JBG SMITH Properties

Previous wording

JBG SMITH Properties ("JBG SMITH"), a Maryland real estate investment trust ("REIT"), owns, operates, invests in and develops mixed-use properties in high growth and high barrier-to-entry submarkets in and around Washington, D.C., most notably National Landing. Through an intense focus on placemaking, JBG SMITH cultivates vibrant, amenity-rich, walkable neighborhoods throughout the Washington, D.C. metropolitan area. Approximately 75.0% of our holdings are in the National Landing submarket in Northern Virginia, which is anchored by four key demand drivers: Amazon.com, Inc.'s ("Amazon") new headquarters; Virginia Tech's under-construction $1 billion Innovation Campus; the submarket’s proximity to the Pentagon; and our deployment of 5G digital infrastructure. In addition, our third-party asset management and real estate services business provides fee-based real estate services to the legacy funds formerly organized by The JBG Companies ("JBG") (the "JBG Legacy Funds") and other third parties.

Current wording

JBG SMITH Properties ("JBG SMITH"), a Maryland real estate investment trust ("REIT"), owns, operates, invests in and develops mixed-use properties in high growth and high barrier-to-entry submarkets in and around Washington, D.C., most notably National Landing. Through an intense focus on placemaking, JBG SMITH cultivates vibrant, amenity-rich, walkable neighborhoods throughout the Washington, D.C. metropolitan area. Approximately 75.0% of our holdings are in the National Landing submarket in Northern Virginia, which is anchored by four key demand drivers: Amazon.com, Inc.'s

Previous wording

Substantially all our assets are held by, and our operations are conducted through, JBG SMITH Properties LP ("JBG SMITH LP"), our operating partnership. JBG SMITH is referred to herein as "we," "us," "our" or other similar terms. References to "our share" refer to our ownership percentage of consolidated and unconsolidated assets in real estate ventures, but exclude our: (i) 10.0% subordinated interest in one commercial building, (ii) 33.5% subordinated interest in four commercial buildings (the "Fortress Assets"), (iii) 49.0% interest in three commercial buildings (the "L'Enfant Plaza Assets") and (iv) 9.9% interest in The Foundry, as well as the associated non-recourse mortgage loans, held through unconsolidated real estate ventures; these interests and debt are excluded because our investment in each real estate venture is zero, we do not anticipate receiving any near-term cash flow distributions from the real estate ventures, and we have not guaranteed their obligations or otherwise committed to providing financial support.

Current wording

Substantially all our assets are held by, and our operations are conducted through, JBG SMITH Properties LP ("JBG SMITH LP"), our operating partnership. JBG SMITH is referred to herein as "we," "us," "our" or other similar terms. References to "our share" refer to our ownership percentage of consolidated and unconsolidated assets in real estate ventures, but exclude our: (i) 10.0% subordinated interest in one commercial building, (ii) 33.5% subordinated interest in four commercial buildings (the "Fortress Assets") and (iii) 49.0% interest in three commercial buildings (the "L'Enfant Plaza Assets"), as well as the associated non-recourse mortgage loans, held through unconsolidated real estate ventures; these interests and debt are excluded because our investment in each real estate venture is zero, we do not anticipate receiving any near-term cash flow distributions from the real estate ventures, and we have not guaranteed their obligations or otherwise committed to providing financial support.

Previous wording

References to our financial statements refer to our unaudited condensed consolidated financial statements as of March 31, 2024 and December 31, 2023, and for the three months ended March 31, 2024 and 2023. References to our balance sheets refer to our condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023. References

Current wording

References to our financial statements refer to our unaudited condensed consolidated financial statements as of June 30, 2024 and December 31, 2023, and for the three and six months ended June 30, 2024 and 2023. References to our balance sheets refer to our condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023. References to our statements of operations refer to our condensed consolidated statements of operations for the three and six months ended June 30, 2024 and 2023. References to our statements of cash flows refer to our condensed consolidated statements of cash flows for the six months ended June 30, 2024 and 2023.

Previous wording

As of March 31, 2024, our Operating Portfolio consisted of 41 operating assets comprising 15 multifamily assets totaling 6,318 units (6,318 units at our share), 24 commercial assets totaling 7.5 million square feet (7.2 million square feet at our share) and two wholly owned land assets for which we are the ground lessor. Additionally, we have two under-construction multifamily assets with 1,583 units (1,583 units at our share) and 18 assets in the development pipeline totaling 11.3 million square feet (9.3 million square feet at our share) of estimated potential development density.

Current wording

As of June 30, 2024, our Operating Portfolio consisted of 40 operating assets comprising 15 multifamily assets totaling 6,318 units (6,318 units at our share), 23 commercial assets totaling 7.2 million square feet (6.9 million square feet at our share) and two wholly owned land assets for which we are the ground lessor. Additionally, we have two under-construction multifamily assets totaling 1,583 units (1,583 units at our share) and 18 assets in the development pipeline totaling 11.4 million square feet (9.3 million square feet at our share) of estimated potential development density.

Previous wording

We continue to implement our comprehensive plan to reposition our holdings in the National Landing submarket in Northern Virginia by executing a broad array of placemaking strategies. Our placemaking includes the delivery of new multifamily and office developments, locally sourced 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 authentic and distinct neighborhoods by creating a vibrant street environment with robust retail offerings and other amenities, including improved public spaces. To that end, we saw the delivery of two placemaking projects, Water Park and Surreal in 2023. Additionally, the digital infrastructure investments we are making, including our ownership of Citizens Broadband Radio Service wireless spectrum in National Landing and our agreements with AT&T, Cisco and Federated Wireless, are advancing our efforts to make National Landing among the first 5G-operable submarkets in the nation.

Current wording

We continue to implement our comprehensive plan to reposition our holdings in the National Landing submarket in Northern Virginia by executing a broad array of placemaking strategies. Our placemaking includes the delivery of new multifamily and office developments, locally sourced 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 authentic and distinct neighborhoods by creating a vibrant street environment with robust retail offerings and other amenities, including improved public spaces. To that end, we saw the delivery of two placemaking projects, Water Park and Surreal in 2023. In the second quarter of 2024, we delivered 1900 Crystal Drive (The Grace and Reva) with 808 units and approximately 39,000 square feet of retail space. Additionally, the digital infrastructure investments we are making are advancing our efforts to make National Landing among the first 5G-operable submarkets in the nation.

Previous wording

how they may impact long-term NAV per share. We intend to continue to opportunistically sell or recapitalize assets as well as land sites where a ground lease or joint venture execution may represent the most attractive path to maximizing value. Successful execution of our capital allocation strategy enables us to source capital at NAV from the disposition of assets generating low cash yields and invest those proceeds in new acquisitions with higher cash yields and growth, development projects with significant yield spreads and profit potential, and share repurchases. Consequently, at any given time, we expect to be in various stages of discussions and negotiations with potential buyers, real estate venture partners, ground lessors and other counterparties with respect to sales, joint ventures and/or ground leases for certain of our assets, including portfolios thereof. These discussions and negotiations may or may not lead to definitive documentation or closed transactions. We anticipate redeploying the proceeds from these sales will not only help fund our planned growth, but will also further advance the strategic shift of our portfolio to majority multifamily. Current market conditions have significantly slowed down the pace of asset sales, and we expect this reduced activity to continue in 2024.

Current wording

A fundamental component of our strategy to maximize long-term net asset value ("NAV") per share is active capital allocation. We evaluate development, acquisition, disposition, share repurchases and other investment decisions based on how they may impact long-term NAV per share. We intend to continue to opportunistically sell or recapitalize assets as well as land sites where a ground lease or joint venture execution may represent the most attractive path to maximizing value. Successful execution of our capital allocation strategy enables us to source capital at NAV from the disposition of assets generating low cash yields and invest those proceeds in new acquisitions with higher cash yields and growth, development projects with significant yield spreads and profit potential, and share repurchases. Consequently, at any given time, we expect to be in various stages of discussions and negotiations with potential buyers, real estate venture partners, ground lessors and other counterparties with respect to sales, joint ventures and/or ground leases for certain of our assets, including portfolios thereof. These discussions and negotiations may or may not lead to definitive documentation or closed transactions. We anticipate redeploying the proceeds from these sales will not only help fund our planned growth, but will also further advance the strategic shift of our portfolio to majority multifamily. Current market conditions have significantly slowed down the pace of asset sales, and we expect this reduced activity to continue in 2024.

Previous wording

Our multifamily portfolio occupancy as of March 31, 2024 of 94.3% decreased by 40 basis points compared to December 31, 2023. First quarter lease expirations increased effective rents, which represent the average change in rental rates versus expiring rental rates net of concessions, by 9.4% upon renewal while achieving a 52.4% renewal rate across our portfolio. We continue to advance our two under-construction multifamily assets in National Landing, 1900 Crystal Drive (The Grace and Reva) and 2000/2001 South Bell Street, totaling 1,583 units. 1900 Crystal Drive began leasing in January 2024 with move-ins commencing in February 2024 and expected delivery of all remaining units in the second quarter of 2024. 2000/2001 South Bell Street is expected to deliver in the third quarter of 2025. We expect that interest expense will increase as we deliver our under-construction assets and cease capitalization of interest on those assets.

Current wording

Our multifamily portfolio occupancy as of June 30, 2024 of 94.3% was consistent compared to March 31, 2024. During the second quarter of 2024, we increased effective rents, which represent the average change in rental rates versus expiring rental rates net of concessions, by 4.6% blended across new and renewal leases and 8.6% upon renewal while achieving a 50.9% renewal rate across our portfolio. We continue to advance our two under-construction multifamily assets in National Landing, 1900 Crystal Drive (The Grace and Reva) and 2000/2001 South Bell Street (Valen and The Zoe), totaling 1,583 units. 1900 Crystal Drive began leasing in January 2024 with move-ins commencing in February 2024 and delivery of all remaining units in the second quarter of 2024, with 38.5% leased as of June 30, 2024. 2000/2001 South Bell Street is expected to deliver in the third quarter of 2025. We expect that interest expense will increase as we deliver our under-construction assets and cease capitalization of interest on those assets.

Previous wording

Our office portfolio occupancy as of March 31, 2024 of 83.1% decreased by 180 basis points as compared to December 31, 2023. As the office market continues to experience headwinds due to hybrid work trends and tenants seeking to repurpose space for flexibility, we anticipate continued weakness in the commercial office sector. In this environment, we expect many tenants will look for space that is newer or repurposed for their current flexible workspace needs. We have also seen tenants lease space but contract their total footprint. Accordingly, our efforts to re-lease certain spaces will be targeted toward buildings with long-term viability where we can concentrate occupancy, and we intend to take some of our other buildings out of service. In addition to 1800 South Bell Street, which we took out of service in the first quarter of 2024, we plan to take 2100 Crystal Drive out of service when Amazon vacates in the second quarter of 2024. We are also phasing 2200 Crystal Drive out of service as leases expire. With the objective of ultimately reducing our competitive office inventory in National Landing, we expect to repurpose these older, obsolete and under-leased buildings for redevelopment, conversion to multifamily, hospitality or another specialty use.

Current wording

Our office portfolio occupancy as of June 30, 2024 of 80.6% decreased by 250 basis points as compared to March 31, 2024. As the office market continues to experience headwinds due to hybrid work trends and tenants seeking to repurpose space for flexibility, we anticipate continued weakness in the commercial office sector. In this environment, we expect many tenants will look for space that is newer or repurposed for their current flexible workspace needs. We have also seen tenants lease space but contract their total footprint. Accordingly, our efforts to re-lease certain spaces will be targeted toward buildings with long-term viability where we can concentrate occupancy, and we intend to take some of our other buildings out of service. In addition to 1800 South Bell Street, which we took out of service in the first quarter of 2024, we took 2100 Crystal Drive out of service when Amazon vacated in the second quarter of 2024. We are also phasing 2200 Crystal Drive out of service as leases expire. With the objective of ultimately reducing our competitive office inventory in National Landing, we expect to repurpose these older, obsolete and under-leased buildings for redevelopment, conversion to

Previous wording

We continue to advance the design and entitlement of our 11.3 million square feet (9.3 million square feet at our share) of estimated potential development density in our development pipeline and will look to source joint venture capital as a means of funding these developments as market conditions permit.

Current wording

We continue to advance the design and entitlement of our 11.4 million square feet (9.3 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 months ended March 31, 2024 included:

Current wording

Key highlights for the three and six months ended June 30, 2024 included:

Previous wording

Additionally, investing and financing activity during the three months ended March 31, 2024 included:

Current wording

Additionally, investing and financing activity during the six months ended June 30, 2024 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 three months ended March 31, 2024.

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 six months ended June 30, 2024.

Previous wording

During the three months ended March 31, 2024, we sold North End Retail. In 2023, we sold an 80.0% interest in 4747 Bethesda Avenue to an unconsolidated real estate venture, and we sold Falkland Chase-South & West/North, 5 M Street Southwest, Crystal City Marriott and Capital Point-North-75 New York Avenue. We collectively refer to these assets as the "Disposed Properties" in the discussion below.

Current wording

During the six months ended June 30, 2024, we sold North End Retail. In 2023, we sold an 80.0% interest in 4747 Bethesda Avenue to an unconsolidated real estate venture, and we sold Falkland Chase-South & West/North, 5 M Street Southwest, Crystal City Marriott and Capital Point-North-75 New York Avenue. We collectively refer to these assets as the "Disposed Properties" in the discussion below.

Previous wording

first quarter of 2024. The increase in other property operating expense was primarily due to a $1.3 million increase in insurance claims covered by our captive insurance subsidiary.

Current wording

Property operating expense increased by approximately $342,000, or 1.0%, to $36.3 million in 2024 from $35.9 million in 2023. The increase was primarily due to a $519,000 increase in property operating expense from our multifamily assets and a $522,000 increase in other property operating expense, partially offset by a $699,000 decrease in property operating expense from our commercial assets. The increase in property operating expense from our multifamily assets was primarily due to a $1.0 million increase related to 1900 Crystal Drive, which we began leasing during the first quarter of 2024, and higher operating expenses due to higher occupancy across the portfolio, partially offset by a $914,000 decrease related to the Disposed Properties. The increase in other property operating expense was primarily due to a $646,000 increase in insurance claims covered by our captive insurance subsidiary. The decrease in property operating expense from our commercial assets was primarily due to an $836,000 decrease related to 1800 South Bell Street and 2100 Crystal Drive, which were taken out of service during 2024, a $525,000 decrease related to the Disposed Properties and lower operating expenses due to lower occupancy across the portfolio, partially offset by a $557,000 increase in expenses incurred in connection with construction management services provided to tenants.

Previous wording

General and administrative expense: third-party real estate services decreased by approximately $1.5 million, or 6.3%, to $22.3 million in 2024 from $23.8 million in 2023. The decrease was primarily due to lower third-party reimbursable expenses.

Current wording

General and administrative expense: third-party real estate services decreased by approximately $3.5 million, or 15.6%, to $18.7 million in 2024 from $22.1 million in 2023. The decrease was primarily due to lower third-party reimbursable expenses.

Previous wording

Property rental revenue decreased by approximately $1.4 million, or 1.1%, to $122.6 million in 2024 from $124.0 million in 2023. The decrease was primarily due to a $14.3 million decrease in revenue from our commercial assets, partially offset by $10.3 million in lease termination revenue, a $1.5 million increase in revenue from our multifamily assets and a $1.1 million increase in other revenue. The decrease in revenue from our commercial assets was primarily due to a $3.8 million decrease related to the Disposed Properties, a $2.1 million decrease related to 1800 South Bell Street, which was taken out of service during the first quarter of 2024, and lower occupancy and rents across the portfolio. The increase in revenue from our multifamily assets was primarily due to higher occupancy and rents across the portfolio and continued lease up of 8001 Woodmont, partially offset by a $2.6 million decrease related to the Disposed Properties.

Current wording

Property rental revenue decreased by approximately $9.5 million, or 3.9%, to $235.2 million in 2024 from $244.6 million in 2023. The decrease was primarily due to a $23.0 million decrease in revenue from our commercial assets, partially offset by $11.1 million in lease termination revenue, a $2.3 million increase in revenue from our multifamily assets and a $163,000 increase in other revenue. The decrease in revenue from our commercial assets was primarily due to a $6.6 million decrease related to the Disposed Properties, a $6.2 million decrease related to 1800 South Bell Street and 2100 Crystal Drive, which were taken out of service during 2024, and lower occupancy and rents across the portfolio. The increase in revenue from our multifamily assets was primarily due to a $1.3 million increase related to 1900 Crystal Drive, which we began leasing during the first quarter of 2024, and higher occupancy and rents across the portfolio, partially offset by a $5.4 million decrease related to the Disposed Properties.

Previous wording

Third-party real estate services revenue, including reimbursements, decreased by approximately $4.9 million, or 21.6%, to $17.9 million in 2024 from $22.8 million in 2023. The decrease was primarily due to a $2.0 million decrease in reimbursement revenue, a $1.7 million decrease in development fees related to the timing of development projects and a $681,000 decrease in property management fees.

Current wording

Third-party real estate services revenue, including reimbursements, decreased by approximately $10.4 million, or 22.7%, to $35.3 million in 2024 from $45.6 million in 2023. The decrease was primarily due to a $4.1 million decrease in development fees related to the timing of development projects, a $3.7 million decrease in reimbursement revenue and a $1.7 million decrease in property management fees.

Previous wording

Depreciation and amortization expense increased by approximately $3.4 million, or 6.4%, to $56.9 million in 2024 from $53.4 million in 2023. The increase was primarily due to (i) a $7.7 million increase related to 2100 Crystal Drive due to the acceleration of depreciation of certain assets as the building will be taken out of service in the second quarter of 2024, (ii) a $2.3 million increase related to 1900 Crystal Drive, which we began leasing during the first quarter of 2024, and (iii) a $1.7 million increase related to various National Landing assets primarily due to placing Water Park and Surreal into service and the acceleration of depreciation of certain assets. The increase in depreciation and amortization expense was partially offset by (iv) a $3.3 million decrease related to 8001 Woodmont due to the amortization of acquired in-place lease intangibles in 2023, (v) a $3.0 million decrease related to the Disposed Properties and (vi) a $2.2 million decrease related to 1800 South Bell Street, which was taken out of service during the first quarter of 2024.

Current wording

Depreciation and amortization expense increased by approximately $5.5 million, or 5.4%, to $108.2 million in 2024 from $102.6 million in 2023. The increase was primarily due to (i) a $7.5 million increase related to 2100 Crystal Drive due to the acceleration of depreciation of certain assets as the building was taken out of service in the second quarter of 2024, (ii) a $6.5 million increase related to 1900 Crystal Drive, which we began leasing during the first quarter of 2024, (iii) a $2.2 million increase related to Crystal City Shops at 2100 due to the acceleration of depreciation and (iv) a $2.0 million increase related to various National Landing assets primarily due to placing Water Park and Surreal into service. The increase in depreciation and amortization expense was partially offset by (v) a $4.9 million decrease related to the Disposed Properties, (vi) a $4.3 million decrease related to 1800 South Bell Street, which was taken out of service during the first quarter of 2024, (vii) a $3.4 million decrease related to 8001 Woodmont due to the amortization of acquired in-place lease intangibles in 2023 and (viii) a $1.0 million decrease related to 2451 Crystal Drive due to the disposal of certain tenant-related assets in 2023.

Previous wording

Real estate taxes expense decreased by approximately $1.4 million, or 9.4%, to $13.8 million in 2024 from $15.2 million in 2023. The decrease was primarily due to a $1.1 million decrease related to the Disposed Properties.

Current wording

Real estate taxes expense decreased by approximately $1.5 million, or 4.9%, to $28.2 million in 2024 from $29.6 million in 2023. The decrease was primarily due to a $1.6 million decrease related to the Disposed Properties and lower assessments across the portfolio, partially offset by a $1.4 million increase related to 1900 Crystal Drive, which we began leasing during the first quarter of 2024.

Previous wording

General and administrative expense: corporate and other decreased by approximately $1.2 million, or 7.1%, to $15.0 million in 2024 from $16.1 million in 2023. The decrease was primarily due to lower compensation expenses, partially offset by a decrease in capitalized payroll.

Current wording

General and administrative expense: corporate and other increased by approximately $758,000, or 2.4%, to $32.0 million in 2024 from $31.2 million in 2023. The increase was primarily due to a decrease in capitalized payroll, partially offset by lower compensation expenses.

Previous wording

Income from unconsolidated real estate ventures increased by approximately $542,000, or 125.2%, to $975,000 in 2024 from $433,000 in 2023. The increase was primarily due to a $480,000 gain at our share from the sale of Central Place Tower in 2024.

Current wording

Income from unconsolidated real estate ventures decreased by approximately $194,000, or 20.6%, to $749,000 in 2024 from $943,000 in 2023. The decrease was due to a decrease in income at our share primarily related to disposition activity, partially offset by a $480,000 gain at our share from the sale of Central Place Tower in 2024.

Previous wording

Interest expense increased by approximately $3.3 million, or 12.4%, to $30.2 million in 2024 from $26.8 million in 2023. The increase in interest expense was primarily due to (i) a $6.8 million increase due to higher outstanding debt, (ii) a $3.1 million increase related to rising interest rates on variable rate mortgage loans and (iii) a $550,000 decrease in capitalized interest as we began placing 1900 Crystal Drive into service during the first quarter of 2024. The increase in interest expense was partially offset by (iv) a $2.7 million decrease related to the increase in mark-to-market associated with our non-designated derivatives, (v) a $2.7 million decrease related to mortgage loans collateralized by 800 North Glebe Road, 2121 Crystal Drive and Falkland Chase-South & West, which were repaid during 2023 and (vi) a $2.1 million decrease related to the Disposed Properties, excluding Falkland Chase-South & West.

Current wording

Interest expense increased by approximately $9.5 million, or 18.0%, to $62.1 million in 2024 from $52.7 million in 2023. The increase in interest expense was primarily due to (i) a $11.9 million increase due to higher outstanding debt, (ii) a $5.9 million increase related to rising interest rates on variable rate mortgage loans and (iii) a $3.4 million decrease in capitalized interest as we placed 1900 Crystal Drive into service. The increase in interest expense was partially offset by (iv) a $5.6 million decrease resulting from the expiration of certain non-designated derivatives, (v) a $4.8 million decrease related to mortgage loans collateralized by 800 North Glebe Road, 2121 Crystal Drive and Falkland Chase-South & West, which were repaid during 2023, and (vi) a $2.1 million decrease related to the Disposed Properties, excluding Falkland Chase-South & West.

Previous wording

Gain on the sale of real estate of $197,000 in 2024 was primarily due to the recognition of previously recorded contingent liabilities, which were relieved in connection with the sale of Central Place Tower by one of our unconsolidated real estate ventures, partially offset by the loss on the sale of North End Retail. Gain on the sale of real estate of $40.7 million in 2023 was due to the sale of the Disposed Properties.

Current wording

Gain on the sale of real estate of $286,000 in 2024 was primarily due to the recognition of previously recorded contingent liabilities, which were relieved in connection with the sale of Central Place Tower by one of our unconsolidated real estate ventures, partially offset by the loss on the sale of North End Retail. Gain on the sale of real estate of $40.7 million in 2023 was due to the sale of the Disposed Properties.

Previous wording

Impairment loss of $17.2 million in 2024 is related to a development parcel, which was written down to its estimated fair value.

Current wording

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

We believe FFO is a meaningful non-GAAP financial measure useful in comparing our levered operating performance from period-to-period and as compared to similar real estate companies because FFO excludes real estate depreciation and amortization expense, which implicitly assumes that the value of real estate diminishes predictably over time rather than fluctuating based on market conditions and other non-comparable income and expenses. FFO does not represent cash generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should

Current wording

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

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 March 31, 2024, our same store pool decreased to 41 properties from 42 properties due to (i) the sale of North End Retail and Central Place Tower, (ii) the exclusion of 1800 South Bell Street, which was taken out of service, and (iii) the inclusion of 8001 Woodmont and 1831/1861 Wiehle Avenue as they were in service for the entirety of the comparable periods. 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

Current wording

properties from 42 properties due to (i) the sale of North End Retail and Central Place Tower, (ii) the exclusion of 1800 South Bell Street and 2100 Crystal Drive, which were taken out of service, and (iii) the inclusion of 8001 Woodmont and 1831/1861 Wiehle Avenue as they were in service for the entirety of the comparable periods. 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 increased $4.6 million, or 6.5%, to $75.7 million for the three months ended March 31, 2024 from $71.1 million for the same period in 2023. The increase was substantially attributable to (i) higher rents and occupancy, partially offset by higher operating expenses in our multifamily portfolio and (ii) burn off of rent abatements and lower bad debt, real estate taxes and operating expenses, partially offset by lower occupancy in our commercial portfolio.

Current wording

Same store NOI increased $2.2 million, or 3.2%, to $71.4 million for the three months ended June 30, 2024 from $69.1 million for the same period in 2023. The increase for the three months ended June 30, 2024 was substantially attributable to (i) higher rents and occupancy and lower concessions, partially offset by higher operating expenses in our multifamily portfolio, and (ii) lower real estate taxes and operating expenses, partially offset by lower occupancy in our commercial portfolio. Same store NOI increased $7.2 million, or 5.2%, to $145.1 million for the six months ended June 30, 2024 from $137.9 million for the same period in 2023. The increase for the six months ended June 30, 2024 was substantially attributable to (i) higher rents and occupancy and lower concessions, partially offset by higher operating expenses in our multifamily portfolio, and (ii) burn off of rent abatements, lower real estate taxes and non-reimbursable operating expenses, partially offset by lower occupancy in our commercial portfolio.

Previous wording

See discussion of third-party real estate services revenue, including reimbursements, and third-party real estate services expenses for the three months ended March 31, 2024 in the preceding pages under "Results of Operations."

Current wording

See discussion of third-party real estate services revenue, including reimbursements, and third-party real estate services expenses for the three and six months ended June 30, 2024 in the preceding pages under "Results of Operations."

Previous wording

Consistent with internal reporting presented to our CODM and our definition of NOI, the third-party asset management and real estate services operating results are excluded from the NOI data below. Property revenue is calculated as property rental revenue plus parking revenue. Property expense is calculated as property operating expenses plus real estate taxes. Consolidated NOI is calculated as property revenue less property expense. See Note 16 to the financial statements for the reconciliation of net income (loss) attributable to common shareholders to consolidated NOI for the three months ended March 31, 2024 and 2023.

Current wording

Consistent with internal reporting presented to our CODM and our definition of NOI, the third-party asset management and real estate services operating results are excluded from the NOI data below. Property revenue is calculated as property rental revenue plus parking revenue. Property expense is calculated as property operating expenses plus real estate taxes. Consolidated NOI is calculated as property revenue less property expense. See Note 16 to the financial statements for the reconciliation of net income (loss) attributable to common shareholders to consolidated NOI for the three and six months ended June 30, 2024 and 2023.

Previous wording

Multifamily: Property revenue increased by $1.5 million, or 3.0%, to $51.6 million in 2024 from $50.1 million in 2023. Consolidated NOI increased by $1.2 million, or 4.4%, to $28.3 million in 2024 from $27.1 million in 2023. The increases in property revenue and consolidated NOI were primarily due to higher occupancy and rents across the portfolio, partially offset by the Disposed Properties. The increase in consolidated NOI was partially offset by an increase in property operating costs.

Current wording

Multifamily: Property revenue increased by $2.2 million, or 2.1%, to $105.0 million in 2024 from $102.9 million in 2023. Consolidated NOI increased by $687,000, or 1.2%, to $56.5 million in 2024 from $55.8 million in 2023. The increases in property revenue and consolidated NOI were primarily due to 1900 Crystal Drive, which we began leasing during the first quarter of 2024, and higher occupancy and rents across the portfolio, partially offset by a decrease related to the Disposed Properties.

Previous wording

Commercial: Property revenue decreased by $14.9 million, or 19.6%, to $61.2 million in 2024 from $76.1 million in 2023. Consolidated NOI decreased by $11.0 million, or 23.0%, to $36.7 million in 2024 from $47.7 million in 2023. The decreases in property revenue and consolidated NOI were primarily due to the Disposed Properties, 1800 South Bell Street being taken out of service during the first quarter of 2024, and lower occupancy and rents across the portfolio.

Current wording

Commercial: Property revenue decreased by $24.1 million, or 16.7%, to $120.7 million in 2024 from $144.8 million in 2023. Consolidated NOI decreased by $18.7 million, or 20.8%, to $71.3 million in 2024 from $90.0 million in 2023. The decreases in property revenue and consolidated NOI were primarily due to the Disposed Properties, 1800 South Bell Street and 2100 Crystal Drive, which were taken out of service during 2024, and lower occupancy and rents across the portfolio.

Previous wording

Our Board of Trustees has authorized the repurchase of up to $1.5 billion of our outstanding common shares. During the three months ended March 31, 2024, we repurchased and retired 3.0 million common shares for $49.4 million, a weighted average purchase price per share of $16.50. During the three months ended March 31, 2023, we repurchased and retired 1.2 million common shares for $20.1 million, a weighted average purchase price per share of $16.66. Since we began the share repurchase program through March 31, 2024, we have repurchased and retired 48.9 million common shares for $1.0 billion, a weighted average purchase price per share of $20.61.

Current wording

Our Board of Trustees has authorized the repurchase of up to $1.5 billion of our outstanding common shares. During the three and six months ended June 30, 2024, we repurchased and retired 4.7 million and 7.7 million common shares for $68.7 million and $118.1 million, a weighted average purchase price per share of $14.62 and $15.35. During the three and six months ended June 30, 2023, we repurchased and retired 9.3 million and 10.5 million common shares for $135.7 million and $155.8 million, a weighted average purchase price per share of $14.54 and $14.79. Since we began the share repurchase program through June 30, 2024, we have repurchased and retired 53.6 million common shares for $1.1 billion, a weighted average purchase price per share of $20.09.

Previous wording

During the three months ended March 31, 2024, there were no significant changes to the material cash requirements information presented in Item 7 of Part II of our Annual Report.

Current wording

During the six months ended June 30, 2024, there were no significant changes to the material cash requirements information presented in Item 7 of Part II of our Annual Report.

Previous wording

Cash Flows for the Three Months Ended March 31, 2024

Current wording

Cash Flows for the Six Months Ended June 30, 2024

Previous wording

Cash and cash equivalents, and restricted cash increased $59.8 million to $260.3 million as of March 31, 2024, compared to $200.4 million as of December 31, 2023. This increase resulted from $123.6 million of net cash provided by investing activities and $37.0 million of net cash provided by operating activities, partially offset by $100.8 million of net cash used in financing activities. Our outstanding debt was $2.6 billion as of March 31, 2024 and December 31, 2023.

Current wording

Cash and cash equivalents, and restricted cash increased $5.5 million to $205.9 million as of June 30, 2024, compared to $200.4 million as of December 31, 2023. This increase resulted from $62.0 million of net cash provided by investing activities and $60.8 million of net cash provided by operating activities, partially offset by $117.3 million of net cash used in financing activities. Our outstanding debt was $2.6 billion as of June 30, 2024 and December 31, 2023.

Previous wording

Net cash provided by operating activities of $37.0 million comprised: (i) $38.2 million of net income (before $80.6 million of non-cash items and a $197,000 gain on the sale of real estate), (ii) $1.2 million of return on capital from unconsolidated real estate ventures and (iii) $2.3 million of net change in operating assets and liabilities. Non-cash income adjustments of $80.6 million primarily include depreciation and amortization expense, impairment loss, share-based compensation expense, deferred rent and amortization of lease incentives.

Current wording

Net cash provided by operating activities of $60.8 million comprised: (i) $70.8 million of net income (before $146.7 million of non-cash items and a $286,000 gain on the sale of real estate), (ii) $1.7 million of return on capital from unconsolidated real estate ventures and (iii) $11.7 million of net change in operating assets and liabilities. Non-cash income adjustments of $146.7 million primarily include depreciation and amortization expense, share-based compensation expense, impairment loss, deferred rent and amortization of lease incentives.

Previous wording

Net cash provided by investing activities of $123.6 million primarily comprised: (i) $160.3 million of distributions of capital from unconsolidated real estate ventures and other investments primarily related to the sale of Central Place Tower by one of our unconsolidated real estate ventures, and (ii) $12.4 million of proceeds from the sale of real estate, partially offset by (iii) $48.0 million of development costs, construction in progress and real estate additions, and (iv) $2.5 million of investments in unconsolidated real estate ventures and other investments.

Current wording

Net cash provided by investing activities of $62.0 million primarily comprised: (i) $163.9 million of distributions of capital from unconsolidated real estate ventures and other investments primarily related to the sale of Central Place Tower by one of our unconsolidated real estate ventures, and (ii) $12.4 million of proceeds from the sale of real estate, partially offset by (iii) $113.4 million of development costs, construction in progress and real estate additions, and (iv) $3.8 million of investments in unconsolidated real estate ventures and other investments.

Previous wording

Net cash used in financing activities of $100.8 million primarily comprised: (i) $92.0 million of repayments on the revolving credit facility, (ii) $49.4 million of common shares repurchased, (iii) $16.1 million of dividends paid to common shareholders and (iv) $2.9 million of distributions to our redeemable noncontrolling interests, partially offset by (v) $31.6 million of borrowings under mortgage loans and (vi) $30.0 million of borrowings under the revolving credit facility.

Current wording

Net cash used in financing activities of $117.3 million primarily comprised: (i) $195.0 million of repayments on the revolving credit facility, (ii) $116.4 million of common shares repurchased, (iii) $32.2 million of dividends paid to common shareholders, (iv) $26.6 million paid for the acquisition of noncontrolling interests and (v) $5.8 million of distributions to our redeemable noncontrolling interests, partially offset by (vi) $173.0 million of borrowings under the revolving credit facility and (vii) $89.6 million of borrowings under mortgage loans.

Previous wording

As of March 31, 2024, we had investments in unconsolidated real estate ventures totaling $104.8 million. For these investments, we exercise significant influence over but do not control these entities and, therefore, account for these investments using the equity method of accounting. For a more complete description of our real estate ventures, see Note 4 to the financial statements.

Current wording

As of June 30, 2024, we had investments in unconsolidated real estate ventures totaling $101.0 million. For these investments, we exercise significant influence over but do not control these entities and, therefore, account for these investments using the equity method of accounting. For a more complete description of our real estate ventures, see Note 4 to the financial statements.

Previous wording

connection with borrowings, (ii) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) in connection with borrowings, or (iii) provide guarantees to lenders and other third parties for the completion of development projects. We customarily have agreements with our outside venture partners whereby the partners agree to reimburse the real estate venture or us for their share of any payments made under certain of these guarantees. At times, we also have agreements with certain of our outside venture partners whereby we agree to either indemnify the partners and/or the associated ventures with respect to certain contingent liabilities associated with operating assets or to reimburse our partner for its share of any payments made by them under certain guarantees. Guarantees (excluding environmental) customarily terminate either upon the satisfaction of specified circumstances or repayment of the underlying debt. Amounts that we may be required to pay in future periods in relation to guarantees associated with budget overruns or operating losses are not estimable.

Current wording

From time to time, we (or ventures in which we have an ownership interest) have agreed, and may in the future agree with respect to unconsolidated real estate ventures, to (i) guarantee portions of the principal, interest and other amounts in connection with borrowings, (ii) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) in connection with borrowings, or (iii) provide guarantees to lenders and other third parties for the completion of development projects. We customarily have agreements with our outside venture partners whereby the partners agree to reimburse the real estate venture or us for their share of any payments made under certain of these guarantees. At times, we also have agreements with certain of our outside venture partners whereby we agree to either indemnify the partners and/or the associated ventures with respect to certain contingent liabilities associated with operating assets or to reimburse our partner for its share of any payments made by them under certain guarantees. Guarantees (excluding environmental) customarily terminate either upon the satisfaction of specified circumstances or repayment of the underlying debt. Amounts that we may be required to pay in future periods in relation to guarantees associated with budget overruns or operating losses are not estimable.