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 1, 2019
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))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, $0.01 par value per share | AHH | New York Stock Exchange | ||
6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share | AHHprA | New York Stock Exchange | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02. Results of Operations and Financial Condition.
On August 1, 2019, Armada Hoffler Properties, Inc. (the “Company”) issued a press release announcing its financial position as of June 30, 2019, results of operations for the three months ended June 30, 2019, and other related information. Also on August 1, 2019, 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, 2019. 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 | |
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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 1, 2019 | /s/ Michael P. O’Hara | |
Michael P. O’Hara | ||
Chief Financial Officer, Treasurer and Secretary | ||
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Exhibit 99.1
 | PRESS RELEASE | |
ARMADA HOFFLER PROPERTIES REPORTS SECOND QUARTER 2019 RESULTS
Net Income of $0.08 Per Diluted Share
Normalized FFO of $0.30 Per Diluted Share
Raised 2019 Full-Year Normalized FFO Guidance
VIRGINIA BEACH, VA, August 1, 2019 – Armada Hoffler Properties, Inc. (NYSE:AHH) today announced its results for the quarter ended June 30, 2019 and provided an update on current events.
Highlights include:
• | Net income attributable to common stockholders and OP Unit holders of $6.0 million, or $0.08 per diluted share, compared to $5.9 million, or $0.09 per diluted share, for the three months ended June 30, 2018. |
• | Funds from operations attributable to common stockholders and OP Unit holders ("FFO") of $19.1 million, or $0.27 per diluted share, compared to $15.1 million, or $0.24 per diluted share, for the three months ended June 30, 2018. See "Non-GAAP Financial Measures." |
• | Normalized funds from operations attributable to common stockholders and OP Unit holders ("Normalized FFO") of $21.1 million, or $0.30 per diluted share, compared to $15.2 million, or $0.24 per diluted share, for the three months ended June 30, 2018. |
• | Raised 2019 full-year Normalized FFO guidance to $1.15 to $1.19 per diluted share up from $1.11 to $1.17 per diluted share. |
• | Core operating property portfolio occupancy at 95.6% as of June 30, 2019 compared to 96.0% as of March 31, 2019. |
• | Same Store Net Operating Income (“NOI”) increased for the 5th consecutive quarter. Same Store NOI increased 6.4% on a GAAP basis and 6.0% on a cash basis compared to the quarter ended June 30, 2018. Same Store NOI increased across all segments; multifamily Same Store NOI increased over 20% on both a GAAP and cash basis primarily due to the performance of the Johns Hopkins Village student housing project. |
• | Exercised our at-cost purchase option to acquire a 79% controlling interest in 1405 Point, the 17-story luxury high-rise apartment building located in the Harbor Point area of the Baltimore waterfront, in exchange for the Company's mezzanine loan investment and the assumption of existing debt. |
• | Completed the acquisitions of Red Mill Commons and Marketplace at Hilltop in Virginia Beach, Virginia for aggregate consideration of $105.0 million, including $63.8 million in Operating Partnership units. |
• | Completed the acquisition of Thames Street Wharf, a certified LEED Gold, trophy office building located on the waterfront in the Harbor Point development of Baltimore, Maryland, for $101.0 million. |
• | Announced Southern Post, a new 240,000 square foot mixed-use development in historic downtown Roswell, Georgia. The Company will be the majority partner in a joint venture to develop the project and |
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anticipates commencing construction in the first quarter of 2020. Estimated development and construction costs for the project are expected to total approximately $80 million.
• | Raised $61.3 million of net proceeds before estimated offering expenses through an underwritten public offering of 2.5 million shares of 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock at a public offering price of $25.00 per share. |
• | Raised $7.6 million of gross proceeds through our at-the-market equity offering program at an average price of $16.89 per share during the quarter ended June 30, 2019. |
"Accretive acquisitions and robust Same Store NOI growth across all segments helped to produce another strong quarter of financial results," said Louis Haddad, President & CEO."Accordingly, we've increased our Normalized FFO guidance range for the year. With both a promising development pipeline and organic growth in our core portfolio, we remain extremely optimistic about our ability to create value well into the future."
Financial Results
Net income attributable to common stockholders and OP Unit holders for the second quarter increased to $6.0 million compared to $5.9 million for the second quarter of 2018. The period-over-period change was primarily due to increased operating income from the property portfolio as a result of property acquisitions and the completion of development projects. Interest income also increased period over period. This was partially offset by increases in interest expense and changes in the fair value of interest rate derivatives.
Normalized FFO attributable to common stockholders and OP Unit holders for the second quarter increased to $21.1 million compared to $15.2 million for the second quarter of 2018. FFO attributable to common stockholders and OP Unit holders for the second quarter increased to $19.1 million compared to $15.1 million for the second quarter of 2018. The period-over-period changes in Normalized FFO and FFO were positively impacted by property acquisitions, completion of development projects, and higher interest income. These increases in Normalized FFO and FFO were partially offset by increased interest expense.
Operating Performance
At the end of the second quarter, the Company’s office, retail and multifamily core operating property portfolios were 94.6%, 96.6% and 94.7% occupied, respectively.
Total construction contract backlog was $178.6 million at the end of the second quarter.
Balance Sheet and Financing Activity
As of June 30, 2019, the Company had $956.1 million of total debt outstanding, including $122.0 million outstanding under its revolving credit facility. Total debt outstanding excludes unamortized GAAP fair value adjustments and deferred financing costs. Approximately 47.8% of the Company’s debt had fixed interest rates or was subject to interest rate swaps as of June 30, 2019. After considering LIBOR interest rate caps with strike prices at or below 250 basis points as of June 30, 2019, 89.7% of the Company’s debt was either fixed or hedged.
There is no debt maturing during the remainder of 2019.
Outlook
The Company is raising its 2019 full-year Normalized FFO guidance range to $1.15 to $1.19 per diluted share up from $1.11 to $1.17 per diluted share. The following table updates the Company's assumptions underpinning this forecast. The Company's executive management will provide further details regarding its 2019 earnings guidance during today's webcast and conference call.
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Full-year 2019 Guidance [1] | Expected Ranges | |||||||
Total NOI | $101.6M | $102.5M | ||||||
Construction Segment Gross Profit | $4.9M | $5.7M | ||||||
Mezzanine Interest Income (Net of Interest Expense) [2] [3] | $15.5M | $16.1M | ||||||
G&A Expenses | $11.8M | $12.2M | ||||||
Interest Expense (Net of Mezzanine Interest Expense) | $25.0M | $26.0M | ||||||
Normalized FFO per diluted share [4] | $1.15 | $1.19 | ||||||
[1] Includes the following assumptions:
• | Sale of Lightfoot Marketplace, a Harris Teeter grocery-anchored shopping center, at a 5.8% cap rate with expected proceeds of approximately $28 million in the third quarter of 2019. |
• | Interest expense is calculated based on Forward LIBOR Curve, which forecasts rates ending the year at 1.90%. |
• | The opportunistic sale of an additional $10 million through the ATM program, for a full year total of $50 million, assuming favorable market conditions. |
• | Full year weighted average share count of 72.0 million. |
[2] Includes $4.5 million of Annapolis Junction loan modification fee.
[3] Net of $5.4 million of interest expense associated with funding the Company's mezzanine program.
[4] Normalized FFO excludes certain items, including debt extinguishment losses, acquisition, development and other pursuit costs, mark-to-market adjustments for interest rate derivatives, severance related costs, and other non-comparable items. See "Non-GAAP Financial Measures." The Company does not provide a reconciliation for its guidance range of Normalized FFO per diluted share to net income per diluted share, the most directly comparable forward-looking GAAP financial measure, because it is unable to provide a meaningful or accurate estimate of reconciling items and the information is not available without unreasonable effort as a result of the inherent difficulty of forecasting the timing and/or amounts of various items that would impact net income per diluted share. For the same reasons, the Company is unable to address the probable significance of the unavailable information and believes that providing a reconciliation for its guidance range of Normalized FFO per diluted share would imply a degree of precision for its forward-looking net income per diluted share that could be misleading to investors.
Supplemental Financial Information
Further details regarding operating results, properties and leasing statistics can be found in the Company’s supplemental financial package available at www.ArmadaHoffler.com.
Webcast and Conference Call
The Company will host a webcast and conference call on Thursday, August 1, 2019 at 8:30 a.m. Eastern Time to review financial results and discuss recent events. The live webcast will be available through the Investors page of the Company’s website, www.ArmadaHoffler.com. To participate in the call, please dial 877-407-3982 (domestic) or 201-493-6780 (international). A replay of the conference call will be available through Sunday, September 1, 2019 by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the pass code 13691838.
About Armada Hoffler Properties, Inc.
Armada Hoffler Properties, Inc. (NYSE: AHH) is a vertically-integrated, self-managed real estate investment trust ("REIT") with four decades of experience developing, building, acquiring, and managing high-quality, institutional-grade office, retail, and multifamily properties located primarily in the Mid-Atlantic and Southeastern United States. In addition to developing and building properties for its own account, the Company also provides development and general contracting construction services to third-party clients. Founded in 1979 by Daniel A. Hoffler, the Company has elected to be taxed as a REIT for U.S. federal income tax purposes.
Forward-Looking Statements
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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, 2018, and the other documents filed by the Company with the Securities and Exchange Commission from time to time.
Non-GAAP Financial Measures
The Company calculates FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“Nareit”). Nareit defines FFO as net income (loss) (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains or losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.
FFO is a supplemental non-GAAP financial measure. The Company uses FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring the Company’s operational performance. Specifically, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared period-over-period, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare the Company’s operating performance with that of other REITs.
However, because FFO excludes depreciation and amortization and captures neither the changes in the value of the Company’s properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of the Company’s properties, all of which have real economic effects and could materially impact the Company’s results from operations, the utility of FFO as a measure of the Company’s performance is limited. In addition, other equity REITs may not calculate FFO in accordance with the Nareit definition as the Company does, and, accordingly, the Company’s FFO may not be comparable to such other REITs’ FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of the Company’s performance.
Management also believes that the computation of FFO in accordance with Nareit’s definition includes certain items that are not indicative of the results provided by the Company’s operating property portfolio and affect the comparability of the Company’s period-over-period performance. Accordingly, management believes that Normalized FFO is a more useful performance measure that excludes certain items, including but not limited to, acquisition, development and other pursuit costs, gains or losses from the early extinguishment of debt, impairment of intangible assets and liabilities, mark-to-market adjustments for interest rate derivatives, severance related costs, 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, 2019 | December 31, 2018 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Real estate investments: | ||||||||
Income producing property | $ | 1,407,224 | $ | 1,037,917 | ||||
Held for development | 2,752 | 2,994 | ||||||
Construction in progress | 156,695 | 135,675 | ||||||
1,566,671 | 1,176,586 | |||||||
Accumulated depreciation | (205,650 | ) | (188,775 | ) | ||||
Net real estate investments | 1,361,021 | 987,811 | ||||||
Real estate investments held for sale | — | 929 | ||||||
Cash and cash equivalents | 23,109 | 21,254 | ||||||
Restricted cash | 2,852 | 2,797 | ||||||
Accounts receivable, net | 20,713 | 19,016 | ||||||
Notes receivable | 144,743 | 138,683 | ||||||
Construction receivables, including retentions | 13,696 | 16,154 | ||||||
Construction contract costs and estimated earnings in excess of billings | 461 | 1,358 | ||||||
Equity method investments | — | 22,203 | ||||||
Operating lease right-of-use assets | 33,268 | — | ||||||
Finance lease right-of-use assets | 24,415 | — | ||||||
Other assets | 105,749 | 55,177 | ||||||
Total Assets | $ | 1,730,027 | $ | 1,265,382 | ||||
LIABILITIES AND EQUITY | ||||||||
Indebtedness, net | $ | 949,345 | $ | 694,239 | ||||
Accounts payable and accrued liabilities | 15,983 | 15,217 | ||||||
Construction payables, including retentions | 37,798 | 50,796 | ||||||
Billings in excess of construction contract costs and estimated earnings | 1,789 | 3,037 | ||||||
Operating lease liabilities | 41,300 | — | ||||||
Finance lease liabilities | 17,862 | — | ||||||
Other liabilities | 59,508 | 46,203 | ||||||
Total Liabilities | 1,123,585 | 809,492 | ||||||
Total Equity | 606,442 | 455,890 | ||||||
Total Liabilities and Equity | $ | 1,730,027 | $ | 1,265,382 | ||||
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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, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(Unaudited) | ||||||||||||||||
Revenues | ||||||||||||||||
Rental revenues | $ | 36,378 | $ | 28,598 | $ | 67,287 | $ | 57,297 | ||||||||
General contracting and real estate services revenues | 21,444 | 20,654 | 38,480 | 43,704 | ||||||||||||
Total revenues | 57,822 | 49,252 | 105,767 | 101,001 | ||||||||||||
Expenses | ||||||||||||||||
Rental expenses | 8,027 | 6,522 | 14,752 | 12,946 | ||||||||||||
Real estate taxes | 3,451 | 2,735 | 6,579 | 5,548 | ||||||||||||
General contracting and real estate services expenses | 20,123 | 20,087 | 36,409 | 42,501 | ||||||||||||
Depreciation and amortization | 13,478 | 9,179 | 23,382 | 18,457 | ||||||||||||
General and administrative expenses | 2,951 | 2,764 | 6,352 | 5,725 | ||||||||||||
Acquisition, development and other pursuit costs | 57 | 9 | 457 | 93 | ||||||||||||
Impairment charges | — | 98 | — | 98 | ||||||||||||
Total expenses | 48,087 | 41,394 | 87,931 | 85,368 | ||||||||||||
Operating income | 9,735 | 7,858 | 17,836 | 15,633 | ||||||||||||
Interest income | 5,593 | 2,375 | 10,912 | 4,607 | ||||||||||||
Interest expense | (7,603 | ) | (4,497 | ) | (13,489 | ) | (8,870 | ) | ||||||||
Equity in income of unconsolidated real estate entities | — | — | 273 | — | ||||||||||||
Change in fair value of interest rate derivatives | (1,933 | ) | (11 | ) | (3,396 | ) | 958 | |||||||||
Other income | 4 | 54 | 64 | 168 | ||||||||||||
Income before taxes | 5,796 | 5,779 | 12,200 | 12,496 | ||||||||||||
Income tax benefit | 30 | 166 | 140 | 432 | ||||||||||||
Net income | 5,826 | 5,945 | 12,340 | 12,928 | ||||||||||||
Net loss attributable to noncontrolling interests in investment entities | 320 | — | 320 | — | ||||||||||||
Preferred stock dividends | (154 | ) | — | (154 | ) | — | ||||||||||
Net income attributable to common stockholders and OP Unit holders | $ | 5,992 | $ | 5,945 | $ | 12,506 | $ | 12,928 | ||||||||
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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, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(Unaudited) | ||||||||||||||||
Net income attributable to common stockholders and OP Unit holders | $ | 5,992 | $ | 5,945 | $ | 12,506 | $ | 12,928 | ||||||||
Depreciation and amortization(1) | 13,118 | 9,179 | 23,247 | 18,457 | ||||||||||||
FFO attributable to common stockholders and OP Unit holders | $ | 19,110 | $ | 15,124 | $ | 35,753 | $ | 31,385 | ||||||||
Acquisition, development and other pursuit costs | 57 | 9 | 457 | 93 | ||||||||||||
Impairment of intangible assets and liabilities | — | 98 | — | 98 | ||||||||||||
Change in fair value of interest rate derivatives | 1,933 | 11 | 3,396 | (958 | ) | |||||||||||
Normalized FFO available to common stockholders and OP Unit holders | $ | 21,100 | $ | 15,242 | $ | 39,606 | $ | 30,618 | ||||||||
Net income attributable to common stockholders and OP Unit holders per diluted share and unit | $ | 0.08 | $ | 0.09 | $ | 0.18 | $ | 0.21 | ||||||||
FFO per diluted share and unit attributable to common stockholders and OP Unit holders | $ | 0.27 | $ | 0.24 | $ | 0.51 | $ | 0.50 | ||||||||
Normalized FFO per diluted share and unit attributable to common stockholders and OP Unit holders | $ | 0.30 | $ | 0.24 | $ | 0.57 | $ | 0.49 | ||||||||
Weighted average common shares and units - diluted | 71,232 | 63,214 | 69,584 | 62,878 | ||||||||||||
________________________________________
(1) The adjustment for depreciation and amortization for the six months ended June 30, 2019 includes $0.2 million of depreciation attributable to the Company's investment in One City Center from January 1, 2019 to March 14, 2019, which was an unconsolidated real estate investment during this period. Additionally, the adjustment for depreciation and amortization for both the three and six month periods ended June 30, 2019 excludes $0.4 million of depreciation attributable to the Company's joint venture partner at 1405 Point.
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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2Q19 Supplemental Financial Package Thames Street Wharf
Table of Contents 2 Forward Looking Statements 03 Corporate Profile 04 Highlights 05 2019 Outlook & Assumptions 06 Summary Information 07 Net Asset Value Component Data 08 Summary Balance Sheet 09 Summary Income Statement 10 FFO, Normalized FFO & Adjusted FFO 11 Outstanding Debt 12 Debt Information 13 Core Debt to Core EBITDA 14 Capitalization & Financial Ratios 15 Property Portfolio 16 Development & Redevelopment Pipeline 18 Mezzanine Investments 19 Acquisitions & Dispositions 20 Thames Street Wharf 21 Harbor Point Investment 22 Construction Business Summary 23 Same Store NOI by Segment 24 Top 10 Tenants by Annualized Base Rent 25 Office Lease Summary 26 Office Lease Expirations 27 Retail Lease Summary 28 Retail Lease Expirations 29 Appendix – Definitions & Reconciliations 30 Same Store vs Non-Same Store Properties 34 Reconciliation to Property Portfolio NOI 35 Reconciliation to GAAP Net Income 37
3 FORWARD - LOOKING STATEMENTS Armada Hoffler This Supplemental Financial Package should be read in conjunction with the unaudited condensed consolidated financial statements appearing in our press release dated August 1, 2019, which has been furnished as Exhibit 99.1 to our Form 8-K filed on August 1, 2019. The Company makes statements in this Supplemental Financial Package that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). In particular, statements pertaining to our capital resources, portfolio performance, mezzanine loan program, development pipeline and results of operations contain forward-looking statements. Likewise, all of our statements regarding anticipated growth in our funds from operations, normalized funds from operations, adjusted funds from operations, 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.
Corporate Profile 4 Armada Hoffler Properties, Inc. (NYSE: AHH) is a vertically-integrated, self-managed real estate investment trust (“REIT”) with four decades of experience developing, building, acquiring, and managing high-quality, institutional-grade office, retail, and multifamily properties located primarily in the Mid-Atlantic and Southeastern United States. In addition to developing and building properties for its own account, the Company also provides development and general contracting construction services to third-party clients. Founded in 1979 by Daniel A. Hoffler, the Company has elected to be taxed as a REIT for U.S. federal income tax purposes. BOARD OF DIRECTORS Daniel A. Hoffler, Executive Chairman of the Board James A. Carroll, Independent Director Louis S. Haddad, Vice Chairman of the Board Eva S. Hardy, Independent Director James C. Cherry, Lead Independent Director A. Russell Kirk, Director George F. Allen, Independent Director John W. Snow, Independent Director Corporate Officers Investor Relations Louis S. Haddad, President and Chief Executive Officer Michael P. O’Hara, Chief Financial Officer Michael P. O’Hara, Chief Financial Officer 757-366-6684 Eric E. Apperson, President of Construction mohara@armadahoffler.com Shelly R. Hampton, President of Asset Management Analyst Coverage Bank of America Merrill Lynch Janney, Montgomery, & Scott LLC Raymond James & Associates Stifel, Nicolaus & Company Inc. James Feldman Robert Stevenson Bill Crow John Guinee (646) 855-5808 (646) 840-3217 (727) 567-2594 (443) 224-1307 james.feldman@baml.com robertstevenson@janney.com bill.crow@raymondjames.com jwguinee@stifel.com D. A. Davidson & Co. B. Riley FBR Robert W. Baird & Co. Craig Kucera David Rodgers (540) 277-3366 (216) 737-7341 craigkucera@brileyfbr.com drodgers@rwbaird.com
Highlights 5 • Net income attributable to common stockholders and OP Unit holders of $6.0 million, or $0.08 per diluted share, compared to $5.9 million, or $0.09 per diluted share, for the three months ended June 30, 2018. • Funds from operations attributable to common stockholders and OP Unit holders ("FFO") of $19.1 million, or $0.27 per diluted share, compared to $15.1 million, or $0.24 per diluted share, for the three months ended June 30, 2018. See "Non-GAAP Financial Measures." • Normalized funds from operations attributable to common stockholders and OP Unit holders ("Normalized FFO") of $21.1 million, or $0.30 per diluted share, compared to $15.2 million, or $0.24 per diluted share, for the three months ended June 30, 2018. • Raised 2019 full-year Normalized FFO guidance to $1.15 to $1.19 per diluted share up from $1.11 to $1.17 per diluted share. • Core operating property portfolio occupancy at 95.6% as of June 30, 2019 compared to 96.0% as of March 31, 2019. • Same Store Net Operating Income (“NOI”) increased for the 5th consecutive quarter. Same Store NOI increased 6.4% on a GAAP basis and 6.0% on a cash basis compared to the quarter ended June 30, 2018. Same Store NOI increased across all segments; multifamily Same Store NOI increased over 20% on both a GAAP and cash basis primarily due to the performance of the Johns Hopkins Village student housing project. • Exercised our at-cost purchase option to acquire a 79% controlling interest in 1405 Point, the 17-story luxury high-rise apartment building located in the Harbor Point area of the Baltimore waterfront, in exchange for the Company's mezzanine loan investment and the assumption of existing debt. • Completed the acquisitions of Red Mill Commons and Marketplace at Hilltop in Virginia Beach, Virginia for aggregate consideration of $105.0 million, including $63.8 million in Operating Partnership Units. • Completed the acquisition of Thames Street Wharf, a certified LEED Gold, trophy office building located on the waterfront in the Harbor Point development of Baltimore, Maryland, for $101.0 million. • Announced Southern Post, a new 240,000 square foot mixed-use development in historic downtown Roswell, Georgia. The Company will be the majority partner in a joint venture to develop the project and anticipates commencing construction in the first quarter of 2020. Estimated development and construction costs for the project are expected to total approximately $80 million. • Raised $61.3 million of net proceeds before estimated offering expenses through an underwritten public offering of 2.5 million shares of 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock at a public offering price of $25.00 per share. • Raised $7.6 million of gross proceeds through our at-the-market equity offering program at an average price of $16.89 per share during the quarter ended June 30, 2019.
2019 Outlook & Assumptions 6 (1) Includes $4.5M of Annapolis Junction Loan Modification Fee. (2) Net of $5.4M of interest expense associated with funding the Company’s mezzanine program. GUIDANCE ASSUMPTIONS • Sale of Lightfoot Marketplace, a Harris Teeter grocery-anchored shopping center at a 5.8% cap rate for expected proceeds of approximately $28M in the third quarter of 2019. • Interest expense is calculated based on Forward LIBOR Curve, which forecasts rates ending the year at 1.90%. • The opportunistic sale of an additional $10M through the ATM program, for a full year total of $50M, assuming favorable market conditions. • Full-year weighted average share count of 72.0M.
Summary Information 7 $ in thousands, except per share data Three months ended 6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018 OPERATIONAL METRICS Net income attributable to AHH and OP Unitholders $5,992 $6,514 $4,895 $5,669 $5,945 Net income attributable to AHH and OP Unitholders per diluted share $0.08 $0.10 $0.07 $0.09 $0.09 Rental properties Net Operating Income (NOI) 24,900 21,056 20,563 18,987 19,341 General contracting and real estate services gross profit 1,321 750 551 977 567 Adjusted EBITDA(1) 28,800 24,038 25,110 (2) 20,124 19,466 Funds From Operations (FFO) attributable to common stockholders and OP unit holders 19,110 16,643 17,089 15,865 15,124 FFO per diluted share attributable to common stockholders and OP unit holders $0.27 $0.25 $0.26 $0.24 $0.24 Normalized FFO attributable to common stockholders and OP unit holders 21,100 18,506 20,190 15,650 15,242 Normalized FFO per diluted share attributable to common stockholders and OP unit holders $0.30 $0.27 $0.30 $0.24 $0.24 Annualized dividend yield 5.08% 5.39% 5.69% 5.29% 5.37% CAPITALIZATION Common shares outstanding 52,794 52,327 50,014 49,576 48,768 Operating Partnership units outstanding 21,178 16,992 17,110 17,167 17,291 Common shares and OP units outstanding 73,972 69,319 67,124 66,743 66,059 Market price per common share $16.55 $15.59 $14.06 $15.11 $14.90 Common equity capitalization(3) $1,224,237 $1,080,683 $943,763 $1,008,487 $984,279 Preferred equity capitalization 63,250 - - - - Total equity capitalization $1,287,487 $1,080,683 $943,763 $1,008,487 $984,279 Total debt(4) 956,068 744,123 700,722 660,608 586,821 Total capitalization 2,243,555 1,824,806 1,644,485 1,669,095 1,571,100 Less: cash (25,961) (18,959) (24,051) (20,648) (15,418) Total enterprise value $2,217,594 $1,805,847 $1,620,434 $1,648,447 $1,555,682 BALANCE SHEET METRICS Core debt / enterprise value 29.0% 32.5% 36.7% 34.9% 34.1% Core debt + preferred equity / enterprise value 31.8% 32.5% 36.7% 34.9% 34.1% Fixed charge coverage ratio 2.8x 3.3x 3.7x 3.5x 3.5x Core debt / Annualized core EBITDA 6.3x 6.3x 6.6x 7.1x 6.8x Core debt + preferred equity / Annualized core EBITDA 6.9x 6.3x 6.6x 7.1x 6.8x CORE PORTFOLIO OCCUPANCY Office(5) 94.6% 94.9% 93.3% 93.8% 93.7% Retail(5) 96.6% 96.1% 96.2% 96.6% 96.7% Multifamily(6) 94.7% (7) 97.2% 97.3% 97.1% 89.2% (7) Weighted Average(8) 95.6% 96.0% 95.8% 96.1% 94.8% (1) See definition on page 32. (2) Includes gain on non-operating real estate of $3.4M and approximately $688K of severance for the three months ended 12/31/18. (3) Includes common shares and OP units. (4) Excludes GAAP adjustments. (5) Office and retail occupancy based on leased square feet as a % of respective total. (6) Multifamily occupancy based on occupied units as a % of respective total. (7) Includes impact of seasonality, attributed to the reduced summer occupancy at the JHU student housing property. (8) Total occupancy weighted by annualized base rent.
Net Asset Value Component Data 8 In thousands Stabilized Portfolio NOI (Cash)(1) Third-Party General Contracting and Real Estate Services Three months ended Annualized Trailing 12 Months 6/30/2019 6/30/2019 General Contracting Gross Profit(4) $7,015 Stabilized Virginia Beach (VB) Town Center(1) Office(2) $3,332 $13,328 Non-Property Assets(5) Retail(2) 2,195 8,780 As of 6/30/2019 Multifamily 1,976 7,904 Cash and Cash Equivalents $23,109 Total Stabilized VB Town Center NOI $7,503 $30,012 Restricted cash 2,852 Accounts Receivable 20,713 Stabilized Portfolio (Excludes VB Town Center)(1) Notes Receivable, Including Mezzanine Investments (6) 143,505 Office(2) $591 $2,364 Construction receivables, including retentions 13,696 Retail 11,543 46,172 Other Assets 106,210 Multifamily 3,172 12,688 Land Held for Development (Book Value) 2,752 Total Stabilized Portfolio (Excludes VB Town Center) $15,306 $61,224 Total Non-Property Assets $312,837 Combined Stabilized Portfolio NOI $22,809 $91,236 Liabilities(5) As of 6/30/2019 Run Rate Adjustments(1) Mortgages and Notes Payable(6) $956,068 Signed Leases Not Yet Occupied or In Free Rent Period $1,161 $4,644 Accounts Payable and Accrued Liabilities 15,983 Net Acquisitions/Dispositions Completed Intra-Quarter 3,241 12,964 Construction Payables, Including Retentions 37,798 Total Run Rate Adjustments $4,402 $17,607 Other Liabilities 61,297 Total Liabilities $1,071,146 Total $27,211 $108,843 Preferred Equity Non-Stabilized Portfolio and Development Pipeline (Cost Basis)(3) Liquidation Value See page 18 for a list of properties Series A Cumulative Redeemable Perpetual Preferred Stock $63,250 As of 6/30/2019 Income Producing Properties $103,000 Construction In Process 149,000 Common Equity Other Assets 3,000 As of 6/30/2019 Total Non-Stabilized Development Portfolio 255,000 Total common shares outstanding 52,794 Total OP units outstanding 21,178 Redevelopment in Process 6,600 Total Common Shares & OP Units Outstanding 73,972 Total Non-Stabilized Redevelopment and Development Portfolio $261,600 (1) NOI from non-stabilized portfolio and development pipeline excluded from stabilized portfolio. (2) Includes leases for space occupied by Armada Hoffler which are eliminated for GAAP purposes. (3) NOI not included in Stabilized Portfolio. (4) Includes $3.4 million from the sale of a distribution center. (5) Lease right of use assets and lease liabilities excluded. (6) Excludes GAAP adjustments.
Summary Balance Sheet 9 $ in thousands As of 6/30/2019 12/31/2018 Assets (Unaudited) Real estate investments: Income producing property $1,407,224 $1,037,917 Held for development 2,752 2,994 Construction in progress 156,695 135,675 Accumulated depreciation (205,650) (188,775) Net real estate investments 1,361,021 987,811 Real estate investments held for sale - 929 Cash and cash equivalents 23,109 21,254 Restricted cash 2,852 2,797 Accounts receivable, net 20,713 19,016 Notes receivable 144,743 138,683 Construction receivables, including retentions 13,696 16,154 Costs and estimated earnings in excess of billings 461 1,358 Equity method investments - 22,203 Operating lease right-of-use assets 33,268 - Finance lease right-of-use assets 24,415 - Other assets 105,749 55,177 Total Assets $1,730,027 $1,265,382 Liabilities and Equity Indebtedness, net $949,345 $694,239 Accounts payable and accrued liabilities 15,983 15,217 Construction payables, including retentions 37,798 50,796 Billings in excess of costs and estimated earnings 1,789 3,037 Operating lease liabilities 41,300 - Finance lease liabilities 17,862 - Other liabilities 59,508 46,203 Total Liabilities 1,123,585 809,492 Total Equity 606,442 455,890 Total Liabilities and Equity $1,730,027 $1,265,382
Summary Income Statement 10 In thousands, except per share data Three months ended Six months ended 6/30/2019 6/30/2018 6/30/2019 6/30/2018 Revenues (Unaudited) Rental revenues $36,378 $28,598 $67,287 $57,297 General contracting and real estate services revenues 21,444 20,654 38,480 43,704 Total Revenues 57,822 49,252 105,767 101,001 Expenses Rental expenses 8,027 6,522 14,752 12,946 Real estate taxes 3,451 2,735 6,579 5,548 General contracting and real estate services expenses 20,123 20,087 36,409 42,501 Depreciation and amortization 13,478 9,179 23,382 18,457 General and administrative expenses 2,951 2,764 6,352 5,725 Acquisition, development & other pursuit costs 57 9 457 93 Impairment charges - 98 - 98 Total Expenses 48,087 41,394 87,931 85,368 Operating Income 9,735 7,858 17,836 15,633 Interest income 5,593 2,375 10,912 4,607 Interest expense (7,603) (4,497) (13,489) (8,870) Equity in income of unconsolidated real estate entities - - 273 - Change in fair value of interest rate derivatives (1,933) (11) (3,396) 958 Other income 4 54 64 168 Income before taxes 5,796 5,779 12,200 12,496 Income tax benefit 30 166 140 432 Net Income $5,826 $5,945 $12,340 $12,928 Net loss attributable to noncontrolling interest in investment entities 320 - 320 - Preferred stock dividends (154) - (154) - Net income attributable to AHH and OP Unitholders $5,992 $5,945 $12,506 $12,928 Net income per diluted share and unit attributable to AHH and OP Unitholders $0.08 $0.09 $0.18 $0.21
FFO, Normalized FFO & AFFO(1) 11 $ in thousands, except per share data Three months ended (Unaudited) 6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018 Funds From Operations Net income attributable to AHH and OP Unitholders $5,992 $6,514 $4,895 $5,669 $5,945 Earnings per diluted share $0.08 $0.10 $0.07 $0.09 $0.09 Depreciation and amortization(2) 13,118 10,129 11,525 10,196 9,179 Gains on dispositions of operating real estate(3) - - (833) - - Impairment of real estate assets (4) - - 1,502 - - FFO $19,110 $16,643 $17,089 $15,865 $15,124 FFO per diluted share $0.27 $0.25 $0.26 $0.24 $0.24 Normalized FFO Acquisition, development & other pursuit costs 57 400 190 69 9 Loss on extinguishment of debt - - - 11 - Impairment of intangible assets and liabilities - - 16 3 98 Severance related costs - - 688 - - Change in fair value of interest rate derivatives 1,933 1,463 2,207 (298) 11 Normalized FFO $21,100 $18,506 $20,190 $15,650 $15,242 Normalized FFO per diluted share $0.30 $0.27 $0.30 $0.24 $0.24 Adjusted FFO Non-cash stock compensation 327 689 55 252 271 Acquisition, development & other pursuit costs (57) (400) (190) (69) (9) Tenant improvements, leasing commissions, lease incentives (5) (841) (809) (2,447) (899) (1,102) Property related capital expenditures (1,983) (1,494) (2,961) (884) (1,098) Adjustment for Annapolis Junction loan modification fee (1,238) (1,118) 4,489 - - Non-cash interest expense 397 304 289 270 231 GAAP Adjustments (1,337) (850) (944) (752) (461) AFFO $16,368 $14,828 $18,481 $13,568 $13,074 AFFO per diluted share $0.23 $0.22 $0.28 $0.20 $0.21 Weighted Average Common Shares Outstanding 52,451 50,926 49,726 49,194 45,928 Weighted Average Operating Partnership ("OP") Units Outstanding 18,781 16,993 17,110 17,168 17,286 Total Weighted Average Common Shares and OP Units Outstanding 71,232 67,919 66,836 66,362 63,214 (1) See definitions on pages 31-32. (2) Adjusted for the depreciation attributable to noncontrolling interests in consolidated investments and unconsolidated entities. (3) Excludes gain on non-operating real estate of $3.4M for the three months ended 12/31/18. (4) Impairment of Waynesboro Commons, which was disposed on 4/1/19. (5) Excludes development, redevelopment, and first generation space.
Outstanding Debt 12 $ in thousands Debt Maturities & Principal Payments Effective Rate as Outstanding as of Debt Stated Rate of 6/30/2019 Maturity Date 2019 2020 2021 2022 2023 Thereafter 6/30/2019 Secured Notes Payable - Core Debt 1405 Point L+2.75% 5.15% May-2020 $64,902 $64,902 Southgate Square L+1.60% 4.00% Apr-2021 440 880 19,682 21,002 Encore Apartments 3.25% 3.25% Sep-2021 124 504 24,338 24,966 4525 Main Street 3.25% 3.25% Sep-2021 158 646 31,230 32,034 Red Mill West 4.23% 4.23% Jun-2022 216 445 465 10,386 11,512 Thames Street Wharf L+1.30% 3.70% Jun-2022 70,000 70,000 Hanbury Village 3.78% 3.78% Aug-2022 253 522 544 17,449 18,768 Marketplace at Hilltop 4.42% 4.42% Oct-2022 192 397 414 9,706 10,709 Socastee Commons 4.57% 4.57% Jan-2023 53 109 115 120 4,222 4,619 Sandbridge Commons L+1.75% 4.15% Jan-2023 119 247 257 268 7,248 8,139 249 Central Park Retail L+1.60% 3.85% (1) Aug-2023 111 230 245 260 16,093 16,939 South Retail L+1.60% 3.85% (1) Aug-2023 49 101 107 114 7,066 7,437 Fountain Plaza Retail L+1.60% 3.85% (1) Aug-2023 68 139 147 156 9,684 10,194 Lightfoot Marketplace L+1.75% 4.77% (2) Oct-2023 17,900 17,900 Red Mill Central 4.80% 4.80% Jun-2024 87 175 175 175 175 1,838 2,625 One City Center L+1.85% 4.25% Apr-2024 254 574 628 659 691 22,734 25,540 Red Mill South 3.57% 3.57% May-2025 148 304 315 327 338 4,853 6,285 Johns Hopkins Village L+1.25% 4.19% (1) Aug-2025 456 941 988 1,031 1,075 47,765 52,256 North Point Center Note 2 7.25% 7.25% Sep-2025 62 130 140 151 162 1,642 2,287 Lexington Square 4.50% 4.50% Sep-2028 124 256 268 280 293 13,599 14,820 Red Mill North 4.73% 4.73% Dec-2028 48 100 105 110 116 3,964 4,443 Smith's Landing 4.05% 4.05% Jun-2035 415 856 891 928 966 14,527 18,583 Liberty Apartments 5.66% 5.66% Nov-2043 138 288 304 332 341 12,900 14,303 The Cosmopolitan 3.35% 3.35% Jul-2051 386 792 819 847 876 40,368 44,088 Total - Secured Core Debt $3,901 $73,538 $82,177 $113,299 $67,246 $164,190 $504,351 Secured Notes Payable - Development Pipeline Greenside Apartments L+2.95% 5.35% Feb-2020 $28,154 $28,154 Premier L+2.75% 5.15% Jun-2020 21,830 21,830 Summit Place L+3.24% 5.64% Jan-2021 24,035 24,035 Hoffler Place L+3.24% 5.64% Jan-2021 22,818 22,818 Wills Wharf L+2.25% 4.65% Jun-2023 - Market at Mill Creek L+1.55% 3.95% Jul-2025 136 338 353 368 383 12,700 14,278 Brooks Crossing Office L+1.60% 4.00% Jul-2025 134 341 360 381 12,386 13,602 Total - Development Pipeline 136 50,456 47,547 728 764 25,086 124,717 Total Secured Notes Payable $4,037 $123,994 $129,724 $114,027 $68,010 $189,276 $629,068 Unsecured Core Debt Senior unsecured line of credit L+1.40% - 2.00% 3.95% Oct-2021 122,000 122,000 Senior unsecured term loan L+1.35% - 1.95% 3.90% Oct-2022 55,000 55,000 Senior unsecured term loan L+1.35% - 1.95% 3.50% - 4.28% (1) Oct-2022 150,000 150,000 Total - Unsecured Core Debt - - 122,000 205,000 - - 327,000 Total Notes Payable excluding GAAP Adjustments $4,037 $123,994 $251,724 $319,027 $68,010 $189,276 $956,068 GAAP Adjustments (6,723) Total Notes Payable $949,345 (1) Includes debt subject to interest rate swap locks. (2) Includes $10.5 million of debt subject to interest rate swap locks.
Debt Information 13 $ in thousands Debt Maturities $350,000 6.0% $300,000 5.1% 5.0% $250,000 4.1% 4.2% 4.1% 4.0% 3.9% $200,000 3.0% $150,000 2.0% $100,000 1.0% $50,000 $0 0.0% 2019 2020 2021 2022 2023 Thereafter Fixed-Rate Debt Variable-Rate Debt Weighted Average Interest Rate(1) Total Debt Composition Interest Rate Cap Agreements Weighted Average Notional % of Debt Interest Rate Maturity Effective Date Maturity Date Strike Rate Amount Secured vs. Unsecured Debt June 2017 JulyCheck 2019 1.50% $50,000 Unsecured Debt 34.2% 3.9% 3.0 Yrs September 2017 October 2019 1.50% 50,000 Secured Debt 65.8% 4.3% 6.1 Yrs November 2017 December 2019 1.50% 50,000 Variable vs. Fixed-rate Debt March 2018 April 2020 2.25% 50,000 (2) Variable-rate Debt 52.2% 4.4% 2.4 Yrs July 2018 August 2020 2.50% 50,000 Fixed-rate Debt(1)(3) 47.8% 3.9% 7.9 Yrs December 2018 January 2021 2.75% 50,000 Fixed-rate and Hedged Debt(1)(3) 89.7% May 2019 June 2022 2.50% 100,000 Total 4.2% 5.0 Yrs Total Interest Rate Caps $400,000 Fixed-rate Debt(2)(3) 457,368 (1) Includes debt subject to interest rate swap locks. Fixed-rate and Hedged Debt $857,368 (2) Excludes debt subject to interest rate swap locks. % of Total Debt(3) 89.7% (3) Excludes GAAP adjustments.
Core Debt to Core EBITDA(1) 14 $ in thousands Three months ended 6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018 Net income available to be allocated to AHH and OP Unitholders $5,992 $6,514 $4,895 $5,669 $5,945 Excluding: Change in fair value of interest rate derivatives 1,933 1,463 2,207 (298) 11 Depreciation and amortization(2) 13,118 10,129 11,525 10,196 9,179 (Gain) Loss on operating real estate dispositions - - (833) - - Impairment of real estate assets - - 1,502 - - Income tax provision (benefit) (30) (110) 523 (120) (166) Interest expense(2) 7,460 6,042 5,692 4,677 4,497 Loss on extinguishment of debt - - - 11 - Non-cash stock compensation 327 689 55 252 271 Adjusted EBITDA $28,800 $24,727 $25,566 (3) $20,387 $19,737 Other adjustments: Development pipeline(2) (1,182) (1,362) (1,129) (94) (106) (Less) Net Acquisitions/Dispositions Completed Intra-Quarter (1,978) - - - - Core EBITDA $25,640 $23,365 $24,437 $20,293 $19,631 Total Debt(4) $956,068 $744,123 $719,179 $660,608 $586,821 Adjustments to debt: (Less) Development pipeline(4) (117,440) (138,501) (100,268) (64,365) (40,232) (Less) Net Acquisitions/Dispositions Completed Intra-Quarter (5) (170,476) - - - - (Less) Cash & restricted cash (25,961) (18,959) (24,051) (20,648) (15,418) Core Debt $642,191 $586,663 $594,860 $575,595 $531,171 Core Debt/Annualized Core EBITDA 6.3x 6.3x 6.6x 7.1x 6.8x (1) See definitions on page 32. (2) Adjusted for the depreciation and interest expense attributable to noncontrolling interests in consolidated investments and unconsolidated entities. (3) Includes gain on non-operating real estate of $3.4M and approximately $688K of severance for the three months ended 12/31/18. These amounts are not annualized in the Core Debt/Annualized Core EBITDA calculation. (4) Excludes GAAP Adjustments. (5) Properties include Thames Street (closed on 6/26/19), Marketplace at Hilltop (closed on 5/23/19), Red Mill Commons (closed on 5/23/19), and 1405 Point (closed on 4/24/19).
Capitalization & Financial Ratios 15 $ in thousands As of June 30, 2019 3% 5% Debt % of Total Principal Balance 16% 9% Debt Unsecured credit facility 13% $122,000 43% Unsecured term loans 21% 205,000 Mortgages payable 66% 629,068 Total debt $956,068 28% Equity 57% Liquidation Value 39% Preferred Equity Shares Per Share Total Liquidation Value 6.75% Series A Cumulative Redeemable 2,530 $25.00 $63,250 Perpetual Preferred Stock (NYSE: AHHPrA) Common Equity % of Total Shares/Units Stock Price Market Value Common stock (NYSE: AHH) 71% 52,794 $16.55 $873,741 Common units 29% 21,178 $16.55 350,496 Unsecured Credit Facility Unsecured Term Loans Mortgages Payable Equity market capitalization 73,972 $1,224,237 Total capitalization $2,243,555 Common Stock Preferred Equity Financial Ratios Unencumbered Properties Debt Service Coverage Ratio(1) 3.2x % of Total Properties 59% Fixed Charge Coverage Ratio(2) 2.8x % of Annualized Base Rent 41% Net Debt to Adjusted EBITDA 8.3x Core Debt to Core EBITDA 6.3x Liquidity Core Debt + Preferred Equity to Core EBITDA 6.9x Cash on hand $25,961 Debt/Market capitalization 43% Availability under credit facility 27,694 Availability under construction loan 104,343 $157,998 (1) Reflects quarterly Adjusted EBITDA divided by total quarterly interest expense and required principal repayment. (2) Reflects quarterly Adjusted EBITDA divided by total quarterly interest expense. required principal repayment and preferred equity dividends.
Property Portfolio 16 As of June 30, 2019 Development/ Development/ Town Unencumbered Redevelopment Core Redevelopment ABR per Leased Property Anchor Tenant(s) Location Center ABR Year Built Core Properties Properties Total Occupancy(2) Leased(2) ABR(3) SF(3) Retail Properties Cheesecake Factory, Brooks Brothers, 249 Central Park Retail(4) Virginia Beach, VA ✓ - 2004 92,710 - 92,710 97.9% - $2,615,411 $28.82 Gordon Biersch Alexander Pointe Harris Teeter Salisbury, NC 100% 1997 57,710 - 57,710 95.1% - 636,621 11.59 Bermuda Crossroads(6) Food Lion, OfficeMax Chester, VA 100% 2001 122,566 - 122,566 98.4% - 1,718,670 14.26 Broad Creek Shopping Center(6)(9) Food Lion, PetSmart Norfolk, VA 100% 1997/2001 121,504 - 121,504 95.5% - 2,055,229 17.71 Broadmoor Plaza Kroger South Bend, IN 100% 1980 115,059 - 115,059 97.5% - 1,382,022 12.31 Brooks Crossing Retail Various Small Shops Newport News, VA 100% 2016 - 18,349 18,349 - 66.3% 169,380 13.92 Columbus Village(6) Barnes & Noble, Shake Shack Virginia Beach, VA ✓ 100% 1980/2013 - 62,362 62,362 - 83.6% 1,544,613 29.63 Columbus Village II Regal Cinemas, BB&B Virginia Beach, VA ✓ 100% 1995/1996 92,061 - 92,061 96.7% - 1,595,334 17.92 Commerce Street Retail(5) Yard House Virginia Beach, VA ✓ 100% 2008 19,173 - 19,173 100.0% - 869,292 45.34 Courthouse 7-Eleven 7-Eleven Virginia Beach, VA 100% 2011 3,177 - 3,177 100.0% - 139,311 43.85 Dick's at Town Center Dick's Sporting Goods, USI Virginia Beach, VA ✓ 100% 2002 103,335 - 103,335 100.0% - 1,261,503 12.21 Dimmock Square Best Buy, Old Navy Colonial Heights, VA 100% 1998 106,166 - 106,166 97.2% - 1,774,212 17.20 Fountain Plaza Retail Ruth's Chris, Ann Taylor Virginia Beach, VA ✓ - 2004 35,961 - 35,961 100.0% - 1,036,401 28.82 Gainsborough Square Food Lion Chesapeake, VA 100% 1999 88,862 - 88,862 91.1% - 1,240,660 15.32 Greentree Shopping Center Various Small Shops Chesapeake, VA 100% 2014 15,719 - 15,719 83.7% - 269,209 20.46 Hanbury Village(6) Harris Teeter, Walgreens Chesapeake, VA 32% 2006/2009 116,635 - 116,635 98.6% - 2,508,753 21.81 Harper Hill Commons(6) Harris Teeter Winston-Salem, NC 100% 2004 96,914 - 96,914 86.9% - 958,658 11.38 Harrisonburg Regal Regal Cinemas Harrisonburg, VA 100% 1999 49,000 - 49,000 100.0% - 683,550 13.95 Indian Lakes Crossing(6) Harris Teeter Virginia Beach, VA 100% 2008 64,973 - 64,973 95.0% - 843,073 13.66 Lexington Square Lowes Foods Lexington, SC - 2017 85,531 - 85,531 93.3% - 1,698,782 21.29 Lightfoot Marketplace(6) Harris Teeter, CHKD Williamsburg, VA - 2016 124,715 - 124,715 85.6% - 1,833,003 17.16 Market at Mill Creek Lowes Foods Mt. Pleasant, SC - 2018 - 72,553 72,553 - 94.3% 1,637,522 23.94 Marketplace at Hilltop(6)(9) Total Wine, Panera Virginia Beach, VA - 2000-2001 117,753 - 117,753 100.0% - 2,675,711 22.72 North Hampton Market PetSmart, Hobby Lobby Taylors, SC 100% 2004 114,935 - 114,935 100.0% - 1,477,315 12.85 North Point Center(6) Harris Teeter, Home Depot, Costco Durham, NC 88% 1998/2009 494,746 - 494,746 100.0% - 3,829,020 7.74 Oakland Marketplace(6) Kroger Oakland, TN 100% 2004 64,538 - 64,538 100.0% - 475,448 7.37 Parkway Centre Publix Moultrie, GA 100% 2017 61,200 - 61,200 98.0% - 812,760 13.55 Parkway Marketplace Rite Aid Virginia Beach, VA 100% 1998 37,804 - 37,804 94.4% - 720,178 20.17 Patterson Place BB&B, PetSmart, DSW, AC Moore Durham, NC 100% 2004 160,942 - 160,942 96.1% - 2,449,678 15.84 Perry Hall Marketplace Safeway Perry Hall, MD 100% 2001 74,256 - 74,256 100.0% - 1,263,806 17.02 Premier Retail Williams Sonoma, Pottery Barn Virginia Beach, VA ✓ - 2018 - 38,798 38,798 - 75.4% 957,730 32.76 Providence Plaza Cranfill, Sumner & Hartzog, Chipotle Charlotte, NC 100% 2007/2008 103,118 - 103,118 98.8% - 2,778,247 27.28 Red Mill Commons(6) Homegoods, Walgreens Virginia Beach, VA 8% 2000-2005 371,112 - 371,112 98.8% - 6,513,649 17.77 Renaissance Square Harris Teeter Davidson, NC 100% 2008 80,467 - 80,467 88.0% - 1,225,345 17.30 Sandbridge Commons(6) Harris Teeter Virginia Beach, VA - 2015 77,993 - 77,993 100.0% - 1,072,546 13.75 Socastee Commons Bi-Lo Myrtle Beach, SC - 2000/2014 57,273 - 57,273 96.7% - 631,327 11.40 Southgate Square Burlington, PetSmart, Michaels Colonial Heights, VA - 1991/2016 220,131 - 220,131 89.7% - 2,711,680 13.74 South Retail lululemon, free people, CPK Virginia Beach, VA ✓ - 2002 38,515 - 38,515 100.0% - 977,399 25.38 South Square(6) Ross, Petco, Office Depot Durham, NC 100% 1977/2005 109,590 - 109,590 95.3% - 1,794,385 17.17 Southshore Shops Buffalo Wild Wings Chesterfield, VA 100% 2006 40,333 - 40,333 88.8% - 737,161 20.59 Stone House Square(6) Weis Markets Hagerstown, MD 100% 2008 112,274 - 112,274 93.1% - 1,767,874 16.92 Studio 56 Retail McCormick & Schmick's Virginia Beach, VA ✓ 100% 2007 11,594 - 11,594 100.0% - 472,156 40.72 Tyre Neck Harris Teeter(9) Harris Teeter Portsmouth, VA 100% 2011 48,859 - 48,859 100.0% - 533,285 10.91 Wendover Village BB&B, T.J. Maxx, Petco Greensboro, NC 100% 2004 176,939 - 176,939 99.3% - 3,470,355 19.75 Total / Weighted Avg Retail Portfolio 62% 4,086,143 192,062 4,278,205 96.6% $67,818,264 $16.51
Property Portfolio Cont. 17 As of June 30, 2019 Town Unencumbered Core Development Core Development Office Properties Anchor Tenant Location Center ABR Year Built Properties Properties Total Occupancy(2) Leased(2) ABR(3) ABR per Leased SF(3) 4525 Main Street Clark Nexsen, Anthropologie, Mythics Virginia Beach, VA ✓ - 2014 234,938 - 234,938 98.1% - $6,615,084 $28.69 Armada Hoffler Tower(4)(5) AHH, Troutman Sanders, Williams Mullen Virginia Beach, VA ✓ 100% 2002 324,473 - 324,473 91.5% - 8,680,395 29.24 Brooks Crossing Office Huntington Ingalls Industries Newport News, VA - 2019 - 98,061 98,061 - 100.0% 1,814,129 18.50 One Columbus(5) BB&T, HBA Virginia Beach, VA ✓ 100% 1984 128,876 - 128,876 92.2% - 2,988,491 25.14 One City Center Duke University, WeWork Durham, NC - 2019 153,666 - 153,666 84.7% - 4,142,424 31.82 Thames Street Wharf(4) Morgan Stanley, JHU Medical Baltimore, MD - 2010 263,426 - 263,426 100.0% - 7,128,202 27.06 Two Columbus Hazen and Sawyer Virginia Beach, VA ✓ 100% 2009 108,459 - 108,459 100.0% - 2,906,020 26.79 Total / Weighted Average Office Portfolio 43% 1,213,838 98,061 1,311,899 94.6% $34,274,745 $27.50 Units Development/ Development/ Town Unencumbered Core Redevelopment Core Redevelopment Monthly Rent per Multifamily Location Center ABR Year Built Properties Properties Total Occupancy (2) Occupancy(2) ABR (7) Occupied Unit 1405 Point(8)(9) Baltimore, MD - 2018 289 - 289 95.8% - $7,172,189 $2,157.70 Encore Apartments Virginia Beach, VA ✓ - 2014 286 - 286 97.6% - 4,398,852 1,313.87 Greenside Apartments Charlotte, NC - 2018 - 225 225 - 80.4% 3,463,104 1,594.43 Johns Hopkins Village(8)(9)(10) Baltimore, MD - 2016 157 - 157 84.0% - 6,561,132 1,146.25 Liberty Apartments(8)(10) Newport News, VA - 2013 197 - 197 93.1% - 2,343,868 1,064.97 Premier Apartments Virginia Beach, VA ✓ - 2018 131 - 131 99.2% - 2,234,256 1,432.22 Smith's Landing(9) Blacksburg, VA - 2009 284 - 284 95.4% - 3,933,962 1,209.71 The Cosmopolitan(8) Virginia Beach, VA ✓ - 2006 - 342 342 - 93.0% (11) 5,323,099 1,601.41 Total / Weighted Avg Multifamily Portfolio - 1,344 567 1,911 94.7% $35,430,462 $1,477.76 (1) The net rentable square footage for each of our retail & office properties is the sum of (a) the square Square Footage footage of existing leases, plus (b) for available space, management’s estimate of net rentable square Properties with Tenants Subject to Number of Leased Pursuant to footage based, in part, on past leases. The net rentable square footage included in office leases is Ground Lease Ground Leases Ground Leases ABR Bermuda Crossroads 2 11,000 $179,685 generally consistent with the Building Owners and Managers Association, or BOMA, 1996 measurement Broad Creek Shopping Center 6 23,825 639,988 guidelines. Columbus Village 1 3,403 200,000 (2) Occupancy for each of our retail & office properties is calculated as (a) square footage under Hanbury Village 2 55,586 1,082,118 Harper Hill Commons 1 41,520 373,680 executed leases as of June 30, 2019, divided by (b) net rentable square feet, expressed as a percentage. Indian Lakes 1 50,311 592,385 Occupancy for our multifamily properties is calculated as (a) total units occupied as of June 30, 2019, Lightfoot Marketplace 3 60,442 660,375 Marketplace at Hilltop 2 5,011 178,843 divided by (b) total units available, as of such date expressed as a percentage. North Point Center 4 280,556 1,146,700 (3) For the properties in our office and retail portfolios, annualized base rent, or ABR, is calculated by Oakland Marketplace 1 45,000 186,347 Red Mill Commons 8 33,961 773,639 multiplying (a) monthly base rent (defined as cash base rent, before contractual tenant concessions and Sandbridge Commons 3 61,864 738,500 abatements, and excluding tenant reimbursements for expenses paid by us) as of June 30, 2019 for in- South Square 1 1,778 60,000 Stone House Square 1 3,650 181,500 place leases as of such date by (b) 12, and does not give effect to periodic contractual rent increases or Tyre Neck Harris Teeter 1 48,859 533,285 contingent rental revenue (e.g., percentage rent based on tenant sales thresholds). ABR per leased Total / Weighted Avg 37 726,766 $7,527,045 square foot is calculated by dividing (a) ABR by (b) square footage under in-place leases as of June 30, 2019. In the case of triple net or modified gross leases, our calculation of ABR does not include tenant (7) For the properties in our multifamily portfolio, ABR is calculated by multiplying (a) base rental reimbursements for real estate taxes, insurance, common area or other operating expenses. payments for the month ended June 30, 2019 by (b) 12. (4) As of June 30, 2019, the Company occupied 50,583 square feet at these three properties at an ABR of (8) The ABR for Liberty, Cosmopolitan, Johns Hopkins Village, and 1405 Point excludes $293K, $878K, $1.6M, or $30.82 per leased square foot, which amounts are reflected in this table. The rent paid by us $1.1M, and $259K from ground floor retail leases, respectively. is eliminated in accordance with GAAP in the consolidated financial statements. (9) The Company leases all of a portion of the land underlying this property pursuant to a ground lease. (5) Includes ABR pursuant to a rooftop lease. (10) Monthly rent per occupied unit is calculated by dividing total base rental payments for the month (6) Net rentable square feet at certain of our retail properties includes pad sites leased pursuant to the ended June 30, 2019 by the number of occupied beds. ground leases in the table to the right: (11) Excludes 44 units offline for redevelopment for occupancy.
18 Development and Redevelopment Pipeline $ in thousands Schedule(1) Property % Leased or Construction Initial Stabilized Estimated Loan Cost to AHH Projects Type Estimated(1) LOI Start Occupancy Operation(2) Cost(1) Commitment Date Ownership % Anchor Tenants Under Development Hoffler Place (King Street) Multifamily 74 units 86% 3Q17 3Q19 4Q19 $48,000 $31,750 $45,000 93% NA Charleston, SC Summit Place (Meeting Street) Multifamily 114 units - 3Q17 3Q20 4Q20 55,000 34,750 47,000 90% NA Charleston, SC Wills Wharf Office 325,000 sf 68% 3Q18 1Q20 3Q20 120,000 76,000 53,000 100% WeWork, Canopy by Hilton Baltimore, MD Total Projects Under Development 223,000 142,500 145,000 Delivered Not Stabilized Brooks Crossing - Office Office 100,000 sf 100% 1Q18 2Q19 3Q19 $20,000 $15,625 $20,000 100% Huntington Ingalls Industries Newport News, VA Brooks Crossing - Retail Retail 18,000 sf 66% 3Q15 3Q16 2Q20 3,000 - 3,000 65%(3) Misc. small shops Newport News, VA Greenside (Harding Place) Multifamily 225 Units 92% 3Q16 3Q18 3Q19 51,000 29,750 51,000 80%(3) NA Charlotte, NC Market at Mill Creek Retail 73,000 sf 93% 1Q18 1Q19 3Q19 23,000 16,185 23,000 (3) Lowes Foods Mt. Pleasant, SC 70% Premier Retail (Town Center Phase VI) Retail 39,000 sf 75% 4Q16 3Q18 3Q20 15,000 8,334 13,000 100% Williams-Sonoma, Pottery Barn Virginia Beach, VA Total Projects Delivered Not Stabilized 112,000 69,894 110,000 Total $335,000 $212,394 $255,000 Property Units Out of Construction Anticipated Same-Store Estimated Loan Cost to Redevelopment Type Service % Leased Start Completion Sales Cost(1) Commitment Date Anchor Tenants The Cosmopolitan Multifamily 44 units 93% 1Q18 4Q20 4Q21 $10,000 NA $3,100 NA Virginia Beach, VA Columbus Village I Retail 28,264 sf 85% 2Q19 4Q20 4Q21 8,753 NA 3,500 Shake Shack, Barnes and Noble Virginia Beach, VA Total $18,753 $6,600 Q2 2019 YTD Capitalized Interest $1,462 $3,011 Capitalized Overhead $841 $1,505 (1) Represents estimates that may change as the development process proceeds. (2) First fully-stabilized quarter. See same store definition on page 33. (3) AHH earns a preferred return on equity prior to any distributions to JV Partners.
Mezzanine Investments 19 $ in thousands Schedule(1) Principal Property % Leased Initial Mezzanine Mezzanine Mezzanine Option to Type Estimated(1) or LOI Occupancy Loan Maturity Interest Rate Financing Interest QTD Interest YTD Purchase Investments with Discounted Purchase Options Nexton Square-Phase I Retail 118,000 80% 2Q19 4Q20 15% $14,000 $524 $1,033 $42,000 Summerville, SC Short Term Investments The Residences at Annapolis Junction Multifamily 416 units 89% 3Q17 4Q19 10% 38,000 935 1,840 - Annapolis Junction, MD $5M Annapolis Junction Loan Modification Fee - 1,238 2,356 - North Decatur Square (Whole Foods) Retail 86,000 sf 100% 4Q18 2Q22 15% 20,000 693 1,331 - Decatur, GA- Loan was paid off on 7/22/19 Delray Plaza (Whole Foods) Retail 83,000 sf 94% 3Q19 4Q20 15% 12,000 414 724 - Delray Beach, FL Solis Apartments at Interlock Multifamily 345 units NA 3Q20 3Q22 13% 17,000 508 972 - Atlanta, GA The Interlock Mixed-use 300,000 sf 64% 3Q20 3Q22 15% 38,000 1,086 1,830 - Atlanta, GA Total(2) $139,000 $5,398 $10,086 Mezzanine Interest Expense (1,444) (2,765) Net Mezzanine Interest Income $3,954 $7,321 (1) Represents estimates that may change as the development process proceeds. (2) Excludes GAAP adjustments.
Acquisitions & Dispositions 20 $ in thousands ACQUISITIONS Reinvested $ Value of Cash Cap Properties Location Square Feet Purchase Price(1) 1031 Proceeds OP Units/Stock(2) Rate Purchase Date Anchor Tenants Thames Street Wharf Baltimore, MD 263,426 $101,000 $ - $ - 7.1% 2Q19 Morgan Stanley, JHU Medical Red Mill Commons & Virginia Beach, VA - T.J. Maxx, Homegoods, Total Wine, 488,865 105,000 63,755 7.7% 2Q19 Marketplace at Hilltop Walgreens Wendover Village III Greensboro, NC 5,286 2,783 2,424 - 9.2% 1Q19 Verizon Lexington Square(3) Lexington, SC 85,531 26,758 - 2,624 6.7% 3Q18 Lowes Foods Parkway Centre Moultrie, GA 61,200 11,200 - 1,624 6.4% 1Q18 Publix Indian Lakes Virginia Beach, VA 71,020 14,700 - - 7.1% 1Q18 Harris Teeter, Wawa Wendover Village Outparcel Greensboro, NC 35,895 14,300 7,900 - 7.7% 3Q17 Panera, Rooms to Go Kids Renaissance Square Davidson, NC 80,468 17,085 - - 7.1% 4Q16 Harris Teeter Columbus Village II Virginia Beach, VA 92,061 26,200 - 26,200 5.6% 4Q16 Regal, Bed Bath & Beyond Southshore Shops Midlothian, VA 40,333 9,160 - 2,475 7.8% 3Q16 Buffalo Wild Wings Southgate Square Colonial Heights, VA 220,131 38,585 - 17,485 7.3% 2Q16 PetSmart, Michael's, Burlington Retail Portfolio (11 properties) Mid-Atlantic 1,082,681 170,500 87,000 - 7.2% 1Q16 Harris Teeter, Bed Bath & Beyond Providence Plaza Charlotte, NC 103,118 26,200 14,000 - 7.3% 3Q15 Chipotle Socastee Commons Myrtle Beach, SC 57,573 8,600 3,600 - 7.3% 3Q15 BiLo Columbus Village Virginia Beach, VA 65,746 21,025 - 14,025 6.4% 3Q15 Barnes & Noble Perry Hall Marketplace & Maryland 182,949 39,555 15,200 4,155 7.4% 2Q15 Safeway & Weis Markets Stone House Square Dimmock Square Colonial Heights, VA 106,166 19,662 - 9,662 7.3% 3Q14 Old Navy, Best Buy, Pier 1 Total/Weighted Average 3,042,449 $652,313 $130,124 $142,005 7.2% DISPOSITIONS Square Cash Cap Properties Location Feet/Units Sale Price Cash Proceeds Gain on Sale Rate Disposition Date Anchor Tenants Indian Lakes Wawa Virginia Beach, VA 6,047 $4,400 $4,400 $ - 5.4% 2Q18 Wawa Commonwealth of VA Buildings Virginia Beach & Chesapeake, VA 47,366 13,150 8,000 4,194 6.8% 3Q17 Commonwealth of VA Greentree Wawa Chesapeake, VA 5,088 4,600 4,400 3,396 5.0% 1Q17 Wawa Oyster Point(4) Newport News, VA 100,139 6,500 - 3,793 16.4% 3Q16 GSA Non-Core Retail Portfolio Various 174,758 12,850 12,600 (27) 7.1% 2Q16 - 3Q16 Kroger, Family Dollar Richmond Tower Richmond, VA 206,969 78,000 77,000 26,674 7.9% 1Q16 Williams Mullen Oceaneering Chesapeake, VA 154,000 30,000 10,000 4,987 6.7% 4Q15 Oceaneering International Whetstone Apartments Durham, NC 203 units 35,625 17,600 7,210 5.7% 2Q15 NA Sentara Williamsburg Williamsburg, VA 49,200 15,450 15,200 6,197 6.3% 1Q15 Sentara Virginia Natural Gas Virginia Beach, VA 31,000 8,900 7,400 2,211 6.3% 4Q14 Virginia Natural Gas Total/Weighted Average 774,567 sf/ $209,475 $156,600 $58,635 7.2% 203 units (1) Contractual purchase price. (2) Value of OP Units/Stock at issuance. (3) Units are issuable contingent on the achievement of certain further occupancy requirements. (4) Anchor tenant vacated 12/31/16, which would represent a 2.5% Cash Cap Rate.
21 ThamesThames Street Street Wharf — Wharf As of June 26,Acquisition 2019 Highlights Investment Summary Property Highlights ◼ Class A, LEED Gold multi-tenant office asset located on the waterfront in Baltimore’s Harbor Point submarket. ◼ Acquired by AHH on 6/26/2019 at a cost of $101 million funded by a 7.4 263,426 combination of preferred equity and new debt. YEARS SQUARE FEET ◼ Built by AHH Construction in 2010 with AHH still a tenant renting LEAD TENANT WALT ~7,500 square feet. NET RBA ◼ Attractive rent roll with only 25% of leased space expiring before 2028, including space leased by AHH. LEED 100% GOLD 2010 ◼ Live / work / play environment with 24/7 amenities within walking distance, including retail and residential product. OCCUPANCY GREEN YEAR BUILT ◼ Continues Armada Hoffler’s expansion into one of the best-performing submarkets in Baltimore. 1 Acquisition accretive to FFO, NAV and portfolio quality Consistent with long-term plan to build scale 2 in Baltimore’s Harbor Point submarket Strong credit tenant base with weighted 3 average remaining lease term of 7.4 years
22 ExperiencedHarbor Point Owner and Investment Developer in Prime Baltimore Submarket Harbor Point Entitled Master Plan Highlights(1) Baltimore CBD 3M 1.6M 250K 500+ 1K square feet of square feet of square feet of hotel residential mixed-use space office space retail space rooms units Harbor East ◼ High-quality credit tenants have recently migrated to the Harbor Point area, including Exelon Corporation, Morgan Stanley and Johns Hopkins University ◼ AHH acts as investment partner, co-developer and general contractor for Harbor 3 Point lead developer Beatty Development Group ◼ AHH’s long-term goal is the development and ownership of a transformative, vibrant urban core similar to the Town Center of Virginia Beach 2 AHH’s Harbor Point Timeline Harbor Point 4 2010: AHH completes construction of Thames Street Wharf 1 2016: AHH completes construction of the Exelon Building, a 21-story, 900,000 square foot mixed-use development 2018: AHH commences development of Wills Wharf 1. Thames Street 2019: AHH acquires 79% of 1405 Point and Thames 2. 1405 Point Street Wharf 2020: AHH expects to complete development of Wills 3. Exelon Wharf and acquire remaining 21% of 1405 Point 4. Wills Wharf (1) Source: Beatty Development, “Harbor Point.” http://beattydevelopment.com/harbor-point/
Construction Business Summary 23 $ in thousands Total Contract Work in Place as Estimated Date Highlighted Projects Location Value of 6/30/2019 Backlog of Completion Interlock Commercial Atlanta, GA $87,441 $20,167 $67,274 3Q 2020 Solis Apartments at Interlock Atlanta, GA 63,166 919 62,247 1Q 2021 Boulders Lakeside Apartments Chesterfield, VA 35,150 468 34,682 1Q 2021 Sub Total 185,757 21,554 164,203 All Other Projects 368,689 354,260 14,429 Total $554,446 375,814 $178,632 Gross Profit Summary Trailing 12 Q2 2019 Months(1) (Unaudited) Revenue $21,444 $74,551 Expense (20,123) (67,536) Gross Profit $1,321 $7,015 (1) Includes gain on non-operating real estate of $3.4M for the three months ended 12/31/18.
Same Store NOI by Segment 24 $ in thousands (Reconciliation to GAAP located in appendix on pg. 37) Three months ended Six months ended 6/30/2019 6/30/2018 $ Change % Change 6/30/2019 6/30/2018 $ Change % Change Office(1) (Unaudited) (Unaudited) Revenue $5,428 $5,287 $141 2.7% $10,754 $10,387 $367 3.5% Expenses(2) 1,863 1,839 24 1.3% 3,721 3,698 23 0.6% Net Operating Income 3,565 3,448 117 3.4% 7,033 6,689 344 5.1% Retail(1) Revenue 15,146 14,627 519 3.5% 28,820 28,247 573 2.0% Expenses(2) 3,368 3,278 90 2.7% 6,590 6,411 179 2.8% Net Operating Income 11,778 11,349 429 3.8% 22,230 21,836 394 1.8% Multifamily(1) Revenue 5,376 4,843 533 11.0% 10,825 9,878 947 9.6% Expenses(2) 2,044 2,086 (42) -2.0% 4,129 4,037 92 2.3% Net Operating Income 3,332 2,757 575 20.9% 6,696 5,841 855 14.6% Same Store Net Operating Income (NOI) $18,675 $17,554 $1,121 6.4% $35,959 $34,366 $1,593 4.6% GAAP Adjustments (607) (512) (95) (1,137) (1,009) (128) Same store portfolio NOI, cash basis $18,068 $17,042 $1,026 6.0% $34,822 $33,357 $1,465 4.4% NOI, Cash Basis: Office $3,192 $3,153 $39 1.2% $6,328 $6,084 $244 4.0% Retail 11,642 11,202 440 3.9% 21,996 21,567 429 2.0% Multifamily 3,234 2,687 547 20.4% 6,498 5,706 792 13.9% $18,068 $17,042 $1,026 6.0% $34,822 $33,357 $1,465 4.4% NOI: Office 3,565 $3,448 $117 3.4% $7,033 $6,689 $344 5.1% Retail 11,778 11,349 429 3.8% 22,230 21,836 394 1.8% Multifamily 3,332 2,757 575 20.9% 6,696 5,841 855 14.6% $18,675 $17,554 $1,121 6.4% $35,959 $34,366 $1,593 4.6% (1) See page 34 for Same Store vs. Non – Same Store Properties. (2) Excludes expenses associated with the Company’s in house asset management division of $700K and $499K for the 3 months ended 6/30/2019 & 6/30/2018 and $1.2M and $1.0M for the 6 months ended 6/30/2019 & 6/30/2018.
Top 10 Tenants by ABR(1) 25 $ in thousands As of June 30, 2019 Office Portfolio Number Lease Annualized Base % of Office Portfolio % of Total Portfolio Tenant of Leases Expiration Rent Annualized Base Rent Annualized Base Rent Morgan Stanley 2 2023 ; 2027 $ 5,761 16.8% 4.2% Clark Nexsen 1 2029 2,588 7.6% 1.9% WeWork 1 2034 2,204 6.4% 1.6% Duke University 1 2029 1,540 4.5% 1.1% Huntington Ingalls 1 2029 1,513 4.4% 1.1% Mythics 1 2030 1,187 3.5% 0.9% Johns Hopkins Medicine 1 2023 1,118 3.3% 0.8% Hampton University 2 2019 ; 2024 1,085 3.2% 0.8% Pender & Coward 1 2030 904 2.6% 0.7% Kimley-Horn 1 2027 876 2.6% 0.6% Top 10 Total $ 18,776 54.9% 13.7% Retail Portfolio Number Lease Annualized Base % of Retail Portfolio % of Total Portfolio Tenant of Leases Expiration Rent Annualized Base Rent Annualized Base Rent Harris Teeter/Kroger 11 2020 - 2036 $ 6,188 9.1% 4.5% Lowes Foods 2 2037 ; 2039 1,976 2.9% 1.4% Regal Cinemas 2 2022 ; 2024 1,679 2.5% 1.2% Bed, Bath, & Beyond 4 2022 - 2025 1,677 2.5% 1.2% PetSmart 5 2020 - 2022 1,438 2.1% 1.0% Food Lion 3 2022 - 2024 1,291 1.9% 0.9% Petco 4 2020 - 2027 877 1.3% 0.6% Dick's Sporting Goods⁽²⁾ 1 2020 840 1.2% 0.6% Weis Markets 1 2028 802 1.2% 0.6% Ross Dress for Less 2 2022 ; 2025 762 1.1% 0.6% Top 10 Total $ 17,530 25.8% 12.6% (1) Includes leases from the development properties that have been delivered, but not stabilized. (2) Dick’s Sporting Goods notified the Company it will not renew its lease beyond January 31, 2020.
Office Lease Summary 26 Renewal Lease Summary GAAP Cash Number of Weighted Leases Net Rentable SF Leases Net Rentable Contractual Prior Rent Releasing Contractual Prior Rent Releasing Average Lease TI & LC Quarter Signed Signed Expiring SF Expiring Rent per SF per SF Spread Rent per SF per SF Spread Term (yrs) TI & LC per SF Q2 2019 1 30,009 1 5,253 $20.37 $21.71 -6.1% $19.00 $23.77 -20.1% 5.00 $114,589 $3.82 Q1 2019 1 11,995 3 15,865 24.92 21.30 17.0% 23.76 23.18 2.5% 5.00 164,879 13.75 Q4 2018 3 5,490 2 1,915 26.13 24.97 4.6% 26.50 26.27 0.9% 3.86 165,800 30.20 Q3 2018 - - 1 9,337 - - 0.0% - - 0.0% - - - New Lease Summary(1) Number of Cash Weighted Leases Net Rentable SF Contractual Average TI & LC Quarter Signed Signed Rent per SF Lease Term TI & LC per SF Q2 2019 4 22,712 $27.11 8.60 $ 1,122,865 $49.44 Q1 2019 4 15,889 25.07 4.88 498,213 31.36 Q4 2018 1 1,242 24.00 5.21 13,585 10.94 Q3 2018 1 1,806 26.00 5.00 14,958 8.28 (1) Excludes leases from properties in development.
Office Lease Expirations 27 As of June 30, 2019 Square Footage % Portfolio % of Portfolio Annualized Base Number of Leases of Leases Net Rentable Annualized Base Annualized Rent per Leased Year Expiring Expiring(1) Square Feet Rent(1) Base Rent Square Foot Available - 65,520 5.0% $ - - $ - M-T-M 3 1,120 0.1% 43,840 0.1% 39.14 2019 7 35,383 2.7% 1,072,211 3.1% 30.30 2020 10 29,014 2.2% 863,889 2.5% 29.77 2021 11 60,456 4.6% 1,695,099 4.9% 28.04 2022 10 75,547 5.8% 2,140,463 6.2% 28.33 2023 13 115,580 8.8% 3,106,377 9.1% 26.88 2024 8 128,822 9.8% 3,242,602 9.5% 25.17 2025 7 70,062 5.3% 1,961,020 5.7% 27.99 2026 7 34,500 2.6% 877,469 2.6% 25.43 2027 4 244,864 18.7% 6,903,527 20.1% 28.19 2028 6 63,319 4.8% 1,737,011 5.1% 27.43 2029 8 244,498 18.6% 6,136,308 17.9% 25.10 Thereafter 5 143,214 11.0% 4,494,928 13.2% 31.39 Total / Weighted Average 99 1,311,899 100.0% $ 34,274,744 100.0% $ 27.50 300,000 25.0% 250,000 20.0% Square Feet % of Portfolio Under Lease ABR 200,000 15.0% 2,500 or less 3% 150,000 2,501-10,000 13% 10.0% 10,001-20,000 17% 100,000 20,001-40,000 21% 50,000 5.0% 40,001-100,000 30% Greater than 100,000 16% - 0.0% Office Portfolio Total 100% Leased Square Feet % ABR of Office Portfolio (1) Includes leases from the development properties that have been delivered, but not stabilized.
Retail Lease Summary 28 Renewal Lease Summary GAAP Cash Number of Net Weighted Leases Rentable SF Net Rentable SF Contractual Prior Rent per Releasing Contractual Prior Rent Releasing Average Lease TI & LC Quarter Signed Signed Leases Expiring Expiring Rent per SF SF Spread Rent per SF per SF Spread Term (yrs) TI & LC per SF Q2 2019 19 193,546 12 36,364 $13.37 $12.64 5.7% $13.37 $12.84 4.1% 4.87 $137,547 $0.71 Q1 2019 24 128,088 11 30,729 16.08 15.25 5.5% 15.96 15.43 3.4% 5.36 123,414 0.96 Q4 2018 23 169,261 13 67,429 15.91 15.14 5.0% 15.78 15.36 2.8% 3.98 175,816 1.04 Q3 2018 10 28,101 11 19,775 29.36 27.23 7.8% 29.95 28.19 6.2% 5.23 115,732 4.12 New Lease Summary(1) Number of Net Weighted Leases Rentable SF Cash Contractual Rent Average Lease TI & LC Quarter Signed Signed per SF Term (yrs) TI & LC per SF Q2 2019 7 31,696 $27.36 9.41 $1,857,154 $58.59 Q1 2019 3 4,001 16.10 4.89 22,127 5.53 Q4 2018 7 60,363 15.09 10.83 2,710,665 44.91 Q3 2018 7 10,444 19.60 5.95 366,032 35.05 (1) Excludes leases from properties in development.
Retail Lease Expirations 29 As of June 30, 2019 Square Footage % Portfolio % of Portfolio Annualized Base Number of Leases of Leases Net Rentable Annualized Base Annualized Rent per Leased Year Expiring Expiring(1) Square Feet Rent(1) Base Rent Square Foot Available - 171,052 4.0% $ - - $ - M-T-M 3 5,300 0.1% 118,571 0.2% 22.37 2019 31 77,272 1.8% 1,740,061 2.6% 22.52 2020 82 538,736 12.6% 7,866,656 11.6% 14.60 2021 87 366,099 8.6% 6,943,765 10.2% 18.97 2022 90 522,320 12.2% 8,804,593 13.0% 16.86 2023 83 495,066 11.6% 8,002,807 11.8% 16.17 2024 76 509,318 11.9% 8,049,588 11.9% 15.80 2025 36 398,818 9.3% 4,938,651 7.3% 12.38 2026 27 190,053 4.4% 3,444,132 5.1% 18.12 2027 21 149,213 3.5% 3,206,834 4.7% 21.49 2028 30 274,971 6.4% 4,137,191 6.1% 15.05 2029 23 110,976 2.6% 2,245,204 3.3% 20.23 Thereafter 27 469,011 11.0% 8,320,212 12.2% 17.74 Total / Weighted Average 616 4,278,205 100.0% $ 67,818,266 100.0% $16.51 600,000 14.0% 500,000 12.0% Square Feet % of Portfolio 10.0% 400,000 Under Lease ABR 8.0% 2,500 or less 15% 300,000 2,501-10,000 33% 6.0% 200,000 10,001-20,000 15% 4.0% 20,001-40,000 14% 100,000 2.0% 40,001-100,000 22% - 0.0% Greater than 100,000 1% Retail Portfolio Total 100% Leased Square Feet % ABR of Retail Portfolio (1) Includes leases from properties in development.
30 Appendix Definitions & Reconciliations
Definitions 31 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 depreciation and amortization related to real estate, gains or losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. FFO is a supplemental non-GAAP financial measure. Management uses FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring our operational performance. Specifically, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared period-over-period, captures trends in occupancy rates, rental rates and operating costs. Other equity REITs may not calculate FFO in accordance with the Nareit definition as we do, and, accordingly, our FFO may not be comparable to such other REITs’ FFO. NORMALIZED FUNDS FROM OPERATIONS: We calculate Normalized Funds From Operations (“Normalized FFO") as FFO calculated in accordance with the standards established by Nareit, adjusted for acquisition, development and other pursuit costs, gains or losses from the early extinguishment of debt, impairment of intangible assets and liabilities, mark-to-market adjustments on interest rate derivatives, severance related costs, and other non-comparable items. Management believes that the computation of FFO in accordance to Nareit’s definition includes certain items that are not indicative of the results provided by the Company’s operating portfolio and affect the comparability of the Company’s period-over-period performance. Our calculation of Normalized FFO differs from Nareit's definition of FFO. Other equity REITs may not calculate Normalized FFO in the same manner as us, and, accordingly, our Normalized FFO may not be comparable to other REITs' Normalized FFO.
Definitions 32 ADJUSTED FUNDS FROM OPERATIONS: We calculate Adjusted Funds From Operations (“AFFO”) as Normalized FFO adjusted for the impact of non-cash stock compensation, tenant improvement, leasing commission and leasing incentive costs associated with second generation rental space, capital expenditures, non-cash interest expense, proceeds from the sale of a purchase option (in excess of amounts recognized in net income), straight-line rents, 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. ADJUSTED EBITDA: We calculate Adjusted EBITDA as net income (loss) (calculated in accordance with GAAP), excluding interest expense, income taxes, depreciation and amortization, gains (or losses) from sales of depreciable operating property, impairment of real estate assets, debt extinguishment losses, non-cash stock compensation 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, 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.
Definitions 33 SAME STORE PORTFOLIO: We define same store properties as those that we owned and operated and that were stabilized for the entirety of both periods compared. We generally consider a property to be stabilized upon the earlier of: (i) the quarter after the property reaches 80% occupancy or (ii) the thirteenth quarter after the property receives its certificate of occupancy. Additionally, any property that is fully or partially taken out of service for the purpose of redevelopment is no longer considered stabilized until the redevelopment activities are complete, the asset is placed back into service, and the stabilization criteria above are again met. A property may also be fully or partially taken out of service as a result of a disposition, depending on the significance of the portion of the property disposed. Finally, any property classified as Held for Sale is taken out of service for the purpose computing same store operating results. The following table shows the properties included in the same store and non-same store portfolio for the comparative periods presented.
34 Same Store vs. Non-Same Store Properties Three Months Ended Six Months Ended Three Months Ended Six Months Ended 6/30/2019 to 2018 6/30/2019 to 2018 6/30/2019 to 2018 6/30/2019 to 2018 Same Non-Same Same Non-Same Same Non-Same Same Non-Same Store Store Store Store Store Store Store Store Retail Properties Retail Properties (Continued) 249 Central Park Retail X X Red Mill Commons X X Alexander Pointe X X Renaissance Square X X Bermuda Crossroads X X Sandbridge Commons X X Broad Creek Shopping Center X X Socastee Commons X X Broadmoor Plaza X X South Retail X X Brooks Crossing (Retail) X X South Square X X Columbus Village X X Southgate Square X X Columbus Village II X X Southshore Shops X X Commerce Street Retail X X Stone House Square X X Courthouse 7-Eleven X X Studio 56 Retail X X Dick’s at Town Center X X Tyre Neck Harris Teeter X X Dimmock Square X X Wendover Village X X Greentree Shopping Center X X Wendover Village II X X Fountain Plaza Retail X X Wendover Village III X X Gainsborough Square X X Office Properties Hanbury Village X X 4525 Main Street X X Harper Hill Commons X X Armada Hoffler Tower X X Harrisonburg Regal X X Brooks Crossing (Office) X X Indian Lakes Crossing X X One City Center X X Lexington Square X X One Columbus X X Lightfoot Marketplace X X Thames Street Wharf X X Market at Mill Creek X X Two Columbus X X Marketplace at Hilltop X X Multifamily Properties North Hampton Market X X 1405 Point X X North Point Center X X Encore Apartments X X Oakland Marketplace X X Greenside Apartments X X Parkway Centre X X Johns Hopkins Village X X Parkway Marketplace X X Liberty Apartments X X Patterson Place X X Premier Apartments X X Perry Hall Marketplace X X Smith’s Landing X X Premier Retail X X The Cosmopolitan X X Providence Plaza X X
35 Reconciliation to Property Portfolio NOI $ in thousands Three months ended 6/30 Six months ended 6/30 2019 2018 2019 2018 Office Same Store(1) Rental revenues $5,428 $5,287 $10,754 $10,387 Property expenses 1,863 1,839 3,721 3,698 NOI 3,565 3,448 7,033 6,689 Non-Same Store NOI(2) 1,311 (98) 1,387 (189) Segment NOI $4,876 $3,350 $8,420 $6,500 Retail Same Store(1) Rental revenues $15,146 $14,627 $28,820 $28,247 Property expenses 3,368 3,278 6,590 6,411 NOI 11,778 11,349 22,230 21,836 Non-Same Store NOI(2) 2,671 1,046 5,065 2,931 Segment NOI $14,449 $12,395 $27,295 $24,767 Multifamily Same Store(1) Rental revenues $5,376 $4,843 $10,825 $9,878 Property expenses 2,044 2,086 4,129 4,037 NOI 3,332 2,757 6,696 5,841 Non-Same Store NOI(2) 2,243 839 3,545 1,694 Segment NOI $5,575 $3,596 $10,241 $7,535 Total Property Portfolio NOI $24,900 $19,341 $45,956 $38,802 (1) See page 34 for the Same Store vs. Non-Same Store properties (2) Includes expenses associated with the company’s in house asset management division.
36 Reconciliation to Property Portfolio NOI $ in thousands Three months ended 6/30/2019 Diversified Portfolio Office Retail Multifamily Total NOI - Cash Basis $591 $11,543 $3,172 $15,306 GAAP Adjustments 411 406 136 953 NOI $1,002 $11,949 $3,308 $16,259 Town Center of Virginia Beach NOI - Cash Basis $3,332 $2,195 $1,976 $7,503 GAAP Adjustments 373 (46) (8) 319 Elimination of intercompany rent (245) (104) - (349) NOI $3,460 $2,045 $1,968 $7,473 NOI Diversified Portfolio $1,002 $11,949 $3,308 $16,259 Town Center of Virginia Beach 3,460 2,045 1,968 7,473 Unstabilized Properties 414 455 299 1,168 Total Property Portfolio NOI $4,876 $14,449 $5,575 $24,900
Reconciliation to GAAP Net Income 37 $ in thousands Three months ended 6/30/2019 Total Rental General Contracting & Office Retail Multifamily Properties Real Estate Services Total Segment revenues $ 7,382 $ 19,235 $ 9,761 $ 36,378 $ 21,444 $ 57,822 Segment expenses 2,506 4,786 4,186 11,478 20,123 31,601 Net operating income $ 4,876 $ 14,449 $ 5,575 $ 24,900 $ 1,321 $ 26,221 Depreciation and amortization (13,478) General and administrative expenses (2,951) Acquisition, development and other pursuit costs (57) Interest income 5,593 Interest expense (7,603) Change in fair value of interest rate derivatives (1,933) Other income (loss) benefit 4 Income tax benefit (provision) 30 Net income $ 5,826 Net loss attributable to noncontrolling interest in investment entities 320 Preferred stock dividends (154) Net income attributable to AHH and OP Unitholders $ 5,992 Six months ended 6/30/2019 Total Rental General Contracting & Office Retail Multifamily Properties Real Estate Services Total Segment revenues $ 12,938 $ 36,492 $ 17,857 $ 67,287 $ 38,480 $ 105,767 Segment expenses 4,518 9,197 7,616 21,331 36,409 57,740 Net operating income $ 8,420 $ 27,295 $ 10,241 $ 45,956 $ 2,071 $ 48,027 Depreciation and amortization (23,382) General and administrative expenses (6,352) Acquisition, development and other pursuit costs (457) Interest income 10,912 Interest expense (13,489) Equity in income of unconsolidated real estate entities 273 Change in fair value of interest rate derivatives (3,396) Other income 64 Income tax benefit (provision) 140 Net income $ 12,340 Net loss attributable to noncontrolling interest in investment entities 320 Preferred stock dividends (154) Net income attributable to AHH and OP Unitholders $ 12,506