Jbg Smith Properties · NYSE:JBGS
Jbg Smith Properties — Investor Presentation (November 2020)
39 slides from Jbg Smith Properties's investor presentation, Nov 10, 2020
Slide 1: Investor Presentation November 2020
INVESTOR PRESENTATION NOVEMBER 2020 901 W Street (Model Unit Interior)
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 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are
Slide 3: Disclosures: Pro Rata Information
DISCLOSURES PRO RATA INFORMATION We present certain financial information and metrics in this release “at JBG SMITH Share,” which refers to our ownership percentage of consolidated and unconsolidated assets and liabilities owned through real estate ventures (collectively, “real estate ventures”) as
Slide 4: Disclosures
DISCLOSURES which represented an $11.0 million increase over the previously estimated contract value resulting from an increase in the approved development density on the site. The sale of Pen Place to Amazon for approximately $149.9 million is expected to close in 2021, subject to customary closing
Slide 5: Mixed-use owner and operator focused on high-growth DC metro submarkets
MIXED-USE OWNER AND OPERATOR FOCUSED ON HIGH-GROWTH, AMENITY-RICH SUBMARKETS IN THE DC METRO AREA SIGNIFICANT DEMAND CATALYSTS IN NATIONAL LANDING SUBSTANTIAL NOI AND LONG-TERM NAV/SHARE GROWTH OPPORTUNITY HQ2 52% home to Amazon’s 4M+ SF new headquarters with 38K+ planned new jobs of the portfolio c
Slide 6: 81% of our portfolio is within a 20-minute commute of National Landing
Bethesda CBD NORTHERN VIRGINIA NATIONAL LANDINGRESTONRB CORRIDOR 52%10%5% Other MD (Off Map) MD WASHINGTON, DC DC EMERGINGDC MATURE 20%5% 20-MINUTE COMMUTE TO NATIONAL LANDING DC Mature DC Emerging RB Corridor MARYLAND BETHESDA CBDOTHER MD 2%6% National Landing 81% OF OUR PORTFOLIO IS WITHIN A 20-MI
Slide 7: Rent growth in our submarkets has outpaced non-JBG SMITH submarkets by 52%
RENT GROWTH IN OUR SUBMARKETS HAS OUTPACED NON-JBG SMITH SUBMARKETS BY 52% 19.4% 25.2% MULTIFAMILY ASKING RENT GROWTH 2009 - 2019 25.0% Asking Rent Growth (%) 15.0% 10.0% 5.0% +7.7% 30.0% Asking Rent Growth (%) NON-JBGS +6.9% 11.7% NON-JBGS JBGS Submarkets 0.0% 18.3% JBGS 7 Note: JBG SMITH office su
Slide 8: Employment in the DC metro more stable than other gateway markets
LIKE IN PAST DOWNTURNS, EMPLOYMENT IN THE DC METRO DURING THE PANDEMIC HAS BEEN MORE STABLE THAN IN OTHER GATEWAY MARKETS 3.0% 2.0% 1.0% 0.0% -1.0% Employment Change (%) -3.0% -4.0% -5.0% -6.0% -7.0% -8.0% -9.0% -10.0% -11.0% -12.0% 1990-1992 Recession 2001-2002 Tech Crash 2008-2009 Great Recession
Slide 9: DC metro asking rents more resilient than other gateway markets
THROUGH THE LAST DOWNTURN, DC METRO ASKING RENTS WERE MORE RESILIENT THAN THOSE IN OTHER GATEWAY MARKETS 10.0% Change in Average Asking Rents (%) OFFICE 2008 - 2009 Change in Average Asking Rents (%) 2.0% MULTIFAMILY 2008 - 2009 -8.0% 0.6% -5.0% -2.0% -10.0% -15.0% -16.2% -4.0% -6.0% -8.1% Washingto
Slide 10: National Landing
New Metro Station NATIONAL LANDING New Metro Entrance New Rail Station and Airport Pedestrian Bridge Route One to Grade Virginia Tech Innovation Campus ARLINGTONALEXANDRIA AMAZON HQ2 JBGS OPERATING JBGS DEVELOPMENT PIPELINE INFRASTRUCTURE/EDUCATION (STATE & LOCAL FUNDED) 10
Slide 11: Potential to start up to 3,100 new multifamily units over next three years
POTENTIAL TO START UP TO 3,100 NEW MULTIFAMILY UNITS OVER THE NEXT THREE YEARS TO MEET MARKET DEMAND AMAZON JOB GROWTH AND MAJOR MILESTONES(1) Amazon HQ2 Virginia Tech Innovation Campus Infrastructure Investments Potential JBG SMITH Multifamily Development Today Initial occupancy of leased assets 1s
Slide 12: Amazon drove office and residential demand near its Seattle headquarters
AMAZON DROVE SIGNIFICANT OFFICE AND RESIDENTIAL DEMAND IN CLOSE PROXIMITY TO ITS SEATTLE HEADQUARTERS OFFICE DEMAND 40K Amazon jobs created from 2010 - 2018, 5.5M+ SF of follow-on technology demand MULTIFAMILY DEMAND 15,000+ apartments built around Amazon from 2011-2019 with 4%+ growth in starting r
Slide 13: National Landing development pipeline map
ALEXANDRIA ARLINGTON New Metro Station Potomac River Virginia Tech Innovation Campus Potomac Yard Landbay G and H 1.9M SF INFRASTRUCTURE/EDUCATION (STATE & LOCAL FUNDED) JBGS DEVELOPMENT PIPELINE REAGAN NATIONAL AIRPORT AMAZON HQ2
Slide 14: Accelerate 5G rollout and other connectivity enhancements
ACCELERATE 5G ROLLOUT AND OTHER CONNECTIVITY ENHANCEMENTS IN THE NEAR TERM ALONGSIDE TECHNICAL PARTNERS 14
Slide 15: Existing operating portfolio expected to benefit from National Landing growth
EXISTING OPERATING PORTFOLIO EXPECTED TO BENEFIT FROM NATIONAL LANDING GROWTH CATALYSTS Q3 2020 NOI BY REGION MD OPERATING PORTFOLIO HIGHLIGHTS National Landing (VA) 57% 4%DC 23% Other VA 16% 11.2M SF 5,999 units 89.8% commercial portfolio multifamily portfolio leased across our In-Service portfolio
Slide 16: Near-term NOI growth from delivery and stabilization of eight new assets
SIGNIFICANT NEAR-TERM NOI GROWTH DRIVEN BY DELIVERY AND STABILIZATION OF EIGHT NEW ASSETS 6 RECENTLY DELIVERED2 UNDER-CONSTRUCTION West Half USE: Multifamily Avenue Commercial Commercial Street Multifamily Multifamily Avenue Multifamily Drive Commercial SUBMARKET: Ballpark Bethesda CBD DC CBD U Stre
Slide 17: Extensive 15M SF development pipeline, 75% multifamily
EXTENSIVE 15M SF DEVELOPMENT PIPELINE - 75% MULTIFAMILY DEVELOPMENT PIPELINE COMPOSITIONHOW ARE WE HARVESTING VALUE? Offi ce 5.6M SF Near-Term Development Pipeline could commence construction in the next three years 25% 800 units 2,300 units at 1900 Crystal Drive could commence construction by early
Slide 18: Opportunistically shift portfolio to majority multifamily over time
OPPORTUNISTICALLY SHIFT PORTFOLIO TO MAJORITY MULTIFAMILY OVER TIME PORTFOLIO MIX Q3 2017 Q3 2020 FUTURE 23% 77% 31% 69% At least 50% <50% Operating CommercialOperating Multifamily 1 Sell or recapitalize at least $1.5B of non-core assets 2 3 18
Slide 19: Sold or recapitalized nearly $1.6B of assets at or above NAV
SINCE ITS INCEPTION, JBG SMITH HAS SOLD OR RECAPITALIZED NEARLY $1.6B OF ASSETS AT OR ABOVE NAV $1.6B 1,800 Non-Income Producing Land(1) 1,400 Suburban/ Non-Core Office Sales ($M) 1,000 800 DC Office 400 200 - Planned capital recycling of at least $1.5B of non-core assets 2 1 3 (1) Includes $150M re
Slide 20: $1.9B of liquidity to withstand headwinds and capitalize on opportunities
$1.9B OF LIQUIDITY TO WITHSTAND HEADWINDS AND CAPITALIZE ON INVESTMENT OPPORTUNITIES TOTAL ENTERPRISE VALUE DEBT MATURITY SCHEDULE Weighted Avg. Cost of Debt: 3.2% Secured Debt Term Loans Secured Debt 28.4% Term Lo 5.5% Equity 66.1% $132 M $177 M $638 M $679 M $228 M $200 M $200 M $201M $33 M 202020
Slide 21: Significant upside potential from NOI growth and shifting portfolio mix
SIGNIFICANT UPSIDE POTENTIAL FROM NEAR-TERM NOI GROWTH, RECESSION-RESISTANT DEMAND CATALYSTS,AND SHIFTING PORTFOLIO MIX TO MULTIFAMILY JBG SMITH SHARE PRICE PERFORMANCE VS. OFFICE SECTOR AND MULTIFAMILY SECTOR PEERS 11/13/2018: Amazon announces its HQ2 will be located in National Landing 2/21/2020:
Slide 22: Appendix
2) APPENDIX
Slide 23: Portfolio and capitalization at a glance
OPERATING PORTFOLIOUNDER-CONSTRUCTIONNEAR-TERM DEVELOPMENT COMMERCIAL SF 11.2M MULTIFAMILY UNITS 5,999 COMMERCIAL SF 274K MULTIFAMILY UNITS 161 5.6M SF FUTURE DEVELOPMENT PIPELINE 9.4M SF WEIGHTED AVERAGE LEASE TERM 6.2 YEARS TOTAL ENTERPRISE VALUE(1) $5.9B 1900 N Street 83 NET DEBT/ TOTAL ENTERPRIS
Slide 24: Commercial portfolio: COVID-19 income declines partially offset by free rent burn off
COVID-19 DRIVEN INCOME STREAM DECLINES PARTIALLY OFFSET BY THE BURN OFF OF FREE RENT Q3 2020 PERFORMANCE Generated $229.3M of Annualized NOI in Q3 2020 versus $231.5M in Q3 2019 Decline primarily due to rent deferrals and reserves for credit losses, decline in parking revenue, and decline in NOI fro
Slide 25: Multifamily portfolio: market demand below normal levels
MARKET DEMAND BELOW NORMAL LEVELS DUE TO COVID-19 CAUSING RENT AND OCCUPANCY DECLINES Q3 2020 PERFORMANCE Generated $61.8M of Annualized NOI in Q3 2020 versus $81.7M in Q3 2019 Decline primarily due to lower occupancy, lower net effective rents, higher operating expenses, and retail rent deferrals 8
Slide 26: DC metro office starts trending downward
DC METRO OFFICE STARTS TRENDING DOWNWARD WITH FEW NEW STARTS POST-COVID-19 Total Under Construction: 8.1M 6.0 4.4M 3.7M 3.6M 3.5M 3.2M 2.5M 1.8M 1.2M 2.3M 2.5M 3.2M 300K 2.1M 5.0M Square Feet (M) 3.0 2.0 1.0 0.0 201420152016201720182019202020212022 Source: JLL Delivered as of Q3 2020Under Constructi
Slide 27: Modest uptick in office vacancy from negative absorption
MODEST UPTICK IN VACANCY DRIVEN BY NEGATIVE ABSORPTION RESULTING FROM COVID-19 OFFICE VACANCY CHANGE(1)OFFICE ABSORPTION(1)OFFICE RENT GROWTH(1) 2.0% 04.0% 1.6% -0.0% -0.1% -0.1% 1.7% 1.5% 1.3% 1.1% 0.9% 0.6% 0.5% 0.6% 0.6% 0.5% 0.4% Q2 2020 - Q3 2020 0.2% Q3 2019 - Q3 2020 Vacancy Change (%) 1.0% 0
Slide 28: Office investment sales volume significantly down
$10.0 $9.0 $6.3B $7.0 Sales Volume ($B) $5.0 $4.0 OFFICE INVESTMENT SALES VOLUME SIGNIFICANTLY DOWN, WITH MAJORITY OF CLOSINGS OCCURRING DURING Q1 2020 $8.9B $6.8B $9.0B $8.0B $8.7B $3.1 $3.1 $3.2 $2.0 $0.3 $4.0 $3.4B 66% of Volume Transacted in Q1 2020 $2.9 $1.7 $4.1 $4.6 $4.6 $1.9 $5.1 $0.9 $1.5 $
Slide 29: Multifamily pipeline continues to decline
THE PIPELINE CONTINUES TO DECLINE WITH 3,500 UNITS COMMENCING CONSTRUCTION YTD WITH ONLY 31% STARTING IN THE LAST TWO QUARTERS 16,000 MULTIFAMILY DELIVERY PIPELINE 12,985 10,205 9,041 9,048 5,970 5,010 3,334 2,351 803 5,010 5,970 8,197 851 10,000 Units 6,000 4,000 2,000 0 Source: CoStar 201720182019
Slide 30: Occupancy losses in multifamily have driven rent declines
OCCUPANCY LOSSES IN MULTIFAMILY HAVE DRIVEN RENT DECLINES AS LANDLORDS COMPETE FOR A SMALLER POOL OF RENTERS -0.8% -0.7% -2.8% -2.5% SAME STORE AVG. OCCUPANCY CHANGE 0.0% SAME STORE AVG. ASKING RENT GROWTH -1.0% -2.0% -1.0% -4.8% -5.2% -7.6% -8.3% Occupancy Change (%) -4.0% -3.0% Rent Growth (%) -5.
Slide 31: Multifamily investment sales volume significantly down
MULTIFAMILY INVESTMENT SALES VOLUME SIGNIFICANTLY DOWN, WITH THE MAJORITY OF CLOSINGS OCCURRING DURING Q1 2020 $8.0 MULTIFAMILY SALES VOLUME $0.9 $0.9 $1.1 $0.8 $1.2 $0.1 $1.2 $1.0 $2.1 $0.9 $2.1 $1.9 $1.3 $2.3 $3.3 $4.0 $4.1 $7.1B $7.0B $6.0 $3.7B $4.6B $4.0B 55% of Volume Transacted in Q1 2020 Sal
Slide 32: Business practices aligned with sustainable growth and responsible development
ALIGNED BUSINESS PRACTICES WITH SUSTAINABLE GROWTH, RESPONSIBLE DEVELOPMENT, AND HIGH-PERFORMANCE OPERATIONS 2019 ENVIRONMENTAL PERFORMANCE HIGHLIGHTS(1) WASHINGTON HOUSING INITIATIVE (WHI) 1 ENERGY 3.9% EM CO2 NS 3.6% ISSIO Like-for-Like WATER 5% D WASTE N IVERSIO 4% 2 million square feet Raised $1
Slide 33: Awards of Excellence
Awards of Excellence 1900 N Street 4747 Bethesda Ave West Half Excellence in Development (Finalist): West Half 4747 Bethesda Ave Best Real Estate Deals: West Half 4747 Bethesda Ave Virginia Tech Innovation Campus #3 Best Place to Work (Largest Companies) Best of the Best 1900 N Street 4747 Bethesda
Slide 34: Definitions
DEFINITIONS DEVELOPMENT PIPELINE “Development Pipeline” refers to the Near-term Development Pipeline and Future Development Pipeline. EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA"), EBITDA FOR REAL ESTATE ("EBITDARE") AND ADJUSTED EBITDA Management uses EBITDA and EBITDAre
Slide 35: Definitions
DEFINITIONS NEAR-TERM DEVELOPMENT PIPELINE ‘‘Near-Term Development Pipeline’’ refers to select assets that could commence construction over the next three years, subject to receipt of full entitlements, completion of design and market conditions. NET OPERATING INCOME ("NOI"), ADJUSTED ANNUALIZED NOI
Slide 36: Definitions
DEFINITIONS difficulty of forecasting the timing and/or amounts of various items that would impact net income. Additionally, no reconciliation of projected NOI yield to the most directly comparable GAAP measure is included in this Investor Presentation because we are unable to quantify certain amoun
Slide 37: EBITDA, EBITDAre and Adjusted EBITDA (Non-GAAP)
EBITDA, EBITDAre AND ADJUSTED EBITDA (NON-GAAP) (UNAUDITED) dollars in thousands Three Months Ended September 30,Nine Months Ended September 30, Year Ended December 31, 20202019202020192019 Interest expense includes the amortization of deferred financing costs and the ineffective portion of any inte
Slide 38: NOI Reconciliations (Non-GAAP)
NOI RECONCILIATIONS (NON-GAAP) (UNAUDITED) Excludes parking revenue of $3.1 million and $10.3 million for the three and nine months ended September 30, 2020, and $6.3 million and $19.5 million for the three and nine months ended September 30, 2019. Excludes parking revenue of $26.0 million and $25.7
Slide 39: JBG SMITH
2) JBG SMITH
JBG SMITH Properties — Investor Presentation (November 2020) on 6ix