Exhibit
November 7, 2018
To Our Fellow Shareholders:
We are pleased to report on our performance for the third quarter of 2018. For details regarding our financial and operating results, please see our third quarter earnings release and supplemental information, which follow this letter.
During the third quarter, we continued to make progress on delivering our Under Construction assets on-time and on-budget, stabilizing our operating portfolio at income levels consistent with our published NOI bridge and market rent expectations, maturing and harvesting opportunities in our Future Development Pipeline, and capitalizing on the current environment to dispose of assets where we can achieve or exceed our estimated NAV pricing for select assets within the portfolio.
Our plans for the highly anticipated Central District Retail in Crystal City passed the critically important milestone of Arlington County zoning approval in October. We intend to commence construction on this project in the fourth quarter of 2018. It will comprise approximately 130,000 gross square feet and will serve as the foundation of anchor amenities from which future phases of placemaking development will emanate in the submarket. The primary anchors of the project will be a 49,000 square foot Alamo Drafthouse Cinema and a specialty grocer. The strength of Alamo Drafthouse Cinema, which was recently ranked the number one North American movie theater chain in a Market Force Information poll, combined with the strong demand that we have seen from other local retail operators, validates our merchandising strategy and provides a catalyst for our placemaking efforts in the market. As we continue to execute on our strategy to reposition the submarket, Central District Retail will set the tone for our long-term vision and reflect our obsessive focus on place and walkability.
Washington, DC Market Update
All data and related information in the following market update has been provided by JLL.
The DC Metro area experienced its highest job growth in more than a decade in the trailing 12 months ended August 2018, with a gain of 64,100 jobs, 49% higher than the preceding 12 months. This strong employment growth points to an accelerating recovery in a market that has lagged other gateway cities in the past several years. We have seen this employment growth and the potential for future growth manifest in several ways: increased federal government budgets for defense sector and government technology initiatives; consistent growth in office tenant demand in transit-oriented locations; multifamily rent growth; an uptick in real estate capital markets volume; and a tightening of pricing.
Office
This stronger economic engine has fueled more dynamic, tighter, office markets for the year, slightly offset by a weak third quarter. Overall regional occupancy decreased by 20 basis points to 83.5% during the quarter, largely due to additional sublease space coming on the market. Despite that occupancy decrease, net absorption remained positive for 2018 with nearly 1.3 million square feet of absorption through the third quarter. The pockets of
weakness in the market were concentrated in suburbs outside the Beltway, with expected downsizing and move-outs on the Toll Road in Northern Virginia and Rockville Pike in Suburban Maryland. Amenity-rich, Metro-served locations were the net beneficiaries of these move-outs, as has been the trend for many years. Looking to the future, we see positive signs for continued growth. In the second quarter alone, 53% of leases larger than 20,000 square feet exhibited tenants growing their footprint, followed by 44% of such leases in the third quarter. Those leases will generate 1.7 million square feet of future occupancy gains in the coming quarters which, translated into net absorption, exceed the absorption gains we have seen through the third quarter.
Heading into 2019, the forces that have weighed on the Downtown office market will remain. Continued high vacancy in the downtown commodity Class A market has driven net effective rent declines due to growing TI packages and landlord capital investments aimed at making these ageing buildings more appealing to tenants. Suburban, off-Metro submarkets throughout the region will also remain challenged due to lack of new demand and a flight of existing tenants to locations with transit and better amenities. As of the third quarter, JBG SMITH-focused submarkets commanded a 23% rent premium to the broader market, while rents in the submarkets where JBG SMITH has no office presence were 21% lower than the broader market. As long as the job market continues to grow, we expect this divide to widen, as better locations absorb at the expense of their farther flung suburban counterparts.
Multifamily
As we predicted at our launch in the summer of 2017, multifamily supply increases are slowing from peaks in recent years. From 2014 through the third quarter of 2018, an estimated 12,310 units delivered to the market each year. In 2019 and 2020, an estimated 9,500 units will deliver each year, a 23% decline. With the supply pipeline slowing from its peak in 2017, rents have begun to move up, particularly in value-focused product, and rents are stabilizing in new product delivered in 2017 and early 2018. Within the infill, urban submarkets on which JBG SMITH focuses, rent growth remains strong and has rebounded through the first nine months of 2018 with 4.7% growth. This growth was more than 100 basis points higher than rent growth achieved in non-JBG SMITH submarkets, which grew only 3.6% in the first nine months of 2018.
Capital Markets
Office investment sales totaled $1.7 billion in the third quarter, up slightly from the second quarter, with the majority of this activity concentrated downtown. In the Trophy market, high demand and low supply have continued to drive pricing upward. Four of the 13 sales that have broken the historic $900 per square foot top-of-market threshold in DC occurred in 2018. As Trophy sales remained few and far between, the Class B market picked up the slack, accounting for 40% of investment sales volume. As Class B leasing fundamentals tighten, investors have begun to look at Class B assets as more than redevelopment plays, and pricing reflects that shift. Average pricing for stabilized Class B buildings has grown from $370 per square foot during the 2008 to 2013 period to $534 per square foot from 2014 to 2018. In the suburbs, assets with transit access continued to attract the most investment activity. This trend was extremely pronounced in Northern Virginia, where 75% of sales volume was concentrated in Silver Line submarkets stretching from Rosslyn to Herndon.
Multifamily investment sales totaled slightly over $4.0 billion through the third quarter of 2018, putting the market on track to easily exceed sales volume of $4.2 billion reached in 2017 and set a new post-recession peak. While sales volume has climbed to new highs, the weighted average price per unit settled near $203,000, a decline of 7% compared to 2017. The decline in average unit pricing has come as investment volume has shifted toward the lower quality end of the market. Nearly 65% of sales volume in 2018 has come from trades of Class B and Class C product, predominantly in suburban submarkets. Washington, DC continued to command a significant premium over
the rest of the region, with pricing averaging over $235,000 per unit, compared to slightly under $151,000 per unit in Suburban Maryland. Northern Virginia, which has driven 46% of overall sales volume in 2018, averaged roughly $223,000 per unit.
Aided by strong investment activity for both office and multifamily assets in 2017, debt capital markets hit a record peak in 2017 with $11.1 billion in financing volume. While activity so far in 2018 has fallen short of the previous year, nearly $4.5 billion of debt financing has closed through the third quarter. The debt markets continue to be very liquid, and it is a good time to be a borrower, especially for cash flowing assets. Base rates continued to rise with the 10-year treasury yield edging above 3% in the third quarter, but that increase has largely been offset by tightening spreads across the board, which have lessened pressure on all-in rates.
Operating Portfolio
Our 11.5 million square foot operating office portfolio (at share) generated $281.2 million of annualized NOI and was 87.1% leased and 85.4% occupied as of the end of the third quarter. Year to date, we have sold several office assets including Summit I and II, the Bowen Building, Executive Tower, 1233 20th Street, and our interest in the Investment Building, all helping to reduce our exposure to the most challenged sectors of the office market. During the third quarter, we completed 42 office lease transactions in our operating office portfolio totaling over 378,000 square feet (at share), including 66,000 square feet of new leases and 312,000 square feet of renewals. For second-generation leases, the rental rate mark-to-market was (5.6%) on a cash basis and (2.6%) on a GAAP basis. This mark-down is within a range that is consistent with our long-term (5%) mark-to-market assumption and is primarily the result of three GSA renewals. Like last quarter, we renewed several leases early to ensure the tenants did not move to other buildings. While these “blend and extend” lease renewals often require a free rent component and, therefore, impact near term NOI and same-store NOI growth, we believe signing these deals is a prudent defensive leasing strategy given the alternative of downtime and re-leasing costs associated with losing these tenants. In addition, we are seeing a trend of existing GSA tenants forgoing market tenant improvement allowances and instead using the value of the improvement allowance to reduce their contractual rental rate prior to signing the lease, rather than amortizing these dollars over the lease term. While these leases cause spikes in our reported negative mark-to-market rent adjustments, the true impact on a net effective rent basis is negligible. To provide a transparent picture of net effective rents over time, we include a schedule of net effective rents in our financial supplemental information.
We have received several inquiries about our approach to flexible space and coworking trends. Our goal is to provide a broad spectrum of real estate solutions to our commercial tenants that meet their needs in ways that work best for them. We intend to maximize value across our portfolio by providing tenants with a range of options while also ensuring that we receive a fair return on investment for each space in our portfolio. Our strategy in this area is to provide best-in-class customer service on economic terms that adequately compensate us for our up-front capital expense and our long-term exposure to credit risk and the market cycle.
Third-party coworking is an important component of our strategy reflected in leases totaling approximately 300,000 square feet with eight different providers. This is a fast-growing user base, and we find coworking tenants can help drive demand from non-traditional tenants for more traditional space across our portfolio. Coworking also provides an opportunity for easily accessible expansion space for other existing tenants in our buildings. Additionally, there is the potential to partner with coworking providers to provide a greater level of service and amenities. While an important part of our strategy, at the end of the third quarter, coworking tenants comprised less than 3% of our portfolio by both square footage and rental revenue - WeWork is the largest of those tenants. We have constructed our leases purposefully to diversify our exposure across our portfolio and to include several different coworking
providers to limit downside risk in the event of an economic downturn or consolidation within the sector. While we anticipate entering into other leases with coworking and flexible space providers where appropriate across our portfolio, we remain focused on lease security and downside protection to guard against any potential volatility in that industry.
In addition to our relationships with coworking providers, we continue to execute a robust, internally managed “spec suite” program in which we provide already-built, turnkey spaces for tenants requiring space quickly. While some tenants seek a shorter-term lease structure for these spaces, we find that the lease term for these spaces often ranges between 5 and 7 years. A premium rent is often achieved given the speed and turnkey buildout these spaces offer. We have also seen multiple tenants graduate from our spec suites into more traditional space in our portfolio with longer term leases. This program is another important element of meeting the needs of our customers in an ever-evolving marketplace.
Our operating multifamily portfolio, comprising approximately 4,523 units (at share), generated $77.9 million of annualized NOI and ended the third quarter at 96.1% leased, up slightly from 95.9% leased in the second quarter. We saw particularly strong performance at Falkland Chase, The Bartlett, and RiverHouse Apartments. In addition, we have seen continued strong leasing activity at 1221 Van Street, a recently delivered multifamily asset in the Ballpark/Southeast submarket. As of the date of this letter, the multifamily portion of 1221 Van Street was 80% leased, and the retail portion was over 90% leased to several high-end, amenity-based retailers.
Development Portfolio
Under Construction
At the end of the third quarter, we had seven assets Under Construction, all of which had guaranteed maximum price construction contracts in place. These assets have a weighted average estimated completion date of the first quarter of 2020, a weighted average estimated stabilization date of the second quarter of 2021, and a projected NOI yield based on Estimated Total Project Cost of 6.8%. Based on projected stabilized NOI (at share), our Under Construction portfolio is 60.9% multifamily and 39.1% office. The office assets represent 546,133 square feet (at share), of which 63.9% is pre-leased.
Near Term Development
We do not have any assets in the Near Term Development Pipeline as of the third quarter. As a reminder, we only place assets into our Near Term Development Pipeline when they have substantially completed the entitlement process and for which we intend to commence construction within 18 months, subject to market conditions.
Future Development Pipeline
Our Future Development Pipeline comprises 19.0 million square feet (at share), with an Estimated Total Investment of approximately $42 per square foot. As of the third quarter, approximately 1.8% of this pipeline was in the DC mature markets, 18.3% was in the DC emerging markets, 27.2% was in Pentagon City, 15.7% was in Crystal City, 18.3% was in Reston, 11.4% was in Other VA, 6.7% was in Silver Spring, and 0.6% was in Greater Rockville. We believe our Future Development Pipeline is a substantial source of value that can be unlocked through new development, land sales, and/or ground leases, and we will continue to explore attractive opportunities to harvest value from land sites as part of our capital recycling and development efforts. As indicated at the beginning of this letter, we expect to commence construction on Central District Retail in Crystal City before year end, which means that asset will move from our Future Development Pipeline into our Under Construction assets in the fourth quarter. In addition to Central District Retail, we are pursuing final entitlements for a multifamily project located at 1900 Crystal Drive, which will include two apartment towers and additional important placemaking retail on the ground
level. We expect to receive final entitlements later in 2019, and this asset is another potential candidate for development under the right market conditions.
Amazon
This is our fifth quarterly investor letter since the Amazon HQ2 search began in September of 2017. As we outlined in our third quarter 2017 letter, Amazon would be a game changer for our local economy and would breathe new life into a market that is still recovering from the headwinds of BRAC, the global financial crisis and sequestration. As a growth engine, Amazon would lead to the healthy diversification of our local economy and would catalyze the development of a technology ecosystem that has long searched for its footing in our region. HQ2 would serve as an incredible catalyst to accelerate the repositioning of our assets in Crystal City and our long-term placemaking strategy in the submarket. Since Amazon’s search for a second headquarters began, our team and our region have put forward a compelling case for any large employer in search of a deep and broad talent base in a business-conducive environment with plenty of room to grow. Whether we are ultimately selected or not, this process has generated extremely valuable attention and interest in all that our region has to offer. The JBG SMITH team has invested considerable time and energy pursuing this once-in-a-generation opportunity. With a decision promised by year end, we are in the home stretch and we continue to hope for the best.
Third-Party Asset Management and Real Estate Services Business
Our share of revenue from the third-party asset management and real estate services business was $14.3 million in the third quarter, primarily driven by $5.9 million in property management fees and $3.6 million in asset management fees. The portion of the total fees associated with the legacy JBG Funds was $6.4 million. The legacy JBG Funds continued to dispose of assets in accordance with their underlying business plans. We continue to expect the fees from the third-party management business to remain relatively stable after the legacy JBG Fund business winds down over the next 4-7 years.
Capital Allocation
Acquisitions
The acquisitions market in Washington, DC continues to be competitive, and we remain cautious. Any near-term acquisition activity will be focused on assets with redevelopment potential in emerging growth neighborhoods, as well as assets adjacent to our existing holdings where the combination of sites can add unique value to any new investment. Where there are opportunities to trade out of higher risk assets with extensive capital needs or those outside of our geographic footprint, we will consider 1031 exchanges.
Dispositions
During the third quarter, we made further progress on our goal to raise $700 million of capital through asset sales and recapitalizations, which we intend to use to deleverage and create balance sheet capacity for future investment opportunities. Year-to-date, we have closed over $553 million of asset sales and recapitalizations, which include 1900 N Street, Summit I and II, the Bowen Building, Executive Tower,1233 20th Street, the Investment Building, and the out-of-service portion of Falkland Chase - North. In July, the deposit related to the $115 million sale of Commerce Executive became non-refundable, which, assuming it closes, brings our aggregate dispositions and recapitalizations to approximately $668 million. Our Future Development Pipeline remains a substantial source of value that can be unlocked through new development, land sales, and/or ground leases. We plan to provide a summary of the impact that our capital recycling efforts have had on our portfolio and our balance sheet, as well as lay out our capital recycling goals for 2019 in conjunction with our year-end investor letter.
Given the continued fervor in the private capital markets, we are exploring additional opportunities to capitalize on attractive market conditions to raise capital through additional sales and recapitalizations. Where appropriate, we will consider 1031 exchanges for low basis assets to improve risk-adjusted returns and upgrade asset quality, location or use type. Over the long term, we expect our capital recycling efforts to reduce our exposure to office and increase our exposure to multifamily in the emerging growth submarkets in which we are concentrated.
Development
We are continuing to advance the entitlement process for assets in our Future Development Pipeline because we believe bringing land to shovel-ready condition is the best way to maximize optionality and value. Some of these assets will be sold or ground leased, and some may be future development opportunities for us. We expect our next development projects to be Central District Retail and additional ground-up multifamily assets in Crystal City. As with all new construction, any future development opportunities will be evaluated on their strength relative to other investment alternatives while maintaining prudent balance sheet capacity.
Balance Sheet
As of September 30, 2018, we had approximately $253.1 million of cash on a GAAP reporting basis, $284.0 million of cash (at share), and $1.1 billion of capacity under our $1.4 billion credit facility. We have $396 million of Estimated Incremental Investment (at share) to complete our seven Under Construction assets, which can be fully funded with cash, in place construction loans, and available draws on our term loan facilities.
During the third quarter, we repaid $88.6 million of mortgage debt and the outstanding $35.7 million balance on our revolving credit facility. We also drew the $200 million term loan, due in 2024, in accordance with the delayed draw provisions of our credit facility. Subsequent to quarter-end, in conjunction with the sale of 1233 20th Street, we repaid the related $41.9 million mortgage. As of September 30, 2018, our fixed-rate debt represents 75% of our total debt, in-line with our target range of 70% to 80% fixed.
As of September 30, 2018, our Net Debt/Adjusted EBITDA ratio was 6.7x, and our Net Debt/Total Enterprise Value was 30.8%. We expect the proceeds from asset sales and recapitalizations to substantially offset the increased leverage that otherwise would have resulted from the incremental investment in our Under Construction assets. Due to our successful capital recycling efforts, we expect to end 2018 with a Net Debt/Adjusted EBITDA ratio of approximately 7.0x and in the low 30’s from a Net Debt/Total Enterprise Value perspective using our stock price at September 30, 2018. It is our goal to create additional capacity to execute on our redevelopment plans in Crystal City and take advantage of acquisition opportunities when the real estate cycle turns.
Environmental, Social and Governance
In September, we achieved a 4-star rating from the Global Real Estate Sustainability Benchmark (GRESB) in the 2018 Real Estate Assessment, ranking second among 25 global participants with mixed-use office and multifamily portfolios. In our first year participating in the GRESB assessment, we outperformed the average score of other first year participants by 23 points with a total score of 82. Each year GRESB assesses and benchmarks the environmental, social and governance (ESG) performance of real assets worldwide and monitors the sector’s progress toward global sustainability goals. GRESB assessments are guided by what investors, and the industry, consider to be material issues in the sustainability performance of real asset investments.
We take our responsibility to contribute to the long-term sustainability of our customers, our region, and our planet seriously. By fully integrating environmental sustainability, social responsibility, and strong governance practices throughout our organization, we believe we can enhance our communities and conserve resources while growing shareholder value. Our investment strategy focuses on aligning long-term business plans with sustainable
development goals, positioning assets to meet market demands for sustainability and achieving long-term targets for conserving resources and reducing carbon emissions. Our portfolio of LEED and ENERGY STAR certified properties demonstrates our commitment to sustainable design and performance. Our emphasis on placemaking and development of high-quality, urban, metro-served real estate is a core aspect of reducing our collective environmental footprint.
In October, we began fundraising for the Washington Housing Initiative Impact Pool, which was created to provide capital for the acquisition and development of affordable workforce housing. As a reminder, we launched the Washington Housing Initiative (WHI) in partnership with the Federal City Council earlier this year. WHI is a transformational, market-driven approach to producing and preserving affordable workforce housing. Its goal is to preserve or build up to 3,000 units of affordable workforce housing in high-impact locations in the Washington, DC region over the next decade. We intend to invest $10 million alongside third-party capital in the WHI and leverage our size and scale to manage the WHI assets. We expect the WHI to begin making investments in 2019.
We are excited to announce the addition of Carey Goldberg, our new Executive Vice President of Human Resources & Inclusion. Carey will serve as a strategic advisor to the executive management team, while overseeing our human resource strategy and direction. Her background building employee experiences and talent development across multiple Fortune 500 companies will serve us well as we strengthen our workplace culture and continue to promote diversity, inclusion, and employee growth.
Finally, we have added a new feature to the News section of our website to share third-party information, such as newsworthy articles, market research reports, or other information on the commercial real estate market that we believe key stakeholders will find valuable. This information can be found at www.jbgsmith.com.
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Thank you for taking the time to read our quarterly investor letter. We will continue to focus on long-term value creation and maximizing net asset value per share. We are excited about the opportunities ahead of our organization, and we will work hard to maintain your trust and confidence as we execute on our growth plans.
W. Matthew Kelly
Chief Executive Officer
FOR IMMEDIATE RELEASE 
CONTACT
Jaime Marcus
SVP, Investor Relations
(240) 333-3643
jmarcus@jbgsmith.com
JBG SMITH ANNOUNCES THIRD QUARTER 2018 RESULTS
Chevy Chase, MD (November 7, 2018) - JBG SMITH (NYSE: JBGS), a leading owner and developer of high-quality, mixed-use properties in the Washington, DC market, today filed its Form 10-Q for the quarter ended September 30, 2018 and reported its financial results.
Additional information regarding our results of operations, properties and tenants can be found in our Third Quarter 2018 Investor Package, which is posted in the Investor Relations section of our website at www.jbgsmith.com.
Third Quarter 2018 Financial Results
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• | Net income attributable to common shareholders was $22.8 million, or $0.19 per diluted share. |
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• | Funds From Operations (“FFO”) attributable to common shareholders was $42.6 million, or $0.36 per diluted share. |
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• | Core Funds From Operations (“Core FFO”) attributable to common shareholders was $51.3 million, or $0.43 per diluted share. |
Nine Months Ended September 30, 2018 Financial Results
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• | Net income attributable to common shareholders was $39.2 million, or $0.33 per diluted share. |
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• | FFO attributable to common shareholders was $120.0 million, or $1.01 per diluted share. |
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• | Core FFO attributable to common shareholders was $156.5 million, or $1.32 per diluted share. |
Operating Portfolio Highlights
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• | Annualized Net Operating Income (“NOI”) for the three months ended September 30, 2018 was $364.9 million, compared to $378.5 million for the three months ended June 30, 2018, at our share. |
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• | The operating office portfolio was 87.1% leased and 85.4% occupied as of September 30, 2018, compared to 87.4% and 86.0% as of June 30, 2018, at our share. |
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• | The operating multifamily portfolio was 96.1% leased and 94.3% occupied as of September 30, 2018, compared to 95.9% and 92.6% as of June 30, 2018, at our share. |
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• | The operating other portfolio (excluding the Crystal City Marriott) was 98.8% leased and 98.6% occupied as of September 30, 2018, compared to 93.4% leased and 91.1% occupied as of June 30, 2018, at our share. |
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• | Executed approximately 378,000 square feet of office leases at our share in the third quarter, comprising approximately 60,000 square feet of new leases, and approximately 318,000 square feet of second generation leases, which generated a 2.6% rental rate decrease on a GAAP basis and a 5.6% rental rate decrease on a cash basis. |
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• | Executed approximately 1.0 million square feet of office leases at our share during the nine months ended September 30, 2018, comprising approximately 277,000 square feet of new leases, and approximately 742,000 |
square feet of second generation leases, which generated a 0.3% rental rate increase on a GAAP basis and a 6.4% rental rate decrease on a cash basis.
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• | Same Store Net Operating Income (“SSNOI”) decreased 0.7% to $70.0 million for the three months ended September 30, 2018, compared to $70.5 million for the three months ended September 30, 2017. SSNOI increased 4.6% to $203.1 million for the nine months ended September 30, 2018, compared to $194.2 million for the nine months ended September 30, 2017. The decrease in SSNOI for the three months ended September 30, 2018 is largely attributable to the conversion of unused tenant incentive allowances to free rent, rental abatement and anticipated tenant move-outs. The increase in SSNOI for the nine months ended September 30, 2018, is mainly driven by the burn off of rent abatements, partially offset by rent abatements given to tenants in 2018. The reported same store pool as of September 30, 2018 includes only the assets that were in service for the entirety of both periods being compared and does not include the JBG Assets acquired in our Formation Transaction. The JBG Assets will be included in reported SSNOI in the fourth quarter of 2018. Including the JBG Assets, SSNOI would have increased 0.7% and 4.9% for the three and nine months ended September 30, 2018. |
Development Portfolio Highlights
Under Construction
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• | During the quarter ended September 30, 2018, there were seven assets under construction (three office assets and four multifamily assets), consisting of 546,133 square feet and 1,284 units, both at our share. |
Near-Term Development
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• | As of September 30, 2018, there were no assets in near-term development. |
Future Development Pipeline
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• | As of September 30, 2018, there were 43 future development assets consisting of 19.0 million square feet of estimated potential density at our share. |
Third-Party Asset Management and Real Estate Services Business
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• | For the three months ended September 30, 2018, revenue from third-party real estate services, including reimbursements, was $23.8 million. Excluding reimbursements and service revenue from our interests in consolidated and unconsolidated real estate ventures, revenue from our third-party asset management and real estate services business was $14.3 million, of which $5.9 million came from property management fees, $3.6 million came from asset management fees, $1.5 million came from leasing fees, $2.3 million came from development fees, $0.6 million came from construction management fees and $0.4 million came from other service revenue. |
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• | The general and administrative expenses allocated to the third-party asset management and real estate services business were $10.1 million for the three months ended September 30, 2018. |
Balance Sheet
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• | We had $2.1 billion of debt ($2.6 billion including our share of debt of unconsolidated real estate ventures) as of September 30, 2018. Of the $2.6 billion of debt at our share, approximately 75% was fixed-rate, and rate caps were in place for approximately 6%. |
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• | The weighted average interest rate of our debt at share was 4.20% as of September 30, 2018. |
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• | At September 30, 2018, our total enterprise value was approximately $7.3 billion, comprising 137.7 million common shares and units valued at $5.1 billion and debt (net of premium / (discount) and deferred financing costs) at our share of $2.5 billion, less cash and cash equivalents of $284.0 million. |
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• | As of September 30, 2018, we had $253.1 million of cash and cash equivalents on a GAAP basis and $284.0 million of cash and cash equivalents at our share, and $1.1 billion of capacity under our credit facility. |
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• | Net Debt / Adjusted EBITDA at our share for the three and nine months ended September 30, 2018 was 6.7x and 6.6x and our Net Debt / Total Enterprise Value was 30.8% as of September 30, 2018. |
Financing and Investing Activities
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• | Drew $200.0 million under the Tranche A-2 Term Loan, in accordance with the delayed draw provisions of the credit facility. We also repaid all outstanding revolving credit facility balances. |
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• | Repaid an aggregate of $88.6 million of mortgage debt comprising the $78.0 million loan on 7200 Wisconsin Avenue and a $10.6 million partial repayment on RTC - West in exchange for modified loan terms. |
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• | Sold Executive Tower, an office building located in Washington, DC, for $121.4 million. |
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• | Sold our 5.0% interest in the real estate venture that owned the Investment Building, an office building located in Washington, DC, for $24.6 million. |
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• | Filed a universal shelf registration statement, which provides us with the ability to efficiently access the public equity markets. |
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• | In July 2018, the buyer’s deposit related to the contract to sell Commerce Executive for $115.0 million became non-refundable. The sale is expected to close in early 2019. |
Subsequent to September 30, 2018:
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• | Sold 1233 20th Street, an office building located in Washington, DC, for $65.0 million. In connection with the sale, we repaid the related $41.9 million mortgage loan. |
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• | Sold the out-of-service portion of Falkland Chase - North, a multifamily building located in Downtown Silver Spring, Maryland, for $3.8 million. |
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• | Including these sales and firm contracts, our aggregate disposition and recapitalization activity is $668 million for 2018, assuming those assets subject to firm contracts close. |
Dividends
In May 2018 and August 2018, we paid dividends totaling $0.45 per common share. In November 2018, our Board of Trustees declared a dividend of $0.225 per common share, an indicated annual dividend of $0.90 per common share. The dividend is payable on November 26, 2018 to common shareholders of record as of November 13, 2018.
About JBG SMITH
JBG SMITH is an S&P 400 company that owns, operates, invests in and develops assets concentrated in leading urban infill submarkets in and around Washington, DC. Our mixed-use operating portfolio comprises approximately 19 million square feet of high-quality office, multifamily and retail assets, 98% at our share of which are Metro-served. With a focus on placemaking, we drive synergies across the portfolio and create amenity-rich, walkable neighborhoods. JBG SMITH’s future development pipeline includes 19.0 million square feet of potential development density at our share. For additional information on JBG SMITH, please visit www.jbgsmith.com.
Forward Looking Statements
Certain statements contained herein may constitute “forward-looking statements” as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Consequently, the future results of JBG SMITH Properties (“JBG SMITH” or the “Company”) may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximate”, “believes”, “expects”, “anticipates”, “estimates”, “intends”, “plans”, “would”, “may” or similar expressions in this earnings release. We also note the following forward-looking statements: our anticipated dispositions, our indicated annual dividend per share and dividend yield, annualized net operating income; in the case of our construction and near-term development assets, estimated square feet, estimated number of units and in the case of our future development assets, estimated potential development density. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or
predict. These factors include, among others: adverse economic conditions in the Washington, DC metropolitan area, the timing of and costs associated with development and property improvements, financing commitments, and general competitive factors. For further discussion of factors that could materially affect the outcome of our forward-looking statements and other risks and uncertainties, see “Risk Factors” and the Cautionary Statement Concerning Forward-Looking Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 and other periodic reports the Company files with the Securities and Exchange Commission. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements after the date hereof.
Pro Rata Information
We present certain financial information and metrics in this release “at JBG SMITH Share,” which refers to our ownership percentage of consolidated and unconsolidated assets in real estate ventures (collectively, “real estate ventures”) as applied to these financial measures and metrics. Financial information “at JBG SMITH Share” is calculated on an asset-by-asset basis by applying our percentage economic interest to each applicable line item of that asset’s financial information. “At JBG SMITH Share” information, which we also refer to as being “at share,” “our pro rata share” or “our share,” is not, and is not intended to be, a presentation in accordance with GAAP. Given that a substantial portion of our assets are held through real estate ventures, we believe this form of presentation, which presents our economic interests in the partially owned entities, provides investors valuable information regarding a significant component of our portfolio, its composition, performance and capitalization.
We do not control the unconsolidated real estate ventures and do not have a legal claim to our co-venturers’ share of assets, liabilities, revenue and expenses. The operating agreements of the unconsolidated real estate ventures generally allow each co-venturer to receive cash distributions to the extent there is available cash from operations. The amount of cash each investor receives is based upon specific provisions of each operating agreement and varies depending on certain factors including the amount of capital contributed by each investor and whether any investors are entitled to preferential distributions.
With respect to any such third-party arrangement, we would not be in a position to exercise sole decision-making authority regarding the property, real estate venture or other entity, and may, under certain circumstances, be exposed to economic risks not present were a third-party not involved. We and our respective co-venturers may each have the right to trigger a buy-sell or forced sale arrangement, which could cause us to sell our interest, or acquire our co-venturers’ interests, or to sell the underlying asset, either on unfavorable terms or at a time when we otherwise would not have initiated such a transaction. Our real estate ventures may be subject to debt, and the repayment or refinancing of such debt may require equity capital calls. To the extent our co-venturers do not meet their obligations to us or our real estate ventures or they act inconsistent with the interests of the real estate venture, we may be adversely affected. Because of these limitations, the non-GAAP “at JBG SMITH Share” financial information should not be considered in isolation or as a substitute for our financial statements as reported under GAAP.
Non-GAAP Financial Measures
This release includes non-GAAP financial measures. For these measures, we have provided an explanation of how these non-GAAP measures are calculated and why JBG SMITH’s management believes that the presentation of these measures provides useful information to investors regarding JBG SMITH’s financial condition and results of operations. Reconciliations of certain non-GAAP measures to the most directly comparable GAAP financial measure are included in this earnings release. Our presentation of non-GAAP financial measures may not be comparable to similar non-GAAP measures used by other companies. In addition to "at share" financial information, the following non-GAAP measures are included in this release:
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), EBITDA for Real Estate ("EBITDAre") and Adjusted EBITDA
Management uses EBITDA and EBITDAre, non-GAAP financial measures, as supplemental operating performance measures and believes they help investors and lenders meaningfully evaluate and compare our operating performance from period-to-period by removing from our operating results the impact of our capital structure (primarily interest charges from our consolidated outstanding debt and the impact of our interest rate swaps) and certain non-cash expenses (primarily depreciation and amortization on our assets). EBITDAre is computed in accordance with the definition established by the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines EBITDAre as GAAP net income (loss) adjusted to exclude interest expense, income taxes, depreciation and amortization expenses, gains on sales of depreciated real estate and impairment losses of depreciable real estate, including our share of such adjustments of unconsolidated real estate ventures. These supplemental measures may help investors and lenders understand our ability to incur and service debt and to make capital expenditures. EBITDA and EBITDAre are not substitutes for net income (loss) (computed in accordance with GAAP) and may not be comparable to similarly titled measures used by other companies.
“Adjusted EBITDA,” a non-GAAP financial measure, represents EBITDAre adjusted for items we believe are not representative of ongoing operating results, such as non-recurring transaction and other costs, gain (loss) on the extinguishment of debt, gain on sale of non-operating real estate, distributions in excess of our net investment in consolidated real estate ventures, gain on the bargain purchase of a business and share-based compensation expense related to the Formation Transaction. We believe that adjusting such items not considered part of our comparable operations, provides a meaningful measure to evaluate and compare our performance from period-to-period.
Because EBITDA, EBITDAre and Adjusted EBITDA have limitations as analytical tools, we use EBITDA, EBITDAre and Adjusted EBITDA to supplement GAAP financial measures. Additionally, we believe that users of these measures should consider EBITDA, EBITDAre and Adjusted EBITDA in conjunction with net income (loss) and other GAAP measures in understanding our operating results.
Funds from Operations ("FFO"), Core FFO and Funds Available for Distribution (“FAD")
FFO is a non-GAAP financial measure computed in accordance with the definition established by NAREIT. NAREIT defines FFO as “net income (computed in accordance with GAAP), excluding gains (or losses) from sales of, or impairment charges related to, depreciable operating properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.”
"Core FFO" represents FFO adjusted to exclude items (net of tax) which we believe are not representative of ongoing operating results, such as transaction and other costs, gains (or losses) on extinguishment of debt, gain on the bargain purchase of a business, gain on sale of non-operating real estate, distributions in excess of our net investment in consolidated real estate ventures, share-based compensation expense related to the Formation Transaction, amortization of the management contracts intangible and the mark-to-market of interest rate swaps.
"FAD" is a non-GAAP financial measure and represents FFO less recurring tenant improvements, leasing commissions and other capital expenditures, net deferred rent activity, third-party lease liability assumption payments, recurring share-based compensation expense, accretion of acquired below-market leases, net of amortization of acquired above-market leases, amortization of debt issuance costs and other non-cash income and charges. FAD is presented solely as a supplemental disclosure that management believes provides useful information as it relates to our ability to fund dividends.
We believe FFO, Core FFO and FAD are meaningful non‑GAAP financial measures useful in comparing our levered operating performance from period-to-period and as compared to similar real estate companies because these non‑GAAP measures exclude real estate depreciation and amortization expense and other non-comparable income and expenses, which implicitly assumes that the value of real estate diminishes predictably over time rather than fluctuating based on market conditions. FFO, Core FFO and FAD do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as a performance measure or cash flow as a liquidity measure. FFO, Core FFO and FAD may not be comparable to similarly titled measures used by other companies.
Net Operating Income ("NOI") and Annualized NOI
“NOI” is a non-GAAP financial measure management uses to measure the operating performance of our assets and consists of property-related revenue (which includes base rent, tenant reimbursements and other operating revenue, net of free rent and payments associated with assumed lease liabilities) less operating expenses and ground rent, if applicable. NOI also excludes deferred rent, related party management fees, interest expense, and certain other non-cash adjustments, including the accretion of acquired below-market leases and amortization of acquired above-market leases and below-market ground lease intangibles. Annualized NOI, for all assets except Crystal City Marriott, represents NOI for the three months ended September 30, 2018 multiplied by four. Due to seasonality in the hospitality business, annualized NOI for Crystal City Marriott represents the trailing twelve-month NOI as of September 30, 2018. Management believes Annualized NOI provides useful information in understanding JBG SMITH’s financial performance over a 12-month period, however, investors and other users are cautioned against attributing undue certainty to our calculation of Annualized NOI. Actual NOI for any 12-month period will depend on a number of factors beyond our ability to control or predict, including general capital markets and economic conditions, any bankruptcy, insolvency, default or other failure to pay rent by one or more of our tenants and the destruction of one or more of our assets due to terrorist attack, natural disaster or other casualty, among others. We do not undertake any obligation to update our calculation to reflect events or circumstances occurring after the date of this earnings release. There can be no assurance that the annualized NOI shown will reflect JBG SMITH’s actual results of operations over any 12-month period.
Management uses each of these measures as supplemental performance measures for its assets and believes they provide useful information to investors because they reflect only those revenue and expense items that are incurred at the asset level, excluding non-cash items. In addition, NOI is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets.
However, because NOI excludes depreciation and amortization and captures neither the changes in the value of our assets that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our assets, all of which have real economic effect and could materially impact the financial performance of our assets, the utility of this measure of the operating performance of our assets is limited. Moreover, our method of calculating NOI may differ from other real estate companies and, accordingly, may not be comparable. NOI should be considered only as a supplement to net operating income (loss) (computed in accordance with GAAP) as a measure of the operating performance of our assets.
Same Store and Non-Same Store
“Same store” refers to the pool of assets that were in service for the entirety of both periods being compared, except for assets for which significant redevelopment, renovation, or repositioning occurred during either of the periods being compared. No JBG Assets are included in the same store pool.
“Non-same store” refers to all operating assets excluded from the same store pool.
Definitions
GAAP
"GAAP" refers to accounting principles generally accepted in the United States of America.
Formation Transaction
"Formation Transaction" refers collectively to the spin-off on July 17, 2017 of substantially all of the assets and liabilities of Vornado’s Washington, DC segment, which operated as Vornado / Charles E. Smith, and the acquisition of the management business and certain assets and liabilities of The JBG Companies.
JBG Assets
"JBG Assets" refers to the management business and certain assets and liabilities of The JBG Companies acquired on July 18, 2017 by JBG SMITH.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) |
| | | | | | | |
in thousands | September 30, 2018 | | December 31, 2017 |
| | | |
ASSETS | |
Real estate, at cost: | | | |
Land and improvements | $ | 1,366,154 |
| | $ | 1,368,294 |
|
Buildings and improvements | 3,678,335 |
| | 3,670,268 |
|
Construction in progress, including land | 649,056 |
| | 978,942 |
|
| 5,693,545 |
| | 6,017,504 |
|
Less accumulated depreciation | (1,020,596 | ) | | (1,011,330 | ) |
Real estate, net | 4,672,949 |
| | 5,006,174 |
|
Cash and cash equivalents | 253,148 |
| | 316,676 |
|
Restricted cash | 127,061 |
| | 21,881 |
|
Tenant and other receivables, net | 40,409 |
| | 46,734 |
|
Deferred rent receivable, net
| 137,200 |
| | 146,315 |
|
Investments in and advances to unconsolidated real estate ventures | 361,014 |
| | 261,811 |
|
Other assets, net
| 281,958 |
| | 263,923 |
|
Assets held for sale | 137,455 |
| | 8,293 |
|
TOTAL ASSETS | $ | 6,011,194 |
| | $ | 6,071,807 |
|
| | | |
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | | | |
Liabilities: | | | |
Mortgages payable, net | $ | 1,769,938 |
| | $ | 2,025,692 |
|
Revolving credit facility | — |
| | 115,751 |
|
Unsecured term loans, net | 296,981 |
| | 46,537 |
|
Accounts payable and accrued expenses | 147,211 |
| | 138,607 |
|
Other liabilities, net | 119,552 |
| | 161,277 |
|
Liabilities related to assets held for sale | 45,657 |
| | — |
|
Total liabilities | 2,379,339 |
| | 2,487,864 |
|
Commitments and contingencies |
| |
|
Redeemable noncontrolling interests | 562,318 |
| | 609,129 |
|
Total equity | 3,069,537 |
| | 2,974,814 |
|
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | $ | 6,011,194 |
| | $ | 6,071,807 |
|
_______________
Note: For complete financial statements, please refer to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2018.
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (Unaudited) |
| | | | | | | | | | | | | | | |
in thousands, except per share data | Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2018 | | 2017 | | 2018 | | 2017 |
REVENUE | | | | | | | |
Property rentals | $ | 123,203 |
| | $ | 116,458 |
| | $ | 375,094 |
| | $ | 316,899 |
|
Tenant reimbursements | 9,744 |
| | 9,593 |
| | 28,651 |
| | 27,161 |
|
Third-party real estate services, including reimbursements | 23,788 |
| | 25,141 |
| | 72,278 |
| | 38,881 |
|
Other income | 1,708 |
| | 1,158 |
| | 4,904 |
| | 3,701 |
|
Total revenue | 158,443 |
| | 152,350 |
| | 480,927 |
| | 386,642 |
|
EXPENSES | | | | | | | |
Depreciation and amortization | 46,603 |
| | 43,951 |
| | 143,880 |
| | 109,726 |
|
Property operating | 34,167 |
| | 29,634 |
| | 95,462 |
| | 77,341 |
|
Real estate taxes | 16,905 |
| | 17,194 |
| | 54,024 |
| | 47,978 |
|
General and administrative: | | | | | | | |
Corporate and other | 12,415 |
| | 10,593 |
| | 37,759 |
| | 35,536 |
|
Third-party real estate services | 20,754 |
| | 21,178 |
| | 64,552 |
| | 30,362 |
|
Share-based compensation related to Formation Transaction
| 8,387 |
| | 14,445 |
| | 26,912 |
| | 14,445 |
|
Transaction and other costs | 4,126 |
| | 104,095 |
| | 12,134 |
| | 115,173 |
|
Total operating expenses | 143,357 |
| | 241,090 |
| | 434,723 |
| | 430,561 |
|
OPERATING INCOME (LOSS) | 15,086 |
| | (88,740 | ) | | 46,204 |
| | (43,919 | ) |
Income (loss) from unconsolidated real estate ventures, net | 13,484 |
| | (1,679 | ) | | 15,418 |
| | (1,365 | ) |
Interest and other income (loss), net | 4,091 |
| | (379 | ) | | 5,177 |
| | 1,366 |
|
Interest expense | (18,979 | ) | | (15,309 | ) | | (56,263 | ) | | (43,813 | ) |
Gain on sale of real estate | 11,938 |
| | — |
| | 45,789 |
| | — |
|
Loss on extinguishment of debt | (79 | ) | | (689 | ) | | (4,536 | ) | | (689 | ) |
Gain (reduction of gain) on bargain purchase | — |
| | 27,771 |
| | (7,606 | ) | | 27,771 |
|
INCOME (LOSS) BEFORE INCOME TAX BENEFIT | 25,541 |
| | (79,025 | ) | | 44,183 |
| | (60,649 | ) |
Income tax benefit | 841 |
| | 1,034 |
| | 1,436 |
| | 317 |
|
NET INCOME (LOSS) | 26,382 |
| | (77,991 | ) | | 45,619 |
| | (60,332 | ) |
Net (income) loss attributable to redeemable noncontrolling
interests | (3,552 | ) | | 8,160 |
| | (6,532 | ) | | 2,481 |
|
Net loss attributable to noncontrolling interests | — |
| | — |
| | 127 |
| | — |
|
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 22,830 |
| | $ | (69,831 | ) | | $ | 39,214 |
| | $ | (57,851 | ) |
EARNINGS (LOSS) PER COMMON SHARE: | | | | | | | |
Basic | $ | 0.19 |
| | $ | (0.61 | ) | | $ | 0.33 |
| | $ | (0.55 | ) |
Diluted | $ | 0.19 |
| | $ | (0.61 | ) | | $ | 0.33 |
| | $ | (0.55 | ) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING : | | | | | | | |
Basic | 119,835 |
| | 114,744 |
| | 118,588 |
| | 105,347 |
|
Diluted | 119,835 |
| | 114,744 |
| | 118,588 |
| | 105,347 |
|
___________________
Note: For complete financial statements, please refer to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2018.
EBITDA, EBITDAre AND ADJUSTED EBITDA (NON-GAAP)
(Unaudited)
|
| | | | | | | | |
| | Three Months Ended September 30, 2018 | | Nine Months Ended September 30, 2018 |
| | | | |
EBITDA, EBITDAre and Adjusted EBITDA | | | | |
Net income |
| $ | 26,382 |
| | $ | 45,619 |
|
Depreciation and amortization expense | | 46,603 |
| | 143,880 |
|
Interest expense (1) | | 18,979 |
| | 56,263 |
|
Income tax benefit (expense) | | (841 | ) | | (1,436 | ) |
Unconsolidated real estate ventures allocated share of above adjustments | | 10,986 |
| | 31,763 |
|
Allocated share of above adjustments to noncontrolling interests in consolidated real estate ventures | | — |
| | 129 |
|
EBITDA | | $ | 102,109 |
| | $ | 276,218 |
|
Gain on sale of interest in unconsolidated real estate venture | | (15,488 | ) | | (15,488 | ) |
Gain on sale of operating real estate | | (11,938 | ) | | (45,334 | ) |
EBITDAre | | $ | 74,683 |
| | $ | 215,396 |
|
Gain on sale of non-operating real estate | | — |
| | (455 | ) |
Transaction and other costs (2) | | 4,126 |
| | 12,134 |
|
Loss on extinguishment of debt | | 79 |
| | 4,536 |
|
Reduction of gain on bargain purchase | | — |
| | 7,606 |
|
Share-based compensation related to Formation Transaction
| | 8,387 |
| | 26,912 |
|
Distributions in excess of our net investment in unconsolidated real estate venture (3) | | (890 | ) | | (6,302 | ) |
Unconsolidated real estate ventures allocated share of above adjustments | | — |
| | 30 |
|
Lease liability adjustments | | (2,543 | ) | | (2,543 | ) |
Allocated share of above adjustments to noncontrolling interests in consolidated real estate ventures | | — |
| | (124 | ) |
Adjusted EBITDA | | $ | 83,842 |
| | $ | 257,190 |
|
| | | | |
Net Debt to Adjusted EBITDA (4) | | 6.7x |
| | 6.6x |
|
| | | | |
| | September 30, 2018 | | |
Net Debt (at JBG SMITH Share) | | | | |
Consolidated indebtedness (5) (6) | | $ | 2,103,589 |
| | |
Unconsolidated indebtedness (5) | | 442,669 |
| | |
Total consolidated and unconsolidated indebtedness | 2,546,258 |
| | |
Less: cash and cash equivalents | | 284,012 |
| | |
Net Debt (at JBG SMITH Share) | | $ | 2,262,246 |
| | |
| | $ | (0.28 | ) | | |
____________________
| |
(1) | Interest expense includes the amortization of deferred financing costs and the marking-to-market of interest rate swaps and caps, net of capitalized interest. |
| |
(2) | Includes amounts incurred for transition services provided by our former parent, integration costs, severance costs, costs incurred in connection with recapitalization transactions and disposition and dead deal costs. |
| |
(3) | Related to our investment in the real estate venture that owns 1101 17th Street. In June 2018, the mortgage loan payable that was collateralized by 1101 17th Street was refinanced eliminating the principal guaranty provisions that had been included in the prior loan. Distributions and our share of the cumulative earnings of the venture exceeded our investment in the venture by $5.4 million, which resulted in a negative investment balance. After the elimination of the principal guaranty provisions in the prior mortgage loan, we recognized the $5.4 million negative investment balance as income within “Income from unconsolidated real estate ventures, net” in our statements of operations for the nine months ended September 30, 2018. We have also suspended the equity method of accounting for this venture and recognized as income in the three and nine months ended September 30, 2018, $890,000 related to cash distributions. |
| |
(4) | Adjusted EBITDA for the three months ended September 30, 2018 is annualized by multiplying by four. Adjusted EBITDA for the nine months ended September 30, 2018 is annualized by multiplying by 1.33. |
| |
(5) | Net of premium/discount and deferred financing costs. |
| |
(6) | Includes mortgage loan related to assets held for sale. |
FFO, CORE FFO AND FAD (NON-GAAP)
(Unaudited)
|
| | | | | | | |
in thousands, except per share data | Three Months Ended September 30, 2018 | | Nine Months Ended September 30, 2018 |
| | | |
FFO and Core FFO | | | |
Net income attributable to common shareholders | $ | 22,830 |
| | $ | 39,214 |
|
Net income attributable to redeemable noncontrolling interests | 3,552 |
| | 6,532 |
|
Net loss attributable to noncontrolling interests | — |
| | (127 | ) |
Net income | 26,382 |
| | 45,619 |
|
Gain on sale of interest in unconsolidated real estate venture | (15,488 | ) | | (15,488 | ) |
Gain on sale of operating real estate | (11,938 | ) | | (45,334 | ) |
Real estate depreciation and amortization | 43,945 |
| | 136,171 |
|
Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures | 6,345 |
| | 18,960 |
|
Net loss attributable to consolidated real estate ventures | — |
| | 129 |
|
FFO Attributable to Operating Partnership Common Units | $ | 49,246 |
| | $ | 140,057 |
|
FFO attributable to redeemable noncontrolling interests | (6,631 | ) | | (20,057 | ) |
FFO attributable to common shareholders | $ | 42,615 |
| | $ | 120,000 |
|
| | | |
FFO attributable to the operating partnership common units | $ | 49,246 |
| | $ | 140,057 |
|
Gain on sale of non-operating real estate | — |
| | (455 | ) |
Transaction and other costs, net of tax (1) | 3,586 |
| | 11,116 |
|
Mark-to-market on derivative instruments | 152 |
| | (1,399 | ) |
Share of gain from mark-to-market on derivative instruments held by unconsolidated real estate ventures | (49 | ) | | (481 | ) |
Loss on extinguishment of debt, net of noncontrolling interests | 79 |
| | 4,412 |
|
Distributions in excess of our net investment in unconsolidated real estate venture (2) | (890 | ) | | (6,302 | ) |
Reduction of gain on bargain purchase | — |
| | 7,606 |
|
Share-based compensation related to Formation Transaction | 8,387 |
| | 26,912 |
|
Lease liability adjustments | (2,543 | ) | | (2,543 | ) |
Amortization of management contracts intangible, net of tax | 1,288 |
| | 3,861 |
|
Core FFO Attributable to Operating Partnership Common Units | $ | 59,256 |
| | $ | 182,784 |
|
Core FFO attributable to redeemable noncontrolling interests | (7,978 | ) | | (26,244 | ) |
Core FFO attributable to common shareholders | $ | 51,278 |
| | $ | 156,540 |
|
FFO per diluted common share | $ | 0.36 |
| | $ | 1.01 |
|
Core FFO per diluted common share | $ | 0.43 |
| | $ | 1.32 |
|
Weighted average diluted shares | 119,835 |
| | 118,588 |
|
| | | |
See footnotes on page 11.
FFO, CORE FFO AND FAD (NON-GAAP)
(Unaudited)
|
| | | | | | | |
in thousands, except per share data | Three Months Ended September 30, 2018 | | Nine Months Ended September 30, 2018 |
| | | |
FAD | | | |
Core FFO attributable to the operating partnership common units | $ | 59,256 |
| | $ | 182,784 |
|
Recurring capital expenditures and second generation tenant improvements and leasing commissions | (19,123 | ) | | (36,277 | ) |
Straight-line and other rent adjustments (3) | (1,368 | ) | | (3,659 | ) |
Share of straight-line rent from unconsolidated real estate ventures | 180 |
| | 528 |
|
Third-party lease liability assumption payments | (912 | ) | | (2,003 | ) |
Share of third party lease liability assumption payments for unconsolidated real estate ventures | — |
| | (50 | ) |
Share-based compensation expense | 4,879 |
| | 15,096 |
|
Amortization of debt issuance costs | 1,155 |
| | 3,520 |
|
Share of amortization of debt issuance costs from unconsolidated real estate ventures | 66 |
| | 201 |
|
Non-real estate depreciation and amortization | 886 |
| | 2,393 |
|
FAD available to the Operating Partnership Common Units (A) | $ | 45,019 |
| | $ | 162,533 |
|
Distributions to common shareholders and unitholders (4) (B) | $ | 31,196 |
| | $ | 93,816 |
|
FAD Payout Ratio (B÷A) (5) | 69.3 | % | | 57.7 | % |
|
| | | | | | | |
Capital Expenditures | | | |
Maintenance and recurring capital expenditures | $ | 7,113 |
| | $ | 13,785 |
|
Share of maintenance and recurring capital expenditures from unconsolidated real estate ventures | 444 |
| | 1,843 |
|
Second generation tenant improvements and leasing commissions | 10,603 |
| | 18,769 |
|
Share of second generation tenant improvements and leasing commissions from unconsolidated real estate ventures | 963 |
| | 1,880 |
|
Recurring capital expenditures and second generation tenant improvements and leasing commissions | 19,123 |
| | 36,277 |
|
First generation tenant improvements and leasing commissions | 4,443 |
| | 15,304 |
|
Share of first generation tenant improvements and leasing commissions from unconsolidated real estate ventures | 169 |
| | 2,555 |
|
Non-recurring capital expenditures | 2,895 |
| | 10,026 |
|
Share of non-recurring capital expenditures from unconsolidated joint ventures | 300 |
| | 1,062 |
|
Non-recurring capital expenditures | 7,807 |
| | 28,947 |
|
Total JBG SMITH Share of Capital Expenditures | $ | 26,930 |
| | $ | 65,224 |
|
_______________
| |
(1) | Includes amounts incurred for transition services provided by our former parent, integration costs, severance costs, costs incurred in connection with recapitalization transactions and disposition and dead deal costs |
| |
(2) | Related to our investment in the real estate venture that owns 1101 17th Street. In June 2018, the mortgage loan payable that was collateralized by 1101 17th Street was refinanced eliminating the principal guaranty provisions that had been included in the prior loan. Distributions and our share of the cumulative earnings of the venture exceeded our investment in the venture by $5.4 million, which resulted in a negative investment balance. After the elimination of the principal guaranty provisions in the prior mortgage loan, we recognized the $5.4 million negative investment balance as income within “Income from unconsolidated real estate ventures, net” in our statements of operations for the nine months ended September 30, 2018. We have also suspended the equity method of accounting for this venture and recognized as income in the three and nine months ended September 30, 2018, $890,000 related to cash distributions. |
| |
(3) | Includes straight-line rent, above/below market lease amortization and lease incentive amortization. |
| |
(4) | In November 2018, our Board of Trustees declared a dividend of $0.225 per share, payable on November 26, 2018. |
| |
(5) | The FAD payout ratio on a quarterly basis is not necessarily indicative of an amount for the full year due to fluctuation in timing of capital expenditures, the commencement of new leases and the seasonality of our operations. |
NOI RECONCILIATIONS (NON-GAAP)
(Unaudited)
|
| | | | | | | | | | | | | | | |
dollars in thousands | Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2018 | | 2017 | | 2018 | | 2017 |
| |
Net income (loss) attributable to common shareholders | $ | 22,830 |
| | $ | (69,831 | ) | | $ | 39,214 |
| | $ | (57,851 | ) |
Add: | | | | | | | |
Depreciation and amortization expense | 46,603 |
| | 43,951 |
| | 143,880 |
| | 109,726 |
|
General and administrative expense: | | | | | | | |
Corporate and other | 12,415 |
| | 10,593 |
| | 37,759 |
| | 35,536 |
|
Third-party real estate services | 20,754 |
| | 21,178 |
| | 64,552 |
| | 30,362 |
|
Share-based compensation related to Formation Transaction
| 8,387 |
| | 14,445 |
| | 26,912 |
| | 14,445 |
|
Transaction and other costs | 4,126 |
| | 104,095 |
| | 12,134 |
| | 115,173 |
|
Interest expense | 18,979 |
| | 15,309 |
| | 56,263 |
| | 43,813 |
|
Loss on extinguishment of debt | 79 |
| | 689 |
| | 4,536 |
| | 689 |
|
Reduction of gain (gain) on bargain purchase | — |
| | (27,771 | ) | | 7,606 |
| | (27,771 | ) |
Income tax benefit | (841 | ) | | (1,034 | ) | | (1,436 | ) | | (317 | ) |
Net (income) loss attributable to redeemable noncontrolling interests | 3,552 |
| | (8,160 | ) | | 6,532 |
| | (2,481 | ) |
Less: | | | | | | | |
Third-party real estate services, including reimbursements
| 23,788 |
| | 25,141 |
| | 72,278 |
| | 38,881 |
|
Other income | 1,708 |
| | 1,158 |
| | 4,904 |
| | 3,701 |
|
Income (loss) from unconsolidated real estate ventures, net | 13,484 |
| | (1,679 | ) | | 15,418 |
| | (1,365 | ) |
Interest and other income (loss), net | 4,091 |
| | (379 | ) | | 5,177 |
| | 1,366 |
|
Gain on sale of real estate | 11,938 |
| | — |
| | 45,789 |
| | — |
|
Net loss attributable to noncontrolling interests | — |
| | — |
| | 127 |
| | — |
|
Consolidated NOI | 81,875 |
| | 79,223 |
| | 254,259 |
| | 218,741 |
|
NOI attributable to consolidated JBG Assets (1) | — |
| | 2,136 |
| | — |
| | 24,670 |
|
Proportionate NOI attributable to unconsolidated JBG Assets (1) | — |
| | 792 |
| | — |
| | 8,648 |
|
Proportionate NOI attributable to unconsolidated real estate ventures | 9,722 |
| | 7,505 |
| | 27,949 |
| | 12,965 |
|
Non-cash rent adjustments (2) | (1,369 | ) | | (1,575 | ) | | (3,659 | ) | | (7,508 | ) |
Other adjustments (3) | 701 |
| | 1,493 |
| | 3,434 |
| | 1,318 |
|
Total adjustments | 9,054 |
| | 10,351 |
| | 27,724 |
| | 40,093 |
|
NOI | $ | 90,929 |
| | $ | 89,574 |
| | $ | 281,983 |
| | $ | 258,834 |
|
Non-same store NOI (4) | 20,910 |
| | 19,048 |
| | 78,862 |
| | 64,643 |
|
Same store NOI (5) | $ | 70,019 |
| | $ | 70,526 |
| | $ | 203,121 |
| | $ | 194,191 |
|
| | | | | | | |
Growth in same store NOI | (0.7 | )% | | | | 4.6 | % | | |
Number of properties in same store pool | 34 |
| | | | 33 |
| | |
___________________
| |
(1) | Includes financial information for the JBG Assets as if the July 18, 2017 acquisition of the JBG Assets had been completed as of the beginning of the period presented. |
| |
(2) | Adjustment to exclude straight-line rent, above/below market lease amortization and lease incentive amortization. |
| |
(3) | Adjustment to include other income and payments associated with assumed lease liabilities related to operating properties, and exclude incidental income generated by development assets and commercial lease termination revenue. |
| |
(4) | Includes the results for properties that were not owned, operated and in service for the entirety of both periods being compared and properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. |
| |
(5) | Includes the results of the properties that are owned, operated and in service for the entirety of both periods being compared except for properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. |
|
| |
TABLE OF CONTENTS | SEPTEMBER 30, 2018 |
|
| |
| Page |
Overview | |
Disclosures | 3-4 |
Company Profile | 5-6 |
Financial Highlights | |
Portfolio Overview | 8-9 |
Financial Information | |
Condensed Consolidated Balance Sheets | |
Condensed Consolidated and Combined Statements of Operations | |
Unconsolidated Real Estate Ventures - Balance Sheet and Operating Information | |
Other Tangible Assets and Liabilities, Net | |
EBITDA, EBITDAre and Adjusted EBITDA (Non-GAAP) | |
FFO, Core FFO and FAD (Non-GAAP) | 15-16 |
Third-Party Asset Management and Real Estate Services Business (Non-GAAP) | |
Pro Rata Adjusted General and Administrative Expenses (Non-GAAP) | |
Operating Assets | |
Summary & Same Store NOI (Non-GAAP) | 20-21 |
Summary NOI (Non-GAAP) | |
Summary NOI - Office (Non-GAAP) | |
Summary NOI - Multifamily (Non-GAAP) | |
NOI Reconciliations (Non-GAAP) | |
Leasing Activity | |
Leasing Activity - Office | |
Net Effective Rent - Office | |
Lease Expirations | |
Signed But Not Yet Commenced Leases | |
Tenant Concentration | |
Industry Diversity
| |
Property Data | |
Portfolio Summary | |
Property Tables: | |
Office | 33-36 |
Multifamily | 37-39 |
Other | 40-41 |
Under Construction | |
Future Development | |
Disposition & Recapitalization Activity | |
Debt | |
Debt Summary | |
Debt by Instrument | 46-47 |
Real Estate Ventures | |
Consolidated Real Estate Ventures | |
Unconsolidated Real Estate Ventures | 49-50 |
Definitions | 51-54 |
|
| |
DISCLOSURES | SEPTEMBER 30, 2018
|
Forward-Looking Statements
Certain statements contained herein may constitute “forward-looking statements” as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Consequently, the future results of JBG SMITH Properties (“JBG SMITH” or the “Company”) may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximate”, “believes”, “expects”, “anticipates”, “estimates”, “intends”, “plans”, “would”, “may” or similar expressions in this document. We also note the following forward-looking statements: our indicated annual dividend per share and dividend yield, annualized net operating income; in the case of our construction and near-term development assets, estimated square feet, estimated number of units, the estimated completion date, estimated stabilization date, estimated incremental investment, estimated total investment, projected net operating income yield and estimated stabilized net operating income; and in the case of our future development assets, estimated potential development density, estimated commercial SF/multifamily units to be replaced, estimated remaining acquisition cost, estimated capitalized cost and estimated total investment. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. These factors include, among others: adverse economic conditions in the Washington, DC metropolitan area, the timing of and costs associated with development and property improvements, financing commitments, and general competitive factors. For further discussion of factors that could materially affect the outcome of our forward-looking statements and other risks and uncertainties, see “Risk Factors” and the Cautionary Statement Concerning Forward-Looking Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 and other periodic reports the Company files with the Securities and Exchange Commission. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the issuance of this Investor Package.
Organization and Basis of Presentation
JBG SMITH was formed by Vornado Realty Trust (“Vornado”) for the purpose of receiving via the spin-off on July 17, 2017, substantially all of the assets and liabilities of Vornado’s Washington, DC segment, which operated as Vornado / Charles E. Smith, (the “Vornado Included Assets”). On July 18, 2017, JBG SMITH acquired the management business and certain assets (the “JBG Assets”) of The JBG Companies (“JBG”). The spin-off from Vornado and combination with JBG are collectively referred to as the "Formation Transaction." The Vornado Included Assets are considered the accounting predecessor. As a result, the financial results of the JBG Assets are only included in the combined company’s financial statements from July 18, 2017 forward and are not reflected in the combined company’s historical financial statements for any prior period. Consequently, our results for the periods before and after the Formation Transaction are not directly comparable. We believe, however, that presenting certain supplemental adjusted financial and operational information at the property-level that is "adjusted" to include the results of the JBG Assets for periods prior to the acquisition date may be useful to investors. No other adjustments have been made to this supplemental adjusted information, which is purely informational and does not purport to be indicative of what would have happened had the acquisition of the JBG Assets occurred at the beginning of the periods presented.
The information contained in this Investor Package does not purport to disclose all items required by the accounting principles generally accepted in the United States of America (“GAAP”) and is unaudited information, unless otherwise indicated.
Pro Rata Information
We present certain financial information and metrics in this Investor Package “at JBG SMITH Share,” which refers to our ownership percentage of consolidated and unconsolidated assets in real estate ventures (collectively, “real estate ventures”) as applied to these financial measures and metrics. Financial information “at JBG SMITH Share” is calculated on an asset-by-asset basis by applying our percentage economic interest to each applicable line item of that asset’s financial information. “At JBG SMITH Share” information, which we also refer to as being “at share,” “our pro rata share” or “our share,” is not, and is not intended to be, a presentation in accordance with GAAP. Given that a substantial portion of our assets are held through real estate ventures, we believe this form of presentation, which presents our economic interests in the partially owned entities, provides investors valuable information regarding a significant component of our portfolio, its composition, performance and capitalization.
We do not control the unconsolidated real estate ventures and do not have a legal claim to our co-venturers’ share of assets, liabilities, revenue and expenses. The operating agreements of the unconsolidated real estate ventures generally allow each co-venturer to receive cash distributions to the extent there is available cash from operations. The amount of cash each investor receives is based upon specific provisions of each operating agreement and varies depending on certain factors including the amount of capital
|
| |
DISCLOSURES | SEPTEMBER 30, 2018
|
contributed by each investor and whether any investors are entitled to preferential distributions.
With respect to any such third-party arrangement, we would not be in a position to exercise sole decision-making authority regarding the property, real estate venture or other entity, and may, under certain circumstances, be exposed to economic risks not present were a third-party not involved. We and our respective co-venturers may each have the right to trigger a buy-sell or forced sale arrangement, which could cause us to sell our interest, or acquire our co-venturers’ interests, or to sell the underlying asset, either on unfavorable terms or at a time when we otherwise would not have initiated such a transaction. Our real estate ventures may be subject to debt, and the repayment or refinancing of such debt may require equity capital calls. To the extent our co-venturers do not meet their obligations to us or our real estate ventures or they act inconsistent with the interests of the real estate venture, we may be adversely affected. Because of these limitations, the non-GAAP “at JBG SMITH Share” financial information should not be considered in isolation or as a substitute for our financial statements as reported under GAAP.
Definitions
See pages 51-54 for definitions of terms used in this Investor Package.
Non-GAAP Measures
This Investor Package includes non-GAAP measures. For these measures, we have provided an explanation of how these non-GAAP measures are calculated and why JBG SMITH’s management believes that the presentation of these measures provides useful information to investors regarding JBG SMITH’s financial condition and results of operations. Reconciliations of certain non-GAAP measures to the most directly comparable GAAP financial measure are included in this Investor Package. Our presentation of non-GAAP financial measures may not be comparable to similar non-GAAP measures used by other companies.
In addition to "at share" financial information, the following non-GAAP measures are included in this Investor Package:
| |
• | Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") |
| |
• | EBITDA For Real Estate ("EBITDAre") |
| |
• | Funds from Operations ("FFO") |
| |
• | Funds Available for Distribution ("FAD") |
| |
• | Net Operating Income ("NOI") |
| |
• | Estimated Stabilized NOI |
| |
• | Adjusted Consolidated and Unconsolidated Indebtedness |
| |
• | Pro Rata Adjusted General and Administrative Expenses |
|
| |
COMPANY PROFILE | SEPTEMBER 30, 2018 (Unaudited) |
JBG SMITH is an S&P 400 company that owns, operates, invests in and develops assets concentrated in leading urban infill submarkets in and around Washington, DC. We own and operate a portfolio of high-quality office and multifamily assets, many of which are amenitized with ancillary retail. Our portfolio reflects our longstanding strategy of owning and operating assets within the Metro-served submarkets in the Washington, DC metropolitan area that have high barriers to entry and key urban amenities, including being within walking distance of a Metro station. Our revenues are derived primarily from leases with office and multifamily tenants, including fixed rents and reimbursements from tenants for certain expenses such as real estate taxes, property operating expenses, and repairs and maintenance. In addition to our portfolio, we have a third-party real estate services business that provides fee-based real estate services to our real estate ventures, the legacy funds formerly organized by JBG and other third parties.
Q3 2018 Financial Results
| |
▪ | Net income attributable to common shareholders was $22.8 million, or $0.19 per diluted share. |
| |
▪ | FFO attributable to common shareholders was $42.6 million, or $0.36 per diluted share. |
| |
▪ | Core FFO attributable to common shareholders was $51.3 million, or $0.43 per diluted share. |
Q3 2018 to Q2 2018 Comparison
Below are the key highlights regarding quarter over quarter changes in the JBG SMITH portfolio.
Operating Assets
| |
▪ | Annualized NOI for the operating portfolio for the three months ended September 30, 2018 was $364.9 million, compared to $378.5 million for the three months ended June 30, 2018, at our share. |
| |
▪ | The operating office portfolio was 87.1% leased and 85.4% occupied as of September 30, 2018, compared to 87.4% and 86.0% as of June 30, 2018 at our share. |
| |
▪ | The operating multifamily portfolio was 96.1% leased and 94.3% occupied as of September 30, 2018, compared to 95.9% and 92.6% as of June 30, 2018 at our share. |
| |
▪ | The operating other portfolio (excluding the Crystal City Marriott) was 98.8% leased and 98.6% occupied as of September 30, 2018, compared to 93.4% leased and 91.1% occupied as of June 30, 2018. |
| |
▪ | Same store NOI decreased 0.7% to $70.0 million for the three months ended September 30, 2018, compared to $70.5 million for the three months ended September 30, 2017. Same store NOI increased 4.6% to $203.1 million for the nine months ended September 30, 2018, compared to $194.2 million for the nine months ended September 30, 2017. The decrease in same store NOI for the three months ended September 30, 2018 is largely attributable to the conversion of unused tenant incentive allowances to free rent, rental abatement and anticipated tenant move-outs. The increase in same store NOI for the nine months ended September 30, 2018, is mainly driven by the burn off of rent abatements, partially offset by rent abatements given to tenants in 2018. The reported same store pool as of September 30, 2018 includes only the assets that were in service for the entirety of both periods being compared and does not include any JBG Assets acquired in the Formation Transaction. The JBG Assets will be included in reported same store NOI in the fourth quarter of 2018. Including the JBG Assets, same store NOI would have increased 0.7% and 4.9% for the three and nine months ended September 30, 2018. See page 53 for the definition of same store. |
Under Construction
| |
▪ | During the quarter ended September 30, 2018, there were seven assets under construction (three office assets and four multifamily assets), consisting of 546,133 square feet and 1,284 units, both at our share. |
Near-Term Development
| |
▪ | As of September 30, 2018, there were no assets in near-term development. |
|
| |
COMPANY PROFILE | SEPTEMBER 30, 2018 (Unaudited) |
Future Development
| |
▪ | As of September 30, 2018, there were 43 future development assets consisting of 19.0 million square feet of estimated potential density at our share. |
Dispositions
During the quarter we closed on the sale of two operating office assets.
| |
▪ | Sold our 5.0% interest in the real estate venture that owned the Investment Building, a 401,000 square foot (20,069 square feet at our share) office building located in Washington, DC, for $24.6 million. |
| |
▪ | Sold Executive Tower, an office building located in Washington, DC, for $121.4 million. |
|
| | | | | | |
Executive Officers & Key Employees | | Company Snapshot as of September 30, 2018 |
| | | | |
W. Matthew Kelly | Chief Executive Officer and Trustee | | Exchange/ticker | NYSE: JBGS |
Robert A. Stewart | Executive Vice Chairman and Trustee | | Insider ownership * | more than 10% |
David P. Paul | President and Chief Operating Officer | | Indicated annual dividend per share | $0.90 |
Stephen W. Theriot | Chief Financial Officer | | Dividend yield | 2.4% |
James L. Iker | Chief Investment Officer | | | |
Brian P. Coulter | Co-Chief Development Officer | | Total Enterprise Value (dollars in billions, except share price) | |
Kevin P. Reynolds | Co-Chief Development Officer | | Share price | $36.83 |
Steven A. Museles | Chief Legal Officer | | Shares and units outstanding (in millions) | 137.74 |
Patrick J. Tyrrell | Chief Administrative Officer | | Total market capitalization | $5.07 |
Angela F. Valdes | Chief Accounting Officer | | Total consolidated and unconsolidated indebtedness at JBG SMITH share | 2.55 |
| | | Less: cash and cash equivalents at JBG SMITH share | (0.28) |
| | | Net debt | $2.27 |
| | | Total Enterprise Value | $7.34 |
| | | | |
| | | Net Debt / Total Enterprise Value | 30.8% |
| | | | |
| * | Represents the percentage of all outstanding common shares of JBG SMITH Properties owned or represented by the Company’s trustees and executive officers as of March 15, 2018 assuming that all OP Units are redeemed for shares.
|
| | | | $ | 2,262,246 |
|
| | | | 30.821 | % |
|
| |
FINANCIAL HIGHLIGHTS | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | |
dollars in thousands, except per share data | Three Months Ended September 30, 2018 | | Nine Months Ended September 30, 2018 |
| | | |
Summary Financial Results | | | |
Total revenue | $ | 158,443 |
| | $ | 480,927 |
|
Net income attributable to common shareholders | $ | 22,830 |
| | $ | 39,214 |
|
Per diluted common share | $ | 0.19 |
| | $ | 0.33 |
|
NOI | $ | 90,929 |
| | $ | 281,983 |
|
FFO attributable to operating partnership common units (including units owned by JBG SMITH Properties) | $ | 49,246 |
| | $ | 140,057 |
|
Per operating partnership common unit | $ | 0.36 |
| | $ | 1.01 |
|
Core FFO attributable to operating partnership common units (including units owned by JBG SMITH Properties) | $ | 59,256 |
| | $ | 182,784 |
|
Per operating partnership common unit | $ | 0.43 |
| | $ | 1.32 |
|
FAD attributable to the operating partnership common units (including units owned by JBG SMITH Properties) | $ | 45,019 |
| | $ | 162,533 |
|
FAD payout ratio | 69.3 | % | | 57.7 | % |
EBITDA attributable to operating partnership common units (including units owned by JBG SMITH Properties) | $ | 102,109 |
| | $ | 276,218 |
|
EBITDAre attributable to operating partnership common units (including units owned by JBG SMITH Properties) | $ | 74,683 |
| | $ | 215,396 |
|
Adjusted EBITDA attributable to operating partnership common units (including units owned by JBG SMITH Properties) | $ | 83,842 |
| | $ | 257,190 |
|
Net debt / annualized adjusted EBITDA | 6.7x |
| | 6.6x |
|
| | | |
| September 30, 2018 | | |
| | | |
Debt Summary and Key Ratios (at JBG SMITH Share) | | | |
Total consolidated indebtedness (1) | $ | 2,103,589 |
| | |
Total consolidated and unconsolidated indebtedness (1) | $ | 2,546,258 |
| | |
Weighted average interest rates: | | | |
Variable rate debt | 4.40 | % | | |
Fixed rate debt | 4.13 | % | | |
Total debt | 4.20 | % | | |
Cash and cash equivalents | $ | 284,012 |
| | |
____________________
| |
(1) | Net of premium/discount and deferred financing costs. |
|
| |
PORTFOLIO OVERVIEW
| SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 100% Share | | At JBG SMITH Share |
| | Number of Assets | | Square Feet/Units | | Square Feet/Units | | %
Leased | | % Occupied | | Annualized
Rent (in thousands) | | Annualized Rent per Square Foot/Monthly Rent Per Unit (1) | Annualized NOI (in thousands) |
| | | | | | | | | | | | | | | |
Operating | | | | | | | | | | | | | | | |
Office | | | | | | | | | | | | | | | |
In service | | 45 |
| | 12,399,166 |
| | 10,917,374 |
| | 87.5 | % | | 85.9 | % | | $ | 418,205 |
| | $ | 44.80 |
| $ | 268,200 |
|
Recently delivered | | 1 |
| | 552,540 |
| | 552,540 |
| | 77.9 | % | | 75.8 | % | | 25,257 |
| | 61.15 |
| 13,044 |
|
Total / weighted average | | 46 |
| | 12,951,706 |
| | 11,469,914 |
| | 87.1 | % | | 85.4 | % | | $ | 443,462 |
| | $ | 45.52 |
| $ | 281,244 |
|
Multifamily | | | | | | | | | | | | | | | |
In service | | 14 |
| | 6,016 |
| | 4,232 |
| | 97.5 | % | | 95.9 | % | | $ | 106,398 |
| | $ | 2,135 |
| $ | 75,672 |
|
Recently delivered | | 1 |
| | 291 |
| | 291 |
| | 73.9 | % | | 70.4 | % | | 6,461 |
| | 2,347 |
| 2,216 |
|
Total / weighted average | | 15 |
| | 6,307 |
| | 4,523 |
| | 96.1 | % | | 94.3 | % | | $ | 112,859 |
| | $ | 2,146 |
| $ | 77,888 |
|
Other (2) | | | | | | | | | | | | | | | |
In service | | 4 |
| | 805,700 |
| | 352,385 |
| | 98.8 | % | | 98.6 | % | | $ | 3,408 |
| | $ | 40.03 |
| $ | 5,783 |
|
| | | | | | | | | | | | | | | |
Operating - Total / Weighted Average | | 65 |
| | 13,757,406 SF/ 6,307 Units |
| | 11,822,299 SF/ 4,523 Units |
| | 89.4 | % | | 87.7 | % | | $ | 559,729 |
| | $45.47 per SF/ $2,146 per unit |
| $ | 364,915 |
|
| | | | | | | | | | | | | | | |
Development (3) | | | | | | | | | | | | | | | |
Under Construction | | | | | | | | | | | | | | | |
Office (4) | | 3 |
| | 778,032 |
| | 546,133 |
| | 63.9 | % | | | | | | | |
Multifamily | | 4 |
| | 1,476 |
| | 1,284 |
| | N/A |
| | | | | | | |
| | | | | | | | | | | | | | | |
Development - Total | | 7 |
| | 778,032 SF/
1,476 Units |
| | 546,133 SF/
1,284 Units |
| | 63.9 | % | | | | | | | |
| | | | | | | | | | | | | | | |
Future Development | | 43 |
| | 22,444,400 |
| | 19,001,700 |
| | | | | | | | | |
See footnotes on page 9.
|
| |
PORTFOLIO OVERVIEW
| SEPTEMBER 30, 2018 (Unaudited)
|
Footnotes
| |
(1) | For office assets, represents annualized office rent divided by occupied office square feet; annualized retail rent and retail square feet are excluded from this metric. For multifamily assets, represents monthly multifamily rent divided by occupied units; retail rent is excluded from this metric. For other assets, represents annualized rent divided by occupied square feet; the Crystal City Marriott is excluded from annualized rent per square foot metrics. Occupied square footage may differ from leased square footage because leased square footage includes leases that have been signed but have not yet commenced. |
| |
(2) | Includes three standalone retail assets and the Crystal City Marriott, a standalone hotel totaling 266,000 square feet and 345 rooms. The Crystal City Marriott is excluded from percent leased, percent occupied, annualized rent, and annualized rent per square foot metrics. |
| |
(3) | Refer to pages 42-43 for detail on under construction and future development assets. |
| |
(4) | Includes JBG SMITH’s lease for approximately 84,400 square feet at 4747 Bethesda Avenue. |
|
| |
CONDENSED CONSOLIDATED BALANCE SHEETS | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | |
in thousands | September 30,
2018 | | December 31,
2017 |
| | | |
ASSETS | |
Real estate, at cost: | | | |
Land and improvements | $ | 1,366,154 |
| | $ | 1,368,294 |
|
Buildings and improvements | 3,678,335 |
| | 3,670,268 |
|
Construction in progress, including land | 649,056 |
| | 978,942 |
|
| 5,693,545 |
| | 6,017,504 |
|
Less accumulated depreciation | (1,020,596 | ) | | (1,011,330 | ) |
Real estate, net | 4,672,949 |
| | 5,006,174 |
|
Cash and cash equivalents | 253,148 |
| | 316,676 |
|
Restricted cash | 127,061 |
| | 21,881 |
|
Tenant and other receivables, net | 40,409 |
| | 46,734 |
|
Deferred rent receivable, net
| 137,200 |
| | 146,315 |
|
Investments in and advances to unconsolidated real estate ventures | 361,014 |
| | 261,811 |
|
Other assets, net
| 281,958 |
| | 263,923 |
|
Assets held for sale | 137,455 |
| | 8,293 |
|
TOTAL ASSETS | $ | 6,011,194 |
| | $ | 6,071,807 |
|
| | | |
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | | | |
Liabilities: | | | |
Mortgages payable, net | $ | 1,769,938 |
| | $ | 2,025,692 |
|
Revolving credit facility | — |
| | 115,751 |
|
Unsecured term loans, net | 296,981 |
| | 46,537 |
|
Accounts payable and accrued expenses | 147,211 |
| | 138,607 |
|
Other liabilities, net | 119,552 |
| | 161,277 |
|
Liabilities related to assets held for sale | 45,657 |
| | — |
|
Total liabilities | 2,379,339 |
| | 2,487,864 |
|
Commitments and contingencies |
| |
|
Redeemable noncontrolling interests | 562,318 |
| | 609,129 |
|
Total equity | 3,069,537 |
| | 2,974,814 |
|
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | $ | 6,011,194 |
| | $ | 6,071,807 |
|
_______________
Note: For complete financial statements, please refer to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2018.
|
| |
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS | SEPTEMBER 30, 2018 (Unaudited)
(Unaudited) (In thousands) |
|
| | | | | | | | | | | | | | | |
in thousands, except per share data | Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2018 | | 2017 | | 2018 | | 2017 |
REVENUE | | | | | | | |
Property rentals | $ | 123,203 |
| | $ | 116,458 |
| | $ | 375,094 |
| | $ | 316,899 |
|
Tenant reimbursements | 9,744 |
| | 9,593 |
| | 28,651 |
| | 27,161 |
|
Third-party real estate services, including reimbursements | 23,788 |
| | 25,141 |
| | 72,278 |
| | 38,881 |
|
Other income | 1,708 |
| | 1,158 |
| | 4,904 |
| | 3,701 |
|
Total revenue | 158,443 |
| | 152,350 |
| | 480,927 |
| | 386,642 |
|
EXPENSES | | | | | | | |
Depreciation and amortization | 46,603 |
| | 43,951 |
| | 143,880 |
| | 109,726 |
|
Property operating | 34,167 |
| | 29,634 |
| | 95,462 |
| | 77,341 |
|
Real estate taxes | 16,905 |
| | 17,194 |
| | 54,024 |
| | 47,978 |
|
General and administrative: | | | | | | | |
Corporate and other | 12,415 |
| | 10,593 |
| | 37,759 |
| | 35,536 |
|
Third-party real estate services | 20,754 |
| | 21,178 |
| | 64,552 |
| | 30,362 |
|
Share-based compensation related to Formation Transaction
| 8,387 |
| | 14,445 |
| | 26,912 |
| | 14,445 |
|
Transaction and other costs | 4,126 |
| | 104,095 |
| | 12,134 |
| | 115,173 |
|
Total operating expenses | 143,357 |
| | 241,090 |
| | 434,723 |
| | 430,561 |
|
OPERATING INCOME (LOSS) | 15,086 |
| | (88,740 | ) | | 46,204 |
| | (43,919 | ) |
Income (loss) from unconsolidated real estate ventures, net | 13,484 |
| | (1,679 | ) | | 15,418 |
| | (1,365 | ) |
Interest and other income (loss), net | 4,091 |
| | (379 | ) | | 5,177 |
| | 1,366 |
|
Interest expense | (18,979 | ) | | (15,309 | ) | | (56,263 | ) | | (43,813 | ) |
Gain on sale of real estate | 11,938 |
| | — |
| | 45,789 |
| | — |
|
Loss on extinguishment of debt | (79 | ) | | (689 | ) | | (4,536 | ) | | (689 | ) |
Gain (reduction of gain) on bargain purchase | — |
| | 27,771 |
| | (7,606 | ) | | 27,771 |
|
INCOME (LOSS) BEFORE INCOME TAX BENEFIT | 25,541 |
| | (79,025 | ) | | 44,183 |
| | (60,649 | ) |
Income tax benefit | 841 |
| | 1,034 |
| | 1,436 |
| | 317 |
|
NET INCOME (LOSS) | 26,382 |
| | (77,991 | ) | | 45,619 |
| | (60,332 | ) |
Net (income) loss attributable to redeemable noncontrolling interests | (3,552 | ) | | 8,160 |
| | (6,532 | ) | | 2,481 |
|
Net loss attributable to noncontrolling interests | — |
| | — |
| | 127 |
| | — |
|
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 22,830 |
| | $ | (69,831 | ) | | $ | 39,214 |
| | $ | (57,851 | ) |
EARNINGS (LOSS) PER COMMON SHARE: | | | | | | | |
Basic | $ | 0.19 |
| | $ | (0.61 | ) | | $ | 0.33 |
| | $ | (0.55 | ) |
Diluted | $ | 0.19 |
| | $ | (0.61 | ) | | $ | 0.33 |
| | $ | (0.55 | ) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING : | | | | | | | |
Basic | 119,835 |
| | 114,744 |
| | 118,588 |
| | 105,347 |
|
Diluted | 119,835 |
| | 114,744 |
| | 118,588 |
| | 105,347 |
|
___________________
Note: For complete financial statements, please refer to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2018.
|
| |
UNCONSOLIDATED REAL ESTATE VENTURES | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | |
in thousands, at JBG SMITH share | |
BALANCE SHEET INFORMATION | September 30, 2018 |
| |
Total real estate, at cost | $ | 843,337 |
|
Less accumulated depreciation | (79,939 | ) |
Real estate, net | 763,398 |
|
Cash and cash equivalents | 30,887 |
|
Other assets, net
| 64,092 |
|
Total assets | $ | 858,377 |
|
Mortgage debt payable, net | $ | 442,669 |
|
Other liabilities, net | 37,496 |
|
Total liabilities | $ | 480,165 |
|
|
| | | | | | | |
OPERATING INFORMATION | Three Months Ended September 30, 2018 | | Nine Months Ended September 30, 2018 |
Total revenue | $ | 18,962 |
| | 59,267 |
|
Expenses: | | | |
Depreciation and amortization | 6,457 |
| | 19,306 |
|
Property operating | 7,917 |
| | 25,387 |
|
Real estate taxes | 2,421 |
| | 7,749 |
|
Total operating expenses | 16,795 |
| | 52,442 |
|
Operating income | 2,167 |
| | 6,825 |
|
Interest expense | (4,641 | ) | | (12,818 | ) |
Interest and other income, net | (6 | ) | | (238 | ) |
Loss before income tax expense | (2,480 | ) | | (6,231 | ) |
Income tax expense | (4 | ) | | (14 | ) |
Net loss | $ | (2,484 | ) | | $ | (6,245 | ) |
Gain on the sale of unconsolidated real estate venture | 15,488 |
| | 15,488 |
|
Basis difference with our unconsolidated real estate partners | 112 |
| | 327 |
|
Distributions in excess of our net investment in unconsolidated real estate ventures | 890 |
| | 6,302 |
|
Other | (522 | ) | | (454 | ) |
Income from unconsolidated real estate ventures, net | $ | 13,484 |
| | $ | 15,418 |
|
|
| |
OTHER TANGIBLE ASSETS AND LIABILITIES, NET | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | |
in thousands, at JBG SMITH share | September 30, 2018 |
| |
Other Tangible Assets, Net (1) | |
Restricted cash | $ | 131,585 |
|
Tenant and other receivables, net | 43,901 |
|
Other assets, net | 67,113 |
|
Total Other Tangible Assets, Net | $ | 242,599 |
|
| |
Other Tangible Liabilities, Net (2) | |
Accounts payable and accrued liabilities | $ | 170,799 |
|
Other liabilities | 107,246 |
|
Total Other Tangible Liabilities, Net | $ | 278,045 |
|
____________________
| |
(1) | Excludes cash and cash equivalents. |
|
| |
EBITDA, EBITDAre AND ADJUSTED EBITDA (NON-GAAP) | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | |
dollars in thousands | | Three Months Ended September 30, 2018 | | Nine Months Ended September 30, 2018 |
| | | | |
EBITDA, EBITDAre and Adjusted EBITDA | | | | |
Net income |
| $ | 26,382 |
| | $ | 45,619 |
|
Depreciation and amortization expense | | 46,603 |
| | 143,880 |
|
Interest expense (1) | | 18,979 |
| | 56,263 |
|
Income tax benefit (expense) | | (841 | ) | | (1,436 | ) |
Unconsolidated real estate ventures allocated share of above adjustments | | 10,986 |
| | 31,763 |
|
Allocated share of above adjustments to noncontrolling interests in consolidated real estate ventures | | — |
| | 129 |
|
EBITDA | | $ | 102,109 |
| | $ | 276,218 |
|
Gain on sale of interest in unconsolidated real estate venture | | (15,488 | ) | | (15,488 | ) |
Gain on sale of operating real estate | | (11,938 | ) | | (45,334 | ) |
EBITDAre | | $ | 74,683 |
| | $ | 215,396 |
|
Gain on sale of non-operating real estate | | — |
| | (455 | ) |
Transaction and other costs (2) | | 4,126 |
| | 12,134 |
|
Loss on extinguishment of debt | | 79 |
| | 4,536 |
|
Reduction of gain on bargain purchase | | — |
| | 7,606 |
|
Share-based compensation related to Formation Transaction
| | 8,387 |
| | 26,912 |
|
Distributions in excess of our net investment in unconsolidated real estate venture (3) | | (890 | ) | | (6,302 | ) |
Unconsolidated real estate ventures allocated share of above adjustments | | — |
| | 30 |
|
Lease liability adjustments | | (2,543 | ) | | (2,543 | ) |
Allocated share of above adjustments to noncontrolling interests in consolidated real estate ventures | | — |
| | (124 | ) |
Adjusted EBITDA | | $ | 83,842 |
| | $ | 257,190 |
|
| | | | |
Net Debt to Adjusted EBITDA (4) | | 6.7x |
| | 6.6x |
|
| | | | |
| | September 30, 2018 | | |
Net Debt (at JBG SMITH Share) | | | | |
Consolidated indebtedness (5) (6) | | $ | 2,103,589 |
| | |
Unconsolidated indebtedness (5) | | 442,669 |
| | |
Total consolidated and unconsolidated indebtedness | 2,546,258 |
| | |
Less: cash and cash equivalents | | 284,012 |
| | |
Net Debt (at JBG SMITH Share) | | $ | 2,262,246 |
| | |
| | $ | (0.28 | ) | | |
____________________
| |
(1) | Interest expense includes the amortization of deferred financing costs and the marking-to-market of interest rate swaps and caps, net of capitalized interest. |
| |
(2) | Includes amounts incurred for transition services provided by our former parent, integration costs, severance costs, costs incurred in connection with recapitalization transactions and disposition and dead deal costs. |
| |
(3) | Related to our investment in the real estate venture that owns 1101 17th Street. In June 2018, the mortgage loan payable that was collateralized by 1101 17th Street was refinanced eliminating the principal guaranty provisions that had been included in the prior loan. Distributions and our share of the cumulative earnings of the venture exceeded our investment in the venture by $5.4 million, which resulted in a negative investment balance. After the elimination of the principal guaranty provisions in the prior mortgage loan, we recognized the $5.4 million negative investment balance as income within “Income from unconsolidated real estate ventures, net” in our statements of operations for the nine months ended September 30, 2018. We have also suspended the equity method of accounting for this venture and recognized as income in the three and nine months ended September 30, 2018, $890,000 related to cash distributions. |
| |
(4) | Adjusted EBITDA for the three months ended September 30, 2018 is annualized by multiplying by four. Adjusted EBITDA for the nine months ended September 30, 2018 is annualized by multiplying by 1.33. |
| |
(5) | Net of premium/discount and deferred financing costs. |
| |
(6) | Includes mortgage loan related to assets held for sale. |
|
| |
FFO, CORE FFO AND FAD (NON-GAAP) | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | |
in thousands, except per share data | Three Months Ended September 30, 2018 | | Nine Months Ended September 30, 2018 |
| | | |
FFO and Core FFO | | | |
Net income attributable to common shareholders | $ | 22,830 |
| | $ | 39,214 |
|
Net income attributable to redeemable noncontrolling interests | 3,552 |
| | 6,532 |
|
Net loss attributable to noncontrolling interests | — |
| | (127 | ) |
Net income | 26,382 |
| | 45,619 |
|
Gain on sale of interest in unconsolidated real estate venture | (15,488 | ) | | (15,488 | ) |
Gain on sale of operating real estate | (11,938 | ) | | (45,334 | ) |
Real estate depreciation and amortization | 43,945 |
| | 136,171 |
|
Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures | 6,345 |
| | 18,960 |
|
Net loss attributable to consolidated real estate ventures | — |
| | 129 |
|
FFO Attributable to Operating Partnership Common Units | $ | 49,246 |
| | $ | 140,057 |
|
FFO attributable to redeemable noncontrolling interests | (6,631 | ) | | (20,057 | ) |
FFO attributable to common shareholders | $ | 42,615 |
| | $ | 120,000 |
|
| | | |
FFO attributable to the operating partnership common units | $ | 49,246 |
| | $ | 140,057 |
|
Gain on sale of non-operating real estate | — |
| | (455 | ) |
Transaction and other costs, net of tax (1) | 3,586 |
| | 11,116 |
|
Mark-to-market on derivative instruments | 152 |
| | (1,399 | ) |
Share of gain from mark-to-market on derivative instruments held by unconsolidated real estate ventures | (49 | ) | | (481 | ) |
Loss on extinguishment of debt, net of noncontrolling interests | 79 |
| | 4,412 |
|
Distributions in excess of our net investment in unconsolidated real estate venture (2) | (890 | ) | | (6,302 | ) |
Reduction of gain on bargain purchase | — |
| | 7,606 |
|
Share-based compensation related to Formation Transaction | 8,387 |
| | 26,912 |
|
Lease liability adjustments | (2,543 | ) | | (2,543 | ) |
Amortization of management contracts intangible, net of tax | 1,288 |
| | 3,861 |
|
Core FFO Attributable to Operating Partnership Common Units | $ | 59,256 |
| | $ | 182,784 |
|
Core FFO attributable to redeemable noncontrolling interests | (7,978 | ) | | (26,244 | ) |
Core FFO attributable to common shareholders | $ | 51,278 |
| | $ | 156,540 |
|
FFO per diluted common share | $ | 0.36 |
| | $ | 1.01 |
|
Core FFO per diluted common share | $ | 0.43 |
| | $ | 1.32 |
|
Weighted average diluted shares | 119,835 |
| | 118,588 |
|
| | | |
See footnotes on page 16.
|
| |
FFO, CORE FFO AND FAD (NON-GAAP) | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | |
in thousands, except per share data | Three Months Ended September 30, 2018 | | Nine Months Ended September 30, 2018 |
| | | |
FAD | | | |
Core FFO attributable to the operating partnership common units | $ | 59,256 |
| | $ | 182,784 |
|
Recurring capital expenditures and second generation tenant improvements and leasing commissions | (19,123 | ) | | (36,277 | ) |
Straight-line and other rent adjustments (3) | (1,368 | ) | | (3,659 | ) |
Share of straight-line rent from unconsolidated real estate ventures | 180 |
| | 528 |
|
Third-party lease liability assumption payments | (912 | ) | | (2,003 | ) |
Share of third party lease liability assumption payments for unconsolidated real estate ventures | — |
| | (50 | ) |
Share-based compensation expense | 4,879 |
| | 15,096 |
|
Amortization of debt issuance costs | 1,155 |
| | 3,520 |
|
Share of amortization of debt issuance costs from unconsolidated real estate ventures | 66 |
| | 201 |
|
Non-real estate depreciation and amortization | 886 |
| | 2,393 |
|
FAD available to the Operating Partnership Common Units (A) | $ | 45,019 |
| | $ | 162,533 |
|
Distributions to common shareholders and unitholders (4) (B) | $ | 31,196 |
| | $ | 93,816 |
|
FAD Payout Ratio (B÷A) (5) | 69.3 | % | | 57.7 | % |
|
| | | | | | | |
Capital Expenditures | | | |
Maintenance and recurring capital expenditures | $ | 7,113 |
| | $ | 13,785 |
|
Share of maintenance and recurring capital expenditures from unconsolidated real estate ventures | 444 |
| | 1,843 |
|
Second generation tenant improvements and leasing commissions | 10,603 |
| | 18,769 |
|
Share of second generation tenant improvements and leasing commissions from unconsolidated real estate ventures | 963 |
| | 1,880 |
|
Recurring capital expenditures and second generation tenant improvements and leasing commissions | 19,123 |
| | 36,277 |
|
First generation tenant improvements and leasing commissions | 4,443 |
| | 15,304 |
|
Share of first generation tenant improvements and leasing commissions from unconsolidated real estate ventures | 169 |
| | 2,555 |
|
Non-recurring capital expenditures | 2,895 |
| | 10,026 |
|
Share of non-recurring capital expenditures from unconsolidated joint ventures | 300 |
| | 1,062 |
|
Non-recurring capital expenditures | 7,807 |
| | 28,947 |
|
Total JBG SMITH Share of Capital Expenditures | $ | 26,930 |
| | $ | 65,224 |
|
_______________
| |
(1) | Includes amounts incurred for transition services provided by our former parent, integration costs, severance costs, costs incurred in connection with recapitalization transactions and disposition and dead deal costs. |
| |
(2) | Related to our investment in the real estate venture that owns 1101 17th Street. In June 2018, the mortgage loan payable that was collateralized by 1101 17th Street was refinanced eliminating the principal guaranty provisions that had been included in the prior loan. Distributions and our share of the cumulative earnings of the venture exceeded our investment in the venture by $5.4 million, which resulted in a negative investment balance. After the elimination of the principal guaranty provisions in the prior mortgage loan, we recognized the $5.4 million negative investment balance as income within “Income from unconsolidated real estate ventures, net” in our statements of operations for the nine months ended September 30, 2018. We have also suspended the equity method of accounting for this venture and recognized as income in the three and nine months ended September 30, 2018, $890,000 related to cash distributions. |
| |
(3) | Includes straight-line rent, above/below market lease amortization and lease incentive amortization. |
| |
(4) | In November 2018, our Board of Trustees declared a dividend of $0.225 per share, payable on November 26, 2018. |
| |
(5) | The FAD payout ratio on a quarterly basis is not necessarily indicative of an amount for the full year due to fluctuation in timing of capital expenditures, the commencement of new leases and the seasonality of our operations. |
|
| |
THIRD-PARTY ASSET MANAGEMENT AND REAL ESTATE SERVICES BUSINESS (NON-GAAP) | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | |
dollars in thousands, at JBG SMITH share
| Three Months Ended September 30, 2018 |
| Source of Revenue | |
|
JBG SMITH JV Partner (1) | Legacy JBG Funds | Third-Party Management | Total |
| | | | |
Service Revenue | | | | |
Property management fees | $ | 1,545 |
| $ | 1,533 |
| $ | 2,834 |
| $ | 5,912 |
|
Asset management fees | 548 |
| 3,096 |
| — |
| 3,644 |
|
Leasing fees | 407 |
| 117 |
| 932 |
| 1,456 |
|
Development fees | 252 |
| 1,530 |
| 507 |
| 2,289 |
|
Construction management fees | 232 |
| 94 |
| 299 |
| 625 |
|
Other service revenue | 295 |
| 1 |
| 110 |
| 406 |
|
Total Revenue (2) | $ | 3,279 |
| $ | 6,371 |
| $ | 4,682 |
| $ | 14,332 |
|
Pro Rata adjusted general and administrative expense: third-party real estate services (3) | | | | (10,092 | ) |
Total Services Revenue Less Allocated General and Administrative Expenses (4) |
|
|
|
|
|
| $ | 4,240 |
|
____________________
| |
(1) | Service revenues from joint ventures are calculated on an asset-by-asset basis by applying our real estate venture partners’ respective economic interests to the fees we earned from each consolidated and unconsolidated real estate venture. |
| |
(2) | Included in “third-party real estate services, including reimbursements” in our consolidated statement of operations are $8.8 million of reimbursement revenue and $0.6 million of service revenue from our economic interest in consolidated and unconsolidated real estate ventures that are excluded from this table. |
| |
(3) | Our personnel perform services for wholly owned properties and properties we manage on behalf of real estate ventures, legacy JBG funds and third-parties. |
We allocate personnel and other costs to wholly owned properties (included in "property operating expenses" and "general and administrative expense: corporate and other" in our consolidated statement of operations) and to properties owned by the real estate ventures, legacy JBG funds and third parties (included in "general and administrative expense: third-party real estate services" in our consolidated statement of operations) using estimates of the time spent performing services related to properties in the respective portfolios and other allocation methodologies.
Allocated general and administrative expenses related to real estate ventures are calculated on an asset-by-asset basis by applying our real estate venture partners’ respective economic interests to the total general and administrative expenses allocated to each asset. See "pro rata adjusted general and administrative expenses" on the next page for a reconciliation of "G&A: third-party real estate services" to "Pro Rata adjusted general and administrative expense: third-party real estate services."
| |
(4) | Services revenue, excluding reimbursement revenue and service revenue from our economic interest in consolidated and unconsolidated real estate ventures, less allocated general and administrative expenses. Management uses this measure as a supplemental performance measure for its third-party asset management and real estate services business and believes it provides useful information to investors because it reflects only those revenue and expense items incurred by the Company and can be used to assess the profitability of the third-party asset management and real estate services business. |
|
| |
PRO RATA ADJUSTED GENERAL AND ADMINISTRATIVE EXPENSES (NON-GAAP) | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | |
dollars in thousands | Three Months Ended September 30, 2018 |
| Per Statement of Operations (1) | Adjustments (2) | Pro Rata Adjusted |
| A | B | C | D |
| | | | | | |
General and Administrative Expenses | | | | | | |
Corporate and other | $ | 12,415 |
| $ | — |
| $ | — |
| $ | 960 |
| $ | (87 | ) | $ | 13,288 |
|
Third-party real estate services | 20,754 |
| — |
| (9,701 | ) | (960 | ) | — |
| 10,093 |
|
Share-based compensation related to Formation Transaction
| 8,387 |
| (8,387 | ) | — |
| — |
| — |
| — |
|
Total | $ | 41,556 |
| $ | (8,387 | ) | $ | (9,701 | ) | $ | — |
| $ | (87 | ) | $ | 23,381 |
|
_______________
| |
(1) | Under the new lease accounting standards, we may no longer be able to capitalize internal leasing costs and instead may be required to expense these costs as incurred. Capitalized internal leasing costs were $1.5 million and $1.0 million for the three months ended September 30, 2018 and 2017, and $4.3 million and $1.8 million for the nine months ended September 30, 2018 and 2017. |
|
|
A - Removes share-based compensation related to the Formation Transaction. |
B - Removes $8.8 million of G&A expenses reimbursed by third-party owners of real estate we manage and $0.9 million of other expenses related to revenue which has been excluded from Service Revenue on page 17. Revenue from reimbursements is included in "Third-party real estate services, including reimbursements" in our consolidated statement of operations. |
C - Reflects an adjustment to allocate our share of G&A expenses of unconsolidated real estate ventures from "Third-party real estate services" to "Corporate and other" and our consolidated real estate venture partners' share of G&A expenses from "Corporate and other" to "Third-party real estate services." |
D - Reflects the adjustment to capitalize G&A expenses related to "Corporate and other" allocation in Adjustment C. |
|
| |
OPERATING ASSETS
| SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | |
dollars in thousands, at JBG SMITH share | | | | | Plus: Signed But Not Yet Commenced Leases | Plus: Lease Up of Recently Delivered Assets (1) | Adjusted Annualized NOI |
| | | Q3 2018 NOI | Annualized NOI |
| % Occupied | |
| | | | | | | |
Office | | | | | | | |
DC | 94.0 | % | | $ | 20,593 |
| $ | 82,372 |
| $ | 814 |
| $ | — |
| $ | 83,186 |
|
VA | 83.8 | % | | 47,555 |
| 190,220 |
| 3,894 |
| — |
| 194,114 |
|
MD | 74.3 | % | | 2,163 |
| 8,652 |
| 2,312 |
| — |
| 10,964 |
|
Total / weighted average | 85.4 | % | | $ | 70,311 |
| $ | 281,244 |
| $ | 7,020 |
| $ | — |
| $ | 288,264 |
|
| | | | | | | |
Multifamily | | | | | | | |
DC | 88.4 | % | | $ | 5,535 |
| $ | 22,140 |
| $ | 344 |
| $ | 2,012 |
| $ | 24,496 |
|
VA | 96.2 | % | | 12,424 |
| 49,696 |
| — |
| — |
| 49,696 |
|
MD | 96.8 | % | | 1,513 |
| 6,052 |
| — |
| — |
| 6,052 |
|
Total / weighted average | 94.3 | % | | $ | 19,472 |
| $ | 77,888 |
| $ | 344 |
| $ | 2,012 |
| $ | 80,244 |
|
| | | | | | | |
Other (2) | | | | | | | |
Total / weighted average | 98.6 | % | | $ | 1,146 |
| $ | 5,783 |
| $ | 13 |
| $ | — |
| $ | 5,796 |
|
| | | | | | | |
Total / Weighted Average | 87.7 | % | | $ | 90,929 |
| $ | 364,915 |
| $ | 7,377 |
| $ | 2,012 |
| $ | 374,304 |
|
____________________
| |
(1) | Incremental multifamily revenue of a recently delivered multifamily asset calculated as the product of units available for occupancy up to 95.0% occupancy and the weighted average monthly market rent per unit as of September 30, 2018, multiplied by 12. Excludes potential revenue from vacant retail space in recently delivered multifamily assets. |
| |
(2) | Includes three standalone retail assets and the Crystal City Marriott, a standalone hotel totaling 266,000 square feet and 345 rooms. The Crystal City Marriott is excluded from the percent occupied metric. |
|
| |
SUMMARY & SAME STORE NOI (NON-GAAP) | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | | | | | | | |
dollars in thousands | | 100% Share | | At JBG SMITH Share |
| | | | | | | | | | | | NOI for the Three Months Ended September 30, |
| | Number of Assets | | Square Feet/Units | | Square Feet/Units | | % Leased (1) | | %
Occupied (1) | | 2018 | | 2017 | | % Change |
| | | | | | | | | | | | | | |
Same Store (2) | | | | | | | | | | | | | | | | |
DC | | 6 |
| | 2,036,650 SF/
283 Units | | 1,679,337 SF/
283 Units | | 96.8 | % | | 96.8 | % | | $ | 17,679 |
| | $ | 16,536 |
| | 6.9 | % |
VA | | 27 |
| | 7,399,210 SF/
2,850 Units | | 7,399,210 SF/
2,850 Units | | 87.9 | % | | 86.3 | % | | 51,587 |
| | 53,243 |
| | (3.1 | )% |
MD | | 1 |
| | 213,131 SF | | 213,131 SF | | 94.9 | % | | 93.4 | % | | 753 |
| | 747 |
| | 0.8 | % |
Total / weighted average | 34 |
| | 9,648,991 SF/
3,133 Units | | 9,291,678 SF/
3,133 Units | | 89.5 | % | | 88.2 | % | | $ | 70,019 |
| | $ | 70,526 |
| | (0.7 | )% |
| | | | | | | | | | | | | | | | |
Non-Same Store | | | | | | | | | | | | | | | | |
DC | | 11 |
| | 1,298,338 SF/
1,549 Units | | 680,932 SF/
865 Units | | 90.0 | % | | 86.5 | % | | $ | 8,592 |
| | $ | 8,987 |
| | (4.4 | )% |
VA | | 11 |
| | 2,432,280 SF/
346 Units | | 1,555,930 SF/
35 Units | | 89.6 | % | | 88.7 | % | | 9,395 |
| | 6,942 |
| | 35.3 | % |
MD | | 9 |
| | 377,797 SF/
1,279 Units | | 293,759 SF/
490 Units | | 85.4 | % | | 81.3 | % | | 2,923 |
| | 3,119 |
| | (6.3 | )% |
Total / weighted average | 31 |
| | 4,108,415 SF/
3,174 Units | | 2,530,621 SF/
1,390 Units | | 89.0 | % | | 86.5 | % | | $ | 20,910 |
| | $ | 19,048 |
| | 9.8 | % |
| | | | | | | | | | | | | | | | |
Total Operating Portfolio | | | | | | | | | | | | | | | | |
DC | | 17 |
| | 3,334,988 SF/
1,832 Units | | 2,360,269 SF/
1,148 Units | | 93.9 | % | | 92.6 | % | | $ | 26,271 |
| | $ | 25,523 |
| | 2.9 | % |
VA | | 38 |
| | 9,831,490 SF/
3,196 Units | | 8,955,140 SF/
2,885 Units | | 88.1 | % | | 86.7 | % | | 60,982 |
| | 60,185 |
| | 1.3 | % |
MD | | 10 |
| | 590,928 SF/
1,279 Units | | 506,890 SF/
490 Units | | 87.7 | % | | 84.3 | % | | 3,676 |
| | 3,866 |
| | (4.9 | )% |
Operating Portfolio - Total / Weighted Average | 65 |
| | 13,757,406 SF/
6,307 Units | | 11,822,299 SF/
4,523 Units | | 89.4 | % | | 87.7 | % | | $ | 90,929 |
| | $ | 89,574 |
| | 1.5 | % |
_______________
Note: Includes financial information for the JBG Assets as if the July 18, 2017 acquisition of the JBG Assets had been completed as of the beginning of the periods presented.
| |
(1) | The Crystal City Marriott is excluded from the percent leased and percent occupied metrics. |
| |
(2) | Same store refers to the pool of assets that were in service for the entirety of both periods being compared, except for assets for which significant redevelopment, renovation, or repositioning occurred during either of the periods being compared. No JBG Assets are included in the same store pool. |
|
| |
SUMMARY & SAME STORE NOI (NON-GAAP) | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | | | | | | | |
dollars in thousands | | 100% Share | | At JBG SMITH Share |
| | | | | | | | | | | | NOI for the Nine Months Ended September 30, |
| | Number of Assets | | Square Feet/Units | | Square Feet/Units | | % Leased (1) | | % Occupied (1) | | 2018 | | 2017 | | % Change |
| | | | | | | | | | | | | | |
Same Store (2) | | | | | | | | | | | | | | | | |
DC | | 6 |
| | 2,036,650 SF/
283 Units | | 1,679,337 SF/
283 Units | | 96.8 | % | | 96.8 | % | | $ | 52,497 |
| | $ | 46,525 |
| | 12.8 | % |
VA | | 26 |
| | 7,399,210 SF/
2,151 Units | | 7,399,210 SF/
2,151 Units | | 87.2 | % | | 85.6 | % | | 148,564 |
| | 144,881 |
| | 2.5 | % |
MD | | 1 |
| | 213,131 SF | | 213,131 SF | | 94.9 | % | | 93.4 | % | | 2,060 |
| | 2,785 |
| | (26.0 | )% |
Total / weighted average | 33 |
| | 9,648,991 SF/
2,434 Units | | 9,291,678 SF/
2,434 Units | | 89.0 | % | | 87.7 | % | | $ | 203,121 |
| | $ | 194,191 |
| | 4.6 | % |
| | | | | | | | | | | | | | | | |
Non-Same Store | | | | | | | | | | | | | | | | |
DC | | 11 |
| | 1,298,338 SF/
1,549 Units | | 680,932 SF/
865 Units | | 90.0 | % | | 86.5 | % | | $ | 26,140 |
| | $ | 24,521 |
| | 6.6 | % |
VA | | 12 |
| | 2,432,280 SF/
1,045 Units | | 1,555,930 SF/
734 Units | | 92.1 | % | | 90.9 | % | | 43,422 |
| | 30,115 |
| | 44.2 | % |
MD | | 9 |
| | 377,797 SF/
1,279 Units | | 293,759 SF/
490 Units | | 85.4 | % | | 81.3 | % | | 9,300 |
| | 10,007 |
| | (7.1 | )% |
Total / weighted average | 32 |
| | 4,108,415 SF/
3,873 Units | | 2,530,621 SF/
2,089 Units | | 90.4 | % | | 88.0 | % | | $ | 78,862 |
| | $ | 64,643 |
| | 22.0 | % |
| | | | | | | | | | | | | | | | |
Total Operating Portfolio | | | | | | | | | | | | | | | | |
DC | | 17 |
| | 3,334,988 SF/
1,832 Units | | 2,360,269 SF/
1,148 Units | | 93.9 | % | | 92.6 | % | | $ | 78,637 |
| | $ | 71,046 |
| | 10.7 | % |
VA | | 38 |
| | 9,831,490 SF/
3,196 Units | | 8,955,140 SF/
2,885 Units | | 88.1 | % | | 86.7 | % | | 191,986 |
| | 174,996 |
| | 9.7 | % |
MD | | 10 |
| | 590,928 SF/
1,279 Units | | 506,890 SF/
490 Units | | 87.7 | % | | 84.3 | % | | 11,360 |
| | 12,792 |
| | (11.2 | )% |
Operating Portfolio - Total / Weighted Average | 65 |
| | 13,757,406 SF/
6,307 Units | | 11,822,299 SF/
4,523 Units | | 89.4 | % | | 87.7 | % | | $ | 281,983 |
| | $ | 258,834 |
| | 8.9 | % |
See footnotes on page 20.
|
| |
SUMMARY NOI (NON-GAAP) | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | | |
dollars in thousands | NOI for the Three Months Ended September 30, 2018 at JBG SMITH Share |
| Consolidated (6) | Unconsolidated | | Office (6) | Multifamily | Other | Total |
Number of operating assets | 47 |
| 18 |
| | 46 |
| 15 |
| 4 |
| 65 |
|
Property rentals (1) | $ | 113,028 |
| $ | 12,189 |
| | $ | 96,606 |
| $ | 27,378 |
| $ | 1,233 |
| $ | 125,217 |
|
Tenant expense reimbursement | 9,669 |
| 2,660 |
| | 10,508 |
| 1,661 |
| 160 |
| 12,329 |
|
Other revenue | 9,131 |
| 774 |
| | 8,023 |
| 1,863 |
| 19 |
| 9,905 |
|
Total revenue | 131,828 |
| 15,623 |
| | 115,137 |
| 30,902 |
| 1,412 |
| 147,451 |
|
| | | | | | | |
Operating expenses | (49,712 | ) | (5,890 | ) | | (43,911 | ) | (11,425 | ) | (266 | ) | (55,602 | ) |
Ground rent expense | (915 | ) | (5 | ) | | (915 | ) | (5 | ) | — |
| (920 | ) |
Total expenses | (50,627 | ) | (5,895 | ) | | (44,826 | ) | (11,430 | ) | (266 | ) | (56,522 | ) |
| | | | | | | |
NOI (1) | $ | 81,201 |
| $ | 9,728 |
| | $ | 70,311 |
| $ | 19,472 |
| $ | 1,146 |
| $ | 90,929 |
|
| | | | | | | |
Annualized NOI | $ | 326,003 |
| $ | 38,912 |
| | $ | 281,244 |
| $ | 77,888 |
| $ | 5,783 |
| $ | 364,915 |
|
Additional Information | | | | | | | |
Free rent (at 100% share) | $ | 5,393 |
| $ | 1,142 |
| | $ | 5,638 |
| $ | 711 |
| $ | 186 |
| $ | 6,535 |
|
Free rent (at JBG SMITH share) | $ | 5,393 |
| $ | 135 |
| | $ | 5,175 |
| $ | 334 |
| $ | 19 |
| $ | 5,528 |
|
Annualized free rent (at JBG SMITH share) (2) | $ | 21,572 |
| $ | 540 |
| | $ | 20,700 |
| $ | 1,336 |
| $ | 76 |
| $ | 22,112 |
|
Payments associated with assumed lease liabilities (at 100% share) | $ | 912 |
| $ | — |
| | $ | 912 |
| $ | — |
| $ | — |
| $ | 912 |
|
Payments associated with assumed lease liabilities (at JBG SMITH share) | $ | 912 |
| $ | — |
| | $ | 912 |
| $ | — |
| $ | — |
| $ | 912 |
|
Annualized payments associated with assumed lease liabilities (at JBG SMITH share)(3) | $ | 3,648 |
| $ | — |
| | $ | 3,648 |
| $ | — |
| $ | — |
| $ | 3,648 |
|
% occupied (at JBG SMITH share) (4) | 87.3 | % | 92.6 | % | | 85.4 | % | 94.3 | % | 98.6 | % | 87.7 | % |
Annualized base rent of signed leases, not commenced (at 100% share) (5) | $ | 6,550 |
| $ | 2,357 |
| | $ | 8,431 |
| $ | 344 |
| $ | 132 |
| $ | 8,907 |
|
Annualized base rent of signed leases, not commenced (at JBG SMITH share) (5) | $ | 6,550 |
| $ | 827 |
| | $ | 7,020 |
| $ | 344 |
| $ | 13 |
| $ | 7,377 |
|
___________________
| |
(1) | Property rentals and NOI exclude management fees, straight-line rent adjustments, and other GAAP adjustments, and include payments associated with assumed lease liabilities. See definition of NOI on page 52. |
| |
(2) | Represents JBG SMITH share of free rent for the three months ended September 30, 2018 multiplied by four. |
| |
(3) | Represents JBG SMITH's share of payments associated with assumed lease liabilities for the three months ended September 30, 2018 multiplied by four. |
| |
(4) | The Crystal City Marriott is excluded from the percent occupied metric. |
| |
(5) | Represents monthly base rent before free rent and straight line rent adjustments, plus estimated tenant reimbursements for the month in which the lease commences, multiplied by 12. Triple net leases are converted to a gross basis by adding estimated tenant reimbursements to monthly base rent. Includes only leases for office and retail spaces that were vacant as of September 30, 2018. |
| |
(6) | Includes $0.9 million of annualized NOI from our 5% interest in the joint venture that owned Investment Building which we sold in August 2018. Includes $3.4 million of annualized NOI from Executive Tower, which was sold in September 2018. Includes $3.2 million of annualized NOI from 1233 20th Street, which was sold in October 2018. |
|
| |
SUMMARY NOI - OFFICE (NON-GAAP)
| SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | | |
dollars in thousands | NOI for the Three Months Ended September 30, 2018 at JBG SMITH Share |
| Consolidated (5) | Unconsolidated | | DC (5) | VA | MD | Total |
Number of operating assets | 35 |
| 11 |
| | 11 |
| 30 |
| 5 |
| 46 |
|
Property rentals (1) | $ | 86,912 |
| $ | 9,694 |
| | $ | 26,206 |
| $ | 66,977 |
| $ | 3,423 |
| $ | 96,606 |
|
Tenant expense reimbursement | 8,036 |
| 2,472 |
| | 5,752 |
| 4,646 |
| 110 |
| 10,508 |
|
Other revenue | 7,428 |
| 595 |
| | 1,653 |
| 5,850 |
| 520 |
| 8,023 |
|
Total revenue | 102,376 |
| 12,761 |
| | 33,611 |
| 77,473 |
| 4,053 |
| 115,137 |
|
| | | | | | | |
Operating expenses | (38,918 | ) | (4,993 | ) | | (12,818 | ) | (29,412 | ) | (1,681 | ) | (43,911 | ) |
Ground rent expense | (915 | ) | — |
| | (200 | ) | (506 | ) | (209 | ) | (915 | ) |
Total expenses | (39,833 | ) | (4,993 | ) | | (13,018 | ) | (29,918 | ) | (1,890 | ) | (44,826 | ) |
| | | | | | | |
NOI (1) | $ | 62,543 |
| $ | 7,768 |
| | $ | 20,593 |
| $ | 47,555 |
| $ | 2,163 |
| $ | 70,311 |
|
| | | | | | | |
Annualized NOI | $ | 250,172 |
| $ | 31,072 |
| | $ | 82,372 |
| $ | 190,220 |
| $ | 8,652 |
| $ | 281,244 |
|
Additional Information | | | | | | | |
Free rent (at 100% share) | $ | 5,098 |
| $ | 540 |
| | $ | 1,041 |
| $ | 4,397 |
| $ | 200 |
| $ | 5,638 |
|
Free rent (at JBG SMITH share) | $ | 5,098 |
| $ | 77 |
| | $ | 750 |
| $ | 4,243 |
| $ | 182 |
| $ | 5,175 |
|
Annualized free rent (at JBG SMITH share) (2) | $ | 20,392 |
| $ | 308 |
| | $ | 3,000 |
| $ | 16,972 |
| $ | 728 |
| $ | 20,700 |
|
Payments associated with assumed lease liabilities (at 100% share) | $ | 912 |
| $ | — |
| | $ | — |
| $ | 912 |
| $ | — |
| $ | 912 |
|
Payments associated with assumed lease liabilities (at JBG SMITH share) | $ | 912 |
| $ | — |
| | $ | — |
| $ | 912 |
| $ | — |
| $ | 912 |
|
Annualized payments associated with assumed lease liabilities (at JBG SMITH share) (3) | $ | 3,648 |
| $ | — |
| | $ | — |
| $ | 3,648 |
| $ | — |
| $ | 3,648 |
|
% occupied (at JBG SMITH share) | 84.8 | % | 92.2 | % | | 94.0 | % | 83.8 | % | 74.3 | % | 85.4 | % |
Annualized base rent of signed leases, not commenced (at 100% share) (4) | $ | 6,206 |
| $ | 2,225 |
| | $ | 2,225 |
| $ | 3,894 |
| $ | 2,312 |
| $ | 8,431 |
|
Annualized base rent of signed leases, not commenced (at JBG SMITH share) (4) | $ | 6,206 |
| $ | 814 |
| | $ | 814 |
| $ | 3,894 |
| $ | 2,312 |
| $ | 7,020 |
|
___________________
| |
(1) | Property rentals and NOI exclude management fees, straight-line rent adjustments, and other GAAP adjustments, and include payments associated with assumed lease liabilities. See definition of NOI on page 52. |
| |
(2) | Represents JBG SMITH share of free rent for the three months ended September 30, 2018 multiplied by four. |
| |
(3) | Represents JBG SMITH's share of payments associated with assumed lease liabilities for the three months ended September 30, 2018 multiplied by four. |
| |
(4) | Represents monthly base rent before free rent and straight line rent adjustments, plus estimated tenant reimbursements for the month in which the lease commences, multiplied by 12. Triple net leases are converted to a gross basis by adding estimated tenant reimbursements to monthly base rent. Includes only leases for office and retail spaces that were vacant as of September 30, 2018. |
| |
(5) | Includes $0.9 million of annualized NOI from our 5% interest in the joint venture that owned Investment Building which we sold in August 2018. Includes $3.4 million of annualized NOI from Executive Tower, which was sold in September 2018. Includes $3.2 million of annualized NOI from 1233 20th Street, which was sold in October 2018. |
|
| |
SUMMARY NOI - MULTIFAMILY (NON-GAAP) | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | | |
dollars in thousands | NOI for the Three Months Ended September 30, 2018 at JBG SMITH Share |
| Consolidated | Unconsolidated | | DC | VA | MD | Total |
Number of operating assets | 9 |
| 6 |
| | 5 |
| 5 |
| 5 |
| 15 |
|
Property rentals (1) | $ | 25,170 |
| $ | 2,208 |
| | $ | 7,956 |
| $ | 17,058 |
| $ | 2,364 |
| $ | 27,378 |
|
Tenant expense reimbursement | 1,564 |
| 97 |
| | 494 |
| 1,102 |
| 65 |
| 1,661 |
|
Other revenue | 1,689 |
| 174 |
| | 539 |
| 1,228 |
| 96 |
| 1,863 |
|
Total revenue | 28,423 |
| 2,479 |
| | 8,989 |
| 19,388 |
| 2,525 |
| 30,902 |
|
| | | | | | | |
Operating expenses | (10,634 | ) | (791 | ) | | (3,454 | ) | (6,964 | ) | (1,007 | ) | (11,425 | ) |
Ground rent expense | — |
| (5 | ) | | — |
| — |
| (5 | ) | (5 | ) |
Total expenses | (10,634 | ) | (796 | ) | | (3,454 | ) | (6,964 | ) | (1,012 | ) | (11,430 | ) |
| | | | | | | |
NOI (1) | $ | 17,789 |
| $ | 1,683 |
| | $ | 5,535 |
| $ | 12,424 |
| $ | 1,513 |
| $ | 19,472 |
|
| | | | | | | |
Annualized NOI | $ | 71,156 |
| $ | 6,732 |
| | $ | 22,140 |
| $ | 49,696 |
| $ | 6,052 |
| $ | 77,888 |
|
Additional Information | | | | | | | |
Free rent (at 100% share) | $ | 295 |
| $ | 416 |
| | $ | 192 |
| $ | 166 |
| $ | 353 |
| $ | 711 |
|
Free rent (at JBG SMITH share) | $ | 295 |
| $ | 39 |
| | $ | 164 |
| $ | 147 |
| $ | 23 |
| $ | 334 |
|
Annualized free rent (at JBG SMITH share) (2) | $ | 1,180 |
| $ | 156 |
| | $ | 656 |
| $ | 588 |
| $ | 92 |
| $ | 1,336 |
|
Payments associated with assumed lease liabilities (at 100% share) | $ | — |
| $ | — |
| | $ | — |
| $ | — |
| $ | — |
| $ | — |
|
Payments associated with assumed lease liabilities (at JBG SMITH share) | $ | — |
| $ | — |
| | $ | — |
| $ | — |
| $ | — |
| $ | — |
|
Annualized payments associated with assumed lease liabilities (at JBG SMITH share) (3) | $ | — |
| $ | — |
| | $ | — |
| $ | — |
| $ | — |
| $ | — |
|
% occupied (at JBG SMITH share) | 94.4 | % | 93.2 | % | | 88.4 | % | 96.2 | % | 96.8 | % | 94.3 | % |
Annualized base rent of signed leases, not commenced (at 100% share) (4) | $ | 344 |
| — |
| | $ | 344 |
| — |
| — |
| $ | 344 |
|
Annualized base rent of signed leases, not commenced (at JBG SMITH share) (4) | $ | 344 |
| — |
| | $ | 344 |
| — |
| — |
| $ | 344 |
|
___________________
| |
(1) | Property rentals and NOI exclude management fees, straight-line rent adjustments, and other GAAP adjustments, and include payments associated with assumed lease liabilities. See definition of NOI on page 52. |
| |
(2) | Represents JBG SMITH share of free rent for the three months ended September 30, 2018 multiplied by four. |
| |
(3) | Represents JBG SMITH's share of payments associated with assumed lease liabilities for the three months ended September 30, 2018 multiplied by four. |
| |
(4) | Represents monthly base rent before free rent and straight line rent adjustments, plus estimated tenant reimbursements for the month in which the lease commences, multiplied by 12. Triple net leases are converted to a gross basis by adding estimated tenant reimbursements to monthly base rent. Includes only leases for office and retail spaces that were vacant as of September 30, 2018. |
|
| |
NOI RECONCILIATIONS (NON-GAAP) | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | |
dollars in thousands | Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2018 | | 2017 | | 2018 | | 2017 |
| |
Net income (loss) attributable to common shareholders | $ | 22,830 |
| | $ | (69,831 | ) | | $ | 39,214 |
| | $ | (57,851 | ) |
Add: | | | | | | | |
Depreciation and amortization expense | 46,603 |
| | 43,951 |
| | 143,880 |
| | 109,726 |
|
General and administrative expense: | | | | | | | |
Corporate and other | 12,415 |
| | 10,593 |
| | 37,759 |
| | 35,536 |
|
Third-party real estate services | 20,754 |
| | 21,178 |
| | 64,552 |
| | 30,362 |
|
Share-based compensation related to Formation Transaction
| 8,387 |
| | 14,445 |
| | 26,912 |
| | 14,445 |
|
Transaction and other costs | 4,126 |
| | 104,095 |
| | 12,134 |
| | 115,173 |
|
Interest expense | 18,979 |
| | 15,309 |
| | 56,263 |
| | 43,813 |
|
Loss on extinguishment of debt | 79 |
| | 689 |
| | 4,536 |
| | 689 |
|
Reduction of gain (gain) on bargain purchase | — |
| | (27,771 | ) | | 7,606 |
| | (27,771 | ) |
Income tax benefit | (841 | ) | | (1,034 | ) | | (1,436 | ) | | (317 | ) |
Net (income) loss attributable to redeemable noncontrolling interests | 3,552 |
| | (8,160 | ) | | 6,532 |
| | (2,481 | ) |
Less: | | | | | | | |
Third-party real estate services, including reimbursements
| 23,788 |
| | 25,141 |
| | 72,278 |
| | 38,881 |
|
Other income | 1,708 |
| | 1,158 |
| | 4,904 |
| | 3,701 |
|
Income (loss) from unconsolidated real estate ventures, net | 13,484 |
| | (1,679 | ) | | 15,418 |
| | (1,365 | ) |
Interest and other income (loss), net | 4,091 |
| | (379 | ) | | 5,177 |
| | 1,366 |
|
Gain on sale of real estate | 11,938 |
| | — |
| | 45,789 |
| | — |
|
Net loss attributable to noncontrolling interests | — |
| | — |
| | 127 |
| | — |
|
Consolidated NOI | 81,875 |
| | 79,223 |
| | 254,259 |
| | 218,741 |
|
NOI attributable to consolidated JBG Assets (1) | — |
| | 2,136 |
| | — |
| | 24,670 |
|
Proportionate NOI attributable to unconsolidated JBG Assets (1) | — |
| | 792 |
| | — |
| | 8,648 |
|
Proportionate NOI attributable to unconsolidated real estate ventures | 9,722 |
| | 7,505 |
| | 27,949 |
| | 12,965 |
|
Non-cash rent adjustments (2) | (1,369 | ) | | (1,575 | ) | | (3,659 | ) | | (7,508 | ) |
Other adjustments (3) | 701 |
| | 1,493 |
| | 3,434 |
| | 1,318 |
|
Total adjustments | 9,054 |
| | 10,351 |
| | 27,724 |
| | 40,093 |
|
NOI | $ | 90,929 |
| | $ | 89,574 |
| | $ | 281,983 |
| | $ | 258,834 |
|
Non-same store NOI (4) | 20,910 |
| | 19,048 |
| | 78,862 |
| | 64,643 |
|
Same store NOI (5) | $ | 70,019 |
| | $ | 70,526 |
| | $ | 203,121 |
| | $ | 194,191 |
|
| | | | | | | |
Growth in same store NOI | (0.7 | )% | | | | 4.6 | % | | |
Number of properties in same store pool | 34 |
| | | | 33 |
| | |
___________________
| |
(1) | Includes financial information for the JBG Assets as if the July 18, 2017 acquisition of the JBG Assets had been completed as of the beginning of the period presented. |
| |
(2) | Adjustment to exclude straight-line rent, above/below market lease amortization and lease incentive amortization. |
| |
(3) | Adjustment to include other income and payments associated with assumed lease liabilities related to operating properties, and exclude incidental income generated by development assets and commercial lease termination revenue. |
| |
(4) | Includes the results for properties that were not owned, operated and in service for the entirety of both periods being compared and properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. |
| |
(5) | Includes the results of the properties that are owned, operated and in service for the entirety of both periods being compared except for properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. |
|
| |
LEASING ACTIVITY - OFFICE | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | |
square feet in thousands | Three Months Ended September 30, 2018 | | Nine Months Ended September 30, 2018 |
Square feet leased: | | |
|
At 100% share | 449 |
| | 1,160 |
|
At JBG SMITH share | 378 |
| | 1,019 |
|
Initial rent (1) | $ | 42.89 |
| | $ | 47.78 |
|
Straight-line rent (2) | $ | 40.76 |
| | $ | 47.99 |
|
Weighted average lease term (years) | 7.0 |
| | 7.6 |
|
Weighted average free rent period (months) | 7.0 |
| | 6.5 |
|
Second generation space: | 60 |
| | 277 |
|
Square feet | 318 |
| | 742 |
|
Cash basis: | | | |
Initial rent (1) | $ | 41.58 |
| | $ | 47.02 |
|
Prior escalated rent | $ | 44.03 |
| | $ | 50.21 |
|
% change | (5.6 | )% | | (6.4 | )% |
GAAP basis: | | | |
Straight-line rent (2) | $ | 38.96 |
| | $ | 46.35 |
|
Prior straight-line rent | $ | 40.02 |
| | $ | 46.22 |
|
% change | (2.6 | )% | | 0.3 | % |
Tenant improvements: | | | |
Per square foot | $ | 26.48 |
| | $ | 44.47 |
|
Per square foot per annum | $ | 3.77 |
| | $ | 5.84 |
|
% of initial rent | 8.8 | % | | 12.2 | % |
Leasing commissions: | | | |
Per square foot | $ | 4.31 |
| | $ | 11.25 |
|
Per square foot per annum | $ | 0.61 |
| | $ | 1.48 |
|
% of initial rent | 1.4 | % | | 3.1 | % |
___________________
Note: At JBG SMITH share, unless otherwise indicated. The leasing activity and related statistics are based on leases signed during the period and are not intended to coincide with the commencement of rental revenue in accordance with GAAP. Second generation space represents square footage that was vacant for less than nine months.
| |
(1) | Represents the cash basis weighted average starting rent per square foot, which is generally indicative of market rents. Triple net leases are converted to a gross basis by adding estimated tenant reimbursements to monthly base rent. Most leases include free rent and periodic step-ups in rent which are not included in the initial cash basis rent per square foot but are included in the GAAP basis deferred rent per square foot. |
| |
(2) | Represents the GAAP basis weighted average rent per square foot that is recognized over the term of the respective leases, and includes the effect of free rent and fixed step-ups in rent. |
|
| |
NET EFFECTIVE RENT - OFFICE | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
square feet in thousands, dollars per square feet, at JBG SMITH share | Trailing Five Quarter Average | | Three Months Ended |
| | September 30, 2018 | | June 30, 2018 | | March 31, 2018 | | December 31, 2017 | | September 30, 2017 |
Square feet | 356 |
| | 378 |
| | 319 |
| | 322 |
| | 558 |
| | 206 |
|
Weighted average lease term (years) | 7.6 |
| | 7.0 |
| | 8.6 |
| | 7.3 |
| | 7.9 |
| | 7.0 |
|
Initial rent (1) | $ | 46.48 |
| | $ | 42.89 |
| | $ | 54.01 |
| | $ | 47.35 |
| | $ | 45.07 |
| | $ | 43.08 |
|
Base rent per annum (2) | $ | 54.51 |
| | $ | 44.43 |
| | $ | 67.89 |
| | $ | 54.38 |
| | $ | 56.14 |
| | $ | 49.73 |
|
Tenant improvements per annum | (6.02 | ) | | (3.77 | ) | | (7.46 | ) | | (6.27 | ) | | (5.91 | ) | | (6.67 | ) |
Leasing commissions per annum | (1.61 | ) | | (0.61 | ) | | (2.03 | ) | | (1.80 | ) | | (1.72 | ) | | (1.87 | ) |
Free rent per annum | (4.32 | ) | | (3.55 | ) | | (4.05 | ) | | (5.89 | ) | | (4.52 | ) | | (3.59 | ) |
Net Effective Rent | $ | 42.57 |
| | $ | 36.50 |
| | $ | 54.35 |
| | $ | 40.42 |
| | $ | 43.99 |
| | $ | 37.60 |
|
| | | | | | | | | | | |
| | | | | | | | | | | |
DC | | | | | | | | | | | |
Square feet | 76 |
| | 88 |
| | 175 |
| | 50 |
| | 39 |
| | 27 |
|
Initial rent (1) | $ | 53.05 |
| | $ | 49.73 |
| | $ | 66.29 |
| | $ | 53.92 |
| | $ | 45.53 |
| | $ | 49.76 |
|
Net effective rent | $ | 47.64 |
| | $ | 42.34 |
| | $ | 64.65 |
| | $ | 45.76 |
| | $ | 37.47 |
| | $ | 47.98 |
|
| | | | | | | | | | | |
VA | | | | | | | | | | | |
Square feet | 240 |
| | 282 |
| | 115 |
| | 250 |
| | 380 |
| | 172 |
|
Initial rent (1) | $ | 41.12 |
| | $ | 41.08 |
| | $ | 38.20 |
| | $ | 44.08 |
| | $ | 40.28 |
| | $ | 41.95 |
|
Net effective rent | $ | 34.39 |
| | $ | 33.86 |
| | $ | 30.61 |
| | $ | 35.28 |
| | $ | 36.71 |
| | $ | 35.47 |
|
| | | | | | | | | | | |
MD | | | | | | | | | | | |
Square feet | 41 |
| | 8 |
| | 28 |
| | 22 |
| | 139 |
| | 6 |
|
Initial rent (1) | $ | 49.36 |
| | $ | 31.75 |
| | $ | 42.70 |
| | $ | 69.26 |
| | $ | 58.03 |
| | $ | 45.06 |
|
Net effective rent | $ | 43.17 |
| | $ | 20.30 |
| | $ | 37.38 |
| | $ | 64.96 |
| | $ | 54.29 |
| | $ | 38.93 |
|
____________________
Note: Leasing activity and related statistics are based on leases signed during the period and are not intended to coincide with the commencement of rental revenue in accordance with GAAP. Second generation space represents square footage that was vacant for less than nine months.
| |
(1) | Represents the cash basis weighted average starting rent per square foot, which is generally indicative of market rents. Triple net leases are converted to a gross basis by adding estimated tenant reimbursements to monthly base rent. Most leases include free rent and periodic step-ups in rent which are not included in the initial cash basis rent per square foot. |
| |
(2) | Represents the weighted average base rent before free rent, plus estimated tenant reimbursements that is recognized over the term of the respective leases, including the effect of fixed step-ups in rent, divided by square feet, and divided by years of lease term. Triple net leases are converted to a gross basis by adding estimated tenant reimbursements to base rent. Tenant reimbursements are estimated by escalating tenant reimbursements as of the respective reporting period, or management’s estimate thereof, by 2.75% annually through the lease expiration year. |
|
| |
LEASE EXPIRATIONS | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | At JBG SMITH Share |
Year of Lease Expiration | | Number
of Leases | |
Square Feet
| | % of
Total
Square Feet | | Annualized
Rent
(in thousands) | | % of
Total
Annualized
Rent | | Annualized
Rent Per
Square Foot | | Estimated
Annualized
Rent Per
Square Foot at
Expiration (1) |
Month-to-Month | | 49 |
| | 181,250 |
| | 1.8 | % | | $ | 5,889 |
| | 1.3 | % | | $ | 32.49 |
| | $ | 32.49 |
|
2018 | | 51 |
| | 237,668 |
| | 2.3 | % | | 9,818 |
| | 2.2 | % | | 41.31 |
| | 41.82 |
|
2019 | | 150 |
| | 1,014,049 |
| | 10.0 | % | | 46,252 |
| | 10.2 | % | | 45.61 |
| | 46.05 |
|
2020 | | 156 |
| | 1,273,831 |
| | 12.6 | % | | 57,421 |
| | 12.7 | % | | 45.08 |
| | 46.38 |
|
2021 | | 120 |
| | 1,074,952 |
| | 10.6 | % | | 49,554 |
| | 11.0 | % | | 46.10 |
| | 48.57 |
|
2022 | | 96 |
| | 1,330,601 |
| | 13.1 | % | | 58,376 |
| | 12.9 | % | | 43.87 |
| | 45.48 |
|
2023 | | 91 |
| | 559,589 |
| | 5.5 | % | | 22,434 |
| | 5.0 | % | | 40.09 |
| | 44.31 |
|
2024 | | 74 |
| | 742,102 |
| | 7.3 | % | | 34,785 |
| | 7.7 | % | | 46.87 |
| | 52.19 |
|
2025 | | 45 |
| | 386,738 |
| | 3.8 | % | | 14,727 |
| | 3.3 | % | | 38.08 |
| | 43.07 |
|
2026 | | 56 |
| | 345,057 |
| | 3.4 | % | | 15,022 |
| | 3.3 | % | | 43.53 |
| | 51.87 |
|
Thereafter | | 149 |
| | 2,996,431 |
| | 29.6 | % | | 137,744 |
| | 30.4 | % | | 45.97 |
| | 57.77 |
|
Total / Weighted Average | | 1,037 |
| | 10,142,268 |
| | 100.0 | % | | $ | 452,022 |
| | 100.0 | % | | $ | 44.57 |
| | $ | 49.84 |
|
____________________
Note: Includes all leases signed as of September 30, 2018 for office and retail space within JBG SMITH's operating portfolio.
| |
(1) | Represents monthly base rent before free rent, plus tenant reimbursements, as of lease expiration multiplied by 12 and divided by square feet. Triple net leases are converted to a gross basis by adding tenant reimbursements to monthly base rent. Tenant reimbursements at lease expiration are estimated by escalating tenant reimbursements as of September 30, 2018, or management’s estimate thereof, by 2.75% annually through the lease expiration year. |
|
| |
SIGNED BUT NOT YET COMMENCED LEASES | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
in thousands | | | | At JBG SMITH Share |
| | | | Estimated Rent (1) for the Quarter Ending | | Total Annualized Estimated Rent Thereafter (3) |
Assets | |
C/U (2)
| | December 31, 2018 | | March 31, 2019 | | June 30, 2019 | | September 30, 2019 | | December 31, 2019 | | March 31, 2020 | |
| | | | | | | | | | | | | | | | |
Office | | | | | | | | | | | | | | | | |
Operating | | C | | $ | 540 |
| | $ | 1,505 |
| | $ | 1,536 |
| | $ | 1,551 |
| | $ | 1,551 |
| | $ | 1,551 |
| | $ | 6,206 |
|
Operating | | U | | 159 |
| | 192 |
| | 204 |
| | 204 |
| | 204 |
| | 204 |
| | 814 |
|
Under construction (4) | | C | | — |
| | — |
| | — |
| | 715 |
| | 2,898 |
| | 3,464 |
| | 13,856 |
|
Under construction | | U | | — |
| | 309 |
| | 1,021 |
| | 1,069 |
| | 1,389 |
| | 2,027 |
| | 8,108 |
|
Total | | | | $ | 699 |
| | $ | 2,006 |
| | $ | 2,761 |
| | $ | 3,539 |
| | $ | 6,042 |
| | $ | 7,246 |
| | $ | 28,984 |
|
| | | | | | | | | | | | | | | | |
Multifamily | | | | | | | | | | | | | | | | |
Operating | | C | | $ | 71 |
| | $ | 86 |
| | $ | 86 |
| | $ | 86 |
| | $ | 86 |
| | $ | 86 |
| | $ | 344 |
|
Under construction | | C | | — |
| | — |
| | 47 |
| | 171 |
| | 231 |
| | 463 |
| | 2,313 |
|
Under construction | | U | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 385 |
|
Total | | | | $ | 71 |
| | $ | 86 |
| | $ | 133 |
| | $ | 257 |
| | $ | 317 |
| | $ | 549 |
| | $ | 3,042 |
|
| | | | | | | | | | | | | | | | |
Other | | | | | | | | | | | | | | | | |
Operating | | U | | $ | — |
| | $ | 1 |
| | $ | 3 |
| | $ | 3 |
| | $ | 3 |
| | $ | 3 |
| | $ | 13 |
|
Future development | | C | | — |
| | — |
| | — |
| | — |
| | 355 |
| | 355 |
| | 1,422 |
|
Total | | | | $ | — |
| | $ | 1 |
| | $ | 3 |
| | $ | 3 |
| | $ | 358 |
| | $ | 358 |
| | $ | 1,435 |
|
| | | | | | | | | | | | | | | | |
Total | | | | $ | 770 |
| | $ | 2,093 |
| | $ | 2,897 |
| | $ | 3,799 |
| | $ | 6,717 |
| | $ | 8,153 |
| | $ | 33,461 |
|
____________________
Note: Includes only leases for office and retail spaces that were vacant as of September 30, 2018.
| |
(1) | Represents contractual monthly base rent before free rent, plus estimated tenant reimbursements for the month in which the lease is estimated to commence, multiplied by the applicable number of months for each quarter based on the lease’s estimated commencement date. Triple net leases are converted to a gross basis by adding estimated tenant reimbursements to monthly base rent. |
| |
(2) | “C” denotes a consolidated interest. “U” denotes an unconsolidated interest. |
| |
(3) | Represents contractual monthly base rent before free rent, plus estimated tenant reimbursements for the month in which the lease is expected to commence, multiplied by 12. Triple net leases are converted to a gross basis by adding estimated tenant reimbursements to monthly base rent. |
| |
(4) | Total Annualized Estimated Rent Quarterly and Total Annualized Estimated Rent Thereafter include contractual revenue of $1.2 million and $4.8 million from JBG SMITH's lease at 4747 Bethesda Avenue, estimated to commence in Q3 2019. |
|
| |
TENANT CONCENTRATION | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | |
dollars in thousands | | | | At JBG SMITH Share |
| Tenant | | Number of Leases | |
Square Feet | | % of Total Square Feet | | Annualized Rent | | % of Total Annualized Rent |
1 |
| U.S. Government (GSA) | | 69 |
| | 2,524,227 |
| | 24.9 | % | | $ | 100,239 |
| | 22.2 | % |
2 |
| The Corporate Executive Board Company | | 1 |
| | 348,847 |
| | 3.4 | % | | 21,629 |
| | 4.8 | % |
3 |
| Family Health International | | 4 |
| | 295,977 |
| | 2.9 | % | | 14,844 |
| | 3.3 | % |
4 |
| Lockheed Martin Corporation | | 3 |
| | 276,272 |
| | 2.7 | % | | 13,330 |
| | 2.9 | % |
5 |
| Arlington County | | 3 |
| | 237,001 |
| | 2.3 | % | | 11,541 |
| | 2.6 | % |
6 |
| Greenberg Traurig LLP | | 1 |
| | 115,315 |
| | 1.1 | % | | 8,905 |
| | 2.0 | % |
7 |
| Accenture LLP | | 2 |
| | 130,716 |
| | 1.3 | % | | 7,371 |
| | 1.6 | % |
8 |
| Baker Botts | | 1 |
| | 84,991 |
| | 0.8 | % | | 6,894 |
| | 1.5 | % |
9 |
| Public Broadcasting Service | | 1 |
| | 140,885 |
| | 1.4 | % | | 5,811 |
| | 1.3 | % |
10 |
| WeWork | | 1 |
| | 122,271 |
| | 1.2 | % | | 5,684 |
| | 1.3 | % |
11 |
| Cooley LLP | | 1 |
| | 71,339 |
| | 0.7 | % | | 5,547 |
| | 1.2 | % |
12 |
| Evolent Health LLC | | 1 |
| | 90,905 |
| | 0.9 | % | | 4,814 |
| | 1.1 | % |
13 |
| DRS Tech Inc dba Finmeccanica | | 2 |
| | 92,834 |
| | 0.9 | % | | 4,179 |
| | 0.9 | % |
14 |
| RTKL Associates Inc | | 2 |
| | 63,403 |
| | 0.6 | % | | 4,056 |
| | 0.9 | % |
15 |
| National Consumer Cooperative | | 1 |
| | 86,762 |
| | 0.9 | % | | 4,049 |
| | 0.9 | % |
16 |
| Chemonics International | | 2 |
| | 98,932 |
| | 1.0 | % | | 3,957 |
| | 0.9 | % |
17 |
| Conservation International Foundation | | 1 |
| | 86,981 |
| | 0.9 | % | | 3,949 |
| | 0.9 | % |
18 |
| Booz Allen Hamilton Inc | | 3 |
| | 94,158 |
| | 0.9 | % | | 3,835 |
| | 0.8 | % |
19 |
| U.S. Green Building Council | | 1 |
| | 54,675 |
| | 0.5 | % | | 3,799 |
| | 0.8 | % |
20 |
| The International Justice Mission | | 1 |
| | 74,833 |
| | 0.7 | % | | 3,785 |
| | 0.8 | % |
| Other | | 936 |
| | 5,050,944 |
| | 50.0 | % | | 213,804 |
| | 47.3 | % |
| Total | | 1,037 |
| | 10,142,268 |
| | 100.0 | % | | $ | 452,022 |
| | 100.0 | % |
_______________
Note: Includes all in-place leases as of September 30, 2018 for office and retail space within JBG SMITH's operating portfolio.
|
| |
INDUSTRY DIVERSITY | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | |
dollars in thousands | | | | At JBG SMITH Share |
| Industry | | Number of Leases | |
Square Feet | | % of Total Square Feet | | Annualized Rent | | % of Total Annualized Rent |
1 |
| Government | | 86 |
| | 2,842,265 |
| | 28.0 | % | | $ | 115,482 |
| | 25.5 | % |
2 |
| Government Contractors | | 116 |
| | 1,742,910 |
| | 17.2 | % | | 77,801 |
| | 17.2 | % |
3 |
| Business Services | | 151 |
| | 1,550,291 |
| | 15.3 | % | | 75,765 |
| | 16.8 | % |
4 |
| Member Organizations | | 83 |
| | 969,167 |
| | 9.6 | % | | 46,591 |
| | 10.3 | % |
5 |
| Legal Services | | 40 |
| | 468,434 |
| | 4.6 | % | | 30,576 |
| | 6.8 | % |
6 |
| Real Estate | | 49 |
| | 376,662 |
| | 3.7 | % | | 17,075 |
| | 3.8 | % |
7 |
| Health Services | | 56 |
| | 381,451 |
| | 3.8 | % | | 15,606 |
| | 3.5 | % |
8 |
| Food and Beverage | | 121 |
| | 262,320 |
| | 2.6 | % | | 14,195 |
| | 3.1 | % |
9 |
| Communications | | 16 |
| | 241,306 |
| | 2.4 | % | | 9,570 |
| | 2.1 | % |
10 |
| Educational Services | | 22 |
| | 187,655 |
| | 1.9 | % | | 7,746 |
| | 1.7 | % |
| Other | | 297 |
| | 1,119,807 |
| | 10.9 | % | | 41,615 |
| | 9.2 | % |
| Total | | 1,037 |
| | 10,142,268 |
| | 100.0 | % | | $ | 452,022 |
| | 100.0 | % |
_______________
Note: Includes all in-place leases as of September 30, 2018 for office and retail space within JBG SMITH's operating portfolio.
|
| |
PORTFOLIO SUMMARY | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | |
| | Number
of Assets | | Rentable
Square Feet | | Number of
Units (1) | | Estimated
Potential Development
Density (2) |
| | | | | | | | |
Wholly Owned | | | | | | | | |
Operating | | 47 |
| | 14,416,711 |
| | 4,199 |
| | — |
|
Under construction | | 2 |
| | 516,945 |
| | 256 |
| | — |
|
Future development | | 27 |
| | — |
| | — |
| | 18,226,900 |
|
Total | | 76 |
| | 14,933,656 |
| | 4,455 |
| | 18,226,900 |
|
| | | | | | | | |
Real Estate Ventures | | | | | | | | |
Operating | | 18 |
| | 4,867,385 |
| | 2,108 |
| | — |
|
Under construction | | 5 |
| | 1,569,909 |
| | 1,220 |
| | — |
|
Future development | | 16 |
| | — |
| | — |
| | 4,217,500 |
|
Total | | 39 |
| | 6,437,294 |
| | 3,328 |
| | 4,217,500 |
|
| | | | | | | | |
Total Portfolio | | 115 |
| | 21,370,950 |
| | 7,783 |
| | 22,444,400 |
|
| | | | | | | | |
Total Portfolio (at JBG SMITH Share) | | 115 |
| | 17,339,223 |
| | 5,806 |
| | 19,001,700 |
|
____________________
Note: At 100% share, unless otherwise indicated.
| |
(1) | For assets under construction, represents estimated number of units based on current design plans. |
| |
(2) | Includes estimated potential office, multifamily and retail development density. |
|
| |
PROPERTY TABLE - OFFICE | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Office Assets | Submarket | %
Ownership |
C/U (1)
| Same Store (2):
Q3 2017-2018 / YTD 2017-2018 | Year Built /
Renovated | Total Square Feet | Office Square Feet | Retail Square Feet | %
Leased | Office % Occupied | Retail % Occupied | Annualized Rent (in thousands) | Office Annualized Rent Per Square Foot (3) | Retail Annualized Rent Per Square Foot (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Universal Buildings | Uptown | 100.0 | % | C | Y / Y | 1956 / 1990 | 659,965 |
| 568,890 |
| 91,075 |
| 98.6 | % | 98.4 | % | 99.6 | % | $ | 32,196 |
| $ | 48.93 |
| $ | 52.95 |
|
2101 L Street | CBD | 100.0 | % | C | Y / Y | 1975 / 2007 | 377,908 |
| 346,588 |
| 31,320 |
| 98.4 | % | 99.0 | % | 92.6 | % | 25,332 |
| 69.21 |
| 54.95 |
|
1730 M Street (5) | CBD | 100.0 | % | C | Y / Y | 1964 / 1998 | 204,748 |
| 196,730 |
| 8,018 |
| 88.5 | % | 88.0 | % | 100.0 | % | 8,744 |
| 48.20 |
| 49.27 |
|
1233 20th Street (6) | CBD | 100.0 | % | C | N / N | 1984 / 2003 | 149,684 |
| 149,684 |
| — |
| 77.8 | % | 77.8 | % | — |
| 5,380 |
| 46.21 |
| — |
|
1600 K Street | CBD | 100.0 | % | C | N / N | 1950 / 2000 | 82,011 |
| 69,620 |
| 12,391 |
| 98.6 | % | 98.3 | % | 100.0 | % | 4,314 |
| 51.14 |
| 65.58 |
|
L’Enfant Plaza Office-East (5) | Southwest | 49.0 | % | U | N / N | 1972 / 2012 | 397,014 |
| 397,014 |
| — |
| 90.6 | % | 90.6 | % | — |
| 16,698 |
| 46.42 |
| — |
|
L’Enfant Plaza Office-North | Southwest | 49.0 | % | U | N / N | 1969 / 2014 | 299,476 |
| 280,002 |
| 19,474 |
| 95.3 | % | 84.4 | % | 85.9 | % | 11,526 |
| 47.61 |
| 16.56 |
|
L’Enfant Plaza Retail (5) | Southwest | 49.0 | % | U | N / N | 1968 / 2014 | 119,361 |
| 16,596 |
| 102,765 |
| 82.6 | % | 100.0 | % | 78.9 | % | 4,857 |
| 36.36 |
| 52.44 |
|
The Warner | East End | 55.0 | % | U | Y / Y | 1924 / 2012 | 583,453 |
| 526,274 |
| 57,179 |
| 98.3 | % | 99.6 | % | 85.6 | % | 40,271 |
| 74.35 |
| 26.34 |
|
The Foundry | Georgetown | 9.9 | % | U | N / N | 1973 / 2017 | 223,359 |
| 216,505 |
| 6,854 |
| 83.2 | % | 76.4 | % | 100.0 | % | 7,898 |
| 46.07 |
| 40.88 |
|
1101 17th Street | CBD | 55.0 | % | U | Y / Y | 1964 / 1999 | 210,576 |
| 200,818 |
| 9,758 |
| 91.2 | % | 91.6 | % | 82.7 | % | 9,947 |
| 51.08 |
| 67.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Courthouse Plaza 1 and 2 (5) | Clarendon/Courthouse | 100.0 | % | C | Y / Y | 1989 / 2013 | 632,628 |
| 575,435 |
| 57,193 |
| 87.5 | % | 86.3 | % | 100.0 | % | $ | 25,367 |
| $ | 47.10 |
| $ | 34.54 |
|
2121 Crystal Drive | Crystal City | 100.0 | % | C | Y / Y | 1985 / 2006 | 505,754 |
| 505,349 |
| 405 |
| 95.3 | % | 95.3 | % | — |
| 23,400 |
| 48.57 |
| — |
|
2345 Crystal Drive | Crystal City | 100.0 | % | C | Y / Y | 1988 / N/A | 502,526 |
| 498,320 |
| 4,206 |
| 82.7 | % | 82.6 | % | 100.0 | % | 18,931 |
| 45.61 |
| 39.01 |
|
2231 Crystal Drive | Crystal City | 100.0 | % | C | Y / Y | 1987 / 2009 | 466,988 |
| 416,028 |
| 50,960 |
| 87.9 | % | 84.2 | % | 100.0 | % | 17,281 |
| 44.00 |
| 36.46 |
|
1550 Crystal Drive (7) | Crystal City | 100.0 | % | C | Y / Y | 1980 / 2001 | 450,411 |
| 450,411 |
| — |
| 87.6 | % | 81.3 | % | — |
| 14,584 |
| 39.81 |
| — |
|
RTC-West (7) | Reston | 100.0 | % | C | N / N | 1988 / 2014 | 435,998 |
| 435,998 |
| — |
| 93.2 | % | 93.2 | % | — |
| 15,548 |
| 38.25 |
| — |
|
RTC-West Retail | Reston | 100.0 | % | C | N / N | 2017 / N/A | 40,025 |
| — |
| 40,025 |
| 91.9 | % | — |
| 91.9 | % | 2,465 |
| — |
| 66.98 |
|
2011 Crystal Drive | Crystal City | 100.0 | % | C | Y / Y | 1984 / 2006 | 439,994 |
| 433,232 |
| 6,762 |
| 90.1 | % | 82.7 | % | 49.7 | % | 16,296 |
| 44.96 |
| 57.44 |
|
2451 Crystal Drive | Crystal City | 100.0 | % | C | Y / Y | 1990 / N/A | 398,329 |
| 386,639 |
| 11,690 |
| 70.7 | % | 69.8 | % | 100.0 | % | 12,125 |
| 43.39 |
| 35.42 |
|
Commerce Executive (7) | Reston | 100.0 | % | C | Y / Y | 1987 / 2015 | 388,450 |
| 372,190 |
| 16,260 |
| 87.4 | % | 87.1 | % | 95.2 | % | 12,207 |
| 36.30 |
| 28.20 |
|
1235 S. Clark Street | Crystal City | 100.0 | % | C | Y / Y | 1981 / 2007 | 383,885 |
| 335,539 |
| 48,346 |
| 85.3 | % | 83.2 | % | 100.0 | % | 12,461 |
| 41.27 |
| 19.36 |
|
241 18th Street S. | Crystal City | 100.0 | % | C | Y / Y | 1977 / 2013 | 356,945 |
| 330,785 |
| 26,160 |
| 77.5 | % | 74.8 | % | 92.7 | % | 10,216 |
| 38.64 |
| 27.11 |
|
251 18th Street S. | Crystal City | 100.0 | % | C | Y / Y | 1975 / 2013 | 342,155 |
| 292,984 |
| 49,171 |
| 99.4 | % | 100.0 | % | 96.2 | % | 13,900 |
| 41.29 |
| 38.15 |
|
1215 S. Clark Street | Crystal City | 100.0 | % | C | Y / Y | 1983 / 2002 | 336,159 |
| 333,546 |
| 2,613 |
| 100.0 | % | 100.0 | % | 100.0 | % | 10,798 |
| 32.12 |
| 32.83 |
|
201 12th Street S. | Crystal City | 100.0 | % | C | Y / Y | 1987 / N/A | 329,885 |
| 317,672 |
| 12,213 |
| 88.6 | % | 88.2 | % | 100.0 | % | 10,498 |
| 35.84 |
| 37.68 |
|
800 North Glebe Road | Ballston | 100.0 | % | C | N / N | 2012 / N/A | 303,644 |
| 277,397 |
| 26,247 |
| 100.0 | % | 100.0 | % | 100.0 | % | 15,771 |
| 52.43 |
| 46.79 |
|
1225 S. Clark Street | Crystal City | 100.0 | % | C | Y / Y | 1982 / 2013 | 283,610 |
| 270,760 |
| 12,850 |
| 48.4 | % | 44.1 | % | 100.0 | % | 4,735 |
| 37.55 |
| 19.35 |
|
2200 Crystal Drive | Crystal City | 100.0 | % | C | Y / Y | 1968 / 2006 | 282,920 |
| 282,920 |
| — |
| 45.6 | % | 45.6 | % | — |
| 4,954 |
| 38.37 |
| — |
|
1901 South Bell Street | Crystal City | 100.0 | % | C | Y / Y | 1968 / 2008 | 277,003 |
| 275,079 |
| 1,924 |
| 100.0 | % | 100.0 | % | 100.0 | % | 11,007 |
| 40.00 |
| 2.26 |
|
|
| |
PROPERTY TABLE - OFFICE | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Office Assets | Submarket | %
Ownership |
C/U (1)
| Same Store (2):
Q3 2017-2018 / YTD 2017-2018 | Year Built /
Renovated | Total Square Feet | Office Square Feet | Retail Square Feet | %
Leased | Office % Occupied | Retail % Occupied | Annualized Rent (in thousands) | Office Annualized Rent Per Square Foot (3) | Retail Annualized Rent Per Square Foot (4) |
2100 Crystal Drive | Crystal City | 100.0 | % | C | Y / Y | 1968 / 2006 | 249,281 |
| 249,281 |
| — |
| 98.8 | % | 98.8 | % | — |
| $ | 10,170 |
| $ | 41.31 |
| $ | — |
|
200 12th Street S. | Crystal City | 100.0 | % | C | Y / Y | 1985 / 2013 | 202,736 |
| 202,736 |
| — |
| 86.7 | % | 86.7 | % | — |
| 7,625 |
| 43.38 |
| — |
|
2001 Jefferson Davis Highway | Crystal City | 100.0 | % | C | Y / Y | 1967 / N/A | 159,757 |
| 159,757 |
| — |
| 66.4 | % | 66.4 | % | — |
| 3,565 |
| 33.58 |
| — |
|
Crystal City Shops at 2100 | Crystal City | 100.0 | % | C | Y / Y | 1968 / 2006 | 78,245 |
| — |
| 78,245 |
| 69.5 | % | — |
| 68.1 | % | 930 |
| — |
| 17.46 |
|
1800 South Bell Street (7) | Crystal City | 100.0 | % | C | N / N | 1969 / 2007 | 74,271 |
| 49,792 |
| 24,479 |
| 100.0 | % | 100.0 | % | 100.0 | % | 2,619 |
| 47.88 |
| 9.61 |
|
Crystal Drive Retail | Crystal City | 100.0 | % | C | Y / Y | 2003 / N/A | 56,965 |
| — |
| 56,965 |
| 100.0 | % | — |
| 100.0 | % | 3,059 |
| — |
| 53.70 |
|
Wiehle Avenue Office Building (7) | Reston | 100.0 | % | C | N / N | 1984 / N/A | 30,237 |
| 30,237 |
| — |
| 100.0 | % | 100.0 | % | — |
| 749 |
| 24.79 |
| — |
|
Pickett Industrial Park | Eisenhower Avenue | 10.0 | % | U | N / N | 1973 / N/A | 246,145 |
| 246,145 |
| — |
| 100.0 | % | 100.0 | % | — |
| 3,845 |
| 15.62 |
| — |
|
Rosslyn Gateway-North | Rosslyn | 18.0 | % | U | N / N | 1996 / 2014 | 143,676 |
| 130,922 |
| 12,754 |
| 80.8 | % | 79.3 | % | 96.0 | % | 4,610 |
| 41.02 |
| 28.69 |
|
Rosslyn Gateway-South | Rosslyn | 18.0 | % | U | N / N | 1961 / N/A | 102,061 |
| 94,477 |
| 7,584 |
| 84.0 | % | 87.5 | % | 40.4 | % | 2,240 |
| 25.43 |
| 44.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MD |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7200 Wisconsin Avenue | Bethesda CBD | 100.0 | % | C | N / N | 1986 / 2015 | 267,312 |
| 250,650 |
| 16,662 |
| 70.2 | % | 58.2 | % | 82.2 | % | $ | 7,881 |
| $ | 49.30 |
| $ | 50.69 |
|
One Democracy Plaza* (5) | Bethesda‑Rock Spring | 100.0 | % | C | Y / Y | 1987 / 2013 | 213,131 |
| 210,993 |
| 2,138 |
| 94.9 | % | 93.4 | % | 100.0 | % | 6,375 |
| 32.03 |
| 29.83 |
|
4749 Bethesda Avenue Retail | Bethesda CBD | 100.0 | % | C | N / N | 2016 / N/A | 7,999 |
| — |
| 7,999 |
| 47.9 | % | — |
| — |
| — |
| — |
| — |
|
11333 Woodglen Drive | Rockville Pike Corridor | 18.0 | % | U | N / N | 2004 / N/A | 62,650 |
| 54,077 |
| 8,573 |
| 97.6 | % | 97.2 | % | 100.0 | % | 2,249 |
| 35.63 |
| 43.82 |
|
NoBe II Office (7) | Rockville Pike Corridor | 18.0 | % | U | N / N | 1965 / 2005 | 39,836 |
| 31,402 |
| 8,434 |
| 49.3 | % | 35.7 | % | 100.0 | % | 514 |
| 24.22 |
| 28.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total / Weighted Average |
|
|
|
| 12,399,166 |
| 11,469,474 |
| 929,692 |
| 87.9 | % | 86.3 | % | 90.4 | % | $ | 476,138 |
| $ | 44.76 |
| $ | 39.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recently Delivered |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEB Tower at Central Place (5) | Rosslyn | 100.0 | % | C | N / N | 2018 / N/A | 552,540 |
| 524,537 |
| 28,003 |
| 77.9 | % | 75.8 | % | 100.0 | % | 25,257 |
| 61.15 |
| 34.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating - Total / Weighted Average |
|
|
|
| 12,951,706 |
| 11,994,011 |
| 957,695 |
| 87.5 | % | 85.8 | % | 90.7 | % | $ | 501,395 |
| $ | 45.39 |
| $ | 39.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
PROPERTY TABLE - OFFICE | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Office Assets | Submarket | %
Ownership |
C/U (1)
| Same Store (2):
Q3 2017-2018 / YTD 2017-2018 | Year Built /
Renovated | Total Square Feet | Office Square Feet | Retail Square Feet | %
Leased | Office % Occupied | Retail % Occupied | Annualized Rent (in thousands) | Office Annualized Rent Per Square Foot (3) | Retail Annualized Rent Per Square Foot (4) |
Under Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1900 N Street (5) (8) | CBD | 55.0 | % | U |
|
| 271,433 |
| 258,931 |
| 12,502 |
| 29.6 | % |
|
|
|
|
|
L’Enfant Plaza Office-Southeast | Southwest | 49.0 | % | U |
|
| 215,185 |
| 215,185 |
| — |
| 74.3 | % |
|
|
|
|
|
MD |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4747 Bethesda Avenue (9) | Bethesda CBD | 100.0 | % | C |
|
| 291,414 |
| 285,251 |
| 6,163 |
| 77.7 | % |
|
|
|
|
|
Under Construction - Total / Weighted Average |
|
|
|
| 778,032 |
| 759,367 |
| 18,665 |
| 60.0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total / Weighted Average |
|
|
|
| 13,729,738 |
| 12,753,378 |
| 976,360 |
| 85.9 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals at JBG SMITH Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In service assets |
|
|
|
|
| 10,917,374 |
| 10,116,951 |
| 800,423 |
| 87.5 | % | 85.9 | % | 91.4 | % | $ | 418,205 |
| $ | 44.80 |
| $ | 39.59 |
|
Recently delivered assets |
|
|
|
|
| 552,540 |
| 524,537 |
| 28,003 |
| 77.9 | % | 75.8 | % | 100.0 | % | 25,257 |
| 61.15 |
| 34.12 |
|
Operating assets |
|
|
|
|
| 11,469,914 |
| 10,641,488 |
| 828,426 |
| 87.1 | % | 85.4 | % | 91.7 | % | 443,462 |
| 45.52 |
| 39.39 |
|
Under construction assets |
|
|
|
|
| 546,133 |
| 533,093 |
| 13,039 |
| 63.9 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | |
Number of Assets and Total Square Feet Reconciliation | | |
| | Number of Assets | | At 100% Share | | At JBG SMITH Share |
Operating Assets | | | Square Feet | | Square Feet |
Q2 2018 | | 48 |
| | 13,676,557 |
| | 11,768,077 |
|
Placed into service | | — |
| | 16,051 |
| | 16,051 |
|
Dispositions (10) | | (2 | ) | | (531,211 | ) | | (149,900 | ) |
Out-of-service adjustment | | — |
| | (21,857 | ) | | (21,857 | ) |
Removed storage square footage (11) | | | | (173,202 | ) | | (127,748 | ) |
Building re-measurements | | — |
| | (14,632 | ) | | (14,709 | ) |
Q3 2018 | | 46 |
| | 12,951,706 |
| | 11,469,914 |
|
See footnotes on page 36.
|
| |
PROPERTY TABLE - OFFICE | SEPTEMBER 30, 2018 (Unaudited)
|
Footnotes
Note: At 100% share, unless otherwise noted. Excludes our 10% subordinated interests in five commercial buildings held through a real estate venture in which we have no economic interest.
* Not Metro-Served.
| |
(1) | “C” denotes a consolidated interest. “U” denotes an unconsolidated interest. |
| |
(2) | “Y” denotes an asset as same store and “N” denotes an asset as non-same store. |
| |
(3) | Represents annualized office rent divided by occupied office square feet; annualized retail rent and retail square feet are excluded from this metric. Occupied office square footage may differ from leased office square footage because leased office square footage includes leases that have been signed but have not yet commenced. |
| |
(4) | Represents annualized retail rent divided by occupied retail square feet. Occupied retail square footage may differ from leased retail square footage because leased retail square footage includes leases that have been signed but have not yet commenced. |
| |
(5) | The following assets are subject to ground leases: |
|
| | |
Office Asset | | Ground Lease Expiration Date |
1730 M Street | | 4/30/2061 |
L'Enfant Plaza Office - East | | 11/23/2064 |
L'Enfant Plaza Retail | | 11/23/2064 |
Courthouse Plaza 1 and 2 | | 1/19/2062 |
One Democracy Plaza | | 11/17/2084 |
CEB Tower at Central Place* | | 6/2/2102 |
1900 N Street** | | 5/31/2106 |
* We have an option to purchase the ground lease at a fixed price.
** Only a portion of the asset is subject to a ground lease.
| |
(6) | In October 2018, we sold 1233 20th Street for $65.0 million. |
| |
(7) | The following assets contain space that is held for development or not otherwise available for lease. This out-of-service square footage is excluded from area, leased, and occupancy metrics in the above table. |
|
| | | | | |
Office Asset | | In-Service | Not Available for Lease |
1550 Crystal Drive | | 450,411 |
| 43,655 |
|
RTC - West | | 435,998 |
| 17,988 |
|
Commerce Executive | | 388,450 |
| 14,085 |
|
1800 South Bell Street | | 74,271 |
| 145,671 |
|
Wiehle Avenue Office Building | | 30,237 |
| 46,901 |
|
NoBe II Office | | 39,836 |
| 93,367 |
|
| |
(8) | Ownership percentage reflects expected dilution of JBG SMITH as contributions are funded during the construction of the asset. As of September 30, 2018, JBG SMITH's ownership interest was 79.2%. |
| |
(9) | Includes JBG SMITH’s lease for approximately 84,400 square feet. |
| |
(10) | In August 2018, we sold our 5% interest in the real estate venture that owned Investment Building for $24.6 million. In September 2018, we sold Executive Tower for $121.4 million. |
| |
(11) | Beginning in Q3 2018, JBG SMITH will exclude storage square feet from "Total Square Feet" and "% Leased" metrics. |
|
| |
PROPERTY TABLE - MULTIFAMILY | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multifamily Assets | Submarket | %
Ownership |
C/U (1)
| Same Store (2):
Q3 2017-2018 / YTD 2017-2018 | Year Built /
Renovated | Number of Units | Total Square Feet | Multifamily Square Feet | Retail Square Feet | % Leased | Multifamily
%
Occupied | Retail
%
Occupied | Annualized Rent (in thousands) |
Monthly Rent Per Unit (3) (4) |
Monthly Rent Per Square Foot (4) (5) |
| | | | | | | | | | | | | | | |
DC | | | | | | | | | | | | | | | |
Fort Totten Square | Brookland/Fort Totten | 100.0 | % | C | N / N | 2015 / N/A | 345 |
| 384,316 |
| 253,652 |
| 130,664 |
| 97.6 | % | 93.3 | % | 100.0 | % | $ | 8,921 |
| $ | 1,751 |
| $ | 2.38 |
|
WestEnd25 | West End | 100.0 | % | C | Y / Y | 2009 / N/A | 283 |
| 273,264 |
| 273,264 |
| — |
| 97.2 | % | 96.1 | % | — |
| 11,399 |
| 3,492 |
| 3.62 |
|
The Gale Eckington | H Street/NoMa | 5.0 | % | U | N / N | 2013 / 2017 | 603 |
| 466,716 |
| 465,516 |
| 1,200 |
| 94.0 | % | 90.9 | % | 100.0 | % | 13,376 |
| 2,028 |
| 2.63 |
|
Atlantic Plumbing | U Street/Shaw | 64.0 | % | U | N / N | 2015 / N/A | 310 |
| 245,527 |
| 221,788 |
| 23,739 |
| 97.3 | % | 94.5 | % | 100.0 | % | 10,203 |
| 2,586 |
| 3.61 |
|
| | | | | | | | | | | | | | | |
VA | | | | | | | | | | | | | | | |
RiverHouse Apartments | Pentagon City | 100.0 | % | C | Y / Y | 1960 / 2013 | 1,670 |
| 1,322,016 |
| 1,319,354 |
| 2,662 |
| 96.7 | % | 95.4 | % | 100.0 | % | $ | 34,007 |
| $ | 1,774 |
| $ | 2.25 |
|
The Bartlett | Pentagon City | 100.0 | % | C | Y / N | 2016 / N/A | 699 |
| 619,372 |
| 577,295 |
| 42,077 |
| 98.5 | % | 96.7 | % | 100.0 | % | 23,013 |
| 2,673 |
| 3.24 |
|
220 20th Street | Crystal City | 100.0 | % | C | Y / Y | 2009 / N/A | 265 |
| 271,476 |
| 269,913 |
| 1,563 |
| 98.8 | % | 96.6 | % | 100.0 | % | 8,049 |
| 2,606 |
| 2.56 |
|
2221 South Clark Street | Crystal City | 100.0 | % | C | Y / Y | 1964 / 2016 | 216 |
| 164,743 |
| 164,743 |
| — |
| 100.0 | % | 100.0 | % | — |
| 3,450 |
| N/A |
| N/A |
|
Fairway Apartments* | Reston | 10.0 | % | U | N / N | 1969 / 2005 | 346 |
| 370,850 |
| 370,850 |
| — |
| 96.4 | % | 96.0 | % | — |
| 6,560 |
| 1,647 |
| 1.54 |
|
| | | | | | | | | | | | | | | |
MD | | | | | | | | | | | | | | | |
Falkland Chase-South & West | Downtown Silver Spring | 100.0 | % | C | N / N | 1938 / 2011 | 268 |
| 222,949 |
| 222,949 |
| — |
| 99.3 | % | 98.9 | % | — |
| $ | 5,657 |
| $ | 1,779 |
| $ | 2.14 |
|
Falkland Chase-North (6) | Downtown Silver Spring | 100.0 | % | C | N / N | 1938 / 1986 | 162 |
| 106,159 |
| 106,159 |
| — |
| 96.2 | % | 96.3 | % | — |
| 2,763 |
| 1,476 |
| 2.25 |
|
Galvan | Rockville Pike Corridor | 1.8 | % | U | N / N | 2015 / N/A | 356 |
| 390,641 |
| 295,033 |
| 95,608 |
| 96.2 | % | 94.4 | % | 96.8 | % | 10,807 |
| 1,794 |
| 2.16 |
|
The Alaire (7) | Rockville Pike Corridor | 18.0 | % | U | N / N | 2010 / N/A | 279 |
| 266,497 |
| 251,691 |
| 14,806 |
| 88.5 | % | 87.5 | % | 100.0 | % | 5,606 |
| 1,719 |
| 1.91 |
|
The Terano (6) (7) | Rockville Pike Corridor | 1.8 | % | U | N / N | 2015 / N/A | 214 |
| 195,864 |
| 183,496 |
| 12,368 |
| 94.1 | % | 93.5 | % | 76.2 | % | 4,505 |
| 1,758 |
| 2.05 |
|
| | | | | | | | | | | | | | | |
Total / Weighted Average | | | | | 6,016 |
| 5,300,390 |
| 4,975,703 |
| 324,687 |
| 96.5 | % | 94.9 | % | 98.1 | % | $ | 148,316 |
| $ | 2,058 |
| $ | 2.48 |
|
| | | | | | | | | | | | | | | |
Recently Delivered | | | | | | | | | | | | | | |
DC | | | | | | | | | | | | | | | |
1221 Van Street | Ballpark/Southeast | 100.0 | % | C | N / N | 2018 / N/A | 291 |
| 226,300 |
| 202,715 |
| 23,585 |
| 73.9 | % | 70.4 | % | 67.8 | % | 6,461 |
| 2,347 |
| 3.37 |
|
Operating - Total / Weighted Average | | | | | 6,307 |
| 5,526,690 |
| 5,178,418 |
| 348,272 |
| 95.5 | % | 93.8 | % | 96.1 | % | $ | 154,777 |
| $ | 2,068 |
| $ | 2.52 |
|
| | | | | | | | | |
| | | | | |
Under Construction | | | | | | | | | | | | | | | |
DC | | | | | | | | | | | | | | | |
West Half | Ballpark/Southeast | 96.9 | % | C | | | 465 |
| 388,174 |
| 346,415 |
| 41,759 |
| | | | | | |
965 Florida Avenue (8) | U Street/Shaw | 96.1 | % | C | | | 433 |
| 336,092 |
| 290,296 |
| 45,796 |
| | | | | | |
Atlantic Plumbing C | U Street/Shaw | 100.0 | % | C | | | 256 |
| 225,531 |
| 206,057 |
| 19,474 |
| | | | | | |
| | | | | | | | | | | | | | | |
MD | | | | | | | | | | | | | | | |
7900 Wisconsin Avenue | Bethesda CBD | 50.0 | % | U | | | 322 |
| 359,025 |
| 338,990 |
| 20,035 |
| | | | | | |
|
| |
PROPERTY TABLE - MULTIFAMILY | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multifamily Assets | Submarket | %
Ownership |
C/U (1)
| Same Store (2):
Q3 2017-2018 / YTD 2017-2018 | Year Built /
Renovated | Number of Units | Total Square Feet | Multifamily Square Feet | Retail Square Feet | % Leased | Multifamily
%
Occupied | Retail
%
Occupied | Annualized Rent (in thousands) |
Monthly Rent Per Unit (3) (4) |
Monthly Rent Per Square Foot (4) (5) |
| | | | | | | | | | | | | | | |
Under Construction - Total | | | | | 1,476 |
| 1,308,822 |
| 1,181,758 |
| 127,064 |
| | | | | | |
| | | | | | | | | | | | | | | |
Total | | | | | 7,783 |
| 6,835,512 |
| 6,360,176 |
| 475,336 |
| | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Totals at JBG SMITH Share | | | | | | | | | | | | | | |
In service assets | | | | | | 4,232 |
| 3,640,380 |
| 3,443,552 |
| 196,828 |
| 97.5 | % | 95.9 | % | 99.9 | % | $ | 106,398 |
| $ | 2,135 |
| $ | 2.61 |
|
Recently delivered assets | | | | | | 291 |
| 226,300 |
| 202,715 |
| 23,585 |
| 73.9 | % | 70.4 | % | 67.8 | % | 6,461 |
| 2,347 |
| 3.37 |
|
Operating assets | | | | | | 4,523 |
| 3,866,680 |
| 3,646,267 |
| 220,413 |
| 96.1 | % | 94.3 | % | 96.5 | % | 112,859 |
| 2,146 |
| 2.65 |
|
Under construction assets | | | | | | 1,284 |
| 1,104,112 |
| 990,148 |
| 113,964 |
| | | | | | |
|
| | | | | | | | | |
Number of Assets and Total Square Feet/Units Reconciliation | | |
| | Number of Assets | | At 100% Share | | At JBG SMITH Share |
Operating Assets | | | Square Feet/Units | | Square Feet/Units |
Q2 2018 | | 15 |
| | 5,533,341 SF/ 6,307 Units |
| | 3,873,331 SF/
4,523 Units |
|
Placed into service | | — |
| | — |
| | — |
|
Out-of-service adjustment | | — |
| | — |
| | — |
|
Removed storage square footage (9) | | — |
| | (6,651 SF)/ 0 Units |
| | (6,651 SF)/ 0 Units |
|
Building re-measurements | | — |
| | — |
| | — |
|
Q3 2018 | | 15 |
| | 5,526,690 SF/ 6,307 Units |
| | 3,866,680 SF/ 4,523 Units |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Leasing Activity - Multifamily |
| Number of Assets | Number of Units | Monthly Rent Per Unit (3) | | Multifamily % Occupied | | Annualized Rent (in thousands) |
| Q3 2018 | Q3 2017 | % Change | | Q3 2018 | Q3 2017 | % Change | | Q3 2018 | Q3 2017 | % Change |
DC | 4 |
| 857 |
| $ | 2,539 |
| $ | 2,633 |
| (3.6 | )% | | 94.4 | % | 93.4 | % | 1.0 | % | | $ | 24,650 |
| $ | 25,270 |
| (2.5 | )% |
VA | 4 |
| 2,669 |
| 2,093 |
| 2,076 |
| 0.8 | % | | 95.9 | % | 94.6 | % | 1.3 | % | | 64,285 |
| 62,911 |
| 2.2 | % |
MD | 5 |
| 490 |
| 1,674 |
| 1,648 |
| 1.6 | % | | 96.8 | % | 94.4 | % | 2.4 | % | | 9,531 |
| 9,159 |
| 4.1 | % |
Total / Weighted Average | 13 |
| 4,016 |
| $ | 2,135 |
| $ | 2,142 |
| (0.3 | )% | | 95.7 | % | 94.3 | % | 1.4 | % | | $ | 98,466 |
| $ | 97,340 |
| 1.2 | % |
Note: At JBG SMITH share. Includes both Vornado Included Assets and JBG Assets placed in service prior to July 1, 2017. |
See footnotes on page 39.
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PROPERTY TABLE - MULTIFAMILY | SEPTEMBER 30, 2018 (Unaudited)
|
Footnotes
Note: At 100% share.
* Not Metro-Served.
| |
(1) | “C” denotes a consolidated interest. “U” denotes an unconsolidated interest. |
| |
(2) | “Y” denotes an asset as same store and “N” denotes an asset as non-same store. |
| |
(3) | Represents multifamily rent divided by occupied multifamily units; retail rent is excluded from this metric. Occupied units may differ from leased units because leased units include leases that have been signed but have not yet commenced. |
| |
(4) | Excludes 2221 South Clark Street (WeLive). |
| |
(5) | Represents multifamily rent divided by occupied multifamily square feet; retail rent and retail square feet are excluded from this metric. Occupied multifamily square footage may differ from leased multifamily square footage because leased multifamily square footage includes leases that have been signed but have not yet commenced. |
| |
(6) | The following assets contain space that is held for development or not otherwise available for lease. This out-of-service square footage is excluded from area, leased, and occupancy metrics in the above table. |
|
| | | | | |
Multifamily Asset | | In-Service | Not Available
for Lease |
Falkland Chase - North | | 106,159 |
| 13,284 |
|
The Terano | | 195,864 |
| 3,904 |
|
| |
(7) | The following assets are subject to ground leases: |
|
| | |
Multifamily Asset | | Ground Lease Expiration Date |
The Alaire | | 3/27/2107 |
The Terano | | 8/5/2112 |
| |
(8) | Ownership percentage reflects expected dilution of JBG SMITH's real estate venture partner as contributions are funded during the construction of the asset. As of September 30, 2018, JBG SMITH's ownership interest was 85.4%. |
| |
(9) | Beginning in Q3 2018, JBG SMITH will exclude storage square feet from "Total Square Feet" and "% Leased" metrics. |
|
| |
PROPERTY TABLE - OTHER | SEPTEMBER 30, 2018 (Unaudited)
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|
| | | | | | | | | | | | | | | | | |
Other Assets | Submarket | %
Ownership |
C/U (1)
| Same Store (2):
Q3 2017-2018 / YTD 2017-2018 | Year Built /
Renovated | Total
Square
Feet (3) | %
Leased | %
Occupied | Annualized
Rent
(in thousands) | Annualized
Rent Per
Square Foot (4) |
| | | | | | | | | | |
Retail | | | | | | | | | | |
DC | | | | | | | | | | |
North End Retail | U Street/Shaw | 100.0% | C | N / N | 2015 / N/A | 27,433 |
| 100.0 | % | 100.0 | % | $ | 1,402 |
| $ | 51.12 |
|
VA | | | | | | | | | | |
Vienna Retail* | Vienna | 100.0% | C | Y / Y | 1981 / N/A | 8,584 |
| 100.0 | % | 100.0 | % | 420 |
| 48.94 |
|
Stonebridge at Potomac Town Center*(5) | Prince William County | 10.0% | U | N / N | 2012 / N/A | 503,683 |
| 98.0 | % | 97.5 | % | 15,854 |
| 32.28 |
|
Total / Weighted Average | | | | | | 539,700 |
| 98.2 | % | 97.7 | % | $ | 17,676 |
| $ | 33.53 |
|
| | | | | | | | | | |
Hotel | | | | | | | | | | |
VA | | | | | | | | | | |
Crystal City Marriott | Crystal City | 100.0% | C | Y / Y | 1968/2013 | 266,000 (345 Rooms) |
| | | | |
| | | | | | | | | | |
Operating - Total | | | | | | 805,700 |
| | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Totals at JBG SMITH Share | | | | | | | | | | |
Operating assets | | | | | | 352,385 |
| 98.8 | % | 98.6 | % | $ | 3,408 |
| $ | 40.03 |
|
|
| | | | | | | | | |
Number of Assets and Total Square Feet Reconciliation | | |
| | Number of | | At 100% Share | | At JBG SMITH Share |
Operating Assets | | Assets | | Square Feet | | Square Feet |
Q2 2018 | | 4 |
| | 764,612 |
| | 348,242 |
|
Placed into service (5) | | — |
| | 41,050 |
| | 4,105 |
|
Out-of-service adjustment | | — |
| | — |
| | — |
|
Building re-measurements | | — |
| | 38 |
| | 38 |
|
Q3 2018 | | 4 |
| | 805,700 |
| | 352,385 |
|
See footnotes on page 41.
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| |
PROPERTY TABLE - OTHER | SEPTEMBER 30, 2018 (Unaudited)
|
Footnotes
Note: At 100% share.
* Not Metro-Served.
| |
(1) | “C” denotes a consolidated interest. “U” denotes an unconsolidated interest. |
| |
(2) | “Y” denotes an asset as same store and “N” denotes an asset as non-same store. |
| |
(3) | Does not include approximately 976,000 square feet of retail space within our operating and under construction office portfolio and approximately 475,000 square feet of retail space within our operating and under construction multifamily portfolio. |
| |
(4) | Represents annualized rent divided by occupied square feet. Occupied square footage may differ from leased square footage because leased square footage includes leases that have been signed but have not yet commenced. |
| |
(5) | In Q2 2018, Stonebridge at Potomac Town Center - Phase II was delivered and is now combined with Stonebridge at Potomac Town Center - Phase I. |
|
| |
PROPERTY TABLE - UNDER CONSTRUCTION | SEPTEMBER 30, 2018 (Unaudited)
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|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
dollars in thousands, except per square foot data | %
Ownership | Estimated Square
Feet | % Pre-Leased | Weighted Average Pre-Lease Rent Per Square Foot (1) | Estimated Number of Units | | Schedule (2) | | | At JBG SMITH Share |
| | Construction Start Date | Estimated Completion Date | Estimated Stabilization Date | | Historical Cost (3) | Estimated Incremental Investment | Estimated Total Investment |
Asset | Submarket | |
| | | | | | | | | | | | | |
Office | | | | | | | | | | | | | |
DC | | | | | | | | | | | | | |
1900 N Street (4) | CBD | 55.0% | 271,433 |
| 29.6 | % | $ | 86.71 |
| — | Q2 2017 | Q2 2020 | Q4 2022 | | $ | 101,139 |
| $ | 22,750 |
| $ | 123,889 |
|
L'Enfant Plaza Office - Southeast | Southwest | 49.0% | 215,185 |
| 74.3 | % | 54.58 |
| — | Q1 2017 | Q3 2019 | Q2 2021 | | 38,581 |
| 8,661 |
| 47,242 |
|
MD | | | | | | | | | | | | | |
4747 Bethesda Avenue (5) | Bethesda CBD | 100.0% | 291,414 |
| 77.7 | % | 61.15 |
| — | Q2 2017 | Q4 2019 | Q2 2021 | | 93,116 |
| 67,504 |
| 160,620 |
|
Total/weighted average | | | 778,032 |
| 60.0 | % | $ | 63.32 |
| — | Q2 2017 | Q4 2019 | Q3 2021 | | $ | 232,836 |
| $ | 98,915 |
| $ | 331,751 |
|
| | | | | | | | | | | | | |
Multifamily | | | | | | | | | | | | | |
DC | | | | | | | | | | | | | |
West Half | Ballpark/Southeast | 96.9% | 388,174 |
| — |
| — |
| 465 | Q1 2017 | Q1 2020 | Q1 2021 | | 137,089 |
| 84,087 |
| 221,176 |
|
965 Florida Avenue (6) | U Street/Shaw | 96.1% | 336,092 |
| — |
| — |
| 433 | Q4 2017 | Q4 2020 | Q1 2022 | | 38,485 |
| 114,134 |
| 152,619 |
|
Atlantic Plumbing C | U Street/Shaw | 100.0% | 225,531 |
| — |
| — |
| 256 | Q1 2017 | Q4 2019 | Q3 2020 | | 113,549 |
| 45,104 |
| 158,653 |
|
MD | | | | | | | | | | | | | |
7900 Wisconsin Avenue | Bethesda CBD | 50.0% | 359,025 |
| — |
| — |
| 322 | Q2 2017 | Q3 2020 | Q4 2021 | | 40,473 |
| 53,942 |
| 94,415 |
|
Total/weighted average | | 1,308,822 |
| — |
| — |
| 1,476 | Q2 2017 | Q2 2020 | Q2 2021 | | $ | 329,596 |
| $ | 297,267 |
| $ | 626,863 |
|
| | | | | | | | | | | | | |
Under Construction - Total / Weighted Average (7) | 2,086,854 |
| 60.0 | % | $ | 63.32 |
| 1,476 | Q2 2017 | Q1 2020 | Q2 2021 | | $ | 562,432 |
| $ | 396,182 |
| $ | 958,614 |
|
| | | | Office | Multifamily | Other | Total | | | | | | |
Weighted average projected NOI yield at JBG SMITH share: | | | | | | | | | | | |
Estimated total project cost (8) | 7.5 | % | 6.4 | % | — |
| 6.8 | % | | | | Consol | 310,829 |
| |
Estimated total investment | 7.3 | % | 6.0 | % | — |
| 6.4 | % | | | | Unconsol | 85,353 |
| |
Estimated incremental investment | 24.3 | % | 12.6 | % | — |
| 15.5 | % | | | | | | |
Estimated Stabilized NOI at JBG SMITH Share (dollars in millions) | $ | 24.1 |
| $ | 37.5 |
| $ | — |
| $ | 61.6 |
| | | | | | |
____________________
Note: At 100% share, unless otherwise noted.
| |
(1) | Based on leases signed as of September 30, 2018 and calculated as contractual monthly base rent before free rent, plus estimated tenant reimbursements for the month in which the lease commences, multiplied by 12. Triple net leases are converted to a gross basis by adding estimated tenant reimbursements to contractual monthly base rent. |
| |
(2) | Average dates are weighted by JBG SMITH share of estimated square feet. |
| |
(3) | Historical cost excludes certain GAAP adjustments, such as capitalized payroll, interest and ground lease costs. See definition of historical cost on page 52. |
| |
(4) | Ownership percentage reflects expected dilution of JBG SMITH as contributions are funded during the construction of the asset. As of September 30, 2018, JBG SMITH's ownership interest was 79.2%. |
| |
(5) | Includes JBG SMITH’s lease for approximately 84,400 square feet. |
| |
(6) | Ownership percentage reflects expected dilution of JBG SMITH's real estate venture partner as contributions are funded during the construction of the asset. As of September 30, 2018, JBG SMITH's ownership interest was 85.4%. |
| |
(7) | Multifamily assets are excluded from the % pre-leased and the weighted average pre-lease rent per square foot metrics. |
| |
(8) | Estimated total project cost is estimated total investment excluding purchase price allocation adjustments recognized as a result of the Formation Transaction. |
|
| |
PROPERTY TABLE - FUTURE DEVELOPMENT | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
dollars in thousands, except per square foot data, at JBG SMITH share | | Estimated Commercial SF / Multifamily Units to be Replaced (1) | | | | | | Estimated Capitalized Cost of SF / Units to Be Replaced (4) | | Estimated Capitalized Cost of Ground Rent Payments (5) | | | | Estimated Total Investment per SF |
| | Number of Assets | | | | | | | | | | | | | Estimated
Remaining Acquisition Cost (3) | | | | Estimated Total Investment | |
| | | Estimated Potential Development Density (SF) | | | Historical Cost (2) | | | | | |
Region | | | Total | | Office | | Multifamily | | Retail | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Owned | | | | | | | | | | | | | | | | | | | | | | | | |
DC | | | | | | | | | | | | | | | | | | | | | | | | |
DC Emerging | | 7 |
| | 1,678,400 |
| | 312,100 |
| | 1,357,300 |
| | 9,000 |
| | — |
| | $ | 94,573 |
| | N/A | | $ | — |
| | $ | — |
| | $ | 94,573 |
| | $ | 56.35 |
|
DC Mature | | 2 |
| | 336,200 |
| | 324,400 |
| | — |
| | 11,800 |
| | — |
| | 63,522 |
| | N/A | | — |
| | — |
| | 63,522 |
| | 188.94 |
|
| | 9 |
| | 2,014,600 |
| | 636,500 |
| | 1,357,300 |
| | 20,800 |
| | — |
| | 158,095 |
| | N/A | | — |
| | — |
| | 158,095 |
| | 78.47 |
|
VA | | | | | | | | | | | | | | | | | | | | | | | | |
Pentagon City | | 5 |
| | 5,170,500 |
| | 4,082,000 |
| | 1,059,500 |
| | 29,000 |
| | — |
| | 165,011 |
| | N/A | | — |
| | — |
| | 165,011 |
| | 31.91 |
|
Reston | | 5 |
| | 3,483,200 |
| | 1,299,800 |
| | 1,971,400 |
| | 212,000 |
| | 30,237 SF /
15 units |
| | 75,933 |
| | N/A | | 6,745 |
| | — |
| | 82,678 |
| | 23.74 |
|
Crystal City | | 9 |
| | 2,974,400 |
| | 620,000 |
| | 2,088,200 |
| | 266,200 |
| | 74,271 SF |
| | 149,538 |
| | N/A | | 23,133 |
| | — |
| | 172,671 |
| | 58.05 |
|
Other VA | | 5 |
| | 951,300 |
| | 496,400 |
| | 394,300 |
| | 60,600 |
| | 21,544 SF |
| | 29,454 |
| | N/A | | 3,028 |
| | 2,431 |
| | 34,913 |
| | 36.70 |
|
| | 24 |
| | 12,579,400 |
| | 6,498,200 |
| | 5,513,400 |
| | 567,800 |
| | 126,052 SF / 15 units |
| | 419,936 |
| | N/A | | 32,906 |
| | 2,431 |
| | 455,273 |
| | 36.19 |
|
MD | | | | | | | | | | | | | | | | | | | | | | | | |
Silver Spring | | 1 |
| | 1,276,300 |
| | — |
| | 1,156,300 |
| | 120,000 |
| | 162 units |
| | 15,044 |
| | N/A | | 26,867 |
| | — |
| | 41,911 |
| | 32.84 |
|
Greater Rockville | | 4 |
| | 126,500 |
| | 19,200 |
| | 88,600 |
| | 18,700 |
| | 7,170 SF |
| | 3,623 |
| | N/A | | — |
| | 718 |
| | 4,341 |
| | 34.32 |
|
| | 5 |
| | 1,402,800 |
| | 19,200 |
| | 1,244,900 |
| | 138,700 |
| | 7,170 SF /
162 units |
| | 18,667 |
| | N/A | | 26,867 |
| | 718 |
| | 46,252 |
| | 32.97 |
|
Total / weighted average | | 38 |
| | 15,996,800 |
| | 7,153,900 |
| | 8,115,600 |
| | 727,300 |
| | 133,222 SF / 177 units |
| | $ | 596,698 |
| | N/A | | $ | 59,773 |
| | $ | 3,149 |
| | $ | 659,620 |
| | $ | 41.23 |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Optioned (6) | | | | | | | | | | | | | | | | | | | | | | | | |
DC | | | | | | | | | | | | | | | | | | | | | | | | |
DC Emerging | | 3 |
| | 1,793,600 |
| | 78,800 |
| | 1,498,900 |
| | 215,900 |
| | — |
| | $ | 18,541 |
| | $ | 25,051 |
| | $ | — |
| | $ | 71,113 |
| | $ | 114,705 |
| | $ | 63.95 |
|
VA | | | | | | | | | | | | | | | | | | | | | | | | |
Other VA | | 2 |
| | 1,211,300 |
| | 600,000 |
| | 610,400 |
| | 900 |
| | — |
| | 62 |
| | 23,895 |
| | — |
| | — |
| | 23,957 |
| | 19.78 |
|
Total / weighted average | | 5 |
| | 3,004,900 |
| | 678,800 |
| | 2,109,300 |
| | 216,800 |
| | — |
| | $ | 18,603 |
| | $ | 48,946 |
| | $ | — |
| | $ | 71,113 |
| | $ | 138,662 |
| | $ | 46.15 |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Total / Weighted Average | | 43 |
| | 19,001,700 |
| | 7,832,700 |
| | 10,224,900 |
| | 944,100 |
| | 133,222 SF / 177 units |
| | $ | 615,301 |
| | $ | 48,946 |
| | $ | 59,773 |
| | $ | 74,262 |
| | $ | 798,282 |
| | $ | 42.01 |
|
____________________
| |
(1) | Represents management's estimate of the total office and/or retail rentable square feet and multifamily units that would need to be redeveloped to access some of the estimated potential development density. |
| |
(2) | Historical cost includes certain intangible assets, such as option and transferable density rights values; and excludes certain GAAP adjustments, such as capitalized payroll, interest and ground lease costs. See definition of historical cost on page 52. |
| |
(3) | Represents management's estimate of remaining deposits, option payments, and option strike prices as of September 30, 2018. |
| |
(4) | Capitalized value of estimated commercial square feet / multifamily units to be replaced, which generated approximately $0.9 million of NOI for the three months ended September 30, 2018 (included in the NOI of the applicable operating segment), at a 6.0% capitalization rate. NoBe II Office's annualized NOI is excluded from this calculation. |
| |
(5) | Capitalized value of stabilized annual ground rent payments associated with leasehold assets at a 5.0% capitalization rate. Two owned parcels and one optioned parcel are leasehold interests with estimated annual stabilized ground rent payments totaling $3.7 million. |
| |
(6) | As of September 30, 2018, the weighted average remaining term for the optioned future development assets is 5.8 years. |
|
| |
DISPOSITION & RECAPITALIZATION ACTIVITY | SEPTEMBER 30, 2018 (Unaudited)
|
Disposition Activity (1):
|
| | | | | | | | | | | | | | | | |
dollars in thousands, at JBG SMITH share | | | | | | Total Square Feet/ Estimated Potential Development Density | Gross Sales Price | Net Cash Proceeds | Book Gain |
Assets | Ownership Percentage | Asset Type | | Location | Date Disposed |
|
| | | | | | | | | |
Q1 2018 | | | | | | | | | |
Summit - MWAA | 100.0% | Future Development | | Reston, VA | February 13, 2018 | — |
| $ | 2,154 |
| $ | 2,154 |
| $ | 455 |
|
| | | | | | | | | |
Q2 2018 | | | | | | | | | |
Summit I and II / Summit Land (2) | 100.0% | Office / Future Development | | Reston, VA | April 3, 2018 | 284,118 / 700,000 |
| $ | 95,000 |
| $ | 35,240 |
| $ | 6,189 |
|
Bowen Building | 100.0% | Office | | Washington, DC | May 1, 2018 | 231,402 |
| 140,000 |
| 136,488 |
| 27,207 |
|
Q2 2018 dispositions | | | |
|
| 515,520 / 700,000 |
| $ | 235,000 |
| $ | 171,728 |
| $ | 33,396 |
|
| | | | | | | | | |
Q3 2018 | | | | | | | | | |
Investment Building | 5.0% | Office | | Washington, DC | August 23, 2018 | 20,069 |
| $ | 24,602 |
| 24,688 |
| 15,488 |
|
Executive Tower | 100.0% | Office | | Washington, DC | September 21, 2018 | 129,831 |
| 121,445 |
| 113,267 |
| 11,938 |
|
Q3 2018 dispositions | | | | | | 149,900 |
| $ | 146,047 |
| $ | 137,955 |
| $ | 27,426 |
|
| | | | | | | | | |
Total | | | |
|
| 665,420 / 700,000 |
| $ | 383,201 |
| $ | 311,837 |
| $ | 61,277 |
|
Recapitalization Activity:
In February 2018, JBG SMITH closed a joint venture with Canadian Pension Plan Investment Board (CPPIB) to recapitalize 1900 N Street, an Under Construction office asset consisting of approximately 271,000 square feet in the CBD of Washington, DC. CPPIB will commit approximately $101 million for a 45% interest based on a total capitalization of approximately $225 million.
_______________
| |
(1) | As of September 30, 2018, three real estate assets (Commerce Executive, 1233 20th Street and the out-of-service portion of Falkland Chase - North) were classified as held for sale in our condensed consolidated balance sheet: |
| |
• | In July 2018, the buyer’s deposit related to the contract to sell Commerce Executive for $115.0 million became non-refundable. The sale is expected to close in early 2019. |
| |
• | In October 2018, we sold 1233 20th Street, an office building located in Washington, DC, for $65.0 million. In connection with the sale, we repaid the related $41.9 million mortgage loan. |
| |
• | In October 2018, we sold the out-of-service portion of Falkland Chase - North, a multifamily building located in Downtown Silver Spring, Maryland, for $3.8 million. |
| |
(2) | In connection with the sale, we repaid the related $59.0 million mortgage loan. |
|
| |
DEBT SUMMARY | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
dollars in thousands, at JBG SMITH share | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | Thereafter | | Total |
| | | | | | | | | | | | | | |
Consolidated and Unconsolidated Principal Balance | | | | | | | | | | |
| Unsecured Debt: | | | | | | | | | | | | | | |
| Revolving credit facility ($1 billion commitment) | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| Term loans ($400 million commitment) | | — |
| | — |
| | — |
| | — |
| | — |
| | 300,000 |
| | 300,000 |
|
Total unsecured debt | | — |
| | — |
| | — |
| | — |
| | — |
| | 300,000 |
| | 300,000 |
|
| Secured Debt: | | | | | | | | | | | | | | |
| Consolidated principal balance | | 207,181 |
| | 224,958 |
| | 97,141 |
| | 98,286 |
| | 327,500 |
| | 860,875 |
| | 1,815,941 |
|
| Unconsolidated principal balance | | 678 |
| | 118,847 |
| | 36,168 |
| | — |
| | 74,294 |
| | 213,903 |
| | 443,890 |
|
Total secured debt | | 207,859 |
| | 343,805 |
| | 133,309 |
| | 98,286 |
| | 401,794 |
| | 1,074,778 |
| | 2,259,831 |
|
| | | | | | | | | | | | | | |
Total Consolidated and Unconsolidated Principal Balance | | $ | 207,859 |
| | $ | 343,805 |
| | $ | 133,309 |
| | $ | 98,286 |
| | $ | 401,794 |
| | $ | 1,374,778 |
| | $ | 2,559,831 |
|
| | | | | | | | | | | | | | | |
| % of total debt maturing | | 8.1 | % | | 13.4 | % | | 5.2 | % | | 3.8 | % | | 15.7 | % | | 53.8 | % | | 100.0 | % |
| % floating rate (1) | | 48.4 | % | | 87.8 | % | | 17.6 | % | | — |
| | — |
| | 15.2 | % | | 24.8 | % |
| % fixed rate (2) | | 51.6 | % | | 12.2 | % | | 82.4 | % | | 100.0 | % | | 100.0 | % | | 84.8 | % | | 75.2 | % |
| | | | | | | | | | | | | | | |
Weighted Average Interest Rates | | | | | | | | | | | | | | |
| Variable rate | | 4.12 | % | | 4.78 | % | | 5.87 | % | | — |
| | — |
| | 3.82 | % | | 4.40 | % |
| Fixed rate | | 4.11 | % | | 4.38 | % | | 3.32 | % | | 4.88 | % | | 3.94 | % | | 4.20 | % | | 4.13 | % |
Total Weighted Average Interest Rates | | 4.11 | % | | 4.73 | % | | 3.77 | % | | 4.88 | % | | 3.94 | % | | 4.14 | % | | 4.20 | % |
| | | | | | | | | | | | | | | |
| | | Credit Facility | | | | | | |
| | | Revolving Credit
Facility | | Tranche A-1 Term Loan | | Tranche A-2 Term Loan | | Total/Weighted Average | | | | | | 2,115,941 |
|
Credit limit | | $ | 1,000,000 |
| | $ | 200,000 |
| | $ | 200,000 |
| | $ | 1,400,000 |
| | | | | | |
Outstanding principal balance | | $ | — |
| | $ | 100,000 |
| | $ | 200,000 |
| | $ | 300,000 |
| | | | | | |
Letters of credit | | $ | 5,743 |
| | $ | — |
| | $ | — |
| | $ | 5,743 |
| | | | | | |
Undrawn capacity | | $ | 994,257 |
| | $ | 100,000 |
| | $ | — |
| | $ | 1,094,257 |
| | | | | | |
Interest rate spread (3) | | 1.10 | % | | 1.20 | % | | 1.55 | % | | 1.43 | % | | | | | | |
All-In interest rate (4) | | 3.36 | % | | 3.32 | % | | 3.81 | % | | 3.65 | % | | | | | | |
Initial maturity date | | Jul-21 |
| | Jan-23 |
| | Jul-24 |
| | — |
| | | | | | |
Delayed draw availability period | — |
| | Jul-19 |
| | — |
| | — |
| | | | | | |
____________________
| |
(1) | Floating rate debt includes floating rate loans with interest rate caps. |
| |
(2) | Fixed rate debt includes floating rate loans with interest rate swaps. |
| |
(3) | The interest rate for the revolving credit facility excludes a 0.15% facility fee. |
| |
(4) | The all-in interest rate is inclusive of interest rate swaps. As of September 30, 2018, only the $100 million outstanding balance on the Tranche A-1 Term Loan had been swapped. |
|
| |
DEBT BY INSTRUMENT | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | |
dollars in thousands
Asset |
% Ownership |
Principal Balance | Stated Interest Rate | Interest Rate Hedge | Current Annual Interest Rate (1) | Initial Maturity Date | Extended Maturity Date (2) |
| | | | | | | |
Consolidated | | | | | | | |
Courthouse Plaza 1 and 2 | 100.0 | % | — |
| L + 1.60% | — | 3.86 | % | 05/10/19 | 05/10/20 |
RTC - West | 100.0 | % | 97,141 |
| L + 1.50% | Swap | 3.33 | % | 04/12/20 | 04/12/21 |
WestEnd25 | 100.0 | % | 98,286 |
| 4.88% | Fixed | 4.88 | % | 06/01/21 | 06/01/21 |
Universal Buildings | 100.0 | % | 182,996 |
| L + 1.90% | Cap | 4.16 | % | 08/12/19 | 08/12/21 |
CEB Tower at Central Place (3) | 100.0 | % | 207,181 |
| L + 2.45% | Swap | 4.11 | % | 11/07/18 | 11/07/21 |
The Bartlett | 100.0 | % | 220,000 |
| L + 1.70% | Swap | 3.79 | % | 06/20/22 | 06/20/22 |
Credit Facility - Revolving Credit Facility | 100.0 | % | — |
| L + 1.10% | — | 3.36 | % | 07/16/21 | 07/16/22 |
Credit Facility -Tranche A-1 Term Loan | 100.0 | % | 100,000 |
| L + 1.20% | Swap | 3.32 | % | 01/18/23 | 01/18/23 |
2121 Crystal Drive | 100.0 | % | 137,396 |
| 5.51% | Fixed | 5.51 | % | 03/01/23 | 03/01/23 |
Falkland Chase - South & West | 100.0 | % | 41,254 |
| 3.78% | Fixed | 3.78 | % | 06/01/23 | 06/01/23 |
800 North Glebe Road | 100.0 | % | 107,500 |
| L + 1.60% | Swap | 3.60 | % | 06/30/22 | 06/30/24 |
Credit Facility - Tranche A-2 Term Loan | 100.0 | % | 200,000 |
| L + 1.55% | — | 3.81 | % | 07/18/24 | 07/18/24 |
2101 L Street | 100.0 | % | 138,228 |
| 3.97% | Fixed | 3.97 | % | 08/15/24 | 08/15/24 |
1233 20th Street | 100.0 | % | 41,962 |
| 4.38% | Fixed | 4.38 | % | 11/01/19 | 11/01/24 |
201 12th Street S., 200 12th Street S., and 251 18th Street S. | 100.0 | % | 84,687 |
| 7.94% | Fixed | 7.94 | % | 01/01/25 | 01/01/25 |
RiverHouse Apartments | 100.0 | % | 307,710 |
| L + 1.28% | Swap | 3.47 | % | 04/01/25 | 04/01/25 |
Fort Totten Square | 100.0 | % | 73,600 |
| L + 1.35% | Swap | 3.77 | % | 05/18/25 | 05/18/25 |
1235 S. Clark Street | 100.0 | % | 78,000 |
| 3.94% | Fixed | 3.94 | % | 11/01/27 | 11/01/27 |
Total Consolidated Principal Balance | | 2,115,941 |
| | | | | |
Premium / (discount) recognized as a result of the Formation Transaction | 1,260 |
| |
|
|
| |
Deferred financing costs - mortgage loans | | (5,345 | ) | |
| | | |
Deferred financing costs - credit facility | | (8,267 | ) | | | | | |
Total Consolidated Indebtedness | | $ | 2,103,589 |
| | | | | |
| | | | | | | |
Total Consolidated Indebtedness (net of premium / (discount) and deferred financing costs) | | | | | |
Mortgages payable | | $ | 1,769,938 |
| | | | | |
Revolving credit facility | | — |
| — |
| 5,292 |
| | | |
Deferred financing costs, net - credit facility (included in other assets) | (5,292 | ) | | | | | |
Unsecured term loan | | 296,981 |
| | | | | |
Liabilities related to assets held for sale - mortgage loan | | 41,962 |
| | | | | |
Total Consolidated Indebtedness | | $ | 2,103,589 |
|
| | | | |
| | | | | | | |
|
| |
DEBT BY INSTRUMENT | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | | | | | | | |
dollars in thousands
Asset |
% Ownership |
Principal Balance | Stated Interest Rate | Interest Rate Hedge | Current Annual Interest Rate (1) | Initial Maturity Date | Extended Maturity Date (2) |
| | | | | | | |
Unconsolidated | | | | | | | |
The Terano | 1.8 | % | $ | 37,683 |
| L + 2.35% | — | 4.61 | % | 11/08/18 | 11/08/19 |
11333 Woodglen Drive | 18.0 | % | 12,909 |
| L + 1.90% | Swap | 3.52 | % | 01/01/20 | 01/01/20 |
Galvan | 1.8 | % | 89,500 |
| L + 1.75% | Cap | 4.01 | % | 03/06/20 | 03/06/21 |
Rosslyn Gateway - North, Rosslyn Gateway - South | 18.0 | % | 48,390 |
| L + 2.00% | Cap | 3.00 | % | 11/17/19 | 11/17/21 |
The Foundry | 9.9 | % | 54,998 |
| L + 1.85% | Cap | 4.11 | % | 12/12/19 | 12/12/21 |
L'Enfant Plaza Office - North, L'Enfant Plaza Office - East, L'Enfant Plaza Retail (4) | 49.0 | % | 213,697 |
| L + 3.65% | Cap | 6.05 | % | 05/08/19 | 05/08/22 |
L'Enfant Plaza Office - Southeast | 49.0 | % | 44,682 |
| L + 3.75% | Cap | 6.01 | % | 05/08/20 | 05/08/22 |
Atlantic Plumbing | 64.0 | % | 100,000 |
| L + 1.50% | Swap | 5.08 | % | 11/08/22 | 11/08/22 |
Stonebridge at Potomac Town Center | 10.0 | % | 103,407 |
| L + 1.70% | Swap | 3.25 | % | 12/10/20 | 12/10/22 |
The Warner | 55.0 | % | 271,741 |
| 3.65% | Fixed | 3.65 | % | 06/01/23 | 06/01/23 |
The Alaire | 18.0 | % | 48,000 |
| L + 1.82% | Cap | 4.08 | % | 03/01/25 | 03/01/25 |
1101 17th Street | 55.0 | % | 60,000 |
| L + 1.25% | Swap | 4.13 | % | 06/13/25 | 06/13/25 |
Fairway Apartments | 10.0 | % | 47,531 |
| L + 1.50% | Swap | 3.60 | % | 07/01/22 | 07/01/25 |
7900 Wisconsin Avenue | 50.0 | % | — |
| 4.82% | Fixed | 4.82 | % | 07/15/25 | 07/15/25 |
The Gale Eckington | 5.0 | % | 110,813 |
| L + 1.60% | Swap | 3.56 | % | 07/31/22 | 07/31/25 |
Pickett Industrial Park | 10.0 | % | 23,600 |
| L + 1.45% | Swap | 3.56 | % | 09/04/25 | 09/04/25 |
Wardman Park | 16.7 | % | 122,673 |
| 4.77% | Fixed | 4.77 | % | 02/01/23 | 02/01/28 |
Total Unconsolidated Principal Balance | | 1,389,624 |
| | | | | |
Deferred financing costs | | (2,555 | ) | | | | | |
Total Unconsolidated Indebtedness | | $ | 1,387,069 |
| | | | | |
| | | | | | | |
Principal Balance at JBG SMITH Share | | | | | | | |
Consolidated principal balance at JBG SMITH share | | $ | 2,115,941 |
| | | | | |
Unconsolidated principal balance at JBG SMITH share | | 443,890 |
| 6 | % | | | | |
Total Consolidated and Unconsolidated Principal Balance at JBG SMITH Share | $ | 2,559,831 |
| | | | | |
| | | | | | | |
Indebtedness at JBG SMITH Share (net of premium / (discount) and deferred financing costs) | | | | | |
Consolidated indebtedness at JBG SMITH Share | | $ | 2,103,589 |
|
| | | | |
Unconsolidated indebtedness at JBG SMITH Share | | 442,669 |
| | | | | |
Total Consolidated and Unconsolidated Indebtedness at JBG SMITH Share | $ | 2,546,258 |
| 2.55 |
| | | | |
____________________
| |
(1) | September 30, 2018 one-month LIBOR of 2.26% applied to loans which are denoted as floating (no swap) or floating with a cap, except as otherwise noted. |
| |
(2) | Represents the maturity date based on execution of all extension options. Many of these extensions are subject to lender covenant tests. |
| |
(3) | The notional amount of the CEB Tower at Central Place interest rate swap as of September 30, 2018 was $107.2 million. |
| |
(4) | The base rate for this loan is three-month LIBOR, which was 2.39% as of September 30, 2018. |
|
| |
CONSOLIDATED REAL ESTATE VENTURES | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | |
| Asset Type | City | Submarket | % Ownership |
Total Square Feet |
Akridge | | | | | |
West Half | Multifamily | Washington, DC | Ballpark/Southeast | 96.9 | % | 388,174 |
|
| | | | | |
MRP Realty | | | | | |
965 Florida Avenue (1) | Multifamily | Washington, DC | U Street/Shaw | 96.1 | % | 336,092 |
|
| | | | | |
Total Consolidated Real Estate Ventures | | | | | 724,266 |
|
____________________
Note: Total square feet at 100% share.
| |
(1) | Ownership percentage reflects expected dilution of JBG SMITH's real estate venture partner as contributions are funded during the construction of the asset. As of September 30, 2018, JBG SMITH's ownership interest was 85.4%. |
|
| |
UNCONSOLIDATED REAL ESTATE VENTURES | SEPTEMBER 30, 2018 (Unaudited)
|
|
| | | | | | | |
| Asset Type | City | Submarket | % Ownership |
Total Square Feet |
Landmark | | | | | |
L'Enfant Plaza Office - East | Office | Washington, DC | Southwest | 49.0 | % | 397,014 |
|
L'Enfant Plaza Office - North | Office | Washington, DC | Southwest | 49.0 | % | 299,476 |
|
L'Enfant Plaza Office - Southeast | Office | Washington, DC | Southwest | 49.0 | % | 215,185 |
|
L'Enfant Plaza Retail | Office | Washington, DC | Southwest | 49.0 | % | 119,361 |
|
Rosslyn Gateway - North | Office | Arlington, VA | Rosslyn | 18.0 | % | 143,676 |
|
Rosslyn Gateway - South | Office | Arlington, VA | Rosslyn | 18.0 | % | 102,061 |
|
11333 Woodglen Drive | Office | Rockville, MD | Rockville Pike Corridor | 18.0 | % | 62,650 |
|
NoBe II Office | Office | Rockville, MD | Rockville Pike Corridor | 18.0 | % | 39,836 |
|
Galvan | Multifamily | Rockville, MD | Rockville Pike Corridor | 1.8 | % | 390,641 |
|
The Alaire | Multifamily | Rockville, MD | Rockville Pike Corridor | 18.0 | % | 266,497 |
|
The Terano | Multifamily | Rockville, MD | Rockville Pike Corridor | 1.8 | % | 195,864 |
|
NoBe II Land | Future Development | Rockville, MD | Rockville Pike Corridor | 18.0 | % | 589,000 |
|
Rosslyn Gateway - South Land | Future Development | Arlington, VA | Rosslyn | 18.0 | % | 498,500 |
|
Rosslyn Gateway - North Land | Future Development | Arlington, VA | Rosslyn | 18.0 | % | 311,000 |
|
L'Enfant Plaza Office - Center | Future Development | Washington, DC | Southwest | 49.0 | % | 350,000 |
|
Courthouse Metro Land | Future Development | Arlington, VA | Clarendon/Courthouse | 18.0 | % | 286,500 |
|
Courthouse Metro Land - Option | Future Development | Arlington, VA | Clarendon/Courthouse | 18.0 | % | 62,500 |
|
5615 Fishers Drive | Future Development | Rockville, MD | Rockville Pike Corridor | 18.0 | % | 106,500 |
|
12511 Parklawn Drive | Future Development | Rockville, MD | Rockville Pike Corridor | 18.0 | % | 6,500 |
|
Woodglen | Future Development | Rockville, MD | Rockville Pike Corridor | 18.0 | % | — |
|
| | | | | 4,442,761 |
|
| | | | | |
CBREI Venture | | | | | |
Pickett Industrial Park | Office | Alexandria, VA | Eisenhower Avenue | 10.0 | % | 246,145 |
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The Foundry | Office | Washington, DC | Georgetown | 9.9 | % | 223,359 |
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The Gale Eckington | Multifamily | Washington, DC | H Street/NoMa | 5.0 | % | 466,716 |
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Fairway Apartments | Multifamily | Reston, VA | Reston | 10.0 | % | 370,850 |
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Atlantic Plumbing | Multifamily | Washington, DC | U Street/Shaw | 64.0 | % | 245,527 |
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Stonebridge at Potomac Town Center | Other | Woodbridge, VA | Prince William County | 10.0 | % | 503,683 |
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Stonebridge at Potomac Town Center - Land | Future Development | Woodbridge, VA | Prince William County | 10.0 | % | 232,700 |
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Fairway Land | Future Development | Reston, VA | Reston | 10.0 | % | 526,200 |
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| | | | | 2,815,180 |
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UNCONSOLIDATED REAL ESTATE VENTURES | SEPTEMBER 30, 2018 (Unaudited)
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| Asset Type | City | Submarket | % Ownership |
Total Square Feet |
Canadian Pension Plan Investment Board | | | | | |
The Warner | Office | Washington, DC | East End | 55.0 | % | 583,453 |
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1900 N Street (1) | Office | Washington, DC | CBD | 55.0 | % | 271,433 |
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1101 17th Street | Office | Washington, DC | CBD | 55.0 | % | 210,576 |
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| | | | | 1,065,462 |
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| | | | | |
Forest City | | | | | |
Waterfront Station | Future Development | Washington, DC | Southwest | 2.5 | % | 662,600 |
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Brandywine | | | | | |
1250 1st Street | Future Development | Washington, DC | NoMa | 30.0 | % | 265,800 |
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51 N Street | Future Development | Washington, DC | NoMa | 30.0 | % | 177,500 |
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50 Patterson Street | Future Development | Washington, DC | NoMa | 30.0 | % | 142,200 |
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| | | | | 585,500 |
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Berkshire Group | | | | | |
7900 Wisconsin Avenue | Multifamily | Bethesda, MD | Bethesda CBD | 50.0 | % | 359,025 |
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CIM Group / Pacific Life Insurance Company | | | | | |
Wardman Park | Future Development | Washington, DC | Woodley Park | 16.7 | % | — |
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| | | | | |
Total Unconsolidated Real Estate Ventures | | | | | 9,930,528 |
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Note: Total square feet at 100% share.
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(1) | Ownership percentage reflects expected dilution of JBG SMITH as contributions are funded during the construction of the asset. As of September 30, 2018, JBG SMITH's ownership interest was 79.2%. |
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DEFINITIONS | SEPTEMBER 30, 2018 |
Annualized Rent
“Annualized rent” is defined as (i) for office and other assets, or the retail component of a mixed-use asset, the in-place monthly base rent before free rent, plus tenant reimbursements as of September 30, 2018, multiplied by 12, with triple net leases converted to a gross basis by adding estimated tenant reimbursements to monthly base rent, and (ii) for multifamily assets, or the multifamily component of a mixed-use asset, the in-place monthly base rent before free rent as of September 30, 2018, multiplied by 12. Annualized rent excludes rent from signed but not yet commenced leases.
Annualized Rent Per Square Foot
“Annualized rent per square foot” is defined as (i) for office assets, annualized office rent divided by occupied office square feet; annualized retail rent and retail square feet are excluded from this metric, (ii) for multifamily assets, monthly multifamily rent divided by occupied multifamily square feet; annualized retail rent and retail square feet are excluded from this metric, and (iii) for other assets, annualized rent divided by occupied square feet. Occupied square footage may differ from leased square footage because leased square footage includes leases that have been signed but have not yet commenced.
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), EBITDA for Real Estate ("EBITDAre") and Adjusted EBITDA
Management uses EBITDA and EBITDAre, non-GAAP financial measures, as supplemental operating performance measures and believes they help investors and lenders meaningfully evaluate and compare our operating performance from period-to-period by removing from our operating results the impact of our capital structure (primarily interest charges from our consolidated outstanding debt and the impact of our interest rate swaps) and certain non-cash expenses (primarily depreciation and amortization on our assets). EBITDAre is computed in accordance with the definition established by the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines EBITDAre as GAAP net income (loss) adjusted to exclude interest expense, income taxes, depreciation and amortization expenses, gains on sales of depreciated real estate and impairment losses of depreciable real estate, including our share of such adjustments of unconsolidated real estate ventures. These supplemental measures may help investors and lenders understand our ability to incur and service debt and to make capital expenditures. EBITDA and EBITDAre are not substitutes for net income (loss) (computed in accordance with GAAP) and may not be comparable to similarly titled measures used by other companies.
“Adjusted EBITDA,” a non-GAAP financial measure, represents EBITDAre adjusted for items we believe are not representative of ongoing operating results, such as non-recurring transaction and other costs, gain (loss) on the extinguishment of debt, gain on sale of non-operating real estate, distributions in excess of our net investment in consolidated real estate ventures, gain on the bargain purchase of a business and share-based compensation expense related to the Formation Transaction. We believe that adjusting such items not considered part of our comparable operations, provides a meaningful measure to evaluate and compare our performance from period-to-period.
Because EBITDA, EBITDAre and Adjusted EBITDA have limitations as analytical tools, we use EBITDA, EBITDAre and Adjusted EBITDA to supplement GAAP financial measures. Additionally, we believe that users of these measures should consider EBITDA, EBITDAre and Adjusted EBITDA in conjunction with net income (loss) and other GAAP measures in understanding our operating results. A reconciliation of net income (loss) to EBITDA, EBITDAre and Adjusted EBITDA is presented on page 14.
Estimated Potential Development Density
‘‘Estimated potential development density’’ reflects management’s estimate of developable gross square feet based on our current business plans with respect to real estate owned or controlled as of September 30, 2018. Our current business plans may contemplate development of less than the maximum potential development density for individual assets. As market conditions change, our business plans, and therefore, the Estimated Potential Development Density, could change accordingly. Given timing, zoning requirements and other factors, we make no assurance that estimated potential development density amounts will become actual density to the extent we complete development of assets for which we have made such estimates.
Free Rent
‘‘Free rent’’ means the amount of base rent and tenant reimbursements that are abated according to the applicable lease agreement(s).
Funds from Operations ("FFO"), Core FFO and Funds Available for Distribution ("FAD")
FFO is a non-GAAP financial measure computed in accordance with the definition established by NAREIT. NAREIT defines FFO as “net income (computed in accordance with GAAP), excluding gains (or losses) from sales of, or impairment charges related to, depreciable operating properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.”
"Core FFO" represents FFO adjusted to exclude items (net of tax) which we believe are not representative of ongoing operating results, such as transaction and other costs, gains (or losses) on extinguishment of debt, gain on the bargain purchase of a business, gain on sale of non-operating real estate, distributions in excess of our net investment in consolidated real estate ventures, share-based compensation expense related to the Formation Transaction, amortization of the management contracts intangible and the mark-to-market of interest rate swaps.
"FAD" is a non-GAAP financial measure and represents FFO less recurring tenant improvements, leasing commissions and other capital expenditures, net deferred rent activity, third-party lease liability assumption payments, recurring share-based compensation expense, accretion of acquired below-market leases, net of amortization of acquired above-market leases, amortization of debt issuance costs and other non-cash income and charges. FAD is presented solely as a supplemental disclosure that management believes provides useful information as it relates to our ability to fund dividends.
We believe FFO, Core FFO and FAD are meaningful non‑GAAP financial measures useful in comparing our levered operating performance from period-to-period and as compared to similar real estate companies because these non‑GAAP measures exclude real estate depreciation and amortization expense and other non-comparable income and expenses, which implicitly assumes that the value of real estate diminishes predictably over time rather than fluctuating based on market conditions. FFO, Core FFO and FAD do not represent cash generated from operating activities and
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DEFINITIONS | SEPTEMBER 30, 2018 |
are not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as a performance measure or cash flow as a liquidity measure. FFO, Core FFO and FAD may not be comparable to similarly titled measures used by other companies. A reconciliation of net income to FFO, Core FFO and FAD is presented on pages 15-16.
Future Development
“Future development” refers to assets that are development opportunities on which we do not intend to commence construction within 18 months of September 30, 2018 where we (i) own land or control the land through a ground lease or (ii) are under a long-term conditional contract to purchase, or enter into a leasehold interest with respect to land.
Historical Cost, Estimated Incremental Investment, Estimated Total Investment and Estimated Total Project Cost
“Historical cost” is a non-GAAP measure which includes the total historical cost incurred by JBG SMITH, with respect to the development of an asset, including any acquisition costs, hard costs, soft costs, tenant improvements, leasing costs and other similar costs, but excluding any financing costs, ground rent expenses and capitalized payroll costs incurred as of September 30, 2018.
“Estimated incremental investment” means management’s estimate of the remaining cost to be incurred in connection with the development of an asset as of September 30, 2018, including all remaining acquisition costs, hard costs, soft costs, tenant improvements, leasing costs and other similar costs to develop and stabilize the asset but excluding any financing costs, ground rent expenses and capitalized payroll costs.
“Estimated total investment” means, with respect to the development of an asset, the sum of the historical cost in such asset and the estimated incremental investment for such asset.
"Estimated total project cost" is estimated total investment excluding purchase price allocation adjustments recognized as a result of the Formation Transaction.
Actual incremental investment, actual total investment and actual total project cost may differ substantially from our estimates due to numerous factors, including unanticipated expenses, delays in the estimated start and/or completion date, changes in design and other contingencies.
In Service
‘‘In service’’ refers to office, multifamily or other assets that are at or above 90% leased or have been operating and collecting rent for more than 12 months as of September 30, 2018.
Metro-Served
“Metro-served” means locations, submarkets or assets that are generally nearby and within walking distance of a Metro station, defined as being within 0.5 miles of an existing or planned Metro station.
Monthly Rent Per Unit
For multifamily assets, represents multifamily rent for the month ended September 30, 2018 divided by occupied units; retail rent is excluded from this metric.
Near-Term Development
‘‘Near-term development’’ refers to assets that have substantially completed the entitlement process and on which we intend to commence construction within 18 months following September 30, 2018, subject to market conditions.
Net Operating Income ("NOI"), Adjusted Annualized NOI, Estimated Stabilized NOI and Projected NOI Yield
“NOI” is a non-GAAP financial measure management uses to measure the operating performance of our assets and consists of property-related revenue (which includes base rent, tenant reimbursements and other operating revenue, net of free rent and payments associated with assumed lease liabilities) less operating expenses and ground rent, if applicable. NOI also excludes deferred rent, related party management fees, interest expense, and certain other non-cash adjustments, including the accretion of acquired below-market leases and amortization of acquired above-market leases and below-market ground lease intangibles. Annualized NOI, for all assets except Crystal City Marriott, represents NOI for the three months ended September 30, 2018 multiplied by four. Due to seasonality in the hospitality business, annualized NOI for Crystal City Marriott represents the trailing twelve-month NOI as of September 30, 2018. Management believes Annualized NOI provides useful information in understanding JBG SMITH’s financial performance over a 12-month period, however, investors and other users are cautioned against attributing undue certainty to our calculation of Annualized NOI. Actual NOI for any 12-month period will depend on a number of factors beyond our ability to control or predict, including general capital markets and economic conditions, any bankruptcy, insolvency, default or other failure to pay rent by one or more of our tenants and the destruction of one or more of our assets due to terrorist attack, natural disaster or other casualty, among others. We do not undertake any obligation to update our calculation to reflect events or circumstances occurring after the date of this Investor Package. There can be no assurance that the annualized NOI shown will reflect JBG SMITH’s actual results of operations over any 12-month period. We also report adjusted annualized NOI which includes signed but not yet commenced leases and incremental revenue from recently delivered assets assuming stabilization. While we believe adjusted annualized NOI provides useful information regarding potential future NOI from our assets, it does not account for any decrease in NOI for lease terminations, defaults or other negative events that could affect NOI and therefore, should not be relied upon as indicative of future NOI.
This Investor Package also contains management’s estimate of stabilized NOI and projections of NOI yield for under construction and near-term development assets, which are based on management’s estimates of property-related revenue and operating expenses for each asset. These estimates are inherently uncertain and represent management’s plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. The property-related revenues and operating expenses for our assets may differ materially from the estimates included in this Investor Package.
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DEFINITIONS | SEPTEMBER 30, 2018 |
Management’s projections of NOI yield are not projections of JBG SMITH’s overall financial performance or cash flow, and there can be no assurance that the projected NOI yield set forth in this Investor Package will be achieved.
“Projected NOI yield” means our estimated stabilized NOI reported as a percentage of (i) estimated total project costs, (ii) estimated total investment and (iii) estimated incremental investment. Actual initial full year stabilized NOI yield may vary from the projected NOI yield based on the actual incremental investment to complete the asset and its actual initial full year stabilized NOI, and there can be no assurance that we will achieve the projected NOI yields described in this Investor Package.
The Company does not provide reconciliations for non-GAAP estimates on a future basis, including adjusted annualized NOI and estimated stabilized NOI because it is unable to provide a meaningful or accurate calculation or estimate of reconciling items and the information is not available without unreasonable effort. This inability is due to the inherent difficulty of forecasting the timing and/or amounts of various items that would impact net income. Additionally, no reconciliation of projected NOI yield to the most directly comparable GAAP measure is included in this Investor Package because we are unable to quantify certain amounts that would be required to be included in the comparable GAAP financial measures without unreasonable efforts because such data is not currently available or cannot be currently estimated with confidence. Accordingly, we believe such reconciliations would imply a degree of precision that would be confusing or misleading to investors.
Management uses each of these measures as supplemental performance measures for its assets and believes they provide useful information to investors because they reflect only those revenue and expense items that are incurred at the asset level, excluding non-cash items. In addition, NOI is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets.
However, because NOI excludes depreciation and amortization and captures neither the changes in the value of our assets that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our assets, all of which have real economic effect and could materially impact the financial performance of our assets, the utility of this measure of the operating performance of our assets is limited. Moreover, our method of calculating NOI may differ from other real estate companies and, accordingly, may not be comparable. NOI should be considered only as a supplement to net operating income (loss) (computed in accordance with GAAP) as a measure of the operating performance of our assets.
Percent Leased
‘‘Percent leased’’ is based on leases signed as of September 30, 2018, and is calculated as total rentable square feet less rentable square feet available for lease divided by total rentable square feet expressed as a percentage. Out-of-service square feet are excluded from this calculation.
Percent Pre-Leased
‘‘Percent pre-leased’’ is based on leases signed as of September 30, 2018, and is calculated as the estimated rentable square feet leased divided by estimated total rentable square feet expressed as a percentage.
Percent Occupied
‘‘Percent occupied’’ is based on occupied rentable square feet/units as of September 30, 2018, and is calculated as (i) for office and retail space, total rentable square feet less unoccupied square feet divided by total rentable square feet, (ii) for multifamily space, total units less unoccupied units divided by total units, expressed as a percentage. Out-of-service square feet are excluded from this calculation.
Pro Rata Adjusted General and Administrative (“G&A”) Expenses
"Pro Rata Adjusted G&A expenses", a non-GAAP financial measure, represents G&A expenses adjusted for share-based compensation expense related to the Formation Transaction and the G&A expenses of our third-party real estate services and asset management business that are directly reimbursed. We believe that adjusting such items not considered part of our comparable operations provides a meaningful measure to assess our G&A expenses as compared to similar real estate companies and in general.
Recently Delivered
“Recently delivered” refers to assets that have been delivered within the 12 months ended September 30, 2018.
Same Store and Non-Same Store
“Same store” refers to the pool of assets that were in service for the entirety of both periods being compared, except for assets for which significant redevelopment, renovation, or repositioning occurred during either of the periods being compared. No JBG Assets are included in the same store pool.
“Non-same store” refers to all operating assets excluded from the same store pool.
Second Generation Lease
“Second generation lease” is a lease on space that had been vacant for less than nine months.
Signed But Not Yet Commenced Leases
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DEFINITIONS | SEPTEMBER 30, 2018 |
“Signed but not yet commenced leases” means leases for assets in JBG SMITH’s portfolio that, as of September 30, 2018, have been executed but for which the contractual lease term had not yet begun, and no rental payments had yet been charged to the tenant.
Square Feet
‘‘Square feet’’ or ‘‘SF’’ refers to the area that can be rented to tenants, defined as (i) for office and other assets, rentable square footage defined in the current lease and for vacant space the rentable square footage defined in the previous lease for that space, (ii) for multifamily assets, management’s estimate of approximate rentable square feet, (iii) for the assets under construction and the near-term development assets, management’s estimate of approximate rentable square feet based on current design plans as of September 30, 2018, or (iv) for future development assets, management’s estimate of developable gross square feet based on its current business plans with respect to real estate owned or controlled as of September 30, 2018.
Transaction and Other Costs
Transaction and other costs include amounts incurred for transition services provided by our former parent, integration costs, severance costs, costs incurred in connection with recapitalization transactions and disposition and dead deal costs.
Under Construction
‘‘Under construction’’ refers to assets that were under construction during the three months ended September 30, 2018.
