JBG SMITH Announces First Quarter 2018 Results

CHEVY CHASE, Md.--()--JBG SMITH (NYSE: JBGS), a leading owner and developer of high-quality, mixed-use properties in the Washington, DC market, today filed its Form 10-Q for the quarter ended March 31, 2018 and reported its financial results.

“net income (computed in accordance with GAAP), excluding gains (or losses) from sales of, or impairment charges related to, depreciable operating properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.”

Additional information regarding our results of operations, properties and tenants can be found in our First Quarter 2018 Investor Report, which is posted in the Investor Relations section of our website at www.jbgsmith.com.

First Quarter 2018 Financial Results

  • Net loss attributable to common shareholders was $(4.2) million, or $(0.04) per diluted share.
  • Funds From Operations (“FFO”) attributable to common shareholders was $41.2 million, or $0.35 per diluted share.
  • Core Funds From Operations (“Core FFO”) attributable to common shareholders was $52.2 million, or $0.44 per diluted share.

Operating Portfolio Highlights

  • Annualized Net Operating Income (“NOI”) for the three months ended March 31, 2018 was $371.3 million, compared to $363.3 million for the three months ended December 31, 2017, at our share.
  • The operating office portfolio was 87.8% leased and 87.0% occupied as of March 31, 2018, compared to 88.0% and 87.2% as of December 31, 2017, at our share.
  • The operating multifamily portfolio was 96.1% leased and 94.2% occupied as of March 31, 2018, compared to 95.6% and 93.8% as of December 31, 2017, at our share.
  • The operating other portfolio (excluding the Crystal City Marriott Hotel) was both 94.2% leased and occupied as of March 31, 2018, compared to 96.5% and 96.2% as of December 31, 2017.
  • Executed approximately 322,000 square feet of office leases at our share in the first quarter, comprised of approximately 134,000 square feet of new leases, and approximately 188,000 square feet of second generation leases, which generated a 1.5% rental rate increase on a GAAP basis and a 3.9% rental rate decrease on a cash basis.
  • Same Store Net Operating Income (“SSNOI”) increased 11.3% to $71.4 million for the three months ended March 31, 2018, compared to $64.2 million for the three months ended March 31, 2017. The increase in SSNOI is largely attributable to the expiration of rent abatements, the expiration of payments associated with the assumption of lease liabilities and higher rental revenue from lease commencements. The same store pool as of March 31, 2018 includes only the assets that were in service for the entirety of both periods being compared and does not include the JBG Assets acquired in our Formation Transaction.

Development Portfolio Highlights

Under Construction

  • As of March 31, 2018, there were 10 assets under construction (four office assets, five multifamily assets and one other asset), consisting of 1.1 million square feet and 1,568 units, both at our share.
  • During the quarter ended March 31, 2018, we delivered 1221 Van Street, a 291-unit multifamily building located in the Ballpark/Southeast submarket in Washington, DC, and CEB Tower at Central Place, a 529,997 square foot Trophy office building in Rosslyn, Virginia. These assets delivered one quarter ahead of schedule and approximately $2.5 million lower than our Estimated Project Total Cost.

Near-Term Development

  • As of March 31, 2018, there were no assets in near-term development.

Future Development Pipeline

  • As of March 31, 2018, there were 43 future development assets consisting of 17.9 million square feet of estimated potential density at our share.

Third-Party Asset Management and Real Estate Services Business

  • For the three months ended March 31, 2018, revenue from third-party real estate services, including reimbursements was $24.3 million. Excluding reimbursements and service revenue from our interests in consolidated and unconsolidated real estate ventures, revenue from our third-party asset management and real estate services business was $14.6 million, of which $5.8 million came from property management fees, $3.8 million came from asset management fees, $1.8 million came from leasing fees, $1.8 million came from development fees, $0.4 million came from construction management fees and $1.0 million came from other service revenue.
  • The general and administrative expenses allocated to the third-party asset management and real estate services business were $11.8 million for the three months ended March 31, 2018.

Balance Sheet

  • We had $2.2 billion of debt ($2.6 billion including our share of debt of unconsolidated real estate ventures) as of March 31, 2018. Of the $2.6 billion of debt at our share, approximately 73% was fixed-rate, and we have caps in place for approximately 17%.
  • The weighted average interest rate of our debt at share was 4.13% at March 31, 2018.
  • At March 31, 2018, our enterprise value was approximately $7.0 billion, comprising 137.7 million common shares and units valued at $4.6 billion and debt at our share of $2.6 billion, less cash and cash equivalents.
  • As of March 31, 2018, we had $222 million of cash and cash equivalents on a GAAP basis and $239 million of cash and cash equivalents at our share, and $1.2 billion of capacity under our credit facility.
  • Net Debt / Adjusted EBITDA at our share for the three months ended March 31, 2018 was 6.9x and our Net Debt / Total Enterprise Value was 34%.

Financing Activities

  • Drew an additional $50.0 million under the Term Loan A-1, in accordance with the delayed draw provisions of the credit facility. Concurrent with the draw, we entered into an agreement to swap the variable interest rate to a fixed rate.
  • Closed three loans at The Galvan, The Alaire and Wardman Park totaling an aggregate amount of $30.7 million at our share.
  • Repaid a $64.3 million secured mortgage on 1221 Van Street, a multifamily development in the Ballpark submarket of Washington, DC.
  • Entered into a joint venture with Canada Pension Plan Investment Board (“CPPIB”) at 1900 N Street, an Under Construction, 271,000-square foot, Trophy office building located in the DC CBD. 1900 N Street is 29.6% pre-leased to Goodwin Procter, a global 50 law firm. CPPIB has committed to invest approximately $101 million for a 45% interest in the venture, and we expect to continue to develop, manage and lease the asset.

Subsequent to March 31, 2018, we:

  • Closed the sale of Summit I and II for $95.0 million. The sale consisted of two 100% occupied office buildings located in Reston, Virginia. In connection with the sale, we repaid the related $59.0 million mortgage loan. We had previously closed on the sale of land and temporary construction easements for $2.2 million.
  • Closed the sale of the Bowen Building, an office building located in Washington, DC, to JP Morgan for a sales price of $140.0 million.

Dividends

On May 3, 2018, our Board of Trustees declared a dividend of $0.225 per common share, an indicated annual dividend of $0.90 per common share. The dividend is payable on May 25, 2018 to common shareholders of record as of May 14, 2018.

About JBG SMITH

JBG SMITH is an S&P 400 company that owns, operates, invests in and develops assets concentrated in leading urban infill submarkets in and around Washington, DC. Our mixed-use operating portfolio comprises approximately 20 million square feet of high-quality office, multifamily and retail assets, 98% of which are Metro-served. With a focus on placemaking, we drive synergies across the portfolio and create amenity-rich, walkable neighborhoods. JBG SMITH’s future development pipeline includes 17.9 million square feet of potential development density at our share. For additional information on JBG SMITH, please visit www.jbgsmith.com.

Forward Looking Statements

Certain statements contained herein may constitute “forward-looking statements” as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Consequently, the future results of JBG SMITH Properties (“JBG SMITH” or the “Company”) may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximate”, “believes”, “expects”, “anticipates”, “estimates”, “intends”, “plans”, “would”, “may” or similar expressions in this earnings release. We also note the following forward-looking statements: our indicated annual dividend per share and dividend yield, annualized net operating income; in the case of our construction and near-term development assets, estimated square feet, estimated number of units and in the case of our future development assets, estimated potential development density. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. These factors include, among others: adverse economic conditions in the Washington, DC metropolitan area, the timing of and costs associated with development and property improvements, financing commitments, and general competitive factors. For further discussion of factors that could materially affect the outcome of our forward-looking statements and other risks and uncertainties, see “Risk Factors” and the Cautionary Statement Concerning Forward-Looking Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2017. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements after the date hereof.

Pro Rata Information

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

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

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

Non-GAAP Financial Measures

This release includes non-GAAP financial measures. For these measures, we have provided an explanation of how these non-GAAP measures are calculated and why JBG SMITH’s management believes that the presentation of these measures provides useful information to investors regarding JBG SMITH’s financial condition and results of operations. Reconciliations of certain non-GAAP measures to the most directly comparable GAAP financial measure are included in this earnings release. Our presentation of non-GAAP financial measures may not be comparable to similar non-GAAP measures used by other companies. In addition to "at share" financial information, the following non-GAAP measures are included in this release:

Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), EBITDA for Real Estate ("EBITDAre") and Adjusted EBITDA

Management uses EBITDA and EBITDAre, non-GAAP financial measures, as supplemental operating performance measures and believes they help investors and lenders meaningfully evaluate and compare our operating performance from period-to-period by removing from our operating results the impact of our capital structure (primarily interest charges from our consolidated outstanding debt and the impact of our interest rate swaps) and certain non-cash expenses (primarily depreciation and amortization on our assets). EBITDAre is computed in accordance with the definition established by the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines EBITDAre as GAAP net income (loss) adjusted to exclude interest expense, income taxes, depreciation and amortization expenses, gains on sales of depreciated real estate and impairment losses of depreciable real estate, including our share of such adjustments of unconsolidated real estate ventures. These supplemental measures may help investors and lenders understand our ability to incur and service debt and to make capital expenditures. EBITDA and EBITDAre are not substitutes for net income (loss) (computed in accordance with GAAP) and may not be comparable to similarly titled measures used by other companies.

“Adjusted EBITDA,” a non-GAAP financial measure, represents EBITDA adjusted for items we believe are not representative of ongoing operating results, such as non-recurring transaction and other costs, gain (loss) on the extinguishment of debt, gain on the bargain purchase of a business and share-based compensation expense related to the Formation Transaction. We believe that adjusting such items not considered part of our comparable operations, provides a meaningful measure to evaluate and compare our performance from period-to-period.

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

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

FFO is a non-GAAP financial measure computed in accordance with the definition established by NAREIT. NAREIT defines FFO as “net income (computed in accordance with GAAP), excluding gains (or losses) from sales of, or impairment charges related to, depreciable operating properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.”

"Core FFO" represents FFO adjusted to exclude items (net of tax) which we believe are not representative of ongoing operating results, such as transaction and other costs, gains (or losses) on extinguishment of debt, gain on the bargain purchase of a business, gains (or losses) on the disposal of non-depreciable assets, share-based compensation expense related to the Formation Transaction, amortization of the management contracts intangible and the mark-to-market of interest rate swaps.

"FAD" is a non-GAAP financial measure and represents FFO less cash basis recurring tenant improvements, leasing commissions and other capital expenditures, net deferred rent activity, recurring share-based compensation expense, accretion of acquired below-market leases, net of amortization of acquired above-market leases, amortization of debt issuance costs and other non-cash income and charges. FAD is presented solely as a supplemental disclosure that management believes provides useful information as it relates to our ability to fund dividends.

We believe FFO, Core FFO and FAD are meaningful non-GAAP financial measures useful in comparing our levered operating performance from period-to-period and as compared to similar real estate companies because these non-GAAP measures exclude real estate depreciation and amortization expense and other non-comparable income and expenses, which implicitly assumes that the value of real estate diminishes predictably over time rather than fluctuating based on market conditions. FFO, Core FFO and FAD do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income (loss) as a performance measure or cash flow as a liquidity measure. FFO, Core FFO and FAD may not be comparable to similarly titled measures used by other companies.

Net Operating Income ("NOI") and Annualized NOI

“NOI” is a non-GAAP financial measure management uses to measure the operating performance of our assets and consists of property-related revenue (which includes base rent, tenant reimbursements and other operating revenue, net of free rent and payments associated with assumed lease liabilities) less operating expenses and ground rent, if applicable. NOI also excludes deferred rent, related party management fees, interest expense, and certain other non-cash adjustments, including the accretion of acquired below-market leases and amortization of acquired above-market leases and below-market ground lease intangibles. Annualized NOI represents NOI for the three months ended March 31, 2018 multiplied by four. Management believes Annualized NOI provides useful information in understanding JBG SMITH’s financial performance over a 12-month period, however, investors and other users are cautioned against attributing undue certainty to our calculation of Annualized NOI. Actual NOI for any 12-month period will depend on a number of factors beyond our ability to control or predict, including general capital markets and economic conditions, any bankruptcy, insolvency, default or other failure to pay rent by one or more of our tenants and the destruction of one or more of our assets due to terrorist attack, natural disaster or other casualty, among others. We do not undertake any obligation to update our calculation to reflect events or circumstances occurring after the date of this earnings release. There can be no assurance that the annualized NOI shown will reflect JBG SMITH’s actual results of operations over any 12-month period.

Management uses each of these measures as supplemental performance measures for its assets and believes they provide useful information to investors because they reflect only those revenue and expense items that are incurred at the asset level, excluding non-cash items. In addition, NOI is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets.

However, because NOI excludes depreciation and amortization and captures neither the changes in the value of our assets that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our assets, all of which have real economic effect and could materially impact the financial performance of our assets, the utility of this measure of the operating performance of our assets is limited. Moreover, our method of calculating NOI may differ from other real estate companies and, accordingly, may not be comparable. NOI should be considered only as a supplement to net operating income (loss) (computed in accordance with GAAP) as a measure of the operating performance of our assets.

Same Store and Non-Same Store

“Same store” refers to the pool of assets that were in service for the entirety of both periods being compared, except for assets for which significant redevelopment, renovation, or repositioning occurred during either of the periods being compared. No JBG Assets are included in the same store pool.

“Non-same store” refers to all assets excluded from the same store pool.

Definitions

GAAP

"GAAP" refers to accounting principles generally accepted in the United States of America.

Formation Transaction

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

JBG Assets

"JBG Assets" refers to the management business and certain assets and liabilities of The JBG Companies acquired on July 18, 2017 by JBG SMITH.

 
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
in thousands   March 31,
2018
  December 31,
2017
         
ASSETS    
Real estate, at cost:
Land and improvements $ 1,469,375 $ 1,368,294
Buildings and improvements 3,880,993 3,670,268
Construction in progress, including land 568,186   978,942  
5,918,554 6,017,504
Less accumulated depreciation (1,045,112 ) (1,011,330 )
Real estate, net 4,873,442 5,006,174
Cash and cash equivalents 221,578 316,676
Restricted cash 26,830 21,881
Tenant and other receivables, net 52,433 46,734
Deferred rent receivable, net 148,094 146,315
Investments in and advances to unconsolidated real estate ventures 368,052 261,811
Other assets, net 276,003 263,923
Assets held for sale   95,314     8,293  
TOTAL ASSETS   $ 6,061,746     $ 6,071,807  
         
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY        
Liabilities:
Mortgages payable, net $ 1,921,048 $ 2,025,692
Revolving credit facility 115,751 115,751
Unsecured term loan, net 96,685 46,537
Accounts payable and accrued expenses 130,185 138,607
Other liabilities, net 133,353 161,277
Liabilities related to assets held for sale 58,524    
Total liabilities 2,455,546   2,487,864  
Commitments and contingencies
Redeemable noncontrolling interests 605,504 609,129
Total equity   3,000,696     2,974,814  
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY   $ 6,061,746     $ 6,071,807  
 
_______________
 
Note: For complete financial statements, please refer to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2018.
 
 
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
 
in thousands, except per share data   Three Months Ended March 31,
2018   2017
REVENUE
Property rentals $ 126,651 $ 99,024
Tenant reimbursements 10,940 8,541
Third-party real estate services, including reimbursements 24,330 7,125
Other income 1,116   1,582  
Total revenue 163,037   116,272  
EXPENSES
Depreciation and amortization 49,160 33,782
Property operating 30,861 23,781
Real estate taxes 19,610 15,172
General and administrative:
Corporate and other 12,711 13,392
Third-party real estate services 22,609 4,698
Share-based compensation related to Formation Transaction 9,428
Transaction and other costs 4,221   5,841  
Total operating expenses 148,600   96,666  
OPERATING INCOME 14,437 19,606
Income (loss) from unconsolidated real estate ventures (1,902 ) 209
Interest and other income, net 573 775
Interest expense (19,257 ) (13,918 )
Gain on sale of real estate 455    
INCOME (LOSS) BEFORE INCOME TAX (EXPENSE) BENEFIT (5,694 ) 6,672
Income tax (expense) benefit 908   (354 )
NET INCOME (LOSS) (4,786 ) 6,318
Net loss attributable to redeemable noncontrolling interests 594
Net loss attributable to noncontrolling interests   2      
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS   $ (4,190 )   $ 6,318  
EARNINGS (LOSS) PER COMMON SHARE:
Basic $ (0.04 ) $ 0.06
Diluted $ (0.04 ) $ 0.06

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - Basic and Diluted

117,955 100,571
 
___________________
 
Note: For complete financial statements, please refer to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2018.
 
 
EBITDA, EBITDAre AND ADJUSTED EBITDA (NON-GAAP)
(Unaudited)
 
dollars in thousands

Three Months Ended
March 31, 2018

     
EBITDA, EBITDAre and Adjusted EBITDA    
Net loss $ (4,786)
Depreciation and amortization expense 49,160
Interest expense (1) 19,257
Income tax benefit (908)
Unconsolidated real estate ventures allocated share of above adjustments     10,175
EBITDA and EBITDAre   $ 72,898
Gain on sale of land (455)
Transaction and other costs 4,221
Share-based compensation related to Formation Transaction 9,428
Unconsolidated real estate ventures allocated share of above adjustments     30
Adjusted EBITDA   $ 86,122
     
Net Debt to Adjusted EBITDA (2)   6.9x
 

March 31,
2018

Net Debt (at JBG SMITH Share)
Consolidated indebtedness (3) $ 2,185,461
Unconsolidated indebtedness   419,476
Total consolidated and unconsolidated indebtedness 2,604,937
Less: cash and cash equivalents   238,519
Net Debt (at JBG SMITH Share) $ 2,366,418

 

____________________
 
(1)   Interest expense includes the amortization of deferred financing costs and the mark-to-market of interest rate swaps and caps, net of capitalized interest costs.
(2) Adjusted EBITDA for the three months ended March 31, 2018 is annualized by multiplying by four.
(3) Includes mortgage loan related to assets held for sale.
 
 
FFO, CORE FFO AND FAD (NON-GAAP)
(Unaudited)
 
in thousands, except per share data  

Three Months Ended
March 31, 2018

     
FFO and Core FFO    
Net loss attributable to common shareholders $ (4,190 )
Net loss attributable to redeemable noncontrolling interests (594 )
Net loss attributable to noncontrolling interests   (2 )
Net loss (4,786 )
Real estate depreciation and amortization 46,639
Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures     6,436  
FFO Attributable to Operating Partnership Common Units   $ 48,289  
FFO attributable to redeemable noncontrolling interests   (7,127 )
FFO attributable to common shareholders $ 41,162  
 
FFO attributable to the operating partnership common units $ 48,289
Gain on sale of land (455 )
Transaction and other costs, net of tax 4,136
Mark-to-market on derivative instruments (1,119 )
Share of gain from mark-to-market on derivative instruments held by unconsolidated real estate ventures (342 )
Share-based compensation related to Formation Transaction 9,428
Amortization of management contracts intangible, net of tax     1,286  
Core FFO Attributable to Operating Partnership Common Units   $ 61,223  
Core FFO attributable to redeemable noncontrolling interests   (9,037 )
Core FFO attributable to common shareholders $ 52,186  
FFO per diluted common share $ 0.35
Core FFO per diluted common share $ 0.44
Weighted average diluted shares 117,955
 
 
FFO, CORE FFO AND FAD (NON-GAAP)
(Unaudited)
 
in thousands, except per share data  

Three Months Ended
March 31, 2018

     
FAD    
Core FFO attributable to the operating partnership common units $ 61,223
Recurring capital expenditures and second generation tenant improvements and leasing commissions (6,097 )
Straight-line and other rent adjustments (1) (1,075 )
Share of straight-line rent from unconsolidated real estate ventures 159
Third-party lease liability assumption payments (472 )
Share of third party lease liability assumption payments for unconsolidated real estate ventures (50 )
Share-based compensation expense 4,276
Amortization of debt issuance costs 1,164
Share of debt issuance costs from unconsolidated real estate ventures 69
Non-real estate depreciation and amortization     749  
FAD available to the Operating Partnership Common Units (A)   $ 59,946  
Distributions to common shareholders and unitholders (2) (B) $ 31,423
FAD Payout Ratio (B÷A) (3) 52.4 %
 
     
Capital Expenditures    
Maintenance and recurring capital expenditures $ 2,683
Share of maintenance capital and recurring expenditures from unconsolidated real estate ventures 1,149
Second generation tenant improvements and leasing commissions 1,893
Share of second generation tenant improvements and leasing commissions from unconsolidated real estate ventures   372  
Recurring capital expenditures and second generation tenant improvements and leasing commissions   6,097  
First generation tenant improvements and leasing commissions 4,185
Share of first generation tenant improvements and leasing commissions from unconsolidated real estate ventures 995
Non-recurring capital expenditures 3,366
Share of non-recurring capital expenditures from unconsolidated joint ventures   620  
Non-recurring capital expenditures     9,166  
Total JBG SMITH Share of Capital Expenditures   $ 15,263  
 
_______________
 
(1) Includes straight-line rent, above/below market lease amortization and lease incentive amortization.
(2) In May 2018, our Board of Trustees declared a dividend of $0.225 per share, payable on May 25, 2018.
(3) The FAD payout ratio on a quarterly basis is not necessarily indicative of an amount for the full year due to fluctuation in timing of capital expenditures, the commencement of new leases and the seasonality of our operations. The FAD payout ratio for the three and six months ended December 31, 2017 was 84.9% and 73.8%.
 
 
NOI RECONCILIATIONS (NON-GAAP)
(Unaudited)
 
dollars in thousands   Three Months Ended March 31, 2018
2018   2017
 
Net income (loss) attributable to common shareholders $ (4,190 ) $ 6,318
Add:
Depreciation and amortization expense 49,160 33,782
General and administrative expense:
Corporate and other 12,711 13,392
Third-party real estate services 22,609 4,698
Share-based compensation related to Formation Transaction 9,428
Transaction and other costs 4,221 5,841
Interest expense 19,257 13,918
Income tax expense (benefit) (908 ) 354
Less:
Third-party real estate services, including reimbursements 24,330 7,125
Other income 1,116 1,582
Income (loss) from unconsolidated real estate ventures (1,902 ) 209
Interest and other income, net 573 775
Gain on sale of real estate 455
Net loss attributable to redeemable noncontrolling interests 594
Net loss attributable to noncontrolling interests   2      
Consolidated NOI 87,120 68,612
NOI attributable to consolidated JBG Assets (1) 11,050
Proportionate NOI attributable to unconsolidated JBG Assets (1) 3,715
Proportionate NOI attributable to unconsolidated real estate ventures 9,207 2,201
Non-cash rent adjustments (2) (1,096 ) (4,017 )
Other adjustments (3)   (2,408 )     1,079  
Total adjustments     5,703       14,028  
NOI   $ 92,823     $ 82,640  
Non-same store NOI     21,419       18,461  
Same store NOI   $ 71,404     $ 64,179  
 
Number of properties in same store pool 36 36
 
___________________
 
(1)   Includes financial information for the JBG Assets as if the July 18, 2017 acquisition of the JBG Assets had been completed as of the beginning of the period presented.
(2) Adjustment to exclude straight-line rent, above/below market lease amortization and lease incentive amortization.
(3) Adjustment to include other income and payments associated with assumed lease liabilities related to operating properties, and exclude incidental income generated by development assets and commercial lease termination revenue.
 

Contacts

JBG SMITH
Jaime Marcus
SVP, Investor Relations
240-333-3643
jmarcus@jbgsmith.com

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