I ran into an interesting situation when working with multiline annotations that have a baseline vertical alignment/justificaiton. These were annotations that we migrated from a different system. So the text for the annotation was brought in as it was in the old system which was unix-based and used just a line feed as the newline character. The annotation correctly displayed as multiple lines. But, the vertical alignment was only affecting the first line of the annotation. I was expecting that the baseline alignment would mean the point of the annotation would be along the bottom of the last line. But it was along the bottom of the first line. After some investigation, I found that it was the line feed character that appears to cause this. If I would edit the text by deleting the newline and placing a new one in the editor, then it would correctly align the entire annotation.
Not sure if this is a bug or the intended behavior. You can't put a line feed in the annotation by using the normal editor. It always uses CR+LF. Which makes sense being a Windows-based system. But I was able to replicate this by using the field calculator and the VbLF character. You can see the results of this in the two screenshots below. The first shows the annotation when updated using the editor. The second shows the annotation when updated using the field calculator to force the line feed.
It would appear ArcMap interprets the line feed as a newline from a display standpoint but not from an alignment standpoint. And the other interesting thing is that if you edit the symbology of the annotation, the preview always shows the text aligned from the first line. Even when the annotation uses the correct CR+LF newline.
I wasn't able to find any discussion of this issue so I thought I would share in case anyone else ran into this in the future.