BETHESDA, Md.--(BUSINESS WIRE)--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 September 30, 2020 and reported its financial results.

Additional information regarding our results of operations, properties and tenants can be found in our Third Quarter 2020 Investor Package, which is posted in the Investor Relations section of our website at www.jbgsmith.com. We encourage investors to consider the information presented here with the information in that document.

Third Quarter 2020 Financial Results

• Net loss attributable to common shareholders was $22.8 million, or $0.18 per diluted share.
• Funds From Operations (“FFO”) attributable to common shareholders was $32.4 million, or $0.24 per diluted share.
• Core Funds From Operations (“Core FFO”) attributable to common shareholders was $40.2 million, or $0.30 per diluted share.

Nine Months Ended September 30, 2020 Financial Results

• Net loss attributable to common shareholders was $16.6 million, or $0.14 per diluted share.
• FFO attributable to common shareholders was $92.9 million, or $0.69 per diluted share.
• Core FFO attributable to common shareholders was $126.4 million, or $0.94 per diluted share.

Operating Portfolio Highlights

• Annualized Net Operating Income (“NOI”) for the three months ended September 30, 2020 was $291.1 million, compared to $307.0 million for the three months ended June 30, 2020, at our share.
• The operating commercial portfolio was 88.4% leased and 85.3% occupied as of September 30, 2020, compared to 90.4% and 88.1% as of June 30, 2020, at our share.
• The operating multifamily portfolio was 83.0% leased and 76.6% occupied as of September 30, 2020, compared to 85.8% and 82.3% as of June 30, 2020, at our share. These decreases were due in part to the movement of The Wren (formerly referred to as 965 Florida Avenue) into our recently delivered operating multifamily portfolio during the quarter. The in-service operating multifamily portfolio was 92.8% leased and 88.1% occupied as of September 30, 2020, compared to 93.3% leased and 90.2% occupied as of June 30, 2020.
• We executed approximately 98,000 square feet of office leases at our share in the third quarter, comprising approximately 9,000 square feet of new leases and approximately 89,000 square feet of second-generation leases, which generated a 3.1% rental rate increase on a GAAP basis and a 0.4% rental rate decrease on a cash basis. We executed approximately 603,000 square feet of office leases at our share during the nine months ended September 30, 2020, comprising approximately 89,000 square feet of new leases and approximately 514,000 square feet of second-generation leases, which generated a 4.3% rental rate increase on a GAAP basis and a 1.0% rental rate increase on a cash basis.
• Same Store Net Operating Income (“SSNOI”) at our share decreased 4.4% to $72.0 million for the three months ended September 30, 2020, compared to $75.4 million for the three months ended September 30, 2019. SSNOI at our share decreased 1.7% to $220.1 million for the nine months ended September 30, 2020, compared to $223.9 million for the nine months ended September 30, 2019. The decreases in SSNOI were substantially all attributable to the COVID-19 pandemic, including (i) lower occupancy, higher concessions, lower rents, higher operating costs, and an increase in uncollectable operating lease receivables at our multifamily properties, (ii) rent deferrals and a decline in parking revenue at our commercial properties, and (iii) lower occupancy at the Crystal City Marriott. These declines were partially offset by the burn-off of rent abatement across our commercial portfolio, which led to same store NOI growth for the same store pool of commercial assets. The reported same store pools as of September 30, 2020 include only the assets that were in-service for the entirety of both periods being compared.
• During the third quarter, NOI for our operating portfolio decreased 7.6% to $72.3 million, and Adjusted EBITDA decreased 20.7% to $65.4 million as compared to the third quarter of 2019. NOI was negatively impacted by $14.8 million associated with the COVID-19 pandemic, comprising $5.1 million of reserves and rent deferrals for office and retail tenants, a $4.9 million decline in NOI in our same store multifamily assets, a $3.9 million decline in parking revenue, and a $0.9 million decline in NOI from the Crystal City Marriott. While the COVID-19 pandemic has impacted these income streams in the short term, we expect these revenues to recover post pandemic. Adjusted EBITDA was negatively impacted by $22.1 million, including the $14.8 million decline in NOI noted above and $0.9 million of straight-line rent reserves both associated with the COVID-19 pandemic, and a $6.4 million decline in Third-Party Asset Management and Real Estate Services fees, primarily related to decreases in development fees due to changes in the timing of projects and a decrease in management fees from the sale of JBG Legacy Fund assets. The $5.1 million of reserves and rent deferrals for office and retail tenants that impacted NOI include (i) $1.3 million of rent deferrals, (ii) $2.3 million of rent deferrals from expected lease modifications, and (iii) $1.5 million of other reserves.

During the third quarter, we entered into rent deferral agreements with tenants totaling $1.3 million. Additionally, we recognized $2.3 million of credit losses for rent deferral agreements that are in negotiation. Our financial results in future periods will not be negatively impacted by the collectability of deferred rents from these tenants because we have fully written off the receivable balances. No revenue related to these executed or pending rent deferrals is included in our third quarter NOI, Adjusted EBITDA or Core FFO.

Development Portfolio Highlights

Under-Construction

• As of September 30, 2020, there were two assets under construction (one commercial asset and one multifamily asset), consisting of approximately 274,000 square feet and 161 units, both at our share.

Near-Term Development Pipeline

• During the third quarter, we modified our definition of Near-Term Development Pipeline to include select assets that could commence construction over the next three years, subject to receipt of full entitlements, completion of design and market conditions.
• As of September 30, 2020, there were 10 near-term development assets consisting of 5.6 million square feet of estimated potential development density.

Future Development Pipeline

• As of September 30, 2020, there were 28 future development assets consisting of 11.5 million square feet of estimated potential development density at our share, including the 2.1 million square feet held for sale to Amazon.com, Inc. ("Amazon").

Third-Party Asset Management and Real Estate Services Business

• For the three months ended September 30, 2020, revenue from third-party real estate services, including reimbursements, was $27.0 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 $4.2 million of property management fees, $2.6 million of development fees, $2.2 million of asset management fees and $1.8 million of other service revenue.

Balance Sheet

• We had $2.1 billion of debt ($2.5 billion including our share of debt of unconsolidated real estate ventures) as of September 30, 2020. Of the $2.5 billion of debt at our share, approximately 61% was fixed-rate, and rate caps were in place for approximately 81% of our variable rate debt.
• The weighted average interest rate of our debt at share was 3.18% as of September 30, 2020.
• As of September 30, 2020, our total enterprise value was approximately $5.9 billion, comprising 146.5 million common shares and units valued at $3.9 billion and debt (net of premium / (discount) and deferred financing costs) at our share of $2.5 billion, less cash and cash equivalents at our share of $465.5 million.
• As of September 30, 2020, we had $455.1 million of cash and cash equivalents ($465.5 million of cash and cash equivalents at our share), and $998.5 million of capacity under our credit facility.
• Net Debt to Annualized Adjusted EBITDA at our share for the three months ended September 30, 2020 was 7.7x and our Net Debt / Total Enterprise Value was 33.9% as of September 30, 2020. On a trailing 12-month basis, our Net Debt to Adjusted EBITDA was 7.3x as of September 30, 2020.

Investing and Financing Activities

• Closed on three separate mortgage loans with an aggregate principal balance of $385.0 million, collateralized by The Bartlett, 1221 Van Street and 220 20th Street.
• Repaid $500.0 million outstanding on our revolving credit facility.
• Repurchased and retired 1.4 million common shares for $38.4 million, an average purchase price of $26.64 per share.
• Invested $25.3 million to acquire between 30 and 40 megahertz of 5G wireless spectrum licenses across National Landing.

Subsequent to September 30, 2020

• Transferred our interest in the venture that owns The Marriott Wardman Park hotel to our venture partner.

Dividends

• On October 29, 2020, our Board of Trustees declared a quarterly dividend of $0.225 per common share, payable on November 30, 2020 to shareholders of record as of November 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 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 development pipeline encompassing 17.1 million square feet of mixed-use development opportunities. For more information on JBG SMITH please visit www.jbgsmith.com.