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 2, 2016
ARMADA HOFFLER PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Maryland | 001-35908 | 46-1214914 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
222 Central Park Avenue, Suite 2100 | ||
Virginia Beach, Virginia | 23462 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (757) 366-4000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
◻ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
◻ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
◻ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
◻ 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 August 2, 2016, Armada Hoffler Properties, Inc. (the “Company”) issued a press release announcing its financial position as of June 30, 2016, results of operations for the three months ended June 30, 2016 and other related information. Also on August 2, 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 June 30, 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.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. | Description | |
99.1 | Press Release, dated August 2, 2016, issued by Armada Hoffler Properties, Inc., providing its financial position as of June 30, 2016 and results of operations for the three months ended June 30, 2016. | |
99.2 | Armada Hoffler Properties, Inc. Second Quarter 2016 Supplemental Information. | |
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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 2, 2016 | /s/ MICHAEL P. O’HARA | |
Michael P. O’Hara | ||
Chief Financial Officer and Treasurer | ||
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EXHIBIT INDEX
Exhibit No. | Description | |
99.1 | Press Release, dated August 2, 2016, issued by Armada Hoffler Properties, Inc., providing its financial position as of June 30, 2016 and results of operations for the three months ended June 30, 2016. | |
99.2 | Armada Hoffler Properties, Inc. Second Quarter 2016 Supplemental Information. | |
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Exhibit 99.1
 | PRESS RELEASE | |
ARMADA HOFFLER PROPERTIES REPORTS SECOND QUARTER 2016 RESULTS
Net Income of $0.06 Per Diluted Share
Normalized FFO of $0.26 Per Diluted Share
Company Raised 2016 Full-Year Normalized FFO Guidance
VIRGINIA BEACH, VA, August 2, 2016 – Armada Hoffler Properties, Inc. (NYSE: AHH) today announced its results for the quarter ended June 30, 2016.
Highlights include:
• | Net income of $3.1 million, or $0.06 per diluted share, for the quarter ended June 30, 2016 compared to net income of $10.3 million, or $0.25 per diluted share, for the quarter ended June 30, 2015. Excluding gains from real estate dispositions, net income for both periods was approximately $3.1 million. |
• | Normalized Funds From Operations (“FFO”) of $12.5 million, or $0.26 per diluted share, for the quarter ended June 30, 2016 compared to Normalized FFO of $9.7 million, or $0.24 per diluted share, for the quarter ended June 30, 2015. |
• | FFO of $11.7 million, or $0.24 per diluted share, for the quarter ended June 30, 2016 compared to FFO of $8.8 million, or $0.22 per diluted share, for the quarter ended June 30, 2015. |
• | Same Store Net Operating Income (“NOI”) increased for the eighth consecutive quarter. |
• | Core operating property portfolio occupancy at 95.3% compared to 95.3% as of June 30, 2015. |
• | 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. |
• | Added 220,000 square feet of retail space in the greater Richmond market through the acquisition of Southgate Square for a combination of $21.1 million in debt and 1.6 million Operating Partnership units, and agreed to purchase another 40,000 square feet of retail space at Southshore Shops for a combination of $6.7 million in cash and 0.2 million Operating Partnership units. |
• | Announced the next phase of development in the Town Center of Virginia Beach, a $35 million mixed-use project expected to include 39,000 square feet of retail space, which is nearly 50% pre-leased, and 120 luxury apartments, as part of the Company's ongoing public-private partnership with the City of Virginia Beach. |
• | Sold Willowbrook Commons (June 20, 2016) and Kroger Junction (July 29, 2016) - two of the non-core retail centers acquired as part of the 11-asset portfolio purchase completed in January - for an aggregate sales price of $12.9 million. |
• | The Company is raising its 2016 full-year Normalized FFO guidance range - now $0.96 to $1.00 per diluted share from its previous guidance range of $0.94 to $0.98 per diluted share. |
Commenting on the Company’s results, Louis Haddad, President and CEO, said, "We are pleased with our results for the second quarter and continue to successfully execute on our strategy. Based on our year-to-date results and the outlook for the rest of the year, we've raised our 2016 Normalized FFO guidance range. By most any measure, we are making good on our promise to investors, and there is still a lot more to come."
Financial Results
Net income for the second quarter decreased to $3.1 million compared to $10.3 million for the second quarter of 2015. Excluding gains on real estate dispositions, net income slightly increased period-over-period. Normalized FFO for the second quarter increased to $12.5 million compared to $9.7 million for the second quarter of 2015. FFO for the second quarter increased to $11.7 million compared to $8.8 million for the second quarter of 2015.
The period-over-period changes in net income, Normalized FFO and FFO were positively impacted by property acquisitions and organic Same Store NOI growth and negatively impacted by lower construction segment gross profits and higher interest expense. The period-over-period changes in net income were also negatively impacted by lower gains on real estate dispositions and higher depreciation and amortization expense from acquired properties and new properties placed into service. Both net income and FFO were negatively impacted by higher mark-to-market losses on interest rate derivatives.
Operating Performance
At the end of the second quarter, the Company’s office, retail and multifamily core operating property portfolios were 94.6%, 96.0% and 93.4% occupied, respectively.
Total construction contract backlog was $252.3 million at the end of the quarter.
Balance Sheet and Financing Activity
As of June 30, 2016, the Company had $513 million of total debt outstanding, including $107 million outstanding under its revolving credit facility. Total debt outstanding excludes unamortized GAAP fair value adjustments and deferred financing costs. Approximately 42% of the Company’s debt had fixed interest rates or were subject to interest rate swaps as of June 30, 2016. After considering LIBOR interest rate caps with strike prices at or below 150 basis points as of June 30, 2016, approximately 95% of the Company’s debt was fixed or hedged.
During the second quarter, the Company raised an aggregate of $21.1 million of gross proceeds under its At-The-Market (“ATM”) continuous equity offering programs at a weighted average price of $12.32 per share.
Outlook
The Company is raising its 2016 full-year guidance and now expects 2016 Normalized FFO in the range of $0.96 to $1.00 per diluted share as compared to the Company's previously announced full-year guidance 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.
Full-year 2016 Guidance [1] | Expected Ranges | |||||||
Total NOI | $65.8M | $66.5M | ||||||
Construction company annual segment gross profit | $4.7M | $5.2M | ||||||
General and administrative expenses | $9.1M | $9.4M | ||||||
Interest income | $3.0M | $3.3M | ||||||
Interest expense | $16.0M | $16.5M | ||||||
Normalized FFO per diluted share [2] | $0.96 | $1.00 | ||||||
[1] Excludes the impact of any future acquisitions other than Southshore Shops, dispositions or other capital markets activity, except for 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 49.8 million weighted average shares and units outstanding, including shares issued under the ATM program. 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,
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because it is unable to provide a meaningful or accurate estimate of reconciling items and the information is not available without unreasonable effort as a result of the inherent difficulty of forecasting the timing and/or amounts of various items that would impact net income per diluted share. For the same reasons, the Company is unable to address the probable significance of the unavailable information and believes that providing a reconciliation for its guidance range of Normalized FFO per diluted share would imply a degree of precision for its forward-looking net income per diluted share that could be misleading to investors.
Supplemental Financial Information
Further details regarding operating results, properties and leasing statistics can be found in the Company’s supplemental financial package available at www.ArmadaHoffler.com under the Investor Relations section.
Webcast and Conference Call
The Company will host a webcast and conference call on Tuesday, August 2, 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, September 2, 2016 by dialing 877-870-5176 (domestic) or 858-384-5517 (international) and entering the pass code 13638902.
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
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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 in the final page of this release.
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ARMADA HOFFLER PROPERTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
June 30, 2016 | December 31, 2015 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Real estate investments: | ||||||||
Income producing property | $ | 752,783 | $ | 579,000 | ||||
Held for development | 2,032 | 1,180 | ||||||
Construction in progress | 79,258 | 53,411 | ||||||
Accumulated depreciation | (127,337 | ) | (125,380 | ) | ||||
Net real estate investments | 706,736 | 508,211 | ||||||
Real estate investments held for sale | 5,829 | 40,232 | ||||||
Cash and cash equivalents | 19,984 | 26,989 | ||||||
Restricted cash | 3,158 | 2,824 | ||||||
Accounts receivable, net | 14,366 | 21,982 | ||||||
Notes receivable | 39,311 | 7,825 | ||||||
Construction receivables, including retentions | 31,277 | 36,535 | ||||||
Construction contract costs and estimated earnings in excess of billings | 1,756 | 88 | ||||||
Other assets | 72,055 | 44,861 | ||||||
Total Assets | $ | 894,472 | $ | 689,547 | ||||
LIABILITIES AND EQUITY | ||||||||
Indebtedness, net | $ | 501,940 | $ | 377,593 | ||||
Debt secured by real estate investments held for sale | 6,380 | — | ||||||
Accounts payable and accrued liabilities | 6,379 | 6,472 | ||||||
Construction payables, including retentions | 49,203 | 52,067 | ||||||
Billings in excess of construction contract costs and estimated earnings | 2,893 | 2,224 | ||||||
Other liabilities | 38,935 | 25,471 | ||||||
Total Liabilities | 605,730 | 463,827 | ||||||
Total Equity | 288,742 | 225,720 | ||||||
Total Liabilities and Equity | $ | 894,472 | $ | 689,547 | ||||
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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, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(Unaudited) | ||||||||||||||||
Revenues | ||||||||||||||||
Rental revenues | $ | 24,251 | $ | 19,908 | $ | 47,534 | $ | 38,098 | ||||||||
General contracting and real estate services | 33,200 | 47,066 | 70,003 | 76,137 | ||||||||||||
Total revenues | 57,451 | 66,974 | 117,537 | 114,235 | ||||||||||||
Expenses | ||||||||||||||||
Rental expenses | 5,071 | 4,631 | 10,400 | 9,391 | ||||||||||||
Real estate taxes | 2,382 | 1,959 | 4,731 | 3,616 | ||||||||||||
General contracting and real estate services | 32,025 | 45,283 | 67,062 | 73,425 | ||||||||||||
Depreciation and amortization | 8,602 | 5,766 | 16,751 | 10,674 | ||||||||||||
General and administrative | 2,224 | 2,096 | 4,708 | 4,424 | ||||||||||||
Acquisition, development and other pursuit costs | 437 | 591 | 1,141 | 762 | ||||||||||||
Impairment charges | — | 23 | 35 | 23 | ||||||||||||
Total expenses | 50,741 | 60,349 | 104,828 | 102,315 | ||||||||||||
Operating income | 6,710 | 6,625 | 12,709 | 11,920 | ||||||||||||
Interest income | 722 | — | 904 | — | ||||||||||||
Interest expense | (3,978 | ) | (3,358 | ) | (7,769 | ) | (6,404 | ) | ||||||||
Loss on extinguishment of debt | — | (180 | ) | — | (407 | ) | ||||||||||
Gain on real estate dispositions | 13 | 7,210 | 26,687 | 13,407 | ||||||||||||
Change in fair value of interest rate derivatives | (373 | ) | (40 | ) | (2,762 | ) | (187 | ) | ||||||||
Other income (expense) | 43 | 24 | 119 | 39 | ||||||||||||
Income before taxes | 3,137 | 10,281 | 29,888 | 18,368 | ||||||||||||
Income tax benefit (provision) | (6 | ) | 4 | (224 | ) | 35 | ||||||||||
Net income | 3,131 | 10,285 | 29,664 | 18,403 | ||||||||||||
Per diluted share | $ | 0.06 | $ | 0.25 | $ | 0.62 | $ | 0.46 | ||||||||
Weighted average shares outstanding | 48,849 | 40,356 | 47,534 | 40,088 | ||||||||||||
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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, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net income | $ | 3,131 | $ | 10,285 | $ | 29,664 | $ | 18,403 | ||||||||
Depreciation and amortization | 8,602 | 5,766 | 16,751 | 10,674 | ||||||||||||
Gain on dispositions of operating real estate(1) | (13 | ) | (7,210 | ) | (26,257 | ) | (13,407 | ) | ||||||||
Funds From Operations (FFO) | $ | 11,720 | $ | 8,841 | $ | 20,158 | $ | 15,670 | ||||||||
Acquisition costs | 437 | 591 | 1,141 | 762 | ||||||||||||
Impairment charges | — | 23 | 35 | 23 | ||||||||||||
Loss on extinguishment of debt | — | 180 | — | 407 | ||||||||||||
Change in fair value of interest rate derivatives | 373 | 40 | 2,762 | 187 | ||||||||||||
Normalized FFO | $ | 12,530 | $ | 9,675 | $ | 24,096 | $ | 17,049 | ||||||||
FFO per diluted share | $ | 0.24 | $ | 0.22 | $ | 0.42 | $ | 0.39 | ||||||||
Normalized FFO per diluted share | $ | 0.26 | $ | 0.24 | $ | 0.51 | $ | 0.43 | ||||||||
Weighted average shares outstanding | 48,849 | 40,356 | 47,534 | 40,088 | ||||||||||||
(1) Excludes gains on non-operating undepreciated real estate of $430 for the six months ended June 30, 2016.
Contact:
Michael P. O’Hara
Armada Hoffler Properties, Inc.
Chief Financial Officer and Treasurer
Email: MOHara@ArmadaHoffler.com
Phone: (757) 366-6684
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SECOND QUARTER 2016
SUPPLEMENTAL INFORMATION
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Table of Contents
Construction Business Summary
Same Store NOI by Segment
Top 10 Tenants by Annualized Base Rent
Office Lease Summary
Office Lease Expirations
Retail Lease Summary
Retail Lease Expirations
Net Asset Value Component Data
Appendix – Definitions & Reconciliations
Definitions
Same Store vs Non-Same Store Properties
Reconciliation to Property Portfolio NOI
Reconciliation to GAAP Net Income
Forward Looking Statements
Corporate Profile
Highlights
2016 Outlook
Summary Information
Summary Balance Sheet
Summary Income Statement
FFO, Normalized FFO & Adjusted FFO
Outstanding Debt
Core Debt to Core EBITDA
Debt Information
Capitalization & Financial Ratios
Property Portfolio
Development Pipeline
Acquisitions & Dispositions
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20
21
22
23
24
25
26
27
28
31
32
34
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10
11
12
13
14
15
17
18
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4
5
6
7
8
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Forward Looking Statements
This Supplemental Information should be read in conjunction with the unaudited condensed consolidated financial statements
appearing in our press release dated August 2, 2016, which has been furnished as Exhibit 99.1 to our Form 8-K filed on August
2, 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.
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.
Analyst Coverage
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Corporate Profile
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.
Board of Directors Corporate Officers
Investor Relations
Daniel A. Hoffler
A. Russell Kirk
Louis S. Haddad
John W. Snow
George F. Allen
James A. Carroll
James C. Cherry
Eva S. Hardy
Executive Chairman of Board
Vice Chairman of the Board
Director
Lead Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
Louis S. Haddad
Michael P. O’Hara
Eric L. Smith
Anthony P. Nero
Eric E. Apperson
Shelly R. Hampton
President and Chief Executive Officer
Chief Financial Officer and Treasurer
Chief Investment Officer and Corporate Secretary
President of Development
President of Construction
President of Asset Management
Michael P. O’Hara Chief Financial Officer and Treasurer
(757) 366-6684 mohara@armadahoffler.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
Robert W. Baird & Co. David Rogers
(216) 737-7341 drogers@rwbaird.com
Stifel, Nicolaus & Company, Inc. John Guinee
(443) 224-1307 jwguinee@stifel.com
Wunderlich Securities Craig Kucera
(540) 277-3366 ckucera@wundernet.com
Stonegate Capital Partners Laura Engel
(214) 987-4121 laura@stonegateinc.com
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Highlights
• Net income of $3.1 million, or $0.06 per diluted share, for the quarter ended June 30, 2016 compared to net income of $10.3
million, or $0.25 per diluted share, for the quarter ended June 30, 2015. Excluding gains from real estate dispositions, net
income for both periods was approximately $3.1 million.
• Normalized Funds From Operations (“FFO”) of $12.5 million, or $0.26 per diluted share, for the quarter ended June 30, 2016
compared to Normalized FFO of $9.7 million, or $0.24 per diluted share, for the quarter ended June 30, 2015.
• FFO of $11.7 million, or $0.24 per diluted share, for the quarter ended June 30, 2016 compared to FFO of $8.8 million, or $0.22
per diluted share, for the quarter ended June 30, 2015.
• Same Store Net Operating Income (“NOI”) increased for the eighth consecutive quarter.
• Core operating property portfolio occupancy at 95.3% compared to 95.3% as of June 30, 2015.
• 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.
• Added 220,000 square feet of retail space in the greater Richmond market through the acquisition of Southgate Square for a
combination of $21.1 million in debt and 1.6 million Operating Partnership units, and agreed to purchase another 40,000 square
feet of retail space at Southshore Shops for a combination of $6.7 million in cash and 0.2 million Operating Partnership units.
• Announced the next phase of development in the Town Center of Virginia Beach, a $35 million mixed-use project expected to
include 39,000 square feet of retail space, which is nearly 50% pre-leased, and 120 luxury apartments, as part of the
Company's ongoing public-private partnership with the City of Virginia Beach.
• Sold Willowbrook Commons (June 20, 2016) and Kroger Junction (July 29, 2016) – two of the non-core retail centers acquired
as part of the 11-asset portfolio purchased completed in January – for an aggregate sales price of $12.9 million.
• The Company is raising its 2016 full-year Normalized FFO guidance range - now $0.96 to $1.00 per diluted share from its
previous guidance range of $0.94 to $0.98 per diluted share.
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2016 Outlook
The Company is raising its 2016 full-year guidance and
now expects 2016 Normalized FFO in the range of $0.96
to $1.00 per diluted share. The following table outlines the
Company’s assumptions along with Normalized FFO per
share estimates for the full-year 2016.
[1] Excludes the impact of any future acquisitions other than Southshore Shops,
dispositions or other capital markets activity, except for 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
49.8 million weighted average shares and units outstanding, including shares issued
under the ATM program.
Ful -y ar 2016 Guidance
[1]
Total GAAP NOI $65.8M $66.5M
Construction company annual segment gross profit $4.7M $5.2M
General and administrative expenses $9.1M $9.4M
Interest income $3.0M $3.3M
Interest expense $16.0M $16.5M
Normalized FFO per diluted share
[2]
$0.96 $1.00
Expected Ranges
7
Summary Information
$ in thousands, except per share data
Three months ended
6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015
OPERATIONAL METRICS
Net income $3,131 $26,533 $8,443 $4,337 $10,285
Net income per diluted share $0.06 $0.57 $0.19 $0.10 $0.25
Rental properties Net Operating Income (NOI) 16,798 15,605 14,713 14,382 13,318
General contracting and real estate services gross profit 1,175 1,766 1,106 2,106 1,783
Adjusted EBITDA (1) 16,077 14,406 12,903 14,341 12,235
Funds From Operations (FFO) 11,720 8,438 9,618 10,654 8,841
FFO per diluted share $0.24 $0.18 $0.22 $0.25 $0.22
Normalized FFO 12,530 11,566 10,614 10,996 9,675
Normalized FFO per diluted share $0.26 $0.25 $0.24 $0.26 $0.24
Annualized dividend yield 5.24% 6.40% 6.49% 6.96% 6.81%
CAPITALIZATION
Total common shares outstanding 32,825 31,095 30,076 26,261 25,855
Operating Partnership ("OP") units outstanding 17,597 16,027 16,027 16,043 14,769
Common shares and OP units outstanding 50,422 47,122 46,103 42,304 40,624
Market price per common share $13.74 $11.25 $10.48 $9.77 $9.99
Equity market capitalization(2) $692,798 $530,123 $483,159 $413,310 $405,834
Total debt(3) 512,702 471,876 382,013 421,442 388,288
Total market capitalization 1,205,500 1,001,999 865,172 834,752 794,122
Less: cash (23,142) (22,505) (29,813) (19,434) (30,446)
Total enterprise value $1,182,358 $979,494 $835,359 $815,318 $763,676
BALANCE SHEET METRICS
Core Debt/enterprise value 35.4% 40.1% 37.0% 44.6% 36.3%
Fixed charge coverage ratio 3.3x 3.1x 3.1x 3.3x 3.1x
Core Debt/Annualized Core EBITDA 6.7x 6.9x 6.1x 6.6x 6.0x
CORE PORTFOLIO OCCUPANCY
Office (4) 94.6% 95.0% 95.8% 95.5% 94.6%
Retail (4) 96.0% 95.1% 95.5% 96.2% 95.6%
Multifamily(5) 94.3% 93.5% 94.2% 94.9% 96.5%
Weighted Average (6) 95.3% 94.7% 95.3% 95.6% 95.3%
(1) Excludes gains on dispositions of real estate and mark-to-market adjustments on interest rate derivatives
(2) Includes common shares and OP units
(3) Excludes unamortized GAAP adjustments
(4) Office and retail occupancy based on occupied square feet as a % of respective total
(5) Multifamily occupancy based on occupied units as a % of respective total
(6) Total occupancy weighted by annualized base rent
8
Summary Balance Sheet
$ in thousands
6/30/2016 12/31/2015
Assets (Unaudited)
Real estate investments:
Income producing property $752,783 $579,000
Held for development 2,032 1,180
Construction in progress 79,258 53,411
Accumulated depreciation (127,337) (125,380)
Net real estate investments 706,736 508,211
Real estate investments held for sale 5,829 40,232
Cash and cash equivalents 19,984 26,989
Restricted cash 3,158 2,824
Accounts receivable, net 14,366 21,982
Notes receivable 39,311 7,825
Construction receivables, including retentions 31,277 36,535
Costs and estimated earnings in excess of bil l ings 1,756 88
Other assets 72,055 44,861
Total Assets $894,472 $689,547
Liabilities and Equity
Indebtedness, net $501,940 $377,593
Debt secured by real estate held for sale 6,380 -
Accounts payable and accrued liabilities 6,379 6,472
Construction payables, including retentions 49,203 52,067
Bil l ings in excess of costs and estimated earnings 2,893 2,224
Other l iabilities 38,935 25,471
Total Liabilities 605,730 463,827
Total Equity 288,742 225,720
Total Liabilities and Equity $894,472 $689,547
As of
9
Summary Income Statement
Amounts in thousands, except per share data
Three months ended Six Months Ended
6/30/2016 6/30/2015 6/30/2016 6/30/2015
Revenues (Unaudited)
Rental revenues $24,251 $19,908 $47,534 $38,098
General contracting and real estate services 33,200 47,066 70,003 76,137
Total Revenues 57,451 66,974 117,537 114,235
Expenses
Rental expenses 5,071 4,631 10,400 9,391
Real estate taxes 2,382 1,959 4,731 3,616
General contracting and real estate services 32,025 45,283 67,062 73,425
Depreciation and amortization 8,602 5,766 16,751 10,674
General and administrative 2,224 2,096 4,708 4,424
Acquisition, development & other pursuit costs 437 591 1,141 762
Impairment charges - 23 35 23
Total Expenses 50,741 60,349 104,828 102,315
Operating Income 6,710 6,625 12,709 11,920
Interest income 722 - 904 -
Interest expense (3,978) (3,358) (7,769) (6,404)
Loss on extinguishment of debt - (180) - (407)
Gain on real estate dispositions 13 7,210 26,687 13,407
Change in fair value of interest rate derivatives (373) (40) (2,762) (187)
Other income 43 24 119 39
Income before taxes 3,137 10,281 29,888 18,368
I come tax benefit (provision) (6) 4 (224) 35
Net Income $3,131 $10,285 $29,664 $18,403
Per Diluted Share $0.06 $0.25 $0.62 $0.46
Weighted Average Shares-Diluted 48,849 40,356 47,534 40,088
(1) See definitions on pages 28-30
(2) Excludes gain on non-operating real estate of $430K for the three months ended 3/31/2016
(3) Excludes first generation rental space
10
FFO, Normalized FFO & Adjusted FFO(1)
$ in thousands, except per share data
Three months ended
6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015
Funds From Operations (Unaudited)
Net income $3,131 $26,533 $8,443 $4,337 $10,285
Earnings per diluted share $0.06 $0.57 $0.19 $0.10 $0.25
Depreciation and amortization 8,602 8,149 6,162 6,317 5,766
Gain on disposition of operating real estate(2) (13) (26,244) (4,987) - (7,210)
Real estate joint ventures - - - - -
FFO $11,720 $8,438 $9,618 $10,654 $8,841
FFO per diluted share $0.24 $0.18 $0.22 $0.25 $0.22
Normalized FFO
Acquisition, development & other pursuit costs 437 704 885 288 591
Loss on extinguishment of debt - - 102 3 180
Impairment charges - 35 18 - 23
Change in fair value of interest rate derivatives 373 2,389 (9) 51 40
Normalized FFO $12,530 $11,566 $10,614 $10,996 $9,675
Normalized FFO per diluted share $0.26 $0.25 $0.24 $0.26 $0.24
Adjusted FFO
Non-cash stock compensation 215 437 176 173 203
Acquisition, development & other pursuit costs (437) (704) (885) (288) (591)
Tenant improvements, leasing commissions (3) (1,365) (287) (509) (992) (756)
Property related capital expenditures (603) (390) (563) (640) (366)
Non-cash interest expense 277 191 215 233 240
Net effect of straight-line rents (194) (122) (134) (309) (545)
Amortization of leasing incentives & above (below) market rents (183) 6 174 170 217
Government development grants - - - 300 -
AFFO $10,240 $10,697 $9,088 $9,643 $8,077
AFFO per diluted share $0.21 $0.23 $0.21 $0.23 $0.20
Weighted Average Common Shares Outstanding 31,736 30,191 27,411 25,958 25,587
Weighted Average Operating Partnership ("OP") Units Outstanding 17,113 16,027 16,027 15,919 14,769
Total Weighted Average Common shares and OP units outstanding 48,849 46,218 43,438 41,877 40,356
11
Outstanding Debt
$ in thousands
Debt Maturities & Principal Payments
Debt Stated Rate
Effective Rate as of
6/30/2016 Maturity Date 2016 2017 2018 2019 2020 Thereafter
Amount Outstanding
as of 6/30/2016
Secured Notes Payable - Core Debt
249 Central Park Retail 5.99% 5.99% 9/8/2016 $15,134 $15,134
South Retail 5.99% 5.99% 9/8/2016 6,677 6,677
Fountain Plaza Retail 5.99% 5.99% 9/8/2016 7,567 7,567
Encore Apartments L+1.95% 2.41% 1/30/2017 25,184 25,184
North Point Note 5 L+2.00% 3.57% (1) 2/1/2017 11 643 654
Oyster Point L+1.40% - 2.00% 2.21% 2/28/2017 6,400 6,400
Harrisonburg Regal 6.06% 6.06% 6/8/2017 105 3,256 3,361
Commonwealth of Virginia - Chesapeake L+1.90% 2.36% 8/28/2017 4,933 4,933
Hanbury Village 6.67% 6.67% 10/11/2017 132 20,709 20,841
Sandbridge Commons L+1.85% 2.31% 1/17/2018 119 247 9,128 9,494
Columbus Village Note 1 L+2.00% 3.05% (1) 4/5/2018 88 178 6,080 6,346
Columbus Village Note 2 L+2.00% 2.46% 4/5/2018 22 47 2,218 2,287
North Point Center Note 1 6.45% 6.45% 2/5/2019 98 205 219 9,352 9,874
Southgate Square L+2.00% 2.46% 4/29/2021 391 539 561 584 19,075 21,150
Socastee Commons 4.57% 4.57% 1/6/2023 45 95 100 105 109 4,458 4,912
North Point Center Note 2 7.25% 7.25% 9/15/2025 49 105 113 121 130 2,095 2,614
Smith's Landing 4.05% 4.05% 6/1/2035 383 760 791 824 858 17,257 20,873
Liberty Apartments 5.66% 5.66% 11/1/2043 157 325 344 364 385 18,586 20,161
The Cosmopolitan 3.75% 3.75% 7/1/2051 321 660 686 712 739 43,087 46,205
Total - Secured Core Debt $30,909 $64,138 $20,218 $12,039 $2,805 $104,558 $234,667
Secured Notes Payable - Development Pipeline
4525 Main Street L+1.95% 2.41% 1/30/2017 31,613 31,613
Lightfoot Marketplace L+1.90% 2.36% 11/14/2017 9,449 9,449
Johns Hopkins Village L+1.90% 2.36% 7/30/2018 29,973 29,973
Total - Development Pipeline - 41,062 29,973 - - - 71,035
Total Secured Notes Payable $30,909 $105,200 $50,191 $12,039 $2,805 $104,558 $305,702
Unsecured Core Debt
Senior unsecured line of credit L+1.40% - 2.00% 2.21% 2/20/2019 107,000 107,000
Senior unsecured term loan L+1.35% - 1.95% 2.16% 2/20/2020 50,000 50,000
Senior unsecured term loan L+1.35% - 1.95% 3.70% (1) 2/20/2020 50,000 50,000
Total - Unsecured Core Debt - - - 107,000 100,000 - 207,000
Total Notes Payable excluding GAAP Adjustments $30,909 $105,200 $50,191 $119,039 $102,805 $104,558 $512,702
Weighted Average Interest Rate 5.9% 3.4% 2.5% 2.6% 3.0% 4.0% 3.3%
Balloon Payments 29,281 101,884 47,123 116,333 100,000 24,492 419,113
Principal amortization 1,628 3,316 3,068 2,706 2,805 80,066 93,589
Total Consolidated Debt $30,909 $105,200 $50,191 $119,039 $102,805 $104,558 $512,702
Fixed-rate Debt(2) 30,768 26,936 8,333 11,478 52,221 85,483 215,219
Variable-rate Debt(3) 141 78,264 41,858 107,561 50,584 19,075 297,483
Total Consolidated Debt $30,909 $105,200 $50,191 $119,039 $102,805 $104,558 $512,702
GAAP Adjustments (4,382)
Total Notes Payable $508,320
30 Day LIBOR 0.460%
(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.
12
Core Debt to Core EBITDA(1)
$ in thousands
Three months ended
6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015
Net Income $3,131 $26,533 $8,443 $4,337 $10,285
Excluding:
Interest expense 3,978 3,791 3,411 3,518 3,358
Income tax 6 218 (117) 118 (4)
Depreciation and amortization 8,602 8,149 6,162 6,317 5,766
Gain on real estate dispositions (13) (26,674) (4,987) - (7,210)
Change in fair value of interest rate derivatives 373 2,389 (9) 51 40
Adjusted EBITDA $16,077 $14,406 $12,903 $14,341 $12,235
Other adjustments:
Loss on extinguishment of debt - - 102 3 180
Non-cash stock compensation 215 437 176 173 203
Development Pipeline (719) (620) (606) (738) (1,086)
Total Other Adjustments (504) (183) (328) (562) (703)
Core EBITDA $15,573 $14,223 $12,575 $13,779 $11,532
Total Debt(2) $512,702 $471,876 $382,013 $421,442 $388,288
Adjustments to Debt:
(Less) Development Pipeline(2) (71,035) (56,592) (43,340) (37,987) (80,877)
(Less) Cash & restricted cash (23,142) (22,505) (29,813) (19,434) (30,446)
Core Debt $418,525 $392,779 $308,860 $364,021 $276,965
Core Debt/Annualized Core EBITDA 6.7x 6.9x 6.1x 6.6x 6.0x
(1) See definitions on page 30
(2) Excludes GAAP Adjustments
13
Debt Information
$ in thousands
Total Debt Composition
Weighted Average
Percent of Debt Interest Rate Maturity
Secured vs. Unsecured Debt
Unsecured Debt 40.7% 2.6% 3.1 Yrs
Secured Debt 59.3% 3.8% 9.6 Yrs
Variable vs. Fixed-rate Debt
Variable-rate Debt(1) 58.0% 2.3% 2.4 Yrs
Fixed-rate Debt(2)(3) 42.0% 4.7% 13.4 Yrs
Fixed-rate and Hedged Debt(2)(3)(4) 94.6%
Total 3.3% 7.0 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
June 17, 2016 June 17, 2018 1.00% 70,000
Total Interest Rate Caps at or Below 1.50% $270,000
Fixed-rate Debt (2)(3) 215,219
Fixed-rate and Hedged Debt $485,219
% of Total (3) 94.6%
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
2016 2017 2018 2019 2020 2021 and
thereafter
($
In
Th
ou
sa
nd
s)
Debt Maturities & Principal Payments
(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)
95%
14
Capitalization & Financial Ratios
$ in thousands
Capitalization as of June 30, 2016 Capital Structure as of June 30, 2016
Debt % of Total Carrying Value
Unsecured Credit Facility 21% $107,000
Unsecured Term Loans 19% 100,000
Mortgages Payable 60% 305,702
Total Debt $512,702
Equity % of Total Shares/Units Stock Price Market Value
Common Stock (NYSE: AHH) 65% 32,825 $13.74 $451,016
Common Units 35% 17,597 $13.74 241,783
Equity Market Capitalization 50,422 $692,798
Total Market Capitalization $1,205,500
Debt/Market Capitalization 42.5%
Dividend Data Liquidity as of June 30, 2016
Q2 2016 Q2 2015
Common Dividend Paid $8,252 $6,775 Cash on Hand $23,142
AFFO $10,240 $8,077 Availability under Credit Facility 43,000
AFFO Payout Ratio 80.6% 83.9% $66,142
Debt
43%Common
57%
15
Property Portfolio
As of 6/30/16
(1) 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.
(2) Occupancy for each of our retail properties is calculated as (a) square footage under executed leases as of June 30, 2016, divided by (b) net rentable square feet, expressed as a percentage.
(3) For the properties in our retail portfolio, annualized base rent, or ABR, is calculated by multiplying (a) base rental payments for executed leases as of June 30, 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 June 30, 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.
(4) As of June 30, 2016, the Company occupied 8,995 square feet at this property at an ABR of $304,841, or $33.89 per leased square foot, which amounts are reflected in this table. The rent paid by us is eliminated in
accordance with GAAP.
(5) Includes $32,760 of ABR pursuant to a rooftop lease.
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 - 2004 91,366 89.8% $2,304,781 $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 93.1% 1,478,465 14.23
Broad Creek Shopping Center Home Depot, Food Lion, PetSmart Norfolk, VA 100% 1997/2001 226,459 99.3% 3,155,610 14.03
Broadmoor Plaza Kroger, Staples, Jo-Ann Fabrics South Bend, IN 100% 1980 115,059 93.2% 1,267,990 11.82
Columbus Village Barnes & Noble Virginia Beach, VA - 1980/2013 66,594 98.7% 1,346,501 20.48
Commerce Street Retail (5) Yard House Virginia Beach, VA 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 100% 2002 103,335 100.0% 1,231,340 11.92
Dimmock Square Best Buy, Old Navy Colonial Heights, VA 100% 1998 106,166 97.2% 1,729,583 16.77
Fountain Plaza Retail Ruth's Chris, Ann Taylor Virginia Beach, VA - 2004 35,961 100.0% 1,022,787 28.44
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% 285,941 21.17
Hanbury Village Walgreens, Starbucks Chesapeake, VA 32% 2006/2009 61,049 92.8% 1,355,478 23.92
Harper Hill Commons Harris Teeter Winston-Salem, NC 100% 2004 55,394 63.0% 503,877 14.43
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% 475,854 7.53
North Hampton Market PetSmart, Hobby Lobby, Dollar Tree Taylors, SC 100% 2004 114,935 98.3% 1,425,251 12.62
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 95.2% 723,834 20.10
Patterson Place Bed Bath & Beyond, PetSmart Durham, NC 100% 2004 160,942 100.0% 2,548,388 15.83
Perry Hall Marketplace Safeway Perry Hall, MD 100% 2001 74,256 100.0% 1,240,540 16.71
Providence Plaza Edward Jones, Chipotle, Choate Const. Charlotte, NC 100% 2007/2008 103,118 97.4% 2,534,172 25.22
Sandbridge Commons Heartland Dental Virginia Beach, VA - 2015 16,129 100.0% 327,230 20.29
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 - 2002 38,515 100.0% 945,176 24.54
South Square Ross, Petco, Office Depot Durham, NC 100% 1977/2005 107,812 100.0% 1,825,803 16.94
Southgate Square Burlington, PetSmart, Michaels Colonial Heights, VA 100% 1991/2016 223,131 100.0% 2,965,206 13.29
Stone House Square Weis Markets Hagerstown, MD 100% 2008 108,624 90.4% 1,531,536 15.59
Studio 56 Retail McCormick & Schmick's Virginia Beach, VA 100% 2007 11,594 100.0% 375,628 32.40
Waynesboro Commons Kroger Waynesboro, VA 100% 1993 52,415 100.0% 438,464 8.37
Wendover Village Bed Bath & Beyond, T.J. Maxx, Petco Greensboro, NC 100% 2004 135,758 100.0% 1,952,614 14.38
Total / Weighted Avg Retail Portfolio 78% 2,765,676 96.0% $41,937,616 $15.80
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 - 2014 - 237,893 237,893 - 57.8% $3,771,435 $27.45
Armada Hoffler Tower(4) AHH, Troutman Sanders, Will iams Mullen Virginia Beach, VA 100% 2002 323,970 - 323,970 97.6% - 8,842,799 27.97
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 100% 1984 129,272 - 129,272 92.5% - 2,925,548 24.46
Oyster Point GSA, SunTrust Bank Newport News, VA - 1989 100,139 - 100,139 82.0% - 1,709,544 20.82
Two Columbus The Art Institute, Kimley-Horn Virginia Beach, VA 100% 2009 108,467 - 108,467 97.5% - 2,898,960 27.41
Total / Weighted Average Office Portfolio 71% 709,214 237,893 947,107 94.6% 57.8% $21,039,272 $26.02
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% - 577,081 23.25
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
Total / Weighted Avg Retail Portfolio Subject to Ground Leases 29% 571,143 - 571,143 100.0% - $4,997,813 $8.75
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 - 2014 286 - 286 95.8% - $4,112,796 $1.74
Liberty Apartments (9) Newport News, VA - 2014 197 - 197 89.6% - 2,110,524 1.38
Smith's Landing(10) Blacksburg, VA - 2009 284 - 284 96.8% - 3,671,940 1.12
The Cosmopolitan (9) Virginia Beach, VA - 2006 342 - 342 93.6% - 6,026,556 1.64
Total / Weighted Avg Multifamily Portfolio - 1,109 - 1,109 94.3% - $15,921,816 $1.47
16
Property Portfolio - Continued
As of 6/30/16
(1) 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.
(2) Occupancy for each of our office properties is calculated as (a) square footage under executed leases as of June 30, 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 June 30, 2016, divided by (b) total units available, expressed as a percentage.
(3) For the properties in our office portfolio, annualized base rent, or ABR, is calculated by multiplying (a) base rental payments for executed leases as of June 30, 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 June 30, 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.
(4) As of June 30, 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.
(5) Pursuant to this ground lease, the Company owns the land and the tenant owns the improvements thereon. The Company will succeed to the ownership of the improvements to the land upon the termination of the ground lease.
(6) 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.
(7) For the properties in our multifamily portfolio, annualized base rent, or ABR, is calculated by multiplying (a) base rental payments for the month ended June 30, 2016 by (b) 12.
(8) ABR per occupied rentable square foot is calculated by dividing (a) ABR, by (b) net rentable square footage of occupied units as of June 30, 2016.
(9) The ABR for Liberty and Cosmopolitan excludes $206,000 and $916,000 from ground floor retail leases, respectively.
(10) The Company leases the land underlying this property pursuant to a ground lease.
17
Development Pipeline
$ in thousands
Johns Hopkins Village
Lightfoot Marketplace
One City Center
Point Street Apts.
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
Town Center Phase VI
Virginia Beach
Mixed-use 120 Units
39,000 SF
46% 4Q16 2Q18 2Q19 $35,000 $1,500 80% Anchor tenants not announced
Johns Hopkins Village
Baltimore, MD
Multifamily 157 units 72% 1Q15 3Q16 3Q17 68,000 57,000 80%(3) CVS(4)
Brooks Crossing Phase 1
Newport News, VA
Mixed-use 50,000 sf NA 3Q15 3Q16 3Q17 10,000 2,500 65%(3) LOI outstanding
Lightfoot Marketplace
Will iamsburg, VA
Retail 109,000 sf 71% 3Q14 3Q16 2Q17 24,000 21,000 60%(3) Harris Teeter, CHKD
Total Development, Not Delivered 137,000 82,000
Development, Delivered Not Stabilized
4525 Main Street
Virginia Beach, VA
Office 239,000 sf 64% (5) 1Q13 3Q14 2Q17 51,000 45,000 100% Clark Nexsen, Development Authority
of Virginia Beach, Anthropologie(4)
Total $188,000 $127,000
Joint Ventures - Minority Partner
AHH
Estimated
Investment
Funded to
Date
One City Center - 37% JV
Durham, NC
Mixed-use 152,000 sf 36% 1Q16 2Q18 2Q19 $34,000 $10,000 100% Duke University
Mezzanine Investments
Purchase
Option Price
Loan
Balance
Point Street Apartments
Inner Harbor Baltimore,
MD
Multifamily 289 units NA 1Q16 4Q17 4Q18 $92,000 $15,000 Option to purchase
88% upon completion
$23M Mezzanine financing by AHH,
earning 8% interest income
Annapolis Junction
Annapolis Junction, MD
Multifamily 416 units NA 2Q16 1Q18 2Q19 102,000 24,000 Option to purchase
88% upon completion
$42M Mezzanine financing by AHH,
earning 10% interest income
Total Mezzanine Investment $194,000 $39,000
Q2 2016 Year to Date
Capitalized Interest $384 $637
Capitalized Overhead $334 $696
(1) Represents estimates that may change as the development process proceeds
(2) First full stabilized quarter
(3) AHH earns a preferred return on equity prior to any distributions to JV Partners
(4) Ground floor retail tenant
(5) ~14K sf leased after 6/30/16
18
Acquisitions & Dispositions
$ in thousands
(1) Contractual 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 6/30/16
ACQUISITIONS
Properties Location Square Feet Purchase Price (1)
Reinvested
1031 Proceeds
$ Value of
OP Units Cash Cap Rate Purchase Date
% Leased as of
6/30/16 Anchor Tenants
Southshore Shops Midlothian, VA 40,333 $9,160 $2,475 7.8% 3Q16 93% Buffalo Wild Wings
Southgate Square Colonial Heights, VA 220,131 $38,585 $0 $17,485 7.3% 2Q16 100% PetSmart, Michael's, Burlington
Retail Portfolio (11 properties) Mid-Atlantic 1,082,681 $170,500 $87,000 7.2% 1Q16 94% Harris Teeter, Bed Bath & Beyond
Providence Plaza Charlotte, NC 103,118 $26,200 $14,000 7.3% 3Q15 97% Chipotle
Socastee Commons Myrtle Beach, SC 57,573 $8,600 $3,600 7.3% 3Q15 100% BiLo
Columbus Village Virginia Beach, VA 65,746 $21,025 - $14,025 6.4% 3Q15 100% Barnes & Noble
Perry Hall Marketplace & Stone
House Square
Maryland 182,949 $39,555 $15,200 $4,155 7.4% 2Q15 93% Safeway & Weis Markets
Dimmock Square Colonial Heights, VA 106,166 $19,662 - $9,662 7.3% 3Q14 100% Old Navy, Best Buy, Pier 1
Total/Weighted Average 1,858,697 $333,287 $119,800 $47,801 7.2%
DISPOSITIONS
Properties Location
Square
Feet/Units Sale Price Cash Proceeds Gain on Sale Cash Cap Rate Disposition Date
% Leased at
closing Anchor Tenants
Oyster Point Newport News, VA 100,139 $6,500 TBD TBD TBD 4Q16 (2) 82%(3) GSA
Non-Core Retail Portfolio Various 174,758 $12,850 $12,600 $0 7.1% 2Q16 - 3Q16 ~85% Kroger, Family Dollar
Richmond Tower Richmond, VA 206,969 $78,000 $77,000 $26,674 7.9% 1Q16 99% Williams Mullen
Oceaneering Chesapeake, VA 154,000 $30,000 $10,000 $4,987 6.7% 4Q15 100% Oceaneering International
Whetstone Apartments Durham, NC 203 units $35,625 $17,600 $7,210 5.7% 2Q15 26% NA
Sentara Williamsburg Williamsburg, VA 49,200 $15,450 $15,200 $6,197 6.3% 1Q15 100% Sentara
Virginia Natural Gas Virginia Beach, VA 31,000 $8,900 $7,400 $2,211 6.3% 4Q14 100% Virginia Natural Gas
Total/Weighted Average 716,066sf/
203 units
$187,325 $139,800 $47,279 7.0%
19
Construction Business Summary
$ in thousands
Gross Profit Summary
Q2 2016
Trailing 12
Months
Revenue $33,200 $165,134
Expense (32,025) (158,981)
Gross Profit $1,175 $6,153
(Unaudited)
Location
Total Contract
Value
Work in Place as
of 6/30/2016 Backlog
Estimated Date
of Completion
Highlighted Projects
Exelon Baltimore, MD $181,768 $178,404 $3,364 3Q 2016
Four Seasons Condominium Expansion Baltimore, MD 70,829 37,242 33,587 2Q 2017
Point Street Apartments Baltimore, MD 69,958 9,857 60,101 1Q 2018
Annapolis Junction Annapolis Junction, MD 68,353 2,136 66,217 1Q 2018
Durham City Center Durham, NC 61,746 3,719 58,027 2Q 2018
27th Street Hotel Virginia Beach, VA 50,345 24,772 25,573 2Q 2017
Sub Total $502,999 $256,130 $246,869
All Other Projects 108,956 103,507 5,449
Total $611,955 $359,637 $252,318
(1) See page 31 for Same Store vs. Non – Same Store Properties
20
Same Store NOI by Segment
$ in thousands
(Reconciliation to GAAP located in appendix pg. 32)
Three months ended Six Months Ended
6/30/2016 6/30/2015 $ Change % Change 6/30/2016 6/30/2015 $ Change % Change
Office(1) (Unaudited) (Unaudited)
Revenue $4,287 $4,277 $10 0.2% $8,466 $8,518 ($52) -0.6%
Expenses 1,430 1,555 (125) -8.0% 2,942 3,181 (239) -7.5%
Net Operating Income 2,857 2,722 135 5.0% 5,524 5,337 187 3.5%
Retail(1)
Revenue 6,451 6,403 48 0.7% 13,059 12,909 150 1.2%
Expenses 1,825 1,777 48 2.7% 3,771 3,718 53 1.4%
Net Operating Income 4,626 4,626 - 0.0% 9,288 9,191 97 1.1%
Multifamily(1)
Revenue 3,021 3,027 (6) -0.2% 6,072 5,964 108 1.8%
Expenses 1,299 1,321 (22) -1.7% 2,620 2,571 49 1.9%
Net Operating Income 1,722 1,706 16 0.9% 3,452 3,393 59 1.7%
Same Store Net Operating Income (NOI) $9,205 $9,054 $151 1.7% $18,264 $17,921 $343 1.9%
Net effect of straight-line rents 69 120 (51) 190 107 83
Amortization of lease incentives and above (below) market rents 134 122 12 242 244 (2)
Same store portfolio NOI, cash basis $9,408 $9,296 $112 1.2% $18,696 $18,272 $424 2.3%
NOI, Cash Basis:
Office $2,823 $2,729 $94 3.4% $5,473 $5,322 $151 2.8%
Retail 4,855 4,826 29 0.6% 9,770 9,489 281 3.0%
Multifamily 1,730 1,741 (11) -0.6% 3,453 3,461 (8) -0.2%
$9,408 $9,296 $112 1.2% $18,696 $18,272 $424 2.3%
NOI:
Office $2,857 $2,722 $135 5.0% $5,524 $5,337 $187 3.5%
Retail 4,626 4,626 - 0.0% 9,288 9,191 97 1.1%
Multifamily 1,722 1,706 16 0.9% 3,452 3,393 59 1.7%
$9,205 $9,054 $151 1.7% $18,264 $17,921 $343 1.9%
21
Top 10 Tenants - Annualized Base Rent
$ in thousands
As of June 30, 2016
Office Portfolio
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 11.6% 2.9%
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 4.2% 1.1%
GSA 1 2016 855 4.1% 1.0%
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 3.4% 0.9%
Top 10 Total $ 10,622 50.5% 12.7%
Retail Portfolio
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 6.1% 3.4%
Kroger 7 2021 2,205 4.7% 2.6%
Home Depot 2 2019 2,190 4.7% 2.6%
Food Lion 3 2020 1,283 2.7% 1.5%
PetSmart 4 2020 1,117 2.4% 1.3%
Bed Bath & Beyond 3 2022 1,077 2.3% 1.3%
Dick's Sporting Goods 1 2020 840 1.8% 1.0%
Safeway 2 2021 821 1.8% 1.0%
Weis Markets 1 2028 802 1.7% 1.0%
Ross Dress for Less 2 2018 755 1.6% 0.9%
Top 10 Total $ 13,942 29.7% 16.6%
22
Office Lease Summary
22
Renewal Lease Summary GAAP Cash
Quarter
Number of
Leases
Signed
Net rentable
SF Signed
Leases
Expiring
Net rentable
SF Expiring
Contractual
Rent per SF
Prior Rent
per SF
Releasing
Spread
Contractual
Rent per SF
Prior Rent
per SF
Releasing
Spread
Weighted
Average Lease
Term (yrs) TI & LC
TI & LC
per SF
Q2 2016 1 2,318 2 3,870 $33.27 $26.53 25.4% $30.00 $28.41 5.6% 10.00 $0 $0.00
Q1 2016 2 6,445 - - 21.34 19.60 8.9% 21.10 20.38 3.5% 1.65 3,773 0.59
Q4 2015 2 5,708 2 3,947 24.50 23.50 4.3% 24.39 23.68 3.0% 1.31 3,682 0.65
Q3 2015 4 16,609 4 9,554 23.69 22.29 6.3% 24.28 23.81 1.9% 5.95 138,923 8.36
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
Q2 2016 1 1,806 $25.00 5.00 $63,579 $35.20
Q1 2016 2 3,773 27.49 6.91 139,067 36.86
Q4 2015 2 9,920 30.13 7.17 421,094 42.45
Q3 2015 3 13,500 21.37 6.02 166,463 12.33
(1) Excludes new leases from properties in development
23
Office Lease Expirations
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
Leased Square Feet % ABR of Office Portfolio
Year of Lease Expiration
Number of
Leases
Expiring
Square
Footage of
Leases
Expiring (1)
% Portfolio
Net Rentable
Square Feet
Annualized
Base Rent
% of Portfolio
Annualized
Base Rent
Annualized Base
Rent per Leased
Square Foot
Available - 138,656 14.6% -$ -$ -$
2016 7 39,986 4.2% 940,653 4.5% 23.52
2017 8 21,254 2.2% 645,398 3.1% 30.37
2018 22 166,325 17.6% 4,679,998 22.2% 28.14
2019 16 103,761 11.0% 2,517,155 12.0% 24.26
2020 5 41,546 4.4% 953,923 4.5% 22.96
2021 6 49,659 5.2% 1,256,031 6.0% 25.29
2022 4 49,923 5.3% 1,372,049 6.5% 27.48
2023 4 43,078 4.5% 1,073,023 5.1% 24.91
2024 3 60,751 6.4% 1,666,025 7.9% 27.42
2025 4 43,292 4.6% 1,218,282 5.8% 28.14
2026 3 16,841 1.8% 400,474 1.9% 23.78
Thereafter 6 172,035 18.2% 4,316,262 20.5% 25.09
Total / Weighted Average 88 947,107 100.0% 21,039,272$ 100.0% $26.02
(1) Includes new leases from properties in development
24
Retail Lease Summary
(1) Excludes new leases from properties in development
Renewal Lease Summary GAAP Cash
Quarter
Number of
Leases
Signed
Net rentable
SF Signed
Leases
Expiring
Net rentable SF
Expiring
Contractual
Rent per SF
Prior Rent
per SF
Releasing
Spread
Contractual
Rent per SF
Prior Rent
per SF
Releasing
Spread
Weighted
Average Lease
Term (yrs) TI & LC
TI & LC
per SF
Q2 2016 25 98,300 14 33,111 $18.28 $17.32 5.5% $17.99 $17.55 2.5% 6.36 $234,929 2.39$
Q1 2016 10 26,870 1 1,800 22.70 21.29 6.6% 22.21 21.78 1.9% 3.37 61,290 2.28
Q4 2015 6 33,274 4 27,146 20.63 18.73 10.1% 20.55 19.45 5.6% 4.54 - -
Q3 2015 11 28,760 5 24,491 25.03 24.67 1.5% 23.96 26.42 -9.3% 2.68 96,077 3.34
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
Q2 2016 4 5,560 $21.24 7.31 $162,432 $29.21
Q1 2016 4 11,913 19.68 5.10 431,103 36.19
Q4 2015 4 24,825 21.83 6.64 421,094 16.96
Q3 2015 1 3,606 19.00 10.00 42,190 11.70
25
Retail Lease Expirations
0.0%
5.0%
10.0%
15.0%
20.0%
-
100,000
200,000
300,000
400,000
500,000
600,000
Leased Square Feet % ABR of Retail Portfolio
Year of Lease Expiration
Number of
Leases
Expiring
Square
Footage of
Leases
Expiring (1)
% Portfolio
Net Rentable
Square Feet
Annualized
Base Rent
% of Portfolio
Annualized
Base Rent
Annualized Base
Rent per Leased
Square Foot
Available - 111,977 4.0% -$ -$ -$
M-T-M 7 10,942 0.4% 208,656 0.5% 19.07
2016 22 53,034 1.9% 986,082 2.4% 18.59
2017 45 209,190 7.6% 3,146,122 7.5% 15.04
2018 68 334,599 12.1% 5,600,617 13.4% 16.74
2019 65 534,793 19.3% 7,844,291 18.7% 14.67
2020 61 547,773 19.8% 7,311,741 17.4% 13.35
2021 36 230,966 8.4% 4,018,503 9.6% 17.40
2022 18 180,442 6.5% 2,577,008 6.1% 14.28
2023 13 125,847 4.6% 2,464,498 5.9% 19.58
2024 13 114,998 4.2% 2,127,990 5.1% 18.50
2025 12 62,257 2.3% 1,550,067 3.7% 24.90
2026 13 84,827 3.1% 1,412,352 3.4% 16.65
Thereafter 10 164,031 5.9% 2,689,691 6.4% 16.40
Total / Weighted Average 383 2,765,676 100.0% 41,937,616$ 100.0% $15.80
(1) Includes new leases from properties in development
26
Net Asset Value Component Data
In thousands
Stabilized Portfolio NOI (Cash) Taxable REIT Subsidiary (TRS)
Three months
ended Annualized Trailing 12 Months
6/30/2016 6/30/2016 6/30/2016
Diversified Portfolio General contracting and real estate services $6,153
Office $325 $1,300
Retail 8,223 32,892 Other Assets
Multifamily 918 3,672 Other Assets As of 6/30/2016
Total Diversified Portfolio NOI $9,466 $37,864 Cash and Cash Equivalents $19,984
Restricted Cash 3,158
Virginia Beach Town Center Accounts Receivable 14,366
Office(1) $2,486 $9,944 Notes Receivable 39,311
Retail (1) 1,743 6,972 Construction receivables, including retentions 31,277
Multifamily 1,763 7,052 Other Assets 73,811
Total Virginia Beach Town Center NOI $5,992 $23,968 Total Other Assets $181,907
Stabilized Portfolio NOI - Cash Basis $15,458 $61,832 Liabilities & Share Count
As of 6/30/2016
Development Pipeline Liabilities
Mortgages and notes payable $508,320
6/30/2016 Accounts payable and accrued liabilities 6,379
Income producing property $41,100 Construction payables, including retentions 49,203
Construction in progress 80,400 Other Liabilities 41,828
Other assets 5,500 Total Liabilities $605,730
Total cost to date (p. 17) $127,000
Three months ended
Land held for development 2,032 Share Count 6/30/2016
Weighted average common shares outstanding 31,736
Weighted average operating partnership ("OP") Units Outstanding 17,113
Total weighted average common shares and OP units outstanding 48,849
(1) Includes leases for space occupied by Armada Hoffler which are eliminated for GAAP purposes
Appendix – Definitions
& Reconciliations
28
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.
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.
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.
29
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.
Definitions
Adjusted EBITDA:
We calculate Adjusted EBITDA as net income (loss) (calculated in accordance with GAAP), excluding interest expense,
income taxes, depreciation and amortization, gains (or losses) from sales of depreciable operating property and mark-to-
market adjustments on interest rate derivates. Management believes Adjusted EBITDA is useful to investors in evaluating
and facilitating comparisons of our operating performance between periods and between REITs by removing the impact of
our capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from our
operating results along with other non-comparable items.
Core EBITDA:
We calculate Core EBITDA as 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.
30
31
Same Store vs. Non-Same Store
Same
Store
Non-Same
Store
Same
Store
Non-Same
Store
Same
Store
Non-Same
Store
Same
Store
Non-Same
Store
Retail Properties Office Properties
249 Central Park Retail X X 4525 Main Street X X
Alexander Pointe X X Armada Hoffler Tower X X
Bermuda Crossroads X X Commonwealth of VA - Chesapeake X X
Broad Creek Shopping Center X X Commonwealth of VA - Virginia Beach X X
Broadmoor Plaza X X Oceaneering X X
Columbus Village X X One Columbus X X
Commerce Street Retail X X Oyster Point X X
Courthouse 7-Eleven X X Richmond Tower X X
Dick’s at Town Center X X Sentara Williamsburg X X
Dimmock Square X X Two Columbus X X
Greentree Shopping Center X X Multifamily Properties
Fountain Plaza Retail X X Encore Apartments X X
Gainsborough Square X X Liberty Apartments X X
Hanbury Village X X Smith’s Landing X X
Harper Hill Commons X X The Cosmopolitan X X
Harrisonburg Regal X X Whetstone Apartments X X
Kroger Junction X X
North Hampton Market X X
North Point Center X X
Oakland Marketplace X X
Parkway Marketplace X X
Patterson Place X X
Perry Hall Marketplace X X
Providence Plaza X X
Sandbridge Commons X X
Socastee Commons X X
South Retail X X
South Square X X
Southgate Square X X
Stone House Square X X
Studio 56 Retail X X
Tyre Neck Harris Teeter X X
Waynesboro Commons X X
Wendover Village X X
Willowbrook Commons X X
Six Months Ended
6/30/2016 to 2015
Three Months Ended
6/30/2016 to 2015
Three Months Ended
6/30/2016 to 2015
Six Months Ended
6/30/2016 to 2015
32
Reconciliation to Property Portfolio NOI
$ in thousands
Three months ended 6/30 Six Months Ended 6/30
2016 2015 2016 2015
Office Same Store(1)
Rental revenues $4,287 $4,277 $8,466 $8,518
Property expenses 1,430 1,555 2,942 3,181
NOI 2,857 2,722 5,524 5,337
Non-Same Store NOI 618 2,823 1,477 5,466
Segment NOI 3,475 $5,545 $7,001 $10,803
Retail Same Store(1)
Rental revenues $6,451 $6,403 $13,059 $12,909
Property expenses 1,825 1,777 3,771 3,718
NOI 4,626 4,626 9,288 9,191
Non-Same Store NOI 5,937 891 10,687 986
Segment NOI $10,563 $5,517 $19,975 $10,177
Multifamily Same Store(1)
Rental revenues $3,021 $3,027 $6,072 $5,964
Pr perty expenses 1,299 1,321 2,620 2,571
NOI 1,722 1,706 3,452 3,393
Non-Same Store NOI 1,038 550 1,975 718
Segment NOI 2,760 2,256 $5,427 $4,111
Total Property Portfolio NOI $16,798 $13,318 $32,403 $25,091
33
Reconciliation to Property NOI
$ in thousands
Three months ended 6/30/2016
Diversified Portfolio Office Retail Multifamily Total
NOI - Cash Basis $325 $8,223 $918 $9,466
Net effect of straight-line rents 25 9 3 37
Amortization of lease incentives and (above) below market rents (32) 152 (13) 107
NOI $521 $8,384 $908 $9,813
Town Center of Virginia Beach Office Retail Multifamily Total
NOI - Cash Basis 2,486 1,743 $1,763 $5,992
Net effect of straight-line rents 35 1 4 40
Amortization of lease incentives and (above) below market rents (26) (87) - (113)
Elimination of AHH rent (175) (80) - (255)
NOI 2,320 1,577 $1,767 $5,664
NOI Office Retail Multifamily Total
Diversified Portfolio $521 $8,384 $908 $9,813
Town Center of Virginia Beach 2,320 1,577 1,766 5,663
Unstabilized Properties 634 602 86 1,322
Total Property Portfolio NOI $3,475 $10,563 $2,760 $16,798
34
Reconciliation to GAAP Net Income
$ in thousands
Office Retail Multifamily
Total Property
Portfolio
General Contracting &
Real Estate Services Total
Segment revenues 5,299$ 14,113$ 4,839$ 24,251$ 33,200$ 57,451$
Segment expenses 1,824 3,550 2,079 7,453 32,025 39,478
Net operating income 3,475$ 10,563$ 2,760$ 16,798$ 1,175$ 17,973$
Depreciation and amortization (8,602)
General and administrative expenses (2,224)
Acquisition, development and other pursuit costs (437)
Interest income 722
Interest expense (3,978)
Gain on real estate dispositions 13
Change in fair value of interest rate derivatives (373)
Other income 43
Income tax provision (6)
Net income 3,131$
Office Retail Multifamily
Total Rental
Properties
General Contracting &
Real Estate Services Total
Segment revenues 10,820$ 27,145$ 9,569$ 47,534$ 70,003$ 117,537$
Segment expenses 3,819 7,170 4,142 15,131 67,062 82,193
Net operating income 7,001$ 19,975$ 5,427$ 32,403$ 2,941$ 35,344$
Depreciation and amortization (16,751)
General and administrative expenses (4,708)
Acquisition, development and other pursuit costs (1,141)
Impairment charges (35)
Interest income 904
Interest expense (7,769)
Loss on extinguishment of debt -
Gain on real estate dispositions 26,687
Change in fair value of interest rate derivatives (2,762)
Other income 119
Income tax provision (224)
Net income 29,664$
Three months ended 6/30/2016
Six Months Ended 6/30/2016