UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 2, 2021
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
| , | |||||||||||||||||
| , | |||||||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||||||||
Registrant’s telephone number, including area code: (757 ) 366-4000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On November 2, 2021, Armada Hoffler Properties, Inc. (the “Company”) issued a press release announcing its financial position as of September 30, 2021, results of operations for the three months ended September 30, 2021, and other related information. Also on November 2, 2021, the Company made available on its website at www.ArmadaHoffler.com certain supplemental information concerning the Company’s financial results and operations for the three months ended September 30, 2021. Copies of such press release and supplemental information are furnished as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
In accordance with General Instructions B.2 and B.6 of Form 8-K, the information included in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company under the Exchange Act or Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
The disclosure contained in Item 2.02 is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |||||||
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ARMADA HOFFLER PROPERTIES, INC. | ||||||||
| Date: November 2, 2021 | By: | /s/ Michael P. O’Hara | ||||||
| Michael P. O’Hara | ||||||||
| Chief Financial Officer, Treasurer and Secretary | ||||||||
Exhibit 99.1
 | PRESS RELEASE | |||||||
ARMADA HOFFLER PROPERTIES REPORTS THIRD QUARTER 2021 RESULTS
Net Income of $0.06 Per Diluted Share
Normalized FFO of $0.26 Per Diluted Share
Raised 2021 Full-Year Normalized FFO Guidance to $1.05 to $1.07 Per Diluted Share
Increased Fourth Quarter Cash Dividend on Common Shares for the Third Time This Year
VIRGINIA BEACH, VA, November 2, 2021 – Armada Hoffler Properties, Inc. (NYSE: AHH) today announced its results for the quarter ended September 30, 2021 and provided an update on current events.
Third Quarter and Recent Highlights:
•Net income attributable to common stockholders and OP Unit holders of $4.9 million, or $0.06 per diluted share, compared to $8.7 million, or $0.11 per diluted share, for the three months ended September 30, 2020.
•Funds from operations attributable to common stockholders and OP Unit holders ("FFO") of $21.9 million, or $0.27 per diluted share, compared to $19.2 million, or $0.24 per diluted share, for the three months ended September 30, 2020. See "Non-GAAP Financial Measures."
•Normalized funds from operations attributable to common stockholders and OP Unit holders ("Normalized FFO") of $21.5 million, or $0.26 per diluted share, compared to $19.0 million, or $0.24 per diluted share, for the three months ended September 30, 2020.
•Raised 2021 full-year Normalized FFO guidance to $1.05 to $1.07 per diluted share from the Company's previous guidance range of $1.02 to $1.06 per diluted share due to higher forecast net operating income ("NOI") from the operating portfolio.
•Announced a fourth quarter cash dividend of $0.17 per common share, resulting in the third quarterly increase this year, a 6.25% increase over the prior quarter's dividend, and a 54.5% cumulative increase year-to-date.
•Stabilized operating property portfolio occupancy increased to 96.4% as of September 30, 2021. Office occupancy was 96.9%, retail occupancy was 95.2%, and multifamily occupancy was 97.4%.
•Positive releasing spreads on retail lease renewals during the third quarter of 13.3% on a GAAP basis and 8.4% on a cash basis.
•Same Store NOI increased 10.5% on a GAAP basis and 8.7% on a cash basis compared to the quarter ended September 30, 2020. Highlights include:
◦Multifamily Same Store NOI increased 19.0% on a GAAP basis and 19.5% on a cash basis compared to the quarter ended September 30, 2020.
◦Retail Same Store NOI increased 15.3% on a GAAP basis and 9.5% on a cash basis compared to the quarter ended September 30, 2020.
•Leased 90,000 square feet of commercial office and retail space since the Company’s previous quarterly update, including 36,000 square feet at Wills Wharf.
•Announced the commencement of construction at mixed-use development project, Southern Post in Roswell, Georgia by the end of 2021.
•Completed the off-market acquisition of Greenbrier Square, a Kroger-anchored retail center in Chesapeake, VA.
•Completed the off-market acquisition of Overlook Village, a 150,000 square foot retail center in Asheville, NC anchored by T.J. Maxx | Homegoods and Ross.
“Leasing activity is at the highest velocity we’ve seen in years, the development pipeline is well-stocked, off-market acquisition opportunities are on the horizon, and property NOI continues to increase.” said Lou Haddad, President & CEO. “All these factors have combined to enable us to again raise our full year guidance. Additionally, as announced in last week's press release, the Board raised the dividend for the third time this year. ”
Financial Results
Net income attributable to common stockholders and OP Unit holders for the third quarter decreased to $4.9 million compared to $8.7 million for the third quarter of 2020. The period-over-period change was primarily due to a decrease in gains on real estate dispositions, a decrease in general contracting gross profit, a decrease in interest income on our mezzanine loan portfolio, and an increase in interest expense. Additionally, we paid more in preferred dividends due to the issuance of additional preferred stock during 2020. These decreases were partially offset by NOI resulting primarily from leasing activity and property acquisitions.
FFO attributable to common stockholders and OP Unit holders for the third quarter increased to $21.9 million compared to $19.2 million for the third quarter of 2020. Normalized FFO attributable to common stockholders and OP Unit holders for the third quarter increased to $21.5 million compared to $19.0 million for the third quarter of 2020. The period-over-period changes in FFO and Normalized FFO were due to NOI resulting primarily from leasing activity and property acquisitions. These increases were partially offset by a decrease in general contracting gross profit, a decrease in interest income on our mezzanine loan portfolio, and an increase in interest expense. Additionally, we paid more in preferred dividends due to the issuance of additional preferred stock during 2020.
Operating Performance
At the end of the third quarter, the Company’s office, retail and multifamily stabilized operating property portfolios were 96.9%, 95.2% and 97.4% (conventional multifamily was 97.4% and student housing was 97.5%) occupied, respectively.
Total construction contract backlog was $106.9 million at the end of the third quarter.
Balance Sheet and Financing Activity
As of September 30, 2021, the Company had $1.0 billion of total debt outstanding, including $30.0 million outstanding under its revolving credit facility. Total debt outstanding excludes GAAP adjustments. Approximately 58% of the Company’s debt had fixed interest rates or was subject to interest rate swaps as of September 30, 2021. After giving effect to LIBOR interest rate caps with strike prices at or below 50 basis points as of September 30, 2021, 96% of the Company’s debt was either fixed or hedged.
The Company refinanced the loan secured by Thames Street during the third quarter. The new $71.0 million loan bears interest at a rate of Bloomberg Short-Term Bank Yield Index ("BSBY") plus a spread of 1.30% and will mature on September 30, 2026. The Company simultaneously entered into an interest rate swap agreement that
2
effectively fixes the interest rate at 2.35% for the term of the loan. The Company has no loans scheduled to mature during the remainder of 2021 and $19.6 million of loans scheduled to mature in 2022.
The Company is currently in compliance with all debt covenants.
Outlook
The Company issued updated 2021 full-year Normalized FFO guidance in the range to $1.05 to $1.07 per diluted share from $1.02 to $1.06. The following table updates the Company's assumptions underpinning this forecast. The Company's executive management will provide further details regarding its 2021 earnings guidance during today's webcast and conference call.
Full-year 2021 Guidance [1] | Expected Ranges | |||||||||||||
| Total NOI | $122.5M | $123.4M | ||||||||||||
| Construction Segment Gross Profit | $3.6M | $4.0M | ||||||||||||
| G&A Expenses | $14.8M | $15.1M | ||||||||||||
| Mezzanine Interest Income | $18.2M | $18.6M | ||||||||||||
Interest Expense[2] | $33.6M | $34.0M | ||||||||||||
Normalized FFO per diluted share [3] | $1.05 | $1.07 | ||||||||||||
[1] Includes the following assumptions:
•Interest Expense based on Forward LIBOR Curve, which forecasts rates ending the year at 0.10%
•Opportunistic sale of common stock through the ATM program, resulting in a full year weighted average share count of 82M
•Disposition of Johns Hopkins Village during the fourth quarter
[2] Includes interest expense on finance leases
[3] Normalized FFO excludes certain items, including debt extinguishment losses, acquisition, development and other pursuit costs, mark-to-market adjustments for interest rate derivatives, provision for unrealized credit losses, amortization of right-of-use assets attributable to finance leases, severance related costs, and other non-comparable items. See "Non-GAAP Financial Measures." The Company does not provide a reconciliation for its guidance range of Normalized FFO per diluted share to net income per diluted share, the most directly comparable forward-looking GAAP financial measure, because it is unable to provide a meaningful or accurate estimate of reconciling items and the information is not available without unreasonable effort as a result of the inherent difficulty of forecasting the timing and/or amounts of various items that would impact net income per diluted share. For the same reasons, the Company is unable to address the probable significance of the unavailable information and believes that providing a reconciliation for its guidance range of Normalized FFO per diluted share would imply a degree of precision for its forward-looking net income per diluted share that could be misleading to investors.
Supplemental Financial Information
Further details regarding operating results, properties and leasing statistics can be found in the Company’s supplemental financial package available at www.ArmadaHoffler.com.
Webcast and Conference Call
The Company will host a webcast and conference call on Tuesday, November 2, 2021 at 8:30 a.m. Eastern Time to review financial results and discuss recent events. The live webcast will be available through the Investors page of the Company’s website, www.ArmadaHoffler.com. To participate in the call, please dial 877-407-3982 (domestic) or 201-493-6780 (international). A replay of the conference call will be available through Thursday, December 2, 2021 by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 13723130.
3
About Armada Hoffler Properties, Inc.
Armada Hoffler Properties (NYSE:AHH) is a vertically-integrated, self-managed real estate investment trust ("REIT") with four decades of experience developing, building, acquiring and managing high-quality office, retail and multifamily properties located primarily in the Mid-Atlantic and Southeastern United States. The Company also provides general construction and development services to third-party clients, in addition to developing and building properties to be placed in their stabilized portfolio. Founded in 1979 by Daniel A. Hoffler, Armada Hoffler has elected to be taxed as a REIT for U.S. federal income tax purposes. For more information visit ArmadaHoffler.com.
Forward-Looking Statements
Certain matters within this press release are discussed using forward-looking language as specified in the Private Securities Litigation Reform Act of 1995, and, as such, may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those projected in the forward-looking statement. These forward-looking statements may include comments relating to the current and future performance of the Company’s operating property portfolio, the Company’s development pipeline, the Company’s construction and development business, including backlog and timing of deliveries and estimated costs, financing activities, and the Company’s financial outlook and expectations. For a description of factors that may cause the Company’s actual results or performance to differ from its forward-looking statements, please review the information under the heading “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, and the other documents filed by the Company with the Securities and Exchange Commission (the “SEC”) from time to time. The Company’s actual future results and trends may differ materially from expectations depending on a variety of factors discussed in the Company’s filings with the the SEC. These factors include, without limitation: (a) the impact of the coronavirus (COVID-19) pandemic on macroeconomic conditions and economic conditions in the markets in which the Company operates, including, among others: (i) disruptions in, or a lack of access to, the capital markets or disruptions in the Company’s ability to borrow amounts subject to existing construction loan commitments; (ii) adverse impacts to the Company’s tenants’ and other third parties’ businesses and financial condition that adversely affect the ability and willingness of the Company’s tenants and other third parties to satisfy their rent and other obligations to the Company, including deferred rent; (iii) the ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration of the leases or to re-lease the Company’s properties on the same or better terms in the event of nonrenewal or early termination of existing leases; and (iv) federal, state and local government initiatives to mitigate the impact of the COVID-19 pandemic, including additional restrictions on business activities, shelter-in place orders and other restrictions, and the timing and amount of economic stimulus or other initiatives; (b) the Company’s ability to continue construction on development and construction projects, in each case on the timeframes and on terms currently anticipated; (c) the Company’s ability to accurately assess and predict the impact of the COVID-19 pandemic on its results of operations, financial condition, dividend policy, acquisition and disposition activities and growth opportunities; and (d) the Company’s ability to maintain compliance with the covenants under its existing debt agreements or to obtain modifications to such covenants from the applicable lenders. The Company expressly disclaims any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Non-GAAP Financial Measures
The Company calculates FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts ("Nareit"). Nareit defines FFO as net income (loss) (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains or losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.
FFO is a supplemental non-GAAP financial measure. The Company uses FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring the Company’s operational performance. Specifically, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared period-over-period, captures trends in occupancy rates, rental
4
rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare the Company’s operating performance with that of other REITs.
However, because FFO excludes depreciation and amortization and captures neither the changes in the value of the Company’s properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of the Company’s properties, all of which have real economic effects and could materially impact the Company’s results from operations, the utility of FFO as a measure of the Company’s performance is limited. In addition, other equity REITs may not calculate FFO in accordance with the Nareit definition as the Company does, and, accordingly, the Company’s FFO may not be comparable to such other REITs’ FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of the Company’s performance.
Management also believes that the computation of FFO in accordance with Nareit’s definition includes certain items that are not indicative of the results provided by the Company’s operating property portfolio and affect the comparability of the Company’s period-over-period performance. Accordingly, management believes that Normalized FFO is a more useful performance measure that excludes certain items, including but not limited to, acquisition, development and other pursuit costs, gains or losses from the early extinguishment of debt, impairment of intangible assets and liabilities, mark-to-market adjustments for interest rate derivatives, provision for unrealized credit losses, amortization of right-of-use assets attributable to finance leases, severance related costs, and other non-comparable items.
NOI is the measure used by the Company’s chief operating decision-maker to assess segment performance. The Company calculates NOI as property revenues (base rent, expense reimbursements, termination fees and other revenue) less property expenses (rental expenses and real estate taxes). NOI is not a measure of operating income or cash flows from operating activities as measured in accordance with GAAP and is not indicative of cash available to fund cash needs. As a result, NOI should not be considered an alternative to cash flows as a measure of liquidity. Not all companies calculate NOI in the same manner. The Company considers NOI to be an appropriate supplemental measure to net income because it assists both investors and management in understanding the core operations of the Company’s real estate and construction businesses. To calculate NOI on a cash basis, we adjust NOI to exclude the net effects of straight line rent and the amortization of lease incentives and above/below market rents.
For reference, as an aid in understanding the Company’s computation of NOI, NOI Cash Basis, FFO and Normalized FFO, a reconciliation of net income calculated in accordance with GAAP to NOI, NOI Cash Basis, FFO and Normalized FFO has been included further in this release.
5
ARMADA HOFFLER PROPERTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
| September 30, 2021 | December 31, 2020 | |||||||||||||
| (Unaudited) | ||||||||||||||
| ASSETS | ||||||||||||||
| Real estate investments: | ||||||||||||||
| Income producing property | $ | 1,744,124 | $ | 1,680,943 | ||||||||||
| Held for development | 11,294 | 13,607 | ||||||||||||
| Construction in progress | 54,871 | 63,367 | ||||||||||||
| 1,810,289 | 1,757,917 | |||||||||||||
| Accumulated depreciation | (278,218) | (253,965) | ||||||||||||
| Net real estate investments | 1,532,071 | 1,503,952 | ||||||||||||
| Real estate investments held for sale | 68,762 | 1,165 | ||||||||||||
| Cash and cash equivalents | 28,038 | 40,998 | ||||||||||||
| Restricted cash | 5,415 | 9,432 | ||||||||||||
| Accounts receivable, net | 30,576 | 28,259 | ||||||||||||
| Notes receivable, net | 118,164 | 135,432 | ||||||||||||
| Construction receivables, including retentions, net | 13,753 | 38,735 | ||||||||||||
| Construction contract costs and estimated earnings in excess of billings | 370 | 138 | ||||||||||||
| Equity method investment | 9,174 | 1,078 | ||||||||||||
| Operating lease right-of-use assets | 23,547 | 32,760 | ||||||||||||
| Finance lease right-of-use assets | 47,266 | 23,544 | ||||||||||||
| Acquired lease intangible assets | 65,197 | 58,154 | ||||||||||||
| Other assets | 42,051 | 43,324 | ||||||||||||
| Total Assets | $ | 1,984,384 | $ | 1,916,971 | ||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||
| Indebtedness, net | $ | 968,424 | $ | 963,845 | ||||||||||
| Liabilities related to assets held for sale | 60,021 | — | ||||||||||||
| Accounts payable and accrued liabilities | 26,549 | 23,900 | ||||||||||||
| Construction payables, including retentions | 22,078 | 49,821 | ||||||||||||
| Billings in excess of construction contract costs and estimated earnings | 2,674 | 6,088 | ||||||||||||
| Operating lease liabilities | 31,607 | 41,659 | ||||||||||||
| Finance lease liabilities | 46,078 | 17,954 | ||||||||||||
| Other liabilities | 62,197 | 56,902 | ||||||||||||
| Total Liabilities | 1,219,628 | 1,160,169 | ||||||||||||
| Total Equity | 764,756 | 756,802 | ||||||||||||
| Total Liabilities and Equity | $ | 1,984,384 | $ | 1,916,971 | ||||||||||
6
ARMADA HOFFLER PROPERTIES, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||
| Rental revenues | $ | 49,560 | $ | 39,636 | $ | 142,679 | $ | 121,840 | ||||||||||||||||||
| General contracting and real estate services revenues | 17,502 | 58,617 | 71,473 | 163,283 | ||||||||||||||||||||||
| Total revenues | 67,062 | 98,253 | 214,152 | 285,123 | ||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||
| Rental expenses | 12,717 | 10,223 | 34,841 | 27,907 | ||||||||||||||||||||||
| Real estate taxes | 5,543 | 4,760 | 16,314 | 13,326 | ||||||||||||||||||||||
| General contracting and real estate services expenses | 15,944 | 56,509 | 68,350 | 157,401 | ||||||||||||||||||||||
| Depreciation and amortization | 16,886 | 14,176 | 52,237 | 42,232 | ||||||||||||||||||||||
| Amortization of right-of-use assets - finance leases | 278 | 147 | 745 | 440 | ||||||||||||||||||||||
| General and administrative expenses | 3,449 | 2,601 | 10,957 | 9,382 | ||||||||||||||||||||||
| Acquisition, development and other pursuit costs | 8 | 26 | 111 | 555 | ||||||||||||||||||||||
| Impairment charges | — | 47 | 3,122 | 205 | ||||||||||||||||||||||
| Total expenses | 54,825 | 88,489 | 186,677 | 251,448 | ||||||||||||||||||||||
| Gain (loss) on real estate dispositions, net | (113) | 3,612 | 3,604 | 6,388 | ||||||||||||||||||||||
| Operating income | 12,124 | 13,376 | 31,079 | 40,063 | ||||||||||||||||||||||
| Interest income | 3,766 | 4,417 | 14,628 | 16,055 | ||||||||||||||||||||||
| Interest expense | (8,827) | (7,523) | (25,220) | (22,938) | ||||||||||||||||||||||
| Change in fair value of derivatives and other | 131 | 318 | 838 | (1,424) | ||||||||||||||||||||||
| Unrealized credit loss release (provision) | 617 | 33 | 284 | (227) | ||||||||||||||||||||||
| Other income (expense), net | (105) | 177 | 81 | 521 | ||||||||||||||||||||||
| Income before taxes | 7,706 | 10,798 | 21,690 | 32,050 | ||||||||||||||||||||||
| Income tax benefit | 42 | 28 | 522 | 220 | ||||||||||||||||||||||
| Net income | 7,748 | 10,826 | 22,212 | 32,270 | ||||||||||||||||||||||
| Net loss attributable to noncontrolling interests in investment entities | — | 45 | — | 181 | ||||||||||||||||||||||
| Preferred stock dividends | (2,887) | (2,220) | (8,661) | (4,462) | ||||||||||||||||||||||
| Net income attributable to common stockholders and OP Unitholders | $ | 4,861 | $ | 8,651 | $ | 13,551 | $ | 27,989 | ||||||||||||||||||
7
ARMADA HOFFLER PROPERTIES, INC.
RECONCILIATION OF NET INCOME TO FFO & NORMALIZED FFO
(in thousands, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| Net income attributable to common stockholders and OP Unitholders | $ | 4,861 | $ | 8,651 | $ | 13,551 | $ | 27,989 | ||||||||||||||||||
Depreciation and amortization(1) | 16,886 | 14,131 | 52,237 | 41,867 | ||||||||||||||||||||||
Loss (gain) on operating real estate dispositions, net(2) | 113 | (3,612) | (3,351) | (6,388) | ||||||||||||||||||||||
| Impairment of real estate assets | — | — | 3,039 | — | ||||||||||||||||||||||
| FFO attributable to common stockholders and OP Unitholders | $ | 21,860 | $ | 19,170 | $ | 65,476 | $ | 63,468 | ||||||||||||||||||
| Acquisition, development and other pursuit costs | 8 | 26 | 111 | 555 | ||||||||||||||||||||||
| Impairment of intangible assets and liabilities | — | 47 | 83 | 205 | ||||||||||||||||||||||
| Loss on extinguishment of debt | 120 | — | 120 | — | ||||||||||||||||||||||
| Unrealized credit loss provision (release) | (617) | (33) | (284) | 227 | ||||||||||||||||||||||
| Amortization of right-of-use assets - finance leases | 278 | 147 | 745 | 440 | ||||||||||||||||||||||
| Change in fair value of derivatives and other | (131) | (318) | (838) | 1,424 | ||||||||||||||||||||||
| Normalized FFO available to common stockholders and OP Unitholders | $ | 21,518 | $ | 19,039 | $ | 65,413 | $ | 66,319 | ||||||||||||||||||
| Net income attributable to common stockholders and OP Unitholders per diluted share and unit | $ | 0.06 | $ | 0.11 | $ | 0.17 | $ | 0.36 | ||||||||||||||||||
| FFO attributable to common stockholders and OP Unitholders per diluted share and unit | $ | 0.27 | $ | 0.24 | $ | 0.81 | $ | 0.81 | ||||||||||||||||||
| Normalized FFO attributable to common stockholders and OP Unitholders per diluted share and unit | $ | 0.26 | $ | 0.24 | $ | 0.81 | $ | 0.85 | ||||||||||||||||||
| Weighted average common shares and units - diluted | 81,936 | 78,443 | 81,164 | 78,020 | ||||||||||||||||||||||
________________________________________
| (1) The adjustment for depreciation and amortization for the three and nine months ended September 30, 2020 excludes $0.1 million and $0.4 million, respectively, of depreciation attributable to the Company's joint venture partners. | ||
| (2) The adjustment for gain on operating real estate dispositions for the nine months ended September 30, 2021 excludes the gain on sale of easement rights on a non-operating parcel. | ||
8
ARMADA HOFFLER PROPERTIES, INC.
RECONCILIATION OF NET INCOME TO SAME STORE NOI, CASH BASIS
(in thousands) (unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Office Same Store(1) | ||||||||||||||||||||||||||
| Same Store NOI, Cash Basis | $ | 6,357 | $ | 6,298 | $ | 19,201 | $ | 18,543 | ||||||||||||||||||
GAAP Adjustments (2) | 70 | 286 | 714 | 1,269 | ||||||||||||||||||||||
| Same Store NOI | 6,427 | 6,584 | 19,915 | 19,812 | ||||||||||||||||||||||
Non-Same Store NOI (3) | 550 | 455 | 1,869 | 702 | ||||||||||||||||||||||
| Segment NOI | 6,977 | 7,039 | 21,784 | 20,514 | ||||||||||||||||||||||
Retail Same Store (4) | ||||||||||||||||||||||||||
| Same Store NOI, Cash Basis | 12,092 | 11,046 | 35,350 | 32,879 | ||||||||||||||||||||||
GAAP Adjustments (2) | 163 | (415) | 636 | 2,784 | ||||||||||||||||||||||
| Same Store NOI | 12,255 | 10,631 | 35,986 | 35,663 | ||||||||||||||||||||||
Non-Same Store NOI (3) | 2,598 | 612 | 6,270 | 5,054 | ||||||||||||||||||||||
| Segment NOI | 14,853 | 11,243 | 42,256 | 40,717 | ||||||||||||||||||||||
Multifamily Same Store (5) | ||||||||||||||||||||||||||
| Same Store NOI, Cash Basis | 4,565 | 3,821 | 13,465 | 12,542 | ||||||||||||||||||||||
GAAP Adjustments (2) | 184 | 170 | 557 | 98 | ||||||||||||||||||||||
| Same Store NOI | 4,749 | 3,991 | 14,022 | 12,640 | ||||||||||||||||||||||
Non-Same Store NOI (3) | 4,721 | 2,380 | 13,462 | 6,736 | ||||||||||||||||||||||
| Segment NOI | 9,470 | 6,371 | 27,484 | 19,376 | ||||||||||||||||||||||
| Total Property NOI | 31,300 | 24,653 | 91,524 | 80,607 | ||||||||||||||||||||||
| General contracting & real estate services gross profit | 1,558 | 2,108 | 3,123 | 5,882 | ||||||||||||||||||||||
| Depreciation and amortization | (16,886) | (14,176) | (52,237) | (42,232) | ||||||||||||||||||||||
| General and administrative expenses | (3,449) | (2,601) | (10,957) | (9,382) | ||||||||||||||||||||||
| Acquisition, development and other pursuit costs | (8) | (26) | (111) | (555) | ||||||||||||||||||||||
| Impairment charges | — | (47) | (3,122) | (205) | ||||||||||||||||||||||
| Gain (loss) on real estate dispositions, net | (113) | 3,612 | 3,604 | 6,388 | ||||||||||||||||||||||
| Interest income | 3,766 | 4,417 | 14,628 | 16,055 | ||||||||||||||||||||||
| Interest expense | (8,827) | (7,523) | (25,220) | (22,938) | ||||||||||||||||||||||
| Unrealized credit loss release (provision) | 617 | 33 | 284 | (227) | ||||||||||||||||||||||
| Amortization of right-of-use assets - finance leases | (278) | (147) | (745) | (440) | ||||||||||||||||||||||
| Change in fair value of derivatives and other | 131 | 318 | 838 | (1,424) | ||||||||||||||||||||||
| Other income (expense), net | (105) | 177 | 81 | 521 | ||||||||||||||||||||||
| Income tax benefit | 42 | 28 | 522 | 220 | ||||||||||||||||||||||
| Net income | 7,748 | 10,826 | 22,212 | 32,270 | ||||||||||||||||||||||
| Net loss attributable to noncontrolling interest in investment entities | — | 45 | — | 181 | ||||||||||||||||||||||
| Preferred stock dividends | (2,887) | (2,220) | (8,661) | (4,462) | ||||||||||||||||||||||
| Net income attributable to AHH and OP unitholders | $ | 4,861 | $ | 8,651 | $ | 13,551 | $ | 27,989 | ||||||||||||||||||
| (1) Office same-store portfolio excludes Wills Wharf. | ||
9
| (2) GAAP Adjustments include adjustments for straight-line rent, termination fees, deferred rent, recoveries of deferred rent, and amortization of lease incentives. | ||
| (3) Includes expenses associated with the Company's in-house asset management division. | ||
| (4) Retail same-store portfolio excludes Apex Entertainment, Delray Beach Plaza, Greenbrier Square, Nexton Square, Overlook Village, and Premier Retail. In addition, retail same store results exclude the seven-property retail portfolio that was disposed in May 2020 (Alexander Pointe, Bermuda Crossroads, Gainsborough Square, Harper Hill Commons, Indian Lakes Crossing, Renaissance Square, and Stone House Square) and Oakland Marketplace and Socastee Commons, each of which were disposed in 2021. | ||
| (5) Multifamily same-store portfolio excludes The Residences at Annapolis Junction, Edison Apartments, Johns Hopkins Village, Summit Place, and The Cosmopolitan. | ||
Contact:
Michael P. O’Hara
Armada Hoffler Properties, Inc.
Chief Financial Officer, Treasurer, and Secretary
Email: MOHara@ArmadaHoffler.com
Phone: (757) 366-6684
10
1
2 T A B L E O F C O N T E N T S Forward-Looking Statements Corporate Profile Highlights 2021 Outlook & Assumptions Summary Information Net Asset Value Component Data Summary Balance Sheet Summary Income Statement FFO, Normalized FFO & Adjusted FFO Outstanding Debt Debt Information Core Debt to Core EBITDA Capitalization & Financial Ratios Property Portfolio Development Pipeline Mezzanine Investments Acquisitions & Dispositions Construction Business Summary Same Store NOI by Segment Top 10 Tenants by Annualized Base Rent Lease Summary Office Lease Expirations Retail Lease Expirations Appendix – Definitions & Reconciliations Same Store vs Non-Same Store Reconciliation to Core EBITDA Capital Expenditures Reconciliation to Property Portfolio NOI Reconciliation to GAAP Net Income 03 04 05 06 07 08 09 10 11 12 13 14 15 16 18 20 21 22 23 24 25 26 27 28 32 33 34 35 36
3 This Supplemental Financial Package should be read in conjunction with the unaudited condensed consolidated financial statements appearing in our press release dated November 2, 2021, which has been furnished as Exhibit 99.1 to our Form 8-K filed on November 2, 2021. The Company makes statements in this Supplemental Financial Package that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). These forward-looking statements may include comments relating to the current and future performance of the Company’s operating property portfolio, the Company’s development pipeline, the Company’s construction and development business, including backlog and timing of deliveries and estimated costs, financing activities, and the Company’s financial outlook and expectations. For a description of factors that may cause the Company’s actual results or performance to differ from its forward-looking statements, please review the information under the heading “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and the other documents filed by the Company with the Securities and Exchange Commission (the “SEC”) from time to time. The Company’s actual future results and trends may differ materially from expectations depending on a variety of factors discussed in the Company’s filings with the SEC. These factors include, without limitation: (a) the impact of the coronavirus (COVID-19) pandemic on macroeconomic conditions and economic conditions in the markets in which the Company operates, including, among others: (i) disruptions in, or a lack of access to, the capital markets or disruptions in the Company’s ability to borrow amounts subject to existing construction loan commitments; (ii) adverse impacts to the Company’s tenants’ and other third parties’ businesses and financial conditions that adversely affect the ability and willingness of the Company’s tenants and other third parties to satisfy their rent and other obligations to the Company, including deferred rent; (iii) the ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration of the leases or to re-lease the Company’s properties on the same or better terms in the event of nonrenewal or early termination of existing leases; and (iv) federal, state and local government initiatives to mitigate the impact of the COVID-19 pandemic, including additional restrictions on business activities, shelter-in place orders and other restrictions, and the timing and amount of economic stimulus or other initiatives; (b) the Company’s ability to continue construction on development and construction projects, in each case on the timeframes and on terms currently anticipated; (c) the Company’s ability to accurately assess and predict the impact of the COVID-19 pandemic on its results of operations, financial condition, dividend policy, acquisition and disposition activities and growth opportunities; and (d) the Company’s ability to maintain compliance with the covenants under its existing debt agreements or to obtain modifications to such covenants from the applicable lenders. The Company expressly disclaims any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. FORWARD-LOOKING STATEMENTS
4 BOARD OF DIRECTORS Daniel A. Hoffler, Executive Chairman of the Board Louis S. Haddad, Vice Chairman of the Board James C. Cherry, Lead Independent Director George F. Allen, Independent Director James A. Carroll, Independent Director Eva S. Hardy, Independent Director A. Russell Kirk, Director Dorothy S. McAuliffe, Independent Director John W. Snow, Independent Director CORPORATE OFFICERS Louis S. Haddad, President and Chief Executive Officer Michael P. O’Hara, Chief Financial Officer Shawn J. Tibbetts, Chief Operating Officer Eric E. Apperson, President of Construction Shelly R. Hampton, President of Asset Management Robert W. Baird & Co. David Rodgers (216) 737-7341 drodgers@rwbaird.com Janney, Montgomery, & Scott LLC Robert Stevenson (646) 840-3217 robertstevenson@janney.com Bank of America Merrill Lynch James Feldman (646) 855-5808 james.feldman@bofa.com ANALYST COVERAGE Armada Hoffler Properties, Inc. (NYSE: AHH) is a vertically-integrated, self-managed real estate investment trust with four decades of experience developing, building, acquiring and managing high-quality office, retail and multifamily properties located primarily in the Mid-Atlantic and Southeastern United States. The Company also provides general construction and development services to third-party clients, in addition to developing and building properties to be placed in their stabilized portfolio. Founded in 1979 by Daniel A. Hoffler, Armada Hoffler has elected to be taxed as a REIT for U.S. federal income tax purposes. For more information visit ArmadaHoffler.com. CORPORATE PROFILE Stifel Stephen Manaker (212) 271-3716 manakers@stifel.com Jefferies Peter Abramowitz (212) 336-7241 pabramowitz@jefferies.com Raymond James & Associates Bill Crow (727) 567-2594 bill.crow@raymondjames.com
5 HIGHLIGHTS • Net income attributable to common stockholders and OP Unit holders of $4.9 million, or $0.06 per diluted share, compared to $8.7 million, or $0.11 per diluted share, for the three months ended September 30, 2020. • Funds from operations attributable to common stockholders and OP Unit holders ("FFO") of $21.9 million, or $0.27 per diluted share, compared to $19.2 million, or $0.24 per diluted share, for the three months ended September 30, 2020. See "Non-GAAP Financial Measures." • Normalized funds from operations attributable to common stockholders and OP Unit holders ("Normalized FFO") of $21.5 million, or $0.26 per diluted share, compared to $19.0 million, or $0.24 per diluted share, for the three months ended September 30, 2020. • Raised 2021 full-year Normalized FFO guidance to $1.05 to $1.07 per diluted share from the Company's previous guidance range of $1.02 to $1.06 per diluted share due to higher forecast net operating income ("NOI") from the operating portfolio. • Announced a fourth quarter cash dividend of $0.17 per common share, resulting in the third quarterly increase this year, a 6.25% increase over the prior quarter's dividend, and a 54.5% cumulative increase year-to-date. • Stabilized operating property portfolio occupancy increased to 96.4% as of September 30, 2021. Office occupancy was 96.9%, retail occupancy was 95.2%, and multifamily occupancy was 97.4%. • Positive releasing spreads on retail lease renewals during the third quarter of 13.3% on a GAAP basis and 8.4% on a cash basis. • Same Store NOI increased 10.5% on a GAAP basis and 8.7% on a cash basis compared to the quarter ended September 30, 2020. Highlights include: • Multifamily Same Store NOI increased 19.0% on a GAAP basis and 19.5% on a cash basis compared to the quarter ended September 30, 2020. • Retail Same Store NOI increased 15.3% on a GAAP basis and 9.5% on a cash basis compared to the quarter ended September 30, 2020. • Leased 90,000 square feet of commercial office and retail space since the Company’s previous quarterly update, including 36,000 square feet at Wills Wharf. • Announced the commencement of construction at mixed-use development project, Southern Post in Roswell, Georgia by the end of 2021. • Completed the off-market acquisition of Greenbrier Square, a Kroger-anchored retail center in Chesapeake, Virginia. • Completed the off-market acquisition of Overlook Village, a 150,000 square foot retail center in Asheville, North Carolina anchored by T.J. Maxx | Homegoods and Ross.
6 2021 OUTLOOK & ASSUMPTIONS OUTLOOK LOW HIGH TOTAL NOI $122.5M $123.4M CONSTRUCTION SEGMENT GROSS PROFIT $3.6M $4.0M G&A EXPENSES $14.8M $15.1M MEZZANINE INTEREST INCOME $18.2M $18.6M INTEREST EXPENSE(1) $33.6M $34.0M NORMALIZED FFO PER DILUTED SHARE $1.05 $1.07 • Interest expense based on Forward LIBOR Curve, which forecasts rates ending the year at 0.10% • Opportunistic sale of common stock through the ATM program, resulting in a full year weighted average share count of 82M • Disposition of Johns Hopkins Village during the fourth quarter GUIDANCE ASSUMPTIONS (1) Includes the interest expense on finance leases.
7 SUMMARY INFORMATION $ IN THOUSANDS, EXCEPT PER SHARE DATA (1) Excludes GAAP adjustments. (2) Office and retail occupancy based on leased square feet as a % of respective total. (3) Multifamily and student housing occupancy based on occupied units/beds as a % of total. (4) Regal leases which were terminated in October 2020 have been re-signed and included in occupancy for this quarter. Regal at Columbus Village II was re-signed after December 31, 2020. (5) (6) Total occupancy weighted by annualized base rent. Conventional: Student Housing: 3Q21 97.4% 97.5% 2Q21 96.6% 83.5% 4Q20 95.9% 85.6% 1Q21 95.8% 85.0% Three months ended OPERATIONAL METRICS 9/30/2021 6/30/2021 3/31/2021 12/31/2020 Net income attributable to common stockholders and OP unitholders $4,861 $5,568 $3,122 $1,851 Net income per diluted share attributable to common stockholders and OP unitholders $0.06 $0.07 $0.04 $0.02 Normalized FFO attributable to common stockholders and OP unitholders 21,518 23,320 20,575 19,900 Normalized FFO per diluted share attributable to common stockholders and OP unitholders $0.26 $0.29 $0.26 $0.25 Annualized dividend yield 5.09% 4.82% 4.78% 3.92% Core debt / Annualized core EBITDA 6.9x 6.7x 7.0x 6.6x Fixed charge coverage ratio 2.3x 2.4x 2.4x 2.3x CAPITALIZATION Common shares outstanding 61,324 60,992 59,894 59,073 Operating Partnership units outstanding 20,853 20,853 20,853 20,865 Common shares and Operating Partnership units outstanding 82,177 81,845 80,747 79,938 Market price per common share $13.37 $13.29 $12.54 $11.22 Common equity capitalization 1,098,707 1,087,720 1,012,568 896,904 Preferred equity capitalization 171,085 171,085 171,085 171,085 Total equity capitalization $1,269,792 $1,258,805 $1,183,653 $1,067,989 Total debt(1) 1,017,410 963,885 975,099 962,812 Total capitalization 2,287,202 2,222,690 2,158,752 2,030,801 Less: cash (33,453) (53,242) (34,588) (50,430) Total enterprise value $2,253,749 $2,169,448 $2,124,164 $1,980,371 STABILIZED PORTFOLIO OCCUPANCY Retail (2) 95.2% 94.7% 93.9% 94.7% (4) Office (2) 96.9% 96.5% 97.2% 97.0% Multifamily (3) 97.4% (5) 92.2% (5) 92.2% (5) 92.5% Weighted Average (6) 96.4% 94.1% 94.0% 94.4% PORTFOLIO METRICS (INCLUDING NON-STABILIZED) Net Operating Income (NOI) $31,300 $30,621 $29,603 $28,785 Total Number of Properties 58 57 57 57 Total Rentable Square Feet (RSF) 5,693,551 5,337,669 5,337,657 5,323,441 Retail Portfolio Net Operating Income $14,853 $14,011 $13,392 $13,500 Number of Properties 38 37 37 37 Net Rentable Square Feet 4,064,391 3,709,490 3,709,478 3,690,375 Office Portfolio Net Operating Income $6,977 $7,405 $7,402 $7,073 Number of Properties 8 8 8 8 Net Rentable Square Feet 1,629,160 1,628,179 1,628,179 1,633,066 Multifamily Portfolio Net Operating Income $9,470 $9,205 $8,809 $8,212 Number of Properties 12 12 12 12 Units 2,344 2,344 2,344 2,344 Beds 1,183 1,183 1,183 1,183
8 NET ASSET VALUE COMPONENT DATA $ IN THOUSANDS (1) NOI from non-stabilized portfolio and development pipeline excluded from stabilized portfolio. (2) Excludes expenses associated with the Company’s in-house asset management division of $0.7M for the 3 months ended 9/30/2021. (3) Includes leases for spaces occupied by Armada Hoffler which are eliminated for GAAP purposes. (4) Excludes lease right of use assets and lease liabilities. (5) Excludes GAAP adjustments. (6) Management’s assessment of comparable multifamily assets in the applicable market. Stabilized Portfolio NOI (Cash)(1) Third-Party General Contracting and Real Estate Services Three months ended 9/30/2021 Trailing 12 Months Office(3) Retail Multifamily Total General Contracting Gross Profit $4,915 Stable Portfolio Portfolio NOI (2) $7,533 $14,297 $9,422 $31,252 Non-Property Assets(4) Unstabilized Properties NOI (658) - - (658) As of 9/30/2021 Signed Leases Not Yet Occupied or In Free Rent Period 35 697 137 869 Cash and Retricted Cash $33,453 Net Deferrals and Recoveries (18) (308) (19) (345) Accounts Receivable 30,576 Stable Portfolio NOI $6,892 $14,686 $9,540 $31,118 Notes Receivable, Including Mezzanine Investments (5) 117,927 Intra-Quarter Transactions Construction receivables, including retentions (5) 13,936 Net Acquisitons - 505 - 505 Acquired lease intangible assets, net 65,197 Net Dispositions - - - - Other Assets 42,421 Total - 505 - 505 Total Non-Property Assets $303,510 Annualized $27,568 $60,763 $38,160 $126,491 Liabilities(4) As of 9/30/2021 Non-Stabilized Portfolio Mortgages and Notes Payable(5) $1,017,410 As of 9/30/2021 Accounts Payable and Accrued Liabilities 26,549 Projects Under Development at Cost $62,000 Construction Payables, Including Retentions 22,078 Projects Delivered Not Stabilized at Cost 112,000 Other Liabilities 63,122 Projects Under Predevelopment or On Hold 10,000 Total Liabilities $1,129,159 Unconsolidated Joint Ventures 10,000 Total Non-Stabilized Portfolio $194,000 Preferred Equity Liquidation Value Management's Estimate of Land Value and Vacancy Opportunities Series A Cumulative Redeemable Perpetual Preferred Stock $171,085 Size Estimated Value(6) Harrisonburg MF Development Opportunity 266 units $20,000-30,000/unit Common Equity As of 9/30/2021 Size Net Rent PSF Total common shares outstanding 61,324 Vacant Space at Lease or signed subsequent to 9/30 61,000 sf $18.40 Total OP units outstanding 20,853 Total Common Shares & OP Units Outstanding 82,177
9 SUMMARY BALANCE SHEET $ IN THOUSANDS 9/30/2021 12/31/2020 Assets (Unaudited) Real estate investments: Income producing property $1,744,124 $1,680,943 Held for development 11,294 13,607 Construction in progress 54,871 63,367 Accumulated depreciation (278,218) (253,965) Net real estate investments 1,532,071 1,503,952 Real estate investments held for sale 68,762 1,165 Cash and cash equivalents 28,038 40,998 Restricted cash 5,415 9,432 Accounts receivable, net 30,576 28,259 Notes receivable, net 118,164 135,432 Construction receivables, including retentions, net 13,753 38,735 Construction contract costs and estimated earnings in excess of bil l ings 370 138 Equity method investments 9,174 1,078 Operating lease right-of-use assets 23,547 32,760 Finance lease right-of-use assets 47,266 23,544 Acquired lease intangible assets 65,197 58,154 Other assets 42,051 43,324 Total Assets $1,984,384 $1,916,971 Liabilities and Equity Indebtedness, net $968,424 $963,845 Liabilities related to assets held for sale 60,021 - Accounts payable and accrued liabilities 26,549 23,900 Construction payables, including retentions 22,078 49,821 Bil l ings in excess of costs and estimated earnings 2,674 6,088 Operating lease liabilities 31,607 41,659 Finance lease liabilities 46,078 17,954 Other l iabilities 62,197 56,902 Total Liabilities 1,219,628 1,160,169 Total Equity 764,756 756,802 Total Liabilities and Equity $1,984,384 $1,916,971 As of
10 SUMMARY INCOME STATEMENT $ IN THOUSANDS, EXCEPT PER SHARE DATA Three months ended Nine months ended 9/30/2021 9/30/2020 9/30/2021 9/30/2020 Revenues (Unaudited) Rental revenues $49,560 $39,636 $142,679 $121,840 General contracting and real estate services revenues 17,502 58,617 71,473 163,283 Total Revenues 67,062 98,253 214,152 285,123 Expenses Rental expenses 12,717 10,223 34,841 27,907 Real estate taxes 5,543 4,760 16,314 13,326 General contracting and real estate services expenses 15,944 56,509 68,350 157,401 Depreciation and amortization 16,886 14,176 52,237 42,232 Amortization of right-of-use assets - finance leases 278 147 745 440 General and administrative expenses 3,449 2,601 10,957 9,382 Acquisition, development and other pursuit costs 8 26 111 555 Impairment charges - 47 3,122 205 Total Expenses 54,825 88,489 186,677 251,448 Gain (loss) on real estate dispositions (113) 3,612 3,604 6,388 Operating Income 12,124 13,376 31,079 40,063 Interest income 3,766 4,417 14,628 16,055 Interest expense (8,827) (7,523) (25,220) (22,938) Change in fair value of derivatives and other 131 318 838 (1,424) Unrealized credit loss release (provision) 617 33 284 (227) Other income (expense), net (105) 177 81 521 Income before taxes 7,706 10,798 21,690 32,050 Income tax benefit 42 28 522 220 Net Income $7,748 $10,826 $22,212 $32,270 Net income attributable to noncontrolling interest in investment entities - 45 - 181 Preferred stock dividends (2,887) (2,220) (8,661) (4,462) Net income attributable to AHH and OP unitholders $4,861 $8,651 $13,551 $27,989 Net income per diluted share and unit attributable to AHH and OP unitholders $0.06 $0.11 $0.17 $0.36 Weighted Average Shares & OP Units - Diluted 81,936 78,443 81,164 78,020
11 FFO, NORMALIZED FFO & ADJUSTED FFO(1) $ IN THOUSANDS, EXCEPT PER SHARE DATA (1) See definitions in appendix. (2) Adjusted for the depreciation attributable to noncontrolling interests in consolidated investments. (3) Excludes gain on the sale of easement rights at a non-operating parcel of $0.3M. (4) Related to Socastee Commons. (5) Excludes development, redevelopment, and first-generation space. (6) Includes non-cash interest expense relating to indebtedness and interest expense on finance leases. Three months ended (Unaudited) 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2021 9/30/2020 Funds From Operations Net income attributable to AHH and OP unitholders $4,861 $5,568 $3,122 $1,851 $13,551 $27,989 Net Income per diluted share $0.06 $0.07 $0.04 $0.02 $0.17 $0.36 Depreciation and amortization 16,886 17,285 18,066 17,678 (2) 52,237 41,867 (2) Loss (gain) on dispositions of operating real estate 113 - (3,464) (3) - (3,351) (3) (6,388) Impairment of real estate assets - - 3,039 (4) - 3,039 (4) - FFO $21,860 $22,853 $20,763 $19,529 $65,476 $63,468 FFO per diluted share $0.27 $0.28 $0.26 $0.25 $0.81 $0.81 Normalized FFO Acquisition, development & other pursuit costs 8 32 71 29 111 555 Loss on extinguishment of debt 120 - - - 120 - Non cash GAAP Adjustments (339) 749 134 636 544 872 Change in fair value of derivatives and other (131) (314) (393) (294) (838) 1,424 Normalized FFO $21,518 $23,320 $20,575 $19,900 $65,413 $66,319 Normalized FFO per diluted share $0.26 $0.29 $0.26 $0.25 $0.81 $0.85 Adjusted FFO Non-cash stock compensation 390 423 1,017 471 1,830 1,907 Acquisition, development & other pursuit costs (8) (32) (71) (29) (111) (555) Tenant improvements, leasing commissions, lease incentives (5) (1,837) (1,537) (1,264) (1,924) (4,638) (4,816) Property related capital expenditures (3,457) (2,054) (1,224) (2,500) (6,735) (4,703) Adjustment for mezz loan modification and exit fees (493) (493) (493) (493) (1,479) (3,302) Non-cash interest expense(6) 1,478 1,332 988 934 3,798 2,185 Cash ground rent payment - finance lease (624) (624) (415) (291) (1,663) (748) GAAP Adjustments (645) (1,286) (1,707) (1,940) (3,638) (7,963) AFFO $16,322 $19,049 $17,406 $14,128 $52,777 $48,324 AFFO per diluted share $0.20 $0.23 $0.22 $0.18 $0.65 $0.62 Weighted Average Common Shares Outstanding 61,083 60,409 59,422 58,304 60,310 57,000 Weighted Average Operating Partnership Units Outstanding 20,853 20,853 20,854 20,867 20,854 21,020 Total Weighted Average Common Shares and OP Units Outstanding 81,936 81,262 80,276 79,171 81,164 78,020 Nine months ended (Unaudited)
12 OUTSTANDING DEBT $ IN THOUSANDS (1) Includes debt subject to interest rate swap locks. (2) Subject to a LIBOR rate floor. (3) Held for sale as of 9/30/21. Debt Stated Rate Effective Rate as of 9/30/2021 Maturity Date 2021 2022 2023 2024 2025 Thereafter Outstanding as of 9/30/2021 Secured Notes Payable - Core Debt Red Mill West 4.23% 4.23% Jun-2022 $118 $10,386 $10,504 Marketplace at Hilltop 4.42% 4.42% Oct-2022 105 9,706 9,811 1405 Point L+2.25% 2.33% Jan-2023 182 754 51,532 52,468 Nexton Square L+2.25% 2.50% (2) Feb-2023 - - 20,107 20,107 249 Central Park Retail L+1.60% 3.85% (1) Aug-2023 63 260 16,093 16,416 Fountain Plaza Retail L+1.60% 3.85% (1) Aug-2023 38 156 9,684 9,878 South Retail L+1.60% 3.85% (1) Aug-2023 28 114 7,065 7,207 Hoffler Place L+2.60% 3.00% (2) Jan-2024 - - 257 18,143 18,400 Summit Place L+2.60% 3.00% (2) Jan-2024 - - 311 22,789 23,100 One City Center L+1.85% 1.93% Apr-2024 160 659 691 22,734 24,244 Southgate Square L+2.25% 3.00% (2) Apr-2024 179 728 750 17,550 19,207 Red Mill Central 4.80% 4.80% Jun-2024 44 175 175 1,838 2,232 Premier Apartments L+1.55% 1.63% Oct-2024 54 221 234 16,053 16,562 Premier Retail L+1.55% 1.63% Oct-2024 26 109 115 7,907 8,157 Red Mill South 3.57% 3.57% May-2025 80 327 338 351 4,502 5,598 Brooks Crossing Office L+1.60% 1.68% Jul-2025 128 517 526 534 13,305 15,010 Market at Mill Creek L+1.55% 1.63% Jul-2025 162 647 647 647 11,200 13,303 Johns Hopkins Village(3) L+1.25% 4.19% (1) Aug-2025 252 1,031 1,075 1,116 46,649 50,123 North Point Center Note 2 7.25% 7.25% Sep-2025 36 152 163 175 1,452 1,978 Encore Apartments 2.93% 2.93% Feb-2026 133 540 556 573 590 22,264 24,656 4525 Main Street 2.93% 2.93% Feb-2026 170 693 714 735 757 28,576 31,645 Delray Beach Plaza L+3.00% 3.08% Mar-2026 145 579 579 579 579 11,723 14,184 Thames Street Wharf BSBY+1.30% 2.35% (1) Sep-2026 358 1,433 1,433 1,972 3,050 62,754 71,000 Greenbrier Square 3.74% 3.74% Oct-2027 - 60 371 385 399 18,785 20,000 Lexington Square 4.50% 4.50% Sep-2028 68 280 293 306 320 12,973 14,240 Red Mill North 4.73% 4.73% Dec-2028 27 110 116 121 127 3,715 4,216 Greenside Apartments 3.17% 3.17% Dec-2029 181 735 759 780 808 29,515 32,778 The Residences at Annapolis Junction SOFR+2.66% 2.71% Nov-2030 - - 147 1,753 1,809 80,665 84,374 Smith's Landing 4.05% 4.05% Jun-2035 224 917 956 994 1,037 12,548 16,676 Liberty Apartments 5.66% 5.66% Nov-2043 78 322 341 361 382 12,166 13,650 Edison Apartments 5.30% 5.30% Dec-2044 88 364 384 405 427 14,347 16,015 The Cosmopolitan 3.35% 3.35% Jul-2051 207 847 876 906 937 38,524 42,297 Total - Secured Core Debt 3,334 32,822 117,288 119,707 88,330 348,555 710,036 Secured Notes Payable - Development Pipeline Wills Wharf L+2.25% 2.33% Jun-2023 - - 62,601 62,601 Chronicle Mill L+3.00% 3.25% (2) May-2024 Gainesvil le Apartments L+3.00% 3.75% (2) Aug-2024 - - - 9,773 9,773 Total - Development Pipeline - - 62,601 9,773 - - 72,374 Total Secured Notes Payable 3,334 32,822 179,889 129,480 88,330 348,555 782,410 Unsecured Core Debt Senior Unsecured Line of Credit L+1.30%-1.85% 1.58% Jan-2024 - - - 30,000 30,000 Senior Unsecured Term Loan L+1.25%-1.80% 1.53% Jan-2025 - - - - 19,500 19,500 Senior Unsecured Term Loan L+1.25%-1.80% 1.95% - 4.47% (1) Jan-2025 - - - - 185,500 185,500 Total - Unsecured Core Debt - - - 30,000 205,000 - 235,000 Total Notes Payable excluding GAAP Adjustments $3,334 $32,822 $179,889 $159,480 $293,330 $348,555 $1,017,410 GAAP Adjustments 1,137 Total Notes Payable $1,018,547 Debt Maturities & Principal Payments
13 DEBT INFORMATION Interest Rates(4) (1) Excludes debt subject to interest rate swap locks. (2) Includes debt subject to interest rate swap locks. (3) Excludes GAAP adjustments. (4) Subject to LIBOR rate as of 9/30/21. $ IN THOUSANDS Debt Maturities 3.9% 2.7% 2.5% 3.1% 3.2% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 2021 2022 2023 2024 2025 Thereafter⁽¹⁾ Debt Maturing Weighted Average Interest Rate 2.4% 3.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% Variable-rate Debt Fixed-rate Debt 3.0% Weighted Average Total Debt Composition Weighted Average(4) % of Debt Interest Rate Maturity Variable vs. Fixed-rate Debt Variable-rate Debt(1) 42.4% 2.4% 3.7 Yrs Fixed-rate Debt(2)(3) 57.6% 3.5% 7.2 Yrs Fixed-rate and Hedged Debt(2)(3) 95.5% Secured vs. Unsecured Debt Unsecured Debt 23.1% 2.8% 3.2 Yrs Secured Debt 76.9% 3.0% 6.4 Yrs Total 3.0% 5.7 Yrs Interest Rate Cap Agreements At or Below 0.50% Effective Date Maturity Date Strike Rate Notional Amount July 2020 July 2023 0.50% $100,000 February 2021 February 2023 0.50% 100,000 May 2021 May 2023 0.50% 35,100 May 2021 May 2023 0.50% 50,000 June 2021 July 2023 0.50% 100,000 Total Interest Rate Caps 385,100 Fixed-rate Debt(2)(3) $586,420 Fixed-rate and Hedged Debt $971,520 Total Debt(3) $1,017,410 % of Total Debt(3) 95.5%
14 (1) See reconciliation in appendix. (2) Excludes non-recurring items. (3) Excludes GAAP adjustments. (4) See definition in appendix. (5) Interest expense has been adjusted for the current period and for prior periods to include interest expense relating to finance leases. (6) Includes the unannualized mezzanine loan prepayment premium of $2.4M. (7) Includes the unannualized gain of sale on the non-operating parcel of $0.3M. CORE DEBT TO CORE EBITDA $ IN THE THOUSANDS SEE APPENDIX FOR CALCULATIONS AND RECONCILIATION Three months ended 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 Net income attributable to common stockholders and OP unitholders $4,861 $5,568 $3,122 $1,851 $8,651 Adjusted EBITDA(1)(2)(4)(5) $33,294 $31,918 $31,922 $30,603 $30,045 Other adjustments: Development/Redevelopment (725) (819) (1,060) (880) (2,225) (Less) Acquisitions/Dispositions completed intra-quarter (238) - (447) (961) (155) Core EBITDA(4) $32,331 $31,099 $30,415 $28,762 $27,665 Annualized Core EBITDA $129,324 $126,756 (6) $121,915 (7) $115,046 $110,658 Total debt(3) $1,017,410 $963,885 $975,099 $962,812 $885,359 Adjustments to debt: (Less) Development/Redevelopment (72,374) (62,493) (69,039) (67,285) (143,560) (Less) Net Acquisitions completed intra-quarter (20,000) - (14,473) (84,375) (22,909) (Less) Cash & restricted cash (33,453) (53,242) (34,588) (50,430) (79,224) Core Debt(4) $891,583 $848,150 $856,999 $760,722 $639,666 Core Debt/Annualized Core EBITDA 6.9x 6.7x 7.0x 6.6x 5.8x
15 CAPITALIZATION & FINANCIAL RATIOS $ IN THOUSANDS AS OF SEPTEMBER 30, 2021 (1) Reflects quarterly Adjusted EBITDA divided by total quarterly interest expense and required principal repayment. (2) Reflects quarterly Adjusted EBITDA divided by total quarterly interest expense, required principal repayment, and preferred equity dividends. Unsecured Credit Facility Unsecured Term Loans Mortgages Payable Preferred Equity Common Stock Common Units Equity Debt Debt 44%Equity 56% 1% 9% 34% 8% 36% 12% Debt % of Total Principal Balance Unsecured credit facil ity 3% $30,000 Unsecured term loans 20% 205,000 Mortgages payable 77% 782,410 Total debt $1,017,410 Preferred Equity Shares Liquidation Value Per Share Total Liquidation Value 6,843 $25.00 $171,085 Common Equity % of Total Shares/Units Stock Price Market Value Common stock (NYSE: AHH) 75% 61,324 $13.37 $819,902 Operating Partnership Units 25% 20,853 $13.37 278,805 Equity market capitalization 82,177 $1,098,707 Total capitalization $2,287,202 Financial Ratios Debt Service Coverage Ratio(1) 2.8x Fixed Charge Coverage Ratio(2) 2.3x Net Debt to Adjusted EBITDA 7.4x Core Debt to Core EBITDA 6.9x Core Debt + Preferred Equity to Core EBITDA 8.2x Debt/Total Capitalization 44% Liquidity Unencumbered Properties Cash on hand $33,453 % of Total Properties 54% Availability under credit facil ity 89,000 % of Annualized Base Rent 31% Availability under construction loans 71,925 $194,378 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock (NYSE: AHHPrA)
16 PROPERTY PORTFOLIO AS OF SEPTEMBER 30, 2021 Retail Properties- Stabilized Anchor Tenant(s) Location Town Center Unencumbered ABR Year Built SF(1) Occupancy(2) ABR(3) ABR per Leased SF(3) 249 Central Park Retail Cheesecake Factory, Brooks Brothers Virginia Beach, VA ✓ - 2004 92,400 94.0% $2,280,845 $26.26 Apex Entertainment Apex Entertainment, USI Virginia Beach, VA ✓ 100% 2002 103,335 100.0% 1,492,772 14.45 Broad Creek Shopping Center (6)(9) Food Lion, PetSmart Norfolk, VA 100% 1997/2001 121,504 96.9% 2,151,171 18.27 Broadmoor Plaza Kroger South Bend, IN 100% 1980 115,059 98.2% 1,349,460 11.95 Brooks Crossing Retail Various Small Shops Newport News, VA 100% 2016 18,349 78.3% 205,312 14.29 Columbus Village(6) Barnes & Noble, CAVA, Shake Shack Virginia Beach, VA ✓ 100% 1980/2013 62,362 94.8% 1,798,786 30.44 Columbus Village II BB&B, Regal Virginia Beach, VA ✓ 100% 1995/1996 92,061 96.7% 831,490 9.34 Commerce Street Retail Yard House Virginia Beach, VA ✓ 100% 2008 19,173 100.0% 896,395 46.75 Courthouse 7-Eleven 7-Eleven Virginia Beach, VA 100% 2011 3,276 100.0% 143,653 43.85 Delray Beach Plaza (6)(9) Whole Foods Delray Beach, FL - 2021 87,207 100.0% 2,979,440 34.17 Dimmock Square Best Buy, Old Navy Colonial Heights, VA 100% 1998 106,166 75.3% 1,472,634 18.43 Fountain Plaza Retail Ruth's Chris, Ann Taylor Virginia Beach, VA ✓ - 2004 35,961 100.0% 1,008,015 28.03 Greenbrier Square(6) Kroger, Homegoods, Dick's Sporting Goods Chesapeake, VA - 2017 260,710 95.4% 2,428,432 9.76 Greentree Shopping Center Various Small Shops Chesapeake, VA 100% 2014 15,719 321,936 22.12 Hanbury Village(6) Harris Teeter Chesapeake, VA 100% 2006/2009 98,638 100.0% 1,990,910 20.18 Harrisonburg Regal Regal Cinemas Harrisonburg, VA 100% 1999 49,000 100.0% 717,850 14.65 Lexington Square Lowes Foods Lexington, SC - 2017 85,440 98.3% 1,830,239 21.79 Market at Mill Creek (6) Lowes Foods Mt. Pleasant, SC - 2018 80,319 97.7% 1,824,408 23.24 Marketplace at Hilltop(6)(9) Total Wine, Panera, Chick-Fil-A Virginia Beach, VA - 2000/2001 116,953 98.6% 2,549,976 22.11 Nexton Square Various Small Shops Summerville, SC - 2020 127,208 100.0% 3,305,723 25.99 North Hampton Market PetSmart, Hobby Lobby Taylors, SC 100% 2004 114,954 99.0% 1,524,486 13.40 North Point Center(6) Harris Teeter, Home Depot, Costco Durham, NC 88% 1998/2009 494,746 100.0% 3,904,179 7.89 Overlook Village T.J. Maxx|Homegoods, Ross Asheville, NC 100% 1990 151,365 100.0% 2,193,217 14.49 Parkway Centre Publix Moultrie, GA 100% 2017 61,200 100.0% 836,604 13.67 Parkway Marketplace Rite Aid Virginia Beach, VA 100% 1998 37,804 94.4% 730,175 20.45 Patterson Place BB&B, PetSmart, DSW Durham, NC 100% 2004 160,942 82.7% 2,202,146 16.54 Perry Hall Marketplace Safeway Perry Hall, MD 100% 2001 74,256 98.0% 1,248,621 17.16 Premier Retail Will iams Sonoma, Pottery Barn Virginia Beach, VA ✓ - 2018 38,715 82.0% $1,012,014 31.87 Providence Plaza Cranfil l , Sumner & Hartzog, Chipotle Charlotte, NC 100% 2007/2008 103,118 89.7% 2,643,891 28.59 Red Mill Commons (6) Homegoods, Walgreens Virginia Beach, VA 8% 2000-2005 373,808 90.3% 6,302,258 18.68 Sandbridge Commons (6) Harris Teeter Virginia Beach, VA 100% 2015 76,650 100.0% 1,094,883 14.28 Southgate Square Burlington, PetSmart, Michaels, Conn's Colonial Heights, VA - 1991/2016 260,131 94.3% 3,435,991 14.01 South Retail lululemon, free people, CPK Virginia Beach, VA ✓ - 2002 38,515 77.9% 867,475 28.90 South Square Ross, Petco, Office Depot Durham, NC 100% 1977/2005 109,590 100.0% 1,955,197 17.84 Southshore Shops Buffalo Wild Wings Chesterfield, VA 100% 2006 40,307 78.6% 648,139 20.47 Studio 56 Retail Rocket Title Virginia Beach, VA ✓ 100% 2007 11,594 31.0% 92,654 25.78 Tyre Neck Harris Teeter(6)(9) Harris Teeter Portsmouth, VA 100% 2011 48,859 100.0% 533,285 10.91 Wendover Village T.J. Maxx, Petco, Beauty World Greensboro, NC 100% 2004 176,997 98.8% 3,335,136 19.08 Stabilized Retail Total 38 Properties 55% 4,064,391 95.2% $66,139,798 $17.09
17 PROPERTY PORTFOLIO CONT. AS OF SEPTEMBER 30, 2021 (1) The net rentable square footage for each of our retail & office properties is the sum of (a) the square footage of existing leases, plus (b) for available space, management’s estimate of net rentable square footage based, in part, on past leases. The net rentable square footage included in office leases is generally consistent with the Building Owners and Managers Association, or BOMA, 1996 measurement guidelines. (2) Occupancy for each of our retail & office properties is calculated as (a) square footage under executed leases as of September 30, 2021, divided by (b) net rentable square feet, expressed as a percentage. Occupancy for our multifamily properties is calculated as (a) total units/beds occupied as of September 30, 2021, divided by (b) total units/beds available, as of such date expressed as a percentage. (3) For the properties in our retail & office portfolios, annualized base rent, or ABR, is calculated by multiplying (a) monthly base rent (defined as cash base rent, before contractual tenant concessions and abatements, and excluding tenant reimbursements for expenses paid by us) as of September 30, 2021 for in-place leases as of such date by (b) 12, and does not give effect to periodic contractual rent increases or contingent rental revenue (e.g., percentage rent based on tenant sales thresholds). ABR per leased square foot is calculated by dividing (a) ABR by (b) square footage under in-place leases as of September 30, 2021. In the case of triple net or modified gross leases, our calculation of ABR does not include tenant reimbursements for real estate taxes, insurance, common area or other operating expenses. (4) The Company occupied 55,390 square feet at these two properties at an ABR of $1.8M, or $32.23 per leased square foot, which are reflected in this table. The rent paid by us is eliminated in accordance with GAAP in the consolidated financial statements. (5) Includes ABR pursuant to a rooftop lease. (6) Net rentable square feet at certain of our retail properties includes pad sites leased pursuant to the ground leases. (7) For the properties in our multifamily portfolio, AQR is calculated by multiplying (a) revenue for the quarter ended September 30, 2021 by (b) 4. (8) The ABR for Liberty, Cosmopolitan, Johns Hopkins Village, Hoffler Place, Edison, and 1405 Point excludes approximately $0.3M, $0.9M, $1.3M, $0.2M, $0.3M and $0.4M, respectively, from ground floor retail leases. (9) The Company leases all or a portion of the land underlying this property pursuant to a ground lease. (10) Student Housing property that is leased by bed. Monthly effective rent per occupied unit is calculated by dividing total base rental payments for the month ended September 30, 2021 by the number of occupied beds. Office Properties- Stabilized Anchor Tenant(s) Location Town Center Unencumbered ABR Year Built SF(1) Occupancy(2) ABR(3) ABR per Leased SF(3) 4525 Main Street Clark Nexsen, Anthropologie, Mythics Virginia Beach, VA ✓ - 2014 234,938 99.4% $6,994,090 $29.96 Armada Hoffler Tower(4)(5) AHH, Troutman Pepper, Will iams Mullen Virginia Beach, VA ✓ 100% 2002 315,916 99.5% 9,309,925 29.63 Brooks Crossing Office Huntington Ingalls Industries Newport News, VA - 2019 98,061 100.0% 1,887,674 19.25 One Columbus (5) BB&T, HBA Virginia Beach, VA ✓ 100% 1984 128,770 88.3% 2,896,314 25.46 One City Center Duke University, WeWork Durham, NC - 2019 151,599 89.3% 4,287,825 31.66 Thames Street Wharf(4) Morgan Stanley, JHU Medical Baltimore, MD - 2010 263,426 99.5% 7,443,476 28.41 Two Columbus Hazen & Sawyer, Fidelity Virginia Beach, VA ✓ 100% 2009 108,459 95.4% 2,614,174 25.26 Stabilized Office Total 7 Properties 42% 1,301,169 96.9% $35,433,478 $28.11 Office Properties- Non-Stabilized Anchor Tenant(s) Location Town Center Unencumbered ABR Year Built SF(1) Occupancy(2) ABR(3) ABR per Leased SF(3) Wills Wharf(9) Canopy by Hilton, Transamerica, RBC Baltimore, MD - 2020 327,991 59.8% $5,569,221 $28.39 Non-Stabilized Office Total 1 Property Multifamily Properties- Stabilized Location Town Center Unencumbered AQR Year Built Units/Beds Occupancy (2) AQR (7) Monthly AQR per Occupied Unit/Bed Monthly AQR per Occupied SF 1405 Point(8)(9) Baltimore, MD - 2018 289 98.6% $7,851,258 $2,296 $3.07 Encore Apartments Virginia Beach, VA ✓ - 2014 286 95.8% 5,104,027 1,552 2.16 Edison Apartments (8) Richmond, VA - 2014 174 98.9% 2,857,074 1,384 2.25 Greenside Apartments Charlotte, NC - 2018 225 97.8% 4,282,434 1,622 2.19 Liberty Apartments (8) Newport News, VA - 2013 197 96.4% 3,170,227 1,391 1.91 Premier Apartments Virginia Beach, VA ✓ - 2018 131 95.4% 2,729,466 1,820 2.96 Smith's Landing(9) Blacksburg, VA - 2009 284 99.6% 5,409,282 1,593 1.67 The Cosmopolitan(8) Virginia Beach, VA ✓ - 2006 342 97.7% 8,730,467 2,178 2.25 The Residences at Annapolis Junction Annapolis Junction, MD - 2018 416 96.2% 10,006,392 2,085 2.32 Multifamily Total 9 Properties - 2,344 97.4% 50,140,628 1,830 2.26 Hoffler Place(8)(10) Charleston, SC - 2019 258 97.3% 3,399,358 1,129 3.61 Johns Hopkins Village(8)(9)(10) Baltimore, MD - 2016 568 98.1% 7,659,776 1,146 3.90 Summit Place(10) Charleston, SC - 2020 357 96.6% 3,831,718 926 2.59 Student Housing Total 3 Properties - 1,183 97.5% 14,890,852 1,076 3.40 Total / Weighted Average Multifamily Portfolio 3,527 97.4% $65,031,480 $1,577 $2.45
18 DEVELOPMENT PIPELINE $ IN THOUSANDS (1) Represents estimates that may change as the development and redevelopment process proceeds. (2) First fully-stabilized quarter. See same store definition in appendix. (3) Majority interest in joint venture with preferred return. Gainesville Apts Gainesville, GA Q3 2021 YTD Capitalized Interest $272 $1,082 Capitalized Overhead $500 $1,526 Projects Property Type Estimated (1) % Leased or LOI Construction Start Initial Occupancy Stabilized Operation(2) Estimated Cost(1) Loan Commitment Cost to Date AHH Ownership % Anchor Tenants Under Development Chronicle Mill Belmont, NC Multifamily 238 units / 14,700 sf - 1Q21 3Q22 4Q23 $55,000 $35,100 $18,000 85% (3) Harrisonburg Apartments Harrisonburg, VA Multifamily 266 units - 2Q22 3Q23 4Q24 70,000 TBD - 100% Gainesville Apartments Gainesville, GA Multifamily 223 units - 3Q20 1Q22 2Q23 52,000 31,000 33,000 95% (3) Southern Post Roswell, GA Mixed-use 137 units / 137,000 sf - 1Q22 4Q23 4Q24 110,000 TBD 11,000 100% Total Projects Under Development $287,000 $66,100 $62,000 Delivered Not Stabilized Wills Wharf Baltimore, MD Office 328,000 sf 70% 3Q18 2Q20 3Q22 $120,000 $76,000 $112,000 100% Canopy by Hilton, Transamerica, RBC, Morgan Stanley Predevelopment Ten Tryon Charlotte, NC Mixed-use 220,000 sf - TBD TBD TBD TBD TBD $10,000 80% (3) Unconsolidated JV's T. Rowe Price Global HQ Baltimore, MD $250,000 - $9,000 50% T. Rowe Price Parcel 4 Mixed-Use Baltimore, MD 192,000 - 1,000 50% Total Unconsolidated JV's $442,000 - $10,000 see page 19 for details see page 19 for details Schedule(1)
19 T Rowe Price Global HQ Baltimore, MD 1 - Thames Street Wharf 2 - 1405 Point 3 - Wills Wharf 4 - T. Rowe Price Global HQ 5 - Parcel 4 Mixed Use 6 - Exelon Building Owned 100% by AHH JV with Beatty Development Group Built by AHH (not owned) 6 2 1 3 4 5 DEVELOPMENT PIPELINE(1) UNCONSOLIDATED JOINT-VENTURES- PREDEVELOPMENT: SUBJECT TO CHANGE $ IN THOUSANDS (1) All items are estimated based on predevelopment assumptions. Estimated Property Type Size Construction Start Initial Occupancy Stabilized Operation Project Cost AHH Ownership % AHH Equity Requirement AHH Investment To Date Total Construction Fees T. Rowe Price Global HQ-Baltimore, MD Office 450,000 sf 1Q22 1Q24 2Q24 $250,000 50% $30,000 $9,000 $4-5M Parcel 4 Mixed-Use-Baltimore, MD Mixed-Use/Garage 310 units / 15,000 sf retail / 1,300 parking spaces 1Q22 1Q24 TBD 192,000 50% 30,000 1,000 4M Total Joint-Ventures $442,000 $60,000 $10,000 $8-9M
20 MEZZANINE INVESTMENTS (1) Represents estimates that may change as the development process proceeds. (2) 100% preferred equity, with economic terms and accounting consistent with a mezzanine loan. The Interlock Atlanta, GA AS OF SEPTEMBER 30, 2021 $ IN THOUSANDS The Interlock Atlanta, GA Property Type Estimated Size(1) % Leased or LOI Initial Occupancy Loan Maturity Interest Rate Loan Balance Mezzanine Interest QTD Outstanding Investments The Interlock Atlanta, GA Mixed-use 300,000 sf 81% 1Q21 4Q24 15% $92,254 $3,260 Solis Nexton(2) Summerville, SC Multifamily 320 units NA 4Q22 4Q26 11% 18,549 397 Total $110,803 $3,657 Mezzanine Interest Expense (349) Net Mezzanine Interest Income $3,308 Schedule(1)
21 ACQUISITIONS & DISPOSITIONS $ IN THOUSANDS (1) Contractual purchase price. (2) Includes JV interest in the property. (3) Anchor tenant vacant at time of sale. ACQUISITIONS Properties Location Square Feet/Units Purchase Price(1) Cash Cap Rate Purchase Date Anchor Tenants 2021 412,075 $64,850 6.9% Greenbrier Square Chesapeake, VA 260,710 $36,500 6.3% 3Q21 Kroger, Homegoods, Dick's Sporting Goods Overlook Village Asheville, NC 151,365 $28,350 7.7% 3Q21 T.J. Maxx|Homegoods, Ross 2020 174 units 25,700 6.8% Edison Apartments Richmond, VA 174 units 25,700 6.8% 4Q20 NA 2019 757,577 208,783 7.4% Thames Street Wharf Baltimore, MD 263,426 101,000 7.1% 2Q19 Morgan Stanley, JHU Medical Red Mill Commons & Marketplace at Hilltop Virginia Beach, VA 488,865 105,000 7.7% 2Q19 T.J. Maxx, Homegoods, Total Wine, Walgreens Wendover Village III Greensboro, NC 5,286 2,783 9.2% 1Q19 Verizon 2018 217,751 52,658 6.7% 2017 35,895 14,300 7.7% 2016 1,515,674 261,530 7.0% 2015 409,386 95,380 7.1% 2014 106,166 19,662 7.3% Total/Weighted Average 3,454,524 / 174 units $742,863 7.1% DISPOSITIONS Properties Location Square Feet/Units Sale Price Cash Cap Rate Disposition Date Anchor Tenants 2021 128,105 $15,265 6.3% Courthouse 7-Eleven Virginia Beach, VA 3,177 3,065 4.5% 4Q21 7-Eleven Socastee Commons Myrtle Beach, SC 57,273 3,800 NA (3) 3Q21 Oakland Marketplace Oakland, TN 64,538 5,500 7.8% 1Q21 Kroger Hanbury 7-Eleven Chesapeake, VA 3,117 2,900 5.5% 1Q21 7-Eleven 2020 645,600 97,300 7.7% Hanbury Walgreens Chesapeake, VA 14,820 7,300 6.1% 3Q20 Walgreens Retail Portfolio (7 properties) Mid-Atlantic 630,780 90,000 7.8% 2Q20 Harris Teeter, Food Lion, Weis Markets, Office Max 2019 124,715 30,275 5.8% Lightfoot Marketplace Will iamsburg, VA 124,715 30,275 (2) 5.8% 3Q19 Harris Teeter 2018 6,047 4,400 5.4% 2017 52,454 17,750 6.3% 2016 481,866 97,350 8.4% 2015 203,200 / 203 units 81,075 6.2% 2014 31,000 8,900 6.3% Total/Weighted Average 1,672,987 / 203 units $352,315 7.2%
22 CONSTRUCTION BUSINESS SUMMARY $ IN THOUSANDS Holly Springs Apartments Holly Springs, NC Gross Profit Summary Q3 2021 Trailing 12 Months (Unaudited) Revenue $17,502 $125,336 Expense (15,944) (120,421) Gross Profit $1,558 $4,915 Highlighted Projects Location Total Contract Value Work in Place as of 9/30/2021 Backlog Estimated Date of Completion Adams Hill Apartments Greenville, SC $51,689 $468 $51,221 3Q 2023 Boulders Lakeview Apartments Richmond, VA 37,228 1,244 35,984 1Q 2023 Interlock Rooftop Atlanta, GA 14,775 6,719 8,056 1Q 2022 Subtotal $103,692 $8,431 $95,261 All Other Projects 377,846 366,242 11,604 Total $481,538 $374,673 $106,865
23 SAME STORE NOI BY SEGMENT $ IN THOUSANDS (RECONCILIATION TO GAAP LOCATED IN APPENDIX) (1) See appendix for Same Store vs. Non – Same Store Properties. (2) Excludes expenses associated with the Company’s in-house asset management division of $0.7M and $0.5M for the 3 months ended 9/30/2021 & 9/30/2020, respectively. (3) Excludes deferred rent collected of ($0.3M) and ($0.1M) for the three months ended 9/30/2021 & 9/30/2020, respectively. Three months ended Nine months ended 9/30/2021 9/30/2020 $ Change % Change 9/30/2021 9/30/2020 $ Change % Change Summary NOI: Office $6,427 $6,584 ($157) -2.4% $19,915 $19,812 $103 0.5% Retail 12,255 10,631 1,624 15.3% 35,986 35,663 323 0.9% Multifamily 4,749 3,991 758 19.0% 14,022 12,640 1,382 10.9% $23,431 $21,206 $2,225 10.5% $69,923 $68,115 $1,808 2.7% NOI, Cash Basis: Office $6,357 $6,298 $59 0.9% $19,201 $18,543 $658 3.5% Retail 12,092 11,046 1,046 9.5% 35,350 32,879 2,471 7.5% Multifamily 4,565 3,821 744 19.5% 13,465 12,542 923 7.4% $23,014 $21,165 $1,849 8.7% $68,016 $63,964 $4,052 6.3% Detail by Segment Office(1) Revenue $10,252 $10,232 $20 0.2% $30,752 $30,253 $499 1.6% Rental Expenses (2) 2,510 2,361 149 6.3% 6,934 6,887 47 0.7% Real Estate Taxes 1,315 1,287 28 2.2% 3,903 3,554 349 9.8% Net Operating Income $6,427 $6,584 ($157) -2.4% $19,915 $19,812 $103 0.5% Retail(1) Revenue $16,317 $14,586 $1,731 11.9% $47,976 $47,224 $752 1.6% Rental Expenses (2) 2,371 2,217 154 6.9% 6,742 6,327 415 6.6% Real Estate Taxes 1,691 1,738 (47) -2.7% 5,248 5,234 14 0.3% Net Operating Income $12,255 $10,631 $1,624 15.3% $35,986 $35,663 $323 0.9% Multifamily(1) Revenue $8,217 $7,580 $637 8.4% $23,847 $22,270 $1,577 7.1% Rental Expenses (2) 2,683 2,619 64 2.4% 7,448 7,200 248 3.4% Real Estate Taxes 785 970 (185) -19.1% 2,377 2,430 (53) -2.2% Net Operating Income $4,749 $3,991 $758 19.0% $14,022 $12,640 $1,382 10.9% Same Store Net Operating Income (NOI) $23,431 $21,206 $2,225 10.5% $69,923 $68,115 $1,808 2.7% GAAP Adjustments (417) (41) (376) (1,907) (4,151) 2,244 $23,014 $21,165 $1,849 8.7% $68,016 $63,964 $4,052 6.3%Same Store Portfolio NOI, Cash Basis(3)
24 TOP 10 TENANTS BY ABR(1) $ IN THOUSANDS AS OF SEPTEMBER 30, 2021 (1) Excludes leases from the development and redevelopment properties that have been delivered, but not yet stabilized. (2) Excludes 9.3K SF Morgan Stanley lease at Armada Hoffler Tower expiring in 2023. Inclusive of both leases, Morgan Stanley contributes $6.0M of ABR. (3) 2022 expiration at Red Mill Commons was renewed for five years subsequent to quarter end. Office Portfolio(1) Tenant Number of Leases Lease Expiration Annualized Base Rent % of Office Portfolio Annualized Base Rent % of Total Portfolio Annualized Base Rent Morgan Stanley(2) 1 2027 $ 5,703 16.1% 3.4% Clark Nexsen 1 2029 2,746 7.7% 1.6% WeWork 1 2034 2,065 5.8% 1.2% Duke University 1 2029 1,618 4.6% 1.0% Huntington Ingalls 1 2029 1,575 4.4% 0.9% Mythics 1 2030 1,235 3.5% 0.7% Johns Hopkins Medicine 1 2023 1,180 3.3% 0.7% Pender & Coward 1 2030 950 2.7% 0.6% Kimley-Horn 1 2027 930 2.6% 0.6% Troutman Pepper Hamilton Sanders 1 2025 907 2.6% 0.5% Top 10 Total $ 18,909 53.3% 11.2% Retail Portfolio(1) Tenant Number of Leases Lease Expiration Annualized Base Rent % of Retail Portfolio Annualized Base Rent % of Total Portfolio Annualized Base Rent Harris Teeter/Kroger 6 2023 - 2035 $ 3,739 5.7% 2.2% Lowes Foods 2 2037 ; 2039 1,976 3.0% 1.2% Dick's Sporting Goods 1 2032 1,508 2.3% 0.9% TJ Maxx/Homegoods (3) 5 2022 - 2026 1,504 2.3% 0.9% PetSmart 5 2022 - 2027 1,461 2.2% 0.9% Amazon/Whole Foods 1 2040 1,144 1.7% 0.7% Ross Dress for Less 3 2025 - 2027 1,122 1.7% 0.7% Apex Entertainment 1 2035 1,050 1.6% 0.6% Bed Bath & Beyond 3 2025 - 2027 1,047 1.6% 0.6% Regal Cinemas 2 2021 - 2024 949 1.4% 0.6% Top 10 Total $ 15,500 23.5% 9.3%
25 LEASE SUMMARY OFFICE RETAIL (1) Excludes leases from properties in development. Renewal Lease Summary GAAP Cash Quarter Number of Leases Signed Net Rentable SF Signed Leases Expiring Net Rentable SF Expiring Contractual Rent per SF Prior Rent per SF Releasing Spread Contractual Rent per SF Prior Rent per SF Releasing Spread Wtd Average Lease Term (yrs) TI & LC TI & LC per SF Q3 2021 1 1,400 4 16,017 $25.86 $27.22 -5.0% $25.00 $28.90 -13.5% 3 $2,153 $1.54 Q2 2021 - - - - - - 0.0% - - 0.0% - - - Q1 2021 1 4,152 1 4,152 23.95 23.56 1.6% 24.00 25.46 -5.7% 2 27,960 6.73 Q4 2020 2 14,745 1 3,024 24.81 22.66 9.5% 24.00 25.35 -5.3% 4 206,383 14.00 Office Renewal Total 4 20,297 6 23,193 $24.71 $23.16 6.7% $24.07 $25.62 -6.0% 3.84 $236,496 $11.65 New Lease Summary(1) Quarter Number of Leases Signed Net Rentable SF Signed Cash Contractual Rent per SF Wtd Average Lease Term (yrs) TI & LC TI & LC per SF Q3 2021 3 10,895 $26.71 6 $466,981 $42.86 ` Q2 2021 1 1,700 29.50 3 12,583 7.40 Q1 2021 1 1,455 23.50 2 4,871 3.35 Q4 2020 2 4,032 25.47 7 238,691 59.20 New Office Total 7 18,082 $26.44 5.55 $723,126 $39.99 Renewal Lease Summary GAAP Cash Quarter Number of Leases Signed Net Rentable SF Signed Leases Expiring Net Rentable SF Expiring Contractual Rent per SF Prior Rent per SF Releasing Spread Contractual Rent per SF Prior Rent per SF Releasing Spread Weighted Average Lease Term (yrs) TI & LC TI & LC per SF Q3 2021 10 43,479 7 21,163 $24.96 $22.04 13.3% $24.86 $22.94 8.4% 5 $86,764 $2.00 Q2 2021 15 89,973 13 87,253 18.12 16.78 8.0% 18.13 16.95 6.9% 5 208,544 2.32 Q1 2021 8 21,317 9 22,717 23.78 22.22 7.0% 23.62 23.16 2.0% 4 117,685 5.52 Q4 2020 20 119,351 14 109,544 15.16 15.87 -4.5% 15.00 16.07 -6.7% 7 832,241 6.97 Retail Renewal Total 53 274,120 43 240,677 $18.36 $17.64 4.0% $18.26 $18.00 1.4% 5.99 $1,245,234 $4.54 New Lease Summary(1) Quarter Number of Leases Signed Net Rentable SF Signed Cash Contractual Rent per SF Wtd Average Lease Term (yrs) TI & LC TI & LC per SF Q3 2021 10 34,384 $19.09 9 $898,397 $26.13 Q2 2021 11 55,683 16.05 9 3,029,735 54.41 Q1 2021 7 27,260 19.10 8 612,116 22.45 Q4 2020 10 71,888 16.13 9 1,505,862 20.95 New Retail Total 38 189,215 $17.07 8.83 $6,046,109 $31.95
26 OFFICE LEASE EXPIRATIONS AS OF SEPTEMBER 30, 2021 (1) Excludes leases from properties in development and delivered, but not yet stabilized. Upcoming Expirations Over 20,000 Square Feet Through Dec. 2023 Year Number of Leases Expiring Square Footage of Leases Expiring (1) % Portfolio Net Rentable Square Feet Annualized Base Rent (1) % of Portfolio Annualized Base Rent Annualized Base Rent per Leased Square Foot Available - 40,747 3.1% -$ - -$ M-T-M 5 2,743 0.2% 88,399 0.2% 32.23 2021 2 1,410 0.1% 37,983 0.1% 26.94 2022 10 47,132 3.6% 1,316,942 3.7% 27.94 2023 14 104,247 8.0% 2,852,112 8.0% 27.36 2024 12 142,077 10.9% 3,569,119 10.1% 25.12 2025 19 143,517 11.0% 4,329,313 12.2% 30.17 2026 11 54,089 4.2% 1,376,844 3.9% 25.46 2027 7 262,397 20.2% 7,702,641 21.7% 29.35 2028 11 86,228 6.6% 2,482,298 7.0% 28.79 2029 8 245,366 18.9% 6,471,877 18.3% 26.38 2030 6 107,801 8.3% 3,103,037 8.8% 28.78 2031 1 1,317 0.1% 37,535 0.1% 28.50 Thereafter 1 62,098 4.8% 2,065,378 5.9% 33.26 Total / Weighted Average 107 1,301,169 100.0% $35,433,478 100.0% $28.11 Upcoming Expirations Over 20,000 Square Feet Through Dec. 2023 Tenant Property Expiration Month Square Footage Expiring (1) Status Day & Zimmerman Armada Hoffler Tower Apr-2022 23,267 In Negotiation Johns Hopkins Medicine Thames Street Wharf Apr-2023 46,233 Expected to Vacate
27 RETAIL LEASE EXPIRATIONS AS OF SEPTEMBER 30, 2021 (1) Excludes leases from properties in development and delivered, but not yet stabilized. Year Number of Leases Expiring Square Footage of Leases Expiring (1) % Portfolio Net Rentable Square Feet Annualized Base Rent (1) % of Portfolio Annualized Base Rent Annualized Base Rent per Leased Square Foot Available - 194,770 4.8% -$ - -$ M-T-M 3 7,500 0.2% 165,281 0.2% 22.04 2021 14 77,696 1.9% 793,758 1.2% 10.22 2022 62 250,235 6.2% 4,162,768 6.3% 16.64 2023 66 449,605 11.1% 7,153,876 10.8% 15.91 2024 85 455,391 11.2% 8,500,765 12.9% 18.67 2025 83 628,377 15.5% 8,830,421 13.4% 14.05 2026 71 376,367 9.3% 7,174,271 10.8% 19.06 2027 35 242,510 6.0% 4,765,508 7.2% 19.65 2028 28 73,347 1.8% 1,885,414 2.9% 25.71 2029 25 107,527 2.6% 2,278,204 3.4% 21.19 2030 40 239,821 5.9% 5,301,900 8.0% 22.11 2031 30 217,842 5.4% 4,171,619 6.3% 19.15 Thereafter 29 743,403 18.1% 10,956,013 16.6% 14.74 Total / Weighted Average 571 4,064,391 100.0% $66,139,798 100.0% $17.09 Upcoming Expirations Over 20,000 Square Feet Through 2023 Renewals During the Quarter Over 20,000 Square Feet Tenant Property Expiration Square Footage Expiring (1) Status Regal Cinemas Columbus Village II Dec-2021 51,545 In Negotiation0 0 Jan-1900 - PetSmart Southgate Square Jan-2022 25,950 In Negotiation0 0 Jan-1900 - TJ Maxx Red Mill Commons Mar-2022 30,000 Renewed for 5 years0 0 Jan-1900 - Michaels Red Mill Commons Jul-2022 23,753 In Negotiation0 0 Jan-1900 - Food Lion Broad Creek Shopping Center Aug-2022 33,000 0 0 Jan-1900 - Jo-Ann Fabric Overlook Village Jan-2023 22,835 0 0 Jan-1900 - Home Depot North Point Center Jan-2023 120,000 0 0 Jan-1900 - Golf Galaxy Wendover Village Jun-2023 24,946 0 0 Jan-1900 - Harris Teeter North Point Center Aug-2023 57,590 0 0 Jan-1900 - TJ Maxx Wendover Village Oct-2023 24,903 0 0 Jan-1900 - 0 0 Jan-1900 - Renewals During the Quarter Over 20,000 Squar Feet Tenant Property Square Footage Prior Expiration New Expiration PetSmart Broad Creek 20,114 Jan-2022 Jan-2027
28 APPENDIX DEFINITIONS & RECONCILIATIONS Town Center Virginia Beach, VA
29 D E F I N I T I O N S FUNDS FROM OPERATIONS: We calculate Funds From Operations (“FFO”) in accordance with the standards established by the National Association of Real Estate Investment Trusts (“Nareit”). Nareit defines FFO as net income (loss) (calculated in accordance with accounting principles generally accepted in the United States (“GAAP”)), excluding depreciation and amortization related to real estate, gains or losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. FFO is a supplemental non-GAAP financial measure. Management uses FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring our operational performance. Specifically, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared period-over-period, captures trends in occupancy rates, rental rates and operating costs. Other equity REITs may not calculate FFO in accordance with the Nareit definition as we do, and, accordingly, our FFO may not be comparable to such other REITs’ FFO. NET OPERATING INCOME: We calculate Net Operating Income (“NOI”) as property revenues (base rent, expense reimbursements, termination fees and other revenue) less property expenses (rental expenses and real estate taxes). Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to such other REITs’ NOI. NOI is not a measure of operating income or cash flows from operating activities as measured by GAAP and is not indicative of cash available to fund cash needs. As a result, NOI should not be considered an alternative to cash flows as a measure of liquidity. We consider NOI to be an appropriate supplemental measure to net income because it assists both investors and management in understanding the core operations of our real estate business. To calculate NOI on a cash basis, we adjust NOI to exclude the net effects of straight-line rent and the amortization of lease incentives and above/below market rents. NORMALIZED FUNDS FROM OPERATIONS: We calculate Normalized Funds From Operations (“Normalized FFO") as FFO calculated in accordance with the standards established by Nareit, adjusted for acquisition, development and other pursuit costs, gains or losses from the early extinguishment of debt, impairment of intangible assets and liabilities, mark- to-market adjustments on interest rate derivatives, provision for unrealized credit losses, amortization of right-of-use assets attributable to finance leases, severance related costs, and other non-comparable items. Management believes that the computation of FFO in accordance to Nareit’s definition includes certain items that are not indicative of the results provided by the Company’s operating portfolio and affect the comparability of the Company’s period-over-period performance. Our calculation of Normalized FFO differs from Nareit's definition of FFO. Other equity REITs may not calculate Normalized FFO in the same manner as us, and, accordingly, our Normalized FFO may not be comparable to other REITs' Normalized FFO.
30 D E F I N I T I O N S ADJUSTED FUNDS FROM OPERATIONS: We calculate Adjusted Funds From Operations (“AFFO”) as Normalized FFO adjusted for the impact of non-cash stock compensation, tenant improvement, leasing commission and leasing incentive costs associated with second generation rental space, capital expenditures, non-cash interest expense, proceeds from the sale of a purchase option (in excess of amounts recognized in net income), straight-line rents, cash ground rent payments for finance leases, the amortization of leasing incentives and above (below) market rents, recognition of mezzanine loan exit fees and proceeds from government development grants. Management believes that AFFO provides useful supplemental information to investors regarding our operating performance as it provides a consistent comparison of our operating performance across time periods and allows investors to more easily compare our operating results with other REITs. However, other REITs may use different methodologies for calculating AFFO or similarly entitled FFO measures and, accordingly, our AFFO may not always be comparable to AFFO or other similarly entitled FFO measures of other REITs. ADJUSTED EBITDA: We calculate Adjusted EBITDA as net income (loss) (calculated in accordance with GAAP), excluding interest expense, income taxes, depreciation and amortization, gains (or losses) from sales of depreciable operating property, impairment of real estate assets, debt extinguishment losses, non-cash stock compensation, mark-to-market adjustments on interest rate derivates, mezzanine loan prepayment premiums, and other one-time adjustments including non- recurring bad debt and termination fees. Management believes Adjusted EBITDA is useful to investors in evaluating and facilitating comparisons of our operating performance between periods and between REITs by removing the impact of our capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from our operating results along with other non-comparable items. CORE EBITDA: We calculate Core EBITDA as Adjusted EBITDA, excluding certain items, including, but not limited to, the impact of redevelopment and development pipeline projects that are still in lease-up. We generally consider a property to be in lease-up until the earlier of (i) the quarter after which the property reaches 80% occupancy or (ii) the thirteenth quarter after the property receives its certificate of occupancy. Management believes that Core EBITDA provides useful supplemental information to investors regarding our reoccurring operating performance as it provides a consistent comparison of our operating performance across time periods and allows investors to more easily compare our operating results with other REITs. However, other REITs may use different methodologies for calculating Core EBITDA or similarly entitled measures and, accordingly, our Core EBITDA may not always be comparable to Core EBITDA or other similarly entitled measures of other REITs. CORE DEBT: We calculate Core Debt as our total debt, excluding loans associated with our development pipeline, cash & cash equivalents, and restricted cash.
31 D E F I N I T I O N S SAME STORE PORTFOLIO: We define same store properties as those that we owned and operated and that were stabilized for the entirety of both periods compared. We generally consider a property to be stabilized upon the earlier of: (i) the quarter after the property reaches 80% occupancy or (ii) the thirteenth quarter after the property receives its certificate of occupancy. Additionally, any property that is fully or partially taken out of service for the purpose of redevelopment is no longer considered stabilized until the redevelopment activities are complete, the asset is placed back into service, and the stabilization criteria above are again met. A property may also be fully or partially taken out of service as a result of a disposition, depending on the significance of the portion of the property disposed. Finally, any property classified as Held for Sale is taken out of service for the purpose computing same store operating results. The following table shows the properties included in the same store and non-same store portfolio for the comparative periods presented.
32 S A M E S T O R E V S . N O N - S A M E S T O R E Same Store Non-Same Store Same Store Non-Same Store Same Store Non-Same Store Same Store Non-Same Store Retail Properties Retail Properties (Continued) 249 Central Park Retail X X Sandbridge Commons X X Apex Entertainment X X South Retail X X Broad Creek Shopping Center X X South Square X X Broadmoor Plaza X X Southgate Square X X Brooks Crossing (Retail) X X Southshore Shops X X Columbus Village X X Studio 56 Retail X X Columbus Village II X X Tyre Neck Harris Teeter X X Commerce Street Retail X X Wendover Village X X Courthouse 7-Eleven X X Office Properties Delray Beach Plaza X X 4525 Main Street X X Dimmock Square X X Armada Hoffler Tower X X Fountain Plaza Retail X X Brooks Crossing (Office) X X Greentree Shopping Center X X One City Center X X Greenbrier Square X X One Columbus X X Hanbury Village X X Thames Street Wharf X X Harrisonburg Regal X X Two Columbus X X Lexington Square X X Wills Wharf X X Market at Mill Creek X X Multifamily Properties Marketplace at Hilltop X X 1405 Point X X Nexton Square X X Edison Apartments X X North Hampton Market X X Encore Apartments X X North Point Center X X Greenside Apartments X X Overlook Village X X Hoffler Place X X Parkway Centre X X Johns Hopkins Village X X Parkway Marketplace X X Liberty Apartments X X Patterson Place X X Premier Apartments X X Perry Hall Marketplace X X Smith’s Landing X X Premier Retail X X Summit Place X X Providence Plaza X X The Cosmopolitan X X Red Mill Commons X X The Residences at Annapolis Junction X X Nine Months Ended 9/30/2021 to 2020 Three Months Ended 9/30/2021 to 2020 Three Months Ended 9/30/2021 to 2020 Nine Months Ended 9/30/2021 to 2020
33 R E C O N C I L I A T I O N O F A D J U S T E D E B I T D A , C O R E E B I T D A , A N D C O R E D E B T ( 1 ) $ IN THOUSANDS (1) See definitions in appendix. (2) Adjusted for the depreciation and interest expense attributable to noncontrolling interests in consolidated investments. (3) Excludes non-recurring items. (4) Bad debt resulting from Company’s decision to terminate two defaulted Regal Cinemas leases. (5) Interest expense has been adjusted for the current period and for prior periods to include interest expense relating to finance leases. (6) Excludes GAAP Adjustments. (7) Includes the unannualized mezzanine loan prepayment premium of $2.4M. (8) Includes the unannualized gain of sale on the non-operating parcel of $0.3M. Three months ended 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 Net income attributable to common stockholders and OP unitholders $4,861 $5,568 $3,122 $1,851 $8,651 Excluding: Depreciation and amortization 16,886 17,285 18,066 17,678 (2) 14,131 (2) Loss (gain) on real estate dispositions 113 - (3,717) - (3,612) Impairment of real estate assets - 83 3,039 - - Income tax provision (benefit) (42) (461) (19) (63) (28) Interest expense (5) 8,827 8,418 7,975 8,044 7,478 Change in fair value of derivatives and other (131) (314) (393) (294) (318) Preferred dividends 2,887 2,887 2,887 2,887 2,220 Loss on extinguishment of debt 120 - - - - Non-recurring bad debt - - - - 1,100 (4) Mezzanine loan prepayment premium - (2,359) - - - Unrealized credit loss provision (release) (617) 388 (55) 29 (33) Non-cash stock compensation 390 423 1,017 471 456 Adjusted EBITDA(3) $33,294 $31,918 $31,922 $30,603 $30,045 Development/Redevelopment: Premier Retail - - (221) (202) (223) Wills Wharf (725) (819) (839) (678) (633) The Cosmopolitan Apartments - - - - (981) Summit Place - - - - (388) Total Development (725) (819) (1,060) (880) (2,225) Dispositions completed intra-quarter - - (111) - (80) Acquisitions completed intra-quarter (238) - (336) (961) (75) Core EBITDA $32,331 $31,099 $30,415 $28,762 $27,665 Annualized Core EBITDA $129,324 $126,756 (7) $121,915 (8) $115,046 $110,658 Total debt(6) $1,017,410 $963,885 $975,099 $962,812 $885,359 (Less) Development/Redevelopment Premier Retail - - (8,208) (8,241) (8,250) Wills Wharf (62,601) (61,235) (60,831) (59,044) (57,585) Solis Gainesville (9,773) (1,258) - - - The Cosmopolitan Apartments - - - - (43,110) Summit Place - - - - (34,615) Total Development (72,374) (62,493) (69,039) (67,285) (143,560) (Less) Net Acquisitions completed intra-quarter (20,000) - (14,473) (84,375) (22,909) (Less) Cash & restricted cash (33,453) (53,242) (34,588) (50,430) (79,224) Core Debt $891,583 $848,150 $856,999 $760,722 $639,666 Core Debt/Annualized Core EBITDA 6.9x 6.7x 7.0x 6.6x 5.8x
34 CAPITAL EXPENDITURES QUARTER TO DATE(1) YEAR TO DATE(1) AS OF SEPTEMBER 30, 2021 (1) Excludes acquired, disposed, under development, and held for sale properties. Leasing Commissions Lease Incentive Tenant Improvements Land Improvements Building Improvements Furniture Fixtures & Equipment Total Second Generation Capex Retail $530 -$ $805 $367 $862 -$ $2,564 Office 56 - 254 19 265 - 594 Multifamily 192 - - 49 1,466 429 2,136 Total Portfolio $778 $0 $1,059 $435 $2,593 $429 $5,294 Leasing Commissions Lease Incentive Tenant Improvements Land Improvements Building Improvements Furniture Fixtures & Equipment Total Second Generation Capex Retail $1,494 -$ $1,844 $793 $1,441 -$ $5,572 Office 174 - 857 19 1,187 - 2,237 Multifamily 270 - - 111 2,335 849 3,565 Total Portfolio $1,938 $0 $2,701 $923 $4,963 $849 $11,374
35 RECONCILIATION TO PROPERTY PORTFOLIO NOI $ IN THOUSANDS (1) See appendix for the Same Store vs. Non-Same Store properties. (2) Includes expenses associated with the Company’s in-house asset management division. Three months ended 9/30 Nine months ended 9/30 2021 2020 2021 2020 Office Same Store(1) Rental revenues $10,252 $10,232 $30,752 $30,253 Property expenses 3,825 3,648 10,837 10,441 NOI 6,427 6,584 19,915 19,812 Non-Same Store NOI (2) 550 455 1,869 702 Segment NOI $6,977 $7,039 $21,784 $20,514 Retail Same Store(1) Rental revenues $16,317 $14,586 $47,976 $47,224 Property expenses 4,062 3,955 11,990 11,561 NOI 12,255 10,631 35,986 35,663 Non-Same Store NOI (2) 2,598 612 6,270 5,054 Segment NOI $14,853 $11,243 $42,256 $40,717 Multifamily Same Store(1) Rental revenues $8,217 $7,580 $23,847 $22,270 Property expenses 3,468 3,589 9,825 9,630 NOI 4,749 3,991 14,022 12,640 Non-Same Store NOI (2) 4,721 2,380 13,462 6,736 Segment NOI $9,470 $6,371 $27,484 $19,376 Total Property Portfolio NOI $31,300 $24,653 $91,524 $80,607
36 RECONCILIATION TO GAAP NET INCOME $ IN THOUSANDS Office Retail Multifamily Total Rental Properties General Contracting & Real Estate Services Total Segment revenues 11,933$ 20,223$ 17,404$ 49,560$ 17,502$ 67,062$ Segment expenses 4,956 5,370 7,934 18,260 15,944 34,204 Net operating income 6,977$ 14,853$ 9,470$ 31,300$ 1,558$ 32,858$ Depreciation and amortization (16,886) General and administrative expenses (3,449) Acquisition, development and other pursuit costs (8) Gain (loss) on real estate dispositions (113) Interest income 3,766 Interest expense (8,827) Unrealized credit loss release (provision) 617 Amortization of right-of-use assets - finance leases (278) Change in fair value of derivatives and other 131 Other income (expense) (105) Income tax benefit 42 Net income 7,748$ Preferred stock dividends (2,887) Net income attributable to AHH and OP unitholders 4,861$ Nine months ended 9/30/2021 Office Retail Multifamily Total Rental Properties General Contracting & Real Estate Services Total Segment revenues 35,324$ 57,682$ 49,673$ 142,679$ 71,473$ 214,152$ Segment expenses 13,540 15,426 22,189 51,155 68,350 119,505 Net operating income 21,784$ 42,256$ 27,484$ 91,524$ 3,123$ 94,647$ Depreciation and amortization (52,237) General and administrative expenses (10,957) Acquisition, development and other pursuit costs (111) Impairment charges (3,122) Gain (loss) on real estate dispositions 3,604 Interest income 14,628 Interest Expense (25,220) Unrealized credit loss release (provision) 284 Amortization of right-of-use assets - finance leases (745) Change in fair value of derivatives and other 838 Other income (expense) 81 Income tax benefit 522 Net income 22,212$ Preferred stock dividends (8,661) Net income attributable to AHH and OP unitholders 13,551$ Three months ended 9/30/2021