JBG SMITH — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported Net Loss of $82.0 million ($1.41 per diluted share) for the three months ended September 30, 2026, compared to a Net Loss of $28.6 million ($0.48 per share) in the prior year period.
• Core FFO attributable to common shares was $12.7 million ($0.22 per diluted share) for the quarter, up from $9.1 million ($0.15 per share) in the prior year period.
• FFO attributable to common shareholders was $10.4 million ($0.18 per share) for the quarter, compared to $10.1 million ($0.17 per share) in the prior year period.
• Annualized NOI increased 2.9% quarter-over-quarter to $256.4 million.
• Same Store NOI increased 3.3% year-over-year to $60.8 million for the three months ended September 30, 2026.
• Total revenue for the quarter was $132.4 million, compared to $123.9 million in the prior year period.
• Net Debt to Annualized Adjusted EBITDA was 11.6x as of September 30, 2026, an improvement from 12.6x in the prior quarter.
• Cash and cash equivalents were $78.5 million ($77.7 million at JBG SMITH Share), with $454.2 million of undrawn capacity under the revolving credit facility.
• Impairment losses totaled $69.2 million for the quarter, compared to $4.8 million in the prior year period.

Guidance and Future Outlook:

• Management expects to be on track for the strongest year of new leasing since 2019 entering the fourth quarter.
• Operating performance is expected to continue improving in the short run, though a recovery in private capital markets for office is anticipated to require a longer time horizon.
• The company intends to continue recycling capital out of higher-priced multifamily assets into more accretive uses, including acquisitions of high-growth defense-tech office assets and share repurchases, for the foreseeable future.
• Management anticipates the $1 trillion defense budget will grow next year, supporting demand in the National Landing submarket.
• The company expects the supply pipeline in the DC metro multifamily market to remain significantly constrained due to the elevated rate environment, supporting a longer runway for recovery and growth.

Business Segments and Product Lines:

• Multifamily: The operating portfolio ended the quarter at 92.9% leased and 91.5% occupied. Same Store multifamily occupancy was 93.1% leased and 93.1% occupied, up 270 basis points quarter-over-quarter. Asking rents increased 3.7% from December 2025.
• Office: The operating portfolio ended the quarter at 78.5% leased and 76.8% occupied. The company executed 74,000 square feet of new office leases, with 69,000 square feet in National Landing. Second-generation leases saw a 1.9% rental rate decrease on a cash basis.
• Third-Party Real Estate Services: Revenue from third-party real estate services, including reimbursements, was $18.3 million for the quarter.
• Development: One asset, 2200 Crystal Drive, is under construction (conversion to a 195-unit multifamily asset). The development pipeline consists of 3.5 million square feet of Estimated Potential Development Density at the company's share.
• Recapitalizations: Subsequent to quarter end, the company formed joint ventures to recapitalize 800 North Glebe (selling 90% interest) and Dulles View (selling 50% interest).

Market and Competitive Landscape:

• Northern Virginia office vacancy ended the quarter at approximately 21%, with trophy vacancy falling to 12.9%, the lowest recorded by CBRE.
• National Landing leasing activity is driven by defense, intelligence, and technology sectors, with 99% of third-quarter leasing activity involving tenants in these industries.
• Demand for office space with Sensitive Compartmented Information Facilities (SCIFs) is particularly strong, with 65% of the defense-tech tenancy having a SCIF or secure facility.
• The DC metro multifamily market vacancy was 6.4% as of September, flat relative to the same period last year before federal workforce reductions, and improved from a peak of 6.9% earlier in the year.
• Over 17 million square feet of Northern Virginia office inventory is in various stages of planned or actual redevelopment, representing over 10% of the market's inventory.

Risks and Challenges:

• Elevated interest rates continue to weigh on transaction activity and place pressure on real estate valuations.
• The company faces risks related to adverse economic conditions in the Washington, DC metropolitan area, including reductions in federal government spending, headcount, or leasing.
• The outcome of the Wardman Tower litigation and potential bond posting requirements remain a risk factor.
• The company notes that the recovery in private capital markets for office investment is likely to require a longer time horizon.
• Federal workforce reductions previously caused a rapid decline in multifamily occupancy and rent declines, though the portfolio has recovered most of these losses.

Management Commentary and Tone:

• CEO W. Matthew Kelly stated that while higher interest rates create headwinds, underlying fundamentals in multifamily and office sectors are improving, particularly in markets driven by the defense tech industry.
• Management expressed conviction that Northern Virginia is well-positioned to benefit from demand drivers tied to defense modernization and national security investment.
• The company highlighted its mixed-use operator DNA as a competitive advantage, enabling the ability to recycle capital between product types and unlock development opportunities that single-asset-class investors cannot.
• Management noted that the successful recast of the credit facility solidifies the balance sheet and provides financial flexibility.

Other Key Points:

• In August 2026, the company successfully recast its $690.0 million Revolving Credit Facility and $243.9 million of its Tranche A-2 Term Loan, extending maturity dates to August 2031.
• Since launching its share repurchase program in 2020, the company has repurchased 86.5 million shares (approximately 65% of shares outstanding as of December 31, 2019) for $1.6 billion.
• Through October 30, 2026, the company repurchased and retired 1.0 million common shares for $11.5 million, with a weighted average purchase price of $11.07 per share.
• On October 29, 2026, the Board declared a quarterly dividend of $0.175 per common share, payable on November 25, 2026.
• The company repaid $67.0 million under the revolving credit facility in October 2026.
• 800 North Glebe was recapitalized with a three-year, interest-only $61.3 million mortgage loan at SOFR plus 3.70%.
• Dulles View was recapitalized with a three-year, interest-only $40.9 million mortgage loan at SOFR plus 3.35%.