JBG SMITH Properties Annual Report 2021 Form 10-K (NYSE:JBGS) Published: February 23rd, 2021 PDF generated by stocklight.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 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 Graphic 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 Bethesda MD 20814 Suite 200 (Zip Code) (Address of Principal Executive Offices) 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 Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Y es ☒ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes☐ No ☒ 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b2- of the Exchange Act) Yes ☐ No ☒ As of February 19, 2021, JBG SMITH Properties had1 31,600,858 common shares outstanding. As of June 30, 2020, the aggregate market value of common stock held by non-affiliates of the Registrant was approximately$ 3.8 billion based on the June 30, 2020 closing share price of $29.57 per share on the New York Stock Exchange. DOCUMENTS INCORPORATED BY REFERENCE Part III incorporates by reference information from certain portions of the registrant's definitive proxy statement for its 2021 annual meeting of shareholders to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates. JBG SMITH PROPERTIES ANNUAL REPORT ON FORM 10-K YEAR ENDED DECEMBER 31, 2020 TABLE OF CONTENTS 9 Page Definitions 3 PART I Item 1. Business 8 Item 1A. Risk Factors 18 Item 1B. Unresolved Staff Comments 34 Item 2. Properties 34 Item 3. Legal Proceedings 40 Item 4. Mine Safety Disclosures 40 PART II Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 40 Item 6. Selected Financial Data 42 Management's Discussion and Analysis of Financial Condition and Results of Item 7. Operations 42 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 67 Item 8. Financial Statements and Supplementary Data 69 Changes in and Disagreements with Accountants on Accounting and Financial Item 9. Disclosure 116 Item 9A. Controls and Procedures 116 Item 9B. Other Information 118 PART III Item 10. Directors, Executive Officers and Corporate Governance 141 Item 11. 141 Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 141 Item 13. Certain Relationships and Related Transactions and Director Independence 141 Item 14. Principal Accounting Fees and Services 141 PART IV Item 15. Exhibits and Financial Statement Schedules 142 Item 16. Form 10-K Summary 150 Signatures 151 2 DEFINITIONS Defined terms used in this Annual Report on Form 10-K: "ADA" means the Americans with Disabilities Act. "Amazon" refers to Amazon.com, Inc. "Americana Portfolio" refers to a 1.4-acre future development parcel in National Landing, which was formerly occupied by the Americana Hotel, and three other parcels. "Annualized rent" means: (i) for commercial assets, or the retail component of a mixed-use asset, the in-place monthly base rent before free rent, plus tenant reimbursements as of December 31, 2020, multiplied by 12 and (ii) for multifamily assets, or the multifamily component of a mixed-use asset, the in- place monthly base rent before free rent as of December 31, 2020, multiplied by 12. Annualized rent excludes rent from signed but not yet commenced leases. The in-place monthly base rent does not take into consideration temporary rent relief arrangements. "At JBG SMITH Share" and "Our share" refer to our ownership percentage of consolidated and unconsolidated assets in real estate ventures. "CBRS" means the Citizens Broadband Radio Service. "Code" refers to the Internal Revenue Code of 1986, as amended. "CODM" means our Chief Operating Decision Maker. "Combination" refers to our acquisition of the management business and certain assets and liabilities of JBG. "COVID-19" refers to the novel coronavirus pandemic. "D&I" means diversity and inclusion. "Development pipeline" refers to the near-term development pipeline and future development pipeline. "Disposed Properties" collectively refers to Commerce Executive/Commerce Executive Metro Land, 1600 K Street, Vienna Retail, a 50.0% interest in the entity that owns Central Place Tower, and Metropolitan Park. "ESG" means environmental, social and governance. "Estimated incremental investment" means management's estimate of the remaining cost to be incurred in connection with the development of an asset as of December 31, 2020, including all remaining acquisition costs, hard costs, soft costs, tenant improvements (excluding free rent converted to tenant improvement allowances), leasing costs and other similar costs to develop and stabilize the asset but excluding any financing costs and ground rent expenses. Actual incremental investment may differ substantially from our estimates due to numerous factors, including unanticipated expenses, delays in the estimated start and/or completion date, changes in design and other contingencies. 3 "Estimated potential development density" reflects management's estimate of developable gross square feet based on our current business plans with respect to real estate owned or controlled as of December 31, 2020. Our current business plans may contemplate development of less than the maximum potential development density for individual assets. As market conditions change, our business plans, and therefore, the estimated potential development density, could change accordingly. Given timing, zoning requirements and other factors, we make no assurance that estimated potential development density amounts will become actual density to the extent we complete development of assets for which we have made such estimates. "Exchange Act" refers to the Securities Exchange Act of 1934, as amended. "FATCA" means the Foreign Account Tax Compliance Act. "FATCA withholding" refers to a FATCA withholding tax. "FIRPTA" means the Foreign Investment in Real Property Tax Act of 1980, as amended. "Formation Transaction" refers to the Separation and the Combination. "Free rent" means the amount of base rent and tenant reimbursements that are abated according to the applicable lease agreement(s). "FFO," means funds from operations, a non-GAAP financial measure computed in accordance with the definition established by 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 related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, including our share of such adjustments for unconsolidated real estate ventures . We believe