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): May 3, 2022
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
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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:
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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 May 3, 2022, Armada Hoffler Properties, Inc. (the “Company”) issued a press release announcing its financial position as of March 31, 2022, results of operations for the three months ended March 31, 2022, and other related information. Also on May 3, 2022, 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 March 31, 2022. 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 the 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: May 3, 2022 | By: | /s/ Matthew T. Barnes-Smith | ||||||
| Matthew T. Barnes-Smith | ||||||||
| Chief Financial Officer, Treasurer and Corporate Secretary | ||||||||
Exhibit 99.1
 | PRESS RELEASE | |||||||
ARMADA HOFFLER PROPERTIES REPORTS FIRST QUARTER 2022 RESULTS
Net Income of $0.11 Per Diluted Share
Normalized FFO of $0.28 Per Diluted Share
Raised 2022 Full-Year Normalized FFO Guidance Range to $1.15 to $1.19 Per Diluted Share
VIRGINIA BEACH, VA, May 3, 2022 – Armada Hoffler Properties, Inc. (NYSE: AHH) today announced its results for the quarter ended March 31, 2022 and provided an update on current events.
First Quarter and Recent Highlights:
•Net income attributable to common stockholders and OP Unit holders of $9.3 million, or $0.11 per diluted share, compared to $3.1 million, or $0.04 per diluted share, for the three months ended March 31, 2021.
•Funds from operations attributable to common stockholders and OP Unit holders ("FFO") of $27.6 million, or $0.31 per diluted share, compared to $20.8 million, or $0.26 per diluted share, for the three months ended March 31, 2021. See "Non-GAAP Financial Measures."
•Normalized funds from operations attributable to common stockholders and OP Unit holders ("Normalized FFO") of $24.5 million, or $0.28 per diluted share, compared to $20.6 million, or $0.26 per diluted share, for the three months ended March 31, 2021.
•Raised 2022 full-year Normalized FFO guidance to $1.15 to $1.19 per diluted share from the Company's previous guidance range of $1.11 to $1.15 per diluted share.
•Stabilized operating property portfolio occupancy increased to 97.1% as of March 31, 2022. Office occupancy was 97.3%, retail occupancy was 96.7%, and multifamily occupancy was 97.3%.
•Same Store net operating income ("NOI") increased 7.3% on a GAAP basis and 9.4% on a cash basis compared to the quarter ended March 31, 2021.
◦Multifamily same store NOI increased 15.3% on a GAAP basis and 15.2% on a cash basis.
◦Commercial same store NOI increased 4.3% on a GAAP basis and 7.3% on a cash basis.
•Positive releasing spreads during the first quarter of 11.8% on a GAAP basis and 3.5% on a cash basis for retail and 11.3% on a GAAP basis and 2.6% on a cash basis for office.
•Completed the acquisition of the Class A+ mixed-use Exelon Building in Baltimore's Harbor Point . The building features 444,000 square feet of Class A office space, 103 multifamily units, 38,500 square feet of retail space, and 750 parking spaces, which will complement the Company's existing Harbor Point portfolio and development. In conjunction with this acquisition, the Company raised $58 million at $14.45 per share, net of all fees and discounts.
•Amended the Company’s Bylaws to relax the requirements necessary for stockholders to submit binding proposals.
•Appointed Matthew Barnes-Smith as Chief Financial Officer in accordance with the Company’s strategic succession plan. Former CFO, Michael O'Hara was a key contributor to the Company for over 25 years and
will continue with the Company through the end of the year to primarily oversee the Company’s major investments at Harbor Point.
•In April, completed the disposition of two student housing assets in Charleston for $81 million.
•In April, issued its 2021 Sustainability Report that highlights the Company's ongoing commitment to environmental, workplace health and safety, corporate social responsibility, corporate governance, and other sustainability matters over the course of the past year. The 2021 Sustainability Report can be accessed through the Sustainability page of the Company's website, ArmadaHoffler.com/Sustainability.
"Nearly every leasing metric across our portfolio continues to trend upward despite having already been at very robust levels," said Louis Haddad, President & CEO. "With our significant increases in same store NOI, releasing spreads, and apartment trade outs paired with occupancy at over 97%, the trajectory of our portfolio NOI is unmistakable. We are pleased to raise our guidance by nearly 4%."
Financial Results
Net income attributable to common stockholders and OP Unit holders for the first quarter increased to $9.3 million compared to $3.1 million for the first quarter of 2021. The period-over-period change was primarily due to an increase in property operating income due to acquisitions, developments and improved same-store performance, a decrease in impairment charges, and changes in the fair value of interest rate derivatives. The increase was partially offset by 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.
FFO attributable to common stockholders and OP Unit holders for the first quarter increased to $27.6 million compared to $20.8 million for the first quarter of 2021. Normalized FFO attributable to common stockholders and OP Unit holders for the first quarter increased to $24.5 million compared to $20.6 million for the first quarter of 2021. The period-over-period changes in FFO and Normalized FFO were due to higher property operating income 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.
Operating Performance
At the end of the first quarter, the Company’s office, retail and multifamily stabilized operating property portfolios were 97.3%, 96.7% and 97.3% (conventional multifamily was 96.9% and student housing was 98.9%) occupied, respectively.
Total construction contract backlog was $419.4 million at the end of the first quarter.
Balance Sheet and Financing Activity
As of March 31, 2022, the Company had $1.2 billion of total debt outstanding, including $65.0 million outstanding under its revolving credit facility. Total debt outstanding excludes GAAP adjustments. Approximately 44% of the Company’s debt had fixed interest rates or was subject to interest rate swaps as of March 31, 2022. After giving effect to LIBOR interest rate caps with strike prices at or below 300 basis points as of March 31, 2022, 100% of the Company’s debt was either fixed or hedged.
Certain loans require the Company to comply with various financial and other covenants, including the maintenance of minimum debt coverage ratios. The Company is currently not compliant with a lease-up requirement stipulated by the syndicated loan secured by Wills Wharf. The covenant requires the property to be 75% leased, and the property is currently 70% leased. As a result, the loan administrator ordered an appraisal for the property, and in April 2022 the Company agreed to pledge $4.3 million of cash as additional collateral for the loan. The Company is currently in compliance with all covenants on its other outstanding indebtedness.
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Outlook
The Company raised its 2022 full-year Normalized FFO guidance range to $1.15 to $1.19 per diluted share. The following table updates the Company's assumptions underpinning this forecast. The Company's executive management will provide further details regarding its 2022 earnings guidance during today's webcast and conference call.
Full-year 2022 Guidance [1] | Expected Ranges | |||||||||||||
| Total NOI | $144.1M | $145.1M | ||||||||||||
| Construction Segment Gross Profit | $7.3M | $8.3M | ||||||||||||
| G&A Expenses | $15.8M | $16.3M | ||||||||||||
| Interest Income | $14.7M | $15.1M | ||||||||||||
Interest Expense[2] | $34.3M | $35.0M | ||||||||||||
Normalized FFO per diluted share [3] | $1.15 | $1.19 | ||||||||||||
[1] Includes the following assumptions:
•Disposition of two student housing assets in Charleston for $81 million, which closed in April
•Interest expense, net of interest rate caps, based on the Forward Yield Curve ending 2022 at 3.1%
•Additional capital deployed in Harbor Point Parcel 4 to total $74 million
•Self-funding development pipeline through sale of non-core assets
•No capital markets activity for the remainder of the year
•Acquisition of $25 to $35 million of grocery-anchored retail assets
[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 non-cash 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, May 3, 2022 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 Friday, June 3, 2022 by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 13728403.
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
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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 mezzanine program, the Company’s construction and development business, including backlog and timing of deliveries and estimated costs, financing activities, as well as acquisitions, dispositions, and the Company’s financial outlook, guidance, 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, 2021, and the other documents filed by the Company with the Securities and Exchange Commission from time to time. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in the Company's expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by applicable 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 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. FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or service indebtedness. Also, FFO should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.
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, certain costs for interest
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rate caps, provision for unrealized non-cash 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.
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ARMADA HOFFLER PROPERTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
| March 31, 2022 | December 31, 2021 | |||||||||||||
| (Unaudited) | ||||||||||||||
| ASSETS | ||||||||||||||
| Real estate investments: | ||||||||||||||
| Income producing property | $ | 1,901,331 | $ | 1,658,609 | ||||||||||
| Held for development | 6,294 | 6,294 | ||||||||||||
| Construction in progress | 66,216 | 72,535 | ||||||||||||
| 1,973,841 | 1,737,438 | |||||||||||||
| Accumulated depreciation | (299,452) | (285,814) | ||||||||||||
| Net real estate investments | 1,674,389 | 1,451,624 | ||||||||||||
| Real estate investments held for sale | 80,754 | 80,751 | ||||||||||||
| Cash and cash equivalents | 32,910 | 35,247 | ||||||||||||
| Restricted cash | 6,576 | 5,196 | ||||||||||||
| Accounts receivable, net | 30,162 | 29,576 | ||||||||||||
| Notes receivable, net | 133,557 | 126,429 | ||||||||||||
| Construction receivables, including retentions, net | 19,780 | 17,865 | ||||||||||||
| Construction contract costs and estimated earnings in excess of billings | 121 | 243 | ||||||||||||
| Equity method investment | 20,777 | 12,685 | ||||||||||||
| Operating lease right-of-use assets | 23,440 | 23,493 | ||||||||||||
| Finance lease right-of-use assets | 46,711 | 46,989 | ||||||||||||
| Acquired lease intangible assets | 111,530 | 62,038 | ||||||||||||
| Other assets | 71,248 | 45,927 | ||||||||||||
| Total Assets | $ | 2,251,955 | $ | 1,938,063 | ||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||
| Indebtedness, net | $ | 1,137,467 | $ | 917,556 | ||||||||||
| Liabilities related to assets held for sale | 41,364 | 41,364 | ||||||||||||
| Accounts payable and accrued liabilities | 23,838 | 29,589 | ||||||||||||
| Construction payables, including retentions | 33,177 | 31,166 | ||||||||||||
| Billings in excess of construction contract costs and estimated earnings | 15,054 | 4,881 | ||||||||||||
| Operating lease liabilities | 31,657 | 31,648 | ||||||||||||
| Finance lease liabilities | 46,242 | 46,160 | ||||||||||||
| Other liabilities | 54,952 | 55,876 | ||||||||||||
| Total Liabilities | 1,383,751 | 1,158,240 | ||||||||||||
| Total Equity | 868,204 | 779,823 | ||||||||||||
| Total Liabilities and Equity | $ | 2,251,955 | $ | 1,938,063 | ||||||||||
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ARMADA HOFFLER PROPERTIES, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
| Three Months Ended March 31, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
| (Unaudited) | ||||||||||||||
| Revenues | ||||||||||||||
| Rental revenues | $ | 54,635 | $ | 45,741 | ||||||||||
| General contracting and real estate services revenues | 24,650 | 35,563 | ||||||||||||
| Total revenues | 79,285 | 81,304 | ||||||||||||
| Expenses | ||||||||||||||
| Rental expenses | 12,669 | 10,832 | ||||||||||||
| Real estate taxes | 5,404 | 5,306 | ||||||||||||
| General contracting and real estate services expenses | 23,821 | 34,275 | ||||||||||||
| Depreciation and amortization | 18,557 | 18,066 | ||||||||||||
| Amortization of right-of-use assets - finance leases | 278 | 189 | ||||||||||||
| General and administrative expenses | 4,708 | 4,021 | ||||||||||||
| Acquisition, development and other pursuit costs | 11 | 71 | ||||||||||||
| Impairment charges | 47 | 3,039 | ||||||||||||
| Total expenses | 65,495 | 75,799 | ||||||||||||
| Gain on real estate dispositions, net | — | 3,717 | ||||||||||||
| Operating income | 13,790 | 9,222 | ||||||||||||
| Interest income | 3,568 | 4,116 | ||||||||||||
| Interest expense | (9,031) | (7,975) | ||||||||||||
| Loss on extinguishment of debt | (158) | — | ||||||||||||
| Change in fair value of derivatives and other | 4,182 | 393 | ||||||||||||
| Unrealized credit loss (provision) release | (605) | 55 | ||||||||||||
| Other income (expense), net | 229 | 179 | ||||||||||||
| Income before taxes | 11,975 | 5,990 | ||||||||||||
| Income tax benefit | 301 | 19 | ||||||||||||
| Net income | 12,276 | 6,009 | ||||||||||||
| Net loss attributable to noncontrolling interests in investment entities | (100) | — | ||||||||||||
| Preferred stock dividends | (2,887) | (2,887) | ||||||||||||
| Net income attributable to common stockholders and OP Unitholders | $ | 9,289 | $ | 3,122 | ||||||||||
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ARMADA HOFFLER PROPERTIES, INC.
RECONCILIATION OF NET INCOME TO FFO & NORMALIZED FFO
(in thousands, except per share amounts)
| Three Months Ended March 31, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
| (Unaudited) | ||||||||||||||
| Net income attributable to common stockholders and OP Unitholders | $ | 9,289 | $ | 3,122 | ||||||||||
Depreciation and amortization (1) | 18,285 | 18,066 | ||||||||||||
Gain on operating real estate dispositions, net (2) | — | (3,464) | ||||||||||||
| Impairment of real estate assets | — | 3,039 | ||||||||||||
| FFO attributable to common stockholders and OP Unitholders | $ | 27,574 | $ | 20,763 | ||||||||||
| Acquisition, development and other pursuit costs | 11 | 71 | ||||||||||||
| Impairment of intangible assets and liabilities | 47 | — | ||||||||||||
| Loss on extinguishment of debt | 158 | — | ||||||||||||
| Unrealized credit loss provision (release) | 605 | (55) | ||||||||||||
| Amortization of right-of-use assets - finance leases | 278 | 189 | ||||||||||||
| Change in fair value of derivatives not designated as cash flow hedges and other | (4,182) | (393) | ||||||||||||
| Amortization of interest rate cap premiums designated as cash flow hedges | 42 | 58 | ||||||||||||
| Normalized FFO available to common stockholders and OP Unitholders | $ | 24,533 | $ | 20,633 | ||||||||||
| Net income attributable to common stockholders and OP Unitholders per diluted share and unit | $ | 0.11 | $ | 0.04 | ||||||||||
| FFO attributable to common stockholders and OP Unitholders per diluted share and unit | $ | 0.31 | $ | 0.26 | ||||||||||
| Normalized FFO attributable to common stockholders and OP Unitholders per diluted share and unit | $ | 0.28 | $ | 0.26 | ||||||||||
| Weighted average common shares and units - diluted | 87,749 | 80,276 | ||||||||||||
________________________________________
| (1) The adjustment for depreciation and amortization for the three months ended March 31, 2022 excludes $0.3 million of depreciation attributable to the Company's joint venture partners. | ||
| (2) The adjustment for gain on operating real estate dispositions for the three months ended March 31, 2021 excludes the gain on sale of easement rights on a non-operating parcel. | ||
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ARMADA HOFFLER PROPERTIES, INC.
RECONCILIATION OF NET INCOME TO SAME STORE NOI, CASH BASIS
(in thousands) (unaudited)
| Three Months Ended March 31, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
Office Same Store(1) | ||||||||||||||
| Same Store NOI, Cash Basis | $ | 6,612 | $ | 6,449 | ||||||||||
GAAP Adjustments (2) | 1 | 277 | ||||||||||||
| Same Store NOI | 6,613 | 6,726 | ||||||||||||
Non-Same Store NOI (3) | 4,766 | 676 | ||||||||||||
| Segment NOI | 11,379 | 7,402 | ||||||||||||
Retail Same Store (4) | ||||||||||||||
| Same Store NOI, Cash Basis | 13,221 | 12,042 | ||||||||||||
GAAP Adjustments (2) | 530 | 750 | ||||||||||||
| Same Store NOI | 13,751 | 12,792 | ||||||||||||
Non-Same Store NOI (3) | 1,940 | 600 | ||||||||||||
| Segment NOI | 15,691 | 13,392 | ||||||||||||
Multifamily Same Store (5) | ||||||||||||||
| Same Store NOI, Cash Basis | 8,070 | 7,004 | ||||||||||||
GAAP Adjustments (2) | 217 | 182 | ||||||||||||
| Same Store NOI | 8,287 | 7,186 | ||||||||||||
Non-Same Store NOI (3) | 1,205 | 1,623 | ||||||||||||
| Segment NOI | 9,492 | 8,809 | ||||||||||||
| Total Property NOI | 36,562 | 29,603 | ||||||||||||
| General contracting & real estate services gross profit | 829 | 1,288 | ||||||||||||
| Depreciation and amortization | (18,557) | (18,066) | ||||||||||||
| General and administrative expenses | (4,708) | (4,021) | ||||||||||||
| Acquisition, development and other pursuit costs | (11) | (71) | ||||||||||||
| Impairment charges | (47) | (3,039) | ||||||||||||
| Gain (loss) on real estate dispositions, net | — | 3,717 | ||||||||||||
| Interest income | 3,568 | 4,116 | ||||||||||||
| Loss on extinguishment of debt | (158) | — | ||||||||||||
| Interest expense | (9,031) | (7,975) | ||||||||||||
| Unrealized credit loss (provision) release | (605) | 55 | ||||||||||||
| Amortization of right-of-use assets - finance leases | (278) | (189) | ||||||||||||
| Change in fair value of derivatives and other | 4,182 | 393 | ||||||||||||
| Other income (expense), net | 229 | 179 | ||||||||||||
| Income tax benefit | 301 | 19 | ||||||||||||
| Net income | 12,276 | 6,009 | ||||||||||||
| Net loss attributable to noncontrolling interest in investment entities | (100) | — | ||||||||||||
| Preferred stock dividends | (2,887) | (2,887) | ||||||||||||
| Net income attributable to AHH and OP unitholders | $ | 9,289 | $ | 3,122 | ||||||||||
| (1) Office same-store portfolio excludes Exelon and Wills Wharf. | ||
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| (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 Delray Beach Plaza, Greenbrier Square, Overlook Village, and Premier Retail. | ||
| (5) Multifamily same-store portfolio excludes Gainesville Apartments, Exelon Apartments, Summit Place, and Hoffler Place. | ||
Contact:
Chelsea Forrest
Armada Hoffler Properties, Inc.
Director of Corporate Communications and Investor Relations
Email: CForrest@ArmadaHoffler.com
Phone: (757) 612-4248
10
1 1Q22 SUPPLEMENTAL FINANCIAL PACKAGE Wills Wharf, Harbor Point Baltimore
2 This Supplemental Financial Package should be read in conjunction with the unaudited condensed consolidated financial statements appearing in our press release dated May 3, 2022, which has been furnished as Exhibit 99.1 to our Form 8-K filed on May 3, 2022. 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”)), and, as such, may involve known and unknown risks and 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 Mezzanine program, the Company’s construction and development business, including backlog and timing of deliveries and estimated costs, financing activities, as well as acquisitions, dispositions, and the Company’s financial outlook, guidance, 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, 2021 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 from time to time. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in the Company’s expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by applicable law. FORWARD-LOOKING STATEMENTS
3 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 Matthew T. Barnes-Smith, Chief Financial Officer Shawn J. Tibbetts, Chief Operating Officer Eric E. Apperson, President of Construction Shelly R. Hampton, President of Asset Management Jefferies Peter Abramowitz (212) 336-7241 pabramowitz@jefferies.com Bank of America Merrill Lynch James Feldman (646) 855-5808 james.feldman@bofa.com Janney, Montgomery, & Scott LLC Robert Stevenson (646) 840-3217 robertstevenson@janney.com Raymond James & Associates Bill Crow (727) 567-2594 bill.crow@raymondjames.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 Robert W. Baird & Co. David Rodgers (216) 737-7341 drodgers@rwbaird.com Stifel Stephen Manaker (212) 271-3716 manakers@stifel.com
4 HIGHLIGHTS • Net income attributable to common stockholders and OP Unit holders of $9.3 million, or $0.11 per diluted share, compared to $3.1 million, or $0.04 per diluted share, for the three months ended March 31, 2021. • Funds from operations attributable to common stockholders and OP Unit holders ("FFO") of $27.6 million, or $0.31 per diluted share, compared to $20.8 million, or $0.26 per diluted share, for the three months ended March 31, 2021. See definitions and reconciliations in appendix. • Normalized funds from operations attributable to common stockholders and OP Unit holders ("Normalized FFO") of $24.5 million, or $0.28 per diluted share, compared to $20.6 million, or $0.26 per diluted share, for the three months ended March 31, 2021. • Raised 2022 full-year Normalized FFO guidance to $1.15 to $1.19 per diluted share from the Company's previous guidance range of $1.11 to $1.15 per diluted share. • Stabilized operating property portfolio occupancy increased to 97.1% as of March 31, 2022. Office occupancy was 97.3%, retail occupancy was 96.7%, and multifamily occupancy was 97.3%. • Same Store net operating income ("NOI") increased 7.3% on a GAAP basis and 9.4% on a cash basis compared to the quarter ended March 31, 2021. ◦ Multifamily same store NOI increased 15.3% on a GAAP basis and 15.2% on a cash basis. ◦ Commercial same store NOI increased 4.3% on a GAAP basis and 7.3% on a cash basis. • Positive releasing spreads during the first quarter of 11.8% on a GAAP basis and 3.5% on a cash basis for retail and 11.3% on a GAAP basis and 2.6% on a cash basis for office. • Completed the acquisition of the Class A+ mixed-use Exelon Building in Baltimore's Harbor Point . The building features 444,000 square feet of Class A office space, 103 multifamily units, 38,500 square feet of retail space, and 750 parking spaces, which will complement the Company's existing Harbor Point portfolio and development. In conjunction with this acquisition, the Company raised $58 million at $14.45 per share, net of all fees and discounts. • Amended the Company’s Bylaws to relax the requirements necessary for stockholders to submit binding proposals. • Appointed Matthew Barnes-Smith as Chief Financial Officer in accordance with the Company’s strategic succession plan. Former CFO, Michael O'Hara was a key contributor to the Company for over 25 years and will continue with the Company through the end of the year to oversee the Company’s major investments at Harbor Point. • In April, completed the disposition of two student housing assets in Charleston for $81 million. • In April, issued its 2021 Sustainability Report that highlights the Company's ongoing commitment to environmental, workplace health and safety, corporate social responsibility, corporate governance, and other sustainability matters over the course of the past year. The 2021 Sustainability Report can be accessed through the Sustainability page of the Company's website, ArmadaHoffler.com/Sustainability.
5 2022 OUTLOOK & ASSUMPTIONS OUTLOOK LOW HIGH TOTAL NOI $144.1 $145.1 CONSTRUCTION SEGMENT GROSS PROFIT $7.3 $8.3 G&A EXPENSES $15.8 $16.3 INTEREST INCOME $14.7 $15.1 INTEREST EXPENSE(1) $34.3 $35.0 NORMALIZED FFO PER DILUTED SHARE $1.15 $1.19 GUIDANCE ASSUMPTIONS (1) Includes the interest expense on finance leases. $ IN MILLIONS • Disposition of two student housing assets in Charleston for $81 million, which closed in April • Interest expense, net of interest rate caps, based on the Forward Yield Curve ending 2022 at 3.1% • Additional capital deployed in Harbor Point Parcel 4 to total $74 million • Self-funding development pipeline through sale of non-core assets • No capital markets activity for the remainder of the year • Acquisition of $25 to $35 million of grocery-anchored retail assets
6 SUMMARY INFORMATION $ IN THOUSANDS, EXCEPT PER SHARE (1) As of market close on last day of period. (2) Excludes GAAP adjustments. (3) See appendix for definitions (4) See appendix for 2022 multifamily occupancy calculation. (5) Conventional: Student Housing: (6) Total occupancy weighted by annualized base rent. 2Q21 96.6% 83.5% 3Q21 97.4% 97.5% 4Q21 97.6% 96.7% 1Q22 96.9% 98.9% Three months ended OPERATIONAL METRICS 3/31/2022 12/31/2021 9/30/2021 6/30/2021 Net income attributable to common stockholders and OP unitholders $9,289 $361 $4,861 $5,568 Net income per diluted share attributable to common stockholders and OP unitholders $0.11 $0.00 $0.06 $0.07 Normalized FFO attributable to common stockholders and OP unitholders 24,533 21,907 21,518 23,320 Normalized FFO per diluted share attributable to common stockholders and OP unitholders $0.28 $0.27 $0.26 $0.29 Stabilized Portfolio Debt/Adjusted EBITDA 5.6x 5.4x 5.8x 6.0x Fixed charge coverage ratio 2.6x 2.3x 2.3x 2.4x CAPITALIZATION Common shares outstanding 67,695 63,012 61,324 60,992 Operating Partnership units outstanding 20,622 20,633 20,853 20,853 Common shares and Operating Partnership units outstanding 88,317 83,645 82,177 81,845 Market price per common share(1) $14.60 $15.22 $13.37 $13.29 Common equity capitalization 1,289,428 1,273,077 1,098,707 1,087,720 Preferred equity capitalization 171,085 171,085 171,085 171,085 Total equity capitalization 1,460,513 1,444,162 1,269,792 1,258,805 Total debt(2) 1,179,296 957,387 1,017,410 963,885 Total capitalization $2,639,809 $2,401,549 $2,287,202 $2,222,690 STABILIZED PORTFOLIO OCCUPANCY(3) Retail 96.7% 96.0% 95.2% 94.7% Office 97.3% 96.8% 96.9% 96.5% Multifamily(5) 97.3% (4) 97.4% 97.4% 92.2% Weighted Average(6) 97.1% 96.7% 96.4% 94.1% OPERATING PORTFOLIO Commercial Retail Portfolio Net Operating Income $15,691 $15,389 $14,853 $14,011 Number of Properties 37 37 38 37 Net Rentable Square Feet 4,067,360 4,067,355 4,064,391 3,709,490 Office Portfolio Net Operating Income $11,379 $7,055 $6,977 $7,405 Number of Properties 9 8 8 8 Net Rentable Square Feet 2,120,045 1,629,310 1,629,160 1,628,179 Multifamily Multifamily Portfolio Net Operating Income $9,492 $9,826 $9,470 $9,205 Number of Properties 13 11 12 12 Units 2,670 2,344 2,344 2,344 Beds 615 615 1,183 1,183
7 SUMMARY INCOME STATEMENT $ IN THOUSANDS, EXCEPT PER SHARE Three months ended 3/31/2022 3/31/2021 Revenues (Unaudited) Rental Revenues $54,635 $45,741 General Contracting Revenues 24,650 35,563 Total Revenues 79,285 81,304 Expenses Rental Expenses 12,669 10,832 Real Estate Taxes 5,404 5,306 General Contracting Expenses 23,821 34,275 Depreciation and Amortization 18,557 18,066 Amortization of Right-of-Use Assets - Finance Leases 278 189 General & Administrative Expenses 4,708 4,021 Acquisition, Development & Pursuit 11 71 Impairment Charges 47 3,039 Total Expenses 65,495 75,799 Gain on Real Estate Dispositions - 3,717 Operating Income 13,790 9,222 Interest Income 3,568 4,116 Interest Expense (9,031) (7,975) Loss on Extinguishment of Debt (158) - Change in fair value of derivatives and other 4,182 393 Provision for Unrealized Credit Losses (605) 55 Other Income 229 179 Income Before Taxes 11,975 5,990 Income Tax Provision 301 19 Net Income $12,276 $6,009 Net loss attributable to noncontrolling interest in investment entities (100) - Preferred stock dividends (2,887) (2,887) Net income attributable to AHH and OP unitholders $9,289 $3,122 Net income per diluted share and unit attributable to AHH and OP unitholders $0.11 $0.04 Weighted Average Shares & OP Units - Diluted 87,749 80,276
8 FFO, NORMALIZED FFO & AFFO(1) $ IN THOUSANDS, EXCEPT PER SHARE (1) See definitions in appendix. (2) Adjusted for the depreciation attributable to noncontrolling interests in consolidated investments. (3) Excludes gain/loss on non-operating parcels. (4) Related to Hoffler Place and Summit Place. (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) 3/31/2022 12/31/2021 9/30/2021 6/30/2021 Funds From Operations Net income attributable to AHH and OP unitholders $9,289 $361 $4,861 $5,568 Net Income per diluted share $0.11 $0.00 $0.06 $0.07 Depreciation and amortization(2) 18,285 16,616 16,886 17,285 Gain (loss) on dispositions of operating real estate(3) - (15,442) 113 - Impairment of real estate assets - 18,339 (4) - - FFO $27,574 $19,874 $21,860 $22,853 FFO per diluted share $0.31 $0.24 $0.27 $0.28 Normalized FFO Acquisition, development & other pursuit costs 11 1 8 32 Loss on extinguishment of debt 158 3,690 120 - Non cash GAAP Adjustments 930 (314) (339) 749 Change in fair value of derivatives and other (4,182) (1,344) (131) (314) Amortization of Interest Rate Cap Premium 42 59 59 59 Normalized FFO $24,533 21,966 $21,577 $23,379 Normalized FFO per diluted share $0.28 $0.27 $0.26 $0.29 Adjusted FFO Non-cash stock compensation 1,609 400 390 423 Acquisition, development & other pursuit costs (11) (1) (8) (32) Tenant improvements, leasing commissions, lease incentives (5) (2,873) (1,212) (1,837) (1,537) Property related capital expenditures (3,735) (3,145) (3,457) (2,054) Adjustment for mezz loan modification and exit fees (493) (493) (493) (493) Non-cash interest expense(6) 1,551 1,272 1,419 1,273 Cash ground rent payment - finance lease (635) (624) (624) (624) GAAP Adjustments (1,490) (666) (645) (1,286) AFFO $18,456 $17,497 $16,322 $19,049 AFFO per diluted share $0.21 $0.21 $0.20 $0.23 Weighted Average Common Shares Outstanding 67,128 61,646 61,083 60,409 Weighted Average Operating Partnership Units Outstanding 20,621 20,634 20,853 20,853 Total Weighted Average Common Shares and OP Units Outstanding 87,749 82,280 81,936 81,262
9 NET ASSET VALUE COMPONENT DATA $ IN THOUSANDS (1) Excludes expenses associated with the Company’s in-house asset management division of $0.7M for the 3 months ended 3/31/2022. (2) Includes 100% of joint ventures. (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. Stabilized Portfolio NOI (Cash) Third-Party General Contracting and Real Estate Services Three months ended 3/31/2022 Trailing 12 Months Office(3) Retail Multifamily Total General Contracting Gross Profit $3,377 Stable Portfolio Portfolio NOI(1)(2) $11,141 $14,814 $9,469 $35,424 Non-Property Assets(4) Unstabilized Properties NOI (726) - 90 (636) As of 3/31/2022 Signed Leases Not Yet Occupied or In Free Rent Period 119 644 85 848 Cash and Retricted Cash $39,486 Stable Portfolio NOI $10,534 $15,458 $9,644 $35,636 Accounts Receivable 30,162 Intra-Quarter Transactions Notes Receivable, Including Mezzanine Investments (5) 133,070 Net Acquisitons(2) 569 - 64 632 Construction receivables, including retentions (5) 19,963 Net Dispositions - - - - Acquired lease intangible assets, net 111,530 Other Assets 71,369 Annualized $44,410 $61,831 $38,832 $145,073 Total Non-Property Assets $405,580 Liabilities(4) Non-Stabilized Portfolio As of 3/31/2022 As of 3/31/2022 Mortgages and Notes Payable(5) $1,179,296 Projects Under Development at Cost $48,000 Accounts Payable and Accrued Liabilities 23,838 Projects Delivered Not Stabilized at Cost 162,000 Construction Payables, Including Retentions 33,177 Projects Under Predevelopment or On Hold 15,000 Other Liabilities(5) 67,909 Unconsolidated Joint Ventures 28,000 Total Liabilities $1,304,220 Total Non-Stabilized Portfolio $253,000 Preferred Equity Liquidation Value Series A Cumulative Redeemable Perpetual Preferred Stock $171,085 Common Equity As of 3/31/2022 Total common shares outstanding 67,695 Total OP units outstanding 20,622 Total Common Shares & OP Units Outstanding 88,317
10 PORTFOLIO SUMMARY AS OF MARCH 31, 2022 SEE APPENDIX FOR FULL LIST OF PROPERTIES COMMERCIAL PORTFOLIO Retail Properties - Stabilized # of Properties SF(1) Average Age Occupancy(1) ABR(1) ABR per Leased SF(1) Town Center of Virginia Beach 9 493,961 16 96.4% $11,356,916 $23.84 Grocery Anchored 15 1,676,460 12 98.3% 23,607,310 14.32 Regional Centers 13 1,896,939 17 95.4% 33,426,443 18.47 Total Retail Portfolio 37 4,067,360 15 96.7% $68,390,669 $17.38 Office Properties - Stabilized # of Properties SF(1) Average Age Occupancy(1) ABR(1) ABR per Leased SF(1) Town Center of Virginia Beach 4 788,233 20 97.5% $22,191,928 $28.87 Harbor Point - Baltimore Waterfront 2 754,161 9 98.2% 22,678,063 30.62 Other 2 249,660 3 93.5% 6,281,110 26.90 Stabilized Office Total 8 1,792,054 13 97.3% $51,151,101 $29.35 Office Properties - Non-Stabilized # of Properties SF(1) Average Age Occupancy(1) ABR(1) ABR per Leased SF(1) Wills Wharf 1 327,991 2 70.4% $6,648,602 $28.81 MULTIFAMILY PORTFOLIO Multifamily Properties - Stabilized # of Properties Units/Beds Average Age Occupancy(1) AQR (1) Monthly AQR per Occupied Unit/Bed Town Center of Virginia Beach 3 759 9 96.7% $16,377,198 $1,859 Harbor Point - Baltimore Waterfront 2 392 5 94.0% 10,679,788 2,416 Student Housing(2) 2 615 3 98.9% 8,115,309 1,112 Other 5 1,296 8 98.0% 26,618,876 1,747 Multifamily Total 12 3,062 7 97.3% $61,791,171 $1,728 Multifamily Properties - Non-Stabilized # of Properties Units Average Age Occupancy(1) AQR (1) Monthly AQR per Occupied Unit Gainesville Apartments 1 223 - 29.0% $803,065 $1,035 (1) See appendix for definitions and portfolio detail. (2) Sold April 2022.
11 SAME STORE NOI BY SEGMENT $ IN THOUSANDS (RECONCILIATION TO GAAP LOCATED IN APPENDIX) (1) Excludes expenses associated with the Company’s in-house asset management division of $0.7M and $0.7M for the 3 months ended 3/31/2022 & 3/31/2021, respectively. Three months ended 3/31/2022 3/31/2021 $ Change % Change Office Revenue $10,175 $10,210 ($35) -0.3% Rental Expenses(1) 2,248 2,190 58 2.6% Real Estate Taxes 1,314 1,294 20 1.5% Net Operating Income $6,613 $6,726 ($113) -1.7% GAAP Adjustments (2) (277) 275 Net Operating Income, Cash $6,611 $6,449 $162 2.5% Retail Revenue $18,447 $17,112 $1,335 7.8% Rental Expenses(1) 2,759 2,394 365 15.2% Real Estate Taxes 1,937 1,926 11 0.6% Net Operating Income $13,751 $12,792 $959 7.5% GAAP Adjustments (530) (750) 220 Net Operating Income, Cash $13,221 $12,042 $1,179 9.8% Multifamily Revenue $13,337 $12,027 $1,310 10.9% Rental Expenses(1) 3,730 3,583 147 4.1% Real Estate Taxes 1,320 1,258 62 4.9% Net Operating Income $8,287 $7,186 $1,101 15.3% GAAP Adjustments (217) (182) (35) Net Operating Income, Cash $8,070 $7,004 $1,066 15.2% Same Store NOI $28,651 $26,704 $1,947 7.3% GAAP Adjustments (749) (1,209) 460 $27,902 $25,495 $2,407 9.4%Same Store Portfolio NOI, Cash Basis
12 DEBT TO ADJUSTED EBITDA $ IN THE THOUSANDS SEE APPENDIX FOR CALCULATIONS AND RECONCILIATION (1) Includes development, mezzanine, construction, and other ancillary activities outside of our stabilized portfolio. (2) See appendix for definitions. Three months ended 3/31/2022(2) Stabilized Portfolio Adjusted EBITDA $36,493 Stabilized Portfolio Debt $812,703 Stabilized Portfolio Debt/ Stabilized Portfolio Adjusted EBITDA 5.6x Total Adjusted EBITDA $38,579 Net Debt $1,139,810 Plus Ancillary Debt/Total Adjusted EBITDA 7.4x Net Debt + Preferred $1,310,895 Net Debt + Preferred /Total Adjusted EBITDA 8.5x
13 DEBT INFORMATION(1) $ IN THOUSANDS Debt Maturities (1) Includes debt on held for sale properties. (2) Includes debt subject to interest rate swap locks. (3) Excludes GAAP adjustments. (4) Excludes debt subject to interest rate swap locks. (5) Represents a hedging corridor with a floor of BSBY+1.00% and a ceiling of BSBY+3.00%. 3.8% 2.9% 2.6% 3.0% 2.2% 3.6% 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 $350,000 2022 2023 2024 2025 2026 Thereafter Debt Maturing Weighted Average Interest Rate Total Debt Composition Weighted Average % of Debt Interest Rate Maturity Variable vs. Fixed-rate Debt Variable-rate Debt(4) 55.7% 2.4% 3.5 Yrs Fixed-rate Debt(2)(3) 44.3% 3.4% 7.1 Yrs Secured vs. Unsecured Debt Unsecured Debt 22.9% 2.8% 2.6 Yrs Secured Debt 77.1% 2.8% 5.9 Yrs Total 2.8% 5.1 Yrs Interest Rate Cap Agreements At or Below 3.00% Effective Date Maturity Date Strike Rate Notional Amount May 2019 June 2022 LIBOR 2.50% $100,000 February 2021 February 2023 LIBOR 0.50% 100,000 March 2021 April 2023 LIBOR 2.50% 14,479 May 2021 May 2023 LIBOR 0.50% 35,100 May 2021 May 2023 LIBOR 0.50% 50,000 July 2020 July 2023 LIBOR 0.50% 100,000 June 2021 July 2023 LIBOR 0.50% 100,000 November 2020 November 2023 SOFR 1.84% 84,375 April 2022 February 2024 BSBY 1.00%-3.00%(5) 175,000 Total Interest Rate Caps $758,954 Fixed-rate Debt(2)(3) $522,053 Fixed-rate and Hedged Debt $1,281,007 Total Debt(3) $1,179,296 % Fixed or Hedged 100%
14 OUTSTANDING DEBT $ IN THOUSANDS (1) Includes debt subject to interest rate swap locks. (2) Subject to a rate floor. (3) Held for sale as of 3/31/22. Disposed subsequent to quarter end. Debt Stated Rate Effective Rate as of 3/31/2022 Maturity Date 2022 2023 2024 2025 2026 Thereafter Outstanding as of 3/31/2022 Secured Notes Payable - Stabilized Debt Marketplace at Hilltop 4.42% 4.42% Oct-2022 $9,600 $9,600 1405 Point L+2.25% 2.70% Jan-2023 570 51,531 52,101 Nexton Square L+2.25% 2.70% (2) Feb-2023 - 20,107 20,107 249 Central Park Retail L+1.60% 3.85% (1) Aug-2023 197 16,092 16,289 Fountain Plaza Retail L+1.60% 3.85% (1) Aug-2023 118 9,685 9,803 South Retail L+1.60% 3.85% (1) Aug-2023 86 7,066 7,152 Hoffler Place(3) L+2.60% 3.05% (2) Jan-2024 - 257 18,143 18,400 Summit Place(3) L+2.60% 3.05% (2) Jan-2024 - 311 22,789 23,100 One City Center L+1.85% 2.30% Apr-2024 500 691 22,733 23,924 Red Mill Central 4.80% 4.80% Jun-2024 131 175 1,838 2,144 Premier Apartments L+1.55% 2.00% Oct-2024 166 234 16,053 16,453 Premier Retail L+1.55% 2.00% Oct-2024 82 115 7,907 8,104 Red Mill South 3.57% 3.57% May-2025 246 338 351 4,502 5,437 Brooks Crossing Office L+1.60% 2.05% Jul-2025 346 472 481 13,454 14,753 Market at Mill Creek L+1.55% 2.00% Jul-2025 486 647 647 11,200 12,980 North Point Center Note 2 7.25% 7.25% Sep-2025 114 162 174 1,468 1,918 Encore Apartments 2.93% 2.93% Feb-2026 407 556 573 590 22,263 24,389 4525 Main Street 2.93% 2.93% Feb-2026 522 714 735 757 28,577 31,305 Thames Street Wharf BSBY+1.30% 2.35% (1) Sep-2026 1,075 1,433 1,972 3,050 62,873 70,403 Exelon Building BSBY+1.50% 1.89% (2) Nov-2026 - - - - 175,000 175,000 Southgate Square L+1.90% 2.35% (2) Dec-2026 570 779 796 817 23,891 26,853 Greenbrier Square 3.74% 3.74% Oct-2027 60 371 385 399 415 18,370 20,000 Lexington Square 4.50% 4.50% Sep-2028 211 293 306 320 335 12,638 14,103 Red Mill North 4.73% 4.73% Dec-2028 83 116 121 127 133 3,582 4,162 Greenside Apartments 3.17% 3.17% Dec-2029 550 759 780 808 834 28,682 32,413 The Residences at Annapolis Junction SOFR+2.66% 2.95% Nov-2030 - 147 1,753 1,809 1,860 78,806 84,375 Smith's Landing 4.05% 4.05% Jun-2035 689 956 994 1,037 1,081 11,466 16,223 Liberty Apartments 5.66% 5.66% Nov-2043 243 341 361 382 404 11,763 13,494 Edison Apartments 5.30% 5.30% Dec-2044 275 384 405 427 450 13,896 15,837 The Cosmopolitan 3.35% 3.35% Jul-2051 638 876 906 937 968 37,556 41,881 Total - Secured Stabilized Debt 17,965 115,608 101,203 42,084 319,084 216,759 812,703 Secured Notes Payable - Development Pipeline Wills Wharf L+2.25% 2.70% Jun-2023 - 64,288 64,288 Chronicle Mill L+3.00% 3.45% (2) May-2024 - - 8,210 8,210 Gainesville Apartments L+3.00% 3.75% (2) Aug-2024 - - 24,095 24,095 Total - Development Pipeline - 64,288 32,305 - - - 96,593 Total Secured Notes Payable 17,965 179,896 133,508 42,084 319,084 216,759 909,296 Unsecured Stabilized Debt Senior Unsecured Line of Credit L+1.30%-1.85% 1.95% Jan-2024 - - 65,000 65,000 Senior Unsecured Term Loan L+1.25%-1.80% 1.90% 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 Stabilized Debt - - 65,000 205,000 - - 270,000 Total Notes Payable excluding GAAP Adjustments $17,965 $179,896 $198,508 $247,084 $319,084 $216,759 $1,179,296 GAAP Adjustments (465) Notes Payable Relating to Held for Sale Properties (41,364) Total Notes Payable $1,137,467 Debt Maturities & Principal Payments
15 CAPITALIZATION & FINANCIAL RATIOS $ IN THOUSANDS AS OF MARCH 31, 2022 (1) As of close of market 3/31/22. (2) Reflects quarterly Total Adjusted EBITDA divided by total quarterly interest expense and required principal repayment. (3) Reflects quarterly Total Adjusted EBITDA divided by total quarterly interest expense, required principal repayment, and preferred equity dividends. Debt % of Total Principal Balance Unsecured credit facility 6% $65,000 Unsecured term loans 17% 205,000 Mortgages payable 77% 909,296 Total debt $1,179,296 Preferred Equity Shares Liquidation Value Per Share Total Liquidation Value 6,843 $25.00 $171,085 Common Equity % of Total Shares/Units Stock Price(1) Market Value Common stock (NYSE: AHH) 77% 67,695 $14.60 $988,347 Operating Partnership Units 23% 20,622 $14.60 301,081 Equity market capitalization 88,317 $1,289,428 Total capitalization $2,639,809 Financial Ratios Debt Service Coverage Ratio(2) 3.2x Fixed Charge Coverage Ratio(3) 2.6x Stabilized Portfolio Debt / Stabilized Portfolio Adjusted EBITDA 5.6x Plus Ancillary Debt / Total Adjusted EBITDA 7.4x Net Debt + Preferred / Total Adjusted EBITDA 8.5x Debt/Total Capitalization 45% Liquidity Unencumbered Properties Cash on hand $39,486 % of Total Properties 56% Availability under credit facility 85,000 % of Annualized Base Rent 33% Availability under construction loans 47,045 $171,531 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock (NYSE: AHHPrA) Debt 45% Equity 49% Preferred 6%
16 DEVELOPMENT PIPELINE $ IN THOUSANDS Gainesville Apts Gainesville, GA (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) Includes payments to partners. (4) Majority interest in joint venture with preferred return. Q1 2022 Capitalized Interest $355 Capitalized Overhead $577 Projects Property Type Estimated Size (1) % Leased or LOI Construction Start Initial Occupancy Stabilized Operation(2) Estimated Cost(1) Loan Commitment Cost to Date AHH Ownership % Anchor Tenants Predevelopment Ten Tryon Charlotte, NC Mixed-use TBD - TBD TBD TBD TBD TBD $14,000 (3) 100% Harrisonburg Apartments Harrisonburg, VA Multifamily 266 units - 2Q22 3Q24 3Q25 70,000 TBD 1,000 100% Under Development Total Predevelopment Projects $70,000 - $15,000 Chronicle Mill Belmont, NC Multifamily 244 units / 14,700 sf - 1Q21 3Q22 4Q23 $55,000 $35,100 $35,000 85% (4) Southern Post Roswell, GA Mixed-use 137 units / 137,000 sf - 4Q21 4Q23 4Q24 113,000 TBD 13,000 100% Total Projects Under Development $168,000 $35,100 $48,000 Delivered Not Stabilized Wills Wharf Baltimore, MD Office 328,000 sf 91% 3Q18 2Q20 2Q23 $120,000 $76,000 $114,000 100% Canopy by Hilton, Transamerica, RBC, Morgan Stanley Gainesville Apartments Gainesville, GA Multifamily 223 units 68% 3Q20 1Q22 4Q22 52,000 31,000 48,000 95% (4) Total Delivered Not Stabilized $172,000 $107,000 $162,000 Projects Property Type Estimated Size (1) % Leased or LOI Construction Start Initial Occupancy Stabilized Operation(2) Estimated Cost(1) Equity Requirement Cost to Date AHH Ownership % Anchor Tenants Unconsolidated JV's T. Rowe Price Global HQ Baltimore, MD Office 535,900 sf office / 40,500 sf retail / 250 parking spaces 93% 2Q22 1Q24 2Q24 $246,000 $42,000 $21,000 50% T. Rowe Price Parcel 4 Mixed-Use Baltimore, MD Mixed-Use/Garage 312 units / 13,000 sf retail / 1,250 parking spaces - 2Q22 3Q24 2Q26 198,000 74,000 7,000 90% Total Unconsolidated JV's $444,000 $116,000 $28,000 Schedule(1)
17 PREFERRED INVESTMENTS/MEZZANINE The Interlock Atlanta, GA $ IN THOUSANDS AS OF MARCH 31, 2022 (1) Represents estimates that may change as the development process proceeds. (2) Includes amortization of fees. (3) Preferred equity with economic terms and accounting consistent with a loan receivable. Property Type Estimated Size(1) % Leased or LOI Initial Occupancy Loan Maturity Interest Rate Loan Balance QTD Interest Income(2) Outstanding Investments The Interlock Atlanta, GA Mixed-use 300,000 sf 90% 1Q21 4Q24 15% $78,561 $2,826 Solis Nexton(3) Summerville, SC Multifamily 320 units NA 4Q22 4Q26 11% 24,180 614 Solis City Park(3) Charlotte, NC Multifamily 250 units NA 3Q23 1Q28 13% 4,942 19 Total $107,683 $3,459 Schedule(1)
18 THIRD-PARTY CONSTRUCTION $ IN THOUSANDS Holly Springs Apartments Holly Springs, NC Q1 2022 Q4 2021 Q3 2021 Q2 2021 Trailing 4 Quarters Revenue $24,650 $20,463 $17,502 $18,408 $81,023 Expense (23,821) (19,750) (15,944) (18,131) (77,646) Gross Profit $829 $713 $1,558 $277 $3,377 Operating Margin 3.4% 3.5% 8.9% 1.5% 4.2% Backlog as of Q1 2022 Beginning Backlog $215,518 New Contracts 228,603 QTD Work Performed (24,682) Ending Backlog $419,439
19 ACQUISITIONS & DISPOSITIONS $ IN THOUSANDS (1) Represents 100% of property value of which company owns 90% economic interest. (2) Anchor tenant vacant at time of sale. ACQUISITIONS Properties Location Square Feet/Units Purchase Price Cash Cap Rate Purchase Date Anchor Tenants 2022 482,000 / 103 units $273,000 6.1% Exelon Building Baltimore, MD 482,000 / 103 units 273,000 (1) 6.1% 1Q22 Exelon Generation / Constellation 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 Total/Weighted Average 894,075 / 277 units $363,550 6.3% DISPOSITIONS Properties Location Square Feet/Beds Sale Price Cash Cap Rate Disposition Date Anchor Tenants 2022 618 beds $80,875 4.4% Summit Place Charleston, SC 357 beds 37,800 4.8% 2Q22 NA Hoffler Place Charleston, SC 258 beds 43,075 4.1% 2Q22 NA 2021 128,105 / 568 beds $90,265 5.2% Johns Hopkins Village Baltimore, MD 568 beds 75,000 5.6% 4Q21 NA 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 (2) 3Q21 NA 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 Total/Weighted Average 773,705 / 1,183 beds $268,440 5.9%
20 TOP 20 TENANTS BY ABR(1) $ IN THOUSANDS AS OF MARCH 31, 2022 (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. Commercial Portfolio(1) Tenant Number of Leases Lease Expiration Annualized Base Rent % of Total Annualized Base Rent Exelon 1 2036 $ 14,149 7.8% Morgan Stanley(2) 1 2027 5,817 3.2% Harris Teeter/Kroger 6 2023 - 2035 3,740 2.1% Clark Nexsen 1 2029 2,746 1.5% WeWork 1 2034 2,122 1.2% Lowes Foods 2 2037 ; 2039 1,976 1.1% Duke University 1 2029 1,659 0.9% Huntington Ingalls Industries 1 2029 1,575 0.9% Dick's Sporting Goods 1 2032 1,553 0.9% PetSmart 5 2025 - 2027 1,527 0.8% TJ Maxx/Homegoods 5 2023 - 2027 1,504 0.8% Mythics 1 2030 1,260 0.7% Williams-Sonoma, Inc. 4 2026 - 2031 1,195 0.7% Johns Hopkins Medicine 1 2023 1,180 0.7% Amazon/Whole Foods 1 2040 1,144 0.6% Ross Dress for Less 3 2025 - 2027 1,122 0.6% Apex Entertainment 1 2035 1,092 0.6% Bed Bath & Beyond 2 2025 ; 2027 1,084 0.6% Regal Cinemas 2 MTM ; 2024 1,064 0.6% Pender & Coward 1 2030 974 0.5% Top 20 Total $ 48,482 26.8%
21 LEASE SUMMARY (1) Excludes leases from properties in development. OFFICE Renewals Quarter Number of Leases Signed Net Rentable SF Signed GAAP Releasing Spread Cash Releasing Spread Wtd Average Lease Term (yrs) TI & LC TI & LC per SF Q1 2022 5 22,985 11.3% 2.6% 4.9 $321,154 $13.97 Q4 2021 1 23,267 8.3% -3.8% 5.3 515,175 22.14 Q3 2021 1 1,400 -5.0% -13.5% 3.0 2,153 1.54 Q2 2021 - - 0.0% 0.0% 0.0 - - Trailing 4 Quarters 7 47,652 9.3% -1.2% 5.0 $838,482 $17.60 New Leases(1) Quarter Number of Leases Signed Net Rentable SF Signed Cash Rent per SF Wtd Average Lease Term (yrs) TI & LC TI & LC per SF Q1 2022 2 5,407 $29.11 7.7 $358,633 $66.33 Q4 2021 1 1,428 26.00 10.0 45,198 31.65 Q3 2021 3 10,895 26.71 5.9 466,981 42.86 Q2 2021 1 1,700 29.50 3.3 12,583 7.40 Trailing 4 Quarters 7 19,430 $27.57 6.5 $883,395 $45.47 RETAIL Renewals Quarter Number of Leases Signed Net Rentable SF Signed GAAP Releasing Spread Cash Releasing Spread Wtd Average Lease Term (yrs) TI & LC TI & LC per SF Q1 2022 22 199,653 11.8% 3.5% 6.1 $251,045 $1.26 Q4 2021 16 126,328 9.0% 6.0% 4.8 166,153 1.32 Q3 2021 10 43,479 13.3% 8.4% 5.0 86,764 2.00 Q2 2021 15 89,973 8.0% 6.9% 5.0 208,544 2.32 Trailing 4 Quarters 63 459,433 10.2% 5.8% 5.4 $712,506 $1.55 New Leases(1) Quarter Number of Leases Signed Net Rentable SF Signed Cash Rent per SF Wtd Average Lease Term (yrs) TI & LC TI & LC per SF Q1 2022 5 19,680 $28.15 11.6 $1,753,363 $89.09 Q4 2021 17 61,922 18.27 6.8 1,267,703 20.47 Q3 2021 10 34,384 19.09 8.5 898,397 26.13 Q2 2021 11 55,683 16.05 9.4 3,029,735 54.41 Trailing 4 Quarters 43 171,669 $18.84 8.5 $6,949,198 $40.48
22 LEASE EXPIRATIONS(1) AS OF MARCH 31, 2022 (1) Excludes leases from properties in development and delivered, but not yet stabilized. OFFICE Year Leases Expiring Square Footage Expiring % Portfolio Net Rentable Square Feet ABR % of Portfolio ABR Available - 49,225 2.7% -$ - M-T-M 4 2,743 0.2% 88,449 0.2% 2022 8 11,176 0.6% 361,047 0.7% 2023 12 92,847 5.2% 2,565,713 5.0% 2024 14 150,495 8.4% 3,643,527 7.1% 2025 17 144,972 8.1% 4,436,773 8.7% 2026 12 56,299 3.1% 1,509,260 3.0% 2027 14 310,609 17.3% 9,302,726 18.2% 2028 12 99,554 5.6% 2,833,181 5.5% 2029 9 247,588 13.8% 6,634,411 13.0% 2030 7 109,097 6.1% 3,208,759 6.3% 2031 2 5,317 0.3% 113,535 0.2% 2032 3 6,214 0.3% 182,796 0.4% Thereafter 2 505,918 28.3% 16,270,924 31.7% Total / Weighted Average 116 1,792,054 100.0% $51,151,101 100.0% RETAIL Year Leases Expiring Square Footage Expiring % Portfolio Net Rentable Square Feet ABR % of Portfolio ABR Available - 132,782 3.3% -$ - M-T-M 3 52,757 1.3% 365,997 0.5% 2022 32 71,933 1.8% 1,761,444 2.6% 2023 65 325,677 8.0% 6,307,060 9.2% 2024 86 447,897 11.0% 8,321,085 12.2% 2025 88 642,293 15.8% 9,095,244 13.3% 2026 75 381,967 9.4% 7,471,489 10.9% 2027 61 426,916 10.5% 7,409,286 10.8% 2028 34 107,967 2.7% 2,949,609 4.3% 2029 32 117,876 2.9% 2,549,408 3.7% 2030 40 239,821 5.9% 5,305,481 7.8% 2031 28 206,988 5.1% 4,091,804 6.0% 2032 21 290,454 7.1% 4,681,328 6.8% Thereafter 21 622,032 15.2% 8,081,434 11.9% Total / Weighted Average 586 4,067,360 100.0% $68,390,669 100.0%
23Town Center Virginia Beach, VA APPENDIX DEFINITIONS & RECONCILIATIONS
24 ANNUALIZED BASE RENT: For the properties in our retail & office portfolios, we calculate annualized base rent (“ABR”) 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 March 31, 2022, 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 March 31, 2022. 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. DEFINITIONS 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, straight-line rents, cash ground rent payments for finance leases, the amortization of leasing incentives and above (below) market rents, and proceeds from government development grants, and payments made to purchase interest rate caps designated as cash flow hedges. 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. TOTAL ADJUSTED EBITDA: We calculate Total 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 and mark-to-market adjustments on interest rate derivates, other one-time adjustments including non-recurring bad debt and termination fees. Management believes Total 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.
25 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. DEFINITIONS 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. ANNUALIZED QUARTERLY RENT: For the properties in our multifamily portfolio, we calculate annualized quarterly rent (“AQR”) by multiplying (a) revenue for the quarter ended by (b) 4.
26 DEFINITIONS OCCUPANCY: The occupancy for each of our retail & office properties is calculated as (a) square footage under executed leases as of the last day of the quarter, divided by (b) net rentable square feet, expressed as a percentage. As of January 1, 2022, occupancy for our multifamily properties is calculated as (a) average of the number of occupied units/beds on the 20th day of each of the trailing three months from the reporting period end date, divided by (b) total units/beds available, as of such date expressed as a percentage. Management believes that this methodology best captures the average monthly occupancy. For periods prior to January 1, 2022, multifamily and student housing occupancy was calculated based on occupied units and beds as a percentage of total units and beds. 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 certain items, including but not limited to, acquisition, development and other pursuit costs, debt extinguishment losses, prepayment penalties, impairment of intangible assets and liabilities, mark-to-market adjustments on interest rate derivatives not designated as cash flow hedges, certain costs for interest rate caps designated as cash flow hedges, provision for unrealized non-cash 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 with Nareit’s definition includes certain items that are not indicative of the results provided by our operating property portfolio and affect the comparability of our year-over-year performance. Accordingly, management believes that Normalized FFO is a more useful performance measure. 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. NET RENTABLE SQUARE FOOTAGE: We define net rentable square footage for each of our retail & office properties as 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
27 DEFINITIONS STABILIZED PORTFOLIO DEBT: We calculate Stabilized Portfolio Debt as our total debt secured by our stabilized properties, excluding loans associated with our development pipeline and our unsecured line of credit. 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. STABILIZED PORTFOLIO ADJUSTED EBITDA: We calculate Stabilized Portfolio Adjusted EBITDA as EBITDA coming solely from our stabilized operating properties. We generally consider a property to be stabilized upon 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. 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. Management believes that Stabilized Portfolio Adjusted EBITDA provides useful supplemental information to investors regarding our properties’ recurring 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 Stabilized Portfolio Adjusted EBITDA or similarly entitled measures.
28 PROPERTY PORTFOLIO AS OF MARCH 31, 2022 Retail Properties - Stabilized Location Year Built / Redeveloped SF(1) Occupancy(1) ABR(1) ABR per Leased SF(1) Anchor Tenant(s) Town Center of Virginia Beach 249 Central Park Retail Virginia Beach, VA 2004 92,400 94.2% $2,392,768 $27.49 Cheesecake Factory, Brooks Brothers Apex Entertainment Virginia Beach, VA 2002/2020 103,335 100.0% 1,534,848 14.85 Apex Entertainment, USI Columbus Village Virginia Beach, VA 2013/2020 62,207 100.0% 1,896,832 30.49 Barnes & Noble, CAVA, Shake Shack Columbus Village II Virginia Beach, VA 1996 92,061 96.7% 983,477 11.04 BB&B, Regal Commerce Street Retail Virginia Beach, VA 2008 19,173 100.0% 961,827 50.17 Yard House Fountain Plaza Retail Virginia Beach, VA 2004 35,961 93.7% 1,101,938 32.69 Ruth's Chris, Nando's Premier Retail Virginia Beach, VA 2018 38,715 82.0% 1,079,686 34.00 Williams Sonoma, Pottery Barn South Retail Virginia Beach, VA 2002 38,515 100.0% 999,533 25.95 lululemon, free people, CPK Studio 56 Retail Virginia Beach, VA 2007 11,594 100.0% 406,008 35.02 Rocket Title, Legal Sea Foods Grocery Anchored Broad Creek Shopping Center(2) Norfolk, VA 2001 121,504 96.9% $2,202,784 $18.71 Food Lion, PetSmart Broadmoor Plaza South Bend, IN 1980 115,059 98.2% 1,350,959 11.96 Kroger Brooks Crossing Retail Newport News, VA 2016 18,349 78.3% 218,623 15.21 Various Small Shops (grocery shadow) Delray Beach Plaza(2) Delray Beach, FL 2021 87,207 100.0% 2,993,107 34.32 Whole Foods Greenbrier Square Chesapeake, VA 2017 260,710 95.4% 2,473,575 9.95 Kroger, Homegoods, Dick's Sporting Goods Greentree Shopping Center Chesapeake, VA 2014 15,719 92.6% 322,347 22.15 Various Small Shops (grocery shadow) Hanbury Village Chesapeake, VA 2009 98,638 100.0% 1,993,457 20.21 Harris Teeter Lexington Square Lexington, SC 2017 85,440 98.3% 1,832,602 21.82 Lowes Foods Market at Mill Creek Mt. Pleasant, SC 2018 80,319 97.7% 1,825,232 23.25 Lowes Foods North Point Center Durham, NC 2009 494,746 100.0% 3,912,091 7.91 Harris Teeter, Home Depot, Costco Parkway Centre Moultrie, GA 2017 61,200 100.0% 841,233 13.75 Publix Parkway Marketplace Virginia Beach, VA 1998 37,804 100.0% 769,960 20.37 Rite Aid (grocery shadow) Perry Hall Marketplace Perry Hall, MD 2001 74,256 98.0% 1,243,173 17.09 Safeway Sandbridge Commons Virginia Beach, VA 2015 76,650 100.0% 1,094,883 14.28 Harris Teeter Tyre Neck Harris Teeter(2) Portsmouth, VA 2011 48,859 100.0% 533,285 10.91 Harris Teeter Regional Centers Dimmock Square Colonial Heights, VA 1998 106,166 79.0% $1,546,918 $18.44 Best Buy, Old Navy Harrisonburg Regal Harrisonburg, VA 1999 49,000 100.0% 717,850 14.65 Regal Cinemas Marketplace at Hilltop(2) Virginia Beach, VA 2001 116,953 100.0% 2,664,005 22.78 Total Wine, Panera, Chick-Fil-A Nexton Square Summerville, SC 2020 133,608 95.2% 3,309,880 26.02 Various Small Shops North Hampton Market Taylors, SC 2004 114,954 100.0% 1,568,731 13.65 PetSmart, Hobby Lobby Overlook Village Asheville, NC 1990 151,365 100.0% 2,194,344 14.50 T.J. Maxx|Homegoods, Ross Patterson Place Durham, NC 2004 160,942 95.1% 2,374,808 15.51 BB&B, PetSmart, DSW Providence Plaza Charlotte, NC 2008 103,118 90.5% 2,730,375 29.24 Cranfill, Sumner & Hartzog, Chipotle Red Mill Commons Virginia Beach, VA 2005 373,808 95.4% 6,705,139 18.80 Homegoods, Walgreens Southgate Square Colonial Heights, VA 2016 260,131 94.0% 3,517,684 14.39 Burlington, PetSmart, Michaels, Conn's South Square Durham, NC 2005 109,590 100.0% 1,980,397 18.07 Ross, Petco, Office Depot Southshore Shops Chesterfield, VA 2006 40,307 84.5% 704,170 20.68 Buffalo Wild Wings Wendover Village Greensboro, NC 2004 176,997 98.8% 3,412,142 19.52 T.J. Maxx, Petco, Beauty World Total Retail Portfolio 4,067,360 96.7% $68,390,669 $17.38 (1) See appendix for definitions. (2) The Company leases all or a portion of the land underlying this property pursuant to a ground lease.
29 PROPERTY PORTFOLIO CONT. AS OF MARCH 31, 2022 Office Properties- Stabilized Location SF(1) Year Built Occupancy(1) ABR(1) ABR per Leased SF(1) Anchor Tenants Town Center of Virginia Beach 4525 Main Street Virginia Beach, VA 235,088 2014 100.0% $7,075,702 $30.10 Clark Nexsen, Anthropologie, Mythics Armada Hoffler Tower(3) Virginia Beach, VA 315,916 2002 99.3% 9,437,731 30.10 AHH, Troutman Pepper, Williams Mullen One Columbus Virginia Beach, VA 128,770 1984 88.3% 2,930,846 25.77 Truist, HBA Two Columbus Virginia Beach, VA 108,459 2009 98.0% 2,747,648 25.85 Hazen & Sawyer, Fidelity Harbor Point - Baltimore Waterfront Exelon Building Baltimore, MD 490,735 2016 97.2% $15,069,978 $31.58 Exelon Constellation Thames Street Wharf(3) Baltimore, MD 263,426 2010 100.0% 7,608,085 28.88 Morgan Stanley, JHU Medical Other Brooks Crossing Office Newport News, VA 98,061 2019 100.0% $1,887,419 $19.25 Huntington Ingalls Industries One City Center Durham, NC 151,599 2019 89.3% 4,393,691 32.44 Duke University, WeWork Stabilized Office Total 1,792,054 97.3% $51,151,101 $29.35 Office Properties- Non-Stabilized Wills Wharf(2) Baltimore, MD 327,991 2020 70.4% $6,648,602 $28.81 Canopy by Hilton, Transamerica, RBC Multifamily Properties- Stabilized Location Units/Beds Year Built / Redeveloped Occupancy(1) AQR (1) Monthly AQR per Occupied Unit/Bed Town Center of Virginia Beach Encore Apartments Virginia Beach, VA 286 2014 96.3% $5,157,791 $1,561 Premier Apartments Virginia Beach, VA 131 2018 99.0% 2,805,131 1,802 The Cosmopolitan(4) Virginia Beach, VA 342 2006/2020 96.2% 8,414,276 2,131 Harbor Point - Baltimore Waterfront 1405 Point(2)(4) Baltimore, MD 289 2018 95.3% $7,940,513 $2,403 1305 Dock Street Baltimore, MD 103 2016 90.3% 2,739,275 2,454 Student Housing Hoffler Place(4)(5)(6) Charleston, SC 258 2019 98.8% $3,931,465 $1,285 Summit Place(5)(6) Charleston, SC 357 2020 99.0% 4,183,844 986 Other Edison Apartments(4) Richmond, VA 174 2014 99.0% $3,031,568 $1,467 Greenside Apartments Charlotte, NC 225 2018 99.4% 4,339,866 1,617 Liberty Apartments(4) Newport News, VA 197 2013 95.4% 3,280,239 1,454 Smith's Landing(2) Blacksburg, VA 284 2009 99.4% 5,501,920 1,624 The Residences at Annapolis Junction Annapolis Junction, MD 416 2018 97.0% 10,465,283 2,161 Multifamily Total 3,062 97.3% $61,791,171 $1,728 Multifamily Properties- Non-Stabilized Gainesville Apartments Gainesville, GA 223 2022 29.0% $803,065 $1,035 (1) See appendix for definitions. (2) The Company leases all or a portion of the land underlying this property pursuant to a ground lease. (3) 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. (4) The ABR for Liberty, Cosmopolitan, Hoffler Place, Edison, and 1405 Point excludes approximately $0.2M, $1.0M, $0.3M, $0.3M and $0.4M, respectively, from ground floor retail leases. (5) Sold April 2022. (6) 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 March 31, 2022, by the number of occupied beds.
30 $ IN THOUSANDS RECONCILIATION OF DEBT & EBITDA (1) Excludes GAAP adjustments. (2) Includes the unannualized mezzanine loan prepayment premium of $2.4M. Three months ended 3/31/2022 12/31/2021 9/30/2021 6/30/2021 Property Net Operating Income $36,562 $32,270 $31,301 $30,618 Property Other Income (expense), net 104 (74) (185) (180) Amortization of Right of Use Assets (278) (278) (278) (278) Impairment of intangible assets and liabilities (47) 83 - (83) Property Adjusted EBITDA $36,341 $32,001 $30,838 $30,077 Acquisition 826 - 598 - Disposition - (730) - - Development (674) (681) (725) (819) Stabilized Portfolio Adjusted EBITDA $36,493 $30,590 $30,711 $29,258 Construction Gross Profit 829 713 1,558 278 Corporate G&A (4,552) (3,482) (3,263) (3,308) NonCash Stock Comp 1,609 400 390 423 Acquisition development & other pursuit costs (11) (1) (8) (32) Interest income 3,568 3,829 3,765 4,384 Other income (expense), net (31) 5 15 13 Add Back: Unstabilized Development 674 681 725 819 Total Adjusted EBITDA $38,579 $32,735 $33,893 $31,835 Stabilized Portfolio Debt $812,703 $664,985 $710,036 $696,392 Stabilized Portfolio Debt/ Stabilized Portfolio Adjusted EBITDA 5.6x 5.4x 5.8x 6.0x Total Debt(1) 1,179,296 957,387 1,017,410 963,885 Cash (39,486) (40,443) (33,453) (53,242) Net Debt $1,139,810 $916,944 $983,957 $910,643 Plus Ancillary Debt/Total Adjusted EBITDA 7.4x 7.0x 7.3x 7.0x (2) Preferred 171,085 171,085 171,085 171,085 Net Debt + Preferred $1,310,895 $1,088,029 $1,155,042 $1,081,728 Net Debt + Preferred /Total Adjusted EBITDA 8.5x 8.3x 8.5x 8.3x (2)
31 QUARTER TO DATE(1) $ IN THOUSANDS AS OF MARCH 31, 2022 CAPITAL EXPENDITURES (1) Excludes activity related to held for sale, acquired and/or disposed properties. Leasing Commissions Lease Incentive Tenant Improvements Land Improvements Building Improvements Furniture Fixtures & Equipment Total Second Generation Capex Retail $534 - $1,587 $234 $1,981 - $4,336 Office 111 - 427 - 602 - 1,140 Multifamily 2 - 211 49 638 231 1,131 Total Portfolio $647 - $2,225 $283 $3,221 $231 $6,607
32 RECONCILIATION TO PROPERTY PORTFOLIO NOI $ IN THOUSANDS (1) Includes expenses associated with the Company’s in-house asset management division. Three months ended 3/31 2022 2021 Office Same Store Rental revenues $10,175 $10,210 Property expenses 3,562 3,484 NOI 6,613 6,726 Non-Same Store NOI(1) 4,766 676 Segment NOI $11,379 $7,402 Retail Same Store Rental revenues $18,447 $17,112 Property expenses 4,696 4,320 NOI 13,751 12,792 Non-Same Store NOI(1) 1,940 600 Segment NOI $15,691 $13,392 Multifamily Same Store Rental revenues $13,337 $12,027 Property expenses 5,050 4,841 NOI 8,287 7,186 Non-Same Store NOI(1) 1,205 1,623 Segment NOI $9,492 $8,809 Total Property Portfolio NOI $36,562 $29,603
33 RECONCILIATION TO GAAP NET INCOME $ IN THOUSANDS Office Retail Multifamily Total Rental Properties General Contracting & Real Estate Services Total Segment revenues 17,023$ 21,430$ 16,182$ 54,635$ 24,650$ 79,285$ Segment expenses 5,644 5,739 6,690 18,073 23,821 41,894 Net operating income 11,379$ 15,691$ 9,492$ 36,562$ 829$ 37,391$ Depreciation and amortization (18,557) General and administrative expenses (4,708) Acquisition, development and other pursuit costs (11) Impairment charges (47) Interest income 3,568 Interest expense (9,031) Loss on extinguishment of debt (158) Unrealized credit loss release (provision) (605) Amortization of right-of-use assets - finance leases (278) Change in fair value of derivatives and other 4,182 Other income (expense) 229 Income tax benefit 301 Net income 12,276$ Net loss (income) attributable to noncontrolling interest in investment entities (100) Preferred stock dividends (2,887) Net income attributable to AHH and OP unitholders 9,289$ Three months ended 3/31/2022
34 RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA $ IN THOUSANDS Three months ended 3/31/2022 12/31/2021 9/30/2021 6/30/2021 Net income attributable to common stockholders and OP unitholders $9,289 $361 $4,861 $5,568 Excluding: Depreciation and amortization 18,557 16,616 16,886 17,285 Loss (gain) on real estate dispositions - (15,436) 113 - Impairment of real estate assets - 18,339 - - Income tax provision (benefit) (301) (220) (42) (461) Interest expense 9,031 8,685 8,827 8,418 Change in fair value of derivatives and other (4,182) (1,344) (131) (314) Preferred dividends 2,887 2,887 2,887 2,887 Loss on extinguishment of debt 158 3,690 120 - Mezzanine loan prepayment premium - - - (2,359) Unrealized credit loss provision (release) 605 (508) (617) 388 Investment Entities 100 (5) - - Non-cash stock compensation 1,609 400 390 423 Adjusted EBITDA $37,753 $33,465 $33,294 $31,835 Dispositions - (730) - - Acquisitions (full quarter) 826 - 599 - Total Adjusted EBITDA $38,579 $32,735 $33,893 $31,835 Construction Gross Profit (829) (713) (1,558) (278) Corporate G&A 4,552 3,482 3,263 3,308 NonCash Stock Comp (1,609) (400) (390) (423) Acquisition development & other pursuit costs 11 1 8 32 Interest income (3,568) (3,829) (3,765) (4,384) Other income (expense), net 31 (5) (15) (13) Add Back: Unstabilized Development (674) (681) (725) (819) Stabilized Portfolio Adjusted EBITDA $36,493 $30,590 $30,711 $29,258 Acquisition (826) - (598) - Disposition - 730 - - Development 674 681 725 819 Property Adjusted EBITDA $36,341 $32,001 $30,838 $30,077