JBG SMITH Properties (JBGS) risk factors, FY2024 10-K

Risks Related to Our Business and Operations

1. 01A material portion of our portfolio comprises office assets, which have generally experienced lower demand since early 2020 and may experience a further decrease in demand that could have a material adverse effect on us
2. 02Our portfolio of assets is geographically concentrated in Washington, D.C. metropolitan area submarkets, and particularly concentrated in National Landing, which makes us susceptible to adverse economic and other conditions such that an economic downturn affecting this area could have a material adverse effect on us
3. 03Our assets and the property development market in the Washington, D.C. metropolitan area are dependent on an economy that is heavily reliant on federal government spending and use of office assets, and any actual or anticipated curtailment of such spending could have a material adverse effect on us
4. 04We have significant exposure to Amazon and the National Landing submarket
5. 05We derive a significant portion of our revenue from U.S. federal government tenants, and we may face additional risks and costs associated with directly managing assets occupied by government tenants
6. 06Rent control or rent stabilization legislation and other regulatory restrictions may limit our ability to increase rents and pass through new or increased operating costs to our residents
7. 07We are exposed to risks associated with real estate development and redevelopment, such as unanticipated expenses, delays and other contingencies, any of which could have a material adverse effect on us
8. 08We depend on major tenants in our commercial portfolio, and the bankruptcy, insolvency or inability to pay rent of any of these tenants could have a material adverse effect on us
9. 09We derive a significant portion of our revenue from five of our assets
10. 10The loss of one or more members of our senior management team could adversely affect our ability to manage our business and to implement our growth strategies or could create a negative perception in the capital markets
11. 11The actual density of our development pipeline and/or any development parcel may not be consistent with our estimated potential development density
12. 12Pandemics and other health concerns could have a negative effect on our business, results of operations, cash flows and financial condition
13. 13Increased focus on our sustainability business values may constrain our business operations, impose additional costs and expose us to new risks that could have a material adverse effect on us
14. 14We face risks related to multifamily rental antitrust, regulatory scrutiny and related litigation
15. 15We face risks related to the real estate industry
16. 16We may incur significant costs to comply with environmental laws, and environmental contamination may impair our ability to lease, develop and/or sell real estate

Risks Related to the Capital Markets and Related Activities

1. 17We face risks related to our common shares
2. 18We have a substantial amount of indebtedness, and our debt agreements include restrictive covenants and other requirements, which may limit our financial and operating activities, our future acquisition and development activities, or otherwise affect our financial condition
3. 19We may not be able to obtain capital to make investments and/or obtaining that capital could fundamentally change the composition of our portfolio
4. 20The liquidity of our common shares may decline as a result of our continued repurchase of our common shares
5. 21We are subject to interest rate risk, which could increase our interest expense, increase the cost to refinance and increase the cost of issuing new debt
6. 22Tax consequences to holders of OP Units upon a sale of certain of our assets may cause the interests of our senior management to differ from your own
7. 23time and efforts may be diverted from the management of our assets to management of the JBG Legacy Funds, which could adversely affect the execution of our business plan and our results of operations and cash flow
8. 24We may acquire properties or portfolios of properties through tax deferred contribution transactions, which could result in shareholder dilution and limit our ability to sell or refinance such assets
9. 25Our declaration of trust and bylaws, the partnership agreement of JBG SMITH LP and MGCL, and the Code contain provisions that may delay, defer or prevent a change of control transaction that might involve a premium price for our common shares or that our shareholders otherwise believe to be in their best interest
10. 26As permitted by the MGCL, we have elected to opt out of the business combination and control share provisions of the MGCL. However, we cannot assure you that our Board of Trustees will not opt to be subject to such provisions of the MGCL in the future, including opting to be subject to such provisions retroactively
11. 27Our rights and the rights of our shareholders to take action against our trustees and officers are limited

Risks Related to Our Status as a REIT

1. 28We may fail to qualify or remain qualified as a REIT and may be required to pay income taxes at corporate rates
2. 29REIT distribution requirements could adversely affect our liquidity and our ability to execute our business plan or require us to make distributions of our shares or other securities
3. 30The tax imposed on REITs engaging in "prohibited transactions" may limit our ability to engage in transactions that would be treated as sales for U.S. federal income tax purposes
4. 31To comply with the restrictions imposed on REITs, we may have to conduct certain activities and own certain assets through a TRS, which will be subject to normal corporate income tax, and we could be subject to a 100% penalty tax if our transactions with our TRSs are not conducted on arm's length terms
5. 32Changes in tax laws could negatively impact us
6. 33CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
7. 34For a further discussion of factors that could materially affect the outcome of our forward-looking statements, see "Risk Factors" in this Annual Report on Form 10-K