Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Dividend, Conference Call, Webcast

JBG SMITH Announces Second Quarter 2020 Results


JBG SMITH (NYSE: JBGS), a leading owner and developer of high-growth, mixed-use properties in the Washington, DC market, today filed its Form 10-Q for the quarter ended June 30, 2020 and reported its financial results.

Additional information regarding our results of operations, properties and tenants can be found in our Second Quarter 2020 Investor Package, which is posted in the Investor Relations section of our website at www.jbgsmith.com. Additional information about the current and potential future impact of COVID-19 and the ensuing economic turmoil on us, as well as our response to it, can be found in our Letter to Shareholders in our Second Quarter 2020 Investor Package. We encourage investors to consider the information presented here with the information in that document.

Second Quarter 2020 Financial Results

Six Months Ended June 30, 2020 Financial Results

Operating Portfolio Highlights

Development Portfolio Highlights

Under Construction

Near-Term Development

Future Development Pipeline

Third-Party Asset Management and Real Estate Services Business

For the three months ended June 30, 2020, revenue from third-party real estate services, including reimbursements, was $27.2 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 $12.5 million, primarily driven by $4.3 million of property management fees, $3.0 million of development fees, $2.3 million of asset management fees and $1.7 million of other service revenue.

Balance Sheet

Investing and Financing Activities

Subsequent to June 30, 2020:

Dividends

On July 30, 2020, our Board of Trustees declared a quarterly dividend of $0.225 per common share, which will be paid on August 27, 2020 to shareholders of record as of August 13, 2020.

About JBG SMITH

JBG SMITH is an S&P 400 company that owns, operates, invests in and develops a dynamic portfolio of high-growth mixed-use properties in and around Washington, DC. Through an intense focus on placemaking, JBG SMITH cultivates vibrant, amenity-rich, walkable neighborhoods throughout the Capital region, including National Landing where it now serves as the exclusive developer for Amazon's new headquarters. JBG SMITH's portfolio currently comprises 20.7 million square feet of high-growth office, multifamily and retail assets, 98% at our share of which are Metro-served. It also maintains a robust future development pipeline encompassing 16.6 million square feet of mixed-use development opportunities. For more information on JBG SMITH please visit www.jbgsmith.com.

Forward-Looking Statements

Certain statements contained herein may constitute "forward-looking statements" as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Consequently, the future results of JBG SMITH Properties ("JBG SMITH", the "Company", "we", "us", "our" or similar terms) may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as "approximate", "hypothetical", "potential", "believes", "expects", "anticipates", "estimates", "intends", "plans", "would", "may" or similar expressions in this earnings release. Currently, one of the most significant factors that could cause actual outcomes to differ materially from our forward-looking statements is the adverse effect of the current pandemic of the novel coronavirus, or COVID-19, on our financial condition, results of operations, cash flows, liquidity, performance, tenants, the real estate market and the global economy and financial markets. The extent to which the COVID-19 pandemic continues to impact us and our tenants depends on future developments, many of which are highly uncertain and cannot be predicted with confidence, including the scope, severity, duration and possible resurgence of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. Moreover, investors are cautioned to interpret many of the risks identified under the section titled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic. We also note the following forward-looking statements: the impact of COVID-19 and the ensuing economic turmoil on our Company, net operating income, same store net operating income, net asset value, stock price, occupancy rates, revenue from our multifamily and commercial portfolios, operating costs, deferrals of rent, uncollectable operating lease receivables, parking revenue, and burn-off of rent abatement; the impact of disruptions to the credit and capital markets on our ability to access capital, including refinancing maturing debt; changes to the amount and manner in which tenants use space; whether we incur additional costs or make additional concessions or offer other incentives to existing or prospective tenants to reconfigure space; our 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; expected key Amazon transaction terms and timeframes for closing any Amazon transactions not yet closed; planned infrastructure and education improvements related to Amazon's additional headquarters; the economic impact of Amazon's additional headquarters on the DC region and National Landing; the impact of our role as developer, property manager and retail leasing agent in connection with Amazon's new headquarters; our development plans related to Amazon's additional headquarters; whether any of our tenants succeed in obtaining government assistance under the CARES Act and other programs and use any resulting proceeds to make lease payments owed to us; whether we can access agency debt secured by our currently-unencumbered multifamily assets timely, on reasonable terms or at all; whether the delay in our planned 2020 discretionary operating asset capital expenditures will have any negative impact on our properties or our ability to generate revenue; and the allocation of capital to our share repurchase plan and any impact on our stock price.

Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. These factors include, among others: adverse economic conditions in the Washington, DC metropolitan area, including in relation to COVID-19, the timing of and costs associated with development and property improvements, financing commitments, and general competitive factors. For further discussion of factors that could materially affect the outcome of our forward-looking statements and other risks and uncertainties, see "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Cautionary Statement Concerning Forward-Looking Statements in the Company's Annual Report on Form 10?K for the year ended December 31, 2019 and other periodic reports the Company files with the Securities and Exchange Commission. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date hereof.

Pro Rata Information

We present certain financial information and metrics in this release "at JBG SMITH Share," which refers to our ownership percentage of consolidated and unconsolidated assets in real estate ventures (collectively, "real estate ventures") as applied to these financial measures and metrics. Financial information "at JBG SMITH Share" is calculated on an asset-by-asset basis by applying our percentage economic interest to each applicable line item of that asset's financial information. "At JBG SMITH Share" information, which we also refer to as being "at share," "our pro rata share" or "our share," is not, and is not intended to be, a presentation in accordance with GAAP. Given that a substantial portion of our assets are held through real estate ventures, we believe this form of presentation, which presents our economic interests in the partially owned entities, provides investors valuable information regarding a significant component of our portfolio, its composition, performance and capitalization.

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

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

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 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 and losses on sales of real estate and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, including our share of such adjustments of unconsolidated real estate ventures. These supplemental measures may help investors and lenders understand our ability to incur and service debt and to make capital expenditures. EBITDA and EBITDAre are not substitutes for net income (loss) (computed in accordance with GAAP) and may not be comparable to similarly titled measures used by other companies.

"Adjusted EBITDA," a non-GAAP financial measure, represents EBITDAre adjusted for items we believe are not representative of ongoing operating results, such as transaction and other costs, gain (loss) on the extinguishment of debt, distributions in excess of our investment in unconsolidated real estate ventures, lease liability adjustments and share-based compensation expense related to the Formation Transaction and special equity awards. We believe that adjusting such items not considered part of our comparable operations, provides a meaningful measure to evaluate and compare our performance from period-to-period.

Because EBITDA, EBITDAre and Adjusted EBITDA have limitations as analytical tools, we use EBITDA, EBITDAre and Adjusted EBITDA to supplement GAAP financial measures. Additionally, we believe that users of these measures should consider EBITDA, EBITDAre and Adjusted EBITDA in conjunction with net income (loss) and other GAAP measures in understanding our operating results.

Funds from Operations ("FFO"), Core FFO and Funds Available for Distribution ("FAD")

FFO is a non-GAAP financial measure computed in accordance with the definition established by NAREIT in the NAREIT FFO White Paper - 2018 Restatement issued in 2018. NAREIT defines FFO as net income (computed in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, including our share of such adjustments for unconsolidated real estate ventures.

"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, distributions in excess of our investment in unconsolidated real estate ventures, share-based compensation expense related to the Formation Transaction and special equity awards, lease liability adjustments, amortization of the management contracts intangible and the mark-to-market of derivative instruments.

"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 assess a segment's performance. The most directly comparable GAAP measure is net income (loss) attributable to common shareholders. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only property related revenue (which includes base rent, tenant reimbursements and other operating revenue, 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. Management uses NOI as a supplemental performance measure for our assets and believes it provides useful information to investors because it reflects only those revenue and expense items that are incurred at the asset level, excluding non-cash items. In addition, NOI is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets. However, because NOI excludes depreciation and amortization and captures neither the changes in the value of our assets that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our assets, all of which have real economic effect and could materially impact the financial performance of our assets, the utility of NOI as a measure of the operating performance of our assets is limited. NOI presented by us may not be comparable to NOI reported by other REITs that define these measures differently. We believe that to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) attributable to common shareholders as presented in our financial statements. NOI should not be considered as an alternative to net income (loss) attributable to common shareholders as an indication of our performance or to cash flows as a measure of liquidity or our ability to make distributions. Annualized NOI, for all assets except Crystal City Marriott, represents NOI for the three months ended June 30, 2020 multiplied by four. Due to seasonality in the hospitality business, annualized NOI for Crystal City Marriott represents the trailing 12?month NOI as of June 30, 2020. Management believes Annualized NOI provides useful information in understanding our financial performance over a 12?month period, however, investors and other users are cautioned against attributing undue certainty to our calculation of Annualized NOI. Actual NOI for any 12?month period will depend on a number of factors beyond our ability to control or predict, including general capital markets and economic conditions, any bankruptcy, insolvency, default or other failure to pay rent by one or more of our tenants and the destruction of one or more of our assets due to terrorist attack, natural disaster or other casualty, among others. We do not undertake any obligation to update our calculation to reflect events or circumstances occurring after the date of this earnings release. There can be no assurance that the annualized NOI shown will reflect our actual results of operations over any 12?month period.

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.

"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.

In-Service

??In-service'' refers to commercial or multifamily assets that are at or above 90% leased or have been operating and collecting rent for more than 12 months as of June 30, 2020.

Formation Transaction

"Formation Transaction" refers collectively to the spin-off on July 17, 2017 of substantially all of the assets and liabilities of Vornado Realty Trust's Washington, DC segment, which operated as Vornado / Charles E. Smith, and the acquisition of the management business and certain assets and liabilities of The JBG Companies.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

in thousands

 

June 30, 2020

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Real estate, at cost:

 

 

 

 

 

 

 

 

Land and improvements

 

$

1,285,415

 

$

1,240,455

 

 

Buildings and improvements

 

 

4,065,543

 

 

3,880,973

 

 

Construction in progress, including land

 

 

563,133

 

 

654,091

 

 

 

 

 

5,914,091

 

 

5,775,519

 

 

Less accumulated depreciation

 

 

(1,194,743)

 

 

(1,119,571)

 

 

Real estate, net

 

 

4,719,348

 

 

4,655,948

 

 

Cash and cash equivalents

 

 

710,677

 

 

126,413

 

 

Restricted cash

 

 

20,356

 

 

16,103

 

 

Tenant and other receivables, net

 

 

56,102

 

 

52,941

 

 

Deferred rent receivable, net

 

 

177,951

 

 

169,721

 

 

Investments in unconsolidated real estate ventures

 

 

464,437

 

 

543,026

 

 

Other assets, net

 

 

273,030

 

 

253,687

 

 

Assets held for sale

 

 

73,876

 

 

168,412

 

 

TOTAL ASSETS

 

$

6,495,777

 

$

5,986,251

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Mortgages payable, net

 

$

1,312,524

 

$

1,125,777

 

 

Revolving credit facility

 

 

500,000

 

 

200,000

 

 

Unsecured term loans, net

 

 

397,637

 

 

297,295

 

 

Accounts payable and accrued expenses

 

 

125,433

 

 

157,702

 

 

Other liabilities, net

 

 

220,414

 

 

206,042

 

 

Total liabilities

 

 

2,556,008

 

 

1,986,816

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

 

499,083

 

 

612,758

 

 

Total equity

 

 

3,440,686

 

 

3,386,677

 

 

TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

 

$

6,495,777

 

$

5,986,251

 

__________________

Note: For complete financial statements, please refer to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

in thousands, except per share data

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2020

 

2019

 

2020

 

2019

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

Property rental

 

$

115,459

 

$

122,326

 

$

235,839

 

$

241,739

Third-party real estate services, including reimbursements

 

 

27,167

 

 

29,487

 

 

56,883

 

 

57,178

Other revenue

 

 

2,326

 

 

8,804

 

 

10,337

 

 

16,899

Total revenue

 

 

144,952

 

 

160,617

 

 

303,059

 

 

315,816

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

52,616

 

 

45,995

 

 

101,105

 

 

94,714

Property operating

 

 

33,792

 

 

32,113

 

 

68,295

 

 

64,287

Real estate taxes

 

 

17,869

 

 

18,266

 

 

36,068

 

 

35,501

General and administrative:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and other

 

 

13,216

 

 

11,559

 

 

26,392

 

 

23,873

Third-party real estate services

 

 

29,239

 

 

28,710

 

 

58,053

 

 

56,776

Share-based compensation related to Formation Transaction and special equity awards

 

 

8,858

 

 

9,523

 

 

18,299

 

 

20,654

Transaction and other costs

 

 

1,372

 

 

2,974

 

 

6,681

 

 

7,869

Total expenses

 

 

156,962

 

 

149,140

 

 

314,893

 

 

303,674

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from unconsolidated real estate ventures, net

 

 

(13,485)

 

 

(1,810)

 

 

(16,177)

 

 

1,791

Interest and other income, net

 

 

114

 

 

2,052

 

 

1,021

 

 

3,003

Interest expense

 

 

(15,770)

 

 

(13,107)

 

 

(27,775)

 

 

(30,281)

Gain on sale of real estate

 

 

?

 

 

?

 

 

59,477

 

 

39,033

Loss on extinguishment of debt

 

 

?

 

 

(1,889)

 

 

(33)

 

 

(1,889)

Total other income (expense)

 

 

(29,141)

 

 

(14,754)

 

 

16,513

 

 

11,657

INCOME (LOSS) BEFORE INCOME TAX (EXPENSE) BENEFIT

 

 

(41,151)

 

 

(3,277)

 

 

4,679

 

 

23,799

Income tax (expense) benefit

 

 

888

 

 

(51)

 

 

3,233

 

 

1,121

NET INCOME (LOSS)

 

 

(40,263)

 

 

(3,328)

 

 

7,912

 

 

24,920

Net (income) loss attributable to redeemable noncontrolling interests

 

 

3,483

 

 

288

 

 

(1,767)

 

 

(3,099)

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

 

$

(36,780)

 

$

(3,040)

 

$

6,145

 

$

21,821

EARNINGS (LOSS) PER COMMON SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.28)

 

$

(0.03)

 

$

0.04

 

$

0.16

Diluted

 

$

(0.28)

 

$

(0.03)

 

$

0.04

 

$

0.16

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING :

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

133,613

 

 

131,754

 

 

134,078

 

 

127,189

Diluted

 

 

133,613

 

 

131,754

 

 

134,078

 

 

127,189

__________________________________

Note: For complete financial statements, please refer to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.

EBITDA, EBITDAre AND ADJUSTED EBITDA (NON-GAAP)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

dollars in thousands

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA, EBITDAre and Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(40,263)

 

$

(3,328)

 

$

7,912

 

$

24,920

 

 

Depreciation and amortization expense

 

 

52,616

 

 

45,995

 

 

101,105

 

 

94,714

 

 

Interest expense (1)

 

 

15,770

 

 

13,107

 

 

27,775

 

 

30,281

 

 

Income tax expense (benefit)

 

 

(888)

 

 

51

 

 

(3,233)

 

 

(1,121)

 

 

Unconsolidated real estate ventures allocated share of above adjustments

 

 

10,692

 

 

10,357

 

 

21,529

 

 

18,163

 

 

EBITDA attributable to noncontrolling interests in consolidated real estate ventures

 

 

(6)

 

 

(4)

 

 

(3)

 

 

(5)

 

 

EBITDA

 

$

37,921

 

$

66,178

 

$

155,085

 

$

166,952

 

 

Gain on sale of real estate

 

 

?

 

 

?

 

 

(59,477)

 

 

(39,033)

 

 

(Gain) loss on sale of unconsolidated real estate assets

 

 

2,952

 

 

(335)

 

 

2,952

 

 

(335)

 

 

Impairment of investment in unconsolidated real estate venture (2)

 

 

6,522

 

 

?

 

 

6,522

 

 

?

 

 

EBITDAre

 

$

47,395

 

$

65,843

 

$

105,082

 

$

127,584

 

 

Transaction and other costs (3)

 

 

1,372

 

 

2,974

 

 

6,681

 

 

7,869

 

 

Loss on extinguishment of debt

 

 

?

 

 

1,889

 

 

33

 

 

1,889

 

 

Share-based compensation related to Formation Transaction and special equity awards

 

 

8,858

 

 

9,523

 

 

18,299

 

 

20,654

 

 

Earnings (losses) and distributions in excess of our investment in unconsolidated real estate venture (4)

 

 

(245)

 

 

(232)

 

 

129

 

 

(6,673)

 

 

Unconsolidated real estate ventures allocated share of above adjustments

 

 

747

 

 

?

 

 

1,465

 

 

?

 

 

Adjusted EBITDA

 

$

58,127

 

$

79,997

 

$

131,689

 

$

151,323

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Debt to Annualized Adjusted EBITDA (5)

 

 

8.1

x

 

5.2

x

 

7.2

x

 

5.5

x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2020

 

June 30, 2019

 

 

Net Debt (at JBG SMITH Share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated indebtedness (6)

 

 

 

 

 

 

 

$

2,202,667

 

$

1,653,538

 

 

Unconsolidated indebtedness (6)

 

 

 

 

 

 

 

 

411,599

 

 

312,686

 

 

Total consolidated and unconsolidated indebtedness

 

 

 

 

 

 

 

 

2,614,266

 

 

1,966,224

 

 

Less: cash and cash equivalents

 

 

 

 

 

 

 

 

724,246

 

 

289,554

 

 

Net Debt (at JBG SMITH Share)

 

 

 

 

 

 

 

$

1,890,020

 

$

1,676,670

 

_____________________________

Note: All EBITDA measures as shown above are attributable to operating partnership common units.

(1)

Interest expense includes the amortization of deferred financing costs and the ineffective portion of any interest rate swaps or caps, net of capitalized interest.

(2)

In connection with the preparation and review of our second quarter 2020 financial statements, we determined that our investment in the venture that owns The Marriott Wardman Park hotel was impaired due to a decline in the fair value of the underlying asset and recorded an impairment charge of $6.5 million, reducing the net book value of our investment to zero.

(3)

Includes fees and expenses incurred for demolition costs, fees and expenses incurred in connection with the Formation Transaction (including amounts incurred for transition services provided by our former parent, integration costs and severance costs), pursuit costs related to other completed, potential and pursued transactions, as well as other expenses. For the six months ended June 30, 2020, includes a charitable commitment to the Washington Housing Conservancy, a non-profit that acquires and owns affordable workforce housing in the Washington DC metropolitan region.

(4)

During the six months ended June 30, 2019, we received distributions of $6.6 million from 1101 17th Street.

(5)

Adjusted EBITDA for the six months ended June 30, 2020 and 2019 is annualized by multiplying by two.

(6)

Net of premium/discount and deferred financing costs.

FFO, CORE FFO AND FAD (NON-GAAP)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

in thousands, except per share data

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO and Core FFO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common shareholders

 

$

(36,780)

 

$

(3,040)

 

$

6,145

 

$

21,821

 

 

Net income (loss) attributable to redeemable noncontrolling interests

 

 

(3,483)

 

 

(288)

 

 

1,767

 

 

3,099

 

 

Net income (loss)

 

 

(40,263)

 

 

(3,328)

 

 

7,912

 

 

24,920

 

 

Gain on sale of real estate

 

 

?

 

 

?

 

 

(59,477)

 

 

(39,033)

 

 

(Gain) loss on sale from unconsolidated real estate ventures

 

 

2,952

 

 

(335)

 

 

2,952

 

 

(335)

 

 

Real estate depreciation and amortization

 

 

49,924

 

 

43,308

 

 

95,586

 

 

89,343

 

 

Impairment of investment in unconsolidated real estate venture (1)

 

 

6,522

 

 

?

 

 

6,522

 

 

?

 

 

Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures

 

 

7,498

 

 

4,804

 

 

14,380

 

 

9,457

 

 

FFO attributable to noncontrolling interests in consolidated real estate ventures

 

 

(6)

 

 

(4)

 

 

(3)

 

 

(5)

 

 

FFO Attributable to Operating Partnership Common Units

 

$

26,627

 

$

44,445

 

$

67,872

 

$

84,347

 

 

FFO attributable to redeemable noncontrolling interests

 

 

(2,911)

 

 

(5,014)

 

 

(7,408)

 

 

(9,797)

 

 

FFO attributable to common shareholders

 

$

23,716

 

$

39,431

 

$

60,464

 

$

74,550

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO attributable to the operating partnership common units

 

$

26,627

 

$

44,445

 

$

67,872

 

$

84,347

 

 

Transaction and other costs, net of tax (2)

 

 

1,212

 

 

2,847

 

 

6,378

 

 

7,473

 

 

(Gain) loss from mark-to-market on derivative instruments

 

 

17

 

 

524

 

 

(30)

 

 

48

 

 

Loss on extinguishment of debt

 

 

?

 

 

1,889

 

 

33

 

 

1,889

 

 

Earnings (losses) and distributions in excess of our investment in unconsolidated real estate venture (3)

 

 

(245)

 

 

(232)

 

 

129

 

 

(6,673)

 

 

Share-based compensation related to Formation Transaction and special equity awards

 

 

8,858

 

 

9,523

 

 

18,299

 

 

20,654

 

 

Amortization of management contracts intangible, net of tax

 

 

1,073

 

 

1,288

 

 

2,216

 

 

2,575

 

 

Unconsolidated real estate ventures allocated share of above adjustments

 

 

727

 

 

1,153

 

 

1,903

 

 

1,380

 

 

Core FFO Attributable to Operating Partnership Common Units

 

$

38,269

 

$

61,437

 

$

96,800

 

$

111,693

 

 

Core FFO attributable to redeemable noncontrolling interests

 

 

(4,184)

 

 

(6,931)

 

 

(10,566)

 

 

(12,955)

 

 

Core FFO attributable to common shareholders

 

$

34,085

 

$

54,506

 

$

86,234

 

$

98,738

 

 

FFO per common share - basic and diluted

 

$

0.18

 

$

0.30

 

$

0.45

 

$

0.59

 

 

Core FFO per common share - basic and diluted

 

$

0.26

 

$

0.41

 

$

0.64

 

$

0.78

 

 

Weighted average shares - basic and diluted

 

 

133,613

 

 

131,754

 

 

134,078

 

 

127,189

 

See footnotes under table below.

FFO, CORE FFO AND FAD (NON-GAAP)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

in thousands, except per share data

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FAD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core FFO attributable to the operating partnership common units

 

$

38,269

 

$

61,437

 

$

96,800

 

$

111,693

 

 

Recurring capital expenditures and second generation tenant improvements and leasing commissions (4)

 

 

(12,889)

 

 

(20,076)

 

 

(22,694)

 

 

(42,373)

 

 

Straight-line and other rent adjustments (5)

 

 

(2,383)

 

 

(8,739)

 

 

(7,620)

 

 

(15,547)

 

 

Third-party lease liability assumption payments

 

 

(780)

 

 

(1,183)

 

 

(2,240)

 

 

(2,319)

 

 

Share-based compensation expense

 

 

11,757

 

 

5,694

 

 

19,487

 

 

11,024

 

 

Amortization of debt issuance costs

 

 

673

 

 

875

 

 

1,295

 

 

1,845

 

 

Unconsolidated real estate ventures allocated share of above adjustments

 

 

270

 

 

(1,404)

 

 

464

 

 

(1,491)

 

 

Non-real estate depreciation and amortization

 

 

1,215

 

 

916

 

 

2,469

 

 

1,828

 

 

FAD available to the Operating Partnership Common Units (A)

 

$

36,132

 

$

37,520

 

$

87,961

 

$

64,660

 

 

Distributions to common shareholders and unitholders (6) (B)

 

$

33,970

 

$

34,006

 

$

67,981

 

$

65,290

 

 

FAD Payout Ratio (B÷A) (7)

 

 

94.0

%

 

90.6

%

 

77.3

%

 

101.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maintenance and recurring capital expenditures

 

$

6,541

 

$

7,252

 

$

9,099

 

$

12,747

 

 

Share of maintenance and recurring capital expenditures from unconsolidated real estate ventures

 

 

360

 

 

252

 

 

509

 

 

340

 

 

Second generation tenant improvements and leasing commissions

 

 

5,613

 

 

12,357

 

 

12,556

 

 

28,512

 

 

Share of second generation tenant improvements and leasing commissions from unconsolidated real estate ventures

 

 

375

 

 

215

 

 

530

 

 

774

 

 

Recurring capital expenditures and second generation tenant improvements and leasing commissions

 

 

12,889

 

 

20,076

 

 

22,694

 

 

42,373

 

 

First generation tenant improvements and leasing commissions

 

 

11,853

 

 

18,996

 

 

23,700

 

 

25,193

 

 

Share of first generation tenant improvements and leasing commissions from unconsolidated real estate ventures

 

 

217

 

 

419

 

 

987

 

 

652

 

 

Non-recurring capital expenditures

 

 

6,240

 

 

5,470

 

 

12,427

 

 

12,192

 

 

Share of non-recurring capital expenditures from unconsolidated joint ventures

 

 

238

 

 

30

 

 

340

 

 

30

 

 

Non-recurring capital expenditures

 

 

18,548

 

 

24,915

 

 

37,454

 

 

38,067

 

 

Total JBG SMITH Share of Capital Expenditures

 

$

31,437

 

$

44,991

 

$

60,148

 

$

80,440

 

_______________________

(1)

In connection with the preparation and review of our second quarter 2020 financial statements, we determined that our investment in the venture that owns The Marriott Wardman Park hotel was impaired due to a decline in the fair value of the underlying asset and recorded an impairment charge of $6.5 million, reducing the net book value of our investment to zero.(

(2)

Includes fees and expenses incurred for demolition costs, fees and expenses incurred in connection with the Formation Transaction (including amounts incurred for transition services provided by our former parent, integration costs and severance costs), pursuit costs related to other completed, potential and pursued transactions, as well as other expenses. For the six months ended June 30, 2020, includes a charitable commitment to the Washington Housing Conservancy, a non-profit that acquires and owns affordable workforce housing in the Washington DC metropolitan region.

(3)

During the six months ended June 30, 2019, we received distributions of $6.6 million from 1101 17th Street.

(4)

Includes amounts, at JBG SMITH Share, related to unconsolidated real estate investments.

(5)

Includes straight-line rent, above/below market lease amortization and lease incentive amortization.

(6)

The distribution for the six months ended June 30, 2019 excludes a special dividend of $0.10 per common share that was paid in January 2019.

(7)

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 June 30,

 

Six Months Ended June 30,

 

 

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common shareholders

 

$

(36,780)

 

$

(3,040)

 

$

6,145

 

$

21,821

 

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

52,616

 

 

45,995

 

 

101,105

 

 

94,714

 

 

General and administrative expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and other

 

 

13,216

 

 

11,559

 

 

26,392

 

 

23,873

 

 

Third-party real estate services

 

 

29,239

 

 

28,710

 

 

58,053

 

 

56,776

 

 

Share-based compensation related to Formation Transaction and special equity awards

 

 

8,858

 

 

9,523

 

 

18,299

 

 

20,654

 

 

Transaction and other costs

 

 

1,372

 

 

2,974

 

 

6,681

 

 

7,869

 

 

Interest expense

 

 

15,770

 

 

13,107

 

 

27,775

 

 

30,281

 

 

Loss on extinguishment of debt

 

 

?

 

 

1,889

 

 

33

 

 

1,889

 

 

Income tax expense (benefit)

 

 

(888)

 

 

51

 

 

(3,233)

 

 

(1,121)

 

 

Net income (loss) attributable to redeemable noncontrolling interests

 

 

(3,483)

 

 

(288)

 

 

1,767

 

 

3,099

 

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third-party real estate services, including reimbursements

 

 

27,167

 

 

29,487

 

 

56,883

 

 

57,178

 

 

Other revenue (1)

 

 

1,516

 

 

2,114

 

 

3,146

 

 

3,755

 

 

Income (loss) from unconsolidated real estate ventures, net

 

 

(13,485)

 

 

(1,810)

 

 

(16,177)

 

 

1,791

 

 

Interest and other income, net

 

 

114

 

 

2,052

 

 

1,021

 

 

3,003

 

 

Gain on sale of real estate

 

 

?

 

 

?

 

 

59,477

 

 

39,033

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated NOI

 

 

64,608

 

 

78,637

 

 

138,667

 

 

155,095

 

 

NOI attributable to unconsolidated real estate ventures at our share

 

 

7,495

 

 

5,089

 

 

16,073

 

 

10,252

 

 

Non-cash rent adjustments (2)

 

 

(1,419)

 

 

(8,738)

 

 

(4,964)

 

 

(15,544)

 

 

Other adjustments (3)

 

 

3,516

 

 

3,760

 

 

6,330

 

 

7,091

 

 

Total adjustments

 

 

9,592

 

 

111

 

 

17,439

 

 

1,799

 

 

NOI

 

$

74,200

 

$

78,748

 

$

156,106

 

$

156,894

 

 

Less: out-of-service NOI loss (4)

 

 

(1,475)

 

 

(1,057)

 

 

(2,857)

 

 

(2,122)

 

 

Operating Portfolio NOI

 

$

75,675

 

$

79,805

 

$

158,963

 

$

159,016

 

 

Non-same store NOI (5)

 

 

1,204

 

 

2,992

 

 

8,567

 

 

9,178

 

 

Same store NOI (6)

 

$

74,471

 

$

76,813

 

$

150,396

 

$

149,838

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in same store NOI

 

 

(3.0)

%

 

 

 

 

0.4

%

 

 

 

 

Number of properties in same store pool

 

 

55

 

 

 

 

 

53

 

 

 

 

_____________________________

(1)

Excludes parking revenue of $0.8 million and $7.2 million for the three and six months ended June 30, 2020, and $6.7 million and $13.1 million for the three and six months ended June 30, 2019.

(2)

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

(3)

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

(4)

Includes the results of our Under Construction assets and Future Development Pipeline.

(5)

Includes the results of properties that were not 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.

(6)

Includes the results of the properties that are owned, operated and in-service for the entirety of both periods being compared except for properties that are being phased out of service for future development.

 


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