Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2026
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 001-37994
JBG SMITH PROPERTIES
________________________________________________________________________________
(Exact name of Registrant as specified in its charter)
Maryland
81-4307010
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
4747 Bethesda Avenue Suite 200
Bethesda MD
20814
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code: (240) 333-3600
_______________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Shares, par value $0.01 per share
JBGS
New York Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒
As of October 30, 2026, JBG SMITH Properties had 57,798,620 common shares outstanding and 15,766,633 Class B common shares outstanding.
QUARTERLY REPORT ON FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2026
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
Item 1.
Financial Statements
Page
Condensed Consolidated Balance Sheets (unaudited) as of September 30, 2026 and December 31, 2025
3
Condensed Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2026 and 2025
4
Condensed Consolidated Statements of Comprehensive Loss (unaudited) for the three and nine months ended September 30, 2026 and 2025
5
Condensed Consolidated Statements of Equity (unaudited) for the three and nine months ended September 30, 2026 and 2025
6
Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2026 and 2025
8
Notes to Condensed Consolidated Financial Statements (unaudited)
10
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
32
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
51
Item 4.
Controls and Procedures
52
PART II – OTHER INFORMATION
Legal Proceedings
Item 1A.
Risk Factors
53
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
54
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
55
Signatures
56
2
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except par value amounts)
September 30, 2026
December 31, 2025
ASSETS
Real estate, at cost:
Land and improvements
$
956,369
1,019,967
Buildings and improvements
3,882,816
3,973,514
Construction in progress, including land
107,009
175,673
4,946,194
5,169,154
Less: accumulated depreciation
(1,469,388)
(1,408,641)
Real estate, net
3,476,806
3,760,513
Cash and cash equivalents
78,535
75,270
Restricted cash
25,498
28,020
Tenant and other receivables
27,814
21,810
Deferred rent receivable
180,748
182,891
Investments in unconsolidated real estate ventures
114,545
105,711
Deferred leasing costs, net
52,962
66,356
Intangible assets, net
10,403
30,333
Other assets, net
149,629
117,287
Assets held for sale
84,278
—
TOTAL ASSETS
4,201,218
4,388,191
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgage loans, net
1,602,125
1,579,158
Revolving credit facility
222,000
205,000
Term loans, net
733,311
718,408
Accounts payable and accrued expenses
72,941
84,748
Other liabilities, net
99,036
131,945
Liabilities related to assets held for sale
6,268
Total liabilities
2,735,681
2,719,259
Commitments and contingencies
Redeemable noncontrolling interests
449,300
511,342
Shareholders' equity:
Preferred shares, $0.01 par value - 200,000 shares authorized; none issued
Common shares, $0.01 par value - 470,000 shares authorized; 58,802 and 59,527 shares issued and outstanding as of September 30, 2026 and December 31, 2025
589
596
Class B common shares, $0.01 par value - 30,000 shares authorized; 15,788 and 13,645 shares issued and outstanding as of September 30, 2026 and December 31, 2025
158
136
Additional paid-in capital
2,354,697
2,338,881
Accumulated deficit
(1,360,799)
(1,180,410)
Accumulated other comprehensive income (loss)
10,272
(1,613)
Total shareholders' equity of JBG SMITH Properties
1,004,917
1,157,590
Noncontrolling interests
11,320
Total equity
1,016,237
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
See accompanying notes to the condensed consolidated financial statements (unaudited).
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended September 30,
Nine Months Ended September 30,
2026
2025
REVENUE
Property rental
108,082
103,981
320,570
311,989
Third-party real estate services, including reimbursements
18,270
14,711
52,480
44,430
Other revenue
6,061
5,178
16,340
14,616
Total revenue
132,413
123,870
389,390
371,035
EXPENSES
Depreciation and amortization
44,589
48,164
134,685
143,311
Property operating
39,950
36,564
112,132
104,876
Real estate taxes
10,335
12,284
34,690
37,107
General and administrative:
Corporate and other
12,546
13,214
43,237
45,491
Third-party real estate services
16,440
14,058
49,802
43,691
Transaction and other costs
964
494
11,490
5,251
Total expenses
124,824
124,778
386,036
379,727
OTHER INCOME (EXPENSE)
Loss from unconsolidated real estate ventures, net
(237)
(664)
(1,197)
(165)
Interest and other income, net
760
2,378
6,818
3,601
Interest expense
(36,838)
(34,781)
(108,415)
(105,552)
Gain (loss) on the sale of real estate, net
(213)
4,660
20,577
47,029
Loss on the extinguishment of debt, net
(2,107)
(2,402)
Impairment loss
(69,175)
(4,771)
(114,740)
(45,067)
Total other income (expense)
(107,810)
(33,178)
(199,064)
(102,556)
LOSS BEFORE INCOME TAX EXPENSE
(100,221)
(34,086)
(195,710)
(111,248)
Income tax expense
(926)
(7)
(643)
NET LOSS
(35,012)
(195,717)
(111,891)
Net loss attributable to redeemable noncontrolling interests
18,262
6,457
35,993
18,375
Net income attributable to noncontrolling interests
(47)
(134)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS
(82,006)
(28,555)
(159,858)
(93,516)
LOSS PER COMMON SHARE - BASIC AND DILUTED
(1.41)
(0.48)
(2.75)
(1.35)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED
58,635
60,606
58,662
70,062
Condensed Consolidated Statements of Comprehensive Loss
(In thousands)
OTHER COMPREHENSIVE INCOME (LOSS)
Change in fair value of derivative financial instruments
5,881
980
15,945
(11,632)
Reclassification of net income on derivative financial instruments from accumulated other comprehensive income (loss) into interest expense
(303)
(1,844)
(819)
(8,174)
Total other comprehensive income (loss)
5,578
(864)
15,126
(19,806)
COMPREHENSIVE LOSS
(94,643)
(35,876)
(180,591)
(131,697)
Other comprehensive (income) loss attributable to redeemable noncontrolling interests
(1,179)
181
(3,241)
3,627
COMPREHENSIVE LOSS ATTRIBUTABLE TO JBG SMITH PROPERTIES
(77,607)
(29,238)
(147,973)
(109,695)
Condensed Consolidated Statements of Equity
Accumulated
Other
Class B
Additional
Comprehensive
Non-
Common Shares
Paid-In
Income
controlling
Total
Shares
Amount
Capital
Deficit
(Loss)
Interests
Equity
BALANCE AS OF JUNE 30, 2026
58,426
585
16,094
161
2,328,305
(1,268,511)
5,873
11,573
1,077,986
Net income (loss) attributable to common shareholders and noncontrolling interests
47
(81,959)
Redemption of common limited partnership units ("OP Units")
359
(306)
(3)
4,594
4,595
Common shares issued pursuant to employee incentive compensation plan and Employee Share Purchase Plan ("ESPP")
17
471
Dividends declared on common shares
($0.175 per common share)
(10,282)
Distributions to noncontrolling interests, net
(300)
Redeemable noncontrolling interests redemption value adjustment and total other comprehensive income allocation
21,327
20,148
Total other comprehensive income
BALANCE AS OF SEPTEMBER 30, 2026
58,802
15,788
BALANCE AS OF JUNE 30, 2025
61,945
620
2,397,255
(1,074,678)
(404)
1,322,793
Net loss attributable to common shareholders
Redemption of OP Units
458
9,291
9,296
Common shares repurchased
(3,112)
(31)
(62,905)
(62,936)
Common shares issued pursuant to employee incentive compensation plan and ESPP
11
392
Dividends declared on common shares($0.175 per common share)
(10,829)
Redeemable noncontrolling interests redemption value adjustment and total other comprehensive loss allocation
(38,897)
(38,716)
Total other comprehensive loss
BALANCE AS OF SEPTEMBER 30, 2025
59,302
594
2,305,136
(1,114,062)
(1,087)
1,190,581
BALANCE AS OF DECEMBER 31, 2025
59,527
13,645
134
(159,724)
Issuance of Class B common shares ("Class B Shares")
3,117
(32)
1,031
(974)
(10)
14,551
14,552
(1,848)
(18)
(28,383)
(28,401)
92
1,543
($0.35 per common share)
(20,531)
Sale of interest in consolidated real estate venture
127
11,686
11,813
(500)
28,010
24,769
BALANCE AS OF DECEMBER 31, 2024
84,500
846
2,790,403
(997,283)
15,092
1,809,058
1,170
13
20,137
20,150
(26,441)
(265)
(435,519)
(435,784)
73
1,636
(23,263)
(71,521)
(67,894)
7
Condensed Consolidated Statements of Cash Flows
OPERATING ACTIVITIES
Net loss
Adjustments to reconcile net loss to net cash provided by operating activities:
Share-based compensation expense
22,296
19,854
Depreciation and amortization expense, including amortization of deferred financing costs
140,484
148,834
Deferred rent
(7,126)
(9,653)
1,197
165
Amortization of market lease intangibles, net
261
49
Amortization of lease incentives
1,611
10,458
489
5,053
114,740
45,067
Gain on the sale of real estate, net
(20,577)
(47,029)
Loss on operating lease and other receivables
770
1,096
Income from investments, net
(4,692)
(1,600)
Return on capital from unconsolidated real estate ventures
2,452
1,331
Other non-cash items
550
3,446
Changes in operating assets and liabilities:
(6,274)
(1,415)
(10,670)
(13,328)
(1,159)
(9,520)
(715)
(292)
Net cash provided by operating activities
37,920
40,625
INVESTING ACTIVITIES
Development costs, construction in progress and real estate additions
(63,427)
(92,168)
Acquisition of real estate
(40,267)
Proceeds from the sale of real estate
49,553
537,641
Proceeds from derivative financial instruments
5,340
7,376
Payments on derivative financial instruments
(5,066)
(12,960)
Distributions of capital from unconsolidated real estate ventures and other investments
3,977
2,276
Investments in unconsolidated real estate ventures and other investments
(6,205)
(4,776)
Net cash (used in) provided by investing activities
(15,828)
397,122
FINANCING ACTIVITIES
Borrowings under mortgage loans
25,376
281,381
Borrowings under revolving credit facility
105,000
766,000
Borrowings under term loans
15,000
Repayments of mortgage loans
(4,500)
(506,501)
Repayments of revolving credit facility
(88,000)
(691,000)
7,835
(2,325)
(3,209)
Debt issuance and modification costs
(11,567)
(5,207)
Redemption of noncontrolling interests
(2,347)
Proceeds from common shares issued pursuant to ESPP
593
653
Dividends paid to common shareholders
(30,948)
(38,050)
Distributions to redeemable noncontrolling interests
(10,543)
(9,278)
Distributions to noncontrolling interests
Proceeds from the sale of interest in consolidated real estate venture
100,000
Net cash used in financing activities
(21,349)
(533,160)
Net increase (decrease) in cash and cash equivalents, and restricted cash
743
(95,413)
Cash and cash equivalents, and restricted cash, beginning of period
103,290
183,192
Cash and cash equivalents, and restricted cash, end of period
104,033
87,779
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD
64,437
23,342
Cash and cash equivalents, and restricted cash
SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION
Cash paid for interest (net of capitalized interest of $894 and $4,379 in 2026 and 2025)
99,714
95,197
Accrued capital expenditures
25,586
35,238
Write-off of fully depreciated assets
18,148
27,968
Contribution of land to unconsolidated real estate venture
9,906
Redemption of OP Units for common shares
Redeemable noncontrolling interests redemption value adjustment
(28,010)
71,521
Cash paid for amounts included in the measurement of lease liabilities for operating leases
4,093
5,027
9
Notes to Condensed Consolidated Financial Statements
1.Organization and Basis of Presentation
Organization
JBG SMITH Properties ("JBG SMITH"), a Maryland real estate investment trust, owns, operates and develops mixed-use properties concentrated in amenity-rich, Metro-served submarkets in and around Washington, D.C., most notably National Landing, where through our focus on placemaking, we cultivate vibrant, highly amenitized, walkable neighborhoods. Approximately 80.0% of our portfolio is in the National Landing submarket in Northern Virginia. In addition, our third-party real estate services business provides fee-based real estate services.
Substantially all our assets are held by, and our operations are conducted through JBG SMITH Properties LP ("JBG SMITH LP"), our operating partnership. As of September 30, 2026, JBG SMITH, as its sole general partner, controlled JBG SMITH LP and owned 82.2% of its OP Units, after giving effect to the conversion of certain vested long-term incentive partnership units ("LTIP Units") that are convertible into OP Units. JBG SMITH is referred to herein as "we," "us," "our" or other similar terms. References to "our share" refer to our ownership percentage of consolidated and unconsolidated assets in real estate ventures, but exclude our 33.5% subordinated interest in four commercial buildings (the "Fortress Assets"), as well as the associated non-recourse mortgage loans, held through an unconsolidated real estate venture; the interest and debt are excluded because our investment in the real estate venture is zero, we do not anticipate receiving any near-term cash flow distributions from the real estate venture, and we have not guaranteed its obligations or otherwise committed to providing financial support.
As of September 30, 2026, our Operating Portfolio consisted of 38 operating assets comprising 15 multifamily assets totaling 6,519 units (6,333 units at our share), 22 commercial assets totaling 7.3 million square feet (6.7 million square feet at our share) and one wholly owned land asset for which we are the ground lessor. Additionally, we had one under-construction multifamily asset with 195 units (59 units at our share), and our development pipeline, which consists of owned and entitled land on which we have the potential to commence construction subject to completion of design and/or market conditions, totaled 4.8 million square feet (3.5 million square feet at our share) of estimated potential development density. Our development pipeline excludes unentitled land parcels.
We derive our revenue primarily from leases with multifamily and commercial tenants. Revenue under our multifamily leases is generally due on a monthly basis with terms of approximately one year or less, and may include income from utility recoveries, parking and other miscellaneous items. Our commercial leases include fixed and percentage rents, and reimbursements from tenants for certain expenses such as real estate taxes, property operating expenses, and repairs and maintenance. In addition, our third-party real estate services business provides fee-based real estate services.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements and notes are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not contain certain information required in annual financial statements and notes as required under GAAP. In our opinion, all adjustments considered necessary for a fair presentation have been included, and all such adjustments are of a normal recurring nature. All intercompany transactions and balances have been eliminated. The results of operations for the three and nine months ended September 30, 2026 and 2025 are not necessarily indicative of the results that may be expected for a full year. These condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on February 17, 2026 ("Annual Report").
The accompanying condensed consolidated financial statements include our accounts and those of our wholly owned subsidiaries and consolidated variable interest entities ("VIEs"), including JBG SMITH LP. See Note 5 for additional
information. The portions of the equity and net income (loss) of consolidated VIEs that are not attributable to us are presented separately as amounts attributable to noncontrolling interests in our condensed consolidated financial statements.
References to our financial statements refer to our unaudited condensed consolidated financial statements as of September 30, 2026 and December 31, 2025, and for the three and nine months ended September 30, 2026 and 2025. References to our balance sheets refer to our condensed consolidated balance sheets as of September 30, 2026 and December 31, 2025. References to our statements of operations refer to our condensed consolidated statements of operations for the three and nine months ended September 30, 2026 and 2025. References to our statements of comprehensive loss refer to our condensed consolidated statements of comprehensive loss for the three and nine months ended September 30, 2026 and 2025.
Income Taxes
We have elected to be taxed as a real estate investment trust ("REIT") under sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code"). Under those sections, a REIT which distributes at least 90% of its REIT taxable income as dividends to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. We currently adhere and intend to continue to adhere to these requirements and to maintain our REIT status in future periods. We also participate in the activities conducted by our subsidiary entities that have elected to be treated as taxable REIT subsidiaries under the Code. As such, we are subject to federal, state and local taxes on the income from those activities.
2.Summary of Significant Accounting Policies
Significant Accounting Policies
There were no material changes to our significant accounting policies disclosed in our Annual Report.
Use of Estimates
The preparation of the financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
Recent Accounting Pronouncements
Standards Not Yet Adopted
Interim Reporting
In December 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-11, "Interim Reporting (Topic 270): Narrow-Scope Improvements." ASU 2025-11 improves the navigability of the required interim disclosures and clarifies when that guidance is applicable. The amendments also provide additional guidance on what disclosures should be provided in interim reporting periods. The guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the potential impact of adopting this new guidance on our financial statements.
Hedge Accounting
In November 2025, the FASB issued ASU 2025-09, "Derivatives and Hedging (Topic 815): Hedge Accounting Improvements." ASU 2025-09 amends certain aspects of the hedge accounting guidance in ASC 815, Derivatives and Hedging, to provide targeted improvements intended to enhance the application of hedge accounting, including expanded eligibility of forecasted transactions, additional flexibility in measuring hedge effectiveness and clarifications related to hedging non-financial items. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. The guidance should be applied on a prospective basis. While we are evaluating the potential impact of adopting this new guidance, we currently do not expect the adoption to have a material impact on our financial statements.
Expense Disaggregation Disclosures
In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses." ASU 2024-03 requires expanded interim and annual disclosures of certain expense information in the notes to the financial statements. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The guidance can be applied on a prospective or retrospective basis. We are currently evaluating the potential impact of adopting this new guidance on our financial statements.
3.Dispositions and Assets Held for Sale
Dispositions
The following table summarizes disposition activity for the nine months ended September 30, 2026:
Gain (Loss)
Gross
Cash
on the Sale
Sales
Proceeds
of Real
Date Disposed
Assets
Segment
Price
from Sale
Estate
February 11, 2026
Development Parcel
50,705
46,582
21,075
May 20, 2026
2200 Crystal Drive (1)
(285)
July 16, 2026
Development Parcel (2)
3,600
2,968
(279)
Other (3)
66
In October 2026, we formed a real estate venture to recapitalize 800 North Glebe Road, a 306,210-square-foot commercial asset in Arlington, Virginia, with a total valuation of $79.0 million, in which we sold a 90.0% interest. In connection with the transaction, the venture entered into a three-year, interest-only $61.3 million mortgage loan with an interest rate of Secured Overnight Financing Rate ("SOFR") plus 3.70%, of which $52.7 million was drawn at closing. We retained management and leasing of the asset and will account for the asset as an unconsolidated real estate venture.
In April 2026, we formed a real estate venture to recapitalize Tysons Dulles Plaza, a 491,494-square-foot commercial asset in Tysons, Virginia, with a total valuation of $43.6 million, in which we sold a 50.0% noncontrolling interest. In connection with the transaction, the real estate venture entered into a three-year, interest-only $37.9 million mortgage loan with an interest rate of SOFR plus 2.10%, of which $20.0 million was drawn at closing. We retained management of the asset and continue to account for the asset on a consolidated basis with our venture partners' share reflected in noncontrolling interests.
Assets Held for Sale
The following table summarizes assets held for sale as of September 30, 2026. There were no assets held for sale as of December 31, 2025.
Liabilities Related
Assets Held
to Assets Held
Location
Square Feet
for Sale
800 North Glebe Road (1)
Commercial
Arlington, Virginia
306,210
12
4.Investments in Unconsolidated Real Estate Ventures
The following table summarizes the composition of our investments in unconsolidated real estate ventures:
Effective
Ownership
Real Estate Venture
Interest (1)
J.P. Morgan Global Alternatives ("J.P. Morgan") (2)
50.0%
72,838
71,550
Dulles View Venture (3)
60.0%
17,420
18,536
2200 Crystal Venture (4) (5)
30.0%
10,569
4747 Bethesda Venture
20.0%
6,477
8,085
Brandywine Realty Trust
7,091
6,968
150
572
Total investments in unconsolidated real estate ventures (6) (7)
We provide leasing, property management and other real estate services to our unconsolidated real estate ventures. We recognized revenue, including expense reimbursements, of $3.0 million and $8.7 million for the three and nine months ended September 30, 2026, and $2.8 million and $8.3 million for the three and nine months ended September 30, 2025 in connection with these services.
The following table summarizes the debt of our unconsolidated real estate ventures:
Interest Rate (1)
Mortgage loans (2)
5.26%
175,000
Unamortized deferred financing costs and premium / discount, net
(1,064)
(3,084)
Mortgage loans, net (3)
173,936
171,916
The following tables summarize financial information for our unconsolidated real estate ventures:
Combined balance sheet information: (1)
388,497
374,760
54,063
56,566
Total assets
442,560
431,326
23,878
22,303
197,814
194,219
244,746
237,107
Total liabilities and equity
Combined income statement information: (1)
7,970
7,483
23,996
24,061
Operating income (2)
1,954
446
4,482
7,094
Net loss (2)
(632)
(3,612)
(3,754)
(4,699)
5.Variable Interest Entities
We hold interests in entities deemed to be VIEs, which we evaluate at acquisition, formation, after a change in the ownership agreement, after a change in the entity's economics or after any other reconsideration event to determine if the VIE should be consolidated in our financial statements or should no longer be considered a VIE. An entity is a VIE because it does not hold sufficient equity at risk or conducts substantially all its operations on behalf of an investor with disproportionately few voting rights. We will consolidate a VIE if we are the primary beneficiary of the VIE, which entails having the power to direct the activities that most significantly impact the VIE’s economic performance. We assess our influence over significant business activities, our voting rights and any noncontrolling interest kick-out or participating rights in determining whether we are the primary beneficiary of the VIE.
Unconsolidated VIEs
As of September 30, 2026 and December 31, 2025, we had interests in entities deemed to be unconsolidated VIEs. Although we may be responsible for managing the day-to-day operations of these investees, we are not the primary beneficiary of these VIEs, as we do not hold unilateral power over activities that, when taken together, most significantly impact the respective VIE's economic performance. We account for our investment in these entities under the equity method. As of September 30, 2026 and December 31, 2025, the net carrying amounts of our investment in these entities were $90.5 million and $79.0 million, which were included in "Investments in unconsolidated real estate ventures" in our balance sheets. Our equity in the income (loss) of unconsolidated VIEs was included in "Loss from unconsolidated real estate ventures, net" in our statements of operations. Our maximum loss exposure in these entities is limited to our investments, construction commitments and debt guarantees, as applicable. See Note 17 for additional information.
Consolidated VIEs
JBG SMITH LP is our most significant consolidated VIE. We hold 82.2% of the limited partnership interest in JBG SMITH LP, act as the general partner and exercise full responsibility, discretion and control over its day-to-day management. The
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noncontrolling interest holders of JBG SMITH LP do not have substantive liquidation rights, substantive kick-out rights without cause or substantive participating rights that could be exercised by a simple majority of noncontrolling interest limited partners (including by such a limited partner unilaterally). Because the noncontrolling interest holders do not have these rights, JBG SMITH LP is a VIE. As general partner, we have the power to direct the activities of JBG SMITH LP that most significantly affect its economic performance, and through our majority interest, we have both the right to receive benefits from and the obligation to absorb losses of JBG SMITH LP. Accordingly, we are the primary beneficiary of JBG SMITH LP and consolidate it in our financial statements. Because we conduct our business through JBG SMITH LP, its total assets and liabilities comprise substantially all of our consolidated assets and liabilities.
6.Other Assets, Net
The following table summarizes other assets, net:
Prepaid expenses
12,738
9,648
Derivative financial instruments, at fair value
25,349
13,094
Deferred financing costs, net
11,385
4,362
Operating lease right-of-use assets
39,483
41,491
Investments in funds (1)
35,834
30,555
Other investments (2)
12,478
13,828
Insurance receivable (3)
7,389
4,973
4,309
Total other assets, net
Unrealized gains (losses)
(498)
2,300
3,999
2,017
Realized gains (losses)
826
(69)
529
7.Debt
Mortgage Loans
The following table summarizes mortgage loans:
Weighted Average
Variable rate (2)
5.36%
624,515
600,899
Fixed rate (3)
5.13%
1,017,949
1,020,690
Mortgage loans
1,642,464
1,621,589
Unamortized deferred financing costs and premium / discount, net (4)
(40,339)
(42,431)
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As of September 30, 2026 and December 31, 2025, the net carrying value of real estate collateralizing our mortgage loans totaled $1.6 billion and $1.7 billion. Our mortgage loans contain covenants that limit our ability to incur additional indebtedness on these properties and, in certain circumstances, require lender approval of tenant leases and/or yield maintenance upon repayment prior to maturity.
As of September 30, 2026 and December 31, 2025, we had various interest rate swap and cap agreements on certain mortgage loans with an aggregate notional value of $756.0 million. See Note 15 for additional information.
Revolving Credit Facility and Term Loans
As of September 30, 2026, our unsecured revolving credit facility and term loans totaling $1.4 billion consisted of (i) a revolving credit facility with a capacity of $690.0 million maturing in August 2030, (ii) a $200.0 million term loan ("Tranche A-1 Term Loan") maturing in January 2027, (iii) a $415.0 million term loan ("Tranche A-2 Term Loan"), of which $171.1 million matures in January 2028 and $243.9 million matures in August 2028, and (iv) a $120.0 million term loan ("2023 Term Loan") maturing in June 2028.
In August 2026, the revolving credit facility was amended to reduce the borrowing capacity from $750.0 million to $690.0 million and to extend the maturity date to August 2030 with two six-month extension options. The applicable interest rate varies based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets ranging from SOFR plus 1.30% to SOFR plus 1.75%. We have the option to increase the revolving credit facility or add term loans up to $560.0 million in the aggregate, subject to customary conditions.
In August 2026, the Tranche A-2 Term Loan was amended to increase the borrowing capacity from $400.0 million to $415.0 million and extend $243.9 million of the term loan to August 2028 with three 12-month extension options. The remaining $171.1 million of the term loan matures in January 2028. The applicable interest rate varies based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets ranging from SOFR plus 1.25% to SOFR plus 1.80% until January 2028, at which time the applicable interest rate will change to a range of SOFR plus 1.40% to SOFR plus 2.00%.
In August 2026, we amended the covenants related to the Tranche A-1 Term Loan and the 2023 Term Loan to be consistent with those in the revolving credit facility. Additionally, the applicable interest rate for the 2023 Term Loan was unchanged and varies based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets ranging from SOFR plus 1.15% to SOFR plus 1.70%.
In connection with the amendments, we recognized a $2.1 million loss on the extinguishment of debt, which was included in "Loss on the extinguishment of debt, net" in our statements of operations for the three and nine months ended September 30, 2026.
The agreements for our unsecured revolving credit facility and term loans include customary restrictive covenants, that, among other things, restrict our ability to incur additional indebtedness, to engage in material asset sales, mergers, consolidations and acquisitions, and in certain circumstances, to pay dividends, make distributions and repurchase common shares, and also include requirements to maintain financial ratios. Our ability to borrow is subject to compliance with these covenants, and failure to comply with our covenants could cause a default, and we may then be required to repay such debt.
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The following table summarizes amounts outstanding under the revolving credit facility and term loans:
Revolving credit facility (2) (3)
5.40%
Tranche A-1 Term Loan (4)
5.35%
200,000
Tranche A-2 Term Loan:
Non-Extending
4.31%
171,143
400,000
Extending
4.37%
243,857
Total (5)
415,000
2023 Term Loan (6)
5.41%
120,000
Term loans
735,000
720,000
Unamortized deferred financing costs, net
(1,689)
(1,592)
8.Other Liabilities, Net
The following table summarizes other liabilities, net:
Lease intangible liabilities, net
1,500
1,789
Lease incentive liabilities
2,277
8,333
Liabilities related to operating lease right-of-use assets
38,743
40,764
Prepaid rent
12,650
13,936
Security deposits
12,532
13,135
Environmental liabilities (1)
5,807
17,468
Dividends payable
13,124
7,940
12,350
Accrual for loss contingencies (2)
9,015
2,500
8,572
8,546
Total other liabilities, net
9.Redeemable Noncontrolling Interests
JBG SMITH LP
OP Units held by persons other than JBG SMITH are redeemable for cash or, at our election, our common shares, subject to certain limitations. Vested LTIP Units are convertible into OP Units. During the nine months ended September 30, 2026 and 2025, unitholders redeemed 1.2 million OP Units. As of September 30, 2026, outstanding OP Units and convertible LTIP Units totaled 12.7 million, representing a 17.8% ownership interest in JBG SMITH LP. Our OP Units and certain vested LTIP Units are presented at the higher of their redemption value or their carrying value, with adjustments to the redemption value recognized in "Additional paid-in capital" in our balance sheets. Redemption value per OP Unit is equivalent to the market value of one of our common shares at the end of the period.
Consolidated Real Estate Venture
We have a 60.0% controlling ownership interest in a real estate venture that owns West Half, a multifamily asset in Washington, D.C. Our venture partner has the right, but not the obligation, to cause a sale of the property after May 2027, upon which we can either acquire our venture partner’s interest or market the asset for sale. Given this right held by our venture partner, we account for its interest in the venture as a redeemable noncontrolling interest. The carrying amount of the redeemable noncontrolling interest is adjusted at the end of each reporting period to reflect the greater of (i) the initial carrying amount, increased or decreased for the noncontrolling interest’s share of net income (loss) and distributions, or (ii) the redemption value at the balance sheet date pursuant to a waterfall structure whereby our venture partner is entitled to a priority return. Any adjustments to the carrying amount are recognized in "Additional paid-in capital" in our balance sheets.
The following table summarizes the activity of redeemable noncontrolling interests:
Consolidated
JBG
Real Estate
SMITH LP
Venture
Balance, beginning of period
379,617
113,095
492,712
429,203
114,000
543,203
Redemptions
(5,865)
(9,296)
Net income (loss)
(18,048)
(214)
(18,262)
(6,541)
84
(6,457)
Other comprehensive income (loss)
1,179
(181)
Distributions, net
(2,849)
(3,513)
(2,883)
(674)
(3,557)
4,376
3,591
Adjustment to redemption value
(22,669)
1,342
(21,327)
38,455
442
38,897
Balance, end of period
335,741
113,559
452,348
113,852
566,200
397,831
113,511
423,632
(16,899)
(20,150)
LTIP Units issued in lieu of cash compensation (1)
4,250
3,048
(35,648)
(345)
(35,993)
(18,481)
106
(18,375)
3,241
(3,627)
Contributions (distributions), net
(5,758)
(2,078)
(7,836)
(5,781)
99,326
93,545
19,205
16,606
(30,481)
2,471
57,101
14,420
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10.Property Rental Revenue
The following table summarizes property rental revenue from our non-cancellable leases:
Fixed
98,964
95,965
295,503
288,857
Variable
9,118
8,016
25,067
23,132
Property rental revenue
11.Share-Based Payments
LTIP Units and Time-Based LTIP Units
During the nine months ended September 30, 2026, we granted to certain employees 1.2 million LTIP Units with time-based vesting requirements ("Time-Based LTIP Units") and a weighted average grant-date fair value of $14.87 per unit that vest ratably over four years subject to continued employment and require a three-year post vesting hold for named executive officers ("NEOs"). Compensation expense for these units is primarily recognized over a four-year period.
In January 2026, we granted 237,995 fully vested LTIP Units to certain employees who elected to receive all or a portion of their cash bonuses related to 2025 service as LTIP Units. The LTIP Units had a grant-date fair value of $13.76 per unit. Compensation expense totaling $3.3 million for these LTIP Units was recognized in 2025.
In April 2026, as part of their annual compensation, we granted to non-employee trustees a total of 157,207 fully vested LTIP Units, which includes LTIP Units elected in lieu of cash retainers, with a grant-date fair value of $11.92 per unit. The LTIP Units may not be sold while a trustee is serving on the Board of Trustees.
The aggregate grant-date fair value of the Time-Based LTIP Units and the LTIP Units granted during the nine months ended September 30, 2026 was $22.7 million. The Time-Based LTIP Units and the LTIP Units were valued based on the closing common share price on the grant date, less a discount for post-grant restrictions. The discount was determined using Monte Carlo simulations based on the following significant assumptions:
Expected volatility
31.0% to 36.0%
Risk-free interest rate
3.5% to 4.1%
Post-grant restriction periods
2 to 7 years
Appreciation-Only LTIP Units ("AO LTIP Units")
In January 2026, we granted to certain employees 603,614 performance-based AO LTIP Units with a grant-date fair value of $2.70 per unit. The AO LTIP Units provide for a share of appreciation determined by the increase in the value of a common share at the time of conversion over the participation threshold of $18.37. The AO LTIP Units are subject to a total shareholder return modifier whereby the number of AO LTIP Units that will ultimately be earned will be increased or reduced by a flat 25.0%. The AO LTIP Units have a three-year performance period with 50.0% of the AO LTIP Units earned vesting at the end of the three-year performance period and the remaining 50.0% vesting on the fourth anniversary of the grant date, subject to continued employment. The AO LTIP Units granted expire on the fifth anniversary of their grant date.
The aggregate grant-date fair value of the AO LTIP Units granted during the nine months ended September 30, 2026 was $1.6 million, valued using Monte Carlo simulations based on the following significant assumptions:
32.0%
Dividend yield
4.1%
3.7%
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Performance-Based LTIP Units
In January 2026, we granted to our NEOs 566,250 performance-based LTIP Units with share price appreciation targets ("Share Price Performance LTIP Units") and a grant-date fair value of $10.79 per unit that vest 50.0% on the third anniversary of the grant date and 50.0% on the fourth anniversary of the grant date, subject to continued employment, based on achieving stated share prices over a five-year performance period that commences on the first anniversary of the grant date. The Share Price Performance LTIP Units are earned only if the shares trade at or above a threshold price for 60 consecutive days during the performance period. The threshold prices are $20, $22, $24, $26, and $28, at each of which 20.0% of the award is earned. Compensation expense for these units is being recognized over a four-year period.
The aggregate grant-date fair value of the Share Price Performance LTIP Units granted during the nine months ended September 30, 2026 was $6.1 million, valued using Monte Carlo simulations based on the following significant assumptions:
36.0%
3.8%
In January 2026, we also issued 975,914 performance-based LTIP Units with net operating income ("NOI") targets ("NOI-Based LTIP Units") to certain employees. The NOI-Based LTIP Units vest at the end of a three-year performance period contingent on our achievement of NOI targets. Achievement of NOI targets, set and measured annually by the Compensation Committee, may earn based on threshold (25.0%), target (50.0%), and maximum (100.0%) performance levels, based on the average of the performance achieved during the three-year performance period. The awards vest at the end of the performance period in February 2029 subject to Compensation Committee approval and continued employment. As the performance goals for subsequent years were not set at the time of issuance, the awards are not considered granted for accounting purposes and, therefore, do not have a grant-date fair value. Accordingly, compensation expense for the awards is expected to be recognized beginning in 2028, when all the targets are known and a grant-date fair value is established. The total unrecognized compensation expense related to unvested share-based payment arrangements disclosed below excludes the NOI-Based LTIP Units issued in 2026 and 2025.
Restricted Share Units ("RSUs")
During the nine months ended September 30, 2026, we granted to certain non-executive employees 101,968 time-based RSUs with a grant-date fair value of $16.59 per unit. Vesting requirements and compensation expense recognition for the RSUs are primarily consistent with those of the Time-Based LTIP Units granted in 2026. The aggregate grant-date fair value of the RSUs was $1.7 million. The RSUs were valued based on the closing common share price on the grant date.
Share-Based Compensation Expense
The following table summarizes share-based compensation expense:
X
Time-Based LTIP Units
3,204
2,602
13,700
12,031
AO LTIP Units and Performance-Based LTIP Units
1,172
989
4,605
3,675
LTIP Units
900
Other equity awards (1)
1,091
1,590
3,705
Total share-based compensation expense
5,467
5,181
22,910
20,699
Less: amount capitalized
(151)
(614)
(845)
5,316
4,967
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As of September 30, 2026, we had $20.9 million of total unrecognized compensation expense related to unvested share-based payment arrangements, which is expected to be recognized over a weighted average period of 2.0 years.
12.Transaction and Other Costs
The following table summarizes transaction and other costs:
Completed, potential and pursued transaction expenses (1)
81
141
688
2,703
Severance and other costs
325
483
2,104
Demolition costs
62
28
125
444
Wardman Tower litigation expenses (2)
729
Employee impersonation fraud loss (3)
9,465
13.Interest Expense
The following table summarizes interest expense:
Interest expense before capitalized interest
33,782
32,501
99,977
100,274
Amortization of deferred financing costs
3,193
3,565
9,369
11,410
Net unrealized gain on non-designated derivatives
(21)
(4)
(37)
(59)
Capitalized interest
(116)
(1,281)
(894)
(6,073)
36,838
34,781
108,415
105,552
14.Shareholders' Equity and Loss Per Common Share
Common Shares Repurchased
Our Board of Trustees previously authorized the repurchase of up to $2.0 billion of our outstanding common shares. In October 2026, our Board of Trustees increased our common share repurchase authorization to $2.3 billion. During the nine months ended September 30, 2026, we repurchased and retired 1.8 million common shares for $28.4 million, a weighted average purchase price per share of $15.35. During the three and nine months ended September 30, 2025, we repurchased and retired 3.1 million and 26.4 million common shares for $62.9 million and $435.3 million, a weighted average purchase price per share of $20.21 and $16.46. Since we began the share repurchase program through September 30, 2026, we have repurchased and retired 85.5 million common shares for $1.6 billion, a weighted average purchase price per share of $18.72.
During the fourth quarter of 2026, through October 30, 2026, we repurchased and retired 1.0 million common shares for $11.5 million, a weighted average purchase price per share of $11.07, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.
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Loss Per Common Share
Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding during the period. Unvested share-based compensation awards that entitle holders to receive non-forfeitable distributions are considered participating securities. Consequently, we are required to apply the two-class method of computing basic and diluted earnings (loss) that would otherwise have been available to common shareholders. Under the two-class method, earnings for the period are allocated between common shareholders and participating securities based on their respective rights to receive dividends. During periods of net loss, losses are allocated only to the extent the participating securities are required to absorb their share of such losses. Distributions to participating securities in excess of their allocated income or loss are shown as a reduction to net income (loss) attributable to common shareholders. Diluted earnings (loss) per common share reflects the potential dilution of the assumed exchange of various unit and share-based compensation awards into common shares to the extent they are dilutive.
Class B Shares, held by certain LTIP Unit and OP Unit holders, are entitled to vote on all matters submitted to our shareholders, with common shares and Class B Shares voting as a single class. Class B Shares are automatically cancelled upon the redemption of each corresponding OP Unit. Class B Shares are not listed on any national securities exchange, and do not have any economic rights or rights to any dividends, distributions or proceeds upon our liquidation. Similarly, the Class B Shares are excluded from the calculation of earnings (loss) per common share as they do not participate in profits or losses.
The following table summarizes the calculation of basic and diluted loss per common share and reconciles net loss to the amounts of net loss attributable to common shareholders used in calculating basic and diluted loss per common share:
(In thousands, except per share amounts)
Distributions to participating securities
(599)
(449)
(1,237)
(903)
Net loss available to common shareholders - basic and diluted
(82,605)
(29,004)
(161,095)
(94,419)
Weighted average number of common shares outstanding - basic and diluted
Loss per common share - basic and diluted
The effect of the redemption of OP Units, Time-Based LTIP Units, fully vested LTIP Units and special equity awards that were outstanding as of September 30, 2026 and 2025 is excluded in the computation of diluted loss per common share as the assumed redemption of such units for common shares on a one-for-one basis was antidilutive (the assumed redemption of these units would have no impact on the determination of diluted loss per share). OP Units, Time-Based LTIP Units, fully vested LTIP Units and special equity awards, which are held by noncontrolling interests, are attributed income at an identical proportion to the common shareholders. AO LTIP Units, Performance-Based LTIP Units, formation awards and RSUs, which totaled 8.8 million for the three and nine months ended September 30, 2026, and 7.9 million and 8.0 million for the three and nine months ended September 30, 2025, were excluded from the calculation of diluted loss per common share as they were antidilutive, but could be dilutive in the future.
Dividends Declared in October 2026
On October 29, 2026, our Board of Trustees declared a quarterly dividend of $0.175 per common share, payable on November 25, 2026 to shareholders of record as of November 12, 2026.
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15.Fair Value Measurements
Fair Value Measurements on a Recurring Basis
To manage or hedge our exposure to interest rate risk, we follow established risk management policies and procedures, including the use of a variety of derivative financial instruments.
As of September 30, 2026 and December 31, 2025, we had various derivative financial instruments consisting of interest rate swap and cap agreements that are measured at fair value on a recurring basis. The net unrealized gain (loss) on our derivative financial instruments designated as effective hedges was $11.6 million and ($3.6) million as of September 30, 2026 and December 31, 2025 and was recorded in "Accumulated other comprehensive income (loss)" in our balance sheets, of which a portion was allocated to "Redeemable noncontrolling interests." Within the next 12 months, we expect to reclassify $7.6 million of the net unrealized gain as a decrease to interest expense.
Accounting Standards Codification 820 ("Topic 820"), Fair Value Measurement and Disclosures, defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Topic 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels:
Level 1 — quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities;
Level 2 — observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and
Level 3 — unobservable inputs that are used when little or no market data is available.
The fair values of the derivative financial instruments are based on the estimated amounts we would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and observable inputs. The derivative financial instruments are classified within Level 2 of the valuation hierarchy.
The following table summarizes assets and liabilities measured at fair value on a recurring basis:
Fair Value Measurements
Level 1
Level 2
Level 3
Derivative financial instruments designated as effective hedges:
Classified as assets in "Other assets, net"
17,283
Non-designated derivatives:
8,066
Classified as liabilities in "Other liabilities, net"
6,969
6,352
6,125
5,998
The fair values of our derivative financial instruments were determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of the derivative financial instrument. This analysis reflected the contractual terms of the derivative, including the period to maturity, and used observable market-based inputs, including interest rate market data and implied volatilities in such interest rates. While it was determined that the majority of the inputs used to value the derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with the derivatives also utilized Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default. However, as of September 30, 2026 and December 31, 2025, the significance of the impact of the credit valuation adjustments on the overall valuation of the derivative financial instruments was assessed, and it was
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determined that these adjustments were not significant to the overall valuation of the derivative financial instruments. As a result, it was determined that the derivative financial instruments in their entirety should be classified in Level 2 of the fair value hierarchy. The net unrealized gains (losses) included in "Other comprehensive (income) loss" in our statements of comprehensive loss for the three and nine months ended September 30, 2026 and 2025 were attributable to the net change in unrealized gains (losses) related to effective derivative financial instruments that were outstanding during those periods, none of which were reported in our statements of operations as the derivative financial instruments were documented and qualified as hedging instruments. Realized and unrealized gains (losses) related to non-designated hedges were included in "Interest expense" in our statements of operations.
Fair Value Measurements on a Nonrecurring Basis
Our real estate assets are reviewed for impairment whenever there are changes in circumstances or indicators that the carrying amount of the assets may not be recoverable. Real estate held for sale is carried at the lower of carrying amounts or estimated fair value less disposal costs.
In connection with the preparation and review of the third quarter 2026 financial statements, as a result of our marketing for sale 800 North Glebe Road, a commercial asset, we determined its carrying value exceeded the estimated $80.9 million fair value, which was estimated using a market approach and was classified as Level 2 in the fair value hierarchy. As a result, we recorded an impairment loss of $69.2 million, which was included in "Impairment loss" in our statements of operations for the three and nine months ended September 30, 2026. In October 2026, we sold a 90.0% interest in 800 North Glebe Road.
During the nine months ended September 30, 2026, we determined that the future development of a pre-development project was no longer probable and the carrying amount of the asset was not recoverable. As a result, we recorded an impairment loss of $44.1 million, which was included in "Impairment loss" in our statement of operations for the nine months ended September 30, 2026, related to previously capitalized costs associated with the pre-development project, of which $17.1 million was recorded as part of the formation transaction in 2017.
Financial Assets and Liabilities Not Measured at Fair Value
As of September 30, 2026 and December 31, 2025, all financial assets and liabilities were reflected in our balance sheets at amounts which, in our estimation, reasonably approximated their fair values, except for the following:
Carrying
Amount (1)
Fair Value
Financial liabilities:
1,610,576
1,615,279
221,411
204,344
731,998
717,455
The fair values of the mortgage loans, revolving credit facility and term loans were determined using Level 2 inputs of the fair value hierarchy. The fair value of our mortgage loans is estimated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit profiles based on market sources. The fair value of our revolving credit facility and term loans is calculated based on the net present value of payments over the term of the facilities using estimated market rates for similar notes and remaining terms.
16.Segment Information
We own, operate and develop mixed-use properties concentrated in and around Washington, D.C. We derive our revenue primarily from leases with multifamily and commercial tenants. In addition, our third-party real estate services business provides fee-based real estate services. Our operating segments are aligned with our method of internal reporting and the way our Chief Executive Officer, who is also our Chief Operating Decision Maker ("CODM"), makes key operating
24
decisions, evaluates financial results, allocates resources and manages our business. Accordingly, our three operating and reportable segments are multifamily, commercial and third-party real estate services.
The CODM measures and evaluates the performance of our operating segments based on only the following measures at our share pertaining to each of our segments:
The CODM uses these measures predominantly in the annual budget and forecasting process as well as in his review of our quarterly financial results when making decisions about the allocation of operating and capital resources to each segment. We have included disclosure of NOI and the results of our third-party real estate services business at our share to align with our internal reporting and the information used by our CODM. Asset information, including total assets, investments in equity method investees and expenditures for additions to long-lived assets, is not regularly provided to the CODM for purposes of assessing segment performance or allocating resources. Accordingly, such information is not disclosed by reportable segment.
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The following tables summarize NOI at our share for our multifamily and commercial segments, including a reconciliation to our total NOI at our share:
Three Months Ended September 30, 2026
Multifamily
(In thousands, at our share)
49,612
54,342
103,954
Other property revenue
804
5,120
5,924
Total property revenue
50,416
59,462
109,878
Property expense:
5,488
4,395
9,883
Payroll
3,736
3,379
7,115
Utilities
4,631
5,276
9,907
Repairs and maintenance
6,033
5,654
11,687
Other property operating
3,054
5,463
8,517
Total property expense
22,942
24,167
47,109
NOI from reportable segments
27,474
35,295
62,769
Other NOI (1)
467
NOI
63,236
Three Months Ended September 30, 2025
47,450
52,587
100,037
845
4,183
5,028
48,295
56,770
105,065
5,484
5,902
11,386
3,553
3,197
6,750
4,115
4,342
8,457
5,909
5,300
11,209
4,774
7,828
22,115
23,515
45,630
26,180
33,255
59,435
(549)
58,886
26
Nine Months Ended September 30, 2026
146,093
159,891
305,984
2,211
13,765
15,976
148,304
173,656
321,960
18,355
14,320
32,675
11,191
10,070
21,261
12,433
13,663
26,096
16,639
16,268
32,907
9,266
14,788
24,054
67,884
69,109
136,993
80,420
104,547
184,967
267
185,234
Nine Months Ended September 30, 2025
155,616
154,026
309,642
2,120
12,487
14,607
157,736
166,513
324,249
17,220
17,297
34,517
11,141
9,306
20,447
11,809
10,511
22,320
17,623
15,005
32,628
9,283
13,306
22,589
67,076
65,425
132,501
90,660
101,088
191,748
(1,937)
189,811
The following table summarizes our third-party real estate services business at our share:
Property management fees
3,438
3,321
10,303
9,961
Asset management fees
1,142
1,049
3,368
2,335
Development fees
701
361
1,620
1,348
Leasing fees
651
583
1,357
2,336
Construction management fees
396
179
860
677
Other service revenue
1,654
1,082
4,134
3,152
Third-party real estate services revenue, excluding reimbursements
7,982
6,575
21,642
19,809
Third-party real estate services expenses, excluding reimbursements
5,798
5,725
18,083
18,358
Net third-party real estate services, excluding reimbursements
2,184
850
3,559
1,451
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The following table reconciles revenue at our share to total revenue per the statements of operations:
Total property revenue at our share
Third-party real estate services revenue, excluding reimbursements, at our share
Reimbursement revenue (1)
10,544
8,077
31,254
24,126
Our share of revenue attributable to unconsolidated real estate ventures
(2,041)
(2,146)
(6,042)
(6,403)
Real estate venture partners' share of revenue attributable to consolidated real estate ventures
2,768
1,761
7,064
2,269
1,216
2,061
4,055
5,150
Other adjustments (2)
2,066
2,477
9,457
1,835
Total revenue per statements of operations
The following table reconciles NOI at our share to loss before income tax expense:
NOI at our share
Net third-party real estate services, excluding reimbursements, at our share
Add:
Less:
Depreciation and amortization expense
General and administrative expense: corporate and other
2,107
2,402
69,175
4,771
Adjustments:
Our share of net third-party real estate services attributable to real estate ventures
(354)
(197)
(881)
(712)
NOI attributable to unconsolidated real estate ventures at our share
(1,293)
(1,012)
(3,690)
(3,289)
Real estate venture partners' share of NOI attributable to consolidated real estate ventures
1,580
915
4,203
1,187
Non-cash rent adjustments (1)
2,129
(1,561)
6,774
(4,071)
(1,794)
3,083
(2,433)
984
Total adjustments
268
1,228
3,973
(5,901)
Loss before income tax expense
17.Commitments and Contingencies
Insurance
We maintain general liability insurance with limits of $102.0 million per occurrence and in the aggregate, and property and rental value insurance coverage with limits of $1.0 billion per occurrence, with sub-limits for certain perils such as floods and earthquakes on each of our properties. We also maintain coverage, through our wholly owned captive insurance subsidiary, for a portion of the first loss on the above limits and for both conventional terrorist acts and for nuclear, biological, chemical or radiological terrorism events with limits of $2.0 billion per occurrence. We maintain entity-level insurance with a coverage limit of $70.0 million and other insurance policies with specific coverages totaling over $50.0 million. These policies are partially reinsured by third-party insurance providers.
We will continue to monitor the state of the insurance market, and the scope and costs of coverage for acts of terrorism. We cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are responsible for deductibles and losses in excess of the insurance coverage, which could be material.
Our debt, consisting of mortgage loans secured by our properties, a revolving credit facility and term loans, contains customary covenants requiring adequate insurance coverage. Although we believe that we currently have adequate insurance coverage, we may not be able to obtain an equivalent amount of coverage at a reasonable cost in the future. If lenders insist on greater coverage than we can obtain, it could adversely affect our ability to finance or refinance our properties.
Construction Commitments
As of September 30, 2026, we have construction commitments related to 2200 Crystal Drive, an unconsolidated multifamily asset under construction, that, based on our current plans and estimates, require an additional $17.4 million at our share to complete over the next three years, which the real estate venture expects to finance with debt proceeds.
Environmental Matters
Most of our assets have been subject, at some point, to environmental assessments that are intended to evaluate the environmental condition of the subject and surrounding assets. These environmental assessments generally have included a historical review, a public records review, a visual inspection of the site and surrounding assets, visual or historical evidence of underground storage tanks and other features, and the preparation and issuance of a written report. Soil, soil vapor and/or groundwater subsurface testing is conducted at our assets, when necessary, to further investigate any conditions identified by the initial assessment that could reasonably be expected to pose a material concern to the property or result in us incurring material environmental liabilities as a result of redevelopment. The tests may not, however, have included extensive sampling or subsurface investigations. In each case where the environmental assessments have identified conditions requiring remedial actions required by law, we have initiated appropriate actions. The environmental assessments have not revealed any material environmental contamination that we believe would have a material adverse effect on our overall business, financial condition or results of operations, or that have not been anticipated and remediated during site redevelopment as required by law. Nevertheless, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites or changes in cleanup requirements would not result in significant cost to us. Environmental liabilities totaled $5.8 million and $17.5 million as of September 30, 2026 and December 31, 2025, and were included in "Other liabilities, net" in our balance sheets.
In November 2023, the District of Columbia filed a lawsuit in the Superior Court of the District of Columbia (the "Court") against RealPage, Inc., a provider of revenue management systems, numerous multifamily rental companies, and 14 owners and/or operators of multifamily housing in the District of Columbia, including JBG Associates, L.L.C., one of our subsidiaries, alleging that the defendants violated the District of Columbia Antitrust Act by unlawfully agreeing to use RealPage, Inc. revenue management systems and sharing sensitive data. The District of Columbia is seeking monetary damages, equitable relief, attorneys’ fees, interest and costs. On September 17, 2026, JBG Associates, L.L.C. and the District of Columbia resolved the matter via a Consent Judgment and Order entered by the Court under which JBG Associates, L.L.C. agreed to certain injunctive relief and to remit a settlement payment of $8.1 million to the District of
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Columbia. Per the Consent Judgment and Order, nothing set forth in the order, including the settlement payment, shall be deemed or construed to be an admission by JBG Associates, L.L.C. or evidence of any wrongdoing or violation of law by JBG Associates, L.L.C. or as evidence of the truth of any of the claims or allegations made in the lawsuit.
We, along with multiple other parties, are named defendants in a lawsuit arising out of a condominium development project known as Wardman Tower in Washington, D.C. The lawsuit was filed by the Wardman Tower Residential Condominium Unit Owners Association in the Court on November 25, 2020. The lawsuit seeks damages resulting primarily from alleged construction and design deficiencies, and alleged misrepresentations and omissions, including claims under the D.C. Consumer Protection Procedures Act ("CPPA"). The Wardman Tower project was designed and constructed by other parties and was substantially complete prior to our formation. We have never had any ownership interest in the project. One of our subsidiary entities, which was only made a defendant in the litigation during the trial, had acted under a project management agreement with the project owner. The lawsuit sought compensatory damages and asked that those damages be trebled under the CPPA, plus attorneys' fees.
The bench trial began on November 10, 2025, and the last witness testified on March 5, 2026. On July 31, 2026, the Court entered judgment in favor of Wardman Tower Residential Condominium Unit Owners Association, found damages in the amount of $118.7 million, and ordered the defendants, which include us, to pay treble that amount, or approximately $356.1 million in damages, plus attorneys’ fees in an amount to be determined. We believe the judgment against us, including its conclusion that we are liable for acts of employees of a subsidiary providing services under a project management agreement between the project owner and another subsidiary, is not supported by the facts of the case or applicable law regarding corporate separateness. We believe there are substantial grounds to challenge both the liability findings against us and the size and trebling of the award. On August 27, 2026, we filed our Notice of Appeal. We will continue to defend ourselves vigorously in this matter. The timing and success of any appeal is uncertain, and we cannot be certain of the ultimate outcome of the case.
In assessing whether we should accrue a liability in our financial statements as a result of the judgment, we considered various factors, including the legal and factual circumstances of the case, the trial record, applicable law, the views of legal counsel and the likelihood of successful appeals. As a result of this review, we concluded that a loss attributable to us from this case is not probable at this time and, therefore, a liability has not been recorded with respect to this case as of September 30, 2026. While we believe it is not probable a loss will occur, the existence of the judgment indicates that it is reasonably possible that a loss could occur. The estimate of the possible range of loss is $0 to the $356.1 million judgment, plus attorneys’ fees in an amount to be determined and post-judgment interest that will accrue during the appeal. Additional developments in the lawsuit could affect these assumptions, and therefore, the amount of any accrual.
We anticipate that one or more bonds will be posted by the defendants to stay enforcement of the judgment pending the appeal, and to the extent we are required to collateralize any portion of the bonds, it may impact our liquidity.
There are various other legal actions arising in the ordinary course of business. In our opinion, the outcome of such matters is not expected to have a material adverse effect on our financial position, results of operations or cash flows. Our accrual for loss contingencies relating to unresolved legal matters was included in "Other liabilities, net" in our balance sheets. Actual losses may differ materially from amounts recorded and the ultimate outcome of these legal proceedings is generally not yet determinable.
As of September 30, 2026, we had committed tenant-related obligations totaling $44.1 million ($41.0 million related to our consolidated entities and $3.1 million related to our unconsolidated real estate ventures at our share). The timing and amounts of payments for tenant-related obligations are uncertain and may only be due upon satisfactory performance of certain conditions.
From time to time, we (or ventures in which we have an ownership interest) have agreed, and may in the future agree with respect to unconsolidated real estate ventures, to (i) guarantee portions of the principal, interest and other amounts in connection with borrowings, (ii) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) in connection with borrowings, or (iii) provide guarantees to lenders and other third parties for the completion and stabilization of development projects. We customarily have
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agreements with our outside venture partners whereby the partners agree to reimburse the real estate venture or us for their share of any payments made under certain of these guarantees. At times, we also have agreements with certain of our outside venture partners whereby we agree to either indemnify the partners and/or the associated ventures with respect to certain contingent liabilities associated with operating assets or to reimburse our partner for its share of any payments made by them under certain guarantees. Guarantees (excluding environmental) customarily terminate either upon the satisfaction of specified circumstances or repayment of the underlying debt. Amounts that we may be required to pay in future periods in relation to guarantees associated with budget overruns or operating losses are not estimable. As of September 30, 2026, we had no principal payment guarantees related to our unconsolidated real estate ventures.
Additionally, with respect to borrowings of our consolidated entities, we may agree to (i) guarantee portions of the principal, interest and other amounts, (ii) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) or (iii) provide guarantees to lenders, tenants and other third parties for the completion and stabilization of development projects. As of September 30, 2026, we had principal payment guarantees related to our consolidated real estate assets of $9.6 million.
As of September 30, 2026, we had unfunded capital commitments totaling $3.8 million related to our investments in real estate-focused technology companies and $3.0 million related to our investments in the WHI Impact Pool and the LEO Impact Housing Fund. See Note 18 for additional information.
18.Transactions with Related Parties
LEO Impact Capital ("LEO"), our workforce housing platform dedicated to acquiring, financing and operating multifamily housing in high impact neighborhoods to preserve affordability for middle-income residents, manages the WHI Impact Pool and the LEO Impact Housing Fund. The WHI Impact Pool completed fundraising in 2020 with capital commitments totaling $114.4 million, which included a commitment from us of $11.2 million. Additionally, in 2025, LEO had an initial closing of its multi-market fund, the LEO Impact Housing Fund, totaling $43.5 million ($64.5 million including accordions), which included a commitment from us of $1.3 million. As of September 30, 2026, our remaining unfunded commitments totaled $3.0 million.
Our third-party real estate services business provides fee-based real estate services to third parties, including the legacy funds formerly organized by The JBG Companies ("JBG") (the "JBG Legacy Funds"). The third-party real estate services revenue, including expense reimbursements, from the WHI Impact Pool, the LEO Impact Housing Fund, the JBG Legacy Funds and their affiliates, was $2.1 million and $6.8 million for the three and nine months ended September 30, 2026, and $2.5 million and $7.3 million for the three and nine months ended September 30, 2025. As of September 30, 2026 and December 31, 2025, we had receivables from the WHI Impact Pool, the LEO Impact Housing Fund, the JBG Legacy Funds and their affiliates totaling $836,000 and $951,000 for such services.
We lease our corporate offices from an unconsolidated real estate venture, in which we have a 20.0% interest, and incurred $1.3 million and $4.0 million of rent expense for the three and nine months ended September 30, 2026, and $1.3 million and $3.9 million of rent expense for the three and nine months ended September 30, 2025, which was included in "General and administrative expense" in our statements of operations.
We have agreements with Building Maintenance Services ("BMS"), an entity in which we have a minor preferred interest, to supervise cleaning, engineering and security services at our properties. We paid BMS $2.8 million and $6.5 million for the three and nine months ended September 30, 2026, and $1.9 million and $6.0 million for the three and nine months ended September 30, 2025, which was included in "Property operating expenses" in our statements of operations.
In connection with the contribution to us of certain assets formerly owned by the JBG Legacy Funds, the general partner and managing member interests in the JBG Legacy Funds that were held by certain former JBG executives (and who became members of our management team and/or Board of Trustees) were not transferred to us and remain under the control of these individuals. In addition, certain members of our senior management team and Board of Trustees have ownership interests in the JBG Legacy Funds, and own carried interests in each fund and in certain of our real estate ventures that entitle them to receive cash payments if the fund or real estate venture achieves certain return thresholds.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. Forward-looking statements include but are not limited to our current expectations regarding the performance of our business, our financial results, our liquidity and capital resources, including the impacts and ultimate outcome of the Wardman Tower litigation and our potential need to post bonds or other forms of surety to support our legal remedies in connection with such litigation. You can find many of these statements by looking for words such as "approximates," "believes," "expects," "anticipates," "estimates," "intends," "plans," "would," "may" or other similar expressions in this Quarterly Report on Form 10-Q. Many of the factors that will determine the outcome of these, and our other forward-looking statements are beyond our ability to control or predict. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission ("SEC") on February 17, 2026 ("Annual Report"), as such factors may be updated from time to time in our periodic filings with the SEC, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report on Form 10-Q and our Annual Report.
For these forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.
Organization and Basis of Presentation
JBG SMITH Properties ("JBG SMITH"), a Maryland real estate investment trust, owns, operates and develops mixed-use properties concentrated in amenity-rich, Metro-served submarkets in and around Washington, D.C., most notably National Landing, where through our focus on placemaking, we cultivate vibrant, highly amenitized, walkable neighborhoods. In addition, our third-party real estate services business provides fee-based real estate services.
Substantially all our assets are held by, and our operations are conducted through JBG SMITH Properties LP, our operating partnership. JBG SMITH is referred to herein as "we," "us," "our" or other similar terms. References to "our share" refer to our ownership percentage of consolidated and unconsolidated assets in real estate ventures, but exclude our 33.5% subordinated interest in four commercial buildings, as well as the associated non-recourse mortgage loans, held through an unconsolidated real estate venture; the interest and debt are excluded because our investment in the real estate venture is zero, we do not anticipate receiving any near-term cash flow distributions from the real estate venture, and we have not guaranteed its obligations or otherwise committed to providing financial support.
References to our financial statements refer to our unaudited condensed consolidated financial statements as of September 30, 2026 and December 31, 2025, and for the three and nine months ended September 30, 2026 and 2025. References to our balance sheets refer to our condensed consolidated balance sheets as of September 30, 2026 and December 31, 2025. References to our statements of operations refer to our condensed consolidated statements of operations for the three and nine months ended September 30, 2026 and 2025. References to our statements of cash flows refer to our condensed consolidated statements of cash flows for the nine months ended September 30, 2026 and 2025.
The accompanying financial statements and notes are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.
Our three operating and reportable segments are multifamily, commercial and third-party real estate services.
Our revenue and expenses are, to some extent, subject to seasonality during the year, which impacts quarterly net earnings, cash flows and funds from operations; this seasonality affects the sequential comparison of our results in individual quarters over time. For instance, we have historically experienced higher utility costs in the first and third quarters of the year.
We compete with many property owners, investors and developers. Our success depends upon, among other factors, trends affecting national and local economies, the financial condition and operating results of current and prospective tenants, the availability and cost of capital, interest rates, construction and renovation costs, taxes, governmental regulations and legislation, population trends, zoning laws, and our ability to lease, sublease or sell our assets at profitable levels. Our success is also subject to our ability to refinance existing debt with acceptable terms as it comes due.
Overview
We continue to implement our comprehensive plan to reposition our holdings in National Landing by executing a broad array of placemaking strategies. Our placemaking includes the delivery of new multifamily assets, subject to demand; the delivery of redeveloped and new office assets; amenity retail; and thoughtful improvements to the streetscape, sidewalks, parks and other outdoor gathering spaces. In keeping with our dedication to placemaking, each new project is intended to contribute to an authentic and distinct neighborhood by creating a vibrant street environment with robust retail offerings and other amenities, including improved public spaces. In the second quarter of 2026, we completed construction of an office amenity hub at 2011 Crystal Drive. The repositioned asset brings to National Landing a large-scale externally managed meeting and conference facility, a coffee shop and all-day restaurant, an elevated wine bar and Italian restaurant, and an activated public lobby.
Outlook
Our capital allocation strategy remains focused on enhancing long-term shareholder value and positioning our portfolio for sustained long-term net asset value ("NAV") per share growth. Drawing on our deep expertise in mixed-use, urban infill real estate, we have consistently rotated across asset classes based on relative value, cost of capital and risk-adjusted return potential. In today’s market environment, we believe that distressed office investment opportunities and share repurchases offer compelling economics. Consequently, we are actively pursuing new growth opportunities that align with our strategy and leverage our competitive strengths as a mixed-use owner, operator and developer. We expect to fund growth opportunities and share repurchases through a combination of asset sales and joint ventures. During the nine months ended September 30, 2026: we sold two development parcels; we sold a 70.0% interest in 2200 Crystal Drive to an unconsolidated real estate venture; and we recapitalized Tysons Dulles Plaza by selling a 50.0% noncontrolling interest in a consolidated real estate venture. Additionally, in October 2026, we recapitalized 800 North Glebe Road by selling a 90.0% interest in an unconsolidated real estate venture, and we admitted additional partners to the Dulles View real estate venture whose indirect ownership interest in the real estate venture equals 30.0%. These joint ventures further our strategy of attracting third-party capital partners to expand and diversify our office investment platform while enhancing the efficiency of our business through incremental fee revenue and potential carried interest opportunities. More broadly, they demonstrate our ability to
33
create value through our operating platform while maintaining the potential for future upside and preserving capital and financial flexibility for additional investment opportunities.
During this summer’s peak leasing season, our same store multifamily portfolio re-stabilized and demonstrated encouraging demand even after the economic disruption the region experienced over the past year as a result of job losses primarily in the District of Columbia in 2025 due to federal government spending cuts and a hiring freeze. Across the D.C. metro region, and especially in Northern Virginia, multifamily fundamentals continue to benefit from historically low levels of new supply and the region’s long-term demand drivers, including growing investment in the defense, intelligence, and technology sectors. Our same store multifamily portfolio was 94.4% leased as of September 30, 2026, up 90 basis points compared to June 30, 2026. Our same store multifamily portfolio was 93.1% occupied as of September 30, 2026, up 270 basis points compared to June 30, 2026. During the third quarter of 2026, effective rents, which represent the average change in rental rates versus expiring rental rates net of concessions, decreased by 9.6% for new leases and increased by 2.7% upon renewal while achieving a 56.8% renewal rate across our portfolio. We continue to make progress leasing our recently completed assets — The Grace and Reva were 94.7% leased, and The Zoe and Valen were 81.1% leased as of September 30, 2026.
Our office portfolio was 78.5% leased as of September 30, 2026, an increase of 50 basis points compared to June 30, 2026. Our office portfolio was 76.8% occupied as of September 30, 2026, an increase of 140 basis points compared to June 30, 2026. During the three months ended September 30, 2026, we executed 193,000 square feet of office leases at our share. Demand for space in National Landing and throughout Northern Virginia remains strong, particularly among defense technology, cybersecurity, artificial intelligence and government contracting companies. Our leasing pipeline continues to strengthen and increasingly reflects the growth of these sectors, with tenants seeking proximity to the Pentagon, secure facilities, technical talent and the highly amenitized environment we have created. To support a healthier long-term office market in National Landing, we have reduced our office inventory by more than 25% since our formation by repurposing older, underutilized office buildings for redevelopment or conversion to multifamily housing, hospitality and other complementary uses that create a vibrant mixed-use environment. Over the past year, we expanded this strategy through adaptive reuse and conversion of four obsolete office buildings. We entitled 2100 Crystal Drive for conversion into a 345-key, dual-branded hotel before selling the asset to a hotel developer. We recapitalized and commenced construction on the conversion of 2200 Crystal Drive into a 195-unit multifamily asset. We recently received entitlement approval to convert 1800 and 1901 South Bell Street into multifamily, advancing the next phase of inventory reduction and repositioning within the submarket. Our leasing efforts continue to focus on buildings with long-term potential, concentrating occupancy in areas of National Landing that are accessible via multi-modal transportation and that we have enhanced through our placemaking interventions, including the recent delivery of our new office amenity hub at 2011 Crystal Drive.
We have 4.8 million square feet (3.5 million square feet at our share) of estimated potential development density in our development pipeline and intend to seek joint venture capital to fund these developments as market conditions permit.
Operating Results
Key highlights for the three and nine months ended September 30, 2026 included:
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Additionally, investing and financing activity during the nine months ended September 30, 2026 included:
Activity subsequent to September 30, 2026 included:
Critical Accounting Estimates
Our Annual Report contains a description of our critical accounting estimates, including asset acquisitions, real estate, investments in real estate ventures and revenue recognition. There have been no significant changes to our policies during the nine months ended September 30, 2026.
See Note 2 to the financial statements for a description of recent accounting pronouncements.
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Results of Operations
In 2026, we sold two development parcels and an interest in 2200 Crystal Drive to an unconsolidated real estate venture. In 2025, we sold 8001 Woodmont, WestEnd25 and The Batley. We collectively refer to these assets as the "Disposed Properties" in the discussion below. In 2025, we acquired Tysons Dulles Plaza, which was recapitalized in April 2026 through the formation of a consolidated real estate venture, and the remaining 45.0% interest in an unconsolidated real estate venture that owned 1101 17th Street. In 2025, we began leasing The Zoe and Valen, and in 2024, we began leasing The Grace and Reva.
Comparison of the Three Months Ended September 30, 2026 to 2025
The following table summarizes certain line items from our statements of operations that we believe are important in understanding our operations and/or those items which significantly changed in the three months ended September 30, 2026 compared to the same period in 2025:
% Change
(Dollars in thousands)
3.9
%
Third-party real estate services revenue, including reimbursements
24.2
(7.4)
Property operating expense
9.3
Real estate taxes expense
(15.9)
General and administrative expense:
(5.1)
16.9
5.9
*
* Not meaningful.
Property rental revenue increased by approximately $4.1 million, or 3.9%, to $108.1 million in 2026 from $104.0 million in 2025. The increase was primarily due to a $3.1 million increase in revenue from our commercial assets and a $2.2 million increase in revenue from our multifamily assets, partially offset by a $1.2 million decrease in other revenue. The increase in revenue from our commercial assets was primarily due to a $2.1 million increase related to the consolidation of 1101 17th Street. The increase in revenue from our multifamily assets was primarily due to a $4.1 million increase related to the continued lease up of The Grace, Reva, The Zoe and Valen, partially offset by a $791,000 decrease due to higher concessions across the portfolio, a $568,000 decrease due to the conversion of 900 W Street from a short-term rental property to a traditional multifamily asset, and a $434,000 decrease related to the Disposed Properties.
Third-party real estate services revenue, including reimbursements, increased by approximately $3.6 million, or 24.2%, to $18.3 million in 2026 from $14.7 million in 2025. The increase was primarily due to a $2.4 million increase in reimbursement revenue and a $507,000 increase in other service revenue.
Depreciation and amortization expense decreased by approximately $3.6 million, or 7.4%, to $44.6 million in 2026 from $48.2 million in 2025. The decrease was primarily due to (i) a $3.8 million decrease related to certain assets being either fully depreciated or written off in 2025 and (ii) an $871,000 decrease related to the Disposed Properties, partially offset by (iii) a $766,000 increase as Valen was placed into service.
Property operating expense increased by approximately $3.4 million, or 9.3%, to $40.0 million in 2026 from $36.6 million in 2025. The increase was primarily due to a $3.0 million increase in property operating expense from our commercial assets and a $1.1 million increase from our multifamily assets, partially offset by a $663,000 decrease in other property operating expense. The increase in property operating expense from our commercial assets was primarily due to a $946,000 increase in operating expenses at the amenity hub at 2011 Crystal Drive, an $855,000 increase related to the consolidation of 1101 17th Street and higher operating expenses across the portfolio primarily due to utilities. The increase in property operating expense from our multifamily assets was primarily due to a $1.2 million increase related to the continued lease
36
up of The Grace, Reva, The Zoe and Valen, and higher operating expenses primarily due to utilities, partially offset by a $371,000 decrease related to the Disposed Properties. The decrease in other property operating expense was primarily due to the Disposed Properties.
Real estate taxes expense decreased by approximately $1.9 million, or 15.9%, to $10.3 million in 2026 from $12.3 million in 2025. The decrease was primarily due to a $452,000 decrease related to the Disposed Properties and lower property tax assessments for certain assets.
General and administrative expense: corporate and other decreased by approximately $668,000, or 5.1%, to $12.5 million in 2026 from $13.2 million in 2025. The decrease was primarily due to lower compensation expenses, partially offset by a decrease in capitalized payroll.
General and administrative expense: third-party real estate services increased by approximately $2.4 million, or 16.9%, to $16.4 million in 2026 from $14.1 million in 2025. The increase was primarily due to an increase in third-party reimbursable expenses.
Interest expense increased by approximately $2.1 million, or 5.9%, to $36.8 million in 2026 from $34.8 million in 2025. The increase was primarily due to (i) a $1.2 million decrease in capitalized interest primarily related to Valen, which was placed into service, (ii) a $1.0 million increase due to higher interest expense on our revolving credit facility and term loans, (iii) a $349,000 increase related to the consolidation of 1101 17th Street and (iv) a $367,000 increase due to a new mortgage loan on Tysons Dulles Plaza. The increase in interest expense was partially offset by (v) a $674,000 decrease related to variable rate mortgage loans.
Impairment loss of $69.2 million in 2026 was related to 800 North Glebe Road, which was written down to its estimated fair value. Impairment loss of $4.8 million in 2025 was related to 2200 Crystal Drive, which was written down to its estimated fair value.
Comparison of the Nine Months Ended September 30, 2026 to 2025
The following table summarizes certain line items from our statements of operations that we believe are important in understanding our operations and/or those items which significantly changed in the nine months ended September 30, 2026 compared to the same period in 2025:
2.8
18.1
(6.0)
6.9
(6.5)
(5.0)
14.0
118.8
2.7
(56.2)
154.6
Property rental revenue increased by approximately $8.6 million, or 2.8%, to $320.6 million in 2026 from $312.0 million in 2025. The increase was primarily due to an $18.5 million increase in revenue from our commercial assets, partially offset by a $6.9 million decrease in revenue from our multifamily assets and a $3.0 million decrease in other revenue. The increase in revenue from our commercial assets was primarily due to a $10.9 million increase related to the acquisition of Tysons Dulles Plaza and the consolidation of 1101 17th Street, and a $4.4 million increase related to 2011 Crystal Drive and 1550 Crystal Drive due to the acceleration of lease incentives and deferred rent, as well as the recognition of lease termination revenue associated with early terminations, and a $2.8 million increase related to the commencement of leases at 251 18th
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Street S. and 201 12th Street S. The decrease in revenue from our multifamily assets was primarily due to a $16.4 million decrease related to the Disposed Properties, a $1.5 million decrease due to higher concessions across the portfolio, a $1.1 million decrease due to lower occupancy at RiverHouse Apartments and a $960,000 decrease due to the conversion of 900 W Street from a short-term rental property to a traditional multifamily asset, partially offset by a $12.3 million increase related to the continued lease up of The Grace, Reva, The Zoe and Valen. The decrease in other revenue was primarily due to a $1.4 million decrease related to the Disposed Properties and a $1.4 million decrease related to taking 1831/1861 Wiehle Avenue out of service.
Third-party real estate services revenue, including reimbursements, increased by approximately $8.1 million, or 18.1%, to $52.5 million in 2026 from $44.4 million in 2025. The increase was primarily due to a $6.7 million increase in reimbursement revenue.
Depreciation and amortization expense decreased by approximately $8.6 million, or 6.0%, to $134.7 million in 2026 from $143.3 million in 2025. The decrease was primarily due to (i) a $9.8 million decrease related to certain assets being either fully depreciated or written off in 2025 and (ii) a $6.2 million decrease related to the Disposed Properties. The decrease in depreciation and amortization expense was partially offset by (iii) a $5.2 million increase related to The Zoe and Valen, which were placed into service, and (iv) a $2.4 million increase related to the acquisition of Tysons Dulles Plaza and the consolidation of 1101 17th Street.
Property operating expense increased by approximately $7.3 million, or 6.9%, to $112.1 million in 2026 from $104.9 million in 2025. The increase was primarily due to an $8.0 million increase in property operating expense from our commercial assets and a $593,000 increase from our multifamily assets, partially offset by a $1.4 million decrease in other property operating expense. The increase in property operating expense from our commercial assets was primarily due to a $5.0 million increase related to the acquisition of Tysons Dulles Plaza and the consolidation of 1101 17th Street, a $2.0 million increase in operating expenses at the amenity hub at 2011 Crystal Drive and higher operating expenses across the portfolio primarily due to utilities. The increase in property operating expense from our multifamily assets was primarily due to a $4.3 million increase related to the continued lease up of The Grace, Reva, The Zoe and Valen, and higher operating expenses primarily due to utilities, partially offset by a $5.1 million decrease related to the Disposed Properties. The decrease in other property operating expense was primarily due to a $1.3 million decrease related to the Disposed Properties.
Real estate taxes expense decreased by approximately $2.4 million, or 6.5%, to $34.7 million in 2026 from $37.1 million in 2025. The decrease was primarily due to a $2.1 million decrease related to the Disposed Properties and lower property tax assessments for certain assets, partially offset by a $1.2 million increase related to The Zoe and Valen, which were placed into service, and a $1.0 million increase related to the acquisition of Tysons Dulles Plaza and the consolidation of 1101 17th Street.
General and administrative expense: corporate and other decreased by approximately $2.3 million, or 5.0%, to $43.2 million in 2026 from $45.5 million in 2025. The decrease was primarily due to a decrease in professional fees and other overhead expenses and lower compensation expenses, partially offset by a decrease in capitalized payroll.
General and administrative expense: third-party real estate services increased by approximately $6.1 million, or 14.0%, to $49.8 million in 2026 from $43.7 million in 2025. The increase was primarily due to an increase in third-party reimbursable expenses and higher compensation expenses, partially offset by lower overhead expenses.
Transaction and other costs increased by approximately $6.2 million, or 118.8%, to $11.5 million in 2026 from $5.3 million in 2025. The increase was primarily due to (i) a $9.5 million charge, net of insurance recoveries, related to a criminal fraud scheme involving AI-enabled employee impersonation, which led to fraudulently induced wire transfers, partially offset by (ii) a $2.0 million decrease in completed, potential and pursued transaction expenses, and (iii) a $1.6 million decrease in severance and other costs. See Note 12 to the financial statements for additional information.
Interest expense increased by approximately $2.9 million, or 2.7%, to $108.4 million in 2026 from $105.6 million in 2025. The increase was primarily due to (i) a $5.2 million decrease in capitalized interest primarily related to Valen, which was placed into service, (ii) a $2.1 million increase due to higher interest expense on our revolving credit facility and term loans, (iii) a $1.4 million increase related to the consolidation of 1101 17th Street, (iv) a $615,000 increase due to a new mortgage loan on Tysons Dulles Plaza and (v) a $415,000 increase due to draws on the mortgage loan on The Zoe and Valen. The
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increase in interest expense was partially offset by (vi) a $2.7 million decrease related to mortgage loans on the Disposed Properties, (vii) a $2.7 million decrease related to variable rate mortgage loans and (viii) a $1.4 million decrease related to the refinancing of the mortgage loan on RiverHouse Apartments in March 2025.
Gain on the sale of real estate of $20.6 million in 2026 was primarily due to the sale of a development parcel. Gain on the sale of real estate of $47.0 million in 2025 was primarily due to the sale of WestEnd25.
Impairment loss of $114.7 million in 2026 was primarily related to 800 North Glebe Road, which was written down to its estimated fair value, and the impairment of capitalized costs associated with a pre-development project whose future development was determined to no longer be probable. Impairment loss of $45.1 million in 2025 was related to The Batley, 2200 Crystal Drive and a development parcel, which were written down to their estimated fair value.
Funds from Operations ("FFO")
FFO is a non-GAAP financial measure computed in accordance with the definition established by the National Association of Real Estate Investment Trusts ("Nareit") in the Nareit FFO White Paper - 2018 Restatement. Nareit defines FFO as net income (loss) (computed in accordance with GAAP), excluding depreciation and amortization expense related to real estate, gains (losses) from the sale of certain real estate assets, gains (losses) from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, including our share of such adjustments for unconsolidated real estate ventures.
We believe FFO is a meaningful non-GAAP financial measure useful in comparing our levered operating performance from period-to-period and as compared to similar real estate companies because FFO excludes real estate depreciation and amortization expense, which implicitly assumes that the value of real estate diminishes predictably over time rather than fluctuating based on market conditions and other non-comparable income and expenses. FFO does not represent cash generated from operating activities and is 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 may not be comparable to similarly titled measures used by other companies.
The following table reconciles net loss attributable to common shareholders, the most directly comparable GAAP measure, to FFO:
(Gain) loss on the sale of real estate, net
213
(4,660)
Pro rata share of (gain) loss on the sale of unconsolidated real estate assets
39
(1,500)
Real estate depreciation and amortization
44,305
47,837
133,832
140,306
Impairment loss related to real estate
Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures
970
777
2,919
2,342
FFO attributable to noncontrolling interests in consolidated real estate ventures
(1,245)
(905)
(3,425)
(1,175)
FFO attributable to common limited partnership units ("OP Units")
13,197
12,808
31,811
26,120
FFO attributable to redeemable noncontrolling interests
(2,790)
(2,679)
(6,808)
(5,217)
FFO attributable to common shareholders
10,407
10,129
25,003
20,903
Note: The prior year FFO amounts have been restated to conform to the current year presentation.
NOI and Same Store NOI
NOI and same store NOI are non-GAAP financial measures management uses to assess an asset'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 and same store NOI provide 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) less operating expenses and ground rent for operating leases, if applicable. NOI and same store NOI exclude deferred rent, commercial lease termination revenue, related party management fees, interest expense, and certain other non-cash adjustments, including the accretion of acquired below-market leases and the amortization of acquired above-market leases and below-market ground lease intangibles. Management uses NOI, which includes our proportionate share of revenue and expenses attributable to real estate ventures, as a supplemental performance measure and believes it provides useful information to investors because it reflects only those revenue and expense items that are incurred at the asset level, excluding non-cash items. In addition, NOI is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets. However, because NOI excludes depreciation and amortization expense and captures neither the changes in the value of our assets that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our assets, all of which have real economic effect and could materially impact the financial performance of our assets, the utility of NOI as a measure of the operating performance of our assets is limited. NOI presented by us may not be comparable to NOI reported by other REITs that define these measures differently. We believe 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.
Information provided on a same store basis includes the results of properties that are owned, operated and in-service for the entirety of both periods being compared, which excludes disposed properties or properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared. During the three months ended September 30, 2026, our same store pool increased from 32 properties to 35 properties due to the inclusion of The Grace, Reva and Tysons Dulles Plaza, which were in service the entirety of the comparable periods. During the nine months ended September 30, 2026, our same store pool decreased to 32 properties from 33 properties due to 1831/1861 Wiehle Avenue being taken out of service. While there is judgment surrounding changes in designations, a property is removed from the same store pool when the property is considered to be under construction because it is undergoing significant redevelopment or renovation pursuant to a formal plan or is being repositioned in the market and such renovation or repositioning is expected to have a significant impact on property NOI. A development property or under-construction property is moved to the same store pool once a substantial portion of the growth expected from the development or redevelopment is reflected in both the current and comparable prior year period. Acquisitions are moved into the same store pool once we have owned the property for the entirety of the comparable periods and the property is not under significant development or redevelopment.
Same store NOI increased $1.9 million, or 3.3%, to $60.8 million for the three months ended September 30, 2026 from $58.8 million for the same period in 2025. The increase in our commercial portfolio same store NOI was substantially attributable to higher rental revenue and lower real estate taxes, partially offset by higher utilities expense, and the decrease in our multifamily portfolio same store NOI was substantially attributable to lower rental revenue. Same store NOI decreased $3.9 million, or 2.3%, to $164.0 million for the nine months ended September 30, 2026 from $167.8 million for the same period in 2025. The decrease was substantially attributable to lower rental revenue and higher utilities expense and real estate taxes expense in our multifamily portfolio.
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The following table reconciles net loss attributable to common shareholders to NOI at our share and same store NOI at our share:
926
643
Third-party real estate services, including reimbursements revenue
1,293
1,012
3,690
3,289
(1,580)
(915)
(4,203)
(1,187)
(2,129)
1,561
(6,774)
4,071
1,794
(3,083)
2,433
(984)
(622)
(1,425)
(4,854)
5,189
Less: out-of-service NOI loss (3) (4)
(875)
(1,677)
(3,628)
(5,366)
Operating Portfolio NOI (4)
64,111
60,563
188,862
195,177
Non-same store NOI (4) (5)
3,342
1,743
24,898
27,351
Same store NOI (4) (6)
60,769
58,820
163,964
167,826
Change in same store NOI
3.3%
(2.3%)
Number of properties in same store pool
Reportable Segments
Our three operating and reportable segments are multifamily, commercial, and third-party real estate services. We measure and evaluate the performance of our operating segments, with the exception of the third-party real estate services business, based on NOI at our share, which includes our proportionate share of revenue and expenses attributable to real estate ventures.
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The following table summarizes NOI at our share for our multifamily and commercial segments:
(Dollars in thousands, at our share)
4.6
3.3
(4.9)
22.4
4.4
4.7
0.1
(25.5)
5.2
5.7
12.5
21.5
2.1
6.7
14.4
3.7
4.9
6.1
(6.1)
3.8
4.3
10.2
6.6
(17.2)
0.4
8.2
5.3
30.0
(5.6)
8.4
(0.2)
11.1
1.2
5.6
(11.3)
3.4
Multifamily: Property revenue at our share increased by $2.1 million, or 4.4%, to $50.4 million in 2026 from $48.3 million in 2025. The increase in property revenue at our share was primarily due to the continued lease up of The Grace, Reva, The Zoe and Valen, partially offset by higher concessions across the portfolio. NOI at our share increased by $1.3 million, or 4.9%, to $27.5 million in 2026 from $26.2 million in 2025. The increase in NOI at our share was primarily due to the continued lease up of The Grace, Reva, The Zoe and Valen, partially offset by higher concessions and higher property operating expenses primarily due to higher utilities across the portfolio.
Commercial: Property revenue at our share increased by $2.7 million, or 4.7%, to $59.5 million in 2026 from $56.8 million in 2025. NOI at our share increased by $2.0 million, or 6.1%, to $35.3 million in 2026 from $33.3 million in 2025. The increases in property revenue at our share and NOI at our share were primarily due to the acquisition of Dulles View, the consolidation of 1101 17th Street and higher rental revenue across the portfolio, partially offset by the recapitalization of Tysons Dulles Plaza.
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Multifamily: Property revenue at our share decreased by $9.4 million, or 6.0%, to $148.3 million in 2026 from $157.7 million in 2025. NOI at our share decreased by $10.2 million, or 11.3%, to $80.4 million in 2026 from $90.7 million in 2025. The decreases in property revenue at our share and NOI at our share were primarily due to the Disposed Properties, partially offset by the continued lease up of The Grace, Reva, The Zoe and Valen.
Commercial: Property revenue at our share increased by $7.1 million, or 4.3%, to $173.7 million in 2026 from $166.5 million in 2025. NOI at our share increased by $3.5 million, or 3.4%, to $104.5 million in 2026 from $101.1 million in 2025. The increases in property revenue at our share and NOI at our share were primarily due to the acquisitions of Dulles View and Tysons Dulles Plaza, and the consolidation of 1101 17th Street.
With respect to the third-party real estate services business, we review revenue streams generated by this segment, excluding reimbursement revenue, as well as the expenses attributable to this segment at our proportionate share, calculated by excluding real estate services revenue from our interests in real estate ventures. The following table summarizes our third-party real estate services business at our share:
Third-party real estate services revenue, excluding reimbursements, increased by $1.4 million, or 21.4%, to $8.0 million in 2026 from $6.6 million in 2025. The increase was primarily due to a $572,000 increase in other service revenue, a $340,000 increase in development fees and a $217,000 increase in construction management fees. Third-party real estate services expenses, excluding reimbursements, increased by $73,000, or 1.3%, to $5.8 million in 2026 from $5.7 million in 2025. The increase was primarily due to higher compensation expenses, partially offset by lower overhead expenses.
Third-party real estate services revenue, excluding reimbursements, increased by $1.8 million, or 9.3%, to $21.6 million in 2026 from $19.8 million in 2025. The increase was primarily due to a $1.0 million increase in asset management fees, a $982,000 increase in other service revenue and a $342,000 increase in property management fees, partially offset by a $979,000 decrease in leasing fees. Third-party real estate services expenses, excluding reimbursements, decreased by $275,000, or 1.5%, to $18.1 million in 2026 from $18.4 million in 2025. The decrease was primarily due to lower overhead expenses, partially offset by higher compensation expenses.
Liquidity and Capital Resources
Property rental income is our primary source of operating cash flow and depends on many factors including occupancy levels and rental rates, as well as our tenants' ability to pay rent. In addition, our third-party real estate services business provides fee-based real estate services. Our assets provide cash flow that enables us to pay operating expenses, debt service, recurring capital expenditures, dividends to shareholders, and distributions to holders of OP Units and long-term incentive partnership units ("LTIP Units"). Other sources of liquidity to fund cash requirements include proceeds from financings,
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recapitalizations, asset sales, and the issuance and sale of securities. We anticipate that cash flows from continuing operations and proceeds from financings, asset sales and recapitalizations, together with existing cash balances, will be adequate to fund our business operations, debt amortization, capital expenditures, any dividends to shareholders, and distributions to holders of OP Units and LTIP Units.
With respect to the litigation discussed in Note 17 to the financial statements, we anticipate that one or more bonds will be posted by the defendants to stay enforcement of the judgment pending the appeal. The amount and structure of any bonds have not yet been determined. The range of outcomes is such that the posting of these bonds could range anywhere from having no material impact on our liquidity to materially impacting our liquidity primarily based on the potential collateral requirements (e.g., cash, letters of credit or other assets).
Unamortized deferred financing costs and premium/discount, net (4)
As of September 30, 2026 and December 31, 2025, we had various interest rate swap and cap agreements on certain mortgage loans with an aggregate notional value of $756.0 million. See Note 15 to the financial statements for additional information.
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Our Board of Trustees previously authorized the repurchase of up to $2.0 billion of our outstanding common shares. In October 2026, our Board of Trustees increased our common share repurchase authorization to $2.3 billion. During the nine months ended September 30, 2026, we repurchased and retired 1.8 million common shares for $28.4 million, a weighted average purchase price per share of $15.35. During the three and nine months ended September 30, 2025, we repurchased
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and retired 3.1 million and 26.4 million common shares for $62.9 million and $435.3 million, a weighted average purchase price per share of $20.21 and $16.46. Since we began the share repurchase program through September 30, 2026, we have repurchased and retired 85.5 million common shares for $1.6 billion, a weighted average purchase price per share of $18.72.
Purchases under the program are made either in the open market or in privately negotiated transactions from time to time as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by us at our discretion and will be subject to economic and market conditions, share price, applicable legal requirements and other factors. The program may be suspended or discontinued at our discretion without prior notice.
Material Cash Requirements
Our material cash requirements for the next 12 months and beyond are to fund:
We expect to satisfy these needs using one or more of the following:
During the nine months ended September 30, 2026, there were no significant changes to the material cash requirements information presented in Item 7 of Part II of our Annual Report. However, as discussed in Note 7 to the financial statements, we amended the revolving credit facility in August 2026 that extended its maturity date to August 2030.
See additional information in the following pages under "Commitments and Contingencies."
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Summary of Cash Flows
The following summary discussion of our cash flows is based on our statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows:
Cash Flows for the Nine Months Ended September 30, 2026
Cash and cash equivalents, and restricted cash increased $743,000 to $104.0 million as of September 30, 2026, compared to $103.3 million as of December 31, 2025. This increase resulted from $37.9 million of net cash provided by operating activities, partially offset by $21.3 million of net cash used in financing activities and $15.8 million of net cash used in investing activities.
Net cash provided by operating activities of $37.9 million comprised: (i) $54.3 million of net income (before $270.6 million of non-cash items and a $20.6 million gain on the sale of real estate) and (ii) $2.5 million of return on capital from unconsolidated real estate ventures, partially offset by (iii) $18.8 million of net change in operating assets and liabilities. Non-cash income adjustments of $270.6 million primarily include depreciation and amortization expense, impairment loss and share-based compensation expense.
Net cash used in investing activities of $15.8 million primarily comprised: (i) $63.4 million of development costs, construction in progress and real estate additions, partially offset by (ii) $49.6 million of proceeds from the sale of real estate.
Net cash used in financing activities of $21.3 million primarily comprised: (i) $88.0 million of repayments on the revolving credit facility, (ii) $30.9 million of dividends paid to common shareholders, (iii) $28.4 million of common shares repurchased, (iv) $11.6 million of debt issuance and modification costs, (v) $10.5 million of distributions to redeemable noncontrolling interests and (vi) $4.5 million of repayments of mortgage loans, partially offset by (vii) $105.0 million of borrowings under the revolving credit facility, (viii) $25.4 million of borrowings under mortgage loans, (ix) $15.0 million of borrowings under the Tranche A-2 Term Loan and (x) $11.8 million of proceeds from the sale of a noncontrolling interest in Tysons Dulles Plaza.
Unconsolidated Real Estate Ventures
We consolidate entities in which we have a controlling interest or are the primary beneficiary in a variable interest entity. From time to time, we may have off-balance-sheet unconsolidated real estate ventures and other unconsolidated arrangements with varying structures.
As of September 30, 2026, we had investments in unconsolidated real estate ventures totaling $114.5 million. For these investments, we exercise significant influence over but do not control these entities and, therefore, account for these investments using the equity method of accounting. For a more complete description of our real estate ventures, see Note 4 to the financial statements.
From time to time, we (or ventures in which we have an ownership interest) have agreed, and may in the future agree with respect to unconsolidated real estate ventures, to (i) guarantee portions of the principal, interest and other amounts in connection with borrowings, (ii) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) in connection with borrowings or (iii) provide guarantees to lenders and other third parties for the completion and stabilization of development projects. We customarily have agreements with our outside venture partners whereby the partners agree to reimburse the real estate venture or us for their share of any payments made under certain of these guarantees. At times, we also have agreements with certain of our outside venture partners whereby we agree to either indemnify the partners and/or the associated ventures with respect to certain contingent liabilities associated with operating assets or to reimburse our partner for its share of any payments made by
them under certain guarantees. Guarantees (excluding environmental) customarily terminate either upon the satisfaction of specified circumstances or repayment of the underlying debt. Amounts that we may be required to pay in future periods in relation to guarantees associated with budget overruns or operating losses are not estimable. As of September 30, 2026, we had no principal payment guarantees related to our unconsolidated real estate ventures.
Commitments and Contingencies
In November 2023, the District of Columbia filed a lawsuit in the Superior Court of the District of Columbia (the "Court") against RealPage, Inc., a provider of revenue management systems, numerous multifamily rental companies, and 14 owners and/or operators of multifamily housing in the District of Columbia, including JBG Associates, L.L.C., one of our subsidiaries, alleging that the defendants violated the District of Columbia Antitrust Act by unlawfully agreeing to use RealPage, Inc. revenue management systems and sharing sensitive data. The District of Columbia is seeking monetary damages, equitable relief, attorneys’ fees, interest and costs. On September 17, 2026, JBG Associates, L.L.C. and the District of Columbia resolved the matter via a Consent Judgment and Order entered by the Court under which JBG Associates, L.L.C. agreed to certain injunctive relief and to remit a settlement payment of $8.1 million to the District of Columbia. Per the Consent Judgment and Order, nothing set forth in the order, including the settlement payment, shall be deemed or construed to be an admission by JBG Associates, L.L.C. or evidence of any wrongdoing or violation of law by JBG Associates, L.L.C. or as evidence of the truth of any of the claims or allegations made in the lawsuit.
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As of September 30, 2026, we had unfunded capital commitments totaling $3.8 million related to our investments in real estate-focused technology companies and $3.0 million related to our investments in the Washington Housing Initiative Impact Pool and the LEO Impact Housing Fund. See Note 18 to the financial statements for additional information.
With respect to borrowings of our consolidated entities, we may agree to (i) guarantee portions of the principal, interest and other amounts, (ii) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) or (iii) provide guarantees to lenders, tenants and other third parties for the completion and stabilization of development projects. As of September 30, 2026, we had principal payment guarantees related to our consolidated real estate assets of $9.6 million.
Under various federal, state and local laws, ordinances and regulations, a current or former owner or operator of real estate may be liable for conducting or paying for the costs of the investigation, removal or remediation of certain hazardous or toxic substances or petroleum products on, under or from that real estate. These laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence or release of hazardous or toxic substances or petroleum products, and the liability may be joint and several. The costs of investigation, remediation or removal of these substances may be substantial and could exceed the value of the property, and the presence of these substances, or the failure to promptly remediate these substances, may adversely affect the owner's ability to sell, operate, or develop the real
estate or to borrow using the real estate as collateral. In connection with the ownership and operation of our current and former assets, we may be potentially liable for these costs. The operations of current and former tenants at our assets have involved, or may have involved, the presence or use of hazardous substances or petroleum products or the generation of hazardous wastes, and indemnities in our lease agreements may not fully protect us from liability, if, for example, a tenant responsible for environmental noncompliance or contamination becomes insolvent. The release of these hazardous substances and wastes and petroleum products could result in us incurring liabilities to investigate or remediate any resulting contamination. The presence of contamination or the failure to remediate contamination at our properties may (i) expose us to third-party liability (e.g., for cleanup costs, natural resource damages, bodily injury or property damage), (ii) subject our properties to liens in favor of the government for damages and costs the government incurs in connection with the contamination, (iii) impose restrictions on the manner in which a property may be used or businesses may be operated, or (iv) materially adversely affect our ability to sell, lease or develop the real estate or to borrow using the real estate as collateral. In addition, our assets are exposed to the risk of contamination originating from other sources. While a property owner may not be responsible for remediating contamination that has migrated onsite from an identifiable and viable offsite source, the contaminant's presence can have adverse effects on operations and the redevelopment of our assets. To the extent we arrange for contaminated materials to be sent to other locations for treatment or disposal, we may be liable for the cleanup of those sites if they become contaminated, without regard to whether we complied with environmental laws in doing so.
Most of our assets have been subject, at some point, to environmental assessments that are intended to evaluate the environmental condition of the subject and surrounding assets. These environmental assessments generally have included a historical review, a public records review, a visual inspection of the site and surrounding assets, visual or historical evidence of underground storage tanks and other features, and the preparation and issuance of a written report. Soil, soil vapor and/or groundwater subsurface testing is conducted at our assets, when necessary, to further investigate any conditions identified by the initial assessment that could reasonably be expected to pose a material concern to the property or result in us incurring material environmental liabilities as a result of redevelopment. The tests may not, however, have included extensive sampling or subsurface investigations. In each case where the environmental assessments have identified conditions requiring remedial actions required by law, we have initiated appropriate actions. The environmental assessments have not revealed any material environmental contamination that we believe would have a material adverse effect on our overall business, financial condition or results of operations, or that have not been anticipated and remediated during site redevelopment as required by law. Nevertheless, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites or changes in cleanup requirements would not result in significant cost to us. As disclosed in Note 17 to the financial statements, environmental liabilities totaled $5.8 million and $17.5 million as of September 30, 2026 and December 31, 2025, and were included in "Other liabilities, net" in our balance sheets.
50
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
We have exposure to fluctuations in interest rates, which are sensitive to many factors that are beyond our control. The following table summarizes our annual exposure to a change in interest rates:
Weighted
Average
Annual
Effect of 1%
Interest
Change in
Balance
Rate
Base Rates
Debt (contractual balances):
Mortgage loans:
Variable rate (1)
3,317
5.19%
Fixed rate (2)
5.17%
Revolving credit facility and term loans:
Revolving credit facility (3)
2,251
5.46%
5.44%
4.30%
152
Total (4)
2023 Term Loan (4)
5.51%
957,000
2,403
925,000
Pro rata share of debt of unconsolidated real estate ventures (contractual balances):
35,000
164
5.04%
The fair value of our mortgage loans is estimated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit profiles based on market sources. The fair value of our revolving credit facility and term loans is calculated based on the net present value of payments over the term of the facilities using estimated market rates for similar notes and remaining terms. As of September 30, 2026 and December 31, 2025, the estimated fair value of our consolidated debt was $2.6 billion and $2.5 billion. These estimates of fair value, which are made at the end of the reporting period, may be different from the amounts that may ultimately be realized upon the disposition of our financial instruments.
Hedging Activities
Derivative Financial Instruments Designated as Effective Hedges
Certain derivative financial instruments, consisting of interest rate swap and cap agreements, are cash flow hedges that are designated as effective hedges, and are carried at their estimated fair value on a recurring basis. We assess the effectiveness of our hedges both at inception and on an ongoing basis. If the hedges are deemed to be effective, the fair value is recorded in "Accumulated other comprehensive income (loss)" in our balance sheets and is subsequently reclassified into "Interest expense" in our statements of operations in the period that the hedged forecasted transactions affect earnings. Our hedges become less than perfectly effective if the critical terms of the hedging instrument and the forecasted transactions do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and interest rates. In addition, we evaluate the default risk of the counterparty by monitoring the creditworthiness of the counterparty. While management believes its judgments are reasonable, a change in a derivative's effectiveness as a hedge could materially affect expenses, net income (loss) and equity.
As of September 30, 2026 and December 31, 2025, we had interest rate swap and cap agreements with an aggregate notional value of $1.3 billion, which were designated as effective hedges. The fair value of our interest rate swaps and caps designated as effective hedges primarily consisted of assets totaling $17.3 million and $7.0 million as of September 30, 2026 and December 31, 2025, included in "Other assets, net" in our balance sheets, and liabilities totaling $6.4 million as of December 31, 2025, included in "Other liabilities, net" in our balance sheets.
Non-Designated Derivatives
Certain derivative financial instruments, consisting of interest rate cap agreements, do not meet the accounting requirements to be classified as hedging instruments. These derivatives are carried at their estimated fair value on a recurring basis with realized and unrealized gains (losses) recorded in "Interest expense" in our statements of operations. As of September 30, 2026 and December 31, 2025, we had various interest rate cap agreements with an aggregate notional value of $167.5 million, which were non-designated derivatives. The fair value of our interest rate cap agreements, which were non-designated derivatives, consisted of assets totaling $8.1 million and $6.1 million as of September 30, 2026 and December 31, 2025, included in "Other assets, net" in our balance sheets, and liabilities totaling $7.9 million and $6.0 million as of September 30, 2026 and December 31, 2025, included in "Other liabilities, net" in our balance sheets.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2026, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In November 2023, the District of Columbia filed a lawsuit in the Court against RealPage, Inc., a provider of revenue management systems, numerous multifamily rental companies, and 14 owners and/or operators of multifamily housing in the District of Columbia, including JBG Associates, L.L.C., one of our subsidiaries, alleging that the defendants violated the District of Columbia Antitrust Act by unlawfully agreeing to use RealPage, Inc. revenue management systems and sharing sensitive data. The District of Columbia is seeking monetary damages, equitable relief, attorneys’ fees, interest and costs. On September 17, 2026, JBG Associates, L.L.C. and the District of Columbia resolved the matter via a Consent
Judgment and Order entered by the Court under which JBG Associates, L.L.C. agreed to certain injunctive relief and to remit a settlement payment of $8.1 million to the District of Columbia. Per the Consent Judgment and Order, nothing set forth in the order, including the settlement payment, shall be deemed or construed to be an admission by JBG Associates, L.L.C. or evidence of any wrongdoing or violation of law by JBG Associates, L.L.C. or as evidence of the truth of any of the claims or allegations made in the lawsuit.
We, along with multiple other parties, are named defendants in a lawsuit arising out of a condominium development project known as Wardman Tower in Washington, D.C. The lawsuit was filed by the Wardman Tower Residential Condominium Unit Owners Association in the Court on November 25, 2020. The lawsuit seeks damages resulting primarily from alleged construction and design deficiencies, and alleged misrepresentations and omissions, including claims under the CPPA. The Wardman Tower project was designed and constructed by other parties and was substantially complete prior to our formation. We have never had any ownership interest in the project. One of our subsidiary entities, which was only made a defendant in the litigation during the trial, had acted under a project management agreement with the project owner. The lawsuit sought compensatory damages and asked that those damages be trebled under the CPPA, plus attorneys' fees.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors previously disclosed in our Annual Report and in our Quarterly Report on Form 10-Q, filed on May 5, 2026.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Period
Total Number Of Common Shares Purchased
Average Price Paid Per Common Share
Total Number Of Common Shares Purchased As Part Of Publicly Announced Plans Or Programs
Approximate Dollar Value Of Common Shares That May Yet Be Purchased Under The Plan Or Programs
July 1, 2026 - July 31, 2026
400,107,964
August 1, 2026 - August 31, 2026
September 1, 2026 - September 30, 2026
Total for the three months ended September 30, 2026
Total for the nine months ended September 30, 2026
1,848,178
15.35
Program total since inception in March 2020 (1)
85,473,906
18.72
(1)
In June 2022, our Board of Trustees authorized the repurchase of up to $1.0 billion of our outstanding common shares; in May 2023, it increased the authorized repurchase amount to $1.5 billion; and in February 2025, it increased our common share repurchase authorization to $2.0 billion. In October 2026, our Board of Trustees increased our common share repurchase authorization to $2.3 billion. Purchases under the program are made either in the open market or in privately negotiated transactions from time to time as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by us at our discretion and will be subject to economic and market conditions, share price, applicable legal requirements and other factors. The program may be suspended or discontinued at our discretion without prior notice.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Trading Arrangements
During the three months ended September 30, 2026, none of our officers or trustees adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement."
ITEM 6. EXHIBITS
(a) Exhibit Index
Description
3.1
Declaration of Trust of JBG SMITH Properties, as amended and restated (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed on July 21, 2017).
3.2
Articles Supplementary to Declaration of Trust of JBG SMITH Properties (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed on March 6, 2018).
Articles of Amendment to Declaration of Trust of JBG SMITH Properties (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed on May 3, 2018).
Articles Supplementary Establishing and Fixing the Rights and Preferences of a Class of Shares of Beneficial Interest (incorporated by reference to Exhibit 3.4 in our Quarterly Report on Form 10-Q, filed on October 28, 2025).
3.5
Second Amended and Restated Bylaws of JBG SMITH Properties, effective August 3, 2023 (incorporated by reference to Exhibit 3.4 in our Quarterly Report on Form 10-Q, filed on August 8, 2023).
10.1
Second Amended and Restated Credit Agreement, dated as of August 27, 2026, by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on August 27, 2026).
Third Amendment to Credit Agreement, dated as of August 27, 2026, by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K, filed on August 27, 2026).
10.3
Second Amendment to Credit Agreement, dated as of August 27, 2026, by and among JBG SMITH Properties LP, as Borrower, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K, filed on August 27, 2026).
31.1**
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002.
31.2**
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended and 18 U.S.C 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema
101.CAL
Inline XBRL Extension Calculation Linkbase
101.LAB
Inline XBRL Extension Labels Linkbase
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
**
Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
JBG SMITH Properties
Date:
November 6, 2026
/s/ M. Moina Banerjee
M. Moina Banerjee
Co-President and Chief Financial Officer
(Principal Financial Officer)
/s/ Angela Valdes
Angela Valdes
Chief Accounting Officer
(Principal Accounting Officer)