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Quarterly Investor Package

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JBGS Divider

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Table of Contents

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Section One – Mgmt Letter

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Management Letter

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August 4, 2020

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To Our Fellow Shareholders:

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We hope this letter finds you well and out of harm’s way during these difficult times. While each of the three jurisdictions that comprise the DC metro area have started separate reopening processes, the health and safety of our customers, our team, our business partners, and our community remain our number one priority. Despite the adverse impact of the COVID-19 pandemic, during the second quarter, the DC region performed better than other gateway markets in terms of overall employment, according to the Bureau of Labor Statistics. While our business continued to feel the effects of the pandemic, our rent collections remained steady throughout the quarter at 98.6%, 98.5% and 58.0% for office, residential, and retail, respectively. We executed or expect to execute rent deferral agreements with tenants representing $3.9 million of rents that were contractually due in the second quarter (approximately 2.9% of Total Revenue for the quarter). We are confident that these arrangements represent a worthwhile investment in the long-term survival of these tenants.

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While the unfolding economic downturn threatens to be significant, we take solace in the fact that in each recession over the past 30 years, the DC metro area has proven to be more resilient than other gateway markets. Our concentration in this market, where a high percentage of demand for our business is driven by Amazon, the federal government, and government contractors, should soften the anticipated impact of the looming recession, and may translate into countercyclical growth. DC’s diversification into technology, as highlighted by its ranking as the second-best market in the country for technology talent according to CBRE’s 2020 Tech Talent report, should also help it to weather the storm.

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We expect our heavy concentration in Amazon’s path of growth to bear fruit on multiple fronts. First and foremost, Amazon has historically increased its hiring pace during economic downturns and recently hired its 1,000^th employee in National Landing. Amazon’s latest announcements indicate that it intends to accelerate hiring for HQ2 in the years ahead and remains fully committed to planned occupancies in National Landing. As a reminder, Amazon plans to create at least 37,850 jobs with almost 12,000 of those committed by 2025, according to its 2018 Memorandum of Understanding with the Commonwealth of Virginia. In addition, the potential for construction cost reductions, an expected decline in the supply pipeline, and limited disruptions to permitting and construction, should facilitate our multifamily growth plans, especially those related to new development in National Landing. Finally, we expect increased government spending in response to the pandemic to drive more agency and contractor spending locally. These factors should not only limit the effects of the downturn on our market but may also provide stimulus for future growth. While the unpredictable impact of COVID-19 demands caution in the short-term, we see the potential for strong demand and growth in our market over the medium and long term.

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Since the formation of JBG SMITH in 2017, we have intentionally positioned the company for an expected downturn, and we believe we are well prepared for a prolonged recession and an extended recovery. We have approximately $2 billion of liquidity and only $213 million of debt maturing before the end of 2021. We believe our robust liquidity will enable us both to withstand near-term headwinds and to capitalize on investment opportunities

that will make us even stronger over the long term. Indeed, it is precisely times such as these when those with liquidity, capital capacity, and proven capital allocation capabilities make some of their best investments.

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Long-Term Trends

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We anticipate that the impact of the COVID-19 pandemic will ripple through the real estate industry for years to come.  Over the short term, uncertainty surrounding the pandemic will likely suppress net new demand for office space and bias multifamily leasing to renewals. Retail failures are likely to accelerate, and an already competitive marketplace will favor retailers with experience and capital.

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Over the longer term, however, the story is likely to be more nuanced. For starters, office users may take advantage of the widespread adoption of telework to lease less space, resulting in a potential headwind for office rent growth, much as densification served as a headwind over the past decade. Space reduction of this kind would require the elimination of dedicated desks and the broader adoption of hoteling and “hot desk” configurations. In the past, many employers resisted such changes due to productivity concerns and it is unclear whether employees will embrace trading their dedicated workspace for telework flexibility on a permanent basis. In high-rent districts where the payback is greater, the pressure to transition to this model will likely be intense and we expect the pace to accelerate.

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Regardless of its impact on office absorption, the broader adoption of teleworking and the commuting flexibility that comes with it should enable major urban employment centers to access a deeper pool of talent to drive faster overall hiring and economic growth. Over the past few years, these regions had started to see growth plateau or even slow as a result of congestion and elevated housing costs. While teleworking could permit some of this labor force to locate a plane flight away, we believe most workers miss and greatly value face time with their colleagues (even if not all five days of the work week). If knowledge workers continue to favor the convenience and vibrancy of walkable amenities, then employers who seek to hire these workers will continue to locate and grow their office presence in these same urban, walkable environments. It follows that these areas are likely to capture a disproportionate share of demand and the rent premiums that go with it.

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One likely result of this expected trend is a deepening pool of consumers for all forms of housing (including multifamily) and amenity retail. This demand, of course, depends on the belief that consumers will continue to favor convenience and amenities. Even amid the pandemic, these preferences seem to be a priority for many individuals as evidenced by desperate consumers returning to their favorite stores, restaurants, and bars even as social distancing guidelines remain in place. As these restrictions lift, and after the pandemic has passed, we believe consumer preferences will be a net positive for our mixed-use strategy, particularly in locations such as National Landing, where Amazon continues to grow at a rate far in excess of the market as a whole. Because it offers the most affordable office and residential space of any gateway city and has one of the best educated work forces in the country, the DC region is also likely to benefit post-pandemic.

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While it is still too early to make specific decisions on COVID-19 driven building design changes, we are actively studying the pandemic’s impact on the configuration of office, multifamily, and retail spaces. In office, we do not subscribe to the notion that social distancing (de-densification) will translate into a sustained need for more square footage per person. Rather, we believe that in the near-term offices will continue to operate below full capacity, as health concerns and the practical limitations imposed by schools and mass transit drive a continuation of work-from-home. Over time, a growing portion of many tenants’ office spaces may shift away from private fixed desks for every employee, and more toward meeting spaces and flexible “touchdown” areas that can be used by employees splitting their time between work-from-home and collaborative work in the office. The lasting impact of COVID-19

may not be greater physical distance, but more flexibility and collaboration within spaces designed to accommodate both.

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Multifamily buildings will have to adjust to greater numbers of residents working from home at least some of the time. That said, we do not believe that this adaptation will translate into a significant reversal of the trend toward smaller units. It is more likely that amenities and common spaces will adapt to provide spaces for work, and that renting decisions will be even more predicated on the availability of outdoor space, flexible space within existing unit footprints, and robust internet connectivity throughout the building. Over the short-term, we are likely to see a flight to the suburbs as young people move in with their parents, and those who had been holding off on buying homes take advantage of historically low mortgage rates to become homeowners. We are actively exploring the design changes outlined above as we anticipate the needs of the next wave of renters entering the workforce in a post-pandemic world.

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While the retail world is clearly the most uncertain, we are also exploring how to enable increased, and perhaps sustained, takeout businesses within new restaurant builds, as well as how to incorporate “ghost kitchens” into otherwise non-income producing spaces, such as obsolete retail or excess parking. These “ghost kitchens” serve the growing takeout market (which was already expanding pre-pandemic) and are essentially restaurants without a dining room. While they do not contribute to our overall placemaking efforts, these businesses nonetheless serve as amenities for renters and office workers. We are also looking at how we can permanently expand the availability of outdoor dining, as the value of activated public spaces has been proven for some time, but often comes into conflict with existing governmental regulations and transportation priorities.

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As expected, construction costs are now trending downward. Early signals appeared faster than they did after the Global Financial Crisis (GFC), and we have already seen pricing on certain construction inputs, such as concrete, fall by as much as 8%. While it is still very early, and the full impact of COVID-19 on contractors will take time to play out, we believe current circumstances could create a confluence of favorable inputs for our substantial Future Development Pipeline. We are continuing to move projects through the entitlement process, including over 2,100 multifamily units in National Landing, which we expect to have entitled and designed within the next 12 months. Should construction pricing decrease to attractive enough levels, we intend to use our substantial liquidity to take advantage of these investment opportunities. Combined with Amazon’s growth and government spending tailwinds, we believe these factors could have a long-term positive impact on our growth trajectory.

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These trends and predictions are based upon our early read at the outset of a downturn that we expect to be both long lived and deep. Given the high degree of uncertainty still surrounding the pandemic, and the trajectory of our local economy, we intend to avoid predicating long-term decisions upon short-term observations and we will be watching consumer and business demand trends closely.

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For details regarding our financial and operating results, as well as cautionary disclosures about forward-looking statements, please see our second quarter earnings release and supplemental information, which follow this letter.

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Balance Sheet and Liquidity

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Maintaining prudent leverage levels, ample liquidity, and internal investment capacity are fundamental elements of our strategy for maximizing long-term NAV per share. Our capital allocation decisions over the past three years have put us in the advantageous position of having approximately $2 billion of liquidity, 2020 debt maturities of $10.5 million, 2021 debt maturities of $202.1 million, and limited near-term capital obligations. As a result, we believe we are well prepared to manage through this crisis and grow over the longer term.

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Our cash balance as of June 30, 2020 was approximately $724 million at share. Subsequent to quarter end, we closed on $385 million in financing from Freddie Mac, and repaid our credit facility in full, resulting in a pro forma cash balance of approximately $582 million at share and $1 billion of availability under our credit facility. Additionally, we have approximately $410 million of potential multifamily borrowing capacity from our Operating and Under Construction multifamily assets. We believe we have more than sufficient liquidity to meet the required obligations for our operating portfolio, to continue funding our active Under Construction assets, and to further pursue strategic projects in our Future Development Pipeline while also maintaining ample capacity for net new investment, even under a severe downside scenario.

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Consistent with our strategy to primarily finance our business with non-recourse, asset-level financing, on July 22^nd, we closed on $385 million in 10-year financing from Freddie Mac comprising separate loans on three multifamily assets – The Bartlett, 1221 Van Street, and 220 20^th Street. This financing allowed us to source attractively priced capital for high-quality multifamily assets despite the current economic environment and validated our strategy to preserve borrowing capacity on multifamily assets for use during market downturns.

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As of June 30, 2020, our Net Debt/Total Enterprise Value was 30.2% and our Net Debt/Annualized Adjusted EBITDA was 8.1x. This metric is elevated due to the impacts of COVID-19 on income streams such as parking, the Crystal City Marriott, and our Third-Party Real Estate Services business. On a trailing 12-month basis, our Net Debt/Adjusted EBITDA was 6.5x. Given that these leverage metrics include the debt incurred to date to develop our three Under Construction and five recently delivered assets, but not all the estimated stabilized NOI from those assets, we believe Net Debt/Total Enterprise Value is the most meaningful measure to evaluate our leverage. Our long-term leverage targets remain unchanged at 25% to 35% Net Debt/Total Enterprise Value and between 6x and 7x Net Debt/Adjusted EBITDA, with peak levels in the mid-8x’s during periods of more active capital deployment.

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National Landing Update

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In June, the Crystal City Business Improvement District (BID) officially renamed itself the National Landing BID, with an enlarged boundary that includes legacy Crystal City and a portion of Pentagon City, including the land upon which we are building Amazon’s new headquarters. This milestone formalizes the adoption of a name that was introduced almost two years ago as part of the Amazon HQ2 process, reflects the BID’s enlarged boundaries, and creates a more cohesive identity for the area. In conjunction with the BID rebranding, we launched an updated National Landing website, which provides a summary of the exciting changes happening in the submarket.

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In addition to these important branding and placemaking announcements, two critical HQ2-funded infrastructure projects recently reached significant milestones. While these projects had been expected to take years, the substantial progress made over a relatively short time period is noteworthy and indicative of how all relevant parties are cooperating to rapidly improve National Landing’s infrastructure. First, Arlington County awarded JBG SMITH oversight of the new Metro entrance planned at the corner of 18^th Street and Crystal Drive. As part of a public-private arrangement that maintains the project as an entirely public investment, it can now benefit from the speed and efficiency of JBG SMITH’s dedicated development team. The new entrance will provide additional capacity and will improve access to regional commuter rail service (Virginia Railway Express or VRE), local buses, and our many planned developments on Crystal Drive. The station will be built on JBG SMITH property, adjacent to 1770 Crystal Drive and a planned public plaza. Under the current schedule, the project is expected to be completed by the end of 2023.

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We achieved the second important infrastructure milestone in June when VRE endorsed an agreement with JBG SMITH regarding its new and expanded regional rail station in National Landing. The station, which will also be built on JBG SMITH-owned land, is expected not only to provide VRE service, but also Amtrak and Maryland

commuter rail service, as well as a connection point to the planned pedestrian bridge to Reagan National Airport. Construction of this new regional rail station is expected to begin in 2023 and under the current project schedule, is expected to be completed by the end of 2024.

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These milestones reflect the constant and diligent effort of dozens of individuals at the state and local levels of government, as well as members of the JBG SMITH team and our many private sector partners in the submarket. Even during this time of social distancing, infrastructure priorities continue to receive attention and funding, and we are encouraged by the tremendous progress that has been made on these important investments.

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State of the Markets

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Regional Economy
Although no region in the United States is immune from the impacts of COVID-19, the DC metro area demonstrated its continued resilience relative to other gateway markets, posting a preliminary unemployment rate of 9.0% for May, according to the Bureau of Labor Statistics. While better than other major metro regions, this rate is still up significantly from 3.3% at the end of March. By comparison, other gateway markets have seen far higher levels of unemployment with San Francisco at 12.7%, New York at 15.3%, and Boston at 15.9%. Despite the relative outperformance, 9.0% is the highest we have ever seen in the DC market, exceeding the 6.9% during the Great Recession, 4.3% in the Tech Crash, and 5.6% in the early 90s recession. This 9.0% unemployment rate translates into more than 300,000 jobs lost – although nearly 60% of those were in the retail and hospitality sectors, some of which may not be permanent losses. Though the professional services sector remains relatively healthy, it still saw over 30,000 job losses through May which, when combined with other office-occupying sectors and a move to increased telework, will likely put increased pressure on the office market. While these data points are sobering, we have seen some early positive movement in unemployment (down from April’s 9.8% figure) and unemployment claims from the Department of Labor (peaked in April). It is important to note, however, that these positive moves could be upended by a resurgent virus or an inadequate federal economic response.

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Office

The silence in the office market is deafening, with the second quarter posting minimal levels of absorption, according to JLL, which reported a year-to-date total net absorption of negative 590,000 square feet. While that is close to zero in a 330 million square foot market, it is worth noting that DC proper was responsible for the bulk of the negative absorption while the Virginia and Maryland suburbs posted de minimis levels of positive activity. This difference is less about an urban versus suburban divide and more about exposure to technology and government contracting (Northern Virginia) versus associations and law firms (DC proper). The minimal level of activity across the board also suggests that many tenants are taking a temporary “wait and see” approach to the market, favoring renewals or deferring their decisions. JLL reports that renewal activity as a share of total transaction volume is up 30% year-to-date but that subleasing activity is also on the rise, suggesting that some eventual expirations may lead to contractions. In addition to potential space givebacks, construction in our market was not halted, and deliveries have continued, bringing with them speculative space that is particularly impactful on vacancy rates in a period with little to no demand. While JLL rightly notes that the future office construction pipeline is finally slowing, there remains more than 3 million square feet being built across the market, with 1.3 million square feet of that to-be-delivered space still available.

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Multifamily

The headline story in the multifamily market is the state of the construction pipeline rather than the near-term impact of COVID-19. During the second quarter, only 300 units started construction, bringing the total to approximately 2,700 units for the first six months of the year versus 4,400 in the first half of 2019. This slowdown is not the result of construction holds or delays, but rather cautious sentiment among developers and investors. While a reduction

in construction costs may eventually spur new starts, this pause has exacerbated the declining pipeline we have been writing about for the past few years. As a reminder, peak years of delivery saw north of 14,000 units, and the past few years have seen about 10,000 units per year of deliveries. By contrast, we expect to see approximately 8,200 units deliver in 2020, 6,800 units in 2021, and just below 5,000 units in 2022. With only 2,500 units underway for delivery in 2023, we believe that this pause in construction starts and the overall declining pipeline could make 2022, and perhaps 2023, extremely light years for deliveries. While new starts driven by reduced construction costs could impact 2023, and even 2024 deliveries, when demand recovers, the supply trajectory appears to favor strong rent growth in the coming years.

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Despite our favorable view of supply and demand over the medium and long-term, we do believe that the near-term multifamily market will be soft, driven by the direct impacts of COVID-19. This softness is reflected in second quarter CoStar data which shows that Same Store rents are down nearly 4% compared to the second quarter of 2019 and occupancy declined 1.5% over the same time period. These negative movements were consistent among nearly all submarkets (urban and suburban), reflecting the macro impact that COVID-19 has had on the DC region. We believe that the primary driver of these moves in occupancy and rent is a reduced pool of net new demand. Renewals have predominated in our portfolio, and new leasing traffic is down. Additionally, data compiled by Zillow from the Census Bureau shows an elevated share of adults living with parents or grandparents. That said, we believe these changes are largely near-term and related to the pandemic’s direct effects rather than a long-term change in consumer preference.
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Investment Sales

While investment sales and debt issuance were significantly impacted during the second quarter, there are signs that this may be a temporary pause in activity, particularly for multifamily product. There is still a tremendous amount of private capital in the real estate sector, and according to a CRE Finance Council survey, 89% of lenders (including Fannie Mae and Freddie Mac) remain active. The amount of dry powder waiting for opportunity suggests that any negative impact of COVID-19 on asset pricing may be short lived and limited.

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Office investment sales for the first half of the year were strong, totaling more than $2.5 billion, according to JLL, though the vast majority of the volume occurred in the first quarter. The second quarter accounted for only 15% of this volume, most of which was spread across a variety of core plus or value-add deals in secondary urban markets or far-flung suburbs. There was no activity downtown outside of the $254 million user sale of Capital Gallery to the Smithsonian, signaling that most large investors pressed pause on deals except those that started prior to COVID-19. The small sample size and the profile of trades did not provide adequate data for a reliable average cap rate to be calculated, but we continue to hear of pricing adjustments between 5% and 10% for deals that came to market before COVID-19, but are likely to close during the pandemic.

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Multifamily investment sales stood at just over $950 million for the first half of 2020 – a strong showing even compared to prior years. That said, the second quarter totaled just $50 million, comprising a single transaction, highlighting the abruptness with which the multifamily investment sales market froze. We have seen promising signs, however, that this may be a temporary phenomenon as several pending transactions indicate demand for entitled multifamily land and a view among investors that the multifamily market should be resilient.

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Financial and Operating Metrics

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For the three months ended June 30, 2020, we reported a net loss attributable to common shareholders of $36.8 million and Core FFO attributable to common shareholders of $34.1 million or $0.26 per share. Same Store NOI decreased 3.0%, and our operating portfolio ended the quarter at 89.0% leased and 86.3% occupied. As discussed below, due to the impacts of the COVID-19 pandemic, our Same Store NOI was negatively impacted by $13.1

million or (17.6%) compared to the second quarter of 2019. For second generation leases, the rental rate mark-to-market was positive 4.2%.

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During the second quarter, NOI for our operating portfolio decreased by $4.1 million, or 5.2 %, and Adjusted EBITDA decreased by $21.9 million, or 27.3%, as compared to the second quarter of 2019. NOI was negatively impacted by $13.4 million associated with the COVID-19 pandemic, comprising $8.1 million of reserves and rent deferrals, a $4.1 million decline in parking revenue and a $1.2 million decline in NOI from the Crystal City Marriott. Adjusted EBITDA was negatively impacted by $18.2 million due to the decline in NOI of $13.4 million noted above, a $2.1 million decline in our Third-Party Asset Management and Real Estate Services business and $2.7 million of straight-line rent reserves, all associated with the COVID-19 pandemic. The $8.1 million of reserves and rent deferrals that impacted NOI include (i) $1.4 million of rent deferrals, (ii) $2.5 million of rent deferrals from expected lease modifications, (iii) $2.4 million related to the bankruptcy filing by Parking Management Inc. and (iv) $1.8 million of other reserves. We expect our income streams from parking revenue, the Crystal City Marriott and the Third-Party Asset Management and Real Estate Services business to recover post-pandemic, subject to the continued sale of JBG Legacy Fund assets.

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Operating Portfolio

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For the three months ended June 30, 2020, our 11.2 million square foot operating commercial portfolio generated $230.7 million of annualized NOI and was 90.4% leased and 88.1% occupied. Due to COVID-19, leasing demand during the second quarter dropped significantly, as reflected in our quarterly leasing numbers. We completed 26 office lease transactions in our operating commercial portfolio totaling 206,000 square feet, including 38,000 square feet of new leases and 168,000 square feet of renewals. For second-generation leases, the rental rate mark-to-market was positive 4.2%. Our lease expirations for the remainder of 2020 total approximately 768,000 square feet with no private sector lease greater than 45,000 square feet, and we remain in active negotiations on approximately 72% of these leases. In 2021, we have an additional 909,000 square feet expiring. Our leasing team recently resumed live, in-person tours with stringent protocols around social distancing and mask usage, and early indications of tour activity have been promising.

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In June, we released our Healthy Workplace Blueprint, a comprehensive plan for providing a safe and healthy workplace for our customers during these unprecedented times. To complement the Healthy Workplace Blueprint, we also shared a short video walking prospective customers and visitors through what to expect when visiting a JBG SMITH building.

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Our operating multifamily portfolio, comprising 5,583 units, generated $76.3 million of annualized NOI. Multifamily assets comprise 30.0% of our portfolio (based on square footage at share). As a reminder, we recently delivered three assets into the operating portfolio that are still in lease up – West Half, which was delivered in the fourth quarter of 2019, and 900 W Street and 901 W Street (formerly collectively Atlantic Plumbing C), which were delivered in the first quarter of 2020. Our operating multifamily portfolio was 85.8% leased and 82.3% occupied at the end of the second quarter. Excluding our recently delivered assets, our operating multifamily portfolio was 93.3% leased and 90.2% occupied as of June 30, 2020. Residential leasing demand has been adversely impacted by COVID-19, as fewer people are interested in moving during the pandemic. While renewal activity within our portfolio is higher than in previous periods, some residents are leaving the market upon lease expiration to live with family members, a trend that could continue until work-from-home initiatives begin to lift. We are fortunate to have relatively limited non-payment of rent in our portfolio and have been working with renters who are experiencing financial hardship. We expect increased renter distress if and when government stimulus funds expire before employment begins to recover. We are pleased by our team’s ability to continue to sign leases via virtual showings,

and this trend will likely become a part of our normal leasing process for potential residents in the initial stages of their apartment search. We are slowly moving back to live tours as public health conditions permit.

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While retail tenancy only makes up approximately 7.7% of our annualized rents, our retailers are an important differentiator for our assets.  Although we are fortunate to have a number of essential retailers in our portfolio, we continue to defer rent for retailers on a case-by-case basis so they can survive until the public health crisis abates. We believe helping these customers survive has the added advantage of avoiding the cost of re-tenanting their spaces if they were to vacate.

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As discussed previously, we temporarily closed the Crystal City Marriott in National Landing at the start of the COVID-19 pandemic. We reopened the hotel in mid-June, and have experienced increasing demand, with average occupancy of 15.0% for the month of July.

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While we are always focused on the long term, we are sharing the following data to provide investors with additional information on how the pandemic has impacted rent collections in the second quarter. Though we are providing this information for the second quarter, at some point investors should expect that we will ultimately return to providing our typical metrics.

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Our rent collections for the month of July kept pace with our second quarter rent collections.

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During the second quarter, we entered into rent deferral agreements with tenants totaling $1.4 million. Additionally, we recognized $2.5 million of credit losses for rent deferrals that are in negotiation. No revenue related to these executed or pending modified leases is included in our second quarter NOI, Adjusted EBITDA or Core FFO. Consequently, the deferral agreements for which we have now recognized credit losses will not have a negative impact on our financial results in future periods, regardless of whether these tenants survive the current economic downturn.

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Capital Allocation

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Acquisitions

As mentioned above, we believe this downturn may present attractive investment opportunities, which we intend to evaluate in our customary disciplined manner. Our balance sheet strength is most valuable in periods of distress not only for its defensive power, but also the capacity it provides to make accretive new investments. As we experienced during the GFC, it may take time before price adjustments for asset acquisitions or reductions in construction costs pervade the market, but we intend to take full advantage of opportunities if and when they arise. Share buybacks may also be attractive, although we intend to balance these repurchases with our desire to maximize liquidity for growth through attractive acquisition and development opportunities. As discussed previously, when appropriate, we intend to complete like-kind exchange acquisitions for the proceeds from the sale of low basis assets, including the expected sale of the Pen Place land to Amazon in 2021.

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Dispositions

Given the impact of COVID-19 on the investment sales market, we continue to believe that our original target of an additional $200 million of sales for 2020 will be difficult to achieve. Although the market remained frozen for most of the second quarter, we recently resumed a number of asset marketing processes, and where we can continue to transact at or above NAV or at pricing that is accretive relative to other uses of capital, we intend to do so.

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Development Portfolio

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As of June 30, 2020, our development portfolio consisted of three assets under construction totaling 777,000 square feet and a Future Development Pipeline totaling 16.6 million square feet. Excluding the land at Pen Place held for sale to Amazon, our pipeline was 14.5 million square feet. Of the 777,000 square feet in our Under Construction portfolio, 503,000 square feet is multifamily and 274,000 square feet is commercial, the latter of which is 97.8% pre-leased, primarily to Amazon.

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Under Construction

At the end of the second quarter, our three assets under construction had guaranteed maximum price construction contracts in place.  These assets have weighted average estimated completion dates of the fourth quarter 2020 and estimated stabilization dates of the fourth quarter of 2021, with a projected NOI yield based on Estimated Total Project Cost of 6.3%.  When stabilized, we expect these assets to deliver $22.9 million of annualized NOI.

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During the second quarter, we completed 965 Florida, a 433-unit multifamily asset located in the U Street/Shaw submarket, ahead of schedule and under budget. The Whole Foods located on the ground level of the building opened in July. In addition, during the second quarter, we completed the base building work on 1770 Crystal Drive and turned the space over to Amazon to commence its buildout.

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Near-Term Development

We did not have any assets in the Near-Term Development pipeline at the end of the second quarter. As a reminder, we only place assets into our Near-Term Development pipeline when they have completed the entitlement process and when we intend to commence construction within 18 months, subject to market conditions.

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As discussed last quarter, we obtained the final entitlements for 1900 Crystal Drive in March, securing development rights for approximately 820,000 square feet, including approximately 800 units and approximately 30,000 square feet of retail. We expect to complete design documents in the second half of 2020, at which point we will have a clear sense of expected pricing and the timing of construction commencement. While we are committed to building

this asset as part of our National Landing repositioning, we intend to time construction to capture the benefit of an expected, downturn-induced, decline in construction costs.

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We are continuing to advance the approximately 2,100 units in the next tranche of multifamily development opportunities in National Landing, all of which are within a half mile of Amazon’s new headquarters. These entitlement processes have continued to move forward in Arlington County during the pandemic, and we expect the first of these developments to receive final site plan approval in late 2020 or early 2021.  The commencement of construction on these opportunities will be subject to the same capital allocation discipline governing all our new investments. 

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Future Development Pipeline

As of June 30, 2020, our Future Development Pipeline comprised 16.6 million square feet, with an Estimated Total Investment per square foot of approximately $44.92. Excluding the land at Pen Place under firm contract to Amazon, our Future Development Pipeline was 14.5 million square feet with an Estimated Total Investment per square foot of approximately $46.37. At the end of the second quarter, 54.5% of this pipeline was in National Landing, 20.9% was in DC, 15.6% was in Reston, and the remaining 9.0% was in other Virginia and Maryland submarkets. Our DC holdings are concentrated in the emerging growth submarkets of Union Market and the Ballpark, and our Reston holdings include what we believe is one of the most attractive development sites on the Metro, adjacent to Reston Town Center.

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Over the course of 2020, we expect to continue to advance the entitlement and design of approximately 10.2 million square feet, which represents approximately 70% of our Future Development Pipeline. This includes 6.5 million square feet in National Landing, representing approximately 93% of our Estimated Potential Development Density in the submarket. We continue to seek opportunities to monetize our Future Development Pipeline, either through internal development, land sales, ground lease structures, and in cases where continued control is important, recapitalizations with third-party capital. These potential structures would be most applicable to opportunities where we can achieve mark-ups on our land, thereby preserving our own capital capacity for other, higher-return opportunities.

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Third-Party Asset Management and Real Estate Services Business

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Revenue from our Third-Party Asset Management and Real Estate Services Business was $12.5 million in the second quarter, primarily driven by $4.3 million in property management fees, $3.0 million in development fees, and $2.3 million in asset management fees. The portion of total revenues associated with the JBG Legacy Funds was $2.9 million (approximately 23% of total third-party revenue). The JBG Legacy Funds continued to focus on disposing of assets in accordance with their underlying business plans, although given the disruption in the markets from the pandemic, we expect it will take longer than initially anticipated to dispose of these assets. We expect the fees from retaining management and leasing of sold assets and other third-party fee income streams to offset the loss of management fees attributable to the wind down of the JBG Legacy Fund business over time.

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Environmental, Social, and Governance

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In June, the Washington Post announced that JBG SMITH was recognized as one of the 2020 Top Workplaces in the Washington, DC region. During the past few months, members of our team have stepped up to support each other and our communities in inspiring ways by assisting with childcare and other household needs, including finding new and creative ways to stay connected virtually. Hearing these stories and experiencing the camaraderie firsthand, it is safe to say that our employees are indisputably what makes JBG SMITH one of the best places to work in our city.

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We have an outstanding Board of Trustees with deep experience in the public markets and a strong capital allocation track record. In addition, now that we are three years past the merger, two more of our trustees (Steven Roth and Michael Glosserman) meet the independence requirements of the New York Stock Exchange, bringing the total number of independent trustees on our Board of Trustees to nine out of 11.

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In addition to the challenges of the COVID-19 pandemic, our country is grappling with racial injustice issues. In these tumultuous times, companies and communities must come together in solidarity to heal and drive positive change. We take pride in our diverse and inclusive culture, but we also recognize that we still have work to do. Since she joined us in 2019, Dawnita Wilson, our Vice President of Diversity and Inclusion (D&I) has been focused on developing and executing a comprehensive D&I strategy designed to drive behavioral and cultural change. Internally, we are committed to maintaining an inclusive workplace where diversity can thrive. Externally we are focused on developing strategic partnerships to help advance D&I in the commercial real estate industry and the communities in which we live, work, and serve.

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As a company with a history of promoting housing equity, we understand the importance of housing affordability as a matter of equity and as a condition that fosters overall economic growth in our city. Through our Washington Housing Initiative, we are working to preserve and create affordable housing for middle income renters in high growth neighborhoods. Encouraging other businesses in our region to contribute to these types of initiatives is another important means of addressing systematic inequality.

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During these challenging times we remain focused on the health and safety of our customers, our team, our business partners, and our community. We believe we are well positioned to manage through this crisis and to grow over the longer term. The DC metro region has consistently proven to be more resilient than other gateway markets during downturns, and we believe that Amazon, the federal government, and the Virginia Tech Innovation campus are likely to be countercyclical demand drivers during this recession. We believe that our low leverage levels, strong liquidity, and limited near-term obligations will allow us to weather the challenges that most certainly lie ahead. In the long run, we believe these advantages will enable us to accelerate our growth trajectory and to emerge from this crisis even stronger, as both a company and a team, than we entered it.

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We wish you health and strength during these tumultuous times, and we appreciate your continued support of our team and our business. Now, more than ever, we will continue to work hard to maintain your trust and confidence.

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Thank you and stay healthy,

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W. Matthew Kelly

Chief Executive Officer

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Section Two – Earnings Release

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Earnings Release

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CONTACT

Jaime Marcus

SVP, Investor Relations and Corporate Communications

(240) 333-3643

jmarcus@jbgsmith.com

JBG SMITH ANNOUNCES SECOND QUARTER 2020 RESULTS

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Bethesda, MD (August 4, 2020) - JBG SMITH (NYSE: JBGS), a leading owner and developer of high-growth, mixed-use properties in the Washington, DC market, today filed its Form 10-Q for the quarter ended June 30, 2020 and reported its financial results.

Additional information regarding our results of operations, properties and tenants can be found in our Second Quarter 2020 Investor Package, which is posted in the Investor Relations section of our website at www.jbgsmith.com. Additional information about the current and potential future impact of COVID-19 and the ensuing economic turmoil on us, as well as our response to it, can be found in our Letter to Shareholders in our Second Quarter 2020 Investor Package. We encourage investors to consider the information presented here with the information in that document.

Second Quarter 2020 Financial Results

Six Months Ended June 30, 2020 Financial Results

Operating Portfolio Highlights

Development Portfolio Highlights

Under Construction

Near-Term Development

Future Development Pipeline

Third-Party Asset Management and Real Estate Services Business

For the three months ended June 30, 2020, revenue from third-party real estate services, including reimbursements, was $27.2 million. Excluding reimbursements and service revenue from our interests in consolidated and unconsolidated real estate ventures, revenue from our third-party asset management and real estate services business was $12.5 million, primarily driven by $4.3 million of property management fees, $3.0 million of development fees, $2.3 million of asset management fees and $1.7 million of other service revenue.

Balance Sheet

Investing and Financing Activities

Subsequent to June 30, 2020:

Dividends

On July 30, 2020, our Board of Trustees declared a quarterly dividend of $0.225 per common share, which will be paid on August 27, 2020 to shareholders of record as of August 13, 2020.

About JBG SMITH

JBG SMITH is an S&P 400 company that owns, operates, invests in and develops a dynamic portfolio of high-growth mixed-use properties in and around Washington, DC. Through an intense focus on placemaking, JBG SMITH cultivates vibrant, amenity-rich, walkable neighborhoods throughout the Capital region, including National Landing where it now serves as the exclusive developer for Amazon’s new headquarters. JBG SMITH’s portfolio currently comprises 20.7 million square feet of high-growth office, multifamily and retail assets, 98% at our share of which are Metro-served. It also maintains a robust future development pipeline encompassing 16.6 million square feet of mixed-use development opportunities. For more information on JBG SMITH please visit www.jbgsmith.com.

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 not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Consequently, the future results of JBG SMITH Properties (“JBG SMITH”, the “Company”, "we", "us", "our" or similar terms) may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximate”, "hypothetical", "potential", “believes”, “expects”, “anticipates”, “estimates”, “intends”, “plans”, “would”, “may” or similar expressions in this earnings release. Currently, one of the most significant factors that could cause actual outcomes to differ materially from our forward-looking statements is the adverse effect of the current pandemic of the novel coronavirus, or COVID-19, on our financial condition, results of operations, cash flows, liquidity, performance, tenants, the real estate market and the global economy and financial markets. The extent to which the COVID-19 pandemic continues to impact us and our tenants depends on future developments, many of which are highly uncertain and cannot be predicted with confidence, including the scope, severity, duration and possible resurgence of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. Moreover, investors are cautioned to interpret many of the risks identified under the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic. We also note the following forward-looking statements: the impact of COVID-19 and the ensuing economic turmoil on our Company, net operating income, same store net operating income, net asset value, stock price, occupancy rates, revenue from our multifamily and commercial portfolios, operating costs, deferrals of rent, uncollectable operating lease receivables, parking revenue, and burn-off of rent abatement; the impact of disruptions to the credit and capital markets on our ability to access capital, including refinancing maturing debt; changes to the amount and manner in which tenants use space; whether we incur additional costs or make additional concessions or offer other incentives to existing or prospective tenants to reconfigure space; our annual dividend per share and dividend yield; annualized net operating income; in the case of our construction and near-term development assets, estimated square feet, estimated number of units and in the case of our future development assets, estimated potential development density; expected key Amazon transaction terms and timeframes for closing any Amazon transactions not yet closed; planned infrastructure and education improvements related to Amazon’s additional headquarters; the economic impact of Amazon’s additional headquarters on the DC region and National Landing; the impact of our role as developer, property manager and retail leasing agent in connection with Amazon’s new headquarters; our development plans related to Amazon’s additional headquarters; whether any of our tenants succeed in obtaining government assistance under the CARES

Act and other programs and use any resulting proceeds to make lease payments owed to us; whether we can access agency debt secured by our currently-unencumbered multifamily assets timely, on reasonable terms or at all; whether the delay in our planned 2020 discretionary operating asset capital expenditures will have any negative impact on our properties or our ability to generate revenue; and the allocation of capital to our share repurchase plan and any impact on our stock price.

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 COVID-19, the timing of and costs associated with development and property improvements, financing commitments, and general competitive factors. For further discussion of factors that could materially affect the outcome of our forward-looking statements and other risks and uncertainties, see “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Cautionary Statement Concerning Forward-Looking Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and other periodic reports the Company files with the Securities and Exchange Commission. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date hereof.

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 in real estate ventures (collectively, “real estate ventures”) as applied to these financial measures and metrics. Financial information “at JBG SMITH Share” is calculated on an asset-by-asset basis by applying our percentage economic interest to each applicable line item of that asset’s financial information. “At JBG SMITH Share” information, which we also refer to as being “at share,” “our pro rata share” or “our share,” is not, and is not intended to be, a presentation in accordance with GAAP. Given that a substantial portion of our assets are held through real estate ventures, we believe this form of presentation, which presents our economic interests in the partially owned entities, provides investors valuable information regarding a significant component of our portfolio, its composition, performance and capitalization.

We do not control the unconsolidated real estate ventures and do not have a legal claim to our co-venturers’ share of assets, liabilities, revenue and expenses. The operating agreements of the unconsolidated real estate ventures generally allow each co-venturer to receive cash distributions to the extent there is available cash from operations. The amount of cash each investor receives is based upon specific provisions of each operating agreement and varies depending on certain factors including the amount of capital contributed by each investor and whether any investors are entitled to preferential distributions.

With respect to any such third-party arrangement, we would not be in a position to exercise sole decision-making authority regarding the property, real estate venture or other entity, and may, under certain circumstances, be exposed to economic risks not present were a third-party not involved. We and our respective co-venturers may each have the right to trigger a buy-sell or forced sale arrangement, which could cause us to sell our interest, or acquire our co-venturers’ interests, or to sell the underlying asset, either on unfavorable terms or at a time when we

otherwise would not have initiated such a transaction. Our real estate ventures may be subject to debt, and the repayment or refinancing of such debt may require equity capital calls. To the extent our co-venturers do not meet their obligations to us or our real estate ventures or they act inconsistent with the interests of the real estate venture, we may be adversely affected. Because of these limitations, the non-GAAP “at JBG SMITH Share” financial information should not be considered in isolation or as a substitute for our financial statements as reported under GAAP.

Non-GAAP Financial Measures

This release includes non-GAAP financial measures. For these measures, we have provided an explanation of how these non-GAAP measures are calculated and why JBG SMITH’s management believes that the presentation of these measures provides useful information to investors regarding JBG SMITH’s financial condition and results of operations. Reconciliations of certain non-GAAP measures to the most directly comparable GAAP financial measure are included in this earnings release. Our presentation of non-GAAP financial measures may not be comparable to similar non-GAAP measures used by other companies. In addition to "at share" financial information, the following non-GAAP measures are included in this release:

Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), EBITDA for Real Estate ("EBITDAre") and Adjusted EBITDA

Management uses EBITDA and EBITDAre, non-GAAP financial measures, as supplemental operating performance measures and believes they help investors and lenders meaningfully evaluate and compare our operating performance from period-to-period by removing from our operating results the impact of our capital structure (primarily interest charges from our outstanding debt and the impact of our interest rate swaps) and certain non-cash expenses (primarily depreciation and amortization on our assets). EBITDAre is computed in accordance with the definition established by the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines EBITDAre as GAAP net income (loss) adjusted to exclude interest expense, income taxes, depreciation and amortization expenses, gains and losses on sales of real estate and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, including our share of such adjustments of unconsolidated real estate ventures. These supplemental measures may help investors and lenders understand our ability to incur and service debt and to make capital expenditures. EBITDA and EBITDAre are not substitutes for net income (loss) (computed in accordance with GAAP) and may not be comparable to similarly titled measures used by other companies.

“Adjusted EBITDA,” a non-GAAP financial measure, represents EBITDAre adjusted for items we believe are not representative of ongoing operating results, such as transaction and other costs, gain (loss) on the extinguishment of debt, distributions in excess of our investment in unconsolidated real estate ventures, lease liability adjustments and share-based compensation expense related to the Formation Transaction and special equity awards. We believe that adjusting such items not considered part of our comparable operations, provides a meaningful measure to evaluate and compare our performance from period-to-period.

Because EBITDA, EBITDAre and Adjusted EBITDA have limitations as analytical tools, we use EBITDA, EBITDAre and Adjusted EBITDA to supplement GAAP financial measures. Additionally, we believe that users of these measures should consider EBITDA, EBITDAre and Adjusted EBITDA in conjunction with net income (loss) and other GAAP measures in understanding our operating results.

Funds from Operations ("FFO"), Core FFO and Funds Available for Distribution (“FAD")

FFO is a non-GAAP financial measure computed in accordance with the definition established by NAREIT in the NAREIT FFO White Paper - 2018 Restatement issued in 2018. NAREIT defines FFO as net income (computed in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, including our share of such adjustments for unconsolidated real estate ventures.

"Core FFO" represents FFO adjusted to exclude items (net of tax) which we believe are not representative of ongoing operating results, such as transaction and other costs, gains (or losses) on extinguishment of debt, distributions in excess of our investment in unconsolidated real estate ventures, share-based compensation expense related to the Formation Transaction and special equity awards, lease liability adjustments, amortization of the management contracts intangible and the mark-to-market of derivative instruments.

"FAD" is a non-GAAP financial measure and represents FFO less recurring tenant improvements, leasing commissions and other capital expenditures, net deferred rent activity, third-party lease liability assumption payments, recurring share-based compensation expense, accretion of acquired below-market leases, net of amortization of acquired above-market leases, amortization of debt issuance costs and other non-cash income and charges. FAD is presented solely as a supplemental disclosure that management believes provides useful information as it relates to our ability to fund dividends.

We believe FFO, Core FFO and FAD are meaningful non-GAAP financial measures useful in comparing our levered operating performance from period-to-period and as compared to similar real estate companies because these non-GAAP measures exclude real estate depreciation and amortization expense and other non-comparable income and expenses, which implicitly assumes that the value of real estate diminishes predictably over time rather than fluctuating based on market conditions. FFO, Core FFO and FAD do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as a performance measure or cash flow as a liquidity measure. FFO, Core FFO and FAD may not be comparable to similarly titled measures used by other companies.

Net Operating Income ("NOI") and Annualized NOI

“NOI” is a non-GAAP financial measure management uses to assess a segment’s performance. The most directly comparable GAAP measure is net income (loss) attributable to common shareholders. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only property related revenue (which includes base rent, tenant reimbursements and other operating revenue, net of free rent and payments associated with assumed lease liabilities) less operating expenses and ground rent, if applicable. NOI also excludes deferred rent, related party management fees, interest expense, and certain other non-cash adjustments, including the accretion of acquired below-market leases and amortization of acquired above-market leases and below-market ground lease intangibles. Management uses NOI as a supplemental performance measure for our assets and believes it provides useful information to investors because it reflects only those revenue and expense items that are incurred at the asset level, excluding non-cash items. In addition, NOI is considered by many in the real estate industry to be a useful

starting point for determining the value of a real estate asset or group of assets. However, because NOI excludes depreciation and amortization and captures neither the changes in the value of our assets that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our assets, all of which have real economic effect and could materially impact the financial performance of our assets, the utility of NOI as a measure of the operating performance of our assets is limited. NOI presented by us may not be comparable to NOI reported by other REITs that define these measures differently. We believe that to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) attributable to common shareholders as presented in our financial statements. NOI should not be considered as an alternative to net income (loss) attributable to common shareholders as an indication of our performance or to cash flows as a measure of liquidity or our ability to make distributions. Annualized NOI, for all assets except Crystal City Marriott, represents NOI for the three months ended June 30, 2020 multiplied by four. Due to seasonality in the hospitality business, annualized NOI for Crystal City Marriott represents the trailing 12-month NOI as of June 30, 2020. Management believes Annualized NOI provides useful information in understanding our financial performance over a 12-month period, however, investors and other users are cautioned against attributing undue certainty to our calculation of Annualized NOI. Actual NOI for any 12-month period will depend on a number of factors beyond our ability to control or predict, including general capital markets and economic conditions, any bankruptcy, insolvency, default or other failure to pay rent by one or more of our tenants and the destruction of one or more of our assets due to terrorist attack, natural disaster or other casualty, among others. We do not undertake any obligation to update our calculation to reflect events or circumstances occurring after the date of this earnings release. There can be no assurance that the annualized NOI shown will reflect our actual results of operations over any 12-month period.

Same Store and Non-Same Store

“Same store” refers to the pool of assets that were in-service for the entirety of both periods being compared, except for assets for which significant redevelopment, renovation, or repositioning occurred during either of the periods being compared.

“Non-same store” refers to all operating assets excluded from the same store pool.

Definitions

GAAP

"GAAP" refers to accounting principles generally accepted in the United States of America.

In-Service

‘‘In-service’’ refers to commercial or multifamily assets that are at or above 90% leased or have been operating and collecting rent for more than 12 months as of June 30, 2020.

Formation Transaction

"Formation Transaction" refers collectively to the spin-off on July 17, 2017 of substantially all of the assets and liabilities of Vornado Realty Trust’s Washington, DC segment, which operated as Vornado / Charles E. Smith, and the acquisition of the management business and certain assets and liabilities of The JBG Companies.

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CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

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Note: For complete financial statements, please refer to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

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Note: For complete financial statements, please refer to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.

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EBITDA, EBITDAre AND ADJUSTED EBITDA (NON-GAAP)

(Unaudited)

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Note: All EBITDA measures as shown above are attributable to operating partnership common units.

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FFO, CORE FFO AND FAD (NON-GAAP)

(Unaudited)

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See footnotes on page 13.

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FFO, CORE FFO AND FAD (NON-GAAP)

(Unaudited)

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NOI RECONCILIATIONS (NON-GAAP)

(Unaudited)