JBG SMITH Properties

Previous wording

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. 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, 2024 filed with the Securities and Exchange Commission on February 18, 2025 ("Annual Report") 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.

Current wording

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. 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 such as the impact of the current government shutdown on the economic activity in the Washington, D.C. metropolitan area. 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, 2024 filed with the Securities and Exchange Commission on February 18, 2025 ("Annual Report") 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.

Previous wording

References to our financial statements refer to our unaudited condensed consolidated financial statements as of June 30, 2025 and December 31, 2024, and for the three and six months ended June 30, 2025 and 2024. References to our balance sheets refer to our condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024. References to our statements of operations refer to our condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024. References to our statements of cash flows refer to our condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024.

Current wording

References to our financial statements refer to our unaudited condensed consolidated financial statements as of September 30, 2025 and December 31, 2024, and for the three and nine months ended September 30, 2025 and 2024. References to our balance sheets refer to our condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024. References to our statements of operations refer to our condensed consolidated statements of operations for the three and nine months ended September 30, 2025 and 2024. References to our statements of cash flows refer to our condensed consolidated statements of cash flows for the nine months ended September 30, 2025 and 2024.

Previous wording

We compete with many property owners 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 on acceptable terms as it comes due.

Current wording

We compete with many property owners 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.

Previous wording

As of June 30, 2025, our Operating Portfolio consisted of 38 operating assets comprising 15 multifamily assets totaling 6,596 units (6,410 units at our share), 21 commercial assets totaling 7.0 million square feet (6.6 million square feet at our share) and two wholly owned land assets for which we are the ground lessor. Additionally, we have one under-construction multifamily asset with 355 units (355 units at our share) and 19 assets in the development pipeline totaling 10.7 million square feet (8.7 million square feet at our share) of estimated potential development density.

Current wording

As of September 30, 2025, our Operating Portfolio consisted of 37 operating assets comprising 14 multifamily assets totaling 6,164 units (5,978 units at our share), 21 commercial assets totaling 7.0 million square feet (6.7 million square feet at our share) and two wholly owned land assets for which we are the ground lessor. Additionally, we have one under-construction multifamily asset with 355 units (355 units at our share) and 19 assets in the development pipeline totaling 10.7 million square feet (8.7 million square feet at our share) of estimated potential development density.

Previous wording

robust retail offerings and other amenities, including improved public spaces. In 2024, we delivered The Grace and Reva with 808 multifamily units and approximately 38,000 square feet of retail space. In the first quarter of 2025, we completed construction on The Zoe (formerly 2001 South Bell Street), a 420-unit multifamily tower, and we have fully leased the approximately 8,000 square feet of ground floor retail. We expect to deliver Valen (formerly 2000 South Bell Street), a 355-unit multifamily tower adjacent to The Zoe, later this year. Additionally, in 2024, we started construction on a new office amenity hub at 2011 Crystal Drive that, along with a repositioning of the asset itself, brings to National Landing a large-scale externally managed meeting and conference facility, two elevated food and beverage offerings, and an activated public lobby.

Current wording

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, the delivery of redeveloped and new office assets subject to demand therefor, 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 2024, we delivered The Grace and Reva with 808 multifamily units and approximately 38,000 square feet of retail space. In the first quarter of 2025, we completed construction on The Zoe, a 420-unit multifamily tower, and we have fully leased the approximately 8,000 square feet of ground floor retail. Valen, a 355-unit multifamily tower adjacent to The Zoe, was completed during the third quarter of 2025. Additionally, in 2024, we started construction on a new office amenity hub at 2011 Crystal Drive that, along with a repositioning of the asset itself, brings to National Landing a large-scale externally managed meeting and conference facility, two elevated food and beverage offerings, and an activated public lobby.

Previous wording

A fundamental component of our strategy to maximize long-term net asset value ("NAV") per share is thoughtful capital allocation. While there is continued uncertainty as to how the current political environment will impact us and the Washington, D.C. metropolitan area, we remain focused on our long-term strategy and intend to continue seeking new investments that offer the most accretive returns and that align with our strategy and competitive advantages. We anticipate that new investments will primarily be financed through asset recycling, either in advance or retrospectively. These new investments may include share repurchases, distressed office investments and other opportunistic investments in partnership with third-party capital. The latter may allow us to capitalize on distressed pricing in the office market, to monetize our land bank, and to generate additional fee and carried interest revenue. We intend to continue to opportunistically sell or recapitalize assets (which may be multifamily, commercial and/or retail assets) as well as land sites where a ground lease or joint venture execution may represent the most attractive path to maximizing value. In a climate where office valuations are near cyclical lows with limited liquidity, the most efficiently priced source of capital will likely come from our multifamily assets. To that end, we are currently marketing for sale select multifamily and land assets in both Washington, D.C. and Northern Virginia. During the six months ended June 30, 2025, we sold two multifamily assets and one development parcel for total gross sales proceeds of $391.0 million and sold a 40.0% interest in a real estate venture that owns West Half, a multifamily asset, for $100.0 million. Additionally, in July 2025, we sold The Batley, a multifamily asset, for a gross sales price of $155.0 million. Recycling these assets will also further advance our strategy to concentrate our portfolio in National Landing. As long as we believe our share price does not reflect the underlying, intrinsic value of our business, we expect to continue repurchasing shares through our share repurchase plan (which had a capacity of $499.2 million as of June 30, 2025) and to fund such repurchases through such asset sales or recapitalizations.

Current wording

The current government shutdown has already impacted the economic activity in the Washington, D.C. metropolitan area and, if prolonged, could begin to hinder tenants' desire to make leasing decisions, and significantly dampen regional economic activity. The uncertainty surrounding federal operations and procurement, particularly in a market as closely tied to government and defense spending as ours, poses real risks to growth and stability. Through all of this uncertainty, we remain focused on the fundamental component of our strategy of maximizing long-term net asst value ("NAV") per share through disciplined capital allocation and intend to continue seeking new investments that offer the most accretive returns and that align with our strategy and competitive advantages. We anticipate that new investments will be financed through a combination of asset sales, private equity joint ventures, and issuances of public equity. These new investments may include share repurchases, distressed office investments and other opportunistic investments in partnership with third-party capital. The latter may allow us to capitalize on distressed pricing in the office market, to monetize our land bank, and to generate additional fee and carried interest revenue. We intend to continue to opportunistically sell or recapitalize assets (which may be multifamily, commercial and/or retail assets) as well as land sites where a ground lease or joint venture execution may represent the most attractive path to maximizing value. In a climate where office valuations are near cyclical lows with limited liquidity, the most efficiently priced source of capital will likely come from our multifamily assets. To that end, we are currently marketing for sale select multifamily and land assets. During the nine months ended September 30, 2025, we sold three multifamily assets and one development parcel for total gross sales proceeds of $546.0 million and sold a 40.0% interest in a real estate venture that owns West Half, a multifamily asset, for $100.0 million. Recycling these assets will also further advance our strategy to concentrate our portfolio in National Landing. As long as we believe our share price does not reflect the underlying, intrinsic value of our business, we expect to continue repurchasing shares through our share repurchase plan (which had a capacity of $436.3 million as of September 30, 2025) and to fund such repurchases through such asset sales or recapitalizations.

Previous wording

Our in-service operating multifamily portfolio, which refers to operating assets that are at or above 90% leased or have been operating and collecting rent for more than 12 months as of June 30, 2025, was 92.9% occupied as of June 30, 2025, a decrease of 140 basis points as compared to March 31, 2025. During the second quarter of 2025, we increased effective rents, which represent the average change in rental rates versus expiring rental rates net of concessions, by 1.0% for new leases and 8.9% upon renewal while achieving a 49.0% renewal rate across our portfolio. Our recently delivered assets, The Grace and Reva (placed into service the second quarter of 2024) and The Zoe (placed into service the second quarter of 2025) were a weighted average of 63.7% leased as of June 30, 2025. As a result of these deliveries, interest expense has increased as we have ceased capitalizing the related interest, and we expect additional interest expense when we deliver Valen later this year.

Current wording

Our operating multifamily portfolio occupancy was 87.2% as of September 30, 2025, an increase of 140 basis points as compared to June 30, 2025. During the third quarter of 2025, effective rents, which represent the average change in rental rates versus expiring rental rates net of concessions, decreased by 0.8% for new leases and increased by 4.6% upon renewal while achieving a 56.3% renewal rate across our portfolio. The Grace and Reva, which were placed into service the second quarter of 2024 were 83.8% and 81.2% leased, and The Zoe, which was placed into service the second quarter of 2025, was 50.8% leased as of September 30, 2025. Valen was completed during the third quarter of 2025. As a result of these deliveries, interest expense has increased for these assets as we have ceased capitalizing the related interest expense.

Previous wording

Our office portfolio occupancy was 74.8% as of June 30, 2025, a decrease of 160 basis points as compared to March 31, 2025. The office market continues to experience headwinds, including an increased focus on the reduction of government spending, which could impact U.S. federal government leasing practices and companies dependent on the federal government with many deals paused as tenants continue to wait for more certainty regarding federal government staffing and spending changes. Our leasing efforts continue to focus on buildings with long-term potential, concentrating occupancy in areas of National Landing that we have enhanced through our placemaking initiatives and that are accessible via multi-modal transportation. We took approximately 618,000 office square feet out of service in 2024 at 1800 South Bell Street, 2100 Crystal Drive and 2200 Crystal Drive. Additionally, during the first quarter of 2025, we took 197,124 square feet out of service at 1901 South Bell Street, a commercial asset, and expect to take the remainder of the asset out of service as tenants vacate. With the objective of ultimately reducing our competitive office inventory in National Landing, we expect to help foster a healthier long-term office market while repurposing older, underutilized buildings for redevelopment or

Current wording

National Landing that we have enhanced through our placemaking initiatives and that are accessible via multi-modal transportation. We took approximately 618,000 office square feet out of service in 2024 at 1800 South Bell Street, 2100 Crystal Drive and 2200 Crystal Drive. Additionally, during the first quarter of 2025, we took 197,124 square feet out of service at 1901 South Bell Street, a commercial asset, and expect to take the remainder of the asset out of service as tenants vacate. With the objective of ultimately reducing our competitive office inventory in National Landing, we expect to help foster a healthier long-term office market while repurposing older, underutilized buildings for redevelopment or conversion to multifamily housing, hospitality or other complimentary uses that will support a vibrant mixed-use environment.

Previous wording

We continue to advance the design and entitlement of our 10.7 million square feet (8.7 million square feet at our share) of estimated potential development density in our development pipeline and intend to look to source joint venture capital as a means of funding these developments as market conditions permit.

Current wording

We have 10.7 million square feet (8.7 million square feet at our share) of estimated potential development density in our development pipeline and intend to look to source joint venture capital as a means of funding these developments as market conditions permit.

Previous wording

Key highlights for the three and six months ended June 30, 2025 included:

Current wording

Key highlights for the three and nine months ended September 30, 2025 included:

Previous wording

Additionally, investing and financing activity during the six months ended June 30, 2025 included:

Current wording

Additionally, investing and financing activity during the nine months ended September 30, 2025 included:

Previous wording

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 six months ended June 30, 2025.

Current wording

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, 2025.

Previous wording

During the six months ended June 30, 2025, we sold WestEnd25 and 8001 Woodmont, and in 2024, we sold North End Retail, Fort Totten Square and 2101 L Street. We collectively refer to these assets as the "Disposed Properties" in the discussion below. In 2024, we took 1800 South Bell Street, 2100 Crystal Drive and 2200 Crystal Drive out of service, and during the first quarter of 2025, we took 197,124 square feet out of service at 1901 South Bell Street. In May 2025, we acquired Tysons Dulles Plaza. In 2024, we began leasing The Grace and Reva, and we began leasing The Zoe during the first quarter of 2025.

Current wording

During the nine months ended September 30, 2025, we sold The Batley, WestEnd25 and 8001 Woodmont, and in 2024, we sold North End Retail, Fort Totten Square and 2101 L Street. We collectively refer to these assets as the "Disposed Properties" in the discussion below. In 2024, we took 1800 South Bell Street, 2100 Crystal Drive and 2200 Crystal Drive out of service, and during the first quarter of 2025, we took 197,124 square feet out of service at 1901 South Bell Street. During the nine months ended September 30, 2025, we acquired Tysons Dulles Plaza and the remaining 45.0% interest in an unconsolidated real estate venture that owned 1101 17 th Street. In 2024, we began leasing The Grace and Reva, and in 2025, we began leasing The Zoe and Valen.

Previous wording

Property rental revenue decreased by approximately $6.0 million, or 5.4%, to $106.5 million in 2025 from $112.5 million in 2024. The decrease was primarily due to a $7.6 million decrease in revenue from our commercial assets, partially offset by a $435,000 increase in revenue from our multifamily assets. The decrease in revenue from our commercial assets was primarily due to a $4.2 million decrease related to the commercial Disposed Properties, a $2.1 million decrease related to taking 2100 Crystal Drive and 2200 Crystal Drive out of service, and lower occupancy across the portfolio, partially offset by a $2.3 million increase related to the acquisition of Tysons Dulles Plaza and a $1.9 million increase in lease termination revenue. The increase in revenue from our multifamily assets was primarily due to a $5.7 million increase related to the continued lease up of The Grace, Reva and The Zoe, and higher rents across the portfolio, partially offset by a $6.2 million decrease related to the multifamily Disposed Properties.

Current wording

Property rental revenue decreased by approximately $9.4 million, or 8.3%, to $104.0 million in 2025 from $113.3 million in 2024. The decrease was primarily due to a $6.1 million decrease in revenue from our multifamily assets and a $4.1 million decrease in revenue from our commercial assets. The decrease in revenue from our multifamily assets was primarily due to a $12.2 million decrease related to the Disposed Properties, partially offset by a $4.9 million increase related to the continued lease up of The Grace, Reva, The Zoe and Valen, and higher rents across the portfolio. The decrease in revenue from our commercial assets was primarily due to a $3.6 million decrease related to the Disposed Properties, a $1.3 million decrease related to taking 2200 Crystal Drive out of service, and lower occupancy across the portfolio, partially offset by a $4.0 million increase in lease termination revenue and a $3.9 million increase related to the acquisition of Tysons Dulles Plaza and the consolidation of 1101 17 th Street.

Previous wording

Third-party real estate services revenue, including reimbursements, decreased by approximately $2.6 million, or 14.9%, to $14.8 million in 2025 from $17.4 million in 2024. The decrease was primarily due to a $1.2 million decrease in reimbursement revenue, a $634,000 decrease in property management fees and a $536,000 decrease in asset management fees.

Current wording

Third-party real estate services revenue, including reimbursements, decreased by approximately $2.4 million, or 13.8%, to $14.7 million in 2025 from $17.1 million in 2024. The decrease was primarily due to a $704,000 decrease in property management fees, a $517,000 decrease in reimbursement revenue, a $494,000 decrease in other service revenue and a $417,000 decrease in leasing fees.

Previous wording

Depreciation and amortization expense decreased by approximately $3.7 million, or 7.3%, to $47.6 million in 2025 from $51.3 million in 2024. The decrease was primarily due to (i) a $4.0 million decrease related to Disposed Properties, (ii) a $2.7 million decrease related to 2100 Crystal Drive and Crystal Drive Retail due to the acceleration of depreciation of certain assets in 2024 and (iii) a $799,000 decrease related to West Half due to certain assets being fully depreciated. The decrease in depreciation and amortization expense was partially offset by (iv) a $1.9 million increase related to The Zoe, which we began leasing during the first quarter of 2025, (v) a $1.6 million increase related to 2011 Crystal Drive due to the acceleration of depreciation for certain assets in 2025 and (vi) a $796,000 increase related to the acquisition of Tysons Dulles Plaza.

Current wording

Depreciation and amortization expense decreased by approximately $1.9 million, or 3.8%, to $48.2 million in 2025 from $50.1 million in 2024. The decrease was primarily due to (i) a $6.1 million decrease related to the Disposed Properties, (ii) a $2.0 million decrease related to certain assets being fully depreciated in 2024 and (iii) a $1.4 million decrease related to certain assets written off in 2024. The decrease in depreciation and amortization expense was partially offset by (iv) a $3.3 million increase related to 2231 Crystal Drive and 2011 Crystal Drive due to the acceleration of depreciation for certain assets in 2025, (v) a $3.1 million increase related to The Zoe and Valen, which were placed into service in 2025, and (vi) a $1.2 million increase related to the acquisition of Tysons Dulles Plaza.

Previous wording

Property operating expense decreased by approximately $1.4 million, or 3.8%, to $34.9 million in 2025 from $36.3 million in 2024. The decrease was primarily due to a $1.3 million decrease in property operating expense from our commercial assets, partially offset by a $79,000 increase in property operating expense from our multifamily assets. The decrease in property operating expense from our commercial assets was primarily due to a $1.1 million decrease related to the commercial Disposed Properties and lower operating expenses primarily related to utilities, partially offset by a $630,000 increase related to the acquisition of Tysons Dulles Plaza. The increase in property operating expense from our multifamily assets was primarily due to a $1.4 million increase related to the continued lease up of The Grace, Reva and The Zoe, and higher operating expenses primarily related to repairs and maintenance and utilities, partially offset by a $2.0 million decrease related to the multifamily Disposed Properties.

Current wording

Property operating expense decreased by approximately $2.7 million, or 6.9%, to $36.6 million in 2025 from $39.3 million in 2024. The decrease was primarily due to a $1.4 million decrease in property operating expense from our multifamily assets, a $1.1 million decrease in other property operating expense and a $178,000 decrease in property operating expense from our commercial assets. The decrease in property operating expense from our multifamily assets was primarily due to a $3.6 million decrease related to the Disposed Properties, partially offset by a $1.6 million increase related to the continued lease up of The Grace, Reva, The Zoe and Valen, and higher operating expenses primarily related to repairs and maintenance and utilities expenses across the portfolio. The decrease in other property operating expense was primarily due to a $915,000 decrease in insurance claims covered by our captive insurance subsidiary. The decrease in property operating expense from our commercial assets was primarily due to a $1.2 million decrease related to the Disposed Properties, partially offset by a $1.1 million increase related to the acquisition of Tysons Dulles Plaza.

Previous wording

General and administrative expense: corporate and other increased by approximately $303,000, or 0.9%, to $32.3 million in 2025 from $32.0 million in 2024. The increase was primarily an increase in professional fees and other overhead expenses, partially offset by lower compensation expenses.

Current wording

General and administrative expense: corporate and other increased by approximately $1.3 million, or 11.2%, to $13.2 million in 2025 from $11.9 million in 2024. The increase was primarily due to an increase in professional fees and other overhead expenses, partially offset by lower compensation expenses.

Previous wording

General and administrative expense: third-party real estate services decreased by approximately $11.3 million, or 27.7%, to $29.6 million in 2025 from $41.0 million in 2024. The decrease was primarily due to lower compensation expenses and lower third-party reimbursable expenses related to a decline in the number of third-party management contracts.

Current wording

General and administrative expense: third-party real estate services decreased by approximately $2.0 million, or 12.6%, to $14.1 million in 2025 from $16.1 million in 2024. The decrease was primarily due to lower compensation expenses and lower professional fees.

Previous wording

Interest expense increased by approximately $3.6 million, or 11.3%, to $35.6 million in 2025 from $32.0 million in 2024. The increase was primarily due to (i) a $6.5 million increase due to higher interest expense on our term loans and a higher outstanding balance on our revolving credit facility, (ii) a $1.1 million decrease in capitalized interest as we placed The Grace, Reva and The Zoe into service, and (iii) an $879,000 increase due to draws on the mortgage loan related to The Zoe and Valen. The increase in interest expense was partially offset by (iv) a $2.5 million decrease related to the Disposed Properties and (v) a $1.6 million decrease related to mortgage loans collateralized by 201 12th Street S., 200 12th Street S. and 251 18th Street S., which were repaid during 2024.

Current wording

Interest expense decreased by approximately $486,000, or 1.4%, to $34.8 million in 2025 from $35.3 million in 2024. The decrease was primarily due to (i) a $3.5 million decrease related to the Disposed Properties and (ii) a $1.5 million decrease related to mortgage loans collateralized by 201 12th Street S., 200 12th Street S. and 251 18th Street S., which were repaid during 2024. The decrease in interest expense was partially offset by (iii) a $2.7 million decrease in capitalized interest as The Zoe and Valen were placed into service, (iv) a $1.5 million increase due to higher interest expense on our term loans and a higher outstanding balance on our revolving credit facility and (v) a $953,000 increase due to draws on the mortgage loan related to The Zoe and Valen.

Previous wording

Gain on the sale of real estate of $42.4 million in 2025 was primarily due to the sale of WestEnd25.

Current wording

Gain on the sale of real estate of $4.7 million in 2025 was primarily due to permanent land easement transactions across various parcels in National Landing. Loss on the sale of real estate of $5.4 million in 2024 was due to the sale of Fort Totten Square.

Previous wording

Impairment loss of $31.8 million in 2025 was related to The Batley, which was written down to its estimated fair value.

Current wording

Impairment loss of $4.8 million in 2025 was related to 2200 Crystal Drive, which was written down to its estimated fair value.

Previous wording

The following 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 six months ended June 30, 2025 compared to the same period in 2024:

Current wording

The following 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, 2025 compared to the same period in 2024:

Previous wording

Property rental revenue decreased by approximately $27.2 million, or 11.6%, to $208.0 million in 2025 from $235.2 million in 2024. The decrease was primarily due to a $32.4 million decrease in revenue from our commercial assets, partially offset by a $3.1 million increase in revenue from our multifamily assets. The decrease in revenue from our commercial assets was primarily due to an $8.6 million decrease related to the commercial Disposed Properties, a $7.5 million decrease in lease termination revenue, a $7.0 million decrease related to taking 2100 Crystal Drive, 2200 Crystal Drive and 1901 South Bell Street out of service, and lower occupancy across the portfolio, partially offset by a $2.3 million increase related to the acquisition of Tysons Dulles Plaza. The increase in revenue from our multifamily assets was primarily due to an $11.5 million increase related to the continued lease up of The Grace, Reva and The Zoe, and higher rents across the portfolio, partially offset by a $10.1 million decrease related to the multifamily Disposed Properties.

Current wording

Property rental revenue decreased by approximately $36.5 million, or 10.5%, to $312.0 million in 2025 from $348.5 million in 2024. The decrease was primarily due to a $36.3 million decrease in revenue from our commercial assets and a $3.0 million decrease in revenue from our multifamily assets. The decrease in revenue from our commercial assets was primarily due to a $12.2 million decrease related to the Disposed Properties, an $8.4 million decrease related to taking 2100 Crystal Drive, 2200 Crystal Drive and 1901 South Bell Street out of service, a $3.5 million decrease in lease termination revenue,

Previous wording

Third-party real estate services revenue, including reimbursements, decreased by approximately $5.5 million, or 15.7%, to $29.7 million in 2025 from $35.3 million in 2024. The decrease was primarily due to a $2.7 million decrease in reimbursement revenue, a $1.5 million decrease in property management fees, an $880,000 decrease in asset management fees and a $573,000 decrease in leasing fees.

Current wording

Third-party real estate services revenue, including reimbursements, decreased by approximately $7.9 million, or 15.1%, to $44.4 million in 2025 from $52.3 million in 2024. The decrease was primarily due to a $3.2 million decrease in reimbursement revenue, a $2.2 million decrease in property management fees, a $990,000 decrease in leasing fees and a $971,000 decrease in asset management fees.

Previous wording

Depreciation and amortization expense decreased by approximately $13.0 million, or 12.0%, to $95.1 million in 2025 from $108.2 million in 2024. The decrease was primarily due to (i) an $11.1 million decrease related to 2100 Crystal Drive and Crystal Drive Retail due to the acceleration of depreciation of certain assets in 2024, (ii) an $8.4 million decrease related to Disposed Properties, (iii) a $1.6 million decrease related to West Half due to certain assets being fully depreciated and (iv) a $1.1 million decrease related to 800 North Glebe Road due to the disposal of certain assets in 2024. The decrease in depreciation and amortization expense was partially offset by (v) a $6.5 million increase as we placed The Grace, Reva and The Zoe into service, (vi) a $2.5 million increase related to 2011 Crystal Drive due the acceleration of depreciation for certain assets in 2025 and (vii) a $796,000 increase related to the acquisition of Tysons Dulles Plaza.

Current wording

Depreciation and amortization expense decreased by approximately $14.9 million, or 9.4%, to $143.3 million in 2025 from $158.2 million in 2024. The decrease was primarily due to (i) a $14.5 million decrease related to the Disposed Properties, (ii) an $11.1 million decrease related to 2100 Crystal Drive and Crystal Drive Retail due to the acceleration of depreciation of certain assets in 2024, (iii) a $4.2 million decrease related to certain assets being fully depreciated in 2024, (iv) a $1.5 million decrease related to 800 North Glebe Road due to the disposal of certain assets in 2024 and (v) a $1.4 million decrease related to certain assets written off in 2024. The decrease in depreciation and amortization expense was partially offset by (vi) a $10.5 million increase as The Grace, Reva, The Zoe and Valen were placed into service, (vii) a $5.9 million increase related to 2011 Crystal Drive and 2231 Crystal Drive due to the acceleration of depreciation for certain assets in 2025 and (viii) a $2.0 million increase related to the acquisition of Tysons Dulles Plaza.

Previous wording

Property operating expense decreased by approximately $3.2 million, or 4.5%, to $68.3 million in 2025 from $71.5 million in 2024. The decrease was primarily due to a $2.7 million decrease in property operating expense from our commercial assets and a $1.0 million decrease in other property operating expense, partially offset by a $462,000 increase in property operating expense from our multifamily assets. The decrease in property operating expense from our commercial assets was primarily due to a $2.3 million decrease related to the commercial Disposed Properties and lower operating expenses primarily related to marketing expenses across the portfolio, partially offset by a $630,000 increase related to the acquisition of Tysons Dulles Plaza. The decrease in other property operating expense was primarily due to a $1.5 million decrease in insurance claims covered by our captive insurance subsidiary. The increase in property operating expense from our multifamily assets was primarily due to a $2.6 million increase related to the continued lease up The Grace, Reva and The Zoe, and higher operating expenses primarily related to repairs and maintenance and utilities, partially offset by a $3.5 million decrease related to the multifamily Disposed Properties.

Current wording

Property operating expense decreased by approximately $5.9 million, or 5.3%, to $104.9 million in 2025 from $110.8 million in 2024. The decrease was primarily due to a $2.7 million decrease in property operating expense from our commercial assets, a $2.3 million decrease in other property operating expense and a $983,000 decrease in property operating expense from our multifamily assets. The decrease in property operating expense from our commercial assets was primarily due to a $3.5 million decrease related to the Disposed Properties, partially offset by a $1.7 million increase related to the acquisition of Tysons Dulles Plaza and higher operating expenses primarily due to marketing and utilities. The decrease in other property operating expense was primarily due to a $2.4 million decrease in insurance claims covered by our captive insurance subsidiary. The decrease in property operating expense from our multifamily assets was primarily due to a $6.8 million decrease related to the Disposed Properties, partially offset by a $4.2 million increase related to the continued lease up of The Grace, Reva, The Zoe and Valen, and higher operating expenses primarily related to repairs and maintenance and utilities.

Previous wording

Real estate taxes expense decreased by approximately $1.7 million, or 12.1%, to $12.7 million in 2025 from $14.4 million in 2024. The decrease was primarily due to a $1.6 million decrease related to the Disposed Properties.

Current wording

Real estate taxes expense decreased by approximately $2.9 million, or 7.2%, to $37.1 million in 2025 from $40.0 million in 2024. The decrease was primarily due to a $3.4 million decrease related to the Disposed Properties and lower property value assessments for certain assets, partially offset by a $1.8 million increase related to The Grace, Reva, The Zoe and Valen, which were placed into service.

Previous wording

General and administrative expense: corporate and other decreased by approximately $281,000, or 1.7%, to $16.7 million in 2025 from $17.0 million in 2024. The decrease was primarily due to lower compensation expenses, partially offset by an increase in professional fees and other overhead expenses.

Current wording

General and administrative expense: corporate and other increased by approximately $1.6 million, or 3.7%, to $45.5 million in 2025 from $43.9 million in 2024. The increase was primarily due to an increase in professional fees and other overhead expenses, partially offset by lower compensation expenses.

Previous wording

General and administrative expense: third-party real estate services decreased by approximately $5.1 million, or 27.3%, to $13.6 million in 2025 from $18.7 million in 2024. The decrease was primarily due to lower compensation expenses and lower third-party reimbursable expenses related to a decline in the number of third-party management contracts.

Current wording

General and administrative expense: third-party real estate services decreased by approximately $13.4 million, or 23.4%, to $43.7 million in 2025 from $57.1 million in 2024. The decrease was primarily due to lower compensation expenses, lower third-party reimbursable expenses and lower professional fees.

Previous wording

Interest expense increased by approximately $8.6 million, or 13.9%, to $70.8 million in 2025 from $62.1 million in 2024. The increase was primarily due to (i) a $10.0 million increase due to higher interest expense on our term loans and a higher outstanding balance on our revolving credit facility, (ii) a $3.3 million decrease in capitalized interest as we placed The Grace, Reva and The Zoe into service, (iii) a $2.5 million increase due to draws on the mortgage loan related to The Zoe and Valen and (iv) a $2.3 million increase due to the expiration of interest rate swaps related to the RiverHouse Apartments mortgage loan, which was refinanced in March 2025 with a fixed interest rate mortgage loan. The increase in interest expense was partially offset by (v) a $4.3 million decrease related to the Disposed Properties, (vi) a $3.2 million decrease related to mortgage loans collateralized by 201 12th Street S., 200 12th Street S. and 251 18th Street S., which were repaid during 2024, and (vii) a $1.2 million decrease related to lower rates on variable rate mortgage loans.

Current wording

Interest expense increased by approximately $8.2 million, or 8.4%, to $105.6 million in 2025 from $97.4 million in 2024. The increase was primarily due to (i) an $11.5 million increase due to higher interest expense on our term loans and a higher outstanding balance on our revolving credit facility, (ii) a $6.0 million decrease in capitalized interest as The Grace, Reva, The Zoe and Valen were placed into service, (iii) a $3.5 million increase due to draws on the mortgage loan related to The Zoe and Valen, and (iv) a $2.9 million increase due to the expiration of interest rate swaps related to the RiverHouse Apartments mortgage loan and refinancing in March 2025 with a fixed interest rate mortgage loan. The increase in interest expense was partially offset by (v) a $7.8 million decrease related to the Disposed Properties, (vi) a $4.8 million decrease related to mortgage loans collateralized by 201 12th Street S., 200 12th Street S. and 251 18th Street S., which were repaid during 2024, (vii) a $1.8 million decrease related to lower rates on variable rate mortgage loans and (viii) a $1.2 million

Previous wording

Gain on the sale of real estate of $41.8 million in 2025 was primarily due to the sale of WestEnd25.

Current wording

Gain on the sale of real estate of $47.0 million in 2025 was primarily due to the sale of WestEnd25. Loss on the sale of real estate of $5.1 million in 2024 was primarily due to the sale of Fort Totten Square.

Previous wording

Impairment loss of $40.3 million in 2025 was related to The Batley and a development parcel, which were written down to their estimated fair value. Impairment loss of $18.2 million in 2024 was related to two development parcels, which were written down to their estimated fair value.

Current wording

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. Impairment loss of $18.2 million in 2024 was related to two development parcels, which were written down to their estimated fair value.

Previous wording

The following is the reconciliation of net loss attributable to common shareholders, the most directly comparable GAAP measure, to FFO:

Current wording

The following reconciles net loss attributable to common shareholders, the most directly comparable GAAP measure, to FFO:

Previous wording

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 and payments associated with assumed lease liabilities) 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

Current wording

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.

Previous wording

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 June 30, 2025, our same store pool decreased to 34 properties from 35 properties due to the sale of WestEnd25. During the six months ended June 30, 2025, our same store pool decreased to 34 properties from 36 properties due to the sale of 8001 Woodmont and WestEnd25. 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.

Current wording

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, 2025, our same store pool decreased to 33 properties from 34 properties due to the sale of The Batley. During the nine months ended September 30, 2025, our same store pool decreased to 33 properties from 36 properties due to the sale of The Batley, WestEnd25 and 8001 Woodmont. 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.

Previous wording

Same store NOI decreased $1.8 million, or 3.0%, to $59.5 million for the three months ended June 30, 2025 from $61.3 million for the same period in 2024. Same store NOI decreased $5.7 million, or 4.6%, to $119.2 million for the six months ended June 30, 2025 from $124.9 million for the same period in 2024. The decrease was substantially attributable to (i) lower occupancy and higher operating expenses, partially offset by higher rents in our multifamily portfolio and (ii) lower occupancy and recovery revenue, partially offset by lower real estate taxes in our commercial portfolio.

Current wording

Same store NOI decreased $3.9 million, or 6.7%, to $54.1 million for the three months ended September 30, 2025 from $57.9 million for the same period in 2024. The decrease was substantially attributable to (i) lower occupancy and lower parking revenue in our commercial portfolio and (ii) lower occupancy and higher operating expenses, partially offset by higher rents and lower concessions in our multifamily portfolio. Same store NOI decreased $9.6 million, or 5.4%, to $168.7 million for the nine months ended September 30, 2025 from $178.4 million for the same period in 2024. The decrease was substantially attributable to (i) lower occupancy and recovery revenue, partially offset by lower real estate taxes in our commercial portfolio and (ii) lower occupancy and higher operating expenses, partially offset by higher rents in our multifamily portfolio.

Previous wording

The following is the reconciliation of net loss attributable to common shareholders to NOI at our share and same store NOI at our share. To conform to the current period presentation, we have included certain other property revenue in the calculation of NOI for the three and six months ended June 30, 2024 to align with our internal reporting.

Current wording

The following reconciles net loss attributable to common shareholders to NOI at our share and same store NOI at our share. To conform to the current period presentation, we have included certain other property revenue in the calculation of NOI for the three and nine months ended September 30, 2024 to align with our internal reporting.

Previous wording

The following is a summary of NOI at our share for our multifamily and commercial segments:

Current wording

The following summarizes NOI at our share for our multifamily and commercial segments:

Previous wording

Commercial: Property revenue decreased by $6.6 million, or 10.5%, to $56.3 million in 2025 from $62.8 million in 2024. NOI decreased by $3.7 million, or 9.5%, to $35.0 million in 2025 from $38.6 million in 2024. The decreases in property revenue at our share and NOI at our share were primarily due to the commercial Disposed Properties, properties taken out of service and lower occupancy across the portfolio, partially offset by increases from the acquisition of Tysons Dulles Plaza.

Current wording

Commercial: Property revenue decreased by $3.5 million, or 5.9%, to $56.8 million in 2025 from $60.3 million in 2024. NOI decreased by $4.3 million, or 11.4%, to $33.3 million in 2025 from $37.5 million in 2024. The decreases in property revenue at our share and NOI at our share were primarily due to the Disposed Properties, properties taken out of service and lower occupancy across the portfolio, partially offset by increases from the acquisition of Tysons Dulles Plaza.