JBG SMITH Properties (JBGS)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements contained herein 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 future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. Forward-looking statements include but are not limited to our current expectations regarding the performance of our business, our financial results, our liquidity and capital resources, including the impacts and ultimate outcome of the Wardman Park litigation and our potential need to post bonds or other forms of surety to support our legal remedies in connection with such litigation. You can find many of these statements by looking for words such as "approximates," "believes," "expects," "anticipates," "estimates," "intends," "plans," "would," "may" or other similar expressions in this Quarterly Report on Form 10-Q. 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. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission ("SEC") on February 17, 2026 ("Annual Report"), as such factors may be updated from time to time in our periodic filings with the SEC, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report on Form 10-Q and our Annual Report.

For these forward-looking 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, which speak only as of the date of this Quarterly Report on Form 10-Q. 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

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any revisions to our forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.

Organization and Basis of Presentation

JBG SMITH Properties ("JBG SMITH"), a Maryland real estate investment trust, owns, operates and develops mixed-use properties concentrated in amenity-rich, Metro-served submarkets in and around Washington, D.C., most notably National Landing, where through our focus on placemaking, we cultivate vibrant, highly amenitized, walkable neighborhoods. In addition, our third-party real estate services business provides fee-based real estate services.

Substantially all our assets are held by, and our operations are conducted through JBG SMITH Properties LP, our operating partnership. JBG SMITH is referred to herein as "we," "us," "our" or other similar terms. References to "our share" refer to our ownership percentage of consolidated and unconsolidated assets in real estate ventures, but exclude our 33.5% subordinated interest in four commercial buildings, as well as the associated non-recourse mortgage loans, held through an unconsolidated real estate venture; the interest and debt are excluded because our investment in the real estate venture is zero, we do not anticipate receiving any near-term cash flow distributions from the real estate venture, and we have not guaranteed its obligations or otherwise committed to providing financial support.

References to our financial statements refer to our unaudited condensed consolidated financial statements as of June 30, 2026 and December 31, 2025, and for the three and six months ended June 30, 2026 and 2025. References to our balance sheets refer to our condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025. References to our statements of operations refer to our condensed consolidated statements of operations for the three and six months ended June 30, 2026 and 2025. References to our statements of cash flows refer to our condensed consolidated statements of cash flows for the six months ended June 30, 2026 and 2025.

The accompanying financial statements and notes are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.

We have elected to be taxed as a real estate investment trust ("REIT") under sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code"). Under those sections, a REIT which distributes at least 90% of its REIT taxable income as dividends to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. We currently adhere and intend to continue to adhere to these requirements and to maintain our REIT status in future periods. We also participate in the activities conducted by our subsidiary entities that have elected to be treated as taxable REIT subsidiaries under the Code. As such, we are subject to federal, state and local taxes on the income from those activities.

Our three operating and reportable segments are multifamily, commercial and third-party real estate services.

Our revenue and expenses are, to some extent, subject to seasonality during the year, which impacts quarterly net earnings, cash flows and funds from operations; this seasonality affects the sequential comparison of our results in individual quarters over time. For instance, we have historically experienced higher utility costs in the first and third quarters of the year.

We compete with many property owners, investors and developers. Our success depends upon, among other factors, trends affecting national and local economies, the financial condition and operating results of current and prospective tenants, the availability and cost of capital, interest rates, construction and renovation costs, taxes, governmental regulations and legislation, population trends, zoning laws, and our ability to lease, sublease or sell our assets at profitable levels. Our success is also subject to our ability to refinance existing debt with acceptable terms as it comes due.

Overview

As of June 30, 2026, our Operating Portfolio consisted of 38 operating assets comprising 15 multifamily assets totaling 6,519 units (6,333 units at our share), 22 commercial assets totaling 7.3 million square feet (6.7 million square feet at our

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share) and one wholly owned land asset for which we are the ground lessor. Additionally, we had one under-construction multifamily asset with 195 units (59 units at our share), and our development pipeline, which consists of owned and entitled land on which we have the potential to commence construction subject to completion of design and/or market conditions, totaled 4.8 million square feet (3.5 million square feet at our share) of estimated potential development density. Our development pipeline excludes unentitled land parcels and land parcels controlled through an option agreement.

We continue to implement our comprehensive plan to reposition our holdings in National Landing by executing a broad array of placemaking strategies. Our placemaking includes the delivery of new multifamily assets, subject to demand; the delivery of redeveloped and new office assets; amenity retail; and thoughtful improvements to the streetscape, sidewalks, parks and other outdoor gathering spaces. In keeping with our dedication to placemaking, each new project is intended to contribute to an authentic and distinct neighborhood by creating a vibrant street environment with robust retail offerings and other amenities, including improved public spaces. In the second quarter of 2026, we completed construction of an office amenity hub at 2011 Crystal Drive. The repositioned asset brings to National Landing a large-scale externally managed meeting and conference facility, a coffee shop and all-day restaurant, an elevated wine bar and Italian restaurant, and an activated public lobby.

Outlook

Our capital allocation strategy remains focused on enhancing long-term shareholder value and positioning our portfolio for sustained long-term net asset value ("NAV") per share growth. Drawing on our deep expertise in mixed-use, urban infill real estate, we have consistently rotated across asset classes based on relative value, cost of capital and risk-adjusted return potential. In today’s market environment, we believe that distressed office investment opportunities offer compelling economics. Consequently, we are actively pursuing new growth opportunities that align with our strategy and leverage our competitive strengths as a mixed-use owner, operator and developer. We expect to fund growth opportunities through a combination of asset sales and private equity joint ventures. During the six months ended June 30, 2026, we sold a development parcel, and we sold a 70.0% interest in 2200 Crystal Drive to an unconsolidated real estate venture for total gross sales proceeds of $60.6 million, and we recapitalized Tysons Dulles Plaza by selling a 50.0% noncontrolling interest in a consolidated real estate venture. These real estate ventures further our goal of attracting private capital partners to scale and diversify our distressed office investment strategy and fund the construction of multifamily assets in our development pipeline while also enhancing the efficiency of our platform with incremental fee revenue and potential carried interest income.

We intend to continue to opportunistically sell or recapitalize assets (which may be multifamily, commercial and/or retail assets) as well as land sites where a ground lease or joint venture execution may represent the most attractive path to maximizing value.

In 2026, we began to see some modest improvement in our multifamily portfolio leasing, which had experienced softness largely as a result of job losses primarily in the District of Columbia in 2025 due to federal government spending cuts and a hiring freeze. Our same store multifamily portfolio was 94.3% leased as of June 30, 2026, up 80 basis points as compared to March 31, 2026. Our same store multifamily portfolio was 92.0% occupied as of June 30, 2026, flat as compared to March 31, 2026. During the second quarter of 2026, effective rents, which represent the average change in rental rates versus expiring rental rates net of concessions, decreased by 9.5% for new leases and increased by 2.8% upon renewal while achieving a 55.9% renewal rate across our portfolio. We continue to make progress leasing our recently completed assets — The Grace and Reva were 90.4% leased, and The Zoe and Valen were 58.8% leased as of June 30, 2026.

Our office portfolio was 75.4% occupied as of June 30, 2026, an increase of 20 basis points as compared to March 31, 2026. During the three months ended June 30, 2026, we executed 151,000 square feet of office leases at our share. Leasing activity in our National Landing portfolio continues to be driven primarily by office users who fall int

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is intended to provide material information relevant to our financial condition and results of operations, including cash flows, and should be read in conjunction with the consolidated financial statements and notes thereto appearing in Item 8 - Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

Organization and Basis of Presentation

JBG SMITH, a Maryland real estate investment trust, owns, operates and develops mixed-use properties concentrated in amenity-rich, Metro-served submarkets in and around Washington, D.C., most notably National Landing, where through our focus on Placemaking, we cultivate vibrant, highly amenitized, walkable neighborhoods. In addition, our third-party real estate services business provides fee-based real estate services. Substantially all our assets are held by, and our operations are conducted through, JBG SMITH LP.

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We were organized for the purpose of receiving, via the spin-off on July 17, 2017, substantially all the assets and liabilities of Vornado's Washington, D.C. segment. On July 18, 2017, we acquired the management business and certain assets and liabilities of JBG.

We have elected to be taxed as a REIT under sections 856-860 of the Code. Under those sections, a REIT which distributes at least 90% of its REIT taxable income as dividends to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. We currently adhere and intend to continue to adhere to these requirements and to maintain our REIT status in future periods.

As a REIT, we can reduce our taxable income by distributing all or a portion of such taxable income to shareholders. Future distributions will be declared and paid at the discretion of the Board of Trustees and will depend upon cash generated by operating activities, our financial condition, capital requirements, annual dividend requirements under the REIT provisions of the Code, and such other factors as our Board of Trustees deems relevant.

We also participate in the activities conducted by our subsidiary entities that have elected to be treated as TRSs under the Code. As such, we are subject to federal, state, and local taxes on the income from these activities. Income taxes attributable to our TRSs are accounted for under the asset and liability method. Under the asset and liability method, deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, which will result in taxable or deductible amounts in the future.

Our three operating and reportable segments are multifamily, commercial and third-party real estate services.

We compete with many property owners, investors and developers. Our success depends upon, among other factors, trends affecting national and local economies, the financial condition and operating results of current and prospective tenants, the availability and cost of capital, interest rates, construction and renovation costs, taxes, governmental regulations and legislation, population trends, zoning laws, and our ability to lease, sublease or sell our assets at profitable levels. Our success is also subject to our ability to refinance existing debt on acceptable terms as it comes due.

Overview

As of December 31, 2025, our Operating Portfolio consisted of 39 operating assets comprising 15 multifamily assets totaling 6,519 units (6,333 units at our share), 22 commercial assets totaling 7.3 million square feet (6.9 million square feet at our share) and two wholly owned land assets for which we are the ground lessor. Additionally, our development pipeline totaled 4.9 million square feet (3.6 million square feet at our share) of estimated potential development density. Our development pipeline excludes unentitled land parcels and land parcels controlled through an option agreement.

We continue to implement our comprehensive plan to reposition our holdings in National Landing by executing a broad array of Placemaking strategies. Our Placemaking includes the delivery of new multifamily assets; subject to demand therefore, the delivery of redeveloped and new office assets; amenity retail; and thoughtful improvements to the streetscape, sidewalks, parks and other outdoor gathering spaces. In keeping with our dedication to Placemaking, each new project is intended to contribute to an authentic and distinct neighborhood by creating a vibrant street environment with robust retail offerings and other amenities, including improved public spaces. To that end, we saw the delivery of two food and beverage Placemaking projects in 2023: Water Park and Surreal. In 2024, we delivered two multifamily projects: The Grace and Reva with 808 units and approximately 38,000 square feet of retail space. In 2025, we delivered two additional multifamily projects: The Zoe and Valen with 775 units and approximately 19,000 square feet of retail space. Also, in 2025, we received entitlement approvals to convert two obsolete office buildings into residential and hospitality uses and develop townhomes on currently vacant land. We subsequently sold the site now entitled for hospitality to a hotel owner/operator, and in 2026, we sold the vacant land to a townhome developer. These actions served our strategy of continuing to introduce complimentary uses to National Landing that support a vibrant mixed-use environment. Finally, in the first half of 2026, we expect to complete construction on a new office amenity hub at 2011 Crystal Drive that, along

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with a repositioning of the asset itself, brings to National Landing a large-scale externally managed meeting and conference facility, two elevated food and beverage offerings, and an activated public lobby.

Outlook

Our capital allocation strategy remains anchored in our core objective of maximizing long-term NAV per share growth. Drawing on our deep expertise in mixed-use, urban infill real estate, we have consistently rotated across asset classes based on relative value, cost of capital and risk-adjusted return potential. We continue to believe that share repurchases offer highly attractive returns when our shares trade at a meaningful discount to NAV. In today’s market environment, we believe that distressed office acquisitions offer comparably compelling economics. Going forward, the balance between our investment in new acquisitions and share repurchases will remain entirely opportunistic. We intend to fund growth opportunities through a combination of asset sales and private equity joint ventures. The latter may allow us to generate additional fee and carried interest revenue. During 2025, we capitalized on distressed office acquisitions by acquiring Tysons Dulles Plaza, a three-building office campus with 491,494 square feet in Tysons, Virginia, for $42.3 million. We also acquired Dulles View, two office towers in Herndon, Virginia, which comprise 354,378 square feet, through a real estate venture for $31.5 million, or $18.9 million at our 60.0% share.

We intend to continue to opportunistically sell or recapitalize assets (which may be multifamily, commercial and/or retail assets) as well as land sites where a ground lease or joint venture execution may represent the most attractive path to maximizing value. In a climate where office valuations are near cyclical lows with limited liquidity, the most efficiently priced source of capital will likely come from our multifamily assets. To that end, we are currently marketing for sale select multifamily and land assets. During 2025, we sold three multifamily assets and two development parcels for total gross sales proceeds of $554.0 million and sold a 40.0% interest in a real estate venture that owns West Half, a multifamily asset, for $100.0 million. Recycling these assets will also further advance our strategy to concentrate our portfolio in National Landing.

We have observed softness in our multifamily portfolio, which is mirrored by the broader Washington, D.C. metropolitan area largely the result of job losses primarily in the District of Columbia. Our same-store multifamily portfolio was 90.4% occupied as of December 31, 2025, a decrease of 440 basis points as compared to December 31, 2024. During 2025, effective rents, which represent the average change in rental rates versus expiring rental rates net of concessions, decreased by 1.1% for new leases and increased by 5.0% upon renewal while achieving a 56.2% renewal rate across our portfolio. The Grace and Reva, which were placed into service in 2024 were 86.1% and 77.8% leased as of December 31, 2025; and our recently delivered assets, The Zoe and Valen, which were placed into service in 2025, were 42.6% leased as of December 31, 2025. These assets are not included in our multifamily same-store portfolio. As a result of these deliveries, interest expense has increased for these assets as we have ceased capitalizing the related interest expense.

Our office portfolio occupancy was 75.1% as of December 31, 2025, a decrease of 140 basis points as compared to December 31, 2024. Leasing activity in our National Landing portfolio continues to be driven primarily by office users who fall into three categories (i) those who need secure facility space; (ii) technology-related new tenants; and (iii) defense-related tenants who have long resided in this submarket. Our leasing efforts continue to focus on buildings with long-term potential, concentrating occupancy in areas of National Landing that we have enhanced through our Placemaking interventions and that are accessible via multi-modal transportation. We took approximately 618,000 office square feet out of service in 2024 at 1800 South Bell Street, 2100 Crystal Drive and 2200 Crystal Drive. With the objective of ultimately reducing our competitive office inventory in National Landing, during 2025, we took 202,926 square feet out of service at 1901 South Bell Street, a commercial asset, and expect to take the remainder of the asset out of service as tenants vacate. We expect to help foster a healthier long-term office market by repurposing older, underutilized buildings for redevelopment or conversion to multifamily housing, hospitality or other complimentary uses that will support a vibrant mixed-use environment.

We have 4.9 million square feet (3.6 million square feet at our share) of estimated potential development density in our development pipeline and intend to seek joint venture capital to fund these developments as market conditions permit.

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Operating Results

Highlights of operating results for the year ended December 31, 2025 included:

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