Jbg Smith Properties · NYSE:JBGS
Jbg Smith Properties — Investor Day (May 2022)
59 slides from Jbg Smith Properties's investor day presentation, May 9, 2022
Slide 1: Investor Day May 2022
National Landing Skyline (rendering) 1 INVESTOR DAY MAY 2022
Slide 2: Disclosures: Forward-Looking Statements
DISCLOSURES FORWARD - LOOKING STATEMENTS Certain statements contained herein may constitute “forward - looking statements” as such term is defined in Section 27 A of the Securities Act of 1933 , as amended, and Section 21 E of the Securities Exchange Act of 1934 , as amended .. Forward - looking sta
Slide 3: Disclosures: Pro Rata Information
DISCLOSURES Many of the factors that will determine the outcome of these and our other forward - looking statements are beyond our ability to control or predict .. These factors include, among others : adverse economic conditions in the Washington, DC metropolitan area, including in relation to COVI
Slide 4: Disclosures: Amazon
DISCLOSURES AMAZON In November 2018 , Amazon announced it had selected sites in National Landing as the location of its new headquarters .. We currently have leases with Amazon totaling 1 .. 0 million square feet at six office buildings in National Landing .. In March 2019 , we executed purchase and
Slide 5: Disclosures: Disposition and Recapitalization Activity Subsequent to March 31, 2022
DISCLOSURES DISPOSITION AND RECAPITALIZATION ACTIVITY SUBSEQUENT TO MARCH 31 , 2022 – ADJUSTMENT OF CALCULATIONS On April 1 , 2022 , we sold the Universal Buildings, commercial assets located in Washington DC, for $ 228 .. 0 million .. On April 13 , 2022 , we formed an unconsolidated real estate ven
Slide 6: Agenda
AGENDA 6 1 2 3 4 5 JBG SMITH TRANSFORMATION OPERATING PORTFOLIO HIGHLIGHTS GROWTH AND CAPITALIZATION NOI BRIDGE AND LIQUIDITY Q&A 6 APPENDIX
Slide 7: JBG SMITH Transformation
JBG SMITH TRANSFORMATION
Slide 8: Maximizing Long-Term NAV Per Share Growth
MAXIMIZING LONG - TERM NAV PER SHARE GROWTH TRANSITIONING TO MAJORITY MULTIFAMILY AND CONCENTRATING OFFICE I N NATIONAL LANDING (1) Includes operating portfolio, under - construction assets and Development Pipeline and excludes non - core assets in light of ou r plans to dispose them. (2) Excludes n
Slide 9: Leading on ESG
LEADING ON ESG 9 • Achieved Carbon Neutral operations • 5 - star rating (2020 - 2021) • Global Sector Leader (2021) • Leader in the Light Award (2021) • Fitwel Viral Response Certification • Fitwel Champion • “Best ESG Investment Fund: Real Estate” by ESG Investing (2022) • JBGS - managed Impact Poo
Slide 10: Portfolio Transformation Well Underway
PORTFOLIO TRANSFORMATION WELL UNDERWAY OPPORTUNISTICALLY SHIFTING TO MAJORITY MULTIFAMILY AND CONCENTRA TING OFFICE IN NATIONAL LANDING 10 PORTFOLIO COMPOSITION FORMATION TODAY (1) FUTURE (2) INVESTED IN THE BEST - LOCATED AND FASTEST - GROWING URBAN/SUBURBAN SUBMARKETS IN THE DC METRO AREA Note: Po
Slide 11: Dramatic Repositioning of National Landing
DRAMATIC REPOSITIONING OF NATIONAL LANDING NATIONAL LANDING POSITIONED TO BE THE NATION’S PREMIER LIVE - WORK - PLAY DESTINATION 11 1,583 units under construction and potential to start 2,150+ units over the next 3 years, balancing neighborhood towards multifamily ✓ 55 new retailers under constructi
Slide 12: National Landing Proximate Catalysts
12 NATIONAL LANDING SHOULD BENEFIT FROM NOT ONLY AMAZON AND FOLLOW - ON DEMAND, BUT ALSO FROM OTHER PROXIMATE CATALYSTS FOLLOW - ON TECH DEMAND Digital Infrastructure + 1 MI. RADIUS 1 MILE RADIUS THE PENTAGON AMAZON HQ2 VIRGINIA TECH + + The Pentagon + Department of Defense + N Amazon
Slide 13: Powerful Tech Demand Catalysts in National Landing: Amazon
POWERFUL TECH DEMAND CATALYSTS IN NATIONAL LANDING (1) Based on data from the National Landing Business Improvement District as of November 2018. (2) Based on trends observed at Amazon’s Seattle headquarters, where 20% of Amazon’s employees live within walking or biking dis tance to work. (3) Source
Slide 14: Amazon Impact Comparison
AMAZON IMPACT COMPARISON (1) Source: JLL; reflects market performance in Lake Union from Q4 2010 to Q1 2020. (2) Source: CoStar; based on 1.0 - mile radius around Amazon HQ in South Lake Union. Reflects data from Q4 2010 to Q1 2020. 14 SOUTH LAKE UNION NATIONAL LANDING (Potential) AMAZON JOBS 50,000
Slide 15: Amazon and Follow-On Growth Drove Office Demand in South Lake Union
15 17K Jobs at 240 SF/job = ~35% AMAZON AND FOLLOW - ON GROWTH BY OTHER TECH COMPANIES DROVE SIGNIFICANT OFFICE DEMAND IN SOUTH LAKE UNION (2010 - 2020) 15 Cumulative Follow - On Tech Demand (2) 15 71% Overall rent growth (3) 6% CAGR (3) 13% Increase in occupancy (3) 0.1 0.1 0.3 0.4 0.5 0.7 1.3 2.6
Slide 16: Multifamily Demand Walkable to Amazon and Tech Companies
16 DEMAND FOR MULTIFAMILY WALKABLE TO AMAZON AND OTHER TECH COMPANIES WAS SIGNIFICANT, DRIVING RENTS AND NEW SUPPLY (2010 - 2020) 10,000 14,800 3,400 0 5,000 10,000 15,000 Demand Supply Renters/Units 45%+ Total growth in market rents (3) 4%+ Annual growth in market rents (3) 50K 67K 17K + = Amazon j
Slide 17: Office Demand Could Outstrip Supply
17 4.1 1.7 1 ..0 0.0 1.0 2.0 3.0 4.0 5.0 Expected Demand Expected Supply Office SF (M) Expected Supply and Demand for New Office ~6M SF Amazon owned/leased 38K Amazon jobs IF TECH COMPANIES FOLLOW AMAZON THE SAME WAY THEY DID IN SEATTLE, OFFICE DEMAND COULD OUTSTRIP SUPPLY ~4M SF follow - on tech le
Slide 18: Demand for Walkable Housing Could Outstrip Supply
18 7,600 6,000 2,600 2,200 0 5,000 10,000 Expected Demand Expected Supply Expected Renters / Units THE DEMAND FOR WALKABLE AND BIKEABLE HOUSING COULD ALSO OUTSTRIP SUPPLY 38K 51K 13K + = Amazon jobs Jobs at ~35% Total jobs JBG SMITH Supply Expected Follow - On Amazon Non - JBG SMITH Supply (2) x 20%
Slide 19: Powerful Tech Demand Catalysts: Virginia Tech Innovation Campus
POWERFUL TECH DEMAND CATALYSTS IN NATIONAL LANDING (1) Source: CoStar and McKinsey report. 19 • 750 planned Master's degrees in STEM annually, supplying knowledge workers to National Landing • Attracting funding from STEM employers (technology, defense and aerospace), including over $65M to date fro
Slide 20: Powerful Tech Demand Catalysts: Pentagon and Defense Spending
$6.4 $6.6 $6.9 $8.0 $10.6 $12.7 $21.5 $22.6 $27.4 $74.2 L3Harris BAE Systems Humana Huntington Ingalls ANSER Northrop Grumman Boeing General Dynamics Raytheon Lockheed Martin FY 2020 CONTRACT OBLIGATIONS ($B) POWERFUL TECH DEMAND CATALYSTS IN NATIONAL LANDING Sources: Federal Reserve/Bureau of Econo
Slide 21: Powerful Tech Demand Catalysts: Security and Technology
POWERFUL TECH DEMAND CATALYSTS IN NATIONAL LANDING Sources: Department of Defense, GAO, Breaking Defense, Congressional Research Office, Federal Times, Breaking Defense, Deltek , A EI, NOTE: Defense spending shows DoD budget request vs. 2022 Omnibus Appropriations Bill DoD (Line 051). 21 AMAZON VIRG
Slide 22: Powerful Tech Demand Catalysts: Digital Infrastructure
POWERFUL TECH DEMAND CATALYSTS IN NATIONAL LANDING 22 AMAZON VIRGINIA TECH INNOVATION CAMPUS THE PENTAGON AND THE DEPARTMENT OF DEFENSE DIGITAL INFRASTRUCTURE Cloud & Edge Fortune 500 Artificial Intelligence Fortune 500 Quantum Publicly Traded 5G & Wi - Fi Public Networks Fortune 500 Cloud & Edge Fo
Slide 23: Operating Portfolio Highlights
OPERATING PORTFOLIO HIGHLIGHTS
Slide 24: Existing Operating Portfolio Poised to Benefit from Growth Catalysts
OPERATING PORTFOLIO HIGHLIGHTS EXISTING OPERATING PORTFOLIO POISED TO BENEFIT FROM NATIONAL LANDING GROWTH CATALYSTS (1) As of Q1 2022, excluding assets sold or recapitalized year - to - date and those that are under firm contract. (2) Multifamily % leased and % occupied metrics represents In - Serv
Slide 25: National Landing Commercial Portfolio Highlights
NATIONAL LANDING COMMERCIAL PORTFOLIO HIGHLIGHTS WORK FROM HOME HEADWINDS ARE REAL, BUT STRATEGICALLY LOCATED AMENITY - RICH LOCATIONS WILL OUTPERFORM 25 NOTABLE TECH / CONTRACTOR LEASING TRANSACTIONS SINCE Q2 2020 • 1.8M SF leases executed since Q2 2020, including: • 589K SF of tech and contractor
Slide 26: National Landing Commercial Growth Drivers
NATIONAL LANDING COMMERCIAL GROWTH DRIVERS $42M OF POTENTIAL NOI GROWTH BY YEAR - END 2026 EMBEDDED IN OUR NATIONAL LANDING COMMERCIAL PORTFOLIO 26 COMMERCIAL DRIVERS $20M of NOI anticipated from lease - up and stabilization of operating portfolio • Strong leasing pipeline driven by digital infrastr
Slide 27: Multifamily Growth Drivers
MULTIFAMILY GROWTH DRIVERS $83M OF POTENTIAL NOI GROWTH BY YEAR - END 2026 EMBEDDED IN OUR MU LTIFAMILY PORTFOLIO, $15M OF WHICH IS NEAR - TERM 27 MULTIFAMILY DRIVERS $15M of potential annualized NOI growth from rent recovery and lease - up anticipated by year - end 2022 • In - place portfolio rents
Slide 28: Growth and Capitalization
GROWTH AND CAPITALIZATION
Slide 29: A Proven Capital Allocator
A PROVEN CAPITAL ALLOCATOR (1) Investments include acquisitions and committed development spending. Dispositions include assets sold and under firm cont rac t. (2) Includes assets under firm contract. (3) Represents weighted average per share price of repurchases through April 29, 2022. 29 INVESTMEN
Slide 30: Expect to Meet or Exceed $1B Capital Recycling Goal in 2022
Closed Incremental 2022 Marketing Total 2022 EXPECT TO MEET OR EXCEED $1B CAPITAL RECYCLING GOAL IN 2022 SOURCING CAPITAL AT FULL NAV FROM LOW - GROWTH, NON - CORE ASSETS 30 2022 CAPITAL RECYCLING $845M WE CONTINUE TO SEEK OPPORTUNITIES TO SELL OR RECAPITALIZE OUR RE MAINING NON - CORE ASSETS AT OR
Slide 31: Accretive Investment Opportunities
ACCRETIVE INVESTMENT OPPORTUNITIES REINVESTING CAPITAL INTO HIGH - MARGIN, HIGH - GROWTH OPPORTUNITIES (1) Represents weighted average per share price of repurchases through April 29, 2022. 31 DEVELOPMENT MULTIFAMILY ACQUISITIONS SHARE REPURCHASES • Multifamily – 6.5% historical average stabilized N
Slide 32: Unlocking Value Through Development Since Formation
$780M $1,075M $705M $950M Estimated Total Project Cost Estimated Realized Value UNLOCKING VALUE THROUGH DEVELOPMENT SINCE FORMATION MULTIFAMILY DELIVERED 1,589 UNITS MULTIFAMILY WEIGHTED AVERAGE STABILIZED YIELD 6.5% COMMERCIAL DELIVERED 1.4M SF COMMERCIAL WEIGHTED AVERAGE STABILIZED YIELD 7.0% (1)
Slide 33: 1,583-Unit Multifamily Pipeline Under Construction in National Landing
1,583 - UNIT MULTIFAMILY PIPELINE UNDER CONSTRUCTION IN NATIONAL L ANDING ESTIMATED TOTAL INVESTMENT (1) $743M ESTIMATED INCREMENTAL INVESTMENT $569M WEIGHTED AVERAGE PROJECTED NOI YIELD (2) 6.0% ESTIMATED STABILIZED NOI $44M WEIGHTED AVERAGE STABILIZATION DATE 2H 2026 (1) Estimated Total Investment
Slide 34: Track Record of Unlocking Value Through Monetization Alternatives
STRONG TRACK RECORD OF UNLOCKING VALUE THROUGH VARIOUS MONETIZAT ION ALTERNATIVES (1) Represents Historical Cost reported as of the quarter prior to sale or ground lease execution. If asset has not yet been sol d, reflects Historical Cost as of 3/31/2022. For Joint Ventures, represents JBG SMITH's b
Slide 35: Advancing Entitlements of Development Pipeline
ADVANCING THE ENTITLEMENTS OF OUR DEVELOPMENT PIPELINE IS CRITIC AL TO UNLOCKING AND MONETIZING VALUE 35 IN ADDITION TO DEVELOPMENT, WE CAN MONETIZE OUR LAND BANK THROUGH OPPORTUNISTIC LAND SALES, GROUND LEASES AND/OR RECAPITALIZATIONS Note: Excludes non - core land assets in light of our plans to d
Slide 36: NOI Bridge and Liquidity
NOI BRIDGE AND LIQUIDITY
Slide 37: Estimated NOI Bridge
Q1 2022 Annualized NOI 2022 Capital Recycling Growth from Operating Portfolio Growth from Under- Construction Assets Q4 2026 Annualized NOI ESTIMATED NOI BRIDGE ~$101M OF INCREMENTAL ANNUALIZED NOI BY YEAR - END 2026, EXCLUDING VALUE CREATION FROM MONETIZATION OF 8.6M SF DEVELOPMENT PIPELINE Note: T
Slide 38: Strong Balance Sheet to Fund Future Growth
STRONG BALANCE SHEET TO FUND FUTURE GROWTH ACCESS TO MULTIPLE SOURCES OF CAPITAL (1) Adjusted for mortgages repaid and net proceeds from the sales and recapitalizations which closed subsequent to quarter en d, and $198M of gross proceeds from the sale of Pen Place that is expected to close in Q2 202
Slide 39: Leverage Profile Supports Long-Term Value Creation
$64M $169M $127M $391M $105M $130M $85M $385M $130M $110M $116M $175M $200M $200M $90M 2022 2023 2024 2025 2026 2027 2028 2029+ LEVERAGE PROFILE SUPPORTS LONG - TERM VALUE CREATION LEVERAGE LEVELS WILL FLUCTUATE AS NEWLY DELIVERED ASSETS LEASE - U P AND STABILIZE, AND DEVELOPMENT ACTIVITY INCREASES
Slide 40: What's Next for JBG SMITH?
WHAT’S NEXT FOR JBG SMITH? 40 Complete capital recycling of non - core office and land assets 1 2 4 5 Complete repositioning of National Landing, including digital infrastructure rollout 3 Lease - up operating portfolio, capitalizing on technology - driven tailwinds from National Landing demand cata
Slide 41: Appendix
APPENDIX
Slide 42: JBG SMITH Today
JBG SMITH TODAY Note: Data is as of Q1 2022, adjusting for assets sold or recapitalized year - to - date. (1) Based on In - Service portfolio excluding newly developed and acquired assets. (2) Total Enterprise Value is based on closing price per share of $29.22 as of March 31, 2022. (3) Net debt to
Slide 43: National Landing: JBG SMITH Scale and Reach
NATIONAL LANDING Amazon Commercial Operating Development Pipeline Multifamily Operating and Under - Construction PENTAGON + DEPARTMENT OF DEFENSE VIRGINIA TECH AMAZON HQ2 56% Control of commercial operating (1) 6.2M SF of commercial operating 29% Control of multifamily operating and under constructi
Slide 44: JBG SMITH Concentrated in National Landing
JBG SMITH CONCENTRATED IN NATIONAL LANDING A NATIONAL LANDING - FOCUSED COMPANY WITH MULTIFAMILY CONCENTRATED IN HIGH - GROWTH, AMENITY - RICH, PROXIMATE SUBMARKETS 44 (1) Represents “Future” state and includes operating portfolio, under - construction assets and Development Pipeline and excludes al
Slide 45: Transformative Retail Placemaking Advancements Planned
TRANSFORMATIVE RETAIL PLACEMAKING ADVANCEMENTS PLANNED IN NATION AL LANDING 45 PLANNED RETAIL DELIVERIES OVER THE NEXT THREE YEARS WILL ALMOST TRIPLE THE NUMBER OF STREET - LEVEL RETAILERS ✓ 55 new street - level retailers in National Landing ◦ 65%+ open in next 12 months ◦ 100% open by year - end 2
Slide 46: National Landing Physical Infrastructure Projects
NATIONAL LANDING PHYSICAL INFRASTRUCTURE PROJECTS Note: Delivery dates reflect JBG SMITH’s estimate and are subject to change. 46 $6B OF FULLY COMMITTED PHYSICAL INFRASTRUCTURE PROJECTS PLANNED BY STATE AND LOCAL GOVERNMENTS MULTI - MODAL TRANSIT HUB (2025 DELIVERY) ROUTE 1 AT GRADE (2028 DELIVERY)
Slide 47: National Landing Market Research: Anticipated Rent Growth
NATIONAL LANDING MARKET RESEARCH: ANTICIPATED RENT GROWTH 47 (AS OF APRIL 2022) (AS OF APRIL 2022) (AS OF APRIL 2022) (AS OF MAY 2022) SOURCE ANNUALIZED OFFICE MARKET RENT GROWTH (Q1 2022 – Q4 2026) ANNUALIZED MULTIFAMILY MARKET RENT GROWTH (Q1 2022 – Q4 2026) 2.5% 2.5% 3.5% -- 2.6% -- 2.4% 3.6% --
Slide 48: Executive Team
EXECUTIVE TEAM 48 Executive Vice Presidents Management Tiffany Butcher Residential and Retail Asset Management Bryan Moll Development Evan Regan - Levine Strategic Innovation and Research Donna Wagner Tax AJ Jackson Social Impact Investing Edward Chaglassian Acquisitions Anthony Greenberg Developmen
Slide 49: National Landing Development Pipeline
NATIONAL LANDING DEVELOPMENT PIPELINE
Slide 50: National Landing Near-Term Development Pipeline
NATIONAL LANDING NEAR - TERM DEVELOPMENT PIPELINE Amazon Virginia Tech Innovation Campus Development Pipeline 5 6 2 3 4 1 Property Use Type Density (SF) Ownership % Entitled? 101 12 th Street Office 240K 100% Fully Entitled 2250 Crystal Drive Multifamily 677K 100% In - Process 223 23 rd Street Multi
Slide 51: National Landing Future Development Pipeline
NATIONAL LANDING FUTURE DEVELOPMENT PIPELINE Amazon Virginia Tech Innovation Campus Development Pipeline 1 1 2 3 4 5 6 7 8 4 Property Use Type Density (SF) Ownership % Entitled? RiverHouse Land Multifamily 1.9M 100% In - Process 1800 South Bell St. Land Office 245K 100% In - Process Americana Site M
Slide 52: Definitions
DEFINITIONS CARBON NEUTRAL “Carbon Neutral” means that any Scope 1 or Scope 2 carbon emissions released into the atmosphere from JBG SMITH’s building op era tions is balanced by an equivalent amount being removed. Scope 1 emissions represent natural gas consumed on - site by operating assets. Scope
Slide 53: Definitions
DEFINITIONS ESTIMATED TOTAL INVESTMENT "Estimated Total Investment" means, with respect to the development of an asset, the sum of the Historical Cost in such asset and the Estimated Incremental Investment for such asset .. Actual total investment may differ substantially from our estimates due to n
Slide 54: Definitions
DEFINITIONS LIQUIDITY “Liquidity” refers to the sum of cash, undrawn amounts available under our credit facility and management’s estimated borrowing capacity on our unencumbered multifamily assets .. We can provide no assurance that we would be successful in securing the proceeds of such potential
Slide 55: Definitions: NOI
DEFINITIONS NET OPERATING INCOME ("NOI"), "ANNUALIZED NOI", "ESTIMATED STABI LIZED NOI" AND "PROJECTED NOI YIELD" Net Operating Income ("NOI"), "Annualized NOI", "Estimated Stabilized NOI" and "Projected NOI Yield" are non - GAAP financial measures management uses to assess a segment's performance .
Slide 56: Definitions
DEFINITIONS PERCENT LEASED "Percent Leased" is based on leases signed as of March 31 , 2022 , and is calculated as total rentable square feet less rentable square feet available for lease divided by total rentable square feet expressed as a percentage .. Out - of - service square feet are excluded f
Slide 57: EBITDA, EBITDARE and Adjusted EBITDA (Non-GAAP)
EBITDA, EBITDARE AND ADJUSTED EBITDA (NON - GAAP) (UNAUDITED) Note: All EBITDA measures as shown above are attributable to common limited partnership units. (1) Includes demolition costs, integration and severance costs, pursuit costs related to other completed, potential and pursued t ran sactions,
Slide 58: NOI Reconciliations (Non-GAAP)
NOI RECONCILIATIONS (NON - GAAP) (UNAUDITED) (1) Adjustment to exclude straight - line rent, above/below market lease amortization and lease incentive amortization. (2) Adjustment to include other revenue and payments associated with assumed lease liabilities related to operating properties an d t o
Slide 59: JBG SMITH
JBG SMITH