121,689
295
$ 2,121,984
Net loss attributable to common shareholders —
$ —
$ —
$ (42,729 ) $ —
(29,024 )
⁽¹⁾
(3 ) (71,756 )
Deferred compensation shares and options, net —
—
—
—
—
1,526
—
1,526
Contributions from former parent, net —
—
—
—
—
333,020
—
333,020
Issuance of common limited partnership units
   at the Separation
—
—
—
—
—
(96,632 ) —
(96,632 )
Issuance of common shares at the Separation 94,736
947
2,329,632
—
—
(2,330,579 ) —
—
Issuance of common shares in connection with
   the Combination
23,219
233
864,685
—
—
—
—
864,918
Noncontrolling interests acquired in connection
   with the Combination
—
—
—
—
—
—
3,586
3,586
Dividends declared on common shares
   ($0.45 per common share)
—
—
—
(53,080 ) —
—
—
(53,080 )
Distributions to noncontrolling interests —
—
—
—
—
—
(171 ) (171 )
Contributions from noncontrolling interests —
—
—
—
—
—
499
499
Redeemable noncontrolling interest redemption
   value adjustment and other comprehensive
   income allocation
—
—
(130,692 ) —
(225 ) —
—
(130,917 )
Other comprehensive income —
—
—
—
—
1,837
—
—
1,837
BALANCE AT DECEMBER 31, 2017 117,955
$ 1,180
$ 3,063,625
$ (95,809 ) $ 1,612
$ —
$ 4,206
$ 2,974,814

~~_______________~~


⁽¹⁾	~~Net loss incurred from January 1, 2017 through July 17, 2017 is attributable to our former parent as it was the sole shareholder through July 17, 2017. See Note 1 for additional information.~~

~~See accompanying notes to the consolidated and combined financial statements.~~

JBG SMITH PROPERTIES
Consolidated and Combined Statements of Cash Flows
(In thousands)
Year Ended December 31,
2017 2016 2015
OPERATING ACTIVITIES:
Net income (loss) $ (79,084 ) $ 61,974
$ 49,628
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Share-based compensation expense 33,693
4,502
4,506
Depreciation and amortization, including amortization of debt issuance costs 164,580
135,072
146,985
Deferred rent (10,388 ) (15,551 ) (10,929 )
Loss from unconsolidated real estate ventures, net 4,143
947
4,283
Amortization of above- and below-market lease intangibles, net (862 ) (1,353 ) (2,797 )
Amortization of lease incentives 4,023
3,592
2,570
Return on capital from unconsolidated real estate ventures 2,563
1,520
1,348
Gain on bargain purchase (24,376 ) —
—
Loss on extinguishment of debt 701
—
—
Realized loss on interest rate swaps and caps 27
—
—
Unrealized gain on interest rate swaps and caps (1,348 ) —
—
Bad debt expense 3,807
751
1,407
Other non-cash items 3,928
6,236
626
Deferred tax benefit (10,408 ) —
—
Changes in operating assets and liabilities:
Tenant and other receivables (2,098 ) (3,693 ) (428 )
Other assets, net (23,481 ) (16,614 ) (13,667 )
Accounts payable and accrued expenses 16,160
7,667
(4,004 )
Other liabilities, net (7,397 ) (25,509 ) (1,298 )
Net cash provided by operating activities 74,183
159,541
178,230
INVESTING ACTIVITIES:
Development costs, construction in progress and real estate additions (210,593 ) (237,814 ) (234,285 )
Cash and restricted cash received in connection with the Combination, net 97,416
—
—
Acquisition of interests in unconsolidated real estate ventures, net of cash acquired (8,834 ) —
—
Distributions of capital from unconsolidated real estate ventures 6,929
—
—
Investments in and advances to unconsolidated real estate ventures (16,321 ) (23,027 ) (7,865 )
Repayment of notes receivable 50,934
—
—
Other investments (2,207 ) (1,966 ) (1,467 )
Proceeds from repayment of receivable from former parent 75,000
4,000
7,000
Net cash used in investing activities (7,676 ) (258,807 ) (236,617 )
FINANCING ACTIVITIES:
Contributions from (distributions to) former parent, net 160,203
(3,763 ) 16,495
Repayment of borrowings from former parent (115,630 ) —
(13,600 )
Proceeds from borrowings from former parent 4,000
79,500
96,512
Capital lease payments (17,827 ) —
—
Borrowings under mortgages payable 366,239
—
341,460
Borrowings under revolving credit facility 115,751
—
—
Borrowings under unsecured term loan 50,000
—
—
Repayments of mortgages payable (272,905 ) (24,364 ) (315,824 )
Debt issuance costs (19,287 ) (70 ) (2,359 )
Dividends paid to common shareholders (26,540 ) —
—
Distributions to redeemable noncontrolling interests (4,556 ) —
—
Contributions from noncontrolling interests 357
—
—
Distributions to noncontrolling interests (18 ) (220 ) (13 )
Net cash provided by financing activities 239,787
51,083
122,671
Net increase (decrease) in cash and cash equivalents and restricted cash 306,294
(48,183 ) 64,284
Cash and cash equivalents and restricted cash at beginning of the year 32,263
80,446
16,162
Cash and cash equivalents and restricted cash at end of the year $ 338,557
$ 32,263
$ 80,446

JBG SMITH PROPERTIES
Consolidated and Combined Statements of Cash Flows
(In thousands)
Year Ended December 31,
2017 2016 2015

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
   AT END OF THE YEAR:

Cash and cash equivalents $ 316,676
$ 29,000
$ 74,966
Restricted cash 21,881
3,263
5,480
Cash and cash equivalents and restricted cash $ 338,557
$ 32,263
$ 80,446

SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH
    INFORMATION:

Transfer of mortgage payable to former parent $ 115,630
$ 115,022
$ —
Cash paid for interest (net of capitalized interest of $12,727, $4,076 and $6,437 in
   2017, 2016 and 2015)
52,388
45,373
54,055
Accrued capital expenditures included in accounts payable and accrued expenses 12,445
8,851
29,400
Write-off of fully depreciated assets 55,998
100,076
23,155
Accrued lease incentives —
—
30,514
Deferred interest on mortgages payable 3,714
—
—
Cash payments for income taxes 3,396
1,165
677
Accrued dividends to common shareholders 26,540
—
—
Accrued distributions to redeemable noncontrolling interests 4,557
—
—
Acquisition of consolidated real estate venture ⁽¹⁾
5,420
—
—
Non-cash transactions related to the Formation Transaction: ⁽²⁾

Issuance of common limited partnership units at the Separation 96,632
—
—
Issuance of common shares at the Separation 2,330,579
—
—
Issuance of common shares in connection with the Combination 864,918
—
—
Issuance of common limited partnership units in connection with the Combination 359,967
—
—
Adjustment to record redeemable noncontrolling interest at redemption value 130,692
—
—
Contribution from former parent in connection with the Separation 172,817
—
—

~~_______________~~

⁽¹⁾ ~~See Note 11 for additional information.~~

⁽²⁾~~See Note 3 for information regarding assets, liabilities and noncontrolling interests acquired in the Formation Transaction.~~

~~See accompanying notes to the consolidated and combined financial statements.~~

~~JBG SMITH PROPERTIES~~

~~Notes to Consolidated and Combined Financial Statements~~

~~For the years ended December 31, 2017, 2016 and 2015~~

~~1. Organization and Basis of Presentation~~

~~Organization~~

JBG SMITH Properties ("JBG SMITH") was organized by Vornado Realty Trust ("Vornado" or "former parent") as a Maryland real estate investment trust ("REIT") on October 27, 2016 (capitalized on November 22, 2016). JBG SMITH was formed for the purpose of receiving, via the spin-off on July 17, 2017 (the "Separation"), substantially all of the assets and liabilities of Vornado’s Washington, DC segment, which operated as Vornado / Charles E. Smith, (the "Vornado Included Assets"). On July 18, 2017, JBG SMITH acquired the management business and certain assets and liabilities (the "JBG Assets") of The JBG Companies ("JBG") (the "Combination"). The Separation and the Combination are collectively referred to as the "Formation Transaction." Unless the context otherwise requires, all references to "we," "us," and "our," refer to the Vornado Included Assets (our predecessor and accounting acquirer) for periods prior to the Separation and to JBG SMITH for periods after the Separation. References to "our share" refers to our ownership percentage of consolidated and unconsolidated assets in real estate ventures. Substantially all of our assets are held by, and our operations are conducted through, JBG SMITH Properties LP ("JBG SMITH LP"), our operating partnership.

Prior to the Separation from Vornado, JBG SMITH was a wholly owned subsidiary of Vornado and had no material assets or operations. On July 17, 2017, Vornado distributed 100% of the then outstanding common shares of JBG SMITH on a pro rata basis to the holders of its common shares. Prior to such distribution by Vornado, Vornado Realty L.P. ("VRLP"), Vornado's operating partnership, distributed common limited partnership units ("OP Units") in JBG SMITH LP on a pro rata basis to the holders of VRLP's common limited partnership units, consisting of Vornado and the other common limited partners of VRLP. Following such distribution by VRLP and prior to such distribution by Vornado, Vornado contributed to JBG SMITH all of the OP Units it received in exchange for common shares of JBG SMITH. Each Vornado common shareholder received one JBG SMITH common share for every two Vornado common shares held as of the close of business on July 7, 2017 (the "Record Date"). Vornado and each of the other limited partners of VRLP received one JBG SMITH LP OP Unit for every two common limited partnership units in VRLP held as of the close of business on the Record Date. Our operations are presented as if the transfer of the Vornado Included Assets had been consummated prior to all historical periods presented in the accompanying consolidated and combined financial statements at the carrying amounts of such assets and liabilities reflected in Vornado’s books and records.

In connection with the Separation, JBG SMITH issued 94.7 million common shares and JBG SMITH LP issued 5.8 million OP Units to parties other than JBG SMITH. In connection with the Combination, JBG SMITH issued 23.2 million common shares and JBG SMITH LP issued 13.9 million OP Units to parties other than JBG SMITH. As of the completion of the Formation Transaction there were 118.0 million JBG SMITH common shares outstanding and 19.8 million JBG SMITH LP OP Units outstanding that were owned by parties other than JBG SMITH. As of December 31, 2017, we, as its sole general partner, controlled JBG SMITH LP and owned 85.6% of its OP Units.

As of December 31, 2017, our Operating Portfolio consists of 69 operating assets comprising 51 office assets totaling over 13.7 million square feet (11.8 million square feet at our share), 14 multifamily assets totaling 6,016 units (4,232 units at our share) and four other assets totaling approximately 765,000 square feet (348,000 square feet at our share). Additionally, we have (i) ten assets under construction comprising four office assets totaling approximately 1.3 million square feet (1.2 million square feet at our share), five multifamily assets totaling 1,767 units (1,568 units at our share) and one other asset totaling approximately 41,100 square feet (4,100 square feet at our share); and (ii) 43 future development assets totaling approximately 21.4 million square feet (17.9 million square feet at our share) of estimated potential development density.

Our revenues are derived primarily from leases with office and multifamily tenants, including fixed rents and reimbursements from tenants for certain expenses such as real estate taxes, property operating expenses, and repairs and maintenance. In addition, we have a third-party real estate services business that provides fee-based real estate services to the legacy funds formerly organized by The JBG Companies ("JBG Legacy Funds") and other third parties.

As of December 31, 2017, five of our assets in the aggregate generated approximately 25% of our share of annualized rent. Only the U.S. federal government accounted for 10% or more of our rental revenue, which consists of property rentals and tenant reimbursements, during each of the three years in the period ended December 31, 2017 as follows:

Year Ended December 31,
(Dollars in thousands) 2017 2016 2015
Rental revenue from the U.S. federal government $ 92,192
$ 103,864
$ 102,951
Percentage of office segment rental revenue 24.5 % 29.6 % 29.7 %
Percentage of total rental revenue 19.4 % 23.6 % 23.9 %

~~Basis of Presentation~~

The accompanying consolidated and combined financial statements and notes are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). All intercompany transactions and balances have been eliminated.

The accompanying consolidated and combined financial statements include the accounts of JBG SMITH and our wholly owned subsidiaries and those other entities, including JBG SMITH LP, in which we have a controlling financial interest, including where we have been determined to be the primary beneficiary of a variable interest entity ("VIE"). See Note 6 for additional information on our consolidated VIEs. The portions of the equity and net income (loss) of consolidated subsidiaries that are not attributable to JBG SMITH are presented separately as amounts attributable to noncontrolling interests in the consolidated and combined financial statements.

~~Combination~~

JBG SMITH and the Vornado Included Assets were under common control of Vornado for all periods prior to the Separation. The transfer of the Vornado Included Assets from Vornado to JBG SMITH was completed prior to the Separation, at net book values (historical carrying amounts) carved out from Vornado’s books and records. For purposes of the formation of JBG SMITH, the Vornado Included Assets were designated as the predecessor and the accounting acquirer of the JBG Assets. Consequently, the financial statements of JBG SMITH, as set forth herein, represent a continuation of the financial information of the Vornado Included Assets as the predecessor and accounting acquirer such that the historical financial information included herein as of any date or for any periods on or prior to the completion of the Combination represents the pre-Combination financial information of the Vornado Included Assets. The financial statements reflect the common shares as of the date of the Separation as outstanding for all periods prior to July 17, 2017. The acquisition of the JBG Assets completed subsequently by JBG SMITH was accounted for as a business combination using the acquisition method whereby identifiable assets acquired and liabilities assumed are recorded at the acquisition-date fair values and income and cash flows from the operations were consolidated into the financial statements of JBG SMITH commencing July 18, 2017. Consequently, the financial statements for the periods before and after the Formation Transaction are not directly comparable.

The accompanying statements of operations for the year ended December 31, 2017 include our consolidated accounts and the combined accounts of the Vornado Included Assets. Accordingly, the results of operations for the year ended December 31, 2017 reflect the aggregate operations and changes in cash flows and equity on a combined basis for the period prior to July 17, 2017 and on a consolidated basis for the period subsequent to July 17, 2017. The accompanying financial statements for the years ended December 31, 2016 and 2015 include the Vornado Included Assets. Therefore, our results of operations, cash flows and financial condition set forth in this report are not necessarily indicative of our future results of operations, cash flows or financial condition as an independent, publicly traded company.

The historical financial results for the Vornado Included Assets reflect charges for certain corporate costs allocated by the former parent which we believe are reasonable. These charges were based on either actual costs incurred or a proportion of costs estimated to be applicable to the Vornado Included Assets based on an analysis of key metrics, including total revenues. Such costs do not necessarily reflect what the actual costs would have been if JBG SMITH had been operating as a separate standalone public company. See Note 18 for additional information.

~~Reclassifications~~

~~Certain prior period data have been reclassified to conform to the current period presentation as follows:~~

Reclassification of $4.0 million of investments to "Other assets" on our balance sheet as of December 31, 2016 as a result of the revision in the line item "Investments in and advances to unconsolidated real estate ventures" on our balance sheet to include only real estate investments.

Reclassification of $19.1 million and $18.2 million of expenses for the years ended December 31, 2016 and 2015 to "General and administrative: third-party real estate services" from "Property operating expenses" as it relates to expenses incurred to provide third-party real estate services. Additionally, we reclassified $16.4 million and $15.9 million of income for the years ended December 31, 2016 and 2015 to "Third-party real estate services, including reimbursements" from "Other income" as it relates to revenue earned from providing third-party real estate services.

~~2. Summary of Significant Accounting Policies~~

~~Use of Estimates~~

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant of these estimates include: (i) the underlying cash flows used to establish the fair values recorded in connection with the Combination and used in assessing impairment, (ii) the determination of useful lives for tangible and intangible assets and (iii) the allowance for doubtful accounts. Actual results could differ from those estimates.

~~Business Combinations~~

We account for business combinations, including the acquisition of real estate, using the acquisition method pursuant to which we recognize and measure the identifiable assets acquired, liabilities assumed, and any noncontrolling interests in the acquiree at their acquisition date fair values. Accordingly, we estimate the fair values of acquired tangible assets (consisting of real estate, cash and cash equivalents, tenant and other receivables, investments in unconsolidated real estate ventures and other assets, as applicable), identified intangible assets and liabilities (consisting of the value of in-place leases, above- and below-market leases, options to enter into ground leases and management contracts, as applicable), assumed debt and other liabilities, and noncontrolling interests, as applicable, based on our evaluation of information and estimates available at that date. Based on these estimates, we allocate the purchase price to the identified assets acquired and liabilities assumed. Any excess of the purchase price over the estimated fair value of the net assets acquired is recorded as goodwill. Any excess of the fair value of assets acquired over the purchase price is recorded as a gain on bargain purchase. If, up to one year from the acquisition date, information regarding the fair value of the net assets acquired and liabilities assumed is received and estimates are refined, appropriate adjustments are made on a prospective basis to the purchase price allocation, which may include adjustments to identified assets, assumed liabilities, and goodwill or the gain on bargain purchase, as applicable. The results of operations of acquisitions are prospectively included in our financial statements beginning with the date of the acquisition. Transaction costs related to business combinations are expensed as incurred and included in "Transaction and other costs" in our statements of operations.

The fair values of buildings are determined using the "as-if vacant" approach whereby we use discounted income or cash flow models with inputs and assumptions that we believe are consistent with current market conditions for similar assets. The most significant assumptions in determining the allocation of the purchase price to buildings are the exit capitalization rate, discount rate, estimated market rents and hypothetical expected lease-up periods. We assess fair value of land based on market comparisons and development projects using an income approach of cost plus a margin.

~~The fair values of identified intangible assets are determined based on the following:~~

The value allocable to the above- or below-market component of an acquired in-place lease is determined based upon the present value (using a discount rate which reflects the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be received pursuant to the lease over its remaining term and (ii) management’s estimate of the amounts that would be received using market rates over the remaining term of the lease. Amounts allocated to above- market leases are recorded as "Identified intangible assets" in "Other assets, net" in the balance sheets, and amounts allocated to below-market leases are recorded as "Lease intangible liabilities" in "Other liabilities, net" in the balance sheets. These intangibles are amortized to "Property rentals" in our statements of operations over the remaining terms of the respective leases.

~~Factors considered in determining the value allocable to in-place leases during hypothetical lease-up periods related to space~~

that is leased at the time of acquisition include (i) lost rent and operating cost recoveries during the hypothetical lease-up period and (ii) theoretical leasing commissions required to execute similar leases. These intangible assets are recorded as "Identified intangible assets" in "Other assets, net" in the balance sheets and are amortized to "Depreciation and amortization expenses" in our statements of operations over the remaining term of the existing lease.

The fair value of investments in unconsolidated real estate ventures and related noncontrolling interests is based on the estimated fair values of the identified assets acquired and liabilities assumed of each venture, including future expected cash flows from promote interests.

The fair value of the mortgages payable assumed was determined using current market interest rates for comparable debt financings. The fair values of the interest rate swaps and caps are based on the estimated amounts we would receive or pay to terminate the contract at the acquisition date and are determined using interest rate pricing models and observable inputs. The carrying value of cash, restricted cash, working capital balances, leasehold improvements and equipment, and other assets acquired and liabilities assumed approximates fair value.

~~Real Estate~~

Real estate is carried at cost, net of accumulated depreciation and amortization. Maintenance and repairs are expensed as incurred and are included in "Property operating expenses" in our statements of operations. As real estate is undergoing redevelopment activities, all property operating expenses directly associated with and attributable to the redevelopment, including interest expense, are capitalized to the extent that we believe such costs are recoverable through the value of the property. The capitalization period ends when redevelopment activities are substantially complete. General and administrative costs are expensed as incurred. Depreciation requires an estimate of the useful life of each property and improvement as well as an allocation of the costs associated with a property to its various components. Depreciation is recognized on a straight‑line basis over estimated useful lives, which range from three to 40 years. Tenant improvements are amortized on a straight‑line basis over the lives of the related leases, which approximate the useful lives of the tenant improvements.

Construction in progress, including land, is carried at cost, and no depreciation is recorded. Real estate undergoing significant renovations and improvements is considered to be under development. All direct and indirect costs related to development activities are capitalized into "Construction in progress, including land" on our balance sheets, except for certain demolition costs, which are expensed as incurred. Direct development costs incurred include: pre-development expenditures directly related to a specific project, development and construction costs, interest, insurance and real estate taxes. Indirect development costs include: employee salaries and benefits, travel and other related costs that are directly associated with the development. Our method of calculating capitalized interest expense is based upon applying our weighted average borrowing rate to the actual accumulated expenditures if the property does not have property specific debt. If the property is encumbered by specific debt, we will capitalize both the interest incurred applicable to that debt and additional interest expense using our weighted average borrowing rate for any accumulated expenditures in excess of the principal balance of the debt encumbering the property. The capitalization of such expenses ceases when the real estate is ready for its intended use, but no later than one-year from substantial completion of major construction activity. If we determine that a project is no longer viable, all pre-development project costs are immediately expensed.

Our assets and related intangible assets are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Estimates of future cash flows are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. An impairment loss is recognized if the carrying amount of the asset is not recoverable and is measured based on the excess of the property’s carrying amount over its estimated fair value. If our estimates of future cash flows, anticipated holding periods, or fair values change, based on market conditions or otherwise, our evaluation of impairment charges may be different and such differences could be material to our financial statements. Estimates of future cash flows are subjective and are based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results.

Real estate is classified as held for sale when all the necessary criteria are met. The criteria include (i) management, having the authority to approve action, commits to a plan to sell the property in its present condition, (ii) the sale of the property is at a price reasonable in relation to its current fair value and (iii) the sale is probable and expected to be completed within one year. Real estate held for sale is carried at the lower of carrying amounts or estimated fair value less disposal costs. Depreciation and amortization is not recognized on real estate classified as held for sale.

~~Cash and Cash Equivalents~~

Cash and cash equivalents consist of highly liquid investments with a purchase date life to maturity of three months or less and are carried at cost, which approximates fair value, due to their short‑term maturities.

~~Restricted Cash~~

Restricted cash consists primarily of security deposits held on behalf of our tenants and cash escrowed under loan agreements for debt service, real estate taxes, property insurance and capital improvements.

~~Allowance for Doubtful Accounts~~

We periodically evaluate the collectability of amounts due from tenants, including the receivable arising from deferred rent receivable, and maintain an allowance for doubtful accounts for the estimated losses resulting from the inability of tenants to make required payments under lease agreements. We exercise judgment in establishing these allowances and consider payment history and current credit status in developing these estimates.

~~Investments in and Advances to Real Estate Ventures~~

We analyze our real estate ventures to determine whether the entities should be consolidated. If it is determined that these investments do not require consolidation because the entities are not VIEs in accordance with the Consolidation Topic of the Financial Accounting Standards Board ("FASB"), Accounting Standards Codification ("ASC"), we are not ~~considered the primary beneficiary of the entities determined~~obligated to ~~be VIEs,~~provide for additional losses, have not guaranteed its obligations or otherwise committed to providing financial support, we do not have voting control, and/or the limited partners (or non-managing members) have substantive participatory rights, then the selection of the accounting method used to account for our investments in unconsolidated real estate ventures is generally determined by our voting interests and the degree of influence we have over the entity. Management uses its judgment when determining if we are the primary beneficiary of, or have a controlling financial interest in, an entity in which we have a variable interest. Factors considered in determining whether we have the power to direct the activities that most significantly impact the entity’s economic performance include risk and reward sharing, experience and financial condition of the other partners, voting rights, involvement in day-to-day capital and operating decisions and the extent of our involvement in the entity.

~~We use~~will discontinue the equity method of accounting ~~for investments in unconsolidated real estate ventures when we own 20% or more~~until such point that our share of net income equals the ~~voting interests and have significant influence but do~~share of net losses not ~~have a controlling financial interest, or if we own less than 20% of~~recognized during the ~~voting interests but have determined that we have significant influence. Under~~period the equity method we record our investments in and advances to these entities in our balance sheets, and our proportionate share of earnings or losses earned by the real estate venture is recognized in "Income (loss) from unconsolidated real estate ventures, net" in the accompanying statements of operations. We earn revenues from the management services we provide to unconsolidated entities. These fees are determined in accordance with the terms specific to each arrangement and may include property and asset management fees or transactional fees for leasing, acquisition, development and construction, financing, and legal services provided. We account for this revenue gross of our ownership interest in each respective real estate venture and recognize such revenue in "Third-party real estate services, including reimbursements" in our statements of operations. Our proportionate share of related expenses is recognized in "Income (loss) from unconsolidated real estate ventures, net" in our statements of operations. We may also earn incremental promote distributions if certain financial return benchmarks are achieved upon ultimate disposition of the underlying properties. Management fees are recognized when earned, and promote fees are recognized when certain earnings events have occurred, and the amount is determinable and collectible. Any promote fees are reflected in "Income (loss) from unconsolidated real estate ventures, net" in our statements of operations.

was suspended.

With regard to distributions from unconsolidated real estate ventures, we use the information that is available to us to determine the nature of the underlying activity that generated the distributions. Using the nature of distribution approach, cash flows generated from the operations of an unconsolidated real estate venture are classified as a return on investment (cash inflow from operating activities) and cash flows ~~that~~ from property sales, debt refinancing or sales of our investments are classified as a return of investment (cash inflow from investing activities).

On a periodic basis, we evaluate our investments in unconsolidated entities for impairment. We assess whether there are any indicators, including underlying property operating performance and general market conditions, that the value of our investments in unconsolidated real estate ventures ~~may be impaired.~~for impairment. An investment in a real estate venture is considered impaired if we determine that its fair value is less than the net carrying value of the investment in that real estate venture on an other-than-temporary basis. Cash flow projections for the investments consider property level factors such as expected future operating income, trends and prospects, anticipated holding periods, as well as the effects of demand, competition and other factors. We consider various qualitative factors to determine if a decrease in the value of our investment is other-than-temporary. These factors include the age of the venture, our intent and ability to retain our investment in the ~~entity,~~real estate venture, financial condition and long-term prospects of the ~~entity~~real estate venture and relationships with our partners and banks. If we believe that the decline in the fair value of the investment is temporary, no impairment ~~charge~~loss is recorded. If our

analysis indicates that there is an other-than temporary impairment related to the investment in a particular real estate venture, the carrying value of the venture will be adjusted to an amount that reflects the estimated fair value of the investment.

We evaluate reconsideration events as we become aware of them. Reconsideration events include, among other criteria, amendments to real estate venture agreements or changes in the capital requirements of the real estate venture. A reconsideration event could cause us to consolidate an unconsolidated real estate venture or deconsolidate a consolidated entity.

Intangibles

Intangible assets primarily consist ofof: (i) in-place leases, below-market ground rent obligations, and above-market real estate leases ~~and options to enter into ground lease~~ that were recorded in connection with the acquisition of ~~properties. Intangible assets also include~~properties and (ii) management and leasing contracts and options to enter into ground leases that were acquired in the Combination. Intangible liabilities consist of above-market ground rent obligations and below-market real estate leases that are also recorded in connection with the acquisition of properties. Both intangible assets and liabilities are amortized and accreted using the straight-line method over their applicable remaining useful life. When a lease or contract is terminated early, any remaining unamortized or unaccreted balances are charged to earnings. The useful lives of intangible assets are evaluated each reporting period with any changes in estimated useful lives being accounted for over the revised remaining useful life.

Intangible assets also include the wireless spectrum licenses we acquired. While the licenses are issued for ten years, as long as we act within the requirements and constraints of the regulatory authorities, the renewal and extension of these licenses is reasonably certain at minimal cost, which would be capitalized as part of the asset. Accordingly, we have concluded that the licenses are indefinite-lived intangible assets.

Investments

Investments in equity securities without readily determinable fair values are carried at cost. Investments in investment funds without readily determinable fair values that qualify for the net asset value ("NAV") practical expedient are carried at fair value based on their reported NAV. Investments in equity securities and investment funds are included in "Other assets, net" in our consolidated balance sheets. Realized and unrealized gains (losses) are included in "Interest and other income, net" in our consolidated statements of operations.

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Assets Held for Sale

Assets, primarily consisting of real estate, are classified as held for sale when all the necessary criteria are met. The criteria include: (i) management, having the authority to approve action, commits to a plan to sell the property in its present condition, (ii) the sale of the property is at a price reasonable in relation to its current fair value and (iii) the sale is probable and expected to be completed within one year. Real estate held for sale is carried at the lower of carrying amounts or estimated fair value less disposal costs. Depreciation and amortization expense is not recognized on real estate classified as held for sale.

Deferred Costs

Deferred leasing costs include direct and incremental costs incurred in the successful negotiation of leases, including leasing commissions and other costs, which are deferred and amortized on a straight-line basis over the corresponding lease term. Unamortized leasing costs are charged to expense upon the early termination of the lease.

Deferred financing costs consist of loan issuance costs directly related to financing transactions that are deferred and amortized over the term of the related loan as a component of interest expense. Unamortized deferred financing costs related to our ~~mortgages payable~~mortgage loans and ~~unsecured~~ term ~~loan~~loans are presented as a direct deduction from the carrying amounts of the related debt instruments, while such costs related to our revolving credit facility are included in other assets.

Direct salaries, third-party fees and other costs incurred by us to originate a lease are capitalized in "Other assets, net" in the balance sheets and are amortized against the respective leases using the straight-line method over the term of the related leases.

Noncontrolling Interests

We identify our noncontrolling interests separately ~~within the equity section on the~~in our consolidated balance sheets. Amounts of consolidated net income (loss) attributable to redeemable noncontrolling interests and to the noncontrolling interests in consolidated subsidiaries are presented separately in ~~the~~our consolidated statements of operations.

Redeemable Noncontrolling Interests - Redeemable noncontrolling interests primarily consists of OP Units issued in conjunction with the Formation Transaction and ~~our venture partner's interest in 965 Florida Avenue. The OP~~LTIP Units ~~are redeemable for our common shares or cash beginning August 1, 2018, subject~~issued to ~~certain limitations.~~employees. Redeemable noncontrolling interests are generally redeemable at the option of the holder for our common shares, or cash at our election, subject to certain limitations, and are presented in the mezzanine section between total liabilities and shareholders' equity ~~on the~~in our consolidated balance sheets. The carrying amount of redeemable noncontrolling interests is adjusted to its redemption value at the end of each reporting period, but no less than its initial carrying value, with such adjustments recognized in "Additional paid-in ~~capital".~~capital." See Note 1113 for additional information.

Noncontrolling Interests - Noncontrolling interests represents the portion of equity that we do not own in entities we consolidate, including interests in consolidated real estate ventures.

Derivative Financial Instruments and Hedge Accounting

Derivative financial instruments are used at times to manage exposure to variable interest rate risk. Derivative financial instruments are recognized as either assets or liabilities and are measured at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting ~~designatio~~n.

designation. Cash flows and related gains (losses) associated with derivative financial instruments are classified as operating cash flows in our consolidated statements of cash flows, unless the derivative financial instrument contains an other-than-insignificant financing element at inception, in which case the related cash flows are reported as either cash flows from investing or financing activities depending on the derivative's off-market nature at inception.

Derivative Financial Instruments Designated as ~~Cash Flow~~Effective Hedges - Certain derivative financial instruments, consisting of interest rate swap and cap agreements, are cash flow hedges that are designated as ~~cash flow~~effective hedges, and are carried at their estimated fair value on a recurring basis. We assess the effectiveness of our ~~cash flow~~ hedges both at inception and on an ongoing basis. If the hedges are deemed to be effective, the fair value is recorded in ~~accumulated~~"Accumulated other comprehensive ~~income~~income" in our consolidated balance sheets and is subsequently reclassified into "Interest expense" in our consolidated statements of operations in the period that the hedged forecasted transactions affect earnings. Our ~~cash flow~~ hedges become less than perfectly effective if the critical terms of the hedging instrument and the forecasted transactions do not perfectly match such as

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notional amounts, settlement dates, reset dates, calculation period and interest rates. In addition, we evaluate the default risk of the counterparty by monitoring the ~~credit worthiness~~creditworthiness of the counterparty.

Derivative financial instruments and hedging activities require management to make judgments on the nature of its derivatives and their effectiveness as hedges. These judgments determine if the changes in fair value of the derivative instruments are reported in ~~the~~our consolidated statements of operations, or ~~as a component~~in our consolidated statements of comprehensive income ~~and as a component of shareholders’ equity on the balance sheets.~~

~~Derivative Financial Instruments Not Designated as Hedges~~(loss).

Non-Designated Derivatives - Certain derivative financial instruments, consisting of interest rate ~~swap and~~ cap agreements, are ~~considered economic hedges,~~used to manage our exposure to interest rate movements, but do not ~~designated~~meet the accounting requirements to be classified as ~~accounting hedges, and~~hedging instruments. These derivatives are carried at their estimated fair value on a recurring ~~basis. Realized~~basis with realized and unrealized gains ~~are~~(losses) recorded in "Interest expense" in ~~the~~our consolidated statements of ~~operations in the period in which the change occurs.~~

operations.

Fair Value of Assets and Liabilities

~~ASC~~

Accounting Standards Codification ("ASC") 820 ("Topic 820"), Fair Value Measurement and Disclosures, defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ~~ASC~~Topic 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels:

Level 1 — quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities;

Level 2 — observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and

Level 3 — unobservable inputs that are used when little or no market data is available.

The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterparty credit risk in our assessment of fair value.

Investments that are valued using NAV as a practical expedient are excluded from the fair value hierarchy disclosures.

Revenue Recognition

We have leases with various tenants across our portfolio of properties, which generate rental income and operating cash flows for our benefit. Through these leases, we provide tenants with the right to control the use of our real estate, which tenants agree to use and control. The right to control our real estate conveys to our tenants substantially all of the economic benefits and the right to direct how and for what purpose the real estate is used throughout the period of use, thereby meeting the definition of a lease. Leases will be classified as either operating, sales-type or direct finance leases based on whether the lease is structured in effect as a financed purchase.

Property ~~rentals income~~rental revenue includes base ~~rents that~~rent each tenant pays in accordance with the terms of its respective lease and is reported on a straight-line basis over the non-cancellable term of the lease, which includes the effects of periodic step-ups in rent and rent abatements under the lease. When a renewal option is included within the lease, we assess whether the option is reasonably certain of being exercised against relevant economic factors to determine whether the option period should be included as part of the lease term. Further, property rental revenue includes tenant reimbursement revenue from the recovery of all or a portion of the operating expenses and real estate taxes of the respective assets. Tenant reimbursements, which vary each period, are non-lease components that are not the predominant activity within the contract. We have elected the practical expedient that allows us to combine certain lease and non-lease components of our operating leases. Non-lease components are recognized together with fixed base rent in "Property rental revenue," as variable lease income in the same periods as the related expenses are incurred. Certain commercial leases may also provide for the payment by the lessee of additional rents based on a percentage of sales, which are recorded as variable lease income in the period the additional rents are earned.

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We commence rental revenue recognition when the tenant takes possession of the leased space or controls the physical use of the leased space and when the leased space is substantially ready for its intended use. In circumstances where we provide a tenant improvement allowance for improvements that are owned by the tenant, we recognize the allowance as a reduction of property ~~rentals~~rental revenue on a straight-line basis over the term of the ~~lease.~~lease commencing when the tenant takes possession of the space. Differences between rental ~~income~~revenue recognized and amounts due under the respective lease agreements are recorded as an increase or decrease to "Deferred rent ~~receivable, net" on~~receivable" in our consolidated balance sheets. Property ~~rentals~~rental revenue also includes the ~~amortization/~~amortization or accretion of acquired above-and below-market leases.

~~Tenant reimbursements provide~~ We periodically evaluate the collectability of amounts due from tenants and recognize an adjustment to property rental revenue for ~~the recovery of~~accounts receivable and deferred rent receivable if we conclude it is not probable we will collect substantially all ~~or a portion~~ of the ~~operating expenses~~remaining lease payments under the lease agreements. Any changes to the provision for lease revenue determined to be not probable of collection are included in "Property rental revenue" in our consolidated statements of operations. We exercise judgment in assessing the probability of collection and ~~real estate taxes of the respective assets. Tenant reimbursements are accrued~~consider payment history, current credit status and economic outlook in ~~the same periods as the related expenses are incurred.~~

making this determination.

Third-party real estate services revenue, including reimbursements, ~~is determined in accordance with the terms specific to each arrangement and may include~~includes property and asset management fees, orand transactional fees for leasing, acquisition, development and construction, financing, and legal ~~services provided.~~services. These fees are determined in accordance with the terms specific to each arrangement and are recognized as the related services are performed. Development ~~and construction~~ fees are earned from providing services to third-party property owners and our unconsolidated real estate ~~ventures~~ventures. The performance obligations associated with our development services contracts are ~~recorded~~satisfied over time and we recognize our development fee revenue using a time-based measure of progress over the course of the development project due to the stand-ready nature of the promised services. The transaction prices for our performance obligations are variable based on the costs ultimately incurred to develop the underlying assets and are estimated based on their expected value. Our transaction prices, and the corresponding recognition of revenue, are constrained such that a ~~percentage~~significant reversal of ~~completion basis.~~

revenue is not probable when the variability is subsequently resolved. Judgments impacting the timing and amount of revenue recognized from our development services contracts include the determination of the nature and number of performance obligations within a contract, estimates of total development project costs, from which the fees are typically derived, the application of a constraint to our transaction price and estimates of the period of time over which the development services are expected to be performed, which is the period over which the revenue is recognized. We recognize development fees earned from unconsolidated real estate venture projects to the extent of our venture partners' ownership interest.

Third-Party Real Estate Services Expenses

Third-party real estate services expenses include the costs associated with the management services provided to our unconsolidated real estate ventures and other third ~~parties.~~parties, including amounts paid to third-party contractors for construction projects that we manage. We allocate personnel and other overhead costs using ~~the~~ estimates of the time spent performing services for our third-party real estate services and other allocation methodologies.

Lessee Accounting

We have, or have entered in the past, operating and finance leases, including ground leases on certain of our properties. When a renewal option is included within a lease, we assess whether the option is reasonably certain of being exercised against relevant economic factors to determine whether the option period should be included as part of the lease term. Lease payments associated with renewal periods that we are reasonably certain will be exercised are included in the measurement of the corresponding lease liability and right-of-use asset. Lease expense for our operating leases is recognized on a straight-line basis over the expected lease term and is included in our consolidated statements of operations in "Property operating expenses." Amortization of the right-of-use asset associated with a finance lease is recognized on a straight-line basis over the expected lease term and is included in our consolidated statements of operations in "Depreciation and amortization expense" with the related interest on our outstanding lease liability included in "Interest expense."

Certain lease agreements include variable lease payments that, in the future, will vary based on changes in inflationary measures, market rates or our share of expenditures of the leased premises. Such variable payments are recognized in lease expense in the period in which the variability is determined. Certain lease agreements may also include various non-lease

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components that primarily relate to property operating expenses associated with our office leases, which also vary each period. We have elected the practical expedient which allows us to combine lease and non-lease components for our ground and office leases and recognize variable non-lease components in lease expense when incurred.

We discount our future lease payments for each lease to calculate the related lease liability using an estimated incremental borrowing rate computed based on observable corporate borrowing rates reflective of the general economic environment, taking into consideration our creditworthiness and various financing and asset specific considerations, adjusted to approximate a secured borrowing for the lease term. We made a policy election to forgo recording right-of-use assets and the related lease liabilities for leases with initial terms of 12 months or less.

Income Taxes

We ~~intend to elect~~have elected to be taxed as a REIT under sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code"). Under those sections, a REIT which distributes at least 90% of its REIT taxable income as dividends to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. Prior to the Separation, Vornado operated as a REIT and distributed 100% of its REIT taxable income to its ~~shareholders,~~shareholders; accordingly, no provision for federal income taxes has been made in the accompanying consolidated financial statements for the periods prior to the Separation. We currently adhere and intend to continue to adhere to these requirements and to maintain our REIT status in future periods.

As a REIT, we ~~are allowed to~~can reduce our taxable income by distributing all or a portion of ~~our distributions~~such taxable income to shareholders. Future distributions will be declared and paid at the discretion of the Board of Trustees and will depend upon cash generated by operating activities, our financial condition, capital requirements, annual dividend requirements under the REIT provisions of the Code ~~as amended,~~ and such other factors as our Board of Trustees deems relevant.

We also participate in the activities conducted by our subsidiary entities ~~which~~that have elected to be treated as taxable REIT subsidiaries ("TRS") under the Code. As such, we are subject to federal, state, and local taxes on the income from these activities. Income taxes attributable to our TRSs are accounted for under the asset and liability method. Under the asset and liability method, deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in ~~the~~our consolidated financial statements, which will result in taxable or deductible amounts in the future.

We provide for a valuation allowance for deferred income tax assets if we believe all or some portion of the deferred tax asset may not be realized. Any increase or decrease in the valuation allowance that results from a change in circumstances that causes a change in the estimated ability to realize the related deferred tax asset is included in deferred tax benefit (expense).

ASC ~~740-10,~~740 ("Topic 740"), Income Taxes, provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in ~~the~~our consolidated financial statements. ~~ASC 740-10~~Topic 740 requires the evaluation of tax positions taken in the course of preparing our tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold are recorded as a tax expense in the current year.

Earnings (Loss) Per Common Share

Basic earnings (loss) per common share is computed by dividing net income (loss) ~~attributable~~available to common shareholders by the weighted average common shares outstanding during the period. Unvested ~~and vested~~ share-based ~~payment~~compensation awards that entitle holders to receive non-forfeitable ~~dividends, which include OP Units and long-term incentive partnership units ("LTIP Units"),~~distributions are considered participating securities. Consequently, we are required to apply the two-class method of computing basic and diluted earnings (loss) that would otherwise have been available to common shareholders. Under the two-class method, earnings for the period are allocated between common shareholders and participating securities based on their respective rights to receive dividends. During periods of net loss, losses are allocated only to the extent the participating securities are required to absorb their share of such losses. Distributions to participating securities in excess of their allocated income (loss) are shown as a reduction to net income (loss) attributable to common shareholders. Diluted earnings (loss) per common share reflects the potential dilution of the assumed exchange of various ~~units~~unit and share-based compensation awards into common shares ~~unvested share-based payment awards~~ to the extent they are dilutive.

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Share-Based Compensation

The fair value of share-based compensation awards granted ~~OP Units, formation awards ("Formation Awards"), LTIP Units, LTIP Units with time-based vesting requirements (“Time-Based LTIP Units”)and Performance-Based LTIP Units~~ to our trustees, management ~~and~~or employees ~~in connection with the Separation and Combination. Fair value~~ is determined, depending on the type of award, using the Monte Carlo ~~method~~ or ~~post-vesting restriction periods,~~Black-Scholes methods, which is intended to estimate the fair value of the awards at the grant date using dividend yields, ~~and~~ expected volatilities that are primarily based on available implied data and peer group companies' historical ~~data.~~data and post-vesting restriction periods. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The shortcut method is used for determining the expected life used in the valuation method.

Compensation expense is based on the fair value of our common shares at the date of the grant and is recognized ratably over the vesting period using a graded vesting attribution model. Compensation expense for share-based compensation awards made to retirement eligible employees is recognized over a six-month period after the grant date or over the remaining period until they become retirement eligible. We account for forfeitures as they occur. Distributions paid on unvested OP Units ~~LTIP Units, Time-Based LTIP Units~~ and ~~Performance-Based~~ LTIP Units are ~~charged~~recorded to ~~"Net income attributable to~~"Redeemable noncontrolling interests" in ~~the statements of operations.~~

our consolidated balance sheets. Distributions paid on unvested Restricted Share Units ("RSUs") are recorded to "Additional paid-in capital" in our consolidated balance sheets.

Recent Accounting Pronouncements

~~The following table provides a brief description~~

Standard Adopted

Reference Rate Reform

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform ("Topic 848"), which was amended in December 2022 by ASU 2022-06, Reference Rate Reform (Topic 848). Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. As of ~~recent~~December 31, 2023, we have converted all our London Interbank Offered Rate-indexed debt and derivative financial instruments to Secured Overnight Financing Rate ("SOFR")-based indexes. For all derivative financial instruments designated as effective hedges, we utilized the elective relief in Topic 848 that allows for the continuation of hedge accounting ~~pronouncements (ASU) by~~through the transition process.

Standards Not Yet Adopted

Income Taxes

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("Topic 740"). Topic 740 modifies the rules on income tax disclosures to require entities to disclose (i) specific categories in the rate reconciliation, (ii) the income (loss) from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (iii) income tax expense or benefit from continuing operations (separated by federal, state and foreign). Topic 740 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that ~~could~~ have not yet been issued or made available for issuance. This guidance should be applied on a ~~material effect~~prospective basis, but retrospective application is permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial ~~statements:~~statements and related disclosures.

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segments Disclosures" ("Topic 280"). Topic 280 enhances disclosures of significant segment expenses and other segment items regularly provided to the chief operating decision maker ("CODM"), extends certain annual disclosures to interim periods and permits more than one measure of segment profit (loss) to be reported under certain conditions. The amendments are effective in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Retrospective adoption to all periods presented is required, and early adoption of the

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~~Standard~~	~~Description~~	~~Date of Adoption~~	~~Effect on the Financial Statements or Other~~ ~~Significant Matters~~

~~Standards adopted~~
~~ASU 2016-15,~~ ~~Statement of Cash~~ ~~Flows (Topic 230):~~ ~~Classification of~~ ~~Certain Cash~~ ~~Receipts and Cash~~ ~~Payments and ASU~~ ~~2016-18, Statement~~ ~~of Cash Flows~~ ~~(Topic 230):~~ ~~Restricted Cash~~	These standards amend the existing guidance and address specific cash flow issues with the objective of reducing existing diversity in practice. ASU 2016-15 addresses eight specific cash flow issues and ASU 2016-18 specifically addresses presentation of restricted cash and restricted cash equivalents in the statements of cash flows. These standards are effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017, with early adoption permitted. These standards require a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, entities may apply the amendments prospectively as of the earliest date practicable.	~~December 2017~~	Other than the revised statement of cash flows presentation of restricted cash, the adoption and implementation of these standards did not have a material impact on our financial statements. The standards were retrospectively applied to prior years.
~~ASU 2017‑05, Other Income—Gains and Losses from the Derecognition~~ ~~of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for~~ ~~Partial Sales of Nonfinancial Assets~~	This standard clarifies the scope of recently established guidance on nonfinancial asset derecognition as well as the accounting for partial sales of nonfinancial assets. This update conforms the derecognition guidance on nonfinancial assets with the model for transactions in ASC 606. This standard is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017, with early adoption permitted. This standard may be adopted either retrospectively or on a modified retrospective basis.	~~December~~ ~~2017~~	The adoption and implementation of this standard did not have an impact on our financial statements. In future periods, the adoption of this standard could have a material impact to our results of operations if we sell a significant partial interest in a real estate asset.
~~ASU 2017‑09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting~~	This standard clarifies which changes to the terms or conditions of a share-based payment award are subject to the guidance on modification accounting under ASC Topic 718. Entities would apply the modification accounting guidance unless the value, vesting requirements and classification of a share-based payment award are the same immediately before and after a change to the terms or conditions of the award. This standard is effective for annual periods beginning after December 15, 2017, with early adoption permitted. This standard should be applied prospectively.	~~December~~ ~~2017~~	The adoption and implementation of this standard did not have an impact on our financial statements. In future periods, if we encounter a change to the terms or conditions of any of our share-based payment awards, we will evaluate the need to apply modification accounting based on the new guidance. The general treatment for modifications of share-based payment awards is to record the incremental value arising from the change as additional compensation expense.
~~ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities~~	The standard provides new guidance for the determination of eligibility for hedge accounting and effectiveness. It also amends the presentation and disclosure requirements. This standard is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2018, with early adoption permitted. This standard requires a modified retrospective transition method which requires the recognition of the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the date of adoption.	~~October~~ ~~2017~~	~~The adoption and implementation of this standard did not have a material impact on our financial statements.~~



~~Standard~~	~~Description~~	~~Date of Adoption~~	~~Effect on the Financial Statements or Other~~ ~~Significant Matters~~
~~ASU 2017‑01 Business Combinations (Topic 805): Clarifying the~~ ~~Definition of a Business~~	This standard provides guidance for determination of when an asset acquired or group of assets acquired is not a business. The standard requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This standard reduces the number of transactions that need to be further evaluated. This standard is effective for annual periods beginning after December 15, 2017, with early adoption permitted. This standard should be applied prospectively.	~~September~~ ~~2017~~	The adoption and implementation of this standard did not have an impact on our financial statements. In future periods, the adoption of this standard may result in the capitalization of costs associated with asset acquisitions.
~~Standards not yet adopted~~
~~ASU 2016-02, Leases (Topic 842), as clarified and amended by ASU 2018-01~~	This standard sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASU 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase. Lessees are required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. Lessees will recognize expense based on the effective interest method for finance leases or on a straight-line basis for operating leases. The FASB has also clarified that an assessment of whether a land easement meets the definition of a lease under the new lease standard will be required. An entity with land easements that are not accounted for as leases under the current lease accounting standards, however, may elect a practical expedient to exclude those land easements from assessment under the new lease accounting standards. The provisions of this standard are effective for fiscal years beginning after December 15, 2018 and should be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted.	~~January 2019~~	We are currently evaluating the overall impact of the adoption of ASU 2016-02 on our financial statements, including the timing of adopting this standard. ASU 2016-02 will more significantly impact the accounting for leases in which we are the lessee. We have ground leases for which we will be required to record a right-of-use asset and lease liability equal to the present value of the remaining minimum lease payments upon adoption of this standard. Under ASU 2016-02, initial direct costs for both lessees and lessors would include only those costs that are incremental to the arrangement and would not have been incurred if the lease had not been obtained. As a result, we may no longer be able to capitalize internal leasing costs and instead may be required to expense these costs as incurred. Capitalization of internal leasing costs were $2.9 million, $2.5 million and $4.0 million for each of the three years in the period ended December 31, 2017. We do not have any significant land easements.
~~ASU 2014-09, Revenue from Contracts with Customers (Topic 606), as clarified and amended by ASU 2016-08, ASU 2016-10 and ASU 2016-12~~	This standard establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. It requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. This standard is effective beginning after December 15, 2017, including interim reporting periods within that reporting period and may be adopted either retrospectively or on a modified retrospective basis.	~~January 2018~~	We will utilize the modified retrospective method of adoption. We completed our evaluation of the implementation of this standard, which included gathering and evaluating the inventory of our revenue streams. The standard excludes from its scope the areas of accounting that most significantly affect our revenue recognition, including accounting for leases and financial instruments. Therefore, the adoption of this standard is not expected to have a material impact on our financial statements.~~We expect this standard will have an impact on the timing of gains on future partial sales of real estate.~~


3.	~~The Combination~~

amendments is permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

3. Acquisitions and Dispositions

Acquisitions

During 2023, we paid the deferred purchase price of $19.6 million related to the 2020 acquisition of a development parcel, formerly the Americana hotel.

In ~~the Combination on July 18, 2017,~~October 2022, we acquired the ~~JBG Assets~~remaining 50.0% ownership interest in 8001 Woodmont, a 322-unit multifamily asset in Bethesda, Maryland previously owned by an unconsolidated real estate venture, for a purchase price of $115.0 million, including the assumption of the $51.9 million mortgage loan at our share. The asset was encumbered by a $103.8 million mortgage loan and was consolidated as of the date of acquisition. We recorded our investment in the asset at the carryover basis for our previously held equity investment plus the incremental cash consideration paid to acquire our partner's interest.

In August 2022, we acquired the remaining 36.0% ownership interest in Atlantic Plumbing, a 310-unit multifamily asset in Washington, D.C. previously owned by an unconsolidated real estate venture, which was encumbered by a $100.0 million mortgage loan, for a purchase price of $19.7 million and our partner’s share of the working capital. The mortgage loan was repaid in August 2022. Atlantic Plumbing was consolidated as of the date of acquisition. We recorded our investment in the asset at the carryover basis for our previously held equity investment plus the incremental cash consideration paid to acquire our partner's interest.

In November 2021, we acquired The Batley, a 432-unit multifamily asset in the Union Market submarket of Washington, D.C., for $205.3 million, exclusive of $3.1 million of transaction costs that were capitalized as part of the acquisition. We used The Batley as a replacement property in a like-kind exchange for ~~approximately 37.2 million common shares and OP Units. The Combination has been accounted for at fair value under~~ the ~~acquisition method~~sale of ~~accounting.~~ Pen Place, which closed during the second quarter of 2022.

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The following is a summary of the Performance-Based LTIP Units activity:


		Weighted
	Unvested	Average Grant-
	Shares	Date Fair Value
Unvested as of December 31, 2022	1,957,748	$	19.33
Forfeited ⁽¹⁾	(1,191,918)		17.23
Unvested as of December 31, 2023	765,830		22.58

(1)	Includes 554,093 Performance-Based LTIP Units, which were forfeited in December 2023 as the performance measures were not met.

Unvested Shares Weighted Average Grant-Date Fair Value
Unvested at January 1, 2017 —
$ —
Granted 605,072
15.95
Forfeited (550 ) 15.95
Unvested at December 31, 2017 604,522

15.95

~~Share-Based Compensation Expense~~

~~Share-based compensation expense~~

The total-grant date fair value of the Performance-Based LTIP Units that vested for the years ended December 31, 2022 and 2021 was $4.2 million and $5.1 million.

RSUs

During each of the three years in the period ended December 31, ~~2017~~2023, we granted to certain non-executive employees 78,681, 39,536 and 22,194 RSUs with time-based vesting requirements ("Time-Based RSUs") and a weighted average grant-date fair value of $18.94, $29.36 and $31.52 per unit. During the year ended December 31, 2021, we granted to certain non-executive employees 13,516 RSUs with performance-based vesting requirements ("Performance-Based RSUs") and a weighted average grant-date fair value of $15.16 per unit. Vesting requirements and compensation expense recognition for the Time-Based RSUs and the Performance-Based RSUs are primarily consistent to those of the Time-Based LTIP Units and Performance-Based LTIP Units granted in during each of the three years in the period ended December 31, 2023.

The aggregate grant-date fair value of the RSUs granted during each of the three years in the period ended December 31, 2023 was $1.5 million, $1.2 million and $905,000. The Time-Based RSUs were valued based on the closing common share price on the date of grant and the Performance-Based RSUs were valued using Monte Carlo simulations with the same significant assumptions used to value the Performance-Based LTIP Units above.

The following is ~~summarized as follows:~~a summary of the RSUs activity:


	Time-Based RSUs			Performance-Based RSUs
		Weighted			Weighted
	Unvested	Average Grant-		Unvested	Average Grant-
	Shares	Date Fair Value		Shares	Date Fair Value
Unvested as of December 31, 2022	48,514	$	30.04	13,516	$	15.16
Granted	78,681		18.94	—		—
Vested	(45,019)		24.24	—		—
Forfeited	(11,426)		23.39	(13,516)		15.16
Unvested as of December 31, 2023	70,750		22.46	—		—

The aggregate total-grant date fair value of the RSUs that vested for the years ended December 31, 2023 and 2022 was $1.1 million and $271,000.

ESPP

The ESPP authorized the issuance of up to 2.1 million common shares. The ESPP provides eligible employees an option to contribute up to $25,000 in any calendar year, through payroll deductions, toward the purchase of our common shares at a discount of 15.0% of the closing price of a common share on relevant determination dates. As of December 31, 2023, there were 1.7 million common shares available for issuance under the ESPP.

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Pursuant to the ESPP, employees purchased 84,673, 79,040 and 64,321 common shares for $1.1 million, $1.5 million and $1.6 million during each of the three years in the period ended December 31, 2023, valued using the Black Scholes model based on the following significant assumptions:


	Year Ended December 31,
	2023	2022	2021
Expected volatility	30.0% to 37.0%	23.0% to 30.0%	22.0% to 39.0%
Dividend yield	2.4% to 6.3%	1.6% to 4.1%	1.5% to 3.1%
Risk-free interest rate	4.7% to 5.4%	0.2% to 2.4%	0.1%
Expected life	6 months	6 months	6 months

Share-Based Compensation Expense

The following is a summary of share-based compensation expense:


	Year Ended December 31,
	2023		2022		2021

	(In thousands)
Time-Based LTIP Units	$	16,822	$	19,378	$	16,705
AO LTIP Units and Performance-Based LTIP Units		10,647		12,615		13,101
LTIP Units		1,000		1,000		1,091
Other equity awards ⁽¹⁾		5,394		6,610		7,355
Share-based compensation expense - other		33,863		39,603		38,252
Formation Awards, OP Units and LTIP Units ⁽²⁾		108		2,156		10,801
Special Time-Based LTIP Units and Special Performance-Based LTIP Units ⁽³⁾		441		3,235		5,524
Share-based compensation related to Formation Transaction and special equity awards ⁽⁴⁾		549		5,391		16,325
Total share-based compensation expense		34,412		44,994		54,577
Less: amount capitalized		(2,312)		(3,722)		(3,026)
Share-based compensation expense	$	32,100	$	41,272	$	51,551

Year Ended December 31,
2017 2016 2015
(In thousands)
Formation Awards $ 5,169
$ —
$ —
LTIP Units 2,615
—
—
OP Units ⁽¹⁾
21,467
—
—
Share-based compensation related to Formation Transaction ⁽²⁾
29,251
—
—
Time-Based LTIP Units that vest over four years 2,211
—
—
Performance-Based LTIP Units 1,172
—
—
Other equity awards ⁽³⁾
1,526
4,502
4,506
Share-based compensation expense - other⁽⁴⁾
4,909
4,502
4,506
Total share-based compensation expense 34,160
4,502
4,506
Less amount capitalized (467 ) —
—
Net share-based compensation expense $ 33,693
$ 4,502
$ 4,506

^{______________________________________________}

(1)	Primarily comprising compensation expense for: (i) fully vested LTIP Units issued to certain employees in lieu of all or a portion of any cash bonuses earned, (ii) RSUs and (iii) shares issued under our ESPP.

⁽¹⁾

(2)

~~Represents~~Includes share-based compensation expense for Formation Awards, LTIP Units and OP Units ~~subject to post-combination employment. See Note 3 for additional information.~~issued in the Formation Transaction, which fully vested in July 2022.

(3)	Represents equity awards issued related to our successful pursuit of Amazon's additional headquarters in National Landing.

⁽²⁾

(4)

Included in "General and administrative expense: Share-based compensation related to Formation ~~Transaction"~~Transaction and special equity awards" in the accompanying consolidated statements of operations.


⁽³⁾	~~Represents share-based compensation expense related to equity awards prior to the Formation Transaction.~~


⁽⁴⁾	~~Included in "General and administrative expense" in the accompanying statements of operations.~~

As of December 31, ~~2017,~~2023, we had ~~$124.9~~$27.3 million of total unrecognized compensation expense related to unvested share-based payment arrangements, ~~(unvested OP Units, Formation Awards, Time-Based LTIP Units and Performance-Based LTIP Units). This expense~~which is expected to be recognized over a weighted average period of ~~3.3~~2.9 years.

Employee Benefits

We have a 401(k) defined contribution plan ~~(the "401(k) Plan")~~ covering substantially all of our officers and employees which permits participants to defer compensation up to the maximum amount permitted by law. We provide a discretionary matching contribution. ~~Employees’~~Employer contributions vest ~~immediately and our matching contributions vest over five years.~~after one year of service. Our contributions for each of the three years in the period ended December 31, ~~2017~~2023 were ~~$3.6~~$2.3 million, $2.4 million ~~$2.3~~and $2.4 million.

2024 Grants

In 2024, we granted 1.9 million AO LTIP Units, 974,140 Time-Based LTIP Units and 74,842 Time-Based RSUs to certain employees with an estimated total grant-date fair value of $23.9 million. Additionally, we granted 209,047 fully vested

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LTIP Units, with a total grant-date fair value of $3.0 million, to certain employees who elected to receive all or a portion of their cash bonus earned, related to 2023 service, as LTIP Units.

16. Transaction and Other Costs

The following is a summary of transaction and other costs:


	Year Ended December 31,
	2023		2022		2021

	(In thousands)
Completed, potential and pursued transaction expenses ⁽¹⁾	$	1,625	$	2,660	$	5,818
Severance and other costs		4,491		2,038		1,038
Demolition costs		2,621		813		3,573
Transaction and other costs	$	8,737	$	5,511	$	10,429

~~13.~~

(1)	Includes legal and other costs related to pursued transactions and dead deal costs.

17. Interest Expense

The following is a summary of interest expense:


	Year Ended December 31,
	2023		2022		2021

	(In thousands)
Interest expense before capitalized interest	$	117,811	$	87,246	$	68,485
Amortization of deferred financing costs		9,779		4,532		4,291
Interest expense related to finance lease right-of-use assets		—		2,091		2,261
Net (gain) loss on non-designated derivatives:
Net unrealized (gain) loss		7,822		(7,355)		(342)
Net realized loss		—		304		—
Capitalized interest		(26,752)		(10,888)		(6,734)
Interest expense	$	108,660	$	75,930	$	67,961

18. Shareholders' Equity and Earnings (Loss) Per Common Share

Common Shares Repurchased

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Earnings (Loss) Per Common Share

The following ~~summarizes~~is a summary of the calculation of basic and diluted earnings (loss) per common share and ~~provides~~ a reconciliation of net income (loss) to the amounts of net income (loss) available to common shareholders used in calculating basic and diluted earnings (loss) per common ~~share for each of the three years in the period ended December 31, 2017:~~

Year Ended December 31,
2017 2016 2015
(In thousands, except per share amounts)
Net income (loss) $ (79,084 ) $ 61,974
$ 49,628
Net loss attributable to redeemable noncontrolling interests 7,328
—
—
Net loss attributable to noncontrolling interest 3
—
—
Net income (loss) attributable to common shareholders (71,753 ) 61,974
49,628
Distributions to participating securities (1,655 ) —
—
Net income (loss) available to common shareholders $ (73,408 ) $ 61,974
$ 49,628

Weighted average number of common shares outstanding — basic and diluted ⁽¹⁾
105,359
100,571
100,571
Earnings (loss) per common share:
Basic $ (0.70 ) $ 0.62
$ 0.49
Diluted (0.70 ) 0.62
0.49

~~______________~~


⁽¹⁾	~~Reflects the weighted average common shares outstanding as of the date of the Separation in all periods prior to July 17, 2017.~~


	Year Ended December 31,
	2023		2022		2021

	(In thousands, except per share amounts)
Net income (loss)	$	(91,709)	$	98,986	$	(89,725)
Net (income) loss attributable to redeemable noncontrolling interests		10,596		(13,244)		8,728
Net (income) loss attributable to noncontrolling interests		1,135		(371)		1,740
Net income (loss) attributable to common shareholders		(79,978)		85,371		(79,257)
Distributions to participating securities		(2,054)		(1,860)		(2,854)
Net income (loss) available to common shareholders - basic and diluted	$	(82,032)	$	83,511	$	(82,111)

Weighted average number of common shares outstanding - basic and diluted		105,095		119,005		130,839

Earnings (loss) per common share - basic and diluted	$	(0.78)	$	0.70	$	(0.63)

The effect of the ~~conversion~~redemption of ~~16.7 million~~ OP Units, Time-Based LTIP Units, fully vested LTIP Units and Special Time-Based LTIP Units that were outstanding ~~at December 31, 2017~~as of the end of each period is excluded in the computation of ~~basic and~~ diluted ~~loss~~earnings (loss) per common share as the assumed exchange of such units for common shares on a one-for-one basis was antidilutive (the assumed ~~conversion~~redemption of these units would have no ~~net~~ impact on the determination of diluted earnings (loss) per share). Since ~~vested~~OP Units, Time-Based LTIP Units, LTIP Units and ~~outstanding OP~~Special Time-Based LTIP Units, which are held by noncontrolling interests, are attributed gains ~~and losses~~ at an identical proportion to the common shareholders, the gains ~~and losses~~ attributable and their equivalent weighted average ~~OP Unit~~ impact are excluded from net income (loss) available to common shareholders and from the weighted average number of common shares outstanding in calculating ~~basic and~~ diluted ~~loss~~earnings (loss) per common share. ~~The number~~AO LTIP Units, Performance-Based LTIP Units, Formation Awards and RSUs, which totaled 6.8 million, 5.9 million and 4.5 million for each of ~~additional securities~~the three years in the period ended December 31, 2023, were excluded from the calculation of diluted earnings (loss) per common share as they were antidilutive, but potentially could be dilutive in the ~~future are included~~future.

Dividends Declared in ~~the following table for each~~February 2024

On February 14, 2024, our Board of ~~the three years in the period ended December 31, 2017:~~

Year Ended December 31,
2017 2016 2015
(In thousands)
OP Units 3,087
—
—
Formation Awards 2,674
—
—
Time-Based LTIP Units
409
—
—
Performance-Based LTIP Units 605
—
—

~~14. Future Minimum Rental Income~~

~~We lease space~~Trustees declared a quarterly dividend of $0.175 per common share, payable on March 15, 2024 to ~~tenants under operating leases that expire at various dates through the year 2036. The leases provide for the payment~~shareholders of ~~fixed base rents payable monthly in advance~~record as ~~well as reimbursements~~ of ~~real estate taxes, insurance and maintenance costs. Retail leases may also provide for the payment by the lessee of additional rents based~~March 1, 2024.

19. Fair Value Measurements

Fair Value Measurements on a ~~percentage~~Recurring Basis

To manage or hedge our exposure to interest rate risk, we follow established risk management policies and procedures, including the use of ~~their sales.~~ a variety of derivative financial instruments.

As of December 31, ~~2017, future base rental revenue under these non-cancelable operating leases excluding extension options is as follows:~~

Year ending December 31, Amount
(In thousands)
2018 $ 428,413
2019 341,872
2020 307,181
2021 264,351
2022 226,490
Thereafter 1,167,008

~~15. Fair Value Measurements~~

~~Financial Assets~~2023 and ~~Liabilities Measured at Fair Value on a Recurring Basis~~

~~As of December 31, 2017,~~2022, we had various derivative financial instruments consisting of interest rate swap and cap agreements that are measured at fair value on a recurring basis. ~~There were no derivative financial instruments prior to the Combination.~~ The net unrealized gain on our derivative financial instruments designated as ~~cash flow~~effective hedges was ~~$1.8~~$22.7 million ~~for the year ended~~and $55.0 million as of December 31, ~~2017~~2023 and is2022 and was recorded in "Accumulated other comprehensive income" in ~~the~~our consolidated balance ~~sheet.~~sheets, of which a portion was reclassified to "Redeemable noncontrolling interests." Within the next 12 months, we expect to reclassify ~~$3.6~~$24.2 million of the net unrealized gain as ~~an increase~~a decrease to interest expense. The net unrealized gain on our derivative financial instruments not designated as cash flow hedges was $1.3 million for the year ended December 31, 2017 and is recorded in "Interest expense" in the statement of operations.

The fair values of the derivative financial instruments are based on the estimated amounts we would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and observable inputs. The derivative financial instruments are classified within Level 2 of the valuation hierarchy.

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The following ~~are~~is a summary of assets and liabilities measured at fair value on a recurring ~~basis as of December 31, 2017:~~

Fair Value Measurements
Total Level 1 Level 2 Level 3
December 31, 2017 (In thousands)
Derivative financial instruments designated as cash flow hedges:
Classified as assets in "Other assets, net" $ 1,506
$ —
$ 1,506
$ —
Classified as liabilities in "Other liabilities, net" 2,640
—
2,640
—
Derivative financial instruments not designated as cash flow hedges:
Classified as assets in "Other assets, net" $ 635
$ —
$ 635
$ —
Classified as liabilities in "Other liabilities, net" $ 22
$ —
$ 22
$ —

basis:


	Fair Value Measurements
	Total		Level 1		Level 2		Level 3

	(In thousands)
December 31, 2023
Derivative financial instruments designated as effective hedges:
Classified as assets in "Other assets, net"	$	35,632		—	$	35,632		—
Classified as liabilities in "Other liabilities, net"		7,936		—		7,936		—
Non-designated derivatives:
Classified as assets in "Other assets, net"		6,709		—		6,709		—
Classified as liabilities in "Other liabilities, net"		6,508		—		6,508		—

December 31, 2022
Derivative financial instruments designated as effective hedges:
Classified as assets in "Other assets, net"	$	53,515		—	$	53,515		—
Non-designated derivatives:
Classified as assets in "Other assets, net"		8,107		—		8,107		—

The fair values of our derivative financial instruments were determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of the derivative financial instrument. This analysis reflected the contractual terms of the derivative, including the period to maturity, and used observable market-based inputs, including interest rate market data and implied volatilities in such interest rates. While it was determined that the majority of the inputs used to value the derivatives fall within Level 2 of the fair value hierarchy, ~~under authoritative accounting guidance,~~ the credit valuation adjustments associated with the derivatives also utilized Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default. However, as of December 31, ~~2017,~~2023 and 2022, the significance of the impact of the credit valuation adjustments on the overall valuation of the derivative financial instruments was assessed, and it was determined that these adjustments were not significant to the overall valuation of the derivative financial instruments. As a result, it was determined that the derivative financial instruments in their entirety should be classified in Level 2 of the fair value hierarchy. The net unrealized ~~gain~~gains (losses) included in "Other comprehensive ~~gain'' was primarily~~income (loss)" in our consolidated statements of comprehensive income (loss) for each of the three years in the period ended December 31, 2023 were attributable to the net change in unrealized gains ~~or losses~~(losses) related to ~~the~~effective interest rate swaps that were outstanding ~~as of December 31, 2017,~~during those periods, none of which were reported in ~~the~~our consolidated statements of operations ~~because they~~as the interest rate swaps were documented and qualified as hedging ~~instruments~~instruments. Realized and unrealized gains related to non-designated derivatives are included in "Interest expense" in our consolidated statements of operations.

Fair Value Measurements on a Nonrecurring Basis

Our real estate assets are reviewed for impairment whenever there are changes in circumstances or indicators that the carrying amount of the assets may not be recoverable.

During the year ended December 31, 2023, this assessment resulted in the impairment of three commercial assets and one development parcel. Our estimate of the fair value of 2101 L Street of $121.3 million was determined using a discounted cash flow model and was classified as Level 3 in the fair value hierarchy, which considers, among other things, the anticipated holding period, current market conditions and utilizes unobservable quantitative inputs, including capitalization and discount rates. Our estimate of the fair value of 2100 Crystal Drive, 2200 Crystal Drive and a development parcel totaling $56.4 million was based on a market approach and classified as Level 2 in the fair value hierarchy. The development parcel was sold in December 2023. The impairment loss totaled $90.2 million, which was included in "Impairment loss" in our consolidated statement of operations for the year ended December 31, 2023.

There were no ~~ineffectiveness~~assets measured at fair value on a nonrecurring basis as of December 31, 2022.

During the year ended December 31, 2021, this assessment resulted in ~~relation~~the impairment of 7200 Wisconsin Avenue, RTC-West and a development parcel, which were written down to their estimated aggregate fair value of $309.0 million and were classified as Level 2 in the ~~hedges.~~fair value hierarchy. Our estimates of the fair values were based on expected sales prices

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as determined by contracts that were under negotiation as of December 31, 2021, after adjusting for estimated selling costs. The assets were sold to an unconsolidated real estate venture in April 2022. The impairment loss totaled $25.1 million, which was included in "Impairment loss" in our consolidated statement of operations for the year ended December 31, 2021.

Financial Assets and Liabilities Not Measured at Fair Value

As of December 31, ~~2017~~2023 and ~~2016,~~2022, all financial instruments and liabilities were reflected in our consolidated balance sheets at amounts which, in our estimation, reasonably approximated their fair values, except for the following:


	December 31, 2023				December 31, 2022
	Carrying				Carrying
	Amount ⁽¹⁾		Fair Value		Amount ⁽¹⁾		Fair Value

	(In thousands)
Financial liabilities:
Mortgage loans	$	1,798,225	$	1,753,251	$	1,901,875	$	1,830,651
Revolving credit facility		62,000		62,000		—		—
Term loans		720,000		715,950		550,000		551,369

December 31, 2017 December 31, 2016

     Carrying
      Amount ⁽¹⁾
Fair Value
     Carrying
      Amount ⁽¹⁾
Fair Value
(In thousands)
Financial liabilities:
Mortgages payable $ 2,035,959
$ 2,060,899
$ 1,167,618
$ 1,192,267
Revolving credit facility 115,751
115,768
—
—
Unsecured term loan 50,000
50,029
—
—

^{______________________________________}

(1)	The carrying amount consists of principal only.

⁽¹⁾

The ~~carrying amount consists~~fair values of ~~principal only.~~

the mortgage loans, revolving credit facility and term loans were determined using Level 2 inputs of the fair value hierarchy. The fair value of our ~~mortgages payable~~mortgage loans is estimated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit ~~ratings, which are provided by a third-party specialist. The fair value of the mortgages payable and unsecured term loan was determined using Level 2 inputs of the fair value hierarchy.~~

profiles based on market sources. The fair value of our revolving credit facility and ~~unsecured~~ term ~~loan~~loans is calculated based on the net present value of payments over the term of the facilities using estimated market rates for similar notes and remaining terms. ~~The fair value of the revolving credit facility and unsecured term loan was determined using Level 2 inputs of the fair value hierarchy.~~

~~16.~~

20. Segment Information

We review operating and financial data for each property on an individual basis; therefore, each of our individual properties is a separate operating segment. ~~As a result of the Formation Transaction, we redefined~~We define our reportable segments to be aligned with our method of internal reporting and the way our Chief Executive Officer, who is also our ~~Chief Operating Decision Maker ("CODM"),~~CODM, makes key operating decisions, evaluates financial results, allocates resources and manages our business. Accordingly, we aggregate our operating segments into three reportable segments ~~(office, multifamily,~~(multifamily, commercial and third-party asset management and real estate services) based on the economic characteristics and nature of our assets and services. ~~In connection therewith, we have reclassified the prior period segment financial data to conform to the current period presentation.~~

The CODM measures and evaluates the performance of our operating segments, with the exception of the third-party asset management and real estate services business, based on the net operating income ("NOI") of properties within each segment. NOI includes property rental ~~revenues~~revenue and ~~tenant reimbursements~~parking revenue, and deducts property operating expenses and real estate taxes.

With respect to the third-party asset management and real estate services business, the CODM reviews ~~revenues~~revenue streams generated by this segment ("Third-party real estate services, including reimbursements"), as well as the expenses attributable to the segment ("General and administrative: third-party real estate services"), which are both disclosed separately in ~~the~~our consolidated statements of operations.

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The following represents the components of revenue from our third-party asset management and real estate services business:


	Year Ended December 31,
	2023		2022		2021

	(In thousands)
Property management fees	$	19,930	$	19,589	$	19,427
Asset management fees		5,030		6,191		8,468
Development fees		10,253		8,325		25,493
Leasing fees		5,592		6,017		5,833
Construction management fees		1,383		522		512
Other service revenue		5,316		5,706		6,146
Third-party real estate services revenue, excluding reimbursements		47,504		46,350		65,879
Reimbursement revenue ⁽¹⁾		44,547		42,672		48,124
Third-party real estate services revenue, including reimbursements		92,051		89,022		114,003
Third-party real estate services expenses		88,948		94,529		107,159
Third-party real estate services revenue less expenses	$	3,103	$	(5,507)	$	6,844

(1)	Represents reimbursement of expenses incurred by us on behalf of third parties, including allocated payroll costs and amounts paid to third-party contractors for construction management projects.

Management company assets primarily consist of management and leasing contracts with a net book value of ~~$45.7~~$8.1 million ~~classified in "Other assets, net" in the balance sheet~~and $13.7 million as of December 31, ~~2017.~~2023 and 2022, which are classified in "Intangible assets, net" in our consolidated balance sheets. Consistent with internal reporting presented to our CODM and our definition of NOI, the third-party asset management and real estate services operating results are excluded from the NOI data below.

The following ~~table reflects~~is the reconciliation of net income (loss) attributable to common shareholders to consolidated ~~NOI for each~~NOI:


	Year Ended December 31,
	2023		2022		2021

	(In thousands)
Net income (loss) attributable to common shareholders	$	(79,978)	$	85,371	$	(79,257)
Add:
Depreciation and amortization expense		210,195		213,771		236,303
General and administrative expense:
Corporate and other		54,838		58,280		53,819
Third-party real estate services		88,948		94,529		107,159
Share-based compensation related to Formation Transaction and special equity awards		549		5,391		16,325
Transaction and other costs		8,737		5,511		10,429
Interest expense		108,660		75,930		67,961
Loss on the extinguishment of debt		450		3,073		—
Impairment loss		90,226		—		25,144
Income tax expense (benefit)		(296)		1,264		3,541
Net income (loss) attributable to redeemable noncontrolling interests		(10,596)		13,244		(8,728)
Net income (loss) attributable to noncontrolling interests		(1,135)		371		(1,740)
Less:
Third-party real estate services, including reimbursements revenue		92,051		89,022		114,003
Other revenue		10,902		7,421		7,671
Loss from unconsolidated real estate ventures, net		(26,999)		(17,429)		(2,070)
Interest and other income, net		15,781		18,617		8,835
Gain on the sale of real estate, net		79,335		161,894		11,290
Consolidated NOI	$	299,528	$	297,210	$	291,227

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Table of ~~the three years in the period ended December 31, 2017:~~Contents

Year Ended December 31,
2017 2016 2015
(In thousands)
Net income (loss) attributable to common shareholders $ (71,753 ) $ 61,974
$ 49,628
Add:
Depreciation and amortization expense 161,659
133,343
144,984
General and administrative expense:
Corporate and other 47,131
48,753
44,424
Third-party real estate services 51,919
19,066
18,217
Share-based compensation related to Formation Transaction
29,251
—
—
Transaction and other costs 127,739
6,476
—
Interest expense 58,141
51,781
50,823
Loss on extinguishment of debt 701
—
—
Income tax expense (benefit) (9,912 ) 1,083
420
Less:
Third-party real estate services, including reimbursements
63,236
33,882
29,467
Other income 5,167
5,381
10,854
Loss from unconsolidated real estate ventures, net (4,143 ) (947 ) (4,283 )
Interest and other income (loss), net 1,788
2,992
2,557
Gain on bargain purchase 24,376
—
—
Net loss attributable to redeemable noncontrolling interests 7,328
—
—
Net loss attributable to noncontrolling interest 3
—
—
Consolidated NOI $ 297,121
$ 281,168
$ 269,901

~~Below is a summary of NOI by segment for each of the three years in the period ended December 31, 2017:~~

Year Ended December 31, 2017
Office Multifamily Other Elimination of Intersegment Activity Total
(In thousands)
Rental revenue:
Property rentals $ 343,213
$ 85,809
$ 10,508
$ (2,905 ) $ 436,625
Tenant reimbursements 32,315
5,012
658
—
37,985
Total rental revenue 375,528
90,821
11,166
(2,905 ) 474,610
Rental expense: —

Property operating 93,834
24,297
8,528
(15,604 ) 111,055
Real estate taxes 50,483
10,940
5,011
—
66,434
Total rental expense 144,317
35,237
13,539
(15,604 ) 177,489
Consolidated NOI $ 231,211
$ 55,584
$ (2,373 ) $ 12,699
$ 297,121

Year Ended December 31, 2016
Office Multifamily Other Elimination of Intersegment Activity Total
(In thousands)
Rental revenue:
Property rentals $ 317,956
$ 63,401
$ 23,234
$ (2,996 ) $ 401,595
Tenant reimbursements 33,361
3,454
846
—
37,661
Total rental revenue 351,317
66,855
24,080
(2,996 ) 439,256
Rental expense: —

Property operating 91,128
17,238
7,216
(15,278 ) 100,304
Real estate taxes 46,115
6,993
4,676
—
57,784
Total rental expense 137,243
24,231
11,892
(15,278 ) 158,088
Consolidated NOI $ 214,074
$ 42,624
$ 12,188
$ 12,282
$ 281,168

Year Ended December 31, 2015
Office Multifamily Other Elimination of Intersegment Activity Total
(In thousands)
Rental revenue:
Property rentals $ 311,671
$ 53,071
$ 27,504
$ (2,436 ) $ 389,810
Tenant reimbursements 35,508
2,790
2,178
—
40,476
Total rental revenue 347,179
55,861
29,682
(2,436 ) 430,286
Rental expense:
Property operating 92,355
14,606
9,268
(14,718 ) 101,511
Real estate taxes 45,479
6,022
7,373
—
58,874
Total rental expense 137,834
20,628
16,641
(14,718 ) 160,385
Consolidated NOI $ 209,345
$ 35,233
$ 13,041
$ 12,282
$ 269,901

The following is a summary of NOI and certain balance sheet data by ~~segment as~~segment. Items classified in the Other column include development assets, corporate entities, land assets for which we are the ground lessor and the elimination of ~~December 31, 2017 and 2016:~~inter-segment activity.


	Year Ended December 31, 2023
	Multifamily		Commercial		Other		Total

	(In thousands)
Property rental revenue	$	206,705	$	262,826	$	13,628	$	483,159
Parking revenue		1,047		16,844		195		18,086
Total property revenue		207,752		279,670		13,823		501,245
Property expense:
Property operating		72,264		75,254		(3,469)		144,049
Real estate taxes		21,961		33,546		2,161		57,668
Total property expense		94,225		108,800		(1,308)		201,717
Consolidated NOI	$	113,527	$	170,870	$	15,131	$	299,528

	Year Ended December 31, 2022
	Multifamily		Commercial		Other		Total

	(In thousands)
Property rental revenue	$	180,068	$	301,955	$	9,715	$	491,738
Parking revenue		857		16,530		256		17,643
Total property revenue		180,925		318,485		9,971		509,381
Property expense:
Property operating		62,017		86,223		1,764		150,004
Real estate taxes		20,580		37,950		3,637		62,167
Total property expense		82,597		124,173		5,401		212,171
Consolidated NOI	$	98,328	$	194,312	$	4,570	$	297,210


	Year Ended December 31, 2021
	Multifamily		Commercial		Other		Total

	(In thousands)
Property rental revenue	$	139,918	$	352,180	$	7,488	$	499,586
Parking revenue		415		12,441		246		13,102
Total property revenue		140,333		364,621		7,734		512,688
Property expense:
Property operating		52,527		102,967		(4,856)		150,638
Real estate taxes		20,207		45,701		4,915		70,823
Total property expense		72,734		148,668		59		221,461
Consolidated NOI	$	67,599	$	215,953	$	7,675	$	291,227


	Multifamily		Commercial		Other		Total

	(In thousands)
December 31, 2023
Real estate, at cost	$	3,154,116	$	2,357,713	$	363,333	$	5,875,162
Investments in unconsolidated real estate ventures		—		176,786		87,495		264,281
Total assets		2,559,395		2,683,947		275,173		5,518,515

December 31, 2022
Real estate, at cost	$	2,986,907	$	2,754,832	$	416,343	$	6,158,082
Investments in unconsolidated real estate ventures		304		218,723		80,854		299,881
Total assets		2,483,902		2,829,576		589,960		5,903,438

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Office Multifamily Other Elimination of Intersegment Activity Total
December 31, 2017 (In thousands)
Real estate, at cost $ 3,955,013
$ 1,476,423
$ 594,361
$ —
$ 6,025,797
Investments in and advances to
unconsolidated real estate ventures
124,659
98,835
38,317
—
261,811
Total assets 3,542,977
1,434,999
1,299,085
(205,254 ) 6,071,807
December 31, 2016
Real estate, at cost $ 2,798,946
$ 959,404
$ 397,041
$ —
$ 4,155,391
Investments in and advances to
unconsolidated real estate ventures 45,647
—
129
—
45,776
Total assets 2,388,396
873,157
399,087
—
3,660,640

~~17.~~

21. Commitments and Contingencies

Insurance

We maintain general liability insurance with limits of ~~$200.0~~$150.0 million per occurrence and in the aggregate, and property and rental value insurance coverage with limits of ~~$2.0~~$1.0 billion per occurrence, with sub-limits for certain perils such as floods and earthquakes on each of our properties. We also maintain coverage, through our wholly owned captive insurance subsidiary, for a portion of the first loss on the above limits and for both conventional terrorist acts and for nuclear, biological, chemical or radiological terrorism events with limits of $2.0 billion per occurrence. These policies are partially reinsured by third-party insurance providers.

Our debt, consisting of mortgage loans secured by our properties, a revolving credit facility and ~~unsecured~~ term loans, ~~contain~~contains customary covenants requiring adequate insurance coverage. Although we believe that we currently have adequate insurance coverage, we may not be able to obtain an equivalent amount of coverage at a reasonable ~~costs~~cost in the future. If lenders insist on greater coverage than we are able to obtain, it could adversely affect ~~the~~our ability to finance or refinance our properties.

Construction Commitments

As of December 31, ~~2017,~~2023, we ~~have~~had assets under construction ~~in progress~~ that, ~~will require an additional $766.0 million to complete ($676.0 million related to our consolidated entities and $90.0 million related to our unconsolidated real estate ventures at our share),~~ based on our current plans and estimates, require an additional $177.1 million to complete, which we anticipate will be primarily expended over the next two ~~to three years.~~years. These capital expenditures are generally due as the work is performed, and we expect to finance them with debt proceeds, proceeds from asset ~~recapitalizations~~sales and ~~sales,~~recapitalizations, and available cash.

Environmental Matters

~~Each~~

Most of our ~~properties has~~assets have been ~~subjected~~subject, at some point, to ~~varying degrees~~environmental assessments that are intended to evaluate the environmental condition of ~~environmental assessment at various times.~~the subject and surrounding assets. The environmental assessments ~~did~~have not ~~reveal~~revealed any material environmental contamination that we believe would have a material adverse effect on our overall business, financial condition or results of operations, or that have not been anticipated and remediated during site redevelopment as required by law. Nevertheless, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites or changes in cleanup requirements would not result in significant cost to us. Environmental liabilities totaled $17.6 million and $18.0 million as of December 31, 2023 and 2022, and are included in "Other liabilities, net" in our consolidated balance sheets.

Operating and Finance Leases

As of December 31, 2023, we are obligated under non-cancellable operating leases, including ground leases on certain of our properties with terms extending through the year 2037. As of December 31, 2023, our operating lease liabilities were calculated based on the weighted average discount rates of 5.6% and had a weighted average remaining lease term of 13.5 years.

~~Other~~

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As of December 31, 2023, future minimum lease payments under our non-cancellable operating leases are as follows:


Year ending December 31,	Amount
	(In thousands)
2024	$	6,539
2025		6,737
2026		6,942
2027		7,154
2028		5,934
Thereafter		60,542
Total future minimum lease payments		93,848
Imputed interest		(29,347)
Total liabilities related to lease right-of-use assets	$	64,501

During the year ended December 31, 2023, we incurred $5.4 million of fixed operating lease expenses, and $180,000 of variable operating lease expenses. In April 2022, we sold the finance ground leases at 1730 M Street and Courthouse Plaza 1 and 2 to an unconsolidated real estate venture. During the year ended December 31, 2022, we incurred $601,000 and $2.6 million of fixed operating and finance lease expenses, and $97,000 of variable operating lease expenses. During the year ended December 31, 2021, we incurred $731,000 and $2.8 million of fixed operating and finance lease expenses, and $2.6 million of variable operating lease expenses.

Other

During the year ended December 31, 2023, we recognized a $6.0 million gain from the settlement of litigation, which was included in "Interest and other income, net" in our consolidated statement of operations.

From time to time, we (or ventures in which we have an ownership interest) have agreed, and may in the future agree with respect to ~~(1)~~unconsolidated real estate ventures, to (i) guarantee portions of the principal, interest and other amounts in connection with ~~their~~ borrowings, ~~(2)~~(ii) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) in connection with ~~their~~ borrowings, ~~and (3)~~or (iii) provide guarantees to lenders and other third parties for the completion of development projects. We customarily have agreements with our outside venture partners whereby the partners agree to reimburse the real estate venture or us for their share of any payments made under ~~the guarantee. Amounts that may be required to be paid in future periods in relation to budget overruns or operating losses that~~certain of these guarantees. At times, we also ~~included in some~~have agreements with certain of our ~~guarantees are not estimable.~~outside venture partners whereby we agree to either indemnify the partners and/or the associated ventures with respect to certain contingent liabilities associated with operating assets or to reimburse our partner for its share of any payments made by them under certain guarantees. Guarantees (excluding environmental) customarily terminate either upon the satisfaction of specified circumstances or repayment of the underlying debt. Amounts that we may be required to pay in future periods in relation to guarantees associated with budget overruns or operating losses are not estimable.

As of December 31, ~~2017, the aggregate amount~~2023, we had additional capital commitments and certain recorded guarantees to our unconsolidated real estate ventures and other investments totaling $61.3 million. As of ~~our~~December 31, 2023, we had no principal payment guarantees ~~was approximately $91.5 million for our consolidated entities and $31.0 million for~~related to our unconsolidated real estate ventures.

Additionally, with respect to borrowings of our consolidated entities, we have agreed, and may in the future agree, to (i) guarantee portions of the principal, interest and other amounts, (ii) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) or (iii) provide guarantees to

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lenders, tenants and other third parties for the completion of development projects.As of December 31, ~~2017, we expect to fund additional capital to certain~~2023, the aggregate amount of principal payment guarantees was $8.3 million for our ~~unconsolidated investments totaling approximately $49.3 million, which we anticipate will be primarily expended over the next two to three years.~~

consolidated entities.

In connection with the Formation Transaction, we ~~entered into~~have an agreement with Vornado regarding tax matters (the "Tax Matters Agreement") that provides special rules that allocate tax liabilities if the distribution of JBG SMITH shares by Vornado, together with certain related transactions, is determined not to be tax-free. Under the Tax Matters Agreement, we may be required to indemnify Vornado against any taxes and related amounts and costs resulting from a violation by us of the Tax Matters ~~Agreement, or from the taking of certain restricted actions by us.~~

We are obligated under non-cancelable operating leases including ground leases on certain of our properties through 2106. As of December 31, 2017, future minimum rental payments under non-cancelable operating leases, capital leases and lease assumption liabilities are as follows:

Year ending December 31, Amount
(In thousands)
2018 $ 13,686
2019 14,073
2020 13,866
2021 13,594
2022 12,845
Thereafter 697,903
Total $ 765,967

During each of the three years in the period ended December 31, 2017, we recognized approximately $4.7 million, $2.1 million and $1.9 million of rental expense related to our non-cancelable operating and capital leases.

Agreement.


~~18.~~	~~Transactions with Vornado and Related Parties~~

22. Transactions with ~~Vornado~~

As described in Note 1 and Note 3, the accompanying financial statements present the operations of the Vornado Included Assets as carved-out from the financial statements of Vornado for all periods prior to July 17, 2017.

~~Certain centralized corporate costs borne by Vornado for~~Related Parties

Our third-party asset management and other services including, but not limited to, accounting, reporting, legal, tax, information technology and human resources have been allocated to the assets in the financial statements based on either actual costs incurred or a proportion of costs estimated to be applicable to the Vornado Included Assets based on key metrics including total revenue. The total amounts allocated during each of the three years in the period ended December 31, 2017 were $13.0 million, $20.7 million and $20.0 million. These allocated amounts are included as a component of "General and administrative expense: Corporate and other" expenses on the statements of operations and do not necessarily reflect what actual costs would have been if the Vornado Included Assets were a separate standalone public company. Actual costs may be materially different.

In connection with the Formation Transaction, we entered into an agreement with Vornado under which Vornado provides operational support for an initial period of up to two years. These services include information technology, financial reporting and payroll services. The charges for these services are based on an hourly or per transaction fee arrangement including reimbursement for overhead and out-of-pocket expenses. The total charges for the year ended December 31, 2017 were approximately $2.2 million. Pursuant to an agreement, we are providing Vornado with leasing and property management services for certain of its assets that were not part of the Separation. The total revenue related to these services for the year ended December 31, 2017 was $779,000. We believe that the terms of both of these agreements are comparable to those that would have been negotiated based on market rates.

~~In connection with the Formation Transaction, we entered into a Tax Matters Agreement with Vornado. See Note 17 for additional information.~~

In August 2014, we completed a $185.0 million financing of the Universal buildings, a 687,000 square foot office complex located in Washington, DC. In connection with this financing, pursuant to a note agreement dated August 12, 2014, we used a portion of the financing proceeds and made an $86.0 million loan to Vornado at LIBOR plus 2.9% due August 2019. During 2016 and 2015, Vornado repaid $4.0 million and $7.0 million of the loan receivable. At the Separation, Vornado repaid the outstanding balance of the loan and related accrued interest. As of December 31, 2016, the balance of the receivable from Vornado, including accrued interest, was $75.1 million. We recognized interest income of $1.8 million, $3.3 million and $3.0 million during each of the three years in the period ended December 31, 2017.

In connection with the development of The Bartlett, prior to the Combination, we entered into various note agreements with Vornado whereby we could borrow up to a maximum of $170.0 million. Vornado contributed these note agreements along with accrued and unpaid interest to JBG SMITH at the Separation. As of December 31, 2016, the amounts outstanding under these note

agreements totaled $166.5 million, and are included in "Payable to former parent" on our balance sheets. We incurred interest expense of $4.1 million, $4.1 million and $846,000 during each of the three years in the period ended December 31, 2017.

In June 2016, the $115.0 million mortgage loan (including $608,000 of accrued interest) secured by the Bowen Building, a 231,000 square foot office building located in Washington, DC, was repaid with the proceeds of a $115.6 million draw on our former parent's revolving credit facility. Given that the $115.6 million draw on our former parent's credit facility was secured by an interest in the property, such amount was included in "Payable to former parent" in our balance sheet as of December 31, 2016. The loan was repaid with amounts drawn under our revolving credit facility. See Note 8 for additional information. We incurred interest expense of $1.3 million and $1.1 million during the two years in the period ended December 31, 2017.

We have agreements that are terminable on the second anniversary of the Combination with Building Maintenance Services ("BMS"), a wholly owned subsidiary of Vornado, to supervise cleaning, engineering and security services at our properties. We paid BMS $13.6 million, $12.1 million and $12.4 million during each of the three years in the period ended December 31, 2017, which are included in "Property operating expenses" in our statements of operations.

We entered into a consulting agreement with Mr. Schear, a member of our Board of Trustees and formerly the president of Vornado’s Washington, DC segment. The consulting agreement expired on December 31, 2017 and provides for the payment of consulting fees and expenses at the rate of approximately $169,400 per month for the 24 months following the Separation, including after the termination of the consulting agreement. The amount due under this consulting agreement of $4.1 million was expensed in connection with the Combination during the year ended December 31, 2017. As of December 31, 2017, the remaining liability is $3.0 million. Additionally, in March 2017, Vornado amended Mr. Schear’s employment agreement to provide for the payment of severance, bonus and post-employment services. A total of $16.4 million was expensed in connection with the Separation during the year ended December 31, 2017.

~~Transactions with Real Estate Ventures~~

~~In addition, we have a third-party~~ real estate services business ~~that~~ provides fee-based real estate services to the JBG Legacy Funds, ~~and~~ other third ~~parties. We provide services for~~parties and the ~~benefit of the JBG Legacy Funds that own interests in the assets retained by the JBG Legacy Funds.~~WHI Impact Pool. In connection with the contribution to us of certain assets formerly owned by the JBG Legacy Funds as part of the ~~JBG Assets to us, it was determined that~~Formation Transaction, the general partner and managing member interests in the JBG Legacy Funds that were held by certain former JBG executives (and who became members of our management team and/or Board of Trustees) ~~would~~were not be transferred to us and remain under the control of these individuals. In addition, certain members of our senior management team and Board of Trustees have an ownership ~~interest~~interests in the JBG Legacy Funds, and own carried interests in each fund and in certain of our real estate ventures that ~~entitles~~entitle them to receive ~~additional compensation~~cash payments if the fund or real estate venture achieves certain return thresholds. ~~This~~

We launched the WHI with the Federal City Council in June 2018 as a scalable market-driven model that uses private capital to help address the scarcity of housing for middle income families. As of December 31, 2023, the WHI Impact Pool completed fundraising in 2020 with capital commitments totaling $114.4 million, which included a commitment from us of $11.2 million. As of December 31, 2023, our remaining commitment was $3.5 million.

The third-party real estate services revenue, including expense reimbursements, from ~~these~~the JBG Legacy Funds and the WHI Impact Pool was $21.3 million, $20.0 million and $22.6 million for each of the ~~year~~three years in the period ended December 31, ~~2017 was $19.9 million.~~

~~We rent~~2023. As of December 31, 2023 and 2022, we had receivables from the JBG Legacy Funds and the WHI Impact Pool totaling $3.5 million and $4.5 million for such services.

Commencing in March 2023, in connection with the sale of an 80.0% interest in 4747 Bethesda Avenue, we leased our corporate offices from an unconsolidated real estate venture and incurred ~~$2.3~~$5.0 million ~~during~~of rent expense for the year ended December 31, ~~2017,~~2023, which ~~is recorded~~was included in "General and administrative ~~expense: Corporate and other"~~expense" in our consolidated statement of operations.

~~Registration Rights Agreements~~

~~In connection with the Formation Transaction, we entered into a registration rights agreement with certain~~

We rented our former investors in the legacy JBG funds that received our common shares in the Formation Transaction (the "Shares Registration Rights Agreement") and a separate registration rights agreement with the certain former investors in the legacy JBG funds and certain employees of JBG entities that received OP Units in the Formation Transaction (the "OP Units Registration Rights Agreement" and together with the Shares Registration Rights Agreement, the "Registration Rights Agreements"). Certain holders of common shares and OP Units who may benefitcorporate offices from ~~the Registration Rights Agreements are members of our management team and/or Board of Trustees. Our obligations under the Shares Registration Rights Agreement were fully satisfied in January 2018.~~

~~19. Quarterly Financial Data (unaudited)~~

2017 First Quarter Second Quarter
Third Quarter ⁽¹⁾

Fourth Quarter ⁽²⁾
(In thousands, except per share data)
Total revenue $ 116,272
$ 118,020
$ 152,350
$ 156,371
Net income (loss) 6,318
11,341
(77,991 ) (18,752 )
Net income (loss) attributable to common shareholders 6,318
11,341
(69,831 ) (16,418 )
Earnings (loss) per share:
Basic 0.06
0.11
(0.61 ) (0.15 )
Diluted 0.06
0.11
(0.61 ) (0.15 )

~~_______________~~


⁽¹⁾	During the third quarter of 2017, we recognized transaction and other costs of $104.1 million, a gain on bargain purchase of $27.8 million and share-based compensation expense of $14.4 million in connection with the completion of the Formation Transaction.

⁽²⁾

During the fourth quarter of 2017, we recognized share-based compensation expense of $14.8 million and transaction and other costs of $12.6 million in connection with the completion of the Formation Transaction in the third quarter of 2017. Additionally, we recognized a reduction to the gain on bargain purchase of $3.4 million related to adjustments to the fair value of certain assets acquired and liabilities assumed in the Formation Transaction. See Note 3 for additional information.

2016 First Quarter Second Quarter Third Quarter
Fourth Quarter ⁽¹⁾
(In thousands, except per share data)
Total revenue $ 116,784
$ 116,339
$ 123,357
$ 122,039
Net income 11,547
16,783
21,014
12,630
Net income attributable to common shareholders 11,547
16,783
21,014
12,630
Earnings per share:
Basic 0.11
0.17
0.21
0.13
Diluted 0.11
0.17
0.21
0.13

~~____________~~


⁽¹⁾	~~During the fourth quarter of 2016, we recognized transaction and other costs of $4.9 million in connection with the Formation Transaction completed during the third quarter of 2017.~~


~~20.~~	~~Subsequent Events~~

~~In January 2018, we entered into~~ an agreement for the sale of Summit I and II, two office assets located in Reston, Virginia, which had an aggregate net carrying value of $87.9 million as of December 31, 2017 for an aggregate gross sales price of $95.0 million. The assets met the held for sale criteria subsequent to December 31, 2017.

In January 2018, we drew an additional $50.0 million under the Tranche A-1 Term Loan, in accordance with the delayed draw provisions of the credit facility. Concurrent with the draw, we entered into an interest rate swap agreement to convert the variable interest rate to a fixed interest rate.

In January 2018, we entered into a real estate venture with CIM Group ("CIM") and Pacific Life Insurance Company ("PacLife"), which purchased the 1,152-key Marriott Wardman Park Hotel ("Wardman Park Marriott"), located adjacent to the Woodley Park Metro Station in northwest Washington, DC. We and CIM each contributed $10.1 million for 16.67% interests in theunconsolidated real estate venture and ~~PacLife contributed $40.3~~made payments totaling $922,000 and $1.3 million for the ~~remaining 66.67% interest. Prior~~years ended December 31, 2022 and 2021.

We have agreements with Building Maintenance Services ("BMS"), an entity in which we have a minor preferred interest, to supervise cleaning, engineering and security services at our properties. We paid BMS $9.3 million, $10.7 million and $18.6 million for each of the ~~acquisition, the JBG Legacy Funds owned a 47.64% interest~~three years in the ~~Wardman Park Marriott. While the new real estate venture will attempt to improve hotel operations,~~period ended December 31, 2023, which was included in ~~the event operations continue to decline, the real estate venture provides a low-cost option to pursue a plan to develop a large and potentially valuable land site~~"Property operating expenses" in a high value residential market. We do not intend to devote meaningful resources to managing the asset, and intend to only do so if the land development opportunity becomes the primary business plan for the asset.our consolidated statements of operations.

~~In February 2018, we closed on a joint venture with one~~

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Table of our real estate venture partners, CPPIB, to develop and own 1900 N Street, an under-construction office asset in Washington, DC. CPPIB has committed approximately $101.0 million for a 45% interest, which will reduce our ownership percentage from 100.0% to 55.0% as contributions are funded.Contents

In February 2018, we issued an additional 61,309 Formation Units, 357,922 Time-Based LTIP Units and 553,589 Performance-Based LTIP Units to management and employees with an estimated aggregate fair value of $21.1 million.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL

DISCLOSURES

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the ~~Securities~~ Exchange Act, ~~of 1934, as amended,~~ we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of December 31, ~~2017,~~2023, our disclosure controls and procedures were effective.

~~No Management~~

Management's Report ~~or Attestation Report Regarding~~on Internal Control

~~This annual report does not include a report of management’s assessment regarding~~ over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over our financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of our assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets that could have a material effect on our consolidated financial statements.

As of December 31, 2023, management conducted an ~~attestation report~~assessment of the ~~Company’s~~effectiveness of our internal control over financial reporting based on the framework established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2023.

Deloitte & Touche LLP, an independent registered public accounting firm, ~~due to~~has audited our consolidated financial statements and has issued a ~~transition period established by rules~~report on the effectiveness of ~~the Securities and Exchange Commission for newly public companie~~s.

our internal control over financial reporting, which is included herein.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended December 31, ~~2017~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Trustees of JBG SMITH Properties

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of JBG SMITH Properties and subsidiaries (the "Company") as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 20, 2024, expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

McLean, Virginia

February 20, 2024

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ITEM 9B. OTHER INFORMATION

TRADING ARRANGEMENTS

During the three months ended December 31, 2023, none of our officers or trustees adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement."

AMENDMENT TO EMPLOYMENT AGREEMENTS

On February 14, 2024, the Company’s Compensation Committee approved, and the Company entered into, amendments to the employment agreements between the Company and each of Ms. Banerjee, Messrs. Museles, Reynolds and Xanders which changed the severance amount upon a qualifying change in control termination (as defined in each such employment agreement) from two times the sum of the executive’s current base salary and target annual bonus, to three times the sum of the executive’s current base salary and target annual bonus. The foregoing summary of the amendments is qualified in its entirety by each of the amendments, copies of which are filed as Exhibits 10.57, 10.58, 10.54 and 10.59 to this Annual Report on Form 10-K and incorporated by reference herein.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

The following discussion summarizes our taxation and the material U.S. federal income tax consequences to holders of our common shares, preferred shares and depositary shares (together with common shares and preferred shares, the "shares") as well as our warrants and rights (together with the shares, the "securities") and is provided for general information only. This is not tax advice. The tax treatment of our shareholders will vary depending upon the holder's particular situation, and this discussion does not deal with all aspects of taxation that may be relevant to particular shareholders in light of their personal investment or tax circumstances. This section also does not deal with all aspects of taxation that may be relevant to certain types of shareholders to which special provisions of the U.S. federal income tax laws apply, including:

●

dealers in securities or currencies;

●

traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

●

banks;

●

life insurance companies;

●

tax-exempt organizations;

●

certain insurance companies;

●

persons liable for the alternative minimum tax;

●

persons that hold shares that are a hedge, that are hedged against interest rate or currency risks or that are part of a straddle or conversion transaction;

●

persons that purchase or sell shares as part of a wash sale for tax purposes;

●

persons who do not hold our shares as capital assets; and

●

U.S. shareholders whose functional currency is not the U.S. dollar.

This summary is based on the Internal Revenue Code of 1986 (the "Code"), its legislative history, existing and proposed regulations under the Code, published rulings and court decisions. This summary describes the provisions of these sources of law only as they are currently in effect. All of these sources of law may change at any time, and any change in the law may apply retroactively.

~~None.~~

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If a partnership holds our shares, the U.S. federal income tax treatment of a partner generally depends on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding our shares should consult its tax advisor with regard to the U.S. federal income tax treatment of an investment in our shares.

We urge you to consult with your tax advisors regarding the federal, state, local and foreign tax consequences to you of acquiring, owning and selling our shares, in light of your particular circumstances.

Taxation of JBG SMITH as a REIT

We elected to be taxed as a REIT under Sections 856 through 860 of the Code, commencing with our taxable year that ended December 31, 2017 (our first taxable year). We believe that we are organized and operate in such a manner as to qualify for taxation as a REIT under the applicable provisions of the Code. We conduct our business as an umbrella partnership REIT, pursuant to which substantially all of our assets are held by our operating partnership, JBG SMITH LP. We are the sole general partner of JBG SMITH LP and we own 87.8% of its outstanding OP Units. JBG SMITH LP owns, directly or indirectly, majority interests in several subsidiary REITs and minority interests in certain other subsidiary REITs through its interests in certain joint ventures. Our subsidiary REITs are subject to the same REIT qualification requirements and other limitations described herein that apply to us (and in certain cases, are subject to more stringent REIT qualification requirements).

When we offer our shares, we will request an opinion of Hogan Lovells US LLP, our REIT tax counsel, to the effect that we have been organized and have operated in conformity with the requirements for qualification and taxation as a REIT, effective for each of our taxable years ended December 31, 2017, through and including our immediately preceding calendar year, and that our current organization and current and intended method of operation will enable us to continue to meet the requirements for qualification and taxation as a REIT under the Code for the taxable year in which the offering occurs and thereafter.

It must be emphasized that the opinion of Hogan Lovells US LLP, described in the preceding paragraph, regarding our status as a REIT, will rely, without independent investigation or verification, on various assumptions relating to our organization and operation and on prior opinions provided by Sullivan & Cromwell LLP and Hogan Lovells US LLP, as described below under "Failure to Qualify as a REIT," as to the qualification and taxation of Vornado, each REIT that was contributed by VRLP to JBG SMITH LP and each REIT that was contributed to JBG SMITH LP by JBG, as a REIT, and will be conditioned upon fact-based representations and covenants made by our management regarding our organization, assets and income, and the present and future conduct of our business operations. While we intend to continue to operate so that we continue to qualify to be taxed as a REIT, given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations, and the possibility of future changes in our circumstances, no assurance can be given by Hogan Lovells US LLP or by us that we will qualify to be taxed as a REIT for any particular year. Any such opinion will be expressed as of the date issued. In connection with such opinion, Hogan Lovells US LLP will have no obligation to advise us or our shareholders of any subsequent change in the matters stated, represented or assumed, or of any subsequent change in the applicable law. You should be aware that opinions of counsel are not binding on the IRS, and no assurance can be given that the IRS will not challenge the conclusions set forth in any such opinion. Hogan Lovells US LLP's opinion would not foreclose the possibility that we may have to use one or more of the REIT savings provisions discussed below, which could require us to pay an excise or penalty tax (which could be significant in amount) in order to maintain our REIT qualification.

Our qualification and taxation as a REIT depend on our ability to meet, on a continuing basis, through actual operating results, distribution levels and diversity of share ownership, various qualification requirements imposed upon REITs by the Code, the compliance with which will not be monitored by Hogan Lovells US LLP. Our ability to qualify to be taxed as a REIT also requires that we satisfy certain tests, some of which depend upon the fair market values of assets that we own directly or indirectly. Such values may not be susceptible to a precise determination. Accordingly, no assurance can be given that the actual results of our operations for any taxable year will satisfy such requirements for qualification and taxation as a REIT.

As noted above, we have elected, and believe we have been organized and have operated in such a manner as to qualify, to be taxed as a REIT for U.S. federal income tax purposes, from and after our taxable year that ended December 31, 2017

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(our first taxable year). The material qualification requirements are summarized below under "-Requirements for Qualification." While we believe that we operate so that we qualify to be taxed as a REIT, no assurance can be given that the IRS will not challenge our qualification, or that we will be able to operate in accordance with the REIT requirements in the future. Please refer to "-Failure to Qualify as a REIT." The discussion in this section "-Taxation of JBG SMITH as a REIT" assumes that we will qualify as a REIT.

As a REIT, we generally do not have to pay federal corporate income taxes on our net income that we currently distribute to our shareholders. This treatment substantially eliminates the "double taxation" at the corporate and shareholder levels that generally results from investment in a regular corporation. Our dividends, however, typically are not eligible for (i) the reduced rates of tax applicable to dividends received by noncorporate shareholders, except in limited circumstances, and (ii) the corporate dividends received deduction. For taxable years beginning before January 1, 2026, however, U.S. shareholders that are individuals, trusts or estates may deduct 20% of the aggregate amount of ordinary dividends distributed by us, subject to certain limitations. Our capital gain dividends and qualified dividend income generally are subject to a maximum 23.8% rate (which rate takes into account the maximum capital gain rate of 20% and the 3.8% Medicare tax on net investment income, described below under "-Net Investment Income Tax"). See "-Taxation of U.S. Shareholders-Taxation of Taxable U.S. Shareholders-Taxation of Dividends."

Any net operating losses, foreign tax credits and other tax attributes generated or incurred by us generally do not pass through to our shareholders, subject to special rules for certain items such as the capital gain that we recognize. See "-Taxation of U.S. Shareholders-Taxation of Taxable U.S. Shareholders-Taxation of Dividends."

Although we generally do not pay federal corporate income tax on our net income that we currently distribute to our shareholders, we will have to pay U.S. federal income tax as follows:

●

First, we will have to pay tax at regular corporate rates on any undistributed REIT taxable income, including undistributed net capital gains.

●

Second, if we elect to treat property that we acquire in connection with certain leasehold terminations or a foreclosure of a mortgage loan as "foreclosure property," we may thereby avoid (i) the 100% prohibited transactions tax on gain from a resale of that property (if the sale otherwise would constitute a prohibited transaction); and (ii) the inclusion of any income from such property as non-qualifying income for purposes of the REIT gross income tests discussed below. Income from the sale or operation of the property may be subject to U.S. federal corporate income tax at the highest applicable rate (currently 21%).

●

Third, if we have net income from "prohibited transactions," as defined in the Code, we will have to pay a 100% tax on that income. Prohibited transactions are, in general, certain sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business.

●

Fourth, if we should fail to satisfy the 75% gross income test or the 95% gross income test, as discussed below under "-Requirements for Qualification-Income Tests," but have nonetheless maintained our qualification as a REIT because we have satisfied some other requirements, we will have to pay a 100% tax on an amount equal to (a) the gross income attributable to the greater of (i) 75% of our gross income over the amount of gross income that is qualifying income for purposes of the 75% test, and (ii) 95% of our gross income over the amount of gross income that is qualifying income for purposes of the 95% test, multiplied by (b) a fraction intended to reflect our profitability.

●

Fifth, if we should fail to distribute during each calendar year at least the sum of (1) 85% of our REIT ordinary income for that year, (2) 95% of our REIT capital gain net income for that year and (3) any undistributed taxable income from prior periods, we would have to pay a 4% excise tax on the excess of that required distribution over the sum of the amounts actually distributed and retained amounts on which income tax is paid at the corporate level.

●

Sixth, if we acquire any asset from a C corporation in certain transactions in which we succeed to the basis of the asset or any other property in the hands of the C corporation as the basis of the asset in our hands, and we recognize gain on the disposition of that asset during the five-year period beginning on the date on which we acquired that

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asset, then we will have to pay tax on the built-in gain at the highest regular corporate rate. A C corporation means generally a corporation that has to pay full corporate-level tax.

●

Seventh, if we derive "excess inclusion income" from a residual interest in a REMIC or certain interests in a TMP we could be subject to corporate level federal income tax at a 21% rate to the extent that such income is allocable to certain types of tax-exempt shareholders that are not subject to unrelated business income tax, such as government entities.

●

Eighth, if we receive non-arm's-length income from a TRS, or as a result of services provided by a TRS to our tenants or to us, we will be subject to a 100% tax on the amount of our non-arm's-length income.

●

Ninth, if we fail to satisfy a REIT asset test, as described below, due to reasonable cause and we nonetheless maintain our REIT qualification because of specified cure provisions, we will generally be required to pay a tax equal to the greater of $50,000 or the highest corporate tax rate multiplied by the net income generated by the nonqualifying assets that caused us to fail such test.

●

Tenth, if we fail to satisfy any provision of the Code that would result in our failure to qualify as a REIT (other than a violation of the REIT gross income tests or a violation of the asset tests described below) and the violation is due to reasonable cause, we may retain our REIT qualification but will be required to pay a penalty of $50,000 for each such failure.

●

Eleventh, we have a number of TRSs, the net income of which will be subject to U.S. federal, state and local corporate income tax at normal rates.

Notwithstanding our qualification as a REIT, we and our subsidiaries also may be subject to a variety of other taxes, including payroll taxes, property and other taxes on our assets, operations and net worth. We also could be subject to tax in other situations and on transactions not presently contemplated.

Requirements for Qualification

The Code defines a REIT as a corporation, trust or association:

●

which is managed by one or more directors or trustees;

●

the beneficial ownership of which is evidenced by transferable shares, or by transferable certificates of beneficial interest;

●

that would otherwise be taxable as a domestic corporation, but for Sections 856 through 859 of the Code;

●

that is neither a financial institution nor an insurance company to which certain provisions of the Code apply;

●

the beneficial ownership of which is held by 100 or more persons (except with respect to the first taxable year for which an election to be taxed as a REIT is made);

●

during the last half of each taxable year, not more than 50% in value of the outstanding shares of which is owned, directly or constructively, by five or fewer individuals, as defined in the Code to include certain entities (the "not closely held requirement") (except with respect to the first taxable year for which an election to be taxed as a REIT is made); and

●

that meets certain other tests, including tests described below regarding the nature of its income and assets.

The Code provides that the conditions described in the first through fourth bullet points above must be met during the entire taxable year and that the condition described in the fifth bullet point above must be met during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months. We satisfy the conditions described in the first through sixth bullet points of the preceding paragraph. Our declaration of trust provides for restrictions regarding the ownership and transfer of our shares of beneficial interest, which restrictions are intended to assist us in continuing to satisfy the share ownership requirements described in the fifth and sixth bullet points of the preceding paragraph. The ownership and transfer restrictions pertaining to our common shares are described in this

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prospectus under the heading "Description of Shares of Beneficial Interest-Common Shares-Restrictions on Ownership of Common Shares."

Ownership of Subsidiary Entities

Ownership of Partnerships, Limited Liability Companies and Qualified REIT Subsidiaries

If we are a partner in an entity that is treated as a partnership for U.S. federal income tax purposes, Treasury regulations under Section 856 of the Code provide that for purposes of the gross income and asset tests applicable to REITs that are described below, we will be deemed to own our proportionate share of the assets of the partnership and will be deemed to be entitled to the income of the partnership attributable to that share. In addition, the character of the assets and gross income of the partnership will retain the same character in our hands for purposes of Section 856 of the Code, including for purposes of satisfying the gross income tests and the asset tests. As the sole general partner of our operating partnership, JBG SMITH LP, we have direct control over it and indirect control over the subsidiaries in which JBG SMITH LP or a subsidiary has a controlling interest. We currently intend to operate these entities in a manner consistent with the requirements for our qualification as a REIT. If we are or become a limited partner or non-managing member in any partnership or limited liability company and such entity takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity (including possibly by transferring the interest to one of our TRSs). In addition, it is possible that a partnership or limited liability company could take an action that could cause us to fail a gross income or asset test, and that we would not become aware of such action in time for us to dispose of our interest in the partnership or limited liability company or take other corrective action on a timely basis. In that case, we could fail to qualify as a REIT unless we were entitled to relief as described below in "-Failure to Qualify as a REIT." In addition, actions taken by partnerships in which we own an interest can affect the determination of whether we have net income from prohibited transactions. See the fourth bullet in the list under "-Taxation of JBG SMITH as a REIT" for a brief description of prohibited transactions.

Under the Bipartisan Budget Act of 2015, liability is imposed on a partnership (rather than its partners) for adjustments to reported partnership taxable income resulting from audits or other tax proceedings. The liability can include an imputed underpayment of tax, calculated by using the highest marginal U.S. federal income tax rate, as well as interest and penalties on such imputed underpayment of tax. Using certain rules, partnerships may be able to transfer these liabilities to their partners. In the event any adjustments are imposed by the IRS on the taxable income reported by JBG SMITH LP or any of our other subsidiary partnerships, we intend to use the audit rules to the extent possible to allow us to transfer any liability with respect to such adjustments to the partners of JBG SMITH LP (which would include us) or the partners of any other subsidiary partnership who should properly bear such liability. However, there is no assurance that we will qualify under those rules or that we will have the authority to use those rules under the operating agreements for certain of our subsidiary partnerships.

If we own a corporate subsidiary that is a QRS, the QRS generally is disregarded for U.S. federal income tax purposes, and its assets, liabilities and items of income, deduction and credit are treated as assets, liabilities and items of income, deduction and credit of ours, including for purposes of the gross income and asset tests that apply to us as a REIT. A QRS is any corporation other than a TRS that is wholly owned by us. Other entities that are wholly owned by us, including single member limited liability companies that have not elected to be taxed as corporations for U.S. federal income tax purposes, also generally are disregarded as separate entities for U.S. federal income tax purposes, including for purposes of the REIT income and asset tests. Disregarded subsidiaries, along with any partnerships in which we hold an equity interest, are sometimes referred to herein as "pass-through subsidiaries."

If a disregarded subsidiary ceases to be wholly owned by us (for example, if any equity interest in the subsidiary is acquired by a person other than us or another disregarded subsidiary of ours), the subsidiary's separate existence no longer would be disregarded for U.S. federal income tax purposes. Instead, the subsidiary would have multiple owners and would be treated either as a partnership or a taxable corporation. Such an event could, depending on the circumstances, adversely affect our ability to satisfy the various asset and gross income requirements applicable to REITs, including the requirement that REITs generally may not own, directly or indirectly, more than 10% of the securities of another corporation unless it is a TRS, a QRS or another REIT. See "-Income Tests" and "-Asset Tests."

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Ownership of Subsidiary REITs

JBG SMITH LP owns, directly or indirectly, majority interests in several subsidiary REITs and minority interests in certain other subsidiary REITs through our interests in certain joint ventures. We believe that these subsidiary REITs are organized and operate in a manner that permits them to qualify for taxation as a REIT for U.S. federal income tax purposes. However, if any of these subsidiary REITs were to fail to qualify as a REIT, then (i) the subsidiary REIT would become subject to regular U.S. corporate income tax, as described herein, see "-Failure to Qualify as a REIT" below, and (ii) our equity interest in such subsidiary REIT would cease to be a qualifying real estate asset for purposes of the 75% asset test and could become subject to the 5% asset test, the 10% voting share asset test, and the 10% value asset test generally applicable to our ownership in corporations other than REITs, QRSs and TRSs. See "-Asset Tests" below. If a subsidiary REIT were to fail to qualify as a REIT and if we were not able to treat the subsidiary REIT as a TRS of ours pursuant to certain prophylactic elections we have made, it is possible that we would not meet the 10% voting share test and the 10% value test with respect to our indirect interest in such entity, in which event we would fail to qualify as a REIT unless we could avail ourselves of certain relief provisions.

Taxable REIT Subsidiaries

JBG SMITH LP owns a number of TRSs. A TRS is any corporation in which a REIT directly or indirectly owns stock, provided that the REIT and that corporation make a joint election to treat that corporation as a TRS. The election can be revoked at any time as long as the REIT and the TRS revoke such election jointly. In addition, if a TRS holds, directly or indirectly, more than 35% of the securities of any other corporation other than a REIT (by vote or by value), then that other corporation is also treated as a TRS. A corporation can be a TRS with respect to more than one REIT.

A TRS is subject to U.S. federal income tax at regular corporate rates (currently a maximum rate of 21%), and may also be subject to state and local taxation. Any dividends paid or deemed paid by any one of our TRSs will also be taxable, either (1) to us to the extent the dividend is retained by us, or (2) to our shareholders to the extent the dividends received from the TRS are paid to our shareholders. We may hold more than 10% of the stock of a TRS without jeopardizing our qualification as a REIT notwithstanding the rule described below under "-Asset Tests" that generally precludes ownership of more than 10% of any issuer's securities. However, as noted below, for us to qualify as a REIT, the securities of all the TRSs in which we have invested either directly or indirectly may not represent more than 20% of the total value of our assets. Other than certain activities related to operating or managing a lodging or health care facility, a TRS may generally engage in any business, including the provision of customary or non-customary services to tenants of the parent REIT.

Income Tests

To maintain our qualification as a REIT, we annually must satisfy two gross income requirements.

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First, we must derive at least 75% of our gross income, excluding gross income from prohibited transactions, for each taxable year directly or indirectly from investments relating to real property, mortgages on real property or investments in REIT equity securities, including "rents from real property," as defined in the Code, or from certain types of temporary investments. Rents from real property generally include our expenses that are paid or reimbursed by tenants.

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Second, at least 95% of our gross income, excluding gross income from prohibited transactions, for each taxable year must be derived from real property investments as described in the preceding bullet point, dividends, interest and gain from the sale or disposition of stock or securities, or from any combination of these types of sources.

Rents that we receive will qualify as rents from real property in satisfying the gross income requirements for a REIT described above only if the rents satisfy several conditions.

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First, the amount of rent must not be based in whole or in part on the income or profits of any person. However, an amount received or accrued generally will not be excluded from rents from real property solely because it is based on a fixed percentage or percentages of receipts or sales.

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Second, the Code provides that rents received from a tenant will not qualify as rents from real property in satisfying the gross income tests if the REIT, directly or under the applicable attribution rules, owns a 10% or greater interest in that tenant; except that rents received from a TRS under certain circumstances qualify as rents from real property even if we own more than a 10% interest in the subsidiary. We refer to a tenant in which we own a 10% or greater interest as a "related party tenant."

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Third, if rent attributable to personal property leased in connection with a lease of real property is greater than 15% of the total rent received under the lease, then the portion of rent attributable to the personal property will not qualify as rents from real property.

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Finally, for rents received to qualify as rents from real property, the REIT generally must not operate or manage the property or furnish or render services to the tenants of the property, other than through an independent contractor from whom the REIT derives no revenue or through a TRS. However, we may directly perform certain services that landlords usually or customarily render when renting space for occupancy only or that are not considered rendered to the occupant of the property.

We expect that we will not derive material rents from related party tenants. We also expect that we will not derive material rental income attributable to personal property, except where the personal property is leased in connection with the lease of real property and the amount of which is less than 15% of the total rent received under the lease.

We directly perform services for some of our tenants. We do not believe that the provision of these services will cause our gross income attributable to these tenants to fail to be treated as rents from real property. If we were to directly provide services to a tenant that are other than those that landlords usually or customarily provide when renting space for occupancy only, amounts received or accrued by us for any of these services will not be treated as rents from real property for purposes of the REIT gross income tests. However, the amounts received or accrued for these services will not cause other amounts received with respect to the property to fail to be treated as rents from real property unless the amounts treated as received in respect of the services, together with amounts received for certain management services, exceed 1% of all amounts received or accrued by us during the taxable year with respect to the property. If the sum of the amounts received in respect of the services to tenants and management services described in the preceding sentence exceeds the 1% threshold, then all amounts received or accrued by us with respect to the property will not qualify as rents from real property, even if we only provide the impermissible services to some, but not all, of the tenants of the property.

The term "interest" generally does not include any amount received or accrued, directly or indirectly, if the determination of that amount depends in whole or in part on the income or profits of any person. However, an amount received or accrued generally will not be excluded from the term "interest" solely because it is based on a fixed percentage or percentages of receipts or sales.

From time to time, we may enter into hedging transactions with respect to one or more of our assets or liabilities. Our hedging activities may include entering into interest rate swaps, caps and floors, options to purchase these items, and futures and forward contracts. Except to the extent provided by Treasury regulations, any income we derive from a hedging transaction that is clearly identified as such as specified in the Code, including gain from the sale or disposition of such a transaction, will not constitute gross income for purposes of the 75% or 95% gross income tests, and therefore will be excluded for purposes of these tests, but only to the extent that the transaction hedges indebtedness incurred or to be incurred by us to acquire or carry real estate. The term "hedging transaction," as used above, generally means any transaction we enter into in the normal course of our business primarily to manage risk of interest rate or price changes or currency fluctuations with respect to borrowings made or to be made, or ordinary obligations incurred or to be incurred, by us. "Hedging transaction" also includes any transaction entered into primarily to manage the risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the 75% or 95% gross income test (or any property which generates such income or gain), including gain from the termination of such a transaction. Gross income also excludes income from clearly identified hedging transactions that are entered into with respect to previously acquired hedging transactions that a REIT entered into to manage interest rate or currency fluctuation risks when the previously hedged indebtedness is extinguished or property is disposed of. We intend to structure any hedging transactions in a manner that does not jeopardize our status as a REIT.

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Interest income and gain from the sale of a debt instrument not secured by real property or an interest in real property, including "nonqualified" debt instruments issued by a "publicly offered REIT," are not treated as qualifying income for purposes of the 75% gross income test (even though such instruments are treated as "real estate assets," as discussed below) but are treated as qualifying income for purposes of the 95% gross income test. A "publicly offered REIT" means a REIT that is required to file annual and periodic reports with the SEC under the Exchange Act.

As a general matter, certain foreign currency gains will be excluded from gross income for purposes of one or both of the gross income tests, as follows.

"Real estate foreign exchange gain" will be excluded from gross income for purposes of both the 75% and 95% gross income test. Real estate foreign exchange gain generally includes foreign currency gain attributable to any item of income or gain that is qualifying income for purposes of the 75% gross income test, foreign currency gain attributable to the acquisition or ownership of (or becoming or being the obligor under) obligations secured by mortgages on real property or on interests in real property and certain foreign currency gain attributable to certain qualified business units of a REIT.

"Passive foreign exchange gain" will be excluded from gross income for purposes of the 95% gross income test. Passive foreign exchange gain generally includes real estate foreign exchange gain as described above, and also includes foreign currency gain attributable to any item of income or gain that is qualifying income for purposes of the 95% gross income test and foreign currency gain attributable to the acquisition or ownership of (or becoming or being the obligor under) obligations that would not fall within the scope of the definition of real estate foreign exchange gain.

If we fail to satisfy one or both of the 75% or 95% gross income tests for any taxable year, we may nevertheless qualify as a REIT for that year if we satisfy the requirements of other provisions of the Code that allow relief from disqualification as a REIT. These relief provisions will generally be available if:

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Our failure to meet the income tests was due to reasonable cause and not due to willful neglect; and

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We file a schedule of each item of income in excess of the limitations described above in accordance with regulations to be prescribed by the IRS.

We might not be entitled to the benefit of these relief provisions, however, and, even if these relief provisions apply, we would have to pay a tax on the excess income. The tax will be a 100% tax on an amount equal to (a) the gross income attributable to the greater of (i) 75% of our gross income over the amount of gross income that is qualifying income for purposes of the 75% test, and (ii) 95% of our gross income over the amount of gross income that is qualifying income for purposes of the 95% test, multiplied by (b) a fraction intended to reflect our profitability.

Asset Tests

At the close of each quarter of our taxable year, we must also satisfy four tests relating to the nature of our assets.

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First, at least 75% of the value of our total assets must be represented by real estate assets, including (a) real estate assets held by our QRSs, our allocable share of real estate assets held by partnerships in which we own an interest and stock issued by another REIT, (b) for a period of one year from the date of our receipt of proceeds of an offering of our shares of beneficial interest or publicly offered debt with a term of at least five years, stock or debt instruments purchased with these proceeds, (c) cash, cash items and government securities, and (d) certain debt instruments of "publicly offered REITs" (as defined above), interests in real property or interests in mortgages on real property (including a mortgage secured by both real property and personal property, provided that the fair market value of the personal property does not exceed 15% of the total fair market value of all property securing such mortgage), and personal property to the extent that rents attributable to the property are treated as rents from real property under the applicable Code section.

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Second, not more than 25% of our total assets may be represented by securities other than those in the 75% asset class (except that not more than 25% of the REIT's total assets may be represented by "nonqualified" debt instruments issued by publicly offered REITs). For this purpose, a "nonqualified" debt instrument issued by a

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publicly offered REIT is any real estate asset that would cease to be a real estate asset if the definition of a real estate asset was applied without regard to the reference to debt instruments issued by publicly offered REITs.

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Third, not more than 20% of our total assets may constitute securities issued by TRSs and, of the investments included in the 25% asset class, the value of any one issuer's securities, other than equity securities issued by another REIT or securities issued by a TRS, owned by us may not exceed 5% of the value of our total assets.

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Fourth, we may not own more than 10% of the vote or value of the outstanding securities of any one issuer, except for issuers that are REITs, QRSs or TRSs, or certain securities that qualify under a safe harbor provision of the Code (such as so-called "straight-debt" securities).

Solely for the purposes of the 10% value test described above, the determination of our interest in the assets of any partnership or limited liability company in which we own an interest will be based on our capital interest in any securities issued by the partnership or limited liability company, excluding for this purpose certain securities described in the Code.

If the IRS successfully challenges the partnership status of any of the partnerships in which we maintain a more than 10% vote or value interest, and the partnership is reclassified as a corporation or a publicly traded partnership taxable as a corporation, we could lose our REIT status. In addition, in the case of such a successful challenge, we could lose our REIT status if such recharacterization results in us otherwise failing one of the asset tests described above.

Certain relief provisions may be available to us if we fail to satisfy the asset tests described above after a 30-day cure period. Under these provisions, we will be deemed to have met the 5% and 10% REIT asset tests if the value of our nonqualifying assets (i) does not exceed the lesser of (a) 1% of the total value of our assets at the end of the applicable quarter and (b) $10,000,000, and (ii) we dispose of the nonqualifying assets within (a) six months after the last day of the quarter in which the failure to satisfy the asset tests is discovered or (b) the period of time prescribed by Treasury regulations to be issued. For violations due to reasonable cause and not willful neglect that are not described in the preceding sentence, we may avoid disqualification as a REIT under any of the asset tests, after the 30-day cure period, by taking steps including (i) the disposition of the nonqualifying assets to meet the asset test within (a) six months after the last day of the quarter in which the failure to satisfy the asset tests is discovered or (b) the period of time prescribed by Treasury regulations to be issued, (ii) paying a tax equal to the greater of (a) $50,000 or (b) the highest corporate tax rate multiplied by the net income generated by the nonqualifying assets, and (iii) disclosing certain information to the IRS.

Annual Distribution Requirements.

To qualify as a REIT, we are required to distribute, on an annual basis, dividends, other than capital gain dividends, to our shareholders in an amount at least equal to (1) the sum of (a) 90% of our " REIT taxable income," computed without regard to the dividends paid deduction and our net capital gain, and (b) 90% of the net after-tax income, if any, from foreclosure property minus (2) the sum of certain items of non-cash income.

In addition, if we acquire an asset from a C corporation in a carryover basis transaction and dispose of such asset during the five-year period beginning on the date on which we acquired that asset, we may be required to distribute at least 90% of the after-tax built-in gain, if any, recognized on the disposition of the asset.

These distributions must be paid in the taxable year to which they relate or may be paid in the following taxable year if the distributions are declared before we timely file our tax return for the year to which they relate and are paid on or before the first regular dividend payment after the declaration. A special rule applies that permits distributions that are declared in October, November or December as of a record date in such month and actually paid in January of the following year to be treated as if they were paid on December 31 of the year declared.

To the extent that we do not distribute all of our net capital gain or distribute at least 90%, but less than 100%, of our REIT taxable income, as adjusted, we will have to pay tax on the undistributed amounts at regular ordinary and capital gain corporate tax rates. Furthermore, if we fail to distribute during each calendar year at least the sum of (a) 85% of our ordinary income for that year, (b) 95% of our capital gain net income for that year, and (c) any undistributed taxable income from prior periods, we will have to pay a 4% excise tax on the excess of the required distribution over the sum of the amounts actually distributed and retained amounts on which income tax is paid at the corporate level.

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In order for distributions to be counted as satisfying the annual distribution requirement for REITs, and to provide REITs with a REIT-level dividends paid deduction, the distributions must not be "preferential dividends." A distribution is not a preferential dividend if the distribution is (1) pro rata among all outstanding shares of stock within a particular class and (2) in accordance with the preferences among different classes of stock as set forth in the REIT's organizational documents. This requirement does not apply to publicly offered REITs, including us, but continues to apply to our subsidiary REITs.

We intend to satisfy the annual distribution requirements.

The calculation of REIT taxable income includes deductions for noncash charges, such as depreciation. Accordingly, we anticipate that we generally will have sufficient cash or liquid assets to enable us to satisfy the distribution requirements described above. However, from time to time, we may not have sufficient cash or other liquid assets to meet these distribution requirements due to timing differences between the actual receipt of income and the actual payment of deductible expenses, and the inclusion of income and deduction of expenses for purposes of determining our annual taxable income. Further, under Section 451 of the Code, subject to certain exceptions, we must accrue income for U.S. federal income tax purposes no later than the time at which such income is taken into account in our consolidated financial statements, which could create additional differences between REIT taxable income and the receipt of cash attributable to such income. In addition, we may decide to retain our cash, rather than distribute it, to repay debt, acquire assets, or for other reasons. If these timing differences occur, we may borrow funds to pay dividends or we may pay dividends through the distribution of other property (including our shares) in order to meet the distribution requirements, while preserving our cash. Alternatively, subject to certain conditions and limitations, we may declare a taxable dividend payable in cash or shares at the election of each shareholder, where the aggregate amount of cash to be distributed with respect to such dividend may be subject to limitation. In such case, for U.S. federal income tax purposes, shareholders receiving such dividends will be required to include the full amount (both the cash and share component) of the dividend as ordinary taxable income to the extent of our current and accumulated earnings and profits.

Under certain circumstances, we may be able to rectify a failure to meet the distribution requirement for a year by paying "deficiency dividends" to shareholders in a later year, which may be included in our deduction for dividends paid for the earlier year. Thus, we may be able to avoid being taxed on amounts distributed as deficiency dividends; however, we will be required to pay interest based upon the amount of any deduction taken for deficiency dividends.

Interest Deduction Limitation

Section 163(j) of the Code limits the deductibility of net interest expense paid or accrued on debt properly allocable to a trade or business to 30% of "adjusted taxable income," subject to certain exceptions. Any amount paid or accrued in excess of the limitation is carried forward and may be deducted in a subsequent year, again subject to the 30% limitation. Adjusted taxable income is determined without regard to certain deductions, including those for net interest expense, and net operating loss carryforwards. Beginning with our federal income tax return for the taxable year ended December 31, 2018, we made a timely election (which is irrevocable), such that the 30% limitation does not apply. This election is available for a trade or business involving real property development, redevelopment, construction, reconstruction, rental, operation, acquisition, conversion, disposition, management, leasing or brokerage, within the meaning of Section 469(c)(7)(C) of the Code. As a result of this election, depreciable real property (including certain improvements) held by the relevant trade or business must be depreciated under the alternative depreciation system under the Code, which generally is less favorable than the generally applicable system of depreciation under the Code. If it was subsequently determined that this election was not in fact available with respect to all or certain of our business activities, the new interest deduction limitation could result in us having more REIT taxable income and, thus, increase the amount of distributions we must make in order to comply with the REIT requirements and avoid incurring corporate level income tax.

Failure to Qualify as a REIT

If we would otherwise fail to qualify as a REIT because of a violation of one of the requirements described above, our qualification as a REIT will not be terminated if the violation is due to reasonable cause and not willful neglect and we pay a penalty tax of $50,000 for the violation. The immediately preceding sentence does not apply to a violation of the income tests described above or a violation of the asset tests described above, each of which has a specific relief provision that is described above.

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If we fail to qualify for taxation as a REIT in any taxable year, and the relief provisions described above do not apply, we would be subject to tax on our taxable income at regular corporate tax rates. We cannot deduct distributions to holders of our shares in any year in which we are not a REIT, nor would we be required to make distributions in such a year. We would possibly also be subject to certain taxes enacted by the Inflation Reduction Act of 2022 that are applicable to non-REIT corporations, including the nondeductible 1% excise tax on certain stock repurchases. As a result, we anticipate that our failure to qualify as a REIT would reduce the funds available for distribution by us to our shareholders. In addition, if we fail to qualify as a REIT, all distributions to our shareholders will be taxable as regular corporate dividends to such shareholders to the extent of current and accumulated earnings and profits (as determined for U.S. federal income tax purposes). Such dividends paid to U.S. holders of our shares that are individuals, trusts and estates may be taxable at the preferential income tax rates (i.e., the 23.8% maximum U.S. federal rate for capital gain, which rate takes into account the maximum capital gain rate of 20% and the 3.8% Medicare tax on net investment income, described below under "-Net Investment Income Tax") for qualified dividends. Such dividends, however, would not be eligible for the 20% deduction on "qualified" REIT dividends allowed by Section 199A of the Code generally available to U.S. holders of our shares that are individuals, trusts or estates for taxable years beginning before January 1, 2026. In addition, in a case where we did not qualify to be taxed as a REIT, corporate distributees may be eligible for the dividends received deduction, subject to the limitations of the Code. Unless we are entitled to relief under specific statutory provisions, we also will be disqualified from re-electing to be taxed as a REIT for the four taxable years following the year during which we lose our qualification. It is not possible to state whether, in all circumstances, we will be entitled to this statutory relief.

In addition, if either Vornado or JBG SMITH were to fail to qualify as a REIT immediately after the Separation in July 2017, then, in our 2017 taxable year, we would have to recognize corporate-level gain on our assets that were acquired in so-called "conversion transactions." (Out of an abundance of caution, we are assuming that the "immediately after" requirement would be applied looking at the two years following the Separation). For more information, please review the risk factor entitled "Unless Vornado and JBG SMITH are both REITs immediately after the distribution of JBG SMITH by Vornado and at all times during the two years thereafter, JBG SMITH could be required to recognize certain corporate-level gains for tax purposes" in our Annual Report on Form 10-K for the year ended December 31, 2018, which is incorporated by reference herein. In connection with the distribution of JBG SMITH by Vornado and the combination, we received an opinion of Sullivan & Cromwell LLP and an opinion of Hogan Lovells US LLP to the effect that we were organized in conformity with the requirements for qualification and taxation as a REIT under the Code, and that our proposed method of operation enabled us to meet the requirements for qualification and taxation as a REIT commencing with our taxable year ended December 31, 2017. In addition, we received an opinion of Hogan Lovells US LLP with respect to each REIT that was contributed to JBG SMITH LP by JBG in the combination, and we and JBG received an opinion of Sullivan & Cromwell LLP with respect to each REIT that was contributed by VRLP to JBG SMITH LP, in each case to the effect that each such REIT had been organized and had operated in conformity with the requirements for qualification and taxation as a REIT under the Code, and that its actual method of operation enabled such REIT to meet up to the date of the distribution, and its proposed method of operation would enable such REIT to continue to meet following the date of the distribution, the requirements for qualification and taxation as a REIT under the Code.

Taxation of U.S. Shareholders

Taxation of Taxable U.S. Shareholders

As used in this section, the term "U.S. shareholder" means a holder of our shares who, for U.S. federal income tax purposes, is:

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a citizen or resident of the United States;

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a domestic corporation;

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an estate whose income is subject to U.S. federal income taxation regardless of its source; or

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a trust if a United States court can exercise primary supervision over the trust's administration and one or more United States persons have authority to control all substantial decisions of the trust.

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Taxation of Dividends.

As long as we qualify as a REIT, distributions made by us out of our current or accumulated earnings and profits, and not designated by us as capital gain dividends, will constitute dividends that are taxable to our taxable U.S. shareholders as ordinary income.

Noncorporate U.S. shareholders will generally not be entitled to the preferential tax rate (currently 23.8%, inclusive of the 3.8% net investment income tax) applicable to certain types of dividends that give rise to "qualified dividend income," except with respect to the portion of any distribution (a) that represents income from dividends we received from a corporation in which we own shares to the extent that such dividends would be eligible for the lower rate on dividends if paid by the corporation to its individual shareholders, (b) that is equal to the sum of our REIT taxable income (taking into account the dividends paid deduction available to us) and certain net built-in gain with respect to property acquired from a C corporation in certain transactions in which we must adopt the basis of the asset in the hands of the C corporation for our previous taxable year and less any taxes paid by us during our previous taxable year, or (c) that represents earnings and profits that were accumulated by us in a prior non-REIT taxable year, in each case, provided that certain holding period and other requirements are satisfied at both the REIT and individual shareholder level. For taxable years prior to January 1, 2026, our U.S. shareholders that are individuals, trusts or estates may deduct 20% of the aggregate amount of ordinary dividends distributed by us, subject to certain limitations, pursuant to the temporary 20% deduction allowed by Section 199A of the Code. Such noncorporate U.S. shareholders should consult their tax advisors to determine the impact of tax rates on dividends received from us.

Our distributions will not be eligible for the dividends received deduction in the case of U.S. shareholders that are corporations. Our distributions that we properly designate as capital gain dividends will be taxable to U.S. shareholders as gain from the sale of a capital asset held for more than one year, to the extent that they do not exceed our actual net capital gain for the taxable year, without regard to the period for which a U.S. shareholder has held its shares. Thus, with certain limitations, capital gain dividends received by an individual U.S. shareholder may be eligible for preferential rates of taxation. U.S. shareholders that are corporations may, however, be required to treat up to 20% of certain capital gain dividends as ordinary income. The maximum amount of dividends that may be designated by us as capital gain dividends and as "qualified dividend income" with respect to any taxable year may not exceed the dividends paid by us with respect to such year, including dividends paid by us in the succeeding taxable year that relate back to the prior taxable year for purposes of determining our dividends paid deduction. Capital gains attributable to the sale of depreciable real property held for more than twelve months are subject to a 25% maximum U.S. federal income tax rate for taxpayers who are taxed as individuals, to the extent of previously claimed depreciation deductions. In addition, the IRS has been granted authority to prescribe regulations or other guidance requiring the proportionality of the designation for particular types of dividends (for example, capital gain dividends) among REIT shares.

To the extent that we make ordinary distributions in excess of our current and accumulated earnings and profits, these distributions will be treated first as a tax-free return of capital to each U.S. shareholder. Thus, these distributions will reduce the adjusted basis which the U.S. shareholder has in its shares for tax purposes by the amount of the distribution, but not below zero. Distributions in excess of a U.S. shareholder's adjusted basis in its shares will be taxable as capital gain, provided that the shares have been held as a capital asset. For purposes of determining the portion of distributions on separate classes of shares that will be treated as dividends for federal income tax purposes, current and accumulated earnings and profits will be allocated first to distributions attributable to the priority rights of preferred shares before being allocated to other distributions.

Dividends authorized by us in October, November or December of any year and payable to a shareholder of record on a specified date in any of those months will be treated as both paid by us and received by the shareholder on December 31 of that year, provided that we actually pay the dividend on or before January 31 of the following calendar year but only to the extent of earnings and profits in that year. Shareholders may not include in their own income tax returns any of our net operating losses or capital losses.

We may make distributions to our shareholders that are paid in shares. These distributions would be intended to be treated as dividends for U.S. federal income tax purposes and a U.S. shareholder would, therefore, generally have taxable income

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with respect to such distributions of shares and may have a tax liability on account of such distribution in excess of the cash (if any) that is received.

U.S. shareholders holding shares at the close of our taxable year will be required to include, in computing their long-term capital gains for the taxable year in which the last day of our taxable year falls, the amount of our undistributed net capital gain that we designate in a written notice distributed to our shareholders. We may not designate amounts in excess of our undistributed net capital gain for the taxable year. Each U.S. shareholder required to include the designated amount in determining the shareholder's long-term capital gains will be deemed to have paid, in the taxable year of the inclusion, the tax paid by us in respect of the undistributed net capital gains. U.S. shareholders to whom these rules apply will be allowed a credit or a refund, as the case may be, for the tax they are deemed to have paid. U.S. shareholders will increase their basis in their shares by the difference between the amount of the includible gains and the tax deemed paid by the shareholder in respect of these gains.

Distributions made by us and gain arising from a U.S. shareholder's sale or exchange of shares will not be treated as passive activity income. As a result, U.S. shareholders generally will not be able to apply any passive losses against that income or gain.

Distributions to Holders of Depositary Shares. Owners of depositary shares will be treated for U.S. federal income tax purposes as if they were owners of the underlying preferred shares represented by such depositary shares. Accordingly, such owners will be entitled to take into account, for U.S. federal income tax purposes, income and deductions to which they would be entitled if they were direct holders of underlying preferred shares. In addition, (i) no gain or loss will be recognized for U.S. federal income tax purposes upon the withdrawal of certificates evidencing the underlying preferred shares in exchange for depositary receipts, (ii) the tax basis of each share of the underlying preferred shares to an exchanging owner of depositary shares will, upon such exchange, be the same as the aggregate tax basis of the depositary shares exchanged therefor, and (iii) the holding period for the underlying preferred shares in the hands of an exchanging owner of depositary shares will include the period during which such person owned such depositary shares.

Sale or Exchange of Shares

When a U.S. shareholder sells or otherwise disposes of shares, the shareholder will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference between (a) the amount of cash and the fair market value of any property received on the sale or other disposition, and (b) the holder's adjusted basis in the shares for tax purposes. This gain or loss will be capital gain or loss if the U.S. shareholder has held the shares as a capital asset. The gain or loss will be long-term gain or loss if the U.S. shareholder has held the shares for more than one year. Long-term capital gain of an individual U.S. shareholder is generally taxed at preferential rates. In general, any loss recognized by a U.S. shareholder when the shareholder sells or otherwise disposes of our shares that the shareholder has held for nine months or less, after applying certain holding period rules, will be treated as a long-term capital loss, to the extent of distributions received by the shareholder from us which were required to be treated as long-term capital gains.

The IRS has the authority to prescribe, but has not yet prescribed, Treasury Regulations that would apply a capital gain tax rate of 25% (which is higher than the long-term capital gain tax rate for noncorporate U.S. shareholders) to all or a portion of capital gain realized by a noncorporate U.S. shareholder on the sale of shares of our shares that would correspond to the U.S. shareholder's share of our "unrecaptured Section 1250 gain." U.S. shareholders should consult with their tax advisors with respect to their capital gain tax liability.

Redemption of Preferred Shares and Depositary Shares.

We do not currently have any preferred shares outstanding, but if we were to issue preferred shares in the future, the following would apply to a redemption of those preferred shares.

Whenever we redeem any preferred shares held by the depositary, the depositary will redeem as of the same redemption date the number of depositary shares representing the preferred shares so redeemed. The treatment accorded to any redemption by us for cash (as distinguished from a sale, exchange or other disposition) of our preferred shares to a holder of such preferred shares can only be determined on the basis of the particular facts as to each holder at the time of

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redemption. In general, a holder of our preferred shares will recognize capital gain or loss measured by the difference between the amount received by the holder of such shares upon the redemption and such holder's adjusted tax basis in the preferred shares redeemed (provided the preferred shares are held as a capital asset) if such redemption (i) is "not essentially equivalent to a dividend" with respect to the holder of the preferred shares under Section 302(b)(1) of the Code, (ii) is a "substantially disproportionate" redemption with respect to the shareholder under Section 302(b)(2) of the Code, or (iii) results in a "complete termination" of the holder's interest in all classes of our shares under Section 302(b)(3) of the Code. In applying these tests, there must be taken into account not only any series or class of the preferred shares being redeemed, but also such holder's ownership of other classes of our shares and any options (including stock purchase rights) to acquire any of the foregoing. The holder of our preferred shares also must take into account any such securities (including options) which are considered to be owned by such holder by reason of the constructive ownership rules set forth in Sections 318 and 302(c) of the Code.

If the holder of preferred shares owns (actually or constructively) none of our voting shares, or owns an insubstantial amount of our voting shares, based upon current law, it is probable that the redemption of preferred shares from such a holder would be considered to be "not essentially equivalent to a dividend." However, whether a distribution is "not essentially equivalent to a dividend" depends on all of the facts and circumstances, and a holder of our preferred shares intending to rely on any of these tests at the time of redemption should consult its tax advisor to determine their application to its particular situation.

Satisfaction of the "substantially disproportionate" and "complete termination" exceptions is dependent upon compliance with the respective objective tests set forth in Section 302(b)(2) and Section 302(b)(3) of the Code. A distribution to a holder of preferred shares will be "substantially disproportionate" if the percentage of our outstanding voting shares actually and constructively owned by the shareholder immediately following the redemption of preferred shares (treating preferred shares redeemed as not outstanding) is less than 80% of the percentage of our outstanding voting shares actually and constructively owned by the shareholder immediately before the redemption, and immediately following the redemption the shareholder actually and constructively owns less than 50% of the total combined voting power of the Company. Because the Company's preferred shares are nonvoting shares, a shareholder would have to reduce such holder's holdings (if any) in our classes of voting shares to satisfy this test.

If the redemption does not meet any of the tests under Section 302 of the Code, then the redemption proceeds received from our preferred shares will be treated as a distribution on our shares as described under "-Taxation of U.S. Shareholders-Taxation of Taxable U.S. Shareholders-Taxation of Dividends.," and "-Taxation of Non-U.S. Shareholders." If the redemption of a holder's preferred shares is taxed as a dividend, the adjusted basis of such holder's redeemed preferred shares will be transferred to any other shares held by the holder. If the holder owns no other shares, under certain circumstances, such basis may be transferred to a related person, or it may be lost entirely.

Backup Withholding and Information Reporting

In general, information reporting requirements will apply to payments of dividends on and payments of the proceeds of the sale of our shares held by U.S. shareholders, unless an exception applies. The applicable withholding agent is required to withhold tax on such payments if (i) the payee fails to furnish a TIN to the payor or to establish an exemption from backup withholding, or (ii) the IRS notifies the payor that the TIN furnished by the payee is incorrect. In addition, the applicable withholding agent with respect to the dividends on our shares is required to withhold tax if (i) there has been a notified payee under-reporting with respect to interest, dividends or original issue discount described in Section 3406(c) of the Code, or (ii) there has been a failure of the payee to certify under the penalty of perjury that the payee is not subject to backup withholding under the Code. A U.S. shareholder that does not provide the applicable withholding agent with a correct TIN may also be subject to penalties imposed by the IRS. In addition, we may be required to withhold a portion of capital gain distributions to any U.S. shareholders who fail to certify their U.S. status to us.

Some U.S. shareholders, including corporations, may be exempt from backup withholding. Any amounts withheld under the backup withholding rules from a payment to a U.S. shareholder will be allowed as a credit against the U.S. shareholder's U.S. federal income tax and may entitle the shareholder to a refund, provided that the required information is furnished to the IRS. The applicable withholding agent will be required to furnish annually to the IRS and to U.S. shareholders of our shares information relating to the amount of dividends paid on our shares, and that information reporting may also apply

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to payments of proceeds from the sale of our shares. Some U.S. shareholders, including corporations, financial institutions and certain tax-exempt organizations, are generally not subject to information reporting.

Net Investment Income Tax

A U.S. shareholder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, is subject to a 3.8% tax on the lesser of (1) the U.S. shareholder's "net investment income" (or "undistributed net investment income" in the case of an estate or trust) for the relevant taxable year and (2) the excess of the U.S. shareholder's modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals is between $125,000 and $250,000, depending on the individual's circumstances). A holder's net investment income generally includes its dividend income and its net gains from the disposition of REIT shares, unless such dividends or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). The temporary 20% deduction allowed by Section 199A of the Code with respect to ordinary REIT dividends received by noncorporate taxpayers is allowed only for purposes of Chapter 1 of the Code and, thus, apparently is not allowed as a deduction allocable to such dividends for purposes of determining the amount of net investment income subject to the 3.8% Medicare tax, which is imposed under Chapter 2A of the Code. If you are a U.S. shareholder that is an individual, estate or trust, you are urged to consult your tax advisors regarding the applicability of the Medicare tax to your income and gains in respect of your investment in our shares.

Taxation of Tax-Exempt Shareholders

The IRS has ruled that amounts distributed as dividends by a REIT generally do not constitute unrelated business taxable income when received by a tax-exempt entity. Based on that ruling, provided that a tax-exempt shareholder is not one of the types of entity described below and has not held its shares as "debt financed property" within the meaning of the Code, the dividend income from shares will not be unrelated business taxable income to a tax-exempt shareholder. Similarly, income from the sale of shares will not constitute unrelated business taxable income unless the tax-exempt shareholder has held the shares as "debt financed property" within the meaning of the Code or has used the shares in a trade or business.

Notwithstanding the above paragraph, tax-exempt shareholders will be required to treat as unrelated business taxable income any dividends paid by us that are allocable to our "excess inclusion" income, if any.

Income from an investment in our shares will constitute unrelated business taxable income for tax-exempt shareholders that are social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts, and qualified group legal services plans exempt from U.S. federal income taxation under the applicable subsections of Section 501(c) of the Code, unless the organization is able to properly deduct amounts set aside or placed in reserve for certain purposes so as to offset the income generated by its shares. Prospective investors of the types described in the preceding sentence should consult their tax advisors concerning these "set aside" and reserve requirements.

Notwithstanding the foregoing, however, a portion of the dividends paid by a "pension-held REIT" will be treated as unrelated business taxable income to any trust which:

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is described in Section 401(a) of the Code;

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is tax-exempt under Section 501(a) of the Code; and

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holds more than 10% (by value) of the equity interests in the REIT.

Tax-exempt pension, profit-sharing and stock bonus funds that are described in Section 401(a) of the Code are referred to below as "qualified trusts." A REIT is a "pension-held REIT" if:

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it would not have qualified as a REIT but for the fact that Section 856(h)(3) of the Code provides that stock owned by qualified trusts will be treated, for purposes of the "not closely held" requirement, as owned by the beneficiaries of the trust (rather than by the trust itself); and

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either (a) at least one qualified trust holds more than 25% by value of the interests in the REIT or (b) one or more qualified trusts, each of which owns more than 10% by value of the interests in the REIT, hold in the aggregate more than 50% by value of the interests in the REIT.

The percentage of any REIT dividend treated as unrelated business taxable income to a qualifying trust is equal to the ratio of (a) the gross income of the REIT from unrelated trades or businesses, determined as though the REIT were a qualified trust, less direct expenses related to this gross income, to (b) the total gross income of the REIT, less direct expenses related to the total gross income. A de minimis exception applies where this percentage is less than 5% for any year. We are not and do not expect to be classified as a pension-held REIT.

The rules described above under the heading "U.S. Shareholders" concerning the inclusion of our designated undistributed net capital gains in the income of its shareholders will apply to tax-exempt entities. Thus, tax-exempt entities will be allowed a credit or refund of the tax deemed paid by these entities in respect of the includible gains.

Taxation of Non-U.S. Shareholders

The rules governing U.S. federal income taxation of nonresident alien individuals, foreign corporations, foreign partnerships and estates or trusts that in either case are not subject to U.S. federal income tax on a net income basis who own shares, which we call "non-U.S. shareholders," are complex. The following discussion is only a limited summary of these rules. Prospective non-U.S. shareholders should consult with their tax advisors to determine the impact of U.S. federal, state and local income tax laws with regard to an investment in our shares, including any reporting requirements.

Ordinary Dividends

Distributions, other than distributions that are treated as attributable to gain from sales or exchanges by us of U.S. real property interests, as discussed below, and other than distributions designated by us as capital gain dividends, will be treated as ordinary income to the extent that they are made out of our current or accumulated earnings and profits. A withholding tax equal to 30% of the gross amount of the distribution will ordinarily apply to distributions of this kind to non-U.S. shareholders, unless an applicable tax treaty reduces that tax. However, if income from the investment in the shares is (i) treated as effectively connected with the non-U.S. shareholder's conduct of a U.S. trade or business or is (ii) attributable to a permanent establishment that the non-U.S. shareholder maintains in the United States if that is required by an applicable income tax treaty as a condition for subjecting the non-U.S. shareholder to U.S. taxation on a net income basis, tax at graduated rates will generally apply to the non-U.S. shareholder in the same manner as U.S. shareholders are taxed with respect to dividends, and the 30% branch profits tax may also apply if the shareholder is a foreign corporation. We expect to withhold U.S. tax at the rate of 30% on the gross amount of any dividends, other than dividends treated as attributable to gain from sales or exchanges of U.S. real property interests and capital gain dividends, paid to a non-U.S. shareholder, unless (a) a lower treaty rate applies and the required form evidencing eligibility for that reduced rate is filed with us or the appropriate withholding agent or (b) the non-U.S. shareholder files an IRS Form W-8 ECI or a successor form with us or the appropriate withholding agent claiming that the distributions are effectively connected with the non-U.S. shareholder's conduct of a U.S. trade or business and in either case other applicable requirements were met.

Distributions to a non-U.S. shareholder that are designated by us at the time of distribution as capital gain dividends that are not attributable to, or treated as not attributable to, the disposition by us of a U.S. real property interest generally will not be subject to U.S. federal income taxation, except as described below.

If a non-U.S. shareholder receives an allocation of "excess inclusion income" with respect to a REMIC residual interest or an interest in a TMP owned by us, the non-U.S. shareholder will be subject to U.S. federal income tax withholding at the maximum rate of 30% with respect to such allocation, without reduction pursuant to any otherwise applicable income tax treaty.

Return of Capital

Distributions in excess of our current and accumulated earnings and profits that are not treated as attributable to the gain from our disposition of a U.S. real property interest, will not be taxable to a non-U.S. shareholder to the extent that they

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do not exceed the adjusted basis of the non-U.S. shareholder's shares. Distributions of this kind will instead reduce the adjusted basis of the shares. To the extent that distributions of this kind exceed the adjusted basis of a non-U.S. shareholder's shares, they will give rise to tax liability if the non-U.S. shareholder otherwise would have to pay tax on any gain from the sale or disposition of its shares, as described below. If it cannot be determined at the time a distribution is made whether the distribution will be in excess of current and accumulated earnings and profits, withholding will apply to the distribution at the rate applicable to dividends. However, the non-U.S. shareholder may seek a refund of these amounts from the IRS if it is subsequently determined that the distribution was, in fact, in excess of our current accumulated earnings and profits.

Also, we could potentially be required to withhold at least 15% of any distribution in excess of our current and accumulated earnings and profits, even if the non-U.S. shareholder is not liable for U.S. tax on the receipt of that distribution. However, a non-U.S. shareholder may seek a refund of these amounts from the IRS if the non-U.S. shareholder's tax liability with respect to the distribution is less than the amount withheld. Such withholding should generally not be required if a non-U.S. shareholder would not be taxed under the FIRPTA, upon a sale or exchange of shares. See the discussion below under "-Sales of Shares."

Capital Gain Dividends

Distributions that are attributable to gain from sales or exchanges by us of U.S. real property interests that are paid with respect to any class of stock that is regularly traded on an established securities market located in the United States and held by a non-U.S. shareholder who does not own more than 10% of such class of stock at any time during the one-year period ending on the date of distribution will be treated as a normal distribution by us, and such distributions will be taxed as described above in "-Ordinary Dividends."

Distributions that are not described in the preceding paragraph and are attributable to gain from sales or exchanges by us of U.S. real property interests will be taxed to a non-U.S. shareholder under the provisions of FIRPTA. Under this statute, these distributions are taxed to a non-U.S. shareholder as if the gain were effectively connected with a U.S. business. Thus, non-U.S. shareholders will be taxed on the distributions at the normal capital gain rates applicable to U.S. shareholders, subject to any applicable alternative minimum tax. We are required by applicable Treasury regulations under this statute to withhold 21% of any distribution that we could designate as a capital gain dividend. However, if we designate as a capital gain dividend a distribution made before the day we actually effect the designation, then, although the distribution may be taxable to a non-U.S. shareholder, withholding does not apply to the distribution under this statute. Rather, we must effectuate the 21% withholding from distributions made on and after the date of the designation, until the distributions so withheld equal the amount of the prior distribution designated as a capital gain dividend. The non-U.S. shareholder may credit the amount withheld against its U.S. tax liability.

Share Distributions

We may make distributions to our shareholders that are paid in shares. These distributions will be intended to be treated as dividends for U.S. federal income tax purposes and, accordingly, will be treated in a manner consistent with the discussion above in "-Ordinary Dividends" and "Capital Gain Dividends." If we are required to withhold an amount in excess of any cash distributed along with the shares, we will retain and sell some of the shares that would otherwise be distributed in order to satisfy our withholding obligations.

Sales of Shares

Gain recognized by a non-U.S. shareholder upon a sale or exchange of our shares generally will not be taxed under FIRPTA if we are a "domestically controlled REIT," defined generally as a REIT less than 50% in value of whose stock is and was held directly or indirectly by foreign persons at all times during a specified testing period (for this purpose, if any class of a REIT's stock is regularly traded on an established securities market in the United States, a person holding less than 5% of such class during the testing period is presumed not to be a foreign person, unless we have actual knowledge otherwise). We believe that we are a domestically controlled REIT, but because our common shares are publicly traded, there can be no assurance that we in fact will qualify as a domestically-controlled REIT. Assuming that we continue to be a domestically controlled REIT, taxation under FIRPTA generally will not apply to the sale of shares. However, gain to which the FIRPTA

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rules do not apply still will be taxable to a non-U.S. shareholder if investment in the shares is treated as effectively connected with the non-U.S. shareholder's U.S. trade or business or is attributable to a permanent establishment that the non-U.S. shareholder maintains in the United States if that is required by an applicable income tax treaty as a condition for subjecting the non-U.S. shareholder to U.S. taxation on a net income basis. In this case, the same treatment will apply to the non-U.S. shareholder as to U.S. shareholders with respect to the gain. In addition, gain to which FIRPTA does not apply will be taxable to a non-U.S. shareholder if the non-U.S. shareholder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and has a "tax home" in the United States, or maintains an office or a fixed place of business in the United States to which the gain is attributable. In this case, a 30% tax will apply to the nonresident alien individual's capital gains. A similar rule will apply to capital gain dividends to which FIRPTA does not apply.

If we do not qualify as a domestically controlled REIT, the tax consequences of a sale of shares by a non-U.S. shareholder will depend upon whether such shares are regularly traded on an established securities market and the amount of such shares that are held by the non-U.S. shareholder. Specifically, a non-U.S. shareholder that holds a class of shares that is traded on an established securities market will only be subject to FIRPTA in respect of a sale of such shares if the shareholder owned more than 10% of the shares of such class at any time during a specified period. A non-U.S. shareholder that holds a class of our shares that is not traded on an established securities market will only be subject to FIRPTA in respect of a sale of such shares if, on the date the shares were acquired by the shareholder, the shares had a fair market value greater than the fair market value on that date of 5% of the regularly traded class of our outstanding shares with the lowest fair market value. If a non-U.S. shareholder holds a class of our shares that is not regularly traded on an established securities market, and subsequently acquires additional interests of the same class, then all such interests must be aggregated and valued as of the date of the subsequent acquisition for purposes of the 5% test that is described in the preceding sentence. If tax under FIRPTA applies to the gain on the sale of shares, the same treatment would apply to the non-U.S. shareholder as to U.S. shareholders with respect to the gain, subject to any applicable alternative minimum tax. For purposes of determining the amount of shares owned by a shareholder, complex constructive ownership rules apply. You should consult your tax advisors regarding such rules in order to determine your ownership in the relevant period.

Qualified Shareholders and Qualified Foreign Pension Funds

Stock of a REIT will not be treated as a U.S. real property interest subject to FIRPTA if the stock is held directly (or indirectly through one or more partnerships) by a "qualified shareholder" or "qualified foreign pension fund." Similarly, any distribution made to a "qualified shareholder" or "qualified foreign pension fund" with respect to REIT stock will not be treated as gain from the sale or exchange of a U.S. real property interest to the extent the stock of the REIT held by such qualified shareholder or qualified foreign pension fund is not treated as a U.S. real property interest.

A "qualified shareholder" generally means a foreign person which (i) (x) is eligible for certain income tax treaty benefits and the principal class of interests of which is listed and regularly traded on at least one recognized stock exchange or (y) a foreign limited partnership that has an agreement with the United States for the exchange of information with respect to taxes, has a class of limited partnership units that is regularly traded on the NYSE or the Nasdaq Stock Market, and such units' value is greater than 50% of the value of all the partnership's units; (ii) is a "qualified collective investment vehicle;" and (iii) maintains certain records with respect to certain of its owners. A "qualified collective investment vehicle" is a foreign person which (i) is entitled, under a comprehensive income tax treaty, to certain reduced withholding rates with respect to ordinary dividends paid by a REIT even if such person holds more than 10% of the stock of the REIT; (ii) (x) is a publicly traded partnership that is not treated as a corporation, (y) is a withholding foreign partnership for purposes of chapters 3, 4 and 61 of the Code, and (z) if the foreign partnership were a United States corporation, it would be a United States real property holding corporation, at any time during the five-year period ending on the date of disposition of, or distribution with respect to, such partnership's interest in a REIT; or (iii) is designated as a qualified collective investment vehicle by the Secretary of the Treasury and is either fiscally transparent within the meaning of Section 894 of the Code or is required to include dividends in its gross income, but is entitled to a deduction for distribution to a person holding interests (other than interests solely as a creditor) in such foreign person.

Notwithstanding the foregoing, if a foreign investor in a qualified shareholder directly or indirectly, whether or not by reason of such investor's ownership interest in the qualified shareholder, holds more than 10% of the stock of the REIT, then a portion of the REIT stock held by the qualified shareholder (based on the foreign investor's percentage ownership

~~PART III~~

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of the qualified shareholder) will be treated as a U.S. real property interest in the hands of the qualified shareholder and will be subject to FIRPTA.

A "qualified foreign pension fund" is any trust, corporation, or other organization or arrangement (A) which is created or organized under the law of a country other than the United States, (B) which is established (i) by such country (or one or more political subdivisions thereof) to provide retirement or pension benefits to participants or beneficiaries that are current or former employees (including self-employed individuals) or persons designated by such employees, as a result of services rendered by such employees to their employers or (ii) by one or more employers to provide retirement or pension benefits to participants or beneficiaries that are current or former employees (including self-employed individuals) or persons designated by such employees in consideration for services rendered by such employees to such employers, (C) which does not have a single participant or beneficiary with a right to more than 5% of its assets or income, (D) which is subject to government regulation and with respect to which annual information about its beneficiaries is provided, or is otherwise available, to the relevant tax authorities in the country in which it is established or operates, and (E) with respect to which, under the laws of the country in which it is established or operates, (i) contributions to such organization or arrangement that would otherwise be subject to tax under such laws are deductible or excluded from the gross income of such entity or arrangement or taxed at a reduced rate, or (ii) taxation of any investment income of such organization or arrangement is deferred or such income is excluded from the gross income of such entity or arrangement or is taxed at a reduced rate.

Federal Estate Taxes

Shares held by a non-U.S. shareholder at the time of death will be included in the shareholder's gross estate for U.S. federal estate tax purposes unless an applicable estate tax treaty provides otherwise.

Backup Withholding and Information Reporting

Generally, information reporting will apply to payments of interest and dividends on our shares, and backup withholding described above for a U.S. shareholder will apply, unless the payee certifies that it is not a U.S. person or otherwise establishes an exemption.

The payment of the proceeds from the disposition of our shares to or through the U.S. office of a U.S. or foreign broker will be subject to information reporting and backup withholding as described above for U.S. shareholders unless the non-U.S. shareholder satisfies the requirements necessary to be an exempt non-U.S. shareholder or otherwise qualifies for an exemption. The proceeds of a disposition by a non-U.S. shareholder of our shares to or through a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, if the broker is a U.S. person, a controlled foreign corporation for U.S. federal income tax purposes, a foreign person 50% or more of whose gross income from all sources for specified periods is from activities that are effectively connected with a U.S. trade or business, a foreign partnership if partners who hold more than 50% of the interest in the partnership are U.S. persons, or a foreign partnership that is engaged in the conduct of a trade or business in the U.S., then information reporting generally will apply as though the payment was made through a U.S. office of a U.S. or foreign broker.

Taxation of Holders of Our Warrants and Rights

We do not currently have any warrants or rights outstanding, but if we were in the future, the follow treatment would apply to the holders of those warrants or rights.

Warrants. Holders of our warrants will not generally recognize gain or loss upon the exercise of a warrant. A holder's basis in the common shares, preferred shares, or depositary shares representing preferred shares, as the case may be, received upon the exercise of the warrant will be equal to the sum of the holder's adjusted tax basis in the warrant and the exercise price paid. A holder's holding period in the common shares, preferred shares, or depositary shares representing preferred shares, as the case may be, received upon the exercise of the warrant will not include the period during which the warrant was held by the holder. Upon the expiration of a warrant, the holder will recognize a capital loss in an amount equal to the holder's adjusted tax basis in the warrant. Upon the sale or exchange of a warrant to a person other than us, a holder will recognize gain or loss in an amount equal to the difference between the amount realized on the sale or exchange and the holder's adjusted tax basis in the warrant. Such gain or loss will be capital gain or loss and will be long-term capital gain

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or loss if the warrant was held for more than one year. Upon the sale of the warrant to us, the IRS may argue that the holder should recognize ordinary income on the sale. Prospective holders of our warrants should consult their own tax advisors as to the consequences of a sale of a warrant to us.

Rights. In the event of a rights offering, the tax consequences of the receipt, expiration, and exercise of the rights we issue will be addressed in detail in a prospectus supplement. Prospective holders of our rights should review the applicable prospectus supplement in connection with the ownership of any rights, and consult their own tax advisors as to the consequences of investing in the rights.

Dividend Reinvestment and Share Purchase Plan

General

We offer shareholders and prospective shareholders the opportunity to participate in our Dividend Reinvestment and Share Purchase Plan, which is referred to herein as the "DRIP."

Although we do not currently offer any discount in connection with the DRIP, nor do we plan to offer such a discount at present, we reserve the right to offer in the future a discount on shares purchased, not to exceed 5%, with reinvested dividends or cash distributions and shares purchased through the optional cash investment feature. This discussion assumes that we do not offer a discount in connection with the DRIP. If we were to offer a discount in connection with the DRIP the tax considerations described below would materially differ. In the event that we offer a discount in connection with the DRIP, shareholders are urged to consult with their tax advisors regarding the tax treatment to them of receiving a discount.

Amounts Treated as a Distribution

Generally, a DRIP participant will be treated as having received a distribution with respect to our shares for U.S. federal income tax purposes in an amount determined as described below.

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A shareholder who participates in the dividend reinvestment feature of the DRIP and whose dividends are reinvested in our shares purchased from us will generally be treated for U.S. federal income tax purposes as having received the gross amount of any cash distributions which would have been paid by us to such a shareholder had they not elected to participate. The amount of the distribution deemed received will be reported on the Form 1099-DIV received by the shareholder.

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A shareholder who participates in the dividend reinvestment feature of the DRIP and whose dividends are reinvested in our shares purchased in the open market, will generally be treated for U.S. federal income tax purposes as having received (and will receive a Form 1099-DIV reporting) the gross amount of any cash distributions which would have been paid by us to such a shareholder had they not elected to participate (plus any brokerage fees and any other expenses deducted from the amount of the distribution reinvested) on the date the dividends are reinvested.

We will pay the annual maintenance cost for each shareholder's DRIP account. Consistent with the conclusion reached by the IRS in a private letter ruling issued to another REIT, we intend to take the position that the administrative costs do not constitute a distribution which is either taxable to a shareholder or which would reduce the shareholder's basis in their common shares. However, because the private letter ruling was not issued to us, we have no legal right to rely on its conclusions. Thus, it is possible that the IRS might view the shareholder's share of the administrative costs as constituting a taxable distribution to them and/or a distribution which reduces the basis in their shares. For this and other reasons, we may in the future take a different position with respect to these costs.

In the situations described above, a shareholder will be treated as receiving a distribution from us even though no cash distribution is actually received. These distributions will be taxable in the same manner as all other distributions paid by us, as described above under "-Taxation of U.S. Shareholders-Taxation of Taxable U.S. Shareholders," "-Taxation of U.S. Shareholders -Taxation of Tax-Exempt Shareholders," or "-Taxation of Non-U.S. Shareholders," as applicable.

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Basis and Holding Period in Shares Acquired Pursuant to the DRIP. The tax basis for our shares acquired by reinvesting cash distributions through the DRIP generally will equal the fair market value of our shares on the date of distribution (plus the amount of any brokerage fees paid by the shareholder). The holding period for our shares acquired by reinvesting cash distributions will begin on the day following the date of distribution.

The tax basis in our shares acquired through an optional cash investment generally will equal the cost paid by the participant in acquiring our shares, including any brokerage fees paid by the shareholder. The holding period for our shares purchased through the optional cash investment feature of the DRIP generally will begin on the day our shares are purchased for the participant's account.

Withdrawal of Shares from the DRIP. When a participant withdraws stock from the DRIP and receives whole shares, the participant will not realize any taxable income. However, if the participant receives cash for a fractional share, the participant will be required to recognize gain or loss with respect to that fractional share.

Effect of Withholding Requirements. Withholding requirements generally applicable to distributions from us will apply to all amounts treated as distributions pursuant to the DRIP. See "-Backup Withholding and Information Reporting" for discussion of the withholding requirements that apply to other distributions that we pay. All withholding amounts will be withheld from distributions before the distributions are reinvested under the DRIP. Therefore, if a U.S. shareholder is subject to withholding, distributions which would otherwise be available for reinvestment under the DRIP will be reduced by the withholding amount.

Withholdable Payments to Foreign Financial Entities and Other Foreign Entities

Pursuant to Sections 1471 through 1474 of the Code, commonly known as FATCA, a 30% FATCA withholding may be imposed on U.S.-source dividends paid to you or to certain foreign financial institutions, investment funds and other non-U.S. persons receiving payments on your behalf if you or such persons fail to comply with information reporting requirements. Payments of dividends that you receive in respect of our shares could be affected by this withholding if you are subject to the FATCA information reporting requirements and fail to comply with them or if you hold shares through a non-U.S. person (e.g., a foreign bank or broker) that fails to comply with these requirements (even if payments to you would not otherwise have been subject to FATCA withholding). An intergovernmental agreement between the United States and an applicable non-U.S. government may modify these rules. You should consult your tax advisors regarding the relevant U.S. law and other official guidance on FATCA withholding.

Other Tax Consequences

State and Local Taxes

State or local taxation may apply to us and our shareholders in various state or local jurisdictions, including those in which we or they transact business or reside. The state and local tax treatment of us and our shareholders may not conform to the U.S. federal income tax consequences discussed above. Consequently, prospective shareholders should consult their tax advisors regarding the effect of state and local tax laws on an investment in us.

Legislative or Other Actions Affecting REITs

The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. We cannot assure you that a change in law, including the possibility of major tax legislation, possibly with retroactive application, will not significantly alter the tax considerations (including applicable tax rates) on REITs or their shareholders that we describe herein, which could adversely affect an investment in our shares. Taxpayers should consult with their tax advisors regarding the effect of any future legislation, on their particular circumstances.

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Tax Consequences of Exercising the OP Unit Redemption Right

If you are a holder of OP Units, other than a holder to which special provisions of the U.S. federal income tax laws apply, as enumerated above, and you exercise your redemption right under the JBG SMITH LP partnership agreement, we may elect to exercise our right to acquire some or all of such OP Units in exchange for cash or our common shares (rather than having JBG SMITH LP satisfy your redemption right. However, we are under no obligation to exercise this right. If we do elect to acquire your OP Units in exchange for cash or our common shares, the transaction will be treated as a fully taxable sale of your OP Units to us. Your amount realized, taxable gain and the tax consequences of that gain are described under "- Disposition of OP Units" below. If we do not elect to acquire some or all of your OP Units in exchange for our common shares, JBG SMITH LP is required to redeem those OP Units for cash. Your amount realized, taxable gain and the tax consequences of that gain are described under "- Redemption of OP Units" below. In addition, you will need to take into account the state and local tax consequences that would apply to you on exercise of your redemption right.

Redemption of OP Units

If JBG SMITH LP redeems OP Units for cash contributed by us in order to effect the redemption, the redemption likely will be treated as a sale of the OP Units to us in a fully taxable transaction, with your taxable gain and the tax consequences of that gain determined as described under "- Disposition of OP Units" below.

If your OP Units are redeemed for cash that is not contributed by us to effect the redemption, your tax treatment will depend upon whether or not the redemption results in a disposition of all of your OP Units. If all of your OP Units are redeemed, your taxable gain and the tax consequences of that gain will be determined as described under "- Disposition of OP Units" below. However, if less than all of your OP Units are redeemed, you will recognize taxable gain only if and to the extent that your amount realized, calculated as described below, on the redemption exceeds your adjusted tax basis in all of your OP Units immediately before the redemption (rather than just your adjusted tax basis in the OP Units redeemed), and you will not be allowed to recognize loss on the redemption.

Disposition of OP Units

If you sell, exchange or otherwise dispose of OP Units (including through the exercise of the OP Unit redemption right where the disposition is treated as a sale, as discussed above in "-Redemption of OP Units"), gain or loss from the disposition will be based on the difference between the amount realized on the disposition and the adjusted tax basis of the OP Units. The amount realized on the disposition of OP Units generally will equal the sum of: any cash received, the fair market value of any other property received (including the fair market value of any of our common shares received pursuant to the redemption) received, and the amount of liabilities of JBGS SMITH LP allocated to the OP Units.

You will recognize gain on the disposition of OP Units to the extent that this amount realized exceeds your adjusted tax basis in the OP Units. Because the amount realized includes any amount attributable to the relief from liabilities of JBG SMITH LP attributable to the OP Units, you could have taxable income, or perhaps even a tax liability, in excess of the amount of cash and value of the property received upon the disposition of the OP Units.

Generally, gain recognized on the disposition of OP Units will be capital gain. However, any portion of your amount realized that is attributable to "unrealized receivables" of JBG SMITH LP (as defined in Section 751 of the Code) will give rise to ordinary income. The amount of ordinary income recognized would be equal to the amount by which your share of "unrealized receivables" of JBG SMITH LP exceeds the portion of your adjusted tax basis that is attributable to those assets. Unrealized receivables include, to the extent not previously included in JBG SMITH LP's income, your allocable share of any rights held by JBG SMITH LP to payment for services rendered or to be rendered. Unrealized receivables also include amounts that would be subject to recapture as ordinary income if JBG SMITH LP were to sell its assets at their fair market value at the time of the sale of OP Units. In addition, a portion of the capital gain recognized on a sale or other disposition of OP Units may be subject to tax at a maximum rate of 25% to the extent attributable to accumulated depreciation on our "section 1250 property," or depreciable real property.

If you are considering disposing of your OP Units (including through exercise of your redemption right), you should consult with your personal tax advisor regarding the tax consequences to you of the disposition in light of your particular

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circumstances, particularly if any of your OP Units were converted from LTIP Units. If you are a holder of OP Units and you exercise your redemption right under the JBG SMITH LP partnership agreement, you will be required to reimburse the JBG SMITH LP for certain quarterly nonresident partner state income tax payments made on your behalf.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not Applicable.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information ~~regarding trustees~~required by Item 10 is incorporated herein by reference from ~~the section entitled “Proposal One: Election of Trustees—Nominees for Election as Trustees” in~~ our definitive Proxy Statement ~~(the “2018 Proxy Statement”)~~ to be filed pursuant to Regulation 14A of the ~~Securities~~ Exchange Act ~~of 1934, as amended,~~ for our ~~2018~~2024 Annual Meeting of Shareholders to be held on ~~May 3, 2018.~~April 25, 2024 (the "2024 Proxy Statement"). The ~~2018~~2024 Proxy Statement will be filed within 120 days after the end of our fiscal year ended December 31, ~~2017.~~

2023.

ITEM 11. EXECUTIVE COMPENSATION

The information ~~included under the following captions in our 2018 Proxy Statement~~required by Item 11 is incorporated herein by ~~reference: “Compensation Discussion and Analysis,” “Compensation Committee Report,” “Compensation~~reference from our 2024 Proxy Statement. The 2024 Proxy Statement will be filed within 120 days after the end of Executive Officers,” “Corporate Governance and Board Matters—Compensation of Trustees” and “Corporate Governance and Board Matters—Compensation Committee Interlocks and Insider Participation.”

our fiscal year ended December 31, 2023.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

RELATED STOCKHOLDER MATTERS

~~Information regarding security ownership of certain beneficial owners and management~~

The information required by Item 12 is incorporated herein by reference from ~~the section entitled “Security Ownership of Certain Beneficial Owners and Management” and “Compensation of Executive Officers—Equity Compensation Plan Information” in~~ our ~~2018~~2024 Proxy Statement.

The 2024 Proxy Statement will be filed within 120 days after the end of our fiscal year ended December 31, 2023.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information ~~regarding transactions with related persons and trustee independence~~required by Item 13 is incorporated herein by reference from ~~the sections entitled “Certain Relationships and Related Party Transactions” and “Corporate Governance and Board Matters—Corporate Governance Profile” in the Company’s 2018~~our 2024 Proxy Statement.

The 2024 Proxy Statement will be filed within 120 days after the end of our fiscal year ended December 31, 2023.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information ~~regarding principal auditor fees and services and the audit committee’s pre-approval policies are~~required by Item 14 is incorporated herein by reference from the sections entitled “Proposal Four: Ratification of the Appointment of Independent Registered Public Accounting Firm—Principal Accountant Fees and Services” and “Proposal Four: Ratification of the Appointment of Independent Registered Public Accounting Firm—Pre-Approval Policies and Procedures” in our ~~2018~~2024 Proxy Statement. The 2024 Proxy Statement will be filed within 120 days after the end of our fiscal year ended December 31, 2023.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

~~(a)~~ ~~The following consolidated and combined information is included in this Form 10-K:~~

~~(1) Financial Statements~~

(a)	The following consolidated information is included in this Form 10-K:

(1)	Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Consolidated ~~and Combined~~ Balance Sheets as of December 31, ~~2017~~2023 and ~~2016~~2022

Consolidated ~~and Combined~~ Statements of Operations for the years ended December 31, ~~2017, 2016~~2023, 2022 and ~~2015~~2021

Consolidated ~~and Combined~~ Statements of Comprehensive Income (Loss) for the years ended December 31, ~~2017, 2016~~2023, 2022 and ~~2015~~2021

Consolidated ~~and Combined~~ Statements of Equity for the years ended December 31, ~~2017, 2016~~2023, 2022 and ~~2015~~2021

Consolidated ~~and Combined~~ Statements of Cash Flows for the years ended December 31, ~~2017, 2016~~2023, 2022 and ~~2015~~2021

Notes to Consolidated ~~and Combined~~ Financial Statements

These consolidated financial statements are set forth in Item 8 of this report and are hereby incorporated by reference.

(2) Financial Statement Schedules

9
		Page
	~~Page~~
~~Schedule II - Valuation and Qualifying Accounts~~	~~104~~
Schedule III - Real Estate Investments and Accumulated Depreciation	~~105~~	140

Schedules other than ~~those~~the one listed above are omitted because they are not applicable or the information required is included in the consolidated financial statements or the notes thereto.

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SCHEDULE II

III

JBG SMITH PROPERTIES

~~VALUATION AND QUALIFYING ACCOUNTS~~

Balance at
Beginning of Year

Additions Charged
Against
Operations
Adjustments to Valuation Accounts
Uncollectible
Accounts
Written‑off

Balance at
End of Year
(In thousands)
Year ended December 31, 2017:
Allowance for doubtful accounts ⁽¹⁾
$ 4,526
$ 3,807
$ —
$ (2,048 ) $ 6,285
Year ended December 31, 2016:
Allowance for doubtful accounts ⁽¹⁾
$ 4,431
$ 751
$ —
$ (656 ) $ 4,526
Year ended December 31, 2015:
Allowance for doubtful accounts ⁽¹⁾
$ 2,514
$ 1,407
$ —
$ 510
$ 4,431

~~_______________~~

⁽¹⁾ ~~Includes allowance for doubtful accounts related to tenant and other receivables and deferred rent receivable.~~

~~SCHEDULE III~~

~~JBG SMITH PROPERTIES~~

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, ~~2017~~2023

(Dollars in thousands)


							Costs
							Capitalized		Gross Amounts at Which Carried						Accumulated
			Initial Cost to Company				Subsequent		at Close of Period						Depreciation
			Land and		Buildings and		to		Land and		Buildings and				and		Date of	Date
Description	Encumbrances⁽¹⁾		Improvements		Improvements		Acquisition⁽²⁾		Improvements ⁽³⁾		Improvements		Total		Amortization		Construction⁽⁴⁾	Acquired
Multifamily Operating Assets
Fort Totten Square	$	—	$	24,390	$	90,404	$	2,009	$	24,424	$	92,379	$	116,803	$	23,985	2015	2017
WestEnd25		97,500		67,049		5,039		115,308		69,177		118,219		187,396		44,004	2009	2007
F1RST Residences		77,512		31,064		133,256		1,034		31,069		134,285		165,354		20,740	2017	2019
1221 Van Street		87,253		27,386		63,775		27,952		28,263		90,850		119,113		24,748	2018	2017
North End Retail ⁽⁵⁾		—		5,847		9,333		(109)		5,871		9,200		15,071		1,987	2015	2017
RiverHouse Apartments		307,710		118,421		125,078		101,369		139,341		205,527		344,868		100,055	1960	2007
The Bartlett		217,453		41,687		—		228,710		41,993		228,404		270,397		46,040	2016	2007
220 20th Street		80,240		8,434		19,340		103,748		9,030		122,492		131,522		49,363	2009	2017
West Half		—		45,668		17,902		164,575		49,079		179,066		228,145		43,091	2019	2017
The Wren		110,045		14,306		—		140,978		17,767		137,517		155,284		23,580	2020	2017
900 W Street		—		21,685		5,162		39,214		22,182		43,879		66,061		8,323	2020	2017
901 W Street		—		25,992		8,790		65,715		26,905		73,592		100,497		13,478	2020	2017
The Batley		—		44,315		158,408		403		44,412		158,714		203,126		12,175	2019	2021
2221 S. Clark-Residential		—		6,185		16,981		37,084		6,540		53,710		60,250		16,563	1964	2002
8001 Woodmont Ave		101,720		28,621		180,775		(3,714)		28,641		177,041		205,682		7,596	2021	2022
Atlantic Plumbing		—		50,287		105,483		567		50,307		106,030		156,337		6,528	2016	2022
Commercial Operating Assets
2101 L Street		120,307		32,815		51,642		16,727		29,834		71,350		101,184		1,315	1975	2003
2121 Crystal Drive		—		21,503		87,329		62,516		24,613		146,735		171,348		64,534	1985	2002
2345 Crystal Drive		—		23,126		93,918		62,152		24,260		154,936		179,196		82,224	1988	2002
2231 Crystal Drive		—		20,611		83,705		32,476		21,969		114,823		136,792		63,041	1987	2002
1550 Crystal Drive		—		22,182		70,525		185,485		42,560		235,632		278,192		68,700	1980, 2020	2002
2011 Crystal Drive		—		18,940		76,921		55,542		19,897		131,506		151,403		67,615	1984	2002
2451 Crystal Drive		—		11,669		68,047		53,057		12,573		120,200		132,773		59,539	1990	2002
1235 S. Clark Street		76,537		15,826		56,090		36,146		16,733		91,329		108,062		52,722	1981	2002
241 18th Street S.		—		13,867		54,169		64,746		24,076		108,706		132,782		57,420	1977	2002
251 18th Street S.		34,152		12,305		49,360		60,206		15,572		106,299		121,871		58,313	1975	2002
1215 S. Clark Street		105,000		13,636		48,380		55,905		14,401		103,520		117,921		55,243	1983	2002
201 12th Street S.		32,728		8,432		52,750		31,264		9,106		83,340		92,446		47,072	1987	2002
800 North Glebe Road		—		28,168		140,983		1,865		28,168		142,848		171,016		34,589	2012	2017
2200 Crystal Drive		—		10,136		30,050		(23,390)		3,680		13,116		16,796		281	1968	2002
1225 S. Clark Street		85,000		11,176		43,495		38,712		11,810		81,573		93,383		40,465	1982	2002
1901 South Bell Street		—		11,669		36,918		19,034		12,325		55,296		67,621		32,242	1968	2002
2100 Crystal Drive		—		7,957		23,590		(11,148)		4,650		15,749		20,399		6,873	1968	2002
1800 South Bell Street ⁽⁶⁾		—		9,072		28,702		9,989		9,299		38,464		47,763		36,978	1969	2002
200 12th Street S.		16,439		8,016		30,552		21,349		8,473		51,444		59,917		32,323	1985	2002
Crystal City Shops at 2100		—		4,059		9,309		(5,992)		2,940		4,436		7,376		1,870	1968	2002
Crystal Drive Retail		—		5,241		20,465		(1,230)		5,375		19,101		24,476		11,786	2003	2004
One Democracy Plaza		—		—		33,628		(27,590)		71		5,967		6,038		2,219	1987	2002
1770 Crystal Drive		—		10,771		44,276		72,722		14,385		113,384		127,769		13,965	1980, 2020	2002
Ground Leases and Other
1700 M Street		—		34,178		46,938		(26,130)		54,986		—		54,986		—		2002, 2006
1831/1861 Wiehle Avenue		—		39,529		—		3,677		43,206		—		43,206		—		2017
Under-Construction Assets
1900 Crystal Drive ⁽⁷⁾		187,358		16,811		53,187		335,465		7,989		397,474		405,463		136	2023	2002
2000/2001 South Bell Street		61,271		7,300		8,805		194,793		—		210,898		210,898		—		2002
Development Pipeline		—		144,471		15,189		90,356		136,785		113,231		250,016		25
Corporate
Corporate		782,000		—		—		18,163		—		18,163		18,163		4,657		2017
	$	2,580,225	$	1,124,803	$	2,298,649	$	2,451,710	$	1,194,737	$	4,680,425	$	5,875,162	$	1,338,403

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Initial Cost to Company
Gross Amounts at Which Carried
at Close of Period

Description
Encumbrances⁽¹⁾
Land and Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent to
Acquisition⁽²⁾
Land and Improvements Buildings and
Improvements Total
Accumulated
Depreciation
and
Amortization
Date of
Construction⁽³⁾
Date
Acquired
Office Operating Assets
Universal Buildings $ 184,357
$ 69,393
$ 143,320
$ 22,547
$ 68,612
$ 166,648
$ 235,260
$ 48,187
1956 2007
2101 L Street 140,493
32,815
51,642
83,766
39,768
128,455
168,223
40,822
1975 2003
Bowen Building —
30,077
98,962
6,238
30,176
105,101
135,277
32,854
1922 2005
1730 M Street —
10,095
17,541
16,111
10,687
33,060
43,747
12,537
1964 2002
1233 20th Street 42,684
30,505
23,130
338
30,505
23,468
53,973
735
1984 2017
Executive Tower —
33,481
67,363
9,306
34,178
75,972
110,150
13,180
2001 2011
1600 K Street —
19,870
10,308
193
19,870
10,501
30,371
402
1950 2017
Courthouse Plaza 1 and 2 2,000
—
105,475
56,173
—
161,648
161,648
67,974
1989 2002
2345 Crystal Drive —
23,126
93,918
35,612
23,546
129,110
152,656
54,253
1988 2002
2121 Crystal Drive 139,134
21,503
87,329
47,790
21,934
134,688
156,622
65,256
1985 2002
1550 Crystal Drive —
22,182
70,525
19,796
21,585
90,918
112,503
37,886
1980 2002
RTC - West 107,720
30,326
134,108
(110 ) 30,397
133,927
164,324
3,330
1988 2017
2231 Crystal Drive —
20,611
83,705
18,856
21,001
102,171
123,172
38,807
1987 2002
2011 Crystal Drive —
18,940
76,921
33,139
18,871
110,129
129,000
45,263
1984 2002
2451 Crystal Drive —
16,755
68,047
27,307
17,090
95,019
112,109
35,934
1990 2002
Commerce Executive —
13,401
58,705
26,122
13,140
85,088
98,228
33,829
1987 2002
1235 S. Clark Street 78,000
15,826
56,090
27,075
16,189
82,802
98,991
30,358
1981 2002
241 18th Street S. —
13,867
54,169
25,164
14,894
78,306
93,200
30,915
1977 2002
251 18th Street S. 35,792
12,305
49,360
50,928
12,809
99,784
112,593
34,678
1975 2002
1215 S. Clark Street 34,299
13,636
48,380
54,196
13,926
102,286
116,212
27,373
1983 2002
201 12th Street S. —
14,766
52,750
22,680
15,036
75,160
90,196
27,838
1987 2002
800 North Glebe Road 107,500
28,168
140,983
2,182
28,168
143,165
171,333
2,737
2012 2017
1225 S. Clark Street —
11,176
43,495
19,649
11,413
62,907
74,320
23,247
1982 2002
2200 Crystal Drive —
13,104
30,050
32,798
13,378
62,574
75,952
18,075
1968 2002
1901 South Bell Street —
11,669
36,918
22,584
11,669
59,502
71,171
24,931
1968 2002
2100 Crystal Drive —
10,287
23,590
31,712
10,520
55,069
65,589
22,490
1968 2002
200 12th Street S. 17,227
8,016
30,552
19,423
8,186
49,805
57,991
18,490
1985 2002
2001 Jefferson Davis Highway —
7,300
16,746
11,297
7,281
28,062
35,343
10,135
1967 2002
Summit I 29,500
7,317
30,626
379
7,317
31,005
38,322
662
1987 2017
Summit II 29,500
5,535
28,463
332
5,535
28,795
34,330
741
1986 2017
1800 South Bell Street —
—
28,702
7,220
—
35,922
35,922
14,835
1969 2002
Crystal City Shops at 2100 —
4,059
9,309
5,229
4,049
14,548
18,597
5,611
1968 2002
Wiehle Avenue Office Building —
—
96
—
—
96
96
48
1984 2017
1831 Wiehle Avenue —
—
—
24
—
24
24
2
1983 2017
Crystal Drive Retail —
—
20,465
6,034
55
26,444
26,499
12,133
2003 2004
7200 Wisconsin Avenue 83,130
34,683
92,059
885
34,683
92,944
127,627
1,763
1986 2017
One Democracy Plaza —
—
33,628
6,572
—
40,200
40,200
21,915
1987 2002
4749 Bethesda Avenue Retail —
—
11,830
2,664
—
14,494
14,494
—
2016 2017
RTC - West Retail —
2,894
—
7,011
2,894
7,011
9,905
103
2017 2017
Office Construction Assets

1900 N Street —
—
8,865
86,336
—
95,201
95,201
—
2017
CEB Tower at Central Place 178,783
—
230,280
117,898
—
348,178
348,178
—
2017
4747 Bethesda Avenue —
—
10,040
46,782
—
56,822
56,822
—
2017
Multifamily Operating Assets

Fort Totten Square 73,600
24,390
90,404
566
24,390
90,970
115,360
1,785
2015 2017
WestEnd25 99,456
67,049
5,039
109,922
68,201
113,809
182,010
23,983
2009 2007
RiverHouse Apartments 307,710
118,421
125,078
82,825
138,763
187,561
326,324
56,476
1960 2007
The Bartlett 220,000
41,687
—
224,805
41,687
224,805
266,492
10,074
2016 2007
220 20th Street —
8,434
19,340
99,259
8,693
118,340
127,033
27,749
2009 2017
2221 South Clark Street —
7,405
16,981
41,598
7,386
58,598
65,984
4,109
1964 2002

~~_______________~~

Note: Depreciation of the buildings and improvements is calculated over lives ranging from the life of the lease to 40 years. AsThe net basis of our assets and liabilities for tax reporting purposes is approximately $422.1 million higher than the amounts reported in our consolidated balance sheet as of December 31, ~~2017, the cost of real estate, net of accumulated depreciation, for federal income tax purposes was approximately $3.5 billion.~~

2023.

(1)
⁽¹⁾	Represents the contractual debt obligations.

(2)
⁽²⁾	Includes asset impairments recognized, ~~and~~ amounts written off in connection with redevelopment ~~activities.~~activities and partial sale of assets.

(3)	Land associated with buildings under construction was included in construction in progress which is reflected in the Building and Improvements column.

⁽³⁾

(4)

Date of original construction, many assets have had substantial renovation or additional construction. See "Costs Capitalized Subsequent to Acquisition" column.

(5)	In January 2024, we sold North End Retail for a gross sales price of $14.3 million.

(6)	In the first quarter of 2024, 1800 South Bell Street was taken out of service.

(7)	In December 2023, a portion of 1900 Crystal Drive was placed into service.

The following is a reconciliation of real estate and accumulated depreciation:


	Year Ended December 31,
	2023		2022		2021
Real Estate: ⁽¹⁾
Balance at beginning of the year	$	6,158,082	$	6,310,361	$	6,074,516
Acquisitions		—		365,166		202,565
Additions		347,757		352,034		165,930
Assets sold or written‑off		(444,480)		(869,479)		(92,332)
Real estate impaired ⁽²⁾		(186,197)		—		(40,318)
Balance at end of the year	$	5,875,162	$	6,158,082	$	6,310,361
Accumulated Depreciation:
Balance at beginning of the year	$	1,335,000	$	1,368,012	$	1,232,699
Depreciation expense		187,988		184,678		201,649
Accumulated depreciation on assets sold or written‑off		(88,614)		(217,690)		(51,162)
Accumulated depreciation on real estate impaired ⁽²⁾		(95,971)		—		(15,174)
Balance at end of the year	$	1,338,403	$	1,335,000	$	1,368,012

Year Ended December 31,
2017 2016 2015
(In thousands)
Real Estate:
Balance at beginning of the year $ 4,155,391
$ 4,038,206
$ 3,809,213
Additions during the year:
Land and improvements 428,702
—
—
Buildings and improvements 1,489,409
217,261
252,113
Held for sale 8,293
—
—
Less: Assets written‑off (55,998 ) (100,076 ) (23,120 )
Balance at end of the year $ 6,025,797
$ 4,155,391
$ 4,038,206

Accumulated Depreciation:
Balance at beginning of period $ 930,769
$ 908,233
$ 797,806
Additions charged to operating expenses 136,559
122,612
133,582
Less: Accumulated depreciation on assets written‑off (55,998 ) (100,076 ) (23,155 )
Balance at end of period $ 1,011,330
$ 930,769
$ 908,233

(1)	Includes assets held for sale.

(2)

In 2023, we determined that 2101 L Street, 2100 Crystal Drive, 2200 Crystal Drive and a development parcel were impaired and recorded an impairment loss totaling $90.2 million. In 2021, we determined that 7200 Wisconsin Avenue, RTC-West and a development parcel were impaired and recorded an impairment loss totaling $25.1 million. See Note 19 to the consolidated financial statements for additional information.

141

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~~ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES~~

(3) Exhibit Index


		Exhibits	Description
2.1
~~Exhibits~~	~~Description~~

~~2.1~~	Master Transaction Agreement, dated as of October 31, 2016, by and among Vornado Realty Trust, Vornado Realty L.P., JBG Properties, Inc., JBG/Operating Partners, L.P., certain affiliates of JBG Properties Inc. and JBG/Operating Partners set forth on Schedule A thereto, JBG SMITH Properties and JBG SMITH Properties LP (incorporated by reference to Exhibit 2.1 to our Registration Statement on Form 10, filed on June 12, 2017).

2.2		Amendment to Master Transaction Agreement, dated as of July 17, 2017, by and among Vornado Realty Trust, Vornado Realty L.P., JBG Properties, Inc., JBG/Operating Partners, L.P., certain affiliates of JBG Properties Inc. and JBG/Operating Partners set forth on Schedule A thereto, JBG SMITH Properties and JBG SMITH Properties LP (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K, filed on July 21, 2017).

2.3	Agreement and Plan of Merger, dated as of July 17, 2017, by and between JBG/Fund VI Transferred, L.L.C. and JBGS/Fund VI OP Mergerco, L.L.C. (incorporated by reference to Exhibit 2.3 to our Current Report on Form 8-K, filed on July 21, 2017).

~~2.4~~	Agreement and Plan of Merger, dated as of July 17, 2017, by and between JBG/Fund VII Transferred, L.L.C. and JBGS/Fund VII OP Mergerco, L.L.C. (incorporated by reference to Exhibit 2.4 to our Current Report on Form 8-K, filed on July 21, 2017).

~~2.5~~	Agreement and Plan of Merger, dated as of July 17, 2017, by and between JBG/Fund IX Transferred, L.L.C. and JBGS/Fund IX OP Mergerco, L.L.C. (incorporated by reference to Exhibit 2.5 to our Current Report on Form 8-K, filed on July 21, 2017).

~~2.6~~	Contribution and Assignment Agreement, dated as of July 18, 2017, by and between JBG SMITH Properties LP and JBG/Fund VIII Legacy, L.L.C. (incorporated by reference to Exhibit 2.6 to our Current Report on Form 8-K, filed on July 21, 2017).

~~2.7~~	Contribution and Assignment Agreement, dated as of July 18, 2017, by and between JBG SMITH Properties LP and JBG/UDM Legacy, L.L.C. (incorporated by reference to Exhibit 2.7 to our Current Report on Form 8-K, filed on July 21, 2017).

~~2.8~~	Agreement and Plan of Merger, dated as of July 17, 2017, by and between JBG/Operating Partners, L.P. and JBGS/OP Mergerco, L.L.C. (incorporated by reference to Exhibit 2.8 to our Current Report on Form 8-K, filed on July 21, 2017).

~~2.9~~	Contribution and Assignment Agreement, dated as of July 18, 2017, by and between JBG Properties, Inc. and JBG SMITH Properties LP (incorporated by reference to Exhibit 2.9 to our Current Report on Form 8-K, filed on July 21, 2017).

~~2.10~~	Separation and Distribution Agreement, dated as of July 17, 2017, by and among Vornado Realty Trust, Vornado Realty L.P., JBG SMITH Properties and JBG SMITH Properties LP (incorporated by reference to Exhibit 2.2 to our Current Report on Form 8-K, filed on July 21, 2017).

3.1		Declaration of Trust of JBG SMITH Properties, as amended and restated (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed on July 21, 2017).

3.2		Articles Supplementary to Declaration of Trust of JBG SMITH Properties (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed on March 6, ~~2018~~2018).).

3.3** 3.3		Articles of Amendment to Declaration of Trust of JBG SMITH Properties (incorporated by reference to Exhibit 3.1 to our current report on Form 8-K, filed on May 3, 2018).

3.4		Second Amended and Restated Bylaws of JBG SMITH ~~Properties.~~Properties, effective August 3, 2023 (incorporated by reference to Exhibit 3.4 in our Quarterly Report on Form 10-Q, filed on August 8, 2023).

10.1* 4.1**		~~First~~Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.

10.1		Second Amended and Restated Limited Partnership Agreement of JBG SMITH Properties LP, dated as of ~~July~~December 17, ~~2017~~2020 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on December 17, 2020)..

10.2		Amendment No. 1 to Second Amended and Restated Limited Partnership Agreement of JBG SMITH Properties LP, dated as of April 29, 2021 (incorporated by reference to Exhibit 10.2 to our Registration Statement on Form S-3, filed on June 30, 2021).

10.3		Tax Matters Agreement, dated as of July 17, 2017, by and between Vornado Realty Trust and JBG SMITH Properties (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on July 21, 2017).

~~10.3~~ 10.4		Employee Matters Agreement, dated as of July 17, 2017, by and between Vornado Realty Trust, Vornado Realty L.P., JBG SMITH Properties and JBG SMITH Properties LP (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K, filed on July 21, 2017).

~~10.4~~ 10.5		Transition Services Agreement, dated as of July 17, 2017, by and between Vornado Realty Trust and JBG SMITH Properties (incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K, filed on July 21, 2017).

142

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Exhibits		Description


10.6
~~Exhibits~~	~~Description~~
~~10.5~~	Credit Agreement, dated as of ~~July 18, 2017,~~January 14, 2022 by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit ~~10.4~~10.1 to our Current Report on Form 8-K, filed on January 14, 2022).

10.7		First Amendment to Credit Agreement, dated as of July 29, 2022, by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q, filed on August 2, 2022).

10.8		Second Amendment to Credit Agreement, dated as of July 24, 2023, by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on July ~~21, 2017)~~28, 2023).

~~10.6~~ 10.9		~~Registration Rights~~Credit Agreement, dated as of July ~~18, 2017,~~29, 2022, by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and ~~the holders listed on Schedule I thereto (for holders of common shares of JBG SMITH Properties received in the combination)~~Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit ~~10.5~~10.1 to our Quarterly Report on Form 10-Q, filed on August 2, 2022).

10.10		First Amendment to Credit Agreement, dated as of July 24, 2023, by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.2 to our Current Report on Form - K, filed on July 28, 2023).

10.11		Amended and Restated Credit Agreement, dated as of June 29, 2023, by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on ~~July 21, 2017)~~June 29, 2023).

~~10.7~~ 10.12†	Registration Rights Agreement, dated as of July 18, 2017, by and among JBG SMITH Properties and the holders listed on Schedule I thereto (for holders of OP Units of JBG SMITH LP received in the combination) (incorporated by reference to Exhibit 10.6 to our Current Report on Form 8-K, filed on July 21, 2017).

~~10.8†~~	Form of JBG SMITH Properties Unit Issuance Agreement (incorporated by reference to Exhibit 10.7 to our Current Report on Form 8-K, filed on July 21, 2017).

~~10.9†~~ 10.13†		JBG SMITH Properties Non-Employee Trustee Unit Issuance Agreement, dated July 18, 2017, by and among, JBG SMITH Properties, JBG SMITH Properties LP, Michael J. Glosserman and Glosserman Family JBG Operating, L.L.C. (incorporated by reference to Exhibit 10.8 to our Current Report on Form 8-K, filed on July 21, 2017).

~~10.10†~~ 10.14†		~~Amended and Restated Employment~~Separation Agreement, dated as of ~~June 16, 2017, by and between JBG SMITH Properties and W. Matthew Kelly (incorporated by reference to Exhibit 10.5 to our Registration Statement on Form 10, filed on June 21, 2017).~~

~~10.11†~~	Amended and Restated Employment Agreement, dated as of June 16, 2017, by and between JBG SMITH Properties and James L. Iker (incorporated by reference to Exhibit 10.6 to our Registration Statement on Form 10, filed on June 21, 2017).

~~10.12†~~	Amended and Restated Employment Agreement, dated as of June 16, 2017, by and between JBG SMITH Properties and David P. Paul (incorporated by reference to Exhibit 10.7 to our Registration Statement on Form 10, filed on June 21, 2017).

~~10.13†~~	~~Amended and Restated Employment Agreement, dated as of June 16, 2017,~~July 31, 2020, by and between JBG SMITH Properties and Robert A. Stewart (incorporated by reference to Exhibit ~~10.10 to our Registration Statement on Form 10, filed on June 21, 2017).~~

~~10.14†~~	~~Employment Agreement, dated as of July 17, 2017, by and between JBG SMITH Properties and Stephen W. Theriot (incorporated by reference to Exhibit 10.11~~10.1 to our Current Report on Form ~~8-K,~~10-Q, filed on ~~July 21, 2017)~~November 3, 2020).

10.15†		Form of Indemnification Agreement between JBG SMITH Properties and each of its trustees and executive officers (incorporated by reference to Exhibit 10.12 to our Current Report on Form 8-K, filed on July 21, 2017).

10.16†	Formation Unit Grant Letter, dated as of October 31, 2016, by and between JBG SMITH Properties and Steven Roth (incorporated by reference to Exhibit 10.15 to our Registration Statement on Form 10, filed on January 24, 2017).

~~10.17†~~	Consulting Agreement, dated as of March 10, 2017, by and between JBG SMITH Properties and Mitchell Schear (incorporated by reference to Exhibit 10.16 to our Registration Statement on Form 10, filed on June 12, 2017).

~~10.18†~~	Second Amended and Restated Continuation Agreement, dated as of June 13, 2017, by and between Michael J. Glosserman and JBG/Operating Partners, L.P. (incorporated by reference to Exhibit 10.17 to our Registration Statement on Form 10, filed on June 21, 2017).

~~10.19†~~	JBG SMITH Properties 2017 Employee Share Purchase Plan (incorporated by reference to Exhibit 10.9 to our Current Report on Form 8-K, filed on July 21, 2017).

143

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Exhibits		Description

10.20** 10.17†		Amendment No. 1 to the JBG SMITH Properties 2017 Employee Share Purchase Plan, effective January 1, ~~2018.~~2018 (incorporated by reference to Exhibit 10.20 to our Annual Report on Form 10-K, filed on March 12, 2018).

~~10.21†~~ 10.18†		JBG SMITH Properties 2017 Omnibus Share Plan (incorporated by reference to Exhibit 10.10 to our Current Report on Form 8-K, filed on July 21, 2017).

~~10.22†~~ 10.19†		Form of JBG SMITH Properties Formation Unit Agreement (incorporated by reference to Exhibit 10.18 to our Registration Statement on Form 10, filed on June 12, 2017).

~~10.23†~~ 10.20†		Form of JBG SMITH Properties Formation Unit Agreement for Non-Employee Trustees (incorporated by reference to Exhibit 10.19 to our Registration Statement on Form 10, filed on June 12, 2017)..

~~10.24†~~ 10.21†		Form of JBG SMITH Properties Restricted LTIP Unit Agreement (incorporated by reference to Exhibit 10.20 to our Registration Statement on Form 10, filed on June 12, 2017).


10.22†
~~Exhibits~~	~~Description~~
~~10.25†~~	Form of JBG SMITH Properties Performance LTIP Unit Agreement (incorporated by reference to Exhibit 10.21 to our Registration Statement on Form 10, filed on June 12, 2017).

10.26** 10.23†		Form of Second Amended and Restated 2017 JBG SMITH Properties Performance LTIP Unit Agreement (incorporated by reference to Exhibit 10.1 to our Current Report on Form 10-Q, filed on August 4, 2020).

10.24†		Form of 2018 Performance LTIP Unit ~~Agreement.~~Agreement (incorporated by reference to Exhibit 10.26 to our Annual Report on Form 10-K, filed on March 12, 2018).

~~10.27†~~ 10.25†		Form of July 2021 Performance LTIP Unit Agreement (incorporated by reference to Exhibit 10.3 to our Current Report on Form 10-Q, filed on August 3, 2021).

10.26†		Amended Form of July 2021 Performance LTIP Unit Agreement (incorporated by reference to Exhibit 10.2 to our Current Report on Form 10-Q, filed on November 2, 2021).

10.27†		Form of JBG SMITH Properties Non-Employee Trustee Restricted LTIP Unit Agreement (incorporated by reference to Exhibit 10.22 to our Registration Statement on Form 10, filed on June 21, 2017).

10.28†		Form of JBG SMITH Properties Non-Employee Trustee Restricted Stock Agreement (incorporated by reference to Exhibit 10.23 to our Registration Statement on Form 10, filed on June 21, 2017).

10.29†		Form of JBG SMITH Properties Non-Employee Trustee Unit Issuance Agreement (incorporated by reference to Exhibit 10.24 to our Registration Statement on Form 10, filed on June 21, 2017).

10.30		Side Letter to Tax Matters Agreement, dated as of August 13, 2018, by and between Vornado Realty Trust and JBG SMITH Properties (incorporated by reference to Exhibit 10.1 to our Current Report on Form 10-Q filed on November 7, 2018).

10.31†		Amendment No. 1 to the JBG SMITH Properties 2017 Omnibus Share Plan, effective February 18, 2020 (incorporated by reference to Exhibit 10.30 to our Annual Report on Form 10-K, filed on March 5, 2020).

10.32†		Amendment No. 2 to the JBG SMITH Properties 2017 Employee Share Purchase Plan, effective May 1, 2019 (incorporated by reference to Exhibit 10.31 to our Annual Report on Form 10-K, filed on March 5, 2020).

144

Table of Contents

Exhibits		Description


10.33†		Amendment No. 3 to the 2017 Employee Share Purchase Plan, effective July 20, 2020 (incorporated by reference to Exhibit 10.2 to our Current Report on Form 10-Q, filed on November 3, 2020).

10.34†**		Amendment No. 4 to the 2017 Employee Share Purchase Plan, effective October 30, 2023.

10.35†		Form of 2020 JBG SMITH Properties Restricted LTIP Unit Agreement (incorporated by reference to Exhibit 10.32 to our Annual Report on Form 10-K, filed on March 5, 2020).

10.36†		Form of 2020 JBG SMITH Properties Performance LTIP Unit Agreement (incorporated by reference to Exhibit 10.33 to our Annual Report on Form 10-K, filed on March 5, 2020).

10.37†		Form of Amended and Restated 2018 Performance LTIP Unit Agreement (incorporated by reference to Exhibit 10.30 to our Annual Report on Form 10-K, filed on March 5, 2020).

10.38†		Second Amended and Restated Employment Agreement, dated as of February 18, 2021, by and between JBG SMITH Properties and W. Matthew Kelly (incorporated by reference to Exhibit 10.32 to our Annual Report on Form 10-K, filed on February 23, 2021).

10.39†		Second Amended and Restated Employment Agreement, dated as of February 18, 2021, by and between JBG SMITH Properties and Kevin P. Reynolds (incorporated by reference to Exhibit 10.34 to our Annual Report on Form 10-K, filed on February 23, 2021).

10.40†		Amended and Restated Employment Agreement, dated as of February 18, 2021, by and between JBG SMITH Properties and Madhumita Moina Banerjee (incorporated by reference to Exhibit 10.35 to our Annual Report on Form 10-K, filed on February 23, 2021).

10.41†		Amended and Restated Employment Agreement, dated as of February 18, 2021, by and between JBG SMITH Properties and Steven A. Museles (incorporated by reference to Exhibit 10.37 to our Annual Report on Form 10-K, filed on February 23, 2021).

10.42†		Employment Agreement, dated as of February 18, 2021, by and between JBG SMITH Properties and George Xanders (incorporated by reference to Exhibit 10.38 to our Annual Report on Form 10-K, filed on February 23, 2021).

10.43†		Amendment No. 2 to the JBG SMITH Properties 2017 Omnibus Share Plan, effective December 1, 2020 (incorporated by reference to Exhibit 10.39 to our Annual Report on Form 10-K, filed on February 23, 2021).

10.44†		Amendment No. 3 to the JBG SMITH Properties 2017 Omnibus Share Plan (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on April 30, 2021).

10.45†		Form of JBG SMITH Properties Restricted Share Unit Award Agreement for Employees (incorporated by reference to Exhibit 10.40 to our Annual Report on Form 10-K, filed on February 23, 2021).

10.46†		Form of JBG SMITH Properties Restricted Share Unit Award Agreement for Consultants (incorporated by reference to Exhibit 10.41 to our Annual Report on Form 10-K, filed on February 23, 2021).

10.47†		Form of July 2021 Restricted LTIP Unit Agreement (incorporated by reference to Exhibit 10.5 to our Current Report on Form 10-Q, filed on August 3, 2021).

145

Table of Contents

Exhibits		Description

10.48†		Form of July 2021 Restricted LTIP Unit Agreement (Special Termination & Vesting Provisions) (incorporated by reference to Exhibit 10.6 to our Current Report on Form 10-Q, filed on August 3, 2021).

10.49†		Form of JBG SMITH Properties Performance Share Unit Award Agreement (incorporated by reference to Exhibit 10.42 to our Annual Report on Form 10-K, filed on February 23, 2021).

10.50†		Form of 2021 JBG SMITH Properties Performance LTIP Unit Agreement (incorporated by reference to Exhibit 10.43 to our Annual Report on Form 10-K, filed on February 23, 2021).

10.51†		Form of AO LTIP Unit Agreement (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on January 5, 2022).

10.52†**		Form of 2024 AO LTIP Unit Agreement.

10.53†**		Form of Agreement Equity Award in Lieu of Annual Cash Bonus.

10.54†**		First Amendment to Second Amended and Restated Employment Agreement, dated as of February 14, 2024, by and between JBG SMITH Properties and Kevin P. Reynolds.

10.55†**		Employment Agreement, dated as of February 14, 2024, by and between JBG SMITH Properties and Evan Regan-Levine.

10.56†**		Employment Agreement, dated as of February 14, 2024, by and between JBG SMITH Properties and David Ritchey.

10.57†**		First Amendment to Amended and Restated Employment Agreement, dated as of February 14, 2024, by and between JBG SMITH Properties and Madhumita Moina Banerjee.

10.58†**		First Amendment to Amended and Restated Employment Agreement, dated as of February 14, 2024, by and between JBG SMITH Properties and Steven A. Museles.

10.59†**		First Amendment to Employment Agreement, dated as of February 14, 2024, by and between JBG SMITH Properties and George Xanders.

21.1**		List of Subsidiaries of the Registrant.

23.1**		Consent of Independent Registered Public Accounting ~~Firm~~Firm.

31.1**		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of ~~2002~~2002.

31.2**		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended and 18 U.S.C 1350, as created by Section 906 of the Sarbanes- Oxley Act of 2002.

~~101.INS~~ 97.1†**		JBG SMITH Properties Incentive Compensation Recovery Policy.

101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

146

Table of Contents

Exhibits		Description


101.SCH
~~101.SCH~~	Inline XBRL Taxonomy Extension Schema

101.CAL		Inline XBRL Extension Calculation Linkbase

101.LAB		Inline XBRL Extension Labels Linkbase

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

~~_______________~~



**	~~Filed herewith.~~

†	~~Denotes a management contract or compensatory plan, contract or arrangement.~~

** Filed herewith.

† Denotes a management contract or compensatory plan, contract or arrangement.

ITEM 16. FORM 10-K SUMMARY

None.

~~None.~~

147

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		JBG SMITH Properties

Date: February 20, 2024	~~March 12, 2018~~	/s/ ~~Stephen W. Theriot~~M. Moina Banerjee
	~~Stephen W. Theriot~~	M. Moina Banerjee
		Chief Financial Officer
		(Principal Financial ~~and Accounting~~ Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

NAME	TITLE	DATE

~~SIGNATURE~~	~~TITLE~~	~~DATE~~

/s/ ~~Steven Roth~~Robert A. Stewart	Chairman of the Board	~~March 12, 2018~~ February 20, 2024
~~Steven Roth~~ Robert Stewart

~~/s/ Robert Stewart~~	~~Executive Vice Chairman~~	~~March 12, 2018~~
~~Robert Stewart~~

/s/ W. Matthew Kelly	Chief Executive Officer and Trustee	~~March 12, 2018~~ February 20, 2024
W. Matthew Kelly	(Principal Executive Officer)

/s/ ~~Stephen W. Theriot~~M. Moina Banerjee	Chief Financial Officer	~~March 12, 2018~~ February 20, 2024
~~Stephen W. Theriot~~ M. Moina Banerjee	(Principal Financial ~~and Accounting~~ Officer)

/s/ Angela Valdes	Chief Accounting Officer	February 20, 2024
Angela Valdes	(Principal Accounting Officer)

/s/ Phyllis R. Caldwell	Trustee	February 20, 2024
Phyllis R. Caldwell

/s/ Scott A. Estes	Trustee	~~March 12, 2018~~ February 21, 2023
Scott A. Estes

/s/ Alan S. Forman	Trustee	~~March 12, 2018~~ February 20, 2024
Alan S. Forman

/s/ Michael J. Glosserman	Trustee	~~March 12, 2018~~ February 20, 2024
Michael J. Glosserman

/s/ ~~Charles E. Haldeman, Jr.~~Alisa M. Mall	Trustee	~~March 12, 2018~~ February 20, 2024
~~Charles E. Haldeman, Jr.~~ Alisa M. Mall

/s/ Carol A. Melton	Trustee	~~March 12, 2018~~ February 20, 2024
Carol A. Melton

/s/ William J. Mulrow	Trustee	~~March 12, 2018~~ February 20, 2024
William J. Mulrow

/s/ ~~Mitchell N. Schear~~D. Ellen Shuman	Trustee	~~March 12, 2018~~ February 20, 2024
~~Mitchell N. Schear~~ D. Ellen Shuman

~~/s/ Ellen Shuman~~	~~Trustee~~	~~March 12, 2018~~
~~Ellen Shuman~~

~~/s/ John F. Wood~~	~~Trustee~~	~~March 12, 2018~~
~~John F. Wood~~

148

~~111~~



~~Maryland~~		~~81‑4307010~~
Maryland	81-4307010
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)


~~4445 Willard~~ 4747 Bethesda Avenue ~~Suite 400~~ ~~Chevy Chase, MD~~	Bethesda	~~20815~~ MD	20814
Suite 200			(Zip Code)
(Address of ~~principal executive offices)~~Principal Executive Offices)		~~(Zip Code)~~

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
~~Registrant’s telephone number, including area code:~~ ~~(240) 333‑3600~~



~~Securities registered pursuant to Section 12(b) of the Act:~~
Common Shares, par value $0.01 per share		JBGS	New York Stock Exchange
~~(Title of each class)~~	~~(Name of exchange on which registered)~~
~~Securities registered pursuant to Section 12(g) of the Act: None~~

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


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


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



		~~Page~~
~~PART I~~
~~Item 1.~~	~~Business~~ 9	3
~~Item 1A.~~	~~Risk Factors~~	7	Page
		Definitions	3
		PART I
Item 1.		Business	8
Item 1A.		Risk Factors	20
Item 1B.		Unresolved Staff Comments	32 35
Item 2.1C.	~~Properties~~	32Cybersecurity	35
Item 3.2.	~~Legal Proceedings~~	38Properties	37
Item 3.		Legal Proceedings	41
Item 4.		Mine Safety Disclosures	38 41
		PART II
Item 5.		Market For ~~Registrant’s~~Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	38 42
Item 6.	~~Selected Financial Data~~	41[Reserved]	44
Item 7.	~~Management’s~~	Management's Discussion and Analysis of Financial Condition and Results of Operations	42 44
Item 7A.		Quantitative and Qualitative Disclosures About Market Risk	59 63
Item 8.		Financial Statements and Supplementary Data	61 65
Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	~~102~~ 113
Item 9A.		Controls and Procedures	~~102~~ 113
Item 9B.		Other Information	~~102~~ 115
~~PART III~~ Item 9C.		Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	137
		PART III
Item 10.		Directors, Executive Officers and Corporate Governance	~~102~~ 138
Item 11.		Executive Compensation	~~102~~ 138
Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~102~~ 138
Item 13.		Certain Relationships and Related Transactions and Director Independence	~~102~~ 138
Item 14.		Principal Accounting Fees and Services	~~103~~ 138
		PART IV
Item 15.		Exhibits and Financial Statement Schedules	~~103~~ 139
Item 16.		Form 10-K Summary	~~110~~ 147
	~~Signatures~~	~~111~~Signatures	148



	Year Ended December 31,
(Dollars in thousands)	2017			2016			2015
Rental revenue from the U.S. federal government	$	92,192		$	103,864		$	102,951
Percentage of office segment rental revenue	24.5		%	29.6		%	29.7		%
Percentage of total rental revenue	19.4		%	23.6		%	23.9		%



Office Assets	% Ownership		C/U ⁽¹⁾	Same Store ⁽²⁾ YTD 2016-2017	Total Square Feet	% Leased		Office % Occupied		Retail % Occupied

DC
Universal Buildings	100.0	%	C	Y	686,919	97.7	%	98.9	%	99.6	%
2101 L Street	100.0	%	C	Y	380,375	98.7	%	99.0	%	100.0	%
Bowen Building	100.0	%	C	Y	231,402	86.1	%	86.1	%	—
1730 M Street ⁽³⁾	100.0	%	C	Y	205,360	92.5	%	92.2	%	100.0	%
1233 20th Street	100.0	%	C	N	151,695	86.8	%	87.2	%	—
Executive Tower	100.0	%	C	Y	129,739	79.7	%	80.0	%	88.6	%
1600 K Street	100.0	%	C	N	84,601	92.6	%	91.0	%	100.0	%
L’Enfant Plaza Office-East ⁽³⁾	49.0	%	U	N	437,518	89.7	%	89.9	%	—
L’Enfant Plaza Office-North	49.0	%	U	N	305,157	84.7	%	83.8	%	85.9	%
L’Enfant Plaza Retail ⁽³⁾	49.0	%	U	N	143,614	78.1	%	100.0	%	79.0	%
The Warner	55.0	%	U	Y	585,040	98.6	%	99.6	%	90.4	%
Investment Building	5.0	%	U	Y	401,400	91.3	%	91.1	%	100.0	%
The Foundry	9.9	%	U	N	233,533	91.2	%	92.4	%	70.3	%
1101 17th Street	55.0	%	U	Y	215,675	97.0	%	98.4	%	82.7	%



Office Asset	In-Service	Not Available for Lease
1550 Crystal Drive	489,997	18,293
RTC - West	446,176	19,911
Commerce Executive	393,527	14,085
Summit II	138,350	6,480
1800 South Bell Street	74,701	146,079
1831 Wiehle Avenue	25,152	50,039
NoBe II Office	39,836	96,983



Multifamily Asset	In-Service	Not Available for Lease
Falkland Chase - North	106,159	13,284
The Terano	195,864	3,904



Other Assets	% Ownership	C/U ⁽¹⁾	Same Store ⁽²⁾ YTD 2016-2017	Total Square Feet ⁽³⁾	% Leased		% Occupied

Retail
DC
North End Retail	100.0%	C	N	27,432	100.0	%	99.0	%
VA
Vienna Retail*	100.0%	C	Y	8,547	100.0	%	100.0	%
Stonebridge at Potomac Town Center-Phase I*	10.0%	U	N	462,633	93.9	%	93.9	%
Total / Weighted Average				498,612	94.3	%	94.2	%

Hotel
VA
Crystal City Marriott Hotel	100.0%	C	Y	266,000 (345 Rooms)

Operating - Total				764,612

Under Construction
VA
Stonebridge at Potomac Town Center-Phase II*	10.0%	U	N	41,050	100.0	%

Total				805,662

Totals at JBG SMITH Share
Operating assets				348,242	96.5	%	96.2	%
Under construction assets				4,105	100.0	%



						Estimated Commercial SF / Multifamily Units to be Replaced ⁽¹⁾
	Number of Assets						Estimated Total Investment (In thousands)
		Estimated Potential Development Density (SF)
Region		Total	Office	Multifamily	Retail

Owned
DC
DC Emerging	7	1,426,900	312,100	1,105,800	9,000	—	$	77,143
DC CBD	1	336,200	324,400	—	11,800	—	51,093
	8	1,763,100	636,500	1,105,800	20,800	—	128,236
VA
Pentagon City	5	4,572,800	1,429,100	2,999,100	144,600	—	163,284
Reston	6	4,193,100	1,282,800	2,683,600	226,700	102,680 SF / 15 units	92,596
Crystal City	9	2,982,400	620,000	2,088,200	274,200	74,701 SF	143,575
Other VA	5	951,300	496,400	394,300	60,600	22,203 SF	33,122
	25	12,699,600	3,828,300	8,165,200	706,100	199,584 SF / 15 units	432,577
MD
Silver Spring	1	1,276,300	—	1,156,300	120,000	162 units	40,198
Greater Rockville	4	126,500	19,200	88,600	18,700	7,170 SF	4,029
	5	1,402,800	19,200	1,244,900	138,700	7,170 SF / 162 units	44,227
Total / weighted average	38	15,865,500	4,484,000	10,515,900	865,600	206,754 SF / 177 units	$	605,040
Optioned ⁽²⁾
DC
DC Emerging	4	2,045,100	78,800	1,750,400	215,900	—	$	131,432
VA
Other VA	1	11,300	—	10,400	900	—	1,019
Total / weighted average	5	2,056,400	78,800	1,760,800	216,800	—	$	132,451
Total / Weighted Average	43	17,921,900	4,562,800	12,276,700	1,082,400	206,754 SF / 177 units	$	737,491



		At JBG SMITH Share
Tenant	Number of Leases	Square Feet	% of Total Square Feet		Annualized Rent (In thousands)		% of Total Annualized Rent
GSA	82	2,579,525	24.4	%	$	103,149	22.3	%
Family Health International	9	320,791	3.0	%	15,641		3.4	%
Lockheed Martin Corporation	5	274,361	2.6	%	13,493		2.9	%
Arlington County	9	241,288	2.3	%	11,608		2.5	%
Paul Hastings LLP	5	125,863	1.2	%	9,478		2.1	%
Greenberg Traurig LLP	1	115,315	1.1	%	8,904		1.9	%
Baker Botts	2	85,090	0.8	%	6,796		1.5	%
Public Broadcasting Service	5	140,885	1.3	%	5,707		1.2	%
WeWork	3	122,271	1.2	%	5,553		1.2	%
Accenture LLP	1	102,756	1.0	%	5,545		1.2	%
Total	122	4,108,145	38.9	%	$	185,874	40.2	%



		At JBG SMITH Share
Year of Lease Expiration	Number of Leases	Square Feet	% of Total Square Feet		Annualized Rent (in thousands)		% of Total Annualized Rent		Annualized Rent Per Square Foot		Estimated Annualized Rent Per Square Foot at Expiration ⁽¹⁾
Month-to-Month	77	126,322	1.2	%	$	2,949	0.6	%	$	23.34	$	23.34
2018	193	945,626	8.9	%	40,977		8.9	%	43.33		43.72
2019	174	1,182,027	11.2	%	53,758		11.6	%	45.48		46.65
2020	187	1,472,239	13.9	%	69,613		15.1	%	47.28		49.37
2021	130	1,044,166	9.9	%	47,870		10.4	%	45.84		49.58
2022	126	1,437,614	13.6	%	66,269		14.3	%	46.10		49.36
2023	74	462,611	4.4	%	18,683		4.0	%	40.39		45.85
2024	80	646,725	6.1	%	29,030		6.3	%	44.89		52.42
2025	57	417,943	4.0	%	16,299		3.5	%	39.00		45.34
2026	69	387,140	3.7	%	17,316		3.7	%	44.73		51.89
Thereafter	155	2,453,264	23.1	%	99,555		21.6	%	40.58		51.87
In‑Place Leases - Total/Weighted Average	1,322	10,575,677	100.0	%	$	462,319	100.0	%	$	43.72	$	48.81



	2017
	High Price Per Share		Low Price per Share		Dividends Declared Per Common Share ⁽¹⁾
Third quarter (July 18 - September 30)	$	37.24	$	32.08	$	—
Fourth quarter	35.64		30.79		0.45



	Period Ending
	07/18/17	07/31/17	08/31/17	09/30/17	10/31/17	11/30/17	12/31/17
JBG SMITH Properties	100.00	95.27	87.89	91.86	83.81	90.07	94.51
S&P MidCap 400 Index	100.00	99.90	98.37	102.22	104.54	108.38	108.61
FTSE NAREIT Equity Office Index	100.00	98.56	97.48	99.26	98.39	101.15	102.57



	Weighted Average Effective Interest Rate at	December 31,
	December 31, 2017	2017 ⁽¹⁾			2016
		(In thousands)
Variable rate ⁽²⁾	3.62%	$	498,253		$	547,291
Fixed rate ⁽³⁾	4.25%	1,537,706			620,327
Mortgages payable		2,035,959			1,167,618
Unamortized deferred financing costs and premium/discount, net		(10,267		)	(2,604		)
Mortgages payable, net		$	2,025,692		$	1,165,014
Payable to former parent ⁽⁴⁾	—	$	—		$	283,232



	December 31, 2017
	Interest Rate	Balance
		(In thousands)
Revolving credit facility ⁽¹⁾	2.66%	$	115,751

Tranche A-1 Term Loan	3.17%	$	50,000
Unamortized deferred financing costs, net		(3,463		)
Unsecured term loan, net		$	46,537



	December 31, 2017						December 31, 2016
(Amounts in thousands)			Weighted Average Effective Interest Rate		Effect of 1% Change in Base Rates				Weighted Average Effective Interest Rate
	Balance		Weighted Average Effective Interest Rate		Effect of 1% Change in Base Rates		Balance		Weighted Average Effective Interest Rate
Debt (contractual balances):
Mortgages payable
Variable rate ⁽¹⁾	$	498,253	3.62	%	$	5,052	$	547,291	2.11%
Fixed rate ⁽²⁾	1,537,706		4.25	%	—		620,327		5.52%
	$	2,035,959			$	5,052	$	1,167,618
Credit facility (variable rate):
Revolving credit facility	$	115,751	2.66	%	$	1,174	—		—
Tranche A-1 Term Loan	50,000		3.17	%	507		—		—
Pro rata share of debt of unconsolidated entities (contractual balances):
Variable rate ⁽¹⁾	$	158,154	4.40	%	$	1,604	$	17,050	1.87%
Fixed rate ⁽²⁾	238,138		3.79	%	—		150,150		3.65%
	$	396,292			$	1,604	$	167,200

JBG SMITH PROPERTIES Consolidated and Combined Balance Sheet (In thousands, except par value amounts)

	December 31, 2017			December 31, 2016
ASSETS
Real estate, at cost:
Land and improvements	$	1,368,294		$	939,592
Buildings and improvements	3,670,268			3,064,466
Construction in progress, including land	978,942			151,333
Real estate held for sale	8,293			—
	6,025,797			4,155,391
Less accumulated depreciation	(1,011,330		)	(930,769		)
Real estate, net	5,014,467			3,224,622
Cash and cash equivalents	316,676			29,000
Restricted cash	21,881			3,263
Tenant and other receivables, net	46,734			33,380
Deferred rent receivable, net	146,315			136,582
Investments in and advances to unconsolidated real estate ventures	261,811			45,776
Receivable from former parent	—			75,062
Other assets, net	263,923			112,955
TOTAL ASSETS	$	6,071,807		$	3,660,640

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgages payable, net	$	2,025,692		$	1,165,014
Revolving credit facility	115,751			—
Unsecured term loan, net	46,537			—
Payable to former parent	—			283,232
Accounts payable and accrued expenses	138,607			40,923
Other liabilities, net	161,277			49,487
Total liabilities	2,487,864			1,538,656
Commitments and contingencies
Redeemable noncontrolling interests	609,129			—
Shareholders' equity:
Preferred shares, $0.01 par value - 200,000 shares authorized, none issued	—			—
Common shares, $0.01 par value - 500,000 shares authorized and 117,955 shares issued and outstanding at December 31, 2017	1,180			—
Additional paid-in capital	3,063,625			—
Accumulated deficit	(95,809		)	—
Accumulated other comprehensive income	1,612			—
Total shareholders' equity of JBG SMITH Properties	2,970,608			—
Former parent equity	—			2,121,689
Noncontrolling interests in consolidated subsidiaries	4,206			295
Total equity	2,974,814			2,121,984
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	6,071,807		$	3,660,640



	Common Shares			Additional Paid-In Capital			Accumulated Deficit				Accumulated Other Comprehensive Income			Former Parent Equity				Noncontrolling Interests			Total Equity
	Shares	Amount
BALANCE AT JANUARY 1, 2015														$	1,988,347			$	568		$	1,988,915
Net income attributable to former parent														49,628				—			49,628
Deferred compensation shares and options, net														4,506				—			4,506
Contributions from former parent, net														16,495				(53		)	16,442
BALANCE AT DECEMBER 31, 2015														2,058,976				515			2,059,491
Net income attributable to former parent														61,974				—			61,974
Deferred compensation shares and options, net														4,502				—			4,502
Distributions to former parent, net														(3,763		)		(220		)	(3,983		)
BALANCE AT DECEMBER 31, 2016														2,121,689				295			$	2,121,984
Net loss attributable to common shareholders	—	$	—	$	—		$	(42,729	)		$	—		(29,024		)	⁽¹⁾	(3		)	(71,756		)
Deferred compensation shares and options, net	—	—		—			—				—			1,526				—			1,526
Contributions from former parent, net	—	—		—			—				—			333,020				—			333,020
Issuance of common limited partnership units at the Separation	—	—		—			—				—			(96,632		)		—			(96,632		)
Issuance of common shares at the Separation	94,736	947		2,329,632			—				—			(2,330,579		)		—			—
Issuance of common shares in connection with the Combination	23,219	233		864,685			—				—			—				—			864,918
Noncontrolling interests acquired in connection with the Combination	—	—		—			—				—			—				3,586			3,586
Dividends declared on common shares ($0.45 per common share)	—	—		—			(53,080		)		—			—				—			(53,080		)
Distributions to noncontrolling interests	—	—		—			—				—			—				(171		)	(171		)
Contributions from noncontrolling interests	—	—		—			—				—			—				499			499
Redeemable noncontrolling interest redemption value adjustment and other comprehensive income allocation	—	—		(130,692		)	—				(225		)	—				—			(130,917		)
Other comprehensive income	—	—		—			—			—	1,837			—				—			1,837
BALANCE AT DECEMBER 31, 2017	117,955	$	1,180	$	3,063,625		$	(95,809	)		$	1,612		$	—			$	4,206		$	2,974,814


							Gain (Loss)
			Gross		Cash		on the Sale
			Sales		Proceeds		of Real
Date Disposed	Assets	Segment	Price		from Sale		Estate

			(In thousands)
Year Ended December 31, 2023
March 17, 2023	Development Parcel	Other	$	5,500	$	4,954	$	(53)
March 23, 2023	4747 Bethesda Avenue ⁽¹⁾	Commercial						40,053
September 20, 2023	Falkland Chase-South & West and Falkland Chase-North	Multifamily		95,000		93,094		1,208
October 4, 2023	5 M Street Southwest	Other		29,500		28,585		430
November 30, 2023	Crystal City Marriott	Commercial		80,000		79,563		37,051
December 5, 2023	Capitol Point-North-75 New York Avenue	Other		11,516		11,285		(23)
	Other ⁽²⁾							669
							$	79,335
Year Ended December 31, 2022
March 28, 2022	Development Parcel	Other	$	3,250	$	3,149	$	(136)
April 1, 2022	Universal Buildings ⁽³⁾	Commercial		228,000		194,737		41,245
April 13, 2022	7200 Wisconsin Avenue, 1730 M Street, RTC-West and Courthouse Plaza 1 and 2 ⁽⁴⁾	Commercial/ Other		580,000		527,694		(4,047)
May 25, 2022	Pen Place	Other		198,000		197,528		121,502
December 23, 2022	Land Option	Other		6,150		5,800		3,330
							$	161,894



Fair value of purchase consideration:
Common shares and OP Units	$	1,224,885
Cash	20,573
Total consideration paid	$	1,245,458

Fair value of assets acquired and liabilities assumed:
Land and improvements	$	338,072
Building and improvements	609,156
Construction in progress, including land	699,800
Leasehold improvements and equipment	7,890
Real estate	1,654,918
Cash	104,529
Restricted cash	13,460
Investments in and advances to unconsolidated real estate ventures	241,611
Identified intangible assets	138,371
Notes receivable ⁽¹⁾	50,934
Identified intangible liabilities	(8,687		)
Mortgages payable assumed ⁽²⁾	(768,523		)
Capital lease obligations assumed ⁽³⁾	(33,543		)
Lease assumption liabilities ⁽⁴⁾	(43,388		)
Deferred tax liability ⁽⁵⁾	(18,610		)
Other liabilities acquired, net	(57,650		)
Noncontrolling interests in consolidated subsidiaries	(3,588		)
Net assets acquired	1,269,834
Gain on bargain purchase ⁽⁶⁾	24,376
Total consideration paid	$	1,245,458

(1)
⁽¹⁾	~~During the year ended December 31, 2017, we received proceeds of $50.9 million from the repayment of the notes receivable acquired~~We sold an 80.0% interest in the ~~Combination.~~asset for a gross sales price of $196.0 million, representing a gross valuation of $245.0 million. See Note 5 for additional information.

(2)
⁽²⁾	~~Subject~~Related to ~~various interest rate swap and cap agreements assumed in the Combination that are considered economic hedges, but not designated as accounting hedges.~~prior period dispositions.

(3)
⁽³⁾	InCash proceeds from sale excludes a lease termination fee of $24.3 million received during the ~~Combination, two ground leases were assumed that were determined to be capital leases. On July 25, 2017, we purchased a land parcel located in Reston, Virginia associated with one~~first quarter of ~~the ground leases for $19.5 million.~~2022.


⁽⁵⁾	~~Related to the management and leasing contracts acquired in the Combination.~~



Outstanding common shares and common limited partnership units prior to the Combination	100,571
Exchange ratio ⁽¹⁾	2.71
Common shares and OP Units issued in consideration	37,164
Price per share/unit ⁽²⁾	$	37.10
Fair value of common shares and OP Units issued in consideration	$	1,378,780
Fair value adjustment to OP Units due to transfer restrictions	(43,303		)
Portion of consideration attributable to performance of future services ⁽³⁾	(110,591		)
Fair value of common shares and OP Units purchase consideration	$	1,224,886


⁽¹⁾	~~Represents the implied exchange ratio of one common share and OP Unit of JBG SMITH for 2.71 common shares and common limited partnership units prior to the Combination.~~


⁽²⁾	~~Represents the volume weighted average share price on July 18, 2017.~~



	Total Fair Value		Weighted Average Amortization Period
	Total Fair Value		Weighted Average Amortization Period	Useful Life ⁽¹⁾
	(In thousands)		(In years)
Tangible assets:
Building and improvements	$	543,584		3 - 40 years
Tenant improvements	65,572			Shorter of useful life or remaining life of the respective lease
Total building and improvements	$	609,156
Leasehold improvements	$	4,422		Shorter of useful life or remaining life of the respective lease
Equipment	3,468			5 years
Total leasehold improvements and equipment	$	7,890
Identified intangible assets:
In-place leases	$	60,317	6.4	Remaining life of the respective lease
Above-market real estate leases	11,732		6.3	Remaining life of the respective lease
Below-market ground leases	332		88.5	Remaining life of the respective lease
Option to enter into ground lease	17,090		N/A	Remaining life of contract
Management and leasing contracts ⁽²⁾	48,900		7.5	Estimated remaining life of contracts, ranging between 3 - 9 years
Total identified intangible assets	$	138,371
Identified intangible liabilities:
Below-market real estate leases	$	8,687	10.3	Remaining life of the respective lease


⁽¹⁾	In determining these useful lives, we considered the length of time the asset had been in existence, the maintenance history, as well as anticipated future maintenance, and any contractual stipulations that might limit the useful life.


⁽²⁾	~~Includesin-place property management, leasing, asset management and development management contracts.~~