UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 3, 2016
ARMADA HOFFLER PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
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Maryland |
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001-35908 |
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46-1214914 |
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(State or other jurisdiction |
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(Commission File Number) |
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(IRS Employer |
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222 Central Park Avenue, Suite 2100 |
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Virginia Beach, Virginia |
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23462 |
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(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (757) 366-4000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On May 3, 2016, Armada Hoffler Properties, Inc. (the “Company”) issued a press release announcing its financial position as of March 31, 2016, results of operations for the three months ended March 31, 2016 and other related information. Also on May 3, 2016, the Company made available on its website at www.ArmadaHoffler.com certain supplemental information concerning the Company’s financial results and operations for the three months ended March 31, 2016. Copies of such press release and supplemental information are furnished as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
In accordance with General Instructions B.2 and B.6 of Form 8-K, the information included in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company under the Exchange Act or Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
The disclosure contained in Item 2.02 is incorporated herein by reference.
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Item 9.01. |
Financial Statements and Exhibits. |
(d) Exhibits.
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Exhibit |
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Description |
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99.1 |
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Press Release, dated May 3, 2016, issued by Armada Hoffler Properties, Inc., providing its financial position as of March 31, 2016 and results of operations for the three months ended March 31, 2016. |
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99.2 |
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Armada Hoffler Properties, Inc. First Quarter 2016 Supplemental Information. |
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.
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ARMADA HOFFLER PROPERTIES, INC. | |
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Date: May 3, 2016 |
/s/ MICHAEL P. O’HARA | |
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Michael P. O’Hara | |
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Chief Financial Officer and Treasurer | |
EXHIBIT INDEX
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Exhibit |
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Description |
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99.1 |
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Press Release, dated May 3, 2016, issued by Armada Hoffler Properties, Inc., providing its financial position as of March 31, 2016 and results of operations for the three months ended March 31, 2016. |
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99.2 |
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Armada Hoffler Properties, Inc. First Quarter 2016 Supplemental Information. |
Exhibit 99.1
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PRESS RELEASE |
ARMADA HOFFLER PROPERTIES REPORTS FIRST QUARTER 2016 RESULTS
Normalized FFO of $0.25 Per Diluted Share
Core Operating Property Portfolio at 94.7% Occupancy
Company Raised 2016 Full-Year Normalized FFO Guidance
VIRGINIA BEACH, VA, May 3, 2016 – Armada Hoffler Properties, Inc. (NYSE: AHH) today announced its results for the quarter ended March 31, 2016.
Highlights include:
· Normalized Funds From Operations (“FFO”) of $11.6 million, or $0.25 per diluted share, for the quarter ended March 31, 2016 compared to Normalized FFO of $7.4 million, or $0.19 per diluted share, for the quarter ended March 31, 2015.
· FFO of $8.4 million, or $0.18 per diluted share, for the quarter ended March 31, 2016 compared to FFO of $6.8 million, or $0.17 per diluted share, for the quarter ended March 31, 2015.
· Same Store Net Operating Income (“NOI”) for the quarter ended March 31, 2016 up 2.2% on a GAAP basis and 3.8% on a cash basis compared to the quarter ended March 31, 2015.
· Core operating property portfolio occupancy at 94.7% compared to 95.6% as of March 31, 2015.
· Completed the sale of the Richmond Tower office building for $78 million and reinvested the net proceeds, along with the net proceeds from the fourth quarter 2015 sale of the Oceaneering International building, into a $170.5 million retail property portfolio totaling 1.1 million square feet across 11 assets. The Company recognized a gain on the Richmond Tower sale of $26 million in the first quarter of 2016.
· Entered into a joint venture agreement as a minority partner to develop One City Center, a mixed-use project located in Durham, North Carolina. Upon completion, the Company will exit the joint venture and retain ownership of 150,000 square feet of retail and office space anchored by a 55,000 square foot lease with Duke University.
· Increased the borrowing capacity on the Company’s unsecured credit facility to $250 million.
· Declared a cash dividend of $0.18 per common share for the first quarter of 2016, representing a 5.9% increase over the prior quarter’s cash dividend.
· After the end of the quarter, the Company:
· Completed the acquisition of Southgate Square, a 220,000 square foot retail center adjacent to Southpark Mall in Colonial Heights, Virginia, for a combination of $21.1 million of debt and 1,575,185 Operating Partnership units.
· Agreed to invest $42.0 million in The Residences at Annapolis Junction Town Center, located approximately two miles from Fort Meade, with options to acquire a controlling interest upon the project’s completion.
· Entered into agreements to sell, for $28.3 million, three of the retail centers acquired as part of the 11-asset portfolio purchase completed in January.
Commenting on the Company’s results, Louis Haddad, President and CEO, said, “We continue to successfully execute across all areas of our business, demonstrated by significant year-over-year growth in Normalized FFO, NOI and Same Store NOI. In fact, this marked our seventh consecutive quarter of significant Same Store NOI growth. More importantly, the number of high-quality transactions that we announced this quarter demonstrates our commitment to aggressively manage the portfolio in order to position Armada Hoffler for sustained long-term value creation.”
Financial Results
Net income for the first quarter increased to $26.5 million compared to $8.1 million for the first quarter of 2015. Normalized FFO for the first quarter increased to $11.6 million compared to $7.4 million for the first quarter of 2015. FFO for the first quarter increased to $8.4 million compared to $6.8 million for the first quarter of 2015.
The year-over-year increases in FFO and Normalized FFO were primarily attributable to property acquisitions, organic Same Store NOI growth and higher construction segment gross profits, partially offset by higher interest expense. Both net income and FFO were negatively impacted by higher acquisition, development and other pursuit costs as well as higher mark-to-market losses on interest rate derivatives. The year-over-year increases in net income were also positively impacted by higher gains on real estate sales, partially offset by higher depreciation and amortization from acquired properties and new properties placed into service.
Operating Performance
At the end of the quarter, the Company’s office, retail and multifamily core operating property portfolios were 95.0%, 95.1% and 93.5% occupied, respectively.
Total construction contract backlog was $176.2 million at the end of the quarter.
Balance Sheet and Financing Activity
In the first quarter, the Company increased the total borrowing capacity on its unsecured credit facility to $250 million, consisting of a $100 million term loan and a $150 million revolving credit facility.
As of March 31, 2016, the Company had $472 million of total debt outstanding, including $101 million outstanding under its revolving credit facility. Total debt outstanding excludes unamortized GAAP fair value adjustments and deferred financing costs. Approximately 46% of the Company’s debt had fixed interest rates or were subject to interest rate swaps as of March 31, 2016. After considering LIBOR interest rate caps with strike prices at or below 150 basis points and maturities greater than 30 days as of March 31, 2016, approximately 88% of the Company’s debt was fixed or hedged.
During the first quarter, the Company raised $10.1 million of gross proceeds under the At-The-Market (“ATM”) continuous equity offering program at a weighted average price of $10.76 per share.
Outlook
The Company is raising its 2016 full-year guidance and now expects 2016 Normalized FFO in the range of $0.94 to $0.98 per diluted share. The following table outlines the Company’s assumptions along with Normalized FFO per share estimates for the full-year 2016.
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Full-year 2016 Guidance [1] |
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Expected Ranges |
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Total GAAP NOI |
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$64.5M |
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$65.2M |
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Construction company annual segment gross profit |
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$4.5M |
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$5.0M |
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General and administrative expenses |
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$9.1M |
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$9.4M |
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Interest income |
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$3.2M |
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$3.5M |
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Interest expense |
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$16.0M |
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$16.5M |
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Normalized FFO per diluted share [2] |
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$0.94 |
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$0.98 |
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[1] Includes the sale of three non-core properties by June 30, 2016, the sale of a fourth non-core property in the third quarter of 2016, the impact of the two recently announced pipeline projects, the acquisition of Southgate Square and the additional shares that may be issued under the ATM program, assuming favorable market conditions.
[2] Normalized FFO excludes certain items, including debt extinguishment losses, acquisition, development and other pursuit costs, mark-to-market adjustments for interest rate derivatives and other non-comparable items. See “Non-GAAP Financial Measures.” In addition, the calculation of Normalized FFO per diluted share assumes 48.9 million weighted average shares and units outstanding, including shares issued under the ATM program.
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 under the Investor Relations section.
Webcast and Conference Call
The Company will host a webcast and conference call on Tuesday, May 3, 2016 at 8:30 a.m. Eastern Time to review financial results and discuss recent events. The live webcast will be available through the Investor Relations page of the Company’s website, www.ArmadaHoffler.com, or through www.viavid.com. To participate in the call, please dial 877-407-3982 (domestic) or 201-493-6780 (international). A replay of the conference call will be available through Friday, June 3, 2016 by dialing 877-870-5176 (domestic) or 858-384-5517 (international) and entering the pass code 13632994.
About Armada Hoffler Properties, Inc.
Armada Hoffler Properties, Inc. is a full service real estate company with extensive experience developing, building, owning and managing high-quality, institutional-grade office, retail and multifamily properties in attractive markets throughout the Mid-Atlantic and Southeastern United States. The Company has elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes.
Forward-Looking Statements
Certain matters within this press release are discussed using forward-looking language as specified in the Private Securities Litigation Reform Act of 1995, and, as such, may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those projected in the forward-looking statement. These forward-looking statements may include comments relating to the current and future performance of the Company’s operating property portfolio, the Company’s development pipeline, the Company’s construction and development business, including backlog and timing of deliveries, financing activities, as well as acquisitions, dispositions and the Company’s financial outlook and expectations. For a description
of factors that may cause the Company’s actual results or performance to differ from its forward-looking statements, please review the information under the heading “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, and other documents filed by the Company with the Securities and Exchange Commission.
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 gains (or losses) from sales of depreciable operating property, real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures.
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.
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, debt extinguishment losses and prepayment penalties, property acquisition, development and other pursuit costs, mark-to-market adjustments for interest rate derivatives and other non-comparable items.
For reference, as an aid in understanding the Company’s computation of FFO and Normalized FFO, a reconciliation of net income calculated in accordance with GAAP to FFO and Normalized FFO has been included on page nine of this release.
ARMADA HOFFLER PROPERTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
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March 31, |
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December 31, |
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2016 |
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2015 |
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(Unaudited) |
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Assets |
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Real estate investments: |
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Income producing property |
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$ |
722,123 |
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$ |
579,000 |
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Held for development |
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1,995 |
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1,180 |
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Construction in progress |
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62,365 |
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53,411 |
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Accumulated depreciation |
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(121,920 |
) |
(125,380 |
) | ||
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Net real estate investments |
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664,563 |
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508,211 |
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Real estate investments held for sale |
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2,731 |
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40,232 |
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Cash and cash equivalents |
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18,810 |
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26,989 |
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Restricted cash |
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3,695 |
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2,824 |
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Accounts receivable, net |
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13,360 |
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21,982 |
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Notes receivable |
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10,464 |
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7,825 |
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Construction receivables, including retentions |
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31,567 |
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36,535 |
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Construction costs and estimated earnings in excess of billings |
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300 |
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88 |
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Other assets |
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64,493 |
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44,861 |
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Total Assets |
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$ |
809,983 |
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$ |
689,547 |
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Liabilities and Equity |
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Indebtedness, net |
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$ |
460,938 |
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$ |
377,593 |
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Debt secured by real estate investments held for sale |
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6,373 |
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— |
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Accounts payable and accrued liabilities |
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6,812 |
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6,472 |
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Construction payables, including retentions |
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43,611 |
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52,067 |
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Billings in excess of construction costs and estimated earnings |
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3,177 |
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2,224 |
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Other liabilities |
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33,820 |
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25,471 |
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Total Liabilities |
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554,731 |
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463,827 |
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Total Equity |
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255,252 |
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225,720 |
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Total Liabilities and Equity |
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$ |
809,983 |
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$ |
689,547 |
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ARMADA HOFFLER PROPERTIES, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
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Three Months Ended |
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March 31, |
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2016 |
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2015 |
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(Unaudited) |
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Revenues |
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Rental revenues |
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$ |
23,283 |
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$ |
18,190 |
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General contracting and real estate services |
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36,803 |
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29,071 |
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Total revenues |
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60,086 |
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47,261 |
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Expenses |
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Rental expenses |
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5,329 |
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4,760 |
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Real estate taxes |
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2,349 |
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1,657 |
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General contracting and real estate services |
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35,037 |
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28,142 |
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Depreciation and amortization |
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8,149 |
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4,908 |
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General and administrative |
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2,484 |
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2,328 |
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Acquisition, development and other pursuit costs |
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704 |
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171 |
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Impairment charges |
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35 |
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— |
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Total expenses |
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54,087 |
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41,966 |
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Operating income |
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5,999 |
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5,295 |
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Interest income |
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182 |
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— |
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Interest expense |
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(3,791 |
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(3,046 |
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Loss on extinguishment of debt |
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— |
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(227 |
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Gain on real estate dispositions |
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26,674 |
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6,197 |
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Change in fair value of interest rate derivatives |
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(2,389 |
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(147 |
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Other income (expense) |
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76 |
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15 |
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Income before taxes |
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26,751 |
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8,087 |
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Income tax benefit (provision) |
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(218 |
) |
31 |
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Net income |
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$ |
26,533 |
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$ |
8,118 |
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Per diluted share |
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$ |
0.57 |
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$ |
0.20 |
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Weighted average shares outstanding |
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46,218 |
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39,818 |
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ARMADA HOFFLER PROPERTIES, INC.
RECONCILIATION OF NET INCOME TO FFO & NORMALIZED FFO
(in thousands, except per share amounts)
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Three Months Ended |
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March 31, |
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2016 |
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2015 |
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(Unaudited) |
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Net income |
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$ |
26,533 |
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$ |
8,118 |
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Depreciation and amortization |
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8,149 |
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4,908 |
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Gain on dispositions of operating real estate(1) |
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(26,244 |
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(6,197 |
) | ||
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Funds From Operations (FFO) |
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$ |
8,438 |
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$ |
6,829 |
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Acquisition costs |
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704 |
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171 |
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Impairment charges |
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35 |
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— |
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Loss on extinguishment of debt |
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— |
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227 |
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Change in fair value of interest rate derivatives |
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2,389 |
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147 |
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Normalized FFO |
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$ |
11,566 |
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$ |
7,374 |
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FFO per diluted share |
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$ |
0.18 |
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$ |
0.17 |
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Normalized FFO per diluted share |
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$ |
0.25 |
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$ |
0.19 |
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Weighted average shares outstanding |
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46,218 |
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39,818 |
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(1) Excludes gains on non-operating undepreciated real estate of $430.
Contact:
Michael P. O’Hara
Armada Hoffler Properties, Inc.
Chief Financial Officer and Treasurer
Email: MOHara@ArmadaHoffler.com
Phone: (757) 366-6684
###
Exhibit 99.2
Armada Hoffler Properties, Inc. First Quarter 2016 Supplemental Information
Table of Contents 2 Forward Looking Statements 3 Corporate Profile 4 Highlights 5 2016 Outlook 6 Summary Information 7 Summary Balance Sheet 8 Summary Income Statement 9 FFO, Normalized FFO & Adjusted FFO 10 Outstanding Debt 11 Core Debt to Core EBITDA 12 Debt Information 13 Property Portfolio 14 Property Portfolio - Continued 15 Development Pipeline 16 Acquisitions & Dispositions 17 Construction Business Summary 18 Same Store NOI by Segment 19 Top 10 Tenants by Annualized Base Rent 20 Office Lease Summary 21 Office Lease Expirations 22 Retail Lease Summary 23 Retail Lease Expirations 24 Net Asset Value Component Data 26 Retail Portfolio Acquisition 28 NOI Contribution 29 Appendix - Definitions & Reconciliations 30 Definitions 31 Reconciliation to Property Portfolio NOI 35 Reconciliation to GAAP Net Income 37
Forward Looking Statements This Supplemental Information should be read in conjunction with the unaudited condensed consolidated financial statements appearing in our press release dated May 3, 2016, which has been furnished as Exhibit 99.1 to our Form 8-K filed on May 3, 2016. The Company makes statements in this Supplemental Information 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”)). In particular, statements pertaining to our capital resources, portfolio performance and results of operations contain forward-looking statements. Likewise, all of our statements regarding our 2016 outlook and anticipated growth in our funds from operations, normalized funds from operations, funds available for distribution and net operating income are forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, estimates, data or methods, which may be incorrect or imprecise, and actual results may vary materially from those anticipated, estimated or projected. The Company does not guarantee that the transactions and events described will happen as described (or that they will happen at all). For further discussion of risk factors and other events that could impact our future results, please refer to the section entitled “Risk Factors” in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), and the documents subsequently filed by us from time to time with the SEC. 3
Corporate Profile 4 Board of Directors Corporate Officers Daniel A. Hoffler Executive Chairman of the Board Louis S. Haddad President and Chief Executive Officer A. Russell Kirk Vice Chairman of the Board Anthony P. Nero President of Development Louis S. Haddad Director Shelly R. Hampton President of Asset Management John W. Snow Lead Independent Director Eric E. Apperson President of Construction George F. Allen Independent Director Michael P. O’Hara Chief Financial Officer and Treasurer James A. Carroll Independent Director Eric L. Smith Chief Investment Officer and Corporate Secretary James C. Cherry Independent Director Eva S. Hardy Independent Director Joseph W. Prueher Independent Director Analyst Coverage Janney, Montgomery, & Scott LLC Raymond James & Associates Robert W. Baird & Co. Stifel, Nicolaus & Company, Inc. Wunderlich Securities Robert Stevenson Bill Crow David Rodgers John Guinee Craig Kucera (646) 840-3217 (727) 567-2594 (216) 737-7341 (443) 224-1307 (540) 277-3366 robertstevenson@janney.com rj.milligan@raymondjames.com drodgers@rwbaird.com jwguinee@stifel.com ckucera@wundernet.com Investor Relations Contact Michael P. O’Hara Chief Financial Officer and Treasurer (757) 366-6684 mohara@armadahoffler.com Armada Hoffler Properties, Inc. (NYSE: AHH) is a full service real estate company that develops, constructs and owns institutional grade office, retail and multifamily properties in the Mid-Atlantic United States. The Company also provides general contracting and development services to third-party clients throughout the Mid-Atlantic and Southeastern regions. Armada Hoffler Properties, Inc. was founded in 1979 and is headquartered in Virginia Beach, VA. The Company has elected to be taxed as a real estate investment trust ("REIT") for U.S. federal income tax purposes.
Highlights Normalized Funds From Operations (“FFO”) of $11.6 million, or $0.25 per diluted share, for the quarter ended March 31, 2016 compared to Normalized FFO of $7.4 million, or $0.19 per diluted share, for the quarter ended March 31, 2015. FFO of $8.4 million, or $0.18 per diluted share, for the quarter ended March 31, 2016 compared to FFO of $6.8 million, or $0.17 per diluted share, for the quarter ended March 31, 2015. Same Store Net Operating Income (“NOI”) for the quarter ended March 31, 2016 up 2.2% on a GAAP basis and 3.8% on a cash basis compared to the quarter ended March 31, 2015. Core operating property portfolio occupancy at 94.7% compared to 95.6% as of March 31, 2015. Completed the sale of the Richmond Tower office building for $78 million and reinvested the net proceeds, along with the net proceeds from the fourth quarter 2015 sale of the Oceaneering International building, into a $170.5 million retail property portfolio totaling 1.1 million square feet across 11 assets. The Company recognized a gain on the Richmond Tower sale of $26 million in the first quarter of 2016. Entered into a joint venture agreement as a minority partner to develop One City Center, a mixed-use project located in Durham, North Carolina. Upon completion, the Company will exit the joint venture and retain ownership of 150,000 square feet of retail and office space anchored by a 55,000 square foot lease with Duke University. Increased the borrowing capacity on the Company’s unsecured credit facility to $250 million. Declared a cash dividend of $0.18 per common share for the first quarter of 2016, representing a 5.9% increase over the prior quarter’s cash dividend. After the end of the quarter, the Company: Completed the acquisition of Southgate Square, a 220,000 square foot retail center adjacent to Southpark Mall in Colonial Heights, Virginia, for a combination of $21.1 million of debt and 1,575,185 Operating Partnership units. Agreed to invest $42.0 million in The Residences at Annapolis Junction Town Center, located approximately two miles from Fort Meade, with options to acquire a controlling interest upon the project’s completion. Entered into agreements to sell, for $28.3 million, three of the retail centers acquired as part of the 11-asset portfolio purchase completed in January. 5
2016 Outlook The Company is raising its 2016 full-year guidance and now expects 2016 Normalized FFO in the range of $0.94 to $0.98 per diluted share. The following table outlines the Company’s assumptions along with Normalized FFO per share estimates for the full-year 2016. [1] Includes the sale of three non-core properties by June 30, 2016, the sale of a fourth non-core property in the third quarter of 2016, the impact of the two recently announced pipeline projects, the acquisition of Southgate Square and the additional shares that may be issued under the ATM program, assuming favorable market conditions. [2] Normalized FFO excludes certain items, including debt extinguishment losses, acquisition, development and other pursuit costs, mark-to-market adjustments for interest rate derivatives and other non-comparable items. See “Non-GAAP Financial Measures.” In addition, the calculation of Normalized FFO per diluted share assumes 48.9 million weighted average shares and units outstanding, including shares issued under the ATM program. 6 Full-year 2016 Guidance [1] Total GAAP NOI $64.5M $65.2M Construction company annual segment gross profit $4.5M $5.0M General and administrative expenses $9.1M $9.4M Interest income $3.2M $3.5M Interest expense $16.0M $16.5M Normalized FFO per diluted share [2] $0.94 $0.98 Expected Ranges
Summary Information $ in thousands, except per share data 7 (1) Excludes gains on dispositions of real estate (2) Excludes unamortized GAAP adjustments (3) Office and retail occupancy based on occupied square feet as a % of respective total (4) Multifamily occupancy based on occupied units as a % of respective total (5) Total occupancy weighted by annualized base rent Three months ended 3/31/2016 12/31/2015 9/30/2015 6/30/2015 3/31/2015 OPERATIONAL METRICS Rental revenues $23,283 $21,771 $21,303 $19,908 $18,190 General contracting and real estate services revenues 36,803 41,309 53,822 47,066 29,071 Rental properties Net Operating Income (NOI) 15,605 14,713 14,382 13,318 11,773 General contracting and real estate services gross profit 1,766 1,106 2,106 1,783 929 EBITDA (1) 12,017 12,912 14,290 12,195 9,844 Net income 26,533 8,443 4,337 10,285 8,118 Funds From Operations (FFO) 8,438 9,618 10,654 8,841 6,829 FFO per diluted share $0.18 $0.22 $0.25 $0.22 $0.17 Normalized FFO 11,566 10,614 10,996 9,675 7,374 Normalized FFO per diluted share $0.25 $0.24 $0.26 $0.24 $0.19 CAPITALIZATION Total common shares outstanding 31,095 30,076 26,261 25,855 25,084 Operating Partnership ("OP") units outstanding 16,027 16,027 16,043 14,769 14,776 Common shares and OP units outstanding 47,122 46,103 42,304 40,624 39,860 Market price per common share $11.25 $10.48 $9.77 $9.99 $10.66 Equity market capitalization 530,123 483,159 413,310 405,834 424,908 Total debt (2) 471,876 382,013 421,442 388,288 382,501 Total market capitalization 1,001,999 865,172 834,752 794,122 807,409 Less: cash (22,505) (29,813) (19,434) (30,446) (35,505) Total enterprise value $979,494 $835,359 $815,318 $763,676 $771,904 BALANCE SHEET METRICS Core debt/enterprise value 40.1% 37.0% 44.6% 36.3% 28.6% Fixed charge coverage ratio 2.6x 3.1x 3.3x 3.0x 2.6x Core Debt/Annualized Core EBITDA 6.9x 6.1x 6.6x 6.0x 6.0x CORE PORTFOLIO OCCUPANCY Office (3) 95.0% 95.8% 95.5% 94.6% 93.5% Retail (3) 95.1% 95.5% 96.2% 95.6% 97.4% Multifamily (4) 93.5% 94.2% 94.9% 96.5% 96.6% Weighted Average (5) 94.7% 95.3% 95.6% 95.3% 95.6%
Summary Balance Sheet $ in thousands 8 3/31/2016 12/31/2015 Assets (Unaudited) Real estate investments: Income producing property $722,123 $579,000 Held for development 1,995 1,180 Construction in progress 62,365 53,411 Accumulated depreciation (121,920) (125,380) Net real estate investments 664,563 508,211 Real estate investments held for sale 2,731 40,232 Cash and cash equivalents 18,810 26,989 Restricted cash 3,695 2,824 Accounts receivable, net 13,360 21,982 Notes receivable 10,464 7,825 Construction receivables, including retentions 31,567 36,535 Costs and estimated earnings in excess of billings 300 88 Other assets 64,493 44,861 Total Assets $809,983 $689,547 Liabilities and Equity Indebtedness, net $460,938 $377,593 Debt secured by real estate held for sale 6,373 - Accounts payable and accrued liabilities 6,812 6,472 Construction payables, including retentions 43,611 52,067 Billings in excess of costs and estimated earnings 3,177 2,224 Other liabilities 33,820 25,471 Total Liabilities 554,731 463,827 Total Equity 255,252 225,720 Total Liabilities and Equity $809,983 $689,547 As of
Summary Income Statement Amounts in thousands, except per share data 9 Three months ended 3/31/2016 3/31/2015 Revenues (Unaudited) Rental revenues $23,283 $18,190 General contracting and real estate services 36,803 29,071 Total Revenues 60,086 47,261 Expenses Rental expenses 5,329 4,760 Real estate taxes 2,349 1,657 General contracting and real estate services 35,037 28,142 Depreciation and amortization 8,149 4,908 General and administrative 2,484 2,328 Acquisition, development & other pursuit costs 704 171 Impairment charges 35 - Total Expenses 54,087 41,966 Operating Income 5,999 5,295 Interest income 182 - Interest expense (3,791) (3,046) Loss on extinguishment of debt - (227) Gain on real estate dispositions 26,674 6,197 Change in fair value of interest rate derivatives (2,389) (147) Other income 76 15 Income before taxes 26,751 8,087 Income tax benefit (provision) (218) 31 Net Income $26,533 $8,118 Per Diluted Share $0.57 $0.20 Weighted Average Shares-Diluted 46,218 39,818
FFO, Normalized FFO & Adjusted FFO(1) $ in thousands, except per share data 10 See definitions on page 31-33 Excludes gain on non-operating real estate $430K Excludes first generation rental space Three months ended 3/31/2016 12/31/2015 9/30/2015 6/30/2015 3/31/2015 Funds From Operations (Unaudited) Net income $26,533 $8,443 $4,337 $10,285 $8,118 Depreciation and amortization 8,149 6,162 6,317 5,766 4,908 Gain on disposition of operating real estate (2) (26,244) (4,987) - (7,210) (6,197) FFO $8,438 $9,618 $10,654 $8,841 $6,829 FFO per diluted share $0.18 $0.22 $0.25 $0.22 $0.17 Normalized FFO Acquisition, development & other pursuit costs 704 885 288 591 171 Loss on extinguishment of debt - 102 3 180 227 Impairment charges 35 18 - 23 - Change in fair value of interest rate derivatives 2,389 (9) 51 40 147 Normalized FFO $11,566 $10,614 $10,996 $9,675 $7,374 Normalized FFO per diluted share $0.25 $0.24 $0.26 $0.24 $0.19 Adjusted FFO Non-cash stock compensation 437 176 173 203 379 Acquisition, development & other pursuit costs (704) (885) (288) (591) (171) Tenant improvements, leasing commissions (3) (287) (509) (992) (756) (484) Leasing incentives (3) - - - - - Property related capital expenditures (390) (563) (640) (366) (149) Non-cash interest expense 191 215 233 240 318 GAAP Adjustments Net effect of straight-line rents (122) (134) (309) (545) (646) Amortization of leasing incentives & above (below) market rents 6 174 170 217 177 Government development grants - - 300 - - AFFO $10,697 $9,088 $9,643 $8,077 $6,798 AFFO per diluted share $0.23 $0.21 $0.23 $0.20 $0.17 Weighted Average Common Shares Outstanding 30,191 27,411 25,958 25,587 25,042 Weighted Average Operating Partnership ("OP") Units Outstanding 16,027 16,027 15,919 14,769 14,776 Total Weighted Average Common shares and OP units outstanding 46,218 43,438 41,877 40,356 39,818
Outstanding Debt $ in thousands 11 30 Day LIBOR 0.4385% (1) Subject to an interest rate swap lock. (2) Includes debt subject to interest rate swap locks. (3) Excludes debt subject to interest rate swap locks. Debt Maturities & Principal Payments Debt Stated Rate Effective Rate as of 3/31/2016 Maturity Date 2016 2017 2018 2019 2020 Thereafter Amount Outstanding as of 3/31/2016 Secured Notes Payable - Core Debt 249 Central Park Retail 5.99% 5.99% 9/8/2016 $15,207 $15,207 South Retail 5.99% 5.99% 9/8/2016 6,709 6,709 Fountain Plaza Retail 5.99% 5.99% 9/8/2016 7,604 7,604 Encore Apartments L+1.95% 2.39% 1/30/2017 25,184 25,184 North Point Note 5 L+2.00% 3.57% (1) 2/1/2017 16 643 659 Oyster Point L+1.40% - 2.00% 1.99% 2/28/2017 6,400 6,400 Harrisonburg Regal 6.06% 6.06% 6/8/2017 156 3,256 3,412 Commonwealth of Virginia - Chesapeake L+1.90% 2.34% 8/28/2017 4,933 4,933 Hanbury Village 6.67% 6.67% 10/11/2017 195 20,709 20,904 Sandbridge Commons L+1.85% 2.29% 1/17/2018 670 247 8,525 9,442 Columbus Village Note 1 L+2.00% 3.05% (1) 4/5/2018 129 179 6,079 6,387 Columbus Village Note 2 L+2.00% 2.44% 4/5/2018 36 47 2,217 2,300 North Point Center Note 1 6.45% 6.45% 2/5/2019 146 205 219 9,352 9,922 Socastee Commons 4.57% 4.57% 1/6/2023 67 95 100 105 109 4,458 4,934 North Point Center Note 2 7.25% 7.25% 9/15/2025 73 105 113 121 130 2,095 2,638 Smith's Landing 4.05% 4.05% 6/1/2035 538 747 779 811 843 17,331 21,049 Liberty Apartments 5.66% 5.66% 11/1/2043 233 325 344 364 385 18,586 20,237 The Cosmopolitan 3.75% 3.75% 7/1/2051 480 660 686 712 739 43,086 46,363 Total - Secured Core Debt $32,260 $63,735 $19,062 $11,465 $2,206 $85,556 $214,284 Secured Notes Payable - Development Pipeline 4525 Main Street L+1.95% 2.39% 1/30/2017 31,613 31,613 Lightfoot Marketplace L+1.90% 2.34% 11/14/2017 8,536 8,536 Johns Hopkins Village L+1.90% 2.34% 7/30/2018 16,443 16,443 Total - Development Pipeline - 40,149 16,443 - - - 56,592 Total Secured Notes Payable $32,260 $103,884 $35,505 $11,465 $2,206 $85,556 $270,876 Unsecured Core Debt Senior unsecured line of credit L+1.40% - 2.00% 1.99% 2/20/2019 101,000 101,000 Senior unsecured term loan L+1.35% - 1.95% 1.94% 2/20/2020 50,000 50,000 Senior unsecured term loan L+1.35% - 1.95% 3.50% (1) 2/20/2020 50,000 50,000 Total - Unsecured Core Debt - - - 101,000 100,000 - 201,000 Total Notes Payable excluding GAAP Adjustments $32,260 $103,884 $35,505 $112,465 $102,206 $85,556 $471,876 Balloon Payments 29,281 100,971 33,638 110,333 100,000 5,567 379,790 Principal amortization 2,979 2,913 1,867 2,132 2,206 79,989 92,086 Total Consolidated Debt $32,260 $103,884 $35,505 $112,465 $102,206 $85,556 $471,876 Fixed-rate Debt(2) 31,554 26,924 8,320 11,465 52,206 85,556 216,025 Variable-rate Debt(3) 706 76,960 27,185 101,000 50,000 - 255,851 Total Consolidated Debt $32,260 $103,884 $35,505 $112,465 $102,206 $85,556 $471,876 GAAP Adjustments (4,565) Total Notes Payable $467,311
Core Debt to Core EBITDA(1) $ in thousands 12 See definitions on page 33 Excludes GAAP Adjustments Three months ended 3/31/2016 12/31/2015 9/30/2015 6/30/2015 3/31/2015 Net Income $26,533 $8,443 $4,337 $10,285 $8,118 Excluding: Interest expense 3,791 3,411 3,518 3,358 3,046 Income tax 218 (117) 118 (4) (31) Depreciation and amortization 8,149 6,162 6,317 5,766 4,908 Gain on real estate dispositions (26,674) (4,987) - (7,210) (6,197) EBITDA $12,017 $12,912 $14,290 $12,195 $9,844 Adjustments to EBITDA: Loss on extinguishment of debt - 102 3 180 227 Change in fair value of interest rate derivatives 2,389 (9) 51 40 147 Non-cash stock compensation 437 176 173 203 379 Development Pipeline (620) (606) (738) (1,086) (1,386) Total Other Adjustments 2,206 (337) (511) (663) (633) Core EBITDA $14,223 $12,575 $13,779 $11,532 $9,211 Total Debt (2) $471,876 $382,013 $421,442 $388,288 $382,501 Adjustments to Debt: (Less) Development Pipeline (2) (56,592) (43,340) (37,987) (80,877) (126,554) (Less) Cash & restricted cash (22,505) (29,813) (19,434) (30,446) (35,505) Core Debt $392,779 $308,860 $364,021 $276,965 $220,442 Core Debt/Annualized Core EBITDA 6.9x 6.1x 6.6x 6.0x 6.0x
Debt Information $ in thousands 13 (1) Excludes debt subject to interest rate swap locks. (2) Includes debt subject to interest rate swap locks. (3) Excludes GAAP adjustments. (4) Includes interest rate caps less than or equal to 1.50% Fixed - rate & Hedged Debt (4) 88% $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 2016 2017 2018 2019 2020 2021 and thereafter ($ In Thousands) Debt Maturities & Principal Payments Total Debt Composition Weighted Average Percent of Debt Interest Rate Maturity Secured vs. Unsecured Debt Check Unsecured Debt 43.0% 2.4% 3.4 Yrs Secured Debt 57.0% 4.0% 10.6 Yrs Variable vs. Fixed-rate Debt Variable-rate Debt (1) 54.2% 2.1% 2.4 Yrs Fixed-rate Debt(2)(3) 45.8% 4.7% 13.6 Yrs Fixed-rate and Hedged Debt(2)(3)(4) 88.2% Total 3.3% 7.5 Yrs Interest Rate Cap Agreements At or Below 1.50% Effective Date Maturity Date Strike Rate Notional Amount March 14, 2014 March 1, 2017 1.25% 50,000 October 26, 2015 October 15, 2017 1.25% 75,000 March 1, 2016 March 1, 2018 1.50% 75,000 Total Interest Rate Caps at or Below 1.50% $200,000 Fixed-rate Debt(2)(3) 216,025 Fixed-rate and Hedged Debt $416,025 % of Total(3) 88.2%
Property Portfolio As of 3/31/16 The net rentable square footage for each of our retail properties is the sum of (a) the square footage of existing leases, plus (b) for available space, the field verified square footage. Occupancy for each of our retail properties is calculated as (a) square footage under executed leases as of March 31, 2016, divided by (b) net rentable square feet, expressed as a percentage. For the properties in our retail portfolios, annualized base rent, or ABR, is calculated by multiplying (a) base rental payments for executed leases as of March 31, 2016 (defined as cash base rents before abatements) excluding tenant reimbursements for expenses paid by the landlord), by (b) 12. ABR per leased square foot is calculated by dividing (a) ABR, by (b) square footage under executed leases as of March 31, 2016 . In the case of triple net or modified gross leases, ABR does not include tenant reimbursements for real estate taxes, insurance, common area or other operating expenses. Excludes the square footage of land subject to ground leases. As of March 31, 2016, the Company occupied 8,995 square feet at this property at an ABR of $295,900, or $32.90 per leased square foot, which amounts are reflected in this table. The rent paid by us is eliminated in accordance with GAAP. Includes $32,760 of ABR pursuant to a rooftop lease. 14 Property Anchor Tenant Location Town Center Unencumbered ABR Year Built Net Rentable Square Feet (1) Core Occupancy (2) ABR (3) ABR per Leased SF (3) Retail Properties - Excluding Properties Subject to Ground Lease 249 Central Park Retail (4) Cheesecake Factory, Brooks Brothers, Gordon Biersch Virginia Beach, VA ü - 2004 91,387 89.7% $2,302,266 $28.10 Alexander Pointe Harris Teeter Salisbury, NC 100% 1997 57,710 100.0% 673,796 11.68 Bermuda Crossroads Food Lion, OfficeMax Chester, VA 100% 2001 111,566 91.3% 1,470,353 14.43 Broad Creek Shopping Center Home Depot, Food Lion, PetSmart Norfolk, VA 100% 1997/2001 227,659 98.8% 3,155,289 14.03 Broadmoor Plaza Kroger, Staples, Jo-Ann Fabrics South Bend, IN 100% 1980 115,059 93.8% 1,273,865 11.80 Columbus Village Barnes & Noble Virginia Beach, VA ü - 1980/2013 66,594 93.5% 1,200,454 19.27 Commerce Street Retail (5) Yard House Virginia Beach, VA ü 100% 2008 19,173 100.0% 793,250 41.37 Courthouse 7-Eleven 7-Eleven Virginia Beach, VA 100% 2011 3,177 100.0% 125,015 39.35 Dick's at Town Center Dick's Sporting Goods, USI Virginia Beach, VA ü 100% 2002 103,335 100.0% 1,221,866 11.82 Dimmock Square Best Buy, Old Navy Colonial Heights, VA 100% 1998 106,166 97.2% 1,726,339 16.73 Fountain Plaza Retail Ruth's Chris, Ann Taylor Virginia Beach, VA ü - 2004 35,961 100.0% 1,014,090 28.20 Gainsborough Square Food Lion, Rite Aid Chesapeake, VA 100% 1999 88,862 92.5% 1,252,588 15.24 Greentree Shopping Center Wawa Chesapeake, VA 100% 2014 15,751 85.7% 284,044 21.03 Hanbury Village Walgreens, Starbucks Chesapeake, VA 32% 2006/2009 61,049 92.8% 1,352,725 23.87 Harper Hill Commons Harris Teeter Winston-Salem, NC 100% 2004 55,394 63.0% 501,507 14.36 Harrisonburg Regal Regal Cinemas Harrisonburg, VA - 1999 49,000 100.0% 683,550 13.95 Kroger Junction Kroger, Family Dollar Pasadena, TX 100% 1984 81,158 77.9% 473,108 7.48 North Hampton Market PetSmart, Hobby Lobby, Dollar Tree Taylors, SC 100% 2004 114,935 96.2% 1,352,077 12.23 North Point Center Kroger, PetSmart, BB&B, Costco Durham, NC 52% 1998/2009 215,690 95.9% 2,528,096 12.22 Oakland Marketplace Kroger Oakland, TN 100% 2004 19,600 85.7% 250,656 14.92 Parkway Marketplace Rite Aid Virginia Beach, VA 100% 1998 37,804 100.0% 754,710 19.96 Patterson Place Bed Bath & Beyond, PetSmart Durham, NC 100% 2004 160,942 99.3% 2,546,392 15.93 Perry Hall Marketplace Safeway Perry Hall, MD 100% 2001 74,256 100.0% 1,224,475 16.49 Providence Plaza Edward Jones, Chipotle, Choate Const. Charlotte, NC 100% 2007/2008 103,118 97.4% 2,517,245 25.05 Sandbridge Commons Heartland Dental Virginia Beach, VA - 2015 16,156 92.6% 303,050 20.26 Socastee Commons Bi-Lo Myrtle Beach, SC - 2000/2014 57,573 97.4% 638,616 11.39 South Retail lululemon, free people Virginia Beach, VA ü - 2002 38,515 100.0% 939,543 24.39 South Square Ross, Petco, Office Depot Durham, NC 100% 1977/2005 107,812 100.0% 1,826,837 16.94 Stone House Square Weis Markets Hagerstown, MD 100% 2008 108,624 90.4% 1,566,916 15.95 Studio 56 Retail McCormick & Schmick's Virginia Beach, VA ü 100% 2007 11,594 100.0% 373,360 32.20 Waynesboro Commons Kroger Waynesboro, VA 100% 1993 52,415 100.0% 437,024 8.34 Wendover Village Bed Bath & Beyond, T.J. Maxx, Petco Greensboro, NC 100% 2004 135,758 100.0% 1,949,734 14.36 Willowbrook Commons Kroger Nashville, TN 100% 2005 39,100 82.1% 525,266 16.36 Total / Weighted Avg Retail Portfolio 77% 2,582,893 95.1% $39,238,103 $15.98 (1) (2) (3) (4) (5)
Property Portfolio - Continued As of 3/31/16 The net rentable square footage for each of our office properties is the sum of (a) the square footage of existing leases, plus (b) for available space, management’s estimate of net rentable square footage based, in part, on past leases. The net rentable square footage included in office leases is generally consistent with the Building Owners and Managers Association, or BOMA, 1996 measurement guidelines. Occupancy for each of our office properties is calculated as (a) square footage under executed leases as of March 31, 2016, divided by (b) net rentable square feet, expressed as a percentage. Occupancy for our multifamily properties is calculated as (a) total units occupied as of March 31, 2016, divided by (b) total units available, expressed as a percentage. For the properties in our office portfolios, annualized base rent, or ABR, is calculated by multiplying (a) base rental payments for executed leases as of March 31, 2016 (defined as cash base rents (before abatements) excluding tenant reimbursements for expenses paid by the landlord), by (b) 12. ABR per leased square foot is calculated by dividing (a) ABR, by (b) square footage under executed leases as of March 31, 2016. In the case of triple net or modified gross leases, ABR does not include tenant reimbursements for real estate taxes, insurance, common area or other operating expenses. As of March 31, 2016, the Company occupied 18,984 square feet at this property at an ABR of $559,294 or $29.46 per leased square foot, which amounts are reflected in this table. The rent paid by us is eliminated in accordance with GAAP. In addition, effective March 1, 2013, the Company subleases approximately 5,000 square feet of space from a tenant at this property. Pursuant to this ground lease, the Company owns the land and the tenant owns the improvements thereto. The Company will succeed to the ownership of the improvements to the land upon the termination of the ground lease. The Company leases the land underlying this property and re-leases it to our tenant under a ground lease pursuant to which our tenant owns the improvements on the land. For the properties in our multifamily portfolio, annualized base rent, or ABR, is calculated by multiplying (a) base rental payments for the month ended March 31, 2016 by (b) 12. ABR per occupied rentable square foot is calculated by dividing (a) ABR, by (b) net rentable square footage of occupied units as of March 31, 2016. The ABR for Liberty and Cosmopolitan excludes $206,000 and $967,000 from ground floor retail leases, concurrently. The Company leases the land underlying this property pursuant to a ground lease. 15 Net Rentable Square Feet (RSF) (1) Property Anchor Tenant Location Town Center Unencumbered ABR Year Built Core Properties Development Properties Total Core Occupancy (2) Development Leased (2) ABR (3) ABR per Leased SF (3) Office Properties 4525 Main Street Clark Nexsen, Anthropologie, west elm Virginia Beach, VA ü - 2014 - 237,893 237,893 - 57.8% $3,725,916 $27.12 Armada Hoffler Tower (4) AHH, Troutman Sanders, Williams Mullen Virginia Beach, VA ü 100% 2002 323,970 - 323,970 97.6% - 8,792,059 27.81 Commonwealth of VA - Chesapeake Commonwealth of VA Chesapeake, VA - 2015 36,227 - 36,227 100.0% - 645,927 17.83 Commonwealth of VA - Virginia Beach Commonwealth of VA Virginia Beach, VA 100% 2015 11,139 - 11,139 100.0% - 245,058 22.00 One Columbus BB&T, HBA Virginia Beach, VA ü 100% 1984 129,424 - 129,424 93.2% - 2,913,464 24.16 Oyster Point GSA, SunTrust Bank Newport News, VA - 1989 100,139 - 100,139 83.8% - 1,731,930 20.64 Two Columbus The Art Institute, Kimley-Horn Virginia Beach, VA ü 100% 2009 108,467 - 108,467 97.5% - 2,871,638 27.15 Total / Weighted Average Office Portfolio 71% 709,366 237,893 947,259 95.0% 57.8% $20,925,992 $25.80 Retail Properties Subject to Ground Lease Bermuda Crossroads (5) IHOP, O'Charley's Chester, VA - 2001 11,000 - 11,000 100.0% - $163,350 $14.85 Broad Creek Shopping Center (6) 7-Eleven, Ruby Tuesdays, Home Depot Norfolk, VA - 1997/2001 24,818 - 24,818 100.0% - 607,081 24.46 Greentree Shopping Center Wawa Chesapeake, VA - 2014 5,088 - 5,088 100.0% - 230,004 45.21 Hanbury Village (5) Harris Teeter, Walgreens Chesapeake, VA - 2006/2009 55,586 - 55,586 100.0% - 1,067,598 19.21 Harper Hill Commons Harris Teeter Winston-Salem, NC 100% 2004 41,520 - 41,520 100.0% - 373,680 9.00 Oakland Marketplace Kroger Oakland, TN 100% 2004 45,000 - 45,000 100.0% - 186,300 4.14 North Point Center (5) Home Depot, Costco Durham, NC 15% 1998/2009 280,556 - 280,556 100.0% - 1,083,666 3.86 Sandbridge Commons Harris Teeter Virginia Beach, VA - 2015 53,288 - 53,288 100.0% - 583,000 10.94 South Square Chick-fil-A Durham, NC 100% 1977/2005 1,778 - 1,778 100.0% - 60,000 33.75 Stone House Square Capitol One Bank Hagerstown, MD 100% 2008 3,650 - 3,650 100.0% - 165,000 45.21 Tyre Neck Harris Teeter (6) Harris Teeter Portsmouth, VA 100% 2011 48,859 - 48,859 100.0% - 508,134 10.40 Willowbrook Commons Kroger Nashville, TN 100% 2005 54,500 - 54,500 100.0% - 387,554 7.11 Total / Weighted Avg Retail Portfolio Subject to Ground Leases 34% 625,643 - 625,643 100.0% - $5,415,367 $8.66 Units Multifamily Location Town Center Unencumbered ABR Year Built Core Properties Development Properties Total Core Occupancy (2) Development Occupancy (2) ABR (7) ABR per Occupied RSF (8) Encore Apartments Virginia Beach, VA ü - 2014 286 - 286 88.5% - $3,707,184 $1.75 Liberty Apartments (9) Newport News, VA - 2014 197 - 197 93.0% - 2,131,824 1.35 Smith's Landing (10) Blacksburg, VA - 2009 284 - 284 100.0% - 3,584,052 1.11 The Cosmopolitan (9) Virginia Beach, VA ü - 2006 342 - 342 92.7% - 6,011,172 1.64 Total / Weighted Avg Multifamily Portfolio - 1,109 - 1,109 93.5% - $15,434,232 $1.46 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
Development Pipeline $ in thousands Point Street Apts. Lightfoot Marketplace One City Center Johns Hopkins Village 16 (1) Represents the expected estimates that may change as the development process proceeds (3) AHH earns a preferred return on equity prior to any distributions to JV Partners (4) Ground floor retail tenant (2) First full stabilized quarter Q1 2016 Capitalized Interest $252 Capitalized Overhead $362 Schedule (1) Development, Not Delivered Property Type Estimated (1) % Leased Start Initial Occupancy Stabilized Operation (2) Estimated Cost (1) Cost to Date AHH Ownership % Anchor Tenants & Other Notes Johns Hopkins Village Baltimore, MD Multifamily 157 units 60% 1Q15 3Q16 3Q17 $68,000 $41,000 80% (3) CVS (4) Brooks Crossing Phase 1 Newport News, VA Mixed-use 50,000 sf NA 3Q15 3Q16 3Q17 10,000 2,000 65% (3) LOI outstanding Lightfoot Marketplace Williamsburg, VA Retail 109,000 sf 71% 3Q14 3Q16 2Q17 24,000 18,000 60% (3) Harris Teeter, CHKD Total Development, Not Delivered 102,000 61,000 Development, Delivered Not Stabilized 4525 Main Street Virginia Beach, VA Office 239,000 sf 58% 1Q13 3Q14 2Q17 51,000 45,000 100% Clark Nexsen, Development Authority of Virginia Beach, Anthropologie (4) Total $153,000 $106,000 Joint Ventures - Minority Partner AHH Estimated Investment Cost to Date One City Center - 37% JV Durham, NC Mixed-use 152,000 sf 36% 1Q16 2Q18 2Q19 $34,000 $7,000 100% Duke University Mezzanine Investments Purchase Option Price Loan Balance Point Street Apartments Inner Harbor Baltimore, MD Multifamily 289 units NA 1Q16 3Q17 3Q18 $92,000 $10,000 Option to purchase 88% upon completion $25M Mezzanine financing offered by AHH, earning 8% interest income Annapolis Junction Annapolis Junction, MD Multifamily 416 units NA 2Q16 1Q18 2Q19 102,000 - Option to purchase 88% upon completion $42M Mezzanine financing offered by AHH, earning 10% interest income Total Mezzanine Investment $194,000 $10,000
Acquisitions & Dispositions $ in thousands 17 ACQUISITIONS Properties Location Square Feet Purchase Price (1) Cash Cap Rate Purchase Date Property Type % Leased as of 3/31/16 Anchor Tenants Southgate Square Colonial Heights, VA 220,131 $38,585 7.3% 2Q16 Retail 99% PetSmart, Michael's, Burlington's Retail Portfolio (11 properties) Mid-Atlantic 1,082,681 $170,500 7.2% 1Q16 Retail 94% Harris Teeter, Bed Bath & Beyond Providence Plaza Charlotte, NC 103,118 $26,200 7.3% 3Q15 Retail 97% Chipotle Socastee Commons Myrtle Beach, SC 57,573 $8,600 7.3% 3Q15 Retail 100% BiLo Columbus Village Virginia Beach, VA 65,746 $21,025 6.4% 3Q15 Retail 100% Barnes & Noble Perry Hall Marketplace & Stone House Square Maryland 182,949 $39,555 7.4% 2Q15 Retail 93% Safeway & Weis Markets Dimmock Square Colonial Heights, VA 106,166 $19,662 7.3% 3Q14 Retail 100% Old Navy, Best Buy, Pier 1 Total/Weighted Average 1,818,364 $324,127 7.2% DISPOSITIONS Properties Location Square Feet/Units Sale Price Cash Cap Rate Disposition Date Property Type % Leased at closing Anchor Tenants Oyster Point Newport News, VA 100,139 $6,500 TBD 1Q17 (2) Office 84% (3) GSA Richmond Tower Richmond, VA 206,969 $78,000 7.9% 1Q16 Office 99% Williams Mullen Oceaneering Chesapeake, VA 154,000 $30,000 6.7% 4Q15 Office 100% Oceaneering International Whetstone Apartments Durham, NC 203 units $35,625 5.7% 2Q15 Multifamily 26% NA Sentara Williamsburg Williamsburg, VA 49,200 $15,450 6.3% 1Q15 Office 100% Sentara Virginia Natural Gas Virginia Beach, VA 31,000 $8,900 6.3% 4Q14 Office 100% Virginia Natural Gas Total/Weighted Average 541,308sf/ 203 units $174,475 7.0% (1) Non-GAAP purchase price (2) Anticipated closing date. The disposition is subject to customary conditions and, accordingly, there can be no assurance that this transaction will be completed on the terms set forth herein or at all. (3) As of 3/31/16
Construction Business Summary $ in thousands 18 Gross Profit Summary Q1 2016 Trailing 12 Months Revenue $36,803 $179,000 Expense (35,037) (172,239) Gross Profit $1,766 $6,761 (Unaudited) Location Total Contract Value Work in Place as of 3/31/2016 Backlog Estimated Date of Completion Highlighted Projects Exelon Baltimore, MD $179,629 $170,184 $9,445 2Q 2016 Point Street Apartments Baltimore, MD $68,203 $4,356 $63,847 1Q 2018 One City Center Raleigh, NC $60,905 $1,044 $59,861 2Q 2018 27th Street Hotel Virginia Beach, VA 50,562 16,305 34,257 2Q 2017 Four Seasons Condominium Expansion Baltimore, MD 38,673 33,748 4,925 3Q 2016 Sub Total $397,972 $225,637 $172,335 All Other Projects 104,693 100,849 3,844 Total $502,665 $326,486 $176,179
Same Store NOI by Segment $ in thousands (Reconciliation to GAAP located in appendix pg. 35) 19 (1) See page 34 for Same Store vs. Non - Same Store Properties Three months ended 3/31/2016 3/31/2015 $ Change % Change Office (1) (Unaudited) Revenue $4,262 $4,315 ($53) -1.2% Expenses 1,526 1,637 (111) -6.8% Net Operating Income 2,736 2,678 58 2.2% Retail (1) Revenue 6,608 6,506 102 1.6% Expenses 1,946 1,941 5 0.3% Net Operating Income 4,662 4,565 97 2.1% Multifamily (1) Revenue 3,051 2,937 114 3.9% Expenses 1,321 1,250 71 5.7% Net Operating Income 1,730 1,687 43 2.5% Same Store Net Operating Income (NOI), GAAP basis $9,128 $8,930 $198 2.2% Net effect of straight-line rents 115 (19) 134 Amortization of lease incentives and above (below) market rents 134 121 13 Same store portfolio NOI, cash basis $9,377 $9,032 $345 3.8% Cash Basis: Office $2,713 $2,650 $63 2.4% Retail 4,915 4,663 252 5.4% Multifamily 1,749 1,719 30 1.7% $9,377 $9,032 $345 3.8% GAAP Basis: Office $2,736 $2,678 $58 2.2% Retail 4,662 4,565 97 2.1% Multifamily 1,730 1,687 43 2.5% $9,128 $8,930 $198 2.2%
Top 10 Tenants by Annualized Base Rent $ in thousands As of March 31, 2016 20 Office Portfolio - Top 10 Tenants Tenant Number of Leases Lease Expiration Annualized Base Rent % of Office Portfolio Annualized Base Rent % of Total Portfolio Annualized Base Rent Clark Nexsen 1 2029 $ 2,438 11.7% 3.0% Williams Mullen 1 2018 1,494 7.1% 1.8% Hampton University 2 2024 1,003 4.8% 1.2% Commonwealth of Virginia 2 2030 891 4.3% 1.1% GSA 1 2016 855 4.1% 1.1% Pender & Coward 1 2030 839 4.0% 1.0% Troutman Sanders 1 2025 822 3.9% 1.0% The Art Institute 1 2019 819 3.9% 1.0% Cherry Bekaert 2 2022 736 3.5% 0.9% Kimley-Horn 1 2018 724 3.5% 0.9% Top 10 Total $ 10,622 50.8% 13.1% Retail Portfolio - Top 10 Tenants Tenant Number of Leases Lease Expiration Annualized Base Rent % of Retail Portfolio Annualized Base Rent % of Total Portfolio Annualized Base Rent Harris Teeter 5 2029 $ 2,853 6.4% 3.5% Kroger 7 2021 2,205 4.9% 2.7% Home Depot 2 2019 2,190 4.9% 2.7% Food Lion 3 2020 1,283 2.9% 1.6% PetSmart 4 2020 1,117 2.5% 1.4% Bed Bath & Beyond 3 2022 1,077 2.4% 1.3% Dick's Sporting Goods 1 2020 840 1.9% 1.0% Safeway 2 2021 821 1.8% 1.0% Weis Markets 1 2028 802 1.8% 1.0% Ross Dress for Less 2 2018 755 1.7% 0.9% Top 10 Total $ 13,942 31.2% 17.2%
Office Lease Summary 21 Renewal Lease Summary GAAP Cash Quarter Number of Leases Signed Net rentable SF Signed Leases Expiring Net rentable SF Expiring Contractual Rent per SF Prior Rent per SF Annual Change in Rent per SF Contractual Rent per SF Prior Rent per SF Annual Change in Rent per SF Weighted Average Lease Term (yrs) TI & LC TI & LC per SF Q1 2016 2 6,445 - - $21.34 $19.60 $1.75 $21.10 $20.38 $0.72 1.65 $3,773 $0.59 Q4 2015 2 5,708 2 3,947 24.50 23.50 1.01 24.39 23.68 0.71 1.31 3,682 0.65 Q3 2015 4 16,609 4 9,554 23.69 22.29 1.40 24.28 23.81 0.46 5.95 138,923 8.36 Q2 2015 - - - - - - - - - - - - - New Lease Summary (1) Quarter Number of Leases Signed Net rentable SF Signed Contractual Rent per SF Weighted Average Lease Term (yrs) TI & LC TI & LC per SF Q1 2016 2 3,773 $27.49 6.91 $139,067 $36.86 Q4 2015 2 9,920 30.13 7.17 421,094 42.45 Q3 2015 3 13,500 21.37 6.02 166,463 12.33 Q2 2015 1 3,500 18.25 3.00 22,345 6.38 (1) Excludes new leases from properties in development
Office Lease Expirations 22 Year of Lease Expiration Number of Leases Expiring Square Footage of Leases Expiring (1) % Portfolio Net Rentable Square Feet Annualized Base Rent % of Portfolio Annualized Base Rent Annualized Base Rent per Leased Square Foot Available - 136,050 14.4% - $ - - $ 2016 12 44,550 4.7% 1,058,460 5.1% 23.76 2017 6 21,254 2.2% 610,455 2.9% 28.72 2018 22 166,325 17.6% 4,645,663 22.2% 27.93 2019 16 103,761 11.0% 2,506,963 12.0% 24.16 2020 5 41,546 4.4% 942,604 4.5% 22.69 2021 6 49,659 5.2% 1,227,550 5.9% 24.72 2022 3 48,117 5.1% 1,326,903 6.3% 27.58 2023 4 43,078 4.5% 1,052,197 5.0% 24.43 2024 3 60,751 6.4% 1,666,025 8.0% 27.42 2025 4 43,292 4.6% 1,172,763 5.6% 27.09 2026 3 16,841 1.8% 400,474 1.9% 23.78 Thereafter 6 172,035 18.1% 4,315,937 20.6% 25.09 Total / Weighted Average 90 947,259 100.0% 20,925,993 $ 100.0% $25.80 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% - 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 Leased Square Feet % ABR of Office Portfolio (1) Includes development properties in lease up
Retail Lease Summary 23 Renewal Lease Summary GAAP Cash Quarter Number of Leases Signed Net rentable SF Signed Leases Expiring Net rentable SF Expiring Contractual Rent per SF Prior Rent per SF Annual Change in Rent per SF Contractual Rent per SF Prior Rent per SF Annual Change in Rent per SF Weighted Average Lease Term (yrs) TI & LC TI & LC per SF Q1 2016 10 26,870 1 1,800 $22.70 $21.29 $1.41 $22.21 $21.78 $0.42 3.37 $61,290 2.28 $ Q4 2015 6 33,274 4 27,146 20.63 18.73 1.89 20.55 19.45 1.09 4.54 - - Q3 2015 11 28,760 5 24,491 25.03 24.67 0.37 23.96 26.42 (2.46) 2.68 96,077 3.34 Q2 2015 4 10,352 3 5,255 19.81 17.65 2.16 19.37 19.25 0.11 4.37 - - New Lease Summary (1) Quarter Number of Leases Signed Net rentable SF Signed Contractual Rent per SF Weighted Average Lease Term (yrs) TI & LC TI & LC per SF Q1 2016 4 11,913 $19.68 5.10 $431,103 $36.19 Q4 2015 4 24,825 21.83 6.64 421,094 16.96 Q3 2015 1 3,606 19.00 10.00 42,190 11.70 Q2 2015 3 5,012 13.69 5.59 65,253 13.02 (1) Excludes new leases from properties in development
Retail Lease Expirations 24 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% - 100,000 200,000 300,000 400,000 500,000 600,000 Leased Square Feet % ABR of Retail Portfolio Year of Lease Expiration Number of Leases Expiring Square Footage of Leases Expiring (1) % Portfolio Net Rentable Square Feet Annualized Base Rent % of Portfolio Annualized Base Rent Annualized Base Rent per Leased Square Foot Available - 127,798 4.9% - $ - - $ M-T-M 8 16,280 0.6% 345,732 0.9% 21.24 2016 37 75,417 2.9% 1,633,226 4.2% 21.66 2017 47 190,884 7.4% 3,029,772 7.7% 15.87 2018 63 311,024 12.0% 5,190,373 13.2% 16.69 2019 64 544,478 21.1% 7,912,363 20.2% 14.53 2020 55 532,101 20.6% 7,076,585 18.0% 13.30 2021 27 197,316 7.6% 3,309,754 8.4% 16.77 2022 14 121,405 4.7% 1,906,762 4.9% 15.71 2023 12 125,772 4.9% 2,489,209 6.3% 19.79 2024 14 120,198 4.7% 2,205,990 5.6% 18.35 2025 12 62,257 2.4% 1,546,062 3.9% 24.83 2026 8 71,117 2.8% 1,039,722 2.6% 14.62 Thereafter 5 86,846 3.4% 1,552,553 4.1% 17.88 Total / Weighted Average 366 2,582,893 100.0% 39,238,103 $ 100.0% $15.98 (1) Includes development properties in lease up
Components of Net Asset Value Stabilized Portfolio Cash NOI ÷ Market Cap Rate = Stabilized Portfolio Value Investment in Development Pipeline Trailing 12 Months General Contracting and Real Estate Services x Appropriate Multiple = TRS Value Other Assets Liabilities NAV 25
Net Asset Value Component Data In thousands 26 Stabilized Portfolio NOI (Cash) Taxable REIT Subsidiary (TRS) Three months ended Annualized Trailing 12 Months 3/31/2016 3/31/2016 3/31/2016 Diversified Portfolio General contracting and real estate services $6,761 Office $619 $2,476 Retail 7,886 31,544 Other Assets Multifamily 995 3,980 Other Assets As of 3/31/2016 Total Diversified Portfolio NOI $9,500 $38,000 Cash and Cash Equivalents $18,810 Restricted Cash 3,695 Virginia Beach Town Center Accounts Receivable 13,360 Office (1) $2,424 $9,696 Notes Receivable 10,464 Retail (1) 1,551 6,204 Construction receivables, including retentions 31,567 Multifamily 1,702 6,808 Other Assets 64,793 Total Virginia Beach Town Center NOI $5,677 $22,708 Total Other Assets $142,689 Stabilized Portfolio NOI (Cash) $15,177 $60,708 Liabilities & Share Count As of 3/31/2016 Development Pipeline Liabilities Mortgages and notes payable $467,311 3/31/2016 Accounts payable and accrued liabilities 6,812 Income producing property $41,100 Construction payables, including retentions 43,611 Construction in progress 60,500 Other Liabilities 36,997 Other assets 4,400 Total Liabilities $554,731 Total cost to date (p. 16) $106,000 Three months ended Land held for development 1,995 Share Count 3/31/2016 Weighted average common shares outstanding 30,191 Weighted average operating partnership ("OP") Units Outstanding 16,027 Total weighted average common shares and OP units outstanding 46,218 (1) Includes leases for space occupied by Armada Hoffler which are eliminated for GAAP purposes
Retail Portfolio Acquisition 27
Retail Portfolio Acquisition As of January 14, 2016 Based on 2016 budget adjusted for a full year of operation LOI or Purchase and Sale Agreement outstanding $ in thousands 28 SF Anchors (Shadow) Occupancy (1) NOI (2) % of Total Portfolio NOI Property - To Hold (Core Retail Properties) South Square Raleigh-Durham-Chapel Hill, NC 109,590 Ross, Petco, Office Depot, (Target), (Sam's Club) 100% Patterson Place Raleigh-Durham-Chapel Hill, NC 160,942 Bed Bath & Beyond, PetSmart, Total Wine & More, A.C. Moore, (The Home Depot), (Kohl's), (Kroger) 99% Wendover Village Winston-Salem, NC 135,758 Bed Bath & Beyond, Golfsmith, T.J. Maxx, Petco, Five Below, (Costco) 100% Alexander Pointe Charlotte, NC 57,710 Harris Teeter 100% Harper Hill Commons Greensboro, NC 96,914 Harris Teeter 79% Northhampton Market Greenville-Spartanburg, SC 114,935 Petsmart, Hobby Lobby, Dollar Tree, (Target) 94% Sub Total/Weighted Average 675,849 96% 9,100 75% Properties Under Evaluation Waynesboro Commons Waynesboro, VA 52,415 Kroger (3) 100% Oakland Marketplace Memphis, TN 64,600 Kroger (3) 96% Willowbrook Commons Nashville, TN 93,600 Kroger (3) 88% Broadmoor Plaza South Bend, IN 115,059 Kroger, Staples, Jo-Ann Fabrics (3) 94% Kroger Junction, Pasadena, TX 81,158 Kroger, Family Dollar 78% Sub Total/Weighted Average 406,832 91% 3,100 25% Total/Weighted Average 1,082,681 94% $12,200 100%
As of 12/31/15 NOI Contribution 29 As of 3/31/16 TOP 5 Tenants Gives effect to the disposition of the Richmond Tower office buildings for which Williams Mullen was the anchor tenant. (1) (1) Office Tenant % of Total Portfolio ABR Clark Nexsen 3.0% Williams Mullen 1.8% Hampton University 1.2% Commonwealth of Virginia 1.1% GSA 1.1% Retail 43% Multifamily 17% General Contracting 7% Office 33% Retail 54% General Contracting 10% Multifamily 16% Office 20% Retail Tenant % of Total Portfolio Home Depot 2.9% Harris Teeter 2.0% Food Lion 1.7% Dick's Sporting Goods 1.1% Weis Markets 1.1% Office Tenant % of Total Portfolio Williams Mullen 11.6% Clark Nexsen 3.2% Cherry Bekaert 1.3% Hampton University 1.3% Commonwealth of Va 1.2% % of Total Portfolio ABR % of Total Portfolio ABR Retail Tenant % of Total Portfolio ABR Harris Teeter 3.5% Kroger 2.7% Home Depot 2.7% Food Lion 1.6% PetSmart 1.4%
Appendix – Definitions & Reconciliations
Definitions Net Operating Income: We calculate Net Operating Income (“NOI”) as property revenues (base rent, expense reimbursements 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. 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 gains (or losses) from sales of depreciable operating property, real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. 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. 31
Definitions Normalized Funds From Operations: We calculate Normalized Funds From Operations (“Normalized FFO") as FFO calculated in accordance with the standards established by NAREIT, adjusted for acquisition, development and other pursuit costs, gains or losses from the early extinguishment of debt, impairment charges, mark-to-market adjustments on interest rate derivatives and other non-comparable items. Management believes that the computation of FFO in accordance to NAREIT’s definition includes certain items that are not indicative of the results provided by the Company’s operating portfolio and affect the comparability of the Company’s period-over-period performance. Our calculation of Normalized FFO differs from NAREIT's definition of FFO. Other equity REITs may not calculate Normalized FFO in the same manner as us, and, accordingly, our Normalized FFO may not be comparable to other REITs' Normalized FFO. 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, the amortization of leasing incentives and above (below) market rents and proceeds from government development grants. Management believes that AFFO provides useful supplemental information to investors regarding our operating performance as it provides a consistent comparison of our operating performance across time periods and allows investors to more easily compare our operating results with other REITs. However, other REITs may use different methodologies for calculating AFFO or similarly entitled FFO measures and, accordingly, our AFFO may not always be comparable to AFFO or other similarly entitled FFO measures of other REITs. 32
Definitions EBITDA: We calculate EBITDA as net income (loss) (calculated in accordance with GAAP), excluding interest expense, income taxes and depreciation and amortization. We also exclude gains (or losses) from sales of depreciable operating property from our calculation of EBITDA. Management believes 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. Core EBITDA: We calculate Core EBITDA as EBITDA, excluding certain items, including, but not limited to, debt extinguishment losses, mark-to-market adjustments on interest rate derivatives, non-cash stock compensation and the impact of development pipeline projects that are still in lease-up. We generally consider a property to be in lease-up until the earlier of (i) the quarter after which the property reaches 80% occupancy or (ii) the thirteenth quarter after the property receives its certificate of occupancy. Management believes that Core EBITDA provides useful supplemental information to investors regarding our ongoing operating performance as it provides a consistent comparison of our operating performance across time periods and allows investors to more easily compare our operating results with other REITs. However, other REITs may use different methodologies for calculating Core EBITDA or similarly entitled measures and, accordingly, our Core EBITDA may not always be comparable to Core EBITDA or other similarly entitled measures of other REITs. Core Debt: We calculate Core Debt as our total debt, excluding loans associated with our development pipeline, cash & cash equivalents, and restricted cash. Same Store Portfolio: We define same store properties as those that we owned and operated for the entirety of the comparative periods presented. We generally consider a property to be in lease-up until the earlier of (i) the quarter after which the property reaches 80% occupancy or (ii) the thirteenth quarter after the property receives its certificate of occupancy. The following table shows the properties included in the same store and non-same store portfolio for the comparative periods presented. 33
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Same Store vs. Non-Same Store Properties 34 Same Store Non-Same Store Same Store Non-Same Store Retail Properties Office Properties 249 Central Park Retail X 4525 Main Street X Alexander Pointe X Armada Hoffler Tower X Bermuda Crossroads X Commonwealth of VA - Chesapeake X Broad Creek Shopping Center X Commonwealth of VA - Virginia Beach X Broadmoor Plaza X Oceaneering X Columbus Village X One Columbus X Commerce Street Retail X Oyster Point X Courthouse 7-Eleven X Richmond Tower X Dick’s at Town Center X Sentara Williamsburg X Dimmock Square X Two Columbus X Greentree Shopping Center X Fountain Plaza Retail X Multifamily Properties Gainsborough Square X Encore Apartments X Hanbury Village X Liberty Apartments X Harper Hill Commons X Smith’s Landing X Harrisonburg Regal X The Cosmopolitan X Kroger Junction X Whetstone Apartments X North Hampton Market X North Point Center X Oakland Marketplace X Parkway Marketplace X Patterson Place X Perry Hall Marketplace X Providence Plaza X Sandbridge Commons X Socastee Commons X South Retail X South Square X Stone House Square X Studio 56 Retail X Tyre Neck Harris Teeter X Waynesboro Commons X Wendover Village X Willowbrook Commons X Comparison of Three Months Ended 3/31/2016 to 2015 Comparison of Three Months Ended 3/31/2016 to 2015
Reconciliation to Property Portfolio NOI $ in thousands 35 (1) See page 34 for Same Store vs. Non-Same Store Properties Three months ended 3/31 2016 2015 Office Same Store(1) Rental revenues $4,262 $4,315 Property expenses 1,526 1,637 NOI 2,736 2,678 Non-Same Store NOI 790 2,580 Segment NOI 3,526 $5,258 Retail Same Store(1) Rental revenues $6,608 $6,506 Property expenses 1,946 1,941 NOI 4,662 4,565 Non-Same Store NOI 4,750 95 Segment NOI $9,412 $4,660 Multifamily Same Store (1) Rental revenues $3,051 $2,937 Property expenses 1,321 1,250 NOI 1,730 1,687 Non-Same Store NOI 937 168 Segment NOI 2,667 1,855 Total Property Portfolio NOI $15,605 $11,773
Reconciliation to Property Portfolio NOI $ in thousands 36 Three months ended 3/31/2016 Diversified Portfolio Office Retail Multifamily Total Cash NOI $619 $7,886 $995 $9,500 Net effect of straight-line rents 25 6 (11) 20 Amortization of lease incentives and (above) below market rents - 159 (13) 146 GAAP NOI $644 $8,051 $971 $9,666 Town Center of Virginia Beach Office Retail Multifamily Total Cash NOI $2,424 $1,551 $1,702 $5,677 Net effect of straight-line rents 30 (26) (6) (2) Amortization of lease incentives and (above) below market rents (26) (84) - (110) Elimination of AHH rent (176) (78) - (254) GAAP NOI $2,252 $1,363 $1,696 $5,311 GAAP NOI Office Retail Multifamily Total Diversified Portfolio $644 $8,051 $971 $9,666 Town Center of Virginia Beach 2,252 1,363 1,696 5,311 Unstabilized Properties 630 (3) - 628 Total Property Portfolio NOI $3,526 $9,411 $2,667 $15,605
Reconciliation to GAAP Net Income $ in thousands 37 Office Retail Multifamily Total Property Portfolio General Contracting & Real Estate Services Total Segment revenues 5,521 $ 13,032 $ 4,730 $ 23,283 $ 36,803 $ 60,086 $ Segment expenses 1,995 3,620 2,063 7,678 35,037 42,715 Net operating income 3,526 $ 9,412 $ 2,667 $ 15,605 $ 1,766 $ 17,371 $ Depreciation and amortization (8,149) General and administrative expenses (2,484) Acquisition, development and other pursuit costs (704) Impairment charges (35) Interest income 182 Interest expense (3,791) Loss on extinguishment of debt - Gain on real estate dispositions 26,674 Change in fair value of interest rate derivatives (2,389) Other income 76 Income tax provision (218) Net income 26,533 $ Three months ended 3/31/2016
