UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



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

For the quarterly period ended September 30, ~~2017~~

2021



¨	☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number 001-37994

JBG SMITH PROPERTIES

________________________________________________________________________________

(Exact name of Registrant as specified in its charter)


Maryland
~~Maryland~~		~~81‑4307010~~ 81-4307010
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
4747 Bethesda AvenueSuite 200 BethesdaMD	20814
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number, including area code: (240) 333-3600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
~~4445 Willard Avenue, Suite 400~~ Common Shares, par value $0.01 per share ~~Chevy Chase, MD~~	JBGS	~~20815~~
~~(Address of principal executive offices)~~		~~(Zip Code)~~
~~(240) 333‑3600~~ New York Stock Exchange ~~Registrant’s telephone number, including area code~~

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý☒ No o

☐

Indicate by check mark whether the Registrant has submitted electronically ~~and posted on its corporate Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ý☒ No o

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filero☒ Accelerated filer o☐ Non-accelerated filer ý☐ Smaller reporting company o

☐Emerging growth company o

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange ~~Act~~ o

Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule ~~12b-2~~12b-2 of the Exchange Act) Yes o☐ No ý

☒

As of ~~November 6, 2017,~~October 29, 2021, JBG SMITH Properties had ~~117,957,107~~129,725,289 common shares outstanding.

Table of Contents

JBG SMITH PROPERTIES

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED SEPTEMBER 30, 2021

TABLE OF CONTENTS



	~~JBG SMITH PROPERTIES~~ ~~QUARTERLY REPORT ON FORM 10-Q~~ ~~QUARTER ENDED SEPTEMBER 30, 2017~~

	~~TABLE OF CONTENTS~~

PART I – FINANCIAL INFORMATION

Item 1.		Financial Statements	Page
		Condensed Consolidated ~~and Combined~~ Balance Sheets (unaudited) as of September 30, ~~2017~~ 2021 and December 31, ~~2016~~ 2020	2 3
		Condensed Consolidated ~~and Combined~~ Statements of Operations (unaudited) for the three and nine months ended September 30, ~~2017~~2021 and ~~2016~~ 2020	3 4
		Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and ~~Combined Statement~~nine months ended September 30, 2021 and 2020	5
		Condensed Consolidated Statements of Equity (unaudited) for the three and nine months ended September 30, ~~2017~~ 2021 and 2020	4 6
		Condensed Consolidated ~~and Combined~~ Statements of Cash Flows (unaudited) for the nine months ended September 30, ~~2017~~2021 and ~~2016~~ 2020	5 8
		Notes to Condensed Consolidated ~~and Combined~~ Financial Statements (unaudited)	7 10

Item 2.		~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations	36 30
Item 3.		Quantitative and Qualitative Disclosures about Market Risk	52 49
Item 4.		Controls and Procedures	53 50

PART II – OTHER INFORMATION

Item 1.		Legal Proceedings	54 50
Item 1A.		Risk Factors	54 50
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	54 51
Item 3.		Defaults Upon Senior Securities	54 51
Item 4.		Mine Safety Disclosures	54 51
Item 5.		Other Information	54 51
Item 6.	~~Exhibits~~	55Exhibits	52
~~Signature~~		57Signatures	53

Table of Contents

PART I –- FINANCIAL INFORMATION

ITEM 1. Financial Statements

JBG SMITH PROPERTIES

JBG SMITH PROPERTIES
Condensed Consolidated and Combined Balance Sheets
September 30, 2017 and December 31, 2016
(Unaudited)
(In thousands, except par value amounts)
September 30,
2017 December 31,
2016
ASSETS
Real estate, at cost:
Land and improvements $ 1,272,997
$ 939,592
Buildings and improvements 3,662,853
3,064,466
Construction in progress, including land 906,680
151,333
5,842,530
4,155,391
Less accumulated depreciation (982,454 ) (930,769 )
Real estate, net 4,860,076
3,224,622
Cash and cash equivalents 367,896
29,000
Restricted cash 17,521
3,263
Tenant and other receivables, net 50,474
33,380
Deferred rent receivable, net
145,683
136,582
Investments in and advances to unconsolidated real estate ventures 284,986
45,776
Receivable from former parent —
75,062
Other assets, net
288,391
112,955
TOTAL ASSETS $ 6,015,027
$ 3,660,640

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgages payable, net $ 1,977,674
$ 1,165,014
Revolving credit facility 115,751
—
Unsecured term loan, net 46,389
—
Payable to former parent —
283,232
Accounts payable and accrued expenses 131,627
40,923
Other liabilities, net 100,774
49,487
Total liabilities 2,372,215
1,538,656
Commitments and contingencies

Redeemable noncontrolling interests 567,001
—
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 117,957 shares issued and outstanding at September 30, 2017 1,180
—
Additional paid-in capital 3,099,056
—
Accumulated deficit (28,827 ) —
Total shareholders' equity of JBG SMITH Properties 3,071,409
—
Former parent equity —
2,121,689
Noncontrolling interests in consolidated subsidiaries 4,402
295
Total equity 3,075,811
2,121,984
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY $ 6,015,027
$ 3,660,640

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except par value amounts)


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

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgages payable, net	$	1,674,285	$	1,593,738
Revolving credit facility		—		—
Unsecured term loans, net		398,493		397,979
Accounts payable and accrued expenses		105,307		103,102
Other liabilities, net		200,204		247,774
Total liabilities		2,378,289		2,342,593
Commitments and contingencies
Redeemable noncontrolling interests		526,913		530,748
Shareholders' equity:
Preferred shares, $0.01 par value - 200,000 shares authorized; NaN issued		0		0
Common shares, $0.01 par value - 500,000 shares authorized; 129,704 and 131,778 shares issued and outstanding as of September 30, 2021 and December 31, 2020		1,298		1,319
Additional paid-in capital		3,606,462		3,657,643
Accumulated deficit		(495,033)		(412,944)
Accumulated other comprehensive loss		(25,446)		(39,979)
Total shareholders' equity of JBG SMITH Properties		3,087,281		3,206,039
Noncontrolling interests		16,495		167
Total equity		3,103,776		3,206,206
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	6,008,978	$	6,079,547

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

Table of Contents

JBG SMITH PROPERTIES
Condensed Consolidated and Combined Statements of Operations
For the three and nine months ended September 30, 2017 and 2016
(Unaudited)
(In thousands, except per share data)
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
REVENUE
Property rentals $ 116,458
$ 103,265
$ 316,899
$ 299,497
Tenant reimbursements 9,593
10,231
27,161
28,428
Third-party real estate services, including reimbursements
25,141
8,297
38,881
24,617
Other income 1,158
1,564
3,701
3,938
Total revenue 152,350
123,357
386,642
356,480
EXPENSES
Depreciation and amortization 43,951
31,377
109,726
98,291
Property operating 29,634
27,287
77,341
75,087
Real estate taxes 17,194
14,462
47,978
43,712
General and administrative:
Corporate and other 10,593
10,913
35,536
36,040
Third-party real estate services 21,178
4,779
30,362
14,272
Share-based compensation related to Formation Transaction
14,445
—
14,445
—
Transaction and other costs 104,095
1,528
115,173
1,528
Total operating expenses 241,090
90,346
430,561
268,930
OPERATING (LOSS) INCOME (88,740 ) 33,011
(43,919 ) 87,550
(Loss) income from unconsolidated real estate ventures (1,679 ) 584
(1,365 ) (952 )
Interest and other (loss) income, net (379 ) 749
1,366
2,292
Interest expense (15,309 ) (13,028 ) (43,813 ) (38,662 )
Loss on extinguishment of debt (689 ) —
(689 ) —
Gain on bargain purchase 27,771
—
27,771
—
(LOSS) INCOME BEFORE INCOME TAX EXPENSE (79,025 ) 21,316
(60,649 ) 50,228
Income tax benefit (expense) 1,034
(302 ) 317
(884 )
NET (LOSS) INCOME (77,991 ) 21,014
(60,332 ) 49,344
Net loss attributable to redeemable noncontrolling interests 8,160
—
2,481
—
NET (LOSS) INCOME ATTRIBUTABLE TO
JBG SMITH PROPERTIES $ (69,831 ) $ 21,014
$ (57,851 ) $ 49,344
(LOSS) EARNINGS PER COMMON SHARE:
Basic $ (0.61 ) $ 0.21
$ (0.55 ) $ 0.49
Diluted $ (0.61 ) $ 0.21
$ (0.55 ) $ 0.49
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - basic and diluted $ 114,744
$ 100,571
$ 105,347
$ 100,571

JBG SMITH PROPERTIES

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)


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

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

Table of Contents

JBG SMITH PROPERTIES

Condensed Consolidated ~~and Combined Statement~~Statements of ~~Equity~~

~~For the nine months ended September 30, 2017~~

Comprehensive Income (Loss)

(Unaudited)

(In thousands)

Common Shares
Additional
Paid-In
Capital
Accumulated Deficit
Former
Parent
Equity
Noncontrolling Interests in Consolidated Subsidiaries Total Equity
Shares Amount
BALANCE AT JANUARY 1, 2017 $ 2,121,689
$ 295
$ 2,121,984
Net income (loss) attributable to JBG SMITH
Properties —
$ —
$ —
$ (28,827 ) (29,024 )
⁽¹⁾
—
(57,851 )
Deferred compensation shares and options, net —
—
—
—
1,526
—
1,526
Contributions from former parent, net —
—
—
—
334,843
—
334,843
Issuance of common limited partnership units
   at the Separation
—
—
—
—
(96,632 ) —
(96,632 )
Issuance of common shares at the Separation 94,736
947
2,331,455
—
(2,332,402 ) —
—
Issuance of common shares in connection with the
   Combination
23,221
233
864,685
—
—
—
864,918
Noncontrolling interests acquired in connection
   with the Combination
—
—
—
—
—
3,987
3,987
Distributions to noncontrolling interests —
—
—
—
—
(14 ) (14 )
Contributions from noncontrolling interests —
—
—
—
—
134
134
Adjustment to record redeemable noncontrolling
   interest at redemption value
—
—
(97,084 ) —
—
—
(97,084 )
BALANCE AT SEPTEMBER 30, 2017 117,957
$ 1,180
$ 3,099,056
$ (28,827 ) $ —
$ 4,402
$ 3,075,811

~~_______________~~


⁽¹⁾	~~Net loss earned from January 1, 2017 through July 17, 2017 is attributable to our former parent as it was the sole shareholder prior to July 17, 2017. See Note 1 for additional information.~~


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

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

Table of Contents

JBG SMITH PROPERTIES
Condensed Consolidated and Combined Statements of Cash Flows
For the nine months ended September 30, 2017 and 2016
(Unaudited)
(In thousands)
Nine Months Ended September 30,
2017 2016
OPERATING ACTIVITIES:
Net (loss) income $ (60,332 ) $ 49,344
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Share-based compensation expense 17,164
3,486
Depreciation and amortization, including amortization of debt issuance costs 111,684
99,612
Deferred rent (9,249 ) (10,772 )
Loss from unconsolidated real estate ventures 1,365
952
Amortization of above- and below-market lease intangibles, net (872 ) (1,012 )
Return on capital from unconsolidated real estate ventures 1,149
1,020
Gain on bargain purchase (27,771 ) —
Loss on extinguishment of debt 689
—
Unrealized gain on interest rate swaps (467 ) —
Bad debt expense 1,808
618
Other non-cash items 6,466
3,592
Changes in operating assets and liabilities:
Tenant and other receivables (3,617 ) (2,177 )
Other assets, net (32,884 ) (19,762 )
Accounts payable and accrued expenses 19,077
(4,091 )
Other liabilities, net (817 ) (19,427 )
Net cash provided by operating activities 23,393
101,383
INVESTING ACTIVITIES:
Development costs, construction in progress and real estate additions (115,922 ) (185,439 )
Cash received in connection with the Combination 83,942
—
Restricted cash (798 ) 3,234
Investments in and advances to unconsolidated real estate ventures (1,441 ) (19,965 )
Repayment of notes receivable 50,934
—
Other investments (3,531 ) (1,935 )
Proceeds from repayment of receivable from former parent 75,000
—
Net cash provided by (used in) investing activities 88,184
(204,105 )
FINANCING ACTIVITIES:
Contributions from former parent, net 160,203
32,955
Repayment of borrowings from former parent (115,630 ) —
Capital lease payments (17,776 ) —
Proceeds from borrowings from former parent 4,000
39,000
Proceeds from borrowings 407,769
—
Repayments of borrowings (192,681 ) (8,871 )
Debt issuance costs (18,686 ) (37 )
Contributions from noncontrolling interests 134
—
Distributions to noncontrolling interests (14 ) (7 )
Net cash provided by financing activities 227,319
63,040
Net increase (decrease) in cash and cash equivalents 338,896
(39,682 )
Cash and cash equivalents at beginning of the period 29,000
74,966
Cash and cash equivalents at end of the period $ 367,896
$ 35,284

JBG SMITH PROPERTIES
Condensed Consolidated and Combined Statements of Cash Flows
For the nine months ended September 30, 2017 and 2016
(Unaudited)
(In thousands)

Nine Months Ended September 30,
2017 2016
SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION:⁽¹⁾

Transfer of mortgage payable to former parent $ —
$ 115,022
Cash paid for interest (net of capitalized interest of $2,285 and $3,690 in
2017 and 2016, respectively)
45,354
37,540
Accrued capital expenditures included in accounts payable and accrued expenses 17,633
15,206
Write-off of fully depreciated assets (24,909 ) (87,220 )
Cash payments for income taxes 3,681
1,087
Non-cash transactions related to the Formation Transaction:
Issuance of common limited partnership units at the Separation 96,632
—
Issuance of common shares at the Separation 2,332,402
—
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 97,084
—
Contribution from former parent in connection with the Separation 174,639
—

⁽¹⁾ ~~See Note 3 for information about assets, liabilities and noncontrolling interests acquired in the Formation Transaction.~~

JBG SMITH PROPERTIES

Condensed Consolidated Statements of Equity

(Unaudited)

(In thousands)


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

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

See accompanying notes to the condensed consolidated ~~and combined~~ financial ~~statements.~~

statements (unaudited).

Table of Contents

JBG SMITH PROPERTIES

Condensed Consolidated Statements of Equity

(Unaudited)

(In thousands)



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

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

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

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JBG SMITH PROPERTIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


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

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

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JBG SMITH PROPERTIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Nine Months Ended September 30,
	2021		2020
SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION:
Cash paid for interest (net of capitalized interest of $4,854 and $11,545 in 2021 and 2020)	$	46,010	$	40,744
Accrued capital expenditures included in accounts payable and accrued expenses		41,660		51,092
Write-off of fully depreciated assets		46,278		29,393
Deconsolidation of real estate asset		26,476		—
Conversion of common limited partnership units to common shares		27,350		40,674
Derecognition of operating lease right-of-use assets		—		(13,151)
Derecognition of liabilities related to operating lease right-of-use assets		—		(13,151)
Recognition of finance lease right-of-use assets		—		42,354
Recognition of liabilities related to finance lease right-of-use assets		—		40,684
Cash paid for amounts included in the measurement of lease liabilities for operating leases		1,761		4,603

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

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JBG SMITH PROPERTIES

Notes to Condensed Consolidated ~~and Combined~~ Financial Statements

~~September 30, 2017~~

(Unaudited)

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)~~, owns and operates a portfolio of commercial and multifamily assets amenitized with ancillary retail. JBG SMITH's portfolio reflects its longstanding strategy of owning and operating assets within Metro-served submarkets in the Washington, D.C. metropolitan area that have high barriers to entry and vibrant urban amenities. Over half of our portfolio is in National Landing in Northern Virginia, where we serve as the exclusive developer for Amazon.com, Inc.'s ("Amazon") new headquarters and where Virginia Tech's under-construction $1 billion Innovation Campus is located. In addition, our third-party asset management and real estate services business provides fee-based real estate services to the Washington Housing Initiative ("WHI") Impact Pool, Amazon, the legacy funds formerly organized by The JBG Companies ("JBG") (the "JBG Legacy Funds") and other third parties. 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 September 30, 2021, JBG SMITH, as its sole general partner, controlled JBG SMITH LP and owned 90.8% of its common limited partnership units ("OP Units"). JBG SMITH ~~was formed~~is hereinafter referred to 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.

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’s~~Vornado Realty Trust's ("Vornado") Washington, ~~DC segment, which operated as Vornado / Charles E. Smith, (the "Vornado Included Assets").~~D.C. segment. On July 18, 2017, ~~JBG SMITH~~we acquired the management business and certain assets and liabilities ~~(the "JBG Assets")~~ of ~~The~~ JBG ~~Companies~~ (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 from and after the Separation and Combination.

Prior to the Separation from Vornado, JBG SMITH was a wholly owned subsidiary of Vornado and had no material assets or operations. Pursuant to a separation agreement, 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 Properties LP ("JBG SMITH LP"), our operating partnership, 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 condensed 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 23.3 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 July 18, 2017 and September 30, 2017, we, as its sole general partner controlled JBG SMITH LP and owned 85.6% of its OP Units.

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 concentrating in downtown Washington, DC and other leading urban-infill submarkets with proximity to downtown Washington, DC that have high barriers to entry and key urban amenities, including being within walking distance of a Metro station.

As of September 30, ~~2017,~~2021, our ~~portfolio comprised: (i) 69~~Operating Portfolio consisted of 63 operating assets comprising ~~51 office~~42 commercial assets totaling ~~over 13.7~~13.1 million square feet ~~(11.8~~(11.3 million square feet at our share)~~, 14~~ and 21 multifamily assets totaling ~~6,016~~7,776 units ~~(4,232~~(6,125 units at our share) ~~and four other assets totaling approximately 765,000 square feet (348,000 square feet~~. Additionally, we have: (i) 1 under-construction multifamily asset with 808 units (808 units at our share); (ii) ~~nine assets under construction comprising four office~~11 near-term development assets totaling ~~approximately 1.3~~5.3 million square feet (1.2 million square feet at our share), four multifamily assets totaling 1,334 units (1,149 units at our share) and one other asset totaling approximately 41,100 square feet (4,100 square feet at our share; (iii) one near-term development multifamily asset totaling 433 units (303 units at our share), and (iv) 42 future development assets totaling approximately 21.3 million square feet (17.6(5.0 million square feet at our share) of estimated potential development density; and (iii) 25 future development assets totaling 14.3 million square feet (11.6 million square feet at our share) of estimated potential development density.

~~Our revenues are derived~~

We derive our revenue primarily from leases with ~~office~~commercial and multifamily tenants, ~~including~~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, to our ~~portfolio, we have a~~ third-party asset management and real estate services business ~~that~~ provides fee-based real estate ~~services to our real estate ventures, legacy funds formerly organized by JBG ("JBG Legacy Funds") and other third parties.~~

~~Only the U.S. federal government accounted for 10% or more of our rental revenue for the three and nine months ended September 30, 2017 and 2016, as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
U.S. federal government $ 22,492
$ 27,594
$ 68,869
$ 74,939
Percentage of office segment revenue 22.6 % 30.5 % 25.3 % 28.5 %
Percentage of total rental revenue 17.8 % 24.3 % 20.0 % 22.9 %

services.

Basis of Presentation

The accompanying unaudited condensed consolidated ~~and combined~~ financial statements and notes are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, these ~~unaudited~~ condensed consolidated ~~and combined~~ financial statements do not contain certain information required in annual financial statements and notes as required under GAAP. In our opinion, all adjustments considered necessary for a fair presentation have been included, and all such adjustments are of a normal recurring nature. All intercompany transactions and balances have been eliminated. The results of operations for the three and nine months ended September 30, ~~2017~~2021 and ~~2016~~2020 are not necessarily indicative of the results that may be expected for a full year. These condensed consolidated ~~and combined~~ financial statements should be read in conjunction with our ~~Registration Statement~~Annual Report on Form ~~10, as amended,~~10-K for the year ended December 31, 2020, filed with the Securities and Exchange ~~Commission (the "SEC") and declared effective on June 26, 2017 as well as the final Information Statement filed with the SEC as Exhibit 99.1 to our Current Report on Form 8-K filed on June 27, 2017.~~

Commission.

The accompanying condensed consolidated ~~and combined~~ financial statements include ~~the~~our accounts and those of our wholly owned subsidiaries and consolidated variable interest entities ("VIEs"), including JBG SMITH and our wholly-owned subsidiaries and those other entities in which we have a controlling financial interest, including where we have been determined to be a primary beneficiary of a variable interest entity ("VIE").LP. See Note 65 for ~~more~~ additional

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information on our ~~consolidated~~ VIEs. The portions of the equity and net income (loss) ~~income~~ of consolidated ~~subsidiaries~~entities that are not attributable to ~~JBG SMITH~~us are presented separately as amounts attributable to noncontrolling interests in ~~the~~our condensed consolidated ~~and combined~~ financial statements.

~~Combination~~

~~JBG SMITH and the Vornado Included Assets were under common control of Vornado for all periods prior~~

References to the Separation at July 17, 2017. 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 JBG SMITH. Consequently, theour financial statements ~~of JBG SMITH, as set forth herein, represent a continuation of the~~refer to our condensed consolidated financial ~~information of the Vornado Included Assets as the predecessor and accounting acquirer such that the historical financial information included herein~~statements as of ~~any date or~~September 30, 2021 and December 31, 2020, and for ~~any periods on or prior~~the three and nine months ended September 30, 2021 and 2020. References to ~~the completion of the Combination represents the pre-Combination financial information of the Vornado Included Assets. The financial statements reflect the common shares~~our balance sheets refer to our condensed consolidated balance sheets as of ~~the date of the Separation as outstanding for all prior periods prior~~September 30, 2021 and December 31, 2020. References to July 17, 2017. The acquisition of the management business and certain assets and liabilities of JBG 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 financialour statements of ~~JBG SMITH commencing July 18, 2017.~~

~~The accompanying~~operations refer to our condensed consolidated ~~and combined~~ statements of operations for the three and nine months ended September 30, ~~2017 include~~2021 and 2020. References to our statements of comprehensive income (loss) refer to our condensed consolidated ~~accounts and the combined accounts~~statements of ~~the Vornado Included Assets. Accordingly, the results of operations~~comprehensive income (loss) for the three and nine months ended September 30, ~~2017 reflect the aggregate operations~~2021 and changes in cash flows and equity on a combined basis for all periods prior to July 17, 2017 and on a consolidated basis for all periods subsequent to July 17, 2017. The accompanying condensed combined financial statements for the three and nine months ended September 30, 2016 include the Vornado Included Assets. Therefore, the discussion of our results of operations, cash flows and financial condition set forth in this report is not necessarily indicative of our future results of operations, cash flows or financial condition as an independent, publicly traded company.

References to the financial statements refer to our condensed consolidated and combined financial statements as of September 30, 2017 and December 31, 2016, and for the three and nine months ended September 30, 2017 and 2016. References to the balance sheets refer to our condensed consolidated and combined balance sheets as of September 30, 2017 and December 31, 2016. References to the statement of operations refer to our condensed consolidated and combined statements of operations for the three

and nine months ended September 30, 2017 and 2016. References to the statement of cash flows refer to our condensed consolidated and combined statements of cash flows for the nine months ended September 30, 2017 and 2016.

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 estimated2020.

Income Taxes

We have elected 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 operatingtaxed as a ~~separate standalone public company. These charges are discussed further in Note 17.~~

~~Recasting of 2016 Financial Information~~

~~The historical financial information~~REIT under sections 856-860 of the ~~Vornado Included Assets was recast~~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 ~~exclude Vornado's interest~~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. We currently adhere and intend to continue to adhere to these requirements and to maintain our REIT status in Rosslyn Plaza as it was omitted from the Separation. Financial information disclosed herein as of any date or for any periods on or prior to the completion of the Separation represents such recast amounts.

~~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~~future periods. We also participate in the ~~line item "Investments in~~activities conducted by our subsidiary entities that have elected to be treated as taxable REIT subsidiaries under the Code. As such, we are subject to federal, state and ~~advances to unconsolidated real estate ventures"~~local taxes on ~~our balance sheet to include only real estate investments.~~

~~Reclassification of $4.8 million and $14.3 million of expenses for~~ the ~~three and nine months ended September 30, 2016, respectively, to “General and administrative: third-party real estate services”~~income from “Property operating expenses” as it relates to known expenses incurred to operate our third-party real estate services. Additionally, we reclassified $2.0 million and $6.0 million of income for the three and nine months ended September 30, 2016, respectively, to “Third-party real estate services, including reimbursements” from “Other income” as it relates to revenue earned from our third-party business.

these activities.

2.Summary of Significant Accounting Policies

Significant Accounting Policies

There were no material changes to our significant accounting policies disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.

Use of Estimates

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

~~Business Combinations~~

~~We account~~periods. The most significant of these estimates include: (i) the underlying cash flows and holding periods used in assessing impairment of long-lived assets; (ii) the determination of useful lives for ~~business combinations, including~~tangible and intangible assets; and (iii) the acquisition of real estate, using the acquisition method by recognizing and measuring the identifiable assets acquired, liabilities assumed, and any noncontrolling interests in the acquiree at their acquisition date fair values. As a result, upon the acquisition, we estimate the fair valueassessment of the ~~acquired tangible assets (consisting~~collectability 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 lease 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 theincluding deferred rent receivables. Longer 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. 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 tangible~~holding periods for real estate assets ~~are determined using~~directly reduce the ~~“as-if vacant” approach whereby~~likelihood of recording an impairment loss. If there is a change in the strategy for an asset or if market conditions dictate an earlier sale date, an impairment loss may be recognized, and such loss could be material.

In March 2020, the World Health Organization declared a global pandemic related to the novel coronavirus ("COVID-19"). The significance, extent and duration of the impact of COVID-19 on us and our tenants remains largely uncertain and dependent on near-term and future developments that cannot be accurately predicted at this time, such as the continued severity, duration, transmission rate and geographic spread of COVID-19, the distribution, effectiveness and willingness of people to take COVID-19 vaccines, the extent and effectiveness of the containment measures taken, and the response of the overall economy, the financial markets and the population, particularly in the area in which we ~~use discounted income, or~~operate. The ultimate adverse impact of COVID-19 is highly uncertain; however, the effects of COVID-19 on us and our tenants have affected estimates used in the preparation of the underlying cash ~~flow models with inputs~~flows used in assessing our long-lived assets for impairment and ~~assumptions that~~the assessment of the collectability of receivables from tenants, including deferred rent receivables. We have made what we believe ~~are consistent with current market conditions for similar assets. The most significant assumptions in determining the allocation of the purchase price~~ to ~~tangible assets are the exit capitalization rate, discount rate, estimated market rents and hypothetical expected lease-up periods.~~

~~The fair values of identified intangible assets are determined~~be appropriate accounting estimates 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 termfacts 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 include estimates, during hypothetical lease-up periods, related to space that is actually leased at the time of acquisition. These estimates include (i) lost rent at market rates, (ii) fixed operating costs that will be recovered from tenants and (iii) 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 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 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 and liabilities assumed of each entity.

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 reporting 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.

~~The results of operations of acquisitions are included in our financial statements~~circumstances available as of the ~~dates they are acquired. The intangible assets and liabilities associated with acquisitions are included in "Other assets, net" and "Other liabilities, net", respectively, in~~reporting date. To the extent these estimates differ from actual results, our ~~balance sheets.~~

~~Real Estate~~

Real estate is carried at cost, net of accumulated depreciation and amortization. Maintenance and repairs are expensed as incurred. As real estate is undergoing redevelopment activities, all property operating expenses directly associated with and attributableconsolidated financial statements may be materially affected.

Due to the ~~redevelopment, including interest expense,~~business disruptions and challenges caused by COVID-19, we have provided rent deferrals and other lease concessions to certain tenants. We have entered into agreements with certain tenants, many of which have been placed on the cash basis of accounting, resulting in the deferral to future periods or abatement of $492,000 of rent that had been contractually due in the third quarter of 2021. We are ~~capitalized to the extent that~~negotiating additional rent deferrals and other lease concessions with

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some of our tenants, which have been considered when establishing credit losses against billed and deferred rent receivables. During 2020, we ~~believe such costs are recoverable through the value of the property. The capitalization period begins when redevelopment activities are underway~~began recognizing revenue from substantially all co-working tenants and ends when the project is substantially complete. General and administrative costs are expensed as incurred. Depreciation requires an estimate by management 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 allowances 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 under development. All direct and indirect costs related to development activities are capitalized into "Construction in progress, including land" on our balance sheets,retailers except for grocers, pharmacies, essential businesses and certain demolition costs, which are expensed as incurred. 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 real estate. 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. 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. Similar costs related to properties not under development are expensed as incurred.

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 only if the carrying amount of the asset is not recoverable and is measured basednational credit tenants on the ~~excess~~cash basis 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 Held for Sale~~

Real estate held for sale is recorded at the lower of the carrying amount or the expected sales price less costs to sell. Operations of real estate held for sale and real estate sold are reported in continuing operations if their disposition does not represent a strategic shift that has or will have a major effect on our operations and financial results.

~~The application of the accounting principles that govern the classification any of our real estate as held for sale requires management to make certain significant judgments.~~ accounting.

Recent Accounting Pronouncements

Reference Rate Reform

In ~~evaluating whether real estate meets the held for sale criteria set forth by the Property, Plant and Equipment Topic of~~March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards ~~Codification~~Update 2020-04, Reference Rate Reform ("~~ASC"~~Topic 848"),. Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in Topic 848 is optional and may be elected over the period of March 12, 2020 through December 31, 2022 as reference rate reform activities occur. During the nine months ended September 30, 2021, we did not make ~~a determination as~~any elections. During the year ended December 31, 2020, we elected to apply the ~~point in time~~hedge accounting expedients related to (i) the assertion that ~~it is~~our hedged forecasted transactions remain probable and (ii) the assessments of effectiveness for future London Interbank Offered Rate ("LIBOR") indexed cash flows to assume that ~~a sale~~the index upon which future hedged transactions will be ~~consummated. Given~~based matches the ~~nature~~index on the corresponding derivatives. Application of ~~all real estate sales contracts, it is not unusual for such contracts to allow potential buyers a period~~these expedients preserves our past presentation of ~~time~~our derivatives. We will continue to evaluate the ~~property prior to formal acceptance~~impact of the ~~contract. In addition, certain~~guidance and may apply other ~~matters critical~~elections, as applicable.

3.Acquisition, Dispositions and Assets Held for Sale

Acquisition

We have agreed, subject to ~~the final sale, such as financing arrangements, often remain pending even upon contract acceptance. As~~customary closing conditions, to acquire The Batley, a result, real estate under contract may not close within the expected time period or may not close at all. Therefore, any real estate categorized as held for sale represents only those properties that management has determined are probable to close within the requirements set forth432-unit multifamily asset in the ~~Property, Plant and Equipment Topic~~Union Market submarket of ~~the FASB ASC.~~

~~We do not have any real estate classified as held~~Washington, D.C., for ~~sale~~a purchase price of approximately $205 million. The building was 90.7% occupied as of September 30, ~~2017 and December 31, 2016.~~

~~Cash and Cash Equivalents~~

~~Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less and are carried at cost, which approximates fair value, due~~2021. We expect the acquisition to ~~their short‑term maturities.~~

~~Restricted Cash~~

~~Restricted cash consists primarily of security deposits held on behalf of our tenants, cash escrowed under loan agreements for debt service, real estate taxes,~~close in 2021. We intend to use The Batley as a replacement 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~~in a like-kind exchange for the ~~estimated losses resulting~~proceeds from the ~~inability~~sale of ~~tenants~~Pen Place 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~~Amazon, which is expected to close during the second quarter of 2022.

Dispositions

In April 2021, we invested cash in and ~~Advances~~contributed land to ~~Real Estate Ventures~~

~~We analyze our~~2 real estate ventures ~~to determine whether~~and recognized an $11.3 million gain, which is included in "Gain on sale of real estate" in our statements of operations for the ~~respective entities should be consolidated. If it is determined that these investments do not require consolidation because~~nine months ended September 30, 2021. See Note 4 for additional information.

During the ~~entities are not VIEs in accordance with the Consolidation Topic~~three and nine months ended September 30, 2021, we recognized our proportionate share of the ~~FASB ASC, we are not considered~~gain from the ~~primary beneficiary~~sale of various assets by our unconsolidated real estate ventures, which is included in "Income (loss) from unconsolidated real estate ventures, net" in our statements of operations. See Note 4 for additional information.

Assets Held for Sale

The amounts included in "Assets held for sale" in our balance sheets primarily represent the ~~entities determined to be VIEs, we do not have voting control, and/or the limited partners (or non-managing members) have substantive participatory rights, then the selection~~carrying value of ~~the accounting method used to account~~real estate. The following is a summary of assets held for sale:



			Total	Assets Held
Assets	Segment	Location	Square Feet ⁽¹⁾	for Sale

			(In thousands)
September 30, 2021
Pen Place ⁽²⁾	Other	Arlington, Virginia	2,082	$	74,174
December 31, 2020
Pen Place ⁽²⁾	Other	Arlington, Virginia	2,082	$	73,876

(1)	Represents estimated or approved potential development density.

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(2)	In March 2019, we entered into an agreement for the sale of Pen Place to Amazon, which we expect to close during the second quarter of 2022.

4.Investments in Unconsolidated Real Estate Ventures

The following is a summary of our investments in unconsolidated real estate ventures:


	Effective
	Ownership
Real Estate Venture Partners	Interest ⁽¹⁾	September 30, 2021		December 31, 2020

		(In thousands)
Prudential Global Investment Management	50.0%	$	209,261	$	216,939
Landmark	1.8% - 49.0%		53,295		66,724
CBREI Venture	5.0% - 64.0%		59,028		65,190
Canadian Pension Plan Investment Board ("CPPIB")	55.0%		49,098		47,522
J.P. Morgan Global Alternatives ("J.P. Morgan") ⁽²⁾	50.0%		47,362		—
Berkshire Group	50.0%		53,589		50,649
Brandywine Realty Trust	30.0%		13,755		13,710
Other			664		635
Total investments in unconsolidated real estate ventures ⁽³⁾		$	486,052	$	461,369

(1)	Reflects our effective ownership interests in the underlying real estate as of September 30, 2021. We have multiple investments with certain venture partners with varying ownership interests in the underlying real estate.

(2)	J.P. Morgan is the advisor for an institutional investor.

(3)

As of September 30, 2021 and December 31, 2020, our total investments in unconsolidated real estate ventures were greater than the net book value of the underlying assets by $20.2 million and $18.9 million, resulting principally from capitalized interest and our 0 investment balance in the real estate venture with CPPIB that owns 1101 17th Street.

In April 2021, we entered into 2 real estate ventures with an institutional investor advised by J.P. Morgan, in which we have 50% ownership interests, to design, develop, manage and own approximately 2.0 million square feet of new mixed-use development located in Potomac Yard, the southern portion of National Landing. Our venture partner contributed a land site that is ~~generally~~entitled for 1.3 million square feet of development at Potomac Yard Landbay F, while we contributed cash and adjacent land with over 700,000 square feet of estimated development capacity at Potomac Yard Landbay G. We will also act as pre-developer, developer, property manager and leasing agent for all future commercial and residential properties on the site. We have determined the ventures are VIEs, but we are not the primary beneficiary of the VIEs and, accordingly, we have not consolidated either venture. We recognized an $11.3 million gain on the land contributed to one of the real estate ventures based on the cash received and the remeasurement of our retained interest in the asset, which was included in "Gain on sale of real estate" in our statements of operations for the nine months ended September 30, 2021. As part of the transaction, our venture partner elected to accelerate the monetization of a 2013 promote interest in the land contributed by it to the ventures. During the second quarter of 2021, the total amount of the promote paid was $17.5 million, of which $4.2 million was paid to certain of our non-employee trustees and certain of our executives.

The following is a summary of disposition activity by our unconsolidated real estate ventures for the nine months ended September 30, 2021:

Proportionate

Real Estate

Gross

Share of

Venture

Ownership

Sales

Aggregate

Date Disposed

Partners

Assets

Percentage

Price

Gain ⁽¹⁾

(In thousands)

May 3, 2021

CBREI Venture

Fairway Apartments/Fairway Land ("Fairway") ⁽²⁾

10.0%

93,000

2,094

May 19, 2021

Landmark

Courthouse Metro Land/Courthouse Metro Land – Option ("Courthouse Metro")

18.0%

3,000

2,352

May 27, 2021

Landmark

5615 Fishers Lane

18.0%

6,500

743

September 17, 2021

Landmark

500 L'Enfant Plaza ⁽³⁾

49.0%

166,500

23,137

28,326

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(1)	Included in "Income (loss) from unconsolidated real estate ventures, net" in our statements of operations.

(2)	The venture repaid a related mortgage payable of $45.3 million.

(3)	The venture repaid a related mortgage payable of $80.0 million.

We provide leasing, property management and other real estate services to our unconsolidated real estate ventures. We recognized revenue, including expense reimbursements, of $5.9 million and $17.8 million for the three and nine months ended September 30, 2021, and $6.3 million and $19.3 million for the three and nine months ended September 30, 2020, for such services.

A reconsideration event could cause us to consolidate an unconsolidated real estate venture in the future or deconsolidate a consolidated entity. We evaluate reconsideration events as we become aware of them. Reconsideration events include amendments to real estate venture agreements and changes in our partner's ability to make contributions to the venture. Under certain circumstances, we may purchase our partner's interest.

The following is a summary of the debt of our unconsolidated real estate ventures:


	Weighted
	Average Effective
	Interest Rate ⁽¹⁾	September 30, 2021		December 31, 2020

		(In thousands)
Variable rate ⁽²⁾	2.59%	$	786,169	$	863,617
Fixed rate ⁽³⁾ ⁽⁴⁾	4.16%		293,920		323,050
Mortgages payable			1,080,089		1,186,667
Unamortized deferred financing costs			(5,785)		(7,479)
Mortgages payable, net ⁽⁴⁾		$	1,074,304	$	1,179,188

(1)	Weighted average effective interest rate as of September 30, 2021.

(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)	See Note 17 for additional information on guarantees of the debt of certain of our unconsolidated real estate ventures.

The following is a summary of financial information for our unconsolidated real estate ventures:


	September 30, 2021		December 31, 2020

	(In thousands)
Combined balance sheet information:
Real estate, net	$	2,170,039	$	2,247,384
Other assets, net		257,138		270,516
Total assets	$	2,427,177	$	2,517,900

Mortgages payable, net	$	1,074,304	$	1,179,188
Other liabilities, net		128,554		140,304
Total liabilities		1,202,858		1,319,492
Total equity		1,224,319		1,198,408
Total liabilities and equity	$	2,427,177	$	2,517,900

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	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020		X	2021		2020

	(In thousands)
Combined income statement information: ⁽¹⁾
Total revenue	$	45,289	$	47,235		$	141,370	$	162,128
Operating income (loss) ⁽²⁾		51,068		1,296			94,275		(24,418)
Net income (loss) ⁽²⁾		42,261		(6,265)			69,091		(60,331)

(1)

Excludes information related to the venture that owned The Marriott Wardman Park hotel for the three months ended September 30, 2020 as we suspended equity loss recognition for the venture after June 30, 2020. On October 1, 2020, we transferred our interest in the related venture to our venture partner.

(2)

Includes the gain from the sale 500 L'Enfant Plaza of $47.4 million during the three months ended September 30, 2021. Includes the gain from the sale of Fairway, Courthouse Metro, 5615 Fishers Lane and 500 L'Enfant Plaza totaling $85.5 million during the nine months ended September 30, 2021. Includes the loss from the sale of Woodglen of $16.4 million during the nine months ended September 30, 2020.

5.Variable Interest Entities

We hold various interests in entities deemed to be VIEs, which we evaluate 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 if the VIE should be consolidated in our financial statements or should no longer be considered 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 ~~interests and the degree of influence we have over the entity. Management uses its judgment when determining~~rights. We will consolidate a VIE if we are the primary beneficiary of ~~or have a controlling financial interest in, an entity in~~the VIE, which ~~we have a variable interest. Factors considered in determining whether we have~~entails having the power to direct the activities that most significantly impact the ~~entity’s~~VIE’s economic ~~performance include risk and reward sharing, experience and financial condition~~performance. Certain criteria we assess in determining whether we are the primary beneficiary of the ~~other partners,~~VIE include our influence over significant business activities, our voting rights, ~~involvement~~and any noncontrolling interest kick-out or participating rights.

Unconsolidated VIEs

As of September 30, 2021 and December 31, 2020, we had interests in entities deemed to be VIEs. Although we are engaged to act as the managing partner in charge of day-to-day ~~capital~~operations of these investees, we are not the primary beneficiary of these VIEs, as we do not hold unilateral power over activities that, when taken together, most significantly impact the respective VIE's economic performance. We account for our investment in these entities under the equity method. As of September 30, 2021 and ~~operating decisions and~~December 31, 2020, the ~~extent~~net carrying amount of our ~~involvement~~investment 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 do not have a controlling financial interest, or if we own less than 20% of the voting interests but have determined that we have significant influence. Under the equity method, we record our investments in and advances to these entities was $165.4 million and $116.2 million, which is included in ~~our balance sheets, and our proportionate share of earnings or losses earned by the real estate venture is recognized~~"Investments in ~~"(Loss) income of~~ unconsolidated real estate ventures" in our balance sheets. Our equity in the ~~accompanying statements~~income of ~~operations. We earn revenues~~unconsolidated VIEs is included in "Income (loss) 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"~~ventures, net" in our statements of operations. Our ~~proportionate share~~maximum loss exposure in these entities is limited to our investments, construction commitments and debt guarantees. See Note 17 for additional information.

Consolidated VIEs

JBG SMITH LP is our most significant consolidated VIE. We hold 90.8% of ~~related expenses~~the limited partnership interest in JBG SMITH LP, act as the general partner and exercise full responsibility, discretion and control over its day-to-day management. The noncontrolling interests of JBG SMITH LP do not have substantive liquidation rights, substantive kick-out rights without cause, or substantive participating rights that could be exercised by a simple majority of noncontrolling interest limited partners (including by such a limited partner unilaterally). Because the noncontrolling interest holders do not have these rights, JBG SMITH LP is ~~recognized in "(Loss) income~~a VIE. As general partner, we have the power to direct the activities of ~~unconsolidated real estate ventures"~~JBG SMITH LP that most significantly affect its economic performance, and through our majority interest, we have both the right to receive benefits from and the obligation to absorb losses of JBG SMITH LP. Accordingly, we are the primary beneficiary of JBG SMITH LP and consolidate it in our ~~statements~~financial statements. Because we conduct our business and hold our assets and liabilities through JBG SMITH LP, its total assets and liabilities comprise substantially all of ~~operations. We may also earn incremental promote distributions if certain financial return benchmarks are achieved upon ultimate disposition~~our consolidated assets and liabilities.

Through the structure of the 1900 Crystal Drive transaction we executed in March 2021, we have the ability to facilitate an exchange out of an asset into 1900 Crystal Drive. We leased the land underlying ~~properties. Management fees~~1900 Crystal Drive located in National

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Landing to a lessee, which plans to construct an 808-unit multifamily asset comprising 2 towers with ground floor retail. The ground lessee has engaged us to be the development manager for the construction of 1900 Crystal Drive, and separately, we are ~~recognized when earned,~~the lessee in a master lease of the asset. We have an option to acquire the asset until a specified period after completion. In March 2021, the ground lessee entered into a mortgage loan collateralized by the leasehold interest with a maximum principal balance of $227.0 million and ~~promote fees~~an interest rate of LIBOR plus 3.0% per annum. As of September 30, 2021, 0 proceeds had been received from the mortgage loan. In connection with the mortgage loan, we have guaranteed the completion of the asset and provided certain carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy). The ground lessee was obligated to invest $17.5 million of equity funding, all of which has been funded, and we are ~~recognized when certain earnings events~~obligated to provide additional project funding through a mezzanine loan to the ground lessee, of which we have ~~occurred,~~funded $11.7 million as of September 30, 2021. We determined that 1900 Crystal Drive is a VIE and that we are the primary beneficiary of the VIE. Accordingly, we consolidate the VIE with the lessee's ownership interest shown as "Noncontrolling interests" in our balance sheet. The ground lease, the mezzanine loan and the ~~amount~~master lease described above are eliminated in consolidation. As of September 30, 2021, the VIE had total assets and liabilities of $29.7 million and $4.5 million. The assets of the VIE can only be used to settle the obligations of the VIE, and the liabilities include third-party liabilities of the VIE for which the creditors or beneficial interest holders do not have recourse against us.

6.Other Assets, Net

The following is ~~determinable~~a summary of other assets, net:


	September 30, 2021		December 31, 2020

	(In thousands)
Deferred leasing costs, net	$	116,544	$	117,141
Lease intangible assets, net		11,055		15,565
Management and leasing contracts, net		21,084		25,512
Other identified intangible assets		17,360		17,500
Wireless spectrum licenses ⁽¹⁾		25,730		—
Operating lease right-of-use assets		3,326		3,542
Finance lease right-of-use assets		41,675		41,996
Prepaid expenses		20,171		14,000
Deferred financing costs, net		9,352		6,656
Deposits ⁽¹⁾		12,026		28,560
Other		22,214		16,103
Total other assets, net	$	300,537	$	286,575

(1)

During 2020, we deposited $25.3 million with the Federal Communications Commission in connection with the acquisition of wireless spectrum licenses. In March 2021, we received the licenses. 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. Accordingly, we have concluded that the licenses are indefinite-lived intangible assets.

7.Debt

Mortgages Payable

The following is a summary of mortgages payable:


	Weighted Average
	Effective
	Interest Rate ⁽¹⁾	September 30, 2021		December 31, 2020

		(In thousands)
Variable rate ⁽²⁾	2.08%	$	762,246	$	678,346
Fixed rate ⁽³⁾	4.32%		922,161		925,523
Mortgages payable			1,684,407		1,603,869
Unamortized deferred financing costs and premium / discount, net ⁽⁴⁾			(10,122)		(10,131)
Mortgages payable, net		$	1,674,285	$	1,593,738

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(1)	Weighted average effective interest rate as of September 30, 2021.

(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)	As of September 30, 2021, net deferred financing costs related to an unfunded mortgage loan totaling $4.0 million were included in "Other assets, net."

As of September 30, 2021 and ~~collectible. Any promote fees are reflected in "(Loss) income from unconsolidated real estate ventures" in our statements of operations.~~

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. An investment in a real estate venture is considered impaired only if we determine that its fair value is less thanDecember 31, 2020, the net carrying value of real estate collateralizing our mortgages payable totaled $1.8 billion. Our mortgages payable 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 mortgages payable are recourse to us. See Note 17 for additional information.

In July 2021, we entered into a mortgage loan with a principal balance of $85.0 million, collateralized by 1225 S. Clark Street. The mortgage loan has a seven-year term and an interest rate of LIBOR plus 1.60% per annum.

As of September 30, 2021 and December 31, 2020, we had various interest rate swap and cap agreements on certain mortgages payable with an aggregate notional value of $1.3 billion. See Note 15 for additional information.

Credit Facility

As of September 30, 2021 and December 31, 2020, our $1.4 billion credit facility consisted of a $1.0 billion revolving credit facility maturing in January 2025, a $200.0 million unsecured term loan ("Tranche A-1 Term Loan") maturing in January 2023 and a $200.0 million unsecured term loan ("Tranche A-2 Term Loan") maturing in July 2024. The following is a summary of amounts outstanding under the ~~investment~~credit facility:


	Effective
	Interest Rate ⁽¹⁾	September 30, 2021		December 31, 2020

		(In thousands)
Revolving credit facility ^{(2) (3) (4)}	1.13%	$	—	$	—

Tranche A-1 Term Loan ⁽⁵⁾	2.59%	$	200,000	$	200,000
Tranche A-2 Term Loan ⁽⁵⁾	2.49%		200,000		200,000
Unsecured term loans			400,000		400,000
Unamortized deferred financing costs, net			(1,507)		(2,021)
Unsecured term loans, net		$	398,493	$	397,979

(1)	Effective interest rate as of September 30, 2021.

(2)	As of September 30, 2021 and December 31, 2020, letters of credit with an aggregate face amount of $1.4 million and $1.5 million were outstanding under our revolving credit facility.

(3)	As of September 30, 2021 and December 31, 2020, net deferred financing costs related to our revolving credit facility totaling $5.4 million and $6.7 million were included in "Other assets, net."

(4)	The interest rate for our revolving credit facility excludes a 0.15% facility fee.

(5)

As of September 30, 2021 and December 31, 2020, the outstanding balance was fixed by interest rate swap agreements. The interest rate swaps mature concurrently with the respective term loan and provide a weighted average interest rate of 1.39% for the Tranche A-1 Term Loan and 1.34% for the Tranche A-2 Term Loan.

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8.Other Liabilities, Net

The following is a summary of other liabilities, net:


	September 30, 2021		December 31, 2020

	(In thousands)
Lease intangible liabilities, net	$	8,567	$	10,300
Lease assumption liabilities		6,257		10,126
Lease incentive liabilities		14,125		13,913
Liabilities related to operating lease right-of-use assets		8,914		10,752
Liabilities related to finance lease right-of-use assets		40,733		40,221
Prepaid rent		20,343		19,809
Security deposits		17,953		13,654
Environmental liabilities		18,168		18,242
Deferred tax liability, net		6,290		2,509
Dividends payable		—		34,075
Derivative agreements, at fair value		28,406		44,222
Deferred purchase price ⁽¹⁾		19,639		19,479
Other		10,809		10,472
Total other liabilities, net	$	200,204	$	247,774

(1)	Deferred purchase price associated with the December 2020 acquisition of the former Americana Hotel site.

9.Redeemable Noncontrolling Interests

JBG SMITH LP

OP Units held by persons other than JBG SMITH are redeemable for cash or, at our election, our common shares, subject to certain limitations. During the nine months ended September 30, 2021 and 2020, unitholders redeemed 829,107 and 1.1 million OP Units, which we elected to redeem for an equivalent number of our common shares. As of September 30, 2021, outstanding OP Units totaled 13.1 million, representing a 9.2% ownership interest in ~~that~~JBG SMITH LP. On our balance sheets, our OP Units and certain vested long-term incentive partnership units ("LTIP Units") are presented at the higher of their redemption value or their carrying value, with adjustments to the redemption value recognized in "Additional paid-in capital." Redemption value per OP Unit is equivalent to the market value of one of our common shares at the end of the period. In October 2021, unitholders redeemed 20,953 OP Units, which we elected to redeem for an equivalent number of our common shares.

Consolidated Real Estate Venture

We are a partner in a consolidated real estate venture ~~on an other-than-temporary basis. Cash flow projections~~that owns a multifamily asset located in Washington, D.C. Pursuant to the terms of the real estate venture agreement, we are obligated to fund all capital contributions until our ownership interest reaches a maximum of 97.0%. Our partner can redeem its interest for ~~the investments consider property level factors such as expected future operating income, trends and prospects, as well as the effects~~cash under certain conditions. As of ~~demand, competition and other factors. We consider various qualitative factors to determine if~~September 30, 2021, we held a ~~decrease~~96.0% ownership interest in the real estate venture.

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The following is a summary of the activity of redeemable noncontrolling interests:


	Three Months Ended September 30,
	2021						2020
			Consolidated						Consolidated
	JBG		Real Estate				JBG		Real Estate
	SMITH LP		Venture		Total		SMITH LP		Venture		Total

	(In thousands)
Balance, beginning of period	$	536,171	$	8,468	$	544,639	$	493,067	$	6,016	$	499,083
OP Unit redemptions		(5,670)		—		(5,670)		(4,796)		—		(4,796)
Net income (loss) attributable to redeemable noncontrolling interests		116		(13)		103		(2,176)		(36)		(2,212)
Other comprehensive income		413		—		413		309		—		309
Distributions		(3,993)		—		(3,993)		(3,723)		—		(3,723)
Share-based compensation expense		10,695		—		10,695		14,496		—		14,496
Adjustment to redemption value		(20,748)		1,474		(19,274)		(14,012)		1,776		(12,236)
Balance, end of period	$	516,984	$	9,929	$	526,913	$	483,165	$	7,756	$	490,921

	Nine Months Ended September 30,
	2021						2020
			Consolidated						Consolidated
	JBG		Real Estate				JBG		Real Estate
	SMITH LP		Venture		Total		SMITH LP		Venture		Total

	(In thousands)
Balance, beginning of period	$	522,882	$	7,866	$	530,748	$	606,699	$	6,059	$	612,758
OP Unit redemptions		(27,350)		—		(27,350)		(40,674)		—		(40,674)
LTIP Units issued in lieu of cash bonuses ⁽¹⁾		5,614		—		5,614		4,066		—		4,066
Net loss attributable to redeemable noncontrolling interests		(2,400)		(72)		(2,472)		(366)		(79)		(445)
Other comprehensive income (loss)		1,621		—		1,621		(3,446)		—		(3,446)
Distributions		(9,282)		—		(9,282)		(7,505)		—		(7,505)
Share-based compensation expense		36,066		—		36,066		51,742		—		51,742
Adjustment to redemption value		(10,167)		2,135		(8,032)		(127,351)		1,776		(125,575)
Balance, end of period	$	516,984	$	9,929	$	526,913	$	483,165	$	7,756	$	490,921

(1)	See Note 11 for additional information.

10.Property Rental Revenue

The following is a summary of property rental revenue from our non-cancellable leases:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020		X	2021		2020

	(In thousands)
Fixed	$	114,100	$	109,321		$	339,321	$	326,866
Variable		11,800		9,359			31,639		27,653
Property rental revenue	$	125,900	$	118,680		$	370,960	$	354,519

11.Share-Based Payments

LTIP Units and Time-Based LTIP Units

During the nine months ended September 30, 2021, we granted to certain employees 498,955 LTIP Units with time-based vesting requirements ("Time-Based LTIP Units") with a weighted average grant-date fair value of ~~our investment~~$29.21 per unit that

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primarily vest ratably over four years subject to continued employment. Compensation expense for these units is ~~other-than-temporary. These factors include age~~being recognized over a four-year period.

Additionally, in January 2021, we granted 163,065 fully vested LTIP Units to certain employees, who elected to receive all or a portion of their cash bonus, related to 2020 service, as LTIP Units. The LTIP units had a grant-date fair value of $29.54 per unit. Compensation expense totaling $4.8 million for these LTIP Units was recognized in 2020.

In April 2021, as part of their annual compensation, we granted to non-employee trustees a total of 71,792 fully vested LTIP Units with an aggregate grant-date fair value of $1.9 million. The LTIP Units may not be sold while a trustee is serving on the Board of Trustees.

In July 2021, we granted to certain employees 608,325 Time-Based LTIP Units with a weighted average grant-date fair value of $31.73 per unit that vest 50% on the fifth anniversary of the ~~venture, our intent~~grant date and ~~ability to retain our investment in the entity, financial condition and long-term prospects~~25% on each of the ~~entity~~sixth and ~~relationships with our partners and banks. If we believe that~~seventh anniversaries of the ~~decline in the~~grant date, subject to continued employment. Compensation expense for these units is being recognized over a seven-year period.

The aggregate grant-date fair value of the ~~investment~~Time-Based LTIP Units and LTIP Units granted during the nine months ended September 30, 2021 was $40.6 million. The Time-Based LTIP Units and LTIP Units were valued based on the closing common share price on the date of grant, less a discount for post-grant restrictions. The discount was determined using Monte Carlo simulations, and the following 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~~summary of the ~~venture will be adjusted~~significant assumptions used to ~~an amount that reflects the estimated~~value these units:


Expected volatility		34.0% to 39.0%
Risk-free interest rate		0.1% to 0.4%
Post-grant restriction periods		2 to 3 years

Performance-Based LTIP Units

In January 2021, we granted to certain employees 627,874 LTIP Units with performance-based vesting requirements ("Performance-Based LTIP Units") with a weighted average grant-date fair value of $15.14 per unit. Our Performance-Based LTIP Units have a three-year performance period. 50% of any Performance-Based LTIP Units that are earned vest at the ~~investment.~~

~~Intangibles~~

Intangible assets consist of in-place leases, below-market ground rent obligations, above-market real estate leases, lease origination costs and options to enter into ground lease that were recorded in connection with the acquisition of properties. Intangible assets also include management and leasing contracts acquired as partend of the ~~Combination. Intangible liabilities consist~~three-year performance period and the remaining 50% vest on the fourth anniversary of ~~above-market ground rent obligations~~the date of grant, subject to continued employment. If, however, the Performance-Based LTIP Units do not achieve a positive absolute total shareholder return ("TSR") at the end of the three-year performance period, but satisfy the relative performance criteria thereof, 50% of the units that otherwise could have been earned will be forfeited, and ~~below-market real estate leases~~the remaining units that are ~~also recorded in connection with~~earned will vest if and when we achieve a positive TSR during 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.

~~Deferred Costs~~

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 and unsecured term loan 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~~

Redeemable noncontrolling interests consists of OP Units issued in conjunction with the Formation Transaction. The OP Units are redeemable for our common shares or cash beginning August 1, 2018, subject to certain limitations. Redeemable noncontrolling interests are generally redeemable at the option of the holder and are presented in the mezzanine section between total liabilities and shareholders' equity on the balance sheets. The carrying amount of redeemable noncontrolling interests is adjusted to its redemption valuesucceeding seven years, measured at the end of each ~~reporting~~quarter. Compensation expense for these units is generally being recognized over a four-year period. In January 2021, the three-year performance period ended for the Performance-Based LTIP Units granted on February 2, 2018. Based on our relative performance and absolute TSR over the three-year performance period, 100% of the units granted were earned.

In July 2021, we granted to certain employees 844,070 Performance-Based LTIP Units with a weighted average grant-date fair value of $23.08 per unit that vest 50% on the fifth anniversary of the grant date and 25% on each of the sixth and seventh anniversaries of the grant date, subject to continued employment, and earn based on our achievement of 4 share price targets during the performance period commencing on the first anniversary of the grant date and ending on the sixth anniversary of the grant date. Compensation expense for these units is being recognized over a seven-year period.

The aggregate grant-date fair value of the Performance-Based LTIP Units granted during the nine months ended September 30, 2021 was $29.0 million, valued using Monte Carlo simulations. The following is a summary of the significant assumptions used to value the Performance-Based LTIP Units:


Expected volatility		31.0% - 34.0%
Dividend yield		2.6%
Risk-free interest rate		0.2% - 1.0%

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Restricted Share Units ("RSUs")

In January 2021, we granted to certain non-executive employees 22,194 RSUs with time-based vesting requirements ("Time-Based RSUs") with a weighted average grant-date fair value of $31.52 per unit and 13,516 RSUs with performance-based vesting requirements ("Performance-Based RSUs") with 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 identical to those of the Time-Based LTIP Units and Performance-Based LTIP Units granted in January 2021.

The aggregate grant-date fair value of the RSUs granted during the nine months ended September 30, 2021 was $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.

ESPP

Pursuant to the ESPP, employees purchased 34,320 common shares for $880,000 during the nine months ended September 30, 2021. The following is a summary of the significant assumptions used to value the ESPP common shares using the Black-Scholes model:


Expected volatility		39.0%
Dividend yield		1.5%
Risk-free interest rate		0.1%
Expected life		6 months

Share-Based Compensation Expense

The following is a summary of share-based compensation expense:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020		X	2021		2020

	(In thousands)
Time-Based LTIP Units	$	3,999	$	3,364		$	12,494	$	11,003
Performance-Based LTIP Units		3,216		3,999			9,615		14,207
LTIP Units		—		—			1,091		1,100
Other equity awards ⁽¹⁾		1,473		1,690			4,395		4,829
Share-based compensation expense - other		8,688		9,053			27,595		31,139
Formation Awards		476		875			1,923		3,473
OP Units ⁽²⁾		1,610		4,780			6,508		17,398
LTIP Units ⁽²⁾		66		95			217		310
Special Performance-Based LTIP Units ⁽³⁾		629		657			2,014		2,015
Special Time-Based LTIP Units ⁽³⁾		699		726			2,204		2,236
Share-based compensation related to Formation Transaction and special equity awards ⁽⁴⁾		3,480		7,133			12,866		25,432
Total share-based compensation expense		12,168		16,186			40,461		56,571
Less: amount capitalized		(740)		(1,177)			(2,141)		(3,388)
Share-based compensation expense	$	11,428	$	15,009		$	38,320	$	53,183

(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 bonus earned, (ii) RSUs and (iii) shares issued under our ESPP.

(2)	Represents share-based compensation expense for LTIP Units and OP Units issued in the Formation Transaction, which are subject to post-Combination employment obligations.

(3)	Represents equity awards issued related to our successful pursuit of Amazon's additional headquarters in National Landing.

(4)	Included in "General and administrative expense: Share-based compensation related to Formation Transaction and special equity awards" in the accompanying statements of operations.

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As of September 30, 2021, we had $73.7 million of total unrecognized compensation expense related to unvested share-based payment arrangements, which is expected to be recognized over a weighted average period of 3.5 years.

12.Transaction and Other Costs

The following is a summary of transaction and other costs:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020		X	2021		2020

	(In thousands)
Demolition costs	$	1,422	$	179		$	2,869	$	179
Integration and severance costs		154		406			616		3,066
Completed, potential and pursued transaction expenses		1,375		260			5,426		281
Other ⁽¹⁾		—		—			—		4,000
Transaction and other costs	$	2,951	$	845		$	8,911	$	7,526

(1)	Related to a charitable commitment to the Washington Housing Conservancy, a non-profit that acquires and owns affordable workforce housing in the Washington, D.C. metropolitan area.

13.Interest Expense

The following is a summary of interest expense:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020		X	2021		2020

	(In thousands)
Interest expense before capitalized interest	$	17,278	$	18,274		$	50,744	$	52,751
Amortization of deferred financing costs		1,096		857			3,188		2,255
Interest expense related to finance lease right-of-use assets		430		464			1,284		1,026
Net unrealized (gain) loss on derivative financial instruments not designated as cash flow hedges		37		202			(50)		173
Capitalized interest		(1,598)		(2,912)			(4,854)		(11,545)
Interest expense	$	17,243	$	16,885		$	50,312	$	44,660

14.Shareholders' Equity and Earnings Per Common Share

Common Shares Repurchased

In March 2020, our Board of Trustees authorized the repurchase of up to $500 million of our outstanding common shares. During three and nine months ended September 30, 2021, we repurchased and retired 2.3 million and 2.9 million common shares for $68.9 million and $88.1 million, an average purchase price of $29.73 and $29.99 per share. During the three and nine months ended September 30, 2020, we repurchased and retired 1.4 million and 2.9 million common shares for $38.4 million and $79.6 million, an average purchase price of $26.64 and $27.82 per share. Since we began the share repurchase program, we have repurchased and retired 6.7 million common shares for $192.9 million, an average purchase price of $28.71 per share.

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Earnings (Loss) Per Common Share

The following is a summary of the calculation of basic and diluted earnings (loss) per common share and a reconciliation of the amounts of net income (loss) available to common shareholders used in calculating basic and diluted earnings per common share to net income (loss):


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020		X	2021		2020

	(In thousands, except per share amounts)
Net income (loss)	$	996	$	(25,005)		$	(26,391)	$	(17,093)
Net (income) loss attributable to redeemable noncontrolling interests		(103)		2,212			2,472		445
Net loss attributable to noncontrolling interests		—		—			1,108		—
Net income (loss) attributable to common shareholders		893		(22,793)			(22,811)		(16,648)
Distributions to participating securities		(763)		(822)			(1,497)		(1,729)
Net income (loss) available to common shareholders - basic and diluted	$	130	$	(23,615)		$	(24,308)	$	(18,377)

Weighted average number of common shares outstanding - basic and diluted		131,351		133,620			131,456		133,924

Earnings (loss) per common share - basic and diluted	$	0.00	$	(0.18)		$	(0.18)	$	(0.14)

The effect of the redemption of OP Units, LTIP Units and Time-Based LTIP Units that were outstanding as of September 30, 2021 and 2020 is excluded in the computation of diluted earnings per common share as the assumed exchange of such units for common shares on a one-for-one basis was antidilutive (the assumed redemption of these units would have no impact on the determination of diluted earnings per share). Since OP Units, LTIP Units and Time-Based LTIP Units, which are held by noncontrolling interests, are attributed gains at an identical proportion to the common shareholders, the gains attributable and their equivalent weighted average OP Units, LTIP Units and Time-Based LTIP Unit impact are excluded from net income (loss) available to common shareholders and from the weighted average number of common shares outstanding in calculating diluted earnings per common share. Performance-Based LTIP Units, Special Performance-Based LTIP Units, Formation Awards and RSUs, which totaled 5.2 million and 4.9 million for the three and nine months ended September 30, 2021, and 4.4 million and 4.9 million for the three and nine months ended September 30, 2020, were excluded from the calculation of diluted earnings per common share as they were antidilutive, but ~~no less than its initial carrying value, with such adjustments recognized~~potentially could be dilutive in ~~"Additional paid-in capital".~~

~~Noncontrolling interests~~the future.

Dividends Declared in ~~consolidated subsidiaries represents~~October 2021

On October 27, 2021, our Board of Trustees declared a quarterly dividend of $0.225 per common share, payable on November 24, 2021 to shareholders of record as of November 10, 2021.

15.Fair Value Measurements

Fair Value Measurements on a Recurring Basis

To manage or hedge our exposure to interest rate risk, we follow established risk management policies and procedures, including the ~~portion~~use of ~~equity that we~~a variety of derivative financial instruments. We do not own in entities we consolidate, including interests in consolidated real estate ventures or VIEs in connection with property acquisitions. We identify our noncontrolling interests separately within the equity section on the balance sheets. See Note 10 for further information.

Amounts of consolidated net (loss) income attributable to redeemable noncontrolling interests and to the noncontrolling interests in consolidated subsidiaries are presented separately in the statements of operations.

~~Derivative Financial Instruments and Hedge Accounting~~

~~Derivative~~enter into derivative financial instruments ~~are used at times to manage exposure to variable interest rate risk. Derivative~~for speculative purposes.

As of September 30, 2021 and December 31, 2020, we had various derivative financial instruments consisting of interest rate ~~swaps~~swap and ~~caps,~~cap agreements that are ~~considered economic hedges, but not designated as accounting hedges, and are~~

~~carried~~measured at ~~their estimated~~ fair value on a recurring basis. ~~Realized~~The net unrealized loss on our derivative financial instruments designated as cash flow hedges was $27.8 million and ~~unrealized gains are~~$43.9 million as of September 30, 2021 and December 31, 2020 and was recorded in ~~"Interest and~~"Accumulated other ~~(loss) income, net"~~comprehensive loss" in our balance sheets, of which a portion was reclassified to "Redeemable noncontrolling interests." Within the ~~statements~~next 12 months, we expect to reclassify $14.6 million of ~~operations in the period in which the change occurs.~~net unrealized loss as an increase to interest expense.

~~Fair Value~~

Table of ~~Assets and Liabilities~~Contents

~~ASC~~

Accounting Standards Codification 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.

~~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 of acquired above-and below-market leases, net.

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 joint ventures are recorded on a percentage of completion basis.

~~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 joint ventures and other third parties. We allocate personnel and other overhead costs using the estimates of the time spent performing services for our third-party business and other allocation methodologies.

~~Income Taxes~~

We intend to elect to be taxed as a REIT under sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code"), commencing with the filing of our tax return for the 2017 calendar year, effective for our tax year ending December 31, 2017. 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, the Vornado Included Assets historically operated under Vornado’s REIT structure. Since Vornado operates as a REIT and distributes 100% of taxable income to its shareholders, no provision for federal income taxes has been made in the accompanying financial statements for the periods prior to the Separation. We intend to continue to adhere to these requirements and maintain our REIT status in future periods.

As a REIT, we are allowed to reduce taxable income by all or a portion of our distributions 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 certain activities conducted by entities which 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 financial statements, which will result in taxable or deductible amounts in the future.

ASC 740-10, Income Taxes, provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. ASC 740-10 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. As of September 30, 2017, and December 31, 2016, we determined that no liabilities are required in connection with uncertain tax positions.

~~(Loss) Earnings Per Share~~

Basic (loss) earnings per common share ("EPS") is computed by dividing net (loss) income attributable to common shareholders by the weighted average common shares outstanding during the period. Unvested and vested share-based payment awards that entitle holders to receive non-forfeitable dividends, which include OP Units, long-term incentive partnership units ("LTIP Units") and out-performance award units ("OPP Units"), are considered participating securities. Consequently, we are required to apply the two-class method of computing basic and diluted earnings 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. Diluted earnings per common share reflects the potential dilution of the assumed exchange of various units into common shares unvested share-based payment awards to the extent they are dilutive.

~~Share-Based Compensation~~

We granted OP Units, formation awards ("Formation Awards"), LTIP Units and OPP Units to our trustees, management and employees in connection with the Separation and Combination. The term and vesting of each award were determined by the compensation committee of our Board of Trustees (the “Compensation Committee”).

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.

Compensation expense for the Formation Awards, LTIP Units, OPP Units and certain OP Units is based on the fair value of our common shares at the date of the grant and is recognized ratably over the vesting period. For grants with a graded vesting schedule that are only subject to service conditions, we have elected to recognize compensation expense on a straight-line basis.

We also elected to account for forfeitures as they occur, rather than estimate expected forfeitures. Distributions paid on unvested OP Units, LTIPs and OPPs are charged to “net income attributable to noncontrolling interests” in the statements of operations.

~~Recent Accounting Pronouncements~~

~~The following table provides a brief description of recent accounting pronouncements (Accounting Standards Update or "ASU") by the FASB that could have a material effect on our financial statements:~~



~~Standard~~	~~Description~~	~~Date of Adoption~~	~~Effect on the Financial Statements or Other~~ ~~Significant Matters~~
~~Standards not yet adopted~~
~~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. ASU 2017-12 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.	~~January 2019~~	~~We are currently evaluating the overall impact of the adoption of ASU 2017-12. The adoption of this standard is not expected to have a material impact on our financial statements.~~
~~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.	~~January 2018~~	~~We are currently evaluating the overall impact of the adoption of ASU 2017-09. The adoption of this standard is not expected to have a material impact on our financial statements.~~
~~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.	~~January 2018~~	~~The adoption of this standard is not expected to have a material impact on our financial statements.~~
~~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 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.	~~January 2018~~	~~Other than the revised statement of cash flows presentation of restricted cash, the adoption of these standards is not expected to have a material impact on our financial statements.~~



~~Standard~~	~~Description~~	~~Date of Adoption~~	~~Effect on the Financial Statements or Other~~ ~~Significant Matters~~
~~ASU 2016-02, Leases (Topic 842)~~	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.	~~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. We also expect that this standard will have an impact on the presentation of certain lease and non‑lease components of revenue from leases with no material impact to total revenue. 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.
~~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 may be adopted either retrospectively or on a modified retrospective basis.	~~January 2018~~	We currently expect to utilize the modified retrospective method of adoption. We have commenced the execution of our project plan for adopting this standard, which consists of gathering and evaluating the inventory of our revenue streams. We expect this standard will have an impact on the presentation of certain lease and non-lease components of revenue from leases upon the adoption of ASU 2016‑02, Leases, with no material impact on total revenues. We expect this standard will have an impact on the timing of gains on certain sales of real estate. We are continuing to evaluate the impact of this standard on our financial statements.


3.	~~The Combination~~

~~On July 18, 2017, we completed the Combination and acquired the JBG Assets in exchange for approximately~~ ~~37.2 million~~ common shares and OP Units. The Combination has been accounted for at fair value under the acquisition method of accounting. The following allocation of the purchase price is based on preliminary estimates and assumptions and is subject to change based on a final determination of the assets acquired and liabilities assumed (in thousands):

Fair value of purchase consideration:
Common shares and OP Units $ 1,224,886
Cash 20,573
Total consideration paid $ 1,245,459

Fair value of assets acquired and liabilities assumed:
Land and improvements $ 342,932
Building and improvements 623,889
Construction in progress, including land 632,664
Leasehold improvements and equipment 7,890
Cash 104,516
Restricted cash 13,460
Investments in and advances to unconsolidated real estate ventures 238,388
Identified intangible assets 146,600
Notes receivable ⁽¹⁾
50,934
Identified intangible liabilities (8,449 )
Mortgages payable assumed ⁽²⁾
(768,523 )
Capital lease obligations assumed ⁽³⁾
(33,543 )
Deferred tax liability ⁽⁴⁾
(21,476 )
Other liabilities acquired, net (52,065 )
Noncontrolling interests in consolidated subsidiaries (3,987 )
Net assets acquired 1,273,230
Gain on bargain purchase ⁽⁵⁾
27,771
Total consideration paid $ 1,245,459

~~____________________~~


⁽¹⁾	~~During the three months ended September 30, 2017, we received proceeds of $50.9 million from the repayment of the notes receivable acquired as part of the Combination.~~


⁽²⁾	~~Subject to various interest rate swap and cap agreements assumed in the Combination that are considered economic hedges, but not designated as accounting hedges.~~


⁽³⁾	As part of the Combination, two ground leases were assumed that were capital leases. On July 25, 2017, we purchased a land parcel located in Reston, Virginia associated with one of the ground leases for $19.5 million.


⁽⁴⁾	~~Related to the management and leasing contracts acquired in the Combination.~~

⁽⁵⁾

The Combination resulted in a gain on bargain purchase because the estimated fair value of the identifiable net assets acquired exceeded the purchase consideration by $27.8 million. The purchase consideration was based on the fair value of the common shares and OP Units issued in the Combination. We continue to reassess the recognition and measurement of identifiable assets and liabilities acquired and have preliminarily concluded that all acquired assets and liabilities were recognized and that the valuation procedures and resulting estimates of fair values were appropriate.

~~The fair value of the common shares and OP Units purchase consideration was determined as follows~~ (i~~n thousands, except exchange ratio and price per share/unit):~~

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.~~

⁽³⁾

OP Unit consideration paid to certain of the owners of the JBG Assets which have an estimated fair value of $110.6 million is subject to post-combination employment with vesting over periods of either 12 or 60 months. In accordance with GAAP, consideration that is subject to future employment is not considered a component of the purchase price for the business combination and amortization is recognized as compensation expense over the period of employment and is included in "General and administrative expense: share-based compensation related to Formation Transaction" in the statements of operations.

The JBG Assets acquired comprise: (i) 30 operating assets comprising 19 office assets totaling approximately 3.6 million square feet (2.3 million square feet at our share), nine multifamily assets with 2,883 units (1,099 units at our share) and two other assets totaling approximately 490,000 square feet (73,000 square feet at our share); (ii) 11 office and multifamily assets under construction totaling over 2.5 million square feet (2.2 million square feet at our share); (iii) two near-term development office and multifamily assets totaling approximately 401,000 square feet (242,000 square feet at our share); (iv) 26 future development assets totaling approximately 11.7 million square feet (8.5 million square feet at our share) of estimated potential development density; and (v) JBG/Operating Partners, L.P., a real estate services company providing investment, development, asset management, property management, leasing, construction management and other services. JBG/Operating Partners, L.P. was owned by 20 unrelated individuals of which 19 became our employees, and three serve on our Board of Trustees.

The fair values of the ~~depreciable tangible and identified intangible assets and liabilities, all of which have definite lives and are amortized, are as follows:~~

Total Fair Value Weighted Average Amortization Period

Useful Life ⁽¹⁾
(In thousands) (In years)
Tangible assets:
Building and improvements $ 559,042
3 - 40 years
Tenant improvements 64,847
Shorter of useful life or remaining life of the respective lease
Total building and improvements $ 623,889

Leasehold improvements $ 4,422
Shorter of useful life or remaining life of the respective lease
Identified intangible assets:
In-place leases $ 59,351
6.4 Remaining life of the respective lease
Above-market real estate leases 11,700
6.3 Remaining life of the respective lease
Below-market ground leases 659
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⁾
57,800
7.4 Estimated remaining life of contracts, ranging between 3 - 8 years
Total identified intangible assets $ 146,600

Identified intangible liabilities:
Below-market real estate leases $ 8,449
10.2 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 and construction management contracts.~~

Transaction costs (such as advisory, legal, accounting, valuation and other professional fees) incurred to effect the Formation Transaction are included in "Transaction and other costs" in our statements of operations. We expensed a total of $121.6 million transaction and other costs, of which $104.1 million and $115.2 million were incurred during the three and nine months ended September 30, 2017, and $1.5 million was incurred for both the three and nine months ended September 30, 2016. For the three and nine months ended September 30, 2017, transaction and other costs include severance and transaction bonus expense of $34.3 million, investment banking fees of $33.6 million, legal fees of $13.1 million and accounting fees of $8.1 million.

The total revenue of the JBG Assets for the three and nine months ended September 30, 2017 included in our statements of operations from the acquisition date was $34.9 million. The net loss of the JBG Assets for the three and nine months ended September 30, 2017 included in our statements of operations from the acquisition date was $7.8 million.

The accompanying unaudited pro forma information for the three and nine months ended September 30, 2017 and 2016 is presented as if the Formation Transaction had occurred on January 1, 2016. This pro forma information is based upon the historicalderivative financial statements and should be read in conjunction with our consolidated and combined financial statements and notes thereto included in our Registration Statement on Form 10, as amended, filed with the SEC and declared effective on June 26, 2017. This unaudited pro forma information does not purport to represent what the actual results of our operations would have been, nor does it purport to predict the results of operations of future periods. The unaudited pro forma information for the three and nine months ended September 30, 2017 and 2016 was adjusted to exclude $27.8 million of gain on bargain purchase. The unaudited pro forma information was adjusted to exclude transaction and other costs of $104.1 million and $115.2 million for the three and nine months ended September 30, 2017, respectively, and $1.5 million for the three and nine months ended September 30, 2016.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In thousands) (In thousands)
Unaudited pro forma information:
Total revenue $ 160,428
$ 170,498
$ 481,314
$ 492,874
Net income (loss) attributable to JBG SMITH
Properties
$ 2,283
$ 803
$ (13,741 ) $ (26,701 )
Earnings (loss) per common share:
Basic $ 0.02
$ 0.01
$ (0.13 ) $ (0.27 )
Diluted $ 0.02
$ 0.01
$ (0.13 ) $ (0.27 )

~~4. Tenant and Other Receivables, Net~~

~~The following is a summary of tenant and other receivables, net as of September 30, 2017 and December 31, 2016:~~

September 30,
2017 December 31,
2016
(In thousands)
Tenants $ 32,106
$ 26,278
Other 23,835
11,314
Allowance for doubtful accounts (5,467 ) (4,212 )
Total tenant and other receivables, net $ 50,474
$ 33,380

We incurred bad debt expense of approximately $1.1 million and $1.8 million during the three and nine months ended September 30, 2017, respectively, and $106,000 and $618,000 during the three and nine months ended September 30, 2016, respectively, which is included in "Property operating expenses" in the statement of operations.

~~5. Investments in and Advances to Unconsolidated Real Estate Ventures~~

~~The following is a summary of the composition of our investments in and advances to unconsolidated real estate ventures as of September 30, 2017 and December 31, 2016:~~

Ownership
Interest ⁽¹⁾
Investment Balance
Real Estate Venture Partners ⁽¹⁾
September 30,
2017 September 30,
2017 December 31,
2016
(In thousands)
Landmark 1.8% - 59.0% $ 110,562
$ —
CBREI Venture 5.0% - 64.0% 85,386
—
Canadian Pension Plan Investment Board 55.0% 36,223
36,312
Brandywine 30.0% 13,753
—
Berkshire Group 50.0% 27,647
—
MRP Realty 70.0% 1,802
—
JP Morgan 5.0% 9,351
9,335
Other 242
129
Total investments in unconsolidated real estate ventures 284,966
45,776
Advances to unconsolidated real estate ventures 20
—
Total investments in and advances to unconsolidated real
estate ventures
$ 284,986
$ 45,776

~~_______________~~

⁽¹⁾~~We classify our investments in and advances to unconsolidated real estate ventures by real estate venture partner with which we may have multiple investments with varying ownership interests.~~

~~The following is a summary of the debt of our unconsolidated real estate ventures as of September 30, 2017 and December 31, 2016:~~

Weighted Average Interest Rate Balance as of
September 30,
2017 September 30,
2017 December 31,
2016
(In thousands)
Variable rate ⁽¹⁾
4.08% $ 531,989
$ 31,000
Fixed rate ⁽²⁾
3.90% 643,801
273,000
Unconsolidated real estate ventures - mortgages payable 1,175,790
304,000
Unamortized deferred financing costs, net (860 ) (1,034 )
Unconsolidated real estate ventures - mortgages payable, net $ 1,174,930
$ 302,966

~~______________~~


⁽¹⁾	~~Includes variable rate mortgages payable with interest rate caps.~~


⁽²⁾	~~Includes variable rate mortgages payable with interest rates effectively fixed pursuant to interest rate swaps.~~

The following is a summary of the financial information for our unconsolidated real estate ventures, as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016:

September 30,
2017 December 31, 2016
Combined balance sheet information: (In thousands)
Total assets $ 3,446,348
$ 598,239
Total liabilities 1,253,664
327,862
Noncontrolling interests 343
343
Total equity 2,192,341
270,034

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Combined income statement information: (In thousands)
Total revenue $ 46,830
$ 16,364
$ 83,387
$ 51,066
Net (loss) income (5,191 ) 2,607
(414 ) 5,083

~~6. Variable Interest Entities~~

~~Unconsolidated VIEs~~

As of September 30, 2017 and December 31, 2016, we have interests in several investments that are deemed VIEs that are in development stage and do not hold sufficient equity at risk or conduct substantially all their operations on behalf of the investor with disproportionately few voting rights. Although we are engaged to act as the managing partner in charge of day-to-day operations of these investees, we are not the primary beneficiary of these VIEs as we do not hold unilateral power over activities that, when taken together, most significantly impact the respective VIE’s performance. We account for our investment in these entities under the equity method. As of September 30, 2017 and December 31, 2016, the net carrying amounts of our investment in these entities were $203.0 million and $42.4 million, respectively. Our maximum exposure to loss in these entities is limited to our investments, construction commitments and debt guarantees. See Note 16 for additional information.

~~Consolidated VIEs~~

JBG SMITH LP, our operating partnership, is our most significant consolidated VIE. We hold the majority membership interest in the operating partnership, act as the general partner and exercise full responsibility, discretion and control over its day-to-day management.

The noncontrolling interests of the operating partnership do not have either substantive liquidation rights, or substantive kick-out rights without cause, or substantive participating rights that could be exercised by a simple majority of noncontrolling interest members (including by such a member unilaterally). Because the noncontrolling interest holders do not have these rights, the operating partnership is a VIE. As general partner, we have the power to direct the core activities of the operating partnership that most significantly affect its performance, and through our majority interest in the operating partnership have both the right to receive benefits from and the obligation to absorb losses of the operating partnership. Accordingly, we are the primary beneficiary of the operating partnership and consolidate the operating partnership in our financial statements. As we conduct our business and hold our assets and liabilities through the operating partnership, the total assets and liabilities of the operating partnership comprise substantially all of our consolidated assets and liabilities.

We also consolidate certain VIEs that have minimal noncontrolling interests (less than 5%). These entities are VIEs because the noncontrolling interests do not have substantive kick-out or participating rights. We consolidate these entities because we control all of their significant business activities. As of September 30, 2017, the total assets and liabilities of such consolidated VIEs, excluding the operating partnership, were approximately $78.8 million and $5.1 million, respectively.

~~7. Other Assets, Net~~

~~The following is a summary of other assets, net as of September 30, 2017 and December 31, 2016:~~

September 30,
2017 December 31,
2016
(In thousands)
Deferred leasing costs $ 168,344
$ 157,258
Accumulated amortization (66,403 ) (57,910 )
Deferred leasing costs, net 101,941
99,348
Prepaid expenses 21,942
2,199
Identified intangible assets, net 143,000
3,063
Other 21,508
8,345
Total other assets, net $ 288,391
$ 112,955

~~The following is a summary of the composition of identified intangible assets, net as of September 30, 2017 and December 31, 2016:~~

September 30,
2017 December 31,
2016
Identified intangible assets: (in thousands)
In-place leases $ 72,081
$ 12,777
Above-market real estate leases 12,473
773
Below-market ground leases 2,874
2,215
Option to enter into ground lease 17,090
—
Management and leasing contracts 57,800
—
Other 206
206
Total identified intangibles assets 162,524
15,971
Accumulated amortization:
In-place leases 15,187
10,871
Above-market real estate leases 1,082
612
Below-market ground leases 1,344
1,278
Management and leasing contracts 1,753
—
Other 158
147
Total accumulated amortization 19,524
12,908
Identified intangible assets, net $ 143,000
$ 3,063

~~The following is a summary of amortization expense included in the statements of operations related to identified intangible assets for the three and nine months ended September 30, 2017 and 2016:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in thousands)
In-place lease amortization ⁽¹⁾
$ 4,104
$ 233
$ 4,347
$ 336
Above-market real estate lease amortization ⁽²⁾
448
20
471
64
Below-market ground lease amortization ⁽³⁾
23
21
66
64
Management and leasing contract amortization ⁽¹⁾
1,753
—
1,753
—
Other amortization ⁽¹⁾
3
22
10
69
Total identified intangible asset amortization $ 6,331
$ 296
$ 6,647
$ 533

⁽¹⁾ ~~Amounts are included in "Depreciation and amortization expenses" in our statements of operations.~~

⁽²⁾~~Amounts are included in "Property rentals revenue" in our statements of operations.~~

⁽³⁾ ~~Amounts are included in "Property operating expenses" in our statements of operations.~~

~~As of September 30, 2017, the estimated amortization of identified intangible assets is as follows for each of the five years commencing January 1, 2018:~~

Year ending December 31, Amount
(in thousands)
2018 $ 15,119
2019 12,032
2020 10,105
2021 6,664
2022 5,312

~~8. Debt~~

~~Mortgages Payable~~

~~The following is a summary of mortgages payable as of September 30, 2017 and December 31, 2016:~~

Weighted Average Interest Rate Balance as of
September 30,
2017 September 30,
2017 December 31,
2016
(In thousands)
Variable rate ⁽¹⁾
2.95% $ 1,152,106
$ 547,291
Fixed rate ⁽²⁾
4.79% 836,141
620,327
Mortgages payable ⁽³⁾
1,988,247
1,167,618
Unamortized deferred financing costs and premium/discount, net (10,573 ) (2,604 )
Mortgages payable, net $ 1,977,674
$ 1,165,014
Payable to former parent ⁽⁴⁾
— $ —
$ 283,232

^{__________________________}


⁽¹⁾	~~Includes variable rate mortgages payable with interest rate caps.~~


⁽²⁾	~~Includes variable rate mortgages payable with interest rates effectively fixed pursuant to rate swaps.~~


⁽³⁾	~~Includes mortgages payable assumed as part of the Combination. See Note 3 to the financial statements for additional information.~~

⁽⁴⁾

In June 2016, the mortgage loan for the Bowen Building was repaid with proceeds of a $115.6 million draw on our former parent's revolving credit facility collateralized by an interest in the property, and, accordingly, was reflected as a component of "Payable to former parent" on the combined balance sheets as of December 31, 2016. We repaid the loan with amounts drawn under our revolving credit facility collateralized by a mortgage on the property.

As of September 30, 2017, the net carrying value of real estate collateralizing our mortgages payable totaled $3.9 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. As of September 30, 2017, we were in compliance with all debt covenants.

As part of the Combination, we assumed mortgages payable with an aggregate principal balance of $768.5 million. During the three months ended September 30, 2017, we repaid mortgages payable with an aggregate principal balance of $181.7 million, which includes mortgages payable totaling $63.7 million assumed in the Combination. We recognized losses on extinguishment of debt in conjunction with these repayments of $689,000 for the three and nine months ended September 30, 2017.

~~Credit Facility~~

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%.

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 fees and expenses.

~~The following is a summary of amounts outstanding under the credit facility as of September 30, 2017:~~

Interest Rate Balance as of
September 30,
2017 September 30,
2017
(In thousands)
Revolving credit facility ⁽¹⁾
2.34% $ 115,751

Tranche A-1 Term Loan 2.44% $ 50,000
Unamortized deferred financing costs, net (3,611 )
Unsecured term loan, net $ 46,389

^{__________________________}


⁽¹⁾	~~As of September 30, 2017, letters of credit with an aggregate face amount of $5.2 million were provided under our revolving credit facility.~~

~~Principal Maturities~~

~~Principal maturities of debt outstanding as of September 30, 2017, including mortgages payable, the Tranche A-1 Term Loan and borrowings on the revolving credit facility, are as follows:~~

Year ending December 31, Amount
(In thousands)
2017 $ —
2018 376,019
2019 227,919
2020 215,096
2021 215,592
2022 327,500
Thereafter 791,872
Total $ 2,153,998

~~9. Other Liabilities, Net~~

~~The following is a summary of other liabilities, net as of September 30, 2017 and December 31, 2016:~~

September 30,
2017 December 31,
2016
(In thousands)
Lease intangible liabilities $ 44,965
$ 36,515
Accumulated amortization (26,287 ) (24,945 )
Lease intangible liabilities, net 18,678
11,570
Prepaid rent 12,445
9,163
Lease assumptions liabilities and accrued tenant incentives 12,090
14,907
Capital lease obligation 15,976
—
Security deposits 13,795
10,324
Ground lease deferred rent payable 3,559
3,331
Deferred tax liability ⁽¹⁾
22,007
—
Other 2,224
192
Total other liabilities, net $ 100,774
$ 49,487


⁽¹⁾	~~As of September 30, 2017, the deferred tax liability of $22.0 million is related to the management and leasing contracts assumed in the Combination. See Note 3 for additional information.~~

~~The following is a summary of amortization expense included in the statements of operations related to lease intangible liabilities:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in thousands)
Lease intangible liabilities amortization ⁽¹⁾
$ 633
$ 359
$ 1,343
$ 1,076

⁽¹⁾ ~~Amounts are included in "Property rentals" in our statements of operations.~~

~~As of September 30, 2017, the estimated amortization of lease intangible liabilities is as follows for each of the five years commencing January 1, 2018:~~

Year ending December 31, Amount
(in thousands)
2018 $ 2,765
2019 2,679
2020 2,392
2021 1,917
2022 1,798

~~10. Redeemable Noncontrolling Interests~~

In conjunction with the Formation Transaction, JBG SMITH LP issued 19.8 million OP Units to persons other than JBG SMITH that are redeemable for cash or our common shares beginning August 1, 2018, subject to certain limitations. These OP Units represent a 14.4% interest in JBG SMITH LP as of September 30, 2017. The carrying amount of the 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". Redemption value is equivalent to the market value of one of our common

shares at the end of the period multiplied by the number of vested OP Units outstanding. Below is a summary of the activity of redeemable noncontrolling interests for the nine months ended September 30, 2017:

Nine Months Ended September 30,
2017
(In thousands)
Balance at January 1, 2017 ⁽¹⁾
$ —
OP Units issued at the Separation 96,632
OP Units issued in connection with the Combination ⁽²⁾
359,967
Net loss attributable to redeemable noncontrolling interests (2,481 )
Share-based compensation expense 15,799
Adjustment to redemption value 97,084
Balance as of September 30, 2017 $ 567,001

~~__________________~~


⁽¹⁾	~~We did not have any redeemable noncontrolling interests prior to the Separation on July 17, 2017.~~


⁽²⁾	Excludes certain OP Units issued as part of the Combination which have an estimated fair value of $110.6 million, that are subject to post-combination employment with vesting over periods of either 12 or 60 months. See Note 11 for further information.

~~11. Share-Based Payments and Employee Benefits~~

~~OP UNITS~~

Certain OP Units issued as part of the Combination which have an estimated fair value of $110.6 million, are subject to post-combination employment with vesting over periods of either 12 or 60 months. The fair value of these 3.3 million OP Units was estimated based on the post-vesting restriction periods of the units. The significant assumptions used to value the units include expected volatilities (18.0% to 27.0% ), risk-free interest rates (1.3% to 1.5%) and post-vesting restriction periods (1 year to 3 years). Compensation expense for these units is recognized over the graded vesting period. See Note 3 for additional information. As of September 30, 2017, none of these OP Units had vested or been forfeited.

~~JBG SMITH 2017 Omnibus Share Plan~~

On June 23, 2017, our Board of Trustees adopted the JBG SMITH 2017 Omnibus Share Plan (the "Plan"), effective as of July 17, 2017, and authorized the reservation of approximately 10.3 million of our common shares pursuant to the Plan. On July 10, 2017, our then sole-shareholder approved the Plan. As of September 30, 2017, there were 6.6 million common shares available for issuance under the Plan.

~~Formation Awards~~

Pursuant to the Plan, on July 18, 2017, we granted approximately 2.7 million Formation Awards based on an aggregate notional value of approximately $100.0 million divided by the volume-weighted average price on July 18, 2017 of $37.10 per common share. The Formation Awards are structured in the form of profits interests in JBG SMITH LP that provide for a share of appreciation determined by the increase in the value of a common share at the time of conversion over the $37.10 volume-weighted average price of a common share at the time the formation unit was granted. The Formation Awards, subject to certain conditions, generally vest 25% on each of the third and fourth anniversaries and 50% on the fifth anniversary, of the closing of the Combination, subject to continued employment with JBG SMITH through each vesting date.

The value of vested Formation Awards is realized through conversion into a number of LTIP Units, and subsequent conversion into a number of OP Units determined based on the difference between $37.10 and the value of a common share on the conversion date. The conversion ratio between Formation Awards and OP Units, which starts at zero, is the quotient of (i) the excess of the value of a common share on the conversion date above the per share value at the time the Formation Award was granted over (ii) the value of a common share as of the date of conversion. This is similar to a “cashless exercise” of stock options, whereby the holder receives a number of shares equal in value to the difference between the full value of the total number of shares for which the option is being exercised and the total exercise price. Like options, Formation Awards have a finite term over which their value is allowed to increase and during which they may be converted into LTIP Units (and in turn, OP Units). Holders of Formation Awards will not receive distributions or allocations of net income or net loss prior to vesting and conversion to LTIP Units.

The fair value of the Formation Awards on the grant date was $23.7 million or $8.84 per unit estimated using Monte Carlo simulations. The significant assumptions used to value the awards include expected volatility (26.0%), dividend yield (2.3%), risk-free interest rate (2.3%) and expected life (7 years). Compensation expense for these awards is being recognized over a five-year period. As of September 30, 2017, none of these Formation Awards had vested or been forfeited.

~~LTIP Units~~

On July 18, 2017, we granted a total of 47,166 fully vested LTIP Units to the seven non-employee trustees in the notional amount of $250,000 each. The LTIP Units may not be sold while such non-employee trustee is serving on the Board. On the same date, we also granted 59,927 LTIP units to a key employee 50%, which vested immediately and 50% of which vests in equal monthly installments from the 31st to 60th months following the grant date. These LTIP Units had an aggregate fair value of $3.5 million.

On August 1, 2017, we granted approximately 302,500 LTIP Units to management and other employees under our Plan. The LTIP units vest in four equal installments on August 1 of each year, subject to continued employment. These LTIP Units were valued at a weighted average grant-fair value of $33.71 per unit. Compensation expense for these units is being recognized over a four-year period. As of September 30, 2017, none of these LTIP Units had vested or been forfeited.

The fair value of the LTIP Units was estimated based on the post-vesting restriction periods. The significant assumptions used to value the units include expected volatilities (17.0% to 19.0%), risk-free interest rates (1.3% to 1.5%) and post-vesting restriction periods (2 years to 3 years). Net income and net loss is allocated to each LTIP Unit. LTIP Unit holders have the right to convert all or a portion of vested LTIP Units into OP Units, which are then subsequently exchangeable for our common shares. LTIP Units do not have redemption rights, but any OP Units into which LTIP Units are converted are entitled to redemption rights. LTIP Units, generally, vote with the OP Units and do not have any separate voting rights except in connection with actions that would materially and adversely affect the rights of the LTIP Units.

~~OPP Units~~

On August 1, 2017, we granted approximately 605,100 OPP Units to management and other employees under the Plan. OPP Units are performance-based equity compensation pursuant to which participants have the opportunity to earn OPP units based on the relative performance of the total shareholder return ("TSR") of our common shares compared to the companies in the FTSE NAREIT Equity Office Index, over the three-year performance period beginning on the August 1, 2017 grant date, inclusive of dividends and stock price appreciation. Fifty percent of any OPP Units that are earned vest at the end of the three-year performance period and the remaining 50% on the fourth anniversary of the date of grant, subject to continued employment. Net income and net loss are allocated to each OPP Unit. The fair value of the OPP Units on the date of grant was ~~$9.7 million~~ ~~or $15.95 per unit estimated using Monte Carlo simulations. The significant assumptions used to value the OPP Units include expected volatility (18.0%), dividend yield (2.3%) and risk-free interest rates (1.5%). Compensation expense for these units is being recognized over a four-year period. As of September 30, 2017, none of these OPP Units had vested or been forfeited.~~

~~Share-Based Compensation Expense~~

~~Share-based compensation expense for the nine months ended September 30, 2017 is summarized as follows (in thousands):~~

Formation Awards $ 3,963
LTIP Units that vested immediately 2,546
OP Units ⁽¹⁾
7,936
Share-based compensation related to Formation Transaction ⁽²⁾
14,445
LTIP Units that vest over four years 885
OPP Units 469
Other equity awards 1,526
Share-based compensation expense - other⁽³⁾
2,880
Total share-based compensation expense 17,325
Less amount capitalized (161 )
Net share-based compensation expense ⁽⁴⁾
$ 17,164

^{______________________________________________}


⁽¹⁾	~~Represents share-based compensation expense for OP Units subject to post-combination employment. See Note 3 for further information.~~


⁽²⁾	~~Included in "General and administrative expense: share-based compensation related to Formation Transaction" in the accompanying statements of operations.~~


⁽³⁾	~~Included in "General and administrative expense" in the accompanying statements of operations.~~


⁽⁴⁾	~~Net share-based compensation expense for the three months ended September 30, 2017 was $16.0 million.~~

As of September 30, 2017, we had $141.4 million of total unrecognized compensation expense related to unvested share-based payment arrangements (unvested OP Units, Formation Awards, LTIP Units and OPP Units). This expense is expected to be recognized over a weighted average period of 3.4 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’ contributions vest immediately and our matching contributions vest over five years. Our contributions to the 401(k) Plan for three months ended September 30, 2017 and 2016 were $401,000 and $868,000, respectively. Our contributions during the nine months ended September 30, 2017 and 2016 were $3.2 million and $3.1 million, respectively.

~~12. (Loss) Earnings Per Share~~

The following summarizes the calculation of basic and diluted EPS and provides a reconciliation of the amounts of net (loss) income available to common shareholders and shares of common stock used in calculating basic and diluted EPS for the three and nine months ended September 30, 2017 and 2016:

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In thousands, except per share amounts)
Net (loss) income attributable to JBG SMITH Properties $ (69,831 ) $ 21,014
$ (57,851 ) $ 49,344

Weighted average shares outstanding — basic and diluted ⁽¹⁾
114,744
100,571
105,347
100,571

(Loss) earnings per share available to common shareholders:
Basic $ (0.61 ) $ 0.21
$ (0.55 ) $ 0.49
Diluted $ (0.61 ) $ 0.21
$ (0.55 ) $ 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.~~

The effect of the conversion of 13,408 and 4,518 weighted average vested OP Units for the three and nine months ended September 30, 2017 is excluded in the computation of basic and diluted loss per share, as the assumed exchange of such units for common shares on a one-for-one basis was antidilutive (the assumed conversion of these units would have no net impact on the determination of diluted earnings per share). As vested and outstanding OP Units are held by a noncontrolling interest, losses are attributable to them based on the weighted average outstanding units and are thus excluded from the numerator in calculating basic and diluted loss per share. The number of securities that were excluded from the calculation of diluted (loss) earnings per share because they were antidilutive that potentially could be dilutive in the future are included in the following table:

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
OP Units 3,281
—
3,281
—
Formation Awards 2,681
—
2,681
—
LTIP Units 410
—
410
—
OPP Units 605
—
605
—

~~13. Future Minimum Rental Income~~

We lease space to tenants under operating leases that expire at various dates through the year 2036. The leases provide for the payment of fixed base rents payable monthly in advance 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 on a percentage of their sales. As of September 30, 2017, future base rental revenue under these non-cancelable operating leases excluding extension options is as follows:

Year ending December 31, Amount
(In thousands)
2017 $ 133,025
2018 387,636
2019 310,230
2020 277,278
2021 234,005
2022 195,750
Thereafter 868,284

~~14. Fair Value Measurements~~

~~Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis~~

As of September 30, 2017, we had various interest rate swap and cap agreements assumed in the Combination that are measured at fair value on a recurring basis. There were no interest rate swaps or caps prior to the Combination. The net unrealized gain on our interest rate swaps and caps was $467,000 for both the three and nine months ended September 30, 2017 and are included in "Interest expense" in the accompanying statements of operations. The fair values of the interest rate swaps and capsinstruments are based on the estimated amounts we would receive or pay to terminate the ~~contract~~contracts at the reporting date and are determined using interest rate pricing models and observable inputs. The ~~interest rate swaps and caps~~derivative financial instruments are classified within Level 2 of the valuation hierarchy.

The following ~~are~~is a summary of assets and liabilities measured at fair value on a recurring ~~basis~~basis:


	Fair Value Measurements
	Total		Level 1		Level 2		Level 3

	(In thousands)
September 30, 2021
Derivative financial instruments designated as cash flow hedges:
Classified as liabilities in "Other liabilities, net"	$	28,406		—	$	28,406		—
Derivative financial instruments not designated as cash flow hedges:
Classified as assets in "Other assets, net"		266		—		266		—

December 31, 2020
Derivative financial instruments designated as cash flow hedges:
Classified as liabilities in "Other liabilities, net"	$	44,222		—	$	44,222		—
Derivative financial instruments not designated as cash flow hedges:
Classified as assets in "Other assets, net"		35		—		35		—

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 September 30, ~~2017:~~2021 and December 31, 2020, 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 gains and losses included in "Other comprehensive income (loss)" in our statements of comprehensive income (loss) for the three and nine months ended September 30, 2021 and 2020 were attributable to the net change in unrealized gains or losses related to the interest rate swaps that were outstanding during those periods, none of which were reported in our statements of operations as the interest rate swaps were documented and qualified as hedging instruments.

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Fair Value Measurements
Total Level 1 Level 2 Level 3
September 30, 2017 (In thousands)
Interest rate swaps and caps:
Classified as liabilities in "Other liabilities, net" $ 703
$ —
$ 703
$ —

Financial Assets and Liabilities Not Measured at Fair Value

As of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, all financial ~~instruments~~assets and liabilities were reflected in our balance sheets at amounts which, in our estimation, reasonably approximated their fair values, except for the following:


	September 30, 2021				December 31, 2020
	Carrying				Carrying
	Amount ⁽¹⁾		Fair Value		Amount ⁽¹⁾		Fair Value

	(In thousands)
Financial liabilities:
Mortgages payable	$	1,684,407	$	1,739,548	$	1,603,869	$	1,606,470
Unsecured term loans		400,000		400,201		400,000		399,678

September 30, 2017 December 31, 2016

     Carrying
      Amount ⁽¹⁾
Fair Value
     Carrying
      Amount ⁽¹⁾
Fair Value
(In thousands)
Financial liabilities:
Mortgages payable $ 1,988,247
$ 2,015,653
$ 1,167,618
$ 1,192,267

^{______________________________________}

(1)	The carrying amount consists of principal only.

⁽¹⁾

The ~~carrying amount consists~~fair values of ~~principal only.~~

the mortgages payable and unsecured term loans were determined using Level 2 inputs of the fair value hierarchy. The fair value of our mortgages payable 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 unsecured term ~~loan~~loans is calculated based on the net present value of payments over the term of the ~~loan~~facilities using estimated market rates for similar notes and remaining terms. ~~The fair value of the unsecured term loan was determined using Level 2 inputs of the fair value hierarchy.~~

~~15.~~

16.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~~3 reportable segments ~~(office,~~(commercial, multifamily, 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”~~("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~~("Third-party real estate services, including ~~reimbursements)~~reimbursements"), as well as the expenses attributable to the segment ~~(general~~("General and administrative: third-party real estate ~~services)~~services"), which are both disclosed separately in ~~the~~our statements of operations. The following represents the components of revenue from our third-party real estate services business:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020		X	2021		2020

	(In thousands)
Property management fees	$	4,831	$	4,694		$	14,549	$	15,453
Asset management fees		2,145		2,301			6,602		7,400
Development fees ⁽¹⁾		4,032		2,614			22,705		8,474
Leasing fees		1,822		1,086			4,106		3,627
Construction management fees		—		584			375		2,057
Other service revenue		1,295		2,000			4,783		5,452
Third-party real estate services revenue, excluding reimbursements		14,125		13,279			53,120		42,463
Reimbursement revenue ⁽²⁾		11,717		13,708			37,574		41,407
Third-party real estate services revenue, including reimbursements		25,842		26,987			90,694		83,870
Third-party real estate services expenses		25,542		28,207			80,035		86,260
Third-party real estate services revenue less expenses	$	300	$	(1,220)		$	10,659	$	(2,390)

Table of Contents

(1)	Estimated development fee revenue totaling $51.2 million as of September 30, 2021 is expected to be recognized over the next six years as unsatisfied performance obligations are completed.

(2)	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 ~~$56.0~~$21.1 million and $25.5 million as of September 30, 2021 and December 31, 2020, which are classified in "Other assets, net" in ~~the~~our balance ~~sheet as of September 30, 2017.~~sheets. Consistent with ~~the~~internal reporting presented to our CODM ~~approach~~ 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) ~~income~~ attributable to ~~JBG SMITH Properties~~common shareholders to ~~NOI for the three and nine months ended September 30, 2017 and 2016:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In thousands)
Net (loss) income attributable to JBG SMITH Properties $ (69,831 ) $ 21,014
$ (57,851 ) $ 49,344
Add:
Depreciation and amortization expense 43,951
31,377
109,726
98,291
General and administrative expense:
Corporate and other 10,593
10,913
35,536
36,040
Third-party real estate services 21,178
4,779
30,362
14,272
Share-based compensation related to Formation Transaction
14,445
—
14,445
—
Transaction and other costs 104,095
1,528
115,173
1,528
Interest expense 15,309
13,028
43,813
38,662
Loss on extinguishment of debt 689
—
689
—
Income tax (benefit) expense (1,034 ) 302
(317 ) 884
Less:
Third-party real estate services, including reimbursements
25,141
8,297
38,881
24,617
Other income 1,158
1,564
3,701
3,938
(Loss) income from unconsolidated real estate ventures (1,679 ) 584
(1,365 ) (952 )
Interest and other (loss) income, net (379 ) 749
1,366
2,292
Gain on bargain purchase 27,771
—
27,771
—
Net loss attributable to redeemable noncontrolling interests 8,160
—
2,481
—
NOI $ 79,223
$ 71,747
$ 218,741
$ 209,126

~~Below~~consolidated NOI:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020		X	2021		2020

		(In thousands)
Net income (loss) attributable to common shareholders	$	893	$	(22,793)		$	(22,811)	$	(16,648)
Add:
Depreciation and amortization expense		56,726		56,481			178,130		157,586
General and administrative expense:
Corporate and other		12,105		11,086			38,475		37,478
Third-party real estate services		25,542		28,207			80,035		86,260
Share-based compensation related to Formation Transaction and special equity awards		3,480		7,133			12,866		25,432
Transaction and other costs		2,951		845			8,911		7,526
Interest expense		17,243		16,885			50,312		44,660
Loss on extinguishment of debt		—		—			—		33
Income tax expense (benefit)		217		(488)			4,527		(3,721)
Net income (loss) attributable to redeemable noncontrolling interests		103		(2,212)			(2,472)		(445)
Net loss attributable to noncontrolling interests		—		—			(1,108)		—
Less:
Third-party real estate services, including reimbursements revenue		25,842		26,987			90,694		83,870
Other revenue		1,568		2,292			5,658		5,438
Income (loss) from unconsolidated real estate ventures, net		20,503		(965)			23,513		(17,142)
Interest and other income, net		192		—			163		1,021
Gain on sale of real estate		—		—			11,290		59,477
Consolidated NOI	$	71,155	$	66,830		$	215,547	$	205,497

The following is a summary of NOI by ~~segment for~~segment. Items classified in the ~~three~~Other column include future development assets, corporate entities and ~~nine months ended September 30, 2017 and 2016:~~the elimination of intersegment activity.


	Three Months Ended September 30, 2021
	Commercial		Multifamily		Other		Total

	(In thousands)
Property rental revenue	$	92,522	$	35,020	$	(1,642)	$	125,900
Parking revenue		3,520		111		81		3,712
Total property revenue		96,042		35,131		(1,561)		129,612
Property expense:
Property operating		27,068		14,212		(1,082)		40,198
Real estate taxes		12,098		4,930		1,231		18,259
Total property expense		39,166		19,142		149		58,457
Consolidated NOI	$	56,876	$	15,989	$	(1,710)	$	71,155

Table of Contents

Three Months Ended September 30, 2017
Office Multifamily Other Eliminations Total
(In thousands)
Rental revenue:
Property rentals $ 91,534
$ 23,397
$ 4,171
$ (2,644 ) $ 116,458
Tenant reimbursements 7,917
1,548
128
—
9,593
Total rental revenue 99,451
24,945
4,299
(2,644 ) 126,051
Rental expense: —

Property operating 27,000
6,796
3,502
(7,664 ) 29,634
Real estate taxes 13,038
2,952
1,204
—
17,194
Total rental expense 40,038
9,748
4,706
(7,664 ) 46,828
NOI $ 59,413
$ 15,197
$ (407 ) $ 5,020
$ 79,223

Three Months Ended September 30, 2016
Office Multifamily Other Eliminations Total
(In thousands)
Rental revenue:
Property rentals $ 81,575
$ 15,850
$ 4,898
$ 942
$ 103,265
Tenant reimbursements 8,977
876
378
—
10,231
Total rental revenue 90,552
16,726
5,276
942
113,496
Rental expense: —

Property operating 25,083
4,782
3,065
(5,643 ) 27,287
Real estate taxes 11,793
1,663
1,006
14,462
Total rental expense 36,876
6,445
4,071
(5,643 ) 41,749
NOI $ 53,676
$ 10,281
$ 1,205
$ 6,585
$ 71,747

Nine Months Ended September 30, 2017
Office Multifamily Other Eliminations Total
(In thousands)
Rental revenue:
Property rentals $ 249,532
$ 62,050
$ 9,623
$ (4,306 ) $ 316,899
Tenant reimbursements 22,738
3,772
651
—
27,161
Total rental revenue 272,270
65,822
10,274
(4,306 ) 344,060
Rental expense: —

Property operating 71,377
16,716
11,330
(22,082 ) 77,341
Real estate taxes 37,185
7,973
2,820
—
47,978
Total rental expense 108,562
24,689
14,150
(22,082 ) 125,319
NOI $ 163,708
$ 41,133
$ (3,876 ) $ 17,776
$ 218,741

Nine Months Ended September 30, 2016
Office Multifamily Other Eliminations Total
(In thousands)
Rental revenue:
Property rentals $ 237,826
$ 45,203
$ 18,621
$ (2,153 ) $ 299,497
Tenant reimbursements 24,807
2,422
1,199
—
28,428
Total rental revenue 262,633
47,625
19,820
(2,153 ) 327,925
Rental expenses: —

Property operating 69,740
12,594
14,934
(22,181 ) 75,087
Real estate taxes 34,855
5,063
3,794
—
43,712
Total rental expense 104,595
17,657
18,728
(22,181 ) 118,799
NOI $ 158,038
$ 29,968
$ 1,092
$ 20,028
$ 209,126


	Three Months Ended September 30, 2020
	Commercial		Multifamily		Other		Total

	(In thousands)
Property rental revenue	$	90,050	$	30,452	$	(1,822)	$	118,680
Parking revenue		3,002		74		—		3,076
Total property revenue		93,052		30,526		(1,822)		121,756
Property expense:
Property operating		26,701		13,226		(2,355)		37,572
Real estate taxes		12,136		4,656		562		17,354
Total property expense		38,837		17,882		(1,793)		54,926
Consolidated NOI	$	54,215	$	12,644	$	(29)	$	66,830


	Nine Months Ended September 30, 2021
	Commercial		Multifamily		Other		Total

	(In thousands)
Property rental revenue	$	275,736	$	100,324	$	(5,100)	$	370,960
Parking revenue		9,169		286		188		9,643
Total property revenue		284,905		100,610		(4,912)		380,603
Property expense:
Property operating		76,155		38,449		(4,675)		109,929
Real estate taxes		36,018		15,240		3,869		55,127
Total property expense		112,173		53,689		(806)		165,056
Consolidated NOI	$	172,732	$	46,921	$	(4,106)	$	215,547

	Nine Months Ended September 30, 2020
	Commercial		Multifamily		Other		Total

	(In thousands)
Property rental revenue	$	266,823	$	94,873	$	(7,177)	$	354,519
Parking revenue		10,018		249		—		10,267
Total property revenue		276,841		95,122		(7,177)		364,786
Property expense:
Property operating		78,645		34,238		(7,016)		105,867
Real estate taxes		36,532		14,088		2,802		53,422
Total property expense		115,177		48,326		(4,214)		159,289
Consolidated NOI	$	161,664	$	46,796	$	(2,963)	$	205,497

The following is a summary of certain balance sheet data by ~~segment as of September 30, 2017 and December 31, 2016:~~

segment:


	Commercial		Multifamily		Other		Total

	(In thousands)
September 30, 2021
Real estate, at cost	$	3,494,929	$	2,135,448	$	395,758	$	6,026,135
Investments in unconsolidated real estate ventures		300,304		110,369		75,379		486,052
Total assets ⁽¹⁾		3,541,397		1,779,416		688,165		6,008,978
December 31, 2020
Real estate, at cost	$	3,459,171	$	2,036,131	$	505,329	$	6,000,631
Investments in unconsolidated real estate ventures		327,798		108,593		24,978		461,369
Total assets⁽¹⁾		3,430,509		1,787,718		861,320		6,079,547

Office Multifamily Other Eliminations Total
September 30, 2017 (In thousands)
Real estate, at cost $ 3,867,513
$ 1,434,730
$ 540,287
$ —
$ 5,842,530
Investments in and advances to
unconsolidated real estate ventures
$ 126,620
$ 106,842
$ 51,524
$ —
$ 284,986
Total assets $ 3,338,100
$ 1,472,864
$ 1,204,063
$ —
$ 6,015,027
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

(1)	Includes assets held for sale. See Note 3 for additional information.

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~~16.~~

17.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~~$1.5 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 terrorist acts and for nuclear, biological, chemical or radiological terrorism events with limits of $2.0 billion per ~~occurrence and in the aggregate, and $2.0 billion per occurrence and in the aggregate for nuclear, biological, chemical and radiological terrorism events, as defined~~occurrence. These policies are partially reinsured by the Terrorism Risk Insurance Program Reauthorization Act, which expires in December 2020. Insurance premiums are charged directly to each of the properties and are included in "Property operating expenses" in the statement of operations.

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~~mortgages payable 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 reasonable costs 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 September 30, ~~2017,~~2021, we ~~have~~had assets under construction ~~in progress~~ that will, ~~require an additional $707.8 million to complete ($611.1 million related to our consolidated entities and $96.7 million related to our unconsolidated real estate ventures at our share),~~ based on our current plans and estimates, require an additional $320.3 million to complete, 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, issuance and sale of securities, 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 assets. 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.~~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 $18.2 million as of September 30, 2021 and December 31, 2020 and are included in "Other liabilities, net" in our balance sheets.

Other

As of September 30, 2021, we had committed tenant-related obligations totaling $76.9 million ($73.6 million related to our consolidated entities and $3.3 million 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.

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 ~~joint~~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

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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 September 30, ~~2017, the aggregate amount~~2021, we had additional capital commitments and certain recorded guarantees to our unconsolidated real estate ventures totaling $66.1 million. As of ~~our~~September 30, 2021, we had 0 principal payment guarantees ~~was approximately $89.0 million for our consolidated entities and $63.8 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 lenders, tenants and other third parties for the completion of development projects.As of September 30, ~~2017, we expect to fund additional capital to certain~~2021, the aggregate amount of principal payment guarantees was $8.3 million for our ~~unconsolidated investments totaling approximately $50.6 million, , which we anticipate will be primarily expended over the next two to three years.~~

We are obligated under non-cancelable operating leases, primarily for ground leases on certain of our properties through 2112. As of September 30, 2017, future minimum rental payments under non-cancelable operating and capital leases are as follows:

Year ending December 31, Amount
(In thousands)
2017 $ 1,974
2018 8,391
2019 8,170
2020 7,825
2021 7,496
2022 6,580
Thereafter 874,467
Total $ 914,903


~~17.~~	~~Transactions With Vornado and JBG Legacy Funds~~

consolidated entities.

18.Transactions with ~~Vornado~~

As described in Note 1 and Note 3, the accompanying financial statements present the operations of the office and multifamily 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 consolidated and combined 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 the three months ended September 30, 2017 and 2016 were $873,000 and $4.5 million, respectively. The total amounts allocated during the nine months ended September 30, 2017 and 2016 were $13.0 million and $15.2 million, respectively. 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. Allocated amounts for the three and nine months ended September 30, 2017 and 2016 are not necessarily indicative of allocated amounts for a full year.~~

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 both the three months and nine months ended September 30, 2017 were approximately $912,000. 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 both the three months and nine months ended September 30, 2017 was $68,000. We believe that the terms of both of these agreements are comparable to those that would have been negotiated based on market rates.

In 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, respectively. 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 $130,000 and $1.8 million during the three and nine months ended September 30, 2017, respectively, and $830,000 and $2.3 million during the three and nine months ended September 30, 2016, respectively.

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 at were $166.5 million, and are included in "Payable to former parent" on our balance sheets. We incurred interest of $365,000 and $4.1 million during the three and nine months ended September 30, 2017, respectively, and $1.2 million and $3.0 million during the three and nine months ended September 30, 2016, respectively.

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 Vornado’s revolving credit facility. The loan was repaid with amounts drawn under our revolving credit facility. See Note 8 for further information. Given that the $115.6 million draw on Vornado’s credit facility is secured by an interest in the property, such amount was included in "Payable to former parent" in our balance sheets as of December 31, 2016. We incurred interest expense of $120,000 and $1.3 million during the three and nine months ended September 30, 2017, respectively, and $457,000 and $602,000 for the three and nine months ended September 30, 2016, respectively.

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 $3.6 million and $9.9 million during the three and nine months ended September 30, 2017, respectively, and $3.3 million and $9.6 million during the three and nine months ended September 30, 2016, respectively, 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 expires on December 31, 2017 and provides for the payment of consulting fees at the rate of $166,667 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 recorded as a liability in connection with the Combination. As of September 30, 2017, the remaining liability is $3.6 million. In March 2017, Vornado amended Mr. Schear’s employment agreement with Vornado to provide for the payments that Mr. Schear will receive in connection with certain post-employment services.

~~Fees from JBG Legacy Funds~~

~~In addition to our portfolio, we have a third-party~~ real estate services business ~~that~~ provides fee-based real estate services to ~~our real estate ventures, legacy funds formerly organized by~~the WHI, Amazon, the JBG Legacy Funds and other third parties. We provide services for the benefit of the JBG Legacy Funds that own interests in the assets retained by the JBG Legacy Funds. In connection with the contribution to us of the assets formerly owned by the JBG ~~Assets to us, it was determined that~~Legacy Funds as part of the 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 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 ~~joint~~real estate ventures that ~~entitles~~entitle them to receive ~~additional compensation~~cash payments if the fund or ~~joint~~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. We are the manager for the WHI Impact Pool, which is the social impact debt financing vehicle of the WHI. As of September 30, 2021, the WHI Impact Pool had completed closings of capital commitments totaling $114.4 million, which included a commitment from us of $11.2 million. As of September 30, 2021, our remaining commitment was $8.3 million.

The third-party real estate services revenue, including expense reimbursements, from ~~these~~the JBG Legacy Funds and the WHI Impact Pool was $5.6 million and $17.2 million for ~~both~~ the three and nine months ended September 30, ~~2017 was $8.4 million.~~

~~Registration Rights Agreements~~

~~In connection with~~2021, and $4.6 million and $17.3 million for the ~~Formation Transaction,~~three and nine months ended September 30, 2020. As of September 30, 2021 and December 31, 2020, we entered into a registration rights agreement with certain 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 benefithad receivables from the ~~Registration Rights Agreements are members~~JBG Legacy Funds and the WHI Impact Pool totaling $3.5 million and $7.5 million for such services.

We rented our former corporate offices from an unconsolidated real estate venture and made payments totaling $246,000 and $1.0 million for the three and nine months ended September 30, 2021, and $403,000 and $4.1 million for the three and nine months ended September 30, 2020.

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 $4.9 million and $13.4 million during the three and nine months ended September 30, 2021, and $4.0 million and $12.6 million for the three and nine months ended September 30, 2020, which is included in "Property operating expenses" in our statements of ~~our management team and/or Board~~operations.

Table of ~~Trustees.~~

Contents


~~18.~~	~~Subsequent Events~~

~~In October 2017, we closed a $78.0 million loan on 1235 South Clark, an office asset in Crystal City, Virginia. The loan has a 10-year term and a fixed interest rate of 3.94%.~~

~~In October 2017, we repaid a $67.3 million loan at 220 20th Street, a multifamily asset located in Crystal City, Virginia.~~

~~In October 2017, we entered into agreements in the specified notional amounts to swap variable interest rates to fixed rates on the following debt instruments:~~

~~$50.0 million related to our Tranche A-1 Term Loan;~~

~~$107.7 million related to our mortgage loan on RTC - West; and~~

~~$107.5 million related to our mortgage loan on 800 North Glebe Road.~~

In November 2017, we closed a $110.0 million refinancing on Atlantic Plumbing, a multifamily and retail asset in the U Street/Shaw submarket of Washington, DC. The loan has a five-year term and a floating rate of LIBOR plus 1.50%. A prior swap agreement has been novated to synthetically fix the interest rate through September 2020. At closing, $100.0 million was funded, which was used in part to repay the existing $88.4 million loan. We have the ability to draw an additional $10.0 million based on the asset’s performance.

~~On November 9, 2017, our Board of Trustees declared a quarterly dividend of $0.225 per common share, payable on November 30, 2017 to shareholders of record on November 20, 2017.~~


~~ITEM 2.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of 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 Quarterly Report on Form 10-Q. 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. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see "Risk Factors" in Item 1A of our Registration Statement on Form 10, as amended, filed with the Securities and Exchange Commission (the "SEC") and declared effective on June 26, 2017, as well as the section entitled "Risk Factors" of the final Information Statement filed with the SEC as Exhibit 99.1 on our CurrentAnnual Report on Form ~~8-K filed~~10-K for the year ended December 31, 2020 and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report on ~~June 27, 2017.~~

Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2020.

One of the most significant factors that could cause actual outcomes to differ materially from our forward-looking statements is the adverse effect of the current pandemic of the novel coronavirus ("COVID-19") on our financial condition, results of operations, cash flows, performance, tenants, the real estate market, and the global economy and financial markets. The significance, extent and duration of the impact of COVID-19 on us and our tenants remains largely uncertain and dependent on near-term and future developments that cannot be accurately predicted at this time, such as the continued severity, duration, transmission rate and geographic spread of COVID-19, the distribution, effectiveness and willingness of people to take COVID-19 vaccines, the extent and effectiveness of the containment measures taken, and the response of the overall economy, the financial markets and the population, particularly in the area in which we operate. Moreover, investors are cautioned to interpret many of the risks identified under the section titled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as being heightened as a result of the ongoing and numerous adverse impacts of COVID-19.

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 Quarterly Report on Form 10-Q. 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 Quarterly Report on Form 10-Q.

Organization and Basis of Presentation

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).~~, owns and operates a portfolio of commercial and multifamily assets amenitized with ancillary retail. JBG SMITH's portfolio reflects its longstanding strategy of owning and operating assets within Metro-served submarkets in the Washington, D.C. metropolitan area that have high barriers to entry and vibrant urban amenities. Over half of our portfolio is in National Landing where we serve as the exclusive developer for Amazon.com, Inc.'s ("Amazon") new headquarters and where Virginia Tech's under-construction $1 billion Innovation Campus is located. In addition, our third-party asset management and real estate services business provides fee-based real estate services to the Washington Housing Initiative ("WHI") Impact Pool, Amazon, the legacy funds formerly organized by The JBG Companies ("JBG") (the "JBG Legacy Funds") and other third parties. Substantially all our assets are held by, and our operations are conducted through, JBG SMITH ~~was formed~~Properties LP ("JBG SMITH LP"), our operating partnership. JBG SMITH is referred to 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.

~~Prior to the Separation from Vornado, JBG SMITH was a wholly owned subsidiary~~

Table of Vornado and had no material assets or operations. Pursuant to a separation agreement, 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 Properties LP ("JBG SMITH LP"), our operating partnership, 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. The operations of JBG SMITH are presented as if the transfer of the Vornado Included Assets had been consummated prior to all historical periods presented in the accompanying financial statements at the carrying amounts of such assets and liabilities reflected in Vornado’s books and records.Contents

The following is a discussion of the historical results of operations and liquidity and capital resources of JBG SMITH as of and for the three- and nine-month periods ended September 30, 2017 and 2016, which includes results prior to the consummation of the Formation Transaction. The historical results presented prior to the consummation of the Formation Transaction 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 to July 18, 2017 does not include the results of the JBG Assets . The following discussion should be read in conjunction with the condensed consolidated and combined interim financial statements and notes thereto appearing in "Item 1. Financial Statements.".

References to ~~the~~our financial statements refer to our unaudited condensed consolidated ~~and combined~~ financial statements as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, and for the three and nine months ended September 30, ~~2017~~2021 and ~~2016.~~2020. References to ~~the~~our balance sheets refer to our condensed consolidated ~~and combined~~ balance sheets as of September 30, ~~2017~~2021 and December 31, ~~2016.~~2020. References to ~~the~~our statements of operations refer to our condensed consolidated ~~and combined~~ statements of operations for the three

and nine months ended September 30, ~~2017~~2021 and ~~2016.~~2020. References to ~~the~~our statements of cash flows refer to our condensed consolidated ~~and combined~~ statements of cash flows for the nine months ended September 30, ~~2017~~2021 and ~~2016.~~

2020.

The accompanying ~~unaudited~~ financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP")~~. GAAP~~, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of 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

We have ~~been if the Vornado Included Assets had been operating as a separate standalone public company. These charges are discussed further in Note 17 to the financial statements.~~

~~We intend to elect~~elected to be taxed as a REIT under sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code")~~, commencing with the filing of our tax return for the 2017 calendar year, effective for our tax year ending December 31, 2017.~~. 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, the Vornado Included Assets historically operated under Vornado’s REIT structure. Since Vornado operates as a REIT~~We currently adhere and ~~distributes 100% of taxable income to its shareholders, no provision for federal income taxes has been made in the accompanying financial statements for the periods prior to the Separation. We~~ intend to continue to adhere to these requirements and to maintain our REIT status in future periods.

As a REIT, we are allowed to reduce taxable income by all or a portion of our distributions to shareholders. Future distributions will be declared and paid at the discretion of our 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 ~~certain~~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 financial statements, which will result in taxable or deductible amounts in the future.

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

Our revenues and expenses are, to some extent, subject to seasonality during the year, which impacts quarterly net earnings, cash flows and funds from operations that affects the sequential comparison of our results in individual quarters over time. For instance, we have historically experienced higher utility costs in the first and third quarters of the year.

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

As of September 30, ~~2017,~~2021, our ~~portfolio comprised: (i) 69~~Operating Portfolio consisted of 63 operating assets comprising ~~51 office~~42 commercial assets totaling ~~over 13.7~~13.1 million square feet ~~(11.8~~(11.3 million square feet at our share)~~, 14~~ and 21 multifamily assets totaling ~~6,016~~7,776 units ~~(4,232~~(6,125 units at our share) ~~and four other assets totaling approximately 765,000 square feet (348,000 square feet~~. Additionally, we have: (i) one under-construction multifamily asset with 808 units (808 units at our share); (ii) ~~nine assets under construction comprising four office~~11 near-term development assets totaling ~~approximately 1.3~~5.3 million square feet (1.2 million square feet at our share), four multifamily assets totaling 1,334 units (1,149 units at our share) and one other asset totaling approximately 41,100 square feet (4,100 square feet at our share; (iii) one near-term development multifamily asset totaling 433 units (303 units at our share), and (iv) 42 future development assets totaling approximately 21.3 million square feet (17.6(5.0 million square feet at our share) of estimated potential development density; and (iii) 25 future development assets totaling 14.3 million square feet (11.6 million square feet at our share) of estimated potential development density. In 2021, we achieved carbon neutrality across our Operating Portfolio through the purchase of verified carbon offsets and renewable energy credits.

We continue to focus on our comprehensive plan to reposition our holdings in National Landing in Northern Virginia by executing a broad array of Placemaking strategies. Our Placemaking strategies include 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. We have also invested in Citizens Broadband Radio Service ("CBRS") wireless spectrum in National Landing as part of our efforts to make National Landing among the first 5G-operable submarkets in the nation.

In November 2018, Amazon announced it had selected sites that we own in National Landing as the location of its new headquarters. We currently have leases with Amazon totaling approximately 1.0 million square feet at six office buildings

~~Key highlights~~

Table of ~~operating results~~Contents

in National Landing. In March 2019, we executed purchase and sale agreements with Amazon for two of our National Landing development sites, Metropolitan Park and Pen Place, which will serve as the initial phase of construction associated with Amazon's new headquarters at National Landing. In January 2020, we sold Metropolitan Park to Amazon for $155.0 million and began constructing two new office buildings thereon, totaling 2.1 million square feet, inclusive of over 50,000 square feet of street-level retail with new shops and restaurants. We are the developer, property manager and retail leasing agent for Amazon's new headquarters at National Landing.

2021 Outlook

A fundamental component of our strategy to maximize long-term net asset value per share is active capital allocation. Since our inception in 2017, we have completed the sale, recapitalization and/or ground lease of $1.7 billion of primarily office assets, and we intend to opportunistically sell at least another $1.4 billion of non-core office assets and land. We are currently targeting dispositions primarily of office assets in submarkets where we have less concentration and where we anticipate lower growth rates going forward relative to other opportunities within our portfolio. Additionally, we may market select land assets where ground lease or joint venture execution may represent the clearest path to maximizing value. Redeploying the proceeds from any such sales and recapitalizations will not only help fund our planned growth but will also further advance the strategic shift of our portfolio to majority multifamily.

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. On March 13, 2020, a National Emergency was declared in the United States in response to COVID-19. The efforts made by federal, state and local governments to mitigate the spread of COVID-19 included orders requiring the temporary closure of or imposed limitations on the operations of certain non-essential businesses, which adversely affected many tenants, especially tenants in the retail industry.

The pandemic continues to evolve, and while we are optimistic about the future, we remain cautious about the medium-term implications for office assets. Vacancy is still at record highs across the region, and most companies are still not fully back in the office. Occupancy of our commercial portfolio declined by 180 basis points from June 30, 2021, the majority of which was related to pre-pandemic decision making, although we had two civilian agency Government Services Administration tenants that reduced their leased square footage due to a planned shift toward working from home. We expect continued pressure on our office occupancy through the end of the year and into 2022. Although parking revenue increased during the three months ended September 30, ~~2017~~2021 as compared to the same period in 2020, parking revenue in our commercial portfolio was approximately 60% below pre-pandemic levels of approximately $30 million annually due to delayed return-to-the-office plans for many of our office tenants.

We are seeing improvements in our multifamily portfolio, with a 390 basis point increase in the occupancy of our operating multifamily portfolio from June 30, 2021 and an increase in market rents due to increased demand and limited new supply.

The significance, extent and duration of the impact of COVID-19 on our business remains largely uncertain and dependent on future developments that cannot be accurately predicted at this time. These developments include: the continued severity, duration, transmission rate and geographic spread of COVID-19 in the United States, the continued speed of the vaccine distribution, the effectiveness and willingness of people to take COVID-19 vaccines, the duration of associated immunity and the efficacy of vaccines against variants of COVID-19, the extent and effectiveness of other containment measurestaken, and the response of the overall economy, the financial markets and the population, particularly in areas in which we operate, as containment measures continue to be lifted, and whether the residential market in the Washington, D.C. region and any of our properties will be materially impacted by the moratoriums on residential evictions, among others. These uncertainties make it difficult to predict operating results for our business for 2021. Therefore, we could experience material declines in revenue, net income, NOI and/or Funds from Operations ("FFO"). For more information, see "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Operating Results

Key highlights for the three and nine months ended September 30, 2021 included:

●
▪	a net ~~loss~~income attributable to common shareholders of ~~$69.8 million,~~$893,000, or ~~$0.61~~$0.00 per diluted common share, for the three months ended September 30, ~~2017 as~~2021 compared to a net ~~income~~loss attributable to common shareholders of ~~$21.0~~$22.8 million, or ~~$0.21~~$0.18 per

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diluted common share, for the three months ended September 30, ~~2016. The net~~2020. Net loss attributable to common shareholders of $22.8 million, or $0.18 per diluted common share, for the nine months ended September 30, 2021 compared to $16.6 million, or $0.14 per diluted common share, for the nine months ended September 30, 2020;

~~loss for the three months ended September 30, 2017 was due in part to transaction and other costs of $104.1 million partially offset by a gain on bargain purchase of $27.8 million;~~

●	third-party real estate services revenue, including reimbursements, of $25.8 million and $90.7 million for the three and nine months ended September 30, 2021 compared to $27.0 million and $83.9 million for the three and nine months ended September 30, 2020;

▪●	~~an increase in~~ operating ~~office~~commercial portfolio leased and occupied percentages at our share of 84.9% and 82.6% as of September 30, 2021 compared to ~~88.2%~~85.9% and 84.4% as of June 30, 2021, and 88.4% and 85.3% as of September 30, 2020;

●

operating multifamily portfolio leased and ~~87.5%~~occupied percentages at our share of 92.9% and 90.2% as of September 30, 2021 compared to 91.6% and 86.3% as of June 30, 2021, and 83.0% and 76.6% as of September 30, 2020. The in-service operating multifamily portfolio was 95.1% leased and 92.1% occupied as of September 30, ~~2017 from 87.5%~~2021, compared to 95.0% leased and ~~86.2%~~89.8% occupied as of June 30, ~~2017;~~


▪	~~an increase in operating multifamily portfolio occupancy to 94.6%~~2021, and 92.8% leased and 88.1% occupied as of September 30, ~~2017 from 93.9% as of June 30, 2017. Multifamily portfolio leased percentage decreased to 96.2% as of September 30, 2017 from 96.8% as of June 30, 2017;~~2020;

●

▪

the leasing of ~~approximately 289,000~~159,000 square feet, or ~~206,000~~126,000 square feet at our share, ⁽¹⁾, at an initial rent⁽²⁾⁽¹⁾of ~~$43.08~~$44.82 per square ~~foot;~~foot and

a GAAP-basis weighted average rent per square foot ⁽²⁾of $45.87 for the three months ended September 30, 2021, and the leasing of 1.2 million square feet on a consolidated basis and at our share, at an initial rent⁽¹⁾of $46.04 per square foot and a GAAP-basis weighted average rent per square foot ⁽²⁾of $45.43 for the nine months ended September 30, 2021; and

●

▪

~~an increase in~~ same store ⁽³⁾ ~~net operating income ("NOI")~~NOI of ~~6.3% to $70.3~~$72.7 million for the three months ended September 30, ~~2017 as~~2021 was unchanged compared to ~~$66.1 million for~~ the three months ended September 30, ~~2016.~~

2020, and a decrease in same store ⁽³⁾NOI of 3.3% to $223.3 million for the nine months ended September 30, 2021 compared to $231.0 million for the nine months ended September 30, 2020.

~~_________________~~

(1)
⁽¹⁾	~~Refers to our ownership percentage of consolidated and unconsolidated assets in real estate ventures.~~


⁽²⁾	Represents the cash basis weighted average starting rent per square foot at our share, which excludes free rent and ~~periodic rent steps.~~fixed escalations.

(2)	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.

⁽³⁾

Includes the results of the properties that are owned, operated and ~~stabilized~~in-service for the entirety of both periods being compared, ~~except for~~which excludes 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 ~~three~~nine months ended September 30, ~~2017~~2021 included:

●

▪

the ~~issuance~~lease of ~~94.7 million common shares~~the land underlying 1900 Crystal Drive located in National Landing to a lessee, which plans to construct an 808-unit multifamily asset comprising two towers with ground floor retail. Through the structure of the 1900 Crystal Drive transaction, we have the ability to facilitate an exchange out of an asset into 1900 Crystal Drive. The ground lessee has engaged us to be the development manager for the construction of 1900 Crystal Drive, and ~~5.8 million OP Units~~separately, we are the lessee in ~~connection with~~a master lease of the ~~Separation (see~~asset. We have an option to acquire the asset until a specified period after completion. See Note 15 to the financial statements for ~~more information)~~additional information;

●

an investment in two real estate ventures, in which we have 50% ownership interests, to design, develop, manage and own approximately 2.0 million square feet of new mixed-use development located in Potomac Yard, the southern portion of National Landing. We recognized an $11.3 million gain on the land contributed to one of the real estate ventures based on the cash received and the remeasurement of our retained interest in the asset. See Note 4 to the financial statements for additional information;

●	recognition of an aggregate gain of $28.3 million from the sale of various assets by our unconsolidated real estate ventures. See Note 4 to the financial statements for additional information;

▪●

the ~~completion~~execution of an agreement to acquire The Batley, a 432-unit multifamily asset in the ~~Combination~~Union Market submarket of Washington, D.C., for a purchase price of approximately $205 million, which we intend to use as a replacement property in a like-kind exchange for ~~23.3 million common shares and 13.9 million OP Units (see~~the proceeds from the sale of Pen Place to Amazon. See Note 3 to the financial statements for ~~more information);~~additional information;

●

▪

~~the closing of~~ a ~~$1.4 billion credit facility, consisting of a $1.0 billion revolving credit facility~~new mortgage loan with a ~~four-year term, with two six-month extension options, a five and a half-year delayed draw $200.0~~principal balance of $85.0 million, ~~unsecured term~~collateralized by 1225 S. Clark Street. The mortgage loan ~~and~~has a seven-year ~~delayed draw $200.0~~term and an interest rate of LIBOR plus 1.60% per annum;

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●	the payment of dividends to our common shareholders totaling $88.9 million ~~unsecured term loan;~~and distributions to our noncontrolling interests of $13.7 million;

●
▪	the ~~prepayment~~repurchase and retirement of ~~mortgages payable with~~2.9 million of our common shares for $88.1 million, an ~~aggregate principal balance~~average purchase price of ~~$181.7 million;~~$29.99 per share; and

●
▪	the investment of ~~$115.9~~$108.4 million in development, ~~costs,~~ construction in progress and real estate additions.

Activity subsequent to September 30, 2021 included:

●	the declaration of a quarterly dividend of $0.225 per common share, payable on November 24, 2021 to shareholders of record as of November 10, 2021.

Critical Accounting Policies and Estimates

Our ~~Information Statement~~Annual Report on Form ~~10, as amended, filed with~~10-K for the ~~SEC on June 20, 2017~~year ended December 31, 2020 contains a description of our critical accounting policies, including asset acquisitions and business combinations, real estate, ~~deferred costs,~~investments in real estate ventures, revenue recognition and ~~income taxes. For~~share-based compensation. There have been no significant changes to our policies during the ~~three and~~ nine months ended September 30, ~~2017, there were no material changes to these policies, except for the addition of the following policy:~~

~~Business Combinations~~

We account for business combinations, including the acquisition of real estate, using the acquisition method by recognizing and measuring the identifiable assets acquired, liabilities assumed, and any noncontrolling interests in the acquiree at their acquisition date fair values. As a result, upon the acquisition, we estimate the fair value of the 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. 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 tangible real estate assets 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 tangible assets are the exit capitalization rate, discount rate, estimated market rents and hypothetical expected lease-up periods.

~~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.

The results of operations of acquisitions are included in our financial statements as of the dates they are acquired. The intangible assets and liabilities associated with acquisitions are included in "Other assets, net" and "Other liabilities, net", respectively, in our balance sheets.

2021.

Recent Accounting Pronouncements

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

Results of Operations

In January 2020, we sold Metropolitan Park. In December 2020, we acquired the Americana Portfolio, which consists of a 1.4-acre future development parcel in National Landing that was formerly occupied by the Americana Hotel and three other parcels. In April 2021, we contributed Potomac Yard Landbay G to an unconsolidated real estate venture.

Comparison of the Three Months Ended September 30, ~~2017~~2021 to ~~2016~~

2020

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 three months ended September 30, ~~2017 as~~2021 compared to the same period in ~~2016:~~

2020:


	Three Months Ended September 30,
	2021		2020		% Change

	(Dollars in thousands)
Property rental revenue	$	125,900	$	118,680	6.1	%
Third-party real estate services revenue, including reimbursements		25,842		26,987	(4.2)	%
Depreciation and amortization expense		56,726		56,481	0.4	%
Property operating expense		40,198		37,572	7.0	%
Real estate taxes expense		18,259		17,354	5.2	%
General and administrative expense:
Corporate and other		12,105		11,086	9.2	%
Third-party real estate services		25,542		28,207	(9.4)	%
Share-based compensation related to Formation Transaction and special equity awards		3,480		7,133	(51.2)	%
Transaction and other costs		2,951		845	249.2	%
Income (loss) from unconsolidated real estate ventures, net		20,503		(965)	*
Interest expense		17,243		16,885	2.1	%

Three Months Ended September 30,
2017 2016 % Change
(In thousands)
Property rentals revenue $ 116,458
$ 103,265
12.8 %
Tenant reimbursements revenue 9,593
10,231
(6.2 )%
Third-party real estate services revenue, including reimbursements
25,141
8,297
203.0 %
Depreciation and amortization expense 43,951
31,377
40.1 %
Property operating expense 29,634
27,287
8.6 %
Real estate taxes expense 17,194
14,462
18.9 %
General and administrative expense:
Corporate and other 10,593
10,913
(2.9 )%
Third-party real estate services 21,178
4,779
343.1 %
Share-based compensation related to Formation Transaction
14,445
—
*
Transaction and other costs 104,095
1,528
*
(Loss) income from unconsolidated real estate ventures (1,679 ) 584
*
Interest expense 15,309
13,028
17.5 %
Loss on extinguishment of debt 689
—
*
Gain on bargain purchase 27,771
—
*
Net loss attributable to redeemable noncontrolling interests 8,160
—
*

~~______________~~

* Not meaningful.

Property ~~rentals~~rental revenue increased by approximately ~~$13.2~~$7.2 million, or ~~12.8%~~6.1%, to ~~$116.5~~$125.9 million in ~~2017~~2021 from ~~$103.3~~$118.7 million in ~~2016.~~2020. The increase was primarily due to ~~revenues~~(i) a $5.1 million increase related to the deferral of ~~$13.8 million associated with~~rent and the ~~assets acquired~~write-off of deferred rent receivables for tenants that were placed on the cash basis of accounting in ~~the Combination, partially offset by~~2020 and a decrease in uncollectable operating lease receivables attributable to COVID-19 in 2021, (ii) a $4.7 million increase related to 4747 Bethesda Avenue,

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West Half, The Wren, 900 W Street and 901 W Street as these properties placed additional space into service, (iii) a $2.6 million ~~in revenues associated with existing assets. The $0.6 million decrease in revenues associated with existing assets is primarily due~~increase related to ~~1150 17~~th ~~St and~~ 1770 Crystal Drive, ~~being taken out of service, partially offset by an increase in occupancy and associated rentals at The Bartlett~~ which was placed into service in the ~~second~~fourth quarter of ~~2016.~~

~~Tenant reimbursements~~2020, and (iv) a $1.8 million increase related to the commencement of the lease with Amazon at 2100 Crystal Drive. The increase in property rental revenue decreased by approximately $600,000, or 6.2%, to $9.6 million in 2017 from $10.2 million in 2016. Revenue associated with existing assets decreased $2.0 million, primarily due to lower construction services provided to tenants and lower operating expenses,was partially offset by ~~an increase of $1.4~~a $6.4 million ~~associated with~~decrease related to lower occupancy at the ~~assets acquired in the Combination.~~

Universal Buildings, 2011 Crystal Drive, 2101 L Street and RTC-West.

Third-party real estate services revenue, including reimbursements, ~~increased~~decreased by approximately ~~$16.8~~$1.1 million, or ~~203.0%~~4.2%, to ~~$25.1~~$25.8 million in ~~2017~~2021 from ~~$8.3~~$27.0 million in ~~2016.~~2020. The ~~increase~~decrease was primarily due to ~~the real estate services business acquired~~a $2.0 million decrease in ~~the Combination,~~reimbursements revenue, a $705,000 decrease in other service revenue and a $584,000 decrease in construction management fees, partially offset by ~~lower management fees~~a $1.4 million increase in development fee revenue primarily related to the timing of development projects and a $736,000 increase in leasing ~~commissions from existing arrangements with third-parties.~~

fees.

Depreciation and amortization expense increased by approximately ~~$12.6 million,~~$245,000, or ~~40.1%~~0.4%, to ~~$44.0~~$56.7 million in ~~2017~~2021 from ~~$31.4~~$56.5 million in ~~2016.~~2020. The increase was primarily due to (i) a $1.9 million increase related to 2345 Crystal Drive due to an increase in tenant improvements, (ii) a $1.7 million increase related to 4747 Bethesda Avenue, West Half, The Wren, 900 W Street and 901 W Street as these properties placed additional space into service, and (iii) a $924,000 increase due to 1770 Crystal Drive being placed into service. The increase in depreciation and amortization expense ~~associated with the assets acquired~~was partially offset by a $4.0 million decrease related to 2000 South Bell Street and 2001 South Bell Street as we commenced construction on two new buildings in ~~the Combination.~~

2021.

Property operating expense increased by approximately ~~$2.3~~$2.6 million, or ~~8.6%~~7.0%, to ~~$29.6~~$40.2 million in ~~2017~~2021 from ~~$27.3~~$37.6 million in ~~2016.~~2020. The increase was primarily due to (i) a $1.2 million increase related to 2451 Crystal Drive for costs incurred for construction management services provided to tenants, (ii) an $885,000 increase related to 4747 Bethesda Avenue, West Half, The Wren, 900 W Street and 901 W Street as these properties placed additional space into service, (iii) a $576,000 increase due to 1770 Crystal Drive being placed into service and (iv) $535,000 related to 2221 South Clark Street due to higher operating expenses. The increase in property operating ~~expenses of $4.2 million associated with the assets acquired in the Combination,~~expense was partially offset by a $1.5 million decrease ~~of $1.9 million associated with existing assets~~related to 1901 South Bell Street due ~~primarily~~ to ~~lower tenant~~costs incurred in 2020 for construction management services ~~expense and lower utilities.~~

provided to tenants.

Real estate tax expense increased by approximately ~~$2.7 million,~~$905,000, or ~~18.9%~~5.2%, to ~~$17.2~~$18.3 million in ~~2017~~2021 from ~~$14.5~~$17.4 million in ~~2016.~~2020. The increase was primarily due to ~~real estate tax expense of $2.1 million associated with the assets acquired in the Combination,~~a $548,000 increase related to 4747 Bethesda Avenue and The Wren as these properties placed additional space into service, and a $543,000 increase related to 5 M Street Southwest due to an increase in ~~the~~its applicable tax ~~assessments and lower capitalized real estate taxes.~~

rate in 2021.

General and administrative expense: corporate and other ~~decreased~~increased by approximately ~~$300,000,~~$1.0 million, or ~~2.9%~~9.2%, to ~~$10.6~~$12.1 million in ~~2017~~2021 from ~~$10.9~~$11.1 million in ~~2016.~~2020. The ~~decrease~~increase was primarily due to ~~lower marketing and general office expenses, partially offset by an increase~~a decrease in ~~general operating expenses associated with the operations acquired in the Combination.~~

capitalizable payroll costs related to development projects.

General and administrative expense: third-party real estate services ~~increased~~decreased by approximately ~~$16.4~~$2.7 million, or ~~343.1%~~9.4%, to ~~$21.2~~$25.5 million in ~~2017~~2021 from ~~$4.8~~$28.2 million in ~~2016~~2020. The decrease was primarily due to ~~the real estate services business acquired~~a decrease in ~~the Combination.~~

reimbursable expenses.

General and administrative expense: share-based compensation related to Formation Transaction ~~of $14.4 million in 2017 consists of expense related to share-based compensation issued in connection with the Formation Transaction.~~

~~Transaction~~ and other costs of $104.1 million in 2017 consists primarily of fees and expenses incurred in connection with the Formation Transaction, including severance and transaction bonus expense of $34.3 million, investment banking fees of $33.6 million, legal fees of $13.1 million and accounting fees of $8.1 million.

~~Income (loss) from unconsolidated real estate ventures~~special equity awards decreased by approximately ~~$2.3~~$3.7 million, or 51.2%, to ~~a loss of $1.7~~$3.5 million in ~~2017~~2021 from ~~income of $584,000~~$7.1 million in ~~2016.~~2020. The decrease was primarily due to ~~losses~~the graded vesting of certain awards issued in prior years, which resulted in lower expense as portions of the awards vested.

Transaction and other costs of $3.0 million in 2021 primarily included $1.4 million of demolition costs related to 2000 South Bell Street and 2001 South Bell Street and $1.4 million of expenses related to completed, potential and pursued transactions. Transaction and other costs of $845,000 in 2020 consisted of $406,000 of integration and severance costs, $260,000 of expenses related to completed, potential and pursued transactions, and $179,000 of demolition costs related to 223 23rdStreet and 2300 Crystal Drive.

Income from ~~interests in~~unconsolidated real estate ventures ~~acquired in the Combination.~~

~~Interest expense~~ increased by approximately ~~$2.3~~$21.5 million ~~or 17.5%,~~ to ~~$15.3~~$20.5 million for ~~2017~~2021 from ~~$13.0 million~~a loss of $965,000 in ~~2016.~~2020. The increase was primarily due to ~~$1.8 million~~the recognition of ~~interest expense associated with~~our proportionate share of the ~~assets acquired~~gain from the sale of 500 L'Enfant Plaza of $23.1 million. The increase in ~~the Combination and lower capitalized interest related to The Bartlett which~~income from unconsolidated real estate ventures was ~~placed into service during the second quarter~~

Table of ~~2016,~~ Contents

partially offset by ~~lower interest expense associated with mortgages that were repaid.~~

~~Loss on extinguishment~~a $1.4 million impairment of ~~debt of $689,000~~our investment in ~~2017 relates~~an unconsolidated real estate venture due to ~~the prepayment of mortgages payable.~~

~~The gain on bargain purchase of approximately $27.8 million~~a decrease in ~~2017 represents~~ the ~~estimated fair~~ value of the ~~identifiable net assets acquired~~underlying asset.

Interest expense increased by approximately $358,000, or 2.1%, to $17.2 million in ~~excess of the purchase consideration~~2021 from $16.9 million in ~~the Combination.~~2020. The ~~purchase consideration~~increase was ~~based on the fair value of the common shares and OP Units issued~~primarily due to a $1.3 million decrease in ~~the Combination. See Note 3~~capitalized interest primarily due to the ~~financial statements for~~placing of additional ~~information.~~

~~Net loss attributable~~space into service at 4747 Bethesda Avenue, West Half, The Wren, 901 W Street and 1770 Crystal Drive, and a $293,000 increase due to ~~redeemable noncontrolling interests of approximately $8.2~~a new mortgage loan at 1225 S. Clark Street. The increase in interest expense was partially offset by a $1.2 million ~~in 2017 relates~~decrease related to the ~~allocation~~repayment of ~~net loss to the noncontrolling interest~~a mortgage loan at WestEnd25 in ~~JBG SMITH LP.~~

2020.

Comparison of the Nine Months Ended September 30, ~~2017~~2021 to ~~2016~~

2020

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 nine months ended September 30, ~~2017 as~~2021 compared to the same period in ~~2016:~~

Nine Months Ended September 30,
2017 2016 % Change
(In thousands)
Property rentals revenue $ 316,899
$ 299,497
5.8 %
Tenant reimbursements revenue 27,161
28,428
(4.5 )%
Third-party real estate services revenue, including reimbursements
38,881
24,617
57.9 %
Depreciation and amortization expense 109,726
98,291
11.6 %
Property operating expense 77,341
75,087
3.0 %
Real estate taxes expense 47,978
43,712
9.8 %
General and administrative expense:
Corporate and other 35,536
36,040
(1.4 )%
Third-party real estate services 30,362
14,272
112.7 %
Share-based compensation related to Formation Transaction
14,445
—
*
Transaction and other costs 115,173
1,528
*
Loss from unconsolidated real estate ventures (1,365 ) (952 ) 43.4 %
Interest expense 43,813
38,662
13.3 %
Loss on extinguishment of debt 689
—
*
Gain on bargain purchase 27,771
—
*
Net loss attributable to redeemable noncontrolling interests 2,481
—
*

~~______________~~

* Not meaningful.

2020:


		Nine Months Ended September 30,
		2021		2020		% Change

	(Dollars in thousands)
Property rental revenue		$	370,960	$	354,519	4.6	%
Third-party real estate services revenue, including reimbursements			90,694		83,870	8.1	%
Depreciation and amortization expense			178,130		157,586	13.0	%
Property operating expense			109,929		105,867	3.8	%
Real estate taxes expense			55,127		53,422	3.2	%
General and administrative expense:
Corporate and other			38,475		37,478	2.7	%
Third-party real estate services			80,035		86,260	(7.2)	%
Share-based compensation related to Formation Transaction and special equity awards			12,866		25,432	(49.4)	%
Transaction and other costs			8,911		7,526	18.4	%
Income (loss) from unconsolidated real estate ventures, net			23,513		(17,142)	237.2	%
Interest expense			50,312		44,660	12.7	%
Gain on sale of real estate			11,290		59,477	(81.0)	%

Property ~~rentals~~rental revenue increased by approximately ~~$17.4~~$16.4 million, or ~~5.8%~~4.6%, to ~~$316.9~~$371.0 million in ~~2017~~2021 from ~~$299.5~~$354.5 million in ~~2016.~~2020. The increase was primarily due to ~~revenues of $13.8 million associated with the assets acquired in the Combination and an increase of $3.6 million in revenues associated with existing assets. The $3.6~~(i) a $12.8 million increase ~~in revenues associated with existing assets is primarily~~related to 4747 Bethesda Avenue, West Half, The Wren, 900 W Street and 901 W Street as these properties placed additional space into service, (ii) an $11.1 million increase due to an the deferral of rent and the write-off of deferred rent receivable for tenants that were placed on the cash basis of accounting in 2020 and a decrease in uncollectable operating lease receivables attributable to COVID-19, (iii) a $7.4 million increase ~~in occupancy and associated rentals at The Bartlett multifamily project as the property~~related to 1770 Crystal Drive, which was placed into service in the ~~second~~fourth quarter of ~~2016 and higher rents at 1215~~2020, (iv) a $3.9 million increase related to 1225 S. Clark ~~St,~~Street due to the commencement of a lease and (v) a $3.2 million increase related to the additional space leased by Amazon at 2345 Crystal Drive. The increase in property rental revenue was partially offset by (i) a $14.1 million decrease ~~in revenues~~related to lower occupancy at ~~1150 17~~th ~~St and 1770~~the Universal Buildings, 2011 Crystal Drive, ~~which were taken out of service.~~

~~Tenant reimbursements revenue decreased by approximately $1.2~~2101 L Street and RTC-West, (ii) a $4.2 million ~~or 4.5%,~~decrease related to ~~$27.2 million in 2017 from $28.4 million in 2016. Revenue associated with existing assets decreased by $2.6 million, primarily~~RiverHouse Apartments and The Bartlett due to increased rent concessions and lower market rents, and (iii) a $3.4 million decrease related to 1901 South Bell Street due to tenant reimbursements for construction services ~~provided to tenants and lower operating expenses, partially offset by an increase of $1.4 million associated with the assets acquired~~ in ~~the Combination.~~

2020.

Third-party real estate services revenue, including reimbursements, increased by approximately ~~$14.3~~$6.8 million, or ~~57.9%~~8.1%, to ~~$38.9~~$90.7 million in ~~2017~~2021 from ~~$24.6~~$83.9 million in ~~2016.~~2020. The increase was primarily due to a $14.2 million increase in development fees related to the timing of development projects. The increase in third-party real estate services ~~business acquired in the Combination,~~revenue was partially offset by ~~lower~~a $3.8 million decrease in reimbursements revenue, a $1.7 million decrease in property and asset management fees due to the sale of assets within the JBG Legacy Funds and ~~leasing commissions from existing arrangements with third-parties.~~

a $1.7 million decrease in construction management fees due to the timing of construction projects.

Depreciation and amortization expense increased by approximately ~~$11.4~~$20.5 million, or ~~11.6%~~13.0%, to ~~$109.7 million for 2017 from $98.3~~$178.1 million in ~~2016.~~2021 from $157.6 million in 2020. The increase was primarily due to (i) an $8.1 million increase related to 4747 Bethesda Avenue, West Half, The Wren, 900 W Street and 901 W Street as these properties placed additional space into service, (ii) a $6.8 million increase related to the Universal Buildings due to the write-off of certain tenant improvements, (iii) a $6.0 million increase related to 2345 Crystal Drive due to an increase in tenant improvements, (iv) a $2.5 million increase due to 1770

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Crystal Drive being placed into service, (v) a $1.5 million increase related to 1550 Crystal Drive as additional space was placed into service and (vi) a $1.3 million increase related to RTC-West due to the acceleration of depreciation of certain assets. The increase in depreciation and amortization expense ~~associated with the assets acquired~~was partially offset by a $5.1 million decrease related to 2000 South Bell Street and 2001 South Bell Street as we commenced construction on two new buildings in ~~the Combination.~~

2021.

Property operating expense increased by approximately ~~$2.2~~$4.1 million, or ~~3.0%~~3.8%, to ~~$77.3~~$109.9 million in ~~2017 and~~2021 from ~~$75.1~~$105.9 million in ~~2016.~~2020. The increase was primarily due to (i) a $3.3 million increase related to 4747 Bethesda Avenue, West Half, The Wren, 900 W Street and 901 W Street as these properties placed additional space into service, (ii) a $2.8 million increase related to 2451 Crystal Drive due to costs incurred for construction management services provided to tenants, (iii) a $1.4 million increase due to 1770 Crystal Drive being placed into service and (iv) an $832,000 increase at Courthouse Plaza 1 and 2 related to ground rent expense. The increase in property operating ~~expenses of $4.2 million associated with the assets acquired in the Combination,~~expense was partially offset by a $4.3 million decrease ~~of $2.0 million associated with existing assets~~related to 1901 South Bell Street due ~~primarily~~ to ~~lower tenant~~costs incurred in 2020 for construction management services ~~expense and lower utilities.~~

provided to tenants.

Real estate tax expense increased by approximately ~~$4.3~~$1.7 million, or ~~9.8%~~3.2%, to ~~$48.0~~$55.1 million in ~~2017~~2021 from ~~$43.7~~$53.4 million in ~~2016.~~2020. The increase was primarily due to (i) a $1.8 million increase at 4747 Bethesda Avenue, West Half, The Wren, 900 W Street and 901 W Street as these properties placed additional space into service, (ii) a $701,000 increase related to 5 M Street Southwest due to an increase in its applicable tax rate in 2021 and (iii) an increase of $533,000 due to 1770 Crystal Drive being placed into service. The increase in real estate tax expense ~~of $2.1 million associated with the assets acquired~~was partially offset by a decrease in ~~the Combination, an increase in the~~real estate tax assessments ~~and lower capitalized real estate taxes.~~

for various properties located in National Landing.

General and administrative expense: corporate and other ~~decreased~~increased by approximately ~~$500,000,~~$997,000, or ~~1.4%~~2.7%, to ~~$35.5 million for 2017 from $36.0~~$38.5 million in ~~2016.~~2021 from $37.5 million in 2020. The ~~decrease~~increase was primarily due to ~~lower marketing and general office expenses, partially offset by an increase~~a decrease in ~~general operating expenses associated with the operations acquired in the Combination.~~

capitalizable payroll costs related to development projects.

General and administrative expense: third-party real estate services ~~increased~~decreased by approximately ~~$16.1~~$6.2 million, or ~~112.7%~~7.2%, to ~~$30.4~~$80.0 million in ~~2017~~2021 from ~~$14.3~~$86.3 million in ~~2016~~2020. This decrease was primarily due to ~~the real estate services business acquired~~a decrease in ~~the Combination.~~

reimbursable expenses and a decrease in share-based compensation expense.

General and administrative expense: share-based compensation related to Formation Transaction ~~of $14.4~~and special equity awards decreased by approximately $12.6 million, or 49.4%, to $12.9 million in ~~2017 consists~~2021 from $25.4 million in 2020. The decrease was primarily due to the graded vesting of ~~expense related to share-based compensation~~certain awards issued in ~~connection with~~prior years, which resulted in lower expense as portions of the ~~Formation Transaction.~~

awards vested.

Transaction and other costs of ~~$115.2~~$8.9 million in ~~2017 consists~~2021 consisted of $5.4 million of expenses related to completed, potential and pursued transactions, $2.9 million of demolition costs related to 2000 South Bell Street and 2001 South Bell Street and $616,000 of integration and severance costs. Transaction and other costs of $7.5 million in 2020 primarily included $4.0 million of ~~fees~~costs related to a charitable commitment to the Washington Housing Conservancy, a non-profit that acquires and ~~expenses incurred~~owns affordable workforce housing in ~~connection with~~ the ~~Formation Transaction, including~~Washington, D.C. metropolitan area, and $3.1 million of integration and severance ~~and transaction bonus expense of $34.3 million, investment banking fees of $33.6 million, legal fees of $13.1 million and accounting fees of $8.1 million.~~

~~Loss~~costs.

Income from unconsolidated real estate ventures increased by approximately ~~$400,000~~$40.7 million, or 237.2%, to ~~$1.4~~$23.5 million for 2021 from a loss of $17.1 million in 2017 from $1.0 million 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 a reduction of interest expense of approximately $1.7 million 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 $5.1 million, or 13.3%, to $43.8 million for 2017 from $38.7 million in 2016.~~2020. The increase was primarily due to ~~$1.8~~(i) the recognition of our proportionate share of the gain from the sale of various assets totaling $28.3 million as compared to a $3.0 million loss from the sale of ~~interest expense associated with the assets acquired~~Woodglen in ~~the Combination~~2020 and ~~lower capitalized interest~~(ii) a $6.5 million impairment charge recognized in 2020 related to our investment in a venture that owned The ~~Bartlett which~~Marriott Wardman Park hotel, and $2.7 million for losses incurred from its COVID-19 related closure. The increase in income from unconsolidated real estate ventures was ~~placed into service during the second quarter of 2016,~~ partially offset by ~~lower~~a $1.4 million impairment of our investment in an unconsolidated real estate venture due to a decrease in the value of the underlying asset.

Interest expense increased by approximately $5.7 million, or 12.7%, to $50.3 million in 2021 from $44.7 million in 2020. The increase was primarily due to a $6.7 million decrease in capitalized interest primarily due to the placing of additional space into service at 4747 Bethesda Avenue, West Half, The Wren, 901 W Street and 1770 Crystal Drive and a $5.7 million increase due to new mortgage loans entered into in 2020 at 1221 Van Street, The Bartlett and 220 20^th Street. The increase was also due to higher average outstanding balances under our unsecured term loans. The increase in interest expense ~~associated with mortgages that were repaid.~~was

~~Loss on extinguishment~~

Table of ~~debt of $689,000 in 2017~~Contents

partially offset by a lower outstanding balance under our revolving credit facility and a $3.6 million decrease related to the ~~prepayment~~repayment of ~~mortgages payable.~~

~~The gain~~a mortgage loan at WestEnd25 in 2020.

Gain on ~~bargain purchase~~the sale of ~~approximately $27.8~~real estate of $11.3 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~~2021 was based on the ~~fair value~~cash received and the remeasurement of ~~the common shares and OP Units issued~~our retained interest in the ~~Combination.~~land we contributed to one of our unconsolidated real estate ventures. See Note 34 to the financial statements for additional information.

~~Net loss attributable to redeemable noncontrolling interests~~ Gain on the sale of ~~approximately $2.5~~real estate of $59.5 million in ~~2017 relates~~2020 was due to the ~~allocation~~sale of ~~net loss to the noncontrolling interest in JBG SMITH LP.~~

Metropolitan Park.

~~Funds From Operations~~

~~We believe Funds from Operations ("FFO") (when combined with the primary presentations~~

FFO

FFO is a non-GAAP financial measure computed in accordance with ~~GAAP) is a useful supplemental measure of our operating performance that is a recognized metric used extensively~~the definition established by the ~~real estate industry and, in particular, REITs. The~~ National Association of Real Estate Investment Trusts ("NAREIT") ~~stated~~ in ~~its April 2002~~the NAREIT FFO White Paper ~~on Funds from Operations, "Historical cost accounting for~~- 2018 Restatement. NAREIT defines FFO as net income (loss) (computed in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, including our share of such adjustments for unconsolidated real estate ventures.

We believe FFO is a meaningful non-GAAP financial measure useful in comparing our levered operating performance from period-to-period and as compared to similar real estate companies because FFO excludes real estate depreciation and amortization expense and other non-comparable income and expenses, which implicitly assumes that the value of real estate ~~assets~~ diminishes predictably over ~~time. Since real estate values instead have historically risen or fallen with~~time rather than fluctuating based on market ~~conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves."~~

conditions. FFO as defined by NAREIT, is "net income (computed in accordance with GAAP), excluding gains (or losses) from sales of, or impairment charges related to, depreciable operating properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and real estate ventures. It states further that “adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis.” We believe that financial analysts, investors and shareholders are better served by the clearer presentation of comparable period operating results generated from our FFO measure. Our method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

~~FFO is presented to assist investors in analyzing our operating performance. FFO (i)~~ does not represent cash ~~flow~~generated from ~~operations as defined by GAAP, (ii)~~operating activities and is not necessarily indicative of cash available to fund ~~all~~ cash ~~flow needs, including the ability to make distributions, (iii) is not an alternative to cash flow as a measure of liquidity,~~requirements and ~~(iv)~~ should not be considered as an alternative to net income (loss) ~~income (which is determined~~(computed in accordance with GAAP) ~~for purposes of evaluating our operating performance.~~

as a performance measure or cash flow as a liquidity measure. FFO may not be comparable to similarly titled measures used by other companies.

The following ~~reflects~~is the reconciliation of net income (loss) ~~income~~ attributable to ~~JBG SMITH Properties,~~common shareholders, the most directly comparable GAAP measure, to ~~FFO for the three months ended September 30, 2017:~~

FFO:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020		X	2021		2020

	(In thousands)
Net income (loss) attributable to common shareholders	$	893	$	(22,793)		$	(22,811)	$	(16,648)
Net income (loss) attributable to redeemable noncontrolling interests		103		(2,212)			(2,472)		(445)
Net loss attributable to noncontrolling interests		—		—			(1,108)		—
Net income (loss)		996		(25,005)			(26,391)		(17,093)
Gain on sale of real estate		—		—			(11,290)		(59,477)
(Gain) loss on sale of unconsolidated real estate assets		(23,137)		—			(28,326)		2,952
Real estate depreciation and amortization		54,547		54,004			171,522		149,590
Impairment of investments in unconsolidated real estate ventures ⁽¹⁾		1,380		—			1,380		6,522
Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures		7,002		7,350			21,590		21,730
FFO attributable to noncontrolling interests		(54)		(4)			976		(7)
FFO attributable to OP Units		40,734		36,345			129,461		104,217
FFO attributable to redeemable noncontrolling interests		(4,703)		(3,945)			(13,242)		(11,353)
FFO attributable to common shareholders	$	36,031	$	32,400		$	116,219	$	92,864

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

Three Months Ended September 30, 2017

(In thousands)
Net loss attributable to JBG SMITH Properties $ (69,831 )
Net loss attributable to redeemable noncontrolling interests (8,160 )
Net loss (77,991 )
Real estate depreciation and amortization 41,393
Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures 6,059
FFO attributable to the operating partnership common units (30,539 )
FFO attributable to redeemable noncontrolling interests 3,195
FFO attributable to diluted common shareholders $ (27,344 )
Weighted average diluted shares 114,744

NOI and Same Store NOI

~~In this section, we present~~

NOI ~~which~~ is a non-GAAP financial measure ~~that we use~~management uses to assess a ~~segment’s~~segment's performance. The most directly comparable GAAP measure is net income (loss) attributable to JBG SMITH Properties plus depreciation and amortization expense, general and administrative expense, transaction and other costs, interest expense, gain (loss) on extinguishment of debt and income tax expense, less third-party real estate services, less reimbursements, other income, income (loss) from unconsolidated real estate ventures, interest and other (loss) income, gain on bargain purchase and noncontrolling interests.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)~~revenue, net

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of free rent and payments associated with assumed lease liabilities) less operating ~~expense, before~~expenses and ground rent, if applicable. NOI also excludes deferred rent, ~~and~~ related party management ~~fees.~~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 ~~for~~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 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 ~~JBG SMITH Properties~~common shareholders as presented in our financial statements. NOI should not be considered as an alternative to net income (loss) attributable to ~~JBG SMITH Properties~~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.~~

During the three months ended September 30, 2021, our same store pool decreased to 55 properties from 56 properties due to the exclusion of 500 L'Enfant Plaza, which was sold by an unconsolidated real estate venture during the period. During the nine months ended September 30, 2021, our same store pool increased from 52 properties to 55 properties due to the inclusion of 1800 South Bell Street, F1RST Residences, 1221 Van Street and the commercial portion of 2221 S. Clark Street, and the exclusion of Fairway Apartments, which was sold during the period. Information provided on a same store basis includes the results of properties that are owned, operated and ~~stabilized~~in-service for the entirety of both periods being compared, ~~except for~~which excludes 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 athe property is considered to be ~~a property under construction~~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.~~NOI. A development property or under-construction 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~~

Same store NOI remained at $72.7 million for the three months ended September 30, 2021 compared to the same period in 2020. Same Store NOI was positively impacted by a decrease in uncollectable operating lease receivables and rent deferrals, which was offset by lower occupancy in our commercial portfolio, and lower rents and higher concessions for certain of our multifamily assets.

Same store NOI decreased $7.7 million, or 3.3%, to $223.3 million for the nine months ended September 30, ~~2017, all~~2021 from $231.0 million for the same period in 2020. The decrease was substantially attributable to the COVID-19 pandemic, which commenced at the end of the ~~JBG Assets~~first quarter of 2020, including (i) higher concessions and ~~two Vornado Included Assets (The Bartlett~~lower rents in our multifamily portfolio and ~~1800 South Bell Street)~~(ii) lower occupancy and a decline in parking revenue in our commercial portfolio. These declines were ~~not included~~partially offset by a decrease in ~~the same store comparison as they were not in service or being taken out~~cleaning expenses across our commercial portfolio.

Table of ~~service during portions of the periods being compared.~~Contents

Same store NOI increased by $4.2 million, or 6.3%, and $6.3 million, or 3.1%, for the three and nine months ended September 30, 2017, respectively, as compared to the three and nine months ended September 30, 2016, respectively. The increase in same store

~~NOI for the three and nine months ended September 30, 2017 was primarily due to the expiration of rent abatements and higher property rental revenue from lease commencements.~~

The following ~~table reflects~~is the reconciliation of net income (loss) ~~income~~ attributable to ~~JBG SMITH Properties, the most directly comparable GAAP measure,~~common shareholders to NOI and same store ~~NOI for the periods presented:~~

NOI:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020

	(Dollars in thousands)
Net income (loss) attributable to common shareholders	$	893	$	(22,793)	$	(22,811)	$	(16,648)
Add:
Depreciation and amortization expense		56,726		56,481		178,130		157,586
General and administrative expense:
Corporate and other		12,105		11,086		38,475		37,478
Third-party real estate services		25,542		28,207		80,035		86,260
Share-based compensation related to Formation Transaction and special equity awards		3,480		7,133		12,866		25,432
Transaction and other costs		2,951		845		8,911		7,526
Interest expense		17,243		16,885		50,312		44,660
Loss on extinguishment of debt		—		—		—		33
Income tax expense (benefit)		217		(488)		4,527		(3,721)
Net income (loss) attributable to redeemable noncontrolling interests		103		(2,212)		(2,472)		(445)
Net loss attributable to noncontrolling interests		—		—		(1,108)		—
Less:
Third-party real estate services, including reimbursements revenue		25,842		26,987		90,694		83,870
Other revenue		1,568		2,292		5,658		5,438
Income (loss) from unconsolidated real estate ventures, net		20,503		(965)		23,513		(17,142)
Interest and other income, net		192		—		163		1,021
Gain on sale of real estate		—		—		11,290		59,477
Consolidated NOI		71,155		66,830		215,547		205,497
NOI attributable to unconsolidated real estate ventures at our share		7,336		7,130		22,951		23,206
Non-cash rent adjustments ⁽¹⁾		(3,701)		(4,934)		(12,554)		(9,898)
Other adjustments ⁽²⁾		4,683		2,881		14,608		9,236
Total adjustments		8,318		5,077		25,005		22,544
NOI		79,473		71,907		240,552		228,041
Less: out-of-service NOI loss ⁽³⁾		(2,019)		(442)		(4,638)		(2,774)
Operating Portfolio NOI		81,492		72,349		245,190		230,815
Non-same store NOI ⁽⁴⁾		8,777		(388)		21,868		(165)
Same store NOI ⁽⁵⁾	$	72,715	$	72,737	$	223,322	$	230,980

Change in same store NOI		0.0%				(3.3)%
Number of properties in same store pool		55				55

^{___________________________________________________}

(1)

⁽¹⁾

Adjustment ~~to: (i) include the financial information of the JBG Assets as if the Combination had been completed as of the beginning of the periods presented; (ii) include proportionate share of NOI attributable~~ to ~~unconsolidated real estate ventures; (iii) include other income related to operating properties; (iv)~~ exclude straight-line rent, above/below market lease amortization and lease incentive ~~amortization; and (v) exclude NOI related to non-operating assets.~~amortization.

(2)	Adjustment to include other revenue and payments associated with assumed lease liabilities related to operating properties and to exclude commercial lease termination revenue and allocated corporate general and administrative expenses to operating properties.

⁽²⁾

(3)

Includes the results ~~for~~of our under-construction assets, and near-term and future development pipelines.

(4)	Includes the results of properties that were not ~~owned, operated and stabilized~~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.

(5)
⁽³⁾	Includes the results of the properties that are owned, operated and ~~stabilized~~in-service for the entirety of both periods being ~~compared except~~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 defined 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 (commercial, multifamily, and third-party asset management and real estate services) based on the economic characteristics and nature of our assets and services.

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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 statements of operations. The following represents the components of revenue from our third-party real estate services business:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020		X	2021		2020

	(In thousands)
Property management fees	$	4,831	$	4,694		$	14,549	$	15,453
Asset management fees		2,145		2,301			6,602		7,400
Development fees ⁽¹⁾		4,032		2,614			22,705		8,474
Leasing fees		1,822		1,086			4,106		3,627
Construction management fees		—		584			375		2,057
Other service revenue		1,295		2,000			4,783		5,452
Third-party real estate services revenue, excluding reimbursements		14,125		13,279			53,120		42,463
Reimbursement revenue ⁽²⁾		11,717		13,708			37,574		41,407
Third-party real estate services revenue, including reimbursements		25,842		26,987			90,694		83,870
Third-party real estate services expenses		25,542		28,207			80,035		86,260
Third-party real estate services revenue less expenses	$	300	$	(1,220)		$	10,659	$	(2,390)

(1)	Estimated development fee revenue totaling $51.2 million as of September 30, 2021 is expected to be recognized over the next six years as unsatisfied performance obligations are completed.

(2)	Represents reimbursements of expenses incurred by us on behalf of third parties, including allocated payroll costs and amounts paid to third-party contractors for ~~properties for which significant redevelopment, renovation or repositioning occurred during either~~construction management projects.

See discussion of third-party real estate services revenue, including reimbursements, and third-party real estate services expenses for the three and nine months ended September 30, 2021 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.

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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 16 to the financial statements for the reconciliation of net income (loss) attributable to common shareholders to consolidated NOI for the three and nine months ended September 30, 2021 and 2020. The following is a summary of NOI by segment:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020		X	2021		2020

	(In thousands)
Property revenue:
Commercial	$	96,042	$	93,052		$	284,905	$	276,841
Multifamily		35,131		30,526			100,610		95,122
Other ⁽¹⁾		(1,561)		(1,822)			(4,912)		(7,177)
Total property revenue		129,612		121,756			380,603		364,786

Property expense:
Commercial		39,166		38,837			112,173		115,177
Multifamily		19,142		17,882			53,689		48,326
Other ⁽¹⁾		149		(1,793)			(806)		(4,214)
Total property expense		58,457		54,926			165,056		159,289

Consolidated NOI:
Commercial		56,876		54,215			172,732		161,664
Multifamily		15,989		12,644			46,921		46,796
Other ⁽¹⁾		(1,710)		(29)			(4,106)		(2,963)
Consolidated NOI	$	71,155	$	66,830		$	215,547	$	205,497

(1)	Includes activity related to future development assets and corporate entities and the elimination of intersegment activity.

Comparison of the ~~periods being compared.~~

~~Reportable Segments~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In thousands)
Rental revenue:
Office $ 99,451
$ 90,552
$ 272,270
$ 262,633
Multifamily 24,945
16,726
65,822
47,625
Other 4,299
5,276
10,274
19,820
Eliminations (2,644 ) 942
(4,306 ) (2,153 )
Total rental revenue 126,051
113,496
344,060
327,925

Rental expense:
Office 40,038
36,876
108,562
104,595
Multifamily 9,748
6,445
24,689
17,657
Other 4,706
4,071
14,150
18,728
Eliminations (7,664 ) (5,643 ) (22,082 ) (22,181 )
Total rental expense 46,828
41,749
125,319
118,799

NOI:
Office 59,413
53,676
163,708
158,038
Multifamily 15,197
10,281
41,133
29,968
Other (407 ) 1,205
(3,876 ) 1,092
Eliminations 5,020
6,585
17,776
20,028
Total NOI $ 79,223
$ 71,747
$ 218,741
$ 209,126

Three Months Ended September 30, ~~2017 compared~~2021 to ~~September 30, 2016~~

~~Office: Rental~~2020

Commercial: Property rental revenue increased by ~~$8.9~~$3.0 million, or ~~9.8%~~3.2%, to ~~$99.5~~$96.0 million in ~~2017~~2021 from ~~$90.6~~$93.1 million in ~~2016.~~2020. Consolidated NOI increased by ~~$5.7~~$2.7 million, or ~~10.7%~~4.9%, to ~~$59.4~~$56.9 million in ~~2017~~2021 from ~~$53.7~~$54.2 million in ~~2016.~~2020. The increase in property revenue and consolidated NOI ~~is primarily~~was due to (i) a decline in rent deferrals and uncollectable operating lease receivables related to tenants impacted by COVID-19, (ii) increases related to 1770 Crystal Drive as the ~~Combination.~~

Multifamily: Rental revenue increased by $8.2 million, or 49.1%, to $24.9 million in 2017 from $16.7 million in 2016. NOI increased by $4.9 million, or 47.8%, to $15.2 million in 2017 from $10.3 million in 2016. The increase in revenue and NOI is primarily due to the Combination and an increase in occupancy and associated rentals at The Bartlett whichproperty was placed into service, inand (iii) increases related to 2100 Crystal Drive, 1225 South Clark Street and 2345 Crystal Drive due to higher occupancy. These increases were partially offset by a decrease related to the ~~second quarter of 2016.~~

~~Other: Rental~~Universal Buildings and 2101 L Street due to lower occupancy.

Multifamily: Property rental revenue ~~decreased~~increased by ~~$1.0~~$4.6 million, or ~~18.5%~~15.1%, to ~~$4.3~~$35.1 million in ~~2017~~2021 from ~~$5.3~~$30.5 million in ~~2016. Net operating income (loss) decreased~~2020. Consolidated NOI increased by ~~$1.6~~$3.3 million, or ~~133.8%~~26.5%, to ~~a loss of $407,000~~$16.0 million in 2021 from ~~income of $1.2 million.~~$12.6 million in 2020. The ~~decrease~~increase in property revenue and ~~net operating income (loss) is primarily~~consolidated NOI was due to ~~properties which were taken out of service, including 1700 M~~The Wren, 900 W Street, 901 W Street and ~~1770 Crystal Drive.~~

West Half as these properties placed additional units into service. These increases were partially offset by lower rents and higher concessions at RiverHouse Apartments and 2221 South Clark Street.

Comparison of the Nine Months Ended September 30, ~~2017 compared~~2021 to ~~September 30, 2016~~

~~Office: Rental~~2020

Commercial: Property rental revenue increased by ~~$9.7~~$8.1 million, or ~~3.7%~~2.9%, to ~~$272.3~~$284.9 million in ~~2017~~2021 from ~~$262.6~~$276.8 million in 2016. NOI increased by $5.7 million, or 3.6%, to $163.7 million in 2017 from $158.0 million in 2016. The increase in revenue and NOI is primarily due to the Combination and higher rents due to rent commencements at 1215 S. Clark St.

~~Multifamily: Rental revenue increased by $18.2 million, or 38.2%, to $65.8 million in 2017 from $47.6 million in 2016.~~2020. Consolidated NOI increased by $11.1 million, or ~~37.3%~~6.8%, to ~~$41.1~~$172.7 million in ~~2017~~2021 from ~~$30.0~~$161.7 million in ~~2016.~~2020. The increase in property revenue and consolidated NOI ~~is primarily~~was due to ~~the Combination~~(i) a decline in rent deferrals and ~~an increase~~uncollectable operating lease receivables related to tenants impacted by COVID-19, (ii) increases in ~~occupancy~~revenues related to 4747 Bethesda Avenue and ~~associated rentals at The Bartlett which was~~1770 Crystal Drive as these properties were placed into service, and (iii) increases related to 2100 Crystal Drive, 1225 South Clark Street and 2345 Crystal Drive due to higher occupancy. These increases were partially offset by a decrease in parking revenue due to reduced transient and office parking and decreases related to the ~~second quarter~~Universal Buildings, 2101 L Street and RTC-West due to lower occupancy.

Table of ~~2016.~~Contents

~~Other: Rental~~

Multifamily: Property rental revenue ~~decreased~~increased by ~~$9.5~~$5.5 million, or ~~48.2%~~5.8%, to ~~$10.3~~$100.6 million in ~~2017~~2021 from ~~$19.8~~$95.1 million in ~~2016. Net operating income (loss) decreased~~2020. Consolidated NOI increased by ~~$5.0 million,~~$125,000, or ~~454.9%~~0.3%, to ~~a loss of $3.9~~$46.9 million in 2021 from ~~income of $1.1 million.~~$46.8 million in 2020. The ~~decrease~~increase in property revenue and ~~net operating income (loss) is primarily~~consolidated NOI was due to ~~properties which were taken out of service, including 1700 M~~The Wren, 900 W Street, 901 W Street and ~~1770 Crystal Drive.~~

West Half as these properties placed additional units into service. These increases were partially offset by lower rents and higher concessions at RiverHouse Apartments and The Bartlett.

Liquidity and Capital Resources

Property rental income is our primary source of operating cash flow and is dependent on ~~a number of~~many factors including occupancy levels and rental rates, as well as our ~~tenants’~~tenants' ability to pay rent. In addition, to our ~~portfolio, we have a~~ third-party asset management and real estate services business ~~that~~ provides fee-based real estate services to ~~our real estate ventures, legacy funds formerly organized by JBG ("~~the WHI, Amazon, the JBG Legacy ~~Funds")~~Funds and other third parties. Our assets provide ~~us with~~ 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, recapitalizations, asset sales and ~~asset sales.~~the issuance and sale of securities. We anticipate that cash flows from continuing operations ~~over the next 12 months~~ 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, any dividends to shareholders and distributions to holders of OP ~~Units.~~

Units over the next 12 months.

Financing Activities

The following is a summary of mortgages ~~payable as of September 30, 2017 and December 31, 2016:~~

payable:


	Weighted Average
	Effective
	Interest Rate ⁽¹⁾	September 30, 2021		December 31, 2020

		(In thousands)
Variable rate ⁽²⁾	2.08%	$	762,246	$	678,346
Fixed rate ⁽³⁾	4.32%		922,161		925,523
Mortgages payable			1,684,407		1,603,869
Unamortized deferred financing costs and premium/discount, net ⁽⁴⁾			(10,122)		(10,131)
Mortgages payable, net		$	1,674,285	$	1,593,738

^{__________________________}

(1)	Weighted average effective interest rate as of September 30, 2021.

⁽¹⁾

(2)

Includes variable rate mortgages payable with interest rate ~~caps.~~cap agreements.

(3)
⁽²⁾	Includes variable rate mortgages payable with interest rates ~~effectively~~ fixed ~~pursuant to~~by interest rate ~~swaps.~~swap agreements.

(4)
⁽³⁾	~~Includes mortgages payable assumed as part~~As of ~~the Combination. See Note 3~~September 30, 2021, net deferred financing costs related to ~~the financial statements for additional information.~~

⁽⁴⁾

~~In June 2016, the~~an unfunded mortgage loan ~~for the Bowen Building was repaid with proceeds of a $115.6~~totaling $4.0 million ~~draw on our former parent's revolving credit facility collateralized by an interest~~were included in the property, and, accordingly, was reflected as a component of "Payable to former parent" on the combined balance sheets as of December 31, 2016. We repaid the loan with amounts drawn under our revolving credit facility collateralized by a mortgage on the property."Other assets, net."

As of September 30, ~~2017,~~2021 and December 31, 2020, the net carrying value of real estate collateralizing our mortgages payable totaled ~~$3.9~~$1.8 billion. Our ~~mortgage loans~~mortgages payable 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 mortgages payable are recourse to us. See Note 17 to the financial statements for additional information.

As of September 30, ~~2017,~~2021 and December 31, 2020, we ~~were in compliance with all debt covenants.~~

~~As part of the Combination, we assumed~~had various interest rate swap and cap agreements on certain mortgages payable with an aggregate ~~principal balance~~notional value of ~~$768.5 million. During~~$1.3 billion. See Note 15 to the ~~three months ended~~financial statements for additional information.

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Credit Facility

As of September 30, 2017, we repaid mortgages payable with an aggregate principal balance of $181.7 million, which includes mortgages payable totaling $63.7 million assumed in the Combination. We recognized losses on extinguishment of debt in conjunction with these repayments of $689,000 for the three2021 and ~~nine months ended September 30, 2017.~~

~~On July 18, 2017, we entered into a~~December 31, 2020, our $1.4 billion credit facility ~~consisting~~consisted of a $1.0 billion revolving credit facility maturing in ~~July 2021, with two six-month extension options,~~January 2025, 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%.

~~The~~ following is a summary of amounts outstanding under the credit ~~facility as of September 30, 2017:~~

facility:


	Effective
	Interest Rate ⁽¹⁾	September 30, 2021		December 31, 2020

		(In thousands)
Revolving credit facility ^{(2) (3) (4)}	1.13%	$	—	$	—

Tranche A-1 Term Loan ⁽⁵⁾	2.59%	$	200,000	$	200,000
Tranche A-2 Term Loan ⁽⁵⁾	2.49%		200,000		200,000
Unsecured term loans			400,000		400,000
Unamortized deferred financing costs, net			(1,507)		(2,021)
Unsecured term loans, net		$	398,493	$	397,979

^{__________________________}

(1)	Effective interest rate as of September 30, 2021.

⁽¹⁾

(2)

As of September 30, ~~2017,~~2021 and December 31, 2020, letters of credit with an aggregate face amount of ~~$5.2~~$1.4 million and $1.5 million were ~~provided~~outstanding under our revolving credit facility.

(3)	As of September 30, 2021 and December 31, 2020, net deferred financing costs related to our revolving credit facility totaling $5.4 million and $6.7 million were included in "Other assets, net."

(4)	The interest rate for our revolving credit facility excludes a 0.15% facility fee.

(5)

~~Long-term~~

Our existing floating rate debt instruments, including our credit facility, with a principal balance totaling $1.6 billion and our hedging arrangements with a notional value totaling $1.7 billion currently use as a reference rate the U.S. dollar London Interbank Offered Rate ("LIBOR"), and we expect a transition from LIBOR to another reference rate due to plans to phase out the reference rate by the end of 2021, after which point its continuation cannot be assured. Though an alternative reference rate for LIBOR, the Secured Overnight Financing Rate ("SOFR"), exists, significant uncertainties still remain. We can provide no assurance regarding the future of LIBOR and when our LIBOR-based instruments will transition from LIBOR as a reference rate to SOFR or another reference rate. The discontinuation of a benchmark rate or other financial metric, changes in a benchmark rate or other financial metric, or changes in market perceptions of the acceptability of a benchmark rate or other financial metric, including LIBOR, could, among other things, result in increased interest payments, changes to our risk exposures, or require renegotiation of previous transactions. In addition, any such discontinuation or changes, whether actual or anticipated, could result in market volatility, adverse tax or accounting effects, increased compliance, legal and operational costs, and risks associated with contract negotiations.

Common Shares Repurchased

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,

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applicable legal requirements and other factors. The program may be suspended or discontinued at our discretion without prior notice.

Liquidity Requirements

Our ~~long-term~~principal liquidity needs for the next 12 months and beyond include:

●	normal recurring expenses;

●	debt service and principal repayment obligations, including balloon payments on maturing debt;

●	capital expenditures, including major renovations, tenant improvements and leasing costs;

●	development expenditures;

●	dividends to shareholders and distributions to holders of OP Units;

●	common share repurchases; and

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

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

●	cash and cash equivalent balances;

●	cash flows from operations;

●	distributions from real estate ventures; and

●	proceeds from financings, recapitalizations and asset sales.

While we do not expect the need to do so during the next 12 months, we also can issue securities to raise funds.

While we have not experienced a significant impact to date in this regard, we expect COVID-19 to continue to have an adverse impact on our liquidity and capital ~~requirements consist primarily~~resources. Future decreases in cash flows from operations resulting from tenant defaults, rent deferrals or decreases in our rents or occupancy, would decrease the cash available for the capital uses described above.

As of ~~maturities~~September 30, 2021, we had $998.6 million of availability 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(net 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~~outstanding letters of ~~our contractual obligations and commitments as of September 30, 2017:~~

Total 2017 2018 2019 2020 2021 2022 Thereafter
Contractual cash obligations
(principal and interest):
(In thousands)
Debt obligations ⁽¹⁾
$ 2,480,892
$ 23,597
$ 464,528
$ 294,361
$ 276,060
$ 261,943
$ 371,899
$ 788,504
Operating leases ⁽²⁾
914,903
1,974
8,391
8,170
7,825
7,496
6,580
874,467
Capital lease obligation 15,767
235
953
972
992
1,011
1,032
10,572
Total contractual cash
obligations ⁽³⁾
$ 3,411,562
$ 25,806
$ 473,872
$ 303,503
$ 284,877
$ 270,450
$ 379,511
$ 1,673,543

~~_________________~~


⁽¹⁾	~~Excludes our proportionate share of unconsolidated real estate venture indebtedness. See further information in Off-Balance Sheet Arrangements section below.~~


⁽²⁾	~~Includes ground leases.~~


⁽³⁾	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 further information.

credit totaling $1.4 million). As of September 30, ~~2017,~~2021, we ~~expect~~had no debt on a consolidated basis and at our share scheduled to ~~fund additional capital~~mature in 2021.

Contractual Obligations and Commitments

During the nine months ended September 30, 2021, there were no material changes to ~~certain~~the contractual obligation information presented in Item 7 of Part II of our ~~unconsolidated investments totaling approximately $50.6 million, which we anticipate will be primarily expended over the next two to three years.~~

~~On November 9, 2017, after completion of the period covered by this Quarterly~~Annual Report on Form ~~10-Q,~~10-K for the year ended December 31, 2020.

As of September 30, 2021, we had additional capital commitments and certain recorded guarantees to our unconsolidated real estate ventures totaling $66.1 million.

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completed closings of capital commitments totaling $114.4 million, which included a commitment from us of $11.2 million. As of September 30, 2021, our remaining commitment was $8.3 million.

On October 27, 2021, our Board of Trustees declared a quarterly dividend of $0.225 per common ~~share, payable on November 30, 2017 to shareholders of record on November 20, 2017.~~

~~See Note 18 to the financial statements for additional information about events occurring after September 30, 2017.~~

share.

Summary of Cash Flows

The following summary discussion of our cash flows is based on ~~the~~our 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.~~

Nine Months Ended September 30,
2017 2016 Change
(In thousands)
Net cash provided by operating activities $ 23,393
$ 101,383
$ (77,990 )
Net cash provided by (used in) investing activities 88,184
(204,105 ) 292,289
Net cash provided by financing activities 227,319
63,040
164,279

flows:


	Nine Months Ended September 30,
	2021		2020

	(In thousands)
Net cash provided by operating activities	$	154,412	$	127,855
Net cash used in investing activities		(96,751)		(57,696)
Net cash (used in) provided by financing activities		(91,820)		280,038

Cash Flows for the Nine Months Ended September 30, ~~2017~~

2021

Cash and cash equivalents, ~~were $367.9~~and restricted cash decreased $34.2 million atto $229.2 million as of September 30, ~~2017,~~2021, compared to ~~$29.0~~$263.3 million atas of December 31, ~~2016, an increase of $338.9 million.~~2020. This ~~increase~~decrease resulted from ~~$23.4 million of net cash provided by operating activities, $88.2~~$91.8 million of net cash used in ~~investing~~financing activities and ~~$227.3~~$96.8 million ~~of net cash provided by financing activities. Our outstanding debt was $2.1 billion at September 30, 2017, a $974.8 million increase from the balance at December 31, 2016.~~

Net cash provided by operating activities of $23.4 million comprised: (i) net loss of $60.3 million, (ii) $110.7 million of non-cash items, which include depreciation and amortization, deferred rent, equity in loss from unconsolidated real estate ventures, amortization of above- and below-market lease intangibles, unrealized gains on interest rate swaps and bad debt expense, (iii) share-based compensation of $17.2 million, (iv) return on capital from unconsolidated real estate ventures of $1.1 million, and (v) $689,000 loss on the extinguishment of debt, partially offset by (vi) $27.8 million gain on bargain purchase and (vii) the net change in operating assets and liabilities of $18.2 million.

Net cash provided by investing activities of $88.2 million primarily comprised: (i) $83.9 million net cash consideration received in connection with the Combination, (ii) $75.0 million proceeds from repayment of a receivable by our former parent and (iii) $50.9 million repayment of notes receivable, partially offset by $115.9 million of development costs, construction in progress and real estate additions.

Net cash provided by financing activities of $227.3 million comprised: (i) $407.8 million of proceeds from borrowings related to the credit facility and The Bartlett and (ii) $160.2 million of contributions from our former parent, net, partially offset by (iii) $192.7 million for the repayments of borrowings, (iv) $115.6 million repayment of borrowings by our former parent, (v) $17.8 million capital lease payments and (vi) $18.7 million of debt issuance costs.

~~Cash Flows for the Nine Months Ended September 30, 2016~~

~~Cash and cash equivalents were~~ ~~$35.3 million~~ ~~at September 30, 2016, compared to~~ ~~$75.0 million~~ at ~~December 31, 2015, a decrease of~~ ~~$39.7 million. This decrease resulted from~~ ~~$204.1 million~~ of net cash used in investing activities, partially offset by ~~$101.4~~$154.4 million of net cash provided by operating ~~activities~~activities. Our outstanding debt was $2.1 billion and ~~$63.0 million~~$2.0 billion as of ~~net cash provided by financing activities.~~

September 30, 2021 and December 31, 2020.

Net cash provided by operating activities of ~~$101.4~~$154.4 million primarily comprised: (i) $147.7 million of net income ~~of $49.3 million, (ii) $92.4~~(before $185.4 million of non-cash items and $11.3 million gain on sale of real estate), (ii) $13.2 million of return on capital from unconsolidated real estate ventures and (iii) $6.5 million of net change in operating assets and liabilities. Non-cash income adjustments ~~which~~of $185.4 million primarily include depreciation and amortization ~~loss~~expense, share-based compensation expense, net income from unconsolidated real estate ventures, deferred rent and ~~accretion~~amortization of ~~below-market~~ lease ~~intangibles and (iii) distributions of income from unconsolidated real estate ventures of $1.0 million, partially offset by (iv) the net change in operating assets and liabilities of $45.5 million.~~

incentives.

Net cash used in investing activities of ~~$204.1~~$96.8 million comprised: (i) ~~$185.4~~$108.4 million of development costs, construction in progress and real estate additions, (ii) ~~$20.0~~$32.7 million of investments in ~~and advances to~~ unconsolidated real estate ventures and other, and (iii) ~~$1.9~~$10.3 million of deposits for real estate and other ~~investments,~~acquisitions, partially offset by (iv) ~~a decrease~~$40.2 million of ~~$3.2 million in restricted cash.~~

~~Net cash provided by financing activities~~distributions of ~~$63.0 million primarily comprised : (i) $39.0~~capital from unconsolidated real estate ventures and (v) $14.4 million of proceeds from ~~borrowings from our former parent and (ii) $33.0~~the sale of real estate.

Net cash used in financing activities of $91.8 million primarily comprised: (i) $88.9 million of ~~net contributions from our former parent,~~dividends paid to common shareholders, (ii) $82.3 million of common shares repurchased, (iii) $13.7 million of distributions to redeemable noncontrolling interests, (iv) $5.7 million of debt issuance costs, and (v) $4.5 million of repayments of mortgages payable, partially offset by ~~(iii) $8.9~~(vi) $85.0 million ~~for the repayments~~ of ~~borrowings.~~

borrowings under mortgages payable and (vii) $17.5 million of contributions from noncontrolling interests.

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 September 30, ~~2017,~~2021, we have investments in ~~and advances to~~ unconsolidated real estate ventures totaling ~~$285.0~~$486.1 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 ~~joint~~real estate ventures, see Note 54 to the financial statements.

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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)~~(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 ~~joint~~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~~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. ~~At times,~~Amounts that we ~~have agreements~~may be required to pay in future periods in relation to guarantees associated with ~~our outside partners whereby we agree to reimburse our partner for their share of any payments made by them under certain guarantees.~~ budget overruns or operating losses are not estimable.

As of September 30, ~~2017, the aggregate amount~~2021, we had additional capital commitments and certain recorded guarantees to our unconsolidated real estate ventures totaling $66.1 million. As of ~~our~~September 30, 2021, we had no principal payment guarantees ~~was approximately $63.8 million for~~related to our unconsolidated real estate ventures.

As of September 30, 2017, we expect to fund additional capital to certain of our unconsolidated investments totaling approximately $50.6 million, which we anticipate will be primarily expended over the next two to three years.

~~Reconsideration events~~

A reconsideration event could cause us to consolidate ~~these~~an unconsolidated real estate ~~ventures and partnerships~~venture in the ~~future.~~future or deconsolidate a consolidated entity. We evaluate reconsideration events as we become aware of them. ~~Some triggers~~Reconsideration events include amendments to ~~be considered are additional contributions required by each partner~~real estate venture agreements and ~~each partners’~~changes in our partner's ability to make ~~those contributions.~~contributions to the venture. Under certain ~~of these~~ circumstances, we may purchase our ~~partner’s~~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~~$150.0 million per occurrence and in the aggregate, and property and rental value insurance coverage with limits of ~~$2.0~~$1.5 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 terrorist acts and for nuclear, biological, chemical or radiological terrorism events with limits of $2.0 billion per ~~occurrence and in the aggregate, and $2.0 billion per occurrence and in the aggregate for nuclear, biological, chemical and radiological terrorism events, as defined~~occurrence. These policies are partially reinsured by ~~the Terrorism Risk Insurance Program Reauthorization Act, which expires in December 2020. Insurance premiums are charged directly to each of the properties.~~

third-party insurance providers.

Construction Commitments

Other

~~Other~~

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amounts of payments for tenant-related obligations are uncertain and may only be due upon satisfactory performance of certain conditions.

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 September 30, ~~2017, we expect to fund additional capital to certain~~2021, the aggregate amount of principal payment guarantees was $8.3 million for our ~~unconsolidated investments totaling approximately $50.6 million, which we anticipate will be primarily expended over the next two to three years.~~

consolidated entities.

~~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. Our majority 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~~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. The presence of contamination ifor the ~~responsible party is unable~~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 ~~unwilling~~property damage), (ii) subject our properties to ~~do so.~~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 which 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 ~~generally is~~may not be responsible for remediating contamination that has migrated onsite from an identifiable and viable offsite source, the ~~contaminant’s~~contaminant's presence can have adverse effects on operations and the redevelopment of our assets.

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.

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, ~~screening for the presence~~visual or historical evidence of ~~asbestos‑containing materials, polychlorinated biphenyls and~~ underground storage tanks, and the preparation and issuance of a written report. Soil 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.~~liabilities as a result of redevelopment. They 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 ~~the~~ appropriate actions.

~~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.~~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 17 to the financial statements, environmental liabilities totaled $18.2 million as of September 30, 2021 and December 31, 2020 and are included in "Other liabilities, net" in our balance sheets.

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ITEM 3. 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~~The following is a summary of our annual exposure to a change in interest ~~rates is summarized in the table below.~~

rates:


	September 30, 2021						December 31, 2020
			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):
Mortgages payable:
Variable rate ⁽¹⁾	$	762,246		2.08%	$	7,728	$	678,346	2.18%
Fixed rate ⁽²⁾		922,161		4.32%		—		925,523	4.32%
	$	1,684,407			$	7,728	$	1,603,869
Credit facility:
Revolving credit facility ⁽³⁾	$	—		1.13%	$	—	$	—	1.19%
Tranche A-1 Term Loan ⁽⁴⁾		200,000		2.59%		—		200,000	2.59%
Tranche A-2 Term Loan ⁽⁴⁾		200,000		2.49%		—		200,000	2.49%
	$	400,000			$	—	$	400,000
Pro rata share of debt of unconsolidated real estate ventures (contractual balances):
Variable rate ⁽¹⁾	$	281,752		2.57%	$	2,857	$	319,057	2.47%
Fixed rate ⁽²⁾		83,707		4.46%		—		79,989	4.36%
	$	365,459			$	2,857	$	399,046

2017 2016
(Amounts in thousands) September 30,
Weighted
Average
Interest
Rate

Effect of 1%
Change in
Base Rates
December 31,
Weighted
Average
Interest
Rate
Balance Balance
Consolidated debt (contractual balances):
Mortgages payable
Variable rate ⁽¹⁾
$ 1,152,106
2.95 % $ 11,681
$ 547,291
2.11%
Fixed rate ⁽²⁾
836,141
4.79 % —
620,327
5.52%
$ 1,988,247
$ 11,681
$ 1,167,618

Credit facility (variable rate):
Revolving credit facility $ 115,751
2.34 % $ 1,174
—
—
Tranche A-1 Term Loan 50,000
2.44 % $ 507
—
—

Pro rata share of debt of unconsolidated entities (contractual balances):
Variable rate ⁽¹⁾
$ 159,169
4.08 % $ 1,614
$ 17,050
1.87%
Fixed rate ⁽²⁾
230,541
3.90 % —
150,150
3.65%
$ 389,710
$ 1,614
$ 167,200

~~_________________~~

(1)
⁽¹⁾	Includes variable rate mortgages payable with interest rate ~~caps.~~cap agreements.

(2)
⁽²⁾	Includes variable rate mortgages payable with interest rates ~~effectively~~ fixed ~~pursuant~~by interest rate ~~swaps.~~swap agreements.

(3)	The interest rate for our revolving credit facility excludes a 0.15% facility fee.

(4)

As of September 30, 2021 and December 31, 2020, the outstanding balance was fixed by interest rate swap agreements. The interest rate swaps mature concurrently with the term loan and provide a weighted average interest rate of 1.39% for the Tranche A-1 Term Loan and 1.34% for the Tranche A-2 Term Loan.

The fair value of our ~~consolidated debt~~mortgages payable is ~~calculated~~estimated by discounting the future contractual cash flows of these instruments using current ~~risk‑adjusted~~risk-adjusted rates available to borrowers with similar credit profiles based on market sources. The fair value of our unsecured 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 September 30, ~~2017~~2021 and December 31, ~~2016~~,2020, the estimated fair value of our consolidated debt was $2.1 billion and ~~$1.2 billion, respectively.~~$2.0 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 financial instruments for speculative purposes.

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

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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 loss” in our balance sheets and is subsequently reclassified into "Interest expense" in our 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 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 and equity.

As of September 30, 2021 and December 31, 2020, we had interest rate swap agreements with an aggregate notional value of $862.7 million, which were designated as cash flow hedges. The fair value of our interest rate swaps designated as cash flow hedges consisted of liabilities totaling $28.4 million and ~~caps,~~$44.2 million as of September 30, 2021 and December 31, 2020, included in "Other liabilities, net" in our balance sheets.

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 with realized~~basis. Realized and unrealized gains are recorded ~~into earnings~~in "Interest expense" in our statements of operations in the period in which the change occurs.

As of September 30, ~~2017,~~2021 and December 31, 2020, we had various interest rate ~~swap and~~ cap agreements ~~assumed in the Combination. As~~with an aggregate notional value of ~~September 30, 2017, the~~$867.7 million, which were not designated as cash flow hedges. The fair value of our interest rate ~~swaps and~~ caps not designated as hedges consisted of ~~liabilities~~assets totaling ~~$703,000~~$266,000 and $35,000 as of September 30, 2021 and December 31, 2020, included in ~~"Accounts payable and accrued expenses"~~"Other assets, net" in our balance ~~sheet.~~

sheets.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

~~We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)~~

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), that are designed to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

~~As required by Rule 13a-15(b) under the Exchange Act,~~ 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 September 30, ~~2017,~~2021, our disclosure controls and procedures were effective at the reasonable assurance level such that the information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

effective.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended September 30, ~~2017~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II –- OTHER INFORMATION

ITEM 1. 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 1A. RISK FACTORS

There ~~were~~have been no material changes to the ~~Risk Factors~~risk factors previously disclosed in our ~~Information Statement on Form 10, as amended,~~Annual Report for the year ended December 31, 2020, filed with the SEC on ~~June 20, 2017.~~February 23, 2021.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)

Not applicable.

(b)

Not applicable.

(c)

Purchases of equity securities by the issuer and affiliated purchasers:

~~(a) Not applicable.~~

~~(b) Not applicable.~~

~~(c) Not applicable.~~


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
July 1, 2021 - July 31, 2021	-	$	-	-	$	376,038,752
August 1, 2021 - August 31, 2021	972,766		29.70	972,766		347,130,941
September 1, 2021 - September 30, 2021	1,344,318		29.75	1,344,318		307,107,767
Total for the three months ended September 30, 2021	2,317,084		29.73	2,317,084
Total for the nine months ended September 30, 2021	2,936,833		29.99	2,936,833
Program total since inception in March 2020	6,713,185		28.71	6,713,185

In March 2020, our Board of Trustees authorized the repurchase of up to $500 million of our outstanding common shares. 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.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

~~None.~~

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ITEM 6. EXHIBITS

(a) Exhibit Index

Exhibits	Description

~~(a)~~ 3.1	~~Exhibits~~



~~Exhibits~~	~~Description~~

~~2.1~~	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).

~~2.2~~	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).

~~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).

~~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).
~~3.2~~ 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	Amended and Restated Bylaws of JBG SMITH Properties (incorporated by reference to Exhibit ~~3.2~~3.1 to our Current Report on Form 8-K, filed on ~~July~~February 21, ~~2017)~~2020).
10.1†
~~10.1~~	~~Tax Matters Agreement, dated as~~Form 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).~~

~~10.2~~	~~Employee Matters~~2021 Performance LTIP Unit 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).

~~10.3~~	~~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,~~10-Q, filed on ~~July 21, 2017)~~August 3, 2021).
10.2**†	Amended Form of July 2021 Performance LTIP Unit Agreement.
~~10.4~~ 10.3†	~~Credit Agreement, dated as~~Form of July 18, 2017, 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 to our Current Report on Form 8-K, filed on July 21, 2017).

~~10.5~~	~~Registration Rights~~2021 Restricted LTIP Unit Agreement ~~dated as of July 18, 2017, by and among JBG SMITH Properties and the holders listed on Schedule I thereto (for holders of common shares of JBG SMITH Properties received in the combination)~~ (incorporated by reference to Exhibit 10.5 to our Current Report on Form ~~8-K,~~10-Q, filed on ~~July 21, 2017)~~August 3, 2021).
10.4†
~~10.6~~	~~Registration Rights Agreement, dated as~~Form 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)~~2021 Restricted LTIP Unit Agreement (Special Termination & Vesting Provisions) (incorporated by reference to Exhibit 10.6 to our Current Report on Form ~~8-K,~~10-Q, filed on ~~July 21, 2017)~~August 3, 2021).
31.1**



~~Exhibits~~	~~Description~~
~~10.7~~	~~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).~~

~~10.8~~	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).

~~10.9~~	~~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).~~

~~10.10~~	~~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).~~

~~10.11~~	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 to our Current Report on Form 8-K, filed on July 21, 2017).

~~10.12~~	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).

~~10.13~~	First Amended and Restated Limited Partnership Agreement of JBG SMITH Properties LP, dated as of July 17, 2017 (incorporated by reference to Exhibit 10.13 to our Current Report on Form 8-K, filed on July 21, 2017).

~~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**
~~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~~2002.
32.1**
~~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~~2002.
101.INS
~~101.INS~~	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.
101.SCH
~~101.SCH~~	Inline XBRL Taxonomy Extension Schema
101.CAL
~~101.CAL~~	Inline XBRL Extension Calculation Linkbase
101.LAB
~~101.LAB~~	Inline XBRL Extension Labels Linkbase
101.PRE
~~101.PRE~~	Inline XBRL Taxonomy Extension Presentation Linkbase
101.DEF
~~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.

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~~SIGNATURE~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		JBG SMITH Properties

~~Date:~~	~~November 13, 2017~~	~~/s/ Stephen W. Theriot~~
		~~Stephen W. Theriot~~

Date:	November 2, 2021	/s/ M. Moina Banerjee
		M. Moina Banerjee
		Chief Financial Officer
		(Principal Financial ~~and~~Officer)


		JBG SMITH Properties

Date:	November 2, 2021	/s/ Angela Valdes
		Angela Valdes
		Chief Accounting Officer
		(Principal Accounting Officer)

JBG SMITH PROPERTIES Condensed Consolidated and Combined Balance Sheets September 30, 2017 and December 31, 2016 (Unaudited) (In thousands, except par value amounts)

	September 30, 2017			December 31, 2016
ASSETS
Real estate, at cost:
Land and improvements	$	1,272,997		$	939,592
Buildings and improvements	3,662,853			3,064,466
Construction in progress, including land	906,680			151,333
	5,842,530			4,155,391
Less accumulated depreciation	(982,454		)	(930,769		)
Real estate, net	4,860,076			3,224,622
Cash and cash equivalents	367,896			29,000
Restricted cash	17,521			3,263
Tenant and other receivables, net	50,474			33,380
Deferred rent receivable, net	145,683			136,582
Investments in and advances to unconsolidated real estate ventures	284,986			45,776
Receivable from former parent	—			75,062
Other assets, net	288,391			112,955
TOTAL ASSETS	$	6,015,027		$	3,660,640

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgages payable, net	$	1,977,674		$	1,165,014
Revolving credit facility	115,751			—
Unsecured term loan, net	46,389			—
Payable to former parent	—			283,232
Accounts payable and accrued expenses	131,627			40,923
Other liabilities, net	100,774			49,487
Total liabilities	2,372,215			1,538,656
Commitments and contingencies
Redeemable noncontrolling interests	567,001			—
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 117,957 shares issued and outstanding at September 30, 2017	1,180			—
Additional paid-in capital	3,099,056			—
Accumulated deficit	(28,827		)	—
Total shareholders' equity of JBG SMITH Properties	3,071,409			—
Former parent equity	—			2,121,689
Noncontrolling interests in consolidated subsidiaries	4,402			295
Total equity	3,075,811			2,121,984
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	6,015,027		$	3,660,640

JBG SMITH PROPERTIES Condensed Consolidated and Combined Statements of Operations For the three and nine months ended September 30, 2017 and 2016 (Unaudited) (In thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
REVENUE
Property rentals	$	116,458		$	103,265		$	316,899		$	299,497
Tenant reimbursements	9,593			10,231			27,161			28,428
Third-party real estate services, including reimbursements	25,141			8,297			38,881			24,617
Other income	1,158			1,564			3,701			3,938
Total revenue	152,350			123,357			386,642			356,480
EXPENSES
Depreciation and amortization	43,951			31,377			109,726			98,291
Property operating	29,634			27,287			77,341			75,087
Real estate taxes	17,194			14,462			47,978			43,712
General and administrative:
Corporate and other	10,593			10,913			35,536			36,040
Third-party real estate services	21,178			4,779			30,362			14,272
Share-based compensation related to Formation Transaction	14,445			—			14,445			—
Transaction and other costs	104,095			1,528			115,173			1,528
Total operating expenses	241,090			90,346			430,561			268,930
OPERATING (LOSS) INCOME	(88,740		)	33,011			(43,919		)	87,550
(Loss) income from unconsolidated real estate ventures	(1,679		)	584			(1,365		)	(952		)
Interest and other (loss) income, net	(379		)	749			1,366			2,292
Interest expense	(15,309		)	(13,028		)	(43,813		)	(38,662		)
Loss on extinguishment of debt	(689		)	—			(689		)	—
Gain on bargain purchase	27,771			—			27,771			—
(LOSS) INCOME BEFORE INCOME TAX EXPENSE	(79,025		)	21,316			(60,649		)	50,228
Income tax benefit (expense)	1,034			(302		)	317			(884		)
NET (LOSS) INCOME	(77,991		)	21,014			(60,332		)	49,344
Net loss attributable to redeemable noncontrolling interests	8,160			—			2,481			—
NET (LOSS) INCOME ATTRIBUTABLE TO JBG SMITH PROPERTIES	$	(69,831	)	$	21,014		$	(57,851	)	$	49,344
(LOSS) EARNINGS PER COMMON SHARE:
Basic	$	(0.61	)	$	0.21		$	(0.55	)	$	0.49
Diluted	$	(0.61	)	$	0.21		$	(0.55	)	$	0.49
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - basic and diluted	$	114,744		$	100,571		$	105,347		$	100,571



	Common Shares			Additional Paid-In Capital			Accumulated Deficit			Former Parent Equity				Noncontrolling Interests in Consolidated Subsidiaries			Total Equity
	Shares	Amount		Additional Paid-In Capital			Accumulated Deficit			Former Parent Equity				Noncontrolling Interests in Consolidated Subsidiaries			Total Equity
BALANCE AT JANUARY 1, 2017										$	2,121,689			$	295		$	2,121,984
Net income (loss) attributable to JBG SMITH Properties	—	$	—	$	—		$	(28,827	)	(29,024		)	⁽¹⁾	—			(57,851		)
Deferred compensation shares and options, net	—	—		—			—			1,526				—			1,526
Contributions from former parent, net	—	—		—			—			334,843				—			334,843
Issuance of common limited partnership units at the Separation	—	—		—			—			(96,632		)		—			(96,632		)
Issuance of common shares at the Separation	94,736	947		2,331,455			—			(2,332,402		)		—			—
Issuance of common shares in connection with the Combination	23,221	233		864,685			—			—				—			864,918
Noncontrolling interests acquired in connection with the Combination	—	—		—			—			—				3,987			3,987
Distributions to noncontrolling interests	—	—		—			—			—				(14		)	(14		)
Contributions from noncontrolling interests	—	—		—			—			—				134			134
Adjustment to record redeemable noncontrolling interest at redemption value	—	—		(97,084		)	—			—				—			(97,084		)
BALANCE AT SEPTEMBER 30, 2017	117,957	$	1,180	$	3,099,056		$	(28,827	)	$	—			$	4,402		$	3,075,811



Fair value of purchase consideration:
Common shares and OP Units	$	1,224,886
Cash	20,573
Total consideration paid	$	1,245,459

Fair value of assets acquired and liabilities assumed:
Land and improvements	$	342,932
Building and improvements	623,889
Construction in progress, including land	632,664
Leasehold improvements and equipment	7,890
Cash	104,516
Restricted cash	13,460
Investments in and advances to unconsolidated real estate ventures	238,388
Identified intangible assets	146,600
Notes receivable ⁽¹⁾	50,934
Identified intangible liabilities	(8,449		)
Mortgages payable assumed ⁽²⁾	(768,523		)
Capital lease obligations assumed ⁽³⁾	(33,543		)
Deferred tax liability ⁽⁴⁾	(21,476		)
Other liabilities acquired, net	(52,065		)
Noncontrolling interests in consolidated subsidiaries	(3,987		)
Net assets acquired	1,273,230
Gain on bargain purchase ⁽⁵⁾	27,771
Total consideration paid	$	1,245,459



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



	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	$	559,042		3 - 40 years
Tenant improvements	64,847			Shorter of useful life or remaining life of the respective lease
Total building and improvements	$	623,889
Leasehold improvements	$	4,422		Shorter of useful life or remaining life of the respective lease
Identified intangible assets:
In-place leases	$	59,351	6.4	Remaining life of the respective lease
Above-market real estate leases	11,700		6.3	Remaining life of the respective lease
Below-market ground leases	659		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⁾	57,800		7.4	Estimated remaining life of contracts, ranging between 3 - 8 years
Total identified intangible assets	$	146,600
Identified intangible liabilities:
Below-market real estate leases	$	8,449	10.2	Remaining life of the respective lease



	Ownership Interest ⁽¹⁾	Investment Balance
Real Estate Venture Partners ⁽¹⁾	September 30, 2017	September 30, 2017		December 31, 2016
		(In thousands)
Landmark	1.8% - 59.0%	$	110,562	$	—
CBREI Venture	5.0% - 64.0%	85,386		—
Canadian Pension Plan Investment Board	55.0%	36,223		36,312
Brandywine	30.0%	13,753		—
Berkshire Group	50.0%	27,647		—
MRP Realty	70.0%	1,802		—
JP Morgan	5.0%	9,351		9,335
Other		242		129
Total investments in unconsolidated real estate ventures		284,966		45,776
Advances to unconsolidated real estate ventures		20		—
Total investments in and advances to unconsolidated real estate ventures		$	284,986	$	45,776



	Weighted Average Interest Rate	Balance as of
	September 30, 2017	September 30, 2017			December 31, 2016
		(In thousands)
Variable rate ⁽¹⁾	4.08%	$	531,989		$	31,000
Fixed rate ⁽²⁾	3.90%	643,801			273,000
Unconsolidated real estate ventures - mortgages payable		1,175,790			304,000
Unamortized deferred financing costs, net		(860		)	(1,034		)
Unconsolidated real estate ventures - mortgages payable, net		$	1,174,930		$	302,966



	September 30, 2017		December 31, 2016
Combined balance sheet information:	(In thousands)
Total assets	$	3,446,348	$	598,239
Total liabilities	1,253,664		327,862
Noncontrolling interests	343		343
Total equity	2,192,341		270,034



Year ending December 31,	Amount
	(in thousands)
2018	$	15,119
2019	12,032
2020	10,105
2021	6,664
2022	5,312



	Interest Rate	Balance as of
	September 30, 2017	September 30, 2017
		(In thousands)
Revolving credit facility ⁽¹⁾	2.34%	$	115,751

Tranche A-1 Term Loan	2.44%	$	50,000
Unamortized deferred financing costs, net		(3,611		)
Unsecured term loan, net		$	46,389



Formation Awards	$	3,963
LTIP Units that vested immediately	2,546
OP Units ⁽¹⁾	7,936
Share-based compensation related to Formation Transaction ⁽²⁾	14,445
LTIP Units that vest over four years	885
OPP Units	469
Other equity awards	1,526
Share-based compensation expense - other⁽³⁾	2,880
Total share-based compensation expense	17,325
Less amount capitalized	(161		)
Net share-based compensation expense ⁽⁴⁾	$	17,164



	Fair Value Measurements
	Total		Level 1		Level 2		Level 3
September 30, 2017	(In thousands)
Interest rate swaps and caps:
Classified as liabilities in "Other liabilities, net"	$	703	$	—	$	703	$	—



	September 30, 2017				December 31, 2016
	Carrying Amount ⁽¹⁾		Fair Value		Carrying Amount ⁽¹⁾		Fair Value
	(In thousands)
Financial liabilities:
Mortgages payable	$	1,988,247	$	2,015,653	$	1,167,618	$	1,192,267



	Three Months Ended September 30, 2017
	Office		Multifamily		Other				Eliminations			Total
	(In thousands)
Rental revenue:
Property rentals	$	91,534	$	23,397	$	4,171			$	(2,644	)	$	116,458
Tenant reimbursements	7,917		1,548		128				—			9,593
Total rental revenue	99,451		24,945		4,299				(2,644		)	126,051
Rental expense:								—
Property operating	27,000		6,796		3,502				(7,664		)	29,634
Real estate taxes	13,038		2,952		1,204				—			17,194
Total rental expense	40,038		9,748		4,706				(7,664		)	46,828
NOI	$	59,413	$	15,197	$	(407	)		$	5,020		$	79,223



	Three Months Ended September 30, 2016
	Office		Multifamily		Other			Eliminations			Total
	(In thousands)
Rental revenue:
Property rentals	$	81,575	$	15,850	$	4,898		$	942		$	103,265
Tenant reimbursements	8,977		876		378			—			10,231
Total rental revenue	90,552		16,726		5,276			942			113,496
Rental expense:							—
Property operating	25,083		4,782		3,065			(5,643		)	27,287
Real estate taxes	11,793		1,663		1,006						14,462
Total rental expense	36,876		6,445		4,071			(5,643		)	41,749
NOI	$	53,676	$	10,281	$	1,205		$	6,585		$	71,747



	Nine Months Ended September 30, 2017
	Office		Multifamily		Other				Eliminations			Total
	(In thousands)
Rental revenue:
Property rentals	$	249,532	$	62,050	$	9,623			$	(4,306	)	$	316,899
Tenant reimbursements	22,738		3,772		651				—			27,161
Total rental revenue	272,270		65,822		10,274				(4,306		)	344,060
Rental expense:								—
Property operating	71,377		16,716		11,330				(22,082		)	77,341
Real estate taxes	37,185		7,973		2,820				—			47,978
Total rental expense	108,562		24,689		14,150				(22,082		)	125,319
NOI	$	163,708	$	41,133	$	(3,876	)		$	17,776		$	218,741



	Nine Months Ended September 30, 2016
	Office		Multifamily		Other			Eliminations			Total
	(In thousands)
Rental revenue:
Property rentals	$	237,826	$	45,203	$	18,621		$	(2,153	)	$	299,497
Tenant reimbursements	24,807		2,422		1,199			—			28,428
Total rental revenue	262,633		47,625		19,820			(2,153		)	327,925
Rental expenses:							—
Property operating	69,740		12,594		14,934			(22,181		)	75,087
Real estate taxes	34,855		5,063		3,794			—			43,712
Total rental expense	104,595		17,657		18,728			(22,181		)	118,799
NOI	$	158,038	$	29,968	$	1,092		$	20,028		$	209,126



	2017						2016
(Amounts in thousands)	September 30,		Weighted Average Interest Rate		Effect of 1% Change in Base Rates		December 31,		Weighted Average Interest Rate
	Balance		Weighted Average Interest Rate		Effect of 1% Change in Base Rates		Balance		Weighted Average Interest Rate
Consolidated debt (contractual balances):
Mortgages payable
Variable rate ⁽¹⁾	$	1,152,106	2.95	%	$	11,681	$	547,291	2.11%
Fixed rate ⁽²⁾	836,141		4.79	%	—		620,327		5.52%
	$	1,988,247			$	11,681	$	1,167,618
Credit facility (variable rate):
Revolving credit facility	$	115,751	2.34	%	$	1,174	—		—
Tranche A-1 Term Loan	50,000		2.44	%	$	507	—		—

Pro rata share of debt of unconsolidated entities (contractual balances):
Variable rate ⁽¹⁾	$	159,169	4.08	%	$	1,614	$	17,050	1.87%
Fixed rate ⁽²⁾	230,541		3.90	%	—		150,150		3.65%
	$	389,710			$	1,614	$	167,200

~~Standard~~

~~Description~~

~~Date of Adoption~~

~~Effect on the Financial Statements or Other~~
~~Significant Matters~~

~~Standard adopted~~

~~ASU 2017‑01 Business Combinations (Topic 805): Clarifying the~~
~~Definition of a Business~~

This standard provides a screen to determine when an asset acquired or group of assets acquired is not a business. The screen 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 screen reduces the number of transactions that need to be further evaluated.

~~September~~
~~2017~~

~~The adoption and implementation of this standard did not have an impact on our results of operations, financial condition or cash flows.~~