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JBG Smith Reports $79M Net Loss For 2021, Continues To Focus Growth Around Amazon HQ2

Construction at Metropolitan Park, the two-tower office complex comprising the first phase of Amazon's HQ2, on Nov. 17, 2021.

JBG Smith is projecting an optimistic outlook for 2022, but the Bethesda-based REIT's losses were still significant in 2021.

In its Q4 earnings report Tuesday, JBG revealed a $56.4M net loss in Q4 and a $79.3M net loss for the full year, both of which were bigger losses than JBG reported in 2020. 

The REIT also noted its losses include roughly $25M in impairment losses, atrributable to properties whose value was assessed down.

The net loss came despite annualized net operating income that rose to $345.8M in Q4 2021, compared to $324M the previous year.

In a letter to shareholders, CEO Matt Kelly said JBG has concentrated its portfolio in areas where it sees high future growth and is "well-positioned to fund it with ample balance sheet and continued funding capacity."

"Despite the roller coaster ride of the pandemic throughout 2021, our team did not miss a beat," Kelly said. "When our near-term capital recycling objectives are complete, we will be a majority multifamily company with an office portfolio concentrated in National Landing — in our view, the best-located and fastest growing urban/suburban submarket in the Washington Metro Area."

Same-store net operating income, which removes new buildings from the metric, showed 9.5% growth for Q4 2021 compared to the previous year, which JBG Smith attributes in part to higher occupancy and rents and fewer rent deferrals. That same metric is still down by almost a percentage point year-over-year, which the REIT attributes largely to the effects of the pandemic.

Leasing remained roughly the same across JBG Smith's portfolio for much of last year. The landlord saw no change in the percentage of its commercial operating portfolio leased in Q4, with a slight uptick in occupancy from 82.6% to 82.9%. 

In multifamily, leasing and occupancy both declined by less than a percentage point in Q4.

JBG Smith is in the middle of a transition, as it broadens the scope of its multifamily portfolio and reorients its office holdings to center on National Landing. Already, over 50% of JBG's holdings are in the National Landing submarket.

The REIT has two multifamily developments in the works right now: an 808-unit building at 1900 Crystal Drive and 775 units across 2000 and 2001 South Bell St.

JBG also closed on a $205M deal for The Batley, a 432-unit apartment building near Union Market whose 29K SF of retail includes the La Cosecha food hall.

That acquisition was termed a like-kind exchange candidate for Pen Place, the HQ2 office building JBG Smith plans to sell to Amazon for the newly increased price of $198M. That price was $48M higher than a previous contract price, the Washington Business Journal reported

Amazon already leases 1M SF of office space in National Landing, emphasizing the tech giant's standing as one of JBG's most important clients. Metropolitan Park, the 2.1M SF campus purpose-built for Amazon's HQ2, is still on track to deliver in 2023, the report noted.

JBG also counts the federal government as a significant lessee: the General Services Administration accounted for over 50% of the REIT's lease renewals in Q4 2021.

In May, JBG Smith accepted the resignation of Board Chairman and Vornado CEO Steven Roth, one of the founders of the REIT. Robert Stewart became the new chairman, and Roth was designated chairman emeritus.