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Redeemable Noncontrolling Interests

9 Months Ended

Sep. 30, 2020

9.Redeemable Noncontrolling Interests

JBG SMITH LP

OP Units held by persons other than JBG SMITH are redeemable for cash or, at our election, our common shares, subject to certain limitations. During the nine months ended September 30, 2020 and 2019, unitholders redeemed 1.1 million and 1.7 million OP Units, which we elected to redeem for an equivalent number of our common shares. As of September 30, 2020, outstanding OP Units totaled 14.0 million, representing a 9.6% ownership interest in JBG SMITH LP. On our balance sheets, our OP Units and certain vested long-term incentive partnership units ("LTIP Units") are presented at the higher of their redemption value or their carrying value, with such adjustments recognized in "Additional paid-in capital." Redemption value per OP Unit is equivalent to the market value of one of our common shares at the end of the period. In October 2020, unitholders redeemed 26,538 OP Units, which we elected to redeem for an equivalent number of our common shares.

Consolidated Real Estate Venture

We are a partner in a consolidated real estate venture that owns a multifamily asset located in Washington, D.C. Pursuant to the terms of the real estate venture agreement, we will fund all capital contributions until our ownership interest reaches

a maximum of 97.0%. Our partner can redeem its interest for cash under certain conditions. As of September 30, 2020, we held a 95.9% ownership interest in the real estate venture.

The following is a summary of the activity of redeemable noncontrolling interests:


	Three Months Ended September 30,
	2020						2019
			Consolidated						Consolidated
	JBG		Real Estate				JBG		Real Estate
	SMITH LP		Venture		Total		SMITH LP		Venture		Total

	(In thousands)
Balance as of the beginning of the period	$	493,067	$	6,016	$	499,083	$	568,242	$	5,986	$	574,228
OP Unit redemptions		(4,796)		—		(4,796)		—		—		—
Net income (loss) attributable to redeemable noncontrolling interests		(2,176)		(36)		(2,212)		1,172		—		1,172
Other comprehensive income (loss)		309		—		309		(803)		—		(803)
Distributions		(3,723)		—		(3,723)		(3,831)		—		(3,831)
Share-based compensation expense		14,496		—		14,496		14,320		—		14,320
Adjustment to redemption value		(14,012)		1,776		(12,236)		1,446		—		1,446
Balance as of the end of the period	$	483,165	$	7,756	$	490,921	$	580,546	$	5,986	$	586,532

	Nine Months Ended September 30,
	2020						2019
			Consolidated						Consolidated
	JBG		Real Estate				JBG		Real Estate
	SMITH LP		Venture		Total		SMITH LP		Venture		Total

	(In thousands)
Balance as of the beginning of the period	$	606,699	$	6,059	$	612,758	$	552,159	$	5,981	$	558,140
OP Unit redemptions		(40,674)		—		(40,674)		(57,318)		—		(57,318)
LTIP Units issued in lieu of cash bonuses ⁽¹⁾		4,066		—		4,066		3,954		—		3,954
Net income (loss) attributable to redeemable noncontrolling interests		(366)		(79)		(445)		4,266		5		4,271
Other comprehensive income (loss)		(3,446)		—		(3,446)		(3,689)		—		(3,689)
Distributions		(7,505)		—		(7,505)		(7,670)		—		(7,670)
Share-based compensation expense		51,742		—		51,742		45,937		—		45,937
Adjustment to redemption value		(127,351)		1,776		(125,575)		42,907		—		42,907
Balance as of the end of the period	$	483,165	$	7,756	$	490,921	$	580,546	$	5,986	$	586,532

(1)	See Note 11 for additional information.