SECURITIES AND EXCHANGE COMMISSION



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



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

For the transition period from ___________ to ___________

Commission file number 001-37994

(Exact name of Registrant as specified in its charter)

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

(Address of Principal Executive Offices)

Name of each exchange on which registered

~~4445 Willard Avenue, Suite 400~~

Common Shares, par value $0.01 per share

~~Chevy Chase, MD~~

~~(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,~~August 4, 2023, JBG SMITH Properties had ~~117,957,107~~103,439,327 common shares outstanding.

JBG SMITH PROPERTIES

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED JUNE 30, 2023

TABLE OF CONTENTS

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)


	June 30, 2023		December 31, 2022
ASSETS
Real estate, at cost:
Land and improvements	$	1,267,379	$	1,302,569
Buildings and improvements		4,175,488		4,310,821
Construction in progress, including land		694,793		544,692
		6,137,660		6,158,082
Less: accumulated depreciation		(1,396,766)		(1,335,000)
Real estate, net		4,740,894		4,823,082
Cash and cash equivalents		156,639		241,098
Restricted cash		46,205		32,975
Tenant and other receivables		44,863		56,304
Deferred rent receivable		165,797		170,824
Investments in unconsolidated real estate ventures		309,219		299,881
Intangible assets, net		144,308		162,246
Other assets, net		175,677		117,028
TOTAL ASSETS	$	5,783,602	$	5,903,438

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgage loans, net	$	1,689,207	$	1,890,174
Revolving credit facility		62,000		—
Term loans, net		716,757		547,072
Accounts payable and accrued expenses		129,325		138,060
Other liabilities, net		139,445		132,710
Total liabilities		2,736,734		2,708,016
Commitments and contingencies
Redeemable noncontrolling interests		455,886		481,310
Shareholders' equity:
Preferred shares, $0.01 par value - 200,000 shares authorized; none issued		—		—
Common shares, $0.01 par value - 500,000 shares authorized; 105,139 and 114,013 shares issued and outstanding as of June 30, 2023 and December 31, 2022		1,052		1,141
Additional paid-in capital		3,156,511		3,263,738
Accumulated deficit		(641,813)		(628,636)
Accumulated other comprehensive income		43,491		45,644
Total shareholders' equity of JBG SMITH Properties		2,559,241		2,681,887
Noncontrolling interests		31,741		32,225
Total equity		2,590,982		2,714,112
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	5,783,602	$	5,903,438

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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
REVENUE
Property rental	$	120,592	$	117,036	$	244,625	$	248,634
Third-party real estate services, including reimbursements		22,862		22,157		45,646		46,127
Other revenue		8,641		6,312		14,786		12,709
Total revenue		152,095		145,505		305,057		307,470
EXPENSES
Depreciation and amortization		49,218		49,479		102,649		107,541
Property operating		35,912		35,445		71,524		76,089
Real estate taxes		14,424		14,946		29,648		33,132
General and administrative:
Corporate and other		15,093		14,782		31,216		30,597
Third-party real estate services		22,105		24,143		45,928		51,192
Share-based compensation related to Formation Transaction and special equity awards		—		1,577		351		3,821
Transaction and other costs		3,492		1,987		5,964		2,886
Total expenses		140,244		142,359		287,280		305,258
OTHER INCOME (EXPENSE)
Income (loss) from unconsolidated real estate ventures, net		510		(2,107)		943		1,038
Interest and other income, net		2,281		1,672		6,358		15,918
Interest expense		(25,835)		(16,041)		(52,677)		(32,319)
Gain on the sale of real estate, net		—		158,767		40,700		158,631
Loss on the extinguishment of debt		(450)		(1,038)		(450)		(1,629)
Total other income (expense)		(23,494)		141,253		(5,126)		141,639
INCOME (LOSS) BEFORE INCOME TAX EXPENSE		(11,643)		144,399		12,651		143,851
Income tax expense		(611)		(2,905)		(595)		(2,434)
NET INCOME (LOSS)		(12,254)		141,494		12,056		141,417
Net (income) loss attributable to redeemable noncontrolling interests		1,398		(18,248)		(1,965)		(18,258)
Net loss attributable to noncontrolling interests		311		29		535		84
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(10,545)	$	123,275	$	10,626	$	123,243
EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED	$	(0.10)	$	1.02	$	0.09	$	0.99
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED		109,695		121,316		111,862		123,984

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

(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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
NET INCOME (LOSS)	$	(12,254)	$	141,494	$	12,056	$	141,417
OTHER COMPREHENSIVE INCOME (LOSS):
Change in fair value of derivative financial instruments		21,789		7,225		12,820		32,320
Reclassification of net (income) loss on derivative financial instruments from accumulated other comprehensive income into interest expense		(7,534)		2,791		(15,350)		6,547
Total other comprehensive income (loss)		14,255		10,016		(2,530)		38,867
COMPREHENSIVE INCOME		2,001		151,510		9,526		180,284
Net (income) loss attributable to redeemable noncontrolling interests		1,398		(18,248)		(1,965)		(18,258)
Net loss attributable to noncontrolling interests		311		29		535		84
Other comprehensive (income) loss attributable to redeemable noncontrolling interests		(1,781)		(1,311)		444		(4,277)
Other comprehensive income attributable to noncontrolling interests		(1,019)		—		(67)		—
COMPREHENSIVE INCOME ATTRIBUTABLE TO JBG SMITH PROPERTIES	$	910	$	131,980	$	8,473	$	157,833

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		Income		Interests		Equity
BALANCE AS OF MARCH 31, 2023	113,583	$	1,137	$	3,282,290	$	(607,465)	$	32,036	$	31,042	$	2,739,040
Net loss attributable to common shareholders and noncontrolling interests	—		—		—		(10,545)		—		(311)		(10,856)
Redemption of common limited partnership units ("OP Units") for common shares	821		8		11,718		—		—		—		11,726
Common shares repurchased	(9,321)		(93)		(135,654)		—		—		—		(135,747)
Common shares issued pursuant to employee incentive compensation plan and Employee Share Purchase Plan ("ESPP")	56		—		1,172		—		—		—		1,172
Dividends declared on common shares ($0.225 per common share)	—		—		—		(23,803)		—		—		(23,803)
Distributions to noncontrolling interests, net	—		—		—		—		—		(9)		(9)
Redeemable noncontrolling interests redemption value adjustment and total other comprehensive income allocation	—		—		(3,015)		—		(1,781)		—		(4,796)
Total other comprehensive income	—		—		—		—		14,255		—		14,255
Other comprehensive income attributable to noncontrolling interest	—		—		—		—		(1,019)		1,019		—
BALANCE AS OF JUNE 30, 2023	105,139	$	1,052	$	3,156,511	$	(641,813)	$	43,491	$	31,741	$	2,590,982
							��
BALANCE AS OF MARCH 31, 2022	124,248	$	1,243	$	3,444,793	$	(609,363)	$	9,935	$	28,438	$	2,875,046
Net income (loss) attributable to common shareholders and noncontrolling interests	—		—		—		123,275		—		(29)		123,246
Redemption of OP Units for common shares	72		1		1,761		—		—		—		1,762
Common shares repurchased	(8,499)		(84)		(213,807)		—		—		—		(213,891)
Common shares issued pursuant to employee incentive compensation plan and ESPP	41		—		1,143		—		—		—		1,143
Dividends declared on common shares ($0.225 per common share)	—		—		—		(27,658)		—		—		(27,658)
Contributions from noncontrolling interests, net	—		—		—		—		—		3,231		3,231
Redeemable noncontrolling interests redemption value adjustment and total other comprehensive income allocation	—		—		51,621		—		(1,311)		—		50,310
Total other comprehensive income	—		—		—		—		10,016		—		10,016
BALANCE AS OF JUNE 30, 2022	115,862	$	1,160	$	3,285,511	$	(513,746)	$	18,640	$	31,640	$	2,823,205

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
								Other
				Additional				Comprehensive
	Common Shares			Paid-In		Accumulated		Income		Noncontrolling		Total
	Shares	Amount		Capital		Deficit		(Loss)		Interests		Equity
BALANCE AS OF DECEMBER 31, 2022	114,013	$	1,141	$	3,263,738	$	(628,636)	$	45,644	$	32,225	$	2,714,112
Net income (loss) attributable to common shareholders and noncontrolling interests	—		—		—		10,626		—		(535)		10,091
Redemption of OP Units for common shares	1,577		16		25,492		—		—		—		25,508
Common shares repurchased	(10,526)		(105)		(155,740)		—		—		—		(155,845)
Common shares issued pursuant to employee incentive compensation plan and ESPP	75		—		1,796		—		—		—		1,796
Dividends declared on common shares ($0.225 per common share)	—		—		—		(23,803)		—		—		(23,803)
Distributions to noncontrolling interests, net	—		—		—		—		—		(16)		(16)
Redeemable noncontrolling interests redemption value adjustment and total other comprehensive loss allocation	—		—		21,225		—		444		—		21,669
Other comprehensive loss	—		—		—		—		(2,530)		—		(2,530)
Other comprehensive income attributable to noncontrolling interest	—		—		—		—		(67)		67		—
BALANCE AS OF JUNE 30, 2023	105,139	$	1,052	$	3,156,511	$	(641,813)	$	43,491	$	31,741	$	2,590,982

BALANCE AS OF DECEMBER 31, 2021	127,378	$	1,275	$	3,539,916	$	(609,331)	$	(15,950)	$	22,507	$	2,938,417
Net income (loss) attributable to common shareholders and noncontrolling interests	—		—		—		123,243		—		(84)		123,159
Redemption of OP Units for common shares	280		3		7,773		—		—		—		7,776
Common shares repurchased	(11,840)		(118)		(306,921)		—		—		—		(307,039)
Common shares issued pursuant to employee incentive compensation plan and ESPP	44		—		1,429		—		—		—		1,429
Dividends declared on common shares ($0.225 per common share)	—		—		—		(27,658)		—		—		(27,658)
Contributions from noncontrolling interests, net	—		—		—		—		—		9,217		9,217
Redeemable noncontrolling interests redemption value adjustment and total other comprehensive income allocation	—		—		43,314		—		(4,277)		—		39,037
Other comprehensive income	—		—		—		—		38,867		—		38,867
BALANCE AS OF JUNE 30, 2022	115,862	$	1,160	$	3,285,511	$	(513,746)	$	18,640	$	31,640	$	2,823,205

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)


		Six Months Ended June 30,
		2023		2022
OPERATING ACTIVITIES:
Net income		$	12,056	$	141,417
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense			20,514		25,375
Depreciation and amortization expense, including amortization of deferred financing costs			105,105		109,697
Deferred rent			(15,256)		(7,237)
Income from unconsolidated real estate ventures, net			(943)		(1,038)
Amortization of market lease intangibles, net			(510)		(621)
Amortization of lease incentives			1,340		4,303
Loss on the extinguishment of debt			450		1,629
Gain on the sale of real estate, net			(40,700)		(158,631)
(Income) loss on operating lease and other receivables			(351)		738
Income from investments, net	��		(1,305)		(15,282)
Return on capital from unconsolidated real estate ventures			9,354		6,028
Other non-cash items			5,800		(4,781)
Changes in operating assets and liabilities:
Tenant and other receivables			12,138		(2,847)
Other assets, net			4,273		(3,669)
Accounts payable and accrued expenses			(19,172)		(1,375)
Other liabilities, net			(3,362)		13,943
Net cash provided by operating activities			89,431		107,649
INVESTING ACTIVITIES:
Development costs, construction in progress and real estate additions			(164,776)		(128,114)
Acquisition of real estate			(19,551)		—
Proceeds from the sale of real estate			68,998		923,108
Proceeds from the sale of investments			—		19,030
Distributions of capital from unconsolidated real estate ventures			—		52,465
Investments in unconsolidated real estate ventures and other investments			(20,171)		(81,185)
Net cash (used in) provided by investing activities			(135,500)		785,304
FINANCING ACTIVITIES:
Borrowings under mortgage loans			251,714		—
Borrowings under revolving credit facility			122,000		—
Borrowings under term loans			170,000		—
Repayments of mortgage loans			(278,469)		(167,132)
Repayments of revolving credit facility			(60,000)		(300,000)
Debt issuance and modification costs			(17,213)		(1,256)
Redemption of partner's noncontrolling interest			(647)		—
Proceeds from common shares issued pursuant to ESPP			665		800
Common shares repurchased			(155,845)		(297,040)
Dividends paid to common shareholders			(49,455)		(56,323)
Distributions to redeemable noncontrolling interests			(7,895)		(8,196)
Distributions to noncontrolling interests			(15)		(21)
Contributions from noncontrolling interests			—		9,238
Net cash used in financing activities			(25,160)		(819,930)
Net (decrease) increase in cash and cash equivalents, and restricted cash			(71,229)		73,023
Cash and cash equivalents, and restricted cash, beginning of period			274,073		302,095
Cash and cash equivalents, and restricted cash, end of period		$	202,844	$	375,118

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)


	Six Months Ended June 30,
	2023		2022
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD:
Cash and cash equivalents	$	156,639	$	162,270
Restricted cash		46,205		212,848
Cash and cash equivalents, and restricted cash	$	202,844	$	375,118

SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION:
Cash paid for interest (net of capitalized interest of $7,221 and $3,928 in 2023 and 2022)	$	44,379	$	34,612
Accrued capital expenditures included in accounts payable and accrued expenses		75,565		57,426
Write-off of fully depreciated assets		3,335		7,993
Conversion of OP Units to common shares		25,508		7,776
Recognition of operating lease right-of-use asset		61,443		—
Recognition of liabilities related to operating lease right-of-use asset		61,443		—
Cash paid for amounts included in the measurement of lease liabilities for operating leases		1,967		1,092

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")~~owns, operates, invests in and develops mixed-use properties in high growth and high barrier-to-entry submarkets in and around Washington, D.C. Through an intense focus on ~~October 27, 2016 (capitalized on November 22, 2016).~~placemaking, JBG SMITH ~~was formed~~cultivates vibrant, amenity-rich, walkable neighborhoods throughout the Washington, D.C. metropolitan area. Approximately two-thirds of our holdings are in the National Landing submarket in Northern Virginia, which is anchored by four key demand drivers: Amazon.com, Inc.'s ("Amazon") new headquarters; Virginia Tech's under-construction $1 billion Innovation Campus; the submarket’s proximity to the Pentagon; and our deployment of next-generation public and private 5G digital infrastructure. 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, 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 June 30, 2023, JBG SMITH, as its sole general partner, controlled JBG SMITH LP and owned 88.1% of its OP Units, after giving effect to the conversion of certain vested long-term incentive partnership units ("LTIP Units") that are convertible into OP Units. JBG SMITH is referred to herein as "we," "us," "our" or other similar terms. References to "our share" refer to our ownership percentage of consolidated and unconsolidated assets in real estate ventures, but exclude our: (i) 10.0% subordinated interest in one commercial building, (ii) 33.5% subordinated interest in four commercial buildings (the "Fortress Assets") and (iii) 49.0% interest in three commercial buildings (the "L'Enfant Plaza Assets"), as well as the associated non-recourse mortgage loans, held through unconsolidated real estate ventures; these interests and debt are excluded because our investment in each real estate venture is zero, we do not anticipate receiving any near-term cash flow distributions from the real estate ventures, and we have not guaranteed their obligations or otherwise committed to providing financial support.

We were organized for the purpose of receiving, via the spin-off on July 17, 2017 (the "Separation"), substantially all of the assets and liabilities of ~~Vornado’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~~June 30, 2023, our Operating Portfolio consisted 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, our portfolio comprised: (i) 69~~51 operating assets comprising ~~51 office~~31 commercial assets totaling ~~over 13.7~~9.7 million square feet ~~(11.8~~(8.2 million square feet at our share), 1418 multifamily assets totaling ~~6,016~~6,756 units ~~(4,232~~(6,756 units at our share) and ~~four other~~two wholly owned land assets totaling approximately 765,000 square feet (348,000 square feet at our share); (ii) nine assets under construction comprising four office assets totaling approximately 1.3 million square feet (1.2 million square feet at our share), fourfor which we are the ground lessor. Additionally, we have two under-construction multifamily assets ~~totaling 1,334~~with 1,583 units ~~(1,149~~(1,583 units at our share) and ~~one other asset~~20 assets in the development pipeline 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 21.312.5 million square feet ~~(17.6~~(9.8 million square feet at our share) of estimated potential development density.

~~Our revenues are derived~~

We derive our revenue primarily from leases with ~~office~~multifamily and ~~multifamily~~commercial 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

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for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 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, 2022, 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.~~

February 21, 2023 ("Annual Report").

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 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 unaudited 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~~June 30, 2023 and December 31, 2022, and for ~~any periods on or prior~~the three and six months ended June 30, 2023 and 2022. 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~~June 30, 2023 and December 31, 2022. 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~~six months ended ~~September~~June 30, ~~2017 include our consolidated accounts~~2023 and the combined accounts of the Vornado Included Assets. Accordingly, the results of operations for the three and nine months ended September 30, 2017 reflect the aggregate operations 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.

2022. References to ~~the financial~~our statements of comprehensive income 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 estimated to be applicable to the Vornado Included Assets based on an analysis of key metrics, including total revenues. Such costs do not necessarily reflect what the actual costs would have been if JBG SMITH had been operating as a separate standalone public company. These charges are discussed further in Note 17.

~~Recasting of 2016 Financial Information~~

The historical financial information of the Vornado Included Assets was recast to exclude Vornado's interest 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 in the line item "Investments in and advances to unconsolidated real estate ventures" on our balance sheet to include only real estate investments.

Reclassification of $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” 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 ofcomprehensive income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016, respectively,~~2023 and 2022.

Income Taxes

We have elected to ~~“Third-party~~be taxed as a real estate ~~services, including reimbursements”~~investment trust ("REIT") under sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code"). Under those sections, a REIT which distributes at least 90% of its REIT taxable income as dividends to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. We currently adhere and intend to continue to adhere to these requirements and to maintain our REIT status in future periods. We also participate in the 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 local taxes on the income from ~~“Other income” as it relates to revenue earned from our third-party business.~~

those 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.

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 the 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.~~periods. Actual results could differ from those estimates.

~~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 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 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.

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 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.

~~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 attributable to the redevelopment, including interest expense, are capitalized to the extent that we believe such costs are recoverable through the value of the property. The capitalization period begins when redevelopment activities are underway 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, except for 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 based on the excess of the property’s carrying amount over its estimated fair value. If our estimates of future cash flows, anticipated holding periods, or fair values change, based on market conditions or otherwise, our evaluation of impairment charges may be different and such differences could be material to our financial statements. Estimates of future cash flows are subjective and are based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results.

~~Real Estate 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.~~

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 ("~~ASC"~~ASU") 2020-04, Reference Rate Reform ("Topic 848"), ~~we make a determination as to the point~~which was amended in ~~time~~December 2022 by ASU 2022-06, Reference Rate Reform (Topic 848). Topic 848 contains practical expedients for reference rate reform related activities that itimpact debt, leases, derivatives and other contracts. The guidance in Topic 848 is ~~probable that a sale will~~optional and may be consummated. Given the nature of all real estate sales contracts, it is not unusual for such contracts to allow potential buyers a period of time to evaluate the property prior to formal acceptance of the contract. In addition, certain other matters critical to the final sale, such as financing arrangements, often remain pending even upon contract acceptance. As 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 forth in the Property, Plant and Equipment Topic of the FASB ASC.

~~We do not have any real estate classified as held for sale as of September 30, 2017 and~~elected through December 31, ~~2016.~~

~~Cash~~2024 as reference rate reform activities occur. We elected to apply the hedge accounting expedients that allow us to (i) continue to amortize previously deferred gains 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~~losses in accumulated other comprehensive income related 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, property insurance and capital improvements.

~~Allowance for Doubtful Accounts~~

We periodically evaluate the collectability of amounts due from tenants, including the receivable arising from deferred rent receivable, and maintain an allowance for doubtful accounts for the estimated losses resulting from the inability of tenants to make required payments under lease agreements. We exercise judgment in establishing these allowances and consider payment history and current credit status in developing these estimates.

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

We analyze our real estate ventures to determine whether the respective entities should be consolidated. If it is determined that these investments do not require consolidation because the entities are not VIEsterminated hedges into earnings in accordance with the ~~Consolidation Topic~~underlying hedged forecasted transactions, (ii) modify loan agreements to replace the reference rate without treating the change as a contract modification and (iii) modify the reference rate of the ~~FASB ASC, we are not~~hedging instruments without it being considered a change in critical terms requiring redesignation. We also elected to apply the ~~primary beneficiary~~hedge accounting expedients related to (i) the assertion that 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 the

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index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the past presentation of our derivatives. We will continue to evaluate the impact of the ~~entities determined~~guidance and may apply other elections, as applicable.

3.Acquisition and Dispositions

Acquisition

During the six months ended June 30, 2023, we paid the deferred purchase price of $19.6 million related to ~~be VIEs, we do not have voting control, and/or~~ the ~~limited partners (or non-managing members) have substantive participatory rights, then~~acquisition of a development parcel, formerly the ~~selection~~Americana hotel, in 2020.

Dispositions

The following is a summary of activity for the six months ended June 30, 2023:

Gain (Loss)

Total

Gross

Cash

on the Sale

Square

Sales

Proceeds

of Real

Date Disposed

Assets

Segment

Location

Feet

Price

from Sale

Estate

(In thousands)

March 17, 2023

Development Parcel

Other

Arlington, Virginia

—

5,500

4,954

(53)

March 23, 2023

4747 Bethesda Avenue ⁽¹⁾

Commercial

Bethesda, Maryland

40,053

Other ⁽²⁾

700

40,700

(1)	We sold an 80.0% interest in the asset for a gross sales price of $196.0 million, representing a gross valuation of $245.0 million. See Note 4 for additional information.

(2)	Represents recognition of contingent consideration related to a prior period disposition.

4.Investments in Unconsolidated Real Estate Ventures

The following is a summary of the ~~accounting method used to account for~~composition of our investments in unconsolidated real estate ventures:


	Effective
	Ownership
Real Estate Venture	Interest ⁽¹⁾	June 30, 2023		December 31, 2022

		(In thousands)
Prudential Global Investment Management	50.0%	$	198,475	$	203,529
J.P. Morgan Global Alternatives ("J.P. Morgan") ⁽²⁾	50.0%		68,275		64,803
4747 Bethesda Venture ⁽³⁾	20.0%		13,577		—
Brandywine Realty Trust	30.0%		13,682		13,678
CBREI Venture	9.9% - 10.0%		12,380		12,516
Landmark Partners ⁽⁴⁾	18.0%		2,267		4,809
Other			563		546
Total investments in unconsolidated real estate ventures ⁽⁵⁾ ⁽⁶⁾		$	309,219	$	299,881

(1)	Reflects our effective ownership interests in the underlying real estate as of June 30, 2023. 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)	In March 2023, we sold an 80.0% interest in 4747 Bethesda Avenue for a gross sales price of $196.0 million, representing a gross valuation of $245.0 million. In connection with the transaction, the real estate venture assumed the related $175.0 million mortgage loan.

(4)	Excludes the L'Enfant Plaza Assets for which we have a zero investment balance and discontinued applying the equity method of accounting after September 30, 2022.

(5)

Excludes (i) 10.0% subordinated interest in one commercial building, (ii) the Fortress Assets and (iii) the L'Enfant Plaza Assets held through unconsolidated real estate ventures. For more information see Note 1. Also, excludes our interest in an investment in the real estate venture that owns 1101 17th Street for which we have discontinued applying the equity method of accounting since June

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30, 2018 because we received distributions in excess of our contributions and share of earnings, which reduced our investment to zero; further, we are not obligated to provide for losses, have not guaranteed its obligations or otherwise committed to provide financial support.

(6)

As of June 30, 2023 and December 31, 2022, our total investments in unconsolidated real estate ventures were greater than our share of the net book value of the underlying assets by $7.0 million and $8.9 million, resulting principally from capitalized interest and our zero investment balance in certain real estate ventures.

We provide leasing, property management and other real estate services to our unconsolidated real estate ventures. We recognized revenue, including expense reimbursements, of $5.6 million and $10.8 million for the three and six months ended June 30, 2023, and $6.6 million and $12.2 million for the three and six months ended June 30, 2022 for such services.

The following is ~~generally determined by~~a summary of the debt of our unconsolidated real estate ventures:


	Weighted
	Average Effective
	Interest Rate ⁽¹⁾	June 30, 2023		December 31, 2022

		(In thousands)
Variable rate ⁽²⁾	6.06%	$	358,271	$	184,099
Fixed rate ⁽³⁾	4.13%		60,000		60,000
Mortgage loans ⁽⁴⁾			418,271		244,099
Unamortized deferred financing costs and premium / discount, net			(10,082)		(411)
Mortgage loans, net ^{(4) (5)}		$	408,189	$	243,688

(1)	Weighted average effective interest rate as of June 30, 2023.

(2)	Includes variable rate mortgages with interest rate cap agreements.

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

(4)	Excludes mortgage loans related to the Fortress Assets and the L'Enfant Plaza Assets.

(5)	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:


	June 30, 2023		December 31, 2022

	(In thousands)
Combined balance sheet information: ⁽¹⁾
Real estate, net	$	1,070,477	$	888,379
Other assets, net		184,566		160,015
Total assets	$	1,255,043	$	1,048,394

Mortgage loans, net	$	408,189	$	243,688
Other liabilities, net		53,163		54,639
Total liabilities		461,352		298,327
Total equity		793,691		750,067
Total liabilities and equity	$	1,255,043	$	1,048,394

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	Three Months Ended June 30,					Six Months Ended June 30,
	2023		2022		X	2023		2022

	(In thousands)
Combined income statement information: ⁽¹⁾
Total revenue	$	24,952	$	41,379		$	44,985	$	84,253
Operating income ⁽²⁾		5,088		36,108			7,579		84,534
Net income (loss) ⁽²⁾		(2,214)		25,127			(3,934)		64,410

(1)

Excludes amounts related to the Fortress Assets. Excludes combined balance sheet information for both periods presented and combined income statement information for the three and six months ended June 30, 2023 related to the L'Enfant Plaza Assets as we discontinued applying the equity method of accounting after September 30, 2022.

(2)	Includes the gain on the sale of various assets totaling $32.3 million and $77.4 million during the three and six months ended June 30, 2022.

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 June 30, 2023 and December 31, 2022, we had interests in entities deemed to be VIEs. Although we may be responsible for managing the 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 June 30, 2023 and ~~operating decisions and~~December 31, 2022, the ~~extent~~net carrying amounts 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 were $84.3 million and $83.2 million, which were 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 was 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 88.1% 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 through JBG SMITH LP, its total assets and liabilities comprise substantially all our consolidated assets and liabilities.

As of ~~operations. We may also earn incremental promote distributions if certain financial return benchmarks are achieved upon ultimate disposition~~June 30, 2023 and December 31, 2022, excluding JBG SMITH LP, we consolidated two VIEs (1900 Crystal Drive and 2000/2001 South Bell Street) with total assets of $392.2 million and $265.5 million, and liabilities of $198.7 million and $116.3 million, primarily consisting of construction in process and mortgage loans. The assets of the ~~underlying properties. Management fees are recognized when earned, and promote fees are recognized when certain earnings events have occurred,~~VIEs can only be

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used to settle the obligations of the VIEs, and the ~~amount~~liabilities include third-party liabilities of the VIEs 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:


	June 30, 2023		December 31, 2022

	(In thousands)
Prepaid expenses	$	11,056	$	16,440
Derivative agreements, at fair value		53,569		61,622
Deferred financing costs, net		13,653		5,516
Deposits		401		483
Operating lease right-of-use assets ⁽¹⁾		61,908		1,383
Investments in funds ⁽²⁾		19,671		16,748
Other investments ⁽³⁾		3,589		3,524
Other		11,830		11,312
Total other assets, net	$	175,677	$	117,028

(1)	Includes our corporate office lease at 4747 Bethesda Avenue as of June 30, 2023.

(2)

Consists of investments in real estate-focused technology companies, which are recorded at their fair value based on their reported net asset value. During the three and six months ended June 30, 2023, unrealized (losses) gains related to these investments were ($338,000) and $1.7 million. During the three and six months ended June 30, 2022, unrealized gains related to these investments were $1.0 million and $1.2 million. During the three and six months ended June 30, 2023, realized losses related to these investments were $189,000 and $318,000. Unrealized (losses) gains and realized losses were included in "Interest and other income, net" in our statements of operations.

(3)	Primarily consists of equity investments that are carried at cost. During the three and six months ended June 30, 2022, realized gains related to these investments were $178,000 and $14.1 million, which were included in "Interest and other income, net" in our statements of operations.

7.Debt

Mortgage Loans

The following is a summary of mortgage loans:


	Weighted Average
	Effective
	Interest Rate ⁽¹⁾	June 30, 2023		December 31, 2022

		(In thousands)
Variable rate ⁽²⁾	5.43%	$	678,671	$	892,268
Fixed rate ⁽³⁾	4.45%		1,025,535		1,009,607
Mortgage loans			1,704,206		1,901,875
Unamortized deferred financing costs and premium / discount, net ⁽⁴⁾			(14,999)		(11,701)
Mortgage loans, net		$	1,689,207	$	1,890,174

(1)	Weighted average effective interest rate as of June 30, 2023.

(2)

Includes variable rate mortgage loans with interest rate cap agreements. For mortgage loans with interest rate caps, the weighted average interest rate cap strike was 2.42%, and the weighted average maturity date of the interest rate caps is August 2023. The interest rate cap strike is exclusive of the credit spreads associated with the mortgage loans. As of June 30, 2023, one-month LIBOR was 5.22% and one-month term Secured Overnight Financing Rate ("SOFR") was 5.14%.

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

(4)	As of June 30, 2023 and December 31, 2022, excludes $2.0 million and $2.2 million of net deferred financing costs related to unfunded mortgage loans that were included in "Other assets, net" in our balance sheets.

As of June 30, 2023 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, 2022, the net carrying value of real estate collateralizing our mortgage loans totaled $2.1 billion and $2.2 billion. Our mortgage loans contain covenants that limit our ability to incur additional indebtedness

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on these properties and, in certain circumstances, require lender approval of tenant leases and/or yield maintenance upon repayment prior to maturity. Certain mortgage loans are recourse to us. See Note 17 for additional information.

In January 2023, we entered into a $187.6 million loan facility, collateralized by The Wren and F1RST Residences. The loan has a seven-year term and a fixed interest rate of 5.13%. This loan is the ~~investment~~initial advance under a Fannie Mae multifamily credit facility which provides flexibility for collateral substitutions, future advances tied to performance, ability to mix fixed and floating rates, and staggered maturities. Proceeds from the loan were used, in part, to repay the $131.5 million mortgage loan collateralized by 2121 Crystal Drive, which had a fixed interest rate of 5.51%.

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

As of June 30, 2023 and December 31, 2022, we had various interest rate swap and cap agreements on certain mortgage loans with an aggregate notional value of $1.2 billion and $1.3 billion. See Note 15 for additional information.

Revolving Credit Facility and Term Loans

As of June 30, 2023, our unsecured revolving credit facility and term loans totaling $1.5 billion consisted of a $750.0 million revolving credit facility maturing in June 2027, a $200.0 million term loan ("Tranche A-1 Term Loan") maturing in January 2025, a $400.0 million term loan ("Tranche A-2 Term Loan") maturing in January 2028, which includes the $50.0 million remaining advance drawn in May 2023, and a $120.0 million term loan ("2023 Term Loan") maturing in June 2028.

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

In addition, on June 29, 2023, we entered into a $120.0 million term loan maturing in June 2028 with an interest rate of one-month term SOFR plus 1.25% to one-month term SOFR plus 1.80%, varying based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets. We also entered into an interest rate swap with a total notional value of $120.0 million, which fixes SOFR at an interest rate of 4.01% through the maturity date.

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

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


	Effective
	Interest Rate ⁽¹⁾	June 30, 2023		December 31, 2022

		(In thousands)
Revolving credit facility ^{(2) (3)}	6.49%	$	62,000	$	—

Tranche A-1 Term Loan ⁽⁴⁾	2.61%	$	200,000	$	200,000
Tranche A-2 Term Loan ⁽⁴⁾	3.54%		400,000		350,000
2023 Term Loan ⁽⁵⁾	5.26%		120,000		—
Term loans			720,000		550,000
Unamortized deferred financing costs, net			(3,243)		(2,928)
Term loans, net		$	716,757	$	547,072

(1)	Effective interest rate as of June 30, 2023. The interest rate for our revolving credit facility excludes a 0.15% facility fee.

(2)	As of June 30, 2023, daily SOFR was 5.09%. As of June 30, 2023 and December 31, 2022, letters of credit with an aggregate face amount of $467,000 were outstanding under our revolving credit facility.

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(3)	As of June 30, 2023 and December 31, 2022, excludes $11.7 million and $3.3 million of net deferred financing costs related to our revolving credit facility that were included in "Other assets, net" in our balance sheets.

(4)

As of June 30, 2023 and December 31, 2022, the outstanding balance was fixed by interest rate swap agreements. As of June 30, 2023, these interest rate swap agreements fix SOFR at a weighted average interest rate of 1.46% for the Tranche A-1 Term Loan and 2.29% for the Tranche A-2 Term Loan. Interest rate swaps for the Tranche A-1 Term Loan with a total notional value of $200.0 million mature in July 2024. Interest rate swaps for the Tranche A-2 Term Loan with a total notional value of $200.0 million mature in July 2024 and with a total notional value of $200.0 million mature in January 2028. We have two forward-starting interest rate swaps that will be effective July 2024 with a total notional value of $200.0 million, which will effectively fix SOFR for the Tranche A-2 Term Loan at a weighted average interest rate of 2.81% through the maturity date.

(5)	As of June 30, 2023, the outstanding balance was fixed by an interest rate swap agreement, which fixes SOFR at an interest rate of 4.01% through the maturity date.

8.Other Liabilities, Net

The following is a summary of other liabilities, net:


	June 30, 2023		December 31, 2022

	(In thousands)
Lease intangible liabilities, net	$	6,403	$	7,275
Lease assumption liabilities		1,228		2,647
Lease incentive liabilities		9,685		11,539
Liabilities related to operating lease right-of-use assets ⁽¹⁾		65,875		5,308
Prepaid rent		15,428		15,923
Security deposits		12,879		13,963
Environmental liabilities		17,990		17,990
Deferred tax liability, net		5,181		4,903
Dividends payable		—		29,621
Derivative agreements, at fair value		755		—
Deferred purchase price related to the acquisition of a development parcel		—		19,447
Other		4,021		4,094
Total other liabilities, net	$	139,445	$	132,710

(1)	Includes our corporate office lease at 4747 Bethesda Avenue as of June 30, 2023.

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. Vested LTIP Units are redeemable into OP Units. During the six months ended June 30, 2023 and 2022, unitholders redeemed 1.6 million and 280,451 OP Units, which we elected to redeem for an equivalent number of our common shares. As of June 30, 2023, outstanding OP Units and redeemable LTIP Units totaled 14.1 million, representing an 11.9% ownership interest in JBG SMITH LP. Our OP Units and certain vested 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" in our balance sheets. Redemption value per OP Unit is equivalent to the market value of one common share at the end of the period. In July 2023, unitholders redeemed 257,151 OP Units and LTIP Units, which we elected to redeem for an equivalent number of our common shares.

Consolidated Real Estate Venture

We were a partner in a consolidated real estate venture that owned a multifamily asset, The Wren, located in Washington, D.C. As of June 30, 2022, we held a 96.0% ownership interest in the real estate venture. In October 2022, one partner redeemed its 3.7% interest, and in February 2023, another partner redeemed its 0.3% interest, increasing our ownership interest to 100.0%.

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


	Three Months Ended June 30,
	2023						2022
			Consolidated						Consolidated
	JBG		Real Estate				JBG		Real Estate
	SMITH LP		Venture		Total		SMITH LP		Venture		Total

	(In thousands)
Balance, beginning of period	$	457,778	$	—	$	457,778	$	536,725	$	9,324	$	546,049
Redemptions		(11,726)		—		(11,726)		(1,762)		—		(1,762)
LTIP Units issued in lieu of cash compensation ⁽¹⁾		757		—		757		987		—		987
Net income (loss)		(1,398)		—		(1,398)		18,240		8		18,248
Other comprehensive income		1,781		—		1,781		1,311		—		1,311
Distributions		(3,927)		—		(3,927)		(4,110)		(79)		(4,189)
Share-based compensation expense		9,606		—		9,606		12,369		—		12,369
Adjustment to redemption value		3,015		—		3,015		(50,334)		(1,287)		(51,621)
Balance, end of period	$	455,886	$	—	$	455,886	$	513,426	$	7,966	$	521,392

	Six Months Ended June 30,
	2023						2022
			Consolidated						Consolidated
	JBG		Real Estate				JBG		Real Estate
	SMITH LP		Venture		Total		SMITH LP		Venture		Total

	(In thousands)
Balance, beginning of period	$	480,663	$	647	$	481,310	$	513,268	$	9,457	$	522,725
Redemptions		(25,508)		(647)		(26,155)		(7,776)		—		(7,776)
LTIP Units issued in lieu of cash compensation ⁽¹⁾		5,213		—		5,213		6,584		—		6,584
Net income		1,965		—		1,965		18,237		21		18,258
Other comprehensive income (loss)		(444)		—		(444)		4,277		—		4,277
Distributions		(3,927)		—		(3,927)		(4,110)		(148)		(4,258)
Share-based compensation expense		19,149		—		19,149		24,896		—		24,896
Adjustment to redemption value		(21,225)		—		(21,225)		(41,950)		(1,364)		(43,314)
Balance, end of period	$	455,886	$	—	$	455,886	$	513,426	$	7,966	$	521,392

(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 June 30,					Six Months Ended June 30,
	2023		2022		X	2023		2022

	(In thousands)
Fixed	$	108,124	$	105,498		$	221,195	$	226,135
Variable		12,468		11,538			23,430		22,499
Property rental revenue	$	120,592	$	117,036		$	244,625	$	248,634

11.Share-Based Payments

LTIP Units and Time-Based LTIP Units

During the six months ended June 30, 2023, we granted to certain employees 945,872 LTIP Units with time-based vesting requirements ("Time-Based LTIP Units") and a weighted average grant-date fair value of $17.65 per unit that primarily vest ratably over four years subject to continued employment. Compensation expense for these units is primarily being recognized over a four-year period.

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In February 2023, we granted 280,342 fully vested LTIP Units to certain employees, who elected to receive all or a portion of their cash bonuses related to 2022 service as LTIP Units. The LTIP units had a grant-date fair value of $15.90 per unit. Compensation expense totaling $4.5 million for these LTIP Units was recognized in 2022.

In May 2023, as part of their annual compensation, we granted to non-employee trustees a total of 155,523 fully vested LTIP Units with a grant-date fair value of $11.30 per unit, which includes LTIP Units elected in lieu of cash retainers. The LTIP Units may not be sold while a trustee is serving on ~~an other-than-temporary basis. Cash flow projections~~the Board of Trustees.

The aggregate grant-date fair value of the Time-Based LTIP Units and the LTIP Units granted during the six months ended June 30, 2023 was $22.9 million. The Time-Based LTIP Units and the LTIP Units were valued based on the closing common share price on the grant date, less a discount for post-grant restrictions. The discount was determined using Monte Carlo simulations based on the ~~investments consider property level factors such as expected future operating income, trends and prospects, as well as~~following significant assumptions:


Expected volatility		26.0% to 31.0%
Risk-free interest rate		3.4% to 4.9%
Post-grant restriction periods		2 to 6 years

Appreciation-Only LTIP Units ("AO LTIP Units")

In January 2023, we granted to certain employees 1.7 million performance-based AO LTIP Units with a grant-date fair value of $3.73 per unit. The AO LTIP Units are structured in the ~~effects~~form of ~~demand, competition and other factors. We consider various qualitative factors to determine if~~profits interests that provide for a ~~decrease~~share of appreciation determined by the increase in the value of ~~our investment is other-than-temporary. These factors include age~~a common share at the time of conversion over the participation threshold of $20.83. The AO LTIP Units are subject to a TSR modifier whereby the number of AO LTIP Units that will ultimately be earned will be increased or reduced by as much as 25%. The AO LTIP Units have a three-year performance period with 50% of the ~~venture, our intent and ability to retain our investment in~~AO LTIP Units earned vesting at the ~~entity, financial condition and long-term prospects~~end of the ~~entity~~three-year performance period and ~~relationships with our partners and banks. If we believe that~~ the ~~decline in~~remaining 50% vesting on the fourth anniversary of the grant date, subject to continued employment. The AO LTIP Units expire on the tenth anniversary of their grant date.

The aggregate grant-date fair value of the ~~investment is temporary, no impairment charge is recorded. If our analysis indicates that there is an other-than temporary impairment related~~AO LTIP Units granted during the six months ended June 30, 2023 was $6.4 million, valued using Monte Carlo simulations based on the following significant assumptions:


Expected volatility		30.0%
Dividend yield		3.2%
Risk-free interest rate		4.1%

LTIP Units with Performance-Based Vesting Requirements ("Performance-Based LTIP Units")

In January 2023, 470,773 Performance-Based LTIP Units, which were unvested as of December 31, 2022, were forfeited because the performance measures were not met.

Restricted Share Units ("RSUs")

In January 2023, we granted to ~~the investment in~~certain non-executive employees 78,681 time-based RSUs ("Time-Based RSUs") with a ~~particular real estate venture, the carrying~~grant-date fair value of $18.94 per unit. Vesting requirements and compensation expense recognition for the ~~venture will be adjusted~~Time-Based RSUs are primarily consistent to ~~an amount that reflects~~those of the ~~estimated~~Time-Based LTIP Units granted in 2023.

The aggregate grant-date fair value of the ~~investment.~~RSUs granted during the six months ended June 30, 2023 was $1.5 million. The Time-Based RSUs were valued based on the closing common share price on the date of grant.

~~Intangible assets consist~~

Table of ~~in-place leases, below-market ground rent obligations, above-market real estate leases, lease origination costs and options~~Contents

ESPP

Pursuant 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 part~~ESPP, employees purchased 52,089 common shares for $665,000 during the six months ended June 30, 2023. The following is a summary of the ~~Combination. Intangible liabilities consist of above-market ground rent obligations and below-market real estate leases that are also recorded in connection with~~significant assumptions used to value the ~~acquisition of properties. Both intangible assets and liabilities are amortized and accreted~~ESPP common shares using the ~~straight-line method over their applicable remaining useful life. When~~Black-Scholes model:


Expected volatility		30.0%
Dividend yield		2.4%
Risk-free interest rate		4.7%
Expected life		6 months

Share-Based Compensation Expense

The following is a ~~lease or contract is terminated early, any remaining unamortized or unaccreted balances are charged to earnings. The useful lives~~summary of ~~intangible assets are evaluated each reporting period with any changes in estimated useful lives being accounted for over the revised remaining useful life.~~share-based compensation expense:


	Three Months Ended June 30,					Six Months Ended June 30,
	2023		2022		X	2023		2022

	(In thousands)
Time-Based LTIP Units	$	5,324	$	6,202		$	10,856	$	12,328
AO LTIP Units and Performance-Based LTIP Units		3,282		3,590			6,942		7,747
LTIP Units		1,000		1,000			1,000		1,000
Other equity awards ⁽¹⁾		1,262		1,399			2,798		2,826
Share-based compensation expense - other		10,868		12,191			21,596		23,901
Formation awards, OP Units and LTIP Units ⁽²⁾		—		1,017			108		1,974
Special Time-Based LTIP Units and Special Performance-Based LTIP Units ⁽³⁾		—		560			243		1,847
Share-based compensation related to Formation Transaction and special equity awards ⁽⁴⁾		—		1,577			351		3,821
Total share-based compensation expense		10,868		13,768			21,947		27,722
Less: amount capitalized		(782)		(1,297)			(1,433)		(2,347)
Share-based compensation expense	$	10,086	$	12,471		$	20,514	$	25,375

~~Deferred Costs~~

~~Deferred financing costs consist~~

(1)	Primarily comprising compensation expense for: (i) fully vested LTIP Units issued to certain employees in lieu of all or a portion of any cash bonuses earned, (ii) RSUs and (iii) shares issued under our ESPP.

(2)	Includes share-based compensation expense for formation awards, LTIP Units and OP Units issued in the Formation Transaction, which fully vested in July 2022.

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

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

As of ~~loan issuance costs directly~~June 30, 2023, we had $41.1 million of total unrecognized compensation expense related to ~~financing transactions that are deferred~~unvested share-based payment arrangements, which is expected to be recognized over a weighted average period of 2.9 years.

Table of Contents

12.Transaction and ~~amortized over~~Other Costs

The following is a summary of transaction and other costs:


	Three Months Ended June 30,					Six Months Ended June 30,
	2023		2022		X	2023		2022

	(In thousands)
Completed, potential and pursued transaction expenses ⁽¹⁾	$	227	$	854		$	274	$	1,586
Severance and other costs		1,799		727			3,247		872
Demolition costs		1,466		406			2,443		428
Transaction and other costs	$	3,492	$	1,987		$	5,964	$	2,886

(1)	Primarily consists of legal costs related to pursued transactions.

13.Interest Expense

The following is a summary of interest expense:


	Three Months Ended June 30,					Six Months Ended June 30,
	2023		2022		X	2023		2022

	(In thousands)
Interest expense before capitalized interest	$	27,805	$	18,857		$	55,713	$	37,299
Amortization of deferred financing costs		1,351		1,121			2,630		2,251
Interest expense related to finance lease right-of-use assets		—		247			—		2,091
Net (gain) loss on derivative financial instruments designated as ineffective hedges:
Net unrealized (gain) loss		2,944		(2,027)			5,641		(5,394)
Net realized loss		97		—			230		—
Capitalized interest		(6,362)		(2,157)			(11,537)		(3,928)
Interest expense	$	25,835	$	16,041		$	52,677	$	32,319

14.Shareholders' Equity and Earnings (Loss) Per Common Share

Common Shares Repurchased

Our Board of Trustees previously authorized the ~~term~~repurchase of up to $1.0 billion of our outstanding common shares, and in May 2023, increased the common share repurchase authorization to $1.5 billion. During the three and six months ended June 30, 2023, we repurchased and retired 9.3 million and 10.5 million common shares for $135.7 million and $155.8 million, a weighted average purchase price per share of $14.54 and $14.79. During the three and six months ended June 30, 2022, we repurchased and retired 8.5 million and 11.8 million common shares for $213.9 million and $307.0 million, a weighted average purchase price per share of $25.15 and $25.91. Since we began the share repurchase program through June 30, 2023, we have repurchased and retired 33.8 million common shares for $779.3 million, a weighted average purchase price per share of $23.02.

During the third quarter of 2023, through the date of this filing, we repurchased and retired 2.0 million common shares for $31.5 million, a weighted average purchase price per share of $16.03, pursuant to a repurchase plan under Rule 10b5-1 of the ~~related loan~~Securities Exchange Act of 1934, as amended.

Table of Contents

Earnings (Loss) Per Common Share

The following is a ~~component~~summary of ~~interest expense. Unamortized deferred financing costs related~~the calculation of basic and diluted earnings (loss) per common share and a reconciliation of net income (loss) 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~~net income (loss) available to ~~our revolving credit facility are included~~common shareholders used in ~~other assets.~~

~~Direct salaries, third-party fees~~calculating basic 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 termdiluted earnings (loss) per common share:


	Three Months Ended June 30,					Six Months Ended June 30,
	2023		2022		X	2023		2022

	(In thousands, except per share amounts)
Net income (loss)	$	(12,254)	$	141,494		$	12,056	$	141,417
Net (income) loss attributable to redeemable noncontrolling interests		1,398		(18,248)			(1,965)		(18,258)
Net loss attributable to noncontrolling interests		311		29			535		84
Net income (loss) attributable to common shareholders		(10,545)		123,275			10,626		123,243
Distributions to participating securities		(717)		(12)			(717)		(12)
Net income (loss) available to common shareholders - basic and diluted	$	(11,262)	$	123,263		$	9,909	$	123,231

Weighted average number of common shares outstanding - basic and diluted		109,695		121,316			111,862		123,984

Earnings (loss) per common share - basic and diluted	$	(0.10)	$	1.02		$	0.09	$	0.99

The effect of the ~~related leases.~~

~~Noncontrolling Interests~~

~~Redeemable noncontrolling interests consists~~redemption of OP Units, ~~issued~~Time-Based LTIP Units, fully vested LTIP Units and Special Time-Based LTIP Units that were outstanding as of June 30, 2023 and 2022 is excluded in ~~conjunction with~~ the ~~Formation Transaction. The~~computation of diluted earnings (loss) per common share as the assumed exchange of such units for common shares on a one-for-one basis was antidilutive (the assumed redemption of these units would have no impact on the determination of diluted earnings (loss) per share). Since OP Units, Time-Based LTIP Units, LTIP Units and Special Time-Based LTIP Units, which are ~~redeemable for our common shares or cash beginning August 1, 2018, subject to certain limitations. Redeemable~~held by noncontrolling interests, are ~~generally redeemable~~attributed gains at an identical proportion to the ~~option~~common shareholders, the gains attributable and their equivalent weighted average 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 (loss) per common share. AO LTIP Units, Performance-Based LTIP Units, formation awards and RSUs, which totaled 5.2 million and 5.3 million for the ~~holder~~three and ~~are presented~~six months ended June 30, 2023, and 6.0 million and 5.9 million for the three and six months ended June 30, 2022, were excluded from the calculation of diluted earnings (loss) per common share as they were antidilutive, but potentially could be dilutive in the ~~mezzanine section between total liabilities and shareholders' equity~~future.

Dividends Declared in August 2023

On August 3, 2023, our Board of Trustees declared a quarterly dividend of $0.225 per common share, payable on ~~the balance sheets. The carrying amount~~August 31, 2023 to shareholders of ~~redeemable noncontrolling interests is adjusted to its redemption value at the end~~record as of ~~each reporting period, but no less than its initial carrying value, with such adjustments recognized in "Additional paid-in capital".~~

~~Noncontrolling interests in consolidated subsidiaries represents the portion of equity that we do not own in entities we consolidate, including interests in consolidated real estate ventures~~August 17, 2023.

15.Fair Value Measurements

Fair Value Measurements on a Recurring Basis

To manage or ~~VIEs in connection with property acquisitions. We identify~~hedge 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 financial instruments are used at times to manage~~ exposure to ~~variable~~ interest rate ~~risk. Derivative~~risk, we follow established risk management policies and procedures, including the use of a variety of derivative financial instruments.

As of June 30, 2023 and December 31, 2022, 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 gain on our derivative financial instruments designated as effective hedges was $50.2 million and ~~unrealized gains are~~$55.0 million as of June 30, 2023 and December 31, 2022 and was recorded in ~~"Interest and~~"Accumulated other ~~(loss) income, net"~~comprehensive income" in our balance sheets, of which a portion was allocated to "Redeemable noncontrolling interests." Within the ~~statements~~next 12 months, we expect to reclassify $34.9 million of ~~operations in~~ the ~~period in which the change occurs.~~net unrealized gain as a decrease 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)
June 30, 2023
Derivative financial instruments designated as effective hedges:
Classified as assets in "Other assets, net"	$	51,313		—	$	51,313		—
Classified as liabilities in "Other liabilities, net"		755		—		755		—
Derivative financial instruments designated as ineffective hedges:
Classified as assets in "Other assets, net"		2,256		—		2,256		—

December 31, 2022
Derivative financial instruments designated as effective hedges:
Classified as assets in "Other assets, net"	$	53,515		—	$	53,515		—
Derivative financial instruments designated as ineffective hedges:
Classified as assets in "Other assets, net"		8,107		—		8,107		—

The fair values of our derivative financial instruments were determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of the derivative financial instrument. This analysis reflected the contractual terms of the derivative, including the period to maturity, and used observable market-based inputs, including interest rate market data and implied volatilities in such interest rates. While it was determined that the majority of the inputs used to value the derivatives fall within Level 2 of the fair value hierarchy under authoritative accounting guidance, the credit valuation adjustments associated with the derivatives also utilized Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default. However, as of ~~September~~June 30, ~~2017:~~2023 and December 31, 2022, the significance of the impact of the credit valuation adjustments on the overall valuation of the derivative financial instruments was assessed, and it was determined that these adjustments were not significant to the overall valuation of the derivative financial instruments. As a result, it was determined that the derivative financial instruments in their entirety should be classified in Level 2 of the fair value hierarchy. The net unrealized gains and losses included in "Other comprehensive income (loss)" in our statements of comprehensive income for the three and six months ended June 30, 2023 and 2022 were attributable to the net change in unrealized gains or losses related to effective 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.

Table of Contents

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~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, 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:


	June 30, 2023				December 31, 2022
	Carrying				Carrying
	Amount ⁽¹⁾		Fair Value		Amount ⁽¹⁾		Fair Value

	(In thousands)
Financial liabilities:
Mortgage loans	$	1,704,206	$	1,651,156	$	1,901,875	$	1,830,651
Revolving credit facility		62,000		65,295		—		—
Term loans		720,000		723,019		550,000		551,369

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 mortgage loans, revolving credit facility and term loans were determined using Level 2 inputs of the fair value hierarchy. The fair value of our ~~mortgages payable~~mortgage loans is estimated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit ~~ratings, which are provided by a third-party specialist. The fair value of the mortgages payable and unsecured term loan was determined using Level 2 inputs of the fair value hierarchy.~~

profiles based on market sources. The fair value of our ~~unsecured~~revolving credit facility and 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 reportable segments ~~(office, multifamily,~~(multifamily, commercial, and third-party asset management and real estate services) based on the economic characteristics and nature of our assets and services. ~~In connection therewith, we have reclassified the prior period segment financial data to conform to the current period presentation.~~

The CODM measures and evaluates the performance of our operating segments, with the exception of the third-party asset management and real estate services business, based on the net operating income ~~(“NOI”~~("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 asset management and real estate services business:


	Three Months Ended June 30,					Six Months Ended June 30,
	2023		2022		X	2023		2022

	(In thousands)
Property management fees	$	5,017	$	4,976		$	9,969	$	9,784
Asset management fees		1,255		1,513			2,358		3,284
Development fees		2,756		2,148			4,742		5,687
Leasing fees		1,256		1,038			2,612		2,877
Construction management fees		303		37			643		187
Other service revenue		1,422		1,499			2,646		2,315
Third-party real estate services revenue, excluding reimbursements		12,009		11,211			22,970		24,134
Reimbursement revenue ⁽¹⁾		10,853		10,946			22,676		21,993
Third-party real estate services revenue, including reimbursements		22,862		22,157			45,646		46,127
Third-party real estate services expenses		22,105		24,143			45,928		51,192
Third-party real estate services revenue less expenses	$	757	$	(1,986)		$	(282)	$	(5,065)

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

Management company assets primarily consist of management and leasing contracts with a net book value of ~~$56.0~~$10.9 million ~~classified~~and $13.7 million as of June 30, 2023 and December 31, 2022, which were included in ~~"Other~~"Intangible 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:~~consolidated NOI:


	Three Months Ended June 30,					Six Months Ended June 30,
	2023		2022		X	2023		2022

	(in thousands)
Net income (loss) attributable to common shareholders	$	(10,545)	$	123,275		$	10,626	$	123,243
Add:
Depreciation and amortization expense		49,218		49,479			102,649		107,541
General and administrative expense:
Corporate and other		15,093		14,782			31,216		30,597
Third-party real estate services		22,105		24,143			45,928		51,192
Share-based compensation related to Formation Transaction and special equity awards		—		1,577			351		3,821
Transaction and other costs		3,492		1,987			5,964		2,886
Interest expense		25,835		16,041			52,677		32,319
Loss on the extinguishment of debt		450		1,038			450		1,629
Income tax expense		611		2,905			595		2,434
Net income (loss) attributable to redeemable noncontrolling interests		(1,398)		18,248			1,965		18,258
Net loss attributable to noncontrolling interests		(311)		(29)			(535)		(84)
Less:
Third-party real estate services, including reimbursements revenue		22,862		22,157			45,646		46,127
Other revenue		3,846		1,798			5,572		3,994
Income (loss) from unconsolidated real estate ventures, net		510		(2,107)			943		1,038
Interest and other income, net		2,281		1,672			6,358		15,918
Gain on the sale of real estate, net		—		158,767			40,700		158,631
Consolidated NOI	$	75,051	$	71,159		$	152,667	$	148,128

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~~

The following is a summary of NOI by ~~segment~~segment. Items classified in the Other column include development assets, corporate entities, land assets for which we are the ~~three~~ground lessor and ~~nine months ended September 30, 2017 and 2016:~~the elimination of inter-segment activity.


	Three Months Ended June 30, 2023
	Commercial		Multifamily		Other		Total

	(In thousands)
Property rental revenue	$	64,321	$	52,443	$	3,828	$	120,592
Parking revenue		4,426		295		74		4,795
Total property revenue		68,747		52,738		3,902		125,387
Property expense:
Property operating		18,252		18,394		(734)		35,912
Real estate taxes		8,195		5,648		581		14,424
Total property expense		26,447		24,042		(153)		50,336
Consolidated NOI	$	42,300	$	28,696	$	4,055	$	75,051

	Three Months Ended June 30, 2022
	Commercial		Multifamily		Other		Total

	(In thousands)
Property rental revenue	$	71,903	$	42,939	$	2,194	$	117,036
Parking revenue		4,187		250		77		4,514
Total property revenue		76,090		43,189		2,271		121,550
Property expense:
Property operating		19,624		14,870		951		35,445
Real estate taxes		9,018		5,054		874		14,946
Total property expense		28,642		19,924		1,825		50,391
Consolidated NOI	$	47,448	$	23,265	$	446	$	71,159


	Six Months Ended June 30, 2023
	Commercial		Multifamily		Other		Total

	(In thousands)
Property rental revenue	$	136,238	$	102,353	$	6,034	$	244,625
Parking revenue		8,564		519		131		9,214
Total property revenue		144,802		102,872		6,165		253,839
Property expense:
Property operating		37,623		35,849		(1,948)		71,524
Real estate taxes		17,196		11,256		1,196		29,648
Total property expense		54,819		47,105		(752)		101,172
Consolidated NOI	$	89,983	$	55,767	$	6,917	$	152,667

	Six Months Ended June 30, 2022
	Commercial		Multifamily		Other		Total

	(In thousands)
Property rental revenue	$	159,524	$	85,047	$	4,063	$	248,634
Parking revenue		8,199		384		132		8,715
Total property revenue		167,723		85,431		4,195		257,349
Property expense:
Property operating		45,826		28,625		1,638		76,089
Real estate taxes		20,795		10,275		2,062		33,132
Total property expense		66,621		38,900		3,700		109,221
Consolidated NOI	$	101,102	$	46,531	$	495	$	148,128

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

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

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

~~16.~~ segment:


	Commercial		Multifamily		Other		Total

	(In thousands)
June 30, 2023
Real estate, at cost	$	2,585,492	$	3,126,375	$	425,793	$	6,137,660
Investments in unconsolidated real estate ventures		224,620		—		84,599		309,219
Total assets		2,787,056		2,508,503		488,043		5,783,602

December 31, 2022
Real estate, at cost	$	2,754,832	$	2,986,907	$	416,343	$	6,158,082
Investments in unconsolidated real estate ventures		218,723		304		80,854		299,881
Total assets		2,829,576		2,483,902		589,960		5,903,438

17.Commitments and Contingencies

Construction Commitments

As of ~~September~~June 30, ~~2017,~~2023, 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 $284.7 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~~sales and ~~sales,~~recapitalizations, and available cash.

Environmental Matters

~~Each~~

Most of our ~~properties has~~assets have been ~~subjected~~subject 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 $18.0 million as of June 30, 2023 and December 31, 2022 and are included in "Other liabilities, net" in our balance sheets.

Table of Contents

Other

As of June 30, 2023, we had committed tenant-related obligations totaling $53.1 million ($51.4 million related to our consolidated entities and $1.7 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 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~~June 30, ~~2017,~~2023, we had additional capital commitments and certain recorded guarantees to our unconsolidated real estate ventures and other investments totaling $62.0 million. As of June 30, 2023, we had no debt principal payment guarantees 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 June 30, 2023, the aggregate amount of ~~our~~debt principal payment guarantees was ~~approximately $89.0~~$8.3 million for our consolidated ~~entities and $63.8 million for 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.

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~~

~~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 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.~~

entities.

In connection with the Formation Transaction, we ~~entered into~~have an agreement with Vornado ~~under which~~regarding tax matters (the "Tax Matters Agreement") that provides special rules that allocate tax liabilities if the distribution of JBG SMITH shares by Vornado, ~~provides operational support for an initial period of up~~together with certain related transactions, is determined not to ~~two years. These services include information technology, financial reporting~~be tax-free. Under the Tax Matters Agreement, we may be required to indemnify Vornado against any taxes and ~~payroll services. The charges for these services are based on an hourly or per transaction fee arrangement including reimbursement for overhead~~related amounts 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 partcosts resulting from a violation by us of the ~~Separation. The total revenue related to these services for both the three months~~Tax Matters Agreement.

18.Transactions with Related Parties

Our third-party asset management 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, 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 certain assets formerly owned by the JBG Legacy Funds as part of the ~~JBG Assets to us, it was determined that~~Formation Transaction, the general partner and managing member interests in the JBG Legacy Funds that were held by certain former JBG executives (and who became members of our management team and/or Board of Trustees) ~~would~~were not be transferred to us and remain under the control of these individuals. In addition, certain members of our senior management team and Board of Trustees have an ownership ~~interest~~interests in the JBG Legacy Funds, and own carried interests in each fund and in certain of our ~~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 June 30, 2023, the WHI Impact Pool had completed

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closings of capital commitments totaling $114.4 million, which included a commitment from us of $11.2 million. As of June 30, 2023, our remaining unfunded commitment was $4.3 million.

The third-party real estate services revenue, including expense reimbursements, from ~~these~~the JBG Legacy Funds and the WHI Impact Pool and its affiliates was $5.9 million and $10.8 million for ~~both~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2017 was $8.4 million.~~

~~Registration Rights Agreements~~

In2023, and $4.8 million and $10.3 million for the three and six months ended June 30, 2022. As of June 30, 2023 and December 31, 2022, we had receivables from the JBG Legacy Funds and the WHI Impact Pool and its affiliates totaling $3.8 million and $4.5 million for such services.

Commencing in March 2023, in connection with the ~~Formation Transaction,~~sale of an 80.0% interest in 4747 Bethesda Avenue, we ~~entered into a registration rights agreement with certain former investors in~~leased our corporate offices from an unconsolidated real estate venture and incurred $1.6 million and $1.8 million of rent expense for the ~~legacy JBG funds that received our common shares in the Formation Transaction (the "Shares Registration Rights Agreement")~~three 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 benefit from the Registration Rights Agreements are members of our management team and/or Board of Trustees.


~~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,six months ended June 30, 2023, which was ~~used~~included in ~~part to repay the existing $88.4 million loan.~~ "General and administrative expense" in our statements of operations.

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 $2.3 million and $4.6 million for the ~~ability to draw an additional $10.0~~three and six months ended June 30, 2023, and $2.0 million ~~based on~~and $5.1 million for the ~~asset’s performance.~~

~~On November 9, 2017,~~three and six months ended June 30, 2022, which was included in "Property operating expenses" in our ~~Board~~statements 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.~~

operations.


~~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~~Annual Report on Form ~~10, as amended,~~10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission ~~(the "SEC"~~on February 21, 2023 ("Annual Report") and ~~declared effective on June 26, 2017, as well as the section entitled "Risk Factors"~~"Management's Discussion and Analysis of ~~the final Information Statement filed with the SEC as Exhibit 99.1 on our Current~~Financial Condition and Results of Operations" in this Quarterly Report on Form ~~8-K filed on June 27, 2017.~~

10-Q and our Annual Report.

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

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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. 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, but exclude our: (i) 10.0% subordinated interest in one commercial building, (ii) 33.5% subordinated interest in four commercial buildings and (iii) 49.0% interest in three commercial buildings (the "L'Enfant Plaza Assets"), as well as the associated non-recourse mortgage loans, held through unconsolidated real estate ventures; these interests and debt are excluded because our investment in each real estate venture is zero, we do not anticipate receiving any near-term cash flow distributions from the real estate ventures, and we have not guaranteed their obligations or otherwise committed to providing financial support.

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. 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.

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~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016.~~2022. References to ~~the~~our balance sheets refer to our condensed consolidated ~~and combined~~ balance sheets as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016.~~2022. References to ~~the~~our statements of operations refer to our condensed consolidated ~~and combined~~ statements of operations for the three

and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016.~~2022. References to ~~the~~our statements of cash flows refer to our condensed consolidated ~~and combined~~ statements of cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016.~~

2022.

The accompanying ~~unaudited~~ financial statements and notes 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 the 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~~real estate investment trust ("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~~those 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, multifamily,~~(multifamily, commercial, 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; this seasonality 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~~June 30, ~~2017,~~2023, our ~~portfolio comprised: (i) 69~~Operating Portfolio consisted of 51 operating assets comprising ~~51 office~~31 commercial assets totaling ~~over 13.7~~9.7 million square feet ~~(11.8~~(8.2 million square feet at our share), 1418 multifamily assets totaling ~~6,016~~6,756 units ~~(4,232~~(6,756 units at our share) and ~~four other~~two wholly owned land assets totaling approximately 765,000 square feet (348,000 square feet at our share); (ii) nine assets under construction comprising four office assets totaling approximately 1.3 million square feet (1.2 million square feet at our share), four for which we are the ground lessor. Additionally, we have two under-construction

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multifamily assets ~~totaling 1,334~~with 1,583 units ~~(1,149~~(1,583 units at our share) and ~~one other asset~~20 assets in the development pipeline 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 21.312.5 million square feet ~~(17.6~~(9.8 million square feet at our share) of estimated potential development density.

~~Key highlights~~

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

During the second quarter of 2023, we completed the construction of two new office buildings for Amazon on Metropolitan Park in National Landing, totaling 2.1 million square feet, inclusive of approximately 50,000 square feet of street-level retail with new shops and restaurants, and Amazon took occupancy of its new headquarters in June 2023. We are the developer, property manager and retail leasing agent for Amazon's new headquarters at National Landing. We currently have leases with Amazon totaling 1.0 million square feet across six office buildings in National Landing.

Outlook

A fundamental component of our strategy to maximize long-term net asset value ("NAV") per share is active capital allocation. We evaluate development, acquisition, disposition, share repurchases and other investment decisions based on how they may impact long-term NAV per share. We intend to continue to opportunistically sell or recapitalize assets as well as land sites where a ground lease or joint venture execution may represent the most attractive path to maximizing value. Successful execution of our capital allocation strategy enables us to source capital at NAV from the disposition of assets generating low cash yields and invest those proceeds in share repurchases, new acquisitions with higher cash yields and growth, as well as in development projects with significant yield spreads and profit potential. We view this strategy as a key tool to source capital. Consequently, at any given time, we expect to be in various stages of discussions and negotiations with potential buyers, real estate venture partners, ground lessors and other counterparties with respect to sales, joint ventures and/or ground leases for certain of our assets, including portfolios thereof. These discussions and negotiations may or may not lead to definitive documentation or closed transactions. We anticipate redeploying the proceeds from these sales will not only help fund our planned growth, but will also further advance the strategic shift of our portfolio to majority multifamily. Curbed lending activity, however, has significantly slowed down the pace of asset sales and we expect this reduced activity to continue for the rest of 2023. In the meantime, we continue to advance our two under-construction multifamily assets in National Landing, 1900 Crystal Drive and 2000/2001 South Bell Street, totaling 1,583 units.

Our office portfolio occupancy as of June 30, 2023 decreased by 120 basis points to 84.0% as compared to March 31, 2023. New leasing and lease renewals have been slow and will likely continue to lag due to decision-making related to future office utilization, resulting in higher concessions and an increase in vacancy. During the three months ended ~~September~~June 30, ~~2017~~2023, we executed 210,000 square feet of office leases, approximately 30% of which comprised leases in National Landing. We have 1.8 million square feet of office leases in National Landing expiring through 2024 or on a month-to-month status. Based on tenant discussions to date, we anticipate 1.2 million square feet will vacate, implying an approximately 33% retention rate. Over half of the anticipated vacates are leases with Amazon (678,000 square feet), 300,000 square feet of which expires in 2023, and 378,000 square feet in 2024. 444,000 square feet of the Amazon vacates represent the entirety

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of 1800 South Bell Street and 2100 Crystal Drive, two assets that we plan to take off-line and entitle for an alternate use. Our ability to renew or re-lease this space will impact our future occupancy.

Our multifamily portfolio occupancy as of June 30, 2023 increased by 80 basis points compared to March 31, 2023as higher leasing volume is typical for summer months. For second quarter lease expirations, we increased gross rents by 7.5% upon renewal while achieving a 49.3% renewal rate across our portfolio.

Operating Results

Key highlights for the three and six months ended June 30, 2023 included:

●

▪

a net loss attributable to common shareholders of ~~$69.8~~$10.5 million, or ~~$0.61~~$0.10 per diluted common share, for the three months ended ~~September~~June 30, ~~2017 as~~2023 compared to net income attributable to common shareholders of ~~$21.0~~$123.3 million, or ~~$0.21~~$1.02 per diluted common share, for the three months ended ~~September~~June 30, ~~2016. The net~~2022. Net income attributable to common shareholders of $10.6 million, or $0.09 per diluted common share, for the six months ended June 30, 2023 compared to $123.2 million, or $0.99 per diluted common share, for the six months ended June 30, 2022;

~~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 $22.9 million and $45.6 million for the three and six months ended June 30, 2023, as compared to $22.2 million and $46.1 million for the three and six months ended June 30, 2022;

▪●	~~an increase in~~ operating ~~office~~commercial portfolio leased and occupied percentages ~~to 88.2% leased~~at our share of 86.3% and ~~87.5% occupied as of September 30, 2017 from 87.5% and 86.2%~~84.0% as of June 30, ~~2017;~~


▪	~~an increase in operating multifamily portfolio occupancy~~2023 compared to ~~94.6%~~87.6% and 85.2% as of ~~September 30, 2017 from 93.9%~~March 31, 2023, and 87.3% and 86.1% as of June 30, ~~2017. Multifamily~~2022;

●	operating multifamily portfolio leased ~~percentage decreased to 96.2% as~~and occupied percentages⁽¹⁾ at our share of ~~September 30, 2017 from~~ 96.8% and 93.7% as of June 30, ~~2017;~~2023 compared to 95.0% and 92.9% as of March 31, 2023, and 95.7% and 92.3% as of June 30, 2022;

●

▪

the leasing of ~~approximately 289,000 square feet, or 206,000~~210,000 square feet at our share, ⁽¹⁾, at an initial rent⁽²⁾ of ~~$43.08~~$45.49 per square ~~foot;~~foot and

a GAAP-basis weighted average rent per square foot⁽³⁾ of $44.47 for the three months ended June 30, 2023, and the leasing of 323,000 square feet at our share, at an initial rent⁽²⁾ of $47.40 per square foot and a GAAP-basis weighted average rent per square foot⁽³⁾ of $46.78 for the six months ended June 30, 2023; and

●

▪

an increase in same store^(3) (4) ~~net operating income ("NOI")~~ NOI of ~~6.3%~~0.1% to ~~$70.3~~$78.3 million for the three months ended ~~September~~June 30, ~~2017 as~~2023 compared to ~~$66.1~~$78.2 million for the three months ended ~~September~~June 30, ~~2016.~~

2022, and a decrease in same store⁽⁴⁾ NOI of 0.7% to $153.5 million for the six months ended June 30, 2023 compared to $154.7 million for the six months ended June 30, 2022.

~~_________________~~

(1)
⁽¹⁾	~~Refers to our ownership percentage of consolidated~~2221 S. Clark Street - Residential and ~~unconsolidated assets in real estate ventures.~~900 W Street are excluded from leased and occupied percentages as they are operated as short-term rental properties.

(2)
⁽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.

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

⁽³⁾

(4)

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

Additionally, investing and financing activity during the ~~three~~six months ended ~~September~~June 30, ~~2017~~2023 included:

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●	the payment of dividends totaling $49.5 million and distributions to redeemable noncontrolling interests of $7.9 million;

●	the increase by our Board of Trustees of our common share repurchase authorization to $1.5 billion;

●	the repurchase and retirement of 10.5 million of our common shares for $155.8 million, a weighted average purchase price per share of $14.79; and

●	the investment of ~~$115.9~~$164.8 million in development, ~~costs,~~ construction in progress and real estate additions.

Activity subsequent to June 30, 2023 included:

●	the repurchase and retirement of 2.0 million common shares for $31.5 million, a weighted average purchase price per share of $16.03, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended; and

●	the declaration of a quarterly dividend of $0.225 per common share, payable on August 31, 2023 to shareholders of record as of August 17, 2023.

Critical Accounting ~~Policies and~~ Estimates

Our ~~Information Statement on Form 10, as amended, filed with the SEC on June 20, 2017~~Annual Report contains a description of our critical accounting ~~policies,~~estimates, including asset acquisitions, real estate, deferred costs, revenue recognition and income taxes. For 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~~revenue recognition. There have been no significant changes to our policies during 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 identified intangible assets are determined based on the following:~~

six months ended June 30, 2023.

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

Comparison of the Three Months Ended ~~September~~June 30, ~~2017~~2023 to ~~2016~~

2022

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~~June 30, ~~2017 as~~2023 compared to the same period in ~~2016:~~2022:


	Three Months Ended June 30,
	2023		2022		% Change

	(Dollars in thousands)
Property rental revenue	$	120,592	$	117,036	3.0	%
Third-party real estate services revenue, including reimbursements		22,862		22,157	3.2	%
Depreciation and amortization expense		49,218		49,479	(0.5)	%
Property operating expense		35,912		35,445	1.3	%
Real estate taxes expense		14,424		14,946	(3.5)	%
General and administrative expense:
Corporate and other		15,093		14,782	2.1	%
Third-party real estate services		22,105		24,143	(8.4)	%
Share-based compensation related to Formation Transaction and special equity awards		—		1,577	(100.0)	%
Income (loss) from unconsolidated real estate ventures, net		510		(2,107)	124.2	%
Interest expense		25,835		16,041	61.1	%
Gain on the sale of real estate, net		—		158,767	(100.0)	%

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
—
*

~~______________~~

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Property ~~rentals~~rental revenue increased by approximately ~~$13.2~~$3.6 million, or ~~12.8%~~3.0%, to ~~$116.5~~$120.6 million in ~~2017~~2023 from ~~$103.3~~$117.0 million in ~~2016.~~2022. The increase was primarily due to ~~revenues of $13.8~~a $9.5 million ~~associated with the~~increase in revenue from our multifamily assets, ~~acquired in the Combination,~~ partially offset by a ~~decrease of $0.6 million in revenues associated with existing assets. The $0.6~~$7.6 million decrease in ~~revenues associated with existing~~revenue from our commercial assets. The increase in revenue from our multifamily assets iswas primarily due to ~~1150 17~~th Sta $6.1 million increase related to the consolidation of Atlantic Plumbing and ~~1770 Crystal Drive being taken out of service, partially offset by an increase~~8001 Woodmont, and higher occupancies and rents across the portfolio. The decrease in ~~occupancy and associated rentals at The Bartlett which~~revenue from our commercial assets was ~~placed into service in the second quarter of 2016.~~

~~Tenant reimbursements 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~~a $5.9 million decrease related to ~~tenants and lower operating expenses, partially offset by an increase of $1.4 million associated with~~ the ~~assets acquired in the Combination.~~

Disposed Properties.

Third-party real estate services revenue, including reimbursements, increased by approximately ~~$16.8 million,~~$705,000, or ~~203.0%~~3.2%, to ~~$25.1~~$22.9 million in ~~2017~~2023 from ~~$8.3~~$22.2 million in ~~2016.~~2022. The increase was primarily due to a $608,000 increase in development fees related to the ~~real estate services business acquired in the Combination, partially offset by lower management fees and leasing commissions from existing arrangements with third-parties.~~

timing of development projects.

Depreciation and amortization expense decreased by approximately $261,000, or 0.5%, to $49.2 million in 2023 from $49.5 million in 2022. The decrease was primarily due to a $2.3 million decrease related to the Disposed Properties and a $1.4 million decrease due to the amortization of the acquired in-place lease intangible at The Batley in 2022. The decrease in depreciation and amortization expense was partially offset by a $2.9 million increase related to the consolidation of Atlantic Plumbing and 8001 Woodmont.

Property operating expense increased by approximately ~~$12.6 million,~~$467,000, or ~~40.1%~~1.3%, to ~~$44.0~~$35.9 million in ~~2017~~2023 from ~~$31.4~~$35.4 million in ~~2016.~~2022. The increase was primarily due to ~~depreciation~~a $2.6 million increase related to the consolidation of Atlantic Plumbing and ~~amortization expense associated with the assets acquired~~8001 Woodmont, and a $879,000 increase in ~~the Combination.~~

~~Property~~property operating expenses across our multifamily portfolio, primarily related to higher compensation expenses, cleaning expenses and rising costs. The increase in property operating expense ~~increased~~was partially offset by a $1.7 million decrease related to the Disposed Properties and an $855,000 decrease in insurance claims covered by our captive insurance subsidiary.

Real estate tax expense decreased by approximately ~~$2.3 million,~~$522,000, or ~~8.6%~~3.5%, to ~~$29.6~~$14.4 million in ~~2017~~2023 from ~~$27.3~~$14.9 million in ~~2016.~~2022. The ~~increase~~decrease was primarily due to ~~property operating expenses of $4.2 million associated with~~a $920,000 decrease related to the ~~assets acquired in the Combination,~~Disposed Properties, partially offset by a ~~decrease~~$728,000 increase related to the consolidation of ~~$1.9 million associated with existing assets due primarily to lower tenant services expense~~Atlantic Plumbing and ~~lower utilities.~~

Real estate tax expense increased by approximately $2.7 million, or 18.9%, to $17.2 million in 2017 from $14.5 million in 2016. The increase was primarily due to real estate tax expense of $2.1 million associated with the assets acquired in the Combination, an increase in the tax assessments and lower capitalized real estate taxes.

8001 Woodmont.

General and administrative expense: corporate and other ~~decreased~~increased by approximately ~~$300,000,~~$311,000, or ~~2.9%~~2.1%, to ~~$10.6~~$15.1 million in ~~2017~~2023 from ~~$10.9~~$14.8 million in ~~2016.~~2022. The ~~decrease~~increase was primarily due to ~~lower marketing and general office expenses,~~a decrease in capitalized payroll, partially offset by ~~an increase in general operating expenses associated with the operations acquired in the Combination.~~

lower compensation expenses.

General and administrative expense: third-party real estate services ~~increased~~decreased by approximately ~~$16.4~~$2.0 million, or ~~343.1%~~8.4%, to ~~$21.2~~$22.1 million in ~~2017~~2023 from ~~$4.8~~$24.1 million in ~~2016~~2022. The decrease was primarily due to ~~the real estate services business acquired in the Combination.~~

lower compensation expenses.

General and administrative expense: share-based compensation related to Formation Transaction ~~of $14.4~~and special equity awards decreased by approximately $1.6 million, or 100.0%, to $0 in 2023 from $1.6 million in ~~2017 consists~~2022. 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.~~

~~Transaction and other costs of $104.1 million~~awards vested, as well as an increase 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.~~

recovery due to termination forfeitures.

Income (loss) from unconsolidated real estate ventures ~~decreased~~increased by approximately ~~$2.3~~$2.6 million, or 124.2%, to income of $510,000 in 2023 from a loss of ~~$1.7~~$2.1 million in ~~2017 from income of $584,000 in 2016. The decrease was primarily due to losses from interests in real estate ventures acquired in the Combination.~~

~~Interest expense increased by approximately $2.3 million, or 17.5%, to $15.3 million for 2017 from $13.0 million in 2016.~~2022. The increase was primarily due to a $2.1 million increase related to the consolidation of Atlantic Plumbing and 8001 Woodmont as these assets were not yet stabilized and incurring losses, and a $1.8 million loss on the extinguishment of ~~interest expense associated with the assets acquired in the Combination and lower capitalized interest~~debt related to a property that was sold in 2022. The ~~Bartlett which~~increase in income (loss) from unconsolidated real estate ventures was ~~placed into service during the second quarter of 2016,~~ partially offset by ~~lower~~a $936,000 gain at our share from the sale of various assets in 2022.

Interest expense increased by approximately $9.8 million, or 61.1%, to $25.8 million in 2023 from $16.0 million in 2022. The increase in interest expense ~~associated with mortgages that were repaid.~~

~~Loss on extinguishment of debt of $689,000~~was primarily due to (i) a $5.0 million decrease in ~~2017 relates to the prepayment of mortgages payable.~~

~~Net loss attributable~~

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collateralized by 2121 Crystal Drive and Falkland Chase – South & West repaid during 2023 and (iii) a $1.5 million decrease related to ~~redeemable noncontrolling interests~~the Disposed Properties.

Gain on the sale of ~~approximately $8.2~~real estate of $158.8 million in ~~2017 relates~~2022 was due to the ~~allocation~~sale of ~~net loss to~~ the ~~noncontrolling interest in JBG SMITH LP.~~

Disposed Properties.

Comparison of the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2023 to ~~2016~~

2022

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~~six months ended ~~September~~June 30, ~~2017 as~~2023 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.

2022:


		Six Months Ended June 30,
		2023		2022		% Change

	(Dollars in thousands)
Property rental revenue		$	244,625	$	248,634	(1.6)	%
Third-party real estate services revenue, including reimbursements			45,646		46,127	(1.0)	%
Depreciation and amortization expense			102,649		107,541	(4.5)	%
Property operating expense			71,524		76,089	(6.0)	%
Real estate taxes expense			29,648		33,132	(10.5)	%
General and administrative expense:
Corporate and other			31,216		30,597	2.0	%
Third-party real estate services			45,928		51,192	(10.3)	%
Share-based compensation related to Formation Transaction and special equity awards			351		3,821	(90.8)	%
Income from unconsolidated real estate ventures, net			943		1,038	(9.2)	%
Interest and other income, net			6,358		15,918	(60.1)	%
Interest expense			52,677		32,319	63.0	%
Gain on the sale of real estate, net			40,700		158,631	(74.3)	%

Property ~~rentals~~rental revenue ~~increased~~decreased by approximately ~~$17.4~~$4.0 million, or ~~5.8%~~1.6%, to ~~$316.9~~$244.6 million in ~~2017~~2023 from ~~$299.5~~$248.6 million in ~~2016.~~2022. The ~~increase~~decrease was primarily due to ~~revenues of $13.8~~a $23.3 million ~~associated with the~~decrease in revenue from our commercial assets, ~~acquired in the Combination and an increase of $3.6 million in revenues associated with existing assets. The $3.6~~partially offset by a $17.3 million increase in ~~revenues associated with existing~~revenue from our multifamily assets. The decrease in revenue from our commercial assets iswas primarily due to a $24.4 million decrease related to the Disposed Properties. The increase in revenue from our multifamily assets was primarily due to an $11.4 million increase ~~in occupancy~~related to the consolidation of Atlantic Plumbing and ~~associated rentals at The Bartlett multifamily project as the property was placed into service in the second quarter of 2016~~8001 Woodmont, and higher occupancies and rents ~~at 1215 S. Clark St, partially offset by a decrease in revenues at 1150 17~~th ~~St and 1770 Crystal Drive, which were taken out of service.~~

Tenant reimbursements revenue decreased by approximately $1.2 million, or 4.5%, to $27.2 million in 2017 from $28.4 million in 2016. Revenue associated with existing assets decreased by $2.6 million, primarily due to lower construction services provided to tenants and lower operating expenses, partially offset by an increase of $1.4 million associated withacross the ~~assets acquired in the Combination.~~

portfolio.

Third-party real estate services revenue, including reimbursements, ~~increased~~decreased by approximately ~~$14.3 million,~~$481,000, or ~~57.9%~~1.0%, to ~~$38.9~~$45.6 million in ~~2017~~2023 from ~~$24.6~~$46.1 million in ~~2016.~~2022. The ~~increase~~decrease was primarily due to a $945,000 decrease in development fees related to the timing of development projectsand a $926,000 decrease in asset management fees due to the sale of assets within the JBG Legacy Funds. The decrease in third-party real estate services ~~business acquired in the Combination,~~revenue was partially offset by ~~lower~~a $683,000 increase in reimbursement revenue, a $456,000 increase in construction management fees and ~~leasing commissions from existing arrangements with third-parties.~~

a $331,000 increase in other service revenue.

Depreciation and amortization expense ~~increased~~decreased by approximately ~~$11.4~~$4.9 million, or ~~11.6%~~4.5%, to ~~$109.7 million for 2017 from $98.3~~$102.6 million in ~~2016.~~2023 from $107.5 million in 2022. The ~~increase~~decrease was primarily due to a $9.6 million decrease related to the Disposed Properties and a $4.3 million decrease due to the amortization of the acquired in-place lease intangible at The Batley in 2022. The decrease in depreciation and amortization expense ~~associated with~~was partially offset by a $9.1 million increase related to the ~~assets acquired in the Combination.~~

consolidation of Atlantic Plumbing and 8001 Woodmont.

Property operating expense ~~increased~~decreased by approximately ~~$2.2~~$4.6 million, or ~~3.0%~~6.0%, to ~~$77.3~~$71.5 million in ~~2017 and~~2023 from ~~$75.1~~$76.1 million in ~~2016.~~2022. The ~~increase~~decrease was primarily due to (i) an $8.4 million decrease related to the Disposed Properties, (ii) a $1.2 million decrease in costs incurred related to digital infrastructure initiatives in National Landing and (iii) a $933,000 decrease in insurance claims covered by our captive insurance subsidiary. The decrease in property operating ~~expenses of $4.2 million associated with the assets acquired in the Combination,~~expense was partially offset by a ~~decrease~~$5.3 million increase related to the consolidation of ~~$2.0~~Atlantic Plumbing and 8001 Woodmont, and a $1.9 million ~~associated with existing assets due~~increase in property operating expenses across our multifamily portfolio, primarily related to ~~lower tenant services expense~~higher compensation expenses, cleaning expenses and ~~lower utilities.~~rising costs.

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Real estate tax expense ~~increased~~decreased by approximately ~~$4.3~~$3.5 million, or ~~9.8%~~10.5%, to ~~$48.0~~$29.6 million in ~~2017~~2023 from ~~$43.7~~$33.1 million in ~~2016.~~2022. The ~~increase~~decrease was primarily due to ~~real estate tax expense~~a $4.2 million decrease related to the Disposed Properties, partially offset by a $1.5 million increase related to the consolidation of ~~$2.1 million associated with the assets acquired in the Combination, an increase in the tax assessments~~Atlantic Plumbing and ~~lower capitalized real estate taxes.~~

8001 Woodmont.

General and administrative expense: corporate and other ~~decreased~~increased by approximately ~~$500,000,~~$619,000, or ~~1.4%~~2.0%, to ~~$35.5 million for 2017 from $36.0~~$31.2 million in ~~2016.~~2023 from $30.6 million in 2022. The ~~decrease~~increase was primarily due to ~~lower marketing and general office expenses,~~a decrease in capitalized payroll, partially offset by ~~an increase in general operating expenses associated with the operations acquired in the Combination.~~

lower compensation expenses.

General and administrative expense: third-party real estate services ~~increased~~decreased by approximately ~~$16.1~~$5.3 million, or ~~112.7%~~10.3%, to ~~$30.4~~$45.9 million in ~~2017~~2023 from ~~$14.3~~$51.2 million in ~~2016~~2022. The decrease was primarily due to ~~the real estate services business acquired in the Combination.~~

lower compensation expenses.

General and administrative expense: share-based compensation related to Formation Transaction ~~of $14.4~~and special equity awards decreased by approximately $3.5 million, or 90.8%, to $351,000 in 2023 from $3.8 million in ~~2017 consists~~2022. 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.~~

~~Transaction and other costs of $115.2 million~~awards vested, as well as an increase 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.~~

~~Loss~~recovery due to termination forfeitures.

Income from unconsolidated real estate ventures ~~increased~~decreased by approximately ~~$400,000~~$95,000, or 9.2%, to ~~$1.4 million~~$943,000 in ~~2017~~2023 from $1.0 million in ~~2016.~~2022. The ~~increase in the loss~~decrease was primarily due to ~~losses~~a $6.2 million gain at our share from ~~interests~~the sale of various assets in 2022. The decrease in income from unconsolidated real estate ventures ~~acquired~~was partially offset by (i) a $3.9 million increase related to the consolidation of Atlantic Plumbing and 8001 Woodmont as these assets were not yet stabilized and incurring losses, (ii) a $1.8 million loss on the extinguishment of debt related to a property that was sold in 2022, and (iii) an $875,000 increase related to our suspension of the ~~Combination,~~equity method of accounting for the L’Enfant Plaza Assets as it was incurring losses.

Interest and other income decreased by approximately $9.6 million, or 60.1%, to $6.4 million in 2023 from $15.9 million in 2022. The decrease was primarily due to a $14.4 million decrease in realized gains primarily from the sale of investments in equity securities in 2022, partially offset by a ~~reduction of~~$4.6 million increase in interest ~~expense of approximately $1.7 million~~income on our outstanding cash balances and a $458,000 increase in unrealized gains from ~~the refinancing of the Warner Building mortgage loan~~investments in ~~May 2016 at a lower interest rate and for a lower outstanding principal amount.~~

real estate-focused technology companies.

Interest expense increased by approximately ~~$5.1~~$20.4 million, or ~~13.3%~~63.0%, to ~~$43.8 million for 2017 from $38.7~~$52.7 million in ~~2016.~~2023 from $32.3 million in 2022. The increase in interest expense was primarily due to ~~$1.8~~(i) an $11.0 million ~~of interest expense associated with the assets acquired~~decrease in the Combination and lower capitalized interest related to The Bartlett which was placed into service during the second quarter of 2016, partially offset by lower interest expense associated with mortgages that were repaid.

~~Loss on extinguishment of debt of $689,000 in 2017 related to the prepayment of mortgages payable.~~

The gain on bargain purchase of approximately $27.8 million in 2017 represents the estimated fair value of the identifiable net assets acquired in excess of the purchase consideration in the Combination. The purchase consideration was based on the fair value of ~~the common shares and OP Units issued~~our ineffective interest rate caps due to a decline in the ~~Combination. See Note 3~~forward interest rate curve, (ii) an $8.0 million increase related to variable rate mortgage loans due to rising interest rates, (iii) a $6.6 million increase due to new mortgage loans, (iv) a $3.5 million increase related to additional draws on our term loans, (v) a $3.5 million increase related to construction draws for 1900 Crystal Drive and (vi) a $2.5 million increase related to the ~~financial statements for additional information.~~

~~Net loss attributable~~consolidation of 8001 Woodmont. The increase in interest expense was partially offset by (i) a $7.6 million increase in capitalized interest, (ii) a $3.4 million decrease related to ~~redeemable noncontrolling interests~~the Disposed Properties, (iii) a $3.2 million decrease related to mortgage loans collateralized by 2121 Crystal Drive and Falkland Chase – South & West repaid during 2023 and (iv) a $927,000 decrease related to a lower average outstanding balance on our revolving credit facility.

Gain on the sale of ~~approximately $2.5~~real estate of $40.7 million in ~~2017 relates~~2023 and $158.6 million in 2022 was due to the ~~allocation~~sale of ~~net loss to~~ the ~~noncontrolling interest in JBG SMITH LP.~~

Disposed Properties.

~~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"~~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 expense related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, including our share of such adjustments for unconsolidated real estate ventures.

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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, 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."~~

~~FFO, as defined by NAREIT, is "net~~and other non-comparable 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 ourexpenses. 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:~~

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

FFO:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

	(In thousands)
Net income (loss) attributable to common shareholders	$	(10,545)	$	123,275	$	10,626	$	123,243
Net income (loss) attributable to redeemable noncontrolling interests		(1,398)		18,248		1,965		18,258
Net loss attributable to noncontrolling interests		(311)		(29)		(535)		(84)
Net income (loss)		(12,254)		141,494		12,056		141,417
Gain on the sale of real estate, net of tax		—		(155,642)		(40,700)		(155,506)
Gain on the sale of unconsolidated real estate assets		—		(936)		—		(6,179)
Real estate depreciation and amortization		47,502		47,242		99,113		102,759
Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures		3,111		6,416		5,871		13,286
FFO attributable to noncontrolling interests		311		(47)		535		(73)
FFO attributable to common limited partnership units ("OP Units")		38,670		38,527		76,875		95,704
FFO attributable to redeemable noncontrolling interests		(5,247)		(4,966)		(10,450)		(10,843)
FFO attributable to common shareholders	$	33,423	$	33,561	$	66,425	$	84,861

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~~an asset'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 of free rent and payments associated with assumed lease liabilities) less operating ~~expense, before~~expenses and ground rent for operating leases, 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 expense and captures neither the changes in the value of our assets that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our assets, all of which have real economic effect and could materially impact the financial performance of our assets, the utility of NOI as a measure of the operating performance of our assets is limited. NOI presented by us may not be comparable to NOI reported by other REITs that define these measures differently. We believe ~~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.~~

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 disposed properties or properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. During the three months ended June 30, 2023, our same store pool increased to 50 properties from 49 properties due to the inclusion of 8001

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Woodmont as it was in service for the entirety of the comparable period. During the six months ended June 30, 2023, our same store pool increased to 49 properties from 47 properties due to the inclusion of The Wren and The Batley as they were in service for the entirety of the comparable periods. While there is judgment surrounding changes in designations, a property is removed 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 the three and nine months ended September 30, 2017, all of the JBG Assets and two Vornado Included Assets (The Bartlett and 1800 South Bell Street) were not included in the same store comparison as they were not in service or being taken out of service during portions of the periods being compared.

Same store NOI increased ~~by $4.2~~$104,000, or 0.1%, to $78.3 million ~~or 6.3%, and $6.3 million, or 3.1%,~~ for the three ~~and nine~~ months ended ~~September~~June 30, ~~2017, respectively, as compared~~2023 from $78.2 million for the same period in 2022. Same store NOI decreased $1.1 million, or 0.7%, to $153.5 million for the ~~three and nine~~six months ended ~~September~~June 30, ~~2016, respectively.~~2023 from $154.7 million for the same period in 2022. The decrease for the six months ended June 30, 2023 was substantially attributable to (i) increased abatement and higher vacancy, partially offset by an increase in ~~same store~~

~~NOI for the three~~parking revenue in our commercial portfolio and ~~nine months ended September 30, 2017 was primarily due to the expiration of rent abatements~~(ii) higher occupancy and rents, partially offset by higher concessions and higher ~~property rental revenue from lease commencements.~~

operating expenses, in our multifamily portfolio.

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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

	(Dollars in thousands)
Net income (loss) attributable to common shareholders	$	(10,545)	$	123,275	$	10,626	$	123,243
Add:
Depreciation and amortization expense		49,218		49,479		102,649		107,541
General and administrative expense:
Corporate and other		15,093		14,782		31,216		30,597
Third-party real estate services		22,105		24,143		45,928		51,192
Share-based compensation related to Formation Transaction and special equity awards		—		1,577		351		3,821
Transaction and other costs		3,492		1,987		5,964		2,886
Interest expense		25,835		16,041		52,677		32,319
Loss on the extinguishment of debt		450		1,038		450		1,629
Income tax expense		611		2,905		595		2,434
Net income (loss) attributable to redeemable noncontrolling interests		(1,398)		18,248		1,965		18,258
Net loss attributable to noncontrolling interests		(311)		(29)		(535)		(84)
Less:
Third-party real estate services, including reimbursements revenue		22,862		22,157		45,646		46,127
Other revenue		3,846		1,798		5,572		3,994
Income (loss) from unconsolidated real estate ventures, net		510		(2,107)		943		1,038
Interest and other income, net		2,281		1,672		6,358		15,918
Gain on the sale of real estate, net		—		158,767		40,700		158,631
Consolidated NOI		75,051		71,159		152,667		148,128
NOI attributable to unconsolidated real estate ventures at our share		5,175		8,321		9,604		15,268
Non-cash rent adjustments ⁽¹⁾		(6,311)		(1,978)		(14,688)		(3,769)
Other adjustments ⁽²⁾		5,163		5,695		12,008		14,443
Total adjustments		4,027		12,038		6,924		25,942
NOI		79,078		83,197		159,591		174,070
Less: out-of-service NOI loss ⁽³⁾		(902)		(2,046)		(1,611)		(3,498)
Operating Portfolio NOI		79,980		85,243		161,202		177,568
Non-same store NOI ⁽⁴⁾		1,640		7,007		7,667		22,918
Same store NOI ⁽⁵⁾	$	78,340	$	78,236	$	153,535	$	154,650

Change in same store NOI		0.1%				(0.7%)
Number of properties in same store pool		50				49

^{___________________________________________________}

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(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 related party management fees.

⁽²⁾

(3)

Includes the results ~~for~~of our under-construction assets and assets in the development pipeline.

(4)

Includes the results of properties that were not ~~owned, operated and stabilized~~in-service for the entirety of both periods being compared, including disposed properties, and properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared.

(5)
⁽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 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"), makes key operating decisions, evaluates financial results, allocates resources and manages our business. Accordingly, we aggregate our operating segments into three reportable segments (multifamily, commercial, and third-party asset management and real estate services) based on the economic characteristics and nature of our assets and services.

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

	(In thousands)
Property management fees	$	5,017	$	4,976	$	9,969	$	9,784
Asset management fees		1,255		1,513		2,358		3,284
Development fees		2,756		2,148		4,742		5,687
Leasing fees		1,256		1,038		2,612		2,877
Construction management fees		303		37		643		187
Other service revenue		1,422		1,499		2,646		2,315
Third-party real estate services revenue, excluding reimbursements		12,009		11,211		22,970		24,134
Reimbursement revenue ⁽¹⁾		10,853		10,946		22,676		21,993
Third-party real estate services revenue, including reimbursements		22,862		22,157		45,646		46,127
Third-party real estate services expenses		22,105		24,143		45,928		51,192
Third-party real estate services revenue less expenses	$	757	$	(1,986)	$	(282)	$	(5,065)

(1)	Represents reimbursements of expenses incurred by us on behalf of third parties, including allocated payroll costs and amounts paid to third-party contractors for ~~properties~~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 six months ended June 30, 2023 in the preceding pages under "Results of Operations."

Consistent with internal reporting presented to our CODM and our definition of NOI, the third-party asset management and real estate services operating results are excluded from the NOI data below. Property revenue is calculated as property rental revenue plus parking revenue. Property expense is calculated as property operating expenses plus real estate taxes. Consolidated NOI is calculated as property revenue less property expense. See Note 16 to the financial statements for the reconciliation of net income (loss) attributable to common shareholders to consolidated NOI for the three and six months ended June 30, 2023 and 2022.

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The following is a summary of NOI by segment:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

	(In thousands)
Property revenue: ⁽¹⁾
Commercial	$	68,747	$	76,090	$	144,802	$	167,723
Multifamily		52,738		43,189		102,872		85,431
Other ⁽²⁾		3,902		2,271		6,165		4,195
Total property revenue		125,387		121,550		253,839		257,349

Property expense: ⁽³⁾
Commercial		26,447		28,642		54,819		66,621
Multifamily		24,042		19,924		47,105		38,900
Other ⁽²⁾		(153)		1,825		(752)		3,700
Total property expense		50,336		50,391		101,172		109,221

Consolidated NOI:
Commercial		42,300		47,448		89,983		101,102
Multifamily		28,696		23,265		55,767		46,531
Other ⁽²⁾		4,055		446		6,917		495
Consolidated NOI	$	75,051	$	71,159	$	152,667	$	148,128

(1)	Includes property rental revenue and parking revenue.

(2)	Includes activity related to development assets, corporate entities, land assets for which ~~significant redevelopment, renovation or repositioning occurred during either~~we are the ground lessor and the elimination of inter-segment activity.

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

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~~June 30, ~~2017 compared~~2023 to ~~September 30, 2016~~

~~Office: Rental~~2022

Commercial: Property revenue ~~increased~~decreased by ~~$8.9~~$7.3 million, or ~~9.8%~~9.7%, to ~~$99.5~~$68.7 million in ~~2017~~2023 from ~~$90.6~~$76.1 million in ~~2016.~~2022. Consolidated NOI ~~increased~~decreased by ~~$5.7~~$5.1 million, or ~~10.7%~~10.8%, to ~~$59.4~~$42.3 million in ~~2017~~2023 from ~~$53.7~~$47.4 million in ~~2016.~~2022. The ~~increase~~decreases in property revenue and consolidated NOI iswere primarily due to the ~~Combination.~~

Disposed Properties, partially offset by increased occupancy at 800 North Glebe and 2121 Crystal Drive.

Multifamily: ~~Rental~~Property revenue increased by ~~$8.2~~$9.5 million, or ~~49.1%~~22.1%, to ~~$24.9~~$52.7 million in ~~2017~~2023 from ~~$16.7~~$43.2 million in ~~2016.~~2022. Consolidated NOI increased by ~~$4.9~~$5.4 million, or ~~47.8%~~23.3%, to ~~$15.2~~$28.7 million in ~~2017~~2023 from ~~$10.3~~$23.3 million in ~~2016.~~2022. The ~~increase~~increases in property revenue and consolidated NOI iswere primarily due to the ~~Combination~~consolidation of Atlantic Plumbing and 8001 Woodmont, and higher occupancy and rents across the portfolio. The increase in consolidated NOI was partially offset by an increase in ~~occupancy and associated rentals at The Bartlett which was placed into service in~~property operating costs.

Comparison of the ~~second quarter of 2016.~~

~~Other: Rental~~Six Months Ended June 30, 2023 to 2022

Commercial: Property revenue decreased by ~~$1.0~~$22.9 million, or ~~18.5%~~13.7%, to ~~$4.3~~$144.8 million in ~~2017~~2023 from ~~$5.3~~$167.7 million in ~~2016. Net operating income (loss)~~2022. Consolidated NOI decreased by ~~$1.6~~$11.1 million, or ~~133.8%~~11.0%, to ~~a loss of $407,000~~$90.0 million in 2023 from ~~income of $1.2 million.~~$101.1 million in 2022. The ~~decrease~~decreases in property revenue and ~~net operating income (loss) is primarily due to properties which~~consolidated NOI were ~~taken out of service, including 1700 M Street and 1770 Crystal Drive.~~

~~Nine Months Ended September 30, 2017 compared to September 30, 2016~~

Office: Rental revenue increased by $9.7 million, or 3.7%, to $272.3 million in 2017 from $262.6 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.~~

Disposed Properties.

Multifamily: ~~Rental~~Property revenue increased by ~~$18.2~~$17.4 million, or ~~38.2%~~20.4%, to ~~$65.8~~$102.9 million in ~~2017~~2023 from ~~$47.6~~$85.4 million in ~~2016.~~2022. Consolidated NOI increased by ~~$11.1~~$9.2 million, or ~~37.3%~~19.8%, to ~~$41.1~~$55.8 million in ~~2017~~2023 from ~~$30.0~~$46.5 million in ~~2016.~~2022. The ~~increase~~increases in property revenue and consolidated NOI iswere primarily due to the ~~Combination~~consolidation of Atlantic Plumbing and 8001 Woodmont, and higher occupancy and rents across the portfolio. The increase in consolidated NOI was partially offset by an increase in ~~occupancy and associated rentals at The Bartlett which was placed into service in the second quarter of 2016.~~

~~Other: Rental revenue decreased by $9.5 million, or 48.2%, to $10.3 million in 2017 from $19.8 million in 2016. Net~~property operating income (loss) decreased by $5.0 million, or 454.9%, to a loss of $3.9 million from income of $1.1 million. The decrease in revenue and net operating income (loss) is primarily due to properties which were taken out of service, including 1700 M Street and 1770 Crystal Drive.

costs.

Liquidity and Capital Resources

Property rental income is our primary source of operating cash flow and ~~is dependent~~depends 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

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estate services business ~~that~~ provides fee-based real estate services to ~~our real estate ventures, legacy funds formerly organized by JBG ("~~the WHI Impact Pool, 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.~~Units and long-term incentive partnership units ("LTIP 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, ~~and~~ asset sales and recapitalizations, together with existing cash balances, will be adequate to fund our business operations, debt amortization, capital expenditures, any dividends to shareholders, and distributions to holders of OP ~~Units.~~

~~Financing Activities~~

Units and LTIP Units over the next 12 months.

Mortgage Loans

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

mortgage loans:


	Weighted Average
	Effective
	Interest Rate ⁽¹⁾	June 30, 2023		December 31, 2022

		(In thousands)
Variable rate ⁽²⁾	5.43%	$	678,671	$	892,268
Fixed rate ⁽³⁾	4.45%		1,025,535		1,009,607
Mortgage loans			1,704,206		1,901,875
Unamortized deferred financing costs and premium/discount, net ⁽⁴⁾			(14,999)		(11,701)
Mortgage loans, net		$	1,689,207	$	1,890,174

^{__________________________}

(1)	Weighted average effective interest rate as of June 30, 2023.

⁽¹⁾

(2)

Includes variable rate mortgage loans with interest rate cap agreements. For mortgage loans with interest rate caps, the weighted average interest rate cap strike was 2.42%, and the weighted average maturity date of the interest rate caps is August 2023. The interest rate cap strike is exclusive of the credit spreads associated with the mortgage loans. As of June 30, 2023, one-month London Interbank Offered Rate ("LIBOR") was 5.22% and one-month term Secured Overnight Financing Rate ("SOFR") was 5.14%.

(3)	Includes variable rate mortgages ~~payable~~ with interest rates fixed by interest rate ~~caps.~~swap agreements.

(4)
⁽²⁾	~~Includes variable rate mortgages payable with interest rates effectively fixed pursuant to rate swaps.~~


⁽³⁾	~~Includes mortgages payable assumed as part~~As 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,~~30, 2023 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~~2022, excludes $2.0 million and $2.2 million of net deferred financing costs related to unfunded mortgage loans that were included in "Other assets, net" in our ~~revolving credit facility collateralized by a mortgage on the property.~~balance sheets.

As of ~~September~~June 30, ~~2017,~~2023 and December 31, 2022, the net carrying value of real estate collateralizing our ~~mortgages payable~~mortgage loans totaled ~~$3.9~~$2.1 billion and $2.2 billion. Our mortgage loans contain covenants that limit our ability to incur additional indebtedness on these properties and, in certain circumstances, require lender approval of tenant leases and/or yield maintenance upon repayment prior to maturity. ~~As of September 30, 2017, we were in compliance with all debt covenants.~~

~~As part of~~Certain mortgage loans are recourse to us. See Note 17 to 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 $689,000financial statements for ~~the three and nine months ended September 30, 2017.~~

~~On July 18, 2017,~~additional information.

In January 2023, we entered into a ~~$1.4 billion~~$187.6 million loan facility, collateralized by The Wren and F1RST Residences. The loan has a seven-year term and a fixed interest rate of 5.13%. This loan is the initial advance under a Fannie Mae multifamily credit facility ~~consisting~~which provides flexibility for collateral substitutions, future advances tied to performance, ability to mix fixed and floating rates, and staggered maturities. Proceeds from the loan were used, in part, to repay the $131.5 million mortgage loan collateralized by 2121 Crystal Drive, which had a fixed interest rate of 5.51%.

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

Revolving Credit Facility and Term Loans

As of June 30, 2023, our unsecured revolving credit facility and term loans totaling $1.5 billion consisted of a ~~$1.0 billion~~$750.0 million revolving credit facility maturing in ~~July 2021, with two six-month extension options,~~June 2027, a ~~delayed draw~~ $200.0 million ~~unsecured~~ term loan ("Tranche A-1 Term Loan") maturing in January ~~2023 and~~2025, a ~~delayed draw $200.0~~$400.0 million ~~unsecured~~ term loan ("Tranche A-2 Term Loan") maturing in ~~July 2024. The~~January 2028, which includes the

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$50.0 million remaining advance drawn in May 2023, and a $120.0 million term loan ("2023 Term Loan") maturing in June 2028.

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

In July 2023, we amended the covenants related to the Tranche A-1 Term Loan and the Tranche A-2 Term Loan to be consistent with those of the revolving credit facility ~~from LIBOR plus 1.10% to LIBOR plus 1.50%, (b) in the case of the Tranche A-1~~and 2023 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%.~~

covenants.

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

and term loans:


	Effective
	Interest Rate ⁽¹⁾	June 30, 2023		December 31, 2022

		(In thousands)
Revolving credit facility ^{(2) (3)}	6.49%	$	62,000	$	—

Tranche A-1 Term Loan ⁽⁴⁾	2.61%	$	200,000	$	200,000
Tranche A-2 Term Loan ⁽⁴⁾	3.54%		400,000		350,000
2023 Term Loan ⁽⁵⁾	5.26%		120,000		—
Term loans			720,000		550,000
Unamortized deferred financing costs, net			(3,243)		(2,928)
Term loans, net		$	716,757	$	547,072

^{__________________________}

(1)	Effective interest rate as of June 30, 2023. The interest rate for our revolving credit facility excludes a 0.15% facility fee.

⁽¹⁾

(2)

As of ~~September~~June 30, ~~2017,~~2023, daily SOFR was 5.09%. As of June 30, 2023 and December 31, 2022, letters of credit with an aggregate face amount of ~~$5.2 million~~$467,000 were ~~provided~~outstanding under our revolving credit facility.

(3)	As of June 30, 2023 and December 31, 2022, excludes $11.7 million and $3.3 million of net deferred financing costs related to our revolving credit facility that were included in "Other assets, net" in our balance sheets.

(4)

(5)	As of June 30, 2023, the outstanding balance was fixed by an interest rate swap agreement, which fixes SOFR at an interest rate of 4.01% through the maturity date.

~~Long-term Liquidity Requirements~~

As of June 30, 2023, we had fully-hedged debt with a principal balance totaling $692.7 million that used LIBOR as a reference rate. As of the date of this filing, all our debt and hedging arrangements use SOFR as a reference rate.

Common Shares Repurchased

Our ~~long-term capital requirements consist primarily~~Board of ~~maturities under our credit facility and mortgage loans, construction commitments for development and redevelopment projects and costs related~~Trustees previously authorized the repurchase of up to growing our business, including acquisitions. We intend to fund these requirements through a combination of sources including debt proceeds, proceeds from asset recapitalizations and sales, capital from institutional partners that desire to form real estate venture relationships with us and available cash.

~~Contractual Obligations and Commitments~~

~~Below is a summary~~$1.0 billion of our ~~contractual obligations~~outstanding common shares, and ~~commitments~~in May 2023, increased the common share repurchase authorization to $1.5 billion. During the three and six months ended June 30, 2023, we repurchased and retired 9.3 million and 10.5 million common shares for $135.7 million and $155.8 million, a weighted average purchase price per share of $14.54 and $14.79. During the three and six months ended

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June 30, 2022, we repurchased and retired 8.5 million and 11.8 million common shares for $213.9 million and $307.0 million, a weighted average purchase price per share of $25.15 and $25.91. Since we began the share repurchase program through June 30, 2023, we have repurchased and retired 33.8 million common shares for $779.3 million, a weighted average purchase price per share of $23.02.

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 ~~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

~~_________________~~

any repurchases will be determined by us at our discretion and will be subject to economic and market conditions, share price, applicable legal requirements and other factors. The program may be suspended or discontinued at our discretion without prior notice.

Material Cash Requirements

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

●	normal recurring expenses;

⁽¹⁾

●

~~Excludes~~debt service and principal repayment obligations, including balloon payments on maturing mortgage loans — as of June 30, 2023, we had no debt on a consolidated basis and $13.7 million at our ~~proportionate~~ share scheduled to mature in 2023;

●

capital expenditures, including major renovations, tenant improvements and leasing costs — as of June 30, 2023, we had committed tenant-related obligations totaling $53.1 million ($51.4 million related to our consolidated entities and $1.7 million related to our unconsolidated real estate ~~venture indebtedness. See further information in Off-Balance Sheet Arrangements section below.~~ventures at our share);

●
⁽²⁾	~~Includes ground leases.~~development expenditures — as of June 30, 2023, we had assets under construction that, based on our current plans and estimates, require an additional $284.7 million to complete, which we anticipate will be primarily expended over the next three years;

●	dividends to shareholders and distributions to holders of OP Units and LTIP Units — on August 3, 2023, our Board of Trustees declared a quarterly dividend of $0.225 per common share;

⁽³⁾

●

~~Excludes obligations related to construction or development contracts, since payments are only due upon satisfactory performance under~~possible common share repurchases — during the ~~contracts. See Commitments~~third quarter of 2023, through the date of this filing, we repurchased and ~~Contingencies section below~~retired 2.0 million common shares for ~~further information.~~$31.5 million; and

~~As of September 30, 2017, we~~

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

We expect to ~~fund additional capital~~satisfy these needs using one or more of the following:

●	cash and cash equivalents — as of June 30, 2023, we had cash and cash equivalents of $156.6 million;

●	cash flows from operations;

●	distributions from real estate ventures;

●	borrowing capacity under our revolving credit facility — as of June 30, 2023, we had $687.5 million of availability under our revolving credit facility; and

●	proceeds from financings, asset sales and recapitalizations.

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

During the six months ended June 30, 2023, there were no significant changes to the material cash requirements 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 Report on Form 10-Q, 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.

Annual Report.

See ~~Note 18 to the financial statements for~~ additional information ~~about events occurring after September 30, 2017.~~in the following pages under "Commitments and Contingencies."

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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:


	Six Months Ended June 30,
	2023		2022

	(In thousands)
Net cash provided by operating activities	$	89,431	$	107,649
Net cash (used in) provided by investing activities		(135,500)		785,304
Net cash used in financing activities		(25,160)		(819,930)

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

2023

Cash and cash equivalents, ~~were $367.9~~and restricted cash decreased $71.2 million ~~at September~~to $202.8 million as of June 30, ~~2017,~~2023, compared to ~~$29.0~~$274.1 million atas of December 31, ~~2016, an increase of $338.9 million.~~2022. This ~~increase~~decrease resulted from ~~$23.4 million of net cash provided by operating activities, $88.2~~$135.5 million of net cash used in investing activities and ~~$227.3~~$25.2 million of net cash used in financing activities, partially offset by $89.4 million of net cash provided by ~~financing~~operating activities. Our outstanding debt was ~~$2.1~~$2.5 billion ~~at September~~as of June 30, ~~2017, a $974.8 million increase from the balance at~~2023 and December 31, ~~2016.~~

2022.

Net cash provided by operating activities of ~~$23.4~~$89.4 million comprised: (i) $86.2 million of net ~~loss of $60.3 million, (ii) $110.7~~income (before $114.8 million of non-cash items ~~which include depreciation~~ and ~~amortization, deferred rent, equity in loss from unconsolidated~~a $40.7 million gain on the sale of real ~~estate ventures, amortization~~estate), (ii) $9.4 million 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~~and (iii) $6.1 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~~liabilities. Non-cash income adjustments of ~~$18.2 million.~~

~~Net cash provided by investing activities of $88.2~~$114.8 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 million~~ ~~of net cash provided by operating activities and~~ ~~$63.0 million~~ ~~of net cash provided by financing activities.~~

~~Net cash provided by operating activities of $101.4 million comprised: (i) net income of $49.3 million, (ii) $92.4 million of non-cash adjustments, which~~ include depreciation and amortization ~~loss from unconsolidated real estate ventures,~~expense, share-based compensation expense, deferred rent and accretion 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.

other non-cash items.

Net cash used in investing activities of ~~$204.1~~$135.5 million comprised: (i) ~~$185.4~~$164.8 million of development costs, construction in progress and real estate additions, (ii) ~~$20.0~~$20.2 million of investments in ~~and advances to~~ unconsolidated real estate ventures and ~~(iii) $1.9 million of~~ other investments and (iii) a $19.6 million payment of a deferred purchase price related to the acquisition of a development parcel in 2020, partially offset by (iv) ~~a decrease of $3.2 million in restricted cash.~~

~~Net cash provided by financing activities of $63.0 million primarily comprised : (i) $39.0~~$69.0 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 $25.2 million primarily comprised: (i) $278.5 million of ~~net contributions from~~repayments of mortgage loans, (ii) $155.8 million of common shares repurchased, (iii) $60.0 million of repayments on the revolving credit facility, (iv) $49.5 million of dividends paid to common shareholders, (v) $17.2 million of debt issuance and modification costs, and (vi) $7.9 million of distributions to our ~~former parent,~~redeemable noncontrolling interests, partially offset by ~~(iii) $8.9~~(vii) $251.7 million ~~for~~of borrowings under mortgage loans, (viii) $170.0 million of borrowings under term loans and (ix) $122.0 million of borrowings under the ~~repayments of borrowings.~~

~~Off-Balance Sheet Arrangements~~

revolving credit facility.

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~~June 30, ~~2017,~~2023, we ~~have~~had investments in ~~and advances to~~ unconsolidated real estate ventures totaling ~~$285.0~~$309.2 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.

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

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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~~June 30, ~~2017, the aggregate amount of our principal payment guarantees was approximately $63.8 million for our unconsolidated real estate ventures.~~

~~As of September 30, 2017,~~2023, we ~~expect to fund~~had additional capital commitments and certain recorded guarantees 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 could cause us to consolidate these~~ unconsolidated real estate ventures and ~~partnerships in the future. We evaluate reconsideration events as~~other investments totaling $62.0 million. As of June 30, 2023, we ~~become aware of them. Some triggers~~had no debt principal payment guarantees related to ~~be considered are additional contributions required by each partner and each partners’ ability to make those contributions. Under certain of these circumstances, we may purchase~~ our ~~partner’s interest. Our~~ unconsolidated real estate ventures are held in entities which appear sufficiently stable to meet their capital requirements; however, if market conditions worsen and our partners are unable to meet their commitments, there is a possibility we may have to consolidate these entities.

ventures.

Commitments and Contingencies

Insurance

We maintain general liability insurance with limits of ~~$200.0~~$150.0 million per occurrence and in the aggregate, and property and rental value insurance coverage with limits of ~~$2.0~~$1.0 billion per occurrence, with sub-limits for certain perils such as floods and earthquakes on each of our properties. We also maintain coverage, through our wholly owned captive insurance subsidiary, for a portion of the first loss on the above limits and for both 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.

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

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

Construction Commitments

Other

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~~June 30, ~~2017,~~2023, the aggregate amount of debt principal payment guarantees was $8.3 million for our consolidated entities.

In connection with the Formation Transaction, we ~~expect~~have an agreement with Vornado regarding tax matters (the "Tax Matters Agreement") that provides special rules that allocate tax liabilities if the distribution of JBG SMITH shares by Vornado,

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together with certain related transactions, is determined not to ~~fund additional capital~~be tax-free. Under the Tax Matters Agreement, we may be required 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.~~

~~Inflation~~

~~Substantially all of our office~~indemnify Vornado against any taxes 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~~related amounts and costs resulting from a violation by us 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.

Tax Matters Agreement

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~~that 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~~these substances may be substantial, and the presence of ~~such~~these substances, or the failure to promptly remediate ~~such~~these substances, may adversely affect the ~~owner’s~~owner's ability to sell ~~such~~the real estate or to borrow using ~~such~~the real estate as collateral. In connection with the ownership and operation of our assets, we may be potentially liable for ~~such~~these 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~~these 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 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 the 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. They~~liabilities as a result of redevelopment. The tests may not, however, have included extensive sampling or subsurface investigations. In each case where the environmental assessments have identified conditions requiring remedial actions required by law, we have initiated ~~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 $18.0 million as of June 30, 2023 and December 31, 2022 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:


	June 30, 2023						December 31, 2022
			Weighted						Weighted
			Average		Annual				Average
			Effective		Effect of 1%				Effective
			Interest		Change in				Interest
	Balance		Rate		Base Rates		Balance		Rate

	(Dollars in thousands)
Debt (contractual balances):
Mortgage loans:
Variable rate ⁽¹⁾	$	678,671		5.43%	$	1,445	$	892,268	5.21%
Fixed rate ⁽²⁾		1,025,535		4.45%		—		1,009,607	4.44%
	$	1,704,206			$	1,445	$	1,901,875
Revolving credit facility and term loans:
Revolving credit facility ⁽³⁾	$	62,000		6.49%	$	629	$	—	5.51%
Tranche A-1 Term Loan ⁽⁴⁾		200,000		2.61%		—		200,000	2.61%
Tranche A-2 Term Loan ⁽⁴⁾		400,000		3.54%		—		350,000	3.40%
2023 Term Loan ⁽⁵⁾		120,000		5.26%		—		—	—
	$	782,000			$	629	$	550,000
Pro rata share of debt of unconsolidated real estate ventures (contractual balances):
Variable rate ⁽¹⁾	$	56,916		5.84%	$	164	$	22,065	6.45%
Fixed rate ⁽²⁾		33,000		4.13%		—		33,000	4.13%
	$	89,916			$	164	$	55,065

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)

Includes variable rate mortgage loans with interest rate cap agreements. For mortgage loans with interest rate caps, the weighted average interest rate cap strike was 2.42%, and the weighted average maturity date of the interest rate caps is August 2023. The interest rate cap strike is exclusive of the credit spreads associated with the mortgage loans. As of June 30, 2023, one-month LIBOR was 5.22% and one-month term SOFR was 5.14%. The impact of these interest rate caps is reflected in our calculation of the annual effect of a 1% change in base rates.

⁽¹⁾

(2)

Includes variable rate mortgages ~~payable~~ with interest rates fixed by interest rate ~~caps.~~swap agreements.

(3)
⁽²⁾	~~Includes variable rate mortgages payable with interest rates effectively fixed pursuant~~As of June 30, 2023, daily SOFR was 5.09%. The interest rate ~~swaps.~~for our revolving credit facility excludes a 0.15% facility fee.

(4)

As of June 30, 2023 and December 31, 2022, the outstanding balance was fixed by interest rate swap agreements. As of June 30, 2023, the interest rate swaps fix SOFR at a weighted average interest rate of 1.46% for the Tranche A-1 Term Loan and 2.29% for the Tranche A-2 Term Loan. See Note 7 to the financial statements for additional information.

(5)	As of June 30, 2023, the outstanding balance was fixed by an interest rate swap agreement, which fixes SOFR at an interest rate of 4.01% through the maturity date.

The fair value of our ~~consolidated debt~~mortgage loans 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 revolving credit facility and term loans is calculated based on the net present value of payments over the term of the facilities using estimated market rates for similar notes and remaining terms. As of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016~~,2022, the estimated fair value of our consolidated debt was ~~$2.1 billion and $1.2 billion, respectively.~~$2.4 billion. These estimates of fair value, which are made at the end of the reporting period, may be different from the amounts that may ultimately be realized upon the disposition of our financial instruments.

Hedging Activities

To manage or hedge our exposure to interest rate risk, we follow established risk management policies and procedures, including the use of a variety of derivative financial instruments. ~~We do not enter into~~

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Derivative Financial Instruments Designated as Effective Hedges

Certain derivative ~~instruments for speculative purposes. Derivative~~ financial instruments, consisting of interest rate ~~swaps~~swap and ~~caps,~~cap agreements, are ~~considered economic~~cash flow hedges ~~but not~~that are designated as ~~accounting~~effective hedges, and are carried at their estimated fair value on a recurring ~~basis with realized~~basis. We assess the effectiveness of our hedges both at inception and ~~unrealized gains~~on an ongoing basis. If the hedges are deemed to be effective, the fair value is recorded in "Accumulated other comprehensive income" in our balance sheets and is subsequently reclassified into ~~earnings~~"Interest expense" in our statements of operations in the period that the hedged forecasted transactions affect earnings. Our hedges become less than perfectly effective if the critical terms of the hedging instrument and the forecasted transactions do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and interest rates. In addition, we evaluate the default risk of the counterparty by monitoring the creditworthiness of the counterparty. While management believes its judgments are reasonable, a change in ~~which the change occurs.~~

a derivative's effectiveness as a hedge could materially affect expenses, net income (loss) and equity.

As of ~~September~~June 30, ~~2017,~~2023 and December 31, 2022, we had ~~various~~ interest rate swap and cap agreements ~~assumed in the Combination. As~~with an aggregate notional value of ~~September 30, 2017, the~~$1.4 billion, which were designated as effective hedges. The fair value of our interest rate swaps and caps designated as effective hedges primarily consisted of ~~liabilities~~assets totaling ~~$703,000~~$51.3 million and $53.5 million as of June 30, 2023 and December 31, 2022, included in ~~"Accounts payable and accrued expenses"~~"Other assets, net" in our balance ~~sheet.~~

sheets.

Derivative Financial Instruments Designated as Ineffective Hedges

Certain derivative financial instruments, consisting of interest rate cap agreements, are cash flow hedges that are designated as ineffective hedges, and are carried at their estimated fair value on a recurring basis. Realized and unrealized gains or losses are recorded in "Interest expense" in our statements of operations. As of June 30, 2023 and December 31, 2022, we had various interest rate cap agreements with an aggregate notional value of $711.8 million, which were designated as ineffective hedges. The fair value of our interest rate cap agreements designated as ineffective hedges consisted of assets totaling $2.3 million and $8.1 million as of June 30, 2023 and December 31, 2022, included in "Other assets, net" in our balance 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~~June 30, ~~2017,~~2023, 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~~June 30, ~~2017~~2023 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, filed with the SEC on June 20, 2017.~~Annual Report.

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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:


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
April 1, 2023 - April 30, 2023	2,399,238	$	14.17	2,399,238	$	322,367,801
May 1 2023 - May 31, 2023	4,065,637		14.54	4,065,637		763,155,096
June 1, 2023 - June 30, 2023	2,856,095		14.86	2,856,095		720,668,410
Total for the three months ended June 30, 2023	9,320,970		14.54	9,320,970
Total for the six months ended June 30, 2023	10,526,158		14.79	10,526,158
Program total since inception in March 2020 ⁽¹⁾	33,823,567		23.02	33,823,567

~~(a) Not applicable.~~

~~(b) Not applicable.~~

~~(c) Not applicable.~~

(1)	During the third quarter of 2023, through the date of this filing, we repurchased and retired 2.0 million common shares for $31.5 million, a weighted average purchase price per share of $16.03, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.

In June 2022, our Board of Trustees authorized the repurchase of up to $1.0 billion of our outstanding common shares, and in May 2023, increased the authorized repurchase amount to $1.5 billion. Purchases under the program are made either in the open market or in privately negotiated transactions from time to time as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by us at our discretion and will be subject to economic and market conditions, share price, applicable legal requirements and other factors. The program may be suspended or discontinued at our discretion without prior notice, and, in any event.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Trading Arrangements

During the three months ended June 30, 2023, none of our officers or trustees adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement."

~~None.~~

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Second Amended and Restated Bylaws

On August 3, 2023, our Board of Trustees (the "Board") amended and restated our Amended and Restated Bylaws (the "Second Amended and Restated Bylaws"), effective immediately, to: (i) expressly provide for the ability of stockholders to participate in meetings of stockholders by electronic transmission, (ii) require any shareholder directly or indirectly soliciting proxies from other shareholders to use a proxy card color other than white, (iii) implement and update the procedure and information requirements for the nominations of persons for election to the Board, including to address matters relating to the new universal proxy rules set forth in Rule 14a-19 under the Securities Exchange Act of 1934, as amended, (iv) revise the information required to be included in or updated in a shareholder's notice regarding nomination of a trustee for election or reelection, (v) clarifying the instances in which a shareholder’s notice regarding nomination of a trustee for election or reelection may be disregarded and (vi) make certain other administrative, clarifying and conforming and/or immaterial changes throughout.

The foregoing description of the Second Amended and Restated Bylaws is not complete and is qualified in its entirety by reference to the Second Amended and Restated Bylaws, which are filed as Exhibit 3.4 hereto in unmarked form, and as Exhibit 3.5 hereto in redline form marking the amendments described above, and are incorporated herein by reference.

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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
~~3.2~~	~~Amended and Restated Bylaws~~Articles Supplementary to Declaration of Trust of JBG SMITH Properties (incorporated by reference to Exhibit ~~3.2~~3.1 to our Current Report on Form 8-K, filed on ~~July 21, 2017)~~March 6, 2018).
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).
~~10.1~~ 3.4**	~~Tax Matters~~Second Amended and Restated Bylaws of JBG SMITH Properties, effective August 3, 2023.
3.5**	Second Amended and Restated Bylaws of JBG SMITH Properties, effective August 3, 2023 (redline).
10.1	Amended and Restated Credit Agreement, dated as of ~~July 17, 2017,~~June 29, 2023, by and ~~between Vornado Realty Trust and~~among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on ~~July 21, 2017)~~June 29, 2023).
10.2
~~10.2~~	~~Employee Matters Agreement, dated as of July 17, 2017, by and between Vornado Realty Trust, Vornado Realty L.P., JBG SMITH Properties and JBG SMITH Properties LP (incorporated by reference~~Second Amendment 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, filed on July 21, 2017).

~~10.4~~	Credit Agreement, dated as of July ~~18, 2017,~~24, 2023, by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit ~~10.4~~10.1 to our Current Report on Form 8-K, filed on July ~~21, 2017)~~28, 2023).
10.3
~~10.5~~	~~Registration Rights~~First Amendment to Credit Agreement, dated as of July ~~18, 2017,~~24, 2023, by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and ~~the holders listed on Schedule I thereto (for holders of common shares of JBG SMITH Properties received in the combination)~~Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit ~~10.5~~10.2 to our Current Report on Form ~~8-K,~~- K, filed on July ~~21, 2017)~~28, 2023).
31.1**
~~10.6~~	Registration Rights Agreement, dated as of July 18, 2017, by and among JBG SMITH Properties and the holders listed on Schedule I thereto (for holders of OP Units of JBG SMITH LP received in the combination) (incorporated by reference to Exhibit 10.6 to our Current Report on Form 8-K, filed on July 21, 2017).



~~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
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~~101.CAL~~	Inline XBRL Extension Calculation Linkbase
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~~101.LAB~~	Inline XBRL Extension Labels Linkbase
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~~101.PRE~~	Inline XBRL Taxonomy Extension Presentation Linkbase
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~~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.

Table of Contents

~~SIGNATURE~~

SIGNATURES

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



		JBG SMITH Properties

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

Date:	August 8, 2023	/s/ M. Moina Banerjee
		M. Moina Banerjee
		Chief Financial Officer
		(Principal Financial ~~and~~Officer)


		JBG SMITH Properties

Date:	August 8, 2023	/s/ Angela Valdes
		Angela Valdes
		Chief Accounting Officer
		(Principal Accounting Officer)


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)

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~~



	~~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~~June 30, ~~2017~~ 2023 and December 31, ~~2016~~ 2022	2 3
		Condensed Consolidated ~~and Combined~~ Statements of Operations (unaudited) for the three and ~~nine~~ six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~ 2022	3 4
		Condensed Consolidated Statements of Comprehensive Income (unaudited) for the three and ~~Combined Statement~~six months ended June 30, 2023 and 2022	5
		Condensed Consolidated Statements of Equity (unaudited) for the ~~nine~~three and six months ended ~~September~~ June 30, ~~2017~~ 2023 and 2022	4 6
		Condensed Consolidated ~~and Combined~~ Statements of Cash Flows (unaudited) for the ~~nine~~six months ended ~~September~~ June 30, ~~2017~~2023 and ~~2016~~ 2022	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 29
Item 3.		Quantitative and Qualitative Disclosures about Market Risk	52 47
Item 4.		Controls and Procedures	53 48

PART II – OTHER INFORMATION

Item 1.		Legal Proceedings	54 48
Item 1A.		Risk Factors	54 48
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	54 49
Item 3.		Defaults Upon Senior Securities	54 49
Item 4.		Mine Safety Disclosures	54 49
Item 5.		Other Information	54 49
Item 6.	~~Exhibits~~	55Exhibits	51
~~Signature~~		57Signatures	52

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

●
▪	the ~~issuance~~sale of ~~94.7 million common shares and 5.8 million OP Units~~an 80.0% interest in ~~connection with the Separation (see~~4747 Bethesda Avenue. See Note 14 to the financial statements for ~~more information)~~additional information;

●
▪	~~the completion of the Combination in exchange for 23.3~~a $187.6 million ~~common shares~~loan facility, collateralized by The Wren and ~~13.9 million OP Units (see~~F1RST Residences. See Note 37 to the financial statements for ~~more information);~~additional information;

●
▪	~~the prepayment~~net borrowings of ~~mortgages payable with an aggregate principal balance of $181.7 million; and~~$62.0 million under our revolving credit facility;



	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.~~