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Section 1: 8-K (8-K)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported):

July 2, 2018

 

 

JBG SMITH PROPERTIES

(Exact name of Registrant as specified in its charter)

 

Maryland

 

No. 001-37994

 

81-4307010

(State or other jurisdiction of
incorporation or organization)

 

(Commission file number)

 

(I.R.S. Employer
Identification No.)

 

4445 Willard Avenue, Suite 400
Chevy Chase, MD

 

20815

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (240) 333-3600

 

 

Former name or former address, if changed since last report:

 


 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2.):

 

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) Soliciting

 

o  material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act   o

 

 

 



 

JBG SMITH Properties (the “Company”) is filing this Current Report on Form 8-K to provide (i) the Unaudited Pro Forma Consolidated and Combined Statement of Operations for the year ended December 31, 2017, and (ii) certain historical financial statements that were initially included in the Company’s Registration Statement on Form S-11 (No. 333-220498) and the Current Report on Form 8-K filed with the SEC on July 21, 2017, in each case for the purpose of incorporating this Current Report on Form 8-K by reference into subsequent registration statements.

 

The following financial statements are filed as part of this report:

 

Item 9.01                                           Financial Statements and Exhibits.

 

(a)                                 Financial Statements of Businesses Acquired

 

1.              JBG Real Estate Operating Assets Audited Combined Statement of Revenues and Expenses from Real Estate Operations for the year ended December 31, 2016

 

2.              JBG Real Estate Operating Assets Unaudited Combined Statement of Revenues and Expenses from Real Estate Operations for the six months ended June 30, 2017

 

3.              JBG/Operating Partners, L.P. and Subsidiaries audited financial statements for the year ended December 31, 2016

 

4.              JBG/Operating Partners, L.P. and Subsidiaries unaudited interim financial statements for the six months ended June 30, 2017

 

(b)                                 Pro Forma Financial Information

 

1.              JBG SMITH Properties Unaudited Pro Forma Consolidated and Combined Statement of Operations for the year ended December 31, 2017

 

(d)                                 Exhibits

 

23.1

 

Consent of KPMG LLP

 

 

 

99.1

 

JBG Real Estate Operating Assets Audited Combined Statement of Revenues and Expenses from Real Estate Operations for the year ended December 31, 2016

 

 

 

99.2

 

JBG Real Estate Operating Assets Unaudited Combined Statement of Revenues and Expenses from Real Estate Operations for the six months ended June 30, 2017

 

 

 

99.3

 

JBG/Operating Partners, L.P. and Subsidiaries audited financial statements for the year ended December 31, 2016

 

 

 

99.4

 

JBG/Operating Partners, L.P. and Subsidiaries unaudited interim financial statements for the six months ended June 30, 2017

 

 

 

99.5

 

JBG SMITH Properties Unaudited Pro Forma Consolidated and Combined Statement of Operations for the year ended December 31, 2017

 

2



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

JBG SMITH PROPERTIES

 

 

 

 

 

By:

/s/ Steven A. Museles

 

Name:

Steven A. Museles

 

Title:

Chief Legal Officer and Corporate Secretary

 

July 2, 2018

 

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Section 2: EX-23.1 (EX-23.1)

Exhibit 23.1

 

Consent of Independent Auditors

 

We consent to the incorporation by reference in the registration statement (No. 333-220507) on Form S-8 of JBG SMITH Properties of our reports dated June 8, 2017, with respect to the (i) combined statement of revenues and expenses from real estate operations of the JBG Real Estate Operating Assets for the year ended December 31, 2016; and (ii) consolidated financial statements of JBG/Operating Partners, L.P. as of and for the year ended December 31, 2016, which reports appear in the Form 8-K of JBG SMITH Properties dated July 2, 2018.

 

/s/ KPMG LLP

McLean, Virginia

July 2, 2018

 


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Section 3: EX-99.1 (EX-99.1)

Exhibit 99.1

 

JBG REAL ESTATE OPERATING ASSETS

 

COMBINED STATEMENT OF REVENUES AND EXPENSES FROM

REAL ESTATE OPERATIONS

 

Including Independent Auditors’ Report

 

For the Year Ended December 31, 2016

 



 

INDEPENDENT AUDITORS’ REPORT

 

The Partners of
JBG/Operating Partners, L.P.:

 

We have audited the accompanying combined statement of revenues and expenses from real estate operations (as defined in Note 1) for the year ended December 31, 2016, and the related notes (the “statement”).

 

Management’s Responsibility for the Financial Statement

 

Management is responsible for the preparation and fair presentation of the statement in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the statement that is free from material misstatement, whether due to fraud or error.

 

Auditors’ Responsibility

 

Our responsibility is to express an opinion on the statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement is free from material misstatement.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the statement. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the statement in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the statement.

 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

Opinion

 

In our opinion, the combined statement of revenues and expenses from real estate operations referred to above presents fairly, in all material respects, the revenue and certain expenses described in Note 1 of the statement for the year ended December 31, 2016, in accordance with U.S. generally accepted accounting principles.

 

Emphasis of Matter

 

We draw attention to Note 1 to the statement, which describes that the accompanying statement was prepared for the purpose of complying with the Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended (for inclusion in the filing of Form 10 of JBG SMITH Properties) and is not intended to be a complete presentation of revenues and expenses. Our opinion is not modified with respect to this matter.

 

Other Matter

 

Our audit was conducted for the purpose of forming an opinion on the statement as a whole. The accompanying combining information included in Schedule 1 is presented for purposes of additional analysis and is not a required part of the statement. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the statement. The information has been subjected to the auditing procedures applied in the audit of the statement and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used

 

1



 

to prepare the statement or to the statement itself, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the statement as a whole.

 

/s/ KPMG LLP

 

McLean, Virginia
June 8, 2017

 

2



 

JBG REAL ESTATE OPERATING ASSETS

 

Combined Statement of Revenues and Expenses from Real Estate Operations

(dollar amounts in thousands)

 

 

 

For the
Year Ended
December 31, 2016

 

Revenue

 

 

 

Property rentals

 

$

204,906

 

Tenant expense reimbursement

 

26,916

 

Other revenue

 

3,456

 

Total Revenue

 

235,278

 

Expenses

 

 

 

Property operating

 

72,711

 

Real estate taxes

 

27,832

 

Management fees

 

7,330

 

Total Expenses

 

107,873

 

Revenues in Excess of Expenses

 

$

127,405

 

 

See accompanying notes to combined statement of revenues and expenses from real estate operations.

 

3



 

JBG REAL ESTATE OPERATING ASSETS

 

Notes to the Combined Statement of Revenues and Expenses from

 

Real Estate Operations

 

For the Year Ended December 31, 2016

 

(dollar amounts in thousands)

 

NOTE 1—BASIS OF PRESENTATION

 

JBG Real Estate Operating Assets is not a separate or single legal entity, but rather a combination of real estate operating assets and entities under the common management of JBG/Operating Partners, L.P. (the “Partnership”) and its consolidated subsidiaries (the “Management Company”). The Management Company earns fees in connection with investment, development, property management, leasing, construction management, tenant improvement construction, and finance provided to commercial office, multifamily (both rental and for-sale), retail, and hotel assets. Substantially all fee revenue earned by the Management Company is from services provided to the real estate assets owned by affiliated real estate investment funds (each a “Fund” and collectively, the “Funds”) and real estate ventures (the “Ventures”). The Funds either held or continue to hold direct or indirect ownership in each real estate asset (“Property Asset”) through separate limited liability companies (each, a “Property LLC”). The Funds own direct or indirect equity interests in the Property LLCs. The Ventures also either held or continue to hold interests in real estate assets (the “Venture Assets”). The Management Company, Funds, Ventures, Property Assets, Property LLCs, and Venture Assets are collectively referred to as “JBG”.

 

On October 31, 2016, the Partnership entered into a Master Transaction Agreement (the “Transaction Agreement”) with Vornado Realty Trust, Vornado Realty L.P., JBG Properties, Inc., certain affiliates of JBG Properties, Inc., JBG SMITH Properties (“JBG SMITH”) and JBG SMITH Properties LP, a Delaware limited partnership and JBG SMITH’s subsidiary operating partnership (the “Operating Partnership”). On July 18, 2017, in accordance with the Transaction Agreement, the Management Company, the Funds’ interests in certain Property LLCs, and interests in the Ventures, were contributed through a series of transactions to the Operating Partnership, in exchange for the right to receive units of limited partnership interest in the Operating Partnership or common shares of JBG SMITH or, in certain circumstances, cash (the “Transaction”). As of the closing of the Transaction on July 18, 2017, JBG SMITH was a publicly traded real estate investment trust. Except where the context requires otherwise, “JBG SMITH” refers to JBG SMITH, the Operating Partnership and their consolidated subsidiaries.

 

On July 18, 2017, JBG SMITH acquired up to 100% of the ownership interests in certain Property LLCs from one or more of the following real estate funds, affiliated with the Management Company: JBG Investment Fund I, L.P. (“Fund I”); JBG Investment Fund II, L.P. (“Fund II”); JBG Investment Fund III, L.P. (“Fund III”); JBG Investment Fund VI, L.L.C. (“Fund VI”); JBG Investment Fund VII, L.L.C. (“Fund VII”); JBG Investment Fund VIII, L.L.C. (“Fund VIII”); JBG Investment Fund IX, L.L.C. (“Fund IX”); JBG/Urban Direct Member, L.L.C. (“Urban Direct”); and JBG/Recap Investors, L.L.C. (“Recap”). JBG SMITH also acquired interests in several Ventures from the Funds and other affiliates of the Management Company.

 

The Management Company, Funds, Ventures, and Property LLCs are not entities under common control or subsidiaries of a common parent. The Property Assets and Venture Assets presented in the combined statement of revenues and expenses from real estate operations and supplementary information presented in Schedule 1 (the “Statement”) have been under common management of the Management Company since the date of acquisition by the applicable Fund.

 

Although JBG SMITH acquired less than 100% of the equity interests in certain of the Property LLCs and each Venture, the Statement presents 100% of the revenues and expenses from real estate operations for each Property Asset and Venture Asset. The schedule included in the Supplemental Information identifies the selling entity (Fund) and the name of the Venture, and the percentage ownership in each Property Asset or Venture Asset that was acquired by JBG SMITH.

 

The following tables set forth the percentage ownership interest JBG SMITH acquired in the Property LLCs and Ventures that hold ownership interests in certain Property Assets and Venture Assets. The ownership percentages are unaudited.

 

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JBG REAL ESTATE OPERATING ASSETS

 

Notes to the Combined Statement of Revenues and Expenses from
Real Estate Operations

 

For the Year Ended December 31, 2016

 

(dollar amounts in thousands)

 

NOTE 1—BASIS OF PRESENTATION (Continued)

 

JBG SMITH acquired 100% of the ownership interests in the Property LLCs that hold the ownership interests in the following Property Assets:

 

Property Asset—Office

 

Property Asset—Retail

 

Property Asset—Multifamily

1233 20th Street

 

North End Retail

 

Falkland Chase—North

1600 K Street

 

 

 

Falkland Chase—South & West

1831 Wiehle Avenue

 

 

 

Fort Totten Square

800 North Glebe Road

 

 

 

 

7200 Wisconsin Avenue

 

 

 

 

RTC—West

 

 

 

 

Summit I

 

 

 

 

Summit II

 

 

 

 

Wiehle Avenue Office Building

 

 

 

 

 

JBG SMITH acquired less than 100% of the ownership interests in the Property LLCs and Ventures that hold the ownership interests in the following Property Assets and Venture Assets, with the exception of 12725 Twinbrook Parkway.

 

Property Assets and Venture Assets

 

Type

 

JBG SMITH
Ownership (Unaudited)

 

5640 Fishers/12441 Parklawn

 

Office

 

10.0

%

12725 Twinbroook Parkway

 

Office

 

0.0

%(1)

11333 Woodglen Drive

 

Office

 

18.0

%

Capitol Point—North

 

Office

 

59.0

%

Chase Tower Office/Retail

 

Office

 

10.0

%

Courthouse Metro Office

 

Office

 

18.0

%

Fishers Place I

 

Office

 

10.0

%

Fishers Place II

 

Office

 

10.0

%

Fishers Place III

 

Office

 

10.0

%

L’Enfant Plaza Office—East

 

Office

 

49.0

%

L’Enfant Plaza Office—North

 

Office

 

49.0

%

L’Enfant Plaza Retail

 

Office

 

49.0

%

NoBe II Office

 

Office

 

18.0

%

Pickett Industrial Park

 

Office

 

10.0

%

Rosslyn Gateway—North

 

Office

 

18.0

%

Rosslyn Gateway—South

 

Office

 

18.0

%

The Foundry

 

Office

 

9.9

%

Woodglen

 

Office

 

18.0

%

Stonebridge at Potomac Town Center—Phase I

 

Retail

 

10.0

%

Atlantic Plumbing

 

Multifamily

 

64.0

%

Fairway Apartments

 

Multifamily

 

10.0

%

Galvan

 

Multifamily

 

1.8

%

The Alaire

 

Multifamily

 

18.0

%

The Gale Eckington

 

Multifamily

 

5.0

%

The Terano

 

Multifamily

 

1.8

%

 


(1)         The Fund’s 10% ownership interest in the asset was sold to an unrelated party on July 12, 2017.

 

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JBG REAL ESTATE OPERATING ASSETS

 

Notes to the Combined Statement of Revenues and Expenses from
Real Estate Operations

 

For the Year Ended December 31, 2016

 

(dollar amounts in thousands)

 

NOTE 1—BASIS OF PRESENTATION (Continued)

 

The accompanying combined statement of revenues and expenses from real estate operations has been prepared for the purpose of complying with Rule 3-14 of Regulation S-X promulgated under the Securities Act. Accordingly, the combined statement of revenues and expenses from real estate operations does not reflect the actual operations for the period presented as revenues and expenses from real estate operations excludes certain revenue and expenses expected to be incurred in the future operations of the Property Assets or Venture Assets. Such items include depreciation, amortization, interest expense, interest income, ground rent expense, and amortization of above- and below-market leases. Revenue includes contractual base and other rent pursuant to the lease agreements, tenant expense reimbursements, and other revenue derived from the operation of the real estate asset. The expenses presented are the direct expenses associated with operating and maintaining the real estate asset and are recognized as incurred. Further, the accompanying combined statement of revenues and expenses from real estate operations does not include any amounts for non-operating real estate assets including future development parcels and Property Assets or Venture Assets in the near-term development, development, and construction phases.

 

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Combination—The combined statement of revenues and expenses from real estate operations includes selected accounts of the Property Assets and Venture Assets as described in Note 1. All significant intercompany accounts and transactions have been eliminated in the combined statement of revenues and expenses from real estate operations.

 

Revenue Recognition—Property rental revenue is recognized on a straight-line basis over the lease term when collectability is reasonably assured and the tenant has taken possession or controls the physical use of the leased asset.

 

Tenant expense reimbursements for real estate taxes, common area maintenance, and other recoverable costs are recognized in the period that the expenses are incurred. The reimbursements are recognized and presented gross as the Property Assets and Venture Assets are generally the primary obligor with respect to purchasing goods and services from third-party suppliers, have discretion in selecting the supplier, and bear the associated credit risk.

 

Other revenue is revenue derived from lease termination fees and the tenants’ use of parking and other property facilities. Lease termination fees are recognized when the related leases are canceled and the landlord has no continuing obligation to provide services to such former tenants. Other revenue is recognized when the related services are utilized by the tenants.

 

Use of Estimates—Management has made a number of estimates and assumptions relating to the reporting and disclosure of revenues and expenses from real estate operations during the reporting period to present the statement of revenues and expenses from real estate operations in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates.

 

6



 

JBG REAL ESTATE OPERATING ASSETS

 

Notes to the Combined Statement of Revenues and Expenses from
Real Estate Operations

 

For the Year Ended December 31, 2016

 

(dollar amounts in thousands)

 

NOTE 3—SUMMARY TABLE (UNAUDITED)

 

The following table separately presents the aggregate operating revenues and expenses for the wholly owned Property Assets and the less than wholly owned consolidated and non-consolidated Property Assets and Venture Assets. Presentation of amounts as “100% Owned”, “Less Than 100% Owned Consolidated”, and “Less Than 100% Owned Non-Consolidated” are unaudited.

 

 

 

Year Ended December 31, 2016

 

 

 

100% Owned

 

Less Than
100% Owned
Consolidated

 

Combined

 

Less Than
100% Owned
Non-
Consolidated

 

Revenue

 

 

 

 

 

 

 

 

 

Property rentals

 

$

70,242

 

$

 

$

70,242

 

$

134,664

 

Tenant expense reimbursement

 

6,072

 

 

6,072

 

20,844

 

Other revenue

 

961

 

 

961

 

2,495

 

Total Revenue

 

77,275

 

 

77,275

 

158,003

 

Expenses

 

 

 

 

 

 

 

 

 

Property operating

 

20,942

 

 

20,942

 

51,769

 

Real estate taxes

 

9,511

 

 

9,511

 

18,321

 

Management fees

 

2,283

 

 

2,283

 

5,047

 

Total Expenses

 

32,736

 

 

32,736

 

75,137

 

Revenues in Excess of Expenses (Expenses in Excess of Revenues)

 

$

44,539

 

$

 

$

44,539

 

$

82,866

 

 

NOTE 4—LEASE COMMITMENTS

 

There are various lease agreements in place with tenants to lease space in the Property Assets and Venture Assets. As of December 31, 2016, the minimum future cash rents receivable under non-cancelable operating leases in each of the next five years and thereafter were as follows:

 

2017

 

$

136,004

 

2018

 

133,646

 

2019

 

120,305

 

2020

 

110,195

 

2021

 

84,909

 

Thereafter

 

292,700

 

 

 

$

877,759

 

 

Leases generally require reimbursement of the tenant’s proportional share of common area, real estate taxes, and other operating expenses, which are excluded from the amounts above. Future cash rents receivable on multifamily real estate operating assets are excluded from the table above as the lease terms are generally one year or less.

 

7



 

JBG REAL ESTATE OPERATING ASSETS

 

Notes to the Combined Statement of Revenues and Expenses from
Real Estate Operations

 

For the Year Ended December 31, 2016

 

(dollar amounts in thousands)

 

NOTE 5—TENANT CONCENTRATIONS

 

For the year ended December 31, 2016, 15% of total combined revenue was recognized from one government agency tenant.

 

NOTE 6—RELATED PARTY TRANSACTIONS

 

The Management Company provides all property management and related services for the Property Assets and Venture Assets, which are calculated as a percentage of rental revenue or gross receipts. These fees, which have been recorded as management fees in the accompanying Statement, totaled $7,330 for the year ended December 31, 2016.

 

NOTE 7—SUBSEQUENT EVENTS

 

Subsequent events were evaluated through June 8, 2017, the date the combined statement of revenues and expenses from real estate operations was available to be issued.

 

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JBG REAL ESTATE OPERATING ASSETS

 

Supplemental Information—Schedule 1

 

Combined Statement of Revenues and Expenses from Real Estate Operations

 

For the Year Ended December 31, 2016

 

(dollar amounts in thousands)

 

 

 

Office

 

 

 

Capitol Point—
North

 

L’Enfant
Plaza Office—
East

 

L’Enfant
Plaza Office—
North

 

L’Enfant
Plaza Retail

 

Revenue

 

 

 

 

 

 

 

 

 

Property rentals

 

$

165

 

$

16,883

 

$

8,444

 

$

4,800

 

Tenant expense reimbursement

 

55

 

1,419

 

310

 

890

 

Other revenue

 

(24

)

149

 

81

 

153

 

Total Revenue

 

196

 

18,451

 

8,835

 

5,843

 

Expenses

 

 

 

 

 

 

 

 

 

Property operating

 

335

 

4,911

 

3,627

 

3,472

 

Real estate taxes

 

494

 

3,723

 

1,998

 

802

 

Management fees

 

30

 

524

 

187

 

142

 

Total Expenses

 

859

 

9,158

 

5,812

 

4,416

 

Revenues in Excess of Expenses (Expenses in Excess of Revenues)

 

$

(663

)

$

9,293

 

$

3,023

 

$

1,427

 

Affiliated Seller

 

Fund VI/Urban Direct

 

Fund VI/Urban Direct

 

Fund VI/Urban Direct

 

Fund VI/Urban Direct

 

JBG SMITH Ownership (Unaudited)

 

59.0%

 

49.0%

 

49.0%

 

49.0%

 

Anticipated Financial Statement Presentation by Combined Entity (Unaudited)

 

Non-Consolidated

 

Non-Consolidated

 

Non-Consolidated

 

Non-Consolidated

 

Jurisdiction

 

DC

 

DC

 

DC

 

DC

 

 

Note: This schedule is presented for the purposes of additional analysis and is not a required part of the Statement. The terms “consolidated” and “non-consolidated” reflect management’s preliminary conclusion with respect to presentation of such assets in JBG SMITH’s financial statements upon completion of the transaction described in Note 1 and is therefore unaudited.

 

See accompanying independent auditors’ report.

 

9



 

JBG REAL ESTATE OPERATING ASSETS

 

Supplemental Information—Schedule 1 (Continued)

 

Combined Statement of Revenues and Expenses from Real Estate Operations

 

For the Year Ended December 31, 2016

 

(dollar amounts in thousands)

 

 

 

Office—Continued

 

 

 

1233 20th Street

 

The Foundry

 

1600 K Street

 

Subtotal DC Office

 

Revenue

 

 

 

 

 

 

 

 

 

Property rentals

 

$

5,814

 

$

9,049

 

$

3,656

 

$

48,811

 

Tenant expense reimbursement

 

112

 

249

 

248

 

3,283

 

Other revenue

 

(20

)

29

 

90

 

458

 

Total Revenue

 

5,906

 

9,327

 

3,994

 

52,552

 

Expenses

 

 

 

 

 

 

 

 

 

Property operating

 

1,732

 

2,845

 

1,174

 

18,096

 

Real estate taxes

 

1,199

 

1,625

 

669

 

10,510

 

Management fees

 

153

 

254

 

117

 

1,407

 

Total Expenses

 

3,084

 

4,724

 

1,960

 

30,013

 

Revenues in Excess of Expenses (Expenses in Excess of Revenues)

 

$

2,822

 

$

4,603

 

$

2,034

 

$

22,539

 

Affiliated Seller

 

Fund VIII

 

Fund IX

 

Fund VII

 

 

 

JBG SMITH Ownership (Unaudited)

 

100.0%

 

9.9%

 

100.0%

 

 

 

Anticipated Financial Statement Presentation by Combined Entity (Unaudited)

 

Consolidated

 

Non-Consolidated

 

Consolidated

 

 

 

Jurisdiction

 

DC

 

DC

 

DC

 

 

 

 

See accompanying independent auditors’ report.

 

10



 

JBG REAL ESTATE OPERATING ASSETS

 

Supplemental Information—Schedule 1 (Continued)

 

Combined Statement of Revenues and Expenses from Real Estate Operations

 

For the Year Ended December 31, 2016

 

(dollar amounts in thousands)

 

 

 

Office—Continued

 

 

 

Courthouse Metro
Office

 

Rosslyn
Gateway—
North

 

Rosslyn
Gateway—
South

 

Pickett
Industrial Park

 

1831 Wiehle
Avenue

 

Wiehle Avenue
Office Building

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Property rentals

 

$

637

 

$

5,261

 

$

2,902

 

$

3,014

 

$

1,902

 

$

1,208

 

Tenant expense reimbursement

 

109

 

181

 

145

 

834

 

250

 

121

 

Other revenue

 

66

 

50

 

3

 

(1

)

4

 

4

 

Total Revenue

 

812

 

5,492

 

3,050

 

3,847

 

2,156

 

1,333

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating

 

349

 

1,636

 

1,123

 

867

 

661

 

634

 

Real estate taxes

 

102

 

370

 

335

 

410

 

165

 

142

 

Management fees

 

60

 

156

 

94

 

98

 

65

 

60

 

Total Expenses

 

511

 

2,162

 

1,552

 

1,375

 

891

 

836

 

Revenues in Excess of Expenses (Expenses in Excess of Revenues)

 

$

301

 

$

3,330

 

$

1,498

 

$

2,472

 

$

1,265

 

$

497

 

Affiliated Seller

 

Urban Direct

 

Urban Direct

 

Urban Direct

 

Fund IX

 

Fund VIII/Urban Direct

 

Fund VIII

 

JBG SMITH Ownership (Unaudited)

 

18.0%

 

18.0%

 

18.0%

 

10.0%

 

100.0%

 

100.0%

 

Anticipated Financial Statement Presentation by Combined Entity (Unaudited)

 

Non-Consolidated

 

Non-Consolidated

 

Non-Consolidated

 

Non-Consolidated

 

Consolidated

 

Consolidated

 

Jurisdiction

 

VA

 

VA

 

VA

 

VA

 

VA

 

VA

 

 

See accompanying independent auditors’ report.

 

11



 

JBG REAL ESTATE OPERATING ASSETS

 

Supplemental Information—Schedule 1 (Continued)

 

Combined Statement of Revenues and Expenses from Real Estate Operations

 

For the Year Ended December 31, 2016

 

(dollar amounts in thousands)

 

 

 

Office—Continued

 

 

 

800 North Glebe
Road

 

Summit I

 

Summit II

 

RTC—West

 

Subtotal VA Office

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

Property rentals

 

$

9,914

 

$

3,751

 

$

4,209

 

$

13,427

 

$

46,225

 

Tenant expense reimbursement

 

3,015

 

 

115

 

480

 

5,250

 

Other revenue

 

274

 

2

 

7

 

108

 

517

 

Total Revenue

 

13,203

 

3,753

 

4,331

 

14,015

 

51,992

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

Property operating

 

2,716

 

736

 

1,154

 

3,854

 

13,730

 

Real estate taxes

 

1,730

 

232

 

423

 

1,739

 

5,648

 

Management fees

 

386

 

10

 

122

 

374

 

1,425

 

Total Expenses

 

4,832

 

978

 

1,699

 

5,967

 

20,803

 

Revenues in Excess of Expenses (Expenses in Excess of Revenues)

 

$

8,371

 

$

2,775

 

$

2,632

 

$

8,048

 

$

31,189

 

Affiliated Seller

 

Fund VII/Urban Direct

 

Fund VIII

 

Fund VIII

 

Fund VIII

 

 

 

JBG SMITH Ownership (Unaudited)

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

 

 

Anticipated Financial Statement Presentation by Combined Entity (Unaudited)

 

Consolidated

 

Consolidated

 

Consolidated

 

Consolidated

 

 

 

Jurisdiction

 

VA

 

VA

 

VA

 

VA

 

 

 

 

See accompanying independent auditors’ report.

 

12



 

JBG REAL ESTATE OPERATING ASSETS

 

Supplemental Information—Schedule 1 (Continued)

 

Combined Statement of Revenues and Expenses from Real Estate Operations

 

For the Year Ended December 31, 2016

 

(dollar amounts in thousands)

 

 

 

Office—Continued

 

 

 

11333 Woodglen
Drive

 

NoBe II Office

 

Woodglen

 

7200 Wisconsin
Avenue

 

Chase Tower
Office/Retail

 

12725 Twinbrook
Parkway
(1)

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Property rentals

 

$

2,027

 

$

905

 

$

145

 

$

10,934

 

$

11,310

 

$

1,355

 

Tenant expense reimbursement

 

529

 

101

 

 

427

 

1,102

 

1,093

 

Other revenue

 

69

 

(10

)

 

27

 

189

 

 

Total Revenue

 

2,625

 

996

 

145

 

11,388

 

12,601

 

2,448

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating

 

1,098

 

1,058

 

48

 

2,593

 

2,857

 

936

 

Real estate taxes

 

204

 

144

 

32

 

976

 

1,242

 

131

 

Management fees

 

72

 

32

 

 

327

 

387

 

72

 

Total Expenses

 

1,374

 

1,234

 

80

 

3,896

 

4,486

 

1,139

 

Revenues in Excess of Expenses (Expenses in Excess of Revenues)

 

$

1,251

 

$

(238

)

$

65

 

$

7,492

 

$

8,115

 

$

1,309

 

Affiliated Seller

 

Urban Direct

 

Urban Direct

 

Urban Direct

 

Fund VI

 

Fund I/Fund II/Fund III/Recap

 

Fund I/Fund II/Fund III

 

JBG SMITH Ownership (Unaudited)

 

18.0%

 

18.0%

 

18.0%

 

100.0%

 

10.0%

 

10.0%

 

Anticipated Financial Statement Presentation by Combined Entity (Unaudited)

 

Non-Consolidated

 

Non-Consolidated

 

Non-Consolidated

 

Consolidated

 

Non-Consolidated

 

Non-Consolidated

 

Jurisdiction

 

MD

 

MD

 

MD

 

MD

 

MD

 

MD

 

 


(1)         Asset was sold on July 12, 2017.

 

See accompanying independent auditors’ report.

 

13



 

JBG REAL ESTATE OPERATING ASSETS

 

Supplemental Information—Schedule 1 (Continued)

 

Combined Statement of Revenues and Expenses from Real Estate Operations

 

For the Year Ended December 31, 2016

 

(dollar amounts in thousands)

 

 

 

Office—Continued

 

 

 

 

 

Fishers Place I

 

Fishers Place II

 

Fishers Place III

 

5640
Fishers/12441
Parklawn

 

Subtotal MD
Office

 

Total Office

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Property rentals

 

$

3,992

 

$

2,149

 

$

8,195

 

$

1,768

 

$

42,780

 

$

137,816

 

Tenant expense reimbursement

 

3,505

 

2,544

 

703

 

2,331

 

12,335

 

20,868

 

Other revenue

 

105

 

137

 

136

 

 

653

 

1,628

 

Total Revenue

 

7,602

 

4,830

 

9,034

 

4,099

 

55,768

 

160,312

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating

 

2,979

 

2,415

 

2,273

 

2,279

 

18,536

 

50,362

 

Real estate taxes

 

694

 

271

 

622

 

231

 

4,547

 

20,705

 

Management fees

 

190

 

79

 

269

 

67

 

1,495

 

4,327

 

Total Expenses

 

3,863

 

2,765

 

3,164

 

2,577

 

24,578

 

75,394

 

Revenues in Excess of Expenses (Expenses in Excess of Revenues)

 

$

3,739

 

$

2,065

 

$

5,870

 

$

1,522

 

$

31,190

 

$

84,918

 

Affiliated Seller

 

Fund I/Fund II/Fund III/Recap

 

Fund I/Fund II/Fund III/Recap

 

Fund I/Fund II/Fund III/Recap

 

Fund I/Fund II/Fund III/Recap

 

 

 

 

 

JBG SMITH Ownership (Unaudited)

 

10.0%

 

10.0%

 

10.0%

 

10.0%

 

 

 

 

 

Anticipated Financial Statement Presentation by Combined Entity (Unaudited)

 

Non-Consolidated

 

Non-Consolidated

 

Non-Consolidated

 

Non-Consolidated

 

 

 

 

 

Jurisdiction

 

MD

 

MD

 

MD

 

MD

 

 

 

 

 

 

See accompanying independent auditors’ report.

 

14



 

JBG REAL ESTATE OPERATING ASSETS

 

Supplemental Information—Schedule 1 (Continued)

 

Combined Statement of Revenues and Expenses from Real Estate Operations

 

For the Year Ended December 31, 2016

 

(dollar amounts in thousands)

 

 

 

Retail

 

 

 

North End Retail

 

Subtotal DC Retail

 

Revenue

 

 

 

 

 

Property rentals

 

$

980

 

$

980

 

Tenant expense reimbursement

 

227

 

227

 

Other revenue

 

46

 

46

 

Total Revenue

 

1,253

 

1,253

 

Expenses

 

 

 

 

 

Property operating

 

824

 

824

 

Real estate taxes

 

200

 

200

 

Management fees

 

42

 

42

 

Total Expenses

 

1,066

 

1,066

 

Revenues in Excess of Expenses (Expenses in Excess of Revenues)

 

$

187

 

$

187

 

Affiliated Seller

 

Fund VII

 

 

 

JBG SMITH Ownership (Unaudited)

 

100.0%

 

 

 

Anticipated Financial Statement Presentation by Combined Entity (Unaudited)

 

Consolidated

 

 

 

Jurisdiction

 

DC

 

 

 

 

See accompanying independent auditors’ report.

 

15



 

JBG REAL ESTATE OPERATING ASSETS

 

Supplemental Information—Schedule 1 (Continued)

 

Combined Statement of Revenues and Expenses from Real Estate Operations

 

For the Year Ended December 31, 2016

 

(dollar amounts in thousands)

 

 

 

Retail—Continued

 

 

 

 

 

Stonebridge at Potomac
Town Center—Phase I

 

Subtotal VA Retail

 

Total Retail

 

Revenue

 

 

 

 

 

 

 

Property rentals

 

$

11,075

 

$

11,075

 

$

12,055

 

Tenant expense reimbursement

 

2,870

 

2,870

 

3,097

 

Other revenue

 

349

 

349

 

395

 

Total Revenue

 

14,294

 

14,294

 

15,547

 

Expenses

 

 

 

 

 

 

 

Property operating

 

2,521

 

2,521

 

3,345

 

Real estate taxes

 

1,551

 

1,551

 

1,751

 

Management fees

 

524

 

524

 

566

 

Total Expenses

 

4,596

 

4,596

 

5,662

 

Revenues in Excess of Expenses (Expenses in Excess of Revenues)

 

$

9,698

 

$

9,698

 

$

9,885

 

Affiliated Seller

 

Fund IX

 

 

 

 

 

JBG SMITH Ownership (Unaudited)

 

10.0%

 

 

 

 

 

Anticipated Financial Statement Presentation by Combined Entity (Unaudited)

 

Non-Consolidated

 

 

 

 

 

Jurisdiction

 

VA

 

 

 

 

 

 

See accompanying independent auditors’ report.

 

16



 

JBG REAL ESTATE OPERATING ASSETS

 

Supplemental Information—Schedule 1 (Continued)

 

Combined Statement of Revenues and Expenses from Real Estate Operations

 

For the Year Ended December 31, 2016

 

(dollar amounts in thousands)

 

 

 

Multifamily

 

 

 

The Gale
Eckington

 

Atlantic
Plumbing

 

Fort Totten
Square

 

Subtotal DC
Multifamily

 

Revenue

 

 

 

 

 

 

 

 

 

Property rentals

 

$

13,516

 

$

5,285

 

$

6,375

 

$

25,176

 

Tenant expense reimbursement

 

425

 

177

 

871

 

1,473

 

Other revenue

 

321

 

125

 

155

 

601

 

Total Revenue

 

14,262

 

5,587

 

7,401

 

27,250

 

Expenses

 

 

 

 

 

 

 

 

 

Property operating

 

3,697

 

2,453

 

2,705

 

8,855

 

Real estate taxes

 

77

 

525

 

1,288

 

1,890

 

Management fees

 

561

 

250

 

288

 

1,099

 

Total Expenses

 

4,335

 

3,228

 

4,281

 

11,844

 

Revenues in Excess of Expenses (Expenses in Excess of Revenues)

 

$

9,927

 

$

2,359

 

$

3,120

 

$

15,406

 

Affiliated Seller

 

Fund IX

 

Fund VII

 

Fund VII

 

 

 

JBG SMITH Ownership (Unaudited)

 

5.0%

 

64.0%

 

100.0%

 

 

 

Anticipated Financial Statement Presentation by Combined Entity (Unaudited)

 

Non-Consolidated

 

Non-Consolidated

 

Consolidated

 

 

 

Jurisdiction

 

DC

 

DC

 

DC

 

 

 

 

See accompanying independent auditors’ report.

 

17



 

JBG REAL ESTATE OPERATING ASSETS

 

Supplemental Information—Schedule 1 (Continued)

 

Combined Statement of Revenues and Expenses from Real Estate Operations

 

For the Year Ended December 31, 2016

 

(dollar amounts in thousands)

 

 

 

Multifamily—Continued

 

 

 

Fairway
Apartments

 

Subtotal VA
Multifamily

 

Revenue

 

 

 

 

 

Property rentals

 

$

6,283

 

$

6,283

 

Tenant expense reimbursement

 

559

 

559

 

Other revenue

 

243

 

243

 

Total Revenue

 

7,085

 

7,085

 

Expenses

 

 

 

 

 

Property operating

 

2,096

 

2,096

 

Real estate taxes

 

772

 

772

 

Management fees

 

284

 

284

 

Total Expenses

 

3,152

 

3,152

 

Revenues in Excess of Expenses (Expenses in Excess of Revenues)

 

$

3,933

 

$

3,933

 

Affiliated Seller

 

Fund IX

 

 

 

JBG SMITH Ownership (Unaudited)

 

10.0%

 

 

 

Anticipated Financial Statement Presentation by Combined Entity (Unaudited)

 

Non-Consolidated

 

 

 

Jurisdiction

 

VA

 

 

 

 

See accompanying independent auditors’ report.

 

18



 

JBG REAL ESTATE OPERATING ASSETS

 

Supplemental Information—Schedule 1 (Continued)

 

Combined Statement of Revenues and Expenses from Real Estate Operations

 

For the Year Ended December 31, 2016

 

(dollar amounts in thousands)

 

 

 

Galvan

 

The Terano

 

The Alaire

 

Falkland Chase—
South & West

 

Revenue

 

 

 

 

 

 

 

 

 

Property rentals

 

$

5,543

 

$

4,200

 

$

5,761

 

$

5,190

 

Tenant expense reimbursement

 

340

 

104

 

269

 

123

 

Other revenue

 

109

 

76

 

140

 

141

 

Total Revenue

 

5,992

 

4,380

 

6,170

 

5,454

 

Expenses

 

 

 

 

 

 

 

 

 

Property operating

 

2,589

 

1,620

 

1,685

 

1,279

 

Real estate taxes

 

838

 

437

 

691

 

430

 

Management fees

 

239

 

224

 

252

 

217

 

Total Expenses

 

3,666

 

2,281

 

2,628

 

1,926

 

Revenues in Excess of Expenses (Expenses in Excess of Revenues)

 

$

2,326

 

$

2,099

 

$

3,542

 

$

3,528

 

Affiliated Seller

 

Urban Direct

 

Urban Direct

 

Urban Direct

 

Fund VIII

 

JBG SMITH Ownership (Unaudited)

 

1.8%

 

1.8%

 

18.0%

 

100.0%

 

Anticipated Financial Statement Presentation by Combined Entity (Unaudited)

 

Non-Consolidated

 

Non-Consolidated

 

Non-Consolidated

 

Consolidated

 

Jurisdiction

 

MD

 

MD

 

MD

 

MD

 

 

See accompanying independent auditors’ report.

 

19



 

JBG REAL ESTATE OPERATING ASSETS

 

Supplemental Information—Schedule 1 (Continued)

 

Combined Statement of Revenues and Expenses from Real Estate Operations

 

For the Year Ended December 31, 2016

 

(dollar amounts in thousands)

 

 

 

Multifamily—Continued

 

 

 

 

 

 

 

Falkland Chase—
North

 

Subtotal MD
Multifamily

 

Total
Multifamily

 

Combined
Total

 

Revenue

 

 

 

 

 

 

 

 

 

Property rentals

 

$

2,882

 

$

23,576

 

$

55,035

 

$

204,906

 

Tenant expense reimbursement

 

83

 

919

 

2,951

 

26,916

 

Other revenue

 

123

 

589

 

1,433

 

3,456

 

Total Revenue

 

3,088

 

25,084

 

59,419

 

235,278

 

Expenses

 

 

 

 

 

 

 

 

 

Property operating

 

880

 

8,053

 

19,004

 

72,711

 

Real estate taxes

 

318

 

2,714

 

5,376

 

27,832

 

Management fees

 

122

 

1,054

 

2,437

 

7,330

 

Total Expenses

 

1,320

 

11,821

 

26,817

 

107,873

 

Revenues in Excess of Expenses (Expenses in Excess of Revenues)

 

$

1,768

 

$

13,263

 

$

32,602

 

$

127,405

 

Affiliated Seller

 

Fund VIII

 

 

 

 

 

 

 

JBG SMITH Ownership (Unaudited)

 

100.0%

 

 

 

 

 

 

 

Anticipated Financial Statement Presentation by Combined Entity (Unaudited)

 

Consolidated

 

 

 

 

 

 

 

Jurisdiction

 

MD

 

 

 

 

 

 

 

 

See accompanying independent auditors’ report.

 

20


(Back To Top)

Section 4: EX-99.2 (EX-99.2)

Exhibit 99.2

 

JBG REAL ESTATE OPERATING ASSETS

 

INTERIM COMBINED STATEMENT OF REVENUES AND EXPENSES FROM

REAL ESTATE OPERATIONS (Unaudited)

 

For the Six Months Ended
June 30, 2017

 



 

JBG REAL ESTATE OPERATING ASSETS

 

Combined Statement of Revenues and Expenses from Real Estate Operations (Unaudited)

(dollar amounts in thousands)

 

 

 

For the
Six Months Ended
June 30, 2017

 

Revenue

 

 

 

Property rentals

 

$

110,105

 

Tenant expense reimbursement

 

9,515

 

Other revenue

 

2,045

 

Total Revenue

 

121,665

 

Expenses

 

 

 

Property operating

 

30,571

 

Real estate taxes

 

15,570

 

Management fees

 

4,102

 

Total Expenses

 

50,243

 

Revenues in Excess of Expenses

 

$

71,422

 

 

See accompanying notes to combined statement of revenues and expenses from real estate operations.

 

1



 

JBG REAL ESTATE OPERATING ASSETS

 

Notes to the Combined Statement of Revenues and Expenses from

 

Real Estate Operations (Unaudited)

 

For the Six Months Ended June 30, 2017

 

(dollar amounts in thousands)

 

NOTE 1—BASIS OF PRESENTATION

 

JBG Real Estate Operating Assets is not a separate or single legal entity, but rather a combination of real estate operating assets and entities under the common management of JBG/Operating Partners, L.P. (the “Partnership”) and its consolidated subsidiaries (the “Management Company”). The Management Company earns fees in connection with investment, development, property management, leasing, construction management, tenant improvement construction, and finance provided to commercial office, multifamily (both rental and for-sale), retail, and hotel assets. Substantially all fee revenue earned by the Management Company is from services provided to the real estate assets owned by affiliated real estate investment funds (each a “Fund” and collectively, the “Funds”) and real estate ventures (the “Ventures”). The Funds either held or continue to hold direct or indirect ownership in each real estate asset (“Property Asset”) through separate limited liability companies (each, a “Property LLC”). The Funds own direct or indirect equity interests in the Property LLCs. The Ventures also either held or continue to hold interests in real estate assets (the “Venture Assets”). The Management Company, Funds, Ventures, Property Assets, Property LLCs, and Venture Assets are collectively referred to as “JBG”.

 

On October 31, 2016, the Partnership entered into a Master Transaction Agreement (the “Transaction Agreement”) with Vornado Realty Trust, Vornado Realty L.P., JBG Properties, Inc., certain affiliates of JBG Properties, Inc., JBG SMITH Properties (“JBG SMITH”) and JBG SMITH Properties LP, a Delaware limited partnership and JBG SMITH’s subsidiary operating partnership (the “Operating Partnership”). On July 18, 2017, in accordance with the Transaction Agreement,  the Management Company, the Funds’ interests in certain Property LLCs, and interests in the Ventures, were contributed through a series of transactions to the Operating Partnership, in exchange for the right to receive units of limited partnership interest in the Operating Partnership or common shares of JBG SMITH or, in certain circumstances, cash (the “Transaction”). As of the closing of the Transaction on July 18, 2017, JBG SMITH was a publicly traded real estate investment trust. Except where the context requires otherwise, “JBG SMITH” refers to JBG SMITH, the Operating Partnership and their consolidated subsidiaries.

 

On July 18, 2017, JBG SMITH acquired up to 100% of the ownership interests in certain Property LLCs from one or more of the following real estate funds, affiliated with the Management Company: JBG Investment Fund I, L.P. (“Fund I”); JBG Investment Fund II, L.P. (“Fund II”); JBG Investment Fund III, L.P. (“Fund III”); JBG Investment Fund VI, L.L.C. (“Fund VI”); JBG Investment Fund VII, L.L.C. (“Fund VII”); JBG Investment Fund VIII, L.L.C. (“Fund VIII”); JBG Investment Fund IX, L.L.C. (“Fund IX”); JBG/Urban Direct Member, L.L.C. (“Urban Direct”); and JBG/Recap Investors, L.L.C. (“Recap”). JBG SMITH also acquired interests in several Ventures from the Funds and other affiliates of the Management Company.

 

The Management Company, Funds, Ventures, and Property LLCs are not entities under common control or subsidiaries of a common parent. The Property Assets and Venture Assets presented in the combined statement of revenues and expenses from real estate operations and supplementary information presented in Schedule 1 (the “Statement”) have been under common management of the Management Company since the date of acquisition by the applicable Fund.

 

Although JBG SMITH acquired less than 100% of the equity interests in certain of the Property LLCs and each Venture, the Statement presents 100% of the revenues and expenses from real estate operations for each Property Asset and Venture Asset. The schedule included in the Supplemental Information identifies the selling entity (Fund) and the name of the Venture, and the percentage ownership in each Property Asset or Venture Asset that was acquired by JBG SMITH.

 

The following tables set forth the percentage ownership interest JBG SMITH acquired in the Property LLCs and Ventures that hold ownership interests in certain Property Assets and Venture Assets.

 

2



 

JBG SMITH acquired 100% of the ownership interests in the Property LLCs that hold the ownership interests in the following Property Assets:

 

Property Asset—Office

 

Property Asset—Retail

 

Property Asset—Multifamily

1233 20th Street

 

North End Retail

 

Falkland Chase—North

1600 K Street

 

 

 

Falkland Chase—South & West

1831 Wiehle Avenue

 

 

 

Fort Totten Square

800 North Glebe Road

 

 

 

 

7200 Wisconsin Avenue

 

 

 

 

RTC—West

 

 

 

 

Summit I

 

 

 

 

Summit II

 

 

 

 

Wiehle Avenue Office Building

 

 

 

 

 

JBG SMITH acquired less than 100% of the ownership interests in the Property LLCs and Ventures that hold the ownership interests in the following Property Assets and Venture Assets, with the exception of 12725 Twinbrook Parkway.

 

Property Assets and Venture Assets

 

Type

 

JBG SMITH
Ownership

 

5640 Fishers/12441 Parklawn

 

Office

 

10.0

%

12725 Twinbrook Parkway

 

Office

 

0.0

%(1)

11333 Woodglen Drive

 

Office

 

18.0

%

Capitol Point—North

 

Office

 

59.0

%

Chase Tower Office/Retail

 

Office

 

10.0

%

Courthouse Metro Office

 

Office

 

18.0

%

Fishers Place I

 

Office

 

10.0

%

Fishers Place II

 

Office

 

10.0

%

Fishers Place III

 

Office

 

10.0

%

L’Enfant Plaza Office—East

 

Office

 

49.0

%

L’Enfant Plaza Office—North

 

Office

 

49.0

%

L’Enfant Plaza Retail

 

Office

 

49.0

%

NoBe II Office

 

Office

 

18.0

%

Pickett Industrial Park

 

Office

 

10.0

%

Rosslyn Gateway—North

 

Office

 

18.0

%

Rosslyn Gateway—South

 

Office

 

18.0

%

The Foundry

 

Office

 

9.9

%

Woodglen

 

Office

 

18.0

%

Stonebridge at Potomac Town Center—Phase I

 

Retail

 

10.0

%

Atlantic Plumbing

 

Multifamily

 

64.0

%

Fairway Apartments

 

Multifamily

 

10.0

%

Galvan

 

Multifamily

 

1.8

%

The Alaire

 

Multifamily

 

18.0

%

The Gale Eckington

 

Multifamily

 

5.0

%

The Terano

 

Multifamily

 

1.8

%

 


(1)         The Fund’s 10% ownership interest in the asset was sold to an unrelated party on July 12, 2017.

 

The accompanying combined statement of revenues and expenses from real estate operations has been prepared for the purpose of complying with Rule 3-14 of Regulation S-X promulgated under the Securities Act. Accordingly, the combined statement of revenues and expenses from real estate operations does not reflect the actual operations for the period presented as revenues and expenses from real estate operations excludes certain revenue and expenses expected to be incurred in the future operations of the Property Assets or Venture Assets. Such items include depreciation, amortization, interest expense, interest income, ground rent expense, and amortization of above- and below-market leases. Revenue includes contractual base and other rent pursuant to the lease agreements, tenant expense reimbursements, and other revenue derived from the operation of the real estate asset. The expenses presented are the direct expenses associated with operating and maintaining the real estate asset and are recognized as incurred.

 

3



 

Further, the accompanying combined statement of revenues and expenses from real estate operations does not include any amounts for non-operating real estate assets including future development parcels and Property Assets or Venture Assets in the near-term development, development, and construction phases.

 

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Combination—The combined statement of revenues and expenses from real estate operations includes selected accounts of the Property Assets and Venture Assets as described in Note 1. All significant intercompany accounts and transactions have been eliminated in the combined statement of revenues and expenses from real estate operations.

 

Unaudited Interim Combined Statement—The combined statement of revenues and expenses from real estate operations for the six months ended June 30, 2017 is unaudited. In the opinion of management, the Statement reflects all adjustments necessary for a fair presentation of the results of the interim periods. All such adjustments are of a normal recurring nature.

 

Revenue Recognition—Property rental revenue is recognized on a straight-line basis over the lease term when collectability is reasonably assured and the tenant has taken possession or controls the physical use of the leased asset.

 

Tenant expense reimbursements for real estate taxes, common area maintenance, and other recoverable costs are recognized in the period that the expenses are incurred. The reimbursements are recognized and presented gross as the Property Assets and Venture Assets are generally the primary obligor with respect to purchasing goods and services from third-party suppliers, have discretion in selecting the supplier, and bear the associated credit risk.

 

Other revenue is revenue derived from lease termination fees and the tenants’ use of parking and other property facilities. Lease termination fees are recognized when the related leases are canceled and the landlord has no continuing obligation to provide services to such former tenants. Other revenue is recognized when the related services are utilized by the tenants.

 

Use of Estimates—Management has made a number of estimates and assumptions relating to the reporting and disclosure of revenues and expenses from real estate operations during the reporting period to present the statement of revenues and expenses from real estate operations in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates.

 

NOTE 3—SUMMARY TABLE

 

The following table separately presents the aggregate operating revenues and expenses for the wholly owned Property Assets and the less than wholly owned consolidated and non-consolidated Property Assets and Venture Assets.

 

 

 

Six Months Ended June 30, 2017

 

 

 

100% Owned

 

Less Than
100% Owned
Consolidated

 

Combined

 

Less Than
100% Owned
Non-
Consolidated

 

Revenue

 

 

 

 

 

 

 

 

 

Property rentals

 

$

35,959

 

$

 

$

35,959

 

$

74,146

 

Tenant expense reimbursement

 

3,620

 

 

3,620

 

5,895

 

Other revenue

 

454

 

 

454

 

1,591

 

Total Revenue

 

40,033

 

 

40,033

 

81,632

 

Expenses

 

 

 

 

 

 

 

 

 

Property operating

 

10,279

 

 

10,279

 

20,292

 

Real estate taxes

 

5,067

 

 

5,067

 

10,503

 

Management fees

 

1,273

 

 

1,273

 

2,829

 

Total Expenses

 

16,619

 

 

16,619

 

33,624

 

Revenues in Excess of Expenses

 

$

23,414

 

$

 

$

23,414

 

$

48,008

 

 

4



 

NOTE 4—LEASE COMMITMENTS

 

There are various lease agreements in place with tenants to lease space in the Property Assets and Venture Assets. As of June 30, 2017, the minimum future cash rents receivable under non-cancelable operating leases in each of the next five years and thereafter were as follows:

 

Six Months Ending December 31, 2017

 

$

67,249

 

2018

 

132,940

 

2019

 

119,977

 

2020

 

110,655

 

2021

 

85,295

 

Thereafter

 

295,024

 

 

 

$

811,140

 

 

Leases generally require reimbursement of the tenant’s proportional share of common area, real estate taxes, and other operating expenses, which are excluded from the amounts above. Future cash rents receivable on multifamily real estate operating assets are excluded from the table above as the lease terms are generally one year or less.

 

NOTE 5—TENANT CONCENTRATIONS

 

For the six months ended June 30, 2017, 14% of total combined revenue was recognized from one government agency tenant.

 

NOTE 6—RELATED PARTY TRANSACTIONS

 

The Management Company provides all property management and related services for the Property Assets and Venture Assets, which are calculated as a percentage of rental revenue or gross receipts. These fees, which have been recorded as management fees in the accompanying Statement, totaled $4,102 for the six months ended June 30, 2017.

 

NOTE 7—SUBSEQUENT EVENTS

 

Subsequent events were evaluated through September 15, 2017, the date the combined statement of revenues and expenses from real estate operations was available to be issued.

 

5



 

JBG REAL ESTATE OPERATING ASSETS

 

Supplemental Information—Schedule 1

 

Combined Statement of Revenues and Expenses from Real Estate Operations (Unaudited)

 

For the Six Months Ended June 30, 2017

 

(dollar amounts in thousands)

 

 

 

Office

 

 

 

Capitol Point—
North

 

L’Enfant
Plaza Office—
East

 

L’Enfant
Plaza Office—
North

 

L’Enfant
Plaza Retail

 

Revenue

 

 

 

 

 

 

 

 

 

Property rentals

 

$

67

 

$

9,252

 

$

4,746

 

$

1,968

 

Tenant expense reimbursement

 

(49

)

223

 

148

 

384

 

Other revenue

 

 

41

 

164

 

39

 

Total Revenue

 

18

 

9,516

 

5,058

 

2,391

 

Expenses

 

 

 

 

 

 

 

 

 

Property operating

 

84

 

2,419

 

1,783

 

1,151

 

Real estate taxes

 

246

 

1,998

 

1,371

 

453

 

Management fees

 

10

 

331

 

124

 

77

 

Total Expenses

 

340

 

4,748

 

3,278

 

1,681

 

Revenues in Excess of Expenses (Expenses in Excess of Revenues)

 

$

(322

)

$

4,768

 

$

1,780

 

$

710

 

Affiliated Seller

 

Fund VI/Urban Direct

 

Fund VI/Urban Direct

 

Fund VI/Urban Direct

 

Fund VI/Urban Direct

 

JBG SMITH Ownership

 

59.0%

 

49.0%

 

49.0%

 

49.0%

 

Anticipated Financial Statement Presentation by Combined Entity

 

Non-Consolidated

 

Non-Consolidated

 

Non-Consolidated

 

Non-Consolidated

 

Jurisdiction

 

DC

 

DC

 

DC

 

DC

 

 

Note: This schedule is presented for the purposes of additional analysis and is not a required part of the Statement. The terms “consolidated” and “non-consolidated” reflect management’s preliminary conclusion with respect to presentation of such assets in JBG SMITH’s financial statements upon completion of the transaction described in Note 1.

 

See accompanying notes to combined statement of revenues and expenses from real estate operations.

 

6



 

JBG REAL ESTATE OPERATING ASSETS

 

Supplemental Information—Schedule 1 (Continued)

 

Combined Statement of Revenues and Expenses from Real Estate Operations (Unaudited)

 

For the Six Months Ended June 30, 2017

 

(dollar amounts in thousands)

 

 

 

Office—Continued

 

 

 

1233 20th Street

 

The Foundry

 

1600 K Street

 

Subtotal DC Office

 

Revenue

 

 

 

 

 

 

 

 

 

Property rentals

 

$

2,897

 

$

4,719

 

$

1,747

 

$

25,396

 

Tenant expense reimbursement

 

147

 

116

 

141

 

1,110

 

Other revenue

 

11

 

122

 

40

 

417

 

Total Revenue

 

3,055

 

4,957

 

1,928

 

26,923

 

Expenses

 

 

 

 

 

 

 

 

 

Property operating

 

939

 

1,453

 

583

 

8,412

 

Real estate taxes

 

625

 

804

 

372

 

5,869

 

Management fees

 

73

 

138

 

66

 

819

 

Total Expenses

 

1,637

 

2,395

 

1,021

 

15,100

 

Revenues in Excess of Expenses (Expenses in Excess of Revenues)

 

$

1,418

 

$

2,562

 

$

907

 

$

11,823

 

Affiliated Seller

 

Fund VIII

 

Fund IX

 

Fund VII

 

 

 

JBG SMITH Ownership

 

100.0%

 

9.9%

 

100.0%

 

 

 

Anticipated Financial Statement Presentation by Combined Entity

 

Consolidated

 

Non-Consolidated

 

Consolidated

 

 

 

Jurisdiction

 

DC

 

DC

 

DC

 

 

 

 

See accompanying notes to combined statement of revenues and expenses from real estate operations.

 

7



 

JBG REAL ESTATE OPERATING ASSETS

 

Supplemental Information—Schedule 1 (Continued)

 

Combined Statement of Revenues and Expenses from Real Estate Operations (Unaudited)

 

For the Six Months Ended June 30, 2017

 

(dollar amounts in thousands)

 

 

 

Office—Continued

 

 

 

Courthouse Metro
Office

 

Rosslyn
Gateway—
North

 

Rosslyn
Gateway—
South

 

Pickett
Industrial Park

 

1831 Wiehle
Avenue

 

Wiehle Avenue
Office Building

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Property rentals

 

$

237

 

$

2,815

 

$

1,421

 

$

1,508

 

$

821

 

$

501

 

Tenant expense reimbursement

 

1

 

75