Slide 1: Investor Presentation June 2017
INVESTOR P R E S E N TAT I O N JUNE 2017
Slide 2: North End Retail, Washington, DC
North End Retail Washington, DC
Slide 3: Disclosures
DISCLOSURES General Disclaimer of JBG Information JBG Properties Inc., (together with its affiliates and managed funds, “JBG”) information included in this presentation has been provided to Vornado Realty Trust (“Vornado”) by JBG in connection with the proposed transaction. Vornado has not verified
Slide 4: Definitions
DEFINITIONS Annualized Rent “Annualized Rent” is defined as (i) for office and other assets, or the retail component of a mixed-use asset, the in-place monthly base rent before free rent, plus tenant reimbursements as of 03/31/17, multiplied by 12 and divided by rentable square feet, with triple net
Slide 5: Definitions
DEFINITIONS Asset Value / Historical Cost and Net Asset Value / Historical Cost “Asset Value/Historical Cost” represents management’s estimate of the total value of the Operating Office, Multifamily, and Other assets and the Historical Cost of the Under Construction Properties, Near Term Development
Slide 6: Definitions
DEFINITIONS Net Debt “Net Debt” is a non-GAAP financial measure that represents total pro forma indebtedness less cash and cash equivalents, which have been adjusted for expected facility draws and proceeds from secured financings less estimated transaction costs. We use net debt to review the liqui
Slide 7: EBITDA Reconciliation
E B I T D A R E C O N C I L AT I O N EBITDA and Adjusted EBITDA Reconciliation For the Three Months Ended March 31, 2017 (in thousands) EBITDA Net Debt to Adjusted EBITDA Consolidated and unconsolidated indebtedness, at share before pro forma $2,385,375 Revenues: adjustments Property rentals $118,33
Slide 8: NOI Reconciliation
N O I R E C O N C I L I AT I O N NOI Reconciliation Three Months Ended March 31, 2017 (in thousands) Three months ended March 31, 2017 Vornado Included Assets JBG Included Assets Total JBG SMITH Net Income attributable to the Vornado Included Assets $6,318 Adjustments Depreciation and amortization 3
Slide 9: Net Asset Value / Historical Cost Reconciliation
N E T A S S E T VA L U E / H I S T O R I C A L C O S T ( N AV/ C O S T ) R E C O N C I L I AT I O N (1) As of March 31, 2017 (dollars and shares in thousands, except per share amounts) Total equity per pro forma balance sheet at March 31, 2017 $3,929,082 NAV / Cost adjustment for real estate, at sha
Slide 10: Transaction Overview
Investment Building Washington, DC TRANSACTION OVERVIEW NAME JBG SMITH Properties EXCHANGE/TICKER NYSE/JBGS DEAL SUMMARY VNO to spin off its DC business and JBG to contribute its management company and a selected portfolio of complementary Metro-served assets D I S T R I B U T I O N R AT I O 1 JBGS
Slide 11: JBG SMITH at a glance
FOUNDED 1946 + FOUNDED 1960 Central Place The Bartlett Arlington, VA Arlington, VA Rendering 12.4M Commercial SF + 700K Commercial SF + 565K Commercial SF + 6.3M Commercial SF + 4,232 Multifamily Units 985 Multifamily Units 464 Multifamily Units 12.0M Multifamily SF Operating Portfolio Under Constru
Slide 12: Scale: Largest Pure-Play, DC Metro Focused REIT
S C A L E : L A R G E S T P U R E - P L AY, D C M E T R O F O C U S E D R E I T OFFICE REITS – DC PORTFOLIOS (1) DOES NOT INCLUDE 18.3M SQUARE FEET 13.7 OF ADDITIONAL FUTURE 8.8 DEVELOPMENT POTENTIAL 6.1 5.5 3.7 3.4 2.1 0.9 JBG SMITH Boston Properties Brookfield Property Washington REIT First Potoma
Slide 13: Investment Rationale – JBGS Is the Best Way to Invest in DC
I N V E S T M E N T R AT I O N A L E – J B G S I S T H E B E S T W AY T O I N V E S T I N D C Aerial View of Washington, DC PLATFORM PORTFOLIO GROWTH BALANCE SHEET MARKET JBGS IS A PROVEN CONCENTRATION SIGNIFICANT THE DC MARKET VALUE CREATOR OF HIGH-QUALITY UNRIVALED LIQUIDITY AND HAS BOTTOMED WITH
Slide 14: Platform
PLATFORM JBGS IS A PROVEN VALUE CREATOR WITH A DIFFERENTIATED STRATEGY Rosslyn, Virginia
Slide 15: Platform: Leading DC Real Estate Owner and Operator
P L AT F O R M : L E A D I N G D C R E A L E S TAT E O W N E R A N D O P E R AT O R 1221 Van Street Rooftop View Washington, DC 18.0M SF / 8,800 Units(1) • Deep bench of mixed-use real estate Acquired since 1999 expertise across office, multifamily, and retail 24.1M SF / 9,800 Units(1) • Vertically
Slide 16: Platform: Differentiated Strategy
P L AT F O R M : D I F F E R E N T I AT E D S T R AT E G Y JBGS HAS A PROVEN TRACK RECORD OF RECOGNIZING AND CAPITALIZING ON OPPORTUNITIES THAT OTHERS WITH A SINGLE USE FOCUS CANNOT FOCUS ON HIGH- QUALITY ASSETS IN BEST METRO-SERVED SUBMARKETS LEVERAGE DEEP MAXIMIZE VALUE BENCH OF THROUGH DEVELOPMEN
Slide 17: Platform: Mixed-Use Competitive Advantages
P L AT F O R M : M I X E D - U S E C O M P E T I T I V E A D V A N T A G E S MIXED-USE = TOTAL FLEXIBILITY ACQUISITION OPPORTUNITIES OFFICE M U LT I FA M I LY R E TA I L • Improved access to wide array of use types • Identify value not perceived by single-use players AGILITY • Greater flexibility in
Slide 18: Mixed-Use Advantages – RTC-West Case Study
P L AT F O R M : M I X E D - U S E C O M P E T I T I V E A D V A N TA G E S – R T C - W E S T C A S E S T U D Y UNDER CONSTRUCTION: RETAIL ACQUISITION OPPORTUNITIES – BETTER ACCESS AND VALUE RESTON TOWN CENTER Rendering FUTURE DEVELOPMENT: MULTIFAMILY Rendering FUTURE DEVELOPMENT: OFFICE (2 BUILDING
Slide 19: Mixed-Use Advantages – 77H Case Study
P L AT F O R M : M I X E D - U S E C O M P E T I T I V E A D V A N TA G E S – 7 7 H C A S E S T U D Y AGILITY – UNLOCK HIGHER VALUE THROUGH CYCLES BEFORE: UNDER-UTILIZED LAND BEFORE: UNREALIZED OFFICE STRATEGY AFTER: MEETING MULTIFAMILY DEMAND AFTER: MIXED-USE DEVELOPMENT 9
Slide 20: Mixed-Use Advantages – Skyhouse Case Study
P L AT F O R M : M I X E D - U S E C O M P E T I T I V E A D V A N TA G E S – S K Y H O U S E C A S E S T U D Y DOWNSIDE PROTECTION – ADAPTIVE REUSE TURNS PROBLEMS INTO OPPORTUNITIES BEFORE: VACANT OFFICE BUILDINGS IN-PROGRESS: ADAPTIVE RE-USE OF STRUCTURE AFTER: NEW MULTIFAMILY 10
Slide 21: Platform: Proven Track Record Through All Market Cycles
P L AT F O R M : P R O V E N T R A C K R E C O R D T H R O U G H A L L M A R K E T C YC L E S 4747 Bethesda Avenue JBG PERFORMANCE BEST-IN-CLASS OPERATOR Bethesda, MD (SINCE 1999) WITH SUCCESSFUL HISTORY OF VALUE CREATION $3.7B 9 Funds • Proven track record over Equity Raised Raised multiple market
Slide 22: Platform: Demonstrated Capital Allocation Discipline
P L AT F O R M : D E M O N S T R AT E D C A P I TA L A L L O C AT I O N D I S C I P L I N E 1900 N Street INVESTMENTS / DISPOSITIONS (1) Washington, DC (EQUITY VALUE) $1,203,916 $1,245,622 $1,057,077 $445,413 Rendering ($437,049) $ THOUSANDS ($624,106) ($1,224,825) ($1,418,543) NET BUYER NET SELLER
Slide 23: Platform: Disciplined and Experienced Leadership Team
P L AT F O R M : D I S C I P L I N E D A N D E X P E R I E N C E D L E A D E R S H I P T E A M EXECUTIVE MANAGEMENT TEAM WILL HAVE The Bartlett Rooftop Arlington, VA ONE OF THE MOST SIGNIFICANT OWNERSHIP: ~5% OF JBGS SEASONED TEAMS IN THE DC MARKET Name and Title Age Years with JBGS(1) W. Matt Kelly
Slide 24: Platform: The Management Team
P L A T F O R M : T H E M A N A G E M E N T T E A M EXECUTIVE MANAGEMENT SENIOR VICE PRESIDENTS Judy Carter Kathryn Clement Carter Davis Frank Draper Eddie Dunlap Kristen Edison Bailey Edelson Paul Elias Commercial Asset 3rd Party Property Retail Asset Accounting Engineering Accounting Development C
Slide 25: Platform: Experienced Board of Trustees
P L AT F O R M : E X P E R I E N C E D B O A R D O F T R U S T E E S W I T H S T R O N G S H A R E H O L D E R A L I G N M E N T Name and Title Age Experience/Current Position Steven Roth 75 Chairman of the Board of Trustees of Vornado and CEO of Vornado MAJORITY INDEPENDENT BOARD OF TRUSTEES Chairm
Slide 26: Portfolio
PORTFOLIO CONCENTRATION OF HIGH-QUALITY ASSETS IN BEST URBAN SUBMARKETS 800 North Glebe Road Arlington, VA
Slide 27: Portfolio: Summary
PORTFOLIO: SUMMARY Portfolio Composition (by Rentable Square Footage) The Foundry Building Washington, DC OPERATING DEVELOPMENT All figures shown at share as of 03/31/17. Near-Term Operating Office Under Construction Development Pipeline Properties 5% 50 Assets 8 Assets Under Construction 12.1M SF 6
Slide 28: Portfolio: Concentration of High-Quality Assets in Best Submarkets
P O R T F O L I O : C O N C E N T R AT I O N O F H I G H - Q U A L I T Y A S S E T S I N T H E B E S T S U B M A R K E T S BETHESDA RESTON OUTSIDE THE BELTWAY INSIDE THE BELTWAY 98% METRO-SERVED DOWNTOWN DC RB CORRIDOR CRYSTAL/PENTAGON CITY JBG SMITH ASSETS NOTE: Rockville Pike Corridor, Rock Spring
Slide 29: Portfolio: Summary – Geographic Composition
PORTFOLIO: SUMMARY North End Retail Washington, DC Geographic Composition (by Rentable Square Footage) Other Bethesda CBD 4% 4% Reston 8% Crystal City RB Corridor 38% 8% Pentagon City 11% DC 27% + 18.3M SF Future Development Pipeline All figures shown at share as of 03/31/17. 19
Slide 30: Portfolio: Our Submarkets Have Significantly Outperformed the Market
PORTFOLIO: O U R S U B M A R K E T S H AV E S I G N I F I C A N T LY O U T P E R F O R M E D T H E M A R K E T 1Q17 ASKING RENTS RELATIVE TO MARKET 10-YEAR ASKING RENT GROWTH 10-YEAR AVERAGE OCCUPANCY 30% 25% 90% 20% 88% 26.7% 20% 86% 10% 84% OFFICE 15% 82% 0% -4.5% 80% 23.4% -10% 10% 78% 87.2% -21.
Slide 31: Portfolio: Office Properties
PORTFOLIO: O F F I C E P R O P E R T I E S (1) 800 N. Glebe Road • RB Corridor, VA RTC-West • Reston Town Center, VA 1600 K Street • Washington, DC 2345 Crystal Drive • Crystal City, VA 1233 20th Street • Washington, DC The Foundry • Washington, DC The Bowen • Washington, DC The Warner • Washington,
Slide 32: Portfolio: Operating Office
P O R T F O L I O : O P E R AT I N G O F F I C E Operating Office Portfolio Composition 1Q17 Office NOI by Submarket Bethesda CBD ASSETS 50 5% Reston 8% PRO RATA SQUARE FEET 12.1M RB Corridor 11% PERCENT LEASED 87.0% Crystal City ANNUALIZED RENT PSF $44.41 50% 1Q17 ANNUALIZED NOI $269M DC WEIGHTED A
Slide 33: Portfolio: Multifamily Properties
PORTFOLIO: M U LT I FA M I LY P R O P E R T I E S (1) Falkland Chase • Silver Spring, Maryland Atlantic Plumbing • Washington, DC The Terano • Rockville, Maryland The Bartlett • Pentagon City, Virginia Galvan • Rockville, Maryland 220 20th Street • Crystal City, Virginia RiverHouse Apartments • Pent
Slide 34: Portfolio: Operating Multifamily
P O R T F O L I O : O P E R AT I N G M U LT I FA M I LY Operating Multifamily Portfolio Composition 1Q17 Multifamily NOI by Submarket Other ASSETS 14 Reston 9% 1% Crystal City 12% PRO RATA MF UNITS 4,232 Pentagon City 50% PERCENT LEASED 96.3%(1) DC 28% 1Q17 ANNUALIZED NOI $69M JBGS Resident Data Ave
Slide 35: Growth
GROWTH UNRIVALED GROWTH PROFILE
Slide 36: Portfolio: Summary
PORTFOLIO: SUMMARY Portfolio Composition (by Rentable Square Footage) The Foundry Building Washington, DC OPERATING DEVELOPMENT Near-Term Operating Office Under Construction Development Pipeline Properties 5% 50 Assets 8 Assets Under Construction 12.1M SF 675K SF / 985 Units 8% Operating Other 2% Op
Slide 37: Growth: Under Construction Office/Other Properties
GROWTH: U N D E R C O N S T R U C T I O N O F F I C E / O T H E R P R O P E R T I E S (1) CEB Tower at Central Place RTC – West Retail Arlington, VA (RB Corridor) Reston, VA (Reston) Estimated Completion: 2Q18 Estimated Completion: 2Q17 529,997 SF Office (67% Preleased) 40,025 SF / Retail (55% Prele
Slide 38: Growth: Under Construction Multifamily Properties
GROWTH: U N D E R C O N S T R U C T I O N M U LT I FA M I LY P R O P E R T I E S (1) Atlantic Plumbing C - North West Half II 1221 Van Street Washington, DC (U Street/Shaw) Washington, DC (Ballpark) Washington, DC (Ballpark) Estimated Completion: 4Q19 Estimated Completion: 1Q20 Estimated Completion:
Slide 39: Growth: Under Construction Properties
GROWTH: UNDER CONSTRUCTION PROPERTIES Composition Estimated Total Investment – Office/Other(3) Reston OFFICE MULTIFAMILY DC 7% 10% ASSETS 3 5 PRO RATA COMMERCIAL SF 674,998 NA PRELEASED % 64.3% NA PRO RATA MF UNITS NA 985 ESTIMATED TOTAL INVESTMENT(1)(2) $423M $444M RB Corridor 83% ESTIMATED INCREME
Slide 40: Growth: Near-Term Development Properties
GROWTH: N E A R - T E R M D E V E L O P M E N T P R O P E R T I E S (1) 1900 N Street 965 Florida Avenue 7900 Wisconsin Avenue Washington, DC (CBD) Washington, DC (U Street/Shaw) Bethesda, MD (Bethesda CBD) 271,433 SF Office (29% Preleased(2)) 433 Units Multifamily 322 Units Multifamily 4747 Bethesd
Slide 41: Growth: Near-Term Development Pipeline
GROWTH: NEAR-TERM DEVELOPMENT PIPELINE Composition Estimated Total Investment – Office/Other(1) Other OFFICE/OTHER(1) MULTIFAMILY 1% ASSETS 3 2 Bethesda CBD PRO RATA COMMERCIAL SF 565,150 NA 42% DC PRO RATA MF UNITS NA 464 57% ESTIMATED TOTAL INVESTMENT(2) $368M $206M ESTIMATED INCREMENTAL $275M $19
Slide 42: Growth: Future Development Pipeline
GROWTH: FUTURE DEVELOPMENT PIPELINE Portfolio Composition Historical Cost by Submarket OWNED OPTIONED TOTAL Other MD 4% Other VA 4% NUMBER OF ASSETS 38 6 44 Reston 7% Pentagon City 30% PRO RATA ESTIMATED POTENTIAL 16.0M 2.3M 18.3M DENSITY (SF) HISTORICAL COST(1) $532M $19M $551M DC 25% INCREMENTAL I
Slide 43: Growth: Crystal City
G R O W T H : C R Y S TA L C I T Y DOWNTOWN DC THE PENTAGON REAGAN NATIONAL AIRPORT BLUE = JBGS CONTROL 33
Slide 44: Growth: Crystal City Is a Unique, Large-Scale Opportunity
G R O W T H : C R Y S TA L C I T Y I S A U N I Q U E , L A R G E - S C A L E O P P O R T U N I T Y Crystal City, Arlington Fenway, Boston • Crystal City’s commercial district is comparable in scale to some of the best urban neighborhoods in the country, each with a distinct retail heart • These neig
Slide 45: Growth: Placemaking Crystal City
G R O W T H : P L A C E M A K I N G C R Y S TA L C I T Y TODAY DIVERSITY OF OFFERINGS STRATEGIC ANCHORS AND AMENITIES PUBLIC SPACE WITH HUMAN SCALE GROCERY ANCHOR THEATER WALKABILITY WITH ANCHOR TRANSIT ACCESS PROGRAMMING AND ACTIVATION Rendering 35
Slide 46: Growth: Placemaking Creates Enormous Value
G R O W T H : P L A C E M A K I N G C R E AT E S E N O R M O U S VA L U E Bethesda Row completed in mid-2008 (Federal Realty Investment Trust ) 14th Street in Logan Circle BETHESDA ROW EFFECTIVE RENT PER SF LOGAN-SHAW EFFECTIVE RENT PER SF $3.30 $4.00 $3.10 New amenities added: $3.60 $2.90 12.0% ren
Slide 47: Growth: Placemaking Creates Enormous Value
G R O W T H : P L A C E M A K I N G C R E A T E S E N O R M O U S V A L U E BETHESDA: SUBURBAN VS. DOWNTOWN (ASKING RENTS/SF) RESTON: SUBURBAN RESTON VS. RESTON TOWN CENTER $43.00 (ASKING RENTS/SF) $41.00 $45.00 + Amenities + Amenities $39.00 $40.00 $37.00 $35.00 $35.00 $33.00 $31.00 $30.00 $29.00 $
Slide 48: Growth: Transformative Repositioning of Crystal City
G R O W T H : T R A N S F O R M AT I V E R E P O S I T I O N I N G O F C R Y S TA L C I T Y (1) CRYSTAL CITY TODAY PHASE I PHASE II PHASE III PHASE IV INCREMENTAL INVESTMENT ~$350M $ TBD $ TBD $ TBD NEW MULTIFAMILY UNITS +650 New MF Units +1000 New MF Units +1000 New MF Units +1300 New MF Units NEW
Slide 49: Growth: 5-Year Potential NOI Bridge
G R O W T H : 6 - Y E A R P O T E N T I A L N O I B R I D G E (1) WHAT IS INCLUDED +/- 6% NOI CAGR (2) • Signed but not commenced leases +/- $1.0B INCREMENTAL INVESTMENT • Lease-up of recently delivered multifamily assets to 95% occupancy • Lease-up of office portfolio to 91.5% occupancy at current
Slide 50: Growth: Components of Value
G ROW TH : CO M P O NE NTS O F VALU E $41.34/share + $6.41/share + $3.05/share + $2.10/share = $52.90/share + $36.61/share $5.0B OF POTENTIAL Potential Value FUTURE VALUE AT HISTORICAL COST Potential Value Creation from Assets Under Construction Creation from Near- Term Development + CREATION FROM B
Slide 51: Balance Sheet
BALANCE SHEET SIGNIFICANT LIQUIDITY AND FINANCIAL STRENGTH TO SUPPORT GROWTH Rendering of CEB Tower at Central Place Arlington, VA
Slide 52: Balance Sheet: Strong Balance Sheet to Fund Future Growth
B A L A N C E S H E E T: S T R O N G B A L A N C E S H E E T T O F U N D F U T U R E G R O W T H Financing Strategy 27% Net Debt to Asset Value/Historical Cost(2) • Primarily utilize non-recourse, asset-level financing Net Debt 27% • Prudent Leverage Ratios • 6.4x Net Debt / Adjusted EBITDA(1) • Lar
Slide 53: Balance Sheet: Well Laddered Debt Maturity Profile
B A L A N C E S H E E T: W E L L L A D D E R E D D E B T M AT U R I T Y P R O F I L E (1) ($ in millions) Secured Debt Statistics Weighted Average Interest Rate(2): 3.79% Weighted Average Maturity(3): 4.4 Years % Fixed(4): 47% $555 M $539 M $150 M $453 M $145 M $53 M $372 M $354 M $50 M $342 M $332
Slide 54: Balance Sheet: Capacity for Growth
B A L A N C E S H E E T: C A PA C I T Y F O R G R O W T H Operating Net Debt to Adjusted EBITDA(1) 6.4x 6.0x - 7.0x + Non-Stabilized Assets(2) 6.0x Operating Net Debt / Adjusted EBITDA (3) Potential Peak Net Debt / Adjusted EBITDA Range of 7.5x – 8.5x (6) (3) Current Net Debt / Adjusted EBITDA Effec
Slide 55: Balance Sheet: Run-Rate G&A Analysis
B A L A N C E S H E E T : R U N R AT E G & A A N A LY S I S Initial Run-Rate Explanation of Adjustments G&A(4) G&A 1Q Annualized G&A Expense 157 157 Elimination of non-cash compensation expense related to the amortization of value of certain units Transaction Related Items(1) (39) (39) issued to acq
Slide 56: Market
MARKET THE DC MARKET HAS BOTTOMED AND IS POISED FOR GROWTH View from the Bowen Building Washington, DC
Slide 57: DC Market: Strong Foundation for Growth
D C M A R K E T : S T R O N G F O U N D AT I O N F O R G R O W T H ( 1 ) HIGHEST STRONGEST BEST- LARGEST HOUSEHOLD P O P U L AT I O N E D U C AT E D P E R C E N TA G E INCOMES GROWTH WORKFORCE OF MILLENNIALS MEDIAN HOUSEHOLD POPULATION GROWTH % 25+ WITH BACHELOR'S % 25-34 Year Old Millennials INCOME
Slide 58: DC Market: Strong Foundation for Growth
D C M A R K E T : S T R O N G F O U N D AT I O N F O R G R O W T H 80 MARKET HEADWINDS MARKET RECOVERY 8 Federal Budget Uncertainty Federal Sequester 60 6 Tenant Rightsizing OFFICE NET ABSORPTION (MILLIONS OF SF) 40 4 JOBS ADDED/LOST (THOUSANDS) 20 2 0 0 -20 -2 -40 -4 -60 (1) -6 2007 2008 2009 2010
Slide 59: DC Market: Less Volatile Over Time Relative to Other Gateway Markets
D C M A R K E T : D C I S L E S S V O L AT I L E O V E R T I M E R E L AT I V E T O O T H E R G AT E W AY M A R K E T S DC MARKET IS MORE INSULATED FROM RECESSIONS RAPID RECOVERY AFTER HEADWINDS SUBSIDE 1990 Recession Tech Crash Great Recession 3.0% 0.0% -0.3% 2.0% -1.0% -2.0% 1.0% % EMPLOYMENT CHAN
Slide 60: Office Market: Metro-Proximate, Amenity-Served Buildings Perform Better
O F F I C E M A R K E T : M E T R O - P R O X I M AT E , A M E N I T Y - S E R V E D B U I L D I N G S P E R F O R M S I G N I F I C A N T LY B E T T E R OFFICE NET ABSORPTION OFF METRO VS. ON METRO (0.5 MILE OFFICE ASKING RENT OFF METRO VS. ON METRO (0.5 MILE RADIUS) RADIUS) $50.00 14 $45.24 $45.00
Slide 61: Office Market: Alignment of Congress + Presidency = Net Absorption
O F F I C E M A R K E T: A L I G N M E N T O F C O N G R E S S + P R E S I D E N C Y = N E T A B S O R P T I O N The Warner NET ABSORPTION IN DC METRO AREA DURING PERIODS OF POLITICAL Washington, DC ALIGNMENT AND DIVISION 40 2000-2016 35 35 30 25 MILLIONS OF SQUARE FEET 20 6 YEARS 15 10 5 0 10 YEARS
Slide 62: Office Market: Federal Contracts Spending Is Rebounding
O F F I C E M A R K E T: D C R E G I O N F E D E R A L C O N T R A C T S P E N D I N G I S R E B O U N D I N G FEDERAL GOVERNMENT PROCUREMENT CONTRACTS TO DC METRO AREA Lockheed Martin Fighter Demonstration Center 2121 Crystal Drive 82 Arlington, VA STIMULUS YEARS 80 78 76 74 BILLIONS $ 72 SEQUESTER
Slide 63: Office Market: Vacancy + Growth Potential
O F F I C E M A R K E T: VA C A N C Y + G R O W T H P O T E N T I A L SPREAD BETWEEN TROPHY, CLASS A, AND CLASS B RENTS AS DC CLASS B RENTS RISE, DC CLASS B VACANCIES ARE TRENDING DOWNWARD HAS WIDENED ARLINGTON CLASS B IS POISED FOR GROWTH TROPHY CLASS A (NON-TROPHY) CLASS B DC CLASS B ARLINGTON CLA
Slide 64: Office Market: Pipeline Below Historical Levels
O F F I C E M A R K E T : E V E N W I T H N E W S TA R T S , P I P E L I N E I S B E L O W H I S T O R I C A L L E V E L S AVERAGE OFFICE DELIVERIES PER YEAR 1700 M Street Washington, DC 10 Rendering 9 8 7 6 MILLIONS OF SF 5 4 3 2 1 - 2001-2005 2006-2010 2011-2015 2016-2020E SOURCE: JLL Research 54
Slide 65: Multifamily Market: Population Has Consistently Grown
DISTRICT OF COLUMBIA M U LT I F A M I LY M A R K E T : P O P U L AT I O N H A S C O N S I S T E N T LY G R O W N : P A R T I C U L A R LY I N U R B A N A R E A S DC METRO AREA DISTRICT OF COLUMBIA 6.2 700 PRE-RECESSION POST-RECESSION 6.13 6.08 681 6.02 680 6.0 5.96 670 5.87 659 660 649 5.8 5.78 640
Slide 66: Multifamily Market: Rent Growth and Record Absorption
M U LT I F A M I LY M A R K E T : R E N T G R O W T H A N D R E C O R D A B S O R P T I O N , D E S P I T E S U P P LY G R O W T H METRO DC MULTIFAMILY RENTAL DELIVERIES, ABSORPTION AND RENT GROWTH, 2004-YTD 2017 12,000 $2.50 $2.40 10,000 2004-2017 $2.30 3.5% CAGR $2.20 UNITS DELIVERED/ABSORBED 8,00
Slide 67: Multifamily Market: Metro-Proximate Buildings Driving Absorption
M U LT I F A M I LY M A R K E T : M E T R O - P R O X I M AT E , A M E N I T Y - S E R V E D B U I L D I N G S D R I V I N G A B S O R P T I O N DC METRO AREA MULTIFAMILY CLASS A ASKING RENTS - OFF METRO DC METRO AREA MULTIFAMILY ABSORPTION - METRO VS. NON-METRO VS. ON METRO LOCATIONS INVENTORY $3.0
Slide 68: Multifamily Market: Shrinking Pipeline Will Likely Drive Rent Growth
M U LT I F A M I LY M A R K E T : S H R I N K I N G P I P E L I N E W I L L L I K E LY D R I V E R E N T G R O W T H HOUSING UNIT DELIVERIES IN DC METRO AREA, 2004-2019 25,000 Estimated 7.0% 6.0% 20,000 5.0% MULTIFAMILY RENT GROWTH (%) HOUSING UNITS DELIVERED 15,000 4.0% 3.0% 10,000 2.0% 5,000 1.0%
Slide 69: Multifamily Market: DC Is the Most Affordable Gateway Market
M U LT I F A M I LY M A R K E T : D C I S T H E M O S T A F F O R D A B L E O F A N Y G AT E W AY M A R K E T Average Annual Effective Rent as a Percentage of Average RiverHouse Apartments The Gale Eckington Arlington, VA DC Washington, Household Income 50% 45% 43% 40% 37% 37% 35% 30% 30% 25% 21% 20
Slide 70: Investment Rationale – JBGS Is the Best Way to Invest in DC
I N V E S T M E N T R AT I O N A L E – J B G S I S T H E B E S T W AY T O I N V E S T I N D C Aerial View of Washington, DC PLATFORM PORTFOLIO GROWTH BALANCE SHEET MARKET JBGS IS A PROVEN CONCENTRATION SIGNIFICANT THE DC MARKET VALUE CREATOR OF HIGH-QUALITY UNRIVALED LIQUIDITY AND HAS BOTTOMED WITH
Slide 71: Appendix
APPENDIX 7200 Wisconsin Bethesda, MD
Slide 72: Sustainability Mission Statement and Strategic Goals
S U S TA I N A B I L I T Y M I S S I O N S TAT E M E N T A N D S T R AT E G I C G O A L S THE JBG SMITH SUSTAINABILITY PROGRAM’S MISSION IS TO RAISE THE BAR FOR EXCELLENCE IN ENVIRONMENTAL SUSTAINABILITY AND OCCUPANT WELLNESS. WE ARE COMMITTED TO INTEGRATING SUSTAINABILITY GOALS INTO CORPORATE POLIC
Slide 73: Sustainability Achievements and Initiatives
S U S TA I N A B I L I T Y A C H I E V E M E N T S A N D I N I T I AT I V E S JBG SMITH PORTFOLIO INCLUDES (AT SHARE): JBG SMITH MANAGEMENT TEAM EXPERIENCE INCLUDES: 8.6M SF of LEED Certified 49 employees with professional Assets certifications for sustainability, wellness and energy management 7.9M
Slide 74: Development Adjusted Net Debt to Adjusted EBITDA
DEVELOPMENT ADJUSTED NET DEBT TO ADJUSTED EBITDA Development Adjusted Net Debt to Adjusted EBITDA (1) $ in millions Estimated At Close Secured Debt on Stabilized Assets (at 3/31/2017) $2,101 Secured Debt on The Bartlett (estimated at close) 215 Credit Facility (estimated at close) 117 Term Loans (es
Slide 75: Components of Value
C O M P O N E N T S O F VA L U E (1) Asset Value / Potential Potential $ in millions, at JBG SMITH Share Historical Near Term Future Cost(4) Metric Value Creation Value Creation Office $4,882 $404 / SF Multifamily 1,636 $387K / Unit Operating Portfolio Other 84 $241 / SF Operating Real Estate $6,602
Slide 76: Balance Sheet
B A L A N C E S H E E T (1) $ in thousands, at JBG SMITH Share As of 3/31/2017 Estimated Adjustments Adjusted As of 3/31/2017 Other Tangible Assets:(2) Restricted Cash $24,357 -- $24,357 Tenant and Other Receivables, Net of Allowance for Doubtful Accounts 42,129 -- 42,129 Other Assets, Including Pre
Slide 77: Share Count Summary
S H A R E C O U N T S U M M A R Y (1) JBG SMITH Fully Diluted Shares Calculation: VNO Fully Diluted Shares Outstanding 201,131 Special Dividend of JBG SMITH Shares (2:1) to VNO Investors 100,565 Equity Contribution of VNO Assets 73.0% JBG SMITH Fully Diluted Shares Outstanding 137,796 (1) See page I
Slide 78: Operating Assets
O P E R AT I N G A S S E T S (1) $ in thousands, at JBG SMITH Share Plus: Lease Up Pro Forma Plus: Signed of Recently Annualized 1Q17 Annualized Leases Not Delivered Adjusted Market Market % Occupied NOI NOI Commenced Assets(2) NOI Cap Rate(7) Value Office: DC 90.7% $17,757 $71,028 $2,765 -- $73,793
Slide 79: Under Construction
U N D E R C O N S T R U C T I O N (1) $ in thousands, at JBG SMITH Share Schedule Estimated Costs At JBG SMITH Share Start Completion Stabilization Historical Incremental Total (2) Asset Type Submarket % Ownership SF Units Date Date Date Cost Investment Investment Under Construction: CEB Tower at Ce
Slide 80: Near-Term Development Pipeline
N E A R - T E R M D E V E L O P M E N T P I P E L I N E (1) $ in thousands, at JBG SMITH Share Asset Type Submarket % Ownership SF Units Near-Term Development: 4747 Bethesda Avenue Office Bethesda CBD 100.0% 287,183 -- 1900 N Street Office CBD 100.0% 271,433 -- 7900 Wisconsin Multifamily Bethesda CB
Slide 81: Future Development Pipeline
F U T U R E D E V E L O P M E N T P I P E L I N E (1) Estimated Estimated $ in thousands, at JBG SMITH Share Estimated Capitalized Capitalized Commercial Cost of Cost of Estimated SF / Multifamily Remaining SF / Units Ground Estimated Total Number of Estimated Potential Development Density (SF) Unit
Slide 82: Third-Party Asset Management and Real Estate Services Business
T H I R D - PA R T Y A S S E T M A N A G E M E N T A N D R E A L E S TAT E S E R V I C E S B U S I N E S S (1) $ in thousands, at JBG SMITH Share Three Months Ended 3/31/2017 Annualized 1Q17 Revenue Breakdown by Service Type Source of Revenues(2) Three Months Ended Construction Legacy Other Service
Slide 83: Walk Score Methodology
WALKSCORE METHODOLOGY Walk Score Score Description Walker’s Paradise • Walk Score measures the walkability of any 90 - 100 address Daily errands do not require a car • For each address, Walk Score analyzes hundreds of walking routes to nearby amenities. Points are Very Walkable awarded based on the
Slide 84: Understanding Our Financial Reporting
U N D E R S TA N D I N G O U R F I N A N C I A L R E P O R T I N G Calculated in accordance with NAREIT’s definition, adjusting Net Income/(Loss) for: 1) Real estate-related depreciation and amortization We believe that adjusting for one-time 2) Adjustments for one-time extraordinary items, includin
Slide 85: Atlantic Plumbing Public Art Project, Washington, DC
Atlantic Plumbing Public Art Project Washington, DC
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