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): August 4, 2022
(Exact name of registrant as specified in its charter)
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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 August 4, 2022, Armada Hoffler Properties, Inc. (the “Company”) issued a press release announcing its financial position as of June 30, 2022, results of operations for the three months ended June 30, 2022, and other related information. Also on August 4, 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 June 30, 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: August 4, 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 SECOND QUARTER 2022 RESULTS
Net Income of $0.31 Per Diluted Share
Normalized FFO of $0.30 Per Diluted Share
Raised 2022 Full-Year Normalized FFO Guidance Range to $1.16 to $1.20 Per Diluted Share
Increased Third Quarter Cash Dividend on Common Shares By 12%
VIRGINIA BEACH, VA, August 4, 2022 – Armada Hoffler Properties, Inc. (NYSE: AHH) today announced its results for the quarter ended June 30, 2022 and provided an update on current events.
Second Quarter and Recent Highlights:
•Net income attributable to common stockholders and OP Unit holders of $27.8 million, or $0.31 per diluted share, compared to $5.6 million, or $0.07 per diluted share, for the three months ended June 30, 2021.
•Funds from operations attributable to common stockholders and OP Unit holders ("FFO") of $27.0 million, or $0.31 per diluted share, compared to $22.9 million, or $0.28 per diluted share, for the three months ended June 30, 2021. See "Non-GAAP Financial Measures."
•Normalized funds from operations attributable to common stockholders and OP Unit holders ("Normalized FFO") of $26.2 million, or $0.30 per diluted share, compared to $23.4 million, or $0.29 per diluted share, for the three months ended June 30, 2021.
•Raised 2022 full-year Normalized FFO guidance to $1.16 to $1.20 per diluted share from the Company's previous guidance range of $1.15 to $1.19 per diluted share. This represents a 10% increase over 2021 results.
•Announced a third quarter cash dividend of $0.19 per common share, a 12% increase over the prior quarter's dividend.
•Stabilized operating property portfolio occupancy increased to 97.3% as of June 30, 2022. Office occupancy was 97.9%, retail occupancy was 97.1%, and multifamily occupancy was 97.2%.
•Same Store net operating income ("NOI") increased 6.0% on a GAAP basis and 7.4% on a cash basis compared to the quarter ended June 30, 2021.
◦Multifamily same store NOI increased 12.5% on a GAAP and cash basis.
◦Commercial same store NOI increased 4.1% on a GAAP basis and 5.8% on a cash basis.
•Third-party construction backlog totaling $541 million, highest in the Company's history
•Positive releasing spreads during the second quarter of 13.1% on a GAAP basis and 3.0% on a cash basis for office and 9.9% on a GAAP basis and 3.5% on a cash basis for retail.
•Achieved an 8.1% increase in rental rates on apartment trade outs across the multifamily segment.
•Completed $177 million of sales of noncore assets at a blended 4.1% exit cap rate.
◦The Residences at Annapolis Junction in Baltimore for $150 million, 4.15% cash cap rate.
◦Two outparcels at North Pointe in Durham, North Carolina for $24 million, 4.0% cash cap rate.
◦Two outparcels at Sandbridge Commons in Virginia Beach for $3 million, 4.5% cash cap rate.
•Appointed Dennis H. Gartman, renowned investor, economist, and longtime publisher of “The Gartman Letter,” as a member of our board of directors. He is the sixth independent member.
•Executed a new office lease with Franklin Templeton for 60,000 square feet at the Company’s Wills Wharf office building in Baltimore’s Harbor Point neighborhood. The investment management firm has agreed to lease the entire fifth floor and a portion of the fourth floor of Wills Wharf and will bring the building to 91% occupancy.
"We believe the types of assets we own will outperform the competitive set through most any business cycle. High-quality facilities in mixed-use environments located in desirable sub-markets stand the test of time," said Louis Haddad, President & CEO. "When you have premium properties amongst limited peer competition, you have the ability to move rents in a positive direction through virtually any macro-economic backdrop."
Financial Results
Net income attributable to common stockholders and OP Unit holders for the second quarter increased to $27.8 million compared to $5.6 million for the second quarter of 2021. The period-over-period change was primarily due to an increase in property operating income due to acquisitions, gains recognized on dispositions, developments and improved same-store performance, increased general contracting gross profit, and changes in the fair value of interest rate derivatives. The increase was partially offset by a decrease in interest income on our mezzanine loan portfolio, a decrease in income tax benefit, an increase in interest expense, and an increase in loss on extinguishment of debt.
FFO attributable to common stockholders and OP Unit holders for the second quarter increased to $27.0 million compared to $22.9 million for the second quarter of 2021. Normalized FFO attributable to common stockholders and OP Unit holders for the second quarter increased to $26.2 million compared to $23.4 million for the second 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 and an increase in general contracting gross profit. These increases were partially offset by a decrease in interest income on our mezzanine loan portfolio and an increase in interest expense.
Operating Performance
At the end of the second quarter, the Company’s office, retail and multifamily stabilized operating property portfolios were 97.9%, 97.1% and 97.2% occupied, respectively.
Total construction contract backlog was $541.2 million at the end of the second quarter.
Balance Sheet and Financing Activity
As of June 30, 2022, the Company had $1.2 billion of total debt outstanding, including $82.0 million outstanding under its revolving credit facility. Total debt outstanding excludes GAAP adjustments. Approximately 45% of the Company’s debt had fixed interest rates or was subject to interest rate swaps as of June 30, 2022. The Company’s debt was 100% fixed or hedged as of June 30, 2022 after considering interest rate caps with strike prices at or below 300 basis points.
Outlook
The Company raised its 2022 full-year Normalized FFO guidance range to $1.16 to $1.20 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.
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Full-year 2022 Guidance [1][2] | Expected Ranges | |||||||||||||
| Total NOI | $144.8M | $145.8M | ||||||||||||
| Construction Segment Gross Profit | $7.3M | $8.3M | ||||||||||||
| G&A Expenses | $16.0M | $16.5M | ||||||||||||
| Interest Income | $12.6M | $13.0M | ||||||||||||
Interest Expense[3] | $32.9M | $33.6M | ||||||||||||
| Normalized FFO per diluted share | $1.16 | $1.20 | ||||||||||||
[1] Includes the following assumptions:
•Interest expense, net of interest rate caps, based on the Forward Yield Curve ending 2022 at 3.7%
•No capital markets activity for the remainder of the year
•Acquisition of $25 to $35 million of grocery-anchored retail assets
•The Interlock mezzanine loan paid off during the fourth quarter of 2022
[2] Ranges exclude certain items per Company's Normalized FFO definition: 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, certain costs for interest rate caps designated as cash flow hedges, 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.
[3] Includes interest expense on finance leases
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 Thursday, August 4, 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 Sunday, September 4, 2022 by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 13730643.
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
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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 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.
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
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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)
| June 30, 2022 | December 31, 2021 | |||||||||||||
| (Unaudited) | ||||||||||||||
| ASSETS | ||||||||||||||
| Real estate investments: | ||||||||||||||
| Income producing property | $ | 1,791,302 | $ | 1,658,609 | ||||||||||
| Held for development | 6,294 | 6,294 | ||||||||||||
| Construction in progress | 71,676 | 72,535 | ||||||||||||
| 1,869,272 | 1,737,438 | |||||||||||||
| Accumulated depreciation | (303,032) | (285,814) | ||||||||||||
| Net real estate investments | 1,566,240 | 1,451,624 | ||||||||||||
| Real estate investments held for sale | 115,680 | 80,751 | ||||||||||||
| Cash and cash equivalents | 69,731 | 35,247 | ||||||||||||
| Restricted cash | 6,681 | 5,196 | ||||||||||||
| Accounts receivable, net | 32,250 | 29,576 | ||||||||||||
| Notes receivable, net | 139,383 | 126,429 | ||||||||||||
| Construction receivables, including retentions, net | 29,107 | 17,865 | ||||||||||||
| Construction contract costs and estimated earnings in excess of billings | 493 | 243 | ||||||||||||
| Equity method investments | 53,260 | 12,685 | ||||||||||||
| Operating lease right-of-use assets | 23,387 | 23,493 | ||||||||||||
| Finance lease right-of-use assets | 46,433 | 46,989 | ||||||||||||
| Acquired lease intangible assets | 107,147 | 62,038 | ||||||||||||
| Other assets | 75,743 | 45,927 | ||||||||||||
| Total Assets | $ | 2,265,535 | $ | 1,938,063 | ||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||
| Indebtedness, net | $ | 1,080,664 | $ | 917,556 | ||||||||||
| Liabilities related to assets held for sale | 84,049 | 41,364 | ||||||||||||
| Accounts payable and accrued liabilities | 22,886 | 29,589 | ||||||||||||
| Construction payables, including retentions | 47,429 | 31,166 | ||||||||||||
| Billings in excess of construction contract costs and estimated earnings | 15,075 | 4,881 | ||||||||||||
| Operating lease liabilities | 31,645 | 31,648 | ||||||||||||
| Finance lease liabilities | 46,325 | 46,160 | ||||||||||||
| Other liabilities | 51,126 | 55,876 | ||||||||||||
| Total Liabilities | 1,379,199 | 1,158,240 | ||||||||||||
| Total Equity | 886,336 | 779,823 | ||||||||||||
| Total Liabilities and Equity | $ | 2,265,535 | $ | 1,938,063 | ||||||||||
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ARMADA HOFFLER PROPERTIES, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||
| Rental revenues | $ | 55,224 | $ | 47,378 | $ | 109,859 | $ | 93,119 | ||||||||||||||||||
| General contracting and real estate services revenues | 45,273 | 18,408 | 69,923 | 53,971 | ||||||||||||||||||||||
| Total revenues | 100,497 | 65,786 | 179,782 | 147,090 | ||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||
| Rental expenses | 12,685 | 11,292 | 25,354 | 22,124 | ||||||||||||||||||||||
| Real estate taxes | 5,837 | 5,465 | 11,241 | 10,771 | ||||||||||||||||||||||
| General contracting and real estate services expenses | 43,418 | 18,131 | 67,239 | 52,406 | ||||||||||||||||||||||
| Depreciation and amortization | 18,781 | 17,285 | 37,338 | 35,351 | ||||||||||||||||||||||
| Amortization of right-of-use assets - finance leases | 277 | 278 | 555 | 467 | ||||||||||||||||||||||
| General and administrative expenses | 3,617 | 3,487 | 8,325 | 7,508 | ||||||||||||||||||||||
| Acquisition, development and other pursuit costs | 26 | 32 | 37 | 103 | ||||||||||||||||||||||
| Impairment charges | 286 | 83 | 333 | 3,122 | ||||||||||||||||||||||
| Total expenses | 84,927 | 56,053 | 150,422 | 131,852 | ||||||||||||||||||||||
| Gain on real estate dispositions, net | 19,493 | — | 19,493 | 3,717 | ||||||||||||||||||||||
| Operating income | 35,063 | 9,733 | 48,853 | 18,955 | ||||||||||||||||||||||
| Interest income | 3,352 | 6,746 | 6,920 | 10,862 | ||||||||||||||||||||||
| Interest expense | (9,371) | (8,418) | (18,402) | (16,393) | ||||||||||||||||||||||
| Loss on extinguishment of debt | (618) | — | (776) | — | ||||||||||||||||||||||
| Change in fair value of derivatives and other | 2,548 | 314 | 6,730 | 707 | ||||||||||||||||||||||
| Unrealized credit loss provision | (295) | (388) | (900) | (333) | ||||||||||||||||||||||
| Other income (expense), net | 68 | 7 | 297 | 186 | ||||||||||||||||||||||
| Income before taxes | 30,747 | 7,994 | 42,722 | 13,984 | ||||||||||||||||||||||
| Income tax benefit | 20 | 461 | 321 | 480 | ||||||||||||||||||||||
| Net income | 30,767 | 8,455 | 43,043 | 14,464 | ||||||||||||||||||||||
| Net loss attributable to noncontrolling interests in investment entities | (128) | — | (228) | — | ||||||||||||||||||||||
| Preferred stock dividends | (2,887) | (2,887) | (5,774) | (5,774) | ||||||||||||||||||||||
| Net income attributable to common stockholders and OP Unitholders | $ | 27,752 | $ | 5,568 | $ | 37,041 | $ | 8,690 | ||||||||||||||||||
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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 June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| Net income attributable to common stockholders and OP Unitholders | $ | 27,752 | $ | 5,568 | $ | 37,041 | $ | 8,690 | ||||||||||||||||||
Depreciation and amortization (1) | 18,509 | 17,285 | 36,794 | 35,351 | ||||||||||||||||||||||
Gain on operating real estate dispositions, net (2) | (19,493) | — | (19,493) | (3,464) | ||||||||||||||||||||||
| Impairment of real estate assets | 201 | — | 201 | 3,039 | ||||||||||||||||||||||
| FFO attributable to common stockholders and OP Unitholders | $ | 26,969 | $ | 22,853 | $ | 54,543 | $ | 43,616 | ||||||||||||||||||
| Acquisition, development and other pursuit costs | 26 | 32 | 37 | 103 | ||||||||||||||||||||||
| Impairment of intangible assets and liabilities | 85 | 83 | 132 | 83 | ||||||||||||||||||||||
| Loss on extinguishment of debt | 618 | — | 776 | — | ||||||||||||||||||||||
| Unrealized credit loss provision | 295 | 388 | 900 | 333 | ||||||||||||||||||||||
| Amortization of right-of-use assets - finance leases | 277 | 278 | 555 | 467 | ||||||||||||||||||||||
| Change in fair value of derivatives not designated as cash flow hedges and other | (2,548) | (314) | (6,730) | (707) | ||||||||||||||||||||||
| Amortization of interest rate cap premiums on designated cash flow hedges | 481 | 59 | 523 | 117 | ||||||||||||||||||||||
| Normalized FFO available to common stockholders and OP Unitholders | $ | 26,203 | $ | 23,379 | $ | 50,736 | $ | 44,012 | ||||||||||||||||||
| Net income attributable to common stockholders and OP Unitholders per diluted share and unit | $ | 0.31 | $ | 0.07 | $ | 0.42 | $ | 0.11 | ||||||||||||||||||
| FFO attributable to common stockholders and OP Unitholders per diluted share and unit | $ | 0.31 | $ | 0.28 | $ | 0.62 | $ | 0.54 | ||||||||||||||||||
| Normalized FFO attributable to common stockholders and OP Unitholders per diluted share and unit | $ | 0.30 | $ | 0.29 | $ | 0.58 | $ | 0.54 | ||||||||||||||||||
| Weighted average common shares and units - diluted | 88,331 | 81,262 | 88,042 | 80,771 | ||||||||||||||||||||||
________________________________________
| (1) The adjustment for depreciation and amortization for the three and six months ended June 30, 2022 excludes $0.3 million and $0.5 million, respectively, of depreciation attributable to our joint venture partners. | ||
| (2) The adjustment for gain on operating real estate dispositions for the six months ended June 30, 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 June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Office Same Store(1) | ||||||||||||||||||||||||||
| Same Store NOI, Cash Basis | $ | 6,552 | $ | 6,395 | $ | 13,163 | $ | 12,844 | ||||||||||||||||||
GAAP Adjustments (2) | 122 | 368 | 124 | 645 | ||||||||||||||||||||||
| Same Store NOI | 6,674 | 6,763 | 13,287 | 13,489 | ||||||||||||||||||||||
Non-Same Store NOI (3) | 5,005 | 642 | 9,771 | 1,318 | ||||||||||||||||||||||
| Segment NOI | 11,679 | 7,405 | 23,058 | 14,807 | ||||||||||||||||||||||
Retail Same Store (4) | ||||||||||||||||||||||||||
| Same Store NOI, Cash Basis | 13,897 | 12,931 | 26,250 | 24,106 | ||||||||||||||||||||||
GAAP Adjustments (2) | 856 | 898 | 931 | 1,220 | ||||||||||||||||||||||
| Same Store NOI | 14,753 | 13,829 | 27,181 | 25,326 | ||||||||||||||||||||||
Non-Same Store NOI (3) | 1,187 | 182 | 4,450 | 2,077 | ||||||||||||||||||||||
| Segment NOI | 15,940 | 14,011 | 31,631 | 27,403 | ||||||||||||||||||||||
Multifamily Same Store (5) | ||||||||||||||||||||||||||
| Same Store NOI, Cash Basis | 6,665 | 5,927 | 13,146 | 11,463 | ||||||||||||||||||||||
GAAP Adjustments (2) | 208 | 182 | 426 | 366 | ||||||||||||||||||||||
| Same Store NOI | 6,873 | 6,109 | 13,572 | 11,829 | ||||||||||||||||||||||
Non-Same Store NOI (3) | 2,210 | 3,096 | 5,003 | 6,185 | ||||||||||||||||||||||
| Segment NOI | 9,083 | 9,205 | 18,575 | 18,014 | ||||||||||||||||||||||
| Total Property NOI | 36,702 | 30,621 | 73,264 | 60,224 | ||||||||||||||||||||||
| General contracting & real estate services gross profit | 1,855 | 277 | 2,684 | 1,565 | ||||||||||||||||||||||
| Depreciation and amortization | (18,781) | (17,285) | (37,338) | (35,351) | ||||||||||||||||||||||
| General and administrative expenses | (3,617) | (3,487) | (8,325) | (7,508) | ||||||||||||||||||||||
| Acquisition, development and other pursuit costs | (26) | (32) | (37) | (103) | ||||||||||||||||||||||
| Impairment charges | (286) | (83) | (333) | (3,122) | ||||||||||||||||||||||
| Gain on real estate dispositions, net | 19,493 | — | 19,493 | 3,717 | ||||||||||||||||||||||
| Interest income | 3,352 | 6,746 | 6,920 | 10,862 | ||||||||||||||||||||||
| Loss on extinguishment of debt | (618) | — | (776) | — | ||||||||||||||||||||||
| Interest expense | (9,371) | (8,418) | (18,402) | (16,393) | ||||||||||||||||||||||
| Unrealized credit loss provision | (295) | (388) | (900) | (333) | ||||||||||||||||||||||
| Amortization of right-of-use assets - finance leases | (277) | (278) | (555) | (467) | ||||||||||||||||||||||
| Change in fair value of derivatives and other | 2,548 | 314 | 6,730 | 707 | ||||||||||||||||||||||
| Other income (expense), net | 68 | 7 | 297 | 186 | ||||||||||||||||||||||
| Income tax benefit | 20 | 461 | 321 | 480 | ||||||||||||||||||||||
| Net income | 30,767 | 8,455 | 43,043 | 14,464 | ||||||||||||||||||||||
| Net income attributable to noncontrolling interest in investment entities | (128) | — | (228) | — | ||||||||||||||||||||||
| Preferred stock dividends | (2,887) | (2,887) | (5,774) | (5,774) | ||||||||||||||||||||||
| Net income attributable to AHH and OP unitholders | $ | 27,752 | $ | 5,568 | $ | 37,041 | $ | 8,690 | ||||||||||||||||||
| (1) Office same-store portfolio excludes Exelon and 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 Delray Beach Plaza, Greenbrier Square, Overlook Village, and Premier Retail as well as Oakland Marketplace, which was disposed in March 2021. | ||
| (5) Multifamily same-store portfolio excludes Gainesville Apartments, 1305 Dock Street, Summit Place, Hoffler Place, and The Residences at Annapolis Junction. | ||
Contact:
Chelsea Forrest
Armada Hoffler Properties, Inc.
Director of Corporate Communications and Investor Relations
Email: CForrest@ArmadaHoffler.com
Phone: (757) 612-4248
10
1 2Q22 SUPPLEMENTAL FINANCIAL PACKAGE
2 This Supplemental Financial Package should be read in conjunction with the unaudited condensed consolidated financial statements appearing in our press release dated August 4, 2022, which has been furnished as Exhibit 99.1 to our Form 8-K filed on August 4, 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 Dennis H. Gartman, Independent Director Eva S. Hardy, Independent Director A. Russell Kirk, 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 $27.8 million, or $0.31 per diluted share, compared to $5.6 million, or $0.07 per diluted share, for the three months ended June 30, 2021. • Funds from operations attributable to common stockholders and OP Unit holders ("FFO") of $27.0 million, or $0.31 per diluted share, compared to $22.9 million, or $0.28 per diluted share, for the three months ended June 30, 2021. See "Non-GAAP Financial Measures.“ • Normalized funds from operations attributable to common stockholders and OP Unit holders ("Normalized FFO") of $26.2 million, or $0.30 per diluted share, compared to $23.4 million, or $0.29 per diluted share, for the three months ended June 30, 2021. • Raised 2022 full-year Normalized FFO guidance to $1.16 to $1.20 per diluted share from the Company's previous guidance range of $1.15 to $1.19 per diluted share. This represents a 10% increase over 2021 results. • Announced a third quarter cash dividend of $0.19 per common share, a 12% increase over the prior quarter's dividend. • Stabilized operating property portfolio occupancy increased to 97.3% as of June 30, 2022. Office occupancy was 97.9%, retail occupancy was 97.1%, and multifamily occupancy was 97.2%. • Same Store net operating income ("NOI") increased 6.0% on a GAAP basis and 7.4% on a cash basis compared to the quarter ended June 30, 2021. • Multifamily same store NOI increased 12.5% on a GAAP and cash basis. • Commercial same store NOI increased 4.1% on a GAAP basis and 5.8% on a cash basis. • Third-party construction backlog totaling $541 million, highest in the Company's history. • Positive releasing spreads during the second quarter of 13.1% on a GAAP basis and 3.0% on a cash basis for office and 9.9% on a GAAP basis and 3.5% on a cash basis for retail. • Achieved an 8.1% increase in rental rates on apartment trade outs across the multifamily segment. • Completed $177 million of sales of noncore assets at a blended 4.1% exit cap rate. • The Residences at Annapolis Junction in Baltimore for $150 million, 4.2% cash cap rate. • Two outparcels at North Pointe in Durham, North Carolina for $24 million, 4.0% cash cap rate. • Two outparcels at Sandbridge Commons in Virginia Beach for $3 million, 4.5% cash cap rate. • Appointed Dennis H. Gartman, renowned investor, economist, and longtime publisher of “The Gartman Letter,” as a member of our board of directors. He is the sixth independent member. • Executed a new office lease with Franklin Templeton for 60,000 square feet at the Company’s Wills Wharf office building in Baltimore’s Harbor Point neighborhood. The investment management firm has agreed to lease the entire fifth floor and a portion of the fourth floor of Wills Wharf and will bring the building to 91% occupancy.
5 2022 OUTLOOK & ASSUMPTIONS OUTLOOK(1) LOW HIGH TOTAL NOI $144.8M $145.8M CONSTRUCTION SEGMENT GROSS PROFIT $7.3M $8.3M G&A EXPENSES $16.0M $16.5M INTEREST INCOME $12.6M $13.0M INTEREST EXPENSE(2) $32.9M $33.6M NORMALIZED FFO PER DILUTED SHARE $1.16 $1.20 GUIDANCE ASSUMPTIONS (1) See appendix for Normalized FFO definitions. Ranges exclude certain items as per definition. (2) Includes the interest expense on finance leases. $ IN MILLIONS • Interest expense, net of interest rate caps, based on the forward yield curve ending 2022 at 3.7% • No capital markets activity for the remainder of the year • Acquisition of $25 to $35 million of grocery-anchored retail assets • The Interlock mezzanine loan paid off during the fourth quarter 2022
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) Total occupancy weighted by annualized base rent. Three Months Ended OPERATIONAL METRICS 6/30/2022 3/31/2022 12/31/2021 9/30/2021 Net Income Attributable to Common Stockholders and OP Unitholders $27,752 $9,289 $361 $4,861 Net Income per Diluted Share Attributable to Common Stockholders and OP Unitholders $0.31 $0.11 $0.00 $0.06 Normalized FFO Attributable to Common Stockholders and OP Unitholders 26,203 24,533 21,907 21,518 Normalized FFO per Diluted Share Attributable to Common Stockholders and OP Unitholders $0.30 $0.28 $0.27 $0.26 Stabilized Portfolio Debt / Stabilized Portfolio Adjusted EBITDA 5.5x 5.6x 5.4x 5.8x Fixed charge coverage ratio 2.5x 2.6x 2.3x 2.3x CAPITALIZATION Common Shares Outstanding 67,730 67,695 63,012 61,324 Operating Partnership Units Outstanding 20,621 20,622 20,633 20,853 Common Shares and Operating Partnership Units Outstanding 88,351 88,317 83,645 82,177 Market Price per Common Share(1) $12.84 $14.60 $15.22 $13.37 Common Equity Capitalization 1,134,427 1,289,428 1,273,077 1,098,707 Preferred Equity Capitalization 171,085 171,085 171,085 171,085 Total Equity Capitalization 1,305,512 1,460,513 1,444,162 1,269,792 Total Debt(2) 1,165,108 1,179,296 957,387 1,017,410 Total Capitalization $2,470,620 $2,639,809 $2,401,549 $2,287,202 STABILIZED PORTFOLIO OCCUPANCY(3) Retail 97.1% 96.7% 96.0% 95.2% Office 97.9% 97.3% 96.8% 96.9% Multifamily 97.2% (4) 97.3% (4) 97.4% 97.4% Weighted Average(5) 97.3% 97.1% 96.7% 96.4% STABILIZED PORTFOLIO Commercial Retail Portfolio Net Operating Income $15,940 $15,691 $15,389 $14,853 Number of Properties 37 37 37 38 Net Rentable Square Feet 3,798,868 4,067,360 4,067,355 4,064,391 Office Portfolio Net Operating Income $11,679 $11,379 $7,055 $6,977 Number of Properties 8 8 7 7 Net Rentable Square Feet 1,792,350 1,792,054 1,301,319 1,301,169 Multifamily Multifamily Portfolio Net Operating Income $9,083 $9,492 $9,826 $9,470 Number of Properties 10 12 11 12 Units 2,447 2,447 2,344 2,344 Beds - 615 615 1,183
7 SUMMARY INCOME STATEMENT $ IN THOUSANDS, EXCEPT PER SHARE Three Months Ended Six Months Ended 6/30/2022 6/30/2021 6/30/2022 6/30/2021 Revenues (Unaudited) Rental Revenues $55,224 $47,378 $109,859 $93,119 General Contracting Revenues 45,273 18,408 69,923 53,971 Total Revenues 100,497 65,786 179,782 147,090 Expenses Rental Expenses 12,685 11,292 25,354 22,124 Real Estate Taxes 5,837 5,465 11,241 10,771 General Contracting Expenses 43,418 18,131 67,239 52,406 Depreciation and Amortization 18,781 17,285 37,338 35,351 Amortization of Right-of-Use Assets - Finance Leases 277 278 555 467 General & Administrative Expenses 3,617 3,487 8,325 7,508 Acquisition, Development & Pursuit Costs 26 32 37 103 Impairment Charges 286 83 333 3,122 Total Expenses 84,927 56,053 150,422 131,852 Gain on Real Estate Dispositions 19,493 - 19,493 3,717 Operating Income 35,063 9,733 48,853 18,955 Interest Income 3,352 6,746 6,920 10,862 Interest Expense (9,371) (8,418) (18,402) (16,393) Loss on Extinguishment of Debt (618) - (776) - Change in Fair Value of Derivatives and Other 2,548 314 6,730 707 Provision for Unrealized Credit Losses (295) (388) (900) (333) Other Income 68 7 297 186 Income Before Taxes 30,747 7,994 42,722 13,984 Income Tax Provision 20 461 321 480 Net Income $30,767 $8,455 $43,043 $14,464 Net Loss Attributable to Noncontrolling Interest in Investment Entities (128) - (228) - Preferred Stock Dividends (2,887) (2,887) (5,774) (5,774) Net Income Attributable to AHH and OP Unitholders $27,752 $5,568 $37,041 $8,690 Net Income per Diluted Share and Unit Attributable to AHH and OP Unitholders $0.31 $0.07 $0.42 $0.11 Weighted Average Shares & OP Units - Diluted 88,331 81,262 88,042 80,771
8 SUMMARY BALANCE SHEET $ IN THOUSANDS 6/30/2022 12/31/2021 Assets (Unaudited) Real estate investments: Income producing property $1,791,302 $1,658,609 Held for development 6,294 6,294 Construction in progress 71,676 72,535 Accumulated depreciation (303,032) (285,814) Net real estate investments 1,566,240 1,451,624 Real estate investments held for sale 115,680 80,751 Cash and cash equivalents 69,731 35,247 Restricted cash 6,681 5,196 Accounts receivable, net 32,250 29,576 Notes Receivable 139,383 126,429 Construction Receivables, Including Retentions 29,107 17,865 Costs in Excess of Earnings 493 243 Equity method investments 53,260 12,685 Operating lease right-of-use assets 23,387 23,493 Finance lease right-of-use assets 46,433 46,989 Acquired Intangibles 107,147 62,038 Other assets 75,743 45,927 Total Assets $2,265,535 $1,938,063 Liabilities and Equity Indebtedness, net $1,080,664 $917,556 Liabilities related to assets held for sale 84,049 41,364 Accounts payable and accrued liabilities 22,886 29,589 Construction Payables 47,429 31,166 Billings in Excess 15,075 4,881 Operating lease liabilities 31,645 31,648 Finance lease liabilities 46,325 46,160 Other liabilities 51,126 55,876 Total Liabilities 1,379,199 1,158,240 Total Equity 886,336 779,823 Total Liabilities and Equity $2,265,535 $1,938,063 As Of
9 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 gain on the sale of easement rights a non-operating parcel of $0.3M. (6) Excludes development, redevelopment, and first-generation space. (7) Includes non-cash interest expense relating to indebtedness and interest expense on finance leases. (8) Related to Socastee Commons. Three Months Ended (Unaudited) 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2022 6/30/2021 Funds From Operations Net Income Attributable to AHH and OP Unitholders $27,752 $9,289 $361 $4,861 $37,041 $8,690 Net Income per Diluted Share $0.31 $0.11 $0.00 $0.06 $0.42 $0.11 Depreciation and Amortization(2) 18,509 18,285 16,616 16,886 36,794 35,351 Gain (Loss) on Dispositions of Operating Real Estate(3) (19,493) - (15,442) 113 (19,493) (3,464) (5) Impairment of Real Estate Assets 201 - 18,339 (4) - 201 3,039 (8) FFO $26,969 $27,574 $19,874 $21,860 $54,543 $43,616 FFO per Diluted Share $0.31 $0.31 $0.24 $0.27 $0.62 $0.54 Normalized FFO Acquisition, Development & Other Pursuit Costs 26 11 1 8 37 103 Loss on Extinguishment of Debt 618 158 3,690 120 776 - Non-Cash GAAP Adjustments 657 930 (314) (339) 1,587 883 Change in Fair Value of Derivatives and Other (2,548) (4,182) (1,344) (131) (6,730) (707) Amortization of Interest Rate Cap Premium on Designated Cash Flow Hedges 481 42 59 59 523 117 Normalized FFO 26,203 24,533 $21,966 $21,577 $50,736 $44,012 Normalized FFO per Diluted Share $0.30 $0.28 $0.27 $0.26 $0.58 $0.54 Adjusted FFO Non-Cash Stock Compensation 506 1,609 400 390 2,115 1,440 Acquisition, Development & Other Pursuit Costs (26) (11) (1) (8) (37) (103) Tenant Improvements, Leasing Commissions, Lease Incentives (6) (1,242) (2,873) (1,212) (1,837) (4,115) (2,801) Property-Related Capital Expenditures (2,296) (3,735) (3,145) (3,457) (6,031) (3,278) Adjustment for Mezz Loan Modification and Exit Fees (209) (493) (493) (493) (702) (986) Non-Cash Interest Expense(7) 1,395 1,509 1,272 1,419 2,904 2,203 Cash Ground Rent Payment - Finance Lease (635) (635) (624) (624) (1,270) (1,039) GAAP Adjustments (1,622) (1,490) (666) (645) (3,112) (2,993) AFFO $22,074 $18,414 $17,497 $16,322 $40,488 $36,455 AFFO per Diluted Share $0.25 $0.21 $0.21 $0.20 $0.46 $0.45 Weighted Average Common Shares Outstanding 67,710 67,128 61,646 61,083 67,420 59,918 Weighted Average Operating Partnership Units Outstanding 20,621 20,621 20,634 20,853 20,621 20,853 Total Weighted Average Common Shares and OP Units Outstanding 88,331 87,749 82,280 81,936 88,041 80,771 Six Months Ended (Unaudited)
10 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 6/30/2022. (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) Liabilities(4) Three months ended 6/30/2022 As of 6/30/2022 Office(3) Retail Multifamily Total Mortgages and Notes Payable(5) $1,165,108 Stable Portfolio Accounts Payable and Accrued Liabilities 22,886 Portfolio NOI(1)(2) $11,237 $15,330 $9,084 $35,651 Construction Payables, Including Retentions 47,429 Non-Stabilized Properties NOI (618) - (239) (856) Other Liabilities(5) 64,162 Signed Leases Not Yet Occupied or In Free Rent Period 260 526 7 793 Total Liabilities $1,299,585 Stable Portfolio NOI $10,879 $15,856 $8,852 $35,588 Intra-Quarter Transactions Preferred Equity Net Acquisitons - - - - Liquidation Value Net Dispositions - (224) (77) (301) Series A Cumulative Redeemable Perpetual Preferred Stock $171,085 Annualized $43,517 $62,529 $35,101 $141,146 Non-Stabilized Portfolio Common Equity As of 6/30/2022 As of 6/30/2022 Projects Under Development $68,000 Total Common Shares Outstanding 67,730 Properties in Lease Up 164,000 Total OP Units Outstanding 20,621 Development Opportunities 17,000 Total Common Shares & OP Units Outstanding 88,351 Unconsolidated JV Development 53,000 Total Non-Stabilized Portfolio $302,000 Third-Party General Contracting and Real Estate Services Trailing 12 Months General Contracting Gross Profit $4,955 Non-Property Assets(4) As of 6/30/2022 Cash and Retricted Cash $76,412 Accounts Receivable 32,250 Notes Receivable and Other Notes Receivable(5) 25,716 Preferred Equity / Mezzanine Investments(5) 113,773 Construction Receivables, Including Retentions (5) 29,291 Acquired Lease Intangible Assets, Net 107,147 Other Assets 76,236 Total Non-Property Assets $460,825
11 STABILIZED PORTFOLIO SUMMARY AS OF JUNE 30, 2022 SEE APPENDIX FOR FULL LIST OF PROPERTIES (1) See appendix for definitions and portfolio detail. COMMERCIAL PORTFOLIO Retail Properties - Stabilized # of Properties Net Rentable SF Average Age Occupied SF Occupancy(1) ABR(1) ABR per Occupied SF Town Center of Virginia Beach 9 494,132 16 480,134 97.2% $11,551,435 $24.06 Grocery Anchored 15 1,407,797 12 1,378,584 97.9% 22,681,938 $16.45 Regional Centers 13 1,896,939 17 1,828,271 96.4% 33,923,092 $18.55 Total Retail Portfolio 37 3,798,868 15 3,686,989 97.1% $68,156,465 $18.49 Office Properties - Stabilized # of Properties Net Rentable SF Average Age Occupied SF Occupancy(1) ABR(1) ABR per Occupied SF Town Center of Virginia Beach 4 788,529 20 780,174 98.9% $22,421,901 $28.74 Harbor Point - Baltimore Waterfront 2 754,161 9 740,619 98.2% 22,431,947 30.29 Other 2 249,660 3 233,501 93.5% 6,319,609 27.06 Stabilized Office Total 8 1,792,350 13 1,754,294 97.9% $51,173,457 $29.17 MULTIFAMILY PORTFOLIO Multifamily Properties - Stabilized # of Properties Units Average Age Occupied Units Occupancy(1) AQR (1) Monthly AQR per Occupied Unit Town Center of Virginia Beach 3 759 9 731 96.3% $16,421,297 $1,873 Harbor Point - Baltimore Waterfront 2 392 5 380 97.0% 11,168,943 2,447 Other 5 1,296 8 1,267 97.7% 27,043,282 1,779 Stabilized Multifamily Total 10 2,447 8 2,378 97.2% $54,633,522 $1,915
12 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 6/30/2022 & 6/30/2021, respectively. Three Months Ended Six Months Ended 6/30/2022 6/30/2021 $ Change % Change 6/30/2022 6/30/2021 $ Change % Change Office Revenue $10,371 $10,290 $81 0.8% $20,546 $20,500 $46 0.2% Rental Expenses(1) 2,382 2,233 149 6.7% 4,630 4,423 207 4.7% Real Estate Taxes 1,315 1,294 21 1.6% 2,629 2,588 41 1.6% Net Operating Income $6,674 $6,763 ($89) -1.3% $13,287 $13,489 ($202) -1.5% GAAP Adjustments (122) (368) 246 (124) (645) 521 Net Operating Income, Cash $6,552 $6,395 $157 2.5% $13,163 $12,844 $319 2.5% Retail Revenue $19,736 $18,686 $1,050 5.6% $36,422 $34,063 $2,359 6.9% Rental Expenses(1) 2,867 2,713 154 5.7% 5,340 4,820 520 10.8% Real Estate Taxes 2,116 2,144 (28) -1.3% 3,901 3,917 (16) -0.4% Net Operating Income $14,753 $13,829 $924 6.7% $27,181 $25,326 $1,855 7.3% GAAP Adjustments (856) (898) 42 (931) (1,220) 289 Net Operating Income, Cash $13,897 $12,931 $966 7.5% $26,250 $24,106 $2,144 8.9% Multifamily Revenue $10,958 $10,131 $827 8.2% $21,679 $19,775 $1,904 9.6% Rental Expenses(1) 3,110 3,060 50 1.6% 6,127 6,015 112 1.9% Real Estate Taxes 975 962 13 1.4% 1,980 1,931 49 2.5% Net Operating Income $6,873 $6,109 $764 12.5% $13,572 $11,829 $1,743 14.7% GAAP Adjustments (208) (182) (26) (426) (366) (60) Net Operating Income, Cash $6,665 $5,927 $738 12.5% $13,146 $11,463 $1,683 14.7% Same Store NOI $28,300 $26,701 $1,599 6.0% $54,040 $50,644 $3,396 6.7% GAAP Adjustments (1,186) (1,448) 262 (1,481) (2,231) 750 $27,114 $25,253 $1,861 7.4% $52,559 $48,413 $4,146 8.6%Same Store Portfolio NOI, Cash Basis
13 DEBT TO ADJUSTED EBITDA $ IN THE THOUSANDS SEE APPENDIX FOR DEFINITIONS, CALCULATIONS, AND RECONCILIATIONS (1) Includes income and debt related to development, mezzanine, construction, and other ancillary activities outside of our stabilized portfolio. (2) Total notes payable less GAAP adjustments, cash, restricted cash, and other notes payable. 8.3 x 7.2 x 5.5 x 0.0 x 1.0 x 2.0 x 3.0 x 4.0 x 5.0 x 6.0 x 7.0 x 8.0 x 9.0 x Net Debt + Preferred/ Total Adjusted EBITDA Plus Ancillary Debt/ Total Adjusted EBITDA⁽¹⁾ Stabilized Portfolio Debt/ Stabilized Portfolio Adjusted EBITDA Three months ended 6/30/2022 Stabilized Portfolio Adjusted EBITDA $34,883 Stabilized Portfolio Debt $768,852 Stabilized Portfolio Debt / Stabilized Portfolio Adjusted EBITDA 5.5x Total Adjusted EBITDA(1) $37,982 Net Debt(2) $1,088,696 Net Debt Plus Ancillary Debt/Total Adjusted EBITDA 7.2x Net Debt + Preferred $1,259,781 Net Debt + Preferred /Total Adjusted EBITDA 8.3x
14 DEBT MANAGEMENT(1) $ IN THOUSANDS (1) Includes debt on held for sale properties. (2) Includes impact of non-designated interest rate caps. (3) Excludes debt subject to interest rate swap locks. (4) Includes debt subject to interest rate swap locks. (5) Excludes GAAP adjustments. (6) Part of Management’s blend and extend transaction executed subsequent to quarter end. (7) Represents a hedging corridor. Total Debt Composition(2) Weighted Average % of Debt Interest Rate Maturity Variable vs. Fixed-rate Debt Variable-Rate Debt(3) 55.5% 2.7% 3.5 Yrs Fixed-Rate Debt(4)(5) 44.5% 3.4% 6.9 Yrs Secured vs. Unsecured Debt Unsecured Debt 24.6% 2.8% 2.3 Yrs Secured Debt 75.4% 3.1% 5.8 Yrs Total 3.0% 5.0 Yrs Interest Rate Cap Agreements At or Below 3.00% Effective Date Maturity Date Strike Rate Notional Amount February 2021 February 2023 LIBOR 0.50% $100,000 March 2021 April 2023 LIBOR 2.50% 14,479 November 2020 November 2023 SOFR 1.84% 84,375 July 2022(6) January 2024 SOFR 1.00%-3.00%(7) 85,100 April 2022 February 2024 BSBY 1.00%-3.00%(7) 175,000 July 2022(6) March 2024 SOFR 1.00%-3.00%(7) 200,000 Total Interest Rate Caps $658,954 Fixed-Rate Debt(4)(5) $518,222 Fixed-Rate and Hedged Debt $1,177,176 Total Debt(5) $1,165,108 % Fixed or Hedged 100%
15 OUTSTANDING DEBT $ IN THOUSANDS (1) Excludes non-designated interest rate caps. (2) Includes debt subject to interest rate swap locks. (3) Subject to a rate floor. (4) Includes debt subject to designated interest rate caps. (5) Held for sale as of 6/30/22. Disposed subsequent to quarter end. Debt Stated Rate Effective Rate of as 6/30/2022(1) Maturity Date 2022 2023 2024 2025 2026 Thereafter Outstanding as of 6/30/2022 Secured Notes Payable - Stabilized Debt Marketplace at Hilltop 4.42% 4.42% Oct-2022 $9,492 $9,492 1405 Point L+2.25% 4.04% Jan-2023 382 51,532 51,914 249 Central Park Retail L+1.60% 3.85% (2) Aug-2023 134 16,092 16,226 Fountain Plaza Retail L+1.60% 3.85% (2) Aug-2023 81 9,684 9,765 South Retail L+1.60% 3.85% (2) Aug-2023 59 7,065 7,124 One City Center L+1.85% 3.64% Apr-2024 335 691 22,734 23,760 Red Mill Central 4.80% 4.80% Jun-2024 87 175 1,838 2,100 Premier Apartments L+1.55% 3.34% Oct-2024 111 234 16,054 16,399 Premier Retail L+1.55% 3.34% Oct-2024 55 115 7,907 8,077 Red Mill South 3.57% 3.57% May-2025 165 338 351 4,502 5,356 Brooks Crossing Office L+1.60% 3.39% Jul-2025 132 273 281 13,945 14,631 Market at Mill Creek L+1.55% 3.34% Jul-2025 324 647 647 11,200 12,818 Encore Apartments 2.93% 2.93% Feb-2026 271 556 573 590 22,263 24,253 4525 Main Street 2.93% 2.93% Feb-2026 348 714 735 757 28,579 31,133 Thames Street Wharf BSBY+1.30% 2.35% (2) Sep-2026 717 1,433 1,972 3,050 62,872 70,044 Exelon Building BSBY+1.50% 1.00% (3)(4) Nov-2026 - - - - 175,000 175,000 Southgate Square L+1.90% 3.69% (3) Dec-2026 201 415 428 447 25,165 26,656 Nexton Square SOFR+1.95% 3.45% (3) Jun-2027 286 589 607 631 653 19,734 22,500 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 142 293 306 320 335 12,638 14,034 Red Mill North 4.73% 4.73% Dec-2028 56 116 121 127 133 3,582 4,135 Greenside Apartments 3.17% 3.17% Dec-2029 369 759 780 808 834 28,682 32,232 The Residences at Annapolis Junction(5) SOFR+2.66% 4.16% (4) Nov-2030 - 147 1,753 1,809 1,860 78,806 84,375 Smith's Landing 4.05% 4.05% Jun-2035 462 956 994 1,037 1,081 11,467 15,997 Liberty Apartments 5.66% 5.66% Nov-2043 163 341 361 382 404 11,763 13,414 Edison Apartments 5.30% 5.30% Dec-2044 184 384 405 427 450 13,897 15,747 The Cosmopolitan 3.35% 3.35% Jul-2051 427 876 906 937 968 37,556 41,670 Total - Secured Stabilized Debt 15,043 94,796 60,138 41,368 321,012 236,495 768,852 Secured Notes Payable - Development Pipeline Wills Wharf L+2.25% 4.04% Jun-2023 - 64,288 64,288 Chronicle Mill L+3.00% 4.79% (3) May-2024 - - 14,640 14,640 Gainesville Apartments L+3.00% 4.79% (3) Aug-2024 - - 30,328 30,328 Total - Development Pipeline - 64,288 44,968 - - - 109,256 Total Secured Notes Payable 15,043 159,084 105,106 41,368 321,012 236,495 878,108 Unsecured Stabilized Debt Senior Unsecured Line of Credit L+1.30%-1.85% 3.29% Jan-2024 - - 82,000 82,000 Senior Unsecured Term Loan L+1.25%-1.80% 3.24% Jan-2025 - - - 19,500 19,500 Senior Unsecured Term Loan L+1.25%-1.80% 1.95%-4.47% (2) Jan-2025 - - - 185,500 185,500 Total - Unsecured Stabilized Debt - - 82,000 205,000 - - 287,000 Total Notes Payable Excluding GAAP Adjustments $15,043 $159,084 $187,106 $246,368 $321,012 $236,495 $1,165,108 Other Notes Payable 9,204 GAAP Adjustments (9,599) Notes Payable Relating to Held for Sale Properties (84,049) Total Notes Payable $1,080,664 Debt Maturities & Principal Payments
16 CAPITALIZATION & FINANCIAL RATIOS $ IN THOUSANDS AS OF JUNE 30, 2022 (1) As of close of market 6/30/22. (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. (4) Excludes availability under construction loans. Debt % of Total Principal Balance Unsecured Credit Facility 7% $82,000 Unsecured Term Loans 18% 205,000 Mortgages Payable 75% 878,108 Total Debt $1,165,108 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% 67,730 $12.84 $869,653 Operating Partnership Units 23% 20,621 $12.84 264,774 Equity Market Capitalization 88,351 $1,134,427 Total Capitalization $2,470,620 Financial Ratios Debt Service Coverage Ratio(2) 3.1x Fixed Charge Coverage Ratio(3) 2.5x Stabilized Portfolio Debt / Stabilized Portfolio Adjusted EBITDA 5.5x Stabilized Portfolio Debt Plus Ancillary Debt / Total Adjusted EBITDA 7.2x Net Debt + Preferred / Total Adjusted EBITDA 8.3x Debt/Total Capitalization 47% Liquidity(4) Unencumbered Properties Cash on hand $69,731 % of Total Properties 58% Availability Under Credit Facility 68,000 % of Annualized Base Rent 35% Total Liquidity $137,731 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock (NYSE: AHHPrA) Debt 47% Equity 46% Preferred 7%
17 ACTIVE DEVELOPMENT PROJECTS $ 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. T. Rowe Price/ Parcel 4 Baltimore, MD Chronicle Mill Belmont, NC 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 Chronicle Mill Belmont, NC Multifamily 244 units / 14,700 sf - 1Q21 3Q22 4Q23 $56,500 $35,100 $44,000 85% (3) Southern Post Roswell, GA Mixed-use 137 units / 137,000 sf - 4Q21 4Q23 4Q24 118,000 TBD 24,000 100% Unconsolidated JV Developments Total Projects Under Development $174,500 $35,100 $68,000 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 T. Rowe Price Global HQ Baltimore, MD Office 535,900 sf office / 40,500 sf retail / 250 parking spaces 93% 2Q22 1Q24 2Q24 $258,000 $39,000 $34,000 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 223,000 100,000 19,000 90% Total Unconsolidated JV Development $481,000 $139,000 $53,000 Q2 2022 Year to Date Capitalized Interest $738 $1,093 Capitalized Overhead $749 $1,326 Schedule(1)
18 PROPERTIES IN LEASE UP $ IN THOUSANDS (1) Represents estimates that may change as the development and stabilization process proceeds. (2) First fully-stabilized quarter. See same store definition in appendix. (3) Majority interest in joint venture with preferred return. 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 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, Franklin Templeton Gainesville Apartments Gainesville, GA Multifamily 223 units 98% 3Q20 1Q22 3Q22 52,000 31,000 50,000 95% (3) Total Properties in Lease Up $172,000 $107,000 $164,000 Schedule(1) Gainesville Apts Gainesville, GA
19 PREFERRED INVESTMENTS/MEZZANINE $ IN THOUSANDS AS OF JUNE 30, 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(1) 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% $80,712 $2,361 Solis Nexton(3) Summerville, SC Multifamily 320 units NA 4Q22 4Q26 11% 24,853 672 Solis City Park(3) Charlotte, NC Multifamily 250 units NA 3Q23 1Q28 13% 8,208 206 Total $113,773 $3,239 The Interlock Atlanta, GA
20 THIRD-PARTY CONSTRUCTION $ IN THOUSANDS Adams Hill Greenville, SC Q2 2022 Q1 2022 Q4 2021 Q3 2021 Trailing 4 Quarters Revenue $45,273 $24,650 $20,463 $17,502 $107,888 Expense (43,418) (23,821) (19,750) (15,944) (102,933) Gross Profit $1,855 $829 $713 $1,558 $4,955 Operating Margin 4.1% 3.4% 3.5% 8.9% 4.6% Third-Party Backlog as of Q2 2022 Beginning Backlog $419,439 New Contracts 167,143 QTD Work Performed (45,368) Ending Backlog $541,214
21 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. (3) Closed subsequent to quarter end. 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 Total/Weighted Average 894,075 / 277 units $363,550 6.3% DISPOSITIONS Properties Location Square Feet/Units/Beds Sale Price Cash Cap Rate Disposition Date Anchor Tenants 2022 275,896 / 1,031 units/beds $258,261 4.3% Sandbridge Outparcels(3) Virginia Beach, VA 7,233 3,455 4.5% 3Q22 Autozone, Valvoline Annapolis Junction(3) Annapolis Junction, MD 416 units 150,000 4.2% 3Q22 North Pointe Outparcels Durham, NC 268,663 23,931 4.0% 2Q22 Costco, Home Depot Summit Place Charleston, SC 357 beds 37,800 4.8% 2Q22 Hoffler Place Charleston, SC 258 beds 43,075 4.1% 2Q22 2021 128,105 / 568 beds $90,265 5.2% Johns Hopkins Village Baltimore, MD 568 beds 75,000 5.6% 4Q21 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 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 1,049,601 / 1,599 units/beds $445,826 5.2%
22 TOP 20 TENANTS BY ABR(1) $ IN THOUSANDS AS OF JUNE 30, 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 (Constellation) 1 2036 $14,149 8.1% Morgan Stanley(2) 1 2027 5,817 3.3% Harris Teeter/Kroger 6 2023 - 2035 3,740 2.1% Clark Nexsen 1 2029 2,746 1.6% ABR WeWork 1 2034 2,122 1.2% Lowes Foods 2 2037 ; 2039 1,976 1.1% Duke University 1 2029 1,659 1.0% 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 0.9% TJ Maxx/Homegoods 5 2023 - 2027 1,504 0.9% 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 0.7% 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 0.6% Top 20 Total $48,483 27.8%
23 LEASE SUMMARY (1) Excludes leases from properties in development. OFFICE Renewals For GAAP and Cash Releasing Spread Calc: Quarter Number of Leases Signed Net Rentable SF Signed GAAP Releasing Spread Cash Releasing Spread Wtd Average Lease Term Remaining (yrs) TI & LC TI & LC per SF Q2 2022 3 7,654 13.1% 3.0% 4.6 $14,127 $1.85 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 Trailing 4 Quarters 10 55,306 9.9% -0.6% 5.0 $852,609 $15.42 New Leases(1) Quarter Number of Leases Signed Net Rentable SF Signed Cash Rent per SF Wtd Average Lease Term Remaining (yrs) TI & LC TI & LC per SF Q2 2022 4 18,884 $24.20 6.2 $595,169 $31.52 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 Trailing 4 Quarters 10 36,614 $25.75 6.5 $1,465,981 $40.04 RETAIL Renewals For GAAP and Cash Releasing Spread Calc: Quarter Number of Leases Signed Net Rentable SF Signed GAAP Releasing Spread Cash Releasing Spread Wtd Average Lease Term Remaining (yrs) TI & LC TI & LC per SF Q2 2022 20 217,381 9.9% 3.5% 7.5 $416,696 $1.92 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 Trailing 4 Quarters 68 586,841 10.7% 5.0% 6.3 $920,658 $1.57 New Leases(1) Quarter Number of Leases Signed Net Rentable SF Signed Cash Rent per SF Wtd Average Lease Term Remaining (yrs) TI & LC TI & LC per SF Q2 2022 11 40,190 $18.62 8.2 $1,248,190 $31.06 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 Trailing 4 Quarters 43 156,176 $19.78 8.1 $5,167,653 $33.09
24 LEASE EXPIRATIONS(1) AS OF JUNE 30, 2022 (1) Excludes leases from properties in development and delivered, but not yet stabilized. OFFICE Year Leases Expiring Square Footage Expiring % Portfolio Net Rentable Square Feet ABR % of Portfolio ABR Available - 38,056 2.1% -$ - M-T-M 2 1,623 0.1% 63,329 0.1% 2022 5 7,332 0.4% 192,684 0.4% 2023 11 91,174 5.1% 2,545,424 5.0% 2024 14 150,495 8.4% 3,652,517 7.1% 2025 18 146,092 8.2% 4,494,673 8.8% 2026 11 54,355 3.0% 1,457,227 2.8% 2027 16 316,397 17.7% 9,168,884 17.9% 2028 12 97,673 5.4% 2,799,877 5.5% 2029 11 261,014 14.6% 6,958,513 13.6% 2030 8 110,690 6.2% 3,257,784 6.4% 2031 2 5,317 0.3% 114,285 0.2% 2032 3 6,214 0.3% 197,335 0.4% Thereafter 2 505,918 28.2% 16,270,925 31.8% Total / Weighted Average 115 1,792,350 100.0% $51,173,457 100.0% RETAIL Year Leases Expiring Square Footage Expiring % Portfolio Net Rentable Square Feet ABR % of Portfolio ABR Available - 111,879 2.9% -$ - M-T-M 4 53,955 1.4% 484,879 0.7% 2022 14 29,123 0.8% 729,939 1.1% 2023 63 303,499 8.0% 6,038,204 8.9% 2024 85 437,029 11.5% 8,211,408 12.0% 2025 90 496,298 13.1% 8,700,521 12.8% 2026 78 389,330 10.2% 7,702,014 11.3% 2027 68 442,998 11.7% 8,043,281 11.8% 2028 35 130,802 3.4% 3,192,659 4.7% 2029 31 116,301 3.1% 2,484,091 3.6% 2030 43 250,210 6.6% 5,569,135 8.2% 2031 29 218,696 5.8% 4,262,704 6.3% 2032 25 304,316 8.0% 4,910,476 7.2% Thereafter 22 514,432 13.5% 7,827,154 11.4% Total / Weighted Average 587 3,798,868 100.0% $68,156,465 100.0%
25Town Center Virginia Beach, VA APPENDIX DEFINITIONS & RECONCILIATIONS
26 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 June 30, 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 June 30, 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. 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.
27 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. 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
28 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. PROPERTY/STABILIZED PROPERTY ADJUSTED EBITDA: We calculate Property Adjusted EBITDA as EBITDA coming solely from our operating properties. When referring to Stabilized Property Adjusted EBITDA, we exclude 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 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. 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. Management believes that Stabilized Property 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 Property Adjusted EBITDA or similarly titled measures.
29 DEFINITIONS STABILIZED PROPERTY DEBT: We calculate Stabilized Property Debt as our total debt secured by our stabilized properties, excluding loans associated with our development pipeline and our unsecured line of credit. 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. 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.
30 PROPERTY PORTFOLIO AS OF JUNE 30, 2022 (1) See appendix for definitions. (2) The Company leases all or a portion of the land underlying this property pursuant to a ground lease. Retail Properties - Stabilized Location Year Built / Redeveloped Net Rentable SF Occupancy(1) ABR(1) ABR per Occupied SF(1) Anchor Tenant(s) Town Center of Virginia Beach 249 Central Park Retail Virginia Beach, VA 2004 92,571 98.1% $2,483,563 $27.35 Cheesecake Factory, Brooks Brothers Apex Entertainment Virginia Beach, VA 2002/2020 103,335 100.0% 1,545,919 14.96 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% 1,075,160 12.07 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% 1,000,503 25.98 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 95.7% $2,176,851 $18.72 Food Lion, PetSmart Broadmoor Plaza South Bend, IN 1980 115,059 98.2% 1,353,725 11.98 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% 2,994,709 34.34 Whole Foods Greenbrier Square Chesapeake, VA 2017 260,710 95.4% 2,486,750 10.00 Kroger, Homegoods, Dick's Sporting Goods Greentree Shopping Center Chesapeake, VA 2014 15,719 92.6% 325,080 22.33 Various Small Shops (grocery shadow) Hanbury Village Chesapeake, VA 2009 98,638 100.0% 1,997,031 20.25 Harris Teeter Lexington Square Lexington, SC 2017 85,440 98.3% 1,849,156 22.01 Lowes Foods Market at Mill Creek Mt. Pleasant, SC 2018 80,319 97.7% 1,836,020 23.39 Lowes Foods North Pointe Center Durham, NC 2009 226,083 100.0% 2,920,109 12.92 Harris Teeter Parkway Centre Moultrie, GA 2017 61,200 100.0% 850,761 13.90 Publix Parkway Marketplace Virginia Beach, VA 1998 37,804 100.0% 773,526 20.46 Rite Aid (grocery shadow) Perry Hall Marketplace Perry Hall, MD 2001 74,256 98.0% 1,244,298 17.10 Safeway Sandbridge Commons Virginia Beach, VA 2015 76,650 100.0% 1,095,352 14.29 Harris Teeter Tyre Neck Harris Teeter(2) Portsmouth, VA 2011 48,859 100.0% 559,948 11.46 Harris Teeter Regional Centers Dimmock Square Colonial Heights, VA 1998 106,166 79.0% $1,549,965 $18.47 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% 2,722,215 23.28 Total Wine, Panera, Chick-Fil-A Nexton Square Summerville, SC 2020 133,608 100.0% 3,472,955 25.99 Various Small Shops North Hampton Market Taylors, SC 2004 114,954 97.9% 1,498,710 13.32 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 96.1% 2,403,869 15.55 BB&B, PetSmart, DSW Providence Plaza Charlotte, NC 2008 103,118 90.5% 2,744,018 29.39 Cranfill, Sumner & Hartzog, Chipotle Red Mill Commons Virginia Beach, VA 2005 373,808 95.3% 6,808,844 19.12 Homegoods, Walgreens Southgate Square Colonial Heights, VA 2016 260,131 98.6% 3,672,801 14.32 Burlington, PetSmart, Michaels, Conn's South Square Durham, NC 2005 109,590 100.0% 1,982,585 18.09 Ross, Petco, Office Depot Southshore Shops Chesterfield, VA 2006 40,307 88.9% 739,797 20.64 Buffalo Wild Wings Wendover Village Greensboro, NC 2004 176,997 98.8% 3,415,140 19.54 T.J. Maxx, Petco, Beauty World Total Retail Portfolio 3,798,868 97.1% $68,156,465 $18.49
31 PROPERTY PORTFOLIO CONT. AS OF JUNE 30, 2022 (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 occupies 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, Edison, and 1405 Point excludes approximately $0.2M, $1.0M, $0.3M and $0.4M, respectively, from ground floor retail leases. (5) Sold subsequent to quarter end. Office Properties- Stabilized Location Net Rentable SF Year Built Occupancy(1) ABR(1) ABR per Occupied SF Anchor Tenant(s) 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 98.7% 9,367,856 30.04 AHH, Troutman Pepper, Williams Mullen One Columbus Virginia Beach, VA 129,066 1984 98.3% 3,230,695 25.46 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% $14,789,914 $30.99 Exelon Constellation Thames Street Wharf(3) Baltimore, MD 263,426 2010 100.0% 7,642,032 29.01 Morgan Stanley, JHU Medical Other Brooks Crossing Office Newport News, VA 98,061 2019 100.0% $1,925,168 $19.63 Huntington Ingalls Industries One City Center Durham, NC 151,599 2019 89.3% 4,394,441 32.45 Duke University, WeWork Stabilized Office Total 1,792,350 97.9% $51,173,457 $29.17 Multifamily Properties- Stabilized Location Units Year Built / Redeveloped Occupancy(1) AQR (1) Monthly AQR per Occupied Unit Town Center of Virginia Beach Encore Apartments Virginia Beach, VA 286 2014 97.1% $5,416,728 $1,625 Premier Apartments Virginia Beach, VA 131 2018 97.2% 2,740,703 1,794 The Cosmopolitan(4) Virginia Beach, VA 342 2006/2020 95.2% 8,263,866 2,115 Harbor Point - Baltimore Waterfront 1405 Point(2)(4) Baltimore, MD 289 2018 96.9% $8,302,788 $2,471 1305 Dock Street Baltimore, MD 103 2016 97.4% 2,866,155 2,381 Other Edison Apartments(4) Richmond, VA 174 2014 98.7% $3,033,824 $1,472 Greenside Apartments Charlotte, NC 225 2018 97.8% 4,453,731 1,687 Liberty Apartments(4) Newport News, VA 197 2013 94.8% 3,296,993 1,471 Smith's Landing(2) Blacksburg, VA 284 2009 98.7% 5,520,964 1,641 The Residences at Annapolis Junction(5) Annapolis Junction, MD 416 2018 98.0% 10,737,770 2,195 Multifamily Total 2,447 97.2% $54,633,522 $1,915
32 $ IN THOUSANDS RECONCILIATION OF DEBT & EBITDA (1) Excludes GAAP adjustments. Three Months Ended 6/30/2022 3/31/2022 12/31/2021 9/30/2021 Property Net Operating Income $36,702 $36,562 $32,270 $31,301 Property Other Income (Expense), Net (190) 104 (74) (185) Amortization of Right of Use Assets (277) (278) (278) (278) Impairment of Intangible Assets and Liabilities (85) (47) 83 - Property Adjusted EBITDA $36,150 $36,341 $32,001 $30,838 Acquisition - 826 - 598 Disposition (496) - (730) - Development (771) (674) (681) (725) Stabilized Portfolio Adjusted EBITDA $34,883 $36,493 $30,590 $30,711 Construction Gross Profit 1,855 829 713 1,558 Corporate G&A (3,446) (4,552) (3,482) (3,263) Non-Cash Stock Comp 506 1,609 400 390 Acquisition, Development & Other Pursuit Costs (26) (11) (1) (8) Interest Income 3,350 3,568 3,829 3,765 Other Income (Expense), Net 89 (31) 5 15 Add Back: Unstabilized Development 771 674 681 725 Total Adjusted EBITDA $37,982 $38,579 $32,735 $33,893 Stabilized Portfolio Debt $768,852 $812,703 $664,985 $710,036 Stabilized Portfolio Debt / Stabilized Portfolio Adjusted EBITDA 5.5x 5.6x 5.4x 5.8x Total Debt(1) 1,165,108 1,179,296 957,387 1,017,410 Cash (76,412) (39,486) (40,443) (33,453) Net Debt $1,088,696 $1,139,810 $916,944 $983,957 Net Debt Plus Ancillary Debt/Total Adjusted EBITDA 7.2x 7.4x 7.0x 7.3x Preferred 171,085 171,085 171,085 171,085 Net Debt + Preferred $1,259,781 $1,310,895 $1,088,029 $1,155,042 Net Debt + Preferred /Total Adjusted EBITDA 8.3x 8.5x 8.3x 8.5x
33 QUARTER TO DATE(1) $ IN THOUSANDS AS OF JUNE 30, 2022 CAPITAL EXPENDITURES (1) Excludes activity related to held for sale, acquired and/or disposed properties. YEAR TO DATE(1) Leasing Commissions Lease Incentive Tenant Improvements Land Improvements Building Improvements Furniture Fixtures & Equipment Total Second Generation Capex Retail $423 - $258 $194 $575 - $1,450 Office 201 - 360 - 197 - 758 Multifamily - - - 68 765 496 1,329 Total Portfolio $624 - $618 $262 $1,537 $496 $3,537 Leasing Commissions Lease Incentive Tenant Improvements Land Improvements Building Improvements Furniture Fixtures & Equipment Total Second Generation Capex Retail $957 - $1,845 $428 $2,556 - $5,786 Office 312 - 787 - 799 - 1,898 Multifamily 2 - 211 117 1,403 727 2,460 Total Portfolio $1,271 - $2,843 $545 $4,758 $727 $10,144
34 RECONCILIATION TO PROPERTY PORTFOLIO NOI $ IN THOUSANDS (1) Includes expenses associated with the Company’s in-house asset management division. Three months ended 6/30 Six Months Ended 6/30 2022 2021 2022 2021 Office Same Store Rental revenues $10,371 $10,290 $20,546 $20,500 Property expenses 3,697 3,527 7,259 7,011 NOI 6,674 6,763 13,287 13,489 Non-Same Store NOI(1) 5,005 642 9,771 1,318 Segment NOI $11,679 $7,405 $23,058 $14,807 Retail Same Store Rental revenues $19,736 $18,686 $36,422 $34,063 Property expenses 4,983 4,857 9,241 8,737 NOI 14,753 13,829 27,181 25,326 Non-Same Store NOI(1) 1,187 182 4,450 2,077 Segment NOI $15,940 $14,011 $31,631 $27,403 Multifamily Same Store Rental revenues $10,958 $10,131 $21,679 $19,775 Property expenses 4,085 4,022 8,107 7,946 NOI 6,873 6,109 13,572 11,829 Non-Same Store NOI(1) 2,210 3,096 5,003 6,185 Segment NOI $9,083 $9,205 $18,575 $18,014 Total Property Portfolio NOI $36,702 $30,621 $73,264 $60,224
35 RECONCILIATION TO GAAP NET INCOME $ IN THOUSANDS Office Retail Multifamily Total Rental Properties General Contracting & Real Estate Services Total Segment revenues 18,314$ 21,544$ 15,366$ 55,224$ 45,273$ 100,497$ Segment expenses 6,635 5,604 6,283 18,522 43,418 61,940 Net operating income 11,679$ 15,940$ 9,083$ 36,702$ 1,855$ 38,557$ Depreciation and amortization (18,781) General and administrative expenses (3,617) Acquisition, development and other pursuit costs (26) Impairment charges (286) Gain (loss) on real estate dispositions 19,493 Interest income 3,352 Interest expense (9,371) Loss on extinguishment of debt (618) Unrealized credit loss release (provision) (295) Amortization of right-of-use assets - finance leases (277) Change in fair value of derivatives and other 2,548 Other income (expense) 68 Income tax benefit 20 Net income 30,767$ Net loss (income) attributable to noncontrolling interest in investment entities (128) Preferred stock dividends (2,887) Net income attributable to AHH and OP unitholders 27,752$ Six Months Ended 6/30/2022 Office Retail Multifamily Total Rental Properties General Contracting & Real Estate Services Total Segment revenues 35,337$ 42,974$ 31,548$ 109,859$ 69,923$ 179,782$ Segment expenses 12,279 11,343 12,973 36,595 67,239 103,834 Net operating income 23,058$ 31,631$ 18,575$ 73,264$ 2,684$ 75,948$ Depreciation and amortization (37,338) General and administrative expenses (8,325) Acquisition, development and other pursuit costs (37) Impairment charges (333) Gain (loss) on real estate dispositions 19,493 Interest income 6,920 Interest expense (18,402) Unrealized credit loss release (provision) (900) Amortization of right-of-use assets - finance leases (555) Loss on extinguishment of debt (776) Change in fair value of derivatives and other 6,730 Other income (expense) 297 Income tax benefit 321 Net income 43,043$ Net loss attributable to noncontrolling interest in investment entities (228) Preferred stock dividends (5,774) Net income attributable to AHH and OP unitholders 37,041$ Three Months Ended 6/30/2022
36 RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA $ IN THOUSANDS Three Months Ended 6/30/2022 3/31/2022 12/31/2021 9/30/2021 Net income attributable to common stockholders and OP unitholders $27,752 $9,289 $361 $4,861 Excluding: Depreciation and amortization 18,781 18,557 16,616 16,886 Loss (gain) on real estate dispositions (19,493) - (15,436) 113 Impairment of real estate assets 201 - 18,339 - Income tax provision (benefit) (20) (301) (220) (42) Interest expense 9,371 9,031 8,685 8,827 Change in fair value of derivatives and other (2,548) (4,182) (1,344) (131) Preferred dividends 2,887 2,887 2,887 2,887 Loss on extinguishment of debt 618 158 3,690 120 Unrealized credit loss provision (release) 295 605 (508) (617) Investment Entities 128 100 (5) - Non-cash stock compensation 506 1,609 400 390 Adjusted EBITDA $38,478 $37,753 $33,465 $33,294 Dispositions (496) - (730) - Acquisitions (full quarter) - 826 - 599 Total Adjusted EBITDA $37,982 $38,579 $32,735 $33,893 Construction Gross Profit (1,855) (829) (713) (1,558) Corporate G&A 3,446 4,552 3,482 3,263 Non-Cash Stock Comp (506) (1,609) (400) (390) Acquisition, Development & Other Pursuit Costs 26 11 1 8 Interest income (3,350) (3,568) (3,829) (3,765) Other income (expense), net (89) 31 (5) (15) Add Back: Unstabilized Development (771) (674) (681) (725) Stabilized Portfolio Adjusted EBITDA $34,883 $36,493 $30,590 $30,711 Acquisition - (826) - (598) Disposition 496 - 730 - Development 771 674 681 725 Property Adjusted EBITDA $36,150 $36,341 $32,001 $30,838