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JBG Smith expects no loss from Wardman Tower judgment, pending appeal
The REIT said its liquidity could be impacted if it must post bonds to pause the July 31 ruling while it appeals.
JBG Smith said it does not expect to incur a financial loss from a $356M legal judgment tied to alleged construction defects at the Wardman Tower condominium in Woodley Park, and it reiterated its plan to appeal the decision.
In second-quarter results released Monday, the Bethesda-based REIT said the court’s liability finding is not justifiable, but noted that the existence of the judgment makes a loss reasonably possible, with a potential range of $0 to $356.1M plus attorneys’ fees.
The dispute dates to 2020 and centers on the tower next to the Woodley Park Metro station. The property was renovated in 2017 and its 32 condominium units sold for an aggregate of $115M, after which the condominium association sued JBG Smith and related entities, along with an affiliate of Plaza Construction, alleging misrepresentations as “well-built” and defects tied to elevators, the electrical system, and the foundation.
JBG Smith also warned its liquidity could be affected if it has to contribute bonds to pause the judgment pending appeal. The company delayed its earnings release and CEO Matt Kelly’s quarterly letter by about a week after the D.C. Superior Court issued the July 31 judgment, which found $118.7M in damages and ordered triple damages.