Aug 10, 2026, 6:30 AM ETReal Estate

JBG SMITH — Second Quarter 2026 Earnings Summary

JBGSJBG SMITH PROPERTIES

Financial Performance

Reported a net loss attributable to common shareholders of $59.2 million ($1.03 per diluted share) for the three months ended June 30, 2026, compared to a net loss of $19.2 million ($0.29 per share) in the prior year period.
Funds From Operations (FFO) attributable to common shareholders was $12.5 million ($0.21 per share) for the quarter, up from $10.0 million ($0.15 per share) in the prior year.
Core FFO attributable to common shareholders was $10.4 million ($0.18 per share) for the quarter, down from $12.7 million ($0.19 per share) in the prior year.
Annualized Net Operating Income (NOI) increased 1.3% quarter-over-quarter to $249.2 million, adjusting for assets sold or recapitalized.
Same Store NOI declined 4.0% year-over-year to $54.8 million for the three months ended June 30, 2026.
Total revenue for the quarter was $129.4 million, with property rental revenue at $106.6 million.
Net Debt to Annualized Adjusted EBITDA was 12.4x as of June 30, 2026.
Net Debt to Total Enterprise Value was 70.3% as of June 30, 2026.
Cash and cash equivalents totaled $74.8 million, with $526.2 million of undrawn capacity under the revolving credit facility.
84.2% of debt was fixed or hedged as of the end of the quarter, with a weighted average debt maturity of 2.3 years.

Management expects leverage to moderate in the near term through income stabilization of newly constructed multifamily assets (The Grace, Reva, The Zoe, and Valen) and revenue from signed but not yet commenced leases.
The company anticipates continued momentum in office leasing demand in National Landing, with a pipeline of over 300,000 square feet of tenants looking to occupy space over the next 12 months.
Multifamily fundamentals are expected to improve as new supply remains constrained, with only 2,200 units slated to deliver in 2026 compared to 14,000+ in peak years.
The company plans to continue funding growth through asset sales and private equity joint ventures, prioritizing capital allocation that enhances long-term shareholder value.
Management remains measured on the pace of recovery in transaction markets but maintains conviction in long-term demand drivers aligned with defense, intelligence, and technology sectors.

Multifamily: The operating portfolio ended the quarter at 89.6% leased and 86.6% occupied. The Same Store multifamily portfolio was 94.3% leased and 92.0% occupied. Asking rents in the Same Store portfolio increased 1.0% from March and 2.6% from December 2025.
Office: The operating portfolio ended the quarter at 78.0% leased and 75.4% occupied. The company executed 151,000 square feet of leases in the quarter, including 88,000 square feet of new leases. Second-generation leases showed a negative 2.0% rental rate mark-to-market on a cash basis.
Development: Construction commenced in May 2026 on 2200 Crystal Drive, converting an obsolete office building into a 195-unit multifamily asset (59 units at JBG SMITH share). The development pipeline consists of 3.5 million square feet of estimated potential development density at share.
Third-Party Services: Revenue from third-party real estate services, including reimbursements, was $17.0 million for the quarter. Excluding reimbursements and venture service revenue, this business generated $7.2 million, primarily from property and asset management fees.
Asset Transactions: Sold a 50% interest in Tysons Dulles Plaza (491,500 sq ft) and contributed 2200 Crystal Drive to a joint venture for conversion to multifamily.

Northern Virginia office market recorded its sixth consecutive quarter of positive absorption, reaching 535,000 square feet year-to-date, with headline vacancy falling to 21.3%.
46% of leasing activity in Northern Virginia was attributable to defense or technology firms, with 91% of JBG SMITH's second-quarter leasing activity in National Landing coming from these sectors.
Demand for office space with Sensitive Compartmented Information Facilities (SCIF) is particularly strong, with 92% of National Landing's General Services Administration (GSA) tenancy having a SCIF.
The DC metro area employment bottomed in February 2026 and has recovered by 17,400 jobs, suggesting a return to typical labor market conditions.
Metro-wide vacancy reached 6.8% in February but rental rate trends have begun to improve, with asking rents rebounding 2.4% through June after declining 4.3% from their June 2025 peak.

Wardman Tower Litigation: On July 31, 2026, a court entered judgment against the company for approximately $356.1 million in damages (trebled from $118.7 million) plus attorneys' fees. The company intends to appeal, arguing the judgment is not supported by facts or law regarding corporate separateness. A loss is not currently recognized as probable, but the outcome is uncertain and could impact liquidity if bonds are required.
Macroeconomic Uncertainty: Continued macroeconomic uncertainty, including conflict in the Middle East, elevated interest rates, and inflation risks, has weighed on real estate capital markets and transaction activity.
Leverage: The company is operating at elevated leverage levels (12.4x Net Debt to Annualized Adjusted EBITDA) while leasing up newly constructed multifamily assets.
Federal Workforce Disruption: The multifamily market continues to grapple with effects of federal workforce disruption, though the risk of further significant job cuts is believed to have subsided.

CEO W. Matthew Kelly emphasized that while the macroeconomic environment remains uncertain, underlying trends for the business are moving in a favorable direction, particularly in defense-tech and constrained multifamily supply.
Management stated priorities remain unchanged: allocate capital with discipline, preserve balance sheet flexibility, and maximize long-term NAV per share growth.
Regarding the Wardman Tower judgment, management expressed high confidence in their grounds for appeal and characterized the ruling as a "shocking surprise" that they intend to reverse vigorously.
The tone regarding the National Landing submarket was confident, citing it as the healthiest office market seen since the pandemic due to inventory removal and demand from new defense technology entrants.

No specific analyst questions and answers were included in the provided press release text.

On July 30, 2026, the Board of Trustees declared a quarterly dividend of $0.175 per common share, payable on August 27, 2026.
The company reduced its office inventory by more than 25% since formation by repurposing older buildings for redevelopment or conversion to multifamily, hospitality, and other uses.
2100 Crystal Drive was entitled for conversion into a 345-key dual-branded hotel and subsequently sold to a hotel developer.
Entitlement approval was received to convert 1800 and 1901 South Bell Street into multifamily.
The company's total enterprise value was approximately $3.5 billion as of June 30, 2026.
The portfolio comprises 11.8 million square feet at share of multifamily, office, and retail assets.