EX-99.1 15 a2232453zex-99_1.htm EX-99.1

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Exhibit 99.1

LOGO

Dear Vornado Realty Trust shareholders:

              We are pleased to inform you that, on            , the board of trustees of Vornado Realty Trust ("Vornado") declared the distribution of all of the outstanding common shares of JBG SMITH Properties ("JBG SMITH"), a newly formed wholly owned direct subsidiary of Vornado, to Vornado common shareholders as of the record date of            . JBG SMITH will consist of Vornado's Washington, DC segment (which operates as Vornado / Charles E. Smith), which will be spun off and combined with the management business and certain Washington, DC assets of The JBG Companies ("JBG"), one of the premier real estate companies in the Washington, DC metropolitan area. JBG SMITH's common shares will be listed on the New York Stock Exchange as a new public company focused on the Washington, DC market. Upon completion of the transaction, which is known as a tax-free spin-merge, Vornado shareholders are expected to own approximately 73% of JBG SMITH, subject to certain adjustments.

              Washington, DC, our nation's capital, is one of the nation's premier Gateway Markets and an international hub of economic activity. We believe JBG SMITH, with its outstanding portfolio of assets and growth potential and led by JBG's best-in-class management team, will be the ideal platform for investment in Washington, DC.

              This transaction marks a further step in our continuing strategy to simplify and focus Vornado's business to create shareholder value.

About JBG SMITH

              Vornado/Charles E. Smith and JBG both have deep roots and a more than 50-year track record of success in the Washington, DC metropolitan area. JBG SMITH will be the largest and best-in-class, publicly traded, pure-play real estate company focused on the Washington, DC market. It will hold, directly or indirectly:

    68 operating assets aggregating approximately 20.2 million square feet (16.1 million square feet at our share), comprised of 50 office assets aggregating approximately 14.1 million square feet (12.1 million square feet at our share), 14 multifamily assets aggregating 6,016 units (4,232 units at our share) and four other assets aggregating approximately 765,000 square feet (348,000 square feet at our share);

    eight office and multifamily assets under construction totaling over 1.6 million square feet (1.5 million square feet at our share);

    five near-term development (expected to commence construction within 18 months) office and multifamily assets totaling over 1.3 million estimated square feet (1.0 million square feet at our share); and

    44 future development assets totaling over 22.1 million square feet (18.3 million square feet at our share) of estimated potential development density.

              As early as 2013, Vornado began to evaluate whether separating our Washington, DC business would be beneficial to both our New York and Washington, DC businesses as a means of creating shareholder value. We determined it would be. Although we evaluated a potential stand-alone spin-off of our Washington, DC business and believe that it would have been a satisfactory outcome, it is our firm conviction that the combination of the two premier platforms in the Washington, DC metropolitan area, under the leadership of JBG management, is far superior and will create a world-class company.

              With their successful track record of capital allocation and value creation, the JBG management team is best suited to capitalize on the growth opportunities within both portfolios and to


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execute on JBG SMITH's unrivaled development pipeline. Importantly, JBG SMITH's leadership will be meaningfully aligned with the interests of shareholders, with the focus being on maximizing the value of JBG SMITH common shares. JBG SMITH's management team is expected to own approximately 5% of the economic interests in JBG SMITH, which represents the majority of their collective net worth, and JBG SMITH's management team and board of trustees taken together are expected to beneficially own or represent 13% of the economic interests in JBG SMITH.

              We carefully selected from JBG's funds a portfolio of assets with the best growth characteristics that would diversify, complement and enhance the strategic concentration of Vornado / Charles E. Smith's existing portfolio. Our objective was to create a combined portfolio of high-quality assets, including operating, development and land bank, that reinforced key attributes, including critical mass in core and Metro-served markets; concentrations in complementary submarkets, particularly in mixed-use environments; enhanced diversification; and assets that presented strong value-add opportunities. We excluded assets that did not fit these objectives and were not appropriate for a public REIT: specifically, those which were non-Metro-served; highly levered, single tenant flat leases; near-term sale candidates; hotels; condominiums; and townhouses. These assets will be disposed of in conjunction with the natural wind-down of the legacy JBG funds, and JBG SMITH will not raise any new investment funds going forward.

              The combined portfolio will be unmatched in scale, asset quality and urban infill concentration, and diversified in terms of both asset class and submarkets. JBG SMITH will have a significant presence in the best submarkets of the DC region including Downtown DC, Crystal City, Pentagon City, Rosslyn, Reston and Bethesda. Over 98% of the portfolio is Metro-served.

              JBG SMITH will own a large land bank of developable land comprised of over 22.1 million square feet (18.3 million square feet at our share) of potential development density, which we view as a long-term driver of JBG SMITH's growth. This pipeline has the potential to double the size of JBG SMITH and make JBG SMITH the fastest growing real estate company in the nation. We expect that JBG SMITH will be a major developer of multifamily assets and that over time its mix of assets will become more balanced between office and multifamily.

              There is also a remarkable opportunity within JBG SMITH's Crystal City holdings. This is Exhibit A for why we undertook this deal with the JBG management team and presents an opportunity for tremendous value creation. The Crystal City market has many compelling features such as its unbelievable location with close proximity to key demand drivers and wonderful views of the Potomac River and downtown Washington, DC, but it currently lacks sufficient residential scale, amenities and a true retail core. Our vast holdings here will allow the JBG SMITH team to flex its Placemaking muscles on an unprecedented scale to drive occupancy and rent growth.

              We believe in the future of JBG SMITH. The company is uniquely positioned to outperform based upon its substantial growth opportunities, the expected upswing of the broader Washington, DC real estate market, and its best-in-class management team significantly incentivized for performance. We view JBG SMITH as a win for our shareholders and a unique investment opportunity in the public markets.

Vornado RemainCo

              Over the past few years and including this transaction, Vornado has exited and spun off multiple business lines and sold non-core holdings totaling $15.7 billion while redeploying $3.9 billion of capital, upgrading the quality of our core New York City portfolio. Even as our flagship New York business grew, the softening of the Washington, DC market overshadowed our New York portfolio's stellar performance. While Washington and New York are both international Gateway Markets, each market is in a different stage of its economic cycle and there are limited synergies between the two platforms. We believe that separating the two businesses, each with its own dedicated management team, board of trustees and report card (i.e., stock price), will maximize value for our shareholders.


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              Accordingly, one of the most significant benefits of this transaction is that it will allow investors to fully appreciate the New York City-focused, world class, irreplaceable office and high street retail portfolio of the remaining Vornado business ("RemainCo") (NYSE: VNO), and its industry leading metrics and unique growth opportunities. RemainCo Same Store NOI compound annual growth rate from 2005-2015 was 5.2%—greater than any blue-chip REIT peer. As a clear market leader in arguably the world's best market, we are one of only a handful of firms who have the capital base, track record, talent, relationships, and trust in the marketplace to lease, acquire, develop, finance and manage million square foot towers and Fifth Avenue retail. RemainCo will own 17.1 million square feet of Class A Manhattan office properties in the best submarkets; the largest, highest-quality and unique Manhattan high street retail portfolio, encompassing 2.9 million square feet in 70 properties on the best streets (Fifth Avenue, Times Square, Madison Avenue, 34th Street/Penn Plaza, SoHo and Union Square); and prime franchise assets in San Francisco (the 1.8 million square foot 555 California Street) and Chicago (the 3.7 million square foot theMART). RemainCo will have a fortress balance sheet with available liquidity, currently $4.1 billion, to take advantage of attractive market opportunities and harvest value within our portfolio. Most significant is the unique re-development opportunity of our 9.0 million square feet in the Penn Plaza district. RemainCo is well positioned to grow and senior management is laser-focused on driving shareholder value.

              Upon the completion of this transaction, we will have created three highly-focused, best-in-class, pure-play publicly traded REITs: RemainCo (NYSE: VNO), JBG SMITH (NYSE: JBGS) and Urban Edge Properties (NYSE: UE), a growth-oriented portfolio of strip center retail assets in high barrier locations that we spun off on January 15, 2015 and has since outperformed the RMS by approximately 14% in total shareholder return performance.

The Mechanics of the Transaction

              JBG SMITH was formed for the purpose of receiving, via contribution from Vornado, all of the assets and liabilities of Vornado's Washington, DC segment and combining that business with the management business and certain Washington, DC assets of JBG. On the same date as Vornado declared the distribution of JBG SMITH common shares described above, Vornado Realty L.P., the operating partnership of Vornado ("VRLP"), declared the distribution of all of the common limited partnership units of JBG SMITH Properties LP, a wholly owned subsidiary of VRLP which will be the operating partnership of JBG SMITH ("JBG SMITH LP"), to Vornado and the other holders of common limited partnership units of VRLP. Following such distribution by VRLP and prior to such distribution by Vornado, Vornado will contribute to JBG SMITH all of the common limited partnership units of JBG SMITH LP it receives in the distribution by VRLP in exchange for JBG SMITH common shares. At 12:01 a.m. on the business day following the distribution by Vornado of JBG SMITH common shares and the distribution by VRLP of JBG SMITH LP common limited partnership units, JBG SMITH will be combined with the management business and certain Washington, DC metropolitan area assets (the "JBG Included Assets") of JBG pursuant to the Master Transaction Agreement, dated as of October 31, 2016 (the "MTA"), by and among Vornado, VRLP, JBG Properties, Inc., JBG/Operating Partners, L.P., certain affiliates of JBG Properties, Inc. and JBG/Operating Partners, L.P., JBG SMITH and JBG SMITH LP. Upon completion of the combination, the applicable JBG entities or certain direct and indirect owners of such JBG entities will receive from JBG SMITH and JBG SMITH LP, respectively, in a private placement satisfying the requirements of Regulation D of the Securities Act of 1933 ("Regulation D"), as amended, a number of JBG SMITH common shares or JBG SMITH LP common limited partnership limits, or in certain circumstances, cash consideration. At close, Vornado shareholders are expected to own approximately 73% of JBG SMITH, subject to certain adjustments.

              The distribution of JBG SMITH common shares and JBG SMITH LP common limited partnership units will occur on            . Vornado will distribute all of its JBG SMITH common shares by way of a pro rata special distribution to            Vornado common shareholders as of the record date. Prior to such distribution by Vornado, as part of the transactions to effect the separation of JBG SMITH from Vornado, VRLP will distribute all of the common limited partnership units of JBG


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SMITH LP on a pro rata basis to the holders of its common limited partnership units, consisting of Vornado and the other common limited partners of VRLP. Each Vornado common shareholder will be entitled to receive one JBG SMITH common share for every two Vornado common shares held by such shareholder as of the close of business on            , which is the record date for the distributions by Vornado and VRLP. Vornado and each of the other common limited partners of VRLP will be entitled to receive one JBG SMITH LP common limited partnership unit for every two common limited partnership units of VRLP held as of the close of business on the record date. The JBG SMITH common shares will be issued in book-entry form only, which means that no physical share certificates will be issued. Following such distribution by VRLP and prior to such distribution by Vornado, Vornado will contribute to JBG SMITH all of the common limited partnership units of JBG SMITH LP it receives in the distribution by VRLP in exchange for JBG SMITH common shares. The distribution of JBG SMITH common shares by Vornado and the combination of JBG SMITH with the JBG Included Assets are expected to qualify as generally tax-free for U.S. federal income tax purposes.

              No vote of Vornado shareholders is required to approve the distributions by Vornado and VRLP or the combination, and you are not required to take any action to receive your JBG SMITH common shares. JBG has already obtained all requisite approvals from its investment funds for the combination. Following the distribution, each Vornado common shareholder will own common shares in Vornado and JBG SMITH and each VRLP common limited partner (other than Vornado) will own common limited partnership units of both VRLP and JBG SMITH LP. The number of Vornado common shares that each Vornado common shareholder owns will not change as a result of this distribution. Immediately following the combination, in total and taking into account the indirect interests in JBG SMITH's assets that are held by the limited partners of JBG SMITH LP, the economic interests in JBG SMITH are expected to be owned approximately 73% by Vornado common shareholders and holders of VRLP common limited partnership units as of the record date, 21% by JBG investors as of the date of the combination, and 6% by current JBG management, which percentages are subject to change pursuant to certain closing adjustments set forth in the MTA.

              Vornado's common shares will continue to trade on the New York Stock Exchange under the symbol "VNO". JBG SMITH's common shares have been accepted for listing on the New York Stock Exchange under the symbol "JBGS", subject to official notice of distribution.

              The information statement, which is being mailed to all holders of Vornado common shares as of the record date for the distribution by Vornado, describes the distribution and the combination in detail and contains important information about JBG SMITH, its business, financial condition and operations. We urge you to read the information statement carefully.



              We want to thank you for your continued support of Vornado, and we look forward to your future support of JBG SMITH.

    Sincerely,

 

 

Steven Roth
Chairman and Chief Executive Officer of
Vornado Realty Trust

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Information contained herein is subject to completion or amendment. A Registration Statement on Form 10 relating to these securities has been filed with the U.S. Securities and Exchange Commission under the U.S. Securities Exchange Act of 1934, as amended.

PRELIMINARY AND SUBJECT TO COMPLETION, DATED JUNE 20, 2017

INFORMATION STATEMENT

JBG SMITH Properties

                  This information statement is being furnished in connection with the distribution by Vornado Realty Trust ("Vornado") to the holders of common shares of beneficial interest, par value $0.04 per share ("Vornado common shares"), of Vornado, of all of the outstanding common shares of beneficial interest, par value $0.01 per share ("JBG SMITH common shares"), of JBG SMITH Properties, a Maryland real estate investment trust ("JBG SMITH"), and the distribution by Vornado Realty L.P., the operating partnership of Vornado ("VRLP"), to the holders of VRLP common limited partnership units, of all of the common limited partnership units of JBG SMITH Properties LP, a Delaware limited partnership and the operating partnership of JBG SMITH ("JBG SMITH LP"). JBG SMITH is a new, wholly owned subsidiary of Vornado formed for the purpose of receiving, via contribution from Vornado, all of the assets and liabilities of Vornado's Washington, DC segment, and combining Vornado's Washington, DC segment (which operates as Vornado / Charles E. Smith) and the management business and certain Washington, DC assets of The JBG Companies ("JBG"). Following such distribution by VRLP and prior to such distribution by Vornado, Vornado will contribute to JBG SMITH all of the common limited partnership units of JBG SMITH LP it receives in the distribution by VRLP in exchange for JBG SMITH common shares. At 12:01 a.m. on the business day following the distribution by Vornado of JBG SMITH common shares, JBG SMITH will be combined with the management business and certain Washington, DC metropolitan area assets (the "JBG Included Assets") of JBG pursuant to the Master Transaction Agreement, dated as of October 31, 2016 (the "MTA"), by and among Vornado, VRLP, JBG Properties, Inc., JBG/Operating Partners, L.P., certain affiliates of JBG Properties, Inc. and JBG/Operating Partners, L.P., JBG SMITH and JBG SMITH LP. Upon completion of the combination, the applicable JBG parties or certain direct and indirect owners of such JBG parties will receive from JBG SMITH and JBG SMITH LP, respectively, in a private placement satisfying the requirements of Regulation D of the Securities Act of 1933, as amended ("Regulation D"), a number of JBG SMITH common shares or JBG SMITH LP common limited partnership units, or in certain circumstances, cash consideration.

                  Following the combination, JBG SMITH will be the largest and best-in-class, publicly traded real estate company focused on the Washington, DC market. It will hold, directly or indirectly, (i) 68 operating assets aggregating approximately 20.2 million square feet (16.1 million square feet at our share), comprised of 50 office assets aggregating approximately 14.1 million square feet (12.1 million square feet at our share), 14 multifamily assets aggregating 6,016 units (4,232 units at our share) and four other assets aggregating approximately 765,000 square feet (348,000 square feet at our share); (ii) eight office and multifamily assets under construction totaling over 1.6 million square feet (1.5 million square feet at our share); (iii) five near-term development office and multifamily assets totaling over 1.3 million estimated square feet (1.0 million square feet at our share) and (iv) 44 future development assets totaling over 22.1 million square feet (18.3 million square feet at our share) of estimated potential development density.

                  To implement the distribution, Vornado will distribute all of its JBG SMITH common shares by way of a pro rata special distribution to Vornado common shareholders. Prior to such distribution by Vornado, as part of the transactions to effect the separation of JBG SMITH from Vornado, VRLP will distribute all of the common limited partnership units of JBG SMITH LP on a pro rata basis to the holders of VRLP's common limited partnership units, consisting of Vornado and the other common limited partners of VRLP. Immediately following the combination, in total and taking into account the indirect interests in JBG SMITH's assets that are held by the limited partners of JBG SMITH LP, the economic interests in JBG SMITH are expected to be owned approximately 73% by Vornado common shareholders and holders of VRLP common limited partnership units as of the record date, 21% by JBG investors as of the date of the combination, and 6% by current JBG management, which percentages are subject to change pursuant to certain closing adjustments set forth in the MTA. The distribution of JBG SMITH common shares by Vornado and the combination of JBG SMITH with the JBG Included Assets are expected to qualify as generally tax-free for U.S. federal income tax purposes.

                  For every two Vornado common shares held of record by you as of the close of business on the record date, you will receive one JBG SMITH common share. You will receive cash in lieu of any fractional JBG SMITH common shares that you would have received after application of the above ratios. As discussed under "The Separation and the Combination—Trading Between the Record Date and Distribution Date," if you sell your Vornado common shares in the "regular-way" market (as opposed to the "ex-distribution" market) after the record date and before the distribution, you also will be selling your right to receive JBG SMITH common shares in connection with the separation. We expect the JBG SMITH common shares to be distributed to Vornado common shareholders on             . We refer to the date of the distribution of the JBG SMITH common shares as the "distribution date." You will continue to own the same number of Vornado common shares as you own immediately before the distribution date.

                  No vote of Vornado shareholders is required to approve the distributions by Vornado and VRLP or the combination. We are not asking you for a proxy and you are requested not to send us a proxy. You do not need to pay any consideration, exchange or surrender your existing Vornado common shares or take any other action to receive your JBG SMITH common shares. JBG has already obtained all requisite approvals from its investment funds for the combination.

                  There is no current trading market for JBG SMITH common shares, although we expect that a limited market, commonly known as a "when-issued" trading market, will develop on or shortly before the record date for the distribution by Vornado, and we expect "regular-way" trading of JBG SMITH common shares to begin on the first trading day following the completion of the distribution. JBG SMITH's common shares have been accepted for listing on the New York Stock Exchange under the symbol "JBGS", subject to official notice of distribution.

                  JBG SMITH intends to elect and qualify to be taxed as a real estate investment trust ("REIT") for U.S. federal income tax purposes, from and after JBG SMITH's taxable year that includes the distribution of our common shares by Vornado. To assist JBG SMITH in qualifying as a REIT, among other purposes, JBG SMITH's declaration of trust will contain various restrictions on the ownership and transfer of its shares of beneficial interest, including a provision pursuant to which shareholders will generally be restricted from owning more than 7.5% of the outstanding shares of beneficial interest of any class or series, including JBG SMITH common shares or preferred shares of beneficial interest, par value $0.01 per share, of JBG SMITH of any class or series. Please refer to "Description of Shares of Beneficial Interest—Common Shares—Restrictions on Ownership of Common Shares."

                  In reviewing this information statement, you should carefully consider the matters described under the caption "Risk Factors" beginning on page 59.



                  Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.



                  This information statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.

                  The date of this information statement is            .

                  This information statement will be mailed to Vornado common shareholders as of            .



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PRESENTATION OF INFORMATION

    ii  

INFORMATION STATEMENT SUMMARY

    1  

QUESTIONS AND ANSWERS ABOUT THE SEPARATION AND THE COMBINATION

    39  

SUMMARY HISTORICAL COMBINED FINANCIAL DATA

    54  

SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

    57  

RISK FACTORS

    59  

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

    89  

DIVIDEND POLICY

    90  

CAPITALIZATION

    91  

SELECTED HISTORICAL COMBINED FINANCIAL DATA

    92  

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

    94  

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    114  

BUSINESS AND PROPERTIES

    133  

INDUSTRY OVERVIEW AND MARKET OPPORTUNITY

    199  

MANAGEMENT

    211  

COMPENSATION DISCUSSION AND ANALYSIS

    221  

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

    231  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    242  

THE SEPARATION AND THE COMBINATION

    244  

DESCRIPTION OF MATERIAL INDEBTEDNESS

    268  

DESCRIPTION OF SHARES OF BENEFICIAL INTEREST

    271  

CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR DECLARATION OF TRUST AND BYLAWS

    277  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

    284  

TAXATION OF HOLDERS OF JBG SMITH COMMON SHARES

    296  

SHARES ELIGIBLE FOR FUTURE SALE

    305  

PARTNERSHIP AGREEMENT

    307  

WHERE YOU CAN FIND MORE INFORMATION

    316  

INDEX TO FINANCIAL STATEMENTS

    F-1  

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PRESENTATION OF INFORMATION

              Except as otherwise indicated or unless the context otherwise requires, the information included in this information statement about JBG SMITH Properties, a Maryland real estate investment trust ("JBG SMITH"), assumes the completion of all of the transactions referred to in this information statement in connection with the separation, the distributions by each of Vornado Realty Trust ("Vornado") and Vornado Realty L.P. ("VRLP") and the combination, and references to JBG SMITH's historical business and operations refer to the business and operations of the office, multifamily and other commercial assets to be contributed by Vornado and JBG, comprised of (i) 68 operating assets aggregating approximately 20.2 million square feet (16.1 million square feet at our share), comprised of 50 office assets aggregating approximately 14.1 million square feet (12.1 million square feet at our share), 14 multifamily assets aggregating 6,016 units (4,232 units at our share) and four other assets aggregating approximately 765,000 square feet (348,000 square feet at our share); (ii) eight office and multifamily assets under construction totaling over 1.6 million square feet (1.5 million square feet at our share); (iii) five near-term development office and multifamily assets totaling over 1.3 million estimated square feet (1.0 million square feet at our share) and (iv) 44 future development assets totaling over 22.1 million square feet (18.3 million square feet at our share) of estimated potential development density, as well as Vornado's and JBG's respective Washington, DC management businesses, that will be transferred to JBG SMITH in connection with the separation and the combination as if such transferred businesses were JBG SMITH's business for all historical periods described. Unless the context otherwise requires, references in this information statement to "our company," "the company," "us," "our," and "we" refer to JBG SMITH and its subsidiaries following the separation and the combination. Except as otherwise indicated or unless the context otherwise requires, all references to JBG SMITH per share data assume (i) a distribution ratio of one JBG SMITH common share for every two Vornado common shares, for purposes of the distribution by Vornado to its common shareholders, (ii) a distribution ratio of one common limited partnership unit of JBG SMITH Properties LP ("JBG SMITH LP") for every two common limited partnership units of VRLP, for purposes of the distribution by VRLP to its holders of common limited partnership units (also referred to in this information statement as "common limited partners") and (iii) the issuance of approximately 23.8 million JBG SMITH common shares and approximately 13.4 million common limited partnership units of JBG SMITH LP expected to be issued to the JBG designees in connection with the combination.

              We present certain financial information and metrics in this information statement "at JBG SMITH Share," which refers to our ownership percentage of consolidated and unconsolidated assets in joint ventures (collectively, "partially owned entities"). Financial information "at JBG SMITH Share" is calculated on an entity-by-entity basis. "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 approximately 30% of our assets, as measured by total square feet, are held through joint ventures, we believe this form of presentation, which presents our economic interests in the partially owned entities, provides investors important information regarding a significant component of our portfolio, its composition, performance and capitalization.

              We do not control the unconsolidated joint 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 joint 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, joint venture or other entity, and may, under

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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 joint ventures may be subject to debt, and the refinancing of such debt may require equity capital calls. To the extent our co-venturers do not meet their obligations to us or our joint ventures or they take action inconsistent with the interests of the joint venture, we may be adversely affected. See "Risk Factors—Risks Related to our Business and Operations—Partnership or joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on our partners' or co-venturers' financial condition and disputes between us and our partners or co-venturers". 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. For more information on our joint venture arrangements, see "Our Joint Venture Arrangements", beginning on page 190.

              Unless the context otherwise requires, the terms listed below have the meanings set forth next to such terms.

              "annualized rent" (i) for office and other assets, or the retail component of a mixed-use asset, represents in-place monthly base rent before free rent, plus tenant reimbursements as of March 31, 2017, multiplied by 12, with triple net leases converted to a gross basis by adding estimated tenant reimbursements to monthly base rent, and (ii) for multifamily assets, or the multifamily component of a mixed-use asset, represents in-place monthly base rent before free rent as of March 31, 2017, multiplied by 12. Annualized rent excludes rent from signed but not yet commenced leases.

              "buy-sell right" means a right pursuant to which one member (the "initiating member") of a joint venture may, if certain conditions are met, force the other member (the "non-initiating member") to either, with the choice to be made by the non-initiating member, (1) sell its interest in the joint venture to the initiating member or (2) purchase the initiating member's interest in the joint venture, in either case for a price based on a value for the joint venture's property proposed by the initiating member.

              "close-in" describes a neighborhood or submarket that is located within 10 miles of the White House.

              The "combination" means the combination of JBG SMITH, following the separation, with the management business and certain select assets of JBG in accordance with the MTA.

              "common limited partners" means holders of common limited partnership units of VRLP or JBG SMITH LP, as applicable.

              "densification" means the reduction in square feet leased per worker.

              The "distribution" means, unless otherwise specified, the pro rata distribution by Vornado to its common shareholders of all JBG SMITH common shares held by Vornado.

              The "distribution by VRLP" means the pro rata distribution by VRLP, immediately prior to the distribution by Vornado, of all outstanding JBG SMITH LP common limited partnership units to holders of VRLP's common limited partnership units, consisting of Vornado and the other common limited partners of VRLP.

              "equity multiple" represents (a) the sum of (i) the total contributions and distributions from investments received or projected to be received by the applicable fund, calculated on a quarterly basis, plus (ii) the equity invested or projected to be invested divided by (b) the equity invested or projected to be invested.

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              "estimated incremental investment" reflects management's estimates of all remaining acquisition costs, hard costs, soft costs, tenant improvements, leasing costs and other similar costs to develop and stabilize an asset as of March 31, 2017, excluding any financing costs and ground rent expenses.

              "estimated potential development density" reflects management's estimate of developable gross square feet based on its current business plans with respect to real estate owned or controlled as of March 31, 2017.

              "FAR" means floor to area ratio, which is generally the ratio of the total square feet of a building (existing or planned) divided by the square feet of the lot on which the building is situated.

              "free rent" means the period at inception of a tenant's lease during which the tenant does not pay base rent and operating expenses, as provided for under the lease agreement.

              "future development pipeline" refers to assets that are development opportunities on which we do not intend to commence construction within 18 months of March 31, 2017 where we (i) own land or control the land through a ground lease (16.0 million square feet of estimated potential development density at our share) or (ii) are under a long-term conditional contract to purchase, or enter into a leasehold interest with respect to, land (2.3 million square feet of estimated potential development density at our share).

              "GAAP" means accounting principles generally accepted in the United States.

              "Gateway Markets" means those metropolitan areas that receive the largest volumes of inbound investment capital and have the highest levels of institutional ownership. These markets are generally characterized by advanced infrastructure and connectivity to a wide range of domestic and international destinations as well as a deep pool of educated workers, an extensive network of public and private institutions and concentrations of Fortune 500 and/or high-profile headquarters. Although not necessarily the fastest-growing cities nationally, Gateway Markets provide long-term stability for both owners and occupiers. Gateway Markets generally command the highest rents and pricing for top-tier assets and achievable per-square-foot sales pricing is comparable to other global business hubs.

              "GDP" means gross domestic product.

              "gross leveraged IRR" represents the leveraged internal rate of return based on (i) equity invested or projected to be invested and (ii) the total projected distributions from investments (including the return of equity invested), received by the applicable fund, less all sales costs, debt service and all other property level fees where applicable, but before deduction of carried interests and asset management fees where applicable. For investments that are subject to a joint venture, gross leveraged IRR reflects the impact of any promote that was either paid or earned or projected to be paid or earned.

              "GSA" means the General Services Administration, which is the independent federal government agency that manages real estate procurement for the federal government and federal agencies.

              "Included Assets" means the Vornado Included Assets and the JBG Included Assets.

              "JBG" refers to JBG/Operating Partners, L.P. and its affiliated entities that conduct business under The JBG Companies® trade name.

              "JBG Contributing Funds" means JBG/Urban Direct Member, L.L.C., JBG/Urban Development Investment Partner L.L.C. and the four JBG Funds (i.e., JBG Investment Fund VI, L.L.C., JBG Investment Fund VII, L.L.C., JBG Investment Fund VIII, L.L.C. and JBG Investment Fund IX, L.L.C.) that are contributing interests in real assets to us in the combination.

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              "JBG Funds" means the nine real estate investment funds JBG has raised since 1999.

              "JBG Included Assets" means the JBG Included Properties and certain other assets related thereto, including JBG/Operating Partners L.P.

              "JBG Included Properties" means the portfolio of assets in the Washington, DC metropolitan area to be contributed to JBG SMITH by JBG, consisting of (i) 30 operating assets comprised of 19 office assets totaling approximately 3.6 million square feet (2.3 million square feet at JBG's share), nine multifamily assets with 2,883 units (1,099 units at JBG's share) and two other assets totaling approximately 490,000 square feet (73,000 square feet at JBG's share); (ii) eight office and multifamily assets under construction totaling over 1.6 million square feet (1.5 million square feet at JBG's share); (iii) five near-term development office and multifamily assets totaling over 1.3 million estimated square feet (1.0 million square feet at JBG's share) and (iv) 26 future development assets totaling over 11.7 million square feet (8.5 million square feet at JBG's share) of estimated potential development density.

              "JBG Parties" means JBG Properties Inc., JBG/Operating Partners L.P., JBG Investment Fund VI, L.L.C., JBG Investment Fund VII, L.L.C., JBG Investment Fund VIII, L.L.C., JBG Investment Fund IX, L.L.C. and JBG/Urban Direct Member, L.L.C.

              "JBG SMITH," "our company," "the company," "us," "our" and "we" refer to JBG SMITH Properties, a Maryland real estate investment trust, and its subsidiaries.

              "JBG SMITH common shares" means common shares of beneficial interest, par value $0.01 per share, of JBG SMITH.

              "JBG SMITH LP" means JBG SMITH Properties LP, JBG SMITH's operating partnership.

              The "JBG SMITH portfolio" means (i) 68 operating assets aggregating approximately 20.2 million square feet (16.1 million square feet at our share), comprised of 50 office assets aggregating approximately 14.1 million square feet (12.1 million square feet at our share), 14 multifamily assets aggregating 6,016 units (4,232 units at our share) and four other assets aggregating approximately 765,000 square feet (348,000 square feet at our share); (ii) eight office and multifamily assets under construction totaling approximately over 1.6 million square feet (1.5 million square feet at our share); (iii) five near-term development office and multifamily assets totaling over 1.3 million estimated square feet (1.0 million square feet at our share) and (iv) 44 future development assets totaling over 22.1 million square feet (18.3 million square feet at our share) of estimated potential development density in the Washington, DC metropolitan area, to be transferred to JBG SMITH by Vornado and JBG in the separation and the combination.

              "JBG SMITH Share" refers to JBG SMITH's ownership percentage of consolidated and unconsolidated assets applied to the specified metric.

              "JLL" means Jones Lang LaSalle Americas, Inc., a nationally recognized real estate consulting firm.

              "MTA" means the Master Transaction Agreement, dated as of October 31, 2016, by and among Vornado, VRLP, the JBG Parties, JBG SMITH and JBG SMITH LP.

              "Metro" refers to the public transportation network serving the Washington, DC metropolitan area operated by the Washington Metropolitan Area Transit Authority.

              "Metro-served" means locations, submarkets or assets that are generally nearby and within walking distance of a Metro station, defined as being within 0.5 miles of an existing or planned Metro station.

              "NAREIT" means the National Association of Real Estate Investment Trusts.

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              "near-term development" refers to assets that have substantially completed the entitlement process and on which we intend to commence construction within the 18 months following March 31, 2017, subject to market conditions.

              "net absorption" means the net change in physically occupied space over the applicable review period. Net absorption takes into account move-ins and move-outs within the existing office stock as well as the change in occupied space resulting from the delivery of newly constructed buildings and conversion/demolition of buildings over the review period. The resulting increase or decrease in physically occupied space relative to the starting inventory is characterized as net absorption. Net absorption may be expressed in square footage, or square footage as a percent of inventory based on the square footage at the start of the measurement period.

              "percent leased" is based on leases signed as of March 31, 2017 and is calculated as total rentable square feet less rentable square feet available for lease divided by total rentable square feet.

              "percent pre-leased" is based on leases signed as of March 31, 2017 and is calculated as the estimated rentable square feet leased divided by estimated total rentable square feet expressed as a percentage.

              "percent occupied" is based on occupied rentable square feet/units as of March 31, 2017 and is calculated as (i) for office and retail space, total rentable square feet less unoccupied square feet divided by total rentable square feet, (ii) for multifamily space, total units less unoccupied units divided by total units, expressed as a percentage.

              "recently delivered" means assets that have been delivered within the 12 months ended March 31, 2017.

              "record date" means                  , the record date for the distribution of JBG SMITH common shares by Vornado and for the distribution by JBG SMITH LP common limited partnership units by VRLP.

              "REIT" means a real estate investment trust.

              "SEC" means the U.S. Securities and Exchange Commission.

              "Securities Act" means the U.S. Securities Act of 1933, as amended.

              The "separation" means the separation from Vornado of the Vornado Included Assets from Vornado's other businesses.

              "signed but not yet commenced leases" means leases for assets in JBG SMITH's portfolio that, as of March 31, 2017, have been executed but for which the contractual lease term had not yet begun and no rental payments had yet been received. As of March 31, 2017, this included 35 leases with annualized base rental revenues of over $58.1 million ($43.1 million at our share).

              "square feet" or "SF" means the amount of rentable square feet of a property that can be rented to tenants, defined as (i) for office and other assets, rentable square footage defined in the current lease and for vacant space the rentable square footage defined in the previous lease for that space, (ii) for multifamily assets, management's estimate of approximate rentable square feet, (iii) for the assets under construction and the near-term development assets, management's estimate of actual rentable square feet based on current design plans as of March 31, 2017, or (iv) for the future development assets, management's estimate of developable gross square feet based on its current business plans with respect to real estate owned or controlled as of March 31, 2017.

              The "transaction" means the separation, distribution and combination, collectively.

              "under construction" refers to assets that were under construction as of March 31, 2017.

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              "urban-infill" refers to new development or an existing asset that is sited on vacant or undeveloped land within an existing community, and that is surrounded by other types of development.

              "Vornado" means Vornado Realty Trust, a Maryland real estate investment trust, and its consolidated subsidiaries, including Vornado Realty L.P.

              "Vornado common shares" means common shares of beneficial interest, par value $0.04 per share, of Vornado.

              "Vornado Included Assets" means the Vornado Included Properties, the Vornado Included Entities, the Vornado Included Investments and other assets related thereto, which includes all of the assets and liabilities of Vornado's Washington, DC segment (other than our 46.2% interest in Rosslyn Plaza) and excludes Vornado's 7.5% interest in Fashion Centre Mall and 3040 M Street.

              "Vornado Included Entities" means the entities through which VRLP directly or indirectly holds the Vornado Included Properties that are to be transferred to JBG SMITH LP prior to the distribution.

              "Vornado Included Investments" means certain debt and equity investments owned by certain Vornado Included Entities in certain third-party entities.

              "Vornado Included Properties" means the portfolio of Vornado/Charles E. Smith assets in the Washington, DC metropolitan area to be contributed to JBG SMITH by Vornado, consisting of (i) 38 operating assets comprised of 31 office assets totaling over 10.5 million square feet (9.8 million square feet at Vornado's share), five wholly owned multifamily assets with 3,133 units and two wholly owned other assets totaling approximately 275,000 square feet and (ii) 18 future development assets totaling over 10.4 million square feet (9.8 million square feet at Vornado's share) of estimated potential development density.

              "VRLP" means Vornado Realty L.P., a Delaware limited partnership through which Vornado conducts its business and holds substantially all of its interests in assets.

              "Washington, DC metropolitan area" means the contiguous metropolitan area, centered on the District of Columbia, which also includes certain adjacent, nearby counties in Northern Virginia and Southern Maryland.


Market Data

              We use market data throughout this information statement. We have obtained the information contained in the sections entitled "Summary—Industry Overview and Market Opportunity" and "Industry Overview and Market Opportunity" and certain information contained in the section entitled "Business and Properties" from market research prepared for us by Jones Lang LaSalle Americas, Inc., or JLL, a nationally recognized real estate consulting firm, and such information is included in this information statement in reliance on JLL's authority as an expert in such matters. In addition, we have obtained certain market data from publicly available information and industry publications. These sources generally state that the information they provide has been obtained from sources believed to be reliable, but the accuracy and completeness of the information are not guaranteed. The forecasts and projections are based on industry surveys and the preparers' experience in the industry, and there is no assurance that any of the projections or forecasts will be achieved. We believe that the surveys and market research others have performed are reliable, but we have not independently verified this information.

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INFORMATION STATEMENT SUMMARY

              The following is a summary of material information discussed in this information statement. This summary may not contain all of the details concerning the transaction or other information that may be important to you. To better understand the separation, the distribution, the combination and JBG SMITH's business and financial position, you should carefully review this entire information statement. Except as otherwise indicated or unless the context otherwise requires, the information included in this information statement assumes the completion of all of the transactions referred to in this information statement in connection with the separation, the distributions by each of Vornado and VRLP and the combination, and references to JBG SMITH's historical business and operations refer to the business and operations of those office, multifamily and other commercial assets to be contributed by Vornado and The JBG Companies (which we refer to as JBG), comprised of (i) 68 operating assets aggregating approximately 20.2 million square feet (16.1 million square feet at our share), comprised of 50 office assets aggregating approximately 14.1 million square feet (12.1 million square feet at our share), 14 multifamily assets aggregating 6,016 units (4,232 units at our share) and four other assets aggregating approximately 765,000 square feet (348,000 square feet at our share); (ii) eight office and multifamily assets under construction totaling over 1.6 million square feet (1.5 million square feet at our share); (iii) five near-term development office and multifamily assets totaling over 1.3 million estimated square feet (1.0 million square feet at our share) and (iv) 44 future development assets totaling over 22.1 million square feet (18.3 million square feet at our share) of estimated potential development density, as well as Vornado's and JBG's respective Washington, DC management businesses, that will be transferred to JBG SMITH in connection with the separation and the combination as if such transferred businesses were JBG SMITH's business for all historical periods described. For a glossary of certain terms used in this information statement, please refer to "Presentation of Information."

Our Company

              JBG SMITH represents the combination of Vornado's Washington, DC segment (which operates as Vornado / Charles E. Smith) and the management business and certain Washington, DC metropolitan area assets of The JBG Companies. Vornado / Charles E. Smith and The JBG Companies are two of the largest, most noteworthy, best-in-class Washington, DC focused real estate franchises, each with an over 50-year history of operations in the Washington, DC metropolitan area.

              We believe that the combination of Vornado / Charles E. Smith and The JBG Companies results in the following key strengths and competitive advantages that will contribute to our future success:

    We are the market-leading and largest publicly traded real estate company focused on the Washington, DC metropolitan area;

    Our assets consist of high-quality office, multifamily and retail properties concentrated in what we believe are the most attractive Metro-served, urban-infill submarkets;

    We have a demonstrated track record of combining these uses in vibrant, amenity-rich mixed-use projects that create and sustain value and competitive advantage over time;

    We believe that we are positioned for substantial revenue growth driven by near-term opportunities embedded in our existing operating portfolio and our unrivaled near-term and future development pipelines, which could allow us to roughly double the size of our portfolio based on square footage and further enhance the quality of the portfolio;

    Our best-in-class Washington, DC area management platform has proven investment, operating and development skills and leverages our experience in the use of our Placemaking strategy to unlock value in large scale projects and neighborhood repositionings;

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    We expect to access compelling acquisition opportunities with strong prospects for growth through our proven acquisition platform that combines the longstanding market relationships, reputation and expertise of both the Vornado and JBG Washington, DC platforms;

    Our disciplined, research-based approach ensures our investment decisions are based on current and forecasted market fundamentals and trends, which allows us to identify value creating development, redevelopment and acquisition opportunities in existing and new high-growth submarkets;

    We have a proven track record of superior capital allocation across investment opportunities and market cycles;

    We will have a well-capitalized balance sheet and access to a broad range of funding sources which will allow us to fund our significant growth opportunities while maintaining prudent leverage levels; and

    We believe the Washington, DC metropolitan area economy and office market have bottomed and that the region's real estate market is uniquely positioned to experience a stronger recovery over the next 24 to 36 months compared to other Gateway Markets.

      Our Strategy

              Our mission is to own and operate a high-quality portfolio of Metro-served, urban-infill office, multifamily and retail assets concentrated in downtown Washington, DC, our nation's capital, and other leading urban infill submarkets with proximity to downtown Washington, DC and to grow this portfolio through value-added development and acquisitions. We have significant expertise in the Washington, DC metropolitan area across multiple product types and consider office, multifamily and retail to be our core asset classes. We are known for our creative deal-making and capital allocation skills and for our deep pool of development and value creation expertise across product types. As the leading local sharpshooter, our DC market experience is best-in-class and we have been trendsetters in our market by mixing uses in projects that deliver the amenities and features that tenants demand.

              One of our approaches to value creation involves utilizing a series of complementary disciplines through a process that we call "Placemaking." Placemaking involves strategically mixing high-quality multifamily and commercial buildings with anchor, specialty and neighborhood retail in a high density, thoughtfully planned and designed public space. Through this process, we are able to drive synergies, and thus value, across those varied uses and create unique, amenity-rich, walkable neighborhoods that are desirable and create significant tenant and investor demand. We believe that our Placemaking approach will drive occupancy and rent growth across our entire portfolio, particularly with respect to our concentrated and extensive land and building holdings in Crystal City. Crystal City's attractive attributes of its urban-infill location with close proximity to downtown Washington, DC, its access to Metro and other key transportation infrastructure and strong surrounding demographics serve as an incredible foundation upon which to build the mix of uses and amenities that today's tenants demand. We believe that the application of our Placemaking approach will allow us to increase Crystal City's attractiveness to potential tenants and create significant value for our shareholders. Our investment in Crystal City will focus on creating a vibrant, 24-hour environment with an active retail heart through the delivery of additional anchor and small store retail and the introduction of a greater mix of uses, including new multifamily and the select conversion of office buildings to multifamily. These elements, combined with thoughtfully planned and curated streetscapes and public spaces, are all critical to the creation of a dynamic place that will help drive occupancy and rent growth throughout the submarket over time. Importantly, the broader benefits of this repositioning are achievable without the need to invest capital in the repositioning of each asset in the submarket. Many similar opportunities exist

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elsewhere in our portfolio on a smaller scale, and we expect these to drive significant value over time as well.

              Our high-quality portfolio with significant embedded growth potential, well-capitalized balance sheet, scale and highly experienced and talented local management team combine to make JBG SMITH an attractive public company investment vehicle focused on the Washington, DC metropolitan area. In addition, we expect our assets under construction and unrivaled near-term and future development pipelines, which have a meaningful multifamily focus, will provide significant additional potential growth and value creation opportunities that meet market demand over time.

      Our Portfolio

              We own and operate a portfolio of high-quality office and multifamily assets, many of which are amenitized with ancillary retail. Our portfolio reflects our longstanding strategy of concentrating in downtown Washington, DC and other leading urban-infill submarkets with proximity to downtown Washington, DC that have high barriers to entry and key urban amenities, including being within walking distance of the Metro. Over 98% of our operating assets are Metro-served, based on our share of rentable square feet as of March 31, 2017. Our concentrated holdings and leading market share in our targeted primary submarkets allow us to realize meaningful economies of scale and to enhance our neighborhoods through Placemaking, thereby benefiting our overall holdings within these targeted submarkets. Our fully-integrated platform has demonstrated capability in managing every aspect of real estate ownership, including investment, development, construction management, finance, asset management, property management and leasing. We expect that JBG SMITH will achieve significant growth from the realization of embedded contractual rent growth, the lease-up of our operating assets, the delivery and lease-up of our assets under construction and the development of our unrivaled near-term and future development pipelines aggregating over 23.4 million square feet (19.3 million square feet at our share). While our operating portfolio is currently approximately 70% office and 26% multifamily based on total square footage, a significant portion of our near-term and future development pipelines is focused on multifamily assets; delivering these assets to the market will result over time in our portfolio becoming more balanced between office and multifamily.

              As of March 31, 2017, our operating portfolio consisted of 68 operating assets aggregating approximately 20.2 million square feet (16.1 million square feet at our share), comprised of 50 office assets aggregating approximately 14.1 million square feet (12.1 million square feet at our share), 14 multifamily assets aggregating 6,016 units (4,232 units at our share) and four other assets aggregating approximately 765,000 square feet (348,000 square feet at our share).

              Our assets are located primarily within attractive submarkets in the District of Columbia and in the most desirable, infill, Metro-served submarkets outside of Washington, DC. These include the Rosslyn-Ballston Corridor, Crystal City, Pentagon City and Reston in Virginia. In Maryland, the majority of our assets are concentrated in Bethesda, Silver Spring and the Rockville Pike Corridor. Our current and target submarkets generally share the following key attributes that make them highly desirable and create significant tenant and investor demand:

    They are densely populated, urban-infill submarkets;

    They are well-established or emerging growth submarkets;

    They are Metro-served;

    They exhibit high barriers to new development due to limited available land and/or entitlement constraints; and

    They have a high degree of walkability and feature strong clusters of retail and other amenities.

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      Our Operating Portfolio

              Our operating office portfolio is highly concentrated in five primary, Metro-served, urban-infill submarkets: (i) District of Columbia, (ii) Crystal City and Pentagon City, (iii) the Rosslyn-Ballston Corridor, (iv) Reston and (v) Bethesda. In addition to our ownership of over 4.2 million square feet (2.8 million square feet at our share) across 14 assets in the District of Columbia, we have a leading market position in Crystal City and Pentagon City, with ownership of over 6.4 million square feet in 20 wholly owned assets in an irreplaceable location along the Potomac River adjacent to Washington, DC and the Ronald Reagan National Airport. We also have ownership of approximately 1.2 million square feet (1.0 million square feet at our share) in four assets in the Rosslyn-Ballston Corridor, over 1.3 million square feet in six wholly owned assets in Reston, over 500,000 square feet in three wholly owned assets in Bethesda, approximately 201,000 square feet (36,000 square feet at our share) in two assets in the Rockville Pike Corridor and over 246,000 square feet (24,600 square feet at our share) in one asset in Alexandria (Eisenhower Avenue). Our high-quality, diversified office tenant base spans both the public and private sectors, reflecting the continued evolution and diversification of the Washington, DC economy. Our tenants include many agencies and departments of the U.S. federal government, which collectively comprise our largest tenant, with 80 leases generating approximately 22.3% of our share of annualized rent from our office and retail leases as of March 31, 2017. No other tenant represents more than 3.4% of our share of annualized rent from our office and retail leases. In addition, other major office tenants include Arlington County; non-profit organizations such as Family Health International and the Public Broadcasting Service ("PBS"); leading private-sector companies such as Lockheed Martin Corporation, General Electric, Booz Allen Hamilton, Accenture LLP, Abbott Laboratories, Raytheon Company, and Noblis Inc.; financial institutions such as Citigroup and Wells Fargo; and well-respected law firms and other professional services companies such as Baker Botts LLP, Sidley Austin LLP, Cooley LLP and Deloitte LLP.

              Our operating multifamily portfolio consists of 14 multifamily assets comprising 6,016 units (4,232 units at our share) and is located in some of the most vibrant neighborhoods of the District of Columbia; Crystal City and Pentagon City, the Rosslyn-Ballston Corridor and Reston in Virginia; and Bethesda, Silver Spring and the Rockville Pike Corridor in Maryland. Similar to our office buildings, our multifamily assets are located in the most desirable locations, with 99% within walking distance of the Metro, restaurants, entertainment and other key urban amenities. We believe our multifamily portfolio includes some of the highest quality multifamily assets in the Washington, DC metropolitan area. These assets include (i) The Bartlett, a recently developed 699-unit luxury property in Pentagon City with a Whole Foods Market as its ground floor retail; (ii) Atlantic Plumbing, a 310-unit class-A property in the heart of the vibrant U Street/Shaw neighborhood in Washington, DC; and (iii) WestEnd25, a 283-unit luxury property situated in the coveted West End of Washington, DC.

              Over 1.3 million operating retail square feet are embedded within our office and multifamily assets—a key component of our Placemaking strategy. Our office and multifamily rental rates generally reflect a premium relative to rates in their broader submarkets that we believe is attributable to the presence of thoughtfully curated retail amenities, and we strive to incorporate, where possible, high-quality, value-creating retail space into our office and multifamily assets. Our high-quality, diversified retail tenant base includes anchor, specialty and neighborhood retail shops that create thoughtfully planned and designed public space. Our retail tenants include Whole Foods, Trader Joe's, Starbucks, Dean & DeLuca as well as boutique tenants including Warby Parker, Landmark Theatre and Bonobos.

              In addition, we own interests in three standalone retail assets and one standalone hotel, the 345-room Crystal City Marriott.

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      Our Assets Under Construction and Near-Term and Future Development Pipelines

              In addition to our operating portfolio, as of March 31, 2017, we owned:

    eight assets under construction totaling over 784,000 square feet (675,000 square feet at our share) of office and 1,012 units (985 units at our share) of multifamily with an estimated incremental investment as of March 31, 2017 of approximately $563.5 million ($517.5 million at our share);

    a near-term development pipeline consisting of five assets totaling approximately 559,000 square feet of highly-efficient wholly owned office, 755 multifamily units (464 units at our share) and over 65,000 square feet (6,500 square feet at our share) of retail in our other asset category, located primarily in the District of Columbia and adjacent close-in submarkets; and

    a future development pipeline comprised of 44 future development assets with an estimated potential development density of over 22.1 million square feet (18.3 million square feet at our share).

              With respect to the five assets in our near-term development pipeline, the entitlement process has been substantially completed and these projects, which will capitalize on the demand for high-quality multifamily assets and highly-efficient, high-quality office assets, are in position for construction to commence, and since March 31, 2017, construction has commenced on three of these assets. See "Business and Properties—Recent Developments Since March 31, 2017". In general, given current market expectations, we estimate that we will commence construction on near-term development multifamily assets within the 18 months following March 31, 2017, while commencement of construction on near-term development office assets will more likely depend on either pre-leasing or attractive submarket supply and demand dynamics. Our near-term and future development pipelines have the potential to roughly double the size of our portfolio by square footage and to further enhance the quality of our portfolio. To take advantage of this opportunity, we plan to be an active developer, particularly of multifamily assets, and intend to manage the delivery of our development growth pipeline to meet market demand while prudently managing our long-term leverage levels and balance sheet.

      Our Third-Party Asset Management and Real Estate Services Business

              In addition to our portfolio, we have a third-party asset management and real estate services business that represents the combination of Vornado / Charles E. Smith's and JBG's management platforms that provides fee-based real estate services to nine JBG Funds, other JBG-affiliated entities, joint ventures and third parties with whom we have long-standing relationships.

      Our Management Team and Platform

              We will be self-managed and led by JBG's executive management team, and will combine the best talent from each of Vornado / Charles E. Smith and JBG, providing us with one of the most seasoned and experienced management teams in the Washington, DC market. Executive management of JBG SMITH will include W. Matthew Kelly (Chief Executive Officer), Robert Stewart (Executive Vice Chairman), David Paul (President and Chief Operating Officer), James Iker (Chief Investment Officer), Brian Coulter (Co-Chief Development Officer) and Kevin ("Kai") Reynolds (Co-Chief Development Officer), who are all current managing partners or partners and have an average tenure of 18 years at JBG. These executives manage the JBG business today and have a longstanding track record in the Washington, DC market, in which JBG is considered the leading local sharpshooter. The senior management team of JBG SMITH will also benefit from the experience and expertise of Stephen W. Theriot (Chief Financial Officer), who served as Vornado's Chief Financial Officer from

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June 2013 to February 2017, and Patrick J. Tyrrell (Chief Administrative Officer), who is currently Vornado's Chief Operating Officer of its Washington, DC division. Our commercial leasing team will be led by David Ritchey (Executive Vice President) and will be supported by Jim Creedon, a 25-year veteran with Vornado / Charles E. Smith, and a team of 14 professionals from both JBG and Vornado / Charles E. Smith. Our board of trustees will consist of a majority of independent trustees. In addition to the appointment of seven independent trustees, Steven Roth, Vornado's Chairman and CEO, will be Chairman of the board of trustees of JBG SMITH and Mitchell Schear, Vornado's President of the Washington, DC division, will also serve as a trustee of JBG SMITH. Michael Glosserman, W. Matthew Kelly and Robert Stewart, all current managing partners of JBG, will also serve as trustees of JBG SMITH.

              The JBG management team is a proven steward of investor capital and has a long track record of creating value for investors through numerous economic cycles. JBG has an over 50-year history in the Washington, DC metropolitan area market. In 1999, JBG created its first discretionary investment fund. As of March 31, 2017, JBG has raised approximately $3.7 billion of discretionary fund investment capital for nine real estate investment funds, and has invested in over 235 assets on behalf of these JBG Funds. As of May 31, 2017, the JBG Funds' investments are projected to generate a realized and unrealized aggregate gross leveraged IRR and equity multiple of 23.4% and 1.8x, respectively, while typically employing leverage of approximately 60% of gross asset value. Gross leveraged IRR represents the leveraged internal rate of return based on (i) equity invested or projected to be invested and (ii) the total projected distributions from investments (including the return of equity invested), received by the applicable fund, less all sales costs, debt service and all other property level fees where applicable, but before deduction of carried interests and asset management fees where applicable. For investments that are subject to a joint venture, gross leveraged IRR reflects the impact of any promote that was either paid or earned or projected to be paid or earned. Equity multiple represents (i) the sum of (a) the total contributions and distributions from investments received or projected to be received by the applicable fund, calculated on a quarterly basis, plus (b) the equity invested or projected to be invested divided by (ii) the equity invested or projected to be invested. (These gross leveraged IRRs and equity multiples are not necessarily indicative of the future performance of JBG SMITH, any asset in our portfolio or an investment in our common shares. These metrics are based in part on investments that the JBG Funds sold prior to the combination and thus are not part of our portfolio, and do not reflect the gross leveraged IRRs and equity multiples achieved by Vornado's Washington, DC business during the same time period. There is no assurance that our management will be able to replicate the performance achieved by the JBG Funds with respect to these investments, particularly given our use of lower leverage and a longer-term holding period.) Following the closing of the combination, we do not intend to raise any future investment funds, and current funds will be managed and liquidated over time. We expect to continue to earn fees from these funds as they are wound down, as well as from any joint venture arrangements currently in place and any new joint venture arrangements entered into in the future. The JBG management team will continue to own direct equity co-investment and promote interests in the JBG Funds that are not being contributed to JBG SMITH. As the JBG Funds are wound down over time, these economic interests will decrease and be eliminated.

              Our broad transactional skill sets, multi-asset class experience, deep organizational and financial expertise, and a long and successful track record built over 50 years, allow us to uniquely source and execute on a broad array of opportunities. Our management platform is vertically integrated across functions, including investment, development, construction management, finance, asset management, property management and leasing, which allows us to efficiently execute on our business strategy. Our platform is also horizontally integrated across real estate asset classes, focusing primarily on office, multifamily and retail, which affords us the flexibility to respond to changing market conditions by adjusting our business plans to deliver the type of asset that will meet current market demand. As a result, we are able to execute large-scale mixed-use projects without the need to partner

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with other operators or developers. In addition, we have developed an intimate knowledge of the Washington, DC metropolitan area and a detailed understanding of the key submarkets on a block-by-block basis. We believe that our in-depth market knowledge and extensive network of longstanding relationships with real estate owners, developers, tenants, brokers, lenders, general contractors, municipalities, local community organizations and other market participants provide us with a sustainable competitive advantage.

              We use a disciplined, research-based approach to identify value creating development, redevelopment and acquisition opportunities in existing and new high-growth submarkets.

      Our Balance Sheet

              We will have a well-capitalized balance sheet and access to a broad range of funding sources which we believe will allow us to execute our business plan. On a pro forma basis, JBG SMITH has approximately $2.2 billion aggregate principal amount of consolidated debt outstanding ($2.2 billion at our share) and our unconsolidated joint ventures had over $1.1 billion aggregate principal amount of debt outstanding ($380 million at our share), resulting in a total of approximately $2.6 billion aggregate principal amount of debt outstanding at our share. We will have a well-staggered debt maturity schedule over the next five years, particularly considering our existing as-of-right extension options. We will have significant liquidity upon the completion of the separation and combination with $511 million of cash on a consolidated basis and $17 million of cash at our share of unconsolidated joint ventures, and we are arranging a $1.4 billion credit facility under which we expect to have significant borrowing capacity.

      REIT Status

              We plan to elect to be treated as a REIT in connection with the filing of our federal income tax return for the taxable year that includes the distribution of our common shares by Vornado, and we intend to maintain this status in future periods.

Summary Table—Total Portfolio as of March 31, 2017

 
  Number of
Assets
  Rentable
Square Feet
  Number of
Units(1)
  Estimated
Potential
Development
Density(2)
 

Wholly Owned

                         

Operating

    49     14,730,510     3,908      

Under Construction

    5     1,022,099     547      

Near-Term Development(3)

    2     558,616     0      

Future Development(4)

    26         577     17,074,500  

Total Wholly Owned

    82     16,311,225     5,032     17,074,500  

Joint Ventures (at 100 Percent Share)

                         

Operating

    19     5,435,656     2,108      

Under Construction

    3     602,431     465      

Near-Term Development(3)

    3     759,226     755      

Future Development(4)

    18             5,090,500  

Total Joint Ventures

    43     6,797,313     3,328     5,040,500  

Total Portfolio

    125     23,108,538     8,360     22,115,000  

Total Portfolio (at JBG SMITH Share)

    125     18,555,989     6,258     18,346,506  

Note: Table shown at 100 percent share except where noted as JBG SMITH share. See the "Presentation of Information" on page ii for disclosure regarding at-share metrics.

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(1)
For assets under construction and near-term development assets, represents estimated number of units based on current design plans.

(2)
Includes estimated potential office, multifamily and retail development density.

(3)
Refers to assets that have substantially completed the entitlement process and on which we intend to commence construction within the 18 months following March 31, 2017, subject to market conditions.

(4)
Refers to assets that are development opportunities on which we do not intend to commence construction within 18 months of March 31, 2017.

Summary Table—In-Service Operating Assets as of March 31, 2017

 
  Number of
Assets
  Rentable
Square Feet
  Number of
Units
  Percent
Leased(1)
  Annualized
Rent(2)
($000s)
  Annualized Rent
Per Square Foot/
Monthly Rent
Per Unit(3)
 

Office

    49     14,063,749         87.1 % $ 532,422   $ 45.12  

Office—Recently Delivered(4)

    1     13,633         100.0 %   1,099      

Office—Total

    50     14,077,382         87.1 % $ 533,521   $ 45.22  

Multifamily

   
13
   
4,704,866
   
5,317
   
94.9

%

$

122,388
 
$

1,973
 

Multifamily—Recently Delivered(4)

    1     619,372     699     87.1 %   18,748     2,617  

Multifamily—Total

    14     5,324,238     6,016     94.0 % $ 141,136   $ 2,040  

Other(5)

   
4
   
764,546
   
   
93.6

%

$

14,833
 
$

31.89
 

        

                                     

Total/Weighted Average

    68     20,166,166     6,016     89.2 % $ 689,490        

Total (at JBG SMITH Share)

    68     16,083,997     4,232     87.4 % $ 553,425        

Note: Table shown at 100 percent share except where noted as JBG SMITH share. See the "Presentation of Information" on page ii for disclosure regarding at-share metrics.

(1)
Based on leases signed as of March 31, 2017, and is calculated as total rentable square feet less rentable square feet available for lease divided by total rentable square feet.

(2)
Represents (i) for office and other assets, or the retail component of a mixed-use asset, in-place monthly base rent before free rent, plus tenant reimbursements as of March 31, 2017, multiplied by 12, with triple net leases converted to a gross basis by adding estimated tenant reimbursements to monthly base rent, and (ii) for multifamily assets, or the multifamily component of a mixed-use asset, in-place monthly base rent before free rent as of March 31, 2017, multiplied by 12. Annualized rent excludes rent from signed but not yet commenced leases.

(3)
For office assets, represents annualized office rent divided by occupied office square feet. For multifamily assets, represents monthly multifamily rent divided by occupied units. For other assets, represents annualized rent divided by occupied square feet. Occupied square footage may differ from leased square footage because leased square footage includes leases that have been signed for space within the asset, but that have not yet commenced.

(4)
Refers to assets that have been delivered within the 12 months ended March 31, 2017.

(5)
Segment includes three standalone retail assets and the Crystal City Marriott, a standalone hotel totaling 266,000 square feet and 345 rooms. The Crystal City Marriott is excluded from percent leased, annualized rent, and annualized rent per square foot metrics.

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Summary Table—Assets Under Construction as of March 31, 2017

 
  Number of
Assets
  Estimated
Rentable
Square Feet
  Estimated
Number
of Units
  Percent
Pre-Leased
 

Assets Under Construction

                         

Office

    3     784,279         63.3 %

Multifamily

    5     840,251     1,012     N/A  

Total/Weighted Average

    8     1,624,530     1,012     63.3 %

Total (at JBG SMITH Share)

    8     1,492,928     985     64.3 %

Note: Table shown at 100 percent share except where noted as JBG SMITH share. See the "Presentation of Information" on page ii for disclosure regarding at-share metrics.

Summary Table—Near-Term and Future Development Assets as of March 31, 2017

 
  Number of
Assets
  Estimated
Rentable Square
Feet
  Estimated
Number of
Units
  Estimated
Potential
Development
Density(1)
 

Near-Term and Future Development Assets

                         

Near-Term Development Assets(2)

    5     1,317,842     755      

Future Development Assets(3)

    44             22,115,000  

Total

    49     1,317,842     755     22,115,000  

Total (at JBG SMITH Share)

    49     979,064     464     18,346,506  

Note: Table shown at 100 percent share except where noted as JBG SMITH share. See the "Presentation of Information" on page ii for disclosure regarding at-share metrics.

(1)
Includes estimated potential office, multifamily and retail development density.

(2)
Refers to assets that have substantially completed the entitlement process and on which we intend to commence construction within the 18 months following March 31, 2017, subject to market conditions.

(3)
Refers to assets that are development opportunities on which we do not intend to commence construction within 18 months of March 31, 2017.

Industry Overview and Market Opportunity

              Washington, DC is one of the nation's premier Gateway Markets (which consist of Washington, DC, New York, San Francisco, Los Angeles and Boston), an international hub of economic activity, and the capital of the United States. The Washington, DC metropolitan area is home to an affluent and well-educated population, featuring the highest median household income and educational attainment of any Gateway Market in the United States. Regional growth in both traditional and "new" economies has contributed to positive net migration into the Washington, DC metropolitan area since 2009. The region's strong growth attributes are supported by its younger residents, with a higher percentage of the population between the ages of 25 and 34 than the overall average for Gateway Markets. In addition, the Washington, DC metropolitan area is served by the second-largest rapid transit system in the United States, and the region is routinely ranked as one of the most walkable metropolitan areas in the nation.

              Over the past 25 years, the Washington, DC metropolitan area real estate market has outperformed other Gateway Markets. During this period, the region's market cycle has generally trended independently of other markets, exhibiting meaningful stability compared to other Gateway Markets. Recently, relative to other Gateway Markets, the region was uniquely impacted by the headwinds imposed by sequestration and federal budget challenges. After a more recent return to

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stability and historical job growth levels, the Washington, DC metropolitan area is now outpacing economic and employment growth nationally and, as a result, JLL believes the real estate market over the next 24 to 36 months is positioned for significant occupancy and rent growth, with the Washington, DC metropolitan area real estate market at a much earlier point in its recovery compared to other Gateway Markets.

              The Washington, DC metropolitan area office recovery is, we believe, in its early stages, and based on renewed private sector demand, political alignment which historically drives above-average growth and a supply constrained environment, the Washington, DC metropolitan area is expected to have several years of economic and real estate advancement ahead. With the regional economy and office market coming off the bottom, the region's real estate industry is uniquely positioned to experience a stronger recovery over the next 24 to 36 months compared to other Gateway Markets.

              We own assets in what we believe are the most attractive submarkets within the Washington, DC metropolitan area. Our portfolio is strategically concentrated, with over 98% of our operating assets, based on our share of rentable square feet as of March 31, 2017, being Metro-served. As of March 31, 2017, all of our assets under construction and substantially all of our near-term development assets were Metro-served. According to JLL, for the five year period ended March 31, 2017, 76% of office leasing activity in the Washington, DC metropolitan area (transactions larger than 20,000 square feet) has been within 0.5 miles of an existing or planned Metro station, although only 63% of the overall market is Metro-served, demonstrating that Metro accessibility remains a critical factor in site selection and is a key driver of employee recruitment and retention. Resulting rent premiums in Metro-served submarkets average 69% for office and 32% for multifamily property types.

Our Competitive Strengths

              We believe that our extensive real estate operating and investment platform and our high-quality, urban-infill, Metro-served portfolio provide us with certain competitive advantages outlined below. We believe these competitive advantages will allow us to deliver significant income growth through in-place embedded contractual revenue growth, lease-up of our operating assets, delivery and lease-up of our assets under construction and near-term and future development and acquisition opportunities.

              Market-Leading, Largest Publicly Traded Real Estate Company Focused on the Washington, DC Metropolitan Area. JBG SMITH represents the combination of Vornado / Charles E. Smith and The JBG Companies, two of the largest, most noteworthy, best-in-class Washington, DC focused real estate franchises, each with an over 50-year history of operations in the Washington, DC metropolitan area. We have assembled the largest portfolio, by rentable square feet, of high-quality commercial real estate assets in the Washington, DC metropolitan area of any publicly traded real estate company. Our portfolio is comprised primarily of office and multifamily assets, many of which are amenitized with a complementary retail component. We operate a platform that is both vertically integrated across functions, including investment, development, construction management, finance, asset management, property management and leasing, and horizontally integrated across real estate asset classes, focusing primarily on office, multifamily and retail. Our integrated structure, as well as the size and scope of our platform, enables us to identify value-creation opportunities and realize significant operating efficiencies. Our organization is comprised of over 1,100 employees, including over 400 corporate employees in investment, development, construction management, finance, asset management, property management, leasing and other supporting functions. Through our complementary in-house disciplines, we seek to enhance asset values through proactive asset and property management.

              High-Quality Assets in Most Attractive Submarkets.    Our portfolio of high-quality operating assets is primarily located within what we believe are the most attractive Metro-served, urban-infill submarkets of the Washington, DC metropolitan area, one of the highest barrier-to-entry markets in the United States. Our general strategy is to invest in assets that we anticipate, by virtue of location, physical quality, amenities or other specific features, will possess a sustainable ability to outperform the market, maintain high occupancy levels through all market cycles, attract high-quality tenants and appeal to a broad range of buyers if offered for sale.

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    High-Quality Assets.  Our portfolio is comprised of high-quality office and multifamily assets, many of which have been recently constructed or renovated and are amenitized with ancillary retail. Our operating portfolio was over 89% leased (87% at our share) across all of our asset classes as of March 31, 2017. We believe this provides built-in growth potential as we lease up to a stabilized occupancy level. Moreover, we believe that we have a strong, creditworthy tenant base, with agencies and departments of the U.S. federal government representing approximately 22.3% of our share of annualized rent from our office and retail leases as of March 31, 2017. No other tenant accounted for more than 3.4% of our share of annualized rent from our office and retail leases as of March 31, 2017. The majority of our non-GSA office and retail leases contain contractual rent escalators. In addition, we benefit from high-quality long-term leases, with a weighted average lease term (including leases signed but not yet commenced) of 6.3 years as of March 31, 2017.

              Most Attractive Submarkets.    We have invested in what we believe are the most attractive submarkets within the Washington, DC metropolitan area. These submarkets are in high barrier locations, are Metro-served, have a high degree of walkability and feature strong clusters of nearby amenities. Based on our share of rentable square feet as of March 31, 2017, over 98% of our assets are Metro-served. This concentration of assets positions us well to capitalize on improving real estate market fundamentals, with 76% of Washington, DC metropolitan area office leasing activity for the five year period ended March 31, 2017 within 0.5 miles of an existing or planned Metro station, according to JLL, although only 63% of the overall market is Metro-served. Moreover, the submarkets in which we operate (excluding Crystal City/Pentagon City) have historically outperformed other Washington, DC metropolitan area submarkets (see the charts below). While Crystal City/Pentagon City's metrics were not as compelling over the same time period (largely due to BRAC (Base Realignment and Closure) and sequestration), we believe that this submarket is positioned for recovery because it shares many of the characteristics of other outperforming JBG SMITH submarkets such as an urban street grid, proximity to major demand drivers, and access to all forms of transportation. We believe that once we have been able to apply our Placemaking strategy, Crystal City/Pentagon City will perform in line with our other submarkets.

    In both office and multifamily market metrics, JBG SMITH's submarkets (excluding Crystal City/Pentagon City) have outperformed non-JBG SMITH submarkets.

              In the office sector, as of March 31, 2017, JBG SMITH's submarkets (excluding Crystal City/Pentagon City):

    posted current asking rents above the market average, with Crystal City/Pentagon City also posting a premium to market;

    had seen rent growth over the preceding 10 years far in excess of non-JBG SMITH submarkets, while Crystal City/Pentagon City also modestly outperformed; and

    showed significantly lower historical vacancy rates over the preceding 10 years than the broader market.

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Office asking rents relative to market average   10-year office asking rent growth comparison

GRAPHIC

 

GRAPHIC


 

Source: JLL Research   Source: JLL Research


10-year office average vacancy comparison

GRAPHIC


Source: JLL Research

              In the multifamily sector, as of March 31, 2017, JBG SMITH's submarkets (excluding Crystal City/Pentagon City):

    posted asking rents that commanded a significant premium to the market average compared to a discount in non-JBG SMITH submarkets;

    had seen rent growth over the preceding 10 years on par with Crystal City/Pentagon City and above the non-JBG SMITH submarkets, even with inventory growth far above that seen in non-JBG SMITH submarkets or in Crystal City/Pentagon City;

    absorbed new units over the preceding 10 years at a far greater rate than the non-JBG SMITH submarkets. Despite a slower pace of absorption over the 10 year time period, the Crystal City/Pentagon City market has seen a recent uptick in absorption through March 31, 2017 posting more units absorbed as a percentage of inventory than JBG SMITH or non-JBG SMITH submarkets; and

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    saw outsized inventory growth that helped to drive strong absorption performance.
Multifamily asking rents relative to market average   10-year multifamily asking rent growth comparison

GRAPHIC

 

GRAPHIC


 

Source: JLL Research   Source: JLL Research


10-year multifamily net absorption comparison

GRAPHIC


Source: JLL Research

              Concentrated Submarket Ownership.    Our assets are located primarily within attractive submarkets in the District of Columbia and in the most desirable, infill, Metro-served submarkets outside of Washington, DC. These include the Rosslyn-Ballston Corridor, Crystal City, Pentagon City and Reston in Virginia. In Maryland, the majority of our assets are concentrated in Bethesda, Silver Spring and the Rockville Pike Corridor. Through concentrating our investments in these key submarkets, we believe we achieve improved asset performance across all of our assets within a submarket as we apply our development, redevelopment and Placemaking skills that help enhance the overall attractiveness of the market to tenants and investors. In addition, this concentrated ownership allows us to create value in our operating and development portfolio by recognizing synergies in operating expenses in our portfolio, managing submarket supply through our near-term and future development pipelines, and fostering strong relationships with local jurisdictions that are key to navigating the entitlement process. Finally, our concentrated ownership provides us with greater access to new acquisition and development opportunities and the ability to unlock value not available to competitors lacking the same submarket scale.

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              Strong Management Team with Extensive Market Expertise and Interests Aligned with Shareholders.    We will be self-managed and led by JBG's executive management team, and will combine the best talent from each of Vornado / Charles E. Smith and JBG, providing us with one of the most seasoned and experienced management teams in the Washington, DC market. Our multi-generational leadership team has over 50 years of single-market focus in the Washington, DC metropolitan area. Our team has an intimate knowledge of the Washington, DC area real estate market and deep local relationships.

              Executive management of JBG SMITH will include W. Matthew Kelly (Chief Executive Officer), Robert Stewart (Executive Vice Chairman), David Paul (President and Chief Operating Officer), James Iker (Chief Investment Officer), Brian Coulter (Co-Chief Development Officer), and Kai Reynolds (Co-Chief Development Officer), who are all current managing partners or partners of JBG and have an average tenure of 18 years. These executives manage the JBG business today and have a longstanding track record in the Washington, DC market, in which JBG is considered the leading local sharpshooter. The senior management team of JBG SMITH will also benefit from the experience and expertise of Stephen W. Theriot (Chief Financial Officer), who served as Chief Financial Officer of Vornado from June 2013 to February 2017, and Patrick J. Tyrrell (Chief Administrative Officer), who is currently Vornado's Chief Operating Officer of its Washington, DC division. Our commercial leasing team will be led by David Ritchey (Executive Vice President) and will be supported by Jim Creedon, a 25-year veteran with Vornado / Charles E. Smith, and a team of 14 professionals from both JBG and Vornado / Charles E. Smith. Our board of trustees will consist of a majority of independent trustees. Steven Roth, Vornado's Chairman and CEO, will be Chairman of the board of trustees of JBG SMITH and Mitchell Schear, Vornado's President of the Washington, DC division, will also serve as a trustee of JBG SMITH. Michael Glosserman, W. Matthew Kelly and Robert Stewart, all current managing partners of JBG, will also serve as trustees of JBG SMITH.

              JBG SMITH's leadership will be meaningfully aligned with the interests of shareholders, with the focus on maximizing the value of JBG SMITH common shares. Our management team (excluding Michael Glosserman, who will be a member of our board of trustees) is expected to own approximately 5% of the economic interests in JBG SMITH, which represents the majority of their collective net worth, and our management team and board of trustees are expected to beneficially own or represent approximately 13% of the economic interests in JBG SMITH. The common limited partnership units that the JBG management team will receive in connection with the contribution of the JBG third-party asset management and real estate services business will be subject to certain vesting and transfer restrictions, with 50% vesting upon the closing of the combination and the other 50% vesting in equal monthly installments beginning on the first day of the 31st month after the combination and ending on the first day of the 60th month after the combination as long as the individual remains employed by JBG SMITH. Our management team will also be restricted from redeeming 50% of these units for JBG SMITH common shares for three years, and from redeeming the other 50% of these units for JBG SMITH common shares for five years, following the closing of the combination, further aligning their interests with those of our shareholders, except that up to 10% of an individual's total units may be sold, pledged or redeemed for JBG SMITH common shares during this period (subject to the transfer and redemption restrictions imposed on the units generally by the limited partnership agreement of JBG SMITH LP, which we refer to as the Partnership Agreement). See "The Separation and the Combination—The Combination—The MTA—Consideration" for more information about the vesting and transfer restrictions applicable to this portion of our management team's equity interests. See "The Separation and the Combination—The Combination—Combination Transactions" for information about the interests that certain principals of the JBG Parties who will become our executive officers will retain in certain JBG Funds following the combination.

              Superior Capital Allocation Skills.    We have a proven track record of managing our risk, cost of capital and capital sources by utilizing various capital allocation strategies across investment

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opportunities and market cycles. We believe that we have the ability and expertise to use not only our own balance sheet but also to deploy capital from strategic third-party investors through joint ventures. While we intend to use our own balance sheet as our primary source of capital, we may continue to partner with such third parties in order to selectively develop mixed-use projects or access other opportunities. We have longstanding relationships and a long track record of success with many third-party capital partners. We intend to selectively partner with such third parties in order to recognize value and recycle capital from stabilized assets into higher growth opportunities. In addition to multiple sources of equity capital, we have a variety of relationships with providers of debt capital that we intend to continue to utilize. We also use various capital allocation strategies to manage risks associated with our development activities. For example, we often use capital to option, rather than purchase, raw land positions until the property has received appropriate entitlements, allowing us to pre-lease these development projects prior to or soon after closing on the land. See "Business and Properties—Case Studies" beginning on page 155.

              The JBG management team is a proven steward of investor capital and has a long track record of creating value for investors through numerous economic cycles. In 1999, JBG created its first discretionary investment fund. As of March 31, 2017, JBG has raised approximately $3.7 billion of discretionary fund investment capital for nine real estate investment funds, and has invested in over 235 assets on behalf of these JBG Funds. As of May 31, 2017, the JBG Funds' investments are projected to generate a realized and unrealized aggregate gross leveraged IRR and equity multiple of 23.4% and 1.8x, respectively, while typically employing leverage of approximately 60% of gross asset value. (These gross leveraged IRRs and equity multiples are not necessarily indicative of the future performance of JBG SMITH, any asset in our portfolio or an investment in our common shares. These metrics are based in part on investments that the JBG Funds sold prior to the combination and thus are not part of our portfolio, and do not reflect the gross leveraged IRRs and equity multiples achieved by Vornado's Washington, DC business during the same time period. There is no assurance that our management will be able to replicate the performance achieved by the JBG Funds with respect to these investments, particularly given our use of lower leverage and a longer-term holding period.)

              Proven Platform for Value Creation with Investment, Development and Leasing Expertise.    The JBG management team, which will lead JBG SMITH following the combination, has an extensive track record of investing in, developing and repositioning assets since the first JBG Fund made its first investment in 2000, spanning multiple market cycles, shifting dynamics and a variety of asset classes:

    Invested in more than 235 assets, including over 19.5 million square feet of office, 14,750 multifamily units, over 4.0 million square feet of retail, 5,700 hotel rooms, 3,200 for-sale multifamily units and townhomes and 25.0 million square feet of estimated potential future development density.

    Sold more than 100 assets, including over 10.0 million square feet of office, 6,000 multifamily units, 2.0 million square feet of retail, 2,400 hotel rooms, 2,000 for-sale multifamily units and townhomes, and 2.0 million square feet of estimated potential future development density.

    Completed more than 80 development projects with an associated cost of over $5.0 billion, consisting of over 9.5 million square feet of office, 6,700 multifamily units, 1.5 million square feet of retail, 2,100 hotel rooms and 2,000 for-sale multifamily units and townhomes.

    Redeveloped or repositioned more than 40 assets including over 4.0 million square feet of office, 1,600 multifamily units, 232,000 square feet of retail and 3,900 hotel rooms.

              The JBG SMITH management team has a long history of opportunistic acquisitions and development as market cycles dictate, although it has not been immune to national and local economic trends that are unrelated to its management of assets. JBG SMITH has in-house mixed-use expertise and the retail leasing team to support it. Our dedicated mixed-use operating and development teams

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have a deep bench of product experts, and our in-house multidisciplinary expertise provides a competitive advantage in executing large-scale, mixed-use projects. In addition, our experience owning, operating and managing a range of asset classes gives us a unique capability to identify redevelopment and adaptive reuse opportunities where we can create value.

              In addition, JBG SMITH combines the leasing teams of the JBG management platform and Vornado / Charles E. Smith, which, collectively, over the three years ended March 31, 2017, averaged an annual leasing volume of approximately 3.0 million square feet of office space, 11,000 multifamily leases and approximately 710,000 square feet of retail space across our owned and third-party managed portfolios.

              Our senior management and our 16-person commercial leasing team has deep and longstanding relationships with key office tenants and broker representatives, which allows us to effectively lease-up vacant space, secure renewals of existing leases and identify tenants to pre-lease our development pipeline. We focus on establishing strong relationships with our tenants in order to understand their long-term business needs, which we believe enhances our ability to retain and expand quality tenants, facilitates our leasing efforts and maximizes cash flow from our assets. For example, our long-standing relationship with Corporate Executive Board as their previous landlord helped us to secure them as an anchor tenant for our approximately 530,000 square foot office tower now under construction in Rosslyn. Our research team tracks each major tenant lease expiration in the market in order to anticipate upcoming and future leasing opportunities. We have secured major leases with multiple GSA tenants over the past decade as a result of our deep understanding of the GSA lease process and our expertise in meeting the unique requirements of government tenants.

              Our senior management and our multifamily leasing and unit-pricing teams have strong visibility into pricing and leasing-pace dynamics in the markets in which we operate. This allows us to price, on a unit by unit basis, each of our multifamily assets in order to maximize revenue, lease up pace, and renewal conversion rate. Our visibility into market dynamics allows us to incorporate into our multifamily developments the key amenities and unit design features most sought after by tenants.

              In addition, our retail leasing team has strong and deep retailer relationships with key anchor tenants that enhance our Placemaking activities, including Whole Foods Market, Starbucks, Harris Teeter, Trader Joe's, and multiple other local, regional and national tenants such as Warby Parker and Bonobos. The significant size and attractive locations presented by our retail and development portfolio allow us to maintain and cultivate active relationships with major retailers by offering access to multiple locations that fit their needs, including the highly attractive but difficult to access emerging growth markets.

              Significant Development Pipeline to Drive Growth.    We believe that we control one of the largest development pipelines of any REIT generally and in the Washington, DC metropolitan area specifically and the largest pipeline of Metro-served sites based on potential development density. We believe our near-term and future development pipelines position us for significant future growth. We own five near-term development assets with an aggregate of over 1.3 million square feet (1.0 million square feet at our share). In addition, we own or control 44 future development assets with an estimated potential development density of over 22.1 million square feet (18.3 million square feet at our share). Similar to our operating assets and assets under construction, our near-term development and future development assets are located in what we believe are the most attractive submarkets and will have a meaningful multifamily focus, which we believe will result over time in our portfolio becoming more balanced between office and multifamily. We believe our large and well-located future development pipeline provides us an advantage over other market participants who do not already own development sites within these desirable submarkets and allows JBG SMITH to be well positioned for future growth.

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              Ability to Create Value through Placemaking.    One of our approaches to maximizing the value of our assets includes utilizing a series of complementary disciplines through a process that we call "Placemaking." Placemaking involves strategically mixing high-quality multifamily and commercial buildings with anchor, specialty and neighborhood retail in a high-density, thoughtfully planned and designed public space. This approach is facilitated by our extensive proprietary research platform and deep understanding of submarket dynamics.

              Through this process, we are able to drive synergies across varied uses and create unique, amenity-rich, walkable neighborhoods that are desirable and create significant tenant and investor demand. As part of this process, we build high-quality, distinctive and unique assets that allow the user experience to extend beyond street level into the building itself. As a result, we believe this approach leads to stronger office, multifamily and retail demand, leading to higher rents, stronger leasing velocity and, ultimately, greater asset values. We believe that our approach has helped mitigate the impact of new competitive supply on our projects and has allowed us to scale our success across neighborhoods.

              We plan to use this Placemaking process, among other initiatives, in Crystal City in order to create value over time. Given Crystal City's attractive attributes of its urban-infill location with close proximity to downtown Washington, DC, its access to Metro and other key transportation infrastructure and strong surrounding demographics, we see an opportunity to position Crystal City as a vibrant, amenity-rich destination that can offer a range of uses that will drive office, multifamily and retail demand over time. Moreover, given the critical mass we control in Crystal City, we believe the benefits of our Placemaking can have a significant impact on the submarket and the value of our assets.

              We have successfully developed a number of differentiated projects that achieved top-of-market rental rates and sales prices, while also attracting a diverse group of sought-after retailers as tenants. We believe our Placemaking efforts can benefit entire neighborhoods, creating value across a broad base of assets and accelerating the transformation of submarkets into desirable environments for tenants and residents. See "Business and Properties—Case Studies" beginning on page 155.

              Extensive Market Knowledge and Longstanding Relationships Drive Significant, Unique Deal Flow.    With over 50 years of experience in the Washington, DC metropolitan area, our team possesses a deep and detailed understanding of the market and the growth dynamics of the region. Since 2000, JBG has developed or acquired over 19.5 million square feet of office, 14,750 multifamily units, over 4.0 million square feet of retail, 5,700 hotel rooms, 3,200 for-sale multifamily units and townhomes and 25.0 million square feet of estimated potential future development density in the region, illustrating the expertise that we believe serves as a competitive advantage. The legacy of Vornado / Charles E. Smith is also significant based on its scale, financial strength and development track record, having developed over time almost the entire contributed portfolio of Vornado / Charles E. Smith assets. Our in-depth market knowledge and extensive network of longstanding relationships with a broad range of real estate owners, developers, brokers, lenders, general contractors, municipalities, local community organizations and other market participants has consistently provided us with access to an ongoing pipeline of attractive investment opportunities in our core submarkets that may not be available to our competitors. We believe that our reputation for performance and execution also provides us with a competitive advantage over other market participants. See "Business and Properties—Case Studies" beginning on page 155.

              Disciplined, Research-Based Approach.    We augment our deep and seasoned understanding of the Washington, DC market with a dedicated in-house research function focused on ensuring that our investment decisions are based on current and forecasted market fundamentals and trends in an effort to identify opportunities and mitigate risks. We regularly track changes in the market supply pipeline, construction costs, net absorption, vacancy rates, and rental rate growth in addition to demographic trends, job and population growth patterns, and other leading indicators to determine shifting trends in demand. We synthesize that data to identify value creating development, redevelopment and acquisition

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opportunities in existing and new high-growth submarkets. For example, the design, amenity packages, target unit mix, and other features of our multifamily development projects are influenced by a detailed research process. This includes surveys of existing and proposed competitive projects, tenant focus groups, and analysis of trends in tenant preference, both locally and in other urban markets nationally and internationally, to identify unmet or underserved segments of demand and maximize rent generating potential. Retail and office developments benefit from similar tailored analyses. Before commencing any new development, we evaluate the supply and demand landscape and other market fundamentals to determine whether proceeding or pausing is the right course of action.

              Well-Capitalized Balance Sheet to Support Growth.    We will have a well-capitalized balance sheet and access to a broad range of funding sources which we believe will allow us to execute our business plan. On a pro forma basis, JBG SMITH has approximately $2.2 billion aggregate principal amount of consolidated debt outstanding ($2.2 billion at our share) and our unconsolidated joint ventures had over $1.1 billion aggregate principal amount of debt outstanding ($380 million at our share), resulting in a total of approximately $2.6 billion aggregate principal amount of debt outstanding at our share. We will have a well-staggered debt maturity schedule over the next five years, particularly considering our existing as-of-right extension options. We will have significant liquidity upon the completion of the separation and combination with $511 million of cash on a consolidated basis and $17 million of cash at our share of unconsolidated joint ventures, and we are arranging a $1.4 billion credit facility under which we expect to have significant borrowing capacity.

              Successful Third-Party Asset Management and Real Estate Services Business.    Since 1999, JBG has served as the general partner and managing member of nine real estate investment funds for institutional investors and high net worth individuals with approximately $3.7 billion of discretionary fund investment capital and has invested in more than 235 assets on behalf of the JBG Funds. The JBG third-party asset management and real estate services platform provides fee-based real estate services to the JBG Funds and other JBG-affiliated entities as well as joint venture partners and third-party clients. Although a significant portion of the assets and interests in assets owned by certain of the JBG Funds were contributed in the combination, the JBG Funds retained certain assets that are not consistent with our long-term business strategy, which can generally be categorized as (i) condominium and townhome assets, (ii) hotels, (iii) assets likely to be sold in the near term, whether because they are under contract for sale, being marketed for sale or likely to be marketed for sale in the near term, (iv) assets located in markets that will not be core markets for JBG SMITH going forward or that are non-Metro-served, (v) noncontrolling joint venture interests and (vi) single-tenant leased General Services Administration assets that are encumbered with long-term, hyper-amortizing bond financing that is not consistent with the financing strategy of JBG SMITH. With respect to these funds and for most assets that we hold through joint ventures, we will continue to provide the same asset management, property management, construction management, leasing and other services that we provided prior to the combination. Following the closing of the combination, we do not intend to raise any future investment funds, and current funds will be managed and liquidated over time. We expect to continue to earn fees from these funds as they are wound down, as well as from any joint venture arrangements currently in place and any new joint venture arrangements entered into in the future. The JBG management team will continue to own direct equity co-investment and promote interests in the JBG Funds that are not being contributed to JBG SMITH. As the JBG Funds are wound down over time, these economic interests will decrease and be eliminated.

              In addition, Vornado contributed its third-party asset management and real estate services business which we believe is complementary to JBG's. JBG SMITH would have earned approximately $17.7 million and $78.7 million in combined pro forma revenue from such fees ($17.1 million and $78.7 million at our share) for the three months ended March 31, 2017 and the year ended December 31, 2016, respectively.

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              We expect that the fees we continue to earn in connection with providing such services will enhance our overall returns, provide additional scale and efficiency in our operating, development and acquisition businesses and generate capital which we can use to absorb overhead and other administrative costs of the platform. This scale provides competitive advantages, including market knowledge, buying power and operating efficiencies across all product types. We also believe that our existing relationships arising out of our third-party asset management and real estate services business will continue to provide potential capital and new investment opportunities. See "—Our Third-Party Asset Management and Real Estate Services Business."

Business and Growth Strategies

              Our primary business objectives are to maximize cash flow and generate strong risk-adjusted returns for our shareholders. We intend to pursue these objectives through the following business and growth strategies:

              Focus on High-Quality Mixed-Use Assets in Metro-Served Submarkets in the Washington, DC Metropolitan Area.    We intend to continue our longstanding strategy of owning and operating assets within urban-infill, Metro-served submarkets in the Washington, DC metropolitan area with high barriers to entry and key urban amenities, including being within walking distance of the Metro. These submarkets, which include the District of Columbia; Crystal City and Pentagon City, the Rosslyn-Ballston Corridor, Reston and Alexandria in Virginia; and Bethesda, Silver Spring and the Rockville Pike Corridor in Maryland, generally feature compelling economic and demographic attributes, as well as a premier transportation infrastructure that caters to the preferences of our office, multifamily and retail tenants. We believe these positive attributes will allow our assets located in these submarkets to outperform the Washington, DC metropolitan area as a whole.

              Realize Contractual Embedded Growth.    We believe there are substantial near-term growth opportunities embedded in our existing operating portfolio, many of which are contractual in nature, including the burn-off of free rent, contractual rent escalators in our non-GSA office and retail leases based on increases in CPI or a fixed percentage, and signed but not yet commenced leases. For the three months ended March 31, 2017, we granted free rent totaling approximately $14.8 million ($12.6 million at our share). As of March 31, 2017, we had 35 signed but not yet commenced leases totaling over $58.1 million ($43.1 million at our share) of annualized rent, 30 of which are estimated to commence by March 31, 2018 totaling $37.8 million of annualized rent ($32.9 million at our share).

              Drive Incremental Growth Through Lease-up of Our Assets.    We believe that we are well-positioned to achieve significant additional internal growth through lease-up of our current vacant space and our recently developed assets, given our leasing capabilities and the current strong tenant demand for high-quality space in our submarkets. For example, as of March 31, 2017 we had 12 operating office assets, totaling over 3.4 million square feet, which were on average 74.0% leased resulting in over 883,000 square feet available for lease. We also had one multifamily assets that was delivered during the preceding 12 months, with 699 units, which was 86.4% leased, resulting in 95 multifamily units available for lease.

              We have accomplished significant leasing across our owned and third-party managed portfolios for the three years ended March 31, 2017, averaging an annual leasing volume of approximately 3.0 million square feet of office space, 11,000 multifamily leases and approximately 710,000 square feet of retail space. Based on current market demand in our submarkets and the efforts of our dedicated in-house leasing teams, we expect to significantly increase our occupancy and revenue across our portfolio generally, and in our lease-up assets in particular. See "Business and Properties—Case Studies" beginning on page 155.

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              Deliver Our Assets Under Construction.    As of March 31, 2017, we owned eight high-quality assets under construction with an estimated incremental investment of $563.5 million ($517.5 million at our share). Our assets under construction consist of over 784,000 square feet (675,000 square feet at our share) of office space and 1,012 units (985 at our share) of multifamily, all of which are Metro-served. We believe these projects provide significant potential for value creation. As of March 31, 2017, over 496,000 square feet, or 63.3% (64.3% at our share), of our office assets under construction were pre-leased. See "Business and Properties—Case Studies" beginning on page 155.

              Develop Our Significant Near-Term and Future Development Pipelines.    We have significant pipelines of concentrated opportunities for value creation through ground-up development, with the goal of producing favorable risk-adjusted returns on our capital. We expect to be active in developing these opportunities while maintaining prudent leverage levels in order to create value for JBG SMITH.

    Robust Near-Term Development Pipeline.  In addition to the contribution anticipated from our assets under construction, as of March 31, 2017, we had a pipeline of five high-quality near-term development assets that we expect to provide substantial growth for our portfolio. The near-term development pipeline complements the meaningful multifamily focus of our assets under construction, with seven of the 13 assets in the combined pipeline being multifamily. Our near-term development pipeline is comprised of approximately 559,000 square feet of wholly owned office space, 755 multifamily units (464 units at our share) and over 65,000 square feet (6,500 square feet at our share) of retail in our other asset category, over 99% of which is Metro-served. The majority of these projects have substantially completed the entitlement process and are in a position to commence construction. In general, given current market expectations, we estimate that we will commence construction on near-term development multifamily assets within the 18 months following March 31, 2017, while commencement of construction on near-term development office assets will more likely depend on either pre-leasing or attractive submarket supply and demand dynamics. We believe these projects provide significant potential for value creation.

    Future Development Pipeline.  We also have a future development pipeline consisting of 44 assets. We estimate our future development pipeline can support over 22.1 million square feet of estimated potential development density (18.3 million square feet of estimated potential development density at our share), with over 98% of this potential development density being Metro-served based on our share of estimated potential development density, which will continue to support incremental development activity well into the future. We are actively advancing our design plans and, where not already obtained, vesting entitlements on our future development pipeline, which we believe affords us substantial optionality and value creation potential. Our future development assets are concentrated in what we believe are the most attractive submarkets and will have a meaningful multifamily focus, which we believe will result over time in our portfolio becoming more balanced between office and multifamily.

              Redevelop and Reposition Our Assets.    We intend to seek to increase occupancy and rents, improve tenant quality and enhance cash flow and value by completing the redevelopment and repositioning of a number of our assets, including the use of our Placemaking process. This approach is facilitated by our extensive proprietary research platform and deep understanding of submarket dynamics. The JBG SMITH management team believes there will be significant opportunities to apply our Placemaking process across the portfolio.

              In particular, we plan to use this Placemaking process, among other initiatives, in Crystal City in order to create value over time. Crystal City's attractive attributes of its urban-infill location with close proximity to downtown Washington, DC, its access to Metro and other key transportation infrastructure and strong surrounding demographics serve as an incredible foundation upon which to

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build the mix of uses and amenities that today's tenants demand. We believe that the application of our Placemaking approach will allow us to increase Crystal City's attractiveness to potential tenants and create significant value for our shareholders. In addition to Crystal City, we also believe our Placemaking process will benefit other submarkets, including the District of Columbia, Rosslyn and Bethesda.

              We evaluate our portfolio on an ongoing basis to identify value-creating redevelopment and renovation opportunities, including the addition of amenities, unit renovations and building and landscaping enhancements.

              See "Business and Properties—Case Studies" beginning on page 155.

              Pursue Attractive Acquisition Opportunities.    Since 2000, JBG has invested in more than 235 assets, including over 19.5 million square feet of office, 14,750 multifamily units, over 4.0 million square feet of retail, 5,700 hotel rooms, 3,200 for-sale multifamily units and townhomes and 25.0 million square feet of estimated potential future development density. Due to JBG's high volume of market activity, we are well known in the brokerage community and have deep relationships with the most active brokers and sellers in the Washington, DC market. In addition, we have developed a reputation for fair dealing, performance and creative deal-making, which makes us a preferred counterparty among market participants. We believe that our longstanding market relationships, reputation and expertise will continue to provide us with access to a pipeline of deals that are often compelling, off-market opportunities. We will continue to pursue acquisition opportunities with a disciplined approach and will place an emphasis on well-located, public transit-oriented assets in improving neighborhoods that have strong prospects for growth and where we believe that we can increase value through increasing occupancy and rental rates, re-marketing tenant space, enhancing public spaces, employing Placemaking strategies and improving building management. See "Business and Properties—Case Studies" beginning on page 155.

The Separation

      Background

              Since 2013, the management and board of trustees of Vornado have been considering the merits of alternative strategies involving Vornado's Washington, DC metropolitan area business, including a potential tax-free spin-off into an independent publicly traded company. Ultimately, management and the board of trustees decided that the Washington, DC business and Vornado's New York City-focused office and high street retail business would perform better and be better positioned to grow, and would receive a better combined valuation in the marketplace, if they were separated, which would allow for the delivery of enhanced value to Vornado shareholders.

              In August, 2013, Vornado management began discussions with the management of the JBG Parties regarding a potential combination of Vornado's Washington, DC metropolitan area business with The JBG Companies and certain Washington, DC assets owned by the JBG Parties. Over the course of the following year and a half, Vornado and the JBG Parties conducted due diligence on each other (including with respect to their respective real estate portfolios) and negotiated a non-binding term sheet with respect to the potential combination.

              In April 2014, while discussions with the JBG Parties continued, Vornado announced that, consistent with Vornado's plan to become a highly focused, office and high street retail REIT, its board of trustees had approved a plan to spin off Vornado's shopping center business into Urban Edge Properties, a new publicly traded REIT. Over the course of 2014, Vornado management worked with its financial and legal advisors to effectuate the separation of Urban Edge Properties from Vornado's other businesses.

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              In January of 2015, the negotiations between Vornado and the JBG Parties concluded without the execution of the term sheet or any definitive agreement with respect to the potential combination. On January 15, 2015, Vornado completed the spin-off of Urban Edge Properties from Vornado's other businesses.

              In late 2015, Vornado's management and board of trustees again began to review strategic alternatives with respect to Vornado's Washington, DC business, including the possibility of a tax-free spin-off. In June 2016, Vornado's management, in consultation with its financial advisors, determined that a tax-free spin-off of the Washington, DC business was in the best interests of Vornado and would be the best way to deliver value to shareholders, and directed Vornado's legal and financial advisors to begin preparations for implementing the transaction.

              On August 22, 2016, Steven Roth and Michael Franco of Vornado resumed discussions with W. Matthew Kelly and Michael Glosserman of JBG regarding the possible combination of Vornado's Washington, DC business with that of JBG. Discussions continued over the course of the following week, and the parties exchanged drafts of a non-binding term sheet with respect to the potential combination shortly thereafter.

              During the month of September 2016, Vornado and JBG performed in-depth valuation analyses of each other's businesses, continued to negotiate the terms of the potential separation and combination, and exchanged several drafts of the non-binding term sheet. Members of the respective management of Vornado and JBG, and their respective legal and financial advisors, participated in frequent calls and meetings regarding the principal terms of the transaction. On September 30, 2016, Vornado and JBG agreed with respect to such principal terms and directed their respective legal and financial advisors to draft the agreements necessary to memorialize the agreed terms and to conduct due diligence review of the assets to be included in the separation and combination.

              On October 6, 2016, the Vornado board of trustees met to discuss the potential transaction. At the meeting, the board of trustees indicated its support for management continuing negotiations, subject to the board of trustees' final approval of the definitive agreements prior to their execution. Over the course of October, 2016, Vornado and JBG exchanged and negotiated drafts of the transaction agreements setting forth the terms of the separation and the combination, and continued to perform due diligence on the assets to be included in the transaction. Vornado and JBG continued to negotiate with respect to the relative equity values of the assets to be contributed by each of them and the consideration to be received in exchange therefor.

              On October 31, 2016, the Vornado board of trustees met and approved the proposed transaction and the MTA. On October 31, 2016, Vornado announced that Vornado and VRLP had entered into the MTA with the JBG Parties, JBG SMITH and JBG SMITH LP, pursuant to which Vornado intends to separate the Vornado Included Assets from Vornado's other businesses and combine them with the JBG Included Assets. JBG SMITH will include Vornado's Washington, DC segment.

      Structure and Formation of JBG SMITH

              The separation will be effectuated by means of a pro rata distribution by Vornado to its common shareholders of all outstanding JBG SMITH common shares. JBG SMITH was formed for the purpose of receiving, via contribution from Vornado, all of the assets and liabilities of Vornado's Washington, DC segment, and combining Vornado's Washington, DC segment (which operates as Vornado / Charles E. Smith) and the management business and certain Washington, DC assets of JBG. Immediately prior to such distribution by Vornado, VRLP will distribute all outstanding JBG SMITH LP common limited partnership units on a pro rata basis to holders of VRLP's common limited partnership units, consisting of Vornado and the other common limited partners of VRLP. Following such distribution by VRLP and prior to such distribution by Vornado, Vornado will contribute to JBG SMITH all of the common limited partnership units of JBG SMITH LP it receives in the distribution by VRLP in exchange for JBG SMITH common shares. On            , the board of

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trustees of Vornado declared the distribution of all JBG SMITH common shares on the basis of one JBG SMITH common share for every two Vornado common shares held of record as of the close of business on the record date. On the same date, VRLP declared the distribution of all of the outstanding JBG SMITH LP common limited partnership units to Vornado and the other holders of common limited partnership units of VRLP on the basis of one JBG SMITH LP common limited partnership unit for every two common limited partnership units of VRLP held of record as of the close of business on the record date. Following the distribution by VRLP, the contribution by Vornado to JBG SMITH of JBG SMITH LP common limited partnership units and the distribution by Vornado, Vornado and JBG SMITH will be two independent, publicly held companies.

              Prior to or concurrently with the separation of the Washington, DC segment from Vornado's other businesses and the distribution by Vornado of JBG SMITH common shares, Vornado will engage in certain restructuring transactions that are designed to consolidate the ownership of the Vornado Included Assets into JBG SMITH, facilitate the separation and distribution by Vornado and provide us with our initial capital.

              In connection with the separation and distribution of JBG SMITH common shares by Vornado, the following transactions have occurred or are expected to occur concurrently with or prior to completion of the separation and distribution by Vornado:

    JBG SMITH was formed as a Maryland real estate investment trust on October 27, 2016.

    Our operating partnership, which we refer to as JBG SMITH LP, was formed as a Delaware limited partnership on October 28, 2016.

    Pursuant to the terms of the MTA and the Separation and Distribution Agreement (the "Separation Agreement"), VRLP will cause the Vornado Included Assets, and the Vornado Included Entities that own the Vornado Included Assets, to be contributed or otherwise transferred to JBG SMITH LP in exchange for 100% of its outstanding common limited partnership units.

    In connection with the contribution or other transfer of assets described above, it is expected that JBG SMITH or certain entities that will be our subsidiaries after the separation will assume a certain amount of existing secured property-level indebtedness related to certain of the Vornado Included Properties.

    To provide additional liquidity following the separation, we are arranging a credit facility under which we expect to have significant borrowing capacity.

    Certain of VRLP's Washington, DC segment employees will become employees of JBG SMITH.

    Pursuant to the MTA and the Separation Agreement, VRLP will distribute 100% of the outstanding JBG SMITH LP common limited partnership units to Vornado and the other common limited partners of VRLP pro rata with respect to their ownership of common limited partnership units of VRLP as of the record date. Vornado and each of the other common limited partners of VRLP will be entitled to receive one JBG SMITH LP common limited partnership unit for every two common limited partnership units of VRLP held as of the close of business on the record date.

    Pursuant to the MTA and the Separation Agreement, Vornado will contribute all of its JBG SMITH LP common limited partnership units to JBG SMITH in exchange for additional JBG SMITH common shares.

    Pursuant to the MTA and the Separation Agreement, Vornado will distribute all of our outstanding common shares to Vornado common shareholders as of the record date on a pro rata basis. Each Vornado common shareholder will be entitled to receive one JBG SMITH common share for every two Vornado common shares held by such shareholder as of the record date.

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    In addition to the MTA and the Separation Agreement, JBG SMITH will enter into a Transition Services Agreement, a Tax Matters Agreement, an Employee Matters Agreement, the Cleaning Services Agreements, and a Management Agreement (as defined below) with Vornado.

              In general, we intend to own our assets and conduct substantially all of our business through our operating partnership and its subsidiaries. The following diagram depicts our expected organizational structure upon the completion of the separation and distribution by Vornado and prior to the combination.

GRAPHIC

      Our Post-Separation Relationship with Vornado

              JBG SMITH will enter into the Separation Agreement with Vornado. In addition, JBG SMITH will enter into various other agreements to effect the separation and provide a framework for our relationship with Vornado after the separation, such as the Transition Services Agreement, a tax matters agreement (the "Tax Matters Agreement"), an employee matters agreement (the "Employee Matters Agreement"), certain cleaning services agreements with a subsidiary of Vornado with respect to the JBG Included Properties and Vornado Included Properties (the "Cleaning Services Agreements"), and a management agreement (the "Management Agreement"). These agreements will provide for the allocation between JBG SMITH and Vornado of Vornado's assets, liabilities and obligations (including its assets, employment and benefits liabilities, and tax-related assets and liabilities) attributable to periods prior to, at and after our separation from Vornado and will govern certain relationships between JBG SMITH and Vornado after the separation.

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              JBG SMITH and JBG SMITH LP will be responsible for all bona fide third-party expenses in connection with the separation and distributions by each of the Vornado Parties, the JBG Parties, JBG SMITH and JBG SMITH LP, whether before or after the distribution date, other than certain consent expenses, financial advisor expenses, and certain costs, up to a specified cap, incurred in connection with the prosecution or settlement of any claim under certain tenants' rights statutes in Washington, DC and Montgomery County, Maryland.

              JBG SMITH and Vornado will enter into a Transition Services Agreement prior to the distribution pursuant to which Vornado and its subsidiaries will provide various corporate support services to JBG SMITH. The services to be provided to JBG SMITH will initially include information technology, financial reporting and SEC compliance, and possibly other matters. The costs of the services to be provided to JBG SMITH will be based on fully burdened cost and are expected to diminish over time as JBG SMITH fills vacant positions and builds its own infrastructure. We believe that the terms are comparable to those that would have been negotiated on an arm's-length basis. In addition, pursuant to the terms of the MTA, following the consummation of the separation and the combination, from time to time, JBG SMITH may provide property management, asset management, leasing brokerage and other similar services with respect to any Vornado real property asset that is located in the Washington, DC metropolitan area that is excluded from the separation and the combination (including any such Vornado Included Asset that is designated as a Kickout Interest pursuant to the MTA). However, JBG SMITH will not provide any services that, as of the date of the combination, are provided to such property by a third party that is not an affiliate of Vornado. Such services will be provided pursuant to the Management Agreement, which will be entered into upon the terms specified in the MTA and upon such other reasonable and customary terms as we and Vornado may agree in good faith. The aggregate annual amount of fees we expect to receive pursuant to the Management Agreement is $65,000.

              For additional information regarding the Separation Agreement and other transaction agreements, please refer to the sections entitled "Risk Factors—Risks Related to the Separation and the Combination" and "Certain Relationships and Related Person Transactions."

The Combination

              At 12:01 a.m. on the business day following the separation, the JBG Parties will contribute to JBG SMITH the JBG Included Assets, which consist of a portfolio of assets in the Washington, DC metropolitan area consisting of (i) 30 operating assets comprised of 19 office assets totaling approximately 3.6 million square feet (2.3 million square feet at JBG's share), nine multifamily assets with 2,883 units (1,099 units at JBG's share) and two other assets totaling approximately 490,000 square feet (73,000 square feet at JBG's share); (ii) eight office and multifamily assets under construction totaling over 1.6 million square feet (1.5 million square feet at JBG's share); (iii) five near-term development office and multifamily assets totaling over 1.3 million estimated square feet (1.0 million square feet at JBG's share) and (iv) 26 future development assets totaling over 11.7 million square feet (8.5 million square feet at JBG's share) of estimated potential development density in exchange for newly issued JBG SMITH common shares or newly issued common limited partnership units of JBG SMITH LP (or, in certain circumstances, cash). In addition, JBG will contribute its management business to JBG SMITH through the merger of JBG/Operating Partners, L.P. (which we refer to as JBG Operating Partners) with and into a subsidiary of JBG SMITH LP and the contribution of all of the assets of JBG Properties to JBG SMITH LP in exchange for newly issued common limited partnership units of JBG SMITH LP, as well as the contribution of certain managing member interests in certain entities (the "JBG Included Entities") owning the JBG Included Properties held by certain affiliates (the "JBG Managing Member Entities") of the JBG Management Entities.

              Immediately following the combination, in total and taking into account the indirect interests in JBG SMITH's assets that are held by the limited partners of JBG SMITH LP, the economic interests in JBG SMITH are expected to be owned approximately 73% by Vornado common shareholders and

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holders of VRLP common limited partnership units as of the record date, 21% by JBG investors as of the date of the combination, and 6% by current JBG management, which percentages are subject to change pursuant to certain closing adjustments set forth in the MTA. The economic interests in JBG SMITH that will be owned by JBG investors and current JBG management will consist of the JBG SMITH common shares and JBG SMITH LP common limited partnership units issued upon the completion of the combination in a private placement satisfying the requirements of Regulation D. At such time, JBG SMITH's common shares are expected to be owned approximately 80% by Vornado common shareholders as of the record date and approximately 20% by JBG investors and current JBG management. In addition, holders of VRLP common limited partnership units as of the record date are expected to own approximately 4% of the common limited partnership units of JBG SMITH LP, JBG investors as of the date of the combination are expected to own approximately 10% of the common limited partnership units of JBG SMITH LP, and JBG SMITH is expected to own the remaining 86%.

      Combination Steps and Key Terms and Conditions of the MTA

      Combination Steps

              In connection with the combination, the following transactions have occurred or are expected to occur concurrently with or prior to completion of the combination:

    The separation and distribution will be completed, as described above.

    Prior to the combination, each JBG Contributing Fund will engage in a restructuring through a series of steps pursuant to which, among other things, the JBG Included Assets of such JBG Contributing Funds will be transferred to a newly formed entity (each, a "Transferred LLC" and, collectively, the "Transferred LLCs") to be owned directly or indirectly by the members of such JBG Contributing Fund.

    In the combination, the JBG Included Assets owned by the Transferred LLCs will be contributed to JBG SMITH LP or its subsidiaries through a series of contribution and merger transactions (the "JBG Asset Contributions").

    In the combination, JBG Operating Partners will merge with and into a wholly owned subsidiary of JBG SMITH LP, with the partners of JBG Operating Partners receiving newly issued common limited partnership units of JBG SMITH LP (the "JBG OP Merger").

    In the combination, JBG Properties will transfer all of its assets to JBG SMITH LP, in exchange for newly issued common limited partnership units of JBG SMITH LP (the "JBG Properties Contribution").

    In the combination, each JBG Managing Member Entity will transfer and contribute certain non-economic managing member interests it has in any JBG Included Entity to a newly formed wholly owned subsidiary of JBG SMITH LP (the "JBG Managing Member Interest Contribution").

    In the combination, in consideration of JBG's contribution of the JBG Included Assets to JBG SMITH, the applicable JBG entity or certain direct and indirect owners of such JBG entity (which we refer to as the JBG designees) will receive from JBG SMITH and JBG SMITH LP, in a private placement satisfying the requirements of Regulation D, a number of JBG SMITH common shares and/or common limited partnership units (or, in certain circumstances, cash).

    JBG's employees, with limited exceptions, will become employees of JBG SMITH.

    In connection with the contribution or other transfer of assets described above, it is expected that JBG SMITH or certain entities that will be our subsidiaries after the combination will assume a certain amount of existing secured property-level indebtedness related to the JBG Included Properties (in addition to the secured property-level indebtedness related to the Vornado Included Properties assumed in connection with the separation). On a pro forma

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      basis, JBG SMITH has approximately $2.2 billion aggregate principal amount of consolidated debt outstanding ($2.2 billion at our share) and our unconsolidated joint ventures had over $1.1 billion aggregate principal amount of debt outstanding ($380 million at our share), resulting in a total of approximately $2.6 billion aggregate principal amount of debt outstanding at our share.

              Following the combination, certain JBG Funds will continue to own assets that will not be contributed to JBG SMITH LP pursuant to the MTA (the "JBG Excluded Assets") and the principals of the JBG Parties, including the principals who will become executive officers of JBG SMITH at the completion of the combination, will retain interests in these JBG Funds, which entitle them to "promote" payments with respect to the JBG Excluded Assets and certain joint venture interests if certain return thresholds are achieved. Following the combination, the expected economic interests in JBG SMITH held by such principals who are also executive officers of JBG SMITH will be significantly greater than their expected economic interests in the JBG Funds. The JBG Excluded Assets are largely not in direct competition with JBG SMITH since they are not consistent with JBG SMITH's long-term business strategy, either because they are asset types that JBG SMITH does not intend to focus on going forward or because they are located in markets that will not be core markets for JBG SMITH going forward or that are not Metro-served. Furthermore, the JBG Excluded Assets are expected to be sold over time as their respective business plans are completed, eliminating any actual or potential conflicts of interest. The JBG Excluded Assets can generally be categorized as (i) condominium and townhome assets, (ii) hotels, (iii) assets likely to be sold in the near term, whether because they are under contract for sale, being marketed for sale or likely to be marketed for sale in the near term, (iv) assets located in markets that will not be core markets for JBG SMITH going forward or that are non-Metro-served, (v) noncontrolling joint venture interests and (vi) single-tenant leased General Services Administration assets that are encumbered with long-term, hyper-amortizing bond financing that is not consistent with the financing strategy of JBG SMITH.

      The MTA

              The MTA provides for the transactions that will comprise the separation and the combination and sets out the rights and obligations of Vornado, VRLP, JBG SMITH, JBG SMITH LP and the JBG Parties in connection therewith. A summary of the principal terms of the MTA is set forth below. This summary does not purport to be complete, and is qualified in its entirety by reference to the full text of the MTA, which will be filed as Exhibit 2.1 to the registration statement on Form 10 of which this information statement forms a part and is incorporated herein by reference. See "The Separation and the Combination—The Combination—The MTA" for more information.

      The Separation and the Combination

              The MTA provides for the separation to take place as described above under "—The Separation," and for the combination to take place through a series of contributions and mergers between the JBG Parties and JBG SMITH or its subsidiaries, as described above.

      Consideration

              In consideration of JBG's contribution of the JBG Included Assets to JBG SMITH, the applicable JBG entity or certain direct and indirect owners of such JBG entity (which we refer to as the JBG designees) will receive from JBG SMITH and JBG SMITH LP, in a private placement satisfying the requirements of Regulation D, a number of JBG SMITH common shares and/or common limited partnership units (or, in certain circumstances, cash) to be determined based upon the relative equity values of the Vornado Included Assets and the JBG Included Assets. The JBG Parties will be entitled, in the aggregate, to receive a total number of JBG SMITH common shares and/or JBG SMITH LP common limited partnership units (which we refer to as equity consideration) equal to the product of (x) a fraction, the numerator of which is the aggregate of the equity values of the JBG Parties' JBG Included Assets (as determined in accordance with the MTA) and of the total amount of

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cash contributed by the JBG Parties to JBG SMITH upon the consummation of the combination, and the denominator of which is the aggregate of the equity values of the Vornado Included Assets (as determined in accordance with the MTA) and of the total amount of cash contributed by Vornado to JBG SMITH upon the separation, multiplied by (y) the sum of (i) the number of JBG SMITH LP common limited partnership units received by holders of VRLP common limited partnership units (other than Vornado) in the distribution by VRLP plus (ii) the number of JBG SMITH common shares received by shareholders of Vornado in the distribution by Vornado. With respect to the JBG Asset Contributions, the applicable JBG entity (or its JBG designees) will be entitled to receive JBG SMITH common shares and/or JBG SMITH LP common limited partnership units in accordance with the elections of such JBG designees. With respect to the JBG OP Merger and the JBG Properties Contribution, the applicable JBG entity (or its JBG designees) will be entitled to receive only JBG SMITH LP common limited partnership units. With respect to the JBG Managing Member Interest Contribution, the applicable JBG Managing Member Entity will receive no consideration.

              To the extent that Vornado and VRLP reasonably determine with respect to any JBG entity or JBG designee that the issuance of JBG SMITH common shares or JBG SMITH LP common limited partnership units to such JBG entity or JBG designee cannot be effected in a private placement satisfying the requirements of Regulation D, or if the JBG Parties do not timely furnish to the Vornado Parties a satisfactory investor questionnaire from any JBG entity or JBG designee, JBG SMITH and JBG SMITH LP shall pay the consideration owed to such JBG entity or JBG designee in the form of cash (which we refer to as cash consideration) rather than equity consideration. Any such cash consideration shall be equal to the product of (x) the number of JBG SMITH common shares and/or JBG SMITH LP common limited partnership units that would otherwise have been payable to such JBG entity or JBG designee multiplied by (y) the average of the high and the low trading prices of JBG SMITH common shares on the New York Stock Exchange, which we refer to as the NYSE, on the date of the completion of the combination. If the total amount of cash consideration exceeds $5 million, then unless Vornado and VRLP agree that the excess may be drawn from JBG SMITH's credit facility, then the revaluation time (as defined below under "—Kickout Interests") shall be extended until 11:59 p.m. on the last day of the calendar month in which Vornado and JBG first determine that the total cash consideration will be equal to or less than $5 million, provided that the revaluation time may not be extended as a result of an excess of cash consideration beyond April 30, 2017. Because the closing of the combination will take place on the fifteenth day of the calendar month immediately following the month in which the revaluation time occurs, any postponement of the revaluation time due to an excess of cash consideration will result in a postponement of the closing.

              The common limited partnership units of JBG SMITH LP issued in connection with the JBG OP Merger and the JBG Properties Contribution to individuals employed by JBG Properties and who will continue as employees of JBG SMITH and to Michael Glosserman (as a member of the board of trustees of JBG SMITH) will be subject to certain vesting and/or transfer restrictions. 50% of such units will be fully vested and not subject to forfeiture at the consummation of the combination, with the remaining 50% vesting in equal monthly installments over a 30-month period beginning on the first day of the 31st month after the combination and ending on the first day of the 60th month after the combination as long as the individual remains employed by JBG SMITH (subject to accelerated vesting upon the occurrence of certain specified events as described in "The Separation and the Combination—The Combination—The MTA—Consideration"). The units that are fully vested at the time of issuance will not be transferable or redeemable, including for JBG SMITH common shares or otherwise, for three years following the combination (subject to early termination of the transfer restrictions upon the occurrence of certain specified events as described in "The Separation and the Combination—The Combination—The MTA—Consideration"), except that up to 10% of an individual's total units may be sold, pledged or redeemed for JBG SMITH common shares during this period (subject to the transfer and redemption restrictions imposed on the units generally by the Partnership Agreement). The units that vest after issuance will be subject to the foregoing restrictions

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on transfer and redemption for five years following the combination (subject to early termination of the transfer restrictions upon the occurrence of certain specified events as described in "The Separation and the Combination—The Combination—The MTA—Consideration"). The units issued to JBG employees who are retiring in connection with, or are expected to retire within a year after, the combination will not be subject to transfer or redemption restrictions other than those applicable to such units generally, but may be subject to vesting and forfeiture, as set forth in the applicable Unit Issuance Agreement pursuant to which such units are issued.

      Kickout Interests

              The contribution of certain assets to JBG SMITH LP in connection with the separation and the combination will require the consent of certain third parties, including joint venture partners, lenders and ground lessors of the Vornado Parties and the JBG Parties or their respective subsidiaries. The MTA requires the Vornado Parties and the JBG Parties to seek to obtain such consents, and with respect to any required debt consent, to seek to prepay or refinance the applicable loan if such consent is not received within 120 days following the date of the MTA. If (i) a consent (or, with respect to debt consents, a prepayment or refinancing in a manner that does not restrict the separation and the combination and meets certain other terms set forth in the MTA) is not obtained with respect to certain specified assets prior to the date that is 20 days before the anticipated completion of the combination, or (ii) certain entities owned by the Vornado Parties and/or by the JBG Parties have not completed certain specified actions prior to the date that is 20 days before the anticipated completion of the combination, such assets will not be contributed or transferred as part of the separation and the combination (we refer to each such asset or entity that is excluded for the above-referenced reasons or pursuant to another provision of the MTA as a "Kickout Interest"). In addition, at any time on or before the revaluation time (as defined below), the Vornado Parties have the right to elect to designate one JBG Included Property as being excluded from the Included Assets, and such asset will not be transferred at the time of the separation and the combination. The "revaluation time" will be 11:59 p.m. Eastern time on the last day of the calendar month in which all of the conditions to consummation of the separation and the combination have been satisfied or waived (unless such conditions are satisfied or waived in the last five days of a calendar month, in which case the revaluation time will be 11:59 p.m. Eastern time on the last day of the following calendar month).

              Until the later of 60 days following the completion of the combination and December 29, 2017 (which we refer to as the outside date), with respect to certain Kickout Interests, the MTA obligates the Vornado Parties and the JBG Parties to cooperate in good faith and use commercially reasonable efforts to obtain the necessary consents required to transfer such Kickout Interests after the completion of the combination. For any such Kickout Interest for which such consent is obtained within such period, such Kickout Interest will be contributed to JBG SMITH LP by the applicable Vornado Party or JBG Party in exchange for JBG SMITH LP common limited partnership units or JBG SMITH common shares, as applicable.

      JBG SMITH Board of Trustees and Officers

              Immediately after the separation and distribution by Vornado, (i) the number of trustees of JBG SMITH shall increase to 12, and the board of trustees shall be comprised of six individuals designated by the JBG Parties (such persons, and any replacement designees selected, the "JBG Board Designees") and six individuals designated by the Vornado Parties (such persons, and any replacement designees selected, the "Vornado Board Designees") and (ii) the board of trustees of JBG SMITH shall (a) appoint Steven Roth as Chairman of the board of trustees of JBG SMITH and Robert Stewart as Executive Vice Chairman of the board of trustees of JBG SMITH and (b) appoint an equal number of JBG Board Designees and Vornado Board Designees to the Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee (with the JBG Board Designees and the Vornado Board Designees to serve on such committees being selected at the direction of the JBG Parties and Vornado, respectively). In addition to Mr. Roth as Chairman, Mitchell Schear, the

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current President of Vornado / Charles E. Smith, will serve as a trustee and be a Vornado Board Designee. In addition to Mr. Stewart as Vice Chairman, W. Matthew Kelly and Michael Glosserman, who are currently Managing Partners of JBG, will serve as trustees and be JBG Board Designees.

              For a period of two years following the consummation of the separation and the combination, if any Vornado Board Designee or JBG Board Designee is unable or unwilling to serve or is otherwise no longer serving as a member of the board of trustees of JBG SMITH, then the remaining Vornado Board Designees or JBG Board Designees, respectively, may designate a replacement individual reasonably satisfactory to the Corporate Governance and Nominating Committee of the board of trustees of JBG SMITH (which we refer to as a replacement designee) and the board of trustees of JBG SMITH shall promptly appoint such replacement designee to fill the vacancy created thereby. In addition, in connection with the first annual meeting following the consummation of the separation and the combination, the board of trustees of JBG SMITH, subject to the reasonable exercise of its duties, will take all such actions as may be necessary to nominate the Vornado Board Designees and the JBG Board Designees (including their respective replacement designees, if any) for election by JBG SMITH's shareholders and will use no less rigorous efforts to cause the election of such Vornado Board Designees and JBG Board Designees than the manner in which JBG SMITH supports other nominees for the board of trustees of JBG SMITH.

              JBG SMITH will be led by the current executive management team of the JBG Management Entities. W. Matthew Kelly will be named Chief Executive Officer, David Paul will be named President and Chief Operating Officer, James Iker will be named Chief Investment Officer and Brian Coulter and Kai Reynolds will be named Co-Chief Development Officers. In addition, from Vornado, Stephen W. Theriot will be Chief Financial Officer and Patrick J. Tyrrell will be Chief Administrative Officer.

      Conditions to Consummation of the Separation and the Combination

              Consummation of the separation and the combination is subject to certain mutual conditions of the parties, including: (i) that the JBG SMITH common shares to be distributed shall have been accepted for listing on the NYSE, subject to official notice of distribution; (ii) that no law shall have been enacted or promulgated by any governmental entity of competent jurisdiction which prohibits or makes illegal the consummation of the separation, the distributions by Vornado and VRLP or the combination; (iii) that any required waiting periods under any provision of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and any other federal or state antitrust law shall have expired, been waived or been terminated; (iv) the consummation of the separation and the distribution by Vornado in all material respects in accordance with the Separation Agreement; (v) that the SEC shall have declared effective the registration statement on Form 10 of which this information statement forms a part, and such registration statement shall not be subject to any stop order or proceeding seeking a stop order; and (vi) that no more than 40% of the JBG Included Properties and no more than 20% of the Vornado Included Properties (each percentage based on the initial asset values agreed to by the parties in the MTA) shall be designated as "Kickout Interests" (and therefore prevented from being transferred to JBG SMITH) pursuant to the terms of the MTA. In addition, the combination will not take place before the outside date unless the parties otherwise agree or, assuming the satisfaction or waiver of all other conditions to the consummation of the separation and the combination (other than those that by their terms are to be satisfied at the consummation of the separation and the combination, but subject to the satisfaction or waiver of such conditions), one of the parties exercises its right to cause the consummation of the separation and the combination to take place as follows (with each of the following percentages based on the initial asset values agreed to by the parties in the MTA): (i) the Vornado Parties may set the revaluation time to allow the date of the combination to be on or after March 15, 2017 once (a) no more than 10% of the Vornado Included Properties shall be Kickout Interests and (b) no more than 20% of the JBG Included Properties shall be Kickout Interests; (ii) the Vornado Parties may set the revaluation time to allow the date of the combination to be after

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May 1, 2017 once (a) no more than 15% of the Vornado Included Properties shall be Kickout Interests and (b) no more than 30% of the JBG Included Properties shall be Kickout Interests; (iii) the JBG Parties may set the revaluation time to allow the date of the combination to be after July 1, 2017 once (a) no more than 10% of the Vornado Included Properties shall be Kickout Interests, (b) no more than 20% of the JBG Included Properties shall be Kickout Interests and (c) no more than 20% of a specified subset of JBG Included Properties shall be Kickout Interests; and (iv) the JBG Parties may set the revaluation time to allow the date of the combination to be on or after March 15, 2017 once no Vornado Included Properties or Vornado Included Properties are deemed Kickout Interests.

              In addition, the Vornado Parties' obligation to consummate the separation and the combination is subject to certain other conditions, including, among others, (i) the accuracy of the JBG Parties' representations and warranties and the JBG Parties' compliance with their covenants and agreements contained in the MTA, subject to customary materiality and material adverse effect qualifiers; (ii) the receipt by Vornado and JBG SMITH of an opinion of Hogan Lovells US LLP, REIT counsel to JBG, with respect to each REIT that is being contributed to JBG SMITH by JBG in the combination, on which Sullivan & Cromwell LLP, REIT counsel to Vornado, and, following the combination, JBG SMITH and its REIT counsel, shall be entitled to rely, to the effect that each such REIT has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"); (iii) the receipt by Vornado and JBG SMITH of an opinion of Sullivan & Cromwell LLP to the effect that JBG SMITH will be organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code and that its proposed method of operation will enable it to continue to meet such requirements; (iv) the receipt by Vornado of an opinion of Sullivan & Cromwell LLP, satisfactory to the Vornado board of trustees, to the effect that the distribution by Vornado, together with certain related transactions, will qualify as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Code; (v) that certain key individuals shall have remained employed by the JBG Parties through the date of the consummation of the combination, and shall not have repudiated their employment agreements entered into with JBG SMITH prior to the consummation of the combination; and (vi) that the JBG Parties have obtained all of the licenses, approvals, permits and registrations necessary to operate the management business of the JBG Parties following the consummation of the combination, subject to certain exceptions.

              The JBG Parties' obligation to consummate the separation and the combination is also subject to certain other conditions, including, among others, (i) the accuracy of the Vornado Parties' representations and warranties and the Vornado Parties' compliance with their covenants and agreements contained in the MTA, subject to customary materiality and material adverse effect qualifiers; (ii) the receipt by JBG and JBG SMITH of a written opinion of Sullivan & Cromwell LLP, REIT counsel to Vornado, with respect to Vornado and to each REIT that is being contributed by VRLP to JBG SMITH LP, on which Hogan Lovells US LLP, REIT counsel to JBG, and, following the combination, JBG SMITH and its REIT counsel, shall be entitled to rely, to the effect that Vornado and each such REIT have been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code; (iii) the receipt by JBG and JBG SMITH of a written opinion of Hogan Lovells US LLP, REIT counsel to JBG, to the effect that JBG SMITH will be organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code and its proposed method of operation will enable it to continue to meet such requirements; and (iv) that each current member of JBG SMITH's board of trustees who is not a JBG Board Designee or a Vornado Board Designee shall have delivered an irrevocable written resignation from the board of trustees of JBG SMITH or shall have otherwise ceased to be a member of the board of trustees of JBG SMITH.

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      Termination

              The MTA may be terminated by either Vornado or the JBG Parties (i) if the consummation of the combination has not occurred on or before the outside date; (ii) if the separation and the combination are permanently enjoined or otherwise prohibited by action of a governmental entity; or (iii) in the event of certain uncured breaches by the other party that would result in a closing condition being incapable of being satisfied by the outside date.

      Post-Combination Structure of JBG SMITH

              The following diagram depicts our expected organizational structure upon the completion of the separation and the combination.

GRAPHIC

Reasons for the Separation and the Combination

              Vornado's board of trustees believes that separating the Vornado Included Assets from the remainder of Vornado's businesses and assets and combining the Vornado Included Assets with the

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JBG Included Assets is in the best interests of Vornado for a number of reasons, including the following:

    Provides potential for a higher aggregate market value for shareholders.  The separation will enable investors and the financial community to evaluate the performance of JBG SMITH's and Vornado's remaining portfolios separately, which Vornado believes could result in a higher aggregate market value than Vornado's pre-spin value. Vornado believes the separation and combination will enable each business to cultivate a distinct identity and to appeal to different investors. As a separate company, JBG SMITH will be focused on Washington, DC, making it an attractive investment opportunity for REIT investors looking for exposure to this market. The ability to provide investors with two focused investment vehicles with distinct strategies may enhance both companies' attractiveness to investors, and may increase each company's ability to raise capital, including the ability to use its respective common shares as acquisition currency.

    Creates two separate, focused companies executing distinct business strategies.  As two separate companies with dedicated management teams, Vornado and JBG SMITH will be highly focused on their respective markets and will have an enhanced ability to maximize value for their respective shareholders. Upon the separation, Vornado expects to be the premier pure-play, publicly traded New York City ("NYC") focused real estate company, with 89% of EBITDA as adjusted generated from NYC assets during the fourth quarter of 2016. Vornado will have a leading competitive position within key office submarkets, including Penn Plaza, Midtown, the Plaza District, Midtown South and Chelsea/Meatpacking and key high street retail destinations, including upper Fifth Avenue, Times Square, Madison Avenue, SoHo, Union Square and the 34th Street—Penn Plaza District. Further, Vornado will be the only REIT with a significant concentration of Manhattan high street retail assets, which Vornado believes to be amongst the scarcest and most valuable real estate in the world. Vornado believes that the combination of JBG SMITH with the JBG Included Assets will create a world-class, market-leading Washington, DC real estate company. With a premier portfolio of Washington, DC assets and a dedicated and highly accomplished Washington, DC focused management team, JBG SMITH will be positioned to maximize value through the execution of its embedded growth opportunities, from the capturing of positive Washington, DC market trends and the development of accretive growth projects as market conditions warrant. The JBG Included Assets were carefully selected from the JBG Funds' portfolios in order to diversify, complement, and enhance the strategic concentration of Vornado / Charles E. Smith's existing portfolio in the most desirable submarkets with a focus on growth. Assets that did not fit these objectives and were not appropriate for a public REIT were deliberately excluded. As a result, JBG SMITH's portfolio will be unmatched in scale, with 68 operating assets aggregating approximately 20.2 million square feet (16.1 million square feet at our share), comprised of 50 office assets aggregating approximately 14.1 million square feet (12.1 million square feet at our share), 14 multifamily assets aggregating 6,016 units (4,232 units at our share) and four other assets aggregating approximately 765,000 square feet (348,000 square feet at our share); (ii) eight office and multifamily assets under construction totaling over 1.6 million square feet (1.5 million square feet at our share); (iii) five near-term development office and multifamily assets totaling over 1.3 million estimated square feet (1.0 million square feet at our share) and (iv) 44 future development assets totaling over 22.1 million square feet (18.3 million square feet at our share) of estimated potential development density. JBG SMITH will have a significant presence in what JBG SMITH believes are the best submarkets in the Washington, DC metropolitan area, including Downtown DC, Crystal City, Pentagon City, Rosslyn, Reston and Bethesda. Over 98% of the portfolio is Metro-served, and JBG SMITH expects to be in an excellent position to drive shareholder returns over time.

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    Sharpens focus of Vornado as the premier pure-play NYC real estate company.  The separation represents a significant milestone in the continuation of Vornado's long-term simplification strategy, which has resulted in Vornado exiting multiple business lines and non-core assets, and allowed Vornado to redeploy capital and upgrade the quality of its core NYC portfolio. In recent years, the softening of the Washington, DC market overshadowed the NYC portfolio's performance. After the separation, investors will be able to more fully appreciate the industry-leading metrics of the remaining Vornado business, which will be a peerless, highly focused NYC-centric real estate company with premier office assets and the only high street retail portfolio of unique quality and scale in which the public can invest. Vornado's premier NYC platform is a market-leader with substantial embedded growth potential.

    Vornado has the largest NYC portfolio of any REIT by gross asset value, with a unique opportunity to create substantial value through the redevelopment of its Penn Plaza holdings.

    Creates market-leading Washington, DC company with dedicated, best-in-class management team.  As a result of the combination, JBG SMITH will be led by a dedicated management team composed of the current executive management team of the JBG Management Entities. W. Matthew Kelly will be named Chief Executive Officer, David Paul will be named President and Chief Operating Officer, James Iker will be named Chief Investment Officer and Brian Coulter and Kai Reynolds will be named Co-Chief Development Officers. In addition, from Vornado, Stephen W. Theriot will be Chief Financial Officer and Patrick J. Tyrrell will be Chief Administrative Officer. JBG SMITH's commercial leasing team will be led by David Ritchey (Executive Vice President) and will be supported by Jim Creedon, a 25-year veteran with Vornado / Charles E. Smith, and a team of 14 professionals from both JBG and Vornado / Charles E. Smith. The management team has a collective track record of active management of a large-scale real estate portfolio and success throughout market cycles in the Washington, DC metropolitan area.

    Aligns incentives of JBG SMITH management and Vornado management with their respective shareholders.  JBG SMITH, like Vornado, believes equity compensation is most effective as a motivational tool if it relates to the economic performance of the business that is the employee's particular area of responsibility and is not affected by unrelated businesses. As such, JBG SMITH's and Vornado's executive compensation and incentive arrangements will be designed to motivate their respective management teams to successfully execute their respective business strategies. After the separation, equity compensation awarded to JBG SMITH's employees will be unaffected by the performance of Vornado and instead will only be affected by the economic performance of JBG SMITH's assets, which are located in the Washington, DC metropolitan area, and equity compensation awarded to Vornado's employees will be unaffected by the performance of JBG SMITH and instead will be affected only by the economic performance of its assets, thereby making such compensation more effective in motivating, attracting and retaining key employees.

    Allows the Vornado Included Assets, particularly in Crystal City, to benefit from JBG SMITH management's value creating Placemaking process.  The JBG management team has extensive experience with Placemaking. Vornado believes this approach will allow JBG SMITH to unlock the value of the Vornado Included Assets over time by improving the submarkets in which they are located, increasing their attractiveness to potential tenants. In particular, JBG SMITH expects to use Placemaking on the critical mass of assets it controls in Crystal City, allowing it to leverage Crystal City's proximity to downtown Washington, DC and Metro and other key transportation infrastructure, urban-infill location and strong surrounding demographics to position Crystal City as a vibrant, amenity-rich destination that can offer a range of uses. This will drive office, multifamily and retail demand over time, significantly increasing the value of JBG SMITH's assets. JBG SMITH also expects to apply the

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      Placemaking approach to the Vornado Included Assets in Pentagon City and Rosslyn, with similar benefits.

    Enhances transparency and better highlights the attributes of each company.  With the separation of Vornado's Washington, DC assets into a separate, independent, publicly traded company, followed immediately by the combination, investors will have the opportunity to invest in two separate platforms with dedicated and focused management teams. The separation will improve transparency and better highlight the attributes of both companies, thereby permitting investors to evaluate each company based upon its own unique investment characteristics and assess their investment decisions accordingly. Further, this will allow for more effective independent management and internal capital allocation decisions as standalone, relevant performance measures will be available for both entities without competition for internal resources. The separation will also, by its nature, reduce the size of both JBG SMITH and Vornado, thereby underscoring the relative importance of each company's respective business initiatives and increasing their relative contribution to each company's underlying performance.

    Separates two businesses with limited synergies.  The office and multifamily businesses in Washington, DC are significantly different from Vornado's New York City office and high street retail businesses in terms of tenant bases, geography, asset management and leasing requirements. Vornado believes there are limited synergies arising from these businesses.

Vornado's board of trustees also considered a number of potentially negative factors in evaluating the separation and the combination. Vornado's board of trustees concluded that the potential benefits of the separation outweighed these factors. For more information, please refer to the sections entitled "The Separation and the Combination—Reasons for the Separation and the Combination" and "Risk Factors" included elsewhere in this information statement.

Corporate Information

              JBG SMITH was formed as a Maryland real estate investment trust on October 27, 2016 for the purpose of receiving, via contribution from Vornado, all of the assets and liabilities of Vornado's Washington, DC segment. JBG SMITH is currently owned by Vornado. Prior to the contribution of the Vornado Included Assets to JBG SMITH LP and the contribution by Vornado of its common limited partnership units of JBG SMITH LP to JBG SMITH, which will occur prior to the distribution by Vornado of JBG SMITH common shares, JBG SMITH will have no operations. The address of JBG SMITH's principal executive office will be 4445 Willard Avenue, Suite 400, Chevy Chase, Maryland 20815. The telephone number for JBG SMITH's principal executive office will be (240) 333-3600.

              JBG SMITH will also maintain a website at JBGSMITH.com. JBG SMITH's website and the information contained therein or connected thereto will not be deemed to be incorporated herein, and you should not rely on any such information in making any investment decision.

Reason for Furnishing this Information Statement

              This information statement is being furnished solely to provide information to Vornado common shareholders who will receive JBG SMITH common shares in the distribution by Vornado. It is not and is not to be construed as an inducement or encouragement to buy or sell any of JBG SMITH's securities. The information contained in this information statement is believed by JBG SMITH to be accurate as of the date set forth on its cover. Changes may occur after that date and neither Vornado nor JBG SMITH will update the information except in the normal course of their respective disclosure obligations and practices.

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Risks Associated with JBG SMITH's Business and the Separation

              An investment in our common shares is subject to a number of risks, including risks relating to the separation. The following list of risk factors is not exhaustive. Please read the information in the section captioned "Risk Factors" for a more thorough description of these and other risks.

    Our portfolio of assets is geographically concentrated in the Washington, DC metropolitan area, which makes us more susceptible to regional and local adverse economic and other conditions than if we owned a more geographically diverse portfolio.

    Our assets and our property development market are dependent on a metropolitan economy that is heavily reliant on actual and anticipated federal government spending, and any actual or anticipated curtailment of such spending could have a material adverse effect on our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders.

    We derive a significant portion of our revenues from U.S. federal government tenants.

    Capital markets and economic conditions can materially affect our liquidity, financial condition and results of operations, as well as the value of our debt and equity securities.

    Our real estate development activities are subject to risks particular to development, such as unanticipated expenses, delays and other contingencies, any of which could adversely affect our financial condition, results of operations, cash flow and the per share trading price of our common shares.

    We may be unable to renew leases, lease vacant space or re-let space as leases expire (particularly at our Crystal City assets, which have a number of scheduled lease expirations in the near-term), which could adversely affect our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders.

    We derive a significant portion of our revenues from five of our assets.

    We derive most of our revenues from office assets and are subject to risks that affect the businesses of our office tenants, which are generally financial, legal and other professional firms as well as the U.S. federal government and defense contractors.

    Certain of our retail assets depend on anchor or major tenants to attract shoppers and could be adversely affected by the loss of, or a store closure by, one or more of these tenants.

    Real estate is a competitive business.

    We depend on leasing space to tenants on economically favorable terms and collecting rent from tenants who may not be able to pay.

    We may be required to make rent or other concessions and/or significant capital expenditures to improve our assets in order to retain and attract tenants, which could adversely affect our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders.

    Our success depends on our senior management team whose continued service is not guaranteed, and the loss of one or more of these persons 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.

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    The realized and unrealized "gross leveraged IRRs" and "equity multiples" achieved by the JBG Funds are not necessarily indicative of the future performance of our company, any asset in our portfolio or an investment in our common shares.

    The actual density of our future development pipeline and/or any particular future development parcel may not be consistent with the estimated potential development density.

    We may not be able to realize potential incremental annualized rent from our office, multifamily or other lease-up opportunities set forth in this information statement.

    Partnership or joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on partners' or co-venturers' financial condition and disputes between us and our partners or co-venturers.

    Terrorist attacks, such as those of September 11, 2001, may adversely affect the value of our assets and our ability to generate revenue.

    We have no history operating as an independent company, and our historical and pro forma financial information is not necessarily representative of the results that we would have achieved as a separate, publicly traded company and may not be a reliable indicator of our future results.

    We are dependent on Vornado to provide certain services to us pursuant to the Transition Services Agreement, and it may be difficult to replace the services provided under such agreement.

    If the distribution by Vornado, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, Vornado and Vornado shareholders could be subject to significant tax liabilities.

    JBG SMITH could be required to indemnify Vornado for certain material tax obligations that could arise as addressed in the Tax Matters Agreement.

    Unless Vornado and JBG SMITH are both REITs immediately after the distribution and at all times during the two years thereafter, the distribution could be taxable to Vornado and its shareholders or JBG SMITH could be required to recognize gain for tax purposes.

    Potential indemnification liabilities to Vornado pursuant to the Separation Agreement could materially adversely affect our operations.

    Vornado and the JBG Parties may not be able to transfer their respective interests in certain assets that are subject to certain debt arrangements, are partially owned through a joint venture or similar structure, or are leased from a third party due to the need to obtain the consent of third parties, or they may not be able to complete certain actions with respect to certain assets as required by the MTA, which in either case may result in such assets being excluded from the separation and the combination.

    After the separation and the combination, certain of our trustees and executive officers may have actual or potential conflicts of interest because of their previous or continuing equity interest in, or positions at, Vornado or the JBG Parties, as applicable, including members of our senior management, who will continue to have an ownership interest in the JBG Funds and will continue to own carried interests in each fund and in certain of our joint ventures that will entitle them to receive additional compensation if the fund or joint venture achieves certain return thresholds.

    We may not achieve some or all of the expected benefits of the separation and the combination, and the separation and the combination may adversely affect our business.

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    In connection with our separation from Vornado, Vornado will indemnify us for certain pre-distribution liabilities and liabilities related to Vornado assets. However, there can be no assurance that these indemnities will be sufficient to protect us against the full amount of such liabilities, or that Vornado's ability to satisfy its indemnification obligation will not be impaired in the future.

    Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and share price.

    Substantial sales of our common shares may occur in connection with the distribution, which could cause our share price to decline.

    We expect to have a substantial amount of indebtedness, which may limit our financial and operating activities and expose us to the risk of default under our debt obligations.

    We may incur significant costs to comply with environmental laws and environmental contamination may impair our ability to lease and/or sell real estate.

    Our declaration of trust and bylaws, the partnership agreement of our operating partnership and Maryland law 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.

    The limited partnership agreement of our operating partnership requires the approval of the limited partners with respect to certain extraordinary transactions involving JBG SMITH, which may reduce the likelihood of such transactions being consummated, even if they are in the best interests of, and have been approved by, our shareholders.

    Until the 2020 annual meeting of shareholders, JBG SMITH will have a classified board of trustees and that may reduce the likelihood of certain takeover transactions.

    Substantially all of our assets will be owned by subsidiaries. We depend on dividends and distributions from these subsidiaries. The creditors of these subsidiaries are entitled to amounts payable to them by the subsidiaries before the subsidiaries may pay any dividends or other distributions to us.

    No market currently exists for the JBG SMITH common shares and we cannot be certain that an active trading market for our common shares will develop or be sustained after the separation. Following the separation, our share price may fluctuate significantly.

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QUESTIONS AND ANSWERS ABOUT THE SEPARATION AND THE COMBINATION

What is JBG SMITH and why is Vornado separating the Vornado Included Assets, distributing JBG SMITH's shares and combining it with the JBG Included Assets?

  JBG SMITH, which is currently a wholly owned subsidiary of Vornado, was formed for the purpose of receiving, via contribution from Vornado, all of the assets and liabilities of Vornado's Washington, DC segment, and combining Vornado's Washington, DC segment (which operates as Vornado / Charles E. Smith) and the management business and certain Washington, DC assets of JBG. The separation of JBG SMITH from Vornado and the distribution of JBG SMITH common shares by Vornado will enable each of JBG SMITH and Vornado to have a dedicated management team able to focus on its own operations and respond more effectively to the different needs of its businesses. JBG SMITH and Vornado expect that the separation and the combination will result in enhanced long-term performance of each business for the reasons discussed in the sections entitled "The Separation and the Combination—Background" and "The Separation and the Combination—Reasons for the Separation and the Combination."

What is JBG?

 

The JBG Companies is a group of affiliated entities that invest in, own, develop and manage real estate assets in the Washington, DC metropolitan area. JBG, the leading local sharpshooter, is a mixed-use specialist that invests almost exclusively in urban-infill, transit-oriented real estate in Washington, DC. Pursuant to the terms of the MTA, Vornado and JBG have agreed to combine nearly all of Vornado's Washington, DC assets (which will be contributed to JBG SMITH prior to the separation and distribution) and certain other assets with the management business and certain assets of The JBG Companies.

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What is a REIT?

 

Following the separation, JBG SMITH intends to elect and qualify to be taxed as a REIT under Sections 856 through 859 of the Code, from and after JBG SMITH's taxable year that includes the distribution of our common shares by Vornado. As a REIT, JBG SMITH generally will not be subject to U.S. federal income tax on its REIT taxable income that it distributes to its shareholders. A company's qualification as a REIT depends on its ability to meet, on a continuing basis, through actual investment and operating results, various complex requirements under the Code relating to, among other things, the sources of its gross income, the composition and values of its assets, its distribution levels and the diversity of ownership of its shares. JBG SMITH believes that, immediately after the separation, it will be organized in conformity with the requirements for qualification and taxation as a REIT under the Code, and that its intended manner of operation enables it to meet the requirements for qualification and taxation as a REIT. JBG SMITH anticipates that distributions it makes to its shareholders generally will be taxable to its shareholders as ordinary income, although a portion of the distributions may be designated by JBG SMITH as qualified dividend income or capital gain or may constitute a return of capital. For a more complete discussion of the U.S. federal income taxation of REITs and the tax treatment of distributions to shareholders of JBG SMITH, please refer to "Material U.S. Federal Income Tax Consequences."

Why am I receiving this document?

 

You are receiving this document because you are a Vornado common shareholder. If you are a Vornado common shareholder as of the close of business on                         , you are entitled to receive one JBG SMITH common share for every two Vornado common shares that you held at the close of business on such date. This document will help you understand how the separation and the combination will affect your investment in Vornado and your investment in JBG SMITH after the separation.

How will the separation of JBG SMITH from Vornado work?

 

To accomplish the separation, Vornado will distribute all of the outstanding JBG SMITH common shares to Vornado common shareholders on a pro rata basis, with each Vornado common shareholder entitled to receive one JBG SMITH common share for every two Vornado common shares held by such shareholder as of the record date.

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What is the record date for the distribution?

 

The record date for the distribution by Vornado will be the close of business on                        .

How will the combination of JBG SMITH with the JBG Included Assets work?

 

At 12:01 a.m. on the business day following the distribution, JBG will contribute the JBG Included Assets to JBG SMITH in a series of contribution and merger transactions, as described more fully in this information statement under "The Separation and the Combination—The Combination."

When will the distribution and the combination occur?

 

It is expected that Vornado will distribute all of the outstanding JBG SMITH common shares on                        to holders of record of Vornado common shares on the record date. At 12:01 a.m. on the following business day, JBG SMITH will combine with the JBG Included Assets in a series of contribution and merger transactions, as described more fully in this information statement under "The Separation and the Combination—The Combination."

What do shareholders need to do to participate in the distribution?

 

Vornado common shareholders as of the record date will not be required to take any action to receive JBG SMITH common shares in the distribution by Vornado, but you are urged to read this entire information statement carefully. No shareholder approval of the distribution by Vornado is required. You are not being asked for a proxy. You do not need to pay any consideration, exchange or surrender your existing Vornado common shares or take any other action to receive your JBG SMITH common shares. Please do not send in your Vornado share certificates. The distribution will not affect the number of outstanding Vornado common shares or any rights of Vornado common shareholders, although it will affect the market value of each outstanding Vornado common share.

How will JBG SMITH common shares be issued?

 

You will receive JBG SMITH common shares through the same channels that you currently use to hold or trade Vornado common shares, whether through a brokerage account, 401(k) plan or other channel. Receipt of JBG SMITH common shares will be documented for you in the same manner that you typically receive shareholder updates, such as monthly broker statements and 401(k) statements.

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If you own Vornado common shares as of the close of business on the record date, including shares owned in certificated form, Vornado, with the assistance of American Stock Transfer & Trust Company, LLC, the settlement and distribution agent, will electronically distribute JBG SMITH common shares to you or to your brokerage firm on your behalf in book-entry form. American Stock Transfer & Trust Company, LLC will mail you a book-entry account statement that reflects your JBG SMITH common shares, or your bank or brokerage firm will credit your account for the shares. Following the distribution, shareholders whose shares are held in book-entry form may request that their JBG SMITH common shares held in book-entry form be transferred to a brokerage or other account at any time, without charge.

How many JBG SMITH common shares will I receive in the distribution?

 

Vornado will distribute to you one JBG SMITH common share for every two Vornado common shares held by you as of the record date. Based on approximately 189.4 million Vornado common shares outstanding as of May 31, 2017, a total of approximately 94.7 million JBG SMITH common shares will be distributed. For additional information on the distribution, please refer to "The Separation and the Combination."

Will JBG SMITH issue fractional shares in the distribution?

 

No. JBG SMITH will not issue fractional shares in the distribution. Fractional shares that Vornado common shareholders would otherwise have been entitled to receive will be aggregated and sold in the public market by the distribution agent following the distribution. The aggregate net cash proceeds of these sales will be distributed pro rata (based on the fractional share such holder would otherwise be entitled to receive) to those common shareholders who would otherwise have been entitled to receive fractional shares, and will be taxable upon receipt for U.S. federal income tax purposes to Vornado common shareholders to the extent described under "The Separation and the Combination—Material U.S. Federal Income Tax Consequences of the Distribution to U.S. Holders of Vornado Common Shares." Receipts of cash in lieu of any fractional shares will not be entitled to any interest on the amounts of payment made in lieu of fractional shares.

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Will JBG SMITH incur or assume indebtedness in connection with the separation and the combination?

 

Yes. JBG SMITH will assume existing property-level indebtedness with respect to the Included Assets. Also, pursuant to the MTA, Vornado and JBG are cooperating to arrange a credit facility for JBG SMITH on or immediately prior to the combination. The credit facility is expected to provide borrowing capacity of $1.4 billion.

What are the conditions to the separation and the combination?

 

The separation and the combination is subject to a number of conditions:

 

Conditions to each party's obligation to consummate the separation and the combination, including, among others:

 

The JBG SMITH common shares to be distributed shall have been accepted for listing on the NYSE, subject to official notice of distribution;

 

No law shall have been enacted or promulgated by any governmental entity of competent jurisdiction which prohibits or makes illegal the consummation of the separation, the distributions by Vornado and VRLP or the combination;

 

Any required waiting periods under any provision of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and any other federal or state antitrust law shall have expired, been waived or been terminated;

 

The SEC shall have declared effective the registration statement on Form 10 of which this information statement forms a part, and such registration statement shall not be subject to any stop order or proceeding seeking a stop order; and

 

No more than 40% of the JBG Included Properties and no more than 20% of the Vornado Included Properties (each percentage based on the initial asset values agreed to by the parties in the MTA) shall be designated as "Kickout Interests" (and therefore prevented from being transferred to JBG SMITH) pursuant to the terms of the MTA (see "The Separation and the Combination—The Combination—The MTA—Kickout Interests" beginning on page 254 for more information on Kickout Interests).

       

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Conditions to the obligation of the Vornado Parties to consummate the separation and the combination, including, among others:

 

The receipt by Vornado and JBG SMITH of an opinion of Hogan Lovells US LLP, REIT counsel to JBG, with respect to each REIT that is being contributed to JBG SMITH by JBG in the combination, on which Sullivan & Cromwell LLP, REIT counsel to Vornado, and, following the combination, JBG SMITH and its REIT counsel, shall be entitled to rely, to the effect that each such REIT has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code;

 

The receipt by Vornado and JBG SMITH of an opinion of Sullivan & Cromwell LLP to the effect that JBG SMITH will be organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code and that its proposed method of operation will enable it to continue to meet such requirements;

 

The receipt by Vornado of an opinion of Sullivan & Cromwell LLP, satisfactory to the Vornado board of trustees, to the effect that the distribution by Vornado, together with certain related transactions, will qualify as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Code; and

 

Certain key individuals shall have remained employed by the JBG Parties through the date of the consummation of the combination, and shall not have repudiated their employment agreements entered into with JBG SMITH prior to the consummation of the combination.

 

Conditions to the obligation of the JBG Parties to consummate the separation and the combination, including, among others:

 

The receipt by JBG and JBG SMITH of a written opinion of Sullivan & Cromwell LLP, REIT counsel to Vornado, with respect to Vornado and to each REIT that is being contributed by VRLP to JBG SMITH LP, on which Hogan Lovells US LLP, REIT counsel to JBG, and, following the combination, JBG SMITH and its REIT counsel, shall be entitled to rely, to the effect that Vornado and each such REIT have been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code; and

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The receipt by JBG and JBG SMITH of a written opinion of Hogan Lovells US LLP, REIT counsel to JBG, to the effect that JBG SMITH will be organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code and its proposed method of operation will enable it to continue to meet such requirements.

 

Vornado and JBG SMITH cannot assure you that any or all of these conditions will be met. In addition, Vornado and JBG may, under certain circumstances, decide not to go forward with the separation and the combination. For a complete discussion of all of the conditions to the separation and the combination, please refer to "The Separation and the Combination—Conditions to the Separation and the Combination."

What is the expected date of completion of the separation and the combination?

 

The completion and timing of the separation and the combination are dependent upon a number of conditions. It is expected that Vornado will distribute its JBG SMITH common shares on                        to the holders of record of Vornado common shares at the close of business on the record date. It is expected that, at 12:01 a.m. on the business day after the separation, JBG SMITH will combine with the JBG Included Assets in a series of contribution and merger transactions, as described more fully in this information statement under "The Separation and the Combination—The Combination". However, no assurance can be provided as to the timing of the separation and the combination or that all conditions to the separation and the combination will be met.

Can Vornado decide to cancel the separation, the distribution of JBG SMITH common shares by Vornado, and the combination with the JBG Included Assets, even if all the conditions have been met?

 

No. The separation, the distribution by Vornado and the combination are subject to the satisfaction or waiver of certain conditions. Please refer to "The Separation and the Combination—The Combination—The MTA—Conditions to the Separation and the Combination." Once all of the conditions have been satisfied, Vornado does not have the right to terminate the separation, the distribution and the combination without the prior written consent of the JBG Parties.

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What if I want to sell my Vornado common shares or my JBG SMITH common shares?

 

You should consult with your financial advisors, such as your stockbroker, bank or tax advisor.

What is "regular-way" and "ex-distribution" trading of Vornado common shares?

 

Beginning on or shortly before the record date and continuing up to and through the distribution date, it is expected that there will be two markets in Vornado common shares: a "regular-way" market and an "ex-distribution" market. Vornado common shares that trade in the "regular-way" market will trade with an entitlement to JBG SMITH common shares distributed pursuant to the distribution by Vornado. Shares that trade in the "ex-distribution" market will trade without an entitlement to JBG SMITH common shares distributed pursuant to the distribution by Vornado.

 

If you decide to sell any Vornado common shares before the distribution date, you should make sure your stockbroker, bank or other nominee understands whether you want to sell your Vornado common shares with or without your entitlement to JBG SMITH common shares pursuant to the distribution by Vornado.

Where will I be able to trade JBG SMITH common shares?

 

JBG SMITH's common shares have been accepted for listing on the NYSE under the symbol "JBGS", subject to official notice of distribution. JBG SMITH anticipates that trading in its common shares will begin on a "when-issued" basis on or shortly before the record date and will continue up to and through the distribution date and that "regular-way" trading in JBG SMITH common shares will begin on the first trading day following the completion of the separation. If trading begins on a "when-issued" basis, you may purchase or sell JBG SMITH common shares up to and through the distribution date, but your transaction will not settle until after the distribution date. JBG SMITH cannot predict the trading prices for its common shares before, on or after the distribution date.

What will happen to the listing of Vornado shares?

 

Vornado's common shares will continue to trade on the NYSE after the distribution under the symbol "VNO."

Will the number of Vornado common shares that I own change as a result of the distribution?

 

No. The number of Vornado common shares that you own will not change as a result of the distribution.

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Will the distribution affect the market price of my Vornado shares?

 

Yes. As a result of the distribution, Vornado expects the trading price of Vornado common shares immediately following the distribution to be lower than the "regular-way" trading price of such shares immediately prior to the distribution because the trading price will no longer reflect the value of Vornado's portion of the portfolio held by JBG SMITH, which will have been spun off in the separation. Instead, the value of Vornado's portion of JBG SMITH's portfolio will be reflected in the trading price of the JBG SMITH common shares to be received by Vornado common shareholders in the distribution. Furthermore, until the market has fully analyzed the value of Vornado without the JBG SMITH portfolio, the trading price of Vornado common shares may fluctuate. Vornado believes that, over time following the separation, assuming the same market conditions and the realization of the expected benefits of the separation, the Vornado common shares and the JBG SMITH common shares should have a higher aggregate market value as compared to what the market value of Vornado common shares would be if the separation did not occur. There can be no assurance, however, that such a higher aggregate market value will be achieved. It is possible that, after the separation, the combined equity value of Vornado and JBG SMITH will be less than Vornado's equity value before the separation.

How will the number of JBG SMITH common shares and JBG SMITH LP common limited partnership units to be issued to JBG investors in the combination be determined?

 

In consideration of the contribution by the JBG Parties of their management business and the other JBG Included Assets, the applicable JBG Party or certain direct and indirect owners of such JBG Party (which we refer to as the JBG designees) will receive from JBG SMITH and JBG SMITH LP, as applicable, in a private placement satisfying the requirements of Regulation D, a number of JBG SMITH common shares and/or JBG SMITH LP common limited partnership units to be determined in accordance with a formula set forth in the MTA, as described in more detail under "The Separation and the Combination—The Combination—The MTA—Consideration" beginning on page 252.

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How will the value of the Vornado Included Properties and the JBG Included Properties be determined for purposes of the MTA?

 

The parties to the MTA agreed on the equity value of each of the Vornado Included Assets and the JBG Included Assets when the MTA was executed, but the equity values are subject to certain upward or downward adjustments as set forth in the MTA. These adjustments include, among other things, (i) increasing such equity value by amounts actually paid prior to the revaluation time by Vornado or the JBG Parties, as applicable, on account of certain leasing costs, capital expenditures, certain debt amortizations and paydowns, certain acquisition and development costs and any positive net working capital balance with respect to such property and (ii) decreasing such equity value by the amount of certain leasing costs not yet paid as of the revaluation time pursuant to leases included as part of the initial asset value in the MTA with respect to such property, new indebtedness, certain debt prepayment fees and any negative net working capital balance. The "revaluation time" will be 11:59 p.m. Eastern time on the last day of the calendar month in which all of the conditions to consummation of the separation and the combination have been satisfied or waived (unless such conditions are satisfied or waived in the last five days of a calendar month, in which case the revaluation time will be 11:59 p.m. Eastern time on the last day of the following calendar month).

What are the material U.S. federal income tax consequences of the separation, the distribution and the combination?

 

It is a condition to the completion of the separation, the distribution and the combination that Vornado obtain an opinion of Sullivan & Cromwell LLP, satisfactory to the Vornado board of trustees, to the effect that the distribution by Vornado, together with certain related transactions, will qualify as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Code. Assuming that the distribution, together with certain related transactions, so qualifies, you will not recognize any gain or loss, and no amount will be included in your income, upon your receipt of JBG SMITH common shares pursuant to the distribution, except with respect to any cash received in lieu of fractional JBG SMITH common shares.

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You should consult your tax advisor as to the particular consequences of the distribution to you, including the applicability and effect of any U.S. federal, state and local tax laws, as well as foreign tax laws, which may result in the distribution being taxable to you. For more information regarding the tax opinion and certain U.S. federal income tax consequences of the separation, please refer to the discussion under "The Separation and the Combination—Material U.S. Federal Income Tax Consequences of the Distribution to U.S. Holders of Vornado Common Shares."

Will Vornado or JBG SMITH be required to make any tax indemnification payments to the original Charles E. Smith sellers to Vornado of the Vornado Included Assets if JBG SMITH elects to sell one or more of the Vornado Included Assets after the separation?

 

No. Although a taxable sale by Vornado of the Vornado Included Assets prior to 2022 would likely have required an indemnification payment to the original Charles E. Smith sellers, including to entities controlled by Robert E. Kogod, a trustee of Vornado, as a result of the separation (i) a sale by JBG SMITH of any of those assets after the spin-off will not result in any indemnification payments by JBG SMITH or Vornado and (ii) if there is a future sale of any Vornado Included Asset in a taxable transaction, the unamortized built-in gain attributable to that asset will be allocable to all JBG SMITH shareholders and certain JBG SMITH LP unit holders rather than solely to the original Charles E. Smith sellers.

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What will JBG SMITH's relationship be with Vornado following the separation?

 

Following the separation, JBG SMITH and Vornado will be separate publicly traded companies, each with its own board of trustees and management team. In order to effect the separation and provide a framework for JBG SMITH's relationship with Vornado after the separation, JBG SMITH will enter into the Separation Agreement and various other agreements with Vornado, such as a Transition Services Agreement, a Tax Matters Agreement, an Employee Matters Agreement, certain Cleaning Services Agreements with a subsidiary of Vornado with respect to the JBG Included Properties and Vornado Included Properties, and a Management Agreement. These agreements will provide for the allocation between JBG SMITH and Vornado of Vornado's assets, liabilities and obligations (including its assets, employees and tax-related assets and liabilities) attributable to periods prior to, at and after our separation from Vornado and will govern certain relationships between JBG SMITH and Vornado after the separation.

 

For additional information regarding the Separation Agreement and other transaction agreements, please refer to the sections entitled "Risk Factors—Risks Related to the Separation and the Combination" and "Certain Relationships and Related Person Transactions."

Who will serve as trustees of JBG SMITH following the completion of the separation and the combination?

 

JBG SMITH will have 12 trustees following the completion of the separation and the combination. Steven Roth, Vornado's Chairman and Chief Executive Officer, will be Chairman of the board of trustees of JBG SMITH. Mitchell Schear, President of Vornado / Charles E. Smith, will also serve as a trustee. Robert Stewart, a managing partner of JBG, will be Executive Vice Chairman of the board of trustees of JBG SMITH. W. Matthew Kelly, a JBG managing partner who will be Chief Executive Officer of JBG SMITH, will also serve as a trustee, along with Michael Glosserman, who is a managing partner of JBG. The remaining seven trustees will be independent.

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How will JBG SMITH's initial trustees be chosen?

 

Each of Vornado and JBG will designate six trustees, for a total of 12 members of the board of trustees of JBG SMITH. For a period of two years following the combination, if any trustee originally designated by Vornado or the JBG Parties (which we refer to as a "Vornado Board Designee" or "JBG Board Designee," respectively) is unable or is unwilling to serve or is otherwise no longer serving on the board of trustees, then the remaining Vornado Board Designees or JBG Board Designees, respectively, will select a replacement designee reasonably satisfactory to JBG SMITH's Corporate Governance and Nominating Committee, who shall be appointed to fill the vacancy.

 

In addition, in connection with the first annual meeting of JBG SMITH shareholders following the combination, the board of trustees, subject to the reasonable exercise of its duties, will take all such actions as may be necessary to nominate the Vornado Board Designees and the JBG Board Designees (including their respective replacement designees, if any) for election by JBG SMITH's shareholders and use no less rigorous efforts to cause the election of the such Vornado Board Designees and JBG Board Designees (including their respective replacement designees, if any) than the manner in which it supports other nominees for the board of trustees.

Who will manage JBG SMITH after the separation and the combination?

 

Steven Roth, Vornado's Chairman and Chief Executive Officer, will be JBG SMITH's Chairman of the board of trustees. W. Matthew Kelly, a managing partner of JBG, will be Chief Executive Officer of JBG SMITH and a member of the board of trustees. Robert Stewart, a managing partner of JBG, will be Executive Vice Chairman of the board of trustees. There will also be seven independent trustees. Other members of JBG management will manage JBG SMITH after the separation and the combination, including David Paul as President and Chief Operating Officer, James Iker as Chief Investment Officer, and Brian Coulter and Kai Reynolds as Co-Chief Development Officers. From Vornado, Stephen W. Theriot will be Chief Financial Officer and Patrick J. Tyrrell will be Chief Administrative Officer. For more information regarding JBG SMITH's management please refer to "Management."

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Who will own JBG SMITH following the combination?

 

Immediately following the combination, in total and taking into account the indirect interests in JBG SMITH's assets that are held by the limited partners of JBG SMITH LP, the economic interests in JBG SMITH are expected to be owned approximately 73% by Vornado common shareholders and holders of VRLP common limited partnership units as of the record date, 21% by JBG investors as of the date of the combination, and 6% by current JBG management, which percentages are subject to change pursuant to certain closing adjustments set forth in the MTA. Our management team (excluding Michael Glosserman, who will be a member of our board of trustees) is expected to own approximately 5% of the economic interests in JBG SMITH, which represents the majority of their collective net worth, and our management team and board of trustees are expected to beneficially own or represent approximately 13% of the economic interests in JBG SMITH.

Are there risks associated with owning JBG SMITH common shares?

 

Yes. Ownership of JBG SMITH common shares is subject to both general and specific risks relating to JBG SMITH's business, the industry in which it operates, its ongoing contractual relationships with Vornado and its status as a separate, publicly traded company. Ownership of JBG SMITH common shares is also subject to risks relating to the separation. These risks are described in the "Risk Factors" section of this information statement beginning on page 59. You are encouraged to read that section carefully.

Does JBG SMITH plan to pay dividends?

 

We are a newly formed company that has not commenced operations, and as a result, we have not paid any dividends as of the date of this information statement. We expect to distribute 100% of our REIT taxable income to our shareholders out of assets legally available therefor. We expect that the cash required to fund our dividends will be covered by cash generated from operations and, to the extent they are not so covered, from our cash on hand. Our dividends must be authorized by our board of trustees, in its sole discretion.

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To qualify as a REIT, we must distribute to our shareholders an amount at least equal to:

 

(i)

 

90% of our REIT taxable income, determined before the deduction for dividends paid and excluding any net capital gain (which does not necessarily equal net income as calculated in accordance with GAAP); plus

 

(ii)

 

90% of the excess of our net income from foreclosure property over the tax imposed on such income by the Code; less

 

(iii)

 

Any excess non-cash income (as determined under the Code). Please refer to "Material U.S. Federal Income Tax Consequences."

 

Although JBG SMITH currently expects that it will pay a regular cash dividend, the declaration and payment of any dividends in the future by JBG SMITH will be subject to the sole discretion of our board of trustees and will depend upon many factors. Please refer to "Dividend Policy."

Who will be the distribution agent, transfer agent and registrar for the JBG SMITH common shares?

 

The distribution agent, transfer agent and registrar for the JBG SMITH common shares will be American Stock Transfer & Trust Company,  LLC. For questions relating to the transfer or mechanics of the share distribution, you should contact:

 

American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
www.astfinancial.com
(800) 937-5449

Where can I find more information about Vornado and JBG SMITH?

 

Before the distribution by Vornado, if you have any questions, you should contact:

 

Vornado Realty Trust
210 Route 4 East
Paramus, New Jersey 07652
Attention: Investor Relations
(201) 587-1000
vno.com/investor-relations/stock-info

 

After the distribution by Vornado, JBG SMITH shareholders who have any questions relating to JBG SMITH should contact JBG SMITH at:

 

JBG SMITH Properties
4445 Willard Avenue, Suite 400
Chevy Chase, Maryland 20815
Attention: Investor Relations

 

JBG SMITH will maintain a website at JBGSMITH.com.

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SUMMARY HISTORICAL COMBINED FINANCIAL DATA

              The following tables set forth the summary historical combined financial and other data of JBG SMITH as it will exist following the separation but prior to the combination, when we will own the Vornado Included Assets but will not yet have acquired the JBG Included Assets, which was carved out from the financial information of Vornado as described below. We were formed for the purpose of receiving, via contribution from Vornado, all of the assets and liabilities of Vornado's Washington, DC segment, and combining Vornado's Washington, DC segment (which operates as Vornado / Charles E. Smith) and the management business and certain Washington, DC assets of JBG. Prior to the effective date of the registration statement on Form 10 of which this information statement forms a part, and the completion of the distributions by each of Vornado and VRLP, we did not conduct any business and did not have any material assets or liabilities. The selected historical financial data set forth below as of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015 and 2014 has been derived from our audited combined financial statements, which are included elsewhere in this information statement. The selected historical financial data set forth below as of December 31, 2014 has been derived from our audited combined financial statements, which are not included in this information statement. The income statement data for each of the three months ended March 31, 2017 and 2016 and the balance sheet data as of March 31, 2017 have been derived from our unaudited interim combined financial statements included elsewhere in this information statement. Our unaudited interim combined financial statements as of March 31, 2017 and for the three months ended March 31, 2017 and 2016 were prepared on the same basis as our audited combined financial statements as of December 31, 2016 and 2015 and for each of the years ended December 31, 2016, 2015 and 2014 and, in the opinion of management, include all adjustments, consisting only of normal, recurring adjustments, necessary to present fairly our financial position and results of operations for these periods. The interim results of operations are not necessarily indicative of operations for a full fiscal year.

              The accompanying combined financial statements include the accounts of office, multifamily and other commercial assets aggregating over 15.2 million square feet, with 3,906 multifamily units, and a future development pipeline with estimated development potential of approximately 10.9 million square feet located in the Washington, DC metropolitan area, all of which are under common control of Vornado. The assets and liabilities in these combined financial statements have been carved out of Vornado's books and records at their historical carrying amounts. All significant intercompany transactions have been eliminated.

              The historical financial results for the carved out assets reflect charges for certain corporate costs which we believe are reasonable. These charges were based on either actual costs incurred or a proportion of costs estimated to be applicable to the Vornado Included Assets based on an analysis of key metrics, including total revenues. Such costs do not necessarily reflect what the actual costs would have been if JBG SMITH were operating as a separate standalone public company. These charges are discussed further in Note 5—Related Party Transactions in our audited combined financial statements included elsewhere in this information statement.

              The accompanying combined financial statements have been prepared on a carve-out basis in accordance with GAAP. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and revenues and expenses during the reporting periods. Actual results could differ from these estimates.

              Subsequent to the transfer of assets to JBG SMITH and the distribution of JBG SMITH's common shares to Vornado's shareholders, JBG SMITH expects to operate in a manner intended to enable it to qualify 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 a dividend to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which

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is distributed to its shareholders. Since Vornado operates as a REIT and distributes 100% of taxable income to its shareholders, no provision for Federal income taxes has been made in the accompanying combined financial statements. The carved out assets are also subject to certain other taxes, including state and local taxes which are included in general and administrative expenses in the combined statements of income.

              Presentation of earnings per share information is not applicable in these carved out combined financial statements, since these assets and liabilities are owned by Vornado.

              For purposes of our historical combined financial statements, the Vornado Included Assets aggregate assets into two reportable segments—office and multifamily—because all of the assets in each segment have similar economic characteristics and we will provide similar products and services to similar types of office and multifamily tenants.

 
  As of
March 31,
  As of December 31,  
 
  (Unaudited)   (Audited)   (Audited)   (Audited)  
(Amounts in thousands)
  2017   2016   2015   2014  

Balance Sheet Data:

                         

Total assets

  $ 3,686,203   $ 3,660,640   $ 3,575,878   $ 3,357,744  

Real estate, at cost

    4,178,065     4,155,391     4,038,206     3,809,213  

Accumulated depreciation and amortization

    957,270     930,769     908,233     797,806  

Mortgages payable, net of deferred financing costs

    1,161,984     1,165,014     1,302,956     1,277,889  

Payable to Vornado

    289,590     283,232     82,912      

Noncontrolling interest in consolidated subsidiaries

    295     295     515     568  

Total equity

    2,140,587     2,121,984     2,059,491     1,988,915  

 

 
  (Unaudited)
Three Months Ended
March 31,
  (Audited)
For the Year Ended December 31,
 
(Amounts in thousands)
  2017   2016   2016   2015   2014  

Income Statement Data:

                               

Total revenues

  $ 116,272   $ 116,784   $ 478,519   $ 470,607   $ 472,923  

Operating income

    19,606     24,276     112,793     102,597     138,619  

Net income attributable to the Vornado Included Assets

    6,318     11,547     61,974     49,628     81,299  

Cash Flow Statement Data:

   
 
   
 
   
 
   
 
   
 
 

Provided by operating activities

    39,601     57,861     159,541     178,230     187,386  

Used in investing activities

    (30,094 )   (58,182 )   (256,590 )   (237,953 )   (236,923 )

Provided by (used in) financing activities

    12,205     (32,196 )   51,083     122,671     33,353  

      Funds From Operations ("FFO")

              We calculate FFO in accordance with the definition used by NAREIT. NAREIT defines FFO as GAAP net income or loss adjusted to exclude net gains from sales of depreciated real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets and other specified non-cash items, including the pro rata share of such adjustments of unconsolidated subsidiaries. Adjusted FFO means FFO as adjusted to exclude non-comparable income and expenses in each period. We believe FFO and Adjusted FFO are meaningful non-GAAP financial measures useful in comparing our levered operating performance both internally from period to period and among our peers because these non-GAAP measures exclude net gains on sales of depreciable real estate, real

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estate impairment losses, and depreciation and amortization expense which implicitly assumes that the value of real estate diminishes predictably over time rather than fluctuating based on market conditions. FFO and adjusted FFO 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 as a performance measure or cash flow as a liquidity measure. FFO and adjusted FFO may not be comparable to similarly titled measures employed by others.

              The following tables reconcile net income attributable to the Vornado Included Assets to FFO and adjusted FFO for the three months ended March 31, 2017 and 2016 and for the years ended December 31, 2016, 2015 and 2014.

 
  (Unaudited)
For the
Three Months Ended
March 31,
 
(Amounts in thousands)
  2017   2016  

Net income attributable to the Vornado Included Assets

  $ 6,318   $ 11,547  

Depreciation and amortization of real property

    35,142     35,622  

FFO

    41,460     47,169  

Noncomparable items:

             

Professional fees associated with the spin-off of the Vornado Included Assets

    5,841      

Adjusted FFO

  $ 47,301   $ 47,169  

 

 
  (Unaudited)
For the Year Ended December 31,
 
(Amounts in thousands)
  2016   2015   2014  

Net income attributable to the Vornado Included Assets

  $ 61,974   $ 49,628   $ 81,299  

Depreciation and amortization of real property

    138,591     150,708     117,018  

FFO

    200,565     200,336     198,317  

Noncomparable items:

                   

Professional fees associated with the spin-off of the Vornado Included Assets

    6,476          

Non-cash impairment loss on an investment

    213     405      

Reversal of deferred income tax liabilities

        (745 )    

Prepayment penalty on refinancing of RiverHouse

        640      

Our share of a net gain on sale of land

            (1,800 )

Subtotal adjustments

    6,689     300     (1,800 )

Adjusted FFO

  $ 207,254   $ 200,636   $ 196,517  

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SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

              The following table presents summary unaudited pro forma combined financial information about JBG SMITH's combined balance sheet and statements of income, and gives effect to both the separation and the combination. The information under "Balance Sheet Data" below combines the historical balance sheet of JBG SMITH with the historical combined balance sheets of the Vornado Included Assets and the JBG Included Assets as of March 31, 2017 and gives effect to the separation and the combination as if they had been consummated on March 31, 2017. The information under "Income Statement Data" below combines the income statement of JBG SMITH with each of the Vornado Included Assets and the JBG Included Assets for the three months ended March 31, 2017 and the year ended December 31, 2016 and gives effect to the separation and the combination as if they had been consummated on January 1, 2016. This unaudited pro forma combined financial information was prepared using the acquisition method of accounting with Vornado Included Assets considered the acquiror of the JBG Included Assets.

              The unaudited pro forma combined financial information is presented for illustrative purposes only and is not necessarily indicative of the financial position or financial results that would have actually been reported had the separation and the combination occurred on January 1, 2016 or March 31, 2017, as applicable, nor is it indicative of our future financial position or financial results.

              The unaudited pro forma combined financial statements include the results of the carve-out of the Vornado Included Assets from the financial information of Vornado. The historical financial results of the Vornado Included Assets reflect charges for certain corporate expenses which include, but are not limited to, costs related to human resources, security, payroll and benefits, legal, corporate communications, information services and restructuring and reorganization. Costs of the services that were allocated or charged to the Vornado Included Assets were based on either actual costs incurred or a proportion of costs estimated to be applicable to the Vornado Included Assets based on a number of factors, most significantly, the Vornado Included Assets' percentage of Vornado's revenue. We believe these charges are reasonable; however, these results may not reflect what our expenses would have been had the Vornado Included Assets been operating as a separate standalone public company.

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              The unaudited pro forma combined financial information should be read in conjunction with the pro forma combined financial statements and the combined financial statements and related notes thereto contained elsewhere in this information statement.

(Amounts in thousands)
  As of
March 31,
2017
 
 
  (Unaudited)
 

Balance Sheet Data:

       

Total assets

  $ 6,315,818  

Real estate, at cost

    5,872,761  

Accumulated depreciation and amortization

    957,270  

Mortgages payable, net of deferred financing costs

    2,059,515  

Payable to Vornado(1)

     

Noncontrolling interest in JBG SMITH LP

    566,777  

Noncontrolling interest in consolidated subsidiaries

    4,153  

Total equity

    3,929,082  

(1)
The mortgage for the Bowen Building ($115,630 principal balance and $1,639 accrued interest) will be assigned to JBG SMITH and the note will be repaid with new financing proceeds from JBG SMITH.


(Amounts in thousands)
  Three Months Ended
March 31,
2017
  Year Ended
December 31,
2016
 
 
  (Unaudited)
  (Unaudited)
 

Income Statement Data:

             

Total revenues

  $ 159,236   $ 652,728  

Operating income

    14,342     68,555  

Net loss

    (10,055 )   (39,396 )

Net loss attributable to shareholders

    (8,650 )   (33,891 )

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RISK FACTORS

              You should carefully consider the following risks and other information in this information statement in evaluating our company and our common shares. The occurrence of any of the following risks could materially and adversely affect our business, prospects, financial condition, results of operations and cash flow. Some statements in this information statement, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section entitled "Cautionary Statement Concerning Forward-Looking Statements" for additional information regarding these forward-looking statements.

Risks Related to Our Business and Operations

Our portfolio of assets is geographically concentrated in the Washington, DC metropolitan area, which makes us more susceptible to regional and local adverse economic and other conditions than if we owned a more geographically diverse portfolio.

              All of our assets are located in the Washington, DC metropolitan area. As a result, we are particularly susceptible to adverse economic or other conditions in this market (such as periods of economic slowdown or recession, business layoffs or downsizing, industry slowdowns, relocations of businesses, increases in real estate and other taxes, and the cost of complying with governmental regulations or increased regulation), as well as to natural disasters (including earthquakes, storms and hurricanes), potentially adverse effects of "global warming" and other disruptions that occur in this market (such as terrorist activity or threats of terrorist activity and other events), any of which may have a greater impact on the value of our assets or on our operating results than if we owned a more geographically diverse portfolio. This market experienced an economic downturn in recent years. A similar or worse economic downturn in the future could materially and adversely affect our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders.

              We cannot assure you that this market will grow or that underlying real estate fundamentals will be favorable to owners, operators and developers of office, multifamily or retail assets or future development assets. Our operations may also be affected if competing assets are built in this market. Moreover, submarkets within our core market may be dependent upon a limited number of industries. Any adverse economic or other conditions in the Washington, DC metropolitan area, or any decrease in demand for office, multifamily or retail assets could adversely impact our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders.

Our assets and our property development market are dependent on a metropolitan economy that is heavily reliant on actual and anticipated federal government spending, and any actual or anticipated curtailment of such spending could have a material adverse effect on our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders.

              The real estate and property development market in the Washington, DC metropolitan area is heavily dependent upon actual and anticipated government spending, and the professional services and other industries that support the federal government. Any actual or anticipated curtailment of government spending, whether due to an actual or potential change of presidential administration or control of Congress, anticipation of federal government sequestrations, furloughs or shutdowns, a slowdown of the U.S. and/or global economy or other factors, could have an adverse impact on real estate values and property development in the Washington, DC metropolitan area, on demand and willingness to enter into long-term contracts for office space by the federal government and companies dependent upon the federal government, as well as on occupancy rates and annualized rents of multifamily and retail assets by occupants or patrons whose employment is by or related to the federal government. For example, sequestration, which mainly impacted government contractors and federal

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government agencies, resulted in a large decrease in federal government spending, and the implementation of BRAC, which shifted Department of Defense real estate from leased space to owned bases, contributed to 5.2 million square feet of occupancy losses in the Washington, DC metropolitan area from 2012 through 2014, mainly in Northern Virginia. Similar curtailments in federal spending or changes in federal leasing policy could occur in the future, which could have a material adverse effect on our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders.

We derive a significant portion of our revenues from U.S. federal government tenants.

              As of March 31, 2017, approximately 22.3% of our share of annualized rent from our office and retail leases in our operating portfolio were generated by rentals to U.S. federal government tenants. The occurrence of events that have a negative impact on the demand for federal government office space, such as a decrease in federal government payrolls or a change in policy that prevents governmental tenants from renting our office space, would have a much larger adverse effect on our revenues than a corresponding occurrence affecting other categories of tenants. If the revenues generated by U.S. federal government tenants were to decline substantially, our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders could be negatively impacted in a material fashion.

We may face additional risks and costs associated with directly managing assets occupied by government tenants.

              We currently own 26 assets in which some or all of the tenants are federal government agencies. As such, lease agreements with these federal government agencies contain certain provisions required by federal law, which require, among other things, that the contractor (which is the lessor or the owner of the property), agree to comply with certain rules and regulations, including, but not limited to, rules and regulations related to anti-kickback procedures, examination of records, audits and records, equal opportunity provisions, prohibition against segregated facilities, certain executive orders, subcontractor cost or pricing data, and certain provisions intending to assist small businesses. Through one of our wholly owned subsidiaries, we directly manage assets with federal government agency tenants and, therefore, we are subject to additional risks associated with compliance with all such federal rules and regulations. In addition, there are certain additional requirements relating to the potential application of certain equal opportunity provisions and the related requirement to prepare written affirmative action plans applicable to government contractors and subcontractors. Some of the factors used to determine whether such requirements apply to a company that is affiliated with the actual government contractor (the legal entity that is the lessor under a lease with a federal government agency) include whether such company and the government contractor are under common ownership, have common management, and are under common control. As a result of the separation, the distribution and the combination, we will own the entity that is the government contractor and the property manager, increasing the risk that requirements of the Employment Standards Administration's Office of Federal Contract Compliance Programs and requirements to prepare affirmative action plans pursuant to the applicable executive order may be determined to be applicable to us.

Capital markets and economic conditions can materially affect our liquidity, financial condition and results of operations, as well as the value of our debt and equity securities.

              There are many factors that can affect the value of our equity securities and any debt securities we may issue in the future, including the state of the capital markets and the economy. Demand for office space may decline nationwide as it did in 2008 and 2009, due to an economic downturn, bankruptcies, downsizing, layoffs and cost cutting. Government action or inaction may adversely affect the state of the capital markets. The cost and availability of credit may be adversely affected by illiquid

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credit markets and wider credit spreads, which may adversely affect our liquidity and financial condition, including our results of operations, and the liquidity and financial condition of our tenants. Our inability or the inability of our tenants to timely refinance maturing liabilities and access the capital markets to meet liquidity needs may materially affect our financial condition and results of operations and the value of our equity securities and any debt securities we may issue in the future.

We may acquire, develop or redevelop real estate and acquire related companies and this may create risks.

              We may acquire, develop or redevelop assets or acquire real estate related companies when we believe doing so is consistent with our business strategy. We may not succeed in (i) developing, redeveloping or acquiring real estate and real estate related companies; (ii) completing these activities on time or within budget; and (iii) leasing or selling developed, redeveloped or acquired assets at amounts sufficient to cover our costs. Competition in these activities could also significantly increase our costs. Difficulties in integrating acquisitions may prove costly or time-consuming and could divert management's attention. Acquisitions or developments in new markets or types of assets where we do not have the same level of market knowledge may result in weaker than anticipated performance. We may also abandon acquisition, development or redevelopment opportunities that we have begun pursuing and consequently fail to recover expenses already incurred. Furthermore, we may be exposed to the liabilities of assets or companies acquired, some of which we may not be aware of at the time of acquisition.

Partnership or joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on partners' or co-venturers' financial condition and disputes between us and our partners or co-venturers.

              Approximately 30% of our assets measured by total square feet are held through joint ventures and we expect to co-invest in the future with other third parties through partnerships, joint ventures or other entities, acquiring noncontrolling interests in or sharing responsibility for managing the affairs of a property, partnership, joint venture or other entity. Consequently, with respect to any such third-party arrangement, we would not be in a position to exercise sole decision-making authority regarding the property, partnership, joint venture or other entity, and may, under certain circumstances, be exposed to risks not present were a third party not involved, including the possibility that partners or co-venturers might become bankrupt or fail to fund their share of required capital contributions, and we may be forced to make contributions to maintain the value of the property. Partners or co-venturers may have economic or other business interests or goals that are inconsistent with our business interests or goals and may be in a position to take action or withhold consent contrary to our policies or objectives. In some instances, partners or co-venturers may have competing interests in our markets that could create conflict of interest issues. Such investments may also have the potential risk of impasses on decisions, such as a sale, because neither we nor the partner or co-venturer would have full control over the partnership or joint venture. We and our respective partners or co-venturers may each have the right to trigger a buy-sell right or forced sale arrangement, which could cause us to sell our interest, or acquire our partners' or co-venturers' interest, or to sell the underlying asset, either on unfavorable terms or at a time when we otherwise would not have initiated such a transaction. In addition, a sale or transfer by us to a third party of our interests in the partnership or joint venture may be subject to consent rights or rights of first refusal in favor of our partners or co-venturers, which would in each case restrict our ability to dispose of our interest in the partnership or joint venture. Where we are a limited partner or non-managing member in any partnership or limited liability company, if such entity takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity. Disputes between us and partners or co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and/or trustees from focusing their time and effort on our business. Consequently, actions by or disputes with partners or co-venturers might result in subjecting assets owned by the

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partnership or joint venture to additional risk. In addition, we may in certain circumstances be liable for the actions of our third-party partners or co-venturers. Our joint ventures may be subject to debt and the refinancing of such debt may require equity capital calls. We will review the qualifications and previous experience of any partners and co-venturers, although we may not obtain financial information from, or undertake independent investigations with respect to, prospective partners or co-venturers. To the extent our partners and co-venturers do not meet their obligations to us or our partnerships or joint ventures or they take action inconsistent with the interests of the partnership or joint venture, we may be adversely affected.

We may be unable to renew leases, lease vacant space or re-let space as leases expire (particularly at our Crystal City assets, which have a number of scheduled lease expirations in the near-term), which could adversely affect our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders.

              As of March 31, 2017, leases representing 7% of our share of the office and retail square footage in our operating portfolio will expire by the end of 2017 and 15% of our share of the square footage of the assets in our office and other portfolios was unoccupied and not generating rent. We cannot assure you that expiring leases, particularly those at our Crystal City assets, which have a number of scheduled lease expirations in the near-term will be renewed or that our assets will be re-let at rental rates equal to or above current average rental rates or that substantial free rent, tenant improvements, early termination rights or below-market renewal options will not be offered to attract new tenants or retain existing tenants. In addition, our ability to lease our multifamily assets at favorable rates, or at all, may be adversely affected by any increase in supply and/or deterioration in the multifamily market, is dependent upon the overall level of spending in the economy, which is adversely affected by, among other things, job losses and unemployment levels, recession, personal debt levels, housing market conditions, stock market volatility and uncertainty about the future. If the rental rates for our assets decrease, our existing tenants do not renew their leases or we do not re-let a significant portion of our available space and space for which leases will expire, our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders could be adversely affected.

We depend on major tenants in our office portfolio, and the bankruptcy, insolvency or inability to pay rent of any of these tenants could have an adverse effect on our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders.

              As of March 31, 2017, the 20 largest office and retail tenants in our operating portfolio represented approximately 49.3% of our share of total annualized office and retail rent. In many cases, through tenant improvement allowances and other concessions, we have made substantial upfront investments in leases with our major tenants that we may not be able to recover.

              The inability of a major tenant to pay rent, or the bankruptcy or insolvency of a major tenant, may adversely affect the income produced by our office portfolio. If a tenant becomes bankrupt or insolvent, federal law may prohibit us from evicting such tenant based solely upon such bankruptcy or insolvency. In addition, a bankrupt or insolvent tenant may be authorized to reject and terminate its lease with us. If a lease is rejected by a tenant in bankruptcy, we may have only a general unsecured claim for damages that is limited in amount and may only be paid to the extent that funds are available and in the same percentage as is paid to all other holders of unsecured claims. Moreover, any claim against such tenant for unpaid, future rent would be subject to a statutory cap that might be substantially less than the remaining rent owed under the lease.

              If any of our major tenants were to experience a downturn in its business, or a weakening of its financial condition resulting in its failure to make timely rental payments or causing it to default under its lease, we may experience delays in enforcing our rights as landlord and may incur substantial

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costs in protecting our investment. Any such event could have an adverse effect on our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders.

We derive a significant portion of our revenues from five of our assets.

              As of March 31, 2017, five of our assets in the aggregate generated approximately 23% of our share of annualized rent. The occurrence of events that have a negative impact on one or more of these assets, such as a natural disaster that damages one or more of the assets, would have a much larger adverse effect on our revenues than a corresponding occurrence affecting a less significant property. If the revenues generated by one or more of these assets were to decline substantially, our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders could be adversely affected.

We derive most of our revenues from office assets and are subject to risks that affect the businesses of our office tenants, which are generally financial, legal and other professional firms as well as the U.S. federal government and defense contractors.

              As of March 31, 2017, our 50 operating office assets generated approximately 77% of our share of annualized rent. As a result, the occurrence of events that have a negative impact on the market for office space, such as increased unemployment in the Washington, DC metropolitan area, would have a much larger adverse effect on our revenues than a corresponding occurrence affecting our other segments. Our office tenants are generally financial, legal and other professional firms, as well as the U.S. federal government and defense contractors. This means that we are subject to factors that affect the financial, legal and professional services industries or the federal government generally, including the state of the economy, stock market volatility, and the level of unemployment. These factors could adversely affect the financial condition of our office tenants and the willingness of firms to lease space in our office buildings, which in turn may materially and adversely affect our results of operations, financial condition and ability to service current debt and to make distributions to our shareholders.

Certain of our retail assets depend on anchor or major tenants to attract shoppers and could be adversely affected by the loss of, or a store closure by, one or more of these tenants.

              Certain of our retail assets are anchored by large, nationally recognized tenants. At any time, such tenants may experience a downturn in their business that may significantly weaken their financial condition. As a result, such tenants may fail to comply with their contractual obligations to us, seek concessions in order to continue operations or declare bankruptcy, any of which could result in the termination of such tenants' leases. In addition, certain of our tenants may cease operations while continuing to pay rent. Moreover, mergers or consolidations among large retail establishments could result in the closure of existing stores or duplicate or geographically overlapping store locations, which could include stores at our retail assets.

              Loss of, or a store closure by, an anchor or major tenant could decrease customer traffic, thereby decreasing sales for our other tenants at the applicable retail property. If sales of our other tenants decrease, they may be unable to pay their minimum rents or expense recovery charges. Such circumstances may significantly reduce our occupancy level or the rent we receive from our retail assets, and we may not have the right to re-lease vacated space or we may be unable to re-lease vacated space at attractive rents or at all. Moreover, in the event of default by a major tenant or anchor store, we may experience delays and costs in enforcing our rights as landlord to recover amounts due to us under the terms of our agreements with those parties.

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              The occurrence of any of the situations described above, particularly if it involves an anchor or major tenant with leases in multiple locations, could seriously harm our performance and could adversely affect the value of the applicable retail property.

We are subject to risks that affect the retail environment generally, such as weakness in the economy, consumer spending, adverse financial condition of large retail companies and competition from discount and online retailers, any of which could adversely affect market rents for retail space and the willingness or ability of retailers to lease space in our retail assets.

              A portion of our assets are in the retail real estate market. This means that we are subject to factors that affect the retail environment generally, as well as the market for retail space. The retail environment and the market for retail space have previously been, and could again be, adversely affected by weakness in national, regional and local economies, consumer spending and consumer confidence, adverse financial condition of some large retailing companies, ongoing consolidation in the retail sector, excess amount of retail space in a number of markets and increasing competition from online retailers and other online businesses, discount retailers and outlet malls. Increases in online consumer spending may significantly affect our retail tenants' ability to generate sales in their stores. If we fail to reinvest in and redevelop our assets so as to maintain their attractiveness to retailers and shoppers, our revenue and profitability may suffer. If retailers or shoppers perceive that shopping at other venues, online or by phone is more convenient, cost-effective or otherwise more attractive, our revenues and profitability may also suffer.

              Any of the foregoing factors could adversely affect the financial condition of our retail tenants and the willingness of retailers to lease space in our retail assets, which in turn, could negatively impact market rents for retail space and, therefore, materially and adversely affect our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders.

We face risks associated with our tenants being designated "Prohibited Persons" by the Office of Foreign Assets Control.

              Pursuant to Executive Order 13224 and other laws, the Office of Foreign Assets Control of the United States Department of the Treasury ("OFAC") maintains a list of persons designated as terrorists or who are otherwise blocked or banned ("Prohibited Persons") from conducting business or engaging in transactions in the United States and thereby restricts our doing business with such persons. In addition, our leases, loans and other agreements may require us to comply with OFAC and related requirements, and any failure to do so may result in a breach of such agreements. If a tenant or other party with whom we conduct business is placed on the OFAC list or is otherwise a party with whom we are prohibited from doing business, we may be required to terminate the lease or other agreement. Any such termination could result in a loss of revenue or otherwise negatively affect our financial results and cash flows.

Real estate is a competitive business.

              We compete with a large number of property owners and developers, some of which may be willing to accept lower returns on their investments than we are. Principal factors of competition include rents charged, attractiveness of location, the quality of the property and breadth and quality of services provided. Our success depends upon, among other factors, trends of the global, national, regional and local economies, the financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation and population and employment trends.

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We depend on leasing space to tenants on economically favorable terms and collecting rent from tenants who may not be able to pay.

              Our financial results depend significantly on leasing space in our assets to tenants on economically favorable terms. In addition, because a majority of our income is derived from renting real property, our income, funds available to pay indebtedness and funds available for distribution to shareholders will decrease if certain of our tenants cannot pay their rent or if we are not able to maintain occupancy levels on favorable terms. If a tenant does not pay its rent, we might not be able to enforce our rights as landlord without delays and might incur substantial legal and other costs. During periods of economic adversity, there may be an increase in the number of tenants that cannot pay their rent and an increase in vacancy rates.

We may be required to make rent or other concessions and/or significant capital expenditures to improve our assets in order to retain and attract tenants, which could adversely affect our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders.

              We may be required to make rent or other concessions to tenants, accommodate requests for renovations, build-to-suit remodeling and other improvements or provide additional services to our tenants. As a result, we may have to make significant capital or other expenditures in order to retain tenants whose leases expire and to attract new tenants in sufficient numbers. If the necessary capital is unavailable, we may be unable to make such expenditures. This could result in non-renewals by tenants upon expiration of their leases and our vacant space remaining untenanted, which could adversely affect our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders.

Affordable housing and tenant protection regulations may limit our ability to increase rents and pass through new or increased operating expenses to our tenants.

              Certain states and municipalities have adopted laws and regulations imposing restrictions on the timing or amount of rent increases and other tenant protections. Approximately 4% of the units in our operating multifamily portfolio are designated as affordable housing. In addition, Washington, DC and Montgomery County, Maryland have laws that require, in certain circumstances, an owner of a multifamily rental property to allow tenant organizations the option to purchase the building at a market price if the owner attempts to sell the property. We presently expect to continue operating and acquiring assets in areas that either are subject to these types of laws or regulations or where such laws or regulations may be enacted in the future. Such laws and regulations limit our ability to charge market rents, increase rents, evict tenants or recover increases in our operating expenses and could make it more difficult for us to dispose of assets in certain circumstances.

Increased competition and increased affordability of residential homes could limit our ability to retain residents, lease apartment homes and increase or maintain rents at our multifamily assets.

              Our multifamily assets compete with numerous housing alternatives in attracting residents, including other multifamily assets and single-family rental homes, as well as owner-occupied single and multifamily homes. Competitive housing in a particular area and an increase in the affordability of owner-occupied single and multifamily homes due to, among other things, affordable housing prices, oversupply, low mortgage interest rates, and tax incentives and government programs that promote home ownership, could adversely affect our ability to retain residents, lease apartment homes and increase or maintain rents at our multifamily assets.

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Our success depends on our senior management team whose continued service is not guaranteed, and the loss of one or more of these persons 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.

              Our success and our ability to implement and manage anticipated future growth depend, in large part, upon the efforts of our senior management team, who have extensive market knowledge and relationships, and exercise substantial influence over our operational, financing, acquisition and disposition activity. Members of our senior management team have national or regional industry reputations that attract business and investment opportunities and assist us in negotiations with lenders, existing and potential tenants and other industry participants. The loss of services of one or more members of our senior management team, or our inability to attract and retain similarly qualified personnel, could adversely affect our business, diminish our investment opportunities and weaken our relationships with lenders, business partners, existing and prospective tenants and industry participants, which could adversely affect our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders.

The realized and unrealized "gross leveraged IRRs" and "equity multiples" achieved by the JBG Funds are not necessarily indicative of the future performance of our company, any asset in our portfolio or an investment in our common shares.

              We have presented in this information statement realized and unrealized gross leveraged IRRs and equity multiples achieved by the JBG Funds as of March 31, 2017. While we believe these financial metrics may be useful to investors in evaluating the managerial capabilities of the JBG team that will comprise the executive management of JBG SMITH, they are not necessarily indicative of the future performance of our company, any asset in our portfolio or an investment in our common shares. In that regard, they do not include the performance of any of the Vornado Included Assets. In particular, in considering the historical gross leveraged IRRs and equity multiples presented in this information statement, you should consider that:

    these metrics are substantially based on investments that the JBG Funds have sold and will not be included in our portfolio upon completion of the combination;

    our leverage and hedging strategies are expected to differ substantially from those employed by the JBG Funds;

    the JBG Funds made the initial investment in the realized and unrealized investments and operated and, in the case of the realized investments, sold them under market conditions that may differ substantially from current or future market conditions;

    as a REIT, we expect to hold our assets for a longer time period than the JBG Funds have historically held their assets, which means we would expect, all else being equal, to achieve lower IRRs than the JBG Funds;

    these metrics are computed on a cash basis and have not been computed in accordance with GAAP;

    these metrics may not be comparable to similar metrics provided by other companies that calculate them differently;

    equity multiples do not reflect the length of time the JBG Funds were invested in the realized investments or have been invested in the unrealized investments; and

    the JBG Funds were not subject to the income, asset and other limitations imposed by the REIT provisions of the Code under which we will be required to operate.

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              In addition, the realized and unrealized gross leveraged IRRs and equity multiples presented in this information statement do not reflect the impact of carried interests or asset management fees, as applicable, paid to JBG or cash-based general and administrative expenses that we will incur in the future in connection with the operation of JBG SMITH. Our general and administrative expenses will include salaries, wages and equity-based compensation for our employees and other expenses primarily related to our operations (e.g., legal, insurance, accounting and other expenses related to corporate governance, periodic SEC reporting and other compliance matters) and will impact the performance of our company and may impact the per share trading price of our common shares. We can provide no assurance that we will be able to replicate the performance achieved by the JBG Funds represented by these financial metrics.

The actual density of our future development pipeline and/or any particular future development parcel may not be consistent with the estimated potential development density set forth in this information statement.

              As of March 31, 2017, we estimate that our 44-asset future development pipeline provided over 22.1 million square feet (18.3 million at our share) of estimated potential development density. We caution you not to place undue reliance on the potential development density estimates for our future development pipeline and/or any particular future development parcel because they are based solely on our estimates, using data currently available to us, and our business plans as of March 31, 2017. The actual density of our future development pipeline and/or any particular future development parcel may differ substantially from our estimates based on numerous factors, including our inability to obtain necessary zoning, land use and other required entitlements, as well as building, occupancy and other required governmental permits and authorizations, and changes in the entitlement, permitting and authorization processes that restrict or delay our ability to develop, redevelop or use our future development pipeline at anticipated density levels. Moreover, we may strategically choose not to develop, redevelop or use our future development pipeline to its maximum potential development density or may be unable to do so as a result of factors beyond our control, including our ability to obtain financing on terms and conditions that we find acceptable, or at all, to fund our development activities. We can provide no assurance that the actual density of our future development pipeline and/or any particular future development parcel will be consistent with the estimated potential development density set forth in this information statement.

We may not be able to realize potential incremental annualized rent from our office, multifamily or other lease-up opportunities set forth in this information statement.

              Based on current market demand in our submarkets and the efforts of our dedicated in-house leasing teams, we believe we can increase our occupancy and revenue at certain office, multifamily and retail assets. However, we cannot assure you that we will be able to realize potential incremental annualized rent from our office, multifamily or other lease-up opportunities. Our ability to increase our occupancy and revenue at certain office, multifamily and other assets may be adversely affected by an increase in supply and/or deterioration in the office, multifamily or other markets. In addition, if our competitors offer space at rental rates below current asking rates or below our in-place rates, we may experience difficulties attracting new tenants or retaining existing tenants and may be pressured to reduce our rental rates below those we currently charge or to offer more substantial free rent, tenant improvements, early termination rights or below-market renewal options in order to attract or retain tenants. We caution you not to place undue reliance on our belief that we can increase our occupancy and revenue at certain office, multifamily and retail assets.

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We own assets in the same geographic regions as Vornado and the JBG Funds and may compete for tenants with Vornado and such JBG Funds.

              Although Vornado and the JBG Funds have collectively contributed the majority of their assets located in the Washington, DC metropolitan area to our company as part of the transaction and may contribute or sell additional assets to us in the future, we have not and will not acquire all of the assets of Vornado or the JBG Funds in the Washington, DC metropolitan area. We will therefore own assets in the same geographic regions as Vornado and the JBG Funds, and, as a result, we may compete for tenants with Vornado and such JBG Funds. Competition may affect our ability to attract and retain tenants and may reduce the rental rates we are able to charge, which could adversely affect our results of operations and cash flow.

Some of our potential losses may not be covered by insurance.

              Vornado maintains general liability insurance with limits of $300,000,000 per occurrence and per property, and all-risk property and rental value insurance coverage with limits of $2.0 billion per occurrence, with sub-limits for certain perils such as floods and earthquakes on each of Vornado's properties. Vornado maintains coverage for terrorism acts with limits of $4.0 billion per occurrence and in the aggregate, and $2.0 billion per occurrence and in the aggregate for terrorism involving nuclear, biological, chemical and radiological terrorism events, as defined by the Terrorism Risk Insurance Program Reauthorization Act, which expires in December 2020. JBG SMITH intends to obtain appropriate insurance coverage on its own and coverages may differ from those noted above. Also, the resulting insurance premiums may differ materially from amounts included in the accompanying combined financial statements. JBG SMITH will be responsible for deductibles and losses in excess of insurance coverage, which could be material.

              JBG SMITH will continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future.

              Vornado's mortgage loans are generally non-recourse and contain customary covenants requiring adequate insurance coverage. Although we believe that we currently have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. If lenders insist on greater coverage than JBG SMITH is able to obtain, it could adversely affect the ability to finance or refinance the properties.

Compliance or failure to comply with the Americans with Disabilities Act or other safety regulations and requirements could result in substantial costs.

              The Americans with Disabilities Act ("ADA") generally requires that public buildings, including our assets, meet certain federal requirements related to access and use by disabled persons. Noncompliance could result in the imposition of fines by the federal government or the award of damages to private litigants and/or legal fees to their counsel. If, under the ADA, we are required to make substantial alterations and capital expenditures in one or more of our assets, including the removal of access barriers, it could adversely affect our financial condition and results of operations, as well as the amount of cash available for distribution to shareholders.

              Our assets are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements. If we fail to comply with these requirements, we could incur fines or private damage awards. We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that will affect our cash flow and results of operations.

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Terrorist attacks, such as those of September 11, 2001, may adversely affect the value of our assets and our ability to generate revenue.

              Our assets are located in the Washington, DC metropolitan area, which has been and may be in the future the target of actual or threatened terrorism activity. As a result, some tenants in this market may choose to relocate their businesses to other markets or to lower-profile office buildings within this market that may be perceived to be less likely targets of future terrorist activity. This could result in an overall decrease in the demand for office space in this market generally or in our assets in particular, which could increase vacancies in our assets or necessitate that we lease our assets on less favorable terms or both. In addition, future terrorist attacks in the Washington, DC metropolitan area could directly or indirectly damage our assets, both physically and financially, or cause losses that materially exceed our insurance coverage. As a result of the foregoing, the value of our assets and our ability to generate revenues could decline materially.

Our business and operations would suffer in the event of system failures.

              Despite system redundancy, the implementation of security measures and the existence of a disaster recovery plan for our internal information technology systems, our systems are vulnerable to damages from any number of sources, including computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism, war and telecommunication failures. Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business. We may also incur additional costs to remedy damages caused by such disruptions.

The occurrence of cyber incidents, or a deficiency in our cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.

              A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity, or availability of our information resources. More specifically, a cyber incident is an intentional attack or an unintentional event that can include unauthorized persons gaining access to systems to disrupt operations, corrupt data, or steal confidential information. As our reliance on technology has increased, so have the risks posed to our systems, both internal and those we have outsourced. Our primary risks that could directly result from the occurrence of a cyber incident are theft of assets, operational interruption, damage to our relationship with our tenants, and private data exposure. We have implemented processes, procedures and controls to help mitigate these risks, but these measures, as well as our increased awareness of a risk of a cyber incident, do not guarantee that our financial results will not be negatively impacted by such an incident.

We have no operating history as a REIT and may not be able to successfully operate as a REIT.

              We have no operating history as a REIT. We cannot assure you that the past experience of our senior management team will be sufficient to successfully operate our company as a REIT. Upon completion of the transaction, we will be required to develop and implement control systems and procedures in order to maintain our qualification as a REIT, and this transition could place a significant strain on our management systems, infrastructure and other resources. Failure to maintain our qualification as a REIT would have an adverse effect on our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders.

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Risks Related to the Separation and the Combination

We have no history operating as an independent company, and our historical and pro forma financial information is not necessarily representative of the results that we would have achieved as a separate, publicly traded company and may not be a reliable indicator of our future results.

              The historical information about us in this information statement refers to our business as operated by Vornado and the JBG Parties separately from each other. Our historical and pro forma financial information included in this information statement is derived from the consolidated financial statements and accounting records of Vornado or Vornado and the JBG Parties, respectively. Accordingly, the historical and pro forma financial information included in this information statement does not necessarily reflect the financial condition, results of operations or cash flows that we would have achieved as a separate, publicly traded company during the periods presented or those that we will achieve in the future. Factors which could cause our results to differ from those reflected in such historical and pro forma financial information and which may adversely impact our ability to receive similar results in the future may include, but are not limited to, the following:

    Prior to the separation, our business has been operated by Vornado or the JBG Parties, as applicable, as part of its or their broader organization, rather than as an independent company. Vornado and the JBG Parties performed various management functions for us, such as accounting, information technology and finance. Following the separation and the combination, Vornado will provide some of these functions to us, as described in "Certain Relationships and Related Person Transactions," and we will provide some of these functions on our own behalf through the management business we are acquiring from the JBG Parties. Our historical and pro forma financial results reflect allocations of expenses from Vornado or the JBG Parties, as applicable, for such functions and may be less than the expenses we would have incurred had we operated as a separate, publicly traded company. We may need to make certain investments to replicate or outsource from other providers certain facilities, systems, infrastructure and personnel previously provided by Vornado. Developing our ability to operate as a separate, publicly traded company will be costly and may prove difficult. We may not be able to operate our business efficiently or at comparable costs, and our profitability may decline;

    Currently, our business is integrated with the other businesses of Vornado or the JBG Parties, as applicable, and we are able to use Vornado's and JBG's size and purchasing power in procuring various goods and services and shared economies of scope and scale in costs, employees, vendor relationships and customer relationships. For example, we have historically been able to take advantage of Vornado's and JBG's purchasing power in technology and services, including information technology, marketing, insurance, treasury services, property support and the procurement of goods. Although JBG SMITH will enter into certain transition and other separation-related agreements with Vornado, these arrangements may not fully capture the benefits we have enjoyed as a result of being integrated with Vornado or the JBG Parties and may result in us paying higher charges than in the past for these services. In addition, services provided to us under the Transition Services Agreement will generally only be provided for up to 24 months, and this may not be sufficient to meet our needs. As a separate, independent company, we may be unable to obtain goods and services at the prices and terms obtained prior to the separation and the combination, which could decrease our overall profitability. As a separate, independent company, we may also not be as successful in negotiating favorable tax treatments and credits with governmental entities. Likewise, it may be more difficult for us to attract and retain desired tenants. This could have an adverse effect on our business, results of operations and financial condition following the completion of the separation;

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    Generally, our working capital requirements and capital for our general business purposes, including acquisitions, research and development, and capital expenditures, have historically been satisfied as part of the company-wide cash management policies of Vornado or the cash management policies of the JBG Parties, as applicable. Following the separation and the combination, we may need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities, strategic relationships or other arrangements, which may not be on terms as favorable to those obtained by Vornado or the JBG Parties, and the cost of capital for our business may be higher than Vornado's or JBG's cost of capital prior to the separation; and

    As a separate public company, we will become subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the Dodd-Frank Act and will be required to prepare our financial statements according to the rules and regulations required by the SEC. Upon completion of the transaction, we will be required to develop and implement control systems and procedures in order to satisfy our periodic and current reporting requirements under applicable SEC regulations and comply with NYSE listing standards, and this transition could place a significant strain on our management systems, infrastructure and other resources. We cannot assure you that the past experience of our senior management team will be sufficient to successfully operate as a publicly traded company.

              Other significant changes may occur in our cost structure, management, financing and business operations as a result of operating as an independent company. For additional information about the past financial performance of our business and the basis of presentation of the historical combined financial statements and the unaudited pro forma combined financial statements of our business, please refer to "Unaudited Pro Forma Combined Financial Statements," "Selected Historical Combined Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical financial statements and accompanying notes included elsewhere in this information statement.

We are dependent on Vornado to provide certain services to us pursuant to the Transition Services Agreement, and it may be difficult to replace the services provided under such agreement.

              Historically, we have relied on Vornado to provide certain financial, administrative and other support functions to operate our business and we will continue to rely on Vornado for certain of these services on a transitional basis pursuant to the Transition Services Agreement that we expect to enter into with Vornado. See "Certain Relationships and Related Person Transactions—Transition Services Agreement." In addition, it may be difficult for us to replace the services provided by Vornado under the Transition Services Agreement, and the terms of any agreements to replace such services may be less favorable to us. Any failure by Vornado in the performance of such services, or any failure on our part to successfully transition these services away from Vornado by the expiration of the Transition Services Agreement, could materially harm our business and financial performance.

If the distribution by Vornado, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, Vornado and Vornado shareholders could be subject to significant tax liabilities.

              It is a condition to the completion of the separation, the distribution and the combination that Vornado obtain an opinion of Sullivan & Cromwell LLP, satisfactory to the Vornado board of trustees, to the effect that the distribution by Vornado, together with certain related transactions, will qualify as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Code. The opinion of Sullivan & Cromwell LLP will be based on, among other things, certain facts and assumptions, as well as certain representations, statements and undertakings of Vornado and JBG SMITH (including those relating to the past and future conduct of

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Vornado and JBG SMITH). If any of these representations, statements or undertakings are, or become, inaccurate or incomplete, or if Vornado or JBG SMITH breaches any of its respective covenants in the MTA or any of the other agreements entered into in connection with the separation, the distribution and the combination, the opinion of Sullivan & Cromwell LLP may be invalid and the conclusions reached therein could be jeopardized. Vornado does not intend to request any ruling from the IRS as to the U.S. federal income tax consequences of the distribution by Vornado. No assurance can be given that the IRS will not challenge the conclusions reflected herein or in the opinion of Sullivan & Cromwell LLP or that a court would not sustain such a challenge.

              Nonetheless, the IRS could determine that the distribution, together with certain related transactions, should be treated as a taxable transaction if it determines that any of the representations, assumptions or undertakings upon which the opinion of Sullivan & Cromwell LLP was based are false or have been violated, or if it disagrees with the conclusions in the opinion of Sullivan & Cromwell LLP. The opinion of Sullivan & Cromwell LLP is not binding on the IRS and there can be no assurance that the IRS will not take a contrary position.

              If the distribution, together with certain related transactions, fails to qualify for tax-free treatment, in general, Vornado would recognize taxable gain as if it had sold the JBG SMITH common shares in a taxable sale for their fair market value and Vornado shareholders who receive JBG SMITH common shares in the distribution could be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares. For more information, please refer to "The Separation and the Combination—Material U.S. Federal Income Tax Consequences of the Distribution to U.S. Holders of Vornado Common Shares."

JBG SMITH could be required to indemnify Vornado for certain material tax obligations that could arise as addressed in the Tax Matters Agreement.

              The Tax Matters Agreement that JBG SMITH will enter into with Vornado will provide special rules that allocate tax liabilities in the event the distribution by Vornado, together with certain related transactions, is not tax-free. Under the Tax Matters Agreement, JBG SMITH may be required to indemnify Vornado against any taxes and related amounts and costs resulting from (i) an acquisition of all or a portion of the equity securities or assets of JBG SMITH, whether by merger or otherwise, (ii) other actions or failures to act by JBG SMITH, or (iii) any of JBG SMITH's representations or undertakings being incorrect or violated. In addition, under the Tax Matters Agreement, JBG SMITH is liable for any taxes attributable to JBG SMITH and its subsidiaries, unless such taxes are imposed on JBG SMITH or any of the REITs contributed by Vornado (i) with respect to a period before the distribution as a result of any action taken by Vornado after the distribution, or (ii) with respect to any period as a result of Vornado's failure to qualify as a REIT for the taxable year of Vornado that includes the distribution. For a more detailed discussion, please refer to "Certain Relationships and Related Person Transactions—Tax Matters Agreement."

Unless Vornado and JBG SMITH are both REITs immediately after the distribution and at all times during the two years thereafter, the distribution could be taxable to Vornado and its shareholders or JBG SMITH could be required to recognize certain corporate-level gains for tax purposes.

              Section 355(h) of the Code provides that tax-free treatment will not be available unless, as relevant here, Vornado and JBG SMITH are both REITs immediately after the distribution.

              In addition, the Treasury Department and the IRS recently released temporary Treasury regulations pursuant to which, subject to certain exceptions, a REIT must recognize corporate-level gain if it acquires property from a non-REIT "C" corporation in certain so-called "conversion" transactions and engages in a Section 355 transaction within ten years of such conversion. For this purpose, a conversion transaction refers to the qualification of a non-REIT "C" corporation as a REIT

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or the transfer of property owned by a non-REIT "C" corporation to a REIT. JBG SMITH or its subsidiaries will have acquired property pursuant to conversion transactions within ten years of the distribution. One of the exceptions applies to a distribution described in Section 355 of the Code in which the distributing corporation and the controlled corporation are both REITs immediately after such distribution and at all times during the two years thereafter.

              Each of Vornado and JBG SMITH believes that it qualifies as a REIT and intends to operate in a manner so that each will so qualify immediately after the distribution and at all times during the two years after the distribution. If either Vornado or JBG SMITH were to fail to qualify as a REIT immediately after the distribution of JBG SMITH from Vornado, Section 355(h) of the Code would cause the distribution and separation to be treated as a taxable transaction to Vornado and its shareholders. In addition, if either Vornado or JBG SMITH were to fail to qualify as a REIT at any time during the two years after the distribution, then, for JBG SMITH's taxable year that includes the distribution, the IRS may assert that JBG SMITH would have to recognize corporate-level gain on assets acquired in conversion transactions.

We may not be able to engage in potentially desirable strategic or capital-raising transactions following the separation. In addition, if we were able to engage in such transactions, we could be liable for adverse tax consequences resulting therefrom.

              To preserve the tax-free treatment of the separation, for the two-year period following the separation, JBG SMITH will be prohibited, except in specific circumstances, from: (i) entering into any transaction pursuant to which all or a portion of JBG SMITH's shares would be acquired, whether by merger or otherwise, (ii) issuing equity securities beyond certain thresholds and except in certain circumscribed manners, (iii) repurchasing JBG SMITH common shares, (iv) ceasing to actively conduct certain of its businesses, or (v) taking or failing to take any other action that prevents the distribution and certain related transactions from being tax-free.

              These restrictions may limit JBG SMITH's ability to pursue strategic transactions or engage in new business or other transactions that may maximize the value of JBG SMITH's business. For more information, please refer to "The Separation and the Combination—Material U.S. Federal Income Tax Consequences of the Distribution to U.S. Holders of Vornado Common Shares" and "Certain Relationships and Related Person Transactions—Tax Matters Agreement."

Potential indemnification liabilities to Vornado pursuant to the Separation Agreement could materially adversely affect our operations.

              The Separation Agreement with Vornado provides for, among other things, the principal transactions required to effect the separation, certain conditions to the separation and distribution and provisions governing our relationship with Vornado with respect to and following the separation and distribution. Among other things, the Separation Agreement provides for indemnification obligations designed to make us financially responsible for substantially all liabilities that may exist relating to our business activities, whether incurred prior to or after the separation and distribution, as well as those obligations of Vornado that we will assume pursuant to the Separation Agreement. If we are required to indemnify Vornado under the circumstances set forth in this agreement, we may be subject to substantial liabilities. For a description of this agreement, please refer to "Certain Relationships and Related Person Transactions—The Separation Agreement."

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Vornado and the JBG Parties may not be able to transfer their respective interests in certain assets that are subject to certain debt arrangements, are partially owned through a joint venture or similar structure, or are leased from a third party due to the need to obtain the consent of third parties, or they may not be able to complete certain actions with respect to certain assets as required by the MTA, which in either case may result in such assets being excluded from the separation and the combination.

              Certain covenants and other restrictions contained in agreements governing indebtedness secured by certain of our assets and the co-owned or leased nature of some of our assets may require Vornado or JBG, as applicable, to obtain lender, co-venturer, or landlord consent in order to transfer such assets to us prior to completion of the separation or the combination, as applicable. There is no assurance that Vornado or JBG will be able to obtain these consents on terms that they determine to be reasonable, or at all. In addition, each of Vornado and the JBG Parties is obligated by the MTA to complete certain actions with respect to certain assets (for example, entering into definitive agreements to acquire such property or to bifurcate a master ground lease including such property so that such property is part of its own separate ground lease) before such assets can be transferred to us in the separation or the combination, as applicable. Failure to obtain the consents described above, or to complete the actions described above with respect to the assets specified in the MTA, could result in these assets being deemed to be "Kickout Interests" under the MTA, which would require Vornado or JBG to retain such assets and could have a material adverse effect on our business, results of operations and financial condition. Please refer to "The Separation and the Combination—The Combination—The MTA—Kickout Interests" for more information.

Tenant protection regulations may impede the ability of Vornado and the JBG Parties to transfer certain assets to us in the separation and the combination, which may result in a decrease in the size of our portfolio.

              Washington, DC and Montgomery County, Maryland have laws that require, in certain circumstances, an owner of a multifamily rental property to allow tenant organizations the option to purchase the multifamily rental property at a market price if the owner attempts to sell the property. The separation and the combination may constitute a sale of certain Vornado Included Properties and JBG Included Properties that are subject to these provisions and thus may require the applicable property owner to offer the opportunity to purchase such assets to the respective tenants. If the tenants elect to purchase any of the assets subject to these regulations, such assets will not be contributed to us in the separation and the combination, and instead the proceeds of such sale will be contributed to us.

There may be undisclosed liabilities of the Vornado Included Assets or the JBG Included Assets that might expose us to potentially large, unanticipated costs.

              Prior to entering into the MTA, each of Vornado and JBG performed diligence with respect to the business and assets of the other. However, these diligence reviews have necessarily been limited in nature and scope, and may not have adequately uncovered all of the contingent or undisclosed liabilities that we are assuming in connection with the separation and the combination, many of which may not be covered by insurance. Further, the MTA does not provide for indemnification for these types of liabilities by either party following the closing of the combination, and therefore we may not have any recourse with respect to such unexpected liabilities. Any such liabilities could cause us to experience losses, which may be significant, which could materially adversely affect our business, results of operations and financial condition.

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After the separation and the combination, certain of our trustees and executive officers may have actual or potential conflicts of interest because of their previous or continuing equity interest in, or positions at, Vornado or the JBG Parties, as applicable, including members of our senior management, who will continue to have an ownership interest in the JBG Funds and will continue to own carried interests in each fund and in certain of our joint ventures that will entitle them to receive additional compensation if the fund or joint venture achieves certain return thresholds.

              Some of our trustees and executive officers will be persons who are or have been employees of Vornado or the JBG Parties. Because of their current or former positions with Vornado or the JBG Parties, certain of our expected trustees and executive officers will own Vornado common shares or other equity awards or equity interests in certain JBG Funds and related entities. Following the separation and the combination, even though our board of trustees will consist of a majority of trustees who are independent, some of our executive officers and some of our trustees will continue to have a financial interest in Vornado common shares or in the JBG Parties or JBG Funds. In addition, one of our trustees will continue serving on the board of trustees of Vornado. Continued ownership of Vornado common shares or interests in the JBG Parties or JBG Funds, or service as a trustee or managing partner, as applicable, at both companies, could create, or appear to create, potential conflicts of interest.

              Certain of the JBG Funds will continue to own assets that are not being contributed to us in the transaction, which JBG Funds are owned in part by members of our senior management. In addition, although the asset management and property management fees associated with the JBG Excluded Assets will be assigned to us upon completion of the transaction, in connection with obtaining the necessary approvals from the constituent members of the JBG Funds, it was determined that the general partner and managing member interests in the JBG Funds that are held by current JBG executives (and who will become members of our management team) would not be transferred to us and will remain under the control of these individuals. As a result, our management's time and efforts may be diverted from the management of our assets to management of the JBG Funds, which could adversely affect the execution of our business plan and our results of operations and cash flow.

              In addition, members of our senior management will continue to have an ownership interest in the JBG Funds and will continue to own carried interests in each fund and in certain of our joint ventures that will entitle them to receive additional compensation if the fund or joint venture achieves certain return thresholds. As a result, members of our senior management could be incentivized to spend time and effort maximizing the cash flow from the assets being retained by the JBG Funds and certain joint ventures, particularly through sales of assets, which may accelerate payments of the carried interest but would reduce the asset management and other fees that would otherwise be payable to us with respect to the JBG Excluded Assets. These actions could adversely impact our results of operations and cash flow.

Vornado will not be required to present investments to us that satisfy our investment guidelines before pursuing such opportunities on Vornado's behalf.

              Our agreements with Vornado will not require Vornado to present to us investment opportunities that satisfy our investment guidelines before Vornado pursues such opportunities. While Vornado does not intend to continue to operate within the Washington, DC metropolitan area after the separation, should it choose to do so Vornado will be free to direct investment opportunities away from JBG SMITH, and we may be unable to compete with Vornado in pursuing such opportunities.

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We may not achieve some or all of the expected benefits of the separation and the combination, and the separation and the combination may adversely affect our business.

              After consummation of the combination, JBG SMITH will be a new public company with significantly more revenues, assets and employees than management of the company was responsible for prior to the combination. The integration process will require JBG SMITH management to devote a significant amount of time and attention to the process of integrating the operations of the Vornado Included Assets and the JBG Included Assets. There is a significant degree of difficulty and management involvement inherent in that process, and the actions required to separate our business from that of Vornado and to implement the combination could disrupt our operations. In addition, JBG SMITH will incur certain transaction costs in connection with the separation and the combination, including our obligation pursuant to the MTA to pay all bona fide third-party expenses (with certain limited exceptions) incurred by Vornado and JBG in connection therewith. Some of the transaction costs that we incur may be greater than anticipated, which could adversely affect our available liquidity and ability to execute our business plan. Furthermore, following the separation and the combination, we may be more susceptible to market fluctuations and other adverse events than if we were still a part of Vornado, and our business will be less diversified than Vornado's business prior to the separation. As a result, we may not be able to achieve the full strategic and financial benefits expected to result from the separation and the combination, or such benefits may be delayed due to a variety of circumstances (not all of which may be under our control), which could have a materially adverse effect on our business, financial condition and results of operations.

No vote of Vornado shareholders is required in connection with the separation and distribution.

              No vote of Vornado shareholders is required in connection with the separation and distribution. Accordingly, if this transaction occurs and you do not want to receive our common shares in the distribution, your only recourse will be to divest yourself of your Vornado common shares prior to the record date for the distribution.

The separation, the distribution and the combination, and related transactions, are subject to the satisfaction or waiver by Vornado's board of trustees or by the JBG Parties, in their respective sole discretion, of a number of conditions. We cannot assure you that any or all of these conditions will be met or that the separation, the distribution and the combination will be completed in a timely manner or at all.

              The consummation of the separation, the distribution and the combination is subject to the satisfaction or waiver by Vornado's board of trustees or by the JBG Parties, in their respective sole discretion, of a number of conditions, and we cannot assure you that any or all of these conditions will be met. This means that Vornado or the JBG Parties may be able to elect to cancel or delay the planned separation, the distribution of our common shares and the combination if certain closing conditions have not been met. For example, if the separation, the distribution and the combination have not been consummated on or prior to December 29, 2017, then either Vornado or the JBG Parties may elect to terminate the MTA, which means the separation, the distribution and the combination will not take place. If Vornado's board of trustees or the JBG Parties makes a decision to cancel the separation and the combination, shareholders of Vornado will not receive any distribution of our common shares, Vornado will be under no obligation whatsoever to its shareholders to distribute such common shares, and our business will not be combined with the JBG Included Assets.

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In connection with our separation from Vornado, Vornado will indemnify us for certain pre-distribution liabilities and liabilities related to Vornado assets. However, there can be no assurance that these indemnities will be sufficient to protect us against the full amount of such liabilities, or that Vornado's ability to satisfy its indemnification obligation will not be impaired in the future.

              Pursuant to the Separation Agreement, Vornado will agree to indemnify us for certain liabilities. However, third parties could seek to hold us responsible for any of the liabilities that Vornado agrees to retain, and there can be no assurance that Vornado will be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering from Vornado any amounts for which we are held liable, such indemnification may be insufficient to fully offset the financial impact of such liabilities and/or we may be temporarily required to bear these losses while seeking recovery from Vornado.

Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and share price.

              As a public company, we will become subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the Dodd-Frank Act and will be required to prepare our financial statements according to the rules and regulations required by the SEC. In addition, the Exchange Act requires that we file annual, quarterly and current reports. Our failure to prepare and disclose this information in a timely manner or to otherwise comply with applicable law could subject us to penalties under federal securities laws, expose us to lawsuits and restrict our ability to access financing.

              In addition, the Sarbanes-Oxley Act requires that we, among other things, establish and maintain effective internal controls and procedures for financial reporting and disclosure purposes. Internal control over financial reporting is complex and may be revised over time to adapt to changes in our business, or changes in applicable accounting rules. We cannot assure you that our internal control over financial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which we had previously believed that internal controls were effective. If we are not able to maintain or document effective internal control over financial reporting, our independent registered public accounting firm will not be able to certify as to the effectiveness of our internal control over financial reporting.

              Matters impacting our internal controls may cause us to be unable to report our financial information on a timely basis, or may cause our company to restate previously issued financial information, and thereby subject us to adverse regulatory consequences, including sanctions or investigations by the SEC, or violations of applicable stock exchange listing rules. There could also be a negative reaction in the financial markets due to a loss of investor confidence in our company and the reliability of our financial statements. Confidence in the reliability of our financial statements is also likely to suffer if we or our independent registered public accounting firm report a material weakness in our internal control over financial reporting. This could materially adversely affect our company by, for example, leading to a decline in our share price and impairing our ability to raise additional capital.

Substantial sales of our common shares may occur in connection with the distribution and the combination, which could cause our share price to decline.

              The shares that Vornado intends to distribute to its shareholders generally may be sold immediately in the public market. Upon completion of the distribution, based on the number of outstanding Vornado common shares as of May 31, 2017, we expect that we will have an aggregate of approximately 94.7 million common shares issued and outstanding. These shares will be freely tradable without restriction or further registration under the Securities Act, unless the shares are owned by one of our "affiliates," as that term is defined in Rule 405 under the Securities Act. In addition, we expect to issue approximately 23.8 million additional common shares to JBG investors in the combination, who

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will be permitted to sell the common shares they receive in the combination after a registration statement for such resales has been declared effective or pursuant to an exemption from the registration requirements.

              Although we have no actual knowledge of any plan or intention on the part of any 5% or greater shareholder to sell our common shares following the distribution, it is possible that some shareholders, including possibly some of our large shareholders, will sell our common shares that they receive in the distribution or the combination. For example, Vornado shareholders may sell our common shares because our business profile or market capitalization as an independent company does not fit their investment objectives or because our common shares are not included in certain indices after the distribution. A portion of Vornado's shares is held by index funds tied to the Standard & Poor's 500 Index or other indices, and if we are not included in these indices at the time of the distribution, these index funds may be required to sell our common shares. Additionally, JBG investors who receive common shares in the combination will have liquidity for their investments (unlike with respect to their equity interests in the JBG Contributing Funds) and may decide to sell their shares to realize such liquidity. The sales of significant amounts of our common shares, or the perception in the market that this will occur, may result in the lowering of the market price of our common shares.

Risks Related to Our Indebtedness and Financing

We expect to have a substantial amount of indebtedness, which may limit our financial and operating activities and expose us to the risk of default under our debt obligations.

              Upon completion of the transaction, we anticipate that we will have $2.2 billion aggregate principal amount of consolidated debt outstanding ($2.2 billion at our share) and our unconsolidated joint ventures will have over $1.1 billion aggregate principal amount of debt outstanding ($380 million at our share), resulting in a total of approximately $2.6 billion aggregate principal amount of debt outstanding at our share. A subset of our outstanding debt will be guaranteed by our operating partnership, and we may incur significant additional debt to finance future acquisition and development activities.

              Payments of principal and interest on borrowings may leave us with insufficient cash resources to operate our assets or to pay the dividends currently contemplated or necessary to maintain our REIT qualification. Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following:

    our cash flow may be insufficient to meet our required principal and interest payments;

    we may be unable to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our ability to meet operational needs;

    we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness;

    we may be forced to dispose of one or more of our assets, possibly on unfavorable terms or in violation of certain covenants to which we may be subject;

    we may violate restrictive covenants in our loan documents, which would entitle the lenders to accelerate our debt obligations; and

    our default under any loan with cross-default provisions could result in a default on other indebtedness.

              If any one of these events were to occur, our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to make distributions to our shareholders could be adversely affected. Furthermore, foreclosures could create taxable income

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without accompanying cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Code.

Our debt agreements include restrictive covenants, requirements to maintain financial ratios and default provisions, which could limit our flexibility and our ability to make distributions and require us to repay the indebtedness prior to its maturity.

              The mortgages on our assets contain customary negative covenants that, among other things, limit our ability, without the prior consent of the lender, to further mortgage the property and to reduce or change insurance coverage. On a pro forma basis, JBG SMITH has approximately $2.2 billion aggregate principal amount of consolidated debt outstanding ($2.2 billion at our share) and our unconsolidated joint ventures had over $1.1 billion aggregate principal amount of debt outstanding ($380 million at our share), resulting in a total of approximately $2.6 billion aggregate principal amount of debt outstanding at our share. We are arranging a $1.4 billion credit facility under which we expect to have significant borrowing capacity. Additionally, our debt agreements contain customary covenants that, among other things, restrict our ability to incur additional indebtedness and, in certain instances, restrict our ability to engage in material asset sales, mergers, consolidations and acquisitions, and restrict our ability to make capital expenditures. These debt agreements, in some cases, also subject us to guarantor and liquidity covenants, and the credit facility that we are arranging will, and other future debt may, require us to maintain various financial ratios. Some of our debt agreements contain certain cash flow sweep requirements and mandatory escrows, and our property mortgages generally require certain mandatory prepayments upon disposition of underlying collateral. Our ability to borrow is subject to compliance with these and other covenants, and failure to comply with our covenants could cause a default under the applicable debt instrument, and we may then be required to repay such debt with capital from other sources or give possession of a secured property to the lender. Under those circumstances, other sources of capital may not be available to us, or may be available only on unattractive terms.

We may not be able to obtain capital to make investments.

              We depend primarily on external financing to fund the growth of our business. This is because one of the requirements of the Code for a REIT is that it distributes at least 90% of its taxable income, excluding net capital gains, to its shareholders. There is a separate requirement to distribute net capital gains or pay a corporate level tax in lieu thereof. Our access to debt or equity financing depends on the willingness of third parties to lend or make equity investments and on conditions in the capital markets generally. Although we believe that we will be able to finance any investments we may wish to make in the foreseeable future, there can be no assurance that new financing will be available or available on acceptable terms. For information about our available sources of funds, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" and the notes to the consolidated financial statements in this information statement.

We may not be permitted to dispose of certain assets or pay down the debt associated with those assets when we might otherwise desire to do so without incurring additional costs. In addition, when we dispose of or sell assets, we may not be able to reinvest the sales proceeds and earn similar returns.

              As part of an acquisition of a property, or a portfolio of assets, we may agree not to dispose of the acquired assets or reduce the mortgage indebtedness for a long-term period, unless we pay certain of the resulting tax costs of the seller. Such an agreement could result in us holding on to assets that we would otherwise sell and not pay down or refinance the mortgage indebtedness encumbering such assets. In addition, when we dispose of or sell assets, we may not be able to reinvest the sales proceeds and earn returns similar to those generated by the assets that were sold.

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Our decision to dispose of real estate assets would change the holding period assumption in our valuation analyses, which could result in material impairment losses and adversely affect our financial results.

              We evaluate real estate assets for impairment based on the projected cash flow of the asset over our anticipated holding period. If we change our intended holding period, due to our intention to sell or otherwise dispose of an asset, then under accounting principles generally accepted in the United States, we must reevaluate whether that asset is impaired. Depending on the carrying value of the property at the time we change our intention and the amount that we estimate we would receive on disposal, we may record an impairment loss that would adversely affect our financial results. This loss could be material to our results of operations in the period that it is recognized.

Risks Related to the Real Estate Industry

Real estate investments' value and income fluctuate due to various factors.

              The value of real estate fluctuates depending on conditions in the general economy and the real estate business. These conditions may also adversely impact our revenues and cash flows.

              The factors that affect the value of our real estate include, among other things:

    global, national, regional and local economic conditions;

    competition from other available space;

    local conditions such as an oversupply of space or a reduction in demand for real estate in the area;

    how well we manage our assets;

    the development and/or redevelopment of our assets;

    changes in market rental rates;

    the timing and costs associated with property improvements and rentals;

    whether we are able to pass all or portions of any increases in operating costs through to tenants;

    changes in real estate taxes and other expenses;

    whether tenants and users consider a property attractive;

    the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;

    availability of financing on acceptable terms or at all;

    inflation or deflation;

    fluctuations in interest rates;

    our ability to obtain adequate insurance;

    changes in zoning laws and taxation;

    government regulation;

    consequences of any armed conflict involving, or terrorist attack against, the United States or individual acts of violence in public spaces;

    potential liability under environmental or other laws or regulations;

    natural disasters;

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    general competitive factors; and

    climate changes.

              The rents or sales proceeds we receive and the occupancy levels at our assets may decline as a result of adverse changes in any of these factors. If rental revenues, sales proceeds and/or occupancy levels decline, we generally would expect to have less cash available to pay indebtedness and for distribution to shareholders. In addition, some of our major expenses, including mortgage payments, real estate taxes and maintenance costs generally do not decline when the related rents decline.

It may be difficult to buy and sell real estate quickly, which may limit our flexibility.

              Real estate investments are relatively difficult to buy and sell quickly. Consequently, we may have limited ability to vary our portfolio promptly in response to changes in economic or other conditions. Moreover, our ability to buy, sell, or finance real estate assets may be adversely affected during periods of uncertainty or unfavorable conditions in the credit markets as we, or potential buyers of our assets, may experience difficulty in obtaining financing.

We may incur significant costs to comply with environmental laws and environmental contamination may impair our ability to lease and/or sell real estate.

              Our operations and assets are subject to various federal, state and local laws and regulations concerning the protection of the environment including air and water quality, hazardous or toxic substances and health and safety. Under some environmental laws, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released at a property. The owner or operator may also be held liable to a governmental entity or to third parties for property damage or personal injuries and for investigation and clean-up costs incurred by those parties because of the contamination. These laws often impose liability without regard to whether the owner or operator knew of the release of the substances or caused such release. The presence of contamination or the failure to remediate contamination may impair our ability to sell or lease real estate or to borrow using the real estate as collateral. Other laws and regulations govern indoor and outdoor air quality including those that can require the abatement or removal of asbestos-containing materials in the event of damage, demolition, renovation or remodeling, and also govern emissions of and exposure to asbestos fibers in the air. The maintenance and removal of lead paint and certain electrical equipment containing polychlorinated biphenyls (PCBs) are also regulated by federal and state laws. We are also subject to risks associated with human exposure to chemical or biological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be alleged to be connected to allergic or other health effects and symptoms in susceptible individuals. Our predecessor companies may be subject to similar liabilities for activities of those companies in the past. We could incur fines for environmental noncompliance and be held liable for the costs of remedial action with respect to the foregoing regulated substances or related claims arising out of environmental contamination or human exposure at or from our assets.

              Most of our assets have been subjected to varying degrees of environmental assessment at various times. To date, these environmental assessments have not revealed any environmental condition material to our business. However, identification of new compliance concerns or undiscovered areas of contamination, changes in the extent or known scope of contamination, human exposure to contamination or changes in cleanup or compliance requirements could result in significant costs to us.

              In addition, we may become subject to costs or taxes, or increases therein, associated with natural resource or energy usage (such as a "carbon tax"). These costs or taxes could increase our operating costs and decrease the cash available to pay our obligations or distribute to equity holders.

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If we default on or fail to renew at expiration the ground leases for land on which some of our assets are located or other long-term leases, our results of operations could be adversely affected.

              We will own leasehold interests in certain land on which some of the assets to be acquired in the transaction are located. If we default under the terms of any of these ground leases, we may be liable for damages and could lose our leasehold interest in the property or our option to purchase the underlying fee interest in such assets. In addition, unless we purchase the underlying fee interests in the land on which a particular property is located, we will lose our right to operate the property or we will continue to operate it at much lower profitability, which would significantly adversely affect our results of operations. In addition, if we are perceived to have breached the terms of a ground lease, the fee owner may initiate proceedings to terminate the lease. The remaining weighted average term of our ground leases, including unilateral as-of-right extension rights available to us, is approximately 72.4 years. Our share of annualized rent from assets subject to ground leases as of March 31, 2017 was approximately $43.4 million, or 7.8%.

Risks Related to Our Organization and Structure

Tax consequences to holders of JBG SMITH LP limited partnership units upon a sale of certain of our assets may cause the interests of our senior management to differ from your own.

              Some holders of JBG SMITH LP limited partnership units, including members of our senior management, may suffer different and more adverse tax consequences than holders of our common shares upon the sale of certain of the assets owned by our operating partnership, and therefore these holders may have different objectives regarding the appropriate pricing, timing and other material terms of any sale or refinancing of certain assets, or whether to sell such assets at all.

Our declaration of trust and bylaws, the partnership agreement of our operating partnership and Maryland law 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.

      Our declaration of trust contains certain ownership limits with respect to our shares.

              Generally, to maintain our qualification as a REIT, no more than 50% in value of our outstanding shares of beneficial interest may be owned, directly or indirectly, by five or fewer individuals at any time during the last half of our taxable year. The Code defines "individuals" for purposes of the requirement described in the preceding sentence to include some types of entities. Our declaration of trust, as it will be amended and restated in connection with the transaction, authorizes our board of trustees to take such actions as it determines are necessary or advisable to preserve our qualification as a REIT. Our declaration of trust will prohibit, among other things, the actual, beneficial or constructive ownership by any person of more than 7.5% in value or number of shares, whichever is more restrictive, of the outstanding shares of any class or series. For these purposes, our declaration of trust will include a "group" as that term is used for purposes of Section 13(d)(3) of the Exchange Act in the definition of "person." Our board of trustees may exempt a person, prospectively or retroactively, from these ownership limits if certain conditions are satisfied.

              This ownership limit and the other restrictions on ownership and transfer of our shares contained in our declaration of trust may:

    discourage a tender offer or other transactions or a change in management or of control that might involve a premium price for our common shares or that our shareholders might otherwise believe to be in their best interest; or

    result in the transfer of shares acquired in excess of the restrictions to a trust for the benefit of a charitable beneficiary and, as a result, the forfeiture by the acquirer of the benefits of owning the additional shares.

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      Certain provisions of Maryland law could inhibit changes in control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that might involve a premium price for our common shares or that our shareholders might otherwise believe to be in their best interest.

              Certain provisions of the Maryland General Corporation Law, or MGCL, may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of common shares with the opportunity to realize a premium over the then-prevailing market price of such shares, including:

    "business combination" provisions that, subject to limitations, prohibit certain business combinations between us and an "interested shareholder" (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then-outstanding voting shares at any time within the two-year period immediately prior to the date in question) for five years after the most recent date on which the shareholder becomes an interested shareholder, and thereafter impose fair price and/or supermajority shareholder voting requirements on these combinations; and

    "control share" provisions that provide that a shareholder's "control shares" of our company (defined as shares that, when aggregated with other shares controlled by the shareholder, entitle the shareholder to exercise one of three increasing ranges of voting power in electing trustees) acquired in a "control share acquisition" (defined as the direct or indirect acquisition of ownership or control of issued and outstanding "control shares") have no voting rights with respect to their control shares, except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

              As permitted by the MGCL, we have elected in our bylaws to opt out of the 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.

              Certain provisions of Subtitle 8 of Title 3 of the MGCL permit our board of trustees, without shareholder approval and regardless of what is currently provided in our declaration of trust or bylaws, to implement certain corporate governance provisions, some of which (for example, approval by at least two-thirds of all shareholders to remove a trustee) are not currently applicable to us. These provisions may have the effect of limiting or precluding a third party from making an unsolicited acquisition proposal for us or of delaying, deferring or preventing a change in control of us under circumstances that otherwise could provide the holders of common shares with the opportunity to realize a premium over the then current market price.

The limited partnership agreement of our operating partnership requires the approval of the limited partners with respect to certain extraordinary transactions involving JBG SMITH, which may reduce the likelihood of such transactions being consummated, even if they are in the best interests of, and have been approved by, our shareholders.

              The limited partnership agreement of JBG SMITH LP, our operating partnership, as it will be amended and restated in connection with the combination, will provide that JBG SMITH may not engage in a merger, consolidation or other combination with or into another person, a sale of all or substantially all of our assets, or a reclassification, recapitalization or a change in outstanding shares (except for changes in par value, or from par value to no par value, or as a result of a subdivision or combination of our common shares), which we refer to collectively as an extraordinary transaction,

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unless certain criteria are met. In particular, with respect to any extraordinary transaction, if partners will receive consideration for their limited partnership units and if we seek the approval of JBG SMITH shareholders for the transaction (or if we would have been required to obtain shareholder approval of any such extraordinary transaction but for the fact that a tender offer shall have been accepted with respect to a sufficient number of our common shares to permit consummation of such extraordinary transaction without shareholder approval), then the limited partnership agreement prohibits us from engaging in the extraordinary transaction unless we also obtain "partnership approval." In order to obtain "partnership approval," we must obtain the consent of our limited partners (including us and any limited partners majority owned, directly or indirectly, by us) representing a percentage interest in JBG SMITH LP that is equal to or greater than the percentage of our outstanding common shares required (or that would have been required in the absence of a tender offer) to approve the extraordinary transaction, provided that we and any limited partners majority owned, directly or indirectly, by us will be deemed to have provided consent for our partnership units solely in proportion to the percentage of our common shares approving the extraordinary transaction (or, if there is no shareholder vote with respect to such extraordinary transaction because a tender offer shall have been accepted with respect to a sufficient number of our common shares to permit consummation of the extraordinary transaction without shareholder approval, the percentage of our common shares with respect to which such tender offer shall have been accepted). This requirement is described in more detail under "Partnership Agreement."

              The limited partners of JBG SMITH LP may have interests in an extraordinary transaction that differ from those of JBG SMITH common shareholders, and there can be no assurance that, if we are required to seek "partnership approval" for such a transaction, we will be able to obtain it. As a result, if a sufficient number of limited partners oppose such an extraordinary transaction, the limited partnership agreement may prohibit JBG SMITH from consummating it, even if it is in the best interests of, and has been approved by, our shareholders.

Until the 2020 annual meeting of shareholders, JBG SMITH will have a classified board of trustees and that may reduce the likelihood of certain takeover transactions.

              Our declaration of trust, which will be amended and restated prior to the separation, will initially divide our board of trustees into three classes. The initial terms of the first, second and third classes will expire at the first, second and third annual meetings of shareholders, respectively, held following the separation and the combination. Initially, shareholders will elect only one class of trustees each year. Shareholders will elect successors to trustees of the first class for a two-year term and successors to trustees of the second class for a one-year term, in each case upon the expiration of the terms of the initial trustees of each class. Commencing with the 2020 annual meeting of shareholders, each trustee shall be elected annually for a term of one year and shall hold office until the next succeeding annual meeting and until a successor is duly elected and qualifies. There is no cumulative voting in the election of trustees. Until the 2020 annual meeting of the shareholders, JBG SMITH's board will be classified, which may reduce the possibility of a tender offer or an attempt to change control of JBG SMITH, even though a tender offer or change in control might be in the best interest of JBG SMITH's shareholders.

We may issue additional shares in a manner that could adversely affect the likelihood of certain takeover transactions.

              JBG SMITH's declaration of trust, which will be amended and restated prior to the separation, will authorize the board of trustees, without shareholder approval, to:

    cause JBG SMITH to issue additional authorized but unissued common or preferred shares;

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    classify or reclassify, in one or more classes or series, any unissued common or preferred shares;

    set the preferences, rights and other terms of any classified or reclassified shares that JBG SMITH issues; and

    amend JBG SMITH's declaration of trust to increase the number of shares of beneficial interest that JBG SMITH may issue.

              The board of trustees could establish a class or series of common or preferred shares whose terms could delay, deter or prevent a change in control of JBG SMITH or other transaction that might involve a premium price or otherwise be in the best interest of our shareholders, although the board of trustees does not now intend to establish a class or series of common or preferred shares of this kind. JBG SMITH's declaration of trust and bylaws will contain other provisions that may delay, deter or prevent a change in control of JBG SMITH or other transaction that might involve a premium price or otherwise be in the best interest of our shareholders.

Substantially all of our assets will be owned by subsidiaries. We depend on dividends and distributions from these subsidiaries. The creditors of these subsidiaries are entitled to amounts payable to them by the subsidiaries before the subsidiaries may pay any dividends or other distributions to us.

              Substantially all of our assets are held through JBG SMITH LP, our operating partnership, which holds substantially all of its assets through wholly owned subsidiaries. JBG SMITH LP's cash flow is dependent on cash distributions to it by its subsidiaries, and in turn, substantially all of our cash flow is dependent on cash distributions to us by JBG SMITH LP. The creditors of each of our subsidiaries are entitled to payment of that subsidiary's obligations to them when due and payable before distributions may be made by that subsidiary to its equity holders. Thus, JBG SMITH LP's ability to make distributions to holders of its units depends on its subsidiaries' ability first to satisfy their obligations to their creditors, and then to make distributions to JBG SMITH LP. Likewise, our ability to pay dividends to our shareholders depends on JBG SMITH LP's ability first to satisfy its obligations, if any, to its creditors and make distributions payable to holders of preferred units (if any), and then to make distributions to us.

              In addition, our participation in any distribution of the assets of any of our subsidiaries upon the liquidation, reorganization or insolvency of the subsidiary, is only after the claims of the creditors, including trade creditors, and preferred security holders, if any, of the applicable direct or indirect subsidiaries are satisfied.

Risks Related to Our Status as a REIT

JBG SMITH may fail to qualify or remain qualified as a REIT and may be required to pay income taxes at corporate rates.

              Although we believe that we will be organized and will continue to operate so as to qualify as a REIT for federal income tax purposes, we may fail to remain so qualified. Qualifications are governed by highly technical and complex provisions of the Code for which there are only limited judicial or administrative interpretations and depend on various facts and circumstances that are not entirely within our control. In addition, legislation, new regulations, administrative interpretations or court decisions may significantly change the relevant tax laws and/or the federal income tax consequences of qualifying as a REIT. If, with respect to any taxable year, we fail to maintain our qualification as a REIT and do not qualify under statutory relief provisions, we could not deduct distributions to shareholders in computing our taxable income and would have to pay federal income tax on our taxable income at regular corporate rates. The federal income tax payable would include any applicable alternative minimum tax. If we had to pay federal income tax, the amount of money

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available to distribute to shareholders and pay our indebtedness would be reduced for the year or years involved, and we would not be required to make distributions to shareholders in that taxable year and in future years until we were able to qualify as a REIT. In addition, we would also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost, unless we were entitled to relief under the relevant statutory provisions.

REIT distribution requirements could adversely affect our liquidity and our ability to execute our business plan.

              In order for us to qualify to be taxed as a REIT, and assuming that certain other requirements are also satisfied, we generally must distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains, to our shareholders each year, so that U.S. federal corporate income tax does not apply to earnings that we distribute. To the extent that we satisfy this distribution requirement and qualify for taxation as a REIT, but distribute less than 100% of our REIT taxable income, determined without regard to the dividends paid deduction and including any net capital gains, we will be subject to U.S. federal corporate income tax on our undistributed net taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we distribute to our shareholders in a calendar year is less than a minimum amount specified under U.S. federal income tax laws. We intend to distribute 100% of our REIT taxable income to our shareholders out of assets legally available therefor.

              From time to time, we may generate taxable income greater than our cash flow as a result of differences in timing between the recognition of taxable income and the actual receipt of cash or the effect of nondeductible capital expenditures, the creation of reserves, or required debt or amortization payments. If we do not have other funds available in these situations, we could be required to borrow funds on unfavorable terms, sell assets at disadvantageous prices, distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt, or make taxable distributions of our shares or debt securities to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirement and avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase our costs or reduce our equity. Further, amounts distributed will not be available to fund investment activities. Thus, compliance with the REIT requirements may hinder our ability to grow, which could adversely affect the value of our shares. Any restrictions on our ability to incur additional indebtedness or make certain distributions could preclude us from meeting the 90% distribution requirement. Decreases in funds from operations due to unfinanced expenditures for acquisitions of assets or increases in the number of shares outstanding without commensurate increases in funds from operations would each adversely affect our ability to maintain distributions to our shareholders. Consequently, there can be no assurance that we will be able to make distributions at the anticipated distribution rate or any other rate. Please refer to "Dividend Policy."

We face possible adverse changes in tax laws, which may result in an increase in our tax liability and adverse consequences to our shareholders.

              Changes in U.S. federal, state and local tax laws or regulations, with or without retroactive application, could have a negative effect on us. New legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify to be taxed as a REIT and/or the U.S. federal income tax consequences to our investors and to our company of such qualification. In addition, recent events and the shortfall in tax revenues for states and municipalities in recent years may lead to an increase in the frequency and size of such tax law changes. Even changes that do not impose greater taxes on us could potentially result in adverse consequences to our shareholders. For example, a decrease in corporate tax rates could decrease the attractiveness of the REIT structure relative to companies that are not organized as REITs.

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              In any event, the rules of Section 355 of the Code and the Treasury Regulations promulgated thereunder, which apply to determine the taxability of the separation and the combination, have been the subject of change and may continue to be the subject of change, possibly with retroactive application, which could have a negative effect on us and our shareholders. If such changes occur, we may be required to pay additional taxes on our assets or income. These increased tax costs could adversely affect our financial condition and results of operations and the amount of cash available for payment of dividends.

Risks Related to Our Common Shares

No market currently exists for the JBG SMITH common shares and we cannot be certain that an active trading market for our common shares will develop or be sustained after the separation. Following the separation, our share price may fluctuate significantly.

              A public market for our common shares does not currently exist. We anticipate that on or prior to the record date for the distribution, trading of our common shares will begin on a "when-issued" basis and will continue through the distribution date. However, we cannot guarantee that an active trading market will develop or be sustained for our common shares after the separation. Nor can we predict the prices at which our common shares may trade after the separation. Similarly, we cannot predict the effect of the separation on the trading prices of our common shares or whether the combined market value of our common shares and Vornado's common shares will be less than, equal to, or greater than the market value of Vornado's common shares prior to the separation. The market price of our common shares may fluctuate significantly due to a number of factors, some of which may be beyond our control, including:

    our financial condition and performance;

    the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;

    actual or anticipated quarterly fluctuations in our operating results and financial condition;

    our dividend policy;

    the reputation of REITs and real estate investments generally and the attractiveness of REIT equity securities in comparison to other equity securities, including securities issued by other real estate companies, and fixed income securities;

    perceptions of the Washington, DC metropolitan area real estate market;

    uncertainty and volatility in the equity and credit markets;

    fluctuations in interest rates;

    changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other REITs;

    failure to meet analysts' revenue or earnings estimates;

    speculation in the press or investment community;

    strategic actions by us or our competitors, such as acquisitions or restructurings;

    the extent of institutional investor interest in us;

    the extent of short-selling of our common shares and the shares of our competitors;

    fluctuations in the stock price and operating results of our competitors;

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    general financial and economic market conditions and, in particular, developments related to market conditions for REITs and other real estate related companies;

    domestic and international economic factors unrelated to our performance; and

    all other risk factors addressed elsewhere in this information statement.

              In addition, when the market price of a company's common shares drops significantly, shareholders often institute securities class action lawsuits against the company. A lawsuit against us could cause us to incur substantial costs and could divert the time and attention of our management and other resources.

We cannot guarantee the timing, amount, or payment of dividends on our common shares.

              Although we expect to pay regular cash dividends following the separation, the timing, declaration, amount and payment of future dividends to shareholders will fall within the discretion of our board of trustees. Our board of trustees' decisions regarding the payment of dividends will depend on many factors, such as our financial condition, earnings, capital requirements, debt service obligations, limitations under our financing arrangements, industry practice, legal requirements, regulatory constraints, and other factors that it deems relevant. Our ability to pay dividends will depend on our ongoing ability to generate cash from operations and access the capital markets. We cannot guarantee that we will pay a dividend in the future or continue to pay any dividend if we commence paying dividends. For more information, please refer to "Dividend Policy."

Your percentage of ownership in our company may be diluted in the future.

              In the future, your percentage of ownership in us may be diluted because of equity issuances for acquisitions, capital market transactions or otherwise. We also anticipate granting compensatory equity awards to our trustees, officers, employees, advisors and consultants who will provide services to us after the distribution. Such awards will have a dilutive effect on our earnings per share, which could adversely affect the market price of our common shares.

              In addition, our declaration of trust will authorize us to issue, without the approval of our shareholders, one or more classes or series of preferred shares having such designation, voting powers, preferences, rights and other terms, including preferences over our common shares respecting dividends and distributions, as our board of trustees generally may determine. The terms of one or more classes or series of preferred shares could dilute the voting power or reduce the value of our common shares. For example, we could grant the holders of preferred shares the right to elect some number of our trustees in all events or on the occurrence of specified events, or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we could assign to holders of preferred shares could affect the residual value of our common shares. Please refer to "Description of Shares of Beneficial Interest."

From time to time we may seek to make one or more material acquisitions. The announcement of such a material acquisition may result in a rapid and significant decline in the price of our common shares.

              We are continuously looking at material transactions that we believe will maximize shareholder value. However, an announcement by us of one or more significant acquisitions could result in a quick and significant decline in the price of our common shares.

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

              Certain statements contained herein constitute forward-looking statements. 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. 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 information statement. In particular, information included under "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business and Properties," and "The Separation and the Combination" contains forward-looking statements. We also note the following forward-looking statements: in the case or our development and redevelopment projects, the estimated completion date, estimated project cost and cost to complete; and estimates of future capital expenditures, dividends to common shareholders and operating partnership distributions. 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 a discussion of factors that could materially affect the outcome of our forward-looking statements, see "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this information statement.

              You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this information statement or the date of any document incorporated by reference. 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 of this information statement.

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DIVIDEND POLICY

              We are a newly formed company that has not commenced operations and, as a result, we have not paid any dividends as of the date of this information statement. We expect to distribute 100% of our REIT taxable income to our shareholders out of assets legally available therefor. We expect that the cash required to fund our dividends will be covered by cash generated from operations and, to the extent they are not so covered, from our cash on hand. Our dividends must be authorized by our board of trustees, in its sole discretion.

              To qualify as a REIT, we must distribute to our shareholders an amount at least equal to:

(i)
90% of our REIT taxable income, determined before the deduction for dividends paid and excluding any net capital gain (which does not necessarily equal net income as calculated in accordance with GAAP); plus

(ii)
90% of the excess of our net income from foreclosure property over the tax imposed on such income by the Code; less

(iii)
Any excess non-cash income (as determined under the Code). Please refer to "Material U.S. Federal Income Tax Consequences."

              We cannot assure you that our distribution policy will remain the same in the future, or that any estimated distributions will be made or sustained. Distributions made by us will be authorized by our board of trustees, in its sole discretion, and declared by us out of legally available funds, and will be dependent upon a number of factors, including restrictions under applicable law, actual and projected financial condition, liquidity, funds from operations and results of operations, the revenue we actually receive from our assets, our operating expenses, our debt service requirements, our capital expenditures, prohibitions and other limitations under our financing arrangements, the annual REIT distribution requirements and such other factors as our board of trustees deems relevant. For more information regarding risk factors that could materially and adversely affect our ability to make distributions, please refer to "Risk Factors."

              Our distributions may be funded from a variety of sources. In particular, we expect that initially our distributions may exceed our net income under GAAP because of non-cash expenses, principally depreciation and amortization expense, included in net income under GAAP. To the extent that our cash available for distribution is less than 100% of our taxable income, we may consider various means to cover any such shortfall, including borrowing, selling certain of our assets or using a portion of the net proceeds we receive from future offerings of equity, equity-related or debt securities or declaring taxable share dividends. In addition, our declaration of trust will allow us to issue shares of preferred equity that could have a preference on distributions and, if we do, the distribution preference on the preferred equity could limit our ability to make distributions to the holders of our common shares.

              For a discussion of the tax treatment of distributions to holders of our common shares, please refer to "Material U.S. Federal Income Tax Consequences."

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CAPITALIZATION

              The following table sets forth JBG SMITH's capitalization as of March 31, 2017 on an unaudited historical basis as it existed prior to the separation and the combination, when it had no material assets or operations, and on a pro forma basis to give effect to the pro forma adjustments included in JBG SMITH's unaudited pro forma financial information. The information below is not necessarily indicative of what JBG SMITH's capitalization would have been had the separation, distribution, combination and related transactions been completed as of March 31, 2017. In addition, it is not indicative of JBG SMITH's future capitalization. This table should be read in conjunction with "Unaudited Pro Forma Combined Financial Statements," "Selected Historical Combined Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and JBG SMITH's audited combined financial statements and notes and unaudited combined interim financial statements and notes included elsewhere in this information statement.

 
  As of March 31, 2017  
 
  Actual   Pro Forma
Adjustments
  Pro Forma  

(Amounts in thousands)

                   

Cash and cash equivalents(1)

  $ 1   $ 510,517   $ 510,518  

Mortgages payable, net of deferred financing costs

 
$

 
$

2,059,515
 
$

2,059,515
 

Revolving credit facility(1)(2)

        117,269     117,269  

Unsecured term loan(1)

        50,000     50,000  

Total debt

        2,226,784     2,226,784  

Shareholder's equity(1)

    1     3,358,151     3,358,152  

Noncontrolling interests in JBG SMITH LP

        566,777     566,777  

Noncontrolling interest in consolidated subsidiaries

        4,153     4,153  

Total Capitalization

  $ 1   $ 6,155,865   $ 6,155,866  

(1)
Pursuant to the separation, the distributions by each of Vornado and VRLP, and the combination, these adjustments reflect:

(i)
Vornado's and JBG's contribution of cash in connection with the separation and combination, which results in a pro forma cash balance of $510.5 million, after reduction for transaction costs, that is to be used by JBG SMITH for general corporate purposes;

(ii)
the reclassification of Vornado equity to shareholders' equity; and

(iii)
the execution of a $1.4 billion credit agreement under which $167.3 million is expected to be drawn and outstanding as of the date of the separation, including the borrowing described in (2) below.

(2)
The mortgage for the Bowen Building ($115,630 principal balance and $1,639 accrued interest) will be assigned to JBG SMITH and the note will be repaid with new financing proceeds from JBG SMITH's revolving credit facility.

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SELECTED HISTORICAL COMBINED FINANCIAL DATA

              The following tables set forth the summary historical combined financial and other data of JBG SMITH as it will exist following the separation but prior to the combination, when we will own the Vornado Included Assets but will not yet have acquired the JBG Included Assets, which was carved out from the financial information of Vornado as described below. We were formed for the purpose of receiving, via contribution from Vornado, all of the assets and liabilities of Vornado's Washington, DC segment, and combining Vornado's Washington, DC segment (which operates as Vornado / Charles E. Smith) and the management business and certain Washington, DC assets of JBG. Prior to the effective date of the registration statement on Form 10 of which this information statement forms a part, and the completion of the distributions by each of Vornado and VRLP, we did not conduct any business and did not have any material assets or liabilities. The selected historical financial data set forth below as of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015 and 2014 has been derived from our audited combined financial statements, which are included elsewhere in this information statement. The selected financial historical data set forth below as of December 31, 2014 and 2013 and for the year ended December 31, 2013 has been derived from our audited combined financial statements, which are not included in this information statement. The selected historical combined financial data as of December 31, 2012 and for the year ended December 31, 2012 has been derived from our unaudited combined financial statements, which are not included in this information statement. The income statement data for each of the three months ended March 31, 2017 and 2016 and the balance sheet data as of March 31, 2017 have been derived from our unaudited interim combined financial statements included elsewhere in this information statement. Our unaudited interim combined financial statements as of March 31, 2017 and for the three months ended March 31, 2017 and 2016 were prepared on the same basis as our audited combined financial statements as of December 31, 2016, 2015 and 2014 and for each of the years ended December 31, 2016, 2015 and 2014 and, in the opinion of management, include all adjustments, consisting only of normal, recurring adjustments, necessary to present fairly our financial position and results of operations for these periods. The interim results of operations are not necessarily indicative of operations for a full fiscal year.

              The historical results set forth below do not indicate results expected for any future periods. The selected financial data set forth below are qualified in their entirety by, and should be read in conjunction with, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our combined financial statements and related notes thereto included elsewhere in this information statement.

              The following tables set forth selected financial and operating data for the Vornado Included Assets. This data may not be comparable to, or indicative of, future operating results.

 
   
  As of December 31,  
 
  (Unaudited)  
 
  (Audited)   (Audited)   (Audited)   (Audited)   (Unaudited)  
 
  As of
March 31,
2017
 
 
  2016   2015   2014   2013   2012  

(Amounts in thousands)

                                     

Balance Sheet Data:

                                     

Total assets

  $ 3,686,203   $ 3,660,640   $ 3,575,878   $ 3,357,744   $ 3,226,203   $ 3,223,365  

Real estate, at cost

    4,178,065     4,155,391     4,038,206     3,809,213     3,700,763     3,641,205  

Accumulated depreciation and amortization

    957,270     930,769     908,233     797,806     732,707     661,597  

Mortgages payable, net of deferred financing costs

    1,161,984     1,165,014     1,302,956     1,277,889     1,180,480     1,354,895  

Payable to Vornado

    289,590     283,232     82,912              

Noncontrolling interest in consolidated subsidiaries

    295     295     515     568     536     448  

Total equity

    2,140,587     2,121,984     2,059,491     1,988,915     1,966,321     1,771,398  

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  (Unaudited)    
   
   
   
   
 
 
  For the Year Ended December 31,  
 
  Three Months
Ended March 31,
 
 
  (Audited)   (Audited)   (Audited)   (Audited)   (Unaudited)  
 
  2017   2016   2016   2015   2014   2013   2012  

(Amounts in thousands)

                                           

Income Statement Data:

                                           

Total revenues

  $ 116,272   $ 116,784   $ 478,519   $ 470,607   $ 472,923   $ 476,311   $ 479,800  

Operating income

    19,606     24,276     112,793     102,597     138,619     149,674     142,904  

Net income attributable to the Vornado Included Assets

    6,318     11,547     61,974     49,628     81,299     92,026     59,626  

Cash Flow Statement Data:

                                           

Provided by operating activities

    39,601     57,861     159,541     178,230     187,386     176,255     195,690  

Used in investing activities

    (30,094 )   (58,182 )   (256,590 )   (237,953 )   (236,923 )   (99,018 )   (70,065 )

Provided by (used in) financing activities

    12,205     (32,196 )   51,083     122,671     33,353     (73,711 )   (123,770 )

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UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

              The following unaudited pro forma combined financial statements have been prepared in accordance with Article 11 of Regulation S-X, using the assumptions set forth in the notes to the unaudited pro forma combined financial information by applying pro forma adjustments to the historical combined financial information to reflect the separation of the Vornado Included Assets from Vornado and the acquisition of the JBG Included Assets (including JBG Operating Partners) as described elsewhere in this information statement. The unaudited pro forma combined balance sheet gives effect to the transaction as if it had occurred on March 31, 2017. The unaudited pro forma combined statements of operations give effect to the transaction as if it had occurred on January 1, 2016. All significant pro forma adjustments and underlying assumptions are described in the notes to the unaudited pro forma combined financial statements.

              The unaudited pro forma adjustments include the following:

    The contribution from Vornado to JBG SMITH of the assets and liabilities that comprise the Vornado Included Assets' business and $213.0 million of cash;

    The acquisition of the JBG Included Assets (including JBG Operating Partners), including cash of $80.6 million;

    The issuance of approximately 19.3 million common limited partnership units of JBG SMITH LP (in addition to 118.5 million common limited partnership units issued to JBG SMITH, the general partner of JBG SMITH LP, in connection with the distribution) based upon (i) a distribution ratio of one common limited partnership unit of JBG SMITH LP for every two common limited partnership units of VRLP, resulting in the expected issuance of approximately 5.9 million common limited partnership units to VRLP's unitholders and (ii) the issuance of approximately 13.4 million common limited partnership units to the JBG designees in connection with the combination;

    The issuance of approximately 118.5 million JBG SMITH common shares based upon (i) a distribution ratio of one JBG SMITH common share for every two Vornado common shares, resulting in the expected issuance of approximately 94.7 million JBG SMITH common shares to Vornado's common shareholders on the distribution date and (ii) the issuance of approximately 23.8 million JBG SMITH common shares to the JBG designees on the following day in connection with the combination; and

    The execution of a $1.4 billion credit agreement.

              The accompanying unaudited pro forma combined financial statements do not give effect to the potential impact of cost savings that may result from the transactions described above or items that will not have a recurring impact. While Vornado will provide JBG SMITH with certain information technology, financial reporting, SEC compliance, and possibly other support services on a transitional basis pursuant to a Transition Services Agreement, a significant portion of these services are expected to be less than one year in duration. Accordingly, the accompanying unaudited pro forma combined financial statements do not give effect to the Transition Services Agreement with Vornado, as the majority of these services are not expected to be recurring in nature and therefore do not have a continuing impact on JBG SMITH's unaudited pro forma combined statements of operations.

              In the event the mortgage lender does not provide consent to transfer of the beneficial interests in the owner of 2121 Crystal Drive, the $141,015 mortgage will either be defeased or repaid with a yield maintenance premium and the approximate cost of the defeasance or yield maintenance premium is estimated to be approximately $25,600, which has not been reflected as a pro forma adjustment herein.

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              The unaudited pro forma combined financial statements are presented for illustrative purposes only and are not necessarily indicative of the financial position or financial results that would have actually been reported had the transaction occurred on January 1, 2016 or March 31, 2017, as applicable, nor are they indicative of our future financial position or financial results. The differences that will occur between the preliminary estimates and the final acquisition accounting could have a material impact on the unaudited pro forma combined financial statements, including the impact on pro forma amortization of intangible assets and depreciation of property, plant and equipment.

              The unaudited pro forma combined financial statements include the results of the carve-out of the Vornado Included Assets from the financial information of Vornado. The historical financial results of the Vornado Included Assets reflect charges for certain corporate expenses which include, but are not limited to, costs related to human resources, security, payroll and benefits, legal, corporate communications, information services and restructuring and reorganization. Costs of the services that were allocated or charged to the Vornado Included Assets were based on either actual costs incurred or a proportion of costs estimated to be applicable to the Vornado Included Assets based on a number of factors, most significantly, the Vornado Included Assets' percentage of Vornado's revenue. This unaudited pro forma financial information is based on available information and various assumptions that management believes to be reasonable. However, these results may not reflect what our expenses would have been had the Vornado Included Assets been operating as a separate standalone public company.

              We considered the guidance in Financial Accounting Standards Board Accounting Standards Codification ("ASC") 805, Business Combinations, and determined that the Vornado Included Assets should be the accounting acquirer and all of their assets, liabilities and results of operations will be recorded at their historical cost basis. Although the management team of JBG Operating Partners will represent the majority of the management of JBG SMITH, our conclusion is supported by the following considerations: (i) Vornado common shareholders will hold a significant majority of the JBG SMITH common shares and the voting rights attendant thereto; (ii) the fair value of the Vornado Included Assets is significantly greater than that of the JBG Included Assets (including JBG Operating Partners); and (iii) while the board of trustees will include six trustees designated by Vornado and six trustees designated by JBG, the majority voting rights provide Vornado common shareholders, as a result of the issuance to them of what is expected to comprise a significant majority of the common shares of JBG SMITH, with the ability to determine the outcome of elections for the board of trustees occurring beginning in 2018 (with the full board of trustees subject to reelection within three years) and the outcome of the vote on other matters that require shareholder approval. The JBG Included Assets (including JBG Operating Partners) are not entities under common control or subsidiaries of a common parent.

              The unaudited pro forma combined financial statements also include the effect of the acquisition by JBG SMITH of the JBG Included Assets (including JBG Operating Partners), which will be accounted for under the acquisition method of accounting and recognized at the estimated fair value of the assets acquired and liabilities assumed on the date of such acquisition in accordance with ASC 805.

              The unaudited pro forma combined financial statements should be read in conjunction with the combined financial statements and related notes thereto contained elsewhere in this information statement.

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JBG SMITH Properties
PRO FORMA COMBINED BALANCE SHEET
March 31, 2017
(Unaudited)
(Amounts in thousands)

 
   
   
  JBG Included Assets    
   
   
 
 
  JBG SMITH
Properties
(A)
  Vornado
Included
Assets
(B)
  Acquisition of
JBG Operating Partners
(C)
  Acquisition of
JBG Consolidated Assets
and Unconsolidated Real
Estate Ventures
(C)
  Elimination
Pro Forma
Adjustments
(D)
  Other
Pro Forma
Adjustments
(E)
  JBG SMITH
Properties
Pro Forma
 

ASSETS

                                           

Real estate, at cost:

                                           

Land

  $   $ 934,317   $   $ 440,111   $   $   $ 1,374,428  

Buildings and improvements

        3,053,802         693,641             3,747,443  

Construction in progress

        167,248         548,144             715,392  

Leasehold improvements and equipment

        22,698     6,813     1,913         4,074     35,498  

Total

        4,178,065     6,813     1,683,809         4,074     5,872,761  

Less accumulated depreciation and amortization

        (957,270 )                   (957,270 )

Real estate, net

        3,220,795     6,813     1,683,809         4,074     4,915,491  

Cash and cash equivalents

    1     50,712         22,576         437,229     510,518  

Restricted cash

        4,728         13,913             18,641  

Tenant and other receivables, net of allowance for doubtful accounts

        28,442     25,039     1,370     (2,272 )   (14,973 )   37,606  

Investments in unconsolidated real estate ventures

        49,958     24     239,682             289,664  

Receivables arising from the straight-lining of rents, net of allowance

        140,329                     140,329  

Identified intangible assets, net of accumulated amortization

        2,904     84,397     83,129             170,430  

Goodwill

            68,842     (15,011 )           53,831  

Deferred leasing costs, net of accumulated amortization

        102,356                     102,356  

Receivable from Vornado

        75,894                 (75,894 )    

Notes receivable and other assets, including prepaid expenses

        10,085     495     55,618         10,754     76,952  

  $ 1   $ 3,686,203   $ 185,610   $ 2,085,086   $ (2,272 ) $ 361,190   $ 6,315,818  

LIABILITIES AND EQUITY

                                           

Mortgages payable, net of deferred financing costs

  $   $ 1,161,984   $   $ 725,662   $   $ 171,869   $ 2,059,515  

Revolving credit facility

                        117,269     117,269  

Unsecured term loan

                        50,000     50,000  

Payable to Vornado

        289,590                 (289,590 )    

Accounts payable and accrued expenses

        42,227     17,052     41,815     (2,272 )   (7,968 )   90,854  

Identified intangible liabilities, net of accumulated amortization

        11,216         1,466             12,682  

Other liabilities

        40,599     5,780     10,037             56,416  

Total liabilities

        1,545,616     22,832     778,980     (2,272 )   41,580     2,386,736  

Commitments and contingencies

                                           

Shareholders' equity

    1     2,140,292         1,050,598         167,261     3,358,152  

Noncontrolling interests in JBG SMITH LP

            162,778     251,650         152,349     566,777  

Noncontrolling interests in consolidated subsidiaries

        295         3,858             4,153  

Total equity

    1     2,140,587     162,778     1,306,106         319,610     3,929,082  

  $ 1   $ 3,686,203   $ 185,610   $ 2,085,086   $ (2,272 ) $ 361,190   $ 6,315,818  

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